1888 Industrial Services, Inc.


1888 Industrial Services, previously known as AAR Intermediate Holdings, LLC provides field support services to oil and gas producers, drilling, and midstream companies in the Denver-Julesburg basin. The company builds, repairs, modifies, and maintains oil and gas production equipment, sites, wells, and pipelines.

The Company was restructured in 2016 in a Debt For Equity swap and is now Lender Owned”.

BDC Credit Reporter View

7/8/2017: We know very little about this privately held oilfield services company. However, Advantage Data records showed 3 BDCs with $62mn of exposure in the form of senior debt and equity in June 2016. As one might expect, the Company has been on Watch List status since the IVQ of 2014, shortly after the investments were made. In the year between IIQ 2015 and IIQ 2016, the senior debt was written down from an 8% discount to a 42% discount. The debt went on non-accrual in the IVQ 2015. The BDC Reporter expected a restructuring or bankruptcy to occur and had the Company’s status as Non Performing and the Credit Rating at 5. As expected, during the IIIQ of 2016, the Company arranged a debt for equity swap which saw big Realized Losses ($42mn by our estimate) incurred by the lenders, and a new capital structure involving Term Debt and control equity, and a new Revolver to fund operations. BDC Senior debt dropped from $55mn to $17mn. Also $4mn of equity was written off but new equity issued as part of the transaction.

The BDC Credit Reporter now has a Credit Rating of 3, and a Performing status. Although The Company remains in operation with a reduced debt loan, there is no guarantee the oil field services business will recover.

From CMFN IIIQ 2016 CC on November 6, 2016: “On a more positive note, after working with the company and our fellow lenders over the past year, we have concluded the financial restructuring of All Around Roustabout, AAR. Historically, CM Finance has held a first lien loan to AAR Intermediate Holding company LLC and warrants at the same entity. Today, our investment has been restructured into a new Term Loan A and Term Loan B, a direct equity investment and an undrawn revolving commitment of approximately $1 million.

The old first lien loan was partially equitized resulting in the lenders taking majority ownership of the company and the remaining loan was restructured into a first out and last out, the Term A and Term B. Our revolver commitment is intended to fund working capital as the company recovers. We have placed the Term A on accrual while the Term B remains on nonaccrual. Our old warrants were canceled.

This restructuring reduces debt and in particular the cash interest burden on the company, while preserving our ability to recoup value in the future. The aggregate fair value of our Term A, Term B and equity position is the same as our fair value on the pre-restructured first lien loans as of June 30.”