NEW YORK, May 4, 2017 /PRNewswire/ -- Alcentra Capital
Corporation (NASDAQ: ABDC) ("Alcentra" or the "Company"), a
provider of customized debt and equity financing solutions
primarily to lower middle-market companies based in the United States, today announced its
financial results for the first quarter March 31, 2017.
First Quarter 2017 Financial Highlights
- Total investment income of $9.2
million
- Net investment income of $4.6
million, or $0.34 per
share
- Invested $31.9 million in debt
and equity securities, including investments in 2 new portfolio
companies and five add-on investments
- Received proceeds from repayments of $22.2 million
- Paid regular quarterly dividend of $0.34 per share and special dividend of
$0.03 per share on April 6, 2017
- Net asset value (NAV) of $180.4
million, or $13.43 per share,
which is down from $13.72 in the
fourth quarter;
- Weighted Average Portfolio Leverage – 3.65x, which is down from
the prior quarter of 3.93x
- Weighted Average Portfolio Yield – 11.7%
Management Commentary
"As stated in our fourth quarter earnings announcement, we will
be deploying capital prudently over the first six months of the
2017 fiscal year, as a series of pre-payments in the fourth quarter
of 2016 left the portfolio at a lower level of AUM than planned.
Based on our pipeline, we are on target to achieve the targeted
level of AUM by the end of the second quarter of 2017; with steady
portfolio growth expected thereafter."
We achieved our earnings goals for the quarter – net investment
income - while maintaining portfolio yield and weighted average
leverage within the portfolio. The number of portfolio companies
written up during the quarter exceeded the number of portfolio
companies written down by two-fold, with 10 of our 31 portfolio
companies experiencing a write-up. Volatility was largely isolated
to one portfolio company, where there is a plan in place to manage
this issue. We are seeing strong performance in several of our
portfolio companies – in semiconductor services, environmental and
recycling services, and technology services - with the expectation
that this dynamic will continue for the rest of the year."
First Quarter 2017 Financial Results
For the three months ended March 31,
2017, total investment income was $9.2 million, a decrease of $0.7 million, or 7.5% over the $9.9 million of total investment income for the
three months ended March 31, 2016.
This decrease was primarily attributable to the shift in timing of
the closing of new deals relative to repayments. Interest and PIK
income comprised $7.3 million and
other income was $0.6 million.
For the three months ended March 31,
2017, total expenses were $4.6
million. Interest and financing expenses for the quarter was
$1.9 million and the base management
fee was $1.2 million. The income
based incentive fee for the three months ended March 31, 2017 was $0.6
million and there was no capital gains incentive fee
accrual. Professional fees and other general and administrative
expenses totaled $0.8 million for the
three months ended March 31,
2017.
Net investment income for the three months ended March 31, 2017 was $4.6
million ($0.34 per share).
During the three months ended March 31,
2017, we recorded a net realized loss on investments of
$1.0 million largely due to the
secondary sale of Wholesome Sweeteners. During the quarter,
we recorded a net change in unrealized depreciation from portfolio
investments of $1.8 million
attributable to net unrealized depreciation on debt
investments.
As a result of these events, our net increase in net assets
resulting from operations during the three months ended
March 31, 2017 was $1.0 million.
Per share results for the first quarter ended March 31, 2017 are based on average shares
outstanding of 13.44 million.
Portfolio and Investment Activities
As of March 31, 2017, the fair
value of our investment portfolio totaled $283.3 million and consisted of 31 portfolio
companies. The average portfolio investment on a cost basis was
$9.5 million and equity constituted
7.7% of the portfolio, down from 29% at the time of the IPO. During
the first quarter, we invested $31.9
million in debt and equity investments, including two new
portfolio companies and five add-on investments, and received
proceeds from repayments and amortizations on investments of
$22.2 million. As of March 31, 2017, the weighted average yield on
debt investments was 11.7%, which is the same as the weighted
average yield from the December 31,
2016 period.
First quarter 2017 investment activity included the following
new portfolio company investments:
- Pharmalogics Recruiting ("PLR") is a provider of recruiting
process outsourcing and staffing services for life science and
pharma companies. Alcentra invested $10.0
million in Senior Notes on January
31, 2017.
- Champion ONE ("C1") resells third party optical transceivers
and related fiber optic network components primarily to telephone
and CATV network operators in the U.S. Alcentra invested
$7.5 million in Senior Notes and
$1.125 million in equity on
March 17, 2017.
