US Edition The shares tumbled almost 30pc to 414pp. Intermediate Capital has been one of the most heavily short sold companies in the financial sector in recent weeks, after the company was not included in the Financial Services Authority's ban on shorting of financial stocks. Almost 20pc of its stock was out on loan on Monday.
Intermediate Capital specialises in providing mezzanine finance - hybrid capital halfway between debt and equity - for buy-out funds.
The company said in a trading update for the three months to December 31, that 13pc of its £3.1bn portfolio was now on its "watchlist" of troubled companies and that it had assembled a senior team to manage the assets. This is up from 11pc at the half year.
Intermediate Capital also warned that provisions for bad debts would be "noticeably higher" than the current level of £54m in the first half of the year due to the economic downturn and because of the fall of the pound against the euro.
Intermediate Capital has developed a reputation for conservative risk management in its 20 years of operation and has always kept a watchlist of companies which require special monitoring. The list in the past is understood to have included Gala Bingo, which Intermediate Capital put on the list two years ahead of the smoking ban in anticipation of a possible fall-off in customers and revenues. Gala Bingo has never breached its covenants to Intermediate Capital.
"Since the end of September we have seen a marked deterioration in the operating performance of a limited number of weaker assets as economic conditions have worsened," the company said. They have been added to the watchlist because of "deteriorating economic conditions and the heightened level of vigilance necessary in the current climate".
The company does not anticipate the companies on the watchlist going down. "We have a strong track record in maximising recoveries in troubled assets," Intermediate Capital said.
Intermediate Capital said that over two thirds of its portfolio of companies were performing at, or above, the prior year.
Intermediate Capital said the drought in liquidity it flagged in November had not let up, saying that the primary leveraged buy-out market remained shut. But it said there were "outstanding" opportunities in the secondary market for senior loans.
Noble, a brokerage, said Intermediate "remains well funded and a controlled deterioration will be witnessed in credit quality rather than a wholesale collapse".