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| 8-K - 8-K - GOLUB CAPITAL BDC, Inc. | gbdc12312016investorpresen.htm |
GOLUB CAPITAL BDC, INC.
INVESTOR
PRESENTATION
QUARTER ENDED DECEMBER 31, 2016
Disclaimer
2
Some of the statements in this presentation constitute forward-looking statements,
which relate to future events or our future performance or financial condition. The
forward-looking statements contained in this presentation involve risks and
uncertainties, including statements as to: our future operating results; our business
prospects and the prospects of our portfolio companies; the effect of investments
that we expect to make and the competition for those investments; our contractual
arrangements and relationships with third parties; actual and potential conflicts of
interest with GC Advisors LLC ("GC Advisors"), our investment adviser, and other
affiliates of Golub Capital LLC (collectively, "Golub Capital"); the dependence of our
future success on the general economy and its effect on the industries in which we
invest; the ability of our portfolio companies to achieve their objectives; the use of
borrowed money to finance a portion of our investments; the adequacy of our
financing sources and working capital; the timing of cash flows, if any, from the
operations of our portfolio companies; general economic and political trends and
other external factors; the ability of GC Advisors to locate suitable investments for
us and to monitor and administer our investments; the ability of GC Advisors or its
affiliates to attract and retain highly talented professionals; our ability to qualify and
maintain our qualification as a regulated investment company and as a business
development company; general price and volume fluctuations in the stock markets;
the impact on our business of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the rules and regulations issued thereunder; and the effect of
changes to tax legislation and our tax position.
Such forward-looking statements may include statements preceded
by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,”
“should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,”
“potential,” “plan” or similar words.
We have based the forward-looking statements included in this presentation on
information available to us on the date of this presentation. Actual results could
differ materially from those anticipated in our forward-looking statements and future
results could differ materially from historical performance. You are advised to
consult any additional disclosures that we may make directly to you or through
reports that we have filed or in the future may file with the Securities and Exchange
Commission (“SEC”), including annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and registration statements on Form N-2.
This presentation contains statistics and other data that have been obtained from or
compiled from information made available by third-party service providers. We have
not independently verified such statistics or data.
In evaluating prior performance information in this presentation, you should
remember that past performance is not a guarantee, prediction or projection of
future results, and there can be no assurance that we will achieve similar results in
the future.
1. As a supplement to U.S. generally accepted accounting principles (“GAAP”) financial measures, the Company has provided this non-GAAP performance result. The Company believes that this non-GAAP financial
measure is useful as it excludes the accrual of the capital gain incentive fee which is not contractually payable under the terms of the Company’s investment advisory agreement with GC Advisors ( the “Investment
Advisory Agreement”). The capital gain incentive fee payable as calculated under the Investment Advisory Agreement for the period ended December 31, 2016 is $0. However, in accordance with GAAP, the Company is
required to include aggregate unrealized appreciation on investments in the calculation and accrue a capital gain incentive fee on a quarterly basis as if such unrealized capital appreciation were realized, even though
such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement. Although this non-GAAP financial measure is intended to
enhance investors’ understanding of the Company’s business and performance, this non-GAAP financial measure should not be considered an alternative to GAAP. Refer to slide 4 for a reconciliation to the nearest
GAAP measure, net investment income per share.
Summary of Quarterly Results
3
First Fiscal Quarter 2017 Highlights
− Net increase in net assets resulting from operations (i.e. net income) for the quarter ended December 31, 2016 was $19.0 million, or $0.34
per share, as compared to $16.1 million, or $0.30 per share, for the quarter ended September 30, 2016.
− Net investment income for the quarter ended December 31, 2016 was $16.9 million, or $0.31 per share, as compared to $17.2 million, or
$0.32 per share, for the quarter ended September 30, 2016. Excluding a $0.5 million accrual for the capital gain incentive fee under GAAP,
net investment income for the quarter ended December 31, 2016 was $17.4 million, or $0.321 per share, as compared to $17.1 million, or
$0.321 per share, when excluding a $0.1 million reversal in the accrual for the capital gain incentive fee under GAAP for the quarter ended
September 30, 2016.
