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TPP Acquisition, Inc.

DBA The Picture People
Photo Studio Chain

TPP Acquisition, Inc. does business under the name The Picture People. With the Company's recent bankruptcy (September 11, 2016), where the business was acquired by its primary lender Monroe Capital, the legal name of the business should change.

The Picture People operates photographic studios in malls, and within "Sears, Wal-Mart and Buy Buy Baby stores". From Bloomberg: " [The Company] offers portrait products for hanging, decorating, sending, and sharing that include portrait prints and packages in various sizes and styles, such as canvas, and photo cards and enhancements; portrait CDs; and frames. The company was founded in 1987 and is based in Plano, Texas. TPP Acquisition, Inc. is a former subsidiary of Hallmark Cards, Inc. On September 2, 2016, TPP Acquisition, Inc. filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas".

BDC Credit Reporter View

The portrait studio company filed for Chapter 11 bankruptcy in September 2016, after changing consumer demands for its products, as well as an overweight reliance on mall traffic caused business failure. The Company was sold to its primary lender Monroe Capital, which has both replaced senior management and changed the corporate strategy. As part of the bankruptcy, the Company asked the court for the rights to jettison dozens of unprofitable mall leases. Instead, the Company will focus more on in-store studios in a number of major retail chains. We have no date for emergence from BK.

Monroe Capital (MRCC) has been the primary lender to the Company all the way back to 2012, according to Advantage Data records. Initially, MRCC provided a $6.6mn Unitranche Loan. That was refinanced by Monroe in the IVQ of 2014, and an equity investment made. Additional loans followed in 2015 even as the Company's fortunes began to sour (the equity was written down to zero in the IIQ of 2015 and added to the Watch List). Just before the Company went on Non-Accrual in the IQ of 2016, MRCC's exposure at cost was $12.2mn, virtually all in debt, and tranches were written down close to 30%. In bankruptcy, MRCC has provided additional debt funding bringing total exposure to $15.7mn. No information has been provided- despite much discussion on the November 8 Conference Call- of the new capital structure.

We rate The Company a 5 due to its Non-Performing status at 9-30-2016 and expect a Realized Loss may be recorded notwithstanding the MRCC acquisition. Next quarter the remaining assets may be marked up (pre-bankruptcy debt is marked down 80% currently), so the Credit Trend is up. When more details are available we will switch the Company to just Under-Performing but retain a 4 Credit Rating. The ability of MRCC to "turn around" this failed business model is by no means certain, and may yet result in new capital being advanced. We are also curious about what exposure-if any-other Monroe entities may have and if there are any conflicts of interest involved.