Alternative Biomedical Solutions: Restructured

The BDC Credit Reporter believes privately-held Alternative Biomedical Solutions LLC, a Centre Lane Partners portfolio company, was restructured in the IIQ 2020. We did not find an official announcement but a review of Capitala Finance’s (CPTA) 10-Q suggested some of the 2022 Term debt due the BDC may have been converted into Preferred stock and warrants were issued. Total exposure by CPTA dropped by a third, suggesting a possible realized loss of ($6mn) in the period but that’s not explicitly confirmed in the 10-Q.

Unfortunately, all our information is from CPTA’s results and cannot address the company’s overall balance sheet or what other lenders – if any – might have done. Furthermore, we don’t know if the sponsor made any capital contribution as part of the restructuring. The company had been underperforming since the IQ 2018 and in 2019 CPTA revealed trailing EBITDA had been headed lower but was stabilizing. As of the IQ 2020, the company’s debt was carried as non performing by the BDC.

As a result of the restructuring, we have upgraded the company from CCR 5 to CCR 3. The remaining debt is valued by CPTA at par, as well as the new preferred. The original $0.800mn in equity remains valued at zero. Total cost is $13.1mn and FMV $12.3mn.

We are keeping the company on the underperformers list despite the restructuring, both because the equity remains valued at zero and due to the recent non accrual and need for restructuring. We hope to learn more in the future.