JZCP Completes Sale of Six European Investments

JZ CAPITAL PARTNERS COMPLETES SALE OF

SIX EUROPEAN INVESTMENTS FOR €96.3 MILLION

09 February 2016

JZ Capital Partners Ltd. (LSE: JZCP.L,  â€œJZCP” or the “Company”), the London listed fund that invests in US and European microcap companies and US real estate, has completed the sale of six of its European investments (held through the EuroMicrocap Fund 2010, L.P. (“EMC 2010”)) to a major financial institution for €96.3 million ($104.6 million).

This transaction will be completed in two phases. Firstly, on February 1, 2016, JZCP sold its stake in the first five assets (Docout, Ombuds, One World Packaging, Toro Finance, and Xacom) for €75.2 million. Secondly, JZCP will sell its stake in Winn for €21.1 million[1] when regulatory approval is received (estimated 4-6 months). Once both phases are completed, JZCP expects to have realized an aggregate gross multiple of invested capital (“MOIC”) of 1.6x in constant euros[2] (1.3x after accounting for FX losses). 

The sale was undertaken as a secondary transaction and priced at net asset value (“NAV”). In addition to validating the Company’s NAV, this transaction provides JZCP with significant liquidity to pursue further investment opportunities across its three portfolios (US microcap, European microcap and real estate).

JZCP sold four out of the six companies at premiums to cost. Had these four companies been sold separately, they would have generated a 2x aggregate gross MOIC in constant euros (1.7x after accounting for FX losses). The other two investments were sold at a discount to cost, but at JZCP’s current NAV.

Furthermore, JZCP will hold onto its equity stake in the three remaining companies in EMC 2010 (Factor Energia, Fidor Bank, and Oro Direct), which had an aggregate fair value of €84.2 million and an aggregate gross unrealized MOIC of 3.1x in constant euros (2.6x after accounting for FX losses) at the secondary transaction’s valuation date.

The announcement marks further progress made with several initiatives completed in the past year which have secured repayment of the 2016 ZDPs and allowed the Company to take advantage of a healthy investment pipeline, including:

• $181.5 million raised via the issuance of new ordinary shares (net £77m / $117.8m) and rollover of approximately £41.6 million ($63.7m) of our current 8% ZDPs due 2016 into a longer-dated ZDP with a much lower yield.
• $124.2 million in proceeds from the full realization of four US portfolio companies.

Together with the secondary sale today, the Company has realized or raised more than $410 million in the past year.

David Zalaznick, JZCP’s Founder and Investment Adviser, commented: “We have been working for the past year on building the liquidity of JZCP for two important reasons: to raise capital for new investments ahead of realizations and to have sufficient funds to repay the balance of the ZDPs due June 2016. In the past fiscal year, we have realized or raised more than $410 million, a significant achievement given our market cap is c.$480 million and we continue to trade at a c.40% discount to NAV.”

Ends

For further information:

Ed Berry / Kit Dunford                                                                [phone]
FTI Consulting

David Zalaznick              [phone]
Jordan/Zalaznick Advisers, Inc.

Paul Le Ray                  [phone]
JZ Capital Partners, Ltd.

About JZCP

JZCP is a London listed fund which invests in high quality US and European microcap companies and US real estate. Its objective is to achieve a superior overall return comprised of a current yield and significant capital appreciation. JZCP receives investment advice from Jordan/Zalaznick Advisers, Inc. (“JZAI”) which is led by David Zalaznick and Jay Jordan. They have worked together for 30 years and are supported by teams of investment professionals in New York, Chicago, London and Madrid. JZAI’s experts work with the existing management of microcap companies to help build better businesses, create value and deliver strong returns for investors. JZCP also invests in mezzanine loans, first and second lien investments and other publicly traded securities. For more information please visit www.jzcp.com.

[1] From February 1, 2016 until the close of the second portion of the transaction, the institutional buyer will pay JZCP 8% interest on the €21.1 million purchase price for Winn.

[2] Gross MOIC (constant euro) figures are for illustrative purposes only, assuming that EuroMicrocap Fund 2010, L.P. was a euro-denominated fund (EuroMicrocap Fund 2010, L.P. is a US dollar-denominated fund).