Intermediate Capital sinks to first loss
INTERMEDIATE Capital Group (ICG), which lends money to buyout firms, has fallen to the first loss in its history as bad debts mounted amid the financial crisis.
The specialist financier suffered a pre-tax loss of £67m in the year ending 31 March, a dramatic reversal from the £230m profit it booked in the previous year.
ICG said it was cutting its total dividend to 41p per share from 65p, blaming soaring provisions against bad debt, which topped £273m, compared to £46m the year before.
Chairman John Manser said the company had been cautious ahead of the financial crisis but admitted that ICG “did not anticipate the severity of the impact on financial markets”.
Chief executive Tom Attwood agreed that the downturn had been worse than expected and said several of ICG’s investments, which include airport operator BAA and Gala Bingo had “moved from bad to dreadful”.
But he said the company expected provisions to fall this year because ICG slashed its exposure in the UK by half before the onset of the credit crunch and has withdrawn from other volatile markets.
Attwood added that ICG would consider buying the European assets of ailing US private equity house American Capital. The optimistic outlook sent ICG’s shares up nearly 22 per cent to close at 560p.
Noble analyst Nitin Arora said the recovery in ICG’s stock was down to its conservative provisioning policy.
“The numbers looked bad, but they seem to have bottomed out,” he said, adding that the dividend cut had removed some uncertainty.
He also pointed to the fact that the group has extended £150m of its £450m banking facility by two years until 2013 and is in talks to restructure another £100m of debt.