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Edited Transcript of OHAI earnings conference call or presentation 22-Mar-19 2:00pm GMT

Q4 2018 OHA Investment Corp Earnings Call

Houston Mar 27, 2019 (Thomson StreetEvents) -- Edited Transcript of OHA Investment Corp earnings conference call or presentation Friday, March 22, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Cory Elvan Gilbert

OHA Investment Corporation - Treasurer & CFO

* Steven T. Wayne

OHA Investment Corporation - CEO and President

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Conference Call Participants

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* Steven L. Martin

Slater Capital Management, L.L.C. - Manager

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to OHA Investment Corporation's Fourth Quarter and Year Ending December 31, 2018, Conference Call. (Operator Instructions) Before we begin, I'd like to remind everyone that today's remarks may include comments, which could be considered forward-looking statements, and such statements are subject to many factors that can cause actual results to differ materially from our expectations as expressed in those forward-looking statements.

Those factors are described in more detail in the company's SEC filings, and I refer you to the company's website or through SEC's website to read those filings.

The company undertakes no obligation to publicly update or revise any forward-looking statements, which speak only as of today's date. As a reminder, this conference is being recorded.

I would now like to turn the call over to Steven Wayne, the company's President and CEO.

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Steven T. Wayne, OHA Investment Corporation - CEO and President [2]

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Thank you, Victor. Good morning. I'd like to welcome all of you to our company's fourth quarter 2018 earnings call. I'm joined on the call today by Cory Gilbert, our Chief Financial Officer. The presentation we're about to review was posted to our website earlier this morning under the Events & Presentations heading of the Investor Relations tab. We also refer you to our annual report on Form 10-K that was filed yesterday.

Before I begin today, I want to remind you that OHAI is in the midst of a strategic review process that our Board of Directors initiated to enhance shareholder value. These options could include, among other things, raising additional capital, the sale of part or all of the company, a merger or joint venture with another party, the acquisition of existing investment portfolios or other strategic transactions. We are actively working with our financial advisor, KBW, although, there is no assurance that the company will execute on any of these options.

As we've said previously, we do not expect to comment further or periodically provide updates to the market with additional information unless and until the company's Board of Directors has approved a specific transaction or otherwise deems disclosure appropriate or necessary.

And I will not be commenting further or answering questions today regarding the strategic review process.

I'll now turn to page 4 and provide a summary of 2018. The end of 2018 marks 17 quarters under OHA's management of OHAI. And while we are pleased with the success of our investment activities in September 2014 that has broadened OHAI's investment focus away from energy, our investment portfolio continued to experience losses in our legacy assets in 2018. NAV declined in 2018 by $0.59 per share from $2.37 at the end of 2017 to $1.78 at December 31, 2018.

During the year, we experienced $9.3 million of net write-downs relating to our legacy investments or approximately $0.46 per share in NAV reduction, which included $18.7 million of write-downs or $0.93 per share of our investments in OCI, our lone remaining nonenergy legacy portfolio company.

These write-downs were partially offset by a $2.9 million mark-up on our investment in Talos as a result of a full redemption at par in February, 2018 and a series of write-ups totaling $6.2 million of our investment in ATP royalty interests during 2018.

During OHA's tenures through December 31, 2018, OHAI has invested $171 million in new assets across 35 new portfolio companies, all outside the energy industry. In 2018, we made investments in 16 new portfolio companies, totaling $29.9 million and a $1.7 million add-on to an existing OHAI portfolio company.

We also had total portfolio realizations of $22.8 million, of which, $12.9 million related to 2 legacy investments and $9.9 million related to 6 OHA investments. I'll talk more about the fourth quarter portfolio activity later on the call.

From a financial standpoint, we finished the year with $671,000 of GAAP net investment income or $0.03 per share and declared distributions of $0.08 per share during the year. The company generated $0.07 per share of taxable income in 2018.

Cory will provide more detail on the financial results in a few minutes. I'll now turn to page 5, which summarizes the developments for OHAI in the fourth quarter. As I mentioned previously, we ended 2018 with an NAV of $1.78 per share. NAV decreased in the fourth quarter 17% or $0.37 per share from $2.15 per share at the end of the third quarter.

In the fourth quarter, we wrote down our investment in OCI subordinated notes by $8.6 million or $0.43 per share, partially offset by a write-up of our ATP royalty interest by $3.1 million or $0.16 per share.

