BBBB TL B5 1L USD 06/30/2024 & BBBB 10 ⅜ 11/15/24

Blackboard Inc

Credit, TMT


Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Blackboard Inc (public debt), Instructure Inc (INST)

Highlights

The presenter is long Blackboard Inc term loan (BBBB TL B5 1L USD) and second lien notes (BBBB 10 3/8 11/15/24), two short-dated securities that exhibit fairly significant upside convexity in his opinion. Blackboard is the largest education software company in the world. It was founded in 1997 with the launch of its flagship learning management system (LMS) and IPOed in 2004. Throughout the 2000s, Blackboard consolidated a fragmented education software space. However, the company began to experience significant headwinds, which materially shrunk the business. The presenter believes these issues are now stabilizing, which will allow Blackboard to return to growth in the coming years. As this recovery plays out, he expects the term loan, which trades at 95, to trade at par within 2 – 3 years and earn investors 9% – 10% IRR. The second lien notes currently trade at 97, but he expects a takeout within 2 – 3 years at par plus coupon step downs and for investors to earn 12% – 15% IRR.

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Idea Discussion

Commentor 1 - 2 weeks ago

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