The BDC Credit Reporter has just added Outdoor Voices, Inc. – a women’s apparel retailer – to their 400+ list of underperforming BDC-financed companies. The decision was triggered by publicly available information regarding a major change in the top job at the company, and rumors of lower than anticipated sales. Those are just the sort of ingredients that causes the BDC Credit Reporter to tag and track a company like Outdoor Voices from the universe of 4,000 or more companies in which BDCs invest.
Bu the way, TPVG has not yet reported IVQ 2019 results. Based on what the BDC Credit Reporter has gathered from the September 30, 2019 results, there are 4 other companies besides Outdoor Voices that are underperforming and in which the BDC has a material stake ($2mn or higher at FMV). With the new addition that makes five, and we’ll be interested to learn more once the year end 2019 results are published.
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Typically, the BDC Credit Reporter adds new companies to our underperforming company list following a write-down of the investment by 10% or more by a BDC. However, we watch the credit markets daily for any early signs that might cause us to add a company based on new publicly available information alone. After all, the earlier we can identify credit troublespots, the better. That’s what’s happened with retailer Outdoor Voices Inc., which at September 30, 2019 was fully valued by its only BDC lender TriplePoint Venture Growth (TPVG).
We were disturbed to hear from a trade article that the company’s CEO and co-founder Tyler Haney was either pushed out or voluntarily left the helm on February 22, 2020, which is rarely a good sign. (Ms Haney remains in other roles at the company; the benefit of being a founder and major shareholder). Adding to our concern is that the CEO’s departure may be associated with under-performance by the privately-held company. BizWomen said the following: “…despite initial excitement, the business failed to scale as quickly as expected and has been slow to introduce workout clothing staples like all-black attire, per BofF, and by last year was losing around $2 million a month in 2019 with annual sales of around $40 million“. That’s enough material for us to add Outdoor Voices to the underperformers list, with an initial credit rating on our five point scale of three.
TPVG only invested in the company recently – IQ 2019 – with both debt and equity at a total cost of $10.2mn. As we’ve said, the investment is valued at 100% of par, which seems hard to reconcile with those $2mn a month losses, but we only have a very partial picture. We may learn more from TPVG when the BDC reports IVQ 2019 results on a date yet to be scheduled.
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