Insurance broker Towergate has been bought by a group of its lenders in a deal which will cause heavy losses for its bondholders.

A group of its creditors have taken control of the firm in a deal which has wiped out more than 60% of its £1 billion debts, down to £375 million.

The agreement will also give the business £75 million of new finance, which chairman Alastair Lyons said “ends a long period of uncertainty” for its 5,000 staff.

The Maidstone-based company put up the for-sale sign in November after it revealed pre-tax losses of £112.7m in the nine months to the end of September.

Chairman Mr Lyons said: “This ends a long period of uncertainty for Towergate and lays the foundations for a strong future.

“With a very substantial reduction in our existing debt burden and £75 million of new investment we have what we need to be able to realise our strategic ambitions.

“This action by our lenders, who now take over the ownership of the group, makes clear their confidence in Towergate as a market leader and in our people’s ability to create significant value from that position.

“That is a confidence that has been shared by all those of our insurer partners, suppliers and clients who have supported us through the difficult period from which we are now emerging – a confidence that we will now be able to repay.”

The change in ownership signals a huge fall from grace for one of Britain’s largest private companies, which was founded by entrepreneur Peter Cullum in 1997.

The business, which handles more than £2 billion of premiums, had expanded following a huge debt-funded acquisition spree, which built up its huge debt burden.

“We view Towergate’s employees as critical to Towergate’s future success and we look forward to working with them to strengthen Towergate’s position as a market-leading UK insurance provider...” - new owners

The company, based at Eclipse Park in Maidstone, also announced on Monday a 4% decline in income last year to £426 million.

Earnings before interest, taxes, depreciation or amortisation fell by 24% to £110 million.

Yet the company’s new owners reassured employees at the company’s 120 offices, which also include branches in Sevenoaks and Whitstable.

A spokesman for the ad hoc committee of creditors said: “We are pleased to announce our agreement to acquire the Towergate Group which provides for a substantially deleveraged capital structure and a new money facility to put the Towergate Group on a stable, long-term footing.

“Our agreement enables the Towergate Group to seize opportunities in the market while establishing the stability required to maintain the support of Towergate’s insurer partners, customers, suppliers and employees.

“We view Towergate’s employees as critical to Towergate’s future success and we look forward to working with them to strengthen Towergate’s position as a market-leading UK insurance provider.”