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Edited Transcript of KCAP earnings conference call or presentation 27-Feb-19 2:00pm GMT

Q4 2018 KCAP Financial Inc Earnings Call

NEW YORK Mar 5, 2019 (Thomson StreetEvents) -- Edited Transcript of KCAP Financial Inc earnings conference call or presentation Wednesday, February 27, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Daniel Patrick Gilligan

KCAP Financial, Inc. - Interim Chief Compliance Officer, VP & Director of Portfolio Administration

* Dayl W. Pearson

KCAP Financial, Inc. - President, CEO & Director

* Edward Joseph Goldthorpe

BC Partners - Managing Partner

* Edward Udall Gilpin

KCAP Financial, Inc. - Secretary, Treasurer & CFO

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Conference Call Participants

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* Christopher John York

JMP Securities LLC, Research Division - MD & Senior Research Analyst

* Christopher Whitbread Patrick Nolan

Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research

* Paul Conrad Johnson

Keefe, Bruyette, & Woods, Inc., Research Division - Associate

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to the KCAP Financial, Inc. Conference Call. An earnings press release was distributed yesterday. If you did not receive a copy, the release is available on the company's website at www.kcapfinancial.com in the Investor Relations section.

As a reminder, this conference call is being recorded today, Wednesday, February 27, 2019. This call is also being hosted on a live webcast, which can be accessed at our company's website at www.kcapfinancial.com in the Investor Relations section under Events.

Today's conference call includes forward-looking statements and projections, and we ask that you refer to KCAP Financial's most recent filings with the SEC for important factors that would cause actual results to differ materially from these projections. KCAP Financial does not undertake to update its forward-looking statements unless required by law.

I would now like to introduce your host for today's conference, Mr. Dayl Pearson, President and Chief Executive Officer of KCAP Financial. Mr. Pearson, you may begin.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [2]

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Good morning, and thank you all for joining KCAP Financial for a review of our full year 2018 results. I am joined today by Ted Gilpin, our CFO; and Ted Goldthorpe of BC Partners.

A lot has happened since our last earnings call in November, so let me comment on our strategic initiatives. As previously announced, the company entered into a stock purchase and transaction agreement with BC Partners Advisors L.P., an affiliate of BC Partners LLP, pursuant to which the company's management function will be externalized. At a special meeting of our company's stockholders held on February 19, 2019, the company's stockholders approved an advisory agreement between the company and Sierra Crest Investment Management LLC, an affiliate of BC Partners. If the transactions contemplated by the externalization agreement are completed and closing conditions are satisfied or appropriately waived upon closing of the externalization, the company will commence operations as an externally managed BDC managed by the adviser. We expect this transaction to close around the end of the first quarter, at which time BC Partners will make a distribution to shareholders of record on the closing date of approximately $0.67 per share. We'll be setting a closing date in the next few days and disclose this in a press release.

On November 8, 2018, we entered into an agreement with LibreMax Intermediate Holdings, under which our wholly owned subsidiary, Commodore Holdings, agreed to sell Katonah Debt Advisors, Trimaran Advisors and Trimaran Advisors Management to LibreMax for a cash purchase price of approximately $37.9 million. This transaction closed on December 31, 2018.

The strategic initiatives will reposition the company but causes the fourth quarter to be a transition quarter, making comparisons with previous quarters difficult. These transactions had an impact on both our income statement and balance sheet in the fourth quarter and will also have an impact in the first quarter of 2019.

Now let me give you a high-level summary of our [2018 fourth] quarter and full year financial highlights before handing it over to Ted Gilpin.

For the year ended December 31, 2018, our NII was approximately $10 million or $0.27 per share. Quarterly distribution was $0.10 compared to $0.10 paid in the third quarter. At the end of the quarter, KCAP had approximately $27 million in investable cash primarily from the disposition of AMA, which we intend to redeploy in transactions that generate cash flows we need to fund further distribution to shareholders. As discussed previously, we are seeing the benefits of the BC relationship in increased deal flow and attractive investment opportunity to invest the year-end cash.

Excluding our $25 million Great Lakes investment -- commitment rather, we have closed approximately $22 million of BCP-sourced loans to date. In addition, approximately $15 million in assets approved by the KCAP Investment Committee that have not closed and more assets identified in the closing pipeline. Our Credit Committee continues to -- our credit quality rather continues to be solid, but as with the broader BDC market, we have experienced an uptick in the number of nonaccruals assets in this quarter, including our investment in Tank Holdings, which is in the process of being restructured.

