Investcorp Credit Management BDC (ICMB) ($17MM market cap) is a distressed subscale BDC that was forced to refinance maturing debt in March with an affiliate of the external manager, post refinancing, the economics of being a standalone BDC don't work and the board commenced a review of strategic alternatives led by a committee of independent directors (including Lee Shaiman, former head of the LSTA, bank loan market's trade organization and Thomas Sullivan who was on the SMTA board). Since then, NAV has eroded to $3.65/share (versus a current quote of $1.20/share), Houlihan Lokey has been formally engaged as an advisor, the external manager has waived a bulk of their fees and closed-fund activist Bulldog Investors (4.1% owner) issued a letter demanding the external manager buy-in the outstanding shares at NAV. This needs to be sold quick, its a melting ice cube splayed out on a hot summer day asphalt driveway.
BDCs are just pools of assets, they can be sold and merged away fairly easily to any number of eager asset managers looking to bulk up their AUM and resulting management fees. Most of these deals happen at an NAV-for-NAV basis, so we're looking for a BDC with a smaller discount (just about all of them) to come in and merge away ICMB. Often there's also a little cash kicker for shareholders to encourage them to vote yes and serves as compensation for entering into a new external management agreement. ICMB's manager, Investcorp, should be incentivized to accept almost any deal, they own 25% of the BDC, have been waiving management fees and luckily for shareholders, don't appear to have a termination fee. Reputationally, they'll want to move on from this experiment.
Below is little math based on our current favorite BDC consolidator, BCP Investment Corp (BCIC), assuming an NAV-for-NAV merger, ICMB could see significant upside. BCIC is just an example, could be a number of potential BDC buyers or if Bulldog has its way, Investcorp might buy it into one of their other strategies (similar to Apollo with ARI) to save face.
This is an illiquid microcap with an upside down balance sheet, if it doesn't get wrapped up fairly quickly, all equity could get wiped out.
Disclosure: I own shares of ICMB