SellerX Gmbh: Cuts Workforce By 20%

Remains Rated 5 & Important Underperformer. Loss Estimate Increased.

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February 19, 2025

It's dismal news to wake up to but a BlackRock TCP (TCPC) portfolio company seems to be getting into ever deeper trouble, despite a recent debt-for equity swap. To make matters worse - but this is, admittedly, more speculative - this might augur poorly for TCPC's investments in other companies in this field.

The company is SellerX Gmbh, much in the news in 2024 and which we last wrote about in August of last year when the company's lenders were putting up the business for auction. Cutting to the chase: the auction was cancelled and a debt-for-equity swap was undertaken with TCPC becoming both lender and part owner, alongside members of the original owners. See the Company File for the whole story. Last we heard - which was some time ago in the IIIQ 2024 - the BDC, and a sister non-traded BDC - had $58mn in loans outstanding at cost to the company - all non-performing - and they were valuing them at $25mn. At that point, no loss had yet been taken and the restructuring. not effectuated.

We expect to see a different picture when TCPC - very shortly - reports IVQ 2024 results. However, events may be overtaking the valuation snapshots we're getting. We've just heard that the company is cutting 20% of its workforce - 170 of 800 employees are being laid off. The company is also shifting its strategy (never a good sign) and the words "cash crunch" have popped up, without further explanation, in this Sifted article. (Sifted is a publication focused on the venture sector in Europe).

We've been skeptical all along that e-commerce aggregators, several of which stumbled spectacularly last year such as Thrasio, would recover as readily as the several BDCs caught up in their slump have expected. In the case of SellerX, the writing seems to be on the wall for a liquidation, or for a sale in bits and pieces that might recoup very little. We are increasing our estimated potential loss from 50%-75% to 75%-100%. For TCPC - whose exposure amounts to $54mn at cost and $24mn at FMV as of the IIIQ 2024 (but may have risen since) - this would be a material loss. However, the damage to its income (just under $8mn of annual interest forgone) is already done.

We continue to rate the company a 5 on our 5 point scale - and at its current value - remains an Important Underperformer.

In a case of credit deja vu, we are concerned that besides SellerX, trouble may be on the horizon (again) for Thrasio - which is held by multiple BDCs with aggregate investments at cost over $100mn - and Razor Gmbh - both of whom are cut from the same "aggregator" cloth. The latter involves $70mn of investments at cost and TCPC and a sister BDC are the BDCs involved. We may learn more from the IVQ 2024 results but - more likely - we'll have to see what happens deeper into 2025 to see if really big realized losses - and pretty big unrealized write-downs - are coming.