Ambrosia Buyer Corp: IQ 2021 Update

We’ve discussed Ambrosia Buyer Corp, which also goes by the name Trimark USA LLC and TMK Hawk Parent Corp on BDC books twice in the past. The first article was on November 26, 2020 when we discussed a major dispute between different lender groups. On February 5, 2021, we confirmed that second lien debt outstanding had been placed on non accrual by Apollo Investment (AINV). However, several other BDC lenders – involved in both the first and second lien debt – had discounted the value of their positions but had not placed the obligations on non performing status. AINV admitted to continuing to receive contractual interest, but applying the proceeds to reducing the cost basis of their investment.

Neither AINV nor the other public BDC with exposure (first lien) New Mountain Finance (NMFC) addressed what is happening at the company on their IQ 2021 conference calls. Last we heard, the dispute between different lender groups was before a judge but we’ve not been able to determine an outcome, if any has occurred. Still, in the IQ 2021 both AINV and NMFC reduced the discount applied to their debt positions. The former’ discount is now (38%) versus (52%) in the prior quarter but remains on non accrual and the cost is still being reduced from interest proceeds. NMFC has reduced its own discount by 10%.

From what we can gather the disputed rescue package has provided the company with much needed liquidity and – presumably – market conditions are improving as lockdowns end and people are eating out again. Moody’s still rates the company Caa2 – or did in January 2021. We’d like to offer more clarity but with the BDC lenders mum, we can only suggest that the company is on the mend and a major financial crisis does not seem likely.

We continue to rate Ambrosia CCR 5, even if NMFC and two other BDCs still have the debt as performing. The company is still Trending, because it’s likely that the valuation will change again – probably for the better – in the IIQ 2021 results when they come out. Moreover, the lawsuit between lenders may get resolved.