Stellus Private Credit BDC Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2022
HOUSTON, March 3, 2023 /PRNewswire/ -- Stellus Private Credit BDC ("Stellus PBDC" or the "Company") today announced financial results for its fourth fiscal quarter and year ended December 31, 2022.
Robert T. Ladd, Chief Executive Officer of Stellus Private Credit BDC, stated, "We are pleased to report strong results for our fourth full quarter of operations. During the quarter we made three new investments and two investments in existing portfolio companies totaling $33 million at fair value, bringing the total portfolio to $158 million at fair value. On December 28, 2022, we declared our fourth quarterly dividend of $0.33 per share representing an annualized dividend yield of 9.0%. We expect our dividend to grow as we continue to build out the portfolio."
FINANCIAL HIGHLIGHTS | ||||||
($ in millions, except data relating to per share amounts and shares outstanding) | ||||||
Three Months Ended | Year Ended | |||||
December 31, 2022 | December 31, 2022 | |||||
Amount | Per Share | Amount | Per Share | |||
Net investment income | $1.88 | $0.35 | $4.20 | $ 1.08 | ||
Net unrealized loss included in earnings | 0.30 | 0.05 | (0.52) | (0.13) | ||
Net increase in net assets resulting from operations | $2.18 | $0.41 | $3.68 | $0.95 | ||
Distributions | (3.51) | (0.66) | (4.28) | (1.11) | ||
Other weighted average share adjustments(1) | — | — | — | 0.03 | ||
Net asset value | 80.3 | $14.64 | 80.3 | 14.64 | ||
Weighted average shares outstanding | 5,344,720 | 3,869,643 | ||||
(1) | Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of the period end. |
PORTFOLIO ACTIVITY | ||||
($ in millions) | ||||
As of | As of | |||
December 31, 2022 | December 31, 2021 | |||
Investments at fair value | $157.5 | — | ||
Total assets | $174.4 | $0.2 | ||
Net assets | $80.3 | ($0.5) | ||
Shares outstanding | 5,483,433 | — | ||
Net asset value per share | $14.64 | N/A | ||
Three Months Ended | Year Ended | |||
December 31, 2022 | December 31, 2022 | |||
New investments | $33.3 | $168.3 | ||
Repayments of investments | (3.5) | (10.5) | ||
Net activity | $29.8 | $157.8 |
Results of Operations
Investment income for the year ended December 31, 2022 totaled $8.0 million, most of which was interest income from portfolio investments.
Operating expenses for the year ended December 31, 2022 totaled $5.7 million, net of $2.0 million in expenses reimbursed and fees waived by the Company's investment advisor, Stellus Private BDC Advisor, LLC (the "Advisor"). For the same period, base management fees totaled $1.3 million (all of which were waived by the Advisor), income incentive fees totaled $0.7 million (net of $0.2 million which were waived as our shares were not listed on a national exchange), fees and expenses related to our borrowings totaled $2.3 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.2 million, and other expenses totaled $1.3 million.
Net investment income was $4.2 million, or $1.08 per common share of beneficial interest based on weighted average common shares of beneficial interest outstanding of 3,869,643 for the year ended December 31, 2022.
The Company's investment portfolio had a net change in unrealized depreciation of ($0.5) million for the year ended December 31, 2022.
Net increase in net assets resulting from operations totaled $3.7 million or $0.95 per common share of beneficial interest, based on weighted average common shares of beneficial interest outstanding of 3,869,643 for the year ended December 31, 2022.
Liquidity and Capital Resources
As of December 31, 2022, our amended and restated senior secured revolving credit agreement with Signature Bank (as amended from time to time, the "Commitment Facility") provided for borrowings in an aggregate amount of up to $100.0 million on a committed basis. As of December 31, 2022 and December 31, 2021, we had $80.6 million and $0.0 million in outstanding borrowings under the Commitment Facility, respectively.
