UK/ITALY - Candover writes off Ferretti investment

According to reports, the restructuring currently being negotiatied includes an equity injection from senior management alongside CEO Norberto Ferretti. However, Candover released a statement today announcing that it has "decided not to participate in the restructuring" as it "believes its existing stake in the business now has no value."

Candover acquired a 50.2% majority stake in Ferretti in a secondary buyout from Permira in December 2006 valued at around EUR 1.7bn. The transaction was supported by a EUR 960m debt package provided by Mediobanca and RBS. Permira, which retained a 10% stake in the business following the 2006 buyout, is expected to follow Candover's lead and write off its minority stake.

Following a breach of banking agreements, Ferretti appointed Rothschild to advice on a debt restructuring in January 2009.

Another of the firm's portfolio companies, UK-laboratory testing services group Alcontrol, has also been reported today as appointing Close Brothers to assist in talks with lenders over a restructuring of the company's debt.

Candover acquired Alcontrol at the end of 2004 in a secondary buyout from Bridgepoint valued at about EUR 200m, with Dresdner Kleinwort Wasserstein and Bank of Scotland providing the debt.

Candover is set to highlight the issues with its portfolio companies alongside the investments company's results next Monday 2 March, when it will also confirm the details of the downsizing of its latest fund.

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