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Eurazeo remains ‘robust’ despite €61m loss

Notwithstanding a dearth of exits and a few troubled deals, such as its investment in hotel group Accor, the listed French firm says its balance sheet is much healthier than its share price reflects. Its full year earnings report revealed it has written down to zero its stake in Colony-backed Station Casinos.

Eurazeo Partners has recorded a net loss of €61 million for 2008 despite its revenue growing 35 percent year-on year to more than €4 billion.

The loss was partly due to a lack of “significant disposals” in 2008, chairman of the executive board, Patrick Sayer, said at a results presentation in Paris this morning. In 2007 it achieved a profit of around €890 million partly from the sale of stakes in Eutelsat Communications and transport company Fraikin.

Eurazeo’s portfolio was also written down significantly for the 12 months to 31 December 2008, resulting in a net asset value of €53.4 per share. The firm has not historically recorded its NAV, but Sayer said that it had taken the decision to do this following the market instability.

Its portfolio companies most affected included Station Casinos, a struggling leisure and gaming investment backed by Los Angeles-based Colony Capital, which was written down to zero, while car parking firm APCOA and real estate investment fund Colyzeo II were also written down significantly.

Despite this, five Eurazeo portfolio companies – Accor, B&B, ANF, APCOA and Elis – posted profit increases of between 2 percent and 15 percent for 2008, while Europcar and Rexel posted profit declines of 15 percent and 0.4 percent respectively.

The firm’s biggest outlay for 2008 was the acquisition of French hotel group Accor for €957 million, including €468 million of debt. In the fourth quarter 2008 it was also forced to inject a €200 million of temporary collateral into Accor after its share price nosedived.

Our share price is not just below our net asset value [today]. The reality of the situation is that the share price is less than our listed entities in cash.

Patrick Sayer

Sayer said the firm remains “robust” and it has “remained true to its business model” and free of structural debt, retaining “a strong cash position” of €300 million and financial resources of €1.6 billion.

He said that despite the pressure on the market none of the firm’s portfolio companies breached their banking covenants in 2008, although French hotel groups Accor and B&B and real estate investor ANF increased their debt margins last year. Station Casinos is currently undergoing a debt restructuring following a missed interest payment, is not included among Eurazeo's consolidated businesses, according to the firm.

As of 24 March 2009 the NAV per share was valued at €44.6 taking into account the decrease in the share price of its listed assets. This morning its shares were trading up 1.3 percent at €20.15 each, compared to a peak of €89 per share last year.

“Our share price is not just below our net asset value [today]. The reality of the situation is that the share price is less than our listed entities in cash. The market is telling us that our private equity companies are worthless but we are showing you that not only are those companies not worthless they are also well financed and well managed,” Sayer said.