− Net realized and unrealized gain on investments and secured borrowings of $2.0 million, or $0.03 per share, for the quarter ended
December 31, 2016 was the result of a $0.9 million net realized gain and $1.1 million of net unrealized appreciation. This compares to a
net realized and unrealized loss on investments and secured borrowings of $1.1 million, or $0.02 per share, for the quarter ended
September 30, 2016.
− On December 29, 2016, we paid a quarterly distribution of $0.32 per share and a special distribution of $0.25 per share. As a result of the
special distribution, our net asset value per share declined to $15.74 as of December 31, 2016 from $15.96 as of September 30, 2016.
Excluding the special distribution, our net asset value per share would have increased at December 31, 2016 because our earnings per
share of $0.34 exceeded our regular quarterly distribution of $0.32 per share.
− New middle-market investment commitments totaled $113.6 million for the quarter ended December 31, 2016. Including investments of
$9.1 million in Senior Loan Fund LLC (“SLF”), total new investment commitments were $122.7 million. Approximately 22% of the new
investment commitments were senior secured loans, 70% were one stop loans, 7% were investments in SLF, and 1% were investments in
subordinated debt and equity securities. Overall, total investments in portfolio companies at fair value increased by approximately 2.1%,
or $35.7 million during the quarter ended December 31, 2016.
1. As a supplement to GAAP financial measures, the Company has provided this non-GAAP performance result. The Company believes that this non-GAAP financial measure is useful as it excludes the accrual of the
capital gain incentive fee which is not contractually payable under the terms of the Investment Advisory Agreement. The capital gain incentive fee payable as calculated under the Investment Advisory Agreement for the
period ended December 31, 2016 is $0. However, in accordance with GAAP, the Company is required to include aggregate unrealized appreciation on investments in the calculation and accrue a capital gain incentive
fee on a quarterly basis as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the
Investment Advisory Agreement. Although this non-GAAP financial measure is intended to enhance investors’ understanding of the Company’s business and performance, this non-GAAP financial measure should not
be considered an alternative to GAAP.
2. Excludes SLF.
3. Includes a special distribution of $0.25 per share.
Financial Highlights
4
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Earnings per share $ 0.40 $ 0.28 $ 0.35 $ 0.30 $ 0.34
Net investment income per share 0.29 0.33 0.31 0.32 0.31
Accrual for capital gain incentive fee per share 0.03 (0.01) 0.01 0.00 0.01
Net investment income before accrual for capital gain
incentive fee per share 1 0.32 0.32 0.32 0.32 0.32
Net realized/unrealized gain (loss) per share 0.11 (0.05) 0.04 (0.02) 0.03
Net asset value per share 15.89 15.85 15.88 15.96 15.74
Distributions paid per share 0.32 0.32 0.32 0.32 0.573
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Investments in Portfolio Companies, at Fair Value (000s) $ 1,416,533 $ 1,494,683 $ 1,517,445 $ 1,556,384 $ 1,587,523
Investments in SLF, at Fair Value (000s) $ 111,929 $ 117,019 $ 111,064 $ 104,228 $ 108,779
Total Fair Value of Investments (000s) $ 1,528,462 $ 1,611,702 $ 1,628,509 $ 1,660,612 $ 1,696,302
Number of Portfolio Company Investments 2 169 176 185 183 182
Average Investment Size (000s) 2 $ 8,382 $ 8,493 $ 8,202 $ 8,505 $ 8,723
Fair Value as a Percentage of Principal (Loans) 98.7% 98.6% 98.8% 98.8% 98.8%
Asset Mix of New Investments Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Senior Secured 21% 24% 17% 14% 22%
One Stop 69% 72% 81% 85% 70%
Second Lien 0% 0% 0% 0% 0%
Subordinated Debt 0% 0% 0% 0% 0%
Investment in SLF 9% 3% 0% 0% 7%
Equity 1% 1% 2% 1% 1%
Select Portfolio Funds Roll Data (in millions) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
New Investment Commitments $ 165.4 $ 155.7 $ 156.0 $ 179.4 $ 122.7
Exits and Sales of Investments 1 171.4 76.5 139.4 151.3 93.9
Net Funds Growth 2 (1.3) 83.2 16.8 32.1 35.7
* Represents an amount less than 0.1%.