Also, we experienced negative mark-to-market adjustments in our OHA portfolio of $1.5 million or $0.07 per share during the quarter. From a net investment income perspective, we earned $47,000, less than $0.01 per share on a GAAP basis and declared distributions of $0.02 per share for the fourth quarter.

This quarter, we invested a total of $3.8 million in 2 new portfolio companies at an average price to par of 97.2% and had $200,000 in net realizations. In December, our remaining position in our CLO investment in Gramercy was redeemed. The $7.2 million investment was initiated in October 2014 and generated a gross unlevered internal rate of return of 12.8%.

Since year-end, we have added or committed to over $5.3 million of new positions and exited $5.5 million of positions, including our entire $5 million investment in the Avantor unsecured notes. I look forward to discussing these new investments on next quarter's call.

Now turning to the leverage credit markets. M&A activity, which generally drives new money financing opportunities in the below investment-grade credit markets, decreased year-over-year in the fourth quarter of 2018 on a deal-count basis by 33%, but increased year-over-year on a deal value basis by 37%, driven by a handful of very large transactions.

Private equity share of M&A activity continues to increase as U.S. private equity deal count in 2018 was the highest on record and deal value was the second highest on record. December was a volatile and challenging end, to what had already been, a mixed 2018 for the U.S. capital markets. The widespread sell-off in most risk assets, which started in November, intensified in December, with equity sliding 9%, high-yield bonds losing 2.2% and leverage loans down 2.5% for the month.

The U.S. high-yield market was down 4.7% in the fourth quarter, its worst quarters since the third quarter of 2015 and end of the year down 2.3% for all of 2018. In the leverage loan market, fourth quarter 2018 new issue volume was down 23% on a year-over-year basis and down 16% quarter-over-quarter. Leverage loan returns were not immune to the broader market sell-off and were down 3.5% in the quarter. December 2018, as I mentioned earlier, was the worst month for loan returns in over 7 years and the worst December since 2008. The S&P/LSTA Leveraged Loan Index posted an annual return of 0.4% for 2018, the third lowest annual return since the inception of the index 19 years ago. Despite the pervasive concerns of the capital markets at the end of 2018, markets have rebounded quickly and strongly at the start of 2019. Through yesterday, the S&P has returned 14.4%, the high-yield market has returned 7.1% and the leveraged loan market has returned 4%.

Syndicated transaction activity in the middle market declined on a year-over-year basis and on a quarter-over-quarter basis. Issuance by companies with EBITDA of $50 million or less, decreased from $2.4 billion in the fourth quarter of 2017 to $1.7 billion in the fourth quarter of 2018. This was also a decrease from $2.4 billion in the third quarter of 2018.

The broader market weakness pushed middle market spreads higher. New issued first lien yields for issuance by companies with EBITDA of $50 million or less, increased 72 basis points quarter-over-quarter to 8.04%, which is 188 basis points higher than the 6.16% in the fourth quarter of 2017. As the markets have rebounded since year-end, new issue spreads in both the bank debt and high-yield markets have tightened.

I'll now turn the call over to Cory to discuss the financial results for the fourth quarter.

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Cory Elvan Gilbert, OHA Investment Corporation - Treasurer & CFO [3]

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Thank you, Steven. The financial headlines for the fourth quarter can be found on Page 6. Our investment income for the quarter totaled $1.7 million or $0.08 per share, an 11% decrease from the third quarter. Base management fees were $366,000, and there was a $6,000 reversal of a capital gains incentive fee accrual in the fourth quarter.

We finished the quarter with net investment income of $43,000 less than $0.01 per share. We recorded net realized and unrealized losses totaling $7.1 million or $0.35 per share. Altogether, we reported a net decrease in net assets from operations of $0.35 per share, after our $0.02 per share distribution declared in December and paid in early January, our net asset value decreased $0.37 per share to $1.78 per share, a 17% decrease from the third quarter.

We continued our practice to seek positive assurance from a third-party evaluation firm on all Level 3 assets with fair values in excess of $10 million on a quarterly basis. We will also seek positive assurance on other Level 3 assets with any meaningful fair value on an annual basis.

