NEW YORK, Nov. 5, 2018 /PRNewswire/ -- Alcentra Capital
Corporation (NASDAQ: ABDC) ("Alcentra" or the "Company"), a
provider of debt financing solutions to middle-market companies
based in the United States, today
announced its financial results for the third quarter of 2018.
Third Quarter 2018 Highlights
- Total investment income of $6.6
million
- Net investment income of $3.0
million, or $0.22 per
share
- Invested $6.1 million of capital
into one new portfolio company and one add on investment
- Received proceeds from repayments, loan dispositions, and
amortizations on investments of $4.6
million
- Paid regular quarterly dividend for the second quarter of 2018
of $0.18 per share on October 4, 2018
- The Company's Board of Directors declared a dividend of
$0.18 per share for the fourth
quarter of 2018, which is payable on January
3, 2019 to stockholders of record as of December 31, 2018
- On November 5, 2018, the
Company's Board of Directors approved a stock repurchase
program. Pursuant to the program, the Company is authorized
to repurchase up to $10 million in
the aggregate of its outstanding common stock in the open
market. The timing, manner, price and amount of any
share repurchases will be determined by the Company's management,
in its discretion, based upon the evaluation of economic and market
conditions, stock price, applicable legal and regulatory
requirements and other factors. The program will be in effect
until the approved dollar amount has been used to repurchase
shares. The program does not require the Company to repurchase any
specific number of shares and the Company cannot assure you that
any shares will be repurchased under the program. The program
may be suspended, extended, modified or discontinued at any
time.
- Net asset value of $149.8
million, or $11.08 per
share
- Weighted average debt portfolio yield – 10.9%
- The Board of Directors elected to increase the size of the
Board from three to five members by adding two independent
directors, William H. Wright II and
Frederick Van Zijl, effective
September 16, 2018
- Senior secured revolving credit facility amendments included
reduction in interest expense, increase in financial flexibility
and maturity extension, among other amendments
Vijay Rajguru, CEO of Alcentra,
commented on the quarter: "We have continued to execute on our plan
to shift our portfolio toward a more traditional private-equity
focused, middle market, senior secured strategy. Our goal
remains to establish and maintain a more stable asset base and NAV,
with appropriate risk/return characteristics that provide
attractive dividends and returns to our shareholders. Our NAV per
share has stabilized, increasing 0.6% since Q2 2018, and we expect
our strategy to yield further stability as we continue our rotation
into middle market senior secured loans. This rotation is
particularly important in market conditions which, while remaining
healthy, require caution this late in the economic cycle."
Third Quarter 2018 Financial Results
For the three months ended September 30,
2018, total investment income was $6.6 million, a decrease of $1.0 million over the $7.6
million of total investment income for the three months
ended September 30, 2017. This
decrease was due to the continued transition of the portfolio to
senior secured loans. For the three months ended September 30, 2018, interest and PIK income
comprised $6.5 million and other
non-recurring income was $0.1
million.
For the three months ended September 30,
2018, net expenses (total expenses less a management fee
waiver) were $3.6 million, an
increase of $0.8 million over the
$2.8 million of net expenses for the
three months ended September 30,
2017. While net expenses increased, total expenses decreased
by $0.2 million due to lower
management fees and the reversal of previously accrued incentive
fees, partially offset by an increase in interest and credit
facility expense.
Net investment income for the three months ended September 30, 2018 was $3.0 million or $0.22 per share as compared to $4.8 million or $0.34 per share for the three months ended
September 30, 2017.
For the three months ended September 30,
2018, we recorded a net realized loss from portfolio
investments of $0.04 million and a
net increase in unrealized appreciation from portfolio investments
of $0.1 million after the provision
for taxes as compared to a net realized loss from portfolio
investments of $10.4 million and a
net change in unrealized depreciation from portfolio investments of
$6.5 million after the provision for
taxes for the three months ended September
30, 2017. As a result, our net increase in net assets
resulting from operations was $3.1
million after the provision for taxes for the three months
ended September 30, 2018 as compared
to our net decrease in net assets resulting from operations of
$1.6 million after the benefit for
taxes for the three months ended September
30, 2017.
Portfolio and Investment Activities
As of September 30, 2018, the fair
value of our investment portfolio totaled $248.6 million and consisted of 34 investments in
28 companies, 5 broadly syndicated loans, and 1 rated debt security
in a CLO. The average portfolio investment size on a cost basis was
$6.9 million and equity investments
constituted 10.8% of the portfolio. We received proceeds from
repayments, loan dispositions, and amortizations on investments of
$4.6 million during the three months
ended September 30, 2018. This
included the sale of Blue Mountain CLO and OZLM Funding IV Ltd CLO
and various amortization payments from portfolio investments.
