WhiteHorse Finance, Inc. Announces Fourth Quarter and Full Year 2015 Earnings Results

Mar 03, 2016, 07:00 ET from WhiteHorse Finance, Inc.

NEW YORK, March 3, 2016 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter and year ended December 31, 2015.

Fourth Quarter 2015 Summary Highlights

  • New investments of $63.7 million and $140.4 million for the fourth quarter and year, respectively
  • Completed a public offering of subscription rights to purchase shares of common stock, which were fully exercised, resulting approximately $44.0 million of net proceeds
  • Refinanced the revolving credit facility, increasing the facility size from $150 million to $200 million and extending the reinvestment period by three years through 2018
  • Net investment income of $3.9 million, or $0.24 per share, for the fourth quarter
  • Net credit facility refinancing costs of $1.8 million, or $0.11 per share
  • Core net investment income of $5.7 million, or $0.35 per share, for the fourth quarter(1)
  • Annual core net investment income of $1.48 per share(1)
  • Annual distributions of $1.42 per share

(1) Core net investment income is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management because it reflects the Company's financial performance excluding the net impact of costs associated with the refinancing of the Company's revolving credit facility. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

Jay Carvell, WhiteHorse Finance's Chief Executive Officer commented, "We are pleased to report strong core earnings for the quarter. Our affiliation with H.I.G. Capital remains strong, and we are pleased with the forward pipeline. We continue to source attractive investments and believe opportunities in the credit markets will allow us to continue to execute on our origination strategy."

Portfolio and Investment Activity

As of December 31, 2015, the fair value of WhiteHorse Finance's investment portfolio was $415.3 million, compared with $403.5 million as of December 31, 2014. The portfolio at December 31, 2015 consisted of 35 positions across 29 companies with an average investment size of $11.5 million and a weighted average effective yield of 11.8 % on income producing investments. The majority of the portfolio was comprised of senior secured loans and more than 97.0% of these loans were variable-rate investments (primarily indexed to LIBOR), which should continue to position the portfolio well for a potential rising interest rate environment.

For the three months ended December 31, 2015, WhiteHorse Finance invested $63.7 million across five portfolio companies. Gross proceeds from sales and repayments totaled $6.4 million for the quarter.

For the year ended December 31, 2015, WhiteHorse Finance invested $140.4 million across twelve portfolio companies. Gross proceeds from sales and repayments totaled $107.7 million for the year.

Results of Operations

For the three months and year ended December 31, 2015, net investment income was $3.9 million and $20.8 million, compared with $5.0 million and $17.0 million for the same periods in the prior year.  For the three months and year ended December 31, 2015, core net investment income, a non-GAAP financial measure, was $5.7 million and $22.6 million, compared with $5.0 million and $17.0 million for the same periods in the prior year. The increase in core net investment income was primarily attributable to increases in the average earning investment balance and the weighted average effective yield over the same periods in the prior year.

For the three months and year ended December 31, 2015, WhiteHorse Finance reported realized and unrealized losses on investments of $18.7 and $23.6 million, respectively. This compares with realized and unrealized losses on investments of $1.3 million and realized and unrealized gains on investments of $2.6 million for the three months and year ended December 31, 2014, respectively. The increase in realized and unrealized losses on investments related primarily to the recognition of unrealized depreciation of $13.3 million on the Company's investment in RCS Capital Corporation during the fourth quarter of 2015.

For the three months and year ended December 31, 2015, WhiteHorse Finance reported a net decrease in net assets of $14.8 million and $2.8 million, respectively, which compares with a net increase in net assets of $3.6 million and $19.5 million for the three months and year ended December 31, 2014.

WhiteHorse Finance's NAV was $244.1 million, or $13.33 per share, as of December 31, 2015, as compared with $227.0 million, or $15.16 per share, reported as of December 31, 2014.

Liquidity and Capital Resources

As of December 31, 2015, WhiteHorse Finance had cash and cash equivalents of $22.8 million, as compared with $25.9 million as of September 30, 2015, inclusive of restricted cash. As of December 31, 2015, the Company had $98.0 million of undrawn capacity under its revolving credit facility.

Distributions

On November 23, 2015, the Company declared a distribution of $0.355 per share for the quarter ended December 31, 2015, consistent for the thirteenth consecutive quarter since the Company's IPO. The distribution was payable on January 4, 2016 to shareholders of record as of December 21, 2015.

