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WhiteHorse Finance, Inc. Announces First Quarter 2020 Earnings Results
NEW YORK, NY, May 11, 2020 – WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the “Company”) (Nasdaq: WHF) today announced its financial results for the quarter ended March 31, 2020.
First Quarter 2020 Summary Highlights
|·||Net Asset Value of $284.7 million, or $13.86 per share|
|·||Investment portfolio(1) totaling $557.1 million|
|·||STRS JV investment portfolio totaling $123.0 million|
|·||Gross investment additions(2) of $26.8 million, including new originations of $26.1 million and $0.7 million of fundings for add-ons to existing investments|
|·||Net investment income of $6.1 million, or $0.297 per share|
|·||Core net investment income of $5.5 million, or $0.267 per share(3)|
|·||First 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 $42.1 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, “The COVID-19 pandemic drove a correction within the debt markets that saw lower debt levels, tighter deal terms, and increased pricing. As a result, we are taking a very conservative view towards adding new assets, having originated 4 first lien loans during the quarter. Our liquidity position remains strong, and we have been working hand in hand to support our borrowers through this difficult time. Over the years we’ve taken deliberate action to build our portfolio upon rigorous underwriting, diversification in our underwriting strategy, a focus on first lien credits, selective sourcing that avoids aggressive credit terms, a focus on the lower middle market, and diligent management of our liquidity position. We are confident that staying true to these longstanding principles has prepared us to navigate the current volatility and deliver for our stakeholders.”
Portfolio and Investment Activity
As of March 31, 2020, the fair value of WhiteHorse Finance’s investment portfolio was $557.1 million, compared with $589.7 million as of December 31, 2019. The portfolio at March 31, 2020 consisted of 65 positions across 52 companies with a weighted average effective yield of 9.9% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV) was $9.3 million with the overall portfolio comprised of approximately 80% first lien secured loans, 10% second lien secured loans, 2% equity and 8% in investments in STRS JV. All loans were substantially variable-rate investments (primarily indexed to LIBOR), with nearly all performing floating rate investments having interest rate floors.
WhiteHorse Finance made investments in four new portfolio companies totaling $26.1 million. Also, the Company added $0.7 million to an existing portfolio company. Proceeds from sales and repayments, including $0.1 million of net repayments on revolvers, totaled approximately $16.9 million for the quarter, driven by a partial paydowns from Oasis Legal Finance, LLC of $7.5 million.
In addition to the transactions above, during the three months ended March 31, 2020, WhiteHorse Finance transferred assets to the STRS JV totaling $28.5 million in exchange for a net investment in STRS JV of $12.7 million as well as cash proceeds of $15.8 million.
WHF STRS Ohio Senior Loan Fund LLC
As of March 31, 2020, STRS JV’s portfolio totaled $123.0 million, consisted of 14 portfolio companies and had a weighted average effective yield of 7.8% on its portfolio.
The following information was filed by Whitehorse Finance, Inc. (WHF) on Monday, May 11, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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