Candover & Permira Bail on Ferretti

Private equity firm Candover has written-off its investment in Italian yacht maker Ferretti after being unable to reach an agreement on the restructuring of the company.

Candover and minority co-investor Permira are not going to participate in the restructuring plan currently on the table. Permira will also loose its investment.

“On the terms proposed, Candover has decided not to participate in the restructuring of Ferretti and believes its existing stake in the business now has no value,” Candover said in a statement.

Rothschild were appointed two months ago after the Italian company breached its covenants. Last year, the company was understood to be considering floating with a potential value of €3 billion, underlining the sharp deterioration in performance since.

Candover’s 50.2% stake in Ferretti was valued at £48.6 million in June 2008 and represented 12.1% of the firm’s asset base along with £5.5 million

 of accrued note interest.

The private equity firm has emerged as one of the most prominent casualties of the current crisis – earlier this month it revealed it was going to shrink the size of the €5 billion fund it was targeting by some billions as its cornerstone investor – the eponymous listed investment vehicle Candover Investments Plc – would be unable to provide its commitments.

Candover acquired Ferretti in a €1.7 billion secondary buyout from Permira in 2007. Permira decided to stay invested and retained a 9.5% stake in the company. Mediobanca and RBS underwrote a €1.125 billion facility to support the deal.

The new restructuring plan would see management inject new equity into Ferretti alongside a new financial investor. Negotiations are described as advanced.

Source: Thomson Merger News