WhiteHorse Finance, Inc. Announces Third Quarter 2015 Earnings Results

Nov 05, 2015, 07:00 ET from WhiteHorse Finance, Inc.

NEW YORK, Nov. 5, 2015 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter ended September 30, 2015.

Third Quarter 2015 Summary Highlights

  • New investments of $27.9 million across three loans in three different sectors
  • Net investment income increased 40.0% year-over-year to $5.7 million
  • Third quarter net investment income of $0.378 per share
  • Third quarter distribution of $0.355 per share

Jay Carvell, WhiteHorse Finance's Chief Executive Officer commented, "We are pleased to report another strong quarter for WhiteHorse Finance. Through our affiliation with H.I.G. Capital, we continue to source attractive investments and manage our portfolio for the long term benefit of our shareholders. H.I.G.'s support was also evidenced this quarter in its affiliate buying program, where H.I.G. funds purchased over $5 million of WHF shares in the secondary market. We are pleased with the forward pipeline and believe opportunities in the credit markets will allow us to continue to achieve our origination strategy."

Portfolio and Investment Activity

As of September 30, 2015, the fair value of WhiteHorse Finance's investment portfolio was $376.1 million, compared with $387.5 million as of June 30, 2015. The portfolio at September 30, 2015 consisted of 32 positions across 26 companies with an average investment size of $11.8 million and a weighted average effective yield of 11.6 %. The majority of the portfolio was comprised of senior secured loans and more than 96.7% of these loans were variable-rate investments (primarily indexed to LIBOR), which should continue to position the portfolio well for a potential rising interest rate environment.

For the three months ended September 30, 2015, WhiteHorse Finance invested $27.9 million across three portfolio companies. Gross proceeds from sales and repayments totaled $35.3 million for the quarter. The Company continued to be highly selective with the deployment of capital into new investments.

Results of Operations

For the three months ended September 30, 2015, net investment income was $5.7 million, compared with $4.0 million for the same period in the prior year, representing an increase of 40.0%. The increase in net investment income was primarily attributable to an increase in the average earning investment balance over the same period in the prior year.

For the three months ended September 30, 2015, WhiteHorse Finance reported realized and unrealized losses on investments of $4.2 million. This compares with realized and unrealized gains on investments of $0.5 million for the three months ended September 30, 2014. The increase in realized and unrealized losses on investments was primarily attributable to fair value adjustments on three investments.

WhiteHorse Finance reported a net increase in net assets of $1.4 million for the three months ended September 30, 2015, which compares with $4.6 million for the three months ended September 30, 2014.

WhiteHorse Finance's NAV was $221.4 million, or $14.77 per share, as of September 30, 2015, as compared with $225.2 million, or $15.03 per share, reported as of June 30, 2015.

Liquidity and Capital Resources

As of September 30, 2015, WhiteHorse Finance had cash and cash equivalents of $25.9 million, as compared with $27.3 million as of June 30, 2015, inclusive of restricted cash. As of September 30, 2015, the Company had $61.5 million of undrawn capacity under its revolving credit facility.

Distributions

On August 20, 2015, the Company declared a distribution of $0.355 per share for the quarter ended September 30, 2015, consistent for the twelfth consecutive quarter since the Company's IPO. The distribution was payable on October 2, 2015 to shareholders of record as of September 21, 2015.

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 third quarter results at 10:00 am ET on Thursday, November 5, 2015. 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#64841910. 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 November 12, 2015. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID#64841910. 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 its investment adviser, H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, L.L.C. ("H.I.G. Capital"). H.I.G. Capital is a leading global alternative asset manager with $19 billion of capital under management* 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.

Based on total capital commitments to funds managed by H.I.G. Capital and its affiliates.

(Financial Tables Follow)

 

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

September 30, 2015

December 31, 2014

(Unaudited)

Assets

Investments, at fair value

Non-controlled/non-affiliate company investments

$

355,888

$

383,500

Non-controlled affiliate company investments

20,200

20,000

Total investments, at fair value (amortized cost $378,201 and $401,062, respectively)

376,088

403,500

Cash and cash equivalents

16,731

11,647

Restricted cash and cash equivalents

9,169

4,495

Interest receivable

2,676

2,702

Deferred financing costs

4,220

4,004

Prepaid expenses and other receivables

216

494

Total assets

$

409,100

$

426,842

Liabilities

Credit facility

$

88,500

$

105,500

Senior notes

30,000

30,000

Unsecured term loan

55,000

55,000

Distributions payable

5,319

5,319

Management fees payable

5,487

5,006

Payable for investments purchased

2,865

Accounts payable and accrued expenses

577

659

Total liabilities

187,748

201,484

Commitments and contingencies

Net assets

Common stock, 14,982,857 shares issued and outstanding, par value $0.001 per share and 100,000,000 authorized

15

15

Paid-in capital in excess of par

228,731

228,731

Accumulated overdistributed net investment income

(4,994)

(5,918)

Accumulated realized gains on investments

349

728

Accumulated unrealized (depreciation) appreciation on investments

(2,749)

