Alteon Health: Cutting Costs

We have to had yet another medical company to the Under Performers list due to the reverberations of the complete focus of the health sector on Covid-19. That’s healthcare recruitment and placement firm Alteon Health, LLC. According to a regional publication, the PE owned form is sharply cutting costs in response to a drastic drop-off in the demand for its services. Based on that news, and the valuation of the company’s traded debt as of April 3 at a 16% discount, we’re initiating at a Corporate Credit Rating of 3.

The three BDCs with $25.4mn of debt at cost to the company were valuing the exposure at close to book value at year-end 2019. All exposure is in the 2022 Term Loan. The BDCs are (in descending order of size): Solar Capital (SLRC); Solar Senior Capital (SUNS) and Ares Capital (ARCC). There’s $2.0mn of investment income in play. There does not seem to be any immediate risk of default but things are moving quickly these days and with the medical crisis in the country likely to last quite some time more, Alteon might be back on our radar very shortly.