Saratoga Investment Corp. Announces Fiscal First Quarter 2012 Financial Results

News provided by

Saratoga Investment Corp.

Jul 14, 2011, 07:30 ET

NEW YORK, July 14, 2011 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR) ("Saratoga Investment" or "the Company"), a business development company, today announced financial results for its 2012 fiscal first quarter.

Operating Results

For the fiscal quarter ended May 31, 2011, Saratoga Investment reported net investment income of $578,609, or $0.18 per share, and net gain on investments of $5.1 million, or $1.56 per share, resulting in an increase in net assets from operations of $5.7 million, or $1.74 per share and an increase in net asset value per share to $28.01 from $26.26 at February 28, 2011.  Net investment income was reduced by the accrual of $721,725 in incentive management fee expense primarily related to the net unrealized appreciation on investments for the quarter. The $5.1 million net gain on investments was comprised of $5.0 million in net unrealized appreciation on investments and $98,000 in net realized gains.  

Net asset value was $91.8 million as of May 31, 2011, compared to $86.1 million as of February 28, 2011.  Net asset value per share was $28.01 as of May 31, 2011 and $26.26 as of February 28, 2011.  

Christian L. Oberbeck, Chairman, Chief Executive Officer and President of Saratoga Investment, said, "We are encouraged by the growth in our net asset value to $28 per share as we build upon our recent achievements in restoring the financial strength of our business.  Our balance sheet remains strong, with our entire financing facility undrawn and available for further investments. Key performance metrics, such as the increase in net assets resulting from operations and earnings per share, continue to improve as we make more investments from our growing pipeline."

Portfolio and Investment Activity

As of May 31, 2011, the fair value of Saratoga Investment's investment portfolio was $93.7 million, principally invested in 22 portfolio companies and one collateralized loan obligation fund (the "CLO"). The overall portfolio composition consisted of 29.7% of first lien term loans, 23.2% of second lien term loans, 10.3% of senior secured notes, 2.2% of unsecured notes, 27.3% of subordinated notes of the CLO and 7.3% of common equity.

During the 2012 fiscal first quarter, Saratoga Investment invested $14.7 million in new or existing portfolio companies and had $7.0 million in aggregate amount of exits and repayments on its investments, resulting in net investments of $7.0 million in aggregate amount for the quarter.  

As of May 31, 2011, 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 9.0%, 10.1%, 16.1%, 18.0%, and 15.5%, respectively, which resulted in an aggregate weighted average current yield of 11.3%.

Liquidity and Capital Resources

As of May 31, 2011, Saratoga Investment had an aggregate of $13.5 million in cash and cash equivalents and payables for unsettled trades of $14.8 million.  Saratoga Investment had no outstanding borrowings and approximately $40.0 million of available liquidity to fund investments of as of May 31, 2011.

Dividend

Given the size of Saratoga Investment's asset base and its growing pipeline of attractive investments, the Company's board of directors believes that using capital resources to build and diversify the portfolio best serves stockholders' interests by positioning the Company to generate current income and capital appreciation on an increasing scale in future periods. Therefore, the Company's board of directors has determined not to pay any dividends at this time.

2012 Fiscal First Quarter Conference Call/Webcast Information

When:  July 14, 2011 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 12:00 p.m. ET on July 14, 2011 through 11:59 p.m. ET on July 21, 2011 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 83362829.

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 invests primarily in leveraged loans and mezzanine debt issued by U.S. middle-market companies, both through direct lending and through participation in loan syndicates. It has elected to be regulated as a business development company under the Investment Company Act of 1940.  Saratoga Investment Corp. is traded on the New York Stock Exchange under the symbol "SAR."

