Exhibit 99.1

 

 

 

WhiteHorse Finance, Inc. Announces Second Quarter 2020 Earnings Results and Declares Quarterly Distribution of $0.355 Per Share

 

NEW YORK, NY, August 10, 2020 – WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the “Company”) (Nasdaq: WHF) today announced its financial results for the quarter ended June 30, 2020. Additionally, the Company announced that its board of directors has declared a distribution of $0.355 per share with respect to the quarter ending September 30, 2020. The distribution will be payable on October 2, 2020 to stockholders of record as of September 21, 2020.

 

Second Quarter 2020 Summary Highlights

·

Net Asset Value of $300.2 million, or $14.61 per share

·

Investment portfolio(1) totaling $547.4 million

·

STRS JV investment portfolio totaling $160.8 million

·

Gross investment additions(2) of $39.4 million, including new positions of $33.6 million and $5.8 million of fundings for add-ons to existing investments

·

Net investment income of $5.2 million, or $0.255 per share

·

Core net investment income of $5.2 million, or $0.255 per share(3)

·

Second quarter distribution of $0.355 per share

 

(1) Includes investments in WHF STRS Ohio Senior Loan Fund LLC (“STRS JV”), an unconsolidated joint venture, totaling $48.9 million, at fair value.

(2) Excludes investments made in STRS JV.

(3) Core net investment income is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management because it reflects the Company's financial performance excluding (i) the net impact of costs associated with the refinancing of the Company’s indebtedness, (ii) the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and (iii) excise and other income taxes related to such net realized gains and losses (net of incentive fees). The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Additional information on core net investment income and a reconciliation of core net investment income to its most directly comparable GAAP financial measure, net investment income, are set forth in Schedule 1 hereto.

 

Stuart Aronson, WhiteHorse Finance’s Chief Executive Officer commented, “Five months into the COVID-19 pandemic, we have seen the market slowly recover from the first shock with moderate pricing and slightly higher deal activity. While NII for the quarter was below our goal, NAV increased materially and liquidity dramatically improved. During the quarter, we continued to grow our portfolio with three new first lien positions and our portfolio is now comprised of 93.8% first lien loans. Recently, we also reduced outstanding borrowings on our credit facility to its minimum requirement and this influx of liquidity will allow us to rebuild our pipeline and take advantage of the better deals we are now seeing in the marketplace. We will continue leveraging our three-tiered sourcing approach and rigorous underwriting standards while continuing to build value for our shareholders.”

 

Portfolio and Investment Activity

 

As of June 30, 2020, the fair value of WhiteHorse Finance’s investment portfolio was $547.4 million, compared with $557.1 million as of March 31, 2020. The portfolio at June 30, 2020 consisted of 68 positions across 53 companies with a weighted average effective yield of 9.6% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV) was $8.8 million with the overall portfolio comprised of approximately 83% first lien secured loans, 5% second lien secured loans, 3% equity and 9% in investments in STRS JV. Almost all loans were substantially variable-rate investments (primarily indexed to the London Interbank Offered Rate) with fixed rate securities representing only 0.4%of loans at fair value. Nearly all performing floating rate investments have interest rate floors.

 

During the three months ended June 30, 2020, WhiteHorse Finance made investments in three new portfolio companies totaling $33.6 million and added a total of $5.8 million to three existing portfolio companies. Proceeds from sales and repayments, including $0.3 million of net repayments on revolvers, totaled approximately $36.9 million for the quarter ended June 30, 2020, driven by a full paydown from Sigue Corporation of $24.8 million.

 

In addition to the transactions above, during the three months ended June 30, 2020, WhiteHorse Finance transferred an aggregate of $36.6 million in assets to STRS JV in exchange for a net investment in STRS JV of $5.7 million as well as cash proceeds of $30.9 million.

