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from Margaret Doyle:

Candover prices in disaster

Shares in Candover Investments appear to be pricing in Armageddon.The shares are trading at around 200p, against a net asset value of 1026p at the end of December.

Candover share price 2008 to June 3, 2009

Candover share price 2008 to June 3, 2009

The shares had a bit of a shock yesterday, thanks to the Financial Times. That reminded investors about covenants on the 198 million pounds worth of bonds outstanding- they restrict debt to 40 percent of the net assets. Journalist Martin Arnold also said that French investment house, Eurazeo, is no longer interested in buying the group of any of its portfolio companies.

Candover has got itself into a bind, but matters are hardly as bleak as the share price suggests. The group issued a statement in response to Arnold's article, saying that it expects to meet covenants all through this year. I understand that, unlike Barclays' stress test, this assertion is not predicated on any asset sales.

It is true that there are huge questions around the group's future. It suspended its 2008 fund when it found itself unable to keep the promises it had made to invest in it. The board is undertaking a strategic review about where it goes from here. All options- a sale of the business or of the underlying assets, a rights issue, renegotiation of the debt or going into run-off mode - are on the table.