NEW YORK, Nov. 6, 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 third quarter of 2017.
Third Quarter 2017 Financial Highlights
- Total investment income of $7.6
million
- Net investment income of $4.8
million, or $0.34 per share
based on weighted average shares of common stock outstanding, after
management fee waivers of $1.2
million
- Invested $28.1 million in debt
and equity securities, inclusive of three add-on investments
- Received proceeds from repayments of $3.9 million
- Paid regular quarterly dividend for the third quarter of 2017
of $0.34 per share on October 5, 2017
- The Company's Board of Directors declared a dividend of
$0.25 per share for the fourth
quarter of 2017, which is payable on January
4, 2018 to stockholders of record as of December 29, 2017
- The Company's Board of Directors approved a $2.5 million open market stock repurchase
program. The program is authorized through November 2, 2018
- Net asset value of $174.8
million, or $12.27 per share,
which is down from $12.73 in the
second quarter of 2017
- Weighted Average Portfolio Company Leverage – 3.59x
- Weighted Average Debt Portfolio Yield – 11.5%
Management Commentary "During the quarter we led an investment
in Carlton Group, a provider of turnkey solutions addressing
employee incentives/rewards program administration which was
acquired by HIG Growth Fund. Subsequent to September 30, 2017 we led an acquisition
financing for Cirrus, a specialized healthcare staffing company
that was acquired by Webster Capital."
On November 2, 2017, the Board of
Directors declared a dividend of $0.25 per share for the fourth fiscal quarter of
2017, which is payable on January 4,
2018. David Scopelliti, the
Company's CEO and CIO, stated, "The board's view on the dividend
policy is to make distributions to shareholders in line with the
earnings potential of the portfolio. The market environment has
changed since the initial dividend rate of $0.34 per share following our IPO in May 2014. While it is still possible to find high
yielding investments, we believe a single strategy of pursuing
higher-yielding junior unsecured debt comes with a greater risk of
principal loss or impairment in the current market
environment. While we will not abandon making junior capital
investments we will continue to expand the senior and unitranche
component of our portfolio in order to diversify and mitigate
portfolio risk." Ellida McMillan,
the Company's CFO and COO, commented that, "Although the earnings
capability of the portfolio has been reduced due to recent
performance of certain credits, the strategy going forward will
allow us to generate income without reducing the quality of our
portfolio or reaching for yield. Our adviser, Alcentra NY LLC, has
waived $1.3 million of its management
fees this fiscal year to-date to meet the $0.34/share dividend to our shareholders for the
past two quarters." Mr. Scopelliti further stated, "The board and
executive management team are committed to creating long-term
shareholder value and believe that aligning the distribution with
earnings power of the portfolio will provide our shareholders with
more stable and consistent returns over the long-term."
Third Quarter 2017 Financial Results
For the three months ended September 30,
2017, total investment income was $7.6 million, a decrease of $1.5 million over the $9.1
million of total investment income for the three months
ended September 30, 2016. This
decrease was primarily attributable to the conversion of My Alarm
Center, LLC to equity and the addition of GST AutoLeather Inc. and
Media Storm, LLC to non-accrual status, along with a shift in
timing of the closing of new deals. Interest and PIK income
comprised $7.2 million and other
income was $0.4 million. Net
investment income for the three months ended September 30, 2017 was $4.8 million ($0.34
per share which is based on average shares outstanding of 14.2
million) and after a management fee waiver of $1.2 million.
For the three months ended September 30,
2017, net expenses were $2.8
million. Interest and financing expenses for the quarter was
$1.8 million and the base management
fee (net of a $1.2 million waiver)
was $0.07 million. There were no
incentive fees earned for the three months ended September 30, 2017. Professional fees and other
general and administrative expenses totaled $0.8 million for the three months ended
September 30, 2017.
During the three months ended September
30, 2017, we recorded a net realized loss on investments of
$10.4 million due to My Alarm Center,
LLC. During the quarter, we also recorded a net change in
unrealized depreciation from portfolio investments of $1.3 million attributable to unrealized
depreciation of our debt investments in GST AutoLeather Inc. and
Southern Technical Institute, Inc offset by the reversal of the
unrealized on My Alarm Center, LLC. The net decrease in
net assets resulting from operations post benefit for taxes during
the three months ended September 30,
2017 was $1.6 million.