 

 

WHF STRS Ohio Senior Loan Fund LLC

 

As of June 30, 2020, STRS JV’s portfolio totaled $160.8 million, consisted of 18 portfolio companies and had a weighted average effective yield of 7.9% on its portfolio.

 

Results of Operations

 

For the three months ended June 30, 2020, the Company’s net investment income was approximately $5.2 million, compared with approximately $7.2 million for the same period in the prior year, representing a decrease of approximately 27.8%. The decrease in net investment income for the year-over-year period is primarily attributable to lower non-recurring fee income in the current quarter. The decrease in fee income during the quarter ended June 30, 2020 as compared to the same period in the prior year is a result of a lower volume in non-recurring, fee-generating events. The decrease in fee income during the quarter ended June 30, 2020 was partially offset by a decrease in incentive fees as compared to the same period in the prior year. The incentive fees decrease was primarily due to lower net investment income in the current quarter.

 

For the three months ended June 30, 2020, core net investment income, a non-GAAP financial measure that excludes capital gains incentive fee accruals, the net effects of excise or other income taxes related to net realized gains and losses, and the associated costs of refinancing the Company’s indebtedness, was $5.2 million, compared with $7.4 million for the same period in the prior year, representing a decrease of approximately 29.4%.

 

For the three months ended June 30, 2020, WhiteHorse Finance reported a net realized and unrealized gain on investments and foreign currency transactions of $17.6 million. This compares with a net realized and unrealized gain on investments and foreign currency transactions of $1.0 million for the three months ended June 30, 2019. The increase in the year-over-year period was primarily attributable to markups in the portfolio as a result of overall market stability and price recovery from the COVID-19 pandemic in the prior quarter.

 

WhiteHorse Finance reported a net increase in net assets resulting from operations of approximately $22.8 million for the three months ended June 30, 2020, which compares with a net increase of $8.2 million for the three months ended June 30, 2019.

 

WhiteHorse Finance’s net asset value was $300.2 million, or $14.61 per share, as of June 30, 2020, as compared with $284.7 million, or $13.86 per share, as of March 31, 2020.

 

Liquidity and Capital Resources

 

As of June 30, 2020, WhiteHorse Finance had cash and cash equivalents of $20.9 million, as compared with $28.1 million as of March 31, 2020, inclusive of restricted cash. As of June 30, 2020, the Company also had $57.8 million of undrawn capacity under its revolving credit facility.

 

Distributions

  

On June 2, 2020, the Company declared a distribution of $0.355 per share for the quarter ended June 30, 2020. The distribution was paid on July 3, 2020 to stockholders of record as of June 19, 2020, and marks the thirty-first consecutive quarterly distribution paid since the Company’s initial public offering with all distributions consistently paid at the quarterly rate of $0.355 per share.

 

 

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 second quarter results at 2:00 p.m. ET on Monday, August 10, 2020. 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 #3181299. 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 August 17, 2020. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID #3181299. 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, lower middle market companies across a broad range of industries. The Company's investment activities are managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, LLC, (“H.I.G. Capital”). H.I.G. Capital is a leading global alternative asset manager with $39 billion of capital under management⁽⁴⁾ 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.

 

^{(4) Based on total capital commitments managed by H.I.G. Capital and affiliates.}

 

 

SCHEDULE 1

 

As a supplement to GAAP financial measures, the Company has provided information relating to core net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income determined in accordance with GAAP. The Company’s non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted to exclude the net impact of costs associated with the refinancing of the Company’s indebtedness, the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and excise or other income taxes related to such net realized gains and losses (net of incentive fees). There were no excise or other income taxes related to net realized gains and losses, nor did the Company refinance any of its indebtedness for the quarters ended June 30, 2020 and June 30, 2019. Additionally, there were no accruals for the capital gains incentive fee attributable to net realized and unrealized gains and losses for the three months ended June 30, 2020.