As of December 31, 2018, our weighted average mark-to-market to par on our debt securities portfolio was 90 compared to the Q3 mark of 93.

In terms of our CLO portfolio, our weighted average mark-to-market value to par was 64 as of December 31 versus the weighted average mark-to-market to par of 72 as of the end of Q3. Both of these have been driven by the selloff in the loan market year-end and have somewhat recovered since year-end. Our CLO investment portfolio at the end of the fourth quarter totaled approximately $44 million. Q4 was a period of weakness and volatility in the broadly syndicated loan market, and this volatility was magnified in the CLO equity marks.

At the end of the fourth quarter, debt securities totaled approximately $148 million and represented about 54% of the total investment portfolio. First lien loans now represent 54% of our debt portfolio. Junior loans represent 46%.

And now I'll ask Ted Gilpin to walk through the details of our financials. Ted?

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Edward Udall Gilpin, KCAP Financial, Inc. - Secretary, Treasurer & CFO [3]

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Thank you, Dayl. Good morning, everyone. As of December 31, 2018, our net asset value stood at $158 million or $4.23 per share, which is down from $182 million or $4.87 per share at the end of 2017. Fourth quarter saw a substantial movement downward in our CLO equity investments and our investment in the joint venture due to widespread dislocation in the CLO markets, accounting for approximately $0.26 per share.

Net investment income for the year was $10 million versus $11 million in 2017. NII per share was $0.27 in 2018 versus $0.30 per share in 2017. 2018 saw approximately $0.04 of nonrecurring expenses, which had a negative impact on NII. Net investment income per share for the fourth quarter of 2018 was $0.06, down from $0.07 per share in the second and third quarters of 2018.

Total realized and unrealized loss in 2018 were $19.4 million versus $3.5 million in 2017 and $19.4 million in 2016. Net loss including realized and unrealized losses was $9.6 million or $0.26 per share versus net income of $3.4 million in 2017.

Taxable distributable income was $9.2 million or $0.25 per share. Total distributions were $0.40 per share, with a return of capital of $5.7 million or $0.15 per share.

Total debt was approximately $100 million at both 12/31/2018 and 12/31/2017. On 12/31/2018, our asset coverage ratio was 249%. And for the year, there was an NAV return of negative 4.7% and a total market return of 13.2%.

On December 31, 2018, KCAP completed the sale of substantially all of its Asset Manager Affiliates. This sale resulted in a distribution from Commodore Holdings to KCAP of $33.8 million, all of which was return of capital. Remaining fair value of our Asset Manager at 12/31/2018 of $3.5 million relates solely to KCAP management, the manager of our joint venture with F3C. Therefore, the cash distribution of $33.8 million plus the $3.5 million fair value of the remaining AMA equals $37.3 million of total value at 12/31/2018 versus $35.8 million fair value for all of the AMAs as of 9/30/2018.

And with that, I'd like to turn it over to Ted Goldthorpe from BC Partners for a few comments.

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [4]

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Thanks, Ted. We are very excited closing the transaction, and we appreciate the support of our shareholders. We are looking forward to engage with all of our stakeholders going forward.

And with that, we'd like to turn the call back to the operator for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Chris York of JMP Securities.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [2]

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So Ted, as you evaluate the portfolio today, are there investments you consider to be noncore or legacy that could be subject to rotation under your and BC's management?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [3]

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That's a great question, Chris. I mean, I think the answer is largely no. We thought the noncore part of the business was the CLO manager, which we monetized. So I don't think you're going to see a massive wholesale rotation of portfolio over a short period of time. I think you ought to see a rotation over a long period of time as we originate new assets.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [4]

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Got it. And then diving a little bit more deeply in the investment portfolio, Dayl or Ted, could you explain the marks in 2 of your investments and then potentially the recovery or risk and changes in the future marks? Specifically, I'm curious about some of the drivers of the write-downs in the Freedom 3 JV, which has declined for a couple of quarters, and is now marked at 74% of cost. And then, Dayl, as you alluded to, Tank Partners, which you said is in the process of being restructured, a bit -- a little bit more color on both of those.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [5]

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Sure. I think, as I said, Tank is in the process of being restructured. There'll be a significant conversion of the lenders' position into equity, into owning a majority then of Tank. Tank is recovering in its markets. So I mean, it's obviously had several difficult years with the lack of drilling activity in the Permian Basin and other places. But the company has a pretty solid backlog, but we just thought it was prudent to restructure the position and convert a significant portion to

