Eurazeo will have to partially write down at least one of its investments despite the listed French private equity firm vowing it will not halt dividend payments.
The firm’s chairman, Patrick Sayer, said in a shareholder letter, Eurazeo had cash reserves and a credit facility of €1 billion which would allow them to “maintain our dividend policy”.
The firm’s minority investment in the Las Vegas casino operator, Station Casino – majority owned by private equity real estate firm, Colony Capital – will have to be partially written down, Sayer said, but, in the long term, is “protected by its real estate assets”. Accor, another Colony and Eurazeo investment, has also been hit by the chaos in the financial markets, he said. In May, Eurazeo and Colony increased their stakes in Accor, Europe’s largest hotel owner, to 30 percent.
Accor’s share price has lost a third of its value since Lehman Brothers filed for bankruptcy in September and Eurazeo was forced to inject €200 million in the company, Sayer said.
However Sayer insisted the rest of Eurazeo’s portfolio companies were strong, or are taking measures to withstand the gloomy financial environment. The remaining portfolio companies, he said, had debt maturities ranging from 2011 to 2017. “We remain true to our strategy, namely, a structural absence of debt at the corporate level,” Sayer said. “With no debt to repay, Eurazeo can fully concentrate on its portfolio companies.”
In September, Eurazeo asked French regulatory authorities to investigate a 19 percent drop in its share price, which the firm suspected was connected to the collapse of Lehman Brothers.
The firm is listed on the Euronext Paris and has €5 billion under management. Eurazeo’s co-investment arm, Eurazeo Co-Investment Partners, was launched last year and closed a $500 million fund in March 2007. The co-investment unit’s stakes in Eurazeo’s portfolio companies include rental car company Europcar and European car parking company Apcoa.