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Saratoga Investment Corp. Announces Fiscal First Quarter 2014 Financial Results

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NEW YORK, July 15, 2013 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR) ("Saratoga Investment" or "the Company"), a business development company, today announced financial results for its 2014 fiscal first quarter.

Operating Results

For the fiscal quarter ended May 31, 2013, Saratoga Investment reported net investment income of $2.5 million or $0.52 on a weighted average per share basis, and net gain on investments of $1.3 million, or $0.28 on a weighted average per share basis, resulting in an increase in net assets from operations of $3.8 million, or $0.80 on a weighted average per share basis.  The $1.3 million net gain on investments was comprised of $0.8 million in net unrealized appreciation on investments and $0.5 million in net realized gains from investments.

Net asset value ("NAV") was $112.5 million as of May 31, 2013, compared to $108.7 million as of February 28, 2013.  NAV per share was $23.78 as of May 31, 2013 compared to $22.98 as of February 28, 2013. 

Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment, said, "Our robust pipeline, balance sheet strength and management team enabled us to make $32.9 million of investments in new and existing portfolio companies during the first quarter. We continue to see attractive opportunities and the number and quality of our portfolio investments have increased as a result."

Portfolio and Investment Activity

As of May 31, 2013, the fair value of the Company's investment portfolio was $164.8 million, principally invested in 28 portfolio companies and one collateralized loan obligation fund (the "CLO"). The overall portfolio composition consisted of 58.0% of first lien term loans, 4.1% of second lien term loans, 15.0% of senior secured notes, 3.0% of unsecured notes, 14.3% of subordinated notes of the CLO and 5.6% of common equity.  

During the 2014 fiscal first quarter, the Company invested $32.9 million in new or existing portfolio companies and had $24.9 million in aggregate amount of exits and repayments on its investments, resulting in net investments of $8.0 million for the period. 

As of May 31, 2013, the weighted average current yields on Saratoga Investment's first lien term loans, second lien term loans, senior secured notes, unsecured notes and the Saratoga CLO subordinated notes were 10.6%, 11.1%, 14.7%, 16.2%, and 29.3%, respectively, which resulted in an aggregate weighted average current yield of 14.3%. 

Liquidity and Capital Resources

As of May 31, 2013, Saratoga Investment had no borrowings outstanding under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC.  In addition, Saratoga Investment had an aggregate of $31.6 million in cash and cash equivalents and $4.8 million in cash and cash equivalents, reserve accounts at May 31, 2013. The Company is required to use the amounts held in cash and cash equivalents, reserve accounts to pay interest expense, reduce borrowings or pay other amounts in accordance with the terms of its senior secured revolving credit facility. As of May 31, 2013, the Company's Small Business Investment Company subsidiary had $25 million in regulatory capital and $40.0 million of Small Business Administration debentures.

In the first quarter, Saratoga Investment closed an underwritten public offering of $48.3 million in aggregate principal amount of 7.50% fixed-rate notes due 2020. The proceeds of the offering were used to pay down the revolving credit facility and to fund new investment opportunities.

With the $45 million credit facility and the up to $150 million borrowing capacity at the SBIC subsidiary, Saratoga Investment has a total of $195 million of borrowing capacity in addition to the Notes.

2014 Fiscal First Quarter Conference Call/Webcast Information

When:  July 16, 2013 at 10:00 a.m. Eastern Time (ET)

Call:  Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada).

A replay of the call will be available from 1:00 p.m. ET on July 16, 2013 through 11:59 p.m. ET on July 22, 2013 by dialing (800) 585-8367 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada). Passcode for both replay numbers is 18211344.

Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.saratogainvestmentcorp.com/events.cfm.

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses.  The Company invests primarily in mezzanine debt, leveraged loans and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors.  Saratoga Investment Corp.'s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.  Saratoga Investment Corp. has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies.  Within the BDC, Saratoga Investment manages both an SBIC-licensed subsidiary and a $400 million Collateralized Loan Obligation (CLO) fund.  These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment to offer a broad range of financing solutions.

