The marquee story of the week was Saratoga Investment's quarterly results through August 2020. Because the BDC has the calendar to itself, the BDC Reporter provided comprehensive coverage: an earnings preview article; a survey of the results themselves and a post facto credit review. Ironically, SAR performed pretty much as we had expected so there were no great shocks to write about. Less obviously, this week was notable for news on three different BDCs negotiating amendments to secured debt facilities with their lenders. In each case, the BDCs involved took a step or two back - agreeing to higher pricing or lower line limits and such. Even BDCs have lenders of their own and have to contend with a lender-friendly environment where "bending the knee" occasionally is necessary. The BDCs involved can take some comfort of being in the catbird seat when contending with their own corporate borrowers. There was else besides, including dividend news from two very different players; and a lawsuit that seems to be over before it's begun. Late on Friday we also heard that Medley Capital sold the assets in its joint venture. This is material news for the perennial BDC under-performer. More on that on Columbus Day.
BDC NEWS: You will remember that Garrison Capital (GARS) and Portman Ridge Financial (PTMN) have agreed to merge and a Proxy has been filed etc. Now we hear from GARS that a shareholder is suing the BDC claiming insufficient disclosures were made. GARS is shocked at the claim and intends to vigorously defend itself BUT is going ahead and making the omitted disclosures anyway. We reviewed the insertions the plaintiff seeks and don't quite see what all the fuss - and expense - is about. Readers can see for themselves in the attached SEC filing. The merger is likely to roll on in any event. This is an interesting development but we won't be writing anything more unless there's word from the plaintiffs or some other material change in the story.
FIRST LOOK: Investcorp Credit Management's (ICMB) only secured debt facilities - provided by UBS - have been amended and reduced in size. This includes both the Revolver and the Term Loan. We've had a first look at the attached SEC filing, which is complex and opaque. However, the subject is very important and is likely to impact the BDC's liquidity growing forward at a time when ICMB has very little cash and no other sources of ongoing funding. The BDC Reporter will follow up with a Premium article shortly analyzing the implications for ICMB going forward of these important changes.
BDC REPORTER: New Mountain Finance (NMFC) pens a routine extension of one of its secured debt facilities but the BDC has to accede to higher pricing. We review the details and the potential impact.
BDC NEWS: We already knew GECC was announcing an unchanged $0.083 per month dividend for the IVQ of 2020. Now the BDC has set the record date for the 3 payments. Unchanged is the fact that 90% of the distribution will be paid with more stock and only 10% in cash. We predict this will be the last quarter with a distribution of $0.25 - even if paid in stock - given the ever increasing share count and the not increasing bottom line. As previously discussed, the BDC Reporter is also concerned that much of the income booked by the BDC is itself in non-cash form - largely from Avanti Communications PIK income.
BDC NEWS: MAIN is one of those BDCs that likes to occasionally update the market about new investment activity and successful exits. (We have yet to see a press release about a realized loss). The latest missive is about activity in one of its three segments - "Private Loans". We don't remember a specific press release about this segment before but - in any case - the information made available isn't very useful, even for the BDC's most ardent investor fans. No names or terms are mentioned, nor anything about the rest of the portfolio, or about repayments, etc. What this does tell you - if that's news - is that MAIN is still active making first lien loans in this segment of its business.
BDC REPORTER: The BDC Reporter has a first look at Saratoga Investment's just-announced quarterly results, as well as the 10-Q and Investor Presentation.
BDC NEWS: WHF has announced a special distribution of $0.125 to holders of Record on October 30. The BDC has managed in this difficult year to avoid any cut to its $0.355 quarterly dividend , unchanged since 2013. This special adds a cherry to the cake. Still, the analysts are doubtful that WHF can generate EPS in 2021 that even matches its annual $1.42 distribution. The current consensus is $1.31 and just $0.29 in the coming quarter. Is WHF's unbroken dividend streak coming to an end just as specials are being paid out ? The IIIQ 2020 results will be telling.
BDC REPORTER: OFS Capital amends its Revolver with one of its secured lenders. We continue a long standing discussion about the BDC's liquidity outlook.