Flanders Language Valley Fund (FLV Fund), the Belgian venture capital firm that has had a torrid past few years, has announced that it has entered into exclusive negotiations with a secondaries specialist over the sale of its entire investment portfolio of speech technology investments.
According to FLV spokesperson, Piet Vandermeersch, the firm, which has declined to be identified, is a “European secondary specialist with some experience of the sector.” Continued Vandermeersch: “We have entered into negotiations this week and so discussions are in their early stages. We have to look at ways to create shareholder value.”
FLV posted a second quarter loss of E1.6m, equivalent to E0.08 per share. The fair market value of the firm’s non-listed investments fell by E1.8m because of additional write-downs for unrealised losses. FLV’s three listed investments increased in value by E0.8m.
As of June 30, 2003 the total fair market value of the portfolio was E16.1m including the three listed companies (Gric, Tele-Atlas, Keyware) valued at E1.7m. Geographically, European investments represent 89 per cent of the portfolio with American investments making up the remainder.
Secondary portfolio transactions are typically made at a discount to the portfolio’s current value, and in a statement, FLV said that this was likely to be the case. Shareholders must “take into account that the value of the portfolio will be negatively affected by a discount, which is customary in similar secondary fund transactions,” the statement read. “It is the intention to pay out the proceeds of the transaction to the shareholders as soon as the funds are received and after completing all legal and statutory requirements.”
Asked whether a secondaries sale was the best route to liquidity, Vandermeersch said: “Every option has advantages and disadvantages but [a secondaries sale] is a good road to explore. It is also important to point out that it is far from a done deal at present.”
In the second quarter of 2003 FLV Fund made three small follow on investments for a total of E0.33m in accordance with previous commitments to protect the value of the investments. There were no major exits from the firm’s portfolio of 22 unlisted investments.
The firm has been hard hit by a series of set backs and controversies in recent years, the most damaging of which was the seizure of $30m it had contributed towards its FLV Fund Korea. The monies were seized by Korean Hanvit Bank which claimed it as security against a loan it had made to personnel connected with the fund. The firm is also facing a series of law suits from American organisations which invested in Lernout & Hauspie Speech Products, which filed for creditor protection in December 2000 and which had connections with FLV.