We’ve not been digging too deeply into the company’s finances and prospects because the only BDC exposure is that of Goldman Sachs BDC (GSBD). Admittedly, the amount invested is material – $9.2mn – but all in the form of equity. That equity was valued at only $0.25mn as of June 2019, and will drop even further when the third and fourth quarter results come out.
The investment has been sitting around on GSBD’s books since 2016, not earning any income and in perpetual decline. If something happens to Prairie Provident – not unlikely given market conditions – a 100% Realized Loss is more likely than not. We’ll chalk it up to another misguided attempt by a BDC – and GSBD has much company from its peers – to invest in a capital hungry and highly cyclical industry which is best left to specialist groups. We’re adding – just based on that stock price – Prairie Provident to our Bankruptcy Imminent list.