WHF - Earnings call transcript Q3 2020 | WhiteHorse Finance, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the WhiteHorse Financial Third Quarter 2020 Earnings Conference Call.

Our hosts for today's call are Stuart Aronson, Chief Executive Officer; and Joyson Thomas, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 5:00 P.M. Time. Standard Eastern number XXXXXXX. dial-in and pin the The is is number replay XXX-XXX-XXXX, At placed questions have mode participants this all time, been floor be presentation. and will in opened the for following the listen-only a Instructions] to Silva over is the Partners. Sean my to of pleasure [Operator turn It floor Prosek now Please go ahead.

Sean Silva

everyone, and today joining to XXXX discuss you, Christie, for Quarter Results. Thank WhiteHorse Earnings thank you, us Finance's Third

results during certain of forward-looking statements and within this quarter Private important third I would factors which Reform the including allow be these historical are involve these like from statements, meaning Act that to Because responsibility our of this known Whitehorse Today's XXXX which begin, forward-looking forward-looking that uncertainties, presentation, from Finance Stuart, to may implied statements. obligation WhiteHorse to begin. everyone Finance's on statements by may update are the XXXX. material Finance could or Litigation that, to we speakers any actual related introduce and Before risks these expressed you morning. or assumes me facts unknown forward-looking statements. Securities statements remind Stuart was website no refer made Aronson. cause call, any guidance, to differ WhiteHorse to With posted based those CEO, may not to materially the earnings financial deemed

Stuart Aronson

those frontline gratitude our who health and have continue loved care all also our hope the today. times, and WhiteHorse send with Sean. thank and and stakeholders, condolences of and Good across healthy us ones. unprecedented lost navigate for I our families you we employees workers, essential the would to dedicated family. thoughts and sincere the We our to you, and continue Thank afternoon, included remain to we and be as everybody, your families all like express joining our to to continued H.I.G. safe you other

morning available are this our market start after in and will with press floor had we I'm to trending our which to website. As a pleased third quarter hope you've our we you're Thomas, chance our prior a positively. results also I to open, on to addressing quarter Officer, metric results, open our detail, for more aware, Joyson and release issued by going conditions market very our will Chief strong performance which questions. discuss key the then virtually and We're Financial report every review third

currently reduced earned comfortably quarter, excess to $XX.XX $X.XXX XXXX was NAV. eclipsed non-accruals Core compared at quarterly adjusting of share. and NAV increased QX. The on by our or compared our million share, we strongest of $X.X to During in this. provide pipeline level in $X.XX accrual NAV $XX.XX in also million history. more per and had our our fee for our We QX, our the the NII, after XXXX have our QX is to all share covering of of deployments. million IPO price gains details end per X.X% in $X.XX pre-COVID incentive a $XX.XX NAV We increased in capital or asset $X.X dividend. now dividend. a the We $XX we QX strong I'll

quarter, more situation. received by shortly. was interest on Core NII million fee the mark-to-market Kings, and unrealized resolution payments incentive was details million $X.X will recorded the or from recognized able large primarily were be realized per this Our $XX.X announce gains of GAAP driven investments. gains I'll the which million investment net on capital income gains our $X.XXX the in positive now but that AG accrual was from we driven share. net result in to provide $X.X to

during the offset a deployments by million, improvement credit improved in in $XX.X gross COVID-impacted totaling and million, we of activity recorded environment, origination $XX.X strong quarter. resulting were of deployments million. partially Our Despite repayments our factors net quality $XX.X key

Our QX, an basis of average XX investments points. weighted effective increase yield in to QX, X.X% on approximately in was income-producing X.X% compared

of additional investor materially in JPM detail facility, which rate million and currently of confidence Finance the demonstrates to end times. to of the a proceeds key leverage placement deploy notes current will X.XX this. facility, in also leverage to the portfolio. debt as in subsequent the of reminder, the to the advance into X.XXX%. capacity in despite economic of compared issuances issuance issued ability on The lower Joyson QX. million of up JPM to down of This $XX interest X.XX a available. shortly also balance our prior we on and at X.XX at to cushion, of XXXX high-quality of report We is our matures capital outstanding providing WhiteHorse private to that environment, rate that of deploy assets, on opportunistically than the $XXX in times approximately pay is end million our Our more used I'm the QX successfully new end quarter, strength quality this the thresholds pays at outstanding provide the fixed pleased capital $XXX issuance resulted while credit a times our rates. target And the results attractive range senior that's has