1. Includes full and partial payoffs and sales of $38.3 million to SLF.
2. Net funds growth includes the impact of new investments and exits of investments as noted in the table above, as well as other variables such as net fundings on revolvers, net change in unamortized fees, net change in
unrealized appreciation (depreciation), etc.
Portfolio Highlights – New Originations
5
Originations and Net Funds Growth
− New investment commitments totaled $122.7 million for the quarter ended December 31, 2016.
− Total investments at fair value increased by 2.1%, or $35.7 million, for the quarter ended December 31, 2016 from
September 30, 2016. During the quarter ended December 31, 2016, SLF purchased $38.3 million of investments and unfunded
commitments at fair value from the Company.
**
6
Portfolio Highlights – Portfolio Diversity as of December 31, 2016
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Historical Investment Portfolio ($mm)
74%
12%
75%
11%
76%
11%
78%
10%
79%
10%
Equity
Inv. in SLF
One Stop
Senior Secured
Investment Portfolio $1,588mm1 // 182 Investments1 – Average Size $8.7mm
$1,528
Sub. Debt 2
Second Lien
$1,612 $1,629
$1,661 $1,696
3%
3% 2%
2%
1%
4%
4% 4%
4% 4%
7%
7% 7%
6%
6%
1. Excludes investment in SLF.
2. The subordinated debt investments held in all periods presented represent an amount less than 1.0%
20%
17%
9%
9%
8%
5%
4%
3%
3%
3%
6%
13%
Healthcare, Education and Childcare
Diversified/Conglomerate Service
Beverage, Food and Tobacco
Retail Stores
Electronics
Diversified/Conglomerate Manufacturing
Aerospace and Defense
Personal and Non Durable Consumer Products (Mfg. Only)
Personal, Food and Miscellaneous Services
Leisure, Amusement, Motion Pictures, Entertainment
Senior Loan Fund
Other
7
Portfolio Highlights – Portfolio Diversity as of December 31, 2016
Industry Diversity of InvestmentsDiversity by Investment Size
1. The percentage of fixed rate loans and floating rate loans is calculated using total debt investments at fair value and excludes equity investments.
Top 25
Investments
38%
Remaining
157 Investments
56%
SLF
6%
Interest Rate on Loans1
Top 10
Investments
19%
Fixed - 0.5%
99.5%
Floating
Portfolio Rotation –
Debt Investments
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Weighted average interest rate
of new investments 1,2 6.7% 7.2% 7.2% 7.6% 6.9%
Weighted average interest rate
on investments
that were sold or paid-off 2,3
7.3% 7.0% 6.8% 6.8% 6.9%
Weighted average spread over
LIBOR of new floating rate
investments 2
5.7% 6.1% 6.2% 6.6% 5.9%
Weighted average interest rate
of new fixed rate investments N/A N/A 10.6% 10.8% N/A
Weighted average fees
on new investments 1.5% 1.8% 2.1% 2.1% 1.6%
Portfolio Highlights – Spread Analysis
8
8.2% 8.0% 8.2%
8.5%
8.1%
7.6% 7.6% 7.6% 7.8% 7.7%
3.3% 3.3% 3.3% 3.4% 3.4%
4.9% 4.7% 4.9%
5.1%
4.7%
0.6% 0.6% 0.7%
0.9% 1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Investment income yield
Income yield
Weighted average cost of debt
Weighted average net investment spread
3-Month London Interbank Offered Rate ("LIBOR")
5
7
6
4
1. Weighted average interest rate on new investments is based on the contractual interest rate at the time of funding. For variable rate loans, the contractual rate is calculated using current LIBOR, the spread over LIBOR
and the impact of any LIBOR floor. For fixed rate loans, the contract rate is the stated fixed rate.
2. Excludes activity on the subordinated note investment in SLF.
3. Excludes exits on investments on non-accrual status.
4. Investment income yield is calculated as (a) the actual amount earned on earning investments, including the subordinated note investment in SLF, including interest and fee income and amortization of capitalized fees
and discounts, divided by (b) the daily average of total earning investments at fair value.
5. Income yield is calculated as (a) the actual amount earned on earning investments, including the subordinated note investment in SLF, including interest and fee income but excluding amortization of capitalized fees
and discounts, divided by (b) the daily average of total earning investments at fair value.
