Fusion Connect : Court Dispute Underway

Telecom company –Fusion Connect — which just exited Chapter 11- is arguing in bankruptcy court that a $2.1mn fine imposed by the Federal Government on the company prior to its filing should not need to be paid. That’s all we know but created a reason to have a new look at the company in its new status.

We know that Fusion, according to Investcorp Credit Management (ICMB), that the company – which previously had been on non-accrual – exited Chapter 11 in January 2020. (ICMB got repaid on a DIP Loan at the time). All this from the BDC’s May 12, 2020 conference call. There are 2 BDCs with $18.6mn of exposure in the restructured company: besides ICMB there’s also Garrison Capital (GARS). The first lien debt was already discounted by (20%) and the second lien by (44%) at 3/31/2020. The equity owned is also greatly discounted by ICMB but not by GARS. We don’t understand why.