On October 29, 2019 we reviewed the public record about HRZN’s only under-performing company that we’ve identified, in advance of IIIQ 2019 earnings season: Audacy Corporation. According to its website, Audacy was launched in 2015 by a team of Stanford graduates, a SpaceX veteran, and NASA award winners. Their mission is “to deliver anytime, highly operable connectivity that advances humankind to an unparalleled age of space exploration and discovery“. Audacy is a “space communications service provider enabling continuous satellite and launch vehicle connectivity from the launchpad to the Moon. Our ground-based services are now operational and our space-based data relay network will launch in 2021″.
The BDC has $3.8mn advanced in debt and equity to the satellite communications provider at June 30, 2019. HRZN initiated exposure recently, as announced by press release on June 12, 2018, which included a 2022 Term Loan. In the IIQ 2019, HRZN increased its exposure by $0.6mn in the form of a 2020 loan. Both loans are priced at LIBOR + 790 bps, and both are on non-accrual. HRZN values the investment at $1.5mn, but we placed the company on our under-performing list in the IQ 2019, when the investment was first written down.
Unfortunately, we found very little public information about the company’s performance, or the reasons for the non-accrual ,in the public record. However, both the 2020 and 2022 loans are institutionally traded and priced at a (60%) discount to cost, only slightly below the June 2019 valuation. This suggests there will be little change in the credit when HRZN reports third quarter 2019 results. We’ll be looking for a little more color as to what has gone wrong and what to expect.
Update: Following the HRZN IIIQ 2019 earnings release on October 30, 2019, no change in the value of Audacy.