BDC Portfolio Company Sold: Impact on Five BDCsPremium Free
There has been a great deal of M&A activity in the leveraged loan markets of late. BDC portfolio companies have been both buyers and sellers. Notably, on July 9, 2019 a press release indicated that Memphis-based Sedgwick will be buying York Risk Services Corp, subject to regulatory approval. Terms were not given. York is a portfolio company for 5 BDCs: 1 public and 4 non-traded. The public BDC with exposure is New Mountain Finance (NMFC) which has $3.0mn in par value subordinated debt that was valued at a (18%) discount or $2.46mn at March 31, 2019 and was yielding 8.5%. That should provide the BDC with a modest increase in book value, probably reflected in the IIQ 2019 results. The other BDCs are FS Investment II through IV as well as Blackstone/GSO Secured Lending with both senior and subordinated positions that date back several years. Total exposure, including NMFC, is $96mn at cost. The 3 FS Investment funds – all of which will shortly be combined and go public – will be the biggest beneficiaries because – like NMFC – some of their exposure is in the subordinated debt which has been written down on an unrealized basis. Of course, all the above is subject to the transaction going through, which is likely to occur in the second half of 2019.Already a Member? Log In
Register for the BDC Reporter
The BDC Reporter has been writing about the changing Business Development Company landscape for a decade. We’ve become the leading publication on the BDC industry, with several thousand readers every month. We offer a broad range of free articles like this one, brought to you by an industry veteran and professional investor with 30 years of leveraged finance experience. All you have to do is register, so we can learn a little more about you and your interests. Registration will take only a few seconds.