6. The weighted average cost of debt is calculated as (a) the actual amount incurred on debt obligations divided by (b) the daily average of total debt obligations.
7. The weighted average net investment spread is calculated as (a) the investment income yield less (b) the weighted average cost of debt.
1. Please see Internal Performance Ratings definitions on the following page.
Portfolio Highlights – Credit Quality
9
Credit Quality – Investment Portfolio
− Fundamental credit quality at December 31, 2016 remains strong with non-accrual investments as a percentage of total
investments at cost and fair value of 0.3% and 0.1%, respectively.
− Over 85.0% of the investments in our portfolio continue to have an Internal Performance Rating1 of 4 or higher as of December
31, 2016.
Non-Accrual – Debt Investments Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Non-accrual investments at amortized cost (000s) $ 13,104 $ 13,104 $ 5,278 $ 5,278 $ 5,278
Non-accrual investments / Total investments at amortized cost 0.9% 0.8% 0.3% 0.3% 0.3%
Non-accrual investments at fair value (000s) $ 6,828 $ 4,282 $ 1,326 $ 1,326 $ 1,101
Non-accrual investments / Total investments at fair value 0.5% 0.3% 0.1% 0.1% 0.1%
Rating Definition
5 Borrower is performing above expectations and the trends and risk factors are generally favorable
4 Borrower is generally performing as expected and the risk factors are neutral to favorable
3 Borrower may be out of compliance with debt covenants; however, loan payments are generally not past due
2 Borrower is performing materially below expectations and the loan’s risk has increased materially since origination
1 Borrower is performing substantially below expectations and the loan’s risk has substantially increased since origination
June 30, 2016 September 30, 2016 December 31, 2016
Internal
Performance Rating
Investments at
Fair Value
(000s)
% of
Total
Portfolio
Investments at
Fair Value
(000s)
% of
Total
Portfolio
Investments at
Fair Value
(000s)
% of
Total
Portfolio
5 $ 93,519 5.7% $ 93,768 5.7% $ 75,633 4.5%
4 $ 1,374,463 84.4% $ 1,380,274 83.1% $ 1,406,965 82.9%
3 $ 158,788 9.8% $ 176,464 10.6% $ 196,001 11.6%
2 $ 1,739 0.1% $ 9,950 0.6% $ 17,772 1.0%
1 $ - 0.0% $ 156 0.0% $ (69) 0.0%
Total $ 1,628,509 100.0% $ 1,660,612 100.0% $ 1,696,302 100.0%
Portfolio Highlights – Portfolio Ratings
10
Portfolio Risk Ratings
Internal Performance Ratings Definition
*
* Represents an amount less than 0.1%.
*
1. The negative fair value is the result of an unfunded commitment being valued below par.
1
Quarterly Statements of Financial Condition
11
1. On September 13, 2011, we received exemptive relief from the SEC to permit us to exclude the debt of our small business investment company (“SBIC”) subsidiaries from our 200% asset coverage test. As such, asset
coverage and regulatory leverage exclude the Small Business Administration (“SBA”) debentures of our SBICs.
