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WhiteHorse Finance, Inc. Announces Fourth Quarter and Full Year 2019 Earnings Results
NEW YORK, NY, March 2, 2020 – WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the “Company”) (NASDAQ: WHF) today announced its financial results for the year ended December 31, 2019.
Fourth Quarter 2019 Summary Highlights
|•||Net Asset Value of $313.0 million, or $15.23 per share, compared to $15.35 per share in 2018|
|•||Investment portfolio(1) totaling $589.7 million|
|•||STRS JV investment portfolio totaling $97.3 million|
|•||Gross investment deployments(2) of $150.6 million for the fourth quarter, including new originations of $137.8 million and $12.8 million of fundings for add-ons to existing investments|
|•||Gross investment deployments(2) of $358.2 million for the year, including new originations of $288.6 million and $69.6 million of fundings for refinancings and add-ons to existing investments|
|•||Net investment income of $7.7 million, or $0.375 per share, for the fourth quarter|
|•||Core net investment income of $7.9 million, or $0.385 per share(3), for the fourth quarter|
|•||Annual net investment income of $31.2 million, or $1.518 per share|
|•||Annual core net investment income of $31.1 million, or $1.515 per share(3)|
|•||Annual distributions of $1.615 per share, including special distributions of $0.195 per share|
(1) Includes investments in WHF STRS Ohio Senior Loan Fund LLC (“STRS JV”), an unconsolidated joint venture, totaling $33.3 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, “During the fourth quarter, we maintained our focus on strong credit quality and successfully originated 13 new first-lien loans. We continue to transfer qualified assets to our joint venture. At end of the quarter, the joint venture has a total of 10 portfolio companies in its portfolio. Due to the strong deployment in the quarter, our net leverage increased markedly from 68% to 88%, further closing the gap to our target leverage range. With the uncertainty in global trade environment and potential pandemic risk, we will continue leveraging our differentiated three-tiered sourcing infrastructure backed by H.I.G. to prudently deploy capital into high credit quality opportunities, further increase portfolio diversification and ultimately enhance shareholder value.”
Portfolio and Investment Activity
As of December 31, 2019, the fair value of WhiteHorse Finance’s investment portfolio was $589.7 million, compared with $469.6 million as of December 31, 2018. The portfolio at December 31, 2019 consisted of 66 positions across 51 companies with a weighted average effective yield of 10.4% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV) was $10.0 million with the overall portfolio comprised of 81% in first lien secured loans, 11% in second lien secured loans, 3% in equity and the remainder in investments in STRS JV. Substantially, all loans were variable-rate investments (primarily indexed to LIBOR), with nearly all performing floating rate investments having interest rate floors.
During the three months ended December 31, 2019, WhiteHorse Finance transferred assets totaling $31.0 million in exchange for a net investment in STRS JV of approximately $5.5 million as well as cash proceeds of $25.5 million. The Company also contributed an additional $3.1 million in cash to STRS JV during the quarter to fund an investment. As of December 31, 2019, the Company’s investment in STRS JV was approximately $33.3 million, at fair value.
In addition to the transactions with STRS JV, WhiteHorse Finance made investments in thirteen new portfolio companies totaling $137.8 million. Also, the Company added $12.8 million to existing portfolio companies, exclusive of refinancing. Gross proceeds from sales and repayments (inclusive of refinancing activities but excluding asset transfers to STRS JV as well as an additional $0.2 million in net repayments on revolvers) totaled approximately $68.3 million for the quarter. The activity was driven by 5 full repayments: Crews of California, Inc. ($18.7 million), Multicultural Radio Broadcasting, Inc. ($16.6 million), StackPath, LLC ($15.5 million), London Trust Media Incorporated ($10.5 million) and Sunteck / TTS Holdings, LLC ($3.5 million).
The following information was filed by Whitehorse Finance, Inc. (WHF) on Monday, March 2, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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