Stellus Private Credit BDC Reports Results for its second fiscal quarter ended June 30, 2022
HOUSTON, Aug. 5, 2022 /PRNewswire/ -- Stellus Private Credit BDC ("Stellus PBDC" or "the Company") today announced financial results for its second fiscal quarter ended June 30, 2022.
Robert T. Ladd, Chief Executive Officer of Stellus Private Credit BDC, stated, "We are pleased to report strong results for our second full quarter of operations. During the quarter we made seven new investments totaling $41 million, bringing the total portfolio to $79 million at fair value. We have continued to stay active since quarter end, growing the portfolio to $99 million over 18 investments today. On August 4, 2022, we declared our first quarterly dividend of $0.21 per share representing an annualized dividend yield of 5.7% based on net asset value at the beginning of the period. We expect our dividend to grow as we continue to build out the portfolio."
FINANCIAL HIGHLIGHTS | ||||||
($ in millions, except data relating to per share amounts and shares outstanding) | ||||||
Three Months Ended | Six Months Ended | |||||
June 30, 2022 | June 30, 2022 | |||||
Amount | Per Share | Amount | Per Share | |||
Net investment income | $0.70 | $0.23 | $0.78 | $0.28 | ||
Net unrealized depreciation included in earnings | (0.08) | (0.03) | (0.19) | (0.07) | ||
Net increase in net assets resulting from operations | 0.62 | 0.20 | 0.59 | 0.21 | ||
Other weighted average share adjustments(1) | - | (0.03) | - | (0.05) | ||
Net asset value | 55.05 | 14.93 | 55.05 | 14.93 | ||
Weighted average shares outstanding | 3,092,695 | 2,790,962 | ||||
Return on equity (annualized) | 4.6 % | 2.6 % | ||||
(1) | Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of the period end. |
PORTFOLIO ACTIVITY | ||||||||
($ in millions) | ||||||||
As of | As of | |||||||
June 30, 2022 | December 31, 2021 | |||||||
Investments at fair value | $78.6 | - | ||||||
Total assets | $127.0 | $0.2 | ||||||
Net assets | $55.1 | ($0.5) | ||||||
Shares outstanding | 3,688,347 | - | ||||||
Net asset value per share | $14.93 | N/A | ||||||
Quarter Ended | Six Months Ended | |||||||
June 30, 2022 | June 30, 2022 | |||||||
New investments | $41.4 | $79.5 | ||||||
Repayments of investments | (0.2) | (0.7) | ||||||
Net activity | $41.2 | $78.8 | ||||||
Results of Operations
Investment income for the three months ended June 30, 2022 totaled $1.3 million, most of which was interest income from portfolio investments.
Operating expenses for the three months ended June 30, 2022 totaled $0.6 million, net of $0.4 million in expenses reimbursed and fees waived by the Company's advisor, Stellus Private BDC Advisor, LLC. For the same period, base management fees totaled $0.3 million (which were waived by the Company's advisor), income incentive fees totaled $0.1 million, fees and expenses related to our borrowings totaled $0.3 million (including interest and amortization of deferred financing costs), administrative expenses totaled less than $0.1 million, and other expenses totaled $0.3 million.
Net investment income was $0.7 million, or $0.23 per common share of beneficial interest based on weighted average common shares of beneficial interest outstanding for the three months ended June 30, 2022 of 3,092,695.
The Company's investment portfolio had a net change in unrealized depreciation for the three months ended June 30, 2022 of $0.1 million.
Net increase in net assets resulting from operations totaled $0.6 million or $0.20 per common share of beneficial interest, based on weighted average common shares of beneficial interest outstanding for the three months ended June 30, 2022 of 3,092,695.
Liquidity and Capital Resources
As of June 30, 2022, our amended and restated senior secured revolving credit agreement with Signature Bank (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $100.0 million on a committed basis. As of June 30, 2022 and December 31, 2021, we had $46.5 million and $0 million in outstanding borrowings under the Credit Facility, respectively.