 

The following table provides a reconciliation of net investment income to core net investment income for the three months ended June 30, 2020 and June 30, 2019 (in thousands, except per share data):
 

		June 30, 2020								June 30, 2019
		Amount				Per Share Amounts				Amount				Per Share Amounts
Net investment income		$	5,240			$	0.255			$	7,226			$	0.352
Net impact of costs associated with refinancing of indebtedness			-				-				-				-
Accrual for capital gains incentive fee			-				-				198				0.010
Net impact of excise tax expense related to net realized gains and losses			-				-				-				-
Core net investment income		$	5,240			$	0.255			$	7,424			$	0.362

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

 

		June 30, 2020				December 31, 2019
		(Unaudited)
Assets
Investments, at fair value
Non-controlled/non-affiliate company investments		$	490,013			$	546,744
Non-controlled affiliate company investments			8,521				9,651
Controlled affiliate company investments			48,863				33,293
Total investments, at fair value (amortized cost $565,762 and $597,725, respectively)			547,397				589,688
Cash and cash equivalents			2,263				4,294
Restricted cash and cash equivalents			18,487				23,252
Restricted foreign currency (cost of $143)			136				—
Interest and dividend receivable			5,900				6,010
Amounts receivable on unsettled investment transactions			297				360
Prepaid expenses and other receivables			464				7,620
Total assets		$	574,944			$	631,224
Liabilities
Debt		$	252,671			$	298,924
Distributions payable			7,294				7,294
Management and incentive fees payable			7,359				8,290
Interest payable			1,315				1,674
Accounts payable and accrued expenses			1,163				1,944
Amounts payable on unsettled investment transactions			4,900				—
Unrealized depreciation on foreign currency forward contracts			3				—
Advances received from unfunded credit facilities			17				143
Total liabilities			274,722				318,269
Commitments and contingencies
Net assets
Common stock, 20,546,032 and 20,546,032 shares issued and outstanding, par value $0.001 per share, respectively, and 100,000,000 authorized			21				21
Paid-in capital in excess of par			300,744				300,744
Accumulated earnings (deficit)			(543	)			12,190
Total net assets			300,222				312,955
Total liabilities and total net assets		$	574,944			$	631,224
Number of shares outstanding			20,546,032				20,546,032
Net asset value per share		$	14.61			$	15.23

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

		Three months ended June 30,								Six months ended June 30,
		2020				2019				2020				2019
Investment income
From non-controlled/non-affiliate company investments
Interest income		$	12,145			$	12,746			$	25,284			$	27,238
Fee income			539				2,926				830				4,083
Dividend income			30				-				79				-
From non-controlled affiliate company investments
Dividend income			263				312				538				587
From controlled affiliate company investments
Interest income			606				-				1,231				-
Dividend income			240				-				393				-
Total investment income			13,823				15,984				28,355				31,908
Expenses
Interest expense			3,223				3,176				6,891				6,249
Base management fees			2,950				2,818				6,042				5,407
Performance-based incentive fees			1,311				2,055				1,752				3,806
Administrative service fees			171				159				342				317
General and administrative expenses			730				532				1,610				1,214
Total expenses, before fees waived			8,385				8,740				16,637				16,993
Base management fee waived			-				(220	)			-				(397	)
Total expenses, net of fees waived			8,385				8,520				16,637				16,596
Net investment income before excise tax			5,438				7,464				11,718				15,312
Excise tax			198				238				376				475
Net investment income after excise tax			5,240				7,226				11,342				14,837
Realized and unrealized gains (losses) on investments and foreign currency transactions
Net realized gains (losses)
Non-controlled/non-affiliate company investments			(77	)			-				433				(2,018	)
Non-controlled-affiliate company investments			-				-				-				-
Foreign currency transactions			70				-				67				-
Foreign currency forward contracts			(6	)			-				-				-
Net realized gains (losses)			(13	)			-				500				(2,018	)
Net change in unrealized appreciation (depreciation)
Non-controlled/non-affiliate company investments			15,841				937				(6,355	)			2,925
Non-controlled affiliate company investments			871				56				(1,130	)			(520	)
Controlled affiliate company investments			1,111				-				(2,842	)			-
Translation of assets and liabilities in foreign currencies			(237	)			-				343				-
Foreign currency forward contracts			(2	)			-				(3	)			-
Net change in unrealized appreciation (depreciation)			17,584				993				(9,987	)			2,405
Net realized and unrealized gains (losses) on investments			17,571				993				(9,487	)			387
Net increase in net assets resulting from operations		$	22,811			$	8,219			$	1,855			$	15,224
Per Common Share Data
Basic and diluted earnings per common share		$	1.11			$	0.41			$	0.09			$	0.74
Dividends and distributions declared per common share		$	0.36			$	0.36			$	0.71			$	0.71
Basic and diluted weighted average common shares outstanding			20,546,032				20,546,032				20,546,032				20,546,032

