AP Alternative Assets, L.P. ("AAA", Euronext Amsterdam: AAA) today
released its financial results for the quarter and year ended December
31, 2007.
AAA invests its capital through, and is the sole limited partner
of, AAA Investments, L.P., which is referred to as the Investment
Partnership. At December 31, 2007, the Investment Partnership´s net
asset value was allocated as follows:
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% of Net
Asset Value
-----------
Private Equity co-investments 31%
Apollo Strategic Value Fund 29
Apollo Investment Europe 18
Apollo Asia Opportunity Fund 11
Apollo European Principal Finance Fund 6
Temporary investments and other 5
-----------
100%
===========
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Overview
As of December 31, 2007, the net asset value of AAA approximated
$2,131 million, or $22.06 per common unit. This compares to $2,186
million, or $22.62 per common unit, as of September 30, 2007, and
$1,917 million or $19.86 per common unit as of December 31, 2006.
Josh Harris, a managing partner and President of Apollo Global
Management, commented, "While the Company´s first-ever quarterly
decline in net asset value was disappointing, it was not unexpected
given the severe dislocation in the global debt capital markets during
the period. Nevertheless, for the full year, the investment portfolio
appreciated nicely." Mr. Harris continued, "Given our expertise at
investing in distressed situations, we remain excited about the
opportunity to put capital to work in the current environment and feel
confident that our diverse portfolio will continue to perform
throughout this cycle."
Results of Operations
Operating results for AAA for the year ended December 31, 2007,
were highlighted by the following:
-- The net increase in net assets resulting from operations was
$235.1 million for the year ended December 31, 2007.
-- Net unrealized appreciation of AAA´s limited partner interests
in the Investment Partnership was $216.2 million, resulting
from the increase in net assets of the Investment Partnership.
This increase in net assets was primarily driven by the net
underlying increase in the unrealized value of investments
held by the Investment Partnership, including the benefit in
2007 from foreign currency movements impacting the Investment
Partnership´s foreign currency denominated investments.
-- Investment income was $34.3 million, which primarily
represented interest income from cash management activities,
dividend income from portfolio investments and net realized
gains from sales.
-- Investment expense and general and administrative expenses
were $15.3 million, which primarily included direct expenses
and allocated expenses from the Investment Partnership for
professional services, management fees, certain deal costs and
other general expenses, as well as expenses of our Managing
General Partner´s board of directors and other administrative
costs.
Operating results for the Investment Partnership for the year
ended December 31, 2007, were highlighted by the following:
-- The net increase in net assets resulting from operations was
$280.3 million for the year ended December 31, 2007.
-- Total net unrealized appreciation, resulting from investments
recorded at fair value, for the year ended December 31, 2007,
was approximately $257.8 million. Our capital market
investments appreciated in value by $72.6 million and our
private equity co-investments appreciated $185.2 million, both
on a net basis.
The increase in net unrealized appreciation in our capital markets
investments for the year was due to increases in the fair value of
Apollo Strategic Value Fund, Apollo Asia Opportunity Fund, and Apollo
Investment Europe, partially offset by a decrease in the fair value of
Apollo European Principal Finance Fund.
For the year ended December 31, 2007, approximately $11.7 million
of the net unrealized appreciation is the result of foreign currency
movements on our foreign currency denominated co-investments.
-- Investment income was $34.7 million, which primarily
represented interest income from cash management activities,
dividend income from portfolio investments and net realized
gains from sales.
-- Expenses were $12.2 million which primarily relates to
management fees, professional fees, certain deal costs and
other administrative costs.
Operating results for AAA for the fourth quarter were highlighted
by the following:
-- The net decrease in net assets resulting from operations was
$54.2 million.
-- Net unrealized depreciation of AAA´s limited partner interests
in the Investment Partnership was $44.6 million, resulting
from the decrease in net assets of the Investment Partnership,
as described below.
-- Investment expense and general and administrative expenses
were $5.5 million, which primarily included direct expenses
and allocated expenses from the Investment Partnership for
professional services, management fees, certain deal costs and
other general expenses, as well as expenses of our Managing
General Partner´s board of directors and other administrative
costs.
Operating results for the Investment Partnership for the fourth
quarter were highlighted by the following:
-- The net decrease in net assets resulting from operations was
$61.6 million for the quarter ended December 31, 2007.
