Alcentra, the Los Angeles-based leveraged loan manager, has liquidated its Pacifica Partners I portfolio over the last few weeks after Imperial Credit Industries (ICI), the equity investor and holder of the double-B notes, cashed in amid strong market conditions. The timing of the portfolio liquidation was partly driven by market conditions, but also by ICI's bankruptcy process, sources said.
ICI, a financial services company that is now in liquidation, once owned Imperial Credit Asset Management (ICAM). Alcentra was formed through a management buyout of ICAM from ICI in 2002. ICI, which had concentrated investments in the sub-prime area, has been in a liquidation bankruptcy for over 18 months, a source stated
The equity and notes from the Pacifica portfolio had been making payments, but it made sense to liquidate while the bids on the underlying loans and bonds were strong--especially in a rising rate environment, the source said. "It was the right move to prevent the double-Bs from taking any hits," he added. ICI was able to bow out through an optional redemption feature on the notes.
The vehicle was originally $400 million of loans with $100 million of bonds, but at moment of liquidation the portfolio was approximately $125 million with only about $30 million of bonds. The reinvestment period passed two years ago, so prepayments had shrunk the portfolio, the source said.
The Pacifica deal, which was originally $500 million when underwritten in 1998 by J.P. Morgan, was performing well and had suffered no downgrades, said the official familiar with the situation. This was confirmed by Rudolph Bunja, a v.p. and senior credit officer within the structured finance group at Moody's Investors Service, who said there have never been any ratings actions on the notes. Alcentra recently priced its third Pacifica deal in April (LMW, 4/26).