(technical difficulty)

so we don't really anticipate further write-downs in that, but then again, it's going to be depending upon the performance of the company going forward. As I said, they have a solid backlog, they have a solid backlog of business right now. So we're pretty confident that, that will convert into revenue and cash flow. In terms of the JV, I think a lot of that was driven by the fact, again, the underlying financing is a CLO-type financing. And so we have the value of the CLO, a lot of loans in there that got hit at year-end due to market dislocation. Even though there aren't necessarily a lot of trading activity in those middle-market loans, it's still -- you have to mark to market. A lot of that has recovered in the first quarter, and we would anticipate that recovery to continue. So we think that's more of a short-term event as it is with the CLO equity securities.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [6]

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Got it. So just to be clear in terms of the assets at the Freedom 3 JV, there is no real credit issues there that would explain that the market's more mark-to-market?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [7]

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It's all mark-to-market.

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Edward Udall Gilpin, KCAP Financial, Inc. - Secretary, Treasurer & CFO [8]

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Yes, mark-to-market.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [9]

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It's all mark-to-market. The JV continues to perform to expectations.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [10]

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And then how about the recoveries there? So if you're -- we're at a mark of 74% of amortized cost, you marked it down, I believe, from the 80%. Is it fair to say that most of that has been given back year-to-date?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [11]

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I would say that the vast majority of that has come back since quarter -- since 12/31.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [12]

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Great. And then what are the expected transaction or friction costs borne by KCAP in the first quarter related to the externalization?

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Edward Udall Gilpin, KCAP Financial, Inc. - Secretary, Treasurer & CFO [13]

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Well, there will clearly be some friction costs. We haven't put a full number on it yet for the first quarter, but there'll be obviously some legal expenses, some deal expenses. There'll be some personnel expenses. There'll be...

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [14]

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A lot of it.

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Edward Udall Gilpin, KCAP Financial, Inc. - Secretary, Treasurer & CFO [15]

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There will be expenses. So I would expect there to be some pressure on the expenses in the first quarter as it relates to closing of the transaction.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [16]

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Yes. And there are certain expenses that were borne by the asset manager or partially borne by the asset manager, such as rent, insurance and other things like that, which are now fully borne by KCAP. So there'll be a little bump in the expenses in the first quarter for that as well, which we expect will normalize over the year as we consolidate and externalize.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [17]

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Okay. So is there any way we could quantify a potential range of those onetime expenses?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [18]

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It's difficult to do at this point. We're still working through [the deal].

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Edward Udall Gilpin, KCAP Financial, Inc. - Secretary, Treasurer & CFO [19]

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Yes. I really can't, there's a couple of pieces there I just don't have the answer to yet.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [20]

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Got it, okay. And then, Ted, so you have -- once you've closed here, you'll have $70 million in capital loss carryforwards. So would your go-forward strategy include ways to utilize these carryforwards by investing either in securities or maybe even companies with capital gain potential?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [21]

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I don't think that's a core part of our strategy on a go-forward basis. It's always been, we've always looked to -- in previous public companies that we've been involved with where we've tried to take advantage of that, that's been very difficult. We might have to rule it out, particularly in the periods of time like the taper change from a couple of years ago and other situations where we -- there might be some one-off, idiosyncratic opportunities for us to do that. But I think we really got to focus on our core middle-market lending business.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [22]

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Got it. And then last one is, what will your target leverage and then ROE potential be under this target leverage upon close?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [23]

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Yes. I think the answer is this. I think the answer is I don't foresee us going above 1:1 anytime soon. And -- because I think that the range of large -- what we typically like to use is somewhere between 0.6 and 0.8. And so I would find it very hard to believe that we're going to be above the 1:1 test, and there are certain things in our debt documents that prevent it anyway. So shareholders are protected in any case. So I think that's a longer-term discussion. So I don't think you're going to see the target -- the debt target really change on a go-forward basis.

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Christopher John York, JMP Securities LLC, Research Division - MD & Senior Research Analyst [24]

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Congrats on the close.

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [25]

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Sure. Thanks, Chris.

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Operator [26]

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Our next question comes from Paul Johnson of KBW.

