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Downgrading toSector Performfrom Outperform.Improving portfolio company performance, strong capital deployment levels, an increased dividend and valuation re-rate potential drove our previously positive bias. However, we believe downside risks have increased recently primarily due to weakening portfolio company performance (e.g., Kimco distribution suspension reported in Q3-18, deteriorating performance at BCC, DNT, and ccComm reported in Q4-18, and Providence Industries – see below). As a result, we believe this increased risk (perceived or otherwise) will send AD back to the penalty box, where the stock spent most of 2016-2018 following significant impairment losses. Therefore, we lowered the target multiple to ~9x (was ~10x) EV/EBITDA to arrive at our $18 PT, reflecting increased portfolio company risk. Currently trading at ~9.1x EV/EBITDA consensus NTM we believe the market shares our views. Given a total return to target of -3%, we now rate the shares Sector Perform. We forecast diluted EPS of $1.56 in 2019 (was $1.65) and $1.69 (was $1.82) in 2020, removing Providence distribution income from our forecasts. nProvidence Industriesdistributions blocked, impairment probable.In April 2016, AD contributed US$30 million to Providence, aCalifornia-based supplier of clothing to international apparel companies and retailers, for US$4.5 million of distributions (a 15% yield). As at Q4-2018, Providence represents ~5% of the carrying value of total investments and ~5% of total run-rate revenues. In Q4 2018, Alaris reported that Providence delivered a maximum distribution decrease (-5%) due to “the decline of their largest customer” and Providence “is no longer providing services to that customer”. We’ve since learned from AD’s Annual Information Form (Footnote 25, page 23), that distributions from Providence will be blocked from future payments by the senior lender. In addition, we’ve learned that Providence’s large customer is LuLaRoe, a California-based multi-level marketing company facing pyramid scheme allegations from the Washington State Attorney General in a lawsuit filed in January 2019. Moreover, Providence is also suing LuLaRoe for US$49 million in receivables claiming LuLaRoe hasn’t paid bills for seven months. Given the size of the receivables owing, we believe LuLaRoe represents a significant portion of Providence’s revenue/earnings and therefore, an impairment of AD’s US$30 million investment in the near term is possible, if not probable. This will constrain AD’s near-term share price performance, in our view.