-- Total net unrealized depreciation resulting from investments
recorded at fair value for the quarter ended December 31,
2007, was $53.0 million. Our capital market investments
depreciated in value by $17.0 million and our private equity
co-investments depreciated $36.0 million.
The decrease in net unrealized depreciation on our capital markets
investments in the fourth quarter was primarily due to a decrease in
fair value in Apollo Strategic Value Fund, offset in part by an
increase in Apollo Asia Opportunity Fund.
-- Expenses were $4.5 million which primarily relates to
management fees, professional fees, certain deal costs and
other administrative costs.
Investments
As of December 31, 2007, AAA´s investments consist of $2,132.8
million invested in AAA Investments, L.P.
The underlying portfolio of AAA Investments, L.P. consists of
temporary investments of $114.7 million and portfolio investments
approximating $2,063.6 million as follows:
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Fair Value at
December 31, 2007
-----------------
Capital Markets Funds:
Apollo Strategic Value Fund $620.5
Apollo Investment Europe 384.3
Apollo Asia Opportunity Fund 239.0
Apollo European Principal Finance
Fund 128.5
Private Equity Co-investments:
CEVA Logistics 118.6
All others 572.7
-----------------
Total $2,063.6
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Subsequent to December 31, 2007 and through February 15, 2008, the
Investment Partnership made capital markets investments in Apollo
European Principal Finance Fund.
Subsequent to December 31, 2007 and through February 15, 2008, the
Investment Partnership closed on investments in Harrah´s
Entertainment, NCL Corporation, and a follow-on co-investment in
Oceania which purchased Regent Seven Seas. Subsequent to December 31,
2007 and through February 15, 2008, the Investment Partnership also
made follow-on investments in Redleaf Partners, L.P., Bondco, and
Deepwood, L.P. These investment vehicles were formed to invest in the
debt securities of companies to capitalize on the recent volatility in
the credit markets.
Information for Investors - Teleconference and Webcast
The company will discuss its financial results during a conference
call on Thursday, February 28, 2008, at 5 p.m. CET (Amsterdam) / 4
p.m. GMT (London) / 11 a.m. EST (New York). All interested parties are
welcome to participate. You can access this call by dialing 20 717
6857 within The Netherlands or 31 20 717 6857 outside of The
Netherlands. Please dial-in approximately 5 to 10 minutes prior to the
call. When prompted, callers should reference "AAA Earnings". An
archived replay of the conference call will also be available through
March 21, 2008, via the company´s website at
www.apolloalternativeassets.com.
About AAA
AP Alternative Assets was established by Apollo and is a
closed-end limited partnership established under the laws of Guernsey.
Apollo is a leading private equity and capital markets investor with
18 years of experience investing across the capital structure of
leveraged companies. AP Alternative Assets is managed by Apollo
Alternative Assets and invests in and co-invests with Apollo´s
private-equity and capital-markets investment funds. For more
information about AP Alternative Assets, please visit
www.apolloalternativeassets.com.
Forward-Looking Statements
This press release contains forward-looking statements.
Forward-looking statements involve risks and uncertainties because
they relate to future events and circumstances. Such statements are
based on currently available operating, financial and competitive
information and are subject to various risks and uncertainties that
could cause actual results and developments to differ materially from
the historical experience and expressed or implied expectations of
AAA. Undue reliance should not be placed on such forward-looking
statements. Forward-looking statements speak only as of the date on
which they are made and AAA does not undertake to update its
forward-looking statements unless required by law.
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AP ALTERNATIVE ASSETS, L.P.
STATEMENT OF OPERATIONS
(In thousands)
----------------------------------------------------------------------
For the Period
For the For the from June 15,
Three Three 2006
Months Months For the (Commencement
ended ended Year of
December December ended Operations)
31, 2007 31, 2006 December to December
(unaudited) (unaudited) 31, 2007 31, 2006
------------ ------------ --------- --------------
NET INVESTMENT
(LOSS) INCOME
ALLOCATED FROM AAA
INVESTMENTS, L.P.