Distributions are paid from taxable earnings and may include return of capital and/or capital gains. The specific tax characteristics of the distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year and in the Company's periodic reports filed with the Securities and Exchange Commission.

Conference Call

WhiteHorse Finance will host a conference call to discuss its fourth quarter and fiscal year-end results at 10:00 am ET on Thursday, March 3, 2016. To access the teleconference, please dial 706-758-9224 (domestic and international) approximately 10 minutes before the teleconference's scheduled start time and reference ID#36543898. Investors may also access the call on the investor relations portion of the Company's website at www.whitehorsefinance.com.

If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call's completion through March 10, 2016. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID#36543898. A webcast replay will also be available on the investor relations portion of the Company's website at www.whitehorsefinance.com.

About WhiteHorse Finance, Inc.

WhiteHorse Finance is a business development company that originates and invests in loans to privately held small-cap companies across a broad range of industries.  The Company's investment activities are managed by its investment adviser, H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, L.L.C. ("H.I.G. Capital"). H.I.G. Capital is a leading global alternative asset manager with $19 billion of capital under management(2) across a number of funds focused on the small and mid-cap markets. For more information about H.I.G. Capital, please visit http://www.higcapital.com.  For more information about the Company, please visit http://www.whitehorsefinance.com.

(2) Based on total capital commitments to funds managed by H.I.G. Capital and its affiliates.

Forward-Looking Statements

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities (in thousands, except share and per share data)

December 31, 2015

 

December 31, 2014

Assets

Investments, at fair value

Non-controlled/non-affiliate company investments

$

395,143

$

383,500

Non-controlled affiliate company investments

20,200

20,000

Total investments, at fair value (amortized cost $436,109 and $401,062, respectively)

415,343

403,500

Cash and cash equivalents

22,769

11,647

Restricted cash and cash equivalents

4,495

Interest receivable

3,407

2,702

Deferred financing costs

3,518

4,004

Prepaid expenses and other receivables

192

494

Total assets

$

445,229

$

426,842

Liabilities

Debt

$

187,000

$

190,500

Distributions payable

6,498

5,319

Management fees payable

3,813

5,006

Payable for investments purchased

2,865

Accounts payable and accrued expenses

1,001

659

Total liabilities

201,177

201,484

Commitments and contingencies

Net assets

Common stock, 18,303,890 and 14,982,857 shares issued and outstanding, par value $0.001 per share and 100,000,000 authorized

18

15

Paid-in capital in excess of par

272,705

228,731

Accumulated overdistributed net investment income

(7,618)

(5,918)

Net realized gains on investments

349

728

Net unrealized (depreciation) appreciation on investments

(21,402)

1,802

Total net assets

244,052

225,358

Total liabilities and total net assets

$

445,229

$

426,842

Number of shares outstanding

18,303,890

14,982,857

Net asset value per share

$

13.33

$

15.04

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Operations (in thousands, except share and per share data)

Years ended December 31,

2015

2014

2013

Investment income

Interest income

$

42,381

$

35,148

$

34,155

Fee income

1,894

1,604

3,462

Dividend income

2,800

794

Total investment income

47,075

37,546

37,617

Expenses

Interest expense

9,970

5,818

5,341

Base management fees

8,560

7,557

5,059

Performance-based incentive fees

4,323

3,387

4,800

Administrative service fees

1,140

1,510

1,173

General and administrative expenses

2,326

2,720

2,182

Total expenses, before fees waived

26,319

20,992

18,555

Base management fees waived

(447)

(248)

Total expenses, net of fees waived

26,319

20,545

18,307

Net investment income

20,756

17,001

19,310

Realized and unrealized (losses) gains on investments

Net realized losses on investments

(379)

(64)

Net change in unrealized (depreciation) appreciation on investments

(23,204)

2,607

(280)

Net realized and unrealized (losses) gains on investments

(23,583)

2,543

(280)

Net (decrease) increase in net assets resulting from operations

$

(2,827)

$

19,544

$

19,030

Per Common Share Data

Basic and diluted (loss) earnings per common share

$

(0.18)

$

1.30

$

1.27

Dividends and distributions declared per common share

$

1.42

$

1.42

$

1.42

Basic and diluted weighted average common shares outstanding

15,319,510

14,982,825

14,971,324

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments December 31, 2015 (in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

North America

Debt Investments

Advertising

Fluent Acquisition II, LLC

First Lien Secured Term Loan

L+11.50% (0.50% Floor)

 

12.00% (1.00% PIK)

 

