Alcentra Capital Corporation Announces First Quarter 2016 Financial Results and Announces Quarterly Dividend of $0.34 Per Share

NEW YORK, May 5, 2016 /PRNewswire/ -- Alcentra Capital Corporation (NASDAQ: ABDC) ("Alcentra" or the "Company"), a provider of customized debt and equity financing solutions primarily to lower middle-market companies based in the United States, today announced its financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Financial Highlights

• Total investment income of $9.9 million
• Net investment income of $5.6 million, or $0.41 per share
• Net increase in net assets resulting from operations of $4.3 million, or $0.32 per share
• Invested $27.6 million in debt and equity securities, including an investment in one new portfolio company
• Received proceeds from repayments and amortizations of $43.9 million
• Paid regular quarterly dividend of $0.34 per share on January 6, 2016
• Net asset value (NAV) of $194.5 million, or $14.41 per share, as of March 31, 2016, which is flat from the prior quarter.
• Weighted Average Portfolio Leverage – 3.86x, which is a slight increase from the prior quarter of 3.72x
• Weighted Average Portfolio Yield – 12.0%, down from 12.4% in the prior quarter

Management Commentary

"Originations in the first quarter were relatively light compared to the prior year, but the Company's pipeline remains strong for the second quarter and we are expecting an increase in net capital deployment during the balance of this year. Assets under management at the end of the first quarter were down 4.7% compared to the December 2015 year end. This was a result of a single subordinated debt investment paying off prematurely on March 28^th, 2016. In the absence of this payoff, AUM would have been up modestly for the quarter.

Given the moderate leverage of our portfolio companies, we expect to see continued velocity in the portfolio, thus providing us an opportunity to redeploy capital in new investments.

We also expect this portfolio velocity to allow us to achieve the number of strategic objectives that we have discussed previously; namely the reduction of equity investments as a percentage of the portfolio and the addition of more floating rate assets. This was demonstrated with our investment in ACT Lighting, which was repaid the first week of April. We received a 1.75x liquidation preference on the par value of our note, plus all accrued interest, and $1.5 million for our warrant. This realization reduced the amount of PIK and equity in our portfolio, while allowing us to recycle this capital into new floating rate investments.

Lastly, we repurchased a small number of our common shares in March. As market conditions dictate, we would expect this share repurchase to continue."

First Quarter 2016 Financial Results

For the three months ended March 31, 2016, total investment income was $9.9 million. This is an increase from the same period in the prior year mainly due to an increase of investments in the portfolio as well as fees associated with repayments. Interest and PIK income comprised $8.9 million and other income of $1.0 million included $0.9 million of prepayment fees and $0.1 million of amendment fee income.

For the three months ended March 31, 2016, total expenses were $4.3 million. Interest and financing expenses for the three months ended March 31, 2016 was $1.5 million and the base management fee was $1.2 million. The income based incentive fee for the three months ended March 31, 2016 was $0.79 million and there was no capital gains incentive fee accrual. Professional fees and other general and administrative expenses totaled $0.69 million for the three months ended March 31, 2016.

Net investment income for the three months ended March 31, 2016 was $5.6 million ($0.41 per share).

During the three months ended March 31, 2016, we recorded a net realized loss on investments of $(8.9) million and a net change in unrealized appreciation on investments of $7.8 million.

The net increase in net assets resulting from operations during the three months March 31, 2016, was $4.3 million, or $0.32 per share.

Per share results for the first quarter ended March 31, 2016 are based on shares outstanding of 13.506 million.

Portfolio and Investment Activities

As of March 31, 2016, Alcentra had debt and equity investments in 31 portfolio companies with a total fair value of $282.3 million. The average portfolio investment on a cost basis was $9.1 million and equity constituted 17.4% of the portfolio, which is down from 29% at the time of the IPO. During the first quarter ended March 31, 2016, Alcentra made investments of $27.6 million, including an investment in one new portfolio company, and received proceeds from repayments and amortizations of investments of $43.9 million. As of March 31, 2016, the weighted average yield on debt investments was 12.0%, which was a slight decrease in the weighted average yield from the December 31, 2015 reporting period of 12.4%.

First quarter 2016 investment activity included the following new portfolio company investment:

• Superior Controls, Inc. develops, installs, maintains and validates highly complex automation systems used in industrial applications. Alcentra invested $10.5 million in first lien notes and $0.400 million of equity on March 22, 2016.
• Alcentra had no investments on non-accrual status as of March 31, 2016.

Liquidity and Capital Resources

At March 31, 2016, Alcentra had $3.8 million in cash and cash equivalents.  Alcentra had $42.7 million of borrowings outstanding on its $135 million senior secured revolving credit facility and $45.4 million outstanding of Alcentra Capital InterNotes as of March 31, 2016.

Subsequent Events

• On April 4, 2016, ACT Lighting repaid the entirety of our debt and equity investments in the amount of $13.8 million.
• On April 13, 2016, Aphena Pharma Solutions repaid a portion of its debt in the amount of $2,000,000.
• On April 22, 2016, Radiant Logistics repaid the entirety of our debt investment in the amount of $10,000,000.
• On May 2, 2016, Alcentra funded an $8,500,000 12.25% second lien debt investment in Healthcare Associates of Texas, Inc ("HCAT").
• On May 5, 2016, Alcentra funded an $8,250,000 13% senior subordinated debt and $500,000 equity investment in Metal Powder Products, LLC ("MPP").

Second Quarter 2016 Dividend of $0.34 Per Share Declared

On May 5, 2016, the Company's Board of Directors declared a regular quarterly dividend of $0.34 per share for the second quarter of 2016 payable on July 7, 2016 to stockholders of record as of June 30, 2016.

Alcentra has adopted a dividend reinvestment plan ("DRIP") that provides for reinvestment of dividends on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, when the Company declares a cash dividend, stockholders who have not "opted out" of the DRIP at least three days prior to the dividend payment date will have their cash dividends automatically reinvested in additional shares of the Company's common stock. Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends in cash by notifying their broker or other financial intermediary of their election.

First Quarter 2016 Financial Results Conference Call

Management will host a conference call to discuss the operating and financial results at 10:00 am ET on Friday, May 6, 2016. To participate in the conference call, please dial (844) 832-0218 approximately 10 minutes prior to the call. International callers should dial (484) 756-4314. Please reference conference ID # 417875.

A live webcast of the conference call will be available at http://investors.alcentracapital.com/events-presentations. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.

An archived webcast replay will be available on the Company's website until May 6, 2017.

ABOUT ALCENTRA CAPITAL CORPORATION

Alcentra Capital Corporation provides customized debt and equity financing solutions to lower middle-market companies, which the Company generally defines as U.S. based companies having revenues between $10.0 million and $100.0 million. Alcentra' investment objective is to provide attractive risk-adjusted returns by generating both current income from our debt investments and capital appreciation from our equity related investments. Alcentra seeks to partner with business owners, management teams and financial sponsors by providing customized financing for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives.

Alcentra is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended. In addition, for tax purposes, Alcentra has elected to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.

FORWARD-LOOKING STATEMENTS

This press release may contain certain forward-looking statements. Any such statements, other than statements of historical fact, are based on management's current expectations, estimates, projections, beliefs and assumptions about the Company, its current and prospective portfolio investments, and its industry. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Company's control, difficult to predict and could cause actual results to differ materially from those expected or forecasted in such forward-looking statements. Actual developments and results are likely to vary materially from these estimates and projections as a result of a number of factors, including those described from time to time in Alcentra' filings with the Securities and Exchange Commission. Such statements speak only as of the time when made, and Alcentra undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

SOURCE Alcentra Capital Corporation