Forward-Looking Statements

This press release may contain certain forward-looking statements, including statements with regard to the future performance of Saratoga Investment Corp.  Words such as "believes," "expects," "projects," "anticipates," and "future" or similar expressions are intended to identify forward-looking statements.  These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions.  Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and these factors are identified from time to time in Saratoga Investment Corp.'s filings with the Securities and Exchange Commission.   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

May 31, 2011

February 28, 2011


(unaudited)

ASSETS







Investments at fair value



Non-control/non-affiliate investments (amortized cost of $83,526,597 and $73,779,271, respectively)

$                        68,101,302

$                     57,292,723

Control investments (cost of $26,205,227 and $27,364,350, respectively)

25,554,797

22,732,038

Total investments at fair value (amortized cost of $109,731,824 and $101,143,621, respectively)

93,656,099

80,024,761

Cash and cash equivalents

10,064,019

10,735,755

Cash and cash equivalents, securitization accounts

3,447,781

4,369,987

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

5,723

16,265

Interest receivable, (net of reserve of $26,627 and $14,796, respectively)

1,321,901

1,666,083

Deferred credit facility financing costs, net

1,468,024

1,638,768

Management fee receivable

229,395

231,753

Other assets

326,023

85,166

Total assets

$                      110,518,965

$                     98,768,538





LIABILITIES


Revolving credit facility

$                                        -

$                       4,500,000

Payable for unsettled trades

14,803,626

4,900,000

Management and incentive fees payable

2,375,106

2,203,806

Accounts payable and accrued expenses

689,774

785,486

Interest and credit facility fees payable

45,823

67,792

Due to manager

823,972

240,000

Total liabilities

$                        18,738,301

$                     12,697,084





NET ASSETS


Common stock, par value $.001 and $.001 per share, respectively, 100,000,000 common shares



authorized, 3,277,077 and 3,277,077 common shares issued and outstanding, respectively

$                                 3,277

$                              3,277

Capital in excess of par value

153,768,680

153,768,680

Distribution in excess of net investment income

(8,340,281)

(8,918,890)

Accumulated net realized loss from investments and derivatives

(37,450,008)

(37,548,016)

Net unrealized depreciation on investments and derivatives

(16,201,004)

(21,233,597)

Total Net Assets

91,780,664

86,071,454





Total liabilities and Net Assets

$                      110,518,965

$                     98,768,538





NET ASSET VALUE PER SHARE

$                                 28.01

$                              26.26






Saratoga Investment Corp.

Consolidated Statements of Operations



For three months ended
May 31, 2011

For three months ended
May 31, 2010


(unaudited)

(unaudited)





INVESTMENT INCOME


Interest from investments



Non-control/Non-affiliate investments

$                                   1,497,889

$                                   1,617,267

Control investments

889,577

652,720

    Total interest income

2,387,466

2,269,987

Interest from cash and cash equivalents

4,148

319

Management fee income

506,368

506,785

Other income

-

33,559

Total investment income

2,897,982

2,810,650





EXPENSES


Interest and credit facility financing expenses

369,910

831,121

Base management fees

398,464

411,389

Professional fees

293,628

1,142,537

Administrator expenses

240,000

155,137

Incentive management fees

721,725

-

Insurance

156,982

194,654

Directors fees and expenses

51,000

164,611

General & administrative

86,354

64,136

Other expense

1,310

-

Expenses before expense waiver and reimbursement

2,319,373

2,963,585

Expense reimbursement

-

(155,137)

Waiver of deferred incentive management fees



Total expenses net of expense waiver and reimbursement

2,319,373

2,808,448






NET INVESTMENT INCOME

578,609

2,202





REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:


Net realized gain/(loss) from investments

98,008

(2,551,410)

Net unrealized appreciation on investments

5,043,135

5,223,815

Net unrealized depreciation on derivatives

(10,542)

(19,869)

Net gain/(loss) on investments

5,130,601

2,652,536





NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$                                   5,709,210

$                                   2,654,738





WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE*

$                                            1.74

$                                            1.57





WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED*

3,277,077

1,694,011





*Weighted average earnings per share and weighted average shares outstanding for the three months ended May 31, 2010 have been adjusted to reflect a one-for-ten reverse stock split in August 2010.

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

Roland Tomforde
Broadgate Consultants
212-232-2222

SOURCE Saratoga Investment Corp.

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