Add-on investments during the quarter included the
following:
- Superior Controls - $5.85 million
investment in 1st lien notes
- LRI - $2.27 million investment in
1st lien notes
- Pharmalogic - $2.12 million
investment in subordinated notes
- Black Diamond - $466k investment
in tranche C super senior notes
- My Alarm Center - $1.01 million
investment in subordinated notes
As of March 31, 2017, Alcentra has
one investment on non-accrual – an out of home media and
advertising company based in Las
Vegas – which has been on our Watch List intermittently and
represents less than 1.5% of our portfolio. We added My Alarm
Center to our Watch List during the first quarter.
Liquidity and Capital Resources
At March 31, 2017, Alcentra had
$4.7 million in cash and cash
equivalents. Alcentra had $46.9
million of borrowings outstanding on its $135 million senior secured revolving credit
facility and $55.0 million
outstanding of Alcentra Capital InterNotes.
Subsequent Events
- On April 6, 2017, Alcentra paid a
dividend to shareholders of record as of March 31, 2017 of $0.34 per share and a special dividend of
$0.03 per share.
- On April 12, 2017, Alcentra
funded an additional $0.144 million
in Black Diamond.
- On April 28, 2017, Alcentra
funded an additional $0.295 million
to My Alarm Center.
- On May 4, 2017, the Board of
Directors approved the 2017 second quarter dividend of $0.34 per share for shareholders of record date
June 30, 2017 and payable
July 6, 2017.
Second Quarter 2017 Regular Dividend of $0.34 Per Share Declared
On May 4, 2017, the Company's
Board of Directors declared a regular quarterly dividend of
$0.34 per share for the Second
Quarter of 2017 payable on July 6,
2017 to stockholders of record as of June 30, 2017.
Alcentra has adopted a dividend reinvestment plan ("DRIP") that
provides for reinvestment of dividends on behalf of its
stockholders, unless a stockholder elects to receive cash. As a
result, when the Company declares a cash dividend, stockholders who
have not "opted out" of the DRIP at least three days prior to the
dividend payment date will have their cash dividends automatically
reinvested in additional shares of the Company's common stock.
Those stockholders whose shares are held by a broker or other
financial intermediary may receive dividends in cash by notifying
their broker or other financial intermediary of their election.
First Quarter 2017 Financial Results Conference Call
Management will host a conference call to discuss the operating
and financial results at 10:30 am ET
on Friday, May 5, 2017. To
participate in the conference call, please dial (844) 832-0218
approximately 10 minutes prior to the call. International callers
should dial (484) 756-4314. Please reference conference ID
15961792#.
A live webcast of the conference call will be available at
http://investors.alcentracapital.com/events-presentations. Please
access the website 15 minutes prior to the start of the call to
download and install any necessary audio software.
An archived webcast replay will be available on the Company's
website until May 5, 2018.
ABOUT ALCENTRA CAPITAL CORPORATION
Alcentra Capital Corporation provides customized debt and equity
financing solutions to lower middle-market companies, which the
Company generally defines as U.S. based companies having revenues
between $10.0 million and $250.0
million. Alcentra' investment objective is to provide
attractive risk-adjusted returns by generating both current income
from our debt investments and capital appreciation from our equity
related investments. Alcentra seeks to partner with business
owners, management teams and financial sponsors by providing
customized financing for change of ownership transactions,
recapitalizations, strategic acquisitions, business expansion and
other growth initiatives.
Alcentra is an externally managed, closed-end, non-diversified
management investment company that has elected to be treated as a
business development company under the Investment Company Act of
1940, as amended. In addition, for tax purposes, Alcentra has
elected to be treated as a regulated investment company, or RIC,
under Subchapter M of the Internal Revenue Code of 1986, as
amended, or the Code.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking
statements. Any such statements, other than statements of
historical fact, are based on management's current expectations,
estimates, projections, beliefs and assumptions about the Company,
its current and prospective portfolio investments, and its
industry. These statements are not guarantees of future performance
and are subject to risks, uncertainties and other factors, some of
which are beyond the Company's control, difficult to predict and
could cause actual results to differ materially from those expected
or forecasted in such forward-looking statements. Actual
developments and results are likely to vary materially from these
estimates and projections as a result of a number of factors,
including those described from time to time in Alcentra' filings
with the Securities and Exchange Commission. Such statements speak
only as of the time when made, and Alcentra undertakes no
obligation to update any such forward-looking statements, whether
as a result of new information, future events, or otherwise, except
as required by law.
