Troubled Bermuda insurer Trenwick is still wrangling with creditors in an attempt to get a year-long extension on its $226 million letter of credit facility.

News that Trenwick was continuing its negotiations with creditors prompted investors to push up the company's share price to $1.04 yesterday - a boost after the company's stock plummeted to a 52-week low of 43 cents last week compared to its 52-week high of $11.05. But there have been questions raised as to whether the company can continue as an "on going concern" if it fails to come to an agreement with creditors in the next week.

The company announced more than a week ago that it had entered into a forbearance agreement with creditors - which was to have run out on November 22 - while it negotiated to keep the letter of credit in place. On Friday Trenwick said creditors had agreed to extend the forbearance agreement through December 6 but "final terms" over retention of the credit facility were yet to be agreed.

Under the forbearance agreement, creditors agreed to refrain from enforcing their rights or remedies" in the next fortnight unless there was another default under the credit facility or if a third party exercised any right of action against Trenwick for a debt in excess of $5 million. Trenwick's Lloyds operation has also been given a grace period with the London insurance marketplace agreeing to accept a delay of its funding for the 2003 year of account "for a short time", in light of the ongoing negotiations.

The credit issue is key for the company which earlier this month posted a nearly $140 million net loss for the third quarter.

Without the letter of credit facility in place, the company would face "substantial doubt" as to its ability to continue underwriting at Lloyds or to continue as an ongoing concern, according to rating agency Standard & Poors (S&P). The S&P downgraded the company's credit rating earlier this month from B to CCC+ and put the rating on credit watch negative which indicated the company's financial strength could be lowered further.