Downgraded From CCR 3 To CCR 5. Added As Important Underperformer
August 4, 2025
Kellermeyer Bergensons Services, LLC (KBS) is a privately held, technology-enabled provider of integrated facility services—including janitorial cleaning, floor care, maintenance, exterior services, and hospitality staffing—across more than 100,000 client locations in North America. The company operates in labor-intensive, recurring service verticals spanning retail, logistics, industrial, and commercial real estate sectors, and is classified under SIC code 7349 (Building Maintenance Services). KBS was formed in 2011 via the merger of Kellermeyer Building Services and Bergensons Property Services and has since scaled into one of the largest operators in its industry. In March 2024, the company completed a major recapitalization and is now backed by private equity sponsors KKR, Ares Management, and BlackRock, who serve as its controlling shareholders.
We last wrote about KBS (we'll dispense with the full name) back in 2024 when the company defaulted on its debt. Subsequently, the company was restructured, taken over by its lenders in a debt for equity swap - as referenced above - and removed from both the non-accrual and Important Underperformers list. As of the IQ 2025, KBS was only on our Watch List, rated 3 on our 5 point scale.
However, with the release of Ares Capital's (ARCC) IIQ 2025 10-Q, the company is back amongst the Important Underperformers. Of the two senior loans ARCC has outstanding to the business, one has been placed on non-accrual. This loan has a cost of $14mn and has been written down to a value of $8mn, versus being carried at 5% premium to par previously. The preferred stock ARCC holds since becoming an "owner" has been written to zero.
BDC CREDIT CONFIDENTIAL
ARCC's exposure in this non-accruing loan is modest and won't move any earnings or capital needles. However, we're reminding our readers that another BDC which yas not yet reported - FS KKR Capital (FSK) - has a great deal more invested in this company: over $340mn, including $293mn in loans. There's a good chance some or all that debt may be placed on non-accrual as well in this quarter, which would have a material impact on FSK. (The same can be said of BlackRock TCP (TCPC) but the amounts involved are much smaller). This serves as a heads up to the BDC's shareholders, both about the prospective impact on the latest results and down the road should the company fail - again. The only saving grace is that FSK was recognizing income only in PIK form and - in the case of the bigger loan - at a below market interest rate. Nonetheless, as much as ($34mn) of annual interest income at FSK is in the line of fire.
We have downgraded the company from a rating of 3 to 5 and added it to the "Major" Important Underperformers list - companies rated 4 or 4 and with FMV in excess of $100mn. This is serious money for FSK, modest for ARCC and negligible for TCPC.
What, you may ask, is going wrong at KBS under its new BDC lenders? Frankly, we don't know. ARCC certainly isn't telling but we may learn sonething from FSK when IIQ 2025 results come out.
A Company File for KBS is being assembled now that we've undertaken this two notch downgrade. Here is a profile we've developed using Perplexity.
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