Bass Pro Group, LLC: Loan Value Dropped

The BDC Credit Reporter added fishing and hunting specialty retailer Bass Pro Group LLC to the under performers list only in IVQ 2019. That was on the back of a worrisome note by Moody’s about the company, which we wrote about on October 1, 2019. The company is privately owned.

There’s been no new information from the ratings group that we’re aware of since, or anything material in the public record. However, when we checked Advantage Data’s records for the latest valuation of the company’s debt we noted a discount of (12%) on March 13, 2020, significantly higher than before the market melt-down.

Moreover, we couldn’t help surmising that a company still heavily reliant on walking around consumers – now stuck at home in some cases – might be impacted going forward. As Moody’s previously noted, the owners have had an “aggressive” financial stance. The loan in which the BDCS involved are funded was expanded in 2018 to allow for the repayment of junior capital, as Moody’s reported at the time. Also, EBITDA is at or above the levels we’d prefer for companies of this size. We are affirming our CCR 3 rating, but will be paying ever closer attention.

At the moment, though, BDC exposure is relatively modest: now just 2 players: publicly traded OFS Capital (OFS) and Garrison Capital (GARS), with $9.0mn invested at cost. (The latter has the bulk of the exposure). Non-traded GSO-Blackstone appears to have dropped out as lender late in 2019. In both remaining cases, the exposure is limited to involvement in the syndicated 2024 Term Loan, mentioned above. OFS actually valued the debt at a premium to par at 12/312/2019 (the GARS report is not available). That might even suggest the debt will shortly be repaid.

In our database, we’ve assumed some potential material credit losses in a worst case, but there’s no immediate reason to be concerned for the BDCs involved. Income at risk is just $0.6mn as the debt is priced at LIBOR + 500 bps.