Ravn Air Group: Files Chapter 11

Bad news for Ravn Air Group Inc. – a small Alaskan air carrier – which filed for Chapter 11 on April 6, 2020 and stopped operations effective immediately. According to news reports “the Anchorage-based airline holds out hopes of restarting operations once the COVID-19 pandemic passes.” Management hopes to ” seek federal CARES Act grants and other sources of financial assistance that will allow us to weather the coronavirus pandemic and emerge successfully once it has passed.” 

The only BDC with exposure is Portman Ridge Financial (PTMN) , which at 12/31/2019, had a $1.8mn cost position – valued close to par – in the airline’s 2021 first lien Term Loan. Based on Advantage Data’s records, that debt is trading at 72 cents on the dollar after the bankruptcy news, probably reflecting the debt’s position in the capital structure and the likelihood that Ravn will be back flying into the wilds of Alaska before long.

PTMN will probably have to book a half million or so realized loss – based on what we know – and lose for some time any income, which amounts to about $100,000 a year. Even for a smaller BDC like PTMN that should not be too egregious.