1,802

Total net assets

221,352

225,358

Total liabilities and total net assets

$

409,100

$

426,842

Number of shares outstanding

14,982,857

14,982,857

Net asset value per share

$

14.77

$

15.04

 

 

WhiteHorse Finance, Inc. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share data)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Investment income

From non-controlled/non-affiliate company investments

  Interest income

$

10,338

$

8,712

$

31,545

$

24,919

  Fee income

681

346

1,505

1,407

From non-controlled affiliate company investments

  Dividend income

688

207

2,090

207

Total investment income

11,707

9,265

35,140

26,533

Expenses

Interest expense

1,654

1,405

5,028

4,146

Base management fees

2,125

1,871

6,377

5,439

Performance-based incentive fees

1,415

1,011

4,220

2,143

Administrative service fees

255

427

898

1,111

General and administrative expenses

596

508

1,736

2,115

Total expenses, before fees waived

6,045

5,222

18,259

14,954

Base management fees waived

(447)

Total expenses, net of fees waived

6,045

5,222

18,259

14,507

Net investment income

5,662

4,043

16,881

12,026

Realized and unrealized (losses) gains on investments

Net realized losses

Non-controlled/non-affiliate company investments

(379)

Net realized losses

(379)

Net change in unrealized (depreciation) appreciation

Non-controlled/non-affiliate company investments

(4,234)

640

(4,751)

4,044

Non-controlled affiliate company investments

(120)

200

(120)

Net change in unrealized (depreciation) appreciation

(4,234)

520

(4,551)

3,924

Net realized and unrealized (losses) gains on investments

(4,234)

520

(4,930)

3,924

Net increase in net assets resulting from operations

$

1,428

$

4,563

$

11,951

$

15,950

Per common share data

Basic and diluted earnings per common share

$

0.10

$

0.31

$

0.80

$

1.06

Dividends and distributions declared per common share

$

0.36

$

0.36

$

1.07

$

1.07

Basic and diluted weighted average common shares outstanding

14,982,857

14,982,857

14,982,857

14,982,815

 

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

September 30, 2015

(in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

North America

Debt Investments

Advertising

Intersection Acquisition, LLC.

First Lien Secured Term Loan

L+10.00%

11.00%

9/15/20

$

16,566

$

16,400

$

16,400

7.41

%

 (1.00% Floor)

Broadcasting

Multicultural Radio Broadcasting, Inc.

First Lien Secured Term Loan

L+10.50%

11.50%

6/27/19

14,850

14,850

14,806

6.69

 (1.00% Floor)

Consumer Finance

Golden Pear Funding III, LLC(7)

Second Lien Secured Term Loan(6)

L+10.25%

11.25%

6/25/20

25,000

24,720

24,500

11.07

(1.00% Floor)

Second Lien Secured Revolving Loan

L+10.25%

11.25%

6/25/20

(55)

(1.00% Floor)

Oasis Legal Finance, LLC (6) (7)

Second Lien Secured Term Loan

N/A(5)

10.50%

9/30/18

9,000

8,872

8,973

4.05

Sigue Corporation (6)

Second Lien Secured Term Loan

L+10.00%

11.00%

12/27/18

25,000

24,646

24,750

11.18

(1.00% Floor)

59,000

58,183

58,223

26.30

Data Processing & Outsourced Services

Future Payment Technologies, L.P. (6)

Second Lien Secured Term Loan

L+12.00%

13.00%

12/31/18

36,262

35,260

36,262

16.38

(1.00% Floor)

(2.00% PIK)

Diversified Support Services

Expert Global Solutions, Inc. (6)

Second Lien Secured Term Loan

L+11.00%

12.50%

10/3/18

7,500

7,434

7,410

3.35

(1.50% Floor)

Orion Healthcorp, Inc.

First Lien Secured Term Loan

L+9.00%

11.00%

9/30/17

7,495

7,312

7,540

3.40

(2.00% Floor)

Sitel Worldwide Corporation

 Second Lien Secured Term Loan

L+9.50%

10.50%

9/18/22

8,670

8,497

8,575

3.87

(1.00% Floor)

Smile Brands Group Inc.

First Lien Secured Term Loan

P+5.25%

8.50%

8/16/19

11,760

11,591

10,219

4.62

(3.25% Floor)

35,425

34,834

33,744

15.24

 

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited) (Continued)

September 30, 2015

(in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

Electronic Equipment & Instruments

AP Gaming I, LLC

  First Lien Secured Term Loan

L+8.25%

9.25%

12/20/20

$

9,825

$

9,581

$

9,746

4.40

%

 (1.00% Floor)

Food Retail

Crews of California, Inc.

  First Lien Secured Term Loan (6)

L+11.00%

12.00%

11/20/19

15,131

14,837

14,889

6.73

(1.00% Floor)

(1.00% PIK)

  First Lien Secured Revolving Loan

L+11.00%

12.00%

11/20/19

3,507

3,413

3,450

1.56

(1.00% Floor)

(1.00% PIK)

First Lien Secured Delayed Draw Term

L+11.00%

12.00%

11/20/19

5,021

4,928

4,941

2.23

Loan

(1.00% Floor)

(1.00% PIK)

23,659

23,178

23,280

10.52

Health Care Distributors

P2 Newco Acquisition, Inc. (6)

 Second Lien Secured Term Loan

L+8.50%

9.50%

10/22/21

6,000

5,950

5,994

2.71

(1.00% Floor)

Health Care Facilities

Coastal Sober Living, LLC (6)

First Lien Secured Term Loan

L+9.25%

10.25%

6/30/19

41,580

40,948

41,248

18.63

 (1.00% Floor)

Grupo HIMA San Pablo, Inc.

