Saratoga Investment Corp. Announces Fiscal First Quarter 2014 Financial Results

15 Jul, 2013, 18:58 ET from Saratoga Investment Corp.

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