Company developments and company hires

Acquisitions

Crescent Capital BDC is set to acquire Alcentra Capital Corp, a middle-market BDC. The transaction is the result of Alcentra Capital’s previously announced review of strategic alternatives led by an independent director committee. Under the terms of the transaction, in exchange for approximately 12.9 million shares of Alcentra Capital common stock, Alcentra Capital’s stockholders will receive approximately US$19.3m in cash, or US$1.50 per share, from Crescent BDC, 5.2 million shares of Crescent BDC common stock and US$21.6m in cash, or US$1.68 per share, from CBDC Advisors, Crescent BDC’s investment adviser. The total cash and stock consideration to be received at closing is currently estimated to be approximately US$141.9m, after taking into account certain post-closing adjustments - representing 1x Alcentra Capital’s net asset value per share, as of 30 June 2019, and 1.36x the closing price of Alcentra Capital’s common stock on 12 August 2019. Following the transaction, Crescent BDC stockholders and Alcentra Capital stockholders are expected to own approximately 81% and 19% respectively of the combined company, which will remain externally managed by Crescent Capital Advisors.

Agency appoints SF vet

ARC has appointed Philip Walsh has been appointed as senior structured finance specialist, under contract. He was previously md and head of the European structured finance business development function at Fitch Ratings, has over 40 years’ experience of complex financings and has spent over 20 years in investment banking. Walsh takes up his post with immediate effect and has responsibility for mentoring the structured finance team, developing and enhancing ARC’s structured finance methodologies as well as fostering and developing relationships with investors and other key market participants.

Barney’s CMBS credit negative

Moody’s notes that Barney’s bankruptcy filing on 6 August and store closures are credit negative for the two US CMBS Moody’s rates with material exposure to the company, DBUBS 2011-LC2 and GSMS 2010-C1, though low loan leverage and the strong locations and demographics surrounding the properties backing the loans help limit these effects.

While the softening of their New York City and Chicago retail submarkets could lead to significant costs and lengthier searches for new tenants, Moody’s expects the impact on these loans to be muted based on the current leverage and in-place rents prior to Barney’s announcement.

BUMF 6 correspondence

Roundstone Technologies (RTL), a company incorporated in the British Virgin Islands, has sent correspondence to a number of parties to the transaction documents governing the Business Mortgage Finance 6 securitisation. This correspondence contends that RTL has certain rights under a purported sale and purchase agreement dated 28 June and asks the addressees to take various action in relation to the same. In particular, pursuant to the purported agreement, RTL purports to have purchased the loans outstanding and all monies standing to the credit of the issuer's bank accounts, and plans to take steps to perfect and transfer the full legal title and/or interest in the collateral security to an unspecified UK affiliate. The issuer wishes to confirm that such an agreement has been declared by the court to be invalid and that it will, if appropriate, make an application to the high court for urgent relief, including preventing RTL from taking any further action. So far as the issuer is aware, RTL is purporting to act through Clifden Management, who is RTL's ‘adviser’.

Whole-biz deal downgraded

KBRA has downgraded the class A1 and class A2 notes of TGIF Funding 2017-1 from triple-B to triple-B minus. The rating agency states that TGI Friday’s has been negatively impacted – like other businesses in the restaurant sector - by factors including a shift in consumer preferences and competition from lower-cost alternatives including fast casual dining, quick-serve restaurants, and other food service alternatives. Additionally, since transaction close, overall same-store sales have experienced nine consecutive quarters of decline although there has been positive growth at company-operated locations in two of those nine quarters.

The rating agency adds that overall store count has also decreased, resulting in a reduction in system-wide sales from approximately US$2.5bn at transaction close to approximately US$2bn for the most recent period. The transaction’s debt service coverage ratio has also declined from approximately 2.2x at transaction close to approximately 1.9x. The senior leverage ratio has increased from approximately 6.1x to 6.8x for the same periods.