FLV Fund continues to retrench

After a torrid time involving burst technology bubbles, court cases and allegations of far-flung fraud, the Belgian VC is still shrinking.

FLV, the Belgian VC firm that specialises in speech technology investments, has announced its third quarter results, revealing a loss of E9.1m for the period. The firm has already announced that it intends to wind up the FLV Fund by the end of 2004. Net operating losses amounted to E9.3 million, while other net income amounted to E0.2 million.

 

The firm has been hard hit by a series of set backs and controversies in recent years, the most damaging of which was the seizure of $30m it had contributed towards its FLV Fund Korea. The monies were seized by Korean Hanvit Bank which claimed it as security against a loan it had made to personnel connected with the fund. The firm is also facing a series of law suits from American organisations which invested in Lernout & Hauspie Speech Products, which filed for creditor protection in December 2000.

 

FLV has been endeavouring to realise value from its portfolio and had been looking at selling the entire portfolio as a whole but, citing contractual restrictions and confidentiality requirements, has declared this unworkable. The challenge now is to exit each company separately, which will be difficult in the current environment. The firm reported the sale of one investment this quarter, in Lenel Systems International, but did not disclose the price achieved.  During the third quarter of 2002, FLV Fund invested a total of E1.5m, only in existing portfolio companies, including Shazam Entertainment, Buytel and Irion.

 

As at 30 September, 2002 FLV said the fair market value of its portfolio totalled E34.1m and the fair market value of the six listed companies of the portfolio was E0.8 million. The European segment and the American segment of the portfolio constituted 70 per cent and 30 per cent respectively of the fair value of the investment portfolio.

 

FLV advised that the civil law suits against it in the US FLV Fund are still pending and no judgment has been passed with regard to the fund's submission of motions to dismiss. A first judgment is expected before the end of this year. With regard to the Korean court case, FLV stated that it had learnt last month that the counter parties (Woori Bank, formerly Hanvit, and Joo Chul Seo) had submitted an antedated document with a forged signature of the former CEO of FLV Fund to the courts and that FLV Fund had therefore filed a complaint in Korea and Belgium for forgery of documents and usage of forged documents.

 

FLV also said that it will refund to investors E0.6 per share via a capital decrease.