Saratoga Investment Corp. Announces Fiscal Third Quarter 2014 Financial Results

PR Newswire

NEW YORK, Jan. 14, 2014 /PRNewswire/ -- Saratoga Investment Corp. (SAR) ("Saratoga Investment" or "the Company"), a business development company, today announced financial results for its 2014 fiscal third quarter.

Operating Results

For the fiscal quarter ended November 30, 2013, Saratoga Investment reported net investment income of $2.9 million or $0.60 on a weighted average per share basis, and net loss on investments of $1.6 million, or $0.34 on a weighted average per share basis, resulting in an increase in net assets from operations of $1.3 million, or $0.26 on a weighted average per share basis.  The $1.6 million net loss on investments was comprised of $1.7 million in net unrealized depreciation on investments and $80,000 in net realized gains from investments.

Net asset value ("NAV") was $111.2 million as of November 30, 2013, compared to $112.4 million as of August 31, 2013 and $112.5 million as of May 31, 2013.  NAV per share was $20.67 ($24.03 before the effect of the dividend described below) as of November 30, 2013 as compared to $23.77 as of August 31, 2013 and $23.78 as of May 31, 2013. 

The decrease in reported NAV per share from August 31, 2013 was primarily the result of the $12.5 million cash and stock dividend (which consisted of $2.5 million in cash and 649,500 shares of common stock) declared by Saratoga Investment's Board of Directors on October 29, 2013 and paid on December 27, 2013 to record holders as of November 13, 2013. In accordance with generally accepted accounting principles ("GAAP"), the number of shares outstanding used to calculate NAV per share as of November 30, 2013 was retroactively adjusted to reflect the additional shares issued in connection with the cash and stock dividend.

Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment, said, "Our team's origination and deal execution capabilities enabled us to make another $22.3 million of investments in new and existing portfolio companies during the quarter. We continue to build our pipeline of investments as we improve the magnitude and quality of our portfolio."

Portfolio and Investment Activity

As of November 30, 2013, the fair value of the Company's investment portfolio was $198.8 million, principally invested in 36 portfolio companies and one collateralized loan obligation fund (the "CLO"). The overall portfolio composition consisted of 18.8% of middle market loans, 35.5% of first lien term loans, 13.9% of second lien term loans, 15.1% of senior secured notes, 2.7% of unsecured notes, 9.6% of subordinated notes of the CLO and 4.4% of common equity.  

During the 2014 fiscal third quarter, the Company invested $22.3 million in new or existing portfolio companies and had $9.9 million in aggregate amount of exits and repayments on its investments, resulting in net investments of $12.4 million for the period. 

As of November 30, 2013, the aggregate weighted average current yield on Saratoga Investment's portfolio was 10.8% which was comprised of a weighted average current yield of 11.1% on first lien term loans, 11.2% on second lien term loans, 14.2% on senior secured notes, 15.1% on unsecured notes, 11.7% on the CLO subordinated notes, and 6.4% on middle market loans. 

Liquidity and Capital Resources

As of November 30, 2013, Saratoga Investment had $48.3 million in notes payable outstanding, $4.0 million outstanding on its $45 million senior secured revolving credit facility with Madison Capital Funding LLC.  In addition, Saratoga Investment had an aggregate of $3.4 million in cash and cash equivalents and $1.6 million in cash and cash equivalents, reserve accounts at November 30, 2013.  The Company is required to use the amounts held in cash and cash equivalents, reserve accounts to pay interest expense, reduce borrowings or pay other amounts in accordance with the terms of its senior secured revolving credit facility and its Small Business Investment Company ("SBIC") subsidiary.  As of December 31, 2013, the SBIC subsidiary had $32 million in regulatory capital and $50.0 million of Small Business Administration debentures. 

2014 Fiscal Third Quarter Conference Call/Webcast Information

When:  Jan. 15, 2014 at 10:00 a.m. Eastern Time (ET)

Call:  Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada).

A replay of the call will be available from 1:00 p.m. ET on Jan. 15, 2014 through 11:59 p.m. ET on Jan. 21, 2014 by dialing (800) 585-8367 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada). Passcode for both replay numbers is 33184740.

Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.saratogainvestmentcorp.com/events.cfm.

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses.  The Company invests primarily in mezzanine debt, leveraged loans and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors.  Saratoga Investment Corp.'s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.  Saratoga Investment Corp. has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies.  Within the BDC, Saratoga Investment manages both an SBIC-licensed subsidiary and a $400 million Collateralized Loan Obligation (CLO) fund.  These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment to offer a broad range of financing solutions.