Portfolio and Investment Activities
As of September 30, 2017, the fair
value of our investment portfolio totaled $282.3 million and consisted of 30 portfolio
companies. The average portfolio investment on a cost basis was
$10.4 million and equity constituted
9.0% of the portfolio. During the third quarter, we invested
$28.1 million in debt and equity
investments, including three add-on investments and received
proceeds from repayments and amortizations on investments of
$3.9 million. As of September 30, 2017, the weighted average yield on
debt investments was 11.5%.
New and add-on investments during the quarter included the
following:
- Carlton Group- $9.8 million in
8.0% 1st lien – tranche A notes and $13.4 million in 12.5% 1st lien –
tranche B notes
- Lugano - $2.0 million additional
investment in 1st lien notes
- Black Diamond Rentals - $1.0
million additional investment in tranche C super senior
notes
- My Alarm Center, LLC - $1.9
million additional investment in preferred equity
As of September 30, 2017, Alcentra
had three debt investments, Show Media, Inc., GST AutoLeather Inc.
and Media Storm, LLC on non-accrual status.
During the quarter the investment team instituted a new Risk
Rating system that will be disclosed quarterly to investors in an
effort to provide more transparency into the overall state of the
portfolio. Details of this rating system may be found in our
website presentation
(https://investors.alcentracapital.com/events-presentations) and in
the MD&A section of the 10Q.
Liquidity and Capital Resources
At September 30, 2017, Alcentra
had $4.9 million in cash and cash
equivalents, $59.7 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 October 5, 2017, Alcentra paid
a dividend to shareholders of record as of September 30, 2017 of $0.34 per share
- On October 19, 2017, Alcentra
invested $19.3 million in Cirrus
Medical Staffing, Inc. (L + 8.25% First Lien debt)
- On November 3, 2017, Nation Safe
Drivers repaid their investment in the amount of $11.7 million
Fourth Quarter 2017 Dividend
On November 2, 2017, the Company's
Board of Directors declared a regular quarterly dividend of
$0.25 per share for the fourth
quarter of 2017, which is payable on January
4, 2018 to stockholders of record as of December 29, 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.
Third Quarter 2017 Financial Results Conference Call
Management will host a conference call to discuss the operating
and financial results at 9:00 am ET
on November 7, 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 7779105#.
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 November 7, 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's 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. In addition, for tax purposes, Alcentra has elected to be
treated as a regulated investment company, under Subchapter M of
the Internal Revenue Code of 1986.
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's 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
September 30,
2017
(Unaudited)
|
|
As of
December 31,
2016
|
Assets
|
Portfolio
investments, at fair value
|
Non-controlled,
non-affiliated investments, at fair value (cost of $257,885,158
and
$248,479,039, respectively)
|
|
$
|
246,751,971
|
|
$
|
239,722,117
|
Non-controlled,
affiliated investments, at fair value (cost of $38,927,216 and
$29,734,859, respectively)
|
|
|
20,143,071
|
|
|
22,094,203
|
Controlled, affiliated
investments, at fair value (cost $15,633,464 and $15,122,171,
respectively)
|
|
|
15,443,922
|
|
|
14,456,630
|
Cash
|
|
|
4,925,485
|
|
|
3,891,606
|
Dividends and
