Saratoga Investment Corp. Announces Fiscal Third Quarter 2013 Financial Results

Jan 14, 2013, 19:17 ET from Saratoga Investment Corp.

NEW YORK, Jan. 14, 2013 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR) ("Saratoga Investment" or "the Company"), a business development company, today announced financial results for its 2013 fiscal third quarter.

Operating Results

For the fiscal quarter ended November 30, 2012, Saratoga Investment reported net investment income of $2.5 million or $0.63 on a weighted average per share basis, and net loss on investments of $1.7 million, or $0.44 on a weighted average per share basis, resulting in an increase in net assets from operations of $0.8 million, or $0.19 on a weighted average per share basis.  The $1.7 million net loss on investments was comprised of $1.8 million in net unrealized depreciation on investments and $0.1 million in net realized gains from investments.

Net asset value ("NAV") was $102.9 million as of November 30, 2012, compared to $105.4 million as of August 31, 2012 and $100.6 million as of May 31, 2012.  NAV per share was $21.75 ($27.39 before the effect of the dividend described below) as of November 30, 2012 and $27.20 as of August 31, 2012 and $25.94 as of May 31, 2012. 

The decrease in reported NAV per share from August 31, 2012 was primarily the result of the $16.5 million cash/stock dividend (which consisted of $3.3 million in cash and 853,455 shares of common stock) declared by Saratoga Investment's Board of Directors on November 9, 2012 and paid on December 31, 2012. In accordance with generally accepted accounting principles ("GAAP"), the number of shares outstanding used to calculate NAV per share as of November 30, 2012 was retroactively adjusted to reflect the additional shares issued in connection with the cash/stock dividend.

Christian L. Oberbeck, Chairman, Chief Executive Officer and President of Saratoga Investment, said, "Our growing pipeline and financial strength enabled us to make another $6.4 million of investments in new and existing portfolio companies during the quarter, plus an additional $30 million of investments during December in four new and one existing portfolio company. We continue to see attractive opportunities, and the trend of improving credit quality within the overall portfolio continues. During this quarter, we have increased both the amount and proportion of internally rated strong credits."

Portfolio and Investment Activity

As of November 30, 2012, the fair value of the Company's investment portfolio was $119.3 million, principally invested in 23 portfolio companies and one collateralized loan obligation fund (the "CLO"). The overall portfolio composition consisted of 53.7% of first lien term loans, 8.4% of second lien term loans, 8.8% of senior secured notes, 1.9% of unsecured notes, 20.7% of subordinated notes of the CLO and 6.5% of common equity.  

During the 2013 fiscal third quarter, the Company invested $6.4 million in new or existing portfolio companies and had $1.5 million in aggregate amount of exits and repayments on its investments, resulting in net investments of $4.9 million for the period.  The Company invested an additional $29.7 million in December with $0.7 million of exits and repayments resulting in net investments of $29.0 million for the month of December 2012.

As of November 30, 2012, the weighted average current yield on Saratoga Investment's first lien term loans, second lien term loans, senior secured notes, unsecured notes and the CLO subordinated notes were 10.0%, 11.3%, 16.8%, 19.9%, and 22.9%, respectively, which resulted in an aggregate weighted average current yield of 12.9%. 

Liquidity and Capital Resources

As of November 30, 2012, Saratoga Investment had $14.9 million in outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC.  In addition, Saratoga Investment had an aggregate of $2.5 million in cash and cash equivalents and $3.8 million in cash and cash equivalents, reserve accounts, at November 30, 2012.  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 November 30, 2012, the Company's Small Business Investment Company subsidiary had $25 million in regulatory capital and $4.0 million of debentures guaranteed by the Small Business Administration.

2013 Fiscal Third Quarter Conference Call/Webcast Information

When:  Jan. 15, 2013 at 9:00 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 11:00 a.m. ET on Jan. 15, 2013 through 11:59 p.m. ET on Jan. 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 88743795.

