LONDON (Alliance News) - Reconstruction Capital II Ltd Wednesday said its net asset value fell by 16% to EUR32.9 million over the course of 2013, primarily due to the write down to zero of its investment in East Point Holdings Ltd, due to a severe deterioration in East Point's financial condition over the year.
The company was created to invest in private and listed equity securities and fixed-income securities, including convertible and other mezzanine instruments, primarily in Romania, Serbia and Bulgaria.
In a statement Wednesday, the AIM-listed closed-end investment company incorporated in the Cayman Islands said its 2013-end NAV per share of EUR0.3287, down from EUR0.3933 at the end of 2012, is almost entirely composed of four investments in Romania, which are generating positive earnings before interest, tax, depreciation and amortisation.
Top Factoring Srl and its sister company Glasro Holdings Ltd, as well as Albalact SA generated free cash flow for Reconstruction Capital II.
Policolor SA, Top Factoring Group and Mamaia Resort Hotels Srl increased by a combined EUR1.0 million in value.
"Both the Romanian and Bulgarian economies improved in 2013, in particular Romania which, with an annual GDP growth of 3.5%, posted the second highest GDP growth in the EU. The prospects for 2014 remain good for both countries as domestic demand is expected to recover and add to the positive effect of exports, which have been the main driver of growth so far," the company said in a statement.
Reconstruction Capital II made no new investments under its private equity programme in 2013, instead continuing to pursue exits from its investee companies as well as from certain of their assets. "Discussions are ongoing with a number of potential buyers," the company said.
The investments held under the private equity programme had a EUR38.0 million fair value at the end of 2013, down 9.6% year-on-year, due a EUR5.9 million writedown of investments in Serbia, partially compensated by the EUR1.8 million increase in the value of Romanian investments.
Meanwhile, Reconstruction Capital II reduced its position in listed equities held under its trading programme.
"Efforts to sell down more shares were unsuccessful, due to the low liquidity of the listed equities owned by RC2," the company said.
At the end of 2013, Reconstruction Capital II's listed equities held under its trading programme had a total market value of EUR400,000. All the investments held under the trading programme were in Romanian equities.
Reconstruction Capital II shares were Wednesday quoted at EUR0.12, untraded.