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Solar Capital Ltd. Message Board

  • jackmaster20 jackmaster20 Jul 24, 2013 9:53 AM Flag

    DS Waters was PIK !!

    Our largest holding, DSW was a P-I-K really, with the completion of this investment
    SLRC gets $150 in gross proceeds.........but from a cash flow standpoint the removal of DSW
    has zero effect on "cash for dividend" and should have been bought out for more than DSW
    was listed on the SLRC books. Will there be zero $$ attributed to income at the time that the
    DSW deals is paid ? Something/anything to credit to NII from this transaction ?

    Midcap was repaid back to SLRC at a premium to par ! $ 87 million. I do not know the P-I-K
    provisions, if any on this loan. But there was some profit, which should translate into benefit
    for SLRC shareholders.

    Where is Crystal Financial NOI during a time of loan repayment ? We heard all first quarter
    how the Cyrstal Financial deal would help .....and we were diluted for its purchase.

    Something is up at SLRC.....cutting the dividend by 5 or 10 cents is understandable, but
    cutting income by 33 % makes mgmt look unprepared for these transactions.

    There has not been enough earnings growth for the past 6 to 8 quarters at SLRC and now
    "good news" comes in and craters the dividend...

    I wonder how these transactions impacted the bonuses and fees of the mgers of SLRC ?
    I would say "quite nicely" I bet Gross made a lot more $ on fees than he lost on his SLRC
    position's dividend cut !

    I was told here and elsewhere "don't worry", the SLRC mgmt with its NOI trend and Crystal
    Financial purchase is making the right moves.........a 33 % dividend cut, at one time, is not
    the correct move ! Cashed in P-I-K loans kill our NOI/dividend ??? Mgmt knew these deals
    were ready to come off......they mentioned it to us in the last CC....looks to be zero pre-emptive
    actions on Gross' part ?

    Glad I hold less a than

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    • My income from SLRC dropped by a third - what do you think the income of the officers did that made the decisions that cut my income?

    • The PIK loan is brought into earnings each quarter and paid out in the dividend. The repayment of the loan does reduce dividend income. I wrote that this was coming on this board a few months ago. It was a known upcoming event. That they would have large loans repay and that cash flow would be reduced. I still did not expect a dividend reduction as I thought they had a cushion. Hence, I sold premarket and will wait and see what happens.

      • 1 Reply to jdb_1234
      • J1234

        The Midcap buy-out was at a premium ! Doesn't some of that transaction benefit NOI ?
        DS Waters was re-structured a few quarters ago and I am sure SLRC wrote off a portion
        of its BV at that time. So now the repayment of DSW has zero realized gain to partition
        to NOI for the next quarter, to offset the lost DSW income you speak about ..?

        Would you not agree that Crystal may not be "working out" and there are some new, material
        non-accurals that have not been disclosed....?

        I see that you wrote you sold "pre-market"......which day ? On July 24th premarket was hit
        immediately at the news release, why would you sell then ? Just wondering about your
        tactics on exit.

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