November 22, 2016 Comments (0) Blog

FS Investments BDC, Latest Valuations

(Last Updated On: April 6, 2017)

Are you concerned about your investment losses in FS Investments (FSCI)? If so, The White Law Group may be able to help by filing a FINRA Dispute Resolution claim against the broker who sold you the investment.

Founded in 2007, Franklin Square Capital Partners manage a variety of BDCs including non-traded, as well as a publicly traded BDCs on the NYSE. Besides managing BDCs, Franklin Square manages a global credit opportunities fund.

A Business Development Company (“BDC”) is a type of investment company that invests in small and mid-sized businesses. Investors can buy shares in a BDC, and the money from their investments  are used to fund the businesses. In turn, investors can profit from dividends paid on their investments, or, in some cases, the sale of their shares. For an in depth look at BDCs, go here.

Franklin Square has various BDCs, both traded and non-traded. The first one, FS Investment Corporation, is publicly traded and focuses on providing customized credit solutions to middle market companies. This BDC seeks to invest in the senior secured debt, as well as the subordinated debt of private middle market US companies. FSIC launched this publicly traded BDC in 2009 and has 23% of investments in capital goods, while 11% is invested in consumer services. More information can be found here.

According to BDC Reporter, one of FSIC’s investments, Caesars Entertainment Operating Company (CEOC) a hotel and casino chain, has had their reorganization challenged by the U.S. Trustee.

At the end of the IQ 2016, FSIC had written down CEOC’s debt by 10-14%.

In September 30, 2016 the loans were marked above par due to the impending reorganization. Now with potential failure of the reorganization, FSIC and three other non-traded BDCs with exposure (FS Energy, FSIC II and FSIC III), might have to lower their latest valuations.

Like all investments, BDCs do not come without risks. Limited liquidity, distributions that may not be guaranteed in frequency or amount, and limited operating history are just a few risks that investors take on when investing in a BDC. Business Development Companies can be a good investment for the right investor, along with a diversified portfolio and sufficient due diligence. BDCs should only be recommended to those investors who are able to both weather substantial losses and those who are not in need of immediate liquidity. Investors should be particularly cautious of riskier non-public and non-traded BDCs.

If you invested in FS Investments or another BDC and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  For more information on the firm and its representation of investors, visit http://www.whitesecuritieslaw.com.