Horizon Technology Finance Withdraws Application for SBIC License
FARMINGTON, Conn., Sep 14, 2011 (GlobeNewswire via COMTEX) -- Horizon Technology Finance Corporation /quotes/zigman/626803/quotes/nls/hrzn HRZN +0.75% (the "Company" or "Horizon"), a leading specialty finance company that provides secured loans to venture capital and private equity backed development-stage companies in the technology, life science, healthcare information and services, and clean-tech industries, today announced it has withdrawn its application for a license from the Small Business Administration ("SBA") to operate a subsidiary as a small business investment company ("SBIC").
The Company previously announced on May 10, 2011 that the SBA had requested additional information in support of the application and that the application process was suspended until such time as the information was provided. Horizon provided all of the information that it possessed with respect to such request and attempted to obtain additional information to satisfy such request. The SBA has now informed Horizon that the information provided with respect to such request is not sufficient for the SBA to proceed with the application process. The SBA has indicated that Horizon may petition the SBA for permission to file a new application for an SBIC license should further information for disclosure to the SBA become available to Horizon.
The additional information that Horizon was unable to provide the SBA relates to specific details concerning a regulatory inquiry that I. Joseph Massoud received. Mr. Massoud is not a current or former employee, officer or board member of Horizon or of the Company's investment advisor (the "Advisor"). Mr. Massoud is an indirect minority owner of the Advisor. The Company has been advised by Mr. Massoud that the regulatory inquiry is unrelated to Horizon or the Advisor, and neither the Company nor the Advisor has had any involvement in that regulatory inquiry.
Robert D. Pomeroy, Jr., Chairman and Chief Executive Officer, commented, "Although we are unable to complete the SBIC application process at this time, it is important to note that our decision to withdraw our application does not in any way result from Horizon's business operations, financial position or future prospects. We believe that Horizon's two existing credit facilities will meet our current leverage needs based on our existing level of equity capital. Management remains focused on the ongoing execution of our investment strategy."
First of all, only about half of the price fall since Massoud's leave of absence is due to that; the other half follows the general market downturn and uncertainty about financials like CODI.
Second, we haven't seen any evidence that the market reaction to Massoud's leave of absence is justified; CODI is doing fine without him. So rather than "hosing" the stock, the price action is better viewed as simply a buying opportunity for long term holders. Short term holders shouldn't be holding a volatile stock like CODI anyways.
Horizon was trying to get an SBA license. The SBA asked for "additional information" in regards to Massoud's informal inquiry. Horizon was unable to provide that information and had to withdraw the license request. Thus, because of Massound, Horizon misses out on an opportunity.