"For over 100 years, American Gilsonite Company has been the world’s only supplier of Gilsonite®, a naturally occurring hydrocarbon resin (uintaite) found exclusively in our mines in Northeastern Utah. With a number of unique chemical properties and physical characteristics, Gilsonite is used extensively as a high-performance additive in oil and gas drilling and other industrial applications. In the oilfield, Gilsonite plays a critical part in meeting increasingly complex drilling challenges. The strength, flexibility, extreme light weight and environmental safety of Gilsonite make it a superior additive for cementing and drilling fluids. In the industrial market, Gilsonite plays a vital role in improving the quality and performance of asphalt, inks, paints, stains, construction materials and foundry castings. We are much more than just a supplier of Gilsonite. We partner with our customers to understand their specific technical challenges and to develop products and solutions that capitalize on Gilsonite’s superior performance in every application. Our products are currently used in over 80 countries on six continents". From the LinkedIn Profile.
In October 2016, the Company agreed to a pre-packaged bankruptcy plan which included its Second Lien lenders converting their Term loan into controlling equity and a new issue of subordinated debt. In addition, the Second Lien lenders, now soon-to-be owners, agreed to provide up to $30mn in Debtor In Possession financing in order to fund continuing operations. Unsecured creditors are to be paid in full.
The two BDCs with debt exposure to the Company are PennantPark Investment or PNNT ($25.4mn) and PennantPark Floating Rate or PFLT ($1mn). Both are invested in the Second Lien debt. At September 30, 2016, the debt was on non-accrual. Should the bankruptcy court approve the reorganization Plan, which seems very likely, both BDCs will presumably incur write-offs of a portion of their current debt exposure, re-classify some portion to Subordinated Debt and increase exposure in the Senior Secured DIP Revolver. PFLT's exposure is minimal, so PNNT is the most affected party.
Given the November 2016 court approval of the DIP financing, we expect the Credit Trend will be Up by the IVQ 2016, whether the final approval has been received or not. We have a Corporate Credit Rating of 5, anticipating the write-off, but that should drop to a rating of 4 after the reorganization is complete. However, there is no certainty the newly restructured company, which will still have debt on its books, will be successful. Likewise, the current status is Non Performing given the non-accrual, but should return to accrual after the Plan is approved by the court.