 

 

WhiteHorse Finance, Inc. 

Consolidated Schedule of Investments (Unaudited) 

June 30, 2020 

(in thousands)

 

Investment Type(1)		Spread Above Index(2)	Interest Rate(3)			Acquisition Date(10)		Maturity Date		Principal/ Share Amount		Amortized Cost			Fair Value(11)			Fair Value As A Percentage of Net Assets
North America
Debt Investments
Advertising
Fluent, LLC
First Lien Secured Term Loan		L+ 7.00%		7.50%		03/26/18		03/27/23		8,645		$	8,645		$	8,619		2.87	%
		(0.50% Floor)
Connexity, Inc.
First Lien Secured Term Loan		L+ 8.50%		10.00%		05/21/20		05/21/25		11,000			10,678			10,675		3.56
		(1.50% Floor)
										19,645			19,323			19,294		6.43
Agricultural & Farm Machinery
Bad Boy Mowers Acquisition, LLC
First Lien Secured Term Loan		L+ 5.75%		6.75%		12/19/19		12/06/25		10,333			10,049			9,816		3.27
		(1.00% Floor)
Air Freight & Logistics
Access USA Shipping, LLC
First Lien Secured Term Loan		L+ 8.00%		9.50%		02/08/19		02/08/24		5,505			5,446			5,441		1.81
		(1.50% Floor)
Application Software
Newscycle Solutions, Inc.
First Lien Secured Term Loan		L+ 7.00%		8.00%		06/14/19		12/29/22		5,195			5,122			4,832		1.61
		(1.00% Floor)
First Lien Secured Revolving Loan		L+ 7.00%		8.00%		06/14/19		12/29/22		301			298			280		0.09
		(1.00% Floor)
										5,496			5,420			5,112		1.70
Automotive Retail
Team Car Care Holdings, LLC
First Lien Secured Term Loan(12)		base rate+ 7.99%		9.40%		02/26/18		02/23/23		16,491			16,295			15,900		5.30
		(1.00% Floor)
BW Gas & Convenience Holdings, LLC
First Lien Secured Term Loan		L+ 6.25%		6.43%		11/15/19		11/18/24		8,288			7,993			8,039		2.68
		(0.00% Floor)
										24,779			24,288			23,939		7.98
Broadcasting
Alpha Media, LLC
First Lien Secured Term Loan		L+ 6.00%		7.00%		08/14/18		02/25/22		5,155			5,077			4,923		1.64
		(1.00% Floor)
Rural Media Group, Inc.
First Lien Secured Term Loan		L+ 8.75%		9.75%		12/29/17		12/29/22		3,391			3,358			3,391		1.13
		(1.00% Floor)
										8,546			8,435			8,314		2.77
Cable & Satellite
Bulk Midco, LLC
First Lien Secured Term Loan(15)		P+ 6.23%		9.48%		06/08/18		06/08/23		15,000			14,868			13,725		4.57
		(0.75% Floor)
Communications Equipment
Sorenson Communications, LLC
First Lien Secured Term Loan		L+ 6.50%		6.81%		03/15/19		04/29/24		4,319			4,220			4,153		1.38
		(0.00% Floor)
Construction & Engineering
Atlas Intermediate Holdings LLC
First Lien Secured Term Loan		L+ 6.25%		7.25%		05/26/20		02/14/26		15,464			14,547			14,553		4.85
		(1.00% Floor)
Data Processing & Outsourced Services
FPT Operating Company, LLC/
TLabs Operating Company, LLC
First Lien Secured Term Loan		L+ 8.25%		9.25%		12/23/16		06/07/24		24,595			24,401			23,120		7.70
		(1.00% Floor)
Geo Logic Systems Ltd. (5)
First Lien Secured Term Loan (13)		C +6.25%		7.25%		12/19/19		12/19/24		6,795			5,089			4,701		1.57
		(1.00% Floor)
First Lien Secured Revolving Loan (7)(13)		C +6.25%		7.25%		12/19/19		12/19/24		-			-			(12	)	-
		(1.00% Floor)
										31,390			29,490			27,809		9.27
Department Stores
Mills Fleet Farm Group, LLC
First Lien Secured Term Loan		L+ 7.00%		8.59%		10/24/18		10/24/24		13,964			13,690			12,567		4.19
		(1.00% Floor)		(0.75%PIK)
Distributors
Crown Brands, LLC
First Lien Secured Term Loan		L+ 8.00%		9.50%		01/28/19		01/25/24		5,727			5,625			5,164		1.72
		(1.50% Floor)
First Lien Secured Delayed Draw Loan		L+ 8.00%		9.50%		06/10/20		01/25/24		850			850			766		0.26
		(1.50% Floor)
										6,577			6,475			5,930		1.98
Diversified Capital Markets
TOUR Intermediate Holdings, LLC
First Lien Secured Delayed Draw Loan		L+ 7.00%		8.00%		06/30/20		05/15/25		1,360			1,334			1,335		0.44
		(1.00% Floor)
Diversified Chemicals
Sklar Holdings, Inc.
First Lien Secured Term Loan		L+ 7.00%		9.00%		11/13/19		05/13/23		8,903			8,713			8,643		2.88
		(1.00% Floor)		(1.00%PIK)

