Listed insurer Insured Group plans to ask shareholders at its AGM in Perth on November 30 to approve paying some creditors with shares to reduce its debt.

The company is proposing to allocate up to 20% of its shareholding to pay debt, although the AGM notice says no individual creditors have been identified to take part in this scheme.

With Insured Group’s share price at $NZ0.001 ($0.0007), shares with a 15% discounted value could be issued up to $NZ255,000 ($200,000).

Sales of various Insured Group subsidiaries are under way, and the company says if all are completed it will have total liabilities of $1.26 million.

It is hoped the sales will raise $4.73 million, a 79% reduction in debt levels.

“The board considers that the sale of a combination of Insured Group subsidiaries and assets constitutes the most feasible method available to the company in the current economic climate to reduce its vendor finance payment obligations and banking commitments,” it says in the AGM papers.

“The sales will allow the company to focus on its insurance broking operations in the key region of WA.”

The sale of its ACIL-owned insurance businesses in NZ to major broker Rothbury will see the Insured Group being unable to offer insurance services there for three years from completion of the sale – despite the fact that the company is listed in NZ.

Insured Group also faces a similar restriction with the sale of the CEMAC business to Austagencies.

It has agreed not to compete against any businesses of CEMAC or approach its customers or employees for three years from the sale date.

Shareholders will be asked to approve both of these sales at the AGM.