jackmaster20,
After reading your last couple of posts I concluded you put a lot of thought into your work and that is a good thing. But we have some differing opinions. For example, DS Waters is not on "non-accrual" status and the preferred stock position and its' PIK income (resulting from the re-structure), is not particularly troubling because the previous DSW notes were also PIK. So the current PIK income status of the DSW position has little to do with SLRC's ability to pay its' current $.60 dividend. It has always paid its' dividend from taxable income (no return of capital) and expects to continue to do so regardless of the old PIK income or the new PIK income from DSW. SLRC is not paying a "Phantom Dividend". Yes we would prefer NON-PIK to PIK income, but we have what we have. Current indications are that DSW is performing in line with current expectations and is increasing revenues. We may have to wait longer for payment of the PIK funds, but we could have even a bigger payday if SLRC monetizes that loan in the near future as they suggested they might do when conditions permit.
Also, and as you point out, Granite and Direct Buy are on non-accrual. But they both should be back to accrual status this quarter. But to assume these two will go on PIK status after the re-structure is tough to justify. Neither was on PIK to start with. SLRC has not suggested they are going on PIK and none of the analyst comments I've heard or seen have hinted at PIK status for these two investments. In fact, SLRC has said that Granite Global will pay interest in Q4 as it comes off of non-accrual which tells us it is not headed for PIK status.
In any event, thanks for your work. It has inspired additional activity on this board. I continue to have a very good feeling about SLRC and I will convey that sentiment by updating my October post.
Just one opinion.
Jan
