Dark Times for Public PE, But Don't Expect Any Take-Privates or Dividends
Massive write-downs and horrific stock prices de damned. Today's earnings calls for BDCs like Allied Capital and American Capital echoed what we heard on Blackstone Group's recent call: "We're not going private anytime soon, and we're not paying any dividends for a while." American Capital announced it was in violation of covenants for the second time in the past year. During its dismal two-hour call, analysts lamented that the company' stock price reflected future (and larger) writedowns, and that it ruined the company's ability to maintain its asset coverage ratios. Even individual investors got on the line to complain. Eventually someone asked point-blank: Do you think the BDC is the best structure for American Capital going forward? Would you consider going private? CEO Malon Wilkus said, "No... Last year we conveyed we had to evaluate our structure, but in this environment it'd be hard to explain that to lenders."
