Alcentra Capital Corporation Announces Second Quarter 2019 Financial Results

NEW YORK, Aug. 7, 2019 /PRNewswire/ -- Alcentra Capital Corporation (NASDAQ: ABDC) (the "Company"), a provider of debt financing solutions to middle-market companies based primarily in the United States, today announced its financial results for the second quarter of 2019.

Second Quarter 2019 Highlights

• Total investment income of $6.1 million
• Net investment income of $2.5 million, or $0.20 per share
• Invested approximately $28.6 million of capital into 6 new portfolio investments, including two new companies
• Received proceeds from repayments, loan dispositions and amortization on investments of approximately $22.1 million
• Net asset value of $141.9 million, or $11.02 per share, after taking into account the $0.15 special dividend paid on July 3, 2019
• Weighted average debt portfolio yield of approximately 10.7%

Suhail A. Shaikh, Chief Executive Officer of the Company, stated, "Over the last several quarters we have made significant progress in rotating our legacy portfolio into our new strategy and stabilizing NAV amid a competitive environment for direct lending. We are pleased with the higher quality of the book today against the comparable period."

Second Quarter 2019 Financial Results

For the three months ended June 30, 2019, total investment income was $6.1 million, a decrease of approximately $1.1 million from the $7.3 million of total investment income for the three months ended June 30, 2018. This decrease was due to continued portfolio rotation of legacy investments to investments more senior in the capital structure of our portfolio companies, and the associated decrease in weighted-average yields. For the three months ended June 30, 2019, interest and PIK income comprised $5.9 million. Net investment income for the three months ended June 30, 2019 was $2.5 million, or $0.20 per share, as compared to $3.5 million, or $0.25 per share, for the three months ended June 30, 2018.

For the three months ended June 30, 2019, total net expenses (after the waiver of management fees) were $3.6 million, a decrease of $0.2 million or 4.3%, from the $3.8 million for the three months ended June 30, 2018. Base management fees were $0.8 million, a decrease of $0.2 million, or 18.8%, from the $1.0 million for the three months ended June 30, 2018. This decrease was due to the lower amount of gross assets outstanding between the comparable periods. For the three months ended June 30, 2019, the Company recorded a net realized gain of $1.6 million and net change in unrealized depreciation from portfolio investments of $1.1 million. As a result, after considering the Company's provision for taxes on unrealized gains, the Company's net increase in net assets resulting from operations was $2.1 million for the three months ended June 30, 2019.

General and administrative expenses for the three months ended June 30, 2019 were $1.5 million, an increase of $0.6 million from the comparable period. This was largely due to an increase in professional fees and directors' fees, both primarily relating to stockholder activist activities and the board of director's formal review process to evaluate strategic alternatives for the Company. These were partially offset by a decrease in our excise tax payable, consulting fees and a reversal of accrued incentive fees.

Portfolio and Investment Activities

As of June 30, 2019, the fair value of the Company's investment portfolio totaled $219.2 million and consisted of 28 companies and 1 rated debt security in a CLO. The average portfolio investment size on an amortized cost and fair market basis was $7.2 million and $7.0 million, respectively. The Company received proceeds from repayments, loan dispositions, and amortization on investments of approximately $22.1 million during the three months ended June 30, 2019.

New and add-on investments totaling approximately $28.6 million during the quarter ended June 30, 2019 included the following:

New portfolio company investment:

• Investment of $5.0 million in the first lien tranche and $5.0 million in the second lien tranche of Perforce Software, Inc.;
• Investment of $7.0 million in the first lien tranche of Digital Room Holdings, Inc.

Existing portfolio company investments and committed capital funding:

• Investment of $6.1 million in the first lien tranche of Manna Pro Products, LLC.
• Investment of $4.8 million in the second lien tranche of Pharmalogic Holdings Corp.
• Investment of $1.0 million in the second lien tranche of BayMark Health Services, Inc.

As of June 30, 2019, the Company had one debt investment (Southern Technical Institute, Inc.) on non-accrual status. 

A risk rating of the portfolio companies is available on the Company's website presentation (https://investors.alcentracapital.com/events-presentations) and in the MD&A section of the Form 10-Q for the quarter ended June 30, 2019 filed with the Securities and Exchange Commission (the "SEC").

Liquidity and Capital Resources

At June 30, 2019, the Company had $7.8 million in cash, $26.6 million of borrowings outstanding on its $115.0 million senior secured revolving credit facility and $55.0 million outstanding of Alcentra Capital InterNotes.

Subsequent Events

• On July 3, 2019, the Company paid a quarterly dividend of $0.18 per share and a special dividend of $0.15 per share to stockholders of record as of June 28, 2019.
• On August 5, 2019, the Board approved the 2019 third quarter dividend of $0.18 per share for stockholders of record as of September 26, 2019, payable on October 3, 2019.

Second Quarter 2019 Financial Results Conference Call

Management will host a conference call to discuss the Company's operating and financial results at 9:30 am, ET on August 8, 2019. To participate in the conference call, please dial (844) 832-0218 approximately 10 minutes prior to the call. International callers should dial (484) 756-4314. Please reference conference ID 8334206#.

A live webcast of the conference call will be available at http://investors.alcentracapital.com/events-presentations. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.

An archived webcast replay will be available on the Company's website until August 8, 2020.

ABOUT ALCENTRA CAPITAL CORPORATION

Alcentra Capital provides customized debt and equity financing solutions to middle-market companies, which Alcentra Capital generally defines as U.S. based companies having between $15.0 million and $75.0 million of EBITDA. Alcentra Capital's investment objective is to provide attractive risk-adjusted returns by generating current income from its debt investments. Alcentra Capital seeks to partner with business owners, management teams and financial sponsors by providing customized financing for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives.

Alcentra Capital, which is externally managed by Alcentra NY, LLC, is a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. In addition, for tax purposes, Alcentra Capital has elected to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code.

Cautionary Statement Regarding Forward-Looking Statements

Statements included herein may constitute "forward-looking statements," which relate to future events or the Company's future performance or financial condition. These statements speak only as of the date of this press release, are based on the Company's current plans, expectations, estimates, projections, beliefs and assumptions and involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements, including those relating to the impact of activist stockholder activities and the strategic alternatives review process on, among other things, the Company's professional and consulting fees and expenses and on management distractions, the nature and timing of any possible transaction or other strategic alternative, or of any potential or anticipated benefits from any such transaction or other alternative, as well as those risks and uncertainties described in the Company's annual report on Form 10-K filed with the SEC on March 12, 2019 and in the Company's other filings made with the SEC from time to time. As a result, any forward-looking statements are not guarantees. In addition, there is no assurance that the Company will purchase additional shares at any specific discount levels or in any specific amounts under its repurchase program. There is no assurance that the market price of the Company's shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase program will enhance stockholder value over the long term. You should not place undue reliance on any forward-looking statements. Except as required by applicable law or regulation, the Company does not undertake any obligation to update its forward-looking statements to reflect future events or circumstances. 

SOURCE Alcentra Capital Corporation

Related Links

http://www.alcentracapital.com