In both the United Kingdom and the United States loan guarantees have been used by government agencies and institutions for supporting companies in financial distress, and for the encouragement of new investment. These and similar insurance schemes have previously been analyzed within a single period, homogeneous class of debt, contingent-claims framework. In this paper we extend this approach to a multi-period, heterogeneous loan capital structure, using a compound option contingent claims analysis. We apply our methodology to the valuation of the loan guarantee provided by the United Kingdom Government to International Computers Limited (ICL), and compare and contrast the size and direction of the consequent wealth transfer to and from claimholders.