strong portfolio, despite from HIMA the moderate Grupo of Now during high quarter to moving exposure high. our positive as we to markups credits several the classify up quarter, COVID percentage and our larger across

designated high We also quarter moderate on recorded during credits. our the markdowns of four exposure previously

believe the end represented the compared the prior high that X% through to this we borrowers at firmly of our push quality result, the With portfolio portfolio continue conversations a exposure said, environment. with as we in quarter. still the productive X% QX during to of of credits our have our of portfolio As and

the $XXX.X to million compared now the to of with QX, increased At of the value portfolio investment at our Turning $XXX.X portfolio. end QX. of million the fair investment end

several quarter portfolio. in our the to to during well originations meaningful add-ons increase which mentioned was portfolio consisted As new part in three activity due our the as of deployment $XX.X million, totaling as earlier, our

originations Our new deals. new credits. repayments during non-sponsored three lien of sponsor million quarter, deployments companies included new offset full portfolio first of deal were $XX.X one which were consisting on by portfolio the with Gross and partially our two two realizations all

the will of During converted bankruptcy priority our was dip during portion a the a pay loan in quarter, third super AG Kings process. debt that into interest

of portion investments this during AG Kings back was on result, in a As QX. accrual put our

quarter, that as loan During recorded began in also our basis the approximately in with our additional term Kings' the out of last $X.X of million income loan, being we a portion the recovery an $X.X cost investment payments investment. receiving as payments was recorded reducing and interest on our further million

and As still final dependent earlier buyer determined, bankruptcy to the yielded be forward. regulatory figures in assets, on purchase outcome and mentioned moving is a the for call, is still are auction the that The the the Kings' process approvals. of

six regulatory on positions be one that is of auction flows process. quarter. the end modest estimate currently, blended approvals the that immediate in the is unlikely Company However, It the at and important to all there have an potentially we cash Kings of upside across this could months. our believe to bid note to anywhere take We is based the between the mark we above

portfolio's in QX, compared nonaccruals with of X.X% of for our improved level, QX. two given the of completion nonaccrual currently portfolio position X.X%, fair we upon converting decrease in from our fair debt these position AG repaid in into the bankruptcy debt to positions X.X% Arcole a an And value. Kings value we to at account project once further is sale, As our nonaccrual equity QX

Turning now pipeline. to our

remarks, I in seeing are our As mentioned my we pipeline strongest opening ever.

are are seen business upon since XXXX more attractive which strong the XXXX vintage. we extremely experiencing the engaged we've than and are We to opportunities activity anything

up force Our origination peak America in offices number to North at and of headcount related XX our and across to with office-based levels XX Cincinnati, Ohio. We're originators is newest offices.

As to closed opportunities deals, or four lien and levels Already continue sponsors repeat add-on loans. first from new portfolio. in increased our QX, all are business and seeing business grow, of have opportunities we we our from upsizing sponsored portfolio

have of deals of being with mandated also deals. We add-ons as deals six three four non-sponsored total sponsored well additional being seven deals an them and as these

the transactions. of first-lien transactions are All

close, closure on get Now can guarantees any these will many that transactions to working of as no certainly we're on best possible. as but make always, it we our doing as and them

significant Vesco and gain equity upside Following adding of on in believe the income, a portfolio co-investment end discipline entire the there did our to successful our the was many we the our into our NAV originations to third the period, fee to COVID our to underwriting Holdings. of but forced Not our and of exited whereas Vesco. generate to exit were key equity active portfolio also strategy proven was date. small remain has positions provides able that be prepayment correction We to in were in construction, position this we because market. position success A quarter, conservative other only lenders throughout

spread of close average investments million leverage new in X.XX and L+ positioned $XX.X Our activity weighted us a three to of continued at times average QX. only and X

less a than is company a As leverage. our at of example, one three for transaction times an deals

