Lack of exits forces Candover to make contingency plans

In its half-year results, Candover reported a £11.2m increase in its net debt, swelling from £26.7m to £37.9m over the last six months. The rise has been attributed to interest charges and operating expenses. Furthermore, £3.1m of the increase was incurred by exchange rate movements.

Candover's growing debt pile has caused its loan-to-value ratio to increase from 18.1% at the end of 2012 to 23.9% as of the end of June.

With its US private placement loan notes maturing from the end of 2014 onwards, the group has decided to look at contingency plans. Although Candover's manager, Arle Capital Partners, is believed to be in a good position to make realisations before Candover's debt repayment deadlines, the group believes it is sensible to start reviewing its options. As well as considering a refinancing of its existing facilities, Candover will also look into obtaining new finance.

Candover's portfolio companies, managed by Arle, have strengthened over the last six months. Expro International's valuation has increased by £13.9m, impacting both headline revenues and profits.

The overall portfolio value has increased by £12.7m, which has been further helped by currency effects, with the euro and the US dollar strengthening against the pound, making up £7.5m of that total.

The Candover 2005 Fund drew down some of its residual commitments over the last six months ahead of the follow-on investment period's expiry date. Cash was drawn down for further investment into Parques Reunidos and Stork, and is expected to be committed by year end.

Candover incurred administrative and finance costs of £5.3m over the last six months, of which £1.3m was paid to Arle in management fees.

The Candover 2001 Fund increased in value by 4% over the first half of the year, while the 2008 Fund increased by 30%. However, the 2005 fund reported a 6% decrease following a reduction to the value of Stork due to first-half underperformance of Stork Technical Services. The combined value of the funds fell by 1% to €1.9bn.

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• Topics
• Funds
• UK / Ireland
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• Candover Investments plc
• Arle Capital Partners