Shares of Callidus Capital Corp, the Toronto specialty lending company owned by Canadian private equity firm Catalyst Capital Group, plunged to an all-time low on Tuesday after it reported a fourth-quarter and annual loss late on Monday.
Callidus said it made a fourth-quarter net loss of $171.6 million in the quarter, compared to a net loss of $58.5 million in the year-ago period, primarily caused by a $131.9 million loan loss provision related to an unnamed energy company. For the whole of 2017 it reported a net loss of $218.5 million, compared to income of $1.2 million for 2016.
Its shares fell as much 42 percent in morning trading to an all-time low of $3.76, later paring losses to trade at $4.75.
The decline below $5 comes after more than a year of Catalyst’s attempts to sell Callidus to a private buyer, saying last year it was targeting a price of $18 to $22 a share.
Catalyst and Callidus head Newton Glassman said on an earnings call early on Tuesday that the effort to take the company private continues, with “numerous parties” still part of the process. He declined to provide additional details.
“The noise in the market, in my opinion likely created in part by short selling, et cetera, has succeeded in reducing the stock price to a level that we don’t believe reflects the real value of the assets,” Glassman said. “We currently have every reason to be optimistic about 2018 and the future,” he added.
The stock price decline Tuesday extends a sharp drop in recent weeks. On March 23, Reuters published an investigation that raised questions about how Catalyst values the companies in its portfolios, including Callidus, a core holding across its private equity funds.
Catalyst last week took out full-page advertisements in the New York Times, USA Today and National Post to dispute reporting by Reuters.
(Reporting by Lawrence Delevingne and John Tilak; Editing by Chizu Nomiyama and Bill Rigby)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Chris Helgren