 

 

WhiteHorse Finance, Inc. 

Consolidated Schedule of Investments (Unaudited) - (continued) 

June 30, 2020 

(in thousands)

 

Diversified Support Services
ImageOne Industries, LLC
First Lien Secured Term Loan	L+ 10.00%		11.00%		01/11/18		01/11/23		7,218			$	7,058			$	7,073		2.36	%
	(1.00% Floor)		(4.00%PIK)
First Lien Secured Revolving Loan(4)(7)	L+ 10.00%		11.00%		07/22/19		12/12/22		5				5				(11	)	-
	(1.00% Floor)		(4.00%PIK)
NNA Services, LLC
First Lien Secured Term Loan	L+ 7.00%		8.50%		10/16/18		10/16/23		9,757				9,629				9,635		3.21
	(1.50% Floor)
									16,980				16,692				16,697		5.57
Education Services
EducationDynamics, LLC
First Lien Secured Term Loan	L+ 7.50%		8.50%		11/26/19		11/26/24		11,406				11,205				11,349		3.78
	(1.00% Floor)
Food Retail
AG Kings Holdings, Inc.
First Lien Secured Term Loan(4)(8)	P+ 11.00%		14.25%		08/10/16		08/10/21		35,693				17,737				21,280		7.09
	(0.75% Floor)		(2.00%PIK)
Health Care Facilities
Grupo HIMA San Pablo, Inc.
First Lien Secured Term Loan A	L+ 9.00%		9.69%		05/15/19		04/30/19		3,855				3,855				2,891		0.96
First Lien Secured Term Loan B	L+ 9.00%		10.50%		02/01/13		04/30/19		13,511				13,511				10,133		3.38
	(1.50% Floor)
Second Lien Secured Term Loan(8)	N/A		15.75%		02/01/13		07/31/18		1,028				1,024				-		-
			(2.00%PIK)
									18,394				18,390				13,024		4.34
Health Care Services
CHS Therapy, LLC
First Lien Secured Term Loan A	L+ 8.50%		10.00%		06/14/19		06/14/24		7,518				7,406				7,302		2.43
	(1.50% Floor)
Lab Logistics, LLC
First Lien Secured Term Loan	L+ 6.50%		7.56%		10/16/19		09/25/23		106				105				104		0.03
	(1.00% Floor)
First Lien Secured Delayed Draw Loan	L+ 6.50%		7.73%		10/16/19		09/25/23		5,262				5,230				5,157		1.72
	(1.00% Floor)
PMA Holdco, LLC
First Lien Secured Term Loan	L+ 10.00%		11.00%		06/28/18		06/28/23		12,841				12,616				12,713		4.23
	(1.00% Floor)
									25,727				25,357				25,276		8.41
Home Furnishings
Sure Fit Home Products, LLC
First Lien Secured Term Loan(8)	L+ 9.75%		10.75%		10/26/18		07/13/22		5,215				5,157				4,206		1.40
	(1.00% Floor)
Interactive Media & Services
What If Media Group, LLC
