WhiteHorse Finance, Inc. Announces Second Quarter 2015 Earnings Results

Aug 05, 2015, 07:21 ET from WhiteHorse Finance, Inc.

NEW YORK, Aug. 5, 2015 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter ended June 30, 2015.

Second Quarter 2015 Summary Highlights

  • Continued to optimize the portfolio, increasing the weighted average effective yield to 11.7% from 11.4% in the prior quarter 
  • Net investment income increased 47.4% year-over-year, and 10.4% over 1Q15, to $5.9 million
  • Second quarter net investment income of $0.393 per share
  • Second quarter distribution of $0.355 per share

Jay Carvell, WhiteHorse Finance's Chief Executive Officer commented, "Our team's ongoing emphasis on optimizing our portfolio has resulted in an increase to our effective yield, rising to 11.7% during the second quarter. This resulted from investing in higher yielding loans while cycling out of lower yielding investments. In the second quarter, our net investment income exceeded our quarterly distribution, which has remained consistent since our IPO in late 2012. We believe that our efforts will continue to achieve results in the second half of 2015, supported by our affiliation with H.I.G. Capital as we seek to source new high quality investments to further optimize our portfolio."

Portfolio and Investment Activity

As of June 30, 2015, the fair value of WhiteHorse Finance's investment portfolio was $387.5 million, compared with $391.3 million as of March 31, 2015. The portfolio at June 30, 2015 consisted of 32 positions across 26 companies with an average investment size of $12.1 million and a weighted average effective yield of 11.7%. The majority of the portfolio was comprised of senior secured loans and more than 96% of these loans were variable-rate investments (indexed to LIBOR) with interest rate floors, which should continue to position the portfolio well for a potential rising interest rate environment.

For the three months ended June 30, 2015, WhiteHorse Finance invested $31.2 million across three portfolio companies. The Company continued to be highly selective with the deployment of capital into new investments. Gross proceeds from sales and repayments totaled $35.6 million for the quarter, which was in line with the Company's expectations. The increase in the weighted average effective yield was the result of investing in assets with above average yields, while optimizing the portfolio through the sales of lower yielding assets.

Results of Operations

For the three months ended June 30, 2015, net investment income was $5.9 million, compared with $4.0 million for the same period in the prior year, representing an increase of 47.4%.

For the three months ended June 30, 2015, WhiteHorse Finance reported realized and unrealized losses on investments of $0.1 million. This compares with realized and unrealized gains on investments of $1.0 million for the three months ended June 30, 2014.

WhiteHorse Finance reported a net increase in net assets of $5.8 million for the three months ended June 30, 2015, which compares with $5.0 million for the three months ended June 30, 2014.

WhiteHorse Finance's NAV was $225.2 million, or $15.03 per share, as of June 30, 2015, as compared with $224.8 million, or $15.00 per share, reported as of March 31, 2015.

Liquidity and Capital Resources

As of June 30, 2015, WhiteHorse Finance had cash and cash equivalents of $27.3 million, as compared with $17.6 million as of March 31, 2015, inclusive of restricted cash. As of June 30, 2015, the Company had $49.5 million of undrawn capacity under its revolving credit facility.

Distributions

On May 19, 2015, the Company declared a distribution of $0.355 per share for the quarter ended June 30, 2015, consistent for the eleventh consecutive quarter since the Company's IPO. The distribution was payable on July 2, 2015 to shareholders of record as of June 19, 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 first quarter results at 10:00 am ET on Wednesday, August 5, 2015. 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# 84043776. 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 August 12, 2015. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID# 84043776. 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, Inc. 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 approximately $19 billion of capital under management* 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.

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.

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

 

(Financial Tables Follow)

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

June 30, 2015

December 31, 2014

(Unaudited)

Assets

Investments, at fair value

Non-controlled/non-affiliate company investments

$

367,296

$

383,500

Non-controlled affiliate company investments

20,200

20,000

Total investments, at fair value (amortized cost $385,375 and $401,062, respectively)

387,496

403,500

Cash and cash equivalents

19,388

11,647

Restricted cash and cash equivalents

7,936

4,495

Interest receivable

3,042

2,702

Deferred financing costs

4,237

4,004

Prepaid expenses and other receivables

192

494

Total assets

$

422,291

$

426,842

Liabilities

Credit facility

$

100,500

$

105,500

Senior notes

30,000

30,000

Unsecured term loan

55,000

55,000

Distributions payable

5,319

5,319

Management fees payable

5,442

5,006

Accounts payable and accrued expenses

787

659

Total liabilities

197,048

201,484

Commitments and contingencies

Net assets

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

15

15

Paid-in capital in excess of par

228,731

228,731

Accumulated overdistributed net investment income

(5,336)

(5,918)