This quarter, we saw and received third-party positive assurance on 100% of our Level 3 assets with any fair value. Page 7, shows the net investment income section of our income statement for the fourth quarter of 2018 compared to our results for the third quarter of 2018 and for the fourth quarter of the prior year. Investment income decreased by approximately $214,000 from the third quarter of 2018, primarily as a result of placing our investment in OCI subordinating notes on full nonaccrual status at the beginning of the fourth quarter. This was partially offset by $193,000 of our final Gramercy CLO remittance applied to interest income. Interest expense for the quarter was $593,000 or $0.03 per share compared to $767,000 or $0.04 per share in the third quarter of 2018 and $956,000 or $0.05 per share in the same quarter of the prior year.

Quarter-over-quarter, the decrease in interest expense is due to a lower average amount outstanding on our credit facility as a result of a $7 million pay down in September and a lower interest spread. This was partially offset by an increase in 1-month LIBOR. Management and incentive fees to our advisor were $43,000 lower in the fourth quarter of 2018 compared to the third quarter. Compared to the same quarter prior year, base management and incentive fees were $51,000 lower.

Other G&A expenses for the quarter were $678,000 or $0.03 per share compared to $659,000 or $0.03 per share in the third quarter of 2018 and $945,000 or $0.05 per share in the same quarter prior year. G&A expenses were $267,000 lower compared to the same quarter prior year, primarily due to lower legal costs and audit fees. As a result, our net investment income for the fourth quarter of 2018 totaled $43,000, less than $0.01 per share compared to $56,000 less than $0.01 per share in the third quarter of 2018.

In comparison, net investment income for the fourth quarter of 2017, totaled $367,000 or $0.02 per share. Turning to Page 8. You can see the summary of realized and unrealized gains and losses in the portfolio for the relevant quarters. There were no meaningful realized gains or losses recognized during the fourth quarter of 2018.

Now let's look at the net unrealized gains and losses on the lower portion of the page. For the fourth quarter of 2018, the total net unrealized loss was $7.1 million. Meaningful valuation changes in the quarter were related to a $8.6 million write-down in our investment in OCI subordinating note, which was offset by a $3.1 million positive change in the unrealized loss related to our ATP royalty interest.

During the quarter, we wrote up the fair value of our investment in ATP by $3.1 million, which consisted of an increase in fair value from $2.2 million at September 30, 2018 to $4.8 million at December 31, 2018, and we reduced our cost basis by the $535,000 of production payments received as we maintain nonaccrual status for this investment.

On Page 9, you'll find a graphical presentation of the components of the quarterly results and their respective impact on our net asset value per share.

Net asset value at the beginning of the quarter was $2.15 per share. Net investment income was less than $0.01 per share. This was partially offset by the fourth quarter distribution of $0.02 per share and the net negative adjustments in the value of our investment portfolio totaling $0.35 per share.

These all combined to decrease our net asset value per share to $1.78 for a quarter-over-quarter decrease of $0.37 per share or 17%.

Now to discuss recent portfolio activity, let me hand the call back over to Steven.

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Steven T. Wayne, OHA Investment Corporation - CEO and President [4]

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Thanks, Cory. Let's go to Page 11. As shown here, OHA has been able to invest just over $171 million in 35 new portfolio companies, since September 30, 2014, which we believe demonstrates OHA's origination capability for OHAI.

Turning to Page 12. During the same period, we realized a $166.1 million of investments, including $114.6 million through the full or partial realization of OHA investments. $99.6 million of this has come from the full realizations of 10 investments. At the end of the fourth quarter, the fair value of our portfolio investments totaled $65.6 million, excluding the $3.1 million of cash on our balance sheet. It is noted at the bottom of the page, our investment portfolio is split 76%, 24% between floating rates and fixed-rate investments. Also 79% of our portfolio investments based on fair value were classified as Level 2.

Moving to Page 13. This page presents the realized and unrealized returns for the portfolio company investments OHA has made through December 31, 2018, since becoming OHAI's investment advisor. These returns further underscore OHA's ability to originate investments for OHAI. The 10 fully realized investments generated $1 weighted-average gross IRR of 13.4% on an unlevered basis and when you include the $8 million of TIBCO that we sold in the third quarter of 2017, this increases to 13.9%, as shown on the page.

The remaining unrealized investments based on prices is presented in our December 31, 2018, financial statements have $1 weighted-average gross IRR of 9.6% on an unlevered basis. Note that the unrealized returns shown here are considerably lower than in previous quarters due to the market sell-off in the fourth quarter of 2018, reflective of lower asset prices in our mark-to-market losses.

