The team at Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or
the “Company”) is working collectively with our employees,
shareholders, stakeholders, bondholders, rating agencies, portfolio
companies, and our venture capital and private equity sponsors to
navigate the significant challenges created by the unprecedented
COVID-19 (Coronavirus) pandemic. We are vigilantly monitoring this
evolving situation and have implemented actions to keep our
employees safe while also managing the continuity of our business.
Our thoughts and prayers are with everyone who has been impacted by
these events.
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the full release here:
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Hercules Capital Debt Maturity Schedule
(as of March 2020) (Graphic: Business Wire)
Proactive Business Continuity
In an effort to keep our employees operating in a safe
environment and meet our obligations to our shareholders,
stakeholders and portfolio companies, effective March 12, 2020 we
transitioned our work force into a work-from-home setting. Prior to
that transition, the Company completed several tests of its
networks, infrastructure and our ability to maintain maximum
functionality, and as of today, we have not experienced any
material interruptions in our ability to continue full business
operations. We will continue to take all necessary steps to
maintain ongoing operations and do our best to ensure the safety
and well being of our employees.
Ample Liquidity and Capital
We ended 2019 with over $235.0 million of liquidity — which was
further strengthened by our $120.0 million private placement of
unsecured debt in early February, our 2020 quarter-to-date ATM
issuances of ~$35.0 million as well as our expanded and enhanced
credit facility of $400.0 million led by MUFG Union Bank that we
announced in late February. Our MUFG credit facility syndicate is
broad and deep with over 10 bank and institutional partners.
Based on our quarter-to-date investment activity as of March 20,
2020, including having received nearly $140.0 million of
prepayments, we anticipate ending Q1 2020 with more than $350.0
million of liquidity, subject to borrowing base, leverage and other
restrictions. In addition, pursuant to our February private
placement, we expect to receive an additional $70.0 million in June
pursuant to the agreement announced on February 6, 2020.
Currently, we believe we have ample liquidity to support our
near-term capital requirements. As the impact of the Coronavirus
continues, we will continue to evaluate our overall liquidity
position and take proactive steps to maintain the appropriate
liquidity position based upon the then current circumstances.
Strong Balance Sheet
Our diverse and well-structured balance sheet is designed to
provide a long-term focused and sustainable investment platform.
Our asset base is well diversified (see Portfolio Positioning
below) and we maintain funding from several different debt capital
sources, including our revolving credit facilities, our
relationship with the U.S. Small Business Administration through
our active Small Business Investment Company (SBIC) license, and
our existing long-term bonds and securitizations.
Debt Maturity Schedule (as of March 2020)
We have no near-term material maturities; as illustrated in the
chart accompanying this press release, with our nearest significant
maturity obligation in 2022.
Diversified Portfolio Positioning
Since inception and throughout the course of our 16-year
history, our belief has been that portfolio diversification and
risk management is essential to achieving long term, sustainable
success in the venture and growth-stage lending space.
We primarily focus on pre-IPO and M&A, innovative
high-growth venture capital-backed companies at their expansion
(venture growth) and established stages in a broadly diversified
variety of technology, life sciences and sustainable and renewable
technology industries. We are generally the only lender and 84.0%
of our debt investments are “true” first-lien senior secured. We do
not have any direct exposure to oil and gas, metals and mining,
CLOs, CMBS or RMBS. Substantially all of our debt investments have
short-term amortizing maturities of 36 to 48 months.
At the end of 2019, our debt investment portfolio was comprised
of $2.17 billion of investments, at cost, and was split nearly
evenly in exposure between technology and life sciences companies
across 16 different industry sectors. Our top 5 and top 10 debt
investments comprised 17 percent and 29 percent of our total debt
portfolio at cost.
As the current situation continues to evolve, we are maintaining
close communications with our portfolio companies to proactively
assess and manage potential risks across our debt investment
portfolio.
Our Future Action Plans
While we are all experiencing difficulties and challenges as we
deal with the impact of the Coronavirus, we will continue to focus
on the continuity of our operations, portfolio and business risk
management, and our responsibilities to our employees, their
families and our communities. We have redoubled our efforts in
credit monitoring and management to increase our flow of
information to gain insight into the economic impact this situation
will have on our entire ecosystem. Our success has always been
predicated on determined and consistent communications with each
and every one of our portfolio companies and helping them navigate
through both good and difficult times.
In the coming weeks and months, we will continue to focus on
what has made Hercules the largest and leading venture lending
platform in the industry while delivering strong, sustainable
long-term shareholder returns.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC) is the leading and largest
specialty finance company focused on providing senior secured
venture growth loans to high-growth, innovative venture
capital-backed companies in a broad variety of technology, life
sciences and sustainable and renewable technology industries. Since
inception (December 2003), Hercules has committed more than $10.0
billion to over 490 companies and is the lender of choice for
entrepreneurs and venture capital firms seeking growth capital
financing. Companies interested in learning more about financing
opportunities should contact info@htgc.com, or call (650)
289-3060.
Hercules’ common stock trades on the New York Stock Exchange
(NYSE) under ticker symbol HTGC. In addition, Hercules has two
retail bond issuances of 5.25% Notes due 2025 (NYSE: HCXZ) and
6.25% Notes due 2033 (NYSE: HCXY).
Forward-Looking Statements
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. You should understand that under Section 27A(b)(2)(B) of
the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act, the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995 do not apply to forward-looking
statements made in periodic reports we file under the Exchange
Act.
The information disclosed in this press release is made as of
the date hereof and reflects Hercules’ most current assessment of
its historical financial performance. Actual financial results
filed with the SEC may differ from those contained herein due to
timing delays between the date of this release and confirmation of
final audit results. These forward-looking statements are not
guarantees of future performance and are subject to uncertainties
and other factors that could cause actual results to differ
materially from those expressed in the forward-looking statements
including, without limitation, the risks, uncertainties, including
the uncertainties surrounding the current market volatility, and
other factors the Company identifies from time to time in its
filings with the SEC. Although Hercules believes that the
assumptions on which these forward-looking statements are based are
reasonable, any of those assumptions could prove to be inaccurate
and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. You should not place undue
reliance on these forward-looking statements. The forward-looking
statements contained in this release are made as of the date
hereof, and Hercules assumes no obligation to update the
forward-looking statements for subsequent events.
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version on businesswire.com: https://www.businesswire.com/news/home/20200323005118/en/
Michael Hara Investor Relations and Corporate Communications
Hercules Capital, Inc. (650) 433-5578 mhara@htgc.com
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