Interest,
dividends and
(losses) gains
from short-term
investments $ (3,652) $11,986 $ 31,804 $29,090
Net realized
(losses) gains
from sales (465) - 2,450 -
Expenses (4,518) (853) (12,238) (3,097)
------------ ------------ --------- --------------
(8,635) 11,133 22,016 25,993
EXPENSES - General
and administrative
expenses (981) (1,099) (3,104) (1,335)
------------ ------------ --------- --------------
NET INVESTMENT
(LOSS) INCOME (9,616) 10,034 18,912 24,658
NET CHANGE IN
UNREALIZED
(DEPRECIATION)
APPRECIATION OF
INVESTMENT IN AAA
INVESTMENTS, L.P. (44,620) 58,914 216,175 71,121
------------ ------------ --------- --------------
NET (DECREASE)
INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS $(54,236) $68,948 $235,087 $95,779
============ ============ ========= ==============
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AP ALTERNATIVE ASSETS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
(In thousands, except per unit amounts)
----------------------------------------------------------------------
As of As of
December 31, December
2007 31, 2006
------------ -----------
ASSETS
Investment in AAA Investments, L.P. (cost $2,132,847 $1,918,723
of $1,803,110 and $1,822,816 at December
31, 2007 and 2006, respectively)
Other assets 1,201 -
------------ -----------
TOTAL ASSETS 2,134,048 1,918,723
------------ -----------
LIABILITIES
Accounts payable and accrued liabilities 2,554 1,107
Due to Affiliates - 226
------------ -----------
NET ASSETS $2,131,494 $1,917,390
============ ===========
NET ASSETS CONSIST OF:
Partners´ capital contribution, net
(96,635,722 and 96,546,000 common units
outstanding at December 31, 2007 and
2006, respectively) $1,824,552 $1,822,818
Partners´ capital distributions (23,924) (1,207)
Accumulated increase in assets resulting
from operations 330,866 95,779
------------ -----------
$2,131,494 $1,917,390
============ ===========
Net asset value per common unit $ 22.06 $ 19.86
============ ===========
Market price $ 15.00 $ 18.50
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AAA INVESTMENTS, L.P.
STATEMENT OF OPERATIONS
(In thousands)
----------------------------------------------------------------------
For the Period
For the For the from June 15,
Three Three 2006
Months Months For the (Commencement
ended ended Year of
December December ended Operations)
31, 2007 31, 2006 December to December
(unaudited) (unaudited) 31, 2007 31, 2006
------------ ------------ --------- --------------
INVESTMENT (LOSS)
INCOME:
Interest,
dividends and
(losses) gains
from short-term
investments $ (3,653) $11,992 $ 31,821 $29,106
Net realized
(losses) gains
from sales (467) - 2,867 -
------------ ------------ --------- --------------
(4,120) 11,992 34,688 29,106
EXPENSES :
Management fees (2,021) - (5,868) -
General and
administrative
expenses (2,499) (853) (6,374) (3,099)
------------ ------------ --------- --------------
NET INVESTMENT
(LOSS) INCOME (8,640) 11,139 22,446 26,007
Net change in
unrealized
(depreciation)
appreciation on
investments (52,984) 58,946 257,825 71,160
------------ ------------ --------- --------------
NET (DECREASE)
INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS $(61,624) $70,085 $280,271 $97,167
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AAA INVESTMENTS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
(In thousands)
----------------------------------------------------------------------
As of December 31,
---------------------
2007 2006
---------- ----------
ASSETS:
Investments:
Investment in Apollo Strategic Value Offshore
Fund, Ltd.
at fair value (cost of $550,000 in 2007
and 2006) $ 620,568 $ 595,081
Co-investments - Apollo Investment Fund VI
at fair value (cost of $494,830 in 2007
and $228,385 in 2006) 691,258 239,590
Investment in AP Investment Europe Limited
at fair value (cost of $339,488 in 2007
and $238,674 in 2006) 384,280 253,549
Investment in Apollo Asia Opportunity Offshore
Fund, Ltd.
at fair value (cost of $218,000 in 2007
and $0 in 2006) 239,014 -
Investment in Apollo European Principal
Fund, L.P.
at fair value (cost of $132,317 in 2007
and $0 in 2006) 128,501 -
---------- ----------
Total Investments 2,063,621 1,088,220
Cash and cash equivalents 114,735 832,371
Other assets 6,130 642
Due from affiliates 2,359 226
---------- ----------
TOTAL ASSETS 2,186,845 1,921,459
---------- ----------
LIABILITIES:
Accounts payable and accrued liabilities 1,878 1,582
Due to affiliates 9,415 102
---------- ----------
NET ASSETS $2,175,552 $1,919,775
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NET ASSETS CONSIST OF:
Partners´ capital $1,798,114 $1,822,608
Accumulated increase in net assets resulting
from operations 377,438 97,167
---------- ----------
$2,175,552 $1,919,775
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