Accumulated realized gains on investments

349

728

Accumulated unrealized appreciation on investments

1,484

1,802

Total net assets

225,243

225,358

Total liabilities and total net assets

$

422,291

$

426,842

Number of shares outstanding

14,982,857

14,982,857

Net asset value per share

$

15.03

$

15.04

 

WhiteHorse Finance, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Investment income

From non-controlled/non-affiliate company      investments

     Interest income

$

10,696

$

8,350

$

21,207

$

16,207

     Fee income

724

668

824

1,061

From non-controlled affiliate company investments

     Dividend income

742

1,402

Total investment income

12,162

9,018

23,433

17,268

Expenses

Interest expense

1,703

1,386

3,373

2,741

Base management fees

2,132

1,781

4,252

3,568

Performance-based incentive fees

1,472

982

2,805

1,132

Administrative service fees

314

359

643

684

General and administrative expenses

655

620

1,140

1,607

Total expenses, before fees waived

6,276

5,128

12,213

9,732

Base management fees waived

(103)

(447)

Total expenses, net of fees waived

6,276

5,025

12,213

9,285

Net investment income

5,886

3,993

11,220

7,983

Realized and unrealized gains (losses) on investments

Net realized losses

     Non-controlled/non-affiliate company investments

(296)

(379)

   Net realized losses

(296)

(379)

Net change in unrealized appreciation (depreciation)

     Non-controlled/non-affiliate company investments

(40)

1,024

(518)

3,404

     Non-controlled affiliate company investments

200

200

   Net change in unrealized appreciation (depreciation)

160

1,024

(318)

3,404

Net realized and unrealized (losses) gains on investments

(136)

1,024

(697)

3,404

Net increase in net assets resulting from operations

$

5,750

$

5,017

$

10,523

$

11,387

Per Common Share Data

Basic and diluted earnings per common share

$

0.38

$

0.34

$

0.70

$

0.76

Dividends and distributions declared per common share

$

0.36

$

0.36

$

0.71

$

0.71

Basic and diluted weighted average common shares   outstanding

14,982,857

14,982,857

14,982,857

14,982,793

 

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

June 30, 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

Broadcasting

Multicultural Radio Broadcasting, Inc.

First Lien Secured Term Loan

L+10.50%

11.50%

6/27/19

$

14,850

$

14,850

$

14,791

6.57%

 (1.00% Floor)

Consumer Finance

Golden Pear Funding III, LLC(7)

    Second Lien Secured Term Loan

L+10.25%

11.25%

6/25/20

25,000

24,709

24,750

10.99

(1.00% Floor)

    Second Lien Secured Revolving Loan

L+10.25%

11.25%

6/25/20

2,500

2,442

2,475

1.10

(1.00% Floor)

Oasis Legal Finance, LLC(7)

Second Lien Secured Term Loan

N/A(5)

10.50%

9/30/18

9,500

9,360

9,500

4.22

Sigue Corporation

Second Lien Secured Term Loan

L+10.00%

11.00%

12/27/18

25,000

24,623

24,950

11.08

(1.00% Floor)

62,000

61,134

61,675

27.39

Data Processing & Outsourced Services

Future Payment Technologies, L.P.

Second Lien Secured Term Loan

L+12.00%

13.00%

12/31/18

36,077

35,014

36,149

16.05

(1.00% Floor)

(2.00% PIK)

Diversified Support Services

Expert Global Solutions, Inc.

  Second Lien Secured Term Loan

L+11.00%

12.50%

10/3/18

7,500

7,430

7,455

3.31

(1.50% Floor)

Orion Healthcorp, Inc.

First Lien Secured Term Loan

L+9.00%

11.00%

9/30/17

7,998

7,793

7,958

3.53

(2.00% Floor)

Smile Brands Group Inc.

First Lien Secured Term Loan

L+6.25%

7.50%

8/16/19

11,790

11,612

10,022

4.45

(1.25% Floor)

27,288

26,835

25,435

11.29

 

   

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited) (Continued)

June 30, 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

Electronic Equipment & Instruments

AP Gaming I, LLC

  First Lien Secured Term Loan

L+8.25%

9.25%

12/20/20

$

9,850

$

9,597

$

9,830

4.36%

 (1.00% Floor)

Food Retail

Crews of California, Inc.

  First Lien Secured Term Loan

L+11.00%

12.00%

11/20/19

15,093

14,785

15,183

6.74

(1.00% Floor)

(1.00% PIK)

  First Lien Secured Revolving Loan

L+11.00%

12.00%

11/20/19

1,501

1,402

1,510

0.67

(1.00% Floor)

(1.00% PIK)

  First Lien Secured Delayed Draw     Term  Loan

L+11.00%

12.00%

11/20/19

5,008

4,910

5,038

2.24

(1.00% Floor)

(1.00% PIK)

21,602

21,097

21,731

9.65

Health Care Distributors

Comprehensive Decubitus Therapy, Inc.