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
Consolidated
Statements of Assets and Liabilities
|
|
|
As of
March 31, 2017
(Unaudited)
|
|
As of
December 31,
2016
|
|
Assets
|
|
|
|
|
|
|
|
Portfolio
investments, at fair value
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments, at fair value (cost of $256,478,870
and
$248,479,039, respectively)
|
|
$
|
246,605,747
|
|
$
|
239,722,117
|
|
Non-controlled,
affiliated investments, at fair value (cost of $30,411,793 and
$29,734,859,
respectively)
|
|
|
21,952,856
|
|
|
22,094,203
|
|
Controlled, affiliated
investments, at fair value (cost $15,288,617 and $15,122,171,
respectively)
|
|
|
14,770,075
|
|
|
14,456,630
|
|
Total of portfolio
investments, at fair value (cost $302,179,280 and $293,336,069,
respectively)
|
|
|
283,328,678
|
|
|
276,272,950
|
|
Cash
|
|
|
4,719,733
|
|
|
3,891,606
|
|
Dividends and
interest receivable
|
|
|
1,765,812
|
|
|
3,240,640
|
|
Receivable for
investments sold
|
|
|
705,733
|
|
|
2,139,463
|
|
Deferred financing
costs
|
|
|
1,014,244
|
|
|
1,287,807
|
|
Deferred tax
asset
|
|
|
1,511,687
|
|
|
1,264,811
|
|
Income tax
liability
|
|
|
795,587
|
|
|
—
|
|
Prepaid expenses and
other assets
|
|
|
50,642
|
|
|
100,770
|
|
Total
Assets
|
|
$
|
293,892,116
|
|
$
|
288,198,047
|
|
|
|
Liabilities
|
|
|
Credit facility
payable
|
|
$
|
46,933,273
|
|
$
|
39,133,273
|
|
Notes payable (net of
deferred note offering costs of $1,399,009 and $1,495,062,
respectively)
|
|
|
53,600,991
|
|
|
53,504,938
|
|
Payable for
investments purchased
|
|
|
71,221
|
|
|
—
|
|
Other accrued
expenses and liabilities
|
|
|
322,664
|
|
|
282,165
|
|
Directors' fees
payable
|
|
|
81,000
|
|
|
95,000
|
|
Professional fees
payable
|
|
|
417,713
|
|
|
331,867
|
|
Interest and credit
facility expense payable
|
|
|
1,564,311
|
|
|
1,008,127
|
|
Management fee
payable
|
|
|
2,551,159
|
|
|
1,301,591
|
|
Income-based
incentive fees payable
|
|
|
1,849,135
|
|
|
2,071,661
|
|
Distributions
payable
|
|
|
4,971,712
|
|
|
4,586,816
|
|
Unearned structuring
fee revenue
|
|
|
1,110,494
|
|
|
1,175,319
|
|
Income tax
liability
|
|
|
—
|
|
|
182,699
|
|
Total
Liabilities
|
|
$
|
113,473,673
|
|
$
|
103,673,456
|
|
|
|
Commitments and
Contingencies (Note 12)
|
|
|
|
|
Net Assets
|
|
|
Common stock, par
value $0.001 per share (100,000,000 shares authorized, 13,437,059
and
13,451,633 shares issued and outstanding, respectively)
|
|
|
13,437
|
|
|
13,452
|
|
Additional paid-in
capital
|
|
|
196,124,849
|
|
|
196,290,348
|
|
Accumulated net
realized loss
|
|
|
(2,228,899)
|
|
|
(776,548)
|
|
Undistributed net
investment income
|
|
|
4,914,081
|
|
|
4,890,065
|
|
Net unrealized
appreciation (depreciation) on investments, net of
benefit/(provision) for taxes of
$445,577 and $1,170,393 as of March 31, 2017 and December 31, 2016,
respectively
|
|
|
(18,405,025)
|
|
|
(15,892,726)
|
|
Total Net
Assets
|
|
|
180,418,443
|
|
|
184,524,591
|
|
Total Liabilities
and Net Assets
|
|
$
|
293,892,116
|
|
$
|
288,198,047
|
|
|
|
Net Asset Value Per
Share
|
|
$
|
13.43
|
|
$
|
13.72
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
Consolidated
Statements of Operations
|
|
|
For the three
months
ended March 31, 2017
(Unaudited)
|
|
For the three
months
ended March 31, 2016
(Unaudited)
|
|
|
Investment
Income:
|
|
From non-controlled,
non-affiliated investments:
|
|
