Saratoga Investment Corp. Announces Fiscal Third Quarter 2014 Financial Results

14 Jan, 2014, 18:14 ET from Saratoga Investment Corp.

NEW YORK, Jan. 14, 2014 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR) ("Saratoga Investment" or "the Company"), a business development company, today announced financial results for its 2014 fiscal third quarter.

Operating Results

For the fiscal quarter ended November 30, 2013, Saratoga Investment reported net investment income of $2.9 million or $0.60 on a weighted average per share basis, and net loss on investments of $1.6 million, or $0.34 on a weighted average per share basis, resulting in an increase in net assets from operations of $1.3 million, or $0.26 on a weighted average per share basis.  The $1.6 million net loss on investments was comprised of $1.7 million in net unrealized depreciation on investments and $80,000 in net realized gains from investments.

Net asset value ("NAV") was $111.2 million as of November 30, 2013, compared to $112.4 million as of August 31, 2013 and $112.5 million as of May 31, 2013.  NAV per share was $20.67 ($24.03 before the effect of the dividend described below) as of November 30, 2013 as compared to $23.77 as of August 31, 2013 and $23.78 as of May 31, 2013. 

The decrease in reported NAV per share from August 31, 2013 was primarily the result of the $12.5 million cash and stock dividend (which consisted of $2.5 million in cash and 649,500 shares of common stock) declared by Saratoga Investment's Board of Directors on October 29, 2013 and paid on December 27, 2013 to record holders as of November 13, 2013. In accordance with generally accepted accounting principles ("GAAP"), the number of shares outstanding used to calculate NAV per share as of November 30, 2013 was retroactively adjusted to reflect the additional shares issued in connection with the cash and stock dividend.

Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment, said, "Our team's origination and deal execution capabilities enabled us to make another $22.3 million of investments in new and existing portfolio companies during the quarter. We continue to build our pipeline of investments as we improve the magnitude and quality of our portfolio."

Portfolio and Investment Activity

As of November 30, 2013, the fair value of the Company's investment portfolio was $198.8 million, principally invested in 36 portfolio companies and one collateralized loan obligation fund (the "CLO"). The overall portfolio composition consisted of 18.8% of middle market loans, 35.5% of first lien term loans, 13.9% of second lien term loans, 15.1% of senior secured notes, 2.7% of unsecured notes, 9.6% of subordinated notes of the CLO and 4.4% of common equity.  

During the 2014 fiscal third quarter, the Company invested $22.3 million in new or existing portfolio companies and had $9.9 million in aggregate amount of exits and repayments on its investments, resulting in net investments of $12.4 million for the period. 

As of November 30, 2013, the aggregate weighted average current yield on Saratoga Investment's portfolio was 10.8% which was comprised of a weighted average current yield of 11.1% on first lien term loans, 11.2% on second lien term loans, 14.2% on senior secured notes, 15.1% on unsecured notes, 11.7% on the CLO subordinated notes, and 6.4% on middle market loans. 

Liquidity and Capital Resources

As of November 30, 2013, Saratoga Investment had $48.3 million in notes payable outstanding, $4.0 million outstanding on its $45 million senior secured revolving credit facility with Madison Capital Funding LLC.  In addition, Saratoga Investment had an aggregate of $3.4 million in cash and cash equivalents and $1.6 million in cash and cash equivalents, reserve accounts at November 30, 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 and its Small Business Investment Company ("SBIC") subsidiary.  As of December 31, 2013, the SBIC subsidiary had $32 million in regulatory capital and $50.0 million of Small Business Administration debentures. 

2014 Fiscal Third Quarter Conference Call/Webcast Information

When:  Jan. 15, 2014 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 Jan. 15, 2014 through 11:59 p.m. ET on Jan. 21, 2014 by dialing (800) 585-8367 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada). Passcode for both replay numbers is 33184740.

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.