12/8/20

$

28,017

$

27,462

$

27,765

11.38%

Intersection Acquisition, LLC

First Lien Secured Term Loan

L+10.00% (1.00% Floor)

 

11.00%

 

9/15/20

16,462

16,302

16,429

6.73

44,479

43,764

44,194

18.11

Broadcasting

Multicultural Radio Broadcasting, Inc.(6)

First Lien Secured Term Loan

L+10.50% (1.00% Floor)

11.50%

 

6/27/19

14,850

14,850

14,806

6.07

Consumer Finance

Golden Pear Funding III, LLC(7)

Second Lien Secured Term Loan

L+10.25% (1.00% Floor)

11.25%

 

6/25/20

25,000

24,731

24,650

10.10

Second Lien Secured Revolving Loan

L+10.25% (1.00% Floor)

11.25%

 

6/25/20

(52)

Oasis Legal Finance, LLC(7)

Second Lien Secured Term Loan

 

N/A

(5)

10.50%

 

9/30/18

9,000

8,881

8,973

3.68

Sigue Corporation(6)

Second Lien Secured Term Loan

L+10.50% (1.00% Floor)

11.50%

 

12/27/18

25,000

24,669

24,875

10.19

59,000

58,229

58,498

23.97

Data Processing & Outsourced Services

Future Payment Technologies, L.P.

Second Lien Secured Term Loan

L+12.00% (1.00% Floor)

 

13.00% (1.00% PIK)

12/31/18

36,447

35,510

36,447

14.93

Distributors

360 Holdings III Corp.(6)

First Lien Secured Term Loan

P+8.00% (3.50% Floor)

11.50%

 

10/1/21

9,975

9,575

9,775

4.01

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments – (continued) December 31, 2015 (in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

Diversified Support Services

Expert Global Solutions, Inc.

Second Lien Secured Term Loan

 

L+11.00% (1.50% Floor)

12.50%

10/3/18

$

20,000

$

19,831

$

19,820

8.12%

Orion Healthcorp, Inc.

First Lien Secured Term Loan

 

L+9.00% (2.00% Floor)

11.00%

9/30/17

6,991

6,830

6,998

2.87

Sitel Worldwide Corporation

Second Lien Secured Term Loan

 

L+9.50% (1.00% Floor)

10.50%

9/18/22

8,670

8,501

8,540

3.50

Smile Brands Group Inc.

First Lien Secured Term Loan

 

L+7.75% (1.25% Floor)

9.00% (1.50% PIK)

8/16/19

11,745

11,585

9,983

4.09

47,406

46,747

45,341

18.58

Electronic Equipment & Instruments

AP Gaming I, LLC (6)

First Lien Secured Term Loan

 

L+8.25% (1.00% Floor)

9.25%

12/20/20

9,800

9,566

9,663

3.96

Food Retail

Crews of California, Inc.

First Lien Secured Term Loan

 

L+11.00% (1.00% Floor)

12.00% (1.00% PIK)

11/20/19

15,170

14,889

14,639

6.00

First Lien Secured Revolving Loan

 

L+11.00% (1.00% Floor)

12.00% (1.00% PIK)

11/20/19

5,019

4,931

4,843

1.98

First Lien Secured Delayed Draw Term Loan

 

L+11.00% (1.00% Floor)

12.00% (1.00% PIK)

11/20/19

5,034

4,946

4,858

1.99

25,223

24,766

24,340

9.97

Health Care Distributors

P2 Newco Acquisition, Inc.(6)

Second Lien Secured Term Loan

 

L+8.50% (1.00% Floor)

9.50%

10/22/21

6,000

5,952

5,982

2.45

Health Care Facilities

Coastal Sober Living, LLC(6)

First Lien Secured Term Loan

 

L+9.25% (1.00% Floor)

10.25%

6/30/19

41,030

40,436

40,251

16.49

Grupo HIMA San Pablo, Inc.

First Lien Secured Term Loan

 

L+7.00% (1.50% Floor)

8.50%

1/31/18

14,588

14,441

14,588

5.98

Second Lien Secured Term Loan

 

N/A

(5)

13.75%

7/31/18

1,000

971

992

0.41

56,618

55,848

55,831

22.88

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments – (continued) December 31, 2015 (in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

Health Care Technology

Client Network Services, Inc.

First Lien Secured Term Loan

 

L+13.00% (0.50% Floor)

13.50%

4/24/19

$

9,185

$

8,954

$

9,350

3.83%

First Lien Secured Revolving Loan

 

P+12.00% (3.50% Floor)

15.50%

4/24/19

1,000

1,000

1,018

0.42

10,185

9,954

10,368

4.25

Integrated Telecommunication Services

Securus Technologies Holdings, Inc.