First Lien Secured Term Loan	L+ 6.50%		7.50%		10/02/19		10/02/24		12,756				12,539				12,692		4.23
	(1.00% Floor)
Internet & Direct Marketing Retail
Potpourri Group, Inc.
First Lien Secured Term Loan	L+ 8.25%		9.75%		07/03/19		07/03/24		18,525				18,194				17,784		5.92
	(1.50% Floor)
Investment Banking & Brokerage
Arcole Acquisition Corp(5)
First Lien Secured Term Loan A(4)(8)	L+ 10.25%		11.25%		11/29/18		11/30/23		5,231				5,159				4,185		1.39
	(1.00% Floor)
First Lien Secured Term Loan B(4)(8)	L+ 16.50%		17.50%		11/29/18		11/30/23		1,819				1,785				1,455		0.48
	(1.00% Floor)		(1.50%PIK)
JVMC Holdings Corp. (f/k/a RJO Holdings Corp)
First Lien Secured Term Loan	L+ 6.50%		7.50%		02/28/19		02/28/24		14,032				13,930				13,892		4.63
	(1.00% Floor)
									21,082				20,874				19,532		6.50
IT Consulting & Other Services
AST-Applications Software Technology LLC
First Lien Secured Term Loan	L+ 8.00%		9.00%		01/10/17		01/10/23		4,049				4,010				4,009		1.34
	(1.00% Floor)		(1.00%PIK)
Leisure Facilities
Honors Holdings, LLC
First Lien Secured Term Loan(16)	L+ 7.75%		8.75%		09/06/19		09/06/24		9,405				9,279				8,465		2.82
	(1.00% Floor)
First Lien Secured Delayed Draw Loan(7)(16)	L+ 6.50%		8.11%		09/06/19		09/06/24		4,633				4,592				4,170		1.39
	(1.00% Floor)
Lift Brands, Inc.
First Lien Secured Term Loan A(8)	L+ 3.75%		4.75%		06/29/20		06/29/25		5,659				5,571				5,571		1.86
	(1.00% Floor)
First Lien Secured Term Loan B(8)	N/A		9.50%		06/29/20		06/29/25		1,109				1,080				1,080		0.36
First Lien Secured Term Loan C(8)(9)	N/A		9.50%		06/29/20		N/A		1,268				1,265				1,265		0.42
									22,074				21,787				20,551		6.85
Office Services & Supplies
Empire Office, Inc.
First Lien Secured Term Loan	L+ 6.75%		8.25%		04/12/19		04/12/24		11,054				10,887				10,797		3.60
	(1.50% Floor)
Packaged Foods & Meats
Lenny & Larry's, LLC
First Lien Secured Term Loan (17)	L+ 7.95%		8.95%		05/15/18		05/15/23		11,237				11,110				10,747		3.58
	(1.00% Floor)		(1.17%PIK)
Property & Casualty Insurance
Policy Services Company, LLC (5)
First Lien Secured Term Loan	L+ 6.25%		7.32%		03/06/20		05/31/24		6,459				6,158				6,136		2.04
	(1.00% Floor)

