Second Quarter Summary
- Net asset value (“NAV”) of $2.60 per share
- Net investment loss of $(0.08) per share
- The board of directors did not declare a dividend this quarter
The total value of our investments was $255.9 million at March 31, 2020. During the quarter ended March 31, 2020, the Company originated $6.6 million of investments and had $20.4 million of repayments and sales, resulting in net repayments and sales of $13.8 million. As of March 31, 2020, the Company had investments in securities of 44 portfolio companies with approximately 41.4% consisting of senior secured first lien investments, 9.9% consisting of senior secured second lien investments, 0.6% consisting of unsecured debt, 16.4% in MCC Senior Loan Strategy JV and 31.7% in equities / warrants. As of March 31, 2020, the weighted average yield based upon the cost basis of our income bearing portfolio investments, excluding cash and cash equivalents, was 8.7%.
Results of Operations
For the three months ended March 31, 2020, the Company reported net investment loss per share and net loss per share of $(0.08) and $(1.45), respectively, calculated based upon the weighted average shares outstanding.
For the six months ended March 31, 2020, the Company reported net investment loss per share and net loss per share of $(0.02) and $(1.37), respectively, calculated based upon the weighted average shares outstanding.
For the three months ended March 31, 2020, total investment income was approximately $5.3 million and consisted of $3.5 million of portfolio interest income, $1.7 million of dividend income, and $0.1 million of fee income.
For the six months ended March 31, 2020, total investment income was approximately $12.8 million and consisted of $8.9 million of portfolio interest income, $3.5 million of dividend income, and $0.4 million of fee income.
For the three months ended March 31, 2020, total expenses were approximately $9.5 million and consisted of the following: base management fees of $1.6 million, interest and financing expenses of $4.4 million, professional fees of $0.1 million, administrator expenses of $0.6 million, directors’ fees of $0.3 million, and other general and administrative related expenses of $2.5 million.
For the six months ended March 31, 2020, total expenses were approximately $13.9 million and consisted of the following: base management fees of $3.6 million, interest and financing expenses of $9.6 million, net professional fees of $(4.3) million, administrator expenses of $1.1 million, directors’ fees of $0.6 million, and other general and administrative related expenses of $3.3 million.
Net Investment Income/Loss
For the three months ended March 31, 2020, the Company reported net investment loss of $(4.2) million, or $(0.08), on a weighted average per share basis.
For the six months ended March 31, 2020, the Company reported net investment loss of $(1.1) million, or $(0.02), on a weighted average per share basis.
Net Realized and Unrealized Gains/Losses
For the three and six months ended March 31, 2020, the Company reported net realized losses of $(0.1) million and net unrealized depreciation of $(73.6) million and net realized losses of $(1.8) million and net unrealized depreciation of $(69.8) million, respectively.
For the three and six months ended March 31, 2019, the Company reported a loss on extinguishment of debt of $(0.9) million and $(1.8) million, respectively.
For the three and six months ended March 31, 2019, the Company reported a change in provision for deferred taxes on unrealized appreciation on investments of $(0.1) million.
Liquidity and Capital Resources
During the quarter ended March 31, 2020 the Company repaid a total of $34.9 million on its Series A Israeli Notes (the “Israeli Notes”), which consisted of its scheduled quarterly amortization payment and an additional pre-payment.
As of March 31, 2020, the Company had $74.0 million outstanding in aggregate principal amount of 6.50% unsecured notes due 2021, $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023, and $21.1 million outstanding in aggregate principal amount of the Israeli Notes.
As of March 31, 2020, the Company had a cash balance of $61.1 million.
On April 14, 2020 the Company repaid the remaining $21.1 million of Israeli Notes outstanding.
The board of directors did not declare a dividend this quarter.
