According to Bloomberg on Thursday, private equity firm Allied Capital Corp. (ALD), a business development company, is seeking bids for its wholly-owned portfolio company Callidus Capital Management LLC., managing about $3.5 billion of primarily broadly syndicated senior loans. Allied Capital acquired Callidus in November 2003.
Washington D.C.-based Callidus Capital is a wholly-owned portfolio company of Allied Capital, which is a specialized asset management company focused on managing leveraged portfolios of corporate fixed income securities, including high-yield bonds, floating rate bank loans and other related assets. The company manages a series of highly structured funds under the Callidus mantle utilizing a value investing approach supported by rigorous, fundamental credit analysis that is highly process-based.
According to a Form 14A filing with the U.S. Securities and Exchange Commission or SEC on October 2, Allied Capital revealed that like many other financial firms, its current business focus has changed from expanding its portfolio to selectively selling portfolio assets in order to generate capital to repay its indebtedness and de-lever its balance sheet. The U.S. debt capital markets have been experiencing extreme volatility and a lack of liquidity for some time.
The lack of investing activities along with an increased cost of debt capital under Allied Capital's restructured debt, has negatively impacted its profitability and ability to pay dividends, the filing stated. The company has not paid a dividend during 2009 and does not expect to pay a cash dividend for an extended period of time.
The Company also intends to continue to take a variety of measures to generate capital in order to repay debt and for investment in yield-oriented investments. These activities include continuing to selectively sell portfolio assets and reducing employee and administrative expenses.
ALD closed Thursday's regular trading session at $3.09, up $0.05 or 1.64% on a volume of 1.43 million shares, lower than the three-month average volume of 1.56 million shares.
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