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WhiteHorse Finance, Inc. Announces Third Quarter 2019 Earnings Results
NEW YORK, NY, November 7, 2019 – WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the “Company”) (NASDAQ: WHF) today announced its financial results for the quarter ended September 30, 2019.
Third Quarter 2019 Summary Highlights
(1) Includes investments in WHF STRS Ohio Senior Loan Fund LLC (“STRS JV”), an unconsolidated joint venture, totaling $24.4 million, at fair value.
(2) Excludes investments made in STRS JV for the quarter.
(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 third quarter, we transferred 5 assets into our recently-launched joint venture, increasing our investment by $24.4 million. Following the close of the third quarter we contributed another 4 assets into the JV, allowing us to quickly ramp up and directly originate into the JV portfolio going forward, offering a wider range of sourcing opportunities. In addition to the JV transfers, we added four new first-lien originations and 3 add-on investments to our portfolio during the quarter to stabilize NAV relative to the JV asset transfers. Our fourth quarter pipeline is as strong as it has ever been, which we credit to our differentiated three-tiered sourcing infrastructure backed by H.I.G. that offers stable and attractive risk-adjusted returns and ultimately enhance shareholder value.”
Portfolio and Investment Activity
As of September 30, 2019, the fair value of WhiteHorse Finance’s investment portfolio was $527.5 million, compared with $534.8 million as of June 30, 2019. The portfolio at September 30, 2019 consisted of 65 positions across 48 companies with a weighted average effective yield of 11.0% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV) was $9.9 million with the overall portfolio comprised of 80% in first lien secured loans, 12% in second lien secured loans, 3% in equity and 5% in investments in STRS JV. All loans were substantially all variable-rate investments (primarily indexed to LIBOR), with nearly all performing floating rate investments having interest rate floors.
During the three months ended September 30, 2019, WhiteHorse Finance launched the operations of its joint venture by transferring assets totaling $56.4 million in exchange for a net investment in STRS JV of $24.4 million as well as cash proceeds of $32 million.
In addition to the transactions with STRS JV, WhiteHorse Finance made investments in four new portfolio companies totaling $47.0 million. Also, the Company added $8.9 million to existing portfolio companies, exclusive of refinancing. Proceeds from sales and repayments, including net fundings on revolvers but exclusive of refinancing, totaled approximately $31.4 million for the quarter, driven by a full repayment of Planet Fit Indy 10 LLC of $19.2 million and a partial paydown of $7.4 million from its investment in CHS Therapy, LLC. In addition, WhiteHorse Finance participated in two refinancings of existing investments. The Company refinanced its $7.5 million first lien investment to Honors Holdings, LLC, increasing its position by adding a net $1.7 million. The Company also participated in the recapitalization of its $17.1 million first lien investment to Clarus Commerce, LLC, by reducing its position by a net $2.4 million to new borrower Marlin DTC-LS Midco 2, LLC. The Company remained highly selective in deploying new investments.
The following information was filed by Whitehorse Finance, Inc. (WHF) on Thursday, November 7, 2019 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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