New and add-on investments totaling $6.1
million during the quarter ended September 30, 2018 included the following:
- Value-Based Care Solutions Group (since re-named Virence Health
Technologies) - $6.0 million in
L+8.125% 2nd lien secured debt
- Envocore - $0.06 million of
preferred equity
As of September 30, 2018, Alcentra
had four debt investments, Black Diamond Rentals, Show Media, Inc.,
Southern Technical Institute, Inc. and Xpress Global Systems, LLC
on non-accrual status.
A risk rating of the portfolio companies is available in our
website presentation
(https://investors.alcentracapital.com/events-presentations) and in
the MD&A section of the Form 10-Q for the quarter ended
September 30, 2018 filed with the
SEC.
Liquidity and Capital Resources
At September 30, 2018, Alcentra
had $7.8 million in cash and cash
equivalents, $54.5 million of
borrowings outstanding on its $115
million senior secured revolving credit facility and
$55.0 million outstanding of Alcentra
Capital InterNotes.
Subsequent Events
- On October 4, 2018, Alcentra paid
a dividend of $0.18 per share to
shareholders of record as of September 28,
2018.
- On October 15, 2018, Alcentra
sold Weight Watchers International for $1.9
million (Senior Secured L + 4.75%).
- On October 16, 2018, Alcentra
sold Lumileds and Asurion, LLC for $1.96
million and $3.1 million,
respectively. Lumileds and Asurion were both senior secured
loans at L + 5.00% and L +6.00%, respectively.
- On October 17, 2018, Alcentra
invested $12.9 million in Impact
Group (L + 6.25% 1st Lien).
- On October 19, 2018, Acuity
Technologies (fka QRC) repaid their debt (subordinated notes) in
full in the amount of $10.0
million.
- On October 22, 2018, Alcentra
sold West Corporation and Mayfield Agency ("Feeco") for
$1.76 million and $1.98 million, respectively. Both loans
were senior secured at L +3.50% and L + 8.50%, respectively.
- On November 2, 2018, Alcentra
invested $4.5 million in Sandvine
Corporation (2nd Lien at L + 8.00%).
- On November 2, 2018, Security
Alarm Financing Enterprises, L.P. ("SAFE") repaid their debt
(subordinated notes) for total proceeds of $10.4 million.
- On November 5, 2018, the
Company's Board of Directors declared a dividend of $0.18 per share for the third quarter of 2018,
which is payable on January 3,
2019.
Third Quarter 2018 Financial Results Conference Call
Management will host a conference call to discuss the operating
and financial results at 9:30 am ET
on November 6, 2018. 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 1168456.
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 6, 2019.
ABOUT ALCENTRA CAPITAL CORPORATION
Alcentra Capital Corporation provides customized debt and equity
financing solutions to middle-market companies, which the Company
generally defines as U.S. based companies having between
$15.0 million and $75.0 million of EBITDA. 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, 2018
(Unaudited)
|
|
As of
December 31, 2017
|
Assets
|
|
Portfolio
investments, at fair value
|
|
Non-controlled,
non-affiliated investments, at fair value (cost of $224,244,959 and
$265,675,598,
respectively)
|
|
$
|
217,130,492
|
|
$
|
252,325,403
|
Non-controlled,
affiliated investments, at fair value (cost of $40,659,071 and
$51,734,635, respectively)
|
|
|
16,499,213
|
|
|
19,972,905
|
Controlled, affiliated
investments, at fair value (cost $15,336,406 and $15,806,301,
respectively)
|
|
|
15,007,246
|
|
|
15,256,237
|
Cash
|
|
|
7,791,745
|
|
|
13,882,956
