13th Jul 2015 08:11
LONDON (Alliance News) - Candover Investments PLC Monday said it has agreed a new term loan facility for up to EUR52 million with 17Capital LLP, a firm known for providing funding to private equity investors, in a move designed to enable the company to strengthen its balance sheet and return GBP21.8 million to shareholders.
The private equity investment trust, which decided it would no longer make new investments following a rapid fall in the value of its assets during the financial crisis of 2007-09, has been focused on returning cash to shareholders since the end of 2010.
In a statement, Candover said the term loan, which attracts payment-in-kind interest at 13% per annum, will allow it to repay its US private placement notes at par value and to meet ongoing working capital requirements. Candover had USD83.9 million of US private placement notes outstanding at the end of June. They are due to mature at the end of December 2015.
Candover said the deal will enable it to return 100 pence per share to shareholders after it realises the necessary assets. Crucially, and unlike its previous debt arrangements, the facility means the company can return the money to shareholders before repaying the debt.
That initial return requires that the value of Candover's portfolio is at least double its debt level. Debt repayments will follow the initial capital return to shareholders.
Candover has the option of extending the facility, which matures in five years' time, at no cost. According to the trust, that would effectively eliminate maturity risk and give it flexibility when making asset disposals. The reason the facility is denominated in euros is because the majority of assets in the portfolio are valued in euros.
"We have tailored a solution that avoids the constraints of traditional debt financing, with interest and loan repayments exclusively dependent on portfolio realisations. As such, our flexible source of capital is aligned with shareholders who benefit from earlier liquidity while preserving the future value of the portfolio," Augustin Duhamel, managing partner of 17Capital, said in a statement.
Rothschild advised Candover on the refinancing.
Candover shares were up 2.9% at 281.98 pence on Monday morning in London.
By Samuel Agini; [email protected]; @samuelagini
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