interest receivable
|
|
|
2,783,875
|
|
|
3,240,640
|
Receivable for
investments sold
|
|
|
720,983
|
|
|
2,139,463
|
Deferred financing
costs
|
|
|
620,533
|
|
|
1,287,807
|
Deferred tax
asset
|
|
|
6,782,823
|
|
|
1,264,811
|
Income tax
asset
|
|
|
796,241
|
|
|
—
|
Prepaid expenses and
other assets
|
|
|
143,993
|
|
|
100,770
|
Total
Assets
|
|
$
|
299,112,897
|
|
$
|
288,198,047
|
|
Liabilities
|
Credit facility
payable
|
|
$
|
59,783,273
|
|
$
|
39,133,273
|
Notes payable (net of
deferred note offering costs of $1,332,553 and $1,495,062,
respectively)
|
|
|
53,667,447
|
|
|
53,504,938
|
Other accrued
expenses and liabilities
|
|
|
477,496
|
|
|
282,165
|
Directors' fees
payable
|
|
|
85,417
|
|
|
95,000
|
Professional fees
payable
|
|
|
389,280
|
|
|
331,867
|
Interest and credit
facility expense payable
|
|
|
1,620,034
|
|
|
1,008,127
|
Management fee
payable
|
|
|
1,130,191
|
|
|
1,301,591
|
Income-based
incentive fees payable
|
|
|
1,294,985
|
|
|
2,071,661
|
Distributions
payable
|
|
|
4,843,375
|
|
|
4,586,816
|
Unearned structuring
fee revenue
|
|
|
1,000,653
|
|
|
1,175,319
|
Income tax
liability
|
|
|
—
|
|
|
182,699
|
Total
Liabilities
|
|
$
|
124,292,151
|
|
$
|
103,673,456
|
|
Commitments and
Contingencies (Note 12)
|
|
Net Assets
|
Common stock, par
value $0.001 per share (100,000,000 shares authorized,
14,245,220
and 13,451,633 shares issued and outstanding,
respectively)
|
|
|
14,245
|
|
|
13,452
|
Additional paid-in
capital
|
|
|
206,977,643
|
|
|
196,290,348
|
Accumulated net
realized loss
|
|
|
(12,604,552)
|
|
|
(776,548)
|
Undistributed net
investment income
|
|
|
4,914,082
|
|
|
4,890,065
|
Net unrealized
appreciation (depreciation) on investments, net of
benefit/(provision) for
taxes of $5,626,202 and $1,170,393 as of September 30, 2017 and
December 31, 2016,
respectively
|
|
|
(24,480,672)
|
|
|
(15,892,726)
|
Total Net
Assets
|
|
|
174,820,746
|
|
|
184,524,591
|
Total Liabilities
and Net Assets
|
|
$
|
299,112,897
|
|
$
|
288,198,047
|
|
Net Asset Value Per
Share
|
|
$
|
12.27
|
|
$
|
13.72
|
|
|
|
|
|
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
For the three
months ended
September 30, 2017
(Unaudited)
|
|
For the three
months ended
September 30, 2016
(Unaudited)
|
|
For the nine
months ended
September 30, 2017
(Unaudited)
|
|
For the nine
months ended
September 30, 2016
(Unaudited)
|
|
Investment
Income:
|
|
From non-controlled,
non-affiliated investments:
|
|
Interest income from
portfolio investments
|
$
|
5,374,814
|
|
$
|
6,306,358
|
|
|
$
|
18,567,193
|
|
$
|
16,743,520
|
|
Paid-in-kind interest
income from portfolio investments
|
|
226,519
|
|
|
409,638
|
|
|
|
876,901
|
|
|
2,769,251
|
|
Other income from
portfolio investments
|
|
377,071
|
|
|
158,048
|
|
|
|
1,574,818
|
|
|
1,729,498
|
|
Dividend income from
portfolio investments
|
|
30,661
|
|
|
52,021
|
|
|
|
87,230
|
|
|
52,021
|
|
From non-controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
405,892
|
|
|
827,500
|
|
|
|
937,704
|
|
|
2,522,867
|
|
Paid in-kind income
from portfolio investments
|
|
609,854
|
|
|
462,161
|
|
|
|
1,375,173
|
|
|
1,947,325
|
|
Other income from
portfolio investments
|
|
—
|
|
|
336,679
|
|
|
|
—
|
|
|
2,287,616
|
|
From controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
411,262
|
|
|
398,185
|
|
|
|
1,219,767
|
|
|
1,162,820
|
|
Paid in-kind income
from portfolio investments
|
|
174,448
|
|
|
165,878
|
|
|
|
511,292
|
|
|
487,910
|
|
Other income from
portfolio investments
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Total investment
income
|
|
7,610,521
|
|
|
9,116,468
|