Recent Portfolio Activity
On April 1, 2022, we invested $5.0 million in the first lien term loan and committed $1.2 million in the revolver of International Designs Group LLC, a regional distributor, seller, and custom fabricator of high-end ceramic and stone tile products and accessories. Additionally, we invested $0.2 million in the equity of the company.
On April 1, 2022, we invested $6.0 million in the first lien term loan and committed $1.0 million in the revolver of Tilley Chemical Company, Inc., a distributor of specialty chemicals, oils, and lubricants into the food & beverage, lubricants, flavor and fragrances, personal care, and other chemicals end-markets.
On April 4, 2022, we invested $5.0 million in the first lien term loan and committed $0.9 million in the revolver of Microbe Formulas LLC, a provider of dietary supplements and other natural solutions for detox and gut health.
On April 29, 2022, we invested $1.3 million in the first lien term loan and committed $1.9 million in the revolver and $1.0 million in the delayed draw term loan of Florachem Holdings, LLC, a distiller and supplier of natural citrus, pine, and specialty inputs. Additionally, we invested $0.2 million in the equity of the company.
On May 17, 2022, we invested $8.9 million in the first lien term loan and committed $1.6 million in the revolver of AIP ATCO Buyer, LLC, a provider of quality assurance services for automotive OEMs and suppliers.
On May 24, 2022, we invested $6.1 million in the first lien term loan and committed €1.3 million in the revolver and €3.6 million in the delayed draw term loan of Monitorus Holding, LLC, a provider of media monitoring and evaluation services.
On June 6, 2022, we invested $6.2 million in the first lien term loan and committed $0.7 million in the revolver of Lightning Intermediate II, LLC, a vitamins, minerals, and supplements brand. Additionally, we invested $0.2 million in the equity of the company.
On June 24, 2022, we invested an additional $0.5 million in the first lien term loan of BDS Solutions Intermediateco, LLC, an existing portfolio company.
Events Subsequent to June 30, 2022
On July 1, 2022, we invested $7.5 million in the first lien term loan and committed $1.5 million in the revolver of Heat Makes Sense Shared Services, LLC, a branded haircare platform. Additionally, we invested $0.4 million in the equity of the company.
On July 5, 2022, we invested $6.2 million in the first lien term loan of Baker Manufacturing Company, LLC, a manufacturer of water well equipment, specialized filtration pumps, and custom castings. Additionally, we invested $0.3 million in the equity of the company.
On July 12, 2022, we fully funded $3.6 million in the delayed draw term loan of Monitorus Holding, LLC, an existing portfolio company.
On July 15, 2022, we received full repayment on the first lien term loan of International Designs Group, LLC for total proceeds of $5.3 million.
On July 29, 2022, we invested $3.6 million in the first lien term loan and committed $1.3 million in the revolver and $3.9 million in the delayed draw term loan of a provider of product testing and consumer insights. Additionally, we invested $0.3 million in the equity of the company.
On August 2, 2022, we partially funded $2.4 million in the delayed draw term loan and an additional $0.1 million in the equity of Inoapps Bidco, LLC, an existing portfolio company.
Credit Facility
The outstanding balance under the Credit Facility as of August 5, 2022 was $44.4 million.
Distributions Declared
On August 4, 2022, our board of trustees declared a regular distribution for the second quarter of 2022 of $0.21 per share, payable to shareholders of record as of August 11, 2022 which will be paid on August 15, 2022.