 

 

WhiteHorse Finance, Inc. 

Consolidated Schedule of Investments (Unaudited) - (continued) 

June 30, 2020 

(in thousands)

 

Research & Consulting Services
Nelson Worldwide, LLC
First Lien Secured Term Loan	L+ 9.25%		10.56%		01/09/18		01/09/23			13,041			$	12,876			$	12,780			4.26	%
	(1.00% Floor)
ALM Media, LLC
First Lien Secured Term Loan	L+ 6.50%		7.50%		11/25/19		11/25/24			15,356				15,086				14,482			4.82
	(1.00% Floor)
										28,397				27,962				27,262			9.08
Restaurants
LS GFG Holdings Inc.
First Lien Secured Term Loan	L+ 6.00%		6.18%		11/30/18		11/19/25			10,177				9,940				8,548			2.85
	(0.00% Floor)
Specialized Consumer Services
True Blue Car Wash, LLC
First Lien Secured Term Loan	L+ 8.12%		9.12%		10/17/19		10/17/24			4,405				4,329				4,361			1.45
	(1.00% Floor)
First Lien Secured Delayed Draw Loan(7)	L+ 8.12%		9.12%		10/17/19		10/17/24			667				661				659			0.22
	(1.00% Floor)									5,072				4,990				5,020			1.67
Specialty Chemicals
Flexitallic Group SAS
First Lien Secured Term Loan	L+ 6.50%		7.57%		10/28/19		10/29/26			11,691				11,425				10,756			3.58
	(1.00% Floor)
Specialized Finance
Golden Pear Funding Assetco, LLC(5)
Second Lien Secured Term Loan	L+ 10.50%		11.50%		09/20/18		03/20/24			17,500				17,263				17,468			5.82
	(1.00% Floor)
Oasis Legal Finance, LLC(5)
Second Lien Secured Term Loan	L+ 10.75%		11.75%		09/09/16		03/09/22			12,500				12,423				12,500			4.16
	(1.00% Floor)
WHF STRS Ohio Senior Loan Fund LLC
Subordinated Note(4)(5)(7)(9)(14)	L+ 6.50%		6.68%		07/19/19		N/A			41,073				41,073				41,073			13.68
										71,073				70,759				71,041			23.66
Systems Software
Vero Parent, Inc.
First Lien Secured Term Loan	L+ 6.00%		7.00%		11/06/19		08/16/24			16,469				15,010				15,971			5.32
	(1.00% Floor)
Technology Hardware, Storage & Peripherals
Source Code Midco, LLC
First Lien Secured Term Loan	L+ 8.25%		9.25%		05/04/18		05/04/23			22,944				22,568				22,675			7.55
	(1.00% Floor)
Trading Companies & Distributors
Vessco Holdings, LLC
First Lien Secured Term Loan	L+ 7.25%		8.75%		08/22/19		08/22/24			8,891				8,744				8,778			2.92
	(1.50% Floor)
Total Debt Investments										566,646				537,793				524,762			174.80
Equity Investments
Diversified Support Services
Quest Events, LLC Preferred Units(4)	N/A		N/A		12/28/18		12/08/25			317				317				-			-
ImageOne Industries, LLC Common A Units(4)	N/A		N/A		09/20/19		N/A			149				-				61			0.02
Health Care Services
Lab Logistics Preferred Units (4)	N/A		N/A		10/29/19		N/A			2				857				844			0.28
PMA Holdco, LLC Warrants(4)	N/A		N/A		06/28/18		06/28/28			8				-				503			0.17
										10				857				1,347			0.45
Leisure Facilities
Lift Brands, Inc. Class A Common Stock (4)	N/A		N/A		06/29/20		N/A			2				1,955				282			0.09
Lift Brands, Inc. Warrants (4)	N/A		N/A		06/29/20		06/28/28			1				793				114			0.04
										3				2,748				396			0.13
Other Diversified Financial Services
RCS Creditor Trust Class B Units(4)(6)	N/A		N/A		10/01/17		N/A			143				-				-			-
SFS Global Holding Company Warrants(4)	N/A		N/A		06/28/18		12/28/25			-				-				-			-
Sigue Corporation Warrants(4)	N/A		N/A		06/28/18		12/28/25			22				2,890				3,499			1.17
										165				2,890				3,499			1.17
Specialized Finance
NMFC Senior Loan Program I LLC Units (4)(5)(6)	N/A		N/A		08/13/14		08/31/22			10,000				10,029				8,521			2.84
WHF STRS Ohio Senior Loan Fund LLC Interests (4)(5)(7)(14)	N/A		N/A		07/19/19		N/A			10,268				10,268				7,789			2.59
										20,268				20,297				16,310			5.43
Trading Companies & Distributors
Vessco Holdings, LLC Units(4)	N/A		N/A		08/22/19		N/A			506				860				993			0.33
Trucking
Europcar Mobility Group Earnout (4)(5)	N/A		N/A		10/31/19		12/31/22			-				-				29			0.01
Total Equity Investments										21,418				27,969				22,635			7.54
Total Investments										588,064			$	565,762			$	547,397			182.34	%

