BDC Portfolio Company Sold: Two BDCs To GainPremium Free
On August 6, 2019 publicly traded Europcar Mobility Group [Paris:EUCAR] announced the acquisition of privately-held Fox-Rent-A-Car.
According to the press release:
“Fox Rent A Car operates a network of 21 corporate stations and 100+ affiliates. It is present in 15 of the country’s top 25 airports, with an attractive value for money price positioning, an impressive track record of organic growth (delivering an average 6.4% revenue growth p.a. between 2013 and 2018) and a fleet of approximately 18,000 vehicles. In 2018, Fox Rent A Car generated around $280m revenue”.
There is no debt exposure to Fox-Rent-A-Car but two BDCs have small equity stakes in the company: WhiteHorse Finance (WHF) and Harvest Capital (HCAP).
At June 30, 2019 the warrants held by the BDCs were valued at $0.767mn and $0.918mn respectively.
The warrants were acquired when debt financing was provided in the past and Fox faced some short term difficulties.
For a time, the debt was on non accrual but was eventually repaid in full.
Based on what HCAP has said on a Conference Call, the investment is valued quarterly based on U.S. public company rental car comparables.
If that’s so – and depending on what Europcar has paid the value of the warrants may be higher than the $1.7mn already valued on the books.
In either case, WHF and HCAP appear to be about to book a modest – but still material – Realized Gain, probably in the IVQ 2019.
For A Change
Of late, as we’ve been digging into BDC portfolios, we’ve been reporting on numerous credit mishaps in the BDC sector.
To provide a balance – and as a reminder that many BDCs have equity stakes that can and do bear fruit – we’re reporting this development.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.