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, including statements about COVID-19 and its impacts, 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
[email protected]
STELLUS PRIVATE CREDIT BDC | ||||||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||||
June 30, 2022 | ||||||
(unaudited) | December 31, 2021 | |||||
ASSETS | ||||||
Non-controlled, non-affiliated investments, at fair value (amortized cost of | $ | 78,630,023 | $ | — | ||
Cash and cash equivalents | 47,051,204 | — | ||||
Interest receivable | 488,877 | — | ||||
Related party receivable | 383,465 | — | ||||
Expense reimbursement receivable from the Advisor | 245,356 | — | ||||
Deferred offering costs | 163,546 | 139,570 | ||||
Prepaid expenses | 48,444 | 93,648 | ||||
Other receivables | 12,997 | — | ||||
Total Assets | $ | 127,023,912 | $ | 233,218 | ||
LIABILITIES | ||||||
Credit Facility payable | $ | 46,164,986 | $ | — | ||
Short-term loan payable | 25,000,000 | — | ||||
Due to affiliate | — | 460,085 | ||||
Unearned revenue | 365,021 | — | ||||
Interest payable | 92,113 | — | ||||
Income incentive fee payable | 77,677 | — | ||||
Administrative services payable | 64,174 | — | ||||
Trustees' fees payable | — | 42,000 | ||||
Other accrued expenses and liabilities | 206,871 | 263,978 | ||||
Total Liabilities | $ | 71,970,842 | $ | 766,063 | ||
Commitments and contingencies (Note 7) | ||||||
Net Assets | $ | 55,053,070 | $ | (532,845) | ||
NET ASSETS | ||||||
Common shares of beneficial interest, par value $0.01 per share (unlimited shares | $ | 36,883 | $ | — | ||
Paid-in capital | 54,963,117 | — | ||||
Accumulated undistributed surplus (deficit) | 53,070 | (532,845) | ||||
Net Assets | $ | 55,053,070 | $ | (532,845) | ||
Total Liabilities and Net Assets | $ | 127,023,912 | $ | 233,218 | ||
Net Asset Value Per Share | $ | 14.93 | $ | N/A | ||
STELLUS PRIVATE CREDIT BDC | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||||
For the three | For the six | ||||||
months ended | months ended | ||||||
June 30, 2022 | June 30, 2022 | ||||||
INVESTMENT INCOME | |||||||
Interest income | $ | 1,247,218 | $ | 1,606,229 | |||
Other income | 30,608 | 41,351 | |||||
Total Investment Income | $ | 1,277,826 | $ | 1,647,580 | |||
OPERATING EXPENSES | |||||||
Management fees | $ | 299,076 | $ | 391,365 | |||
Interest expense and other fees | 277,904 | 350,671 | |||||
Professional fees | 116,476 | 225,064 | |||||
Organization costs | — | 90,184 | |||||
Income incentive fees | 77,677 | 77,677 | |||||
Amortization of deferred offering costs | 62,954 | 97,831 | |||||
Administrative services expenses | 40,257 | 108,399 | |||||
Trustees' fees | 40,000 | 78,000 | |||||
Other general and administrative expenses | 30,392 | 48,369 | |||||
Insurance expense | 20,495 | 40,796 | |||||
Total Operating Expenses | $ | 965,231 | $ | 1,508,356 | |||
Expenses reimbursed/waived by Investment Advisor (Note 2) | $ | (386,500) | $ | (636,722) | |||
Net Operating Expenses | $ | 578,731 | $ | 871,634 | |||
Net Investment Income | $ | 699,095 | $ | 775,946 | |||
Net change in unrealized depreciation on non-controlled, non-affiliated | $ | (82,562) | $ | (190,610) | |||
Net change in unrealized appreciation on foreign currency translation | $ | 579 | $ | 579 | |||
Net Increase in Net Assets Resulting from Operations | $ | 617,112 | $ | 585,915 | |||
Net Investment Income Per Share – basic and diluted | $ | 0.23 | $ | 0.28 | |||
Net Increase in Net Assets Resulting from Operations Per Share – basic | $ | 0.20 | $ | 0.21 | |||
Weighted Average Shares of Common Shares of Beneficial Interest | 3,092,695 | 2,790,962 | |||||
STELLUS PRIVATE CREDIT BDC | ||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited) | ||||||||||||||