 

 

A summary of outstanding financial instruments at June 30, 2020 is as follows:

 

Forward Currency Contracts

 

		Currency to be		Currency to be				Unrealized				Unrealized
Counterparty		sold		purchased		Settlement date		appreciation ($)				depreciation ($)
Morgan Stanley		C$ 1,999 CAD		$ 1,468 USD		09/30/2020		$	-			$	(3	)
								$	-			$	(3	)

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited) - (continued)

June 30, 2020

(in thousands)

 

(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”), which resets monthly, quarterly or semiannually, the Canadian Dollar Offered Rate (“CDOR” or “C”) or the U.S. Prime Rate as published by the Wall Street Journal (“Prime” or “P”). The one, three and six-month LIBOR were 0.2%, 0.3% and 0.4%, respectively, as of June 30, 2020. The Prime was 3.3% as of June 30, 2020. The CDOR was 0.6% as of June 30, 2020.

 

(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)

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

 

(5)

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 represented 82% of total assets as of the date of the consolidated schedule of investments.

 

(6)

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

 

(7)

The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of June 30, 2020.

 

(8)

The investment is on non-accrual status.

 

(9)

Security is perpetual with no defined maturity date.

 

(10)

Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 182% of the Company’s net assets or 95% of the Company’s total assets, are subject to legal restrictions on sales.

 

(11)

The fair value of each investment was determined using significant unobservable inputs.

 

(12)

The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

 

(13)

Principal amount is denominated in Canadian dollars.

 

(14)

Investment is a controlled affiliate investment as defined by the 1940 Act. On January 14, 2019, the Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which invests primarily in senior secured first and second lien term loans.

 

(15)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

 

(16)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

 

(17)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

 

 

Contacts

 

Stuart Aronson

WhiteHorse Finance, Inc.

212-506-0500

saronson@higwhitehorse.com

 

or

 

Joyson Thomas

WhiteHorse Finance, Inc.

305-379-2322

jthomas@higwhitehorse.com

 

or

 

Sean Silva

Prosek Partners

646-818-9122

ssilva@prosek.com

 

Source: WhiteHorse Finance, Inc.