Once in a while, there’s an under-performing loan story with a happy ending. That’s (mostly) the case with Elgin Fasteners. OFS Capital (OFS) had a $3.5mn Senior Secured Loan to the company that was due in August 2018. That maturity debt came and went, without much feed-back from the BDC as to why. All we knew at the time was that a forbearance agreement was entered into between lenders (this was a syndicated loan) and borrower. We added the company to the under-performing list in the IIIQ 2018 because of the non resolution, and even though OFS valued its position at only a small discount to par.
Scroll forward to the BDC’s IIIQ 2019 10-Q, and we find a “Subsequent Development”: The debt was repaid on October 9, 2019 for proceeds of $3.361mn, resulting in a realized loss, but only a modest one: ($0.122mn). That was in line with the discount taken versus cost by the BDC.
We’ve removed Elgin Fasteners from the under-performers list and OFS shareholders should expect to see the nominal realized loss show up in the IVQ 2019 results. We have no idea what the whole back story that caused a fourteen month delay in getting OFS repaid, but the amount involved does not warrant a full fledged credit post mortem.