CVC Fails To Repay Loan, Loses Skylark Stake

TOKYO (Reuters) – UK Private equity firm CVC Capital Partners said it had given up a holding in Japanese restaurant chain Skylark Co, its biggest investment in the country, as the restaurant chain has posted losses for three consecutive years.

CVC Capital has agreed to give its holding in Skylark to Chuo Mitsui Capital Co, a private equity fund owned by Chuo Mitsui Trust Holdings (8309.T), in return for not having to pay back loans made to purchase the stake, a Tokyo-based spokesman for the buyout fund said.

CVC Capital and the private equity unit of Nomura Holdings Inc (8604.T), Japan’s biggest brokerage, helped take the family-oriented restaurant operator private in 2006 through a management buyout — at the time a rarity here.

CVC Capital made its investment through Asia Eateries Holdings NV (AEH), which spent 60 billion yen ($639 million) for a 35.6 percent stake while Nomura took 61.5 percent. AEH’s stake was reduced to around 20 percent after Skylark sold new shares to Nomura in December.

CVC Capital invested an undisclosed amount in AEH and that money will not be returned, the spokesman said.

The U.K. firm is now reviewing its portfolio as it aims to find new opportunities in Japan with about $4 billion in funds it raised last year, the spokesman added.

Skylark’s net loss widened to 26.1 billion yen for the year ended December 2008 from 13 billion yen a year earlier. The firm operates 3,772 outlets in Japan under different brand names, according to its website.

Nomura Principal Finance, Nomura’s buyout unit, now owns 78 percent of Skylark. (Reporting by Junko Fujita; Editing by Edwina Gibbs and Joseph Radford)