Second Lien Secured Term Loan

 

L+7.75% (1.25% Floor)

9.00%

4/30/21

9,090

9,059

5,936

2.43

Oil & Gas Drilling

ProPetro Services, Inc.(6)

First Lien Secured Term Loan

 

L+6.25% (1.00% Floor)

7.25%

9/30/19

8,875

8,809

6,417

2.63

Oil & Gas Exploration & Production

Caelus Energy Alaska O3, LLC

Second Lien Secured Term Loan

 

L+7.50% (1.25% Floor)

8.75%

4/15/20

13,000

12,856

9,269

3.80

Larchmont Resources, LLC

First Lien Secured Term Loan

 

L+8.75% (1.00% Floor)

9.75%

8/7/19

1,745

1,777

1,238

0.51

14,745

14,633

10,507

4.31

Other Diversified Financial Services

RCS Capital Corporation(6)(7)(9)

Second Lien Secured Term Loan

 

L+10.50% (1.00% Floor)

11.50%

4/29/21

20,750

20,687

7,262

2.98

The Pay-O-Matic Corp.

First Lien Secured Term Loan

 

L+11.00% (1.00% Floor)

12.00%

3/31/18

9,750

9,594

9,740

3.99

30,500

30,281

17,002

6.97

Research & Consulting Services

Project Time & Cost, LLC(6)

First Lien Secured Term Loan

 

L+11.00% (0.50% Floor)

11.50%

10/9/20

11,700

11,468

11,571

4.74

Specialized Consumer Services

Pre-Paid Legal Services, Inc.(6)

Second Lien Secured Term Loan

 

L+9.00% (1.25% Floor)

10.25%

7/1/20

18,000

17,830

18,054

7.40

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments – (continued) December 31, 2015 (in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

Specialized Finance

GMT Holdings 1, Ltd. & GMT Holdings 12, Ltd.(4)(7)

First Lien Secured Term Loan

 

N/A

(5)

10.00%

6/30/17

$

1,710

$

1,710

$

1,710

0.70%

Trucking

Fox Rent A Car, Inc.

Second Lien Secured Term Loan

 

L+12.00%

12.43%

10/31/19

7,500

7,438

7,395

3.03

Total Debt Investments

422,103

415,989

393,837

161.37

Equity Investments

Advertising

IDI, Inc. Warrants(6)

 

N/A

 

N/A

12/8/25

Diversified Support Services

Constellation Health, LLC Warrants(6)

 

N/A

 

N/A

9/30/18

989

0.40

Food Retail

Crews of California, Inc. Warrants(6)

 

N/A

N/A

12/31/24

191

0.08

Nicholas & Associates, LLC Warrants(6)

 

N/A

N/A

12/31/24

37

0.01

Pinnacle Management Group, LLC Warrants(6)

 

N/A

N/A

12/31/24

69

0.03

RC3 Enterprises, LLC Warrants(6)

 

N/A

N/A

12/31/24

20

0.01

317

0.13

Specialized Finance

NMFC Senior Loan Program I LLC Units(6)(7)(8)

 

N/A

N/A

6/10/19

20,120

20,200

8.28

Total Equity Investments

20,120

21,506

8.81

Total Investments 

$

422,103

$

436,109

$

415,343

170.19%

(1)

Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the "1940 Act"), and provide collateral for the Company's credit facility.

(2)

The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate ("LIBOR" or "L") or the Prime Rate ("P"), which resets monthly, quarterly or semiannually.

(3)

The interest rate is the "all-in-rate" including the current index and spread, the fixed rate, and the payment-in-kind ("PIK") interest rate, as the case may be.

(4)

WhiteHorse Finance, Inc.'s investments in GMT Holdings 1, Ltd. and GMT Holdings 12, Ltd. are held through its subsidiary Bayside Financing S.A.R.L.

(5)

Interest rate is fixed and accordingly the spread above the index is not applicable.

(6)

The investment or a portion of the investment does not provide collateral for the Company's credit facility.

(7)

Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represent 86% of total assets.

(8)

Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

(9)

The investment is on non-accrual status.

 

Logo - http://photos.prnewswire.com/prnh/20150505/213950LOGO

SOURCE WhiteHorse Finance, Inc.



RELATED LINKS

http://www.whiteHorsefinance.com