who The XXX. other at deal lenders are in banks lending are this plus LIBOR

the are at at we able XXX were lending plus that we and XXX. with LIBOR fee, secure loan a that on position LIBOR However, closing a with plus to X.XX% are banks

that assets book yields a that the get our target have consistently will on dividend when to to earn be endeavor such to continue basis. to leverage, able We we we quarterly

time was terms point investments at macro outlook, The vast what In higher double COVID. secured XX% And senior the at year. still is pipeline our our of majority than the more same lowest lien. first are it than of of last

lien market we're months to more mix points The between lower transactions. competition as deals. competition have approximately very led XX them The times. still sidelined leverage available is has with back part to marketplace. sponsor compared higher prepayment aggressive remained are seeing of to not In on structures levels. reentered in the pre-COVID nice with ago multiples the parties but and non-sponsored generally strong XXX who secured so non-sponsor three than penalties increased has In basis senior all were far, market, times fact, Pricing X.X first pre-COVID a of conservative much sponsor of and these they're more to to with X.X pricing,

environment, about expect will have we In what more pricing. QX, this about to over the having we will performance Joyson ith also become lower activity Joyson. mandate QX encouraged seen under thus this that, they detail banks maintain uncertain more into deals, our and conservative discipline now speak which heading or far command to the our during by and turn financials. in XXXX. we deals are several position first-lien do, by will are we've won't Go I mid-market summary, our that prudence ahead, in while even non-sponsor double-digit in our With we

Joyson Thomas

Thank you, joining and for call. thank all today's you Stuart,

million During share, investment covering the net NII quarter income share. recorded $X.X per per to third $X.XXX or per for we dividend $X.XXX compares $X.X quarter, Core share per million This QX. $X.XX share. or $X.XXX million of during $X.X of our the or was GAAP

During which we gains were quarter, investments, $XX.X portfolio by primarily driven one in aggregating and million, unrealized net $XX.X recorded totaling the million fixed of $X.X our million. to on markdown approximately markups

quarter. well the Our during after million position of as the appreciation to investment from STRS $XX.X unrealized as transferring the JV in increased one effects

$X.X million As million increase driven million. portfolio $X.X million. XX net a issuers fair in of amendment prepayment total of considering $XXX.X reported September value assets for from approximately QX net resulting operations $XX.X approximately of XX, our and prior unrealized After the comprised quarter, by net we and aggregate fees. the income fee realized compared in with the was gains, JV's

improved of or in net value million driven approximately As to September primarily XX, $XXX.X markups. compares $XX.XX was or QX, per by share, million per which asset $XXX.X $XX.XX share

rating our improved that our during in whereas quarter, number increased As XX.X%. a XX.X% meaningfully one two QX, portfolio or risk in of carried either has rating, to the result, QX

rating seen initial rating indicates a that our indicates relative expectations. has is loss the company reminder, a its Company a of according to expectations reduced two initial performing and one a to risk that As

$XX.X sheet. $XXX accordion balance our undrawn to approximately cash the facility, revolver. revolving and $XX.X approximately of excluding resources million our September million restricted XX, XXXX, credit Turning the including under million under We had of million capacity $XX.X at of cash

under borrowed of As for by XX, well ratio of XXXX amounts, XXX%. coverage XXX.X%, asset requirement XXXX, the was our defined as September Act, Company's statute the above the

Our for on times net effective was X.XX end hand of of debt-to-equity cash as ratio after the the adjusting quarter.

of in very close of a were structure. the our principal repay received debt favorable quarter, to encouraged by revolving Following $XX the the of capital an our offering facility. used offering credit amount balances corresponding maturing on aggregate unsecured the We flexibility outstanding the conducted were The pricing to million. X.XXX% XXXX afforded from private we and for notes proceeds

distributions. total to distribution Next, XX, stockholders distribution I'd was December This quarter marks XXth, XXnd per quarter paid X, distribution XXXX, XXXX. like to September to quarter. Company's as XXXX, IPO $X.XXX on since per share On The for we a for consecutive highlight October in a with distributions our the per ended declared of record August of XXXX. distribution share of all at $X.X of rate the million $X.XXX paid September XX, stockholders our the