On September 30, 2022, the Company entered into a senior secured revolving credit agreement with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the "Credit Facility", together with the Commitment Facility, the "Credit Facilities"). The Credit Facility, as amended, provides for borrowings up to a maximum of $130.0 million on a committed basis with an accordion feature that allows the Company to increase the aggregate commitments up to $200.0 million, subject to new or existing lenders agreeing to participate in the increase and other customary conditions. As of December 31, 2022 and December 31, 2021, we had $0.0 million in outstanding borrowings under the Credit Facility.
Recent Portfolio Activity
Activity Type | Date | Company Name | Company Description | Investment Amount | Instrument Type | ||||||
Add-On Investment | October 3, 2022 | BLP Buyer, Inc.* | Distributor of lifting solutions | $ | 1,278,711 | Senior Secured – First Lien | |||||
New Investment | November 16, 2022 | Onpoint Industrial Services, LLC | Provider of safety, logistics, planning, and project management services | $ | 6,805,027 | Senior Secured – First Lien | |||||
$ | 335,499 | Equity | |||||||||
New Investment | November 22, 2022 | COPILOT Provider Support Services, LLC | End-to-end HUB software platform for the healthcare industry | $ | 9,533,636 | Senior Secured – First Lien | |||||
$ | 921,585 | Revolver commitment | |||||||||
$ | 544,779 | Equity | |||||||||
Add-On Investment | December 8, 2022 | BLP Buyer, Inc.* | Distributor of lifting solutions | $ | 4,852,763 | Senior Secured – First Lien | |||||
New Investment | December 30, 2022 | Madison Logic Holdings, Inc | Provider of B2B account based marketing services | $ | 4,756,819 | Senior Secured – First Lien | |||||
$ | 388,726 | Revolver commitment | |||||||||
* Existing portfolio company |
Events Subsequent to December 31, 2022
Activity Type | Date | Company Name | Company Description | Investment Amount | Instrument Type | ||||||
New Investment | January 31, 2023 | Red's All Natural, LLC | Premium frozen food manufacturer | $ | 4,900,742 | Senior Secured – First Lien | |||||
$ | 318,998 | Equity | |||||||||
Credit Facilities
On February 1, 2023, the Company further amended the Commitment Facility with Signature Bank. The Commitment Facility, as amended, provides for borrowings up to a maximum of $50.0 million on a committed basis. Any amounts borrowed under the Commitment Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on December 31, 2023.
As of March 3, 2023, the outstanding balance under the Commitment Facility was $45,000,000 and the outstanding balance under the Credit Facility was $42,000,000.
About Stellus Private Credit BDC
The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans and second lien loans, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Private BDC Advisor, LLC.
Forward-Looking Statements
Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. 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 assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed 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.
Contacts
Stellus Private Credit BDC
W. Todd Huskinson, Chief Financial Officer
(713) 292-5414
thuskinson@stelluscapital.com
STELLUS PRIVATE CREDIT BDC | ||||||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||||
December 31, 2022 | December 31, 2021 | |||||
ASSETS | ||||||
Non-controlled, non-affiliated investments, at fair value (amortized cost of $158,022,677) | $ | 157,504,755 | $ | — | ||
Cash and cash equivalents | 15,469,823 | — | ||||
Interest receivable | 1,030,274 | — | ||||
Expense reimbursement receivable from the Advisor | 165,638 | — | ||||
Deferred offering costs | 54,394 | 139,570 | ||||
Related party receivable | 9,620 | — | ||||
Prepaid expenses | 133,004 | 93,648 | ||||
