(Adds comment from source, details, background)
By Richa Naidu
Feb 2 (Reuters) - British insurance broker TowergateInsurance said on Monday that it had sold itself to its seniorsecured creditors, as part of a deal to slash its 1.04 billionpound ($1.56 billion) debt pile by nearly two-thirds.
The senior bondholders include TPG, Lloyds Banking Group Plc, Pimco and Och-Ziff Capital Management Group Ltd, a source familiar with the matter told Reuters.
TPG declined to comment, while Pimco, Och-Ziff and Lloydscould not be immediately reached.
Towergate said its senior secured creditors would converttheir existing claims into 375 million pounds of new seniorsecured notes, 150 million pounds of subordinated PIK notes and100 percent of the ordinary shares of the new holding company.(http://bit.ly/1CoMZVT)
Following the deal, net senior debt would be reduced by morethan 60 percent, Towergate said, adding that its newconsolidated net senior debt burden of about 370 million poundswould include 75 million pounds of new super-senior notes.
Speculation around a potential restructuring began inNovember, when Towergate revealed that it had fully drawn itsrevolving credit facility, casting doubts on whether it couldcontinue as a going concern.
The company then invited the holders of its senior unsecuredbonds to pitch for control of it in early December.
Several market sources told Thomson Reuters IFR at the timethat distressed debt investors such as KKR and HighbridgeCapital had been buying Towergate's unsecured bonds at deepdiscounts, leading to speculation that they may make a bid forcontrol of the company.
Towergate said the deal would not affect the operations ofany of its units. It added that it would resume its search for anew CEO to replace Mark Hodges, who resigned in October, andthat Alastair Lyons would continue as interim executivechairman. ($1 = 0.6649 pounds) (Editing by Gopakumar Warrier)
Lloyds (LLOY)