According to the Wall Street Journal’s Bankruptcy publication, Craftworks Holdings (aka Craftworks Restaurants & Breweries) is considering a restructuring of its debt. Or filing Chapter 11. Craftworks is the owner of several well known restaurant chains, including Logan’s Roadhouse, acquired in 2018, after filing for bankruptcy in 2016. We looked around for any further information in the public record about this rumored restructuring, but found none.
BDC exposure to Craftworks – according to Advantage Data’s records – is very recent, starting in the IIIQ of 2019 and includes three FS-KKR BDCs: FS-KKR Capital (FSK) and the non-traded FSIC II and FSIC III. Total exposure at cost – and all in second lien debt due 2024 – is $13.4mn. However, that’s exactly the same amount that those three BDCs advanced to Logan’s Roadhouse, so we assume there’s been some reclassification and assumption of debt. The relationship with Logan – which has been fraught – dates back to 2010.
As the above shows, the BDC Credit Reporter knows very little but we’ll speculate that whatever happens – bankruptcy or restructuring – the junior nature of the BDCs status ensures that a complete write-down or write-off is more likely than not. We may learn more when FSK reports its latest results, scheduled for February 27, 2020.