|
|
|
25,150,078
|
|
|
29,702,828
|
|
|
|
Expenses:
|
|
Management
fees
|
|
1,230,961
|
|
|
1,335,294
|
|
|
|
3,710,178
|
|
|
3,908,093
|
|
Income-based
incentive fees
|
|
—
|
|
|
607,739
|
|
|
|
638,244
|
|
|
2,324,624
|
|
Professional
fees
|
|
368,909
|
|
|
273,965
|
|
|
|
862,097
|
|
|
1,000,502
|
|
Valuation
services
|
|
41,346
|
|
|
57,722
|
|
|
|
211,087
|
|
|
199,769
|
|
Interest and credit
facility expense
|
|
1,549,462
|
|
|
1,476,911
|
|
|
|
4,589,436
|
|
|
4,120,365
|
|
Amortization of
deferred financing costs
|
|
232,807
|
|
|
299,932
|
|
|
|
806,418
|
|
|
848,367
|
|
Directors'
fees
|
|
112,281
|
|
|
83,313
|
|
|
|
254,761
|
|
|
232,608
|
|
Insurance
expense
|
|
57,232
|
|
|
65,915
|
|
|
|
181,815
|
|
|
198,296
|
|
Amortization of
deferred note offering costs
|
|
111,726
|
|
|
91,852
|
|
|
|
315,554
|
|
|
91,852
|
|
Other
expenses
|
|
223,318
|
|
|
37,032
|
|
|
|
631,542
|
|
|
488,321
|
|
Total
expenses
|
|
3,928,042
|
|
|
4,329,675
|
|
|
|
12,201,132
|
|
|
13,412,797
|
|
Waiver of management
fees
|
|
(1,160,896)
|
|
|
—
|
|
|
|
(1,330,420)
|
|
|
—
|
|
Net
expenses
|
|
2,767,146
|
|
|
4,329,675
|
|
|
|
10,870,712
|
|
|
13,412,797
|
|
Net investment
income
|
|
4,843,375
|
|
|
4,786,793
|
|
|
|
14,279,366
|
|
|
16,290,031
|
|
|
|
Realized Gain
(Loss) and Net Change in Unrealized Appreciation (Depreciation)
From Portfolio Investments
|
|
Net realized gain
(loss) on:
|
|
Non-controlled,
non-affiliated investments
|
|
(10,477,819)
|
|
|
(361,060)
|
|
|
|
(11,497,056)
|
|
|
1,539,380
|
|
Non-controlled,
affiliated investments
|
|
72,164
|
|
|
9,334,765
|
|
|
|
72,164
|
|
|
11,356,462
|
|
Controlled, affiliated
investments
|
|
—
|
|
|
(109,512)
|
|
|
|
—
|
|
|
(11,264,007)
|
|
Net realized gain
(loss) from portfolio investments
|
|
(10,405,655)
|
|
|
8,864,193
|
|
|
|
(11,424,892)
|
|
|
1,631,835
|
|
Net change in
unrealized appreciation (depreciation) on:
|
|
Non-controlled,
non-affiliated investments
|
|
6,824,145
|
|
|
(8,615,042)
|
|
|
|
(2,376,265)
|
|
|
(18,175,468)
|
|
Non-controlled,
affiliated investments
|
|
(8,156,756)
|
|
|
(9,685,943)
|
|
|
|
(11,143,489)
|
|
|
(9,334,354)
|
|
Controlled, affiliated
investments
|
|
473
|
|
|
(742,006)
|
|
|
|
475,999
|
|
|
10,401,909
|
|
Net change in
unrealized appreciation
(depreciation) from portfolio investments
|
|
(1,332,138)
|
|
|
(19,042,991)
|
|
|
|
(13,043,755)
|
|
|
(17,107,913)
|
|
Benefit/(Provision)
for taxes on unrealized gain
(loss) on investments
|
|
5,282,934
|
|
|
3,549,478
|
|
|
|
4,455,809
|
|
|
3,052,447
|
|
Net realized gain
(loss) and net change in unrealized
appreciation (depreciation) from portfolio
investments
|
|
(6,454,859)
|
|
|
(6,629,320)
|
|
|
|
(20,012,838)
|
|
|
(12,423,631)
|
|
Net Increase
(Decrease) in Net Assets Resulting from
Operations
|
$
|
(1,611,484)
|
|
$
|
(1,842,527)
|
|
|
$
|
(5,733,472)
|
|
$
|
3,866,400
|
|
|
|
Basic and
diluted:
|
|
Net investment income
per share
|
$
|
0.34
|
|
$
|
0.35
|
|
|
$
|
1.03
|
|
$
|
1.21
|
|
Earnings per
share
|
$
|
(0.11)
|
|
$
|
(0.14)
|
|
|
$
|
(0.41)
|
|
$
|
0.29
|
|
Weighted Average
Shares of Common Stock Outstanding
|
|
14,245,220
|
|
|
13,490,636
|
|
|
|
13,825,432
|
|
|
13,502,152
|
|
Dividends declared
per common share
|
$
|
0.340
|
|
$
|
0.340
|
|
|
$
|
1.050
|
|
$
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1.020
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content:http://www.prnewswire.com/news-releases/alcentra-capital-corporation-announces-third-quarter-2017-financial-results-dividend-policy-and-share-repurchase-plan-300550524.html
SOURCE Alcentra Capital Corporation