WhiteHorse Finance, Inc. Announces Fourth Quarter and Full Year 2016 Earnings Results

NEW YORK, March 2, 2017 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter and year ended December 31, 2016.

Fourth Quarter 2016 Summary Highlights

• New investments of $20.1 million and $63.9 million for the fourth quarter and year, respectively
• Net investment income of $6.6 million, or $0.358 per share, for the fourth quarter
• Annual net investment income of $27.0 million, or $1.48 per share
• Annual distribution of $1.42 per share

Stuart Aronson, WhiteHorse Finance's Chief Executive Officer commented, "This was a solid quarter for WhiteHorse, with strong net interest income and modest gains in our NAV. The leadership of our firm remains committed to conservative investing in senior secured assets with a goal of earning our dividend each year and protecting NAV. The pipeline for the first quarter is strong."

Portfolio and Investment Activity

As of December 31, 2016, the fair value of WhiteHorse Finance's investment portfolio was $411.7 million, compared with $415.3 million as of December 31, 2015. The portfolio at December 31, 2016 consisted of 37 positions across 29 companies with an average investment size of $11.1 million based on fair value, a weighted average effective yield of 11.8%, and an estimated weighted average leverage multiple of 3.4x.  The majority of the portfolio comprised senior secured loans and approximately 99.8% of these loans were variable-rate investments (primarily indexed to LIBOR), which should continue to position the portfolio well in a rising interest rate environment.

For the three months ended December 31, 2016, WhiteHorse Finance invested $20.1 million across two new portfolio companies. Gross proceeds from sales and repayments totaled $2.5 million for the quarter.  In addition, WhiteHorse Finance refinanced its $36.8 million loan to Future Payment Technologies into a new $23.3 million first lien loan; reducing its net position by $13.5 million.

For the year ended December 31, 2016, WhiteHorse Finance invested $63.9 million across seven new portfolio companies.  Also, the Company invested $3.2 million in existing portfolio companies. Gross proceeds from sales and repayments totaled $71.3 million for the year. In addition, WhiteHorse Finance refinanced two investments resulting in a net decrease in these investments of $2.9 million.

Results of Operations

For the three months and year ended December 31, 2016, net investment income was approximately $6.6 million and $27.0 million, compared with approximately $3.9 million and $20.8 million for the same periods in the prior year. The increase in net investment income was primarily attributable to (i) an increase in the balance of average earning investments over the same periods in the prior year, (ii) higher amortization of original issue discount related to repayments and (iii) the 2015 write off of deferred financing costs related to a credit line refinancing. In the past 24 months, cumulative core net investment income, a non-GAAP financial measure, exceeded distributions to stockholders.⁽¹⁾

For the three months and year ended December 31, 2016, WhiteHorse Finance reported realized and unrealized gain on investments of $2.5 million and $4.3 million, respectively. This compares with realized and unrealized losses on investments of $18.7 million and $23.6 million for the three months and year ended December 31, 2015, respectively. The increase in realized and unrealized gains on investments was primarily attributable to the recognition of unrealized loss in the Company's investment in RCS Capital Corporation during the fourth quarter of 2015.

For the three months and year ended December 31, 2016, WhiteHorse Finance reported net increases in net assets of $9.1 million and $31.3 million, respectively, which compares to net decreases in net assets of $14.8 million and $2.8 million for the three months and year ended December 31, 2015. 

WhiteHorse Finance's NAV was $249.4 million, or $13.63 per share, as of December 31, 2016, as compared with $246.8 million, or $13.48 per share, as of September 30, 2016. As of December 31, 2015, WhiteHorse Finance's NAV was $244.0 million, or $13.33 per share.

Liquidity and Capital Resources

As of December 31, 2016, WhiteHorse Finance had cash and cash equivalents of $28.9 million, as compared with cash and cash equivalents of $23.7 million as of September 30, 2016, inclusive of restricted cash.  As of December 31, 2016, the Company had approximately $40 million of undrawn capacity under its revolving credit facility.

Distributions

On December 19, 2016, the Company declared a distribution of $0.355 per share for the quarter ended December 31, 2016, consistent for the seventeenth consecutive quarter since the Company's IPO. The distribution was paid on January 3, 2017 to shareholders of record as of December 20, 2016.

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 fourth quarter and fiscal year-end results at 10:00 am ET on Thursday, March 2, 2017. 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 #70205251. 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 March 7, 2017. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID #70205251. 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 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 WhiteHorse Advisers, an affiliate of H.I.G. Capital. H.I.G. Capital is a leading global alternative asset manager with $21 billion of capital under management⁽²⁾ 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.