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Paul Conrad Johnson, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [27]

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My first question was around the $75 million of investments that you're receiving from BC Partners. And I didn't quite catch, $22 million that you funded quarter to date, is that included in that $75 million of investments?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [28]

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Yes, that plus the $25 million commitment to the Great Lakes unitranche joint venture, so that gets you to $47 million. We have another $15 million we expect to close before the end of the quarter, so that would get you to somewhere above -- $60 million to $65 million. So pretty far along that road right now. It's taken a little bit longer than we had hoped to. Loans always take longer to close than you expect, and transfers are harder than you expect and things like that. But we're well on our way to getting to the $75 million.

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Paul Conrad Johnson, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [29]

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Okay, great.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [30]

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And I will say we have a very robust pipeline at the moment. So I think that should happen early in the second quarter.

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Paul Conrad Johnson, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [31]

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Okay. And I think -- I mean, can you describe some of the loans that are in the pipeline or the ones also from BC Partners, just the terms? Or are these senior loan first lien assets? Just what are you potentially looking at here in this quarter?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [32]

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The vast majority of these are first lien assets. There are a couple of opportunistic second lien assets, but they're generally in fairly low leverage situations, so they're not sort of what you think of as the traditional sort of mezzanine-like second lien stuffs that you see. I would say most of the companies are in sort of the $12.5 million to $30 million EBITDA range. Some are bigger. There's nothing below, I don't think, $12.5 million. Actually, I don't think there's anything below $15 million at the moment, although there may be a couple in the pipeline. But traditional middle-market senior -- stretch senior unitranche-type loans, we like being in sort of the first dollar position in these loans particularly in the current marketplace. And I think the yields are attractive. I think based upon what we close right now, the yields are sort of in the high single digits, very high single digits.

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Paul Conrad Johnson, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [33]

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Okay. And then I guess I'd also ask, and maybe this is a question for Ted Goldthorpe. What's the outlook for the CLO portfolio in terms of its role in your go-forward strategy? It's about 15% of the portfolio to date. Do you expect to maintain that, grow that as you guys take over managing the BDC?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [34]

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Yes. I mean, I think you'll see that shrink over time. I don't think you're going to see us include that as a core part of the strategy. It's going to take time obviously to shrink that portfolio, and some of it happens organically as some of these CLOs reset. But yes, I would expect it to be a smaller part of the go-forward strategy.

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Paul Conrad Johnson, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [35]

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Okay. And then last 2 questions. I guess, one, on the leverage, the 201 goes into effect next month. Are you guys -- and the bonds I know aren't callable until September. I mean, are you guys looking to call those -- since possible, are you okay running below 1:1 leverage in the meantime? What's your thoughts on outstanding bonds?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [36]

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Well, there's no real rush from our perspective because it's unlikely we're going to get close to 1:1 leverage in the short term, short term being between now and September. But as always, and we didn't say it on this call, but we say it on all of our calls, we're always looking at financing alternatives. And so that's something we are constantly looking at and discussing internally and will continue to be going forward. I don't know, if -- Ted, if you have anything you want to add to that.

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [37]

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No, I think that's right.

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Paul Conrad Johnson, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [38]

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Okay. And lastly, what are the remaining items essentially that need to be -- or the conditions that need to be satisfied for the transaction to close? I know the 10-K was kind of one of the bigger hurdles, and now that's out of the way. So what are some of the remaining things that need to be satisfied before the transaction's [closed]?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [39]

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I think it's mostly rudimentary stuff: IT, phones, space, a lot of little stuff, nothing that's really all that hard. It just all takes time, and we want to make sure it's all done properly so that there are no potential issues that overhang the closing. So I think the idea is to make sure everything is completely locked down before we close on the transaction. But there is nothing that's outstanding that's dramatic at this point.

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Operator [40]

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Our next questions comes from Christopher Nolan of Ladenburg Thalmann.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [41]

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The nonaccruals, did that reflect sort of a year-end cleanup of sorts?

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [42]

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Well, it really reflected one larger position, right, which was Tank. I'm looking at Dan Gilligan, right?

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Daniel Patrick Gilligan, KCAP Financial, Inc. - Interim Chief Compliance Officer, VP & Director of Portfolio Administration [43]

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Yes, there were 5, so mining, Stafford...

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [44]

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Yes. I mean, well, most of those are tiny positions. The only real significant one is Tank. The other positions are small.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [45]

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Yes. And am I correct that you actually -- your cost basis in Tank actually went up quarter-to-quarter, if I'm correct. Is that correct?