First Lien Secured Term Loan

L+7.00%

8.50%

1/31/18

14,625

14,464

14,625

6.61

(1.50% Floor)

 Second Lien Secured Term Loan

N/A(5)

13.75%

7/31/18

1,000

968

998

0.45

57,205

56,380

56,871

25.69

Health Care Technology

Client Network Services, Inc.

  First Lien Secured Term Loan (6)

L+13.00%

13.50%

4/24/19

13,588

13,312

13,616

6.15

(0.50% Floor)

  First Lien Secured Revolving Loan

P+12.00%

15.25%

4/24/19

(3.25% Floor)

13,588

13,312

13,616

6.15

Integrated Telecommunication Services

Securus Technologies Holdings, Inc.

 Second Lien Secured Term Loan

L+7.75%

9.00%

4/30/21

9,090

9,058

7,799

3.53

(1.25% Floor)

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited) (Continued)

September 30, 2015

(in thousands)

Investment Type(1)

Spread Above Index(2)

Interest Rate(3)

Maturity Date

Principal Amount

Amortized Cost

Fair Value

Fair Value As A Percentage Of Net Assets

Oil & Gas Drilling

ProPetro Services, Inc.

First Lien Secured Term Loan

L+6.25%

7.25%

9/30/19

$

9,000

$

8,930

$

7,407

3.35

%

 (1.00% Floor)

Oil & Gas Exploration & Production

Caelus Energy Alaska O3, LLC

 Second Lien Secured Term Loan

L+7.50%

8.75%

4/15/20

13,000

12,849

11,388

5.14

(1.25% Floor)

Larchmont Resources, LLC

  First Lien Secured Term Loan

L+8.75%

9.75%

8/7/19

1,756

1,789

1,478

0.67

(1.00% Floor)

14,756

14,638

12,866

5.81

Other Diversified Financial Services

RCS Capital Corporation(7)

  Second Lien Secured Term Loan

L+10.50%

11.50%

4/29/21

20,750

20,689

20,522

9.27

(1.00% Floor)

The Pay-O-Matic Corp.

  First Lien Secured Term Loan

L+11.00%

12.00%

3/31/18

9,875

9,704

9,885

4.47

(1.00% Floor)

30,625

30,393

30,407

13.74

Specialized Consumer Services

Pre-Paid Legal Services, Inc. (6)

Second Lien Secured Term Loan

L+9.00%

10.25%

7/1/20

18,000

17,823

18,108

8.18

(1.25% Floor)

Specialized Finance

GMT Holdings 1, Ltd. & GMT Holdings 12, Ltd.(4) (6) (7)

First Lien Secured Term Loan

N/A(5)

10.00%

6/30/17

1,860

1,876

1,860

0.84

Trucking

Fox Rent A Car, Inc. (6)

Second Lien Secured Term Loan

L+12.00%

12.19%

10/31/19

7,500

7,435

7,387

3.34

Total Debt Investments

363,211

358,081

354,776

160.28

Equity Investments

Diversified Support Services

Constellation Health, LLC Warrants (6)

N/A

N/A

9/30/18

901

0.41

Food Retail

Crews of California, Inc. Warrants (6)

N/A

N/A

12/31/24

128

0.06

Nicholas & Associates, LLC Warrants (6)

N/A

N/A

12/31/24

24

0.01

Pinnacle Management Group, LLC Warrants (6)

N/A

N/A

12/31/24

46

0.02

RC3 Enterprises, LLC Warrants (6)

N/A

N/A

12/31/24

13

0.01

211

0.10

Specialized Finance

NMFC Senior Loan Program I LLC Units (6)(7)(8)

N/A

N/A

6/10/19

20,120

20,200

9.12

Total Equity Investments

20,120

21,312

9.63

Total Investments

$

363,211

$

378,201

$

376,088

169.91

%

 

(1)

Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the "1940 Act"), and provide collateral for the Company's credit facility.

(2)

The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate ("LIBOR" or "L") or the Prime Rate ("P"), which resets monthly, quarterly or semiannually.

(3)

The interest rate is the "all-in-rate" including the current index and spread, the fixed rate, and the payment-in-kind ("PIK") interest rate, as the case may be.

(4)

WhiteHorse Finance, Inc.'s investments in GMT Holdings 1, Ltd. and GMT Holdings 12, Ltd. are held through its subsidiary Bayside Financing S.A.R.L.

(5)

Interest rate is fixed and accordingly the spread above the index is not applicable.

(6)

The investment or a portion of the investment does not provide collateral for the Company's credit facility.

(7)

Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represent 81% of total assets.

(8)

Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

 

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SOURCE WhiteHorse Finance, Inc.



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