Italy’s doValue hikes nine-month loss after Spanish non-cash hits

By Valentina Za

MILAN (Reuters) – Italian bad loan manager doValue said its net loss in the first nine months was of 25.7 million euros ($28 million), or almost five times what it had previously reported, due to impairments it booked on its Spanish operations.

DoValue said late on Friday it had approved a business plan for the Iberia region, revising the value of some intangible assets which resulted in an attributable non-monetary hit of 31.4 million euros for the nine months.

Shares in doValue had risen early on Friday on a Bloomberg report about discussions with U.S. fund Elliott to acquire rival Gardant.

Born in 2015 when UniCredit spun off its bad loan business, doValue has been trying to reduce its reliance on a key contract with the Italian bank expiring in 2025, moving into Greece and Spain.

UniCredit sold its bad loan unit to U.S. fund Fortress, which was then acquired by Japan’s Softbank Group, currently the main shareholder in doValue with Bain Capital Credit.

Weighed down by uncertainty over its main shareholders’ plans, the approaching 2025 deadline, and a general dearth of new bad loans in Italy at a time when inflation is inflating costs, doValue has seen its shares slide 59% over the past year.

The company said it would end 2023 with a “single digit positive net result” and confirmed its core profit and leverage guidance, saying its financial structure was sustainable.

It forecast a positive impact on cash flow and net leverage in the first quarter from an arbitration proceeding ongoing in Spain relating to a tax dispute of a local unit.

DoValue’s financial leverage, which measures net debt in relation to core profit, stands at 2.9 times, it said.

“The company continues evaluating and monitoring market conditions … also with respect to a potential refinancing of its existing debt maturities in the high-yield bond market,” it said.

($1 = 0.9133 euros)

(Reporting by Valentina Za; Editing by Toby Chopra)