Receivable for sales and repayments of investments | 26,996 | — | ||||
Total Assets | $ | 174,394,504 | $ | 233,218 | ||
LIABILITIES | ||||||
Credit Facilities payable | $ | 79,448,134 | $ | — | ||
Short-term loan payable | 11,250,000 | — | ||||
Dividends payable | 1,809,533 | — | ||||
Due to affiliate | — | 460,085 | ||||
Unearned revenue | 539,634 | — | ||||
Income incentive fee payable | 328,196 | — | ||||
Interest payable | 563,241 | — | ||||
Administrative services payable | 66,064 | — | ||||
Trustees' fees payable | — | 42,000 | ||||
Income tax payable | 7,471 | — | ||||
Other accrued expenses and liabilities | 119,274 | 263,978 | ||||
Total Liabilities | $ | 94,131,547 | $ | 766,063 | ||
Commitments and contingencies (Note 7) | ||||||
Net Assets | $ | 80,262,957 | $ | (532,845) | ||
NET ASSETS | ||||||
Common shares of beneficial interest, par value $0.01 per share (unlimited shares | $ | 54,834 | $ | — | ||
Paid-in capital | 80,950,845 | — | ||||
Total distributable loss | (742,722) | (532,845) | ||||
Net Assets | $ | 80,262,957 | $ | (532,845) | ||
Total Liabilities and Net Assets | $ | 174,394,504 | $ | 233,218 | ||
Net Asset Value Per Share | $ | 14.64 | $ | N/A | ||
STELLUS PRIVATE CREDIT BDC | ||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS | ||||||
For the | For the period from | |||||
year ended | Inception through | |||||
December 31, 2022 | December 31, 2021 | |||||
INVESTMENT INCOME | ||||||
Interest income | $ | 7,804,783 | $ | — | ||
Other income | 152,173 | — | ||||
Total Investment Income | $ | 7,956,956 | $ | — | ||
OPERATING EXPENSES | ||||||
Management fees | $ | 1,335,054 | $ | — | ||
Income incentive fees | 686,398 | — | ||||
Professional fees | 447,045 | 70,800 | ||||
Organization costs | 90,184 | 416,553 | ||||
Amortization of deferred offering costs | 240,152 | — | ||||
Administrative services expenses | 226,489 | — | ||||
Trustees' fees | 158,000 | 42,000 | ||||
Insurance expense | 82,045 | — | ||||
Valuation fees | 5,519 | — | ||||
Interest expense and other fees | 2,312,701 | — | ||||
Income tax expense | 7,471 | — | ||||
Other general and administrative expenses | 120,343 | 3,492 | ||||
Total Operating Expenses | $ | 5,711,401 | $ | 532,845 | ||
Expenses reimbursed/fees waived by Investment Advisor (Note 2) | $ | (1,952,196) | $ | — | ||
Net Operating Expenses | $ | 3,759,205 | $ | 532,845 | ||
Net Investment Income | $ | 4,197,751 | $ | (532,845) | ||
Net realized gain on foreign currency translation | $ | 1,950 | $ | — | ||
Net change in unrealized depreciation on non-controlled non-affiliated investments | (538,883) | — | ||||
Net change in unrealized appreciation on foreign currency translations | 20,961 | — | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 3,681,779 | $ | (532,845) | ||
Net Investment Income Per Share – basic and diluted | $ | 1.08 | $ | N/A | ||
Net Increase in Net Assets Resulting from Operations Per Share – basic and diluted | $ | 0.95 | $ | N/A | ||
Weighted Average Shares of Common Shares of Beneficial Interest Outstanding – | 3,869,643 | N/A | ||||
Distributions Per Share – basic and diluted | $ | 1.11 | $ | N/A | ||
STELLUS PRIVATE CREDIT BDC | ||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS | ||||||||||||||
Common Shares of | ||||||||||||||
Beneficial Interest | Total | |||||||||||||
Number of | Par | Paid-in | distributable | |||||||||||
shares | value | capital | loss | Net Assets | ||||||||||
Balances at December 31, 2020 | — | $ | — | $ | — | $ | — | $ | — | |||||
Net investment loss | — | — | — | (532,845) | (532,845) | |||||||||
Balances at December 31, 2021 | — | $ | — | $ | — | $ | (532,845) | $ | (532,845) | |||||
Net investment income | — | — | — | 4,197,751 | 4,197,751 | |||||||||
Net realized gain on foreign currency translation | — | — | — | 1,950 | 1,950 | |||||||||
