Beltway Capital Partners, a Hanover Md.-based investment firm, is on the lookout for distressed middle-market loans after raising a new $200 million fund in the summer. "We are still looking to invest the $200 million fund; some has already been put to work," noted James Kirschner, a v.p. with Beltway. "The types of opportunities we are looking for include senior secured debt of non-public companies. Beltway looks to purchase both revolvers, including unfunded commitments, and term pieces." He added that the firm looks for mezzanine, subordinated debt and equity opportunities.
Kirschner said the firm has purchased mainly syndicated credit facilities and some single lender deals with a target hold size of $2 million to $15 million. The overall deal size that the firm buys into averages $75 million for the syndicated deals. Beltway has purchased all tranches of the senior facilities. Normal sellers are domestic banks that are looking to clean up their portfolios of marginal deals, collateralized loan obligations and insurance/senior debt funds. "The banks have looked at the historic recovery rates and realized that those numbers are lower than prior economic cycles," Kirschner said. Additionally, sellers manage assets from a more global perspective today and as a result asset sales are used more regularly as an exit strategy," he explained.
"Though banks have been sellers, the pipeline from them has been diminishing in recent quarters. CLOs that we have come in contact with are limited sellers," he added. Beltway does not accumulate debt to own the business. "We are active in the restructuring negotiation with the borrower. Our objective is to restructure the debt so that the business can operate successfully and repay us," he noted. Kirschner joined Beltway form Bank of America at the beginning of this year. Scott Gray, the principal of Beltway, used to be president of Dunkirk Financial Partners.