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Daniel Patrick Gilligan, KCAP Financial, Inc. - Interim Chief Compliance Officer, VP & Director of Portfolio Administration [46]

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Capitalization of PIK.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [47]

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Capitalization of the PIK.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [48]

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Got it. And then for Ted Goldthorpe, the look back, you guys alluded to a look back when you take over. When does that look back take effect? What does it go back to?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [49]

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So it's currently -- we -- it's currently contemplated. There is not a look back in the externalization agreement.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [50]

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There's no look back?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [51]

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There's no look back as of now.

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Christopher Whitbread Patrick Nolan, Ladenburg Thalmann & Co. Inc., Research Division - EVP of Equity Research [52]

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Okay. And then when you guys issued the press release in terms of going external, you indicated a good risk-adjusted return target for KCAP. Are you able to specify what that might be?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [53]

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Yes. I mean, I think -- I mean, let's take a step back. So I think the broader strategy is, obviously, we wanted to monetize the CLO managers who's not generating NII and dividend coverage, which we've done, and then obviously redeploy that into NII-earning assets. So we've kind of largely done that, as Dayl alluded to earlier in the call. Number two is obviously increase our reliance on first and -- first lien and unitranche-like assets and obviously reduce our reliance on CLO assets. We actually like the CLO business. We like CLO equities. We just don't think it's necessarily the right structure to have them into a BDC. And so I think if you look at where yields are today on both first lien and unitranche loans, it's on an unlevered basis, I would expect our new originations to come out around 10%. That's roughly where we'll originate assets today just given where LIBOR is.

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Operator [54]

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Our next question comes from [Angelo Guarino].

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Unidentified Analyst, [55]

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Dayl and Ted, congratulations on doing this for the company. I think it's a great move. Ted from BCP, in the filings, I didn't see anything really talking about a debt strategy and restructuring KCAP's debt. And I have to imagine that the new organization under your management is going to have access to more favorable terms. So can you tell us maybe a strategy of how you see that going forward?

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [56]

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Yes. So I think you're referring to our liability side of the balance sheet.

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Unidentified Analyst, [57]

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Yes.

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [58]

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Obviously, one of the big advantages of being in a big financial institution like BC Partners is because we use so much financing and because we pay so much in fees to the various investment banks and banks, we oftentimes can ask for a cheaper cost of funding. And so you compare some of the external managers to some of the internal managers or smaller managers versus larger managers, you can see there's definitely a benefit on the liability side. So we would expect, on a spread basis, obviously because LIBOR goes up and down, we should be able to get financing costs that are lower over time, which obviously all drops to the bottom line for our shareholders.

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Unidentified Analyst, [59]

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Yes. I noticed that it wasn't part of your pro forma, and I was surprised that actually refinancing the liabilities wasn't actually part of the case being made.

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [60]

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It's absolutely -- it's actually a really good point. To be honest with you, it's just very hard to quantify because a lot of the bonds that we are refinancing are noncallable. So it's like we would be making a forward estimate of where markets and spreads were at the time we're going to refinance all the debt. So I think vis-à-vis -- I think we're going to be -- I think this is a big part of the value we bring actually, amongst other things, new origination and other things we bring. But I think the ability to reduce financing costs -- and again, like these vehicles are cost of capital vehicles, I think that's a big advantage that you'll see.

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Unidentified Analyst, [61]

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And do you have a philosophy of a mix, fixing the debt for...

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Edward Joseph Goldthorpe, BC Partners - Managing Partner [62]

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Yes. I mean, I -- like obviously, you want to match assets and liabilities, and I don't want to make a big bet on interest rates. I mean, it's not what we're good at. I mean, if you asked me in 2010, I would have told you that interest rates were going up, which took 6 or 7 years to play through. So I would say, again, like we're very good at underwriting credit. We're not good at underwriting macro. So we don't like to take a lot of risk in terms of interest rate risk. That being said, some of our assets are fixed. The cheapest thing in the world right now is financing. If there's ability to raise longer-term fixed-rate debt that has no covenants, obviously, that's something we have to look at. So I think you'll see a decent amount of floating-rate liabilities in our capital structure. But if we can opportunistically tap the baby bond market or other markets where we can lock in long-term cheap financing for our shareholders, I think that might make good sense.

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Operator [63]

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There are no further questions. I'd like to turn the call back over to Dayl Pearson for any closing remarks.

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Dayl W. Pearson, KCAP Financial, Inc. - President, CEO & Director [64]

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Thank you all for joining us today, and thank you for the questions and the robust discussion. And we look forward to talking to you at the end of the -- when we file our first quarter financials. Thank you very much.

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Operator [65]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.