Last month we shared a list of the top 10 BDC non-accruals based on first quarter 2018 SEC filings. Now that we are mid-way through August and second quarter filings are readily available, let’s take a fresh look at the first quarter’s worst performer.
We all know that companies in distress tend to have a harder time meeting their financial obligations, which translates to a higher probability that they will default. A company in this position has pretty straightforward options: either raise enough cash through asset sales, operating improvements, and new financing, or reduce or postpone interest and principal payments on the debt by negotiating with creditors.
For restructuring or turnaround experts, identifying distressed companies is the first hurdle to deal sourcing and business development. Using the AdvantageData workstation, we’ve compiled a list of distressed loans that you might want to be aware of.
Restructuring is often driven by market rhythms, or quantifiable circumstances like the decline of shopping at brick-and-mortar stores in favor of online shopping. An easy example of the latter is the rise in eCommerce at online stores like Amazon, resulting in the bankruptcy and liquidation of Toys R Us. Another, less common circumstance can be natural (or unnatural) disasters.
It has been reported that Pacific Gas & Electric (PG&E), a California based utility, has brought in law firm Weil Gotshal & Manges LLP to explore restructuring options after California officials found the company responsible for the deadliest wildfires in the state’s history in the fall of 2017. One option the firm is said to be exploring is breaking up PG&E and filing bankruptcy for one of the units. For companies struggling financially, sacrificing one area of a business to protect the rest from liabilities is a popular strategy. [source]
Repricings return, aiming for lower margins at BJ's (ACSF, Hancock Park, CCT), Compass Power (FS Energy) and Travel Leaders (Bain, Triton Pacific)
The first week of the new month was dominated by reactive trading and repositioning in the wake of quarterly reports, even as the new-issue market kept rolling out loans and bonds. In bonds, highlights included $1.25 billion short-term-fix from Intelsat just as the identically sized BMC Software buyout bonds got going on international roadshows for next week’s business following June’s completed loan financing.
After a somewhat sleepy start last week, loan arrangers piled it on. M&A deals peeled off the calendar late in the week included the long-awaited deal for Penn National Gaming, Cetera, Travel Leaders and Del Frisco Restaurant Group as gross launched volume jumped to $15.6 billion in the busiest week since June 15. M&A volume was a healthy $7.9 billion.
What we already know...
We know that investment professionals benefit from reliable, holistic, aggregated data. It doesn't take a rocket scientist to figure out that making data easy to find and understand translates to efficient analysts and more profitable firms.
Over the past two weeks, we have shown you a few ways you can leverage business development company filing data with BDC Advantage. BDC Advantage eliminates the tedious, time-consuming process of manually compiling and standardizing BDC quarterly filings, allowing users to easily analyze data relevant to their firm.
We've shown you how to:
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