Investor Profile Report - GSO Capital Partners

17 July 2018

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The Investor Profile reports highlight the strategies and tactics of noteworthy investors in the distressed investment space through:
1) Comparing data on specific institutions to the distressed debt market as a whole
2) Identifying trends in an institution’s distressed market debt activities
3) Reviewing representative cases in the investor’s portfolio
 
Profiled investors are selected from among the largest and most active distressed debt market participants.
 
Our inaugural report profiles GSO Capital Partners, one of the world’s largest credit investment managers, using data available from Debtwire’s Restructuring Database from the beginning of 2016 through the first half of 2018.
Using the Restructuring Database, the Debtwire team identified and analyzed the data from the 21 bankruptcy cases since 1 January 2016 where GSO was known to be invested in the capital structure.
 
Key Insights Include:
  • GSO’s primary strategy in the distressed space is as a rescue lender, rather than a distressed debt trader focused on identifying fulcrum securities.
  • GSO’s rescue lending patience often runs out around the 18-month mark.
  • GSO’s holdings are sector-diverse; we don’t see market-comparable concentrations of holdings in the most bankruptcy prone sectors, such as retail and O&G.
  • GSO does not shy away from experimental strategies or risky litigation, as evidenced by its involvement in LINN EnergyHovnanianJ. Crew and Arch Coal, among others.
  • Cases where GSO is in involved are much less likely to enter bankruptcy in “free fall” and rarely end up in liquidation; rather, they tend to enter bankruptcy with a plan and exit in an orderly fashion as a going concern.
  • GSO negotiates tight agreements for its rescue lending, which can place it in a superior position even with respect to ostensibly pari passu creditors (for example, Logan’s Roadhouse and Atlas/Titan).
  • GSO is a frequent participant in DIP lending and rights offerings – and when GSO is a sole DIP lender, those loans tend to be expensive.