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  

November 30, 2012

February 29, 2012

 (unaudited) 

ASSETS

Investments at fair value

Non-control/non-affiliate investments (amortized cost of $97,083,018 and $73,161,722, respectively)

$            94,649,656

$          69,513,434

Control investments (cost of $20,361,593 and $23,540,517, respectively)

24,641,107

25,846,414

Total investments at fair value (amortized cost of $117,444,611 and $96,702,239, respectively)

119,290,763

95,359,848

Cash and cash equivalents

2,494,552

1,325,698

Cash and cash equivalents, reserve accounts

3,787,183

25,534,195

Outstanding interest rate cap at fair value (cost of $0 and $131,000, respectively)

-

75

Interest receivable, (net of reserve of $228,113 and $273,361, respectively)

1,906,186

1,689,404

Deferred credit facility financing costs, net

1,453,985

1,199,490

Management fee receivable

216,947

227,581

Other assets

18,973

94,823

Receivable from unsettled trades

-

59,511

Total assets

$          129,168,589

$        125,490,625

LIABILITIES

Revolving credit facility

$            14,850,000

$          20,000,000

SBA debentures payable

4,000,000

-

Payable for unsettled trades

-

4,072,500

Dividend payable

3,295,306

-

Management and incentive fees payable

3,364,719

2,885,670

Accounts payable and accrued expenses

508,042

704,949

Interest and credit facility fees payable

140,424

53,262

Due to manager

117,877

394,094

Total liabilities

$            26,276,368

$          28,110,475

NET ASSETS

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

authorized, 4,730,116 and 3,876,661 common shares issued and outstanding, respectively

$                     4,730

$                   3,877

Capital in excess of par value

174,824,076

161,644,426

Distribution in excess of net investment income

(25,319,688)

(13,920,068)

Accumulated net realized loss from investments and derivatives

(48,463,047)

(48,874,767)

Net unrealized appreciation (depreciation) on investments and derivatives

1,846,150

(1,473,318)

Total Net Assets

102,892,221

97,380,150

Total liabilities and Net Assets

$          129,168,589

$        125,490,625

NET ASSET VALUE PER SHARE

$                     21.75

$                   25.12

Saratoga Investment Corp.

Consolidated Statements of Operations

For the three months ended  November 30,

For the nine months ended  November 30,

2012

2011

2012

2011

(unaudited)

(unaudited)

(unaudited)

(unaudited)

INVESTMENT INCOME

Interest from investments

Non-control/Non-affiliate investments

$  2,466,595

$  1,877,650

$  6,951,338

$     5,212,182

Control investments

1,046,285

1,155,241

3,186,751

3,095,304

     Total interest income

3,512,880

3,032,891

10,138,089

8,307,486

Interest from cash and cash equivalents

731

1,567

5,368

6,815

Management fee income

500,454

501,920

1,500,519

1,512,091

Other income

19,750

92,671

172,310

238,579

Total investment income

4,033,815

3,629,049

11,816,286

10,064,971

EXPENSES

Interest and credit facility financing expenses

529,858

307,221

1,808,586

987,042

Base management fees

528,735

393,888

1,492,345

1,203,820

Professional fees

347,459

356,144

986,781

1,282,009

Administrator expenses

250,000

250,000

750,000

730,000

Incentive management fees

(412,654)

1,178,750

887,020

842,097

Insurance

128,891

145,105

389,506

448,786

Directors fees and expenses

53,705

51,000

155,705

153,000

General & administrative

117,357

121,019

265,720

290,232

Other expense

1,311

2,150

4,434

5,340

Total expenses

1,544,662

2,805,277

6,740,097

5,942,326

NET INVESTMENT INCOME

2,489,153

823,772

5,076,189

4,122,645

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain (loss) from investments

95,372

(5,831,905)

542,720

(5,839,864)

Net realized loss from derivatives

-

-

(131,000)

-

Net unrealized appreciation (depreciation) on investments

(1,838,957)

11,221,387

3,188,543

11,927,052

Net unrealized appreciation (depreciation) on derivatives

-

166

130,925

(15,108)

Net gain (loss) on investments

(1,743,585)

5,389,648

3,731,188

6,072,080

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$     745,568

$  6,213,420

$  8,807,377

$   10,194,725

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE

$           0.19

$           1.88

$           2.25

$              3.10

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED

3,970,447

3,310,021

3,907,696

3,287,979

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

Roland Tomforde Broadgate Consultants 212-232-2222

SOURCE Saratoga Investment Corp.



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http://www.saratogainvestmentcorp.com