At these lower prices our unrealized portfolio now has an expected -- a higher expected IRR through maturity versus prior quarters, assuming realizations at par. The returns shown in the -- this presentation and discussed today are unaudited and provided for informational purposes, and these gross IRRs are presented before any fees or expenses. Please note that the explanatory footnotes related to this chart are now found on the following Page 14.

Turning to Page 15. Despite investing $172.9 million over the past 4-plus years, which includes $1.7 million of additional investments in legacy portfolio companies, the size of our portfolio by fair value has decreased 62% since September 2014, driven by $128.3 million in net negative valuation changes and $166.1 million of realizations.

Let's now go to Page 16. This page better illustrates and explains the significant decline in NAV that OHAI has experienced since September 30, 2014, when OHA became the investment manager of OHAI. As shown here, on that date the portfolio consisted of $171 million of investment assets in 10 portfolio companies, concentrated heavily in the energy industry. The price of West Texas Intermediate crude oil, or WTI, was over $90 a barrel, but almost immediately started dropping, falling to around $50 a barrel by the end of 2014.

In early 2016, WTI was under $30 a barrel and closed yesterday at around $60, after hitting a recent high of $76.

This commodity price movement took its toll on these legacy energy assets. Over the past 4-plus years, we've had a write-down, or markdown, of approximately $113.5 million of the original $171 million of investment assets or approximately 2/3 of the fair value. Most of that $113.5 million of write-downs and markdowns, $98 million of it, has come from 7 legacy energy assets that totaled $127 million of the $170 million investment portfolio.

As noted below, the amounts written off and marked down shown here do not take into account any additional investment, paid-in-kind interest or dividends or discount accretions subsequent to September 30, 2014.

Let's now go to Page 17. While the portfolio maybe smaller, this chart does show a material difference in the composition and diversification of today's portfolio. Although, our energy exposure was down to 7% at year-end, as I just discussed, too much of this reduction in energy exposure has come, unfortunately, from the losses in the legacy energy investments. Away from the energy positions, we have substantially diversified our portfolio into a wide range of industries. I will note that our legacy position in OCI, shown here as therapy services, is now under 5% of our investment portfolio plus cash today compared to 15% at the end of the last quarter.

Let's move to Page 18. I will focus my comments on the meaningful changes in the portfolio during the quarter. During the quarter, we increased the fair value of our ATP royalty interest to $4.8 million. Since production recommenced in 2018, we received $1.4 million in production payments. Subsequent to year-end, we received an additional $412,000 in January and February. Our December 31 valuation of $4.8 million is based on the year-end reserve report prepared by a petroleum engineer, the first reserve report we have received since production recommenced. We arrived at our valuation by applying a 15% discount rate on only the proved, producing reserve volume projections.

Moving on to our largest decline in fair value for the quarter, OCI, our last nonenergy legacy portfolio company investment. We wrote down the fair value of OCI subordinated note $2.3 million from $10.8 million at September 30, 2018. OCI, a home health provider of pediatric therapy services to Medicaid patients in Texas, has been negatively impacted by Medicaid reimbursement rate reductions that were initially proposed in June of 2015 and were officially implemented by the State of Texas effective December 15, 2016. Although, approximately 25% of these initial rate cuts subject to a number of specific provisions relating to pediatric therapy reimbursement were restored in September 2017 as a result of the 2018-2019 biennium budget process, OCI's operating performance and cash flow have suffered. As part of the effort to navigate the challenging rate environment on March 1, 2018, OCI entered into a preferred provider arrangement with Superior HealthPlan, covering approximately 170,000 member lives in the Texas Travis Service Delivery area and Central Medicaid Rural Service area. OCI provides speech, physical and occupational therapy in all practiced venues for Superior's pediatric members age 3 years and older. This preferred provider arrangement is the first of its kind in the Texas Medicaid Pediatric Therapy services market and could help mitigate the Medicaid rate reimbursement reduction and other industry issues OCI has faced over the past few years. However, the hefty reduction to Medicaid reimbursement rates continues to be a drag on the financial performance of the company and for the entire industry in Texas.

The 85th Texas Legislative/session, which will determine Medicaid reimbursement rates for the 2020-2021 biennium budget, commenced on January 8, 2019 and will conclude on May 27, 2019.

