The largest Fund purchase during the quarter wasReddy Ice First Lien Senior Secured Bonds (11.25% due March2015), which we bought to yield approximately 9.8 percent to maturity. Reddy Ice is the largest domestic distrib-utor of ice, with a strong market presence in the Southeast. The company experienced a downturn in its ice busi-ness as the economy declined in 2008. Particularly damaging for ice demand was a dramatic drop-off of home-building and outdoor construction in core Reddy Ice markets. Investor sentiment was further depressed as thegovernment initiated an anti-trust investigation into the ice distribution industry, which was recently concludedwithout further action against Reddy Ice. Currently the highly levered company is finally beginning to see stabili-zation in end-use ice demand, but is still challenged by its high cost of capital and increased market competition.Given our debt’s senior position, the stabilization of company EBITDA and additional corporate cost-cutting ef-forts, we believe the value of our bonds is well protected. Currently, the first lien debt has a manageable netdebt to projected 2011 EBITDA multiple of 4.25 times. It is possible that private equity players with access tolower cost capital may have an interest in large, ice industry players, which could ultimately lead to a companyrecap.http://www.scribd.com/fullscreen/54396458
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