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment Corp. makes with the SEC.  Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact: Richard Petrocelli 
Saratoga Investment Corp. 
212-906-7800 

Roland Tomforde 
Broadgate Consultants 
212-232-2222

 

Financial Statements

Saratoga Investment Corp.







Consolidated Statements of Assets and Liabilities










 As of  




November 30, 2013


February 28, 2013




 (unaudited) 



ASSETS











Investments at fair value






Non-control/non-affiliate investments (amortized cost of $180,323,606 and $130,465,086, respectively)


$          179,759,938


$        129,563,428


Control investments (cost of $16,555,808 and $18,944,966 respectively)


19,018,842


25,516,959


Total investments at fair value (amortized cost of $196,879,414 and $149,410,052 respectively)


198,778,780


155,080,387

Cash and cash equivalents


3,359,983


149,025

Cash and cash equivalents, reserve accounts


1,599,132


12,086,142

Interest receivable, (net of reserve of $310,146 and $53,543, respectively)


2,751,138


2,889,358

Due from manager


4,929


-

Deferred debt financing costs, net


4,008,926


2,090,184

Management fee receivable


166,682


215,853

Other assets


99,597


83,407

Receivable from unsettled trades


-


1,817,074


Total assets


$          210,769,167


$        174,411,430







LIABILITIES





Revolving credit facility


$              4,000,000


$          24,300,000

SBA debentures payable


40,000,000


36,000,000

Notes payable


48,300,000


-

Dividend payable


2,507,112


-

Management and incentive fees payable


3,587,061


4,509,322

Accounts payable and accrued expenses


381,485


435,038

Interest and debt fees payable


514,333


257,796

Due to manager


273,083


222,513


Total liabilities


$            99,563,074


$          65,724,669







NET ASSETS





Common stock, par value $.001, 100,000,000 common shares






authorized, 5,379,616 and 4,730,116 common shares issued and outstanding, respectively


$                     5,380


$                   4,730

Capital in excess of par value


184,851,122


174,824,076

Distribution in excess of net investment income


(29,418,170)


(24,522,951)

Accumulated net realized loss from investments and derivatives


(46,131,603)


(47,289,427)

Net unrealized appreciation  on investments and derivatives


1,899,364


5,670,333


Total Net Assets


111,206,093


108,686,761







Total liabilities and Net Assets


$          210,769,167


$        174,411,430







NET ASSET VALUE PER SHARE


$                     20.67


$                   22.98














 

Saratoga Investment Corp.












Consolidated Statements of Operations












(unaudited)

 





For the three months ended 

November 30


For the nine months ended 

November 30





2013


2012


2013


2012












INVESTMENT INCOME










Interest from investments











Non-control/Non-affiliate investments



$  4,279,445


$   2,190,350


$   11,534,271


$     6,129,508


Payment-in-kind interest income from Non-control/Non-affiliate investments



161,485


276,245


634,408


821,830


Control investments



556,291


1,046,285


2,791,830


3,186,751


     Total interest income



4,997,221


3,512,880


14,960,509


10,138,089

Interest from cash and cash equivalents



1,316


731


7,181


5,368

Management fee income



421,198


500,454


1,400,039


1,500,519

Other income



381,480


19,750


838,956


172,310


Total investment income



5,801,215


4,033,815


17,206,685


11,816,286












EXPENSES










Interest and debt financing expenses



1,611,221


529,858


4,342,657


1,808,586

Base management fees



876,345


528,735


2,424,167


1,492,345

Professional fees



312,992


347,459


879,247


986,781

Administrator expenses



250,000


250,000


750,000


750,000

Incentive management fees



(561,539)


(412,654)


219,813


887,020

Insurance



117,955


128,891


357,184


389,506

Directors fees and expenses



35,978


53,705


131,978


155,705

General & administrative



251,058


117,357


440,844


265,720

Other expense



9,172


1,311


21,207


4,434


Total expenses



2,903,182


1,544,662


9,567,097


6,740,097













NET INVESTMENT INCOME



2,898,033


2,489,153


7,639,588


5,076,189












REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:










Net realized gain from investments



82,882


95,372


1,157,824


542,720

Net realized loss from derivatives



-


-


-


(131,000)

Net unrealized appreciation (depreciation) on investments



(1,713,025)


(1,838,957)


(3,770,968)


3,188,543

Net unrealized appreciation on derivatives



-


-


-


130,925


Net gain (loss) on investments



(1,630,143)


(1,743,585)


(2,613,144)


3,731,188












NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS



$  1,267,890


$      745,568


$     5,026,444


$     8,807,377












WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE


$           0.26


$            0.19


$              1.05


$              2.25












WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED


4,851,451


3,970,447


4,770,267


3,907,696



































 

 

 

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