Other than the previously noted mark-to-market adjustments across the portfolio, there were no other meaningful valuation changes during the quarter across the rest of the portfolio, but as you see on our schedule of investments in November, we purchased $600,000 of senior secured notes of Ardana, a leading insurance brokerage and an insurance provider in the United Kingdom. The Ardana senior secured notes were purchased at a 10% discount to par and earn interest payable at a fixed rate of 8.625%.

In December, we purchased $3.3 million of unsecured term loan in Sedgwick Claims Management Services, the largest third-party administrator of insurance claims in the world. The Sedgwick unsecured loan was purchased at a 1.5% discount to par and earns interest payable in cash at a fixed rate of 9%. So let's move on to another snapshot of our investment portfolio, the yield comparison on Page 19. This table focuses on the yield of our portfolio, both as it relates to fair value and cost. Based on our current yielding investments, which includes any PIK component for performing investments, our portfolio yields 10.5% and 10.4% based on weighted average, fair value and cost, respectively at December 31, 2018. This compares to 11.8% and 10.1%, respectively at September 30, 2018.

The portfolio yields at September 30, 2018, excluding our investment in OCI were 10.0% and 10.3% based on weighted-average fair value and cost, respectively. The increase we saw in the fourth quarter of yield based on fair value from 10.0% to 10.5% is largely due to the lower year-end marks.

As shown on Page 20, we now have 26 active portfolio company investments as of December 31, 2018, as compared to 10 investments at September 30, 2014. 24 of these are new investments made by OHA, and they now constitute 89% of the investment portfolio on a fair-value basis.

This ends our formal presentation for today. I'll now turn the call over to the operator to coordinate the Q&A process.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And looks like our first question will be from the line of Steven Martin from Slater.

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Steven L. Martin, Slater Capital Management, L.L.C. - Manager [2]

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Steven, you made a comment about the write-down of -- the unrealized write-down of the portfolio in the fourth quarter, and you also commented that the high-yield market has bounced back. Can you talk about what that $1.6 million markdown might look like now? Or how much of it have you gotten that you think you've gotten back?

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Steven T. Wayne, OHA Investment Corporation - CEO and President [3]

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Sure. As we said, there was $1.5 million of what we characterize as mark-to-market loss in the portfolio. As we kind of look at where that market has gotten to and a lot of the assets are marked through pricing services, they're not marked through valuation committee. We see about half of that or a little bit more than half of that having come back as the market rebounded. Some of those are -- or actually one of those particularly that I mentioned are our sale of Avantor notes, we sold at a pretty significant premium to par. So that's actually realized gain that we've gotten back, but the rest -- most of it moved higher than where they were at year-end, although a few of the lower spread assets have not necessarily come back to where they were at the end of the third quarter. The market has repriced to some degree of risk. So some of the lower yielding or lower spread second lien assets haven't come back as much as some of the others, but happy to say that a little over half of the mark-to-market loss we saw in the fourth quarter at least through yesterday has come back and they're going to obviously, change between now and quarter end.

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Steven L. Martin, Slater Capital Management, L.L.C. - Manager [4]

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And this mark-to-market loss, you don't believe that it has anything to do with the underlying assets themselves. It was -- you believe, based on your commentary, that it was all market activity in the high-yield market.

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Steven T. Wayne, OHA Investment Corporation - CEO and President [5]

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We do. We don't see any credit problems in any of the names in our portfolio. As I highlighted earlier, there were pretty significant moves in the fourth quarter and in December in particular in the credit markets. And we -- obviously, a lot of these marked -- assets are priced through pricing services. So we don't have leeway of pricing that, but even the one in valuation committee. We do take into account these moves in marks and your Ministry Brands. For instance, we did take down from par to 98 as you see and something like that we would expect to likely come back as we will get next, but when the market's down as much as it was, even though these are less liquid assets and even the Level 3 assets, we take a real hard to look at and look at where the market's moved. So again don't think -- none of these moves were credit related.

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Steven L. Martin, Slater Capital Management, L.L.C. - Manager [6]

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Okay. I think it's great that you got -- you started getting royalties on the ATP investment. You said that you got $1.4 million last year and $412,000 for the first 2 months. Do you have any idea of what that's going to look like going forward? And how that relates to the -- your remark of ATP at $4.8 million?