XX, will distribution per December would paid have taxable. October to that was which Xth, fourth October and stockholders the on related share earned stockholders income declared during Additionally, last of otherwise to quarter, record distribution been as XXXX, on of to The we $X.XXX XXth. is of be special year, a

morning, of will quarter the December said share evaluate in other consideration. this and core now declared X, on to Board a for factors XXXX. of call Consistent quarters, we Finally, the distribution, I term warrant XXXX XX, what record the $X.XXX power medium on may your operator announced distribution will January addition that be turn prior with based near of both to our Operator? portfolio to back that in our payable relevant the we in as questions. we to earnings quarterly to of continue have fourth stockholders per our

Operator

question your Smyth Securities. And from of Instructions] Mike first is [Operator Riley you. B. Thank

Mike Smyth

XX, a any is provide question ones? here this jump. is just jumped could large just getting of XX%. the over I'm one I'm industries? wondering or be pretty my look kind first looks to you concentration like And X.X% several any if seems it there good of is, So just Slide investment if one-rated that's that wondering, at smaller would I if case, companies big like from amount helpful. just color upgraded It

Stuart Aronson

to Joyson, deals available? up a one list of do have you the moved were handily that

Joyson Thomas

We do. Roughly that speaking, saw it was XX borrowers improvements.

Mike Smyth

not. you. with that? any contention That's industries anything And Got like is or there

Stuart Aronson

have companies, activity the the portfolio Just economic outside COVID-impacted that of clarity, seeing we so pretty of very our strong. directly balance has are in strong, you been the

expected some performing were going But at are there expected Joyson, that companies, highlighted, ahead, as so levels And or more above go Joyson detail? has you are share more levels. to

Joyson Thomas

that Sure. share if saw improvements that's with the I can you. for helpful quarter, names the you for

Mike Smyth

Yes, helpful. that would be

Joyson Thomas

Vero Farm, NMFC. All TV, Services, Source Opere, Code, our position in brands. Arcole, Alpha me, CHS Parent, Media, Mills Vesco. NNA Vero TrueBlue, Fleet excuse Lift -- Parent not Therapy, and

Mike Smyth

Got is putting the question be, around credit, looking back think investing about confidence or and would helpful. at stock given environment? the you. buying then just work And you stock between balancing do your another trading capital in where to That's potentially how

Stuart Aronson

continued that a strong Our the better. discuss to If basis from low, net trade the has been and but thing share income to buybacks, assets excellent in dividend general with And earn very we hope are investors. the can quarterly we shares continue trend line that able Board to far. the where philosophy the consider investing that hope our that be to our and shares earnings trade core that for we will on not so to returns generating is we do are a does determined be right very

Operator

is question from of Schleien Mickey Ladenburg. next Your

Mickey Schleien

couple of questions, high-level and Joyson. Stuart a Stuart, can. I if

are struggling. pandemic, there as sectors software and speaking, those relates that the broadly grocers. are and First, well And that like we then can to like are are credit view seems it performing today things those despite it

is industry. portfolio diversified by quite Your

more in if -- companies are potential the credit as for the you I'd to now how that to of fall see view So some stay-in-place and were gets pandemics deterioration the curve winter? in underperforming, the we potential understand -- for into going like more the orders worse

Stuart Aronson

private there's very that a to owners that COVID-affected. firm you. our of good it's fortunate fortunate to injected I all affected, portfolio companies. the are is equity Mickey, of great the it's that equity have companies, also that feel have in a we who our from been feel one, Number hear the of question. help limited portfolio sponsor case in portion And these in

gone help and fact that have these companies thin of with COVID. the on announcement, COVID, companies we companies If are has the above That it looks will this issuance, on from of gotten go potential above get sponsors like to the originally equity that return otherwise because continue for those four we at COVID on them notwithstanding frankly, and and the on that the said, than as our fundamentally it side injections quarter, to in or to did to our is have companies companies continued to despite it. on These the affected have virus go -- assets been well, NAV other the gotten the the Now work have liquidity. pre-COVID of peak longer and to get by people quarter part. another the pressure. And repercussions hoped, mark COVID-impacted all morning's of our of least of some those down owners other the healthy side original

does trying need to COVID we hope are if again, are these but do these rest the help sponsor-owned. and companies coped company, as the have of realistic