Net change in unrealized depreciation on non-controlled, non-affiliated investments | — | — | — | (538,883) | (538,883) | |||||||||
Net change in unrealized appreciation on foreign currency translations | — | — | — | 20,961 | 20,961 | |||||||||
Return of capital and other tax related adjustments | — | — | (388,214) | 388,214 | — | |||||||||
Distributions from net investment income | — | — | — | (4,279,870) | (4,279,870) | |||||||||
Issuance of common shares of beneficial interest | 5,483,433 | 54,834 | 81,339,059 | — | 81,393,893 | |||||||||
Balances at December 31, 2022 | 5,483,433 | $ | 54,834 | $ | 80,950,845 | $ | (742,722) | $ | 80,262,957 | |||||
STELLUS PRIVATE CREDIT BDC | ||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
For the period | ||||||
For the | from Inception | |||||
year ended | through | |||||
December 31, 2022 | December 31, 2021 | |||||
Cash flows from Operating Activities | ||||||
Net increase (decrease) in net assets resulting from operations | $ | 3,681,779 | $ | (532,845) | ||
Adjustments to reconcile net increase in net assets from operations to net cash used in | ||||||
Purchases of investments | (168,326,016) | — | ||||
Proceeds from sales and repayments of investments | 10,474,408 | — | ||||
Net change in unrealized depreciation on investments | 538,883 | — | ||||
Net change in unrealized appreciation foreign currency translations | (20,961) | — | ||||
Amortization of premium and accretion of discount, net | (198,065) | — | ||||
Amortization of loan structure fees | 478,626 | — | ||||
Amortization of deferred offering costs | 240,152 | — | ||||
Changes in other assets and liabilities | ||||||
Increase in interest receivable | (1,030,274) | — | ||||
Increase in deferred offering costs | — | (139,570) | ||||
Increase in related party receivable | (9,620) | — | ||||
Increase in expense reimbursements receivable from the Advisor | (165,638) | — | ||||
Increase in prepaid expenses | (39,356) | (93,648) | ||||
(Decrease) increase in due to affiliate | (460,085) | 460,085 | ||||
Increase in professional fees payable | — | 263,978 | ||||
(Decrease) increase in trustees' fees payable | (42,000) | 42,000 | ||||
Increase in administrative services payable | 66,064 | — | ||||
Increase in interest payable | 563,241 | — | ||||
Increase in income incentive fees payable | 328,196 | — | ||||
Increase in unearned revenue | 539,634 | — | ||||
Increase in income tax payable | 7,471 | — | ||||
Decrease in other accrued expenses and liabilities | (144,704) | — | ||||
Net Cash Used in Operating Activities | $ | (153,518,265) | $ | — | ||
Net Cash Provided from Financing Activities | ||||||
Proceeds from issuance of common shares of beneficial interest | $ | 81,393,893 | $ | — | ||
Offering costs paid for common shares of beneficial interest issued | (154,976) | — | ||||
Stockholder distributions paid | (2,470,337) | — | ||||
Borrowings under Credit Facilities | 124,762,500 | — | ||||
Repayments of Credit Facilities | (44,147,500) | — | ||||
Financing costs paid on Credit Facilities | (1,645,492) | — | ||||
Short-term loan borrowings | 11,250,000 | — | ||||
Net Cash Provided by Financing Activities | $ | 168,988,088 | $ | — | ||
Net Increase in Cash and Cash Equivalents | $ | 15,469,823 | $ | — | ||
Cash and Cash Equivalents Balance at Beginning of period | — | — | ||||
Cash and Cash Equivalents Balance at End of Period | $ | 15,469,823 | $ | — | ||
Supplemental and Non-Cash Activities | ||||||
Cash paid for interest expense | $ | 1,270,834 | $ | — | ||
Value of common shares of beneficial interest issued pursuant to Dividend Reinvestment Plan | 43,893 | — | ||||
Increase in dividends payable | 1,809,533 | — | ||||
SOURCE Stellus Private Credit BDC
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