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Steven T. Wayne, OHA Investment Corporation - CEO and President [7]

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Well, I won't necessarily comment, we don't try -- we don't get in to too much of the details underlying our valuation, but what we have said and what's in the K, is the big change and the reason that why I think the valuation looks higher than it was -- this was the first time since production recommenced that we actually had information beyond the payments themselves. As I think we've said in earlier calls, up until the end of this year, the first 6 months or so all we were literally getting was the payments, which were great, and we were happy that we were getting payments on the royalties again, but we weren't getting much information beyond that payment, and it was some very basic production information that supported it. So the change really at year-end was the fact that we actually had an underlying report from a petroleum engineer, a reserve report, that we could actually base a valuation on that would be more traditional in terms of how we will look at an asset like this. And while I think we don't still have all the information we'd like, we would like to have and we're still trying to get more from the operator. We were comfortable looking at just the producing assets in the reserve report, where I think traditionally people would look at more of PB 10 and look at all of 1P assets. All we'd done at this point was just take the producing assets and apply, and we looked at a range of 10% to 20% and settled on a 15% discount rate rather than a 10% discount rate, and that got to the $4.8 million. So I'm not going to comment specifically on our expectations for payments, but clearly we received a couple of hundred thousand dollars for the -- each month for the first 2 months of this year, and we don't expect those to turn off any time soon. And the other thing I will say is that our valuation was based off of the commodity curves at the end of year, those obviously, can change and as we sit here today, those are, at least for oil, it's considerably higher. So that -- we'll look at this obviously, each quarter as we take into account what we've received and what that means for future production and apply the current curve, but it's obviously good news. And I don't want to extrapolate out what we might or may not get. But obviously, it's a good sign that we received a couple of hundred thousand dollars for the first 2 months of 2019.

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Steven L. Martin, Slater Capital Management, L.L.C. - Manager [8]

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And how is that flowing through the income statement? In -- or is that an interest income are return on principle or...

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Steven T. Wayne, OHA Investment Corporation - CEO and President [9]

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Because we've decided or we've determined that it's on full nonaccrual, all those payments are not running through the -- none of those payments are running through the income statement, they're just being applied to our basis. So there is no income statement impact shown either in 2018 or would there be in 2019. Given that we're actually due almost $40 million under the terms of royalty agreement, and we don't think just based on production levels and commodity prices that we would ever expect to get that whole repayment back. We've determined now that we would apply all receipts of royalty payments to basis.

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Steven L. Martin, Slater Capital Management, L.L.C. - Manager [10]

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Okay. And one last one. You've got the OCI notes marked down to $2.3 million. Why is -- why does it still have a value? Why not just write it off and be done with it?

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Steven T. Wayne, OHA Investment Corporation - CEO and President [11]

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Well, I think first and foremost because the company is still operating, which is obviously, a good sign. I mean this company is -- and I'm going to comment too much on the specifics, but for anybody whose looked at what's going on in the pediatric therapy market in Texas, it's been really hit hard by the rate cuts from the last couple of years ago. And the rate cuts were on average, ultimately, ended up for the last 2 years about 30% lower than where they had been, so that's a pretty significant cut. So it's not a secret there's been a lot of companies doing therapy in Texas have gone out of business, a lot of therapists have left the market. So it's been a struggle not only for OCI, but for all the participants in the market, but they are still operating, they are still, if not the largest, one of the largest pediatric therapy providers in the state. So we think that there's -- given they're still in business is obviously a good sign, as we've been the -- one of the market leaders and the management I will say has done an incredibly good job of holding things together in a very difficult market. And we're watching very closely, as I commented on, what's going on in the Texas legislature. They meet every 2 years, and they're currently in session. And I think market participate -- participants are hoping for a significant increase in rates, our valuation did not rely any significant increase in rates. We kind of learned through the last process, trying to handicap and bet what legislatures are going to do with respect to a political process, is it very easy to do or helpful. So obviously, things could look much better for our prospects, if rates are significantly raised by the legislature. So we -- we're watching that what happens down there very closely, but the company continues to operate, and we feel that our valuation currently reflects, at least the information we've gotten in their financial position.

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Operator [12]

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(Operator Instructions) And currently I'm showing no further questions at this time. I'd like to turn the call back to Steven Wayne for closing remarks.

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Steven T. Wayne, OHA Investment Corporation - CEO and President [13]

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Thanks, operator. I want to thank everyone for their time today, and I look forward to speaking with you next quarter, and good luck to everybody in their March Madness brackets.

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Operator [14]

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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.