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Mood Media, Inc.

Muzak,Inc.(Subsidiary)
In Store Music Provider
"Mood Media is the global leader in elevating Customer Experiences, combining sight, sound, scent, social mobile technology and systems to create greater emotional connections between brands and consumers. Mood’s solutions reach over 150 million consumers each day through more than 500,000 active client locations around the globe. Mood’s clients include businesses of all sizes and market sectors, from the world’s most recognized retailers and hotels to quick-service restaurants, local banks and thousands of small businesses." From the LinkedIn Profile.
Mood Media, Inc. brings piped in sounds to retailers worldwide. The formerly publicly-traded Company is in the midst of a two year turnaround in a highly competitive sector that has been undergoing rapid technological change. The lenders have bought out the Company, undertaken a Canadian Chapter 15 restructuring and moved the corporate jurisdiction to Delaware. The Company, despite a debt for equity exchange and new capital raises, remains highly leveraged. However, with both public status and publicly rated debt, information is readily available. Several BDCs have exposure in the form of secured and unsecured debt due in 2019 and 2020. The BDCs with the greatest exposure ($100mn) are FS Investment (FSIC) and non-traded FS Investment II. As of March 2017, the secured debt was marked at or above par, but the 2020 Unsecured Notes have been discounted. Management has been claiming success in improving sales, EBITDA and free cash flow on recent earnings calls. However, the BDC Credit Reporter is not convinced, and we have the benefit of the latest earnings release. See analysis below. The Company is also involved in copyright use litigation. We have a Corporate Credit Rating of 4, implying we believe an ultimate loss is more likely than full recovery. In our view, the BDC valuations here-both senior and junior-are unduly optimistic and there is much room for potential downside write-downs.In a Worst Case we calculate a $420mn Enterprise Value for the Company versus $620mn in debt outstanding and the possibility of $200mn in credit losses.