Horizon Technology Finance Investment Portfolio Positioned to Generate Additional Net Investment Income from Increase in Inte...
December 19 2016 - 4:15PM
Horizon Technology Finance Corporation (NASDAQ:HRZN) (“Horizon”), a
leading specialty finance company that provides capital in the form
of secured loans to venture capital backed companies in the
technology, life science, healthcare information and services, and
cleantech industries, announced today the potential positive impact
to its investment portfolio of a rising interest rate environment
following the Federal Open Market Committee’s (“FOMC”) increase in
the federal funds rate target range by 25 basis points. Horizon
expects each 25 basis points increase in the LIBOR rate will
contribute approximately $264,000, or $0.02 per share, of net
investment income (“NII”) annually to its operating results,
calculated on the basic weighted shares outstanding as of September
30, 2016.
“For some time, Horizon has been shifting its
focus to floating rate loans in anticipation of higher interest
rates,” said Robert D. Pomeroy, Jr., Chairman and Chief Executive
Officer of Horizon. “As of September 30, 2016, 97% of the
outstanding principal amount of our debt investments bore interest
at floating rates with coupons that are structured to increase when
interest rates rise. As a result, we believe Horizon is well
positioned to experience both increasing income and expanding net
interest margin in a rising interest rate environment, which the
FOMC has signaled to in its comments.”
Based on Horizon’s September 30, 2016
consolidated statement of assets and liabilities (without
adjustment for potential changes in the credit market, credit
quality, size and composition of assets on the consolidated
statement of assets and liabilities or other business developments
that could affect net income), the following table shows the annual
impact on the change in NII resulting from changes in interest
rates, which assumes no changes in the Company’s investments and
borrowings:
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Interest Income |
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|
Interest Expense |
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|
Change in Net Investment
Income(1) |
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|
EPS(2) |
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Change in basis points |
|
(In thousands, except per share
data) |
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|
25 basis points |
|
$ |
277 |
|
|
$ |
13 |
|
|
$ |
264 |
|
|
$ |
0.02 |
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|
50 basis points |
|
$ |
735 |
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|
$ |
172 |
|
|
$ |
563 |
|
|
$ |
0.05 |
|
|
75 basis points |
|
$ |
1,199 |
|
|
$ |
332 |
|
|
$ |
867 |
|
|
$ |
0.08 |
|
|
100 basis points |
|
$ |
1,637 |
|
|
$ |
492 |
|
|
$ |
1,145 |
|
|
$ |
0.10 |
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|
200 basis points |
|
$ |
3,217 |
|
|
$ |
1,131 |
|
|
$ |
2,086 |
|
|
$ |
0.18 |
|
|
300 basis points |
|
$ |
4,532 |
|
|
$ |
1,769 |
|
|
$ |
2,763 |
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$ |
0.24 |
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(1) Excludes the impact of incentive fees based on
pre-incentive fee net investment income. |
(2) EPS calculated on basic weighted shares outstanding of
11,549,508 as of September 30, 2016. |
The potential higher net interest income resulting from any
increase in the LIBOR rate would materialize throughout the
Company’s 2017 operating period.
For information on certain countervailing risks
associated with rising interest rates to Horizon’s business,
financial condition and results of operations, please see “Risk
Factors” in Horizon’s annual report on Form 10-K, which may be
accessed at www.horizontechfinance.com.
About Horizon Technology FinanceHorizon
Technology Finance Corporation is a leading specialty finance
company that provides capital in the form of secured loans to
venture capital backed companies in the technology, life science,
healthcare information and services, and cleantech industries. The
investment objective of Horizon is to maximize its investment
portfolio’s return by generating current income from the debt
investments it makes and capital appreciation from the warrants it
receives when making such debt investments. Headquartered in
Farmington, Connecticut, Horizon has regional offices in Walnut
Creek, California and Reston, Virginia. Horizon's common stock
trades on the NASDAQ Global Select Market under the ticker symbol
"HRZN". To learn more, please visit www.horizontechfinance.com.
Forward-Looking
StatementsStatements included herein may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Statements other than
statements of historical facts included in this press release may
constitute forward-looking statements and are not guarantees of
future performance, condition or results and involve a number of
risks and uncertainties. Actual results may differ materially from
those in the forward-looking statements as a result of a number of
factors, including those described from time to time in our filings
with the Securities and Exchange Commission. Horizon undertakes no
duty to update any forward-looking statement made herein. All
forward-looking statements speak only as of the date of this press
release.
Contacts:
Horizon Technology Finance
Daniel R. Trolio
Vice President of Finance and
Interim Chief Financial Officer
(860) 674-9977
dtrolio@horizontechfinance.com
Investor Relations and Media Contacts:
The IGB Group
Scott Eckstein / Leon Berman
(212) 477-8261 / (212) 477-8438
seckstein@igbir.com / lberman@igbir.com
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