Interest income from
portfolio investments
|
|
$
|
7,004,677
|
|
$
|
5,267,543
|
|
|
Paid-in-kind interest
income from portfolio investments
|
|
|
348,192
|
|
|
1,351,088
|
|
|
Other income from
portfolio investments
|
|
|
609,965
|
|
|
918,664
|
|
|
Dividend income from
portfolio investments
|
|
|
27,520
|
|
|
—
|
|
|
From non-controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
|
251,778
|
|
|
910,323
|
|
|
Paid in-kind income
from portfolio investments
|
|
|
387,036
|
|
|
851,139
|
|
|
Other income from
portfolio investments
|
|
|
—
|
|
|
105,882
|
|
|
From controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
|
405,835
|
|
|
381,747
|
|
|
Paid in-kind income
from portfolio investments
|
|
|
166,445
|
|
|
160,005
|
|
|
Other income from
portfolio investments
|
|
|
—
|
|
|
—
|
|
|
Total investment
income
|
|
|
9,201,448
|
|
|
9,946,391
|
|
|
|
Expenses:
|
|
Management
fees
|
|
|
1,249,569
|
|
|
1,289,036
|
|
|
Income-based
incentive fees
|
|
|
653,911
|
|
|
790,727
|
|
|
Professional
fees
|
|
|
266,339
|
|
|
354,002
|
|
|
Valuation
services
|
|
|
101,396
|
|
|
70,986
|
|
|
Interest and credit
facility expense
|
|
|
1,526,907
|
|
|
1,308,944
|
|
|
Amortization of
deferred financing costs
|
|
|
285,563
|
|
|
264,630
|
|
|
Directors'
fees
|
|
|
68,136
|
|
|
64,923
|
|
|
Insurance
expense
|
|
|
64,481
|
|
|
66,610
|
|
|
Amortization of
deferred note offering costs
|
|
|
98,410
|
|
|
—
|
|
|
Other
expenses
|
|
|
294,120
|
|
|
131,641
|
|
|
Total
expenses
|
|
|
4,608,832
|
|
|
4,341,499
|
|
|
Waiver of capital
gains incentive fees
|
|
|
—
|
|
|
—
|
|
|
Net
expenses
|
|
|
4,608,832
|
|
|
4,341,499
|
|
|
Net investment
income
|
|
$
|
4,592,616
|
|
$
|
5,604,892
|
|
|
|
Realized Gain
(Loss) and Net Change in Unrealized Appreciation (Depreciation)
From Portfolio Investments
|
|
Net realized gain
(loss) on:
|
|
Non-controlled,
non-affiliated investments
|
|
|
(1,049,239)
|
|
|
1,876,638
|
|
|
Non-controlled,
affiliated investments
|
|
|
—
|
|
|
394,733
|
|
|
Controlled, affiliated
investments
|
|
|
—
|
|
|
(11,154,495)
|
|
|
Net realized gain
(loss) from portfolio investments
|
|
|
(1,049,239)
|
|
|
(8,883,124)
|
|
|
Net change in
unrealized appreciation (depreciation) on:
|
|
Non-controlled,
non-affiliated investments
|
|
|
(1,116,201)
|
|
|
(5,985,001)
|
|
|
Non-controlled,
affiliated investments
|
|
|
(818,281)
|
|
|
2,579,941
|
|
|
Controlled, affiliated
investments
|
|
|
146,999
|
|
|
11,206,914
|
|
|
Net change in
unrealized appreciation (depreciation) from portfolio
investments
|
|
|
(1,787,483)
|
|
|
7,801,854
|
|
|
Benefit/(Provision)
for taxes on unrealized gain (loss) on investments
|
|
|
(724,816)
|
|
|
(209,864)
|
|
|
Net realized gain
(loss) and net change in unrealized appreciation (depreciation)
from portfolio investments
|
|
|
(3,561,538)
|
|
|
(1,291,134)
|
|
|
Net Increase
(Decrease) in Net Assets Resulting from Operations
|
|
$
|
1,031,078
|
|
$
|
4,313,758
|
|
|
|
Basic and
diluted:
|
|
Net investment income
per share
|
|
$
|
0.34
|
|
$
|
0.41
|
|
|
Earnings per
share
|
|
$
|
0.08
|
|
$
|
0.32
|
|
|
Weighted Average
Shares of Common Stock Outstanding
|
|
|
13,438,800
|
|
|
13,515,498
|
|
|
Dividends declared
per common share
|
|
$
|
0.370
|
|
$
|
0.340
|
|
To view the original version on PR Newswire,
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SOURCE Alcentra Capital Corporation