|
Dividends and
interest receivable
|
|
|
1,400,706
|
|
|
1,942,300
|
Receivable for
investments sold
|
|
|
644,733
|
|
|
669,733
|
Deferred financing
costs
|
|
|
1,521,603
|
|
|
514,241
|
Deferred tax
asset
|
|
|
5,365,469
|
|
|
4,934,962
|
Income tax
asset
|
|
|
614,781
|
|
|
748,408
|
Prepaid expenses and
other assets
|
|
|
143,986
|
|
|
79,005
|
Total
Assets
|
|
$
|
266,119,974
|
|
$
|
310,326,150
|
|
|
Liabilities
|
|
Credit facility
payable
|
|
$
|
54,457,145
|
|
$
|
89,703,273
|
Notes payable (net of
deferred note offering costs of $950,726 and $1,252,165,
respectively)
|
|
|
54,049,274
|
|
|
53,747,835
|
Other accrued
expenses and liabilities
|
|
|
371,444
|
|
|
447,589
|
Directors' fees
payable
|
|
|
78,500
|
|
|
68,917
|
Professional fees
payable
|
|
|
318,505
|
|
|
548,455
|
Interest and credit
facility expense payable
|
|
|
1,342,528
|
|
|
1,248,791
|
Management fee
payable
|
|
|
1,712,974
|
|
|
1,265,172
|
Income-based
incentive fees payable
|
|
|
1,251,180
|
|
|
1,294,985
|
Distributions
payable
|
|
|
2,449,591
|
|
|
3,561,305
|
Unearned structuring
fee revenue
|
|
|
275,020
|
|
|
725,653
|
Total
Liabilities
|
|
|
116,306,161
|
|
|
152,611,975
|
|
|
Commitments and
Contingencies (Note 12)
|
|
|
|
Net
Assets
|
|
Common stock, par
value $0.001 per share (100,000,000 shares authorized, 13,517,234
and 14,222,945 shares
issued and outstanding, respectively)
|
|
|
13,517
|
|
|
14,223
|
Additional paid-in
capital
|
|
|
201,748,407
|
|
|
206,570,701
|
Accumulated net
realized loss
|
|
|
(31,765,697)
|
|
|
(11,436,155)
|
Undistributed net
investment income
|
|
|
7,215,213
|
|
|
4,449,122
|
Net unrealized
appreciation (depreciation) on investments, net of
benefit/(provision) for taxes of $4,205,858 and
3,778,273 as of September 30, 2018 and December 31, 2017,
respectively
|
|
|
(27,397,627)
|
|
|
(41,883,716)
|
Total Net
Assets
|
|
|
149,813,813
|
|
|
157,714,175
|
Total Liabilities
and Net Assets
|
|
$
|
266,119,974
|
|
$
|
310,326,150
|
|
|
Net Asset Value Per
Share
|
|
$
|
11.08
|
|
$
|
11.09
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
For the three
months ended
September 30, 2018
(Unaudited)
|
|
For the three
months ended
September 30, 2017
(Unaudited)
|
|
For the nine
months ended
September 30, 2018
(Unaudited)
|
|
For the nine
months ended
September 30, 2017
(Unaudited)
|
Investment
Income:
|
|
From non-controlled,
non-affiliated investments:
|
|
Interest income from
portfolio investments
|
$
|
5,676,759
|
|
$
|
5,374,814
|
|
|
$
|
17,284,856
|
|
$
|
18,567,193
|
Paid-in-kind interest
income from portfolio investments
|
|
107,164
|
|
|
226,519
|
|
|
|
352,295
|
|
|
876,901
|
Other income from
portfolio investments
|
|
94,668
|
|
|
377,071
|
|
|
|
2,213,784
|
|
|
1,574,818
|
Dividend income from
portfolio investments
|
|
30,756
|
|
|
30,661
|
|
|
|
92,268
|
|
|
87,230
|
From non-controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
58,881
|
|
|
405,892
|
|
|
|
265,414
|
|
|
937,704
|
Paid in-kind income
from portfolio investments
|
|
96,816
|
|
|
609,854
|
|
|
|
309,946
|
|
|
1,375,173
|
Other income from
portfolio investments
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
From controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
488,036
|
|
|
411,262
|
|
|
|
1,470,032
|
|
|
1,219,767
|
Paid in-kind income
from portfolio investments
|
|
—
|
|
|
174,448
|
|
|
|
—
|
|
|
511,292
|
Other income from
portfolio investments
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
Total investment
income