As of
(Dollar amounts in 000s,
except per share data)
December 31, 2015
(unaudited)
March 31, 2016
(unaudited)
June 30, 2016
(unaudited)
September 30, 2016
(audited)
December 31, 2016
(unaudited)
Assets
Investments, at fair value $ 1,528,462 $ 1,611,702 $ 1,628,509 $ 1,660,612 $ 1,696,302
Cash and cash equivalents 6,871 5,335 3,167 10,947 5,709
Restricted cash and cash equivalents 94,199 36,863 58,727 78,593 66,016
Other assets 11,315 11,115 6,293 6,357 6,059
Total Assets $ 1,640,847 $ 1,665,015 $ 1,696,696 $ 1,756,509 $ 1,774,086
Liabilities
Debt $ 809,050 $ 840,050 $ 862,050 $ 864,700 $ 889,500
Unamortized debt issuance costs (6,448) (6,454) (6,051) (5,627) (5,257)
Secured borrowings, at fair value 346 334 326 475 462
Interest payable 4,872 3,136 5,300 3,229 5,937
Management and incentive fee payable 9,566 9,590 11,335 12,763 11,812
Other liabilities 7,101 2,109 3,755 2,144 2,062
Total Liabilities 824,487 848,765 876,715 877,684 904,516
Total Net Assets 816,360 816,250 819,981 878,825 869,570
Total Liabilities and Net Assets $ 1,640,847 $ 1,665,015 $ 1,696,696 $ 1,756,509 $ 1,774,086
Net Asset Value per Share $ 15.89 $ 15.85 $ 15.88 $ 15.96 $ 15.74
GAAP leverage 1.00x 1.03x 1.06x 0.99x 1.03x
Regulatory leverage 1 0.72x 0.75x 0.74x 0.67x 0.70x
Asset coverage 1 239.2% 233.5% 234.5% 248.8% 242.6%
Quarterly Operating Results
12
For the three months ended
(Dollar amounts in 000s,
except share and per share data)
December 31, 2015
(unaudited)
March 31, 2016
(unaudited)
June 30, 2016
(unaudited)
September 30, 2016
(unaudited)
December 31, 2016
(unaudited)
Investment Income
Interest income $ 29,193 $ 29,110 $ 30,867 $ 32,615 $ 32,697
Dividend income 1,007 1,178 1,179 1,274 898
Fee income 300 474 60 614 254
Total Investment Income 30,500 30,762 32,106 34,503 33,849
Expenses
Interest and other debt financing expenses 6,731 6,833 7,019 7,141 7,606
Base management fee 5,314 5,405 5,567 5,734 5,837
Incentive fee 1,771 180 2,311 3,004 2,091
Other operating expenses 1,383 1,445 1,324 1,396 1,352
Total Expenses 15,199 13,863 16,221 17,275 16,886
Excise tax 302 31 - - 10
Net Investment Income after excise tax 14,999 16,868 15,885 17,228 16,953
Net Gain (Loss) on Investments and Secured Borrowings
Net realized gain (loss) on investments 4,978 178 (5,416) 6,514 907
Net unrealized appreciation (depreciation) on investments and
secured borrowings 662 (2,869) 7,820 (7,643) 1,124
Net gain (loss) on investments and secured borrowings 5,640 (2,691) 2,404 (1,129) 2,031
Net Increase in Net Assets Resulting from Operations $ 20,639 $ 14,177 $ 18,289 $ 16,099 $ 18,984
Per Share
Earnings Per Share $ 0.40 $ 0.28 $ 0.35 $ 0.30 $ 0.34
Net Investment Income Per Share $ 0.29 $ 0.33 $ 0.31 $ 0.32 $ 0.31
Distributions Paid $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.571
Weighted average common shares outstanding 51,302,788 51,382,676 51,513,685 53,567,275 55,064,870
Common shares outstanding at end of period 51,379,787 51,511,221 51,623,325 55,059,067 55,237,037
1. Includes a special distribution of $0.25 per share.
Financial Performance Highlights
13
10.1%
7.0%
9.0%
7.5%
8.6%
6%
8%
10%
12%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Net Income
$14.58 $14.60 $14.66
$14.80
$15.12 $15.21
$15.23
$15.41 $15.44
$15.55 $15.55 $15.61
$15.74 $15.80
$15.89 $15.85 $15.88
$15.96
$14.58 $14.60 $14.66
$14.80
$15.12 $15.21
$15.23
$15.41 $15.44
$15.55 $15.55 $15.61
$15.74 $15.80
$15.89 $15.85 $15.88
$15.96
$15.74
$14.00
$14.25
$14.50
$14.75
$15.00
$15.25
$15.50
$15.75
$16.00
$16.25
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
$15.992
Quarterly Distributions Annualized Return on Average Equity1
GBDC Quarterly NAV per Common Share Since FY 2012 Q3
1. The net income annualized return on average equity is calculated as (a) the net increase in assets resulting from operations for the period presented divided by (b) the daily average of total net assets.
2. As a supplement to GAAP financial measures, the Company has provided this non-GAAP performance result. The Company believes that this non-GAAP financial measure is useful as it highlights the changes in NAV per common share for
each quarter excluding the impact of a special distribution that was paid on December 29, 2016 and shows the pro forma change to the Company’s NAV after payment of recurring distributions.