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

Roland Tomforde  Broadgate Consultants  212-232-2222

 

Financial Statements

Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities

 As of  

November 30, 2013

February 28, 2013

 (unaudited) 

ASSETS

Investments at fair value

Non-control/non-affiliate investments (amortized cost of $180,323,606 and $130,465,086, respectively)

$          179,759,938

$        129,563,428

Control investments (cost of $16,555,808 and $18,944,966 respectively)

19,018,842

25,516,959

Total investments at fair value (amortized cost of $196,879,414 and $149,410,052 respectively)

198,778,780

155,080,387

Cash and cash equivalents

3,359,983

149,025

Cash and cash equivalents, reserve accounts

1,599,132

12,086,142

Interest receivable, (net of reserve of $310,146 and $53,543, respectively)

2,751,138

2,889,358

Due from manager

4,929

-

Deferred debt financing costs, net

4,008,926

2,090,184

Management fee receivable

166,682

215,853

Other assets

99,597

83,407

Receivable from unsettled trades

-

1,817,074

Total assets

$          210,769,167

$        174,411,430

LIABILITIES

Revolving credit facility

$              4,000,000

$          24,300,000

SBA debentures payable

40,000,000

36,000,000

Notes payable

48,300,000

-

Dividend payable

2,507,112

-

Management and incentive fees payable

3,587,061

4,509,322

Accounts payable and accrued expenses

381,485

435,038

Interest and debt fees payable

514,333

257,796

Due to manager

273,083

222,513

Total liabilities

$            99,563,074

$          65,724,669

NET ASSETS

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

authorized, 5,379,616 and 4,730,116 common shares issued and outstanding, respectively

$                     5,380

$                   4,730

Capital in excess of par value

184,851,122

174,824,076

Distribution in excess of net investment income

(29,418,170)

(24,522,951)

Accumulated net realized loss from investments and derivatives

(46,131,603)

(47,289,427)

Net unrealized appreciation  on investments and derivatives

1,899,364

5,670,333

Total Net Assets

111,206,093

108,686,761

Total liabilities and Net Assets

$          210,769,167

$        174,411,430

NET ASSET VALUE PER SHARE

$                     20.67

$                   22.98

 

Saratoga Investment Corp.

Consolidated Statements of Operations

(unaudited)

 

For the three months ended 

November 30

For the nine months ended 

November 30

2013

2012

2013

2012

INVESTMENT INCOME

Interest from investments

Non-control/Non-affiliate investments

$  4,279,445

$   2,190,350

$   11,534,271

$     6,129,508

Payment-in-kind interest income from Non-control/Non-affiliate investments

161,485

276,245

634,408

821,830

Control investments

556,291

1,046,285

2,791,830

3,186,751

     Total interest income

4,997,221

3,512,880

14,960,509

10,138,089

Interest from cash and cash equivalents

1,316

731

7,181

5,368

Management fee income

421,198

500,454

1,400,039

1,500,519

Other income

381,480

19,750

838,956

172,310

Total investment income

5,801,215

4,033,815

17,206,685

11,816,286

EXPENSES

Interest and debt financing expenses

1,611,221

529,858

4,342,657

1,808,586

Base management fees

876,345

528,735

2,424,167

1,492,345

Professional fees

312,992

347,459

879,247

986,781

Administrator expenses

250,000

250,000

750,000

750,000

Incentive management fees

(561,539)

(412,654)

219,813

887,020

Insurance

117,955

128,891

357,184

389,506

Directors fees and expenses

35,978

53,705

131,978

155,705

General & administrative

251,058

117,357

440,844

265,720

Other expense

9,172

1,311

21,207

4,434

Total expenses

2,903,182

1,544,662

9,567,097

6,740,097

NET INVESTMENT INCOME

2,898,033

2,489,153

7,639,588

5,076,189

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain from investments

82,882

95,372

1,157,824

542,720

Net realized loss from derivatives

-

-

-

(131,000)

Net unrealized appreciation (depreciation) on investments

(1,713,025)

(1,838,957)

(3,770,968)

3,188,543

Net unrealized appreciation on derivatives

-

-

-

130,925

Net gain (loss) on investments

(1,630,143)

(1,743,585)

(2,613,144)

3,731,188

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$  1,267,890

$      745,568

$     5,026,444

$     8,807,377

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

$           0.26

$            0.19

$              1.05

$              2.25

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED

4,851,451

3,970,447

4,770,267

3,907,696

 

 

 

SOURCE Saratoga Investment Corp.