First Lien Secured Term Loan

P+12.50%

15.75%

3/15/18

11,438

11,286

11,518

5.11

(3.25% Floor)

(3.00% PIK)

First Lien Secured Revolving Loan

P+12.50%

15.75%

3/15/18

(22)

(3.25% Floor)

(3.00% PIK)

P2 Newco Acquisition, Inc. (6)

 Second Lien Secured Term Loan

L+8.50%

9.50%

10/22/21

6,000

5,949

5,958

2.65

(1.00% Floor)

17,438

17,213

17,476

7.76

Health Care Facilities

Coastal Sober Living, LLC

    First Lien Secured Term Loan

L+9.25%

10.25%

6/30/19

42,130

41,462

42,046

18.67

 (1.00% Floor)

Grupo HIMA San Pablo, Inc.

  First Lien Secured Term Loan

L+7.00%

8.50%

1/31/18

14,663

14,487

14,663

6.51

(1.50% Floor)

 Second Lien Secured Term Loan

N/A(5)

13.75%

7/31/18

1,000

966

997

0.44

57,793

56,915

57,706

25.62

Health Care Technology

Client Network Services, Inc.

  First Lien Secured Term Loan

L+13.00%

13.50%

4/24/19

17,992

17,686

18,064

8.02

(0.50% Floor)

  First Lien Secured Revolving Loan

P+12.00%

15.25%

4/24/19

(3.25% Floor)

17,992

17,686

18,064

8.02

Homebuilding

Orleans Homebuilders, Inc.

First Lien Secured Term Loan

L+8.50%

10.50%

2/14/16

16,091

16,116

16,091

7.14

 (2.00% Floor)

Integrated Telecommunication Services

Securus Technologies Holdings, Inc.

Second Lien Secured Term Loan

L+7.75%

9.00%

4/30/21

9,090

9,057

8,881

3.94

(1.25% Floor)

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited) (Continued)

June 30, 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

Oil & Gas Drilling

ProPetro Services, Inc.

First Lien Secured Term Loan

L+6.25%

7.25%

9/30/19

$

9,125

$

9,051

$

8,623

3.83%

 (1.00% Floor)

Oil & Gas Exploration & Production

Caelus Energy Alaska O3, LLC

   Second Lien Secured Term Loan

L+7.50%

8.75%

4/15/20

13,000

12,843

11,882

5.27

(1.25% Floor)

Larchmont Resources, LLC

   First Lien Secured Term Loan

L+7.25%

8.25%

8/7/19

1,985

2,021

1,772

0.79

(1.00% Floor)

14,985

14,864

13,654

6.06

Other Diversified Financial Services

RCS Capital Corporation(7)

   Second Lien Secured Term Loan

L+10.50%

11.50%

4/29/21

17,750

17,826

17,644

7.83

(1.00% Floor)

The Pay-O-Matic Corp.

  First Lien Secured Term Loan

L+11.00%

12.00%

3/31/18

10,000

9,814

9,970

4.43

(1.00% Floor)

27,750

27,640

27,614

12.26

Specialized Consumer Services

Pre-Paid Legal Services, Inc.

Second Lien Secured Term Loan

L+9.00% (1.25% Floor)

10.25%

7/1/20

18,000

17,816

18,072

8.02

Specialized Finance

GMT Holdings 1, Ltd. & GMT Holdings 12, Ltd.(4) (6) (7)

First Lien Secured Term Loan

N/A(5)

10.00%

6/30/17

2,906

2,938

2,906

1.29

Trucking

 Fox Rent A Car, Inc.

Second Lien Secured Term Loan

L+12.00%

12.19%

10/31/19

7,500

7,432

7,538

3.35

 Total Debt Investments

370,337

365,255

366,236

162.60

 Equity Investments

 Diversified Support Services

 Constellation Health, LLC Warrants (6)

N/A

N/A

3/31/18

790

0.35

 Food Retail

 Crews of California, Inc. Warrants (6)

N/A

N/A

12/31/24

163

0.07

 Nicholas & Associates, LLC Warrants (6)

N/A

N/A

12/31/24

31

0.01

 Pinnacle Management Group, LLC Warrants (6)

N/A

N/A

12/31/24

59

0.03

 RC3 Enterprises, LLC Warrants (6)

N/A

N/A

12/31/24

17

0.01

270

0.12

 Specialized Finance

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

N/A

N/A

6/10/19

20,120

20,200

8.97

 Total Equity Investments

20,120

21,260

9.44

Total Investments

$

370,337

$

385,375

$

387,496

172.03%

 

(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)

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 82% of total assets.

(8)

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

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SOURCE WhiteHorse Finance, Inc.



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