$0.32 $0.32 $0.32 $0.32
$0.32
$0.25
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Regular Distribution Special Distribution
$0.57
8.4%
Net Asset Value per Common Share Net Asset Value per Common Share Before Payment of Special Distribution
Portfolio Highlights – Senior Loan Fund LLC
14
− The annualized quarterly return for the quarter ended December 31, 2016 was 7.1%, up from 3.0% for the quarter ended
September 30, 2016. Quarterly returns for the past two quarters have been negatively impacted from a mark-to-market
unrealized loss on one middle market investment.
− Total investments at fair value for the quarter ended December 31, 2016 were $333.3 million, an increase of 3.0%, or $9.8
million, from September 30, 2016. SLF purchased $38.3 million of investments and unfunded commitments from GBDC at fair
value which was offset by $27.9 million of payoffs and sales.
− Subject to leverage and borrowing base restrictions, as of December 31, 2016, SLF had approximately $79.4 million of
remaining commitments and $1.0 million of availability on its revolving credit facility.
1. The Company’s annualized total return is calculated by dividing total income (loss) earned on the Company’s investments in SLF by the combined daily average of its investments in (1) the principal of the SLF
subordinated notes, if any, and (2) the net asset value of the SLF LLC equity interests. Annualized total return excludes the impact of management fees and incentive fees that may be charged by GC Advisors based on
the Company’s investments in SLF and the income from such investments.
(Dollar amounts in 000s) As of
Balance Sheet
December 31, 2015
(unaudited)
March 31, 2016
(unaudited)
June 30, 2016
(unaudited)
September 30, 2016
(audited)
December 31, 2016
(unaudited)
Total investments, at fair value $ 354,468 $ 360,900 $ 350,565 $ 323,510 $ 333,275
Cash and other assets 18,158 22,973 7,178 9,276 11,735
Total assets $ 372,626 $ 383,873 $ 357,743 $ 332,786 $ 345,010
Senior credit facility $ 241,100 $ 246,400 $ 231,550 $ 214,050 $ 220,600
Unamortized debt issuance costs (2,102) (1,719) (1,336) (949) (563)
Other liabilities 5,710 5,456 599 567 654
Total liabilities 244,708 250,137 230,813 213,668 220,691
Subordinated debt and members’ equity 127,918 133,736 126,930 119,118 124,319
Total liabilities and members’ equity $ 372,626 $ 383,873 $ 357,743 $ 332,786 $ 345,010
Senior leverage 1.88x 1.84x 1.82x 1.80x 1.77x
(Dollar amounts in 000s) For the three months ended
GBDC Return on Investments in SLF
December 31, 2015
(unaudited)
March 31, 2016
(unaudited)
June 30, 2016
(unaudited)
September 30, 2016
(unaudited)
December 31, 2016
(unaudited)
Total income (loss) $ (110) $ 3,049 $ 3,685 $ 852 $ 1,887
Annualized total return 1 (0.4)% 10.8% 12.6% 3.0% 7.1%
Liquidity and Investment Capacity
15
Cash and Cash Equivalents
− Unrestricted cash and cash equivalents totaled $5.7 million as of December 31, 2016.
− Restricted cash and cash equivalents totaled $66.0 million as of December 31, 2016. Restricted cash is held in our
securitization vehicles, SBIC subsidiaries and our revolving credit facility subsidiary and is reserved for quarterly interest
payments and is also available for new investments that qualify for acquisition by these entities.
Debt Facilities - Availability
− Revolving Credit Facility – As of December 31, 2016, subject to leverage and borrowing base restrictions, we had
approximately $44.5 million of remaining commitments and $10.5 million of availability on our $200.0 million revolving credit
facility with Wells Fargo.
− SBIC Debentures – As of December 31, 2016, we had $17.0 million of available debentures through two of our SBIC
subsidiaries. On January 12, 2017, we received approval for our third SBIC license, which will allow us to issue an additional
$50.0 million of debentures. Debenture draws are subject to customary SBA regulatory requirements.
− GC Advisors Revolving Credit Facility – As of December 31, 2016, we had $20.0 million of remaining commitments and
availability on our $20.0 million unsecured revolving credit facility with GC Advisors.
