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Candover writes down value of investment in Belgian Ontex

UK-based buy-out group Candover has written down the value of its investment in Belgian nappy manufacturer Ontex by around E300m and warned its portfolio company is in danger of breaching bank convenants.

Candover paid E1bn for the business in 2002, of which 40 per cent was equity and the rest a combination of senior and mezzanine debt. The value of the equity has now been written down to E100m, according to the Financial Times.

Ontex has been suffering from intense competition in some of its key markets from global players such as Procter and Gamble, which has hit margins and affected its ability to meet debt repayments.

Observers do not, however, think the business is in significant trouble. The FT quoted an interested party as describing Candover's move as being 'incredibly prudent.'

Concerns have been growing in recent months that the availability of cheap credit is resulting in a number of buy-out transactions in Europe being dangerously over-leveraged. As yet, however, there have not been any high profile casualties.

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