|
|
6,553,080
|
|
|
7,610,521
|
|
|
|
21,988,595
|
|
|
25,150,078
|
|
|
Expenses:
|
|
Management
fees
|
|
943,360
|
|
|
1,230,961
|
|
|
|
3,214,345
|
|
|
3,710,178
|
Income-based
incentive fees
|
|
(43,805)
|
|
|
—
|
|
|
|
(43,805)
|
|
|
638,244
|
Professional
fees
|
|
362,625
|
|
|
368,909
|
|
|
|
1,095,777
|
|
|
862,097
|
Valuation
services
|
|
78,346
|
|
|
41,346
|
|
|
|
132,279
|
|
|
211,087
|
Interest and credit
facility expense
|
|
1,705,992
|
|
|
1,549,462
|
|
|
|
5,146,364
|
|
|
4,589,436
|
Amortization of
deferred financing costs
|
|
117,587
|
|
|
232,807
|
|
|
|
325,138
|
|
|
806,418
|
Directors'
fees
|
|
87,076
|
|
|
112,281
|
|
|
|
300,104
|
|
|
254,761
|
Insurance
expense
|
|
57,076
|
|
|
57,232
|
|
|
|
169,583
|
|
|
181,815
|
Amortization of
deferred note offering costs
|
|
97,478
|
|
|
111,726
|
|
|
|
343,439
|
|
|
315,554
|
Consulting
fees
|
|
54,152
|
|
|
—
|
|
|
|
535,892
|
|
|
—
|
Other
expenses
|
|
284,764
|
|
|
223,318
|
|
|
|
810,583
|
|
|
631,542
|
Total
expenses
|
|
3,744,651
|
|
|
3,928,042
|
|
|
|
12,029,699
|
|
|
12,201,132
|
Waiver of management
fees
|
|
(157,227)
|
|
|
(1,160,896)
|
|
|
|
(266,508)
|
|
|
(1,330,420)
|
Net
expenses
|
|
3,587,424
|
|
|
2,767,146
|
|
|
|
11,763,191
|
|
|
10,870,712
|
Net investment
income
|
|
2,965,656
|
|
|
4,843,375
|
|
|
|
10,225,404
|
|
|
14,279,366
|
|
|
Realized Gain
(Loss) and Net Change in Unrealized Appreciation (Depreciation)
From Portfolio Investments
|
|
Net realized gain
(loss) on:
|
|
Non-controlled,
non-affiliated investments
|
|
(38,921)
|
|
|
(10,477,819)
|
|
|
|
(10,162,013)
|
|
|
(11,497,056)
|
Non-controlled,
affiliated investments
|
|
(12)
|
|
|
72,164
|
|
|
|
(10,167,529)
|
|
|
72,164
|
Controlled, affiliated
investments
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
Net realized gain
(loss) from portfolio investments
|
|
(38,933)
|
|
|
(10,405,655)
|
|
|
|
(20,329,542)
|
|
|
(11,424,892)
|
Net change in
unrealized appreciation (depreciation) on:
|
|
Non-controlled,
non-affiliated investments
|
|
2,355,583
|
|
|
6,824,145
|
|
|
|
6,235,728
|
|
|
(2,376,265)
|
Non-controlled,
affiliated investments
|
|
(1,610,661)
|
|
|
(8,156,756)
|
|
|
|
7,601,872
|
|
|
(11,143,489)
|
Controlled, affiliated
investments
|
|
—
|
|
|
473
|
|
|
|
220,904
|
|
|
475,999
|
Net change in
unrealized appreciation (depreciation) from
portfolio investments
|
|
744,922
|
|
|
(1,332,138)
|
|
|
|
14,058,504
|
|
|
(13,043,755)
|
Benefit (Provision)
for income taxes on unrealized gain (loss) on
investments
|
|
(589,643)
|
|
|
5,282,934
|
|
|
|
427,585
|
|
|
4,455,809
|
Net realized gain
(loss) and net change in unrealized appreciation
(depreciation) from portfolio investments
|
|
116,346
|
|
|
(6,454,859)
|
|
|
|
(5,843,453)
|
|
|
(20,012,838)
|
Net Increase
(Decrease) in Net Assets Resulting from Operations
|
$
|
3,082,002
|
|
$
|
(1,611,484)
|
|
|
$
|
4,381,951
|
|
$
|
(5,733,472)
|
|
|
Basic and
diluted:
|
|
Net investment income
per share
|
$
|
0.22
|
|
$
|
0.34
|
|
|
$
|
0.74
|
|
$
|
1.03
|
Earnings (loss) per
share
|
$
|
0.23
|
|
$
|
(0.11)
|
|
|
$
|
0.32
|
|
$
|
(0.41)
|
Weighted Average
Shares of Common Stock Outstanding
|
|
13,530,129
|
|
|
14,245,220
|
|
|
|
13,815,619
|
|
|
13,825,432
|
Dividends declared
per common share
|
$
|
0.180
|
|
$
|
0.340
|
|
|
$
|
0.540
|
|
$
|
1.050
|
View original
content:http://www.prnewswire.com/news-releases/alcentra-capital-corporation-announces-third-quarter-2018-financial-results-300744280.html
SOURCE Alcentra Capital Corporation