The Distressed Debt Report - April 24, 2007

Dividend Recaps Expected to Surge

A report from PricewaterhouseCoopers and the Pepper Hamilton law firm points to an impending explosion in the volume of dividend recapitalizations over the next 12 months. The data suggests most of the recaps will involve middle market companies valued from $250 million and $750 million and held in private equity portfolios. Full Story

But Subprime Mortgage Woes Beat Down Shares

At least five new publicly traded business development companies have been launched since December after a run-up in BDC shares last year. But now, four of the five new BDCs are trading below their IPO prices. Investors are fleeing from BDCs, along with those of banks and other kinds of finance companies, because of concerns about rising mortgage defaults. Full Story

Middle market corporate lending giant CIT Group is facing a New York attorney general’s investigation and has placed executives on leave, amid scrutiny of the practices of its student lending division. Full Story

• Wachovia Objects to Le-Nature’s Liquidation Plan
• Churchill Affiliates Merge
• Hercules Wins Exemption from BDC Debt Limits
• BofA Financial Sponsors Head Reportedly Steps Down
• Lehman Financing Apollo’s Buyout of Hotelier
• Jefferies Borrowing $500M to Recapitalize Pipemaker
• Wireless Company Issues $475M in Notes to Pay for Special Dividend

Hospital Operator Seeks Covenant Relief on $326.2M

Oil and gas driller Venoco Inc. said it would syndicate a $500 million second lien term loan facility, in one of the largest recent debt transactions by a middle market company. In other debt financing deals, BioMarin Pharmaceutical sold $324.9 million in senior subordinated convertible notes to the public, and hospital operator Life Care Holdings said it would seek to amend covenants on its $326.2 million in senior secured credit facilities. Full Story