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THL Credit, Inc. (TCRD) Message Board

jan814_1999 1 post  |  Last Activity: Jan 16, 2015 2:52 PM Member since: Apr 27, 2000
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  • jan814_1999 by jan814_1999 Jan 16, 2015 2:52 PM Flag

    Lots of good discussion on the Caesar's bankruptcy filing and its effect on FSIC. So I thought I would add a
    comment.
    Yesterday, KBW issued a two page report on the subject. FSIC has debt in both "The Caesar's Entertainment Operating Company (CEOC), which has filed for bankruptcy, and Caesar's Entertainment Resort Properties, which has not filed for bankruptcy. The FSIC investments in CEOC are at the top of the capital structure and would be paid off first in bankruptcy. Based on the market value of CEOC paper for which pricing is available, KBW estimates that the FSIC paper could be written down by about $2 million which would impact FSIC book by less than $.01 per share. So with no meaningful decline in book due to Caesar's loans, KBW reiterated their "Outperform" rating and suggested this price drop may be an attractive buying opportunity.
    It is hard to disagree since at the current price of $9.40 per share, the dividend yield is 9.5% and the gain to the KBW target price of $11.75 is 25.0% for a potential total return of 34.5%. Even if we use the current street target of $11.06 (4 analysts), the total return is still a hefty 27.2%. The price to book at the $9.40 price is .922. All of the above numbers are very attractive given that FSIC is: a) the third largest BDC (by market cap.) of 50 total; b) has a very friendly fee structure; c) has 1 portfolio company on non-accrual of 128 companies in the portfolio: d) has no need and no plans to issue more stock; and e) more than covers its quarterly dividend with NII and has a significant amount of undistributed NII.
    The KBW NII estimate for 2015 is $1.03 versus the current annual dividend of $.89. So we could see dividend increases and/or dividend extras going forward.
    As always, just one opinion.
    Jan

TCRD
10.89-0.09(-0.82%)Jan 30 4:00 PMEST

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