American Teleconferencing Services (ATS) is a telecommunications company, a subsidiary of Premiere Global Systems (PGi) and a BDC financed company since 2016. Now that all IIQ 2022 BDC results are in, here is an update of what is a Major (i.e. over $100mn at cost) BDC sector exposure - $131mn to be exact, and not including PGi.
This update is more of a post-mortem than anything else as the fair market value of the first lien and second lien debt advanced to the company - all of which is on non accrual - has dropped to only $6.8mn, and even that may be excessive. There are 7 BDCs involved and all will be liking their wounds and writing off their entire exposure.
The BDCs involved are Cion Investment (CION); Capital Southwest (CSWC); Investcorp Credit Management BDC (IVMB); Main Street Capital (MAIN); PennantPark Floating (PFLT); SLR Investment (SLRC) and non-traded MSC Investment, which is controlled by MAIN.
We won't bore you with a history lesson but some of these BDCs have been involved with ATS since 2016. Trouble did not show up till the IVQ 2018 when total exposure was $118mn. The debt went on non accrual about a year ago - in mid 2021 - although not all BDCs admitted as much right away. However, as of the IIQ 2022, all loans are marked as non performing and - as previously indicated - written down to next to nothing. This is what a syndicated loan for a large cap borrower looks like when things go wrong.
Apparently - according to SLRC - the lender group did take control in the middle of 2021 and attempted a rescue. However, neither SLRC not any other BDC lender has offered up any color on what happened, but any hope for a turnaround proved misplaced.
The only good news from a BDC perspective - and for the shareholders of the 7 players involved - is that no income has been derived from ATS for some time and the value is so low as to make the remaining values immaterial. We would be impressed if any BDC - without being asked - might provide some thoughts on what went wrong here. Most likely, though, this investment will shortly be fully written off and forgotten. What is that saying "Success has many fathers but failure is an orphan?"