Daily News Update: Monday October 30, 2017Premium Free
At 12:30 p.m. EST, the main news items relate to one BDC: Medallion Financial or MFIN. Check out the BDC Daily News Table for the info about a new independent Director just appointed to an expanded Board, and the initial grant of a stock option for the upcoming service to the troubled BDC.
In just three hours since the open three BDCs have reached new lows and highs. The BDC Daily News Table provides further details about new lows for Alcentra Capital (ABDC) and Triangle Capital (TCAP). See further discussion below.
The only new high for MVC Capital (MVC), hours before a fateful shareholder vote which will be critical to its future governance. For earlier articles by the BDC Reporter about the only ongoing “shareholder activism” in the BDC sector, click here. There are 4 articles about the subject written since September 26, 2017.
To understand some of the challenges facing ABDC, read this August 7 in-depth review of the BDC’s IIQ 2017 results. Incredibly, just in May of this year, ABDC managed to undertake a secondary equity offering at $13.68. Today, the stock price – without any announced change in distribution – the stock price is down 30%. What is disturbing now – and was back on May 18, 2017 when the BDC Reporter was the only financial news source to make any mention of the development – was the big sale by the insiders of a good portion of their shares just before this price implosion.
Here’s an extensive quote from a follow-up article we wrote on May 23, which continues to sum up our view:
Alcentra Capital (ABDC) filed an amended 13-D Form detailing its revised ownership by its insider groups after the recent dual purpose equity offering where new capital was raised in the markets and certain existing holders sold stock.
The BDC Reporter detailed in an article on May 18th, 2017 how the Investment Advisor to ABDC and an associated company sold their interest in the offering, which was completed on May 22,2017.
SIGNED, SEALED AND DELIVERED
The 13-D confirms that Alcentra NY, LLC sold 1,521, 319 shares and Alcentra Ltd 170,520 shares, with the assistance of Raymond James. That leaves the former with “shared dispositive power” (along with an Alcentra fund) over 257,157 shares or under 2.0% of total shares outstanding.
CAN’T HELP WORRYING
Readers do not need the BDC Reporter to point out that it’s always a little chilling to hear that the groups involved in the launch and management of the BDC have grabbed their parachutes and jumped out, just as more passengers are being let on. Moreover – as we pointed out in the prior article – it’s that more disturbing given this disposition is happening just as a new CEO has been appointed and several senior management changes are occurring.
NO PRESS RELEASES ON THIS ONE
The BDC Reporter – taking advantage of our constitutional right to chide – was disappointed by the absence of any press release or discussion on the Conference Call of the impetus for the insider sale. Alcentra NY and Alcentra Ltd have just folded their tents in the night and slipped away, barring the 257,157 shares remaining. Apparently, the desertion included clients of the parent of Alcentra NY and LTD – which is the Bank of New York – as the filing discloses in general terms:
In addition to the transactions listed above, in the last 60 days, certain clients of the wealth management branch of BNY Mellon, National Association have engaged in transactions whereby the shares previously held in a wealth management account were transferred, sold, or otherwise disposed of by certain wealth management clients.
ENDING ON A POSITIVE NOTE
On the bright side, the Bank of New York itself continues to hold – in toto – a large number of shares in ABDC, including shares owned by wealth management clients, in excess of 8% of the total.
We’ve also written extensively about Triangle Capital (TCAP) in recent months, as any search of our ever expanding archives will show. However, the best insight into what ails the former high flier and long standing BDC is our discussion of the BDC’s credit problems back on February 27, 2017. Some of the details about the troubled loans in portfolio may have changed in the intervening months, but readers will get an idea of the scale of TCAP’s troubles. It’s nothing that can’t be eventually fixed but markets need to be convinced that the management has dsrained the swamp. It’s been more than two years of continuing credit difficulties and yet the BDC Reporter and others are looking for a bottom. Maybe this quarter. Maybe not.
BDC SECTOR AT LOW
Readers who have been following our most recent BDC Market Recap articles will know that the UBS Exchange Traded Note with the ticker BDCS – which we use as a shorthand for evaluating trends in the sector – has been finding new loans. At time of writing this morning BDCS is very close to its YTD low and only 2.5% above the 1 year Low. BDCS is on track to be down 5 days in a row. This might all turn around when earnings season kicks in, or the slip, sliding away could continue.Already a Member? Log In
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