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1 min read CION

CB URS Holdings: IIQ 2022

A vehicle logistics company which was added and then dropped from the underperformers list in 2020 is back.

October 12, 2022

CB URS Holdings is the legal name for United Road Services, a vehicle logistics company. These are the people who the cars to your dealership, amongst other things. The company has been owned by the Carlyle Group since 2017.

Back at the beginning of the pandemic when nobody was allowed outside and commercial activity slowed down sharply, we downgraded the company to CCR 3 on seeing a lower valuation in the IQ 2020 from the only BDC lender: CION Investment (CION). However, the company seemed to improve - as did the valuations from IIIQ 2022 - so we upgraded the rating back to CCR 2.

However, in the IQ 2022 CION discounted its $15.2mn first lien loan due in 2024 by (13%). That's enough in our system to justify returning the company to the underperformers list, which we did - again with a CCR 3 rating. In the IIQ 2022, the discount increased to (18%), reaffirming our decision.

Rather than re-invent the wheel, let's copy what we wrote in our Credit Notes in the Company File about the company:

As you might expect moving cars around for dealers has not been a great business to be in of late. That's why the BDC valuations for the company dropped in 2020 for a while (before recovering) and may explain why in the last two quarters valuations have been dropping again. We don't have much else to go on except the fact that the company's sales dropped (slightly) in 2021 and Moody's downgraded them to Caa1. Still, we are not worrying too much at this point given the basic business need which the company fills has not gone away and United Road Services is a dominant, well-known player. Moreover, the $15mn invested is in first lien debt, making it unlikely any material loss would occur even in a bankruptcy or restructuring situation. The debt is priced at LIBOR + 5.75% suggesting lower risk. We also take comfort with having the highly experienced and deep pocketed Carlyle Group as the sponsor.

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