Whitehorse Finance, Inc. (WHF) SEC Filing 10-Q Quarterly report for the period ending Sunday, June 30, 2019

Exhibit 99.1

WhiteHorse Finance, Inc. Announces Second Quarter 2019 Earnings Results

NEW YORK, NY, August 7, 2019 – WhiteHorse Finance, Inc.

Second Quarter 2019 Summary Highlights

(1) 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 second quarter we grew NAV by adding seven new first-lien originations and one add-on investment to our portfolio. First-lien senior-secured loans now account for 85% of our portfolio and our leverage ratio at the end of the second quarter was 79%, bringing us closer to our target leverage range of between 100 to 125%. Our strong origination activity helped partially offset the impact of underperformance in two of our credit positions as we enter an environment of slower economic growth. Following the close of the quarter, we activated our recently-launched joint venture, which we expect will contribute to future earnings. Going forward we will continue leveraging our differentiated three-tiered sourcing infrastructure backed by H.I.G. to prudently deploy capital into high credit quality opportunities which offer stable and attractive risk-adjusted returns and ultimately enhance shareholder value.”

Portfolio and Investment Activity

As of June 30, 2019, the fair value of WhiteHorse Finance’s investment portfolio was $534.8 million, compared with $468.4 million as of March 31, 2019. The portfolio at June 30, 2019 consisted of 67 positions across 47 companies with an average debt investment size of $8.8 million and a weighted average effective yield of 11.3% on income-producing investments. The majority of the portfolio was comprised of senior secured loans, and these 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 June 30, 2019, WhiteHorse Finance made investments in seven new direct originations totaling $71.4 million. Also, the Company added $3.7 million to an existing portfolio company. Gross proceeds from repayments totaled approximately $12.3 million for the quarter, driven by partial paydowns of $3.8 million from StackPath, LLC & Highwinds Capital, Inc., $1.8 million from PMA Holdco, LLC, $1.3 million from Alpha Media, LLC as well as the full repayment of the Company’s remaining investment in Account Control Technology Holdings, Inc. of $0.6 million. The Company remained highly selective in deploying new investments.

Results of Operations

For the three months ended June 30, 2019, net investment income was approximately $7.2 million, compared with approximately $4.6 million for the same period in the prior year, representing an increase of approximately 56.5%. The increase in net investment income for the year-over-year period was primarily attributable to an increase in non-recurring fee income and a decrease in the amount of capital gains incentive fee recorded.