No. of Recommendations: 2
The largest Fund purchase during the quarter was
Reddy 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.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.