Fortress Reports Wider Q4 Loss

NEW YORK (Reuters) – Fortress Investment Group LLC (FIG.N), which went public two years ago when investment funds were booming, said on Monday the financial crisis had generated more writedowns, deepened its quarterly loss four-fold and prompted more customer redemptions.

Fortress, one of the largest managers of hedge and private-equity funds, reported a net loss of $140 million (99.16 million pounds), or $1.50 a share, for the fourth quarter, compared with a loss of $29 million, or 43 cents a share, a year earlier.

The weak results reflected a loss of $265 million from stakes in private-equity and hedge funds as well as interest expenses. Shrinking funds led to lower management fees, while the plunging markets hurt performance fees and principal investments.

Like its rivals, Fortress is under siege from declining asset values and a wave of customers demanding they be allowed to withdraw their money.

Fortress, manager of the Drawbridge Global Macro fund, suspended redemptions at the end of November but resumed some payments at the end of January.

At that time, Fortress said, $3.3 billion was withdrawn by Drawbridge clients. The fund ended the year with $6.1 billion. Drawbridge paid out $2.1 billion in cash plus $900 million in new special purpose vehicles that hold interests in Drawbridge illiquid securities, Fortress said. The remaining $300 million will be paid out in March.

Fortress said investors in its hybrid hedge funds, which have annual redemptions, asked for $1.5 billion. The funds will be paid out over time as investments are sold.

Assets under management totalled $29.5 billion as of December 31, down 11 percent from a year earlier, and dropped to $27.1 billion one day later because $2.4 billion of capital in liquid hedge funds stopped paying fees as of January 2009. The biggest declines came from fourth-quarter redemptions in these liquid hedge funds.

Fortress did not pay a dividend for a second straight quarter, citing a need to preserve capital. It also disclosed it recently amended a credit agreement to ease terms and paid down $125 million, leaving it with a balance of $604 million.

Last month the city of Vancouver paid C$319 million (178.48 million pounds)) to Fortress, which had cut off funding to the company building athletes’ housing for the 2010 Winter Olympics. City officials said the buyout should ensure on-time completion.

Shares of Fortress closed Friday at $1.50 on the New York Stock Exchange. They have lost more than 90 percent of their value since the company went public in February 2007.

(Reporting by Joe Giannone and Jonathan Stempel; Editing by Steve Orlofsky and John Wallace)