Common Shares of | ||||||||||||||
Beneficial Interest | Accumulated | |||||||||||||
Number of | Par | Paid-in | undistributed | |||||||||||
shares | value | capital | (deficit) surplus | Net Assets | ||||||||||
Balances at December 31, 2021 | — | $ | — | $ | — | $ | (532,845) | $ | (532,845) | |||||
Net investment income | — | — | — | 76,851 | 76,851 | |||||||||
Net change in unrealized depreciation on non-controlled, | — | — | — | (108,048) | (108,048) | |||||||||
Issuance of common shares of beneficial interest | 2,333,334 | 23,333 | 34,976,667 | — | 35,000,000 | |||||||||
Balances at March 31, 2022 | 2,333,334 | $ | 23,333 | $ | 34,976,667 | $ | (564,042) | $ | 34,435,958 | |||||
Net investment income | — | — | — | 699,095 | 699,095 | |||||||||
Net change in unrealized depreciation on non-controlled, | — | — | — | (82,562) | (82,562) | |||||||||
Net change in unrealized appreciation on foreign currency | — | — | — | 579 | 579 | |||||||||
Issuance of common shares of beneficial interest | 1,355,013 | 13,550 | 19,986,450 | — | 20,000,000 | |||||||||
Balances at June 30, 2022 | 3,688,347 | $ | 36,883 | $ | 54,963,117 | $ | 53,070 | $ | 55,053,070 | |||||
STELLUS PRIVATE CREDIT BDC | ||||
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) | ||||
For the six | ||||
months ended | ||||
June 30, 2022 | ||||
Cash flows from operating activities | ||||
Net increase in net assets resulting from operations | $ | 585,915 | ||
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities: | ||||
Purchases of investments | (79,461,775) | |||
Proceeds from sales and repayments of investments | 690,802 | |||
Net change in unrealized depreciation on investments | 190,610 | |||
Net change in unrealized appreciation on foreign currency translation | (579) | |||
Amortization of premium and accretion of discount, net | (49,672) | |||
Amortization of loan structure fees | 144,559 | |||
Amortization of deferred offering costs | 97,831 | |||
Changes in other assets and liabilities | ||||
Increase in interest receivable | (488,877) | |||
Increase in other receivable | (12,997) | |||
Increase in receivable from related party | (383,465) | |||
Increase in expense reimbursements receivable from the Advisor | (245,356) | |||
Decrease in prepaid expenses | 45,204 | |||
Decrease in due to affiliate | (460,085) | |||
Decrease in trustees' fees payable | (42,000) | |||
Increase in administrative services payable | 64,174 | |||
Increase in interest payable | 92,113 | |||
Increase in income incentive fees payable | 77,677 | |||
Increase in unearned revenue | 365,612 | |||
Decrease in other accrued expenses and liabilities | (57,107) | |||
Net Cash Used In Operating Activities | $ | (78,847,416) | ||
Cash flows from Financing Activities | ||||
Proceeds from the issuance of common shares of beneficial interest | $ | 55,000,000 | ||
Offering costs paid for common shares of beneficial interest issued | (121,807) | |||
Borrowings under Credit Facility | 59,950,000 | |||
Repayments of Credit Facility | (13,500,000) | |||
Financing costs paid on Credit facility | (429,573) | |||
Short-term loan borrowings | 25,000,000 | |||
Net Cash Provided by Financing Activities | $ | 125,898,620 | ||
Net Increase in Cash and Cash Equivalents | $ | 47,051,204 | ||
Cash and Cash Equivalents balance at Beginning of period | — | |||
Cash and Cash Equivalents Balance at End of Period | $ | 47,051,204 | ||
Supplemental and Non-Cash Activities | ||||
Cash paid for interest expense | $ | 113,999 | ||
Increase in deferred offering costs | $ | 23,976 | ||
SOURCE Stellus Private Credit BDC
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