|Medley Capital Corporation|
|Consolidated Statements of Assets and Liabilities|
|(in thousands, except share and per share data)|
|March 31, 2020||September 30, 2019|
|Investments at fair value|
|Non-controlled/non-affiliated investments (amortized cost of $143,310 and $204,736, respectively)||$||112,666||$||189,895|
|Affiliated investments (amortized cost of $96,626 and $108,310, respectively)||82,277||99,540|
|Controlled investments (amortized cost of $156,552 and $154,601, respectively)||60,953||107,454|
|Total investments at fair value||255,896||396,889|
|Cash and cash equivalents||61,104||68,245|
|Receivable for dispositions and investments sold||12||419|
|Notes payable (net of debt issuance costs of $1,843 and $5,274, respectively)||$||171,173||$||251,732|
|Accounts payable and accrued expenses||2,258||11,957|
|Interest and fees payable||802||2,905|
|Management and incentive fees payable||1,641||2,231|
|Administrator expenses payable||576||862|
|Due to affiliate||196||44|
|Deferred tax liability||86||—|
|Common stock, par value $0.001 per share, 100,000,000 common shares authorized, |
54,474,211 and 54,474,211 common shares issued and outstanding, respectively
|Capital in excess of par value||673,533||673,533|
|Total distributable earnings/(loss)||(531,845||)||(457,154||)|
|Total net assets||141,742||216,433|
|Total liabilities and net assets||$||318,512||$||486,267|
|NET ASSET VALUE PER SHARE||$||2.60||$||3.97|
|Medley Capital Corporation|
|Consolidated Statements of Operations|
|(in thousands, except share and per share data)|
|For the three months |
ended March 31
|For the six months |
ended March 31
|Interest from investments|
|Total interest income||3,352||10,066||8,504||21,546|
|Interest from cash and cash equivalents||154||211||372||373|
|Total investment income||5,301||12,587||12,792||26,789|
|Base management fees||1,641||3,084||3,649||6,270|
|Interest and financing expenses||4,432||5,899||9,576||11,908|
|General and administrative||2,083||2,881||2,600||3,485|
|Professional fees, net||131||10,157||(4,285||)||11,357|
|Expenses before management and incentive fee waivers||9,517||23,182||13,935||35,625|
|Management fee waiver||—||—||—||—|
|Incentive fee waiver||—||—||—||—|
|Total expenses net of management and incentive fee waivers||9,517||23,182||13,935||35,625|
|NET INVESTMENT INCOME||(4,216||)||(10,595||)||(1,143||)||(8,836||)|
|REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS|
|Net realized gain/(loss) from investments|
|Net realized gain/(loss) from investments||(100||)||(10,615||)||(1,845||)||(67,338||)|
|Net unrealized appreciation/(depreciation) on investments|
|Net unrealized appreciation/(depreciation) on investments||(73,563||)||(3,399||)||(69,832||)||41,610|
|Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments||(86||)||—||(86||)||—|
|Net loss on extinguishment of debt||(895||)||—||(1,784||)||(123||)|
|Net realized and unrealized gain/(loss) on investments||(74,644||)||(14,014||)||(73,547||)||(25,851||)|
|NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS||$||(78,860||)||$||(24,609||)||$||(74,690||)||$||(34,687||)|
|WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE||$||(1.45||)||$||(0.45||)||$||(1.37||)||$||(0.64||)|
|WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE||$||(0.08||)||$||(0.19||)||$||(0.02||)||$||(0.16||)|
|WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED||54,474,211||54,474,211||54,474,211||54,474,211|
|DIVIDENDS DECLARED PER COMMON SHARE||$||—||$||0.05||$||—||$||0.15|
ABOUT MEDLEY CAPITAL CORPORATION
Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that has common stock which trades on the New York Stock Exchange (MCC) and the Tel Aviv Stock Exchange (MCC) and has outstanding bonds which trade on the New York Stock Exchange under the symbols (MCV) and (MCX) . Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Our portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.
ABOUT MCC ADVISORS LLC
MCC Advisors LLC is a subsidiary of Medley Management Inc. (NYSE: MDLY, “Medley”). Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise is a premier provider of capital to the middle market in the U.S. Medley has $4.1 billion of assets under management in two business development companies, Medley Capital Corporation (MCC) (MCC) and Sierra Income Corporation, and several private investment vehicles. Over the past 18 years, we have provided capital to over 400 companies across 35 industries in North America.1 For additional information, please visit Medley Management Inc. at www.mdly.com.
This press release contains “forward-looking” statements, including statements regarding any potential exploration of strategic alternatives by the Company. Such forward-looking statements reflect current views with respect to future events and financial performance, and the Company may make related oral forward-looking statements on or following the date hereof. Statements that include the words “should,” “would,” “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “seek,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements in this material or similar oral statements for purposes of the U.S. federal securities laws or otherwise. Forward-looking statements include, but are not limited to, the introduction, withdrawal, success and timing of business initiatives and strategies; changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes in the value of our assets; the relative and absolute investment performance and operations of MCC Advisors LLC; our business prospects and the prospects of our portfolio companies; uncertainties associated with the impact from the COVID-19 pandemic, including its impact on the global and U.S. capital markets and the global and U.S. economy, the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak, and the impact of the termination of the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and between the Company and Sierra Income Corporation (“Sierra”) and the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among Medley Management Inc., Sierra, and Sierra Management, Inc., on our business, financial results, ability to pay dividends and distributions, if any, to our stockholders, and stock price.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the “Risk Factors” and other sections of the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. The forward-looking statements in this press release represent the Company’s views as of the date of hereof. The Company anticipates that subsequent events and developments will cause its views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company does not have any current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing the Company’s views as of any date subsequent to the date of this material.
SOURCE: Medley Capital Corporation
Investor Relations Contact:
Head of Capital Markets & Risk Management
Medley Management Inc.
Jonathan Gasthalter/Nathaniel Garnick
Gasthalter & Co. LP
1 Medley Management Inc. is the parent company of Medley LLC and several registered investment advisors (collectively, “Medley”). Assets under management refers to assets of Medley’s funds, which represents the sum of the net asset value of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). Assets under management are as of December 31, 2019.