Truck manufacturer Navistar International announced quarterly EBITDA and earnings above expectations. The stock price has jumped. However, the BDC Credit Reporter has looked at the filings, reviewed the projections and analyzed the balance sheet, and is unenthusiastic about the prosoects for repayment at par of the Company's Subordinated Debt, principally held by Franklin Square BDCs.
BDC EXPOSURE: FS Energy & Power Fund, FS Investment II, FS Investment III, FS Investment (FSIC). EXPOSURE AT COST: $235mn.
The BDC Credit Reporter provides a link to Leveraged Loan.com's survey of defaulting credits in large leveraged loans in May 2016 , and delves into BDC exposure to the 4 companies involved. We discuss Big Picture trends in credit, what we're looking for and what to worry about. It's a Glass Half Full-Half Empty story.
BDC Credit Reporter Alert: Zacks says Good News coming from Navistar International regarding quarterly EBITDA and outlook in medium term. May result in better outlook for truck manufacturer whose Subordinated Note exposure by BDCs has been written down by a fifth in latest filings. See Company File for full details.
Prospect Capital has just sold one of its largest portfolio companies, and issued a press release with some key details. The BDC Reporter looks Under The Hood to determine if the investment has been a home run for the BDC, or something else. We look at returns, impact on income and Net Asset Value, amongst other things.
Oil and gas producer Linc USA GP, and other affiliates, has filed for Chapter 11 bankruptcy. Senior secured lenders providing $10mn in Debtor In Possession financing. Company is seeking to sell many of its assets to repay lenders. BDC exposure: Business Development Corporation of America with $8.9mn in Second Lien debt. Already written down 99% at 3-31-2016. Pennant Park (PNNT)…
Chemical company Vertellus Specialties Inc. has filed for bankruptcy. Vertellus reports liabilities of $710mn, including $455mn in senior first lien secured debt. Sales were $596mn in 2015, and EBITDA $61mn. Company appears to be negotiating debt for equity swap with senior lenders. Many existing senior lenders are providing Debtor In Possession financing of $110mn. BDC exposure principally to BlackRock Investment…
5-31-2016: Back in late April 2016, Triangle Petroleum-a publicly traded oil and gas company-received notice from its asset-based lender Wells Fargo that its borrowing base was being reduced due to the lower price of oil. The amount of the borrowing base was $125mn lower than outstandings under the Wells Fargo facility. As per the agreement, the Company had until May…
May 30, 2016: The BDC Credit Reporter noted in the latest 10-Q for the quarter ended March 31, 2016 from WhiteHorse Finance (WHF) that a Subsequent Event was a payment blockage to the second lien lenders reported on April 29, 2016. No further details were available. We used Alpha-Sense to check out the other BDC lender-Harvest Capital or HCAP-which provided…
Big data software company MSC Software Inc. was downgraded by Moody's, both corporate rating and second lien public debt. Moody's cites high leverage and financial performance. BDC exposure of $35,091,000 at Cost and $30,479,000 at FMV at 3-31-2016 is all in Second Lien. BDCs invested are Cion Investment Corporation, TCP Capital (TCPC) and Apollo Investment (AINV), listed in decreasing exposure…
The BDC Credit Reporter updates credit developments to any Business Development Company portfolio company daily in our Master Database. Here we highlight the day's biggest credit story with extracts from our proprietary files and using portfolio ownership from Advantage Data: the return of Aspect Software from bankruptcy and what might happen to the $68mn invested by 4 BDCs.
Speed Commerce has just turned over its assets to its lenders-who include two Business Development Companies-in return for cancellation of its debts. Big realized losses are likely to ensue at both Garrison Capital (GARS) and Credit Suisse BDC-a non-traded entity. The BDC Credit Reporter has updated its file and provides a summary of what happened.
The BDC Reporter has a first look at the just announced but not unexpected sale of American Capital (ACAS) to Ares Capital (ARCC). We debate if the price to be paid-and its form-is a Good Deal or otherwise for the patient investors in the troubled BDC, and what the future might hold with Ares Capital at the helm.
The BDC Credit Reporter adds a new company to its Master File of all BDC-funded companies. The addition is Healthcare Associates of Texas. The only BDC with exposure is Alcentra Capital (ABDC). Read our full file for all the initial details: http://bit.ly/1sMZ1pZ.
5-21-2016: We've just updated our file on AAR Intermediate Holdings, a privately-held oil services company owned by multiple Business Development Companies (including Medley Capital and CM Finance) and which is on non-accrual. Not much has happened this quarter from a valuation perspective. Nonetheless, we expect the $4mn in equity exposure by the BDCs to be written off, and 50%-100% of…
The BDC Credit Reporter reviews Apollo Investment's portfolio in the first of a two parter. In Part One we look at the BDC's troubled energy investments, which have been dragging down the BDC's results and stock price for many quarters. Has a corner been turned ?
The BDC Credit Reporter highlights an operator of restaurants whose business fortunes are weakening and might impact two of the largest Business Development Companies with debt exposure. We mention the company, the BDCs involved and the dollars at risk.
5-19-2016: Sports retailer Dick's Sporting Goods reported weaker than expected sales in the first quarter of 2016, despite weaker competition from several bankrupt competitors. Key metrics from the BDC Credit Reporter's standpoint: "Same-store sales are expected to decline 4% to 1%...[Actual] Same-store sales edged up 0.5%... Same-store sales for Dick's Sporting Goods increased 0.4%, while Golf Galaxy rose 1.7%." This…
The BDC Credit Reporter's Credit Report for Saratoga Investment (SAR) following the publishing of its 10-K for the year ended February 2016. We look at which portfolio companies and investments are under-performing, and why, and seek to evaluate their potential impact on the Company's Net Asset Value and recurring earnings.
We provide an update on how the Sports Authority bankruptcy is going and the likely impact on TPG Specialty (TSLX), FS Investment (FSIC) and two other non-traded Franklin Square funds that have exposure to the failed athletic store chain.
The BDC Credit Reporter undertakes an in-depth review of Fifth Street Senior Floating Rate's (FSFR) investment portfolio following the release of the first quarter 2016 10-Q filing, and using additional information from Advantage Data. We look at realized credit losses and potential write-downs in the quarter and over time. Required reading (if we do say so ourselves) for any investor in FSFR.
BDC Credit Reporter Alert discusses the May 10th payment default at Warren Resources, an oil and gas producer and another company on our Master Watch List. We share our updated view on what might happen to the senior lenders to the Company, which include very large amounts held by several FS Investment funds. We also link readers to our full file on the Company.
The BDC Credit Reporter Alert discusses a new restructuring underway at Cenveo Corporation, and the potential impact on BDC exposure to the Company. Main Street Capital (MAIN) and Hms Income (HMS) have made Senior Secured advances, which are on our Watch List. Click on the attached file for all the news and background info.
The BDC Credit Reporter delves into the two Ares Capital (ARCC) loans that came off non-accrual in the first quarter of 2016 and questions whether the Company is really turning the corner from a credit point of view.
Southland Capital Management-the publisher of the BDC Reporter but also an investment manager of our capital and those of investors-discusses the current Business Development Company landscape and spells out what are the perceived current opportunities in both BDC debt and common stock investments, and what some of the risks are.