Interim Management Statement

RNS Number : 2803M

Intermediate Capital Group PLC

27 January 2009

 



Embargoed until 7.00am on                         

Tuesday, 27 January 2009

INTERMEDIATE CAPITAL GROUP - Interim Management Statement 

for the three months to 31 DECEMBER 2008 (3Q 09)

Intermediate Capital Group PLC ('ICG'), a leading mezzanine and leveraged loan investor and third party fund manager, announces its Interim Management Statement for the three months to 31 December 2008.

Due to the drought of liquidity which we described in our Half Year Results Statement on 25 November 2008 the primary Leveraged Buyout (LBO) market remains shut. At the same time there continue to be very attractive investment opportunities in the secondary market for senior leveraged loans.  

Monitoring and managing our portfolio

ICG's loan and investment portfolio is highly diversified and, while not immune to the recessionary environment, continues to perform satisfactorily. At our recent quarterly portfolio review, over two thirds of our portfolio companies were performing at, or above, the prior year level and close to half were on, or above, budget. This is broadly in line with what we observed in the two previous quarterly reviews. However, since the end of September we have seen a marked deterioration in the operating performance of a limited number of weaker assets as economic conditions have worsened. 

Our watchlist consists of 13 percent of our portfolio by value reflecting the impact of deteriorating economic conditions and the heightened level of vigilance necessary in the current climate. A dedicated team of senior investment executives has been assembled to support our local investment teams in managing assets on our watchlist. We have a strong track record in maximising recoveries in troubled assets and are focused on maintaining this. 

Investing cautiously into the secondary loan market

During the third quarter we arranged or provided £205m in four new investments (£55m of which was retained on our balance sheet), compared with £559m in 11 new investments in the first half of this year (H1 09) and £566m in 10 new investments in the third quarter of last year (3Q 08). Two of these four new investments were primary LBO transactions which had been committed to prior to the end of September 2008 but completed in the early part of the third quarter.

Early redemptions remained at very low levels with only £14m of our loan and investment portfolio repaid this quarter (H1 09: £70m, Q3 H8: £82m). This translates into net new lending of £41m (H1 09: £242m, Q3 H8: £289m).

Through our third party funds we are well positioned to take advantage of the outstanding investment opportunities that are increasingly available in the secondary market for senior loans. In the third quarter, we purchased senior loans in two LBOs and will continue to invest selectively in this market.  

Maintaining a strong balance sheet

Our loan and investment portfolio grew by £514m or 19 percent to £3,103m; the increase was principally due to currency movements which added £484m due to the strength of the Euro and US Dollar against Sterling. As we match assets and liabilities in currency terms, liabilities have also increased by a similar amount. Our balance sheet remains robust, with shareholders' funds of £901m at 31 December 2008, and we continue to operate comfortably within our banking agreements.

  Continuing to raise third party funds

Although the fund raising environment continues to be challenging, we held two fund closings during the quarter as we reported in the Half-Year Statement. We continue to market our Recovery Fund and are aiming to reach a final close in the first half of next financial year. We expect our Eurocredit Opportunities Fund, which is subject to mark to market covenant tests, to be further restructured to strengthen the fund.

Outlook 

We expect net new investments to be limited to the secondary market for senior loans where we are finding excellent value. Core income in the second half is expected to be slightly lower than the level achieved in the first half (adjusted for one off contributions announced at the Interims), as we do not accrue rolled-up interest on impaired assets. We currently anticipate that provisions will be noticeably higher than in the first half due to the impact of the worsening economic environment on our weaker assets and the strength of the Euro against Sterling. Capital gains are expected to remain at the low level experienced in the first half.

Post 31 December 2008 events

No material change has occurred since 31 December 2008.  

Analyst / Investor enquiries: 

Tom Attwood, Managing Director, ICG PLC                                                        [phone] 

Philip Keller, Finance Director, ICG PLC                                                              [phone]

Jean-Christophe Rey, Investor Relations, ICG PLC                                             [phone]

Media enquiries:

Amanda Fong, Corporate Communications, ICG PLC                                       [phone]

Helen Barnes/Teresa Bianchi, Brunswick Group                                                 [phone] 

This interim management statement has been prepared solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. The interim management statement should not be relied on by any other party or for any other purpose. 

This interim management statement may contain forward-looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of this report and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. 

These written materials are not an offer of securities for sale in the United States. Securities may not offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption there from. The issuer has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to offer any securities to the public in the United States.  No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted.

About ICG

Founded in 1989 and quoted on the London Stock Exchange, Intermediate Capital Group PLC is a leading independent investor in LBOs and third party Fund Manager. ICG has a large and experienced investment team with over 70 executives operating out of ICG's head office in London and offices in Paris, Madrid, Stockholm, Frankfurt, Hong Kong, Sydney and New York. Since its inception, ICG has invested more than £10bn in mezzanine and equity in over 340 transactions. In addition ICG manages over £8bn in Mezzanine and CDO Funds on behalf of third parties. Further information at: www.icgplc.com .  

  ICG's New Investments

3 months to 31 DECEMBER 2008

In the 3 month period to 31 December 2008 ICG and/or funds managed by ICG invested in the following four companies:

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Asia Pacific

Veda is Australia's and New Zealand's leading supplier of consumer and commercial credit reporting. In September 2008 ICG facilitated the restructuring of Veda's balance sheet by arranging a AUD 150m mezzanine facility to refinance senior debt and to provide additional working capital. This facility was drawn in October. In September 2008 ICG also acquired AUD 15m of Veda's existing subordinated debt in the secondary market. A further AUD 15m was acquired in early October. The AUD 15m of Veda's existing subordinated debt purchased in September in the secondary market was included in the new lending figures for the six month period to 30 September 2008, with the balance included in the new lending figures for the three month period to 31 December 2008.

Europe

N&W Global Vending is an Italian company that manufactures vending machines. In November 2008 ICG arranged a mezzanine facility of €130m to support the tertiary buyout. 

Secondaries

Bureau Van Dijk, an existing investee company, is an electronic publisher of comprehensive company information based in Belgium. In December 2008 ICG acquired £18.5m of senior facilities with a further commitment of €9m under the revolving credit facility.

Ista, an existing investee company based in Germany, is a global provider for consumption based billing in the metering and sub-metering industry. In November 2008 ICG acquired €5m of the senior facilities. This has subsequently been transferred to the ICG Recovery Fund.

Other

ICG also provided additional funding of over £9m for 5 existing investee companies.

 

END

 

 

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