LONDON (Reuters) – The future of Candover’s 2008 fund hangs in the balance after the private equity firm’s main backer said it will stop investing in the fund as a lack of cash severely curtailed its ability to invest.
Candover Investments Plc CDI.L said it is looking at a range of strategic options as it concentrates on realising value from the investments in its 2001 and 2005 funds, and its shares were down more than 9 percent in morning trading.
“We are not in a crisis as of today, we have got problems as of today, and it’s too early to say what the final result could be,” Chairman Gerry Grimstone said on a conference call.
It has drafted in Merrill Lynch and Lexicon to advise on options, however the company declined to say whether the options included a sale of the group and its investments, a merger or a de-listing.
Candover Invesments Plc last April committed to put 1 billion euros ($1.26 billion) into Candover’s 2008 fund, however it will now limit its entire investment to the 69.5 million pounds ($99.09 million) already put into oil and gas services company Expro.
The firm has recently held a couple of meetings with the fund’s investors regarding a restructuring of the fund, which may include a suspension of the firm’s investments, and the company said opinions across a group of 40 investors were split.
“There’s a spectrum of opinion across those 40, some very much want to carry on, some, I dare say, wouldn’t mind coming out,” said Grimstone.
The company employs 90 professionals in total and said it will reduce its staffing levels to reflect its reduced fund size. It also said its small, nascent Eastern European and Asian operations will be closed down or made into independent self-financed units.
Shares in the Candover Investments, which have lost some 90 percent of their value since end-September, were down 9.21 percent at 1109 GMT after it said net asset value per share had dropped 50 percent at the end of last year to 1026 pence.
Candover Investments last week failed to reach an agreement with lenders to restructure the debt of luxury yacht maker Ferretti and it wrote off its investment. Ferretti accounted for 12.1 percent of Candover’s asset base at end-June 2008.
Candover Investments wrote down the value of its sole 2008 fund investment Expro by 50 percent, and said Candover had guaranteed an additional 44.1 million euro investment on behalf of the 2008 fund.
Candover Investments said it was in the process of renegotiating the terms of a 160 million pound bond raised in 2007 as a precautionary measure.
“While we are not in breach of any financial covenants we will be engaging in discussions with all our lenders in order to re-establish our financial flexibility,” said Grimstone.
The group said it would not pay a final dividend, so that the dividend paid for the year was 22 pence per share, down from 60 pence in 2007.
Grimstone said the 2008 fund — launched in April with a 5 billion euro target — reached 2 billion euros of external commitments by the end of August before fundraising almost completely dried up in September and October as a result of Lehman’s collapse and the credit crunch. ($1=.7940 Euro) ($1=.7014 Pound)
By Simon Meads
(Editing by Sharon Lindores)