Candover Investments is reviewing its contingency plans as the firm tries to avoid running out of cash.
Candover is considering refinancing its existing debt facilities and obtaining new financing, the firm said in its interim results.
London-listed Candover’s net debt increased to £37.9 million during the first six months of 2013, up from £26.7 million at the end of 2012. The firm attributed the increase to a combination of interest changes, operating expenses and an adverse impact of exchange rate movements of £3.1 million.
Candover’s US private placement loan notes are due to be repaid from the end of 2014 onwards, Candover said. Based on the firm’s projections, it “should have received cash by then to meet these repayments”, Candover said. “However, a risk remains that there could be a shortfall, if for various reasons, these realisations do not materialise.”
Candover Investments’s portfolio, which is managed by Arle Capital Partners, consists of three vehicles; the Candover 2001, 2005 and 2008 funds, all of which are in realisation mode. Arle was set up in 2011 following a management buyout of Candover Partners, the now-defunct pan-European firm.
Candover’s overall portfolio performed well in the first half of 2013, reporting a 3 percent increase in EBITDA compared to the prior six months, which was driven predominantly by strong earnings at portfolio companies Expro and Innovia. More than 75 percent of the value in the funds is concentrated in the four largest investments; Expro, Stork, Parques and Technogym.
“There are some encouraging signs of a recovery in value within parts of the portfolio, and Arle’s task of positioning the companies for realisation is progressing steadily,” said Malcolm Fallen, chief executive offer at Candover Investments.
“We will continue to track our manager’s progress towards optimising and realising value over the next three years…returning cash to shareholders as soon as practicable remains our overriding objective”.