Senior Loan Fund LLC (“SLF”) - Recapitalization
− On December 14, 2016, the SLF investment committee approved the recapitalization of SLF’s members. On December 30,
2016, SLF’s members entered into additional LLC equity interest subscriptions totaling $160.0 million, SLF issued capital calls
totaling $89.9 million to us and RGA and the subordinated notes previously issued by SLF were redeemed and terminated. As
a result of the recapitalization, investment income from our investment in SLF will be recognized as dividend income on a go
forward basis, as opposed to a combination of interest and dividend income.
Debt Facilities
16
Tranche Rating (M/S)
Par Amount
($mm) Interest Rate Stated Maturity Reinvestment Period
Class A-1 Notes Aaa/AAA $191.0 3 Month LIBOR + 1.75% April 25, 2026 April 28, 2018
Class A-2 Notes Aaa/AAA $20.0 3 Month LIBOR + 1.95% April 25, 2026 April 28, 2018
Class B Notes Aa2/AA $35.0 3 Month LIBOR + 2.50% April 25, 2026 April 28, 2018
Total Notes Issued 2 $246.0
Tranche Rating (M/S)
Par Amount
($mm) Interest Rate Stated Maturity Reinvestment Period
Class A-Refi Notes Aaa/AAA $205.0 3 Month LIBOR + 1.90% July 20, 2023 July 20, 2018
Total Notes Issued 1 $205.0
Issuer
Amount
Outstanding
($mm)
Maximum
Commitment
($mm) Interest Rate Stated Maturity Reinvestment Period
Wells Fargo Revolving Credit Facility $155.5 $200.0 1 Month LIBOR + 2.25% July 30, 2020 July 29, 2017
SBIC IV $150.0 $150.0 3.5% 3 10-year maturity after drawn N/A
SBIC V $133.0 $150.0 3.5% 3 10-year maturity after drawn N/A
SBIC VI $0.0 $50.0 N/A 10-year maturity after drawn N/A
GC Advisors Revolving Credit Facility $0.0 $20.0 Applicable Federal Rate June 22, 2019 N/A
2010 Debt Securitization
2014 Debt Securitization
1. The Class B-Refi and Subordinated Notes issued in the 2010 Debt Securitization, as amended in October 2016, totaling $10.0 million and $135.0 million, respectively, were retained by us.
2. The Class C Notes and LLC Equity Interests issued in the 2014 Debt Securitization, totaling $37.5 million and $119.1 million, respectively, were retained by us.
3. The SBA debentures have interest rates that are fixed at various pooling dates and have an average annualized rate of 3.5%.
Debt Facilities
Common Stock and Distribution Information
17
Common Stock Data
Distribution Data
Date Declared Record Date Payment Date Amount Per Share Frequency Total Amount (in 000s)
February 3, 2015 March 20, 2015 March 27, 2015 $0.32 Quarterly $15,095
May 11, 2015 June 18, 2015 June 29, 2015 $0.32 Quarterly $16,393
August 4, 2015 September 7, 2015 September 29, 2015 $0.32 Quarterly $16,403
November 17, 2015 December 11, 2015 December 29, 2015 $0.32 Quarterly $16,416
February 2, 2016 March 7, 2016 March 30, 2016 $0.32 Quarterly $16,442
May 3, 2016 June 6, 2016 June 29, 2016 $0.32 Quarterly $16,484
August 3, 2016 September 5, 2016 September 29, 2016 $0.32 Quarterly $17,538
November 14, 2016 December 12, 2016 December 29, 2016 $0.32 Quarterly $17,619
November 14, 2016 December 12, 2016 December 29, 2016 $0.25 Special $13,765
February 7, 2017 March 7, 2017 March 30, 2017 $0.32 Quarterly $17,676 1
Fiscal Year Ended September 30, 2016 High Low End of Period
First Quarter $17.47 $16.12 $16.63
Second Quarter $17.38 $15.23 $17.31
Third Quarter $18.08 $16.84 $18.07
Fourth Quarter $19.75 $18.18 $18.57
Fiscal Year Ended September 30, 2017
First Quarter $18.76 $17.55 $18.39
1. Estimated based on shares outstanding as of December 31, 2016.