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment Corp. makes with the SEC.  Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Financial Statements

 

Saratoga Investment Corp.







Consolidated Statements of Assets and Liabilities










 As of  




May 31, 2013


February 28, 2013




 (unaudited) 



ASSETS











Investments at fair value






Non-control/non-affiliate investments (amortized cost of $140,710,469 and $130,465,086, respectively)


$          141,254,519


$        129,563,428


Control investments (cost of $17,657,435 and $18,944,966 respectively)


23,584,582


25,516,959


Total investments at fair value (amortized cost of $158,367,904 and $149,410,052 respectively)


164,839,101


155,080,387

Cash and cash equivalents


31,555,038


149,025

Cash and cash equivalents, reserve accounts


4,812,160


12,086,142

Interest receivable, (net of reserve of $114,742 and $53,543, respectively)


2,152,892


2,889,358

Due from manager


4,929


-

Deferred debt financing costs, net


4,494,124


2,090,184

Management fee receivable


215,821


215,853

Other assets


147,763


83,407

Receivable from unsettled trades


8,064


1,817,074


Total assets


$          208,229,892


$        174,411,430







LIABILITIES





Revolving credit facility


$                             -


$          24,300,000

SBA debentures payable


40,000,000


36,000,000

Notes payable


48,300,000


-

Management and incentive fees payable


6,067,160


4,509,322

Accounts payable and accrued expenses


673,106


435,038

Interest and debt fees payable


484,287


257,796

Due to manager


218,727


222,513


Total liabilities


$            95,743,280


$          65,724,669







NET ASSETS





Common stock, par value $.001, 100,000,000 common shares






authorized, 4,730,116 and 4,730,116 common shares issued and outstanding, respectively


$                     4,730


$                   4,730

Capital in excess of par value


174,824,076


174,824,076

Distribution in excess of net investment income


(22,053,262)


(24,522,951)

Accumulated net realized loss from investments and derivatives


(46,760,127)


(47,289,427)

Net unrealized appreciation  on investments and derivatives


6,471,195


5,670,333


Total Net Assets


112,486,612


108,686,761







Total liabilities and Net Assets


$          208,229,892


$        174,411,430







NET ASSET VALUE PER SHARE


$                     23.78


$                   22.98








 

Saratoga Investment Corp.









Consolidated Statements of Operations














For the three months
ended May 31, 2013


For the three months
ended May 31, 2012






 (unaudited) 


 (unaudited) 









INVESTMENT INCOME







Interest from investments








Non-control/Non-affiliate investments




$                 4,045,585


$                2,064,985


Control investments




1,126,004


1,045,785


     Total interest income




5,171,589


3,110,770

Interest from cash and cash equivalents




1,906


2,846

Management fee income




498,091


499,840

Other income




346,176


5,726


Total investment income




6,017,762


3,619,182









EXPENSES







Interest and debt financing expenses




1,127,855


625,703

Base management fees




736,716


458,808

Professional fees




331,064


345,839

Administrator expenses




250,000


250,000

Incentive management fees




821,122


430,271

Insurance




119,995


130,307

Directors fees and expenses




51,000


51,000

General & administrative




98,361


51,341

Other expense




11,960


3,123


Total expenses




3,548,073


2,346,392










NET INVESTMENT INCOME




2,469,689


1,272,790









REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:







Net realized gain from investments




529,300


178,630

Net realized loss from derivatives




-


(131,000)

Net unrealized appreciation on investments




800,862


1,739,422

Net unrealized appreciation on derivatives




-


130,925


Net gain on investments




1,330,162


1,917,977









NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS




$                 3,799,851


$                3,190,767









WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE



$                          0.80


$                         0.82









WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED



4,730,116


3,876,661










 

 

Contact: Richard Petrocelli
Saratoga Investment Corp.
212-906-7800

Roland Tomforde
Broadgate Consultants
212-232-2222

SOURCE Saratoga Investment Corp.



RELATED LINKS
http://www.saratogainvestmentcorp.com

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