ETF News

Lender Yorkville seeks $400 mln for default names

* Private equity firms, trade buyers showing interest

* Defaulting companies’ market caps from $1 mln to $150 mln

LONDON, March 3 (Reuters) - U.S. lender Yorkville Advisors, wants to make as much as $400 million this year by offloading firms it was forced to take private in the credit crisis, seeking buyers amid improving market liquidity.

Yorkville, which makes direct loans to primarily public companies, wants to sell 12 to 15 names that it took control of when they defaulted on its loans. Following an independent valuation, these are thought to be worth approximately $400 million in today’s market.

Tom Anderson, director of investor relations, said YA Global Investments LP had taken $200 million in writedowns in the last 18 months due to companies in its 100-name portfolio defaulting.

The defaulting companies’ market capitalisations range in size from $1 million to $150 million. They include technology, consumer, and energy companies in the U.S.

Anderson said Yorkville is seeking exits over the next 12 months as liquidity has picked up, with some possible by summer.

“We’ve been approached by private equity firms looking at some of the positions we have, and oil and gas companies looking at the energy concerns,” he told Reuters.

He added that one possibility was to relist a company.

Before mid-2008, Yorkville had seized collateral on less than 12 occasions, but defaults increased in the recession as over-extended companies struggled. The firm is typically at the top of the capital structure, but still had to “battle through” bankruptcy courts to protect its collateral, Anderson said.

He said there was currently no shortage of new loans that Yorkville could make but it was trying to be selective, to make sure it gets its money back in anticipation of a second wave of defaults in the U.S.

“We’ve taken all the write downs that we can imagine taking at this point but we’re being very cautious. The new loans we’re doing now are with companies that we have previously funded.”

The average coupon on new loans is now at 12-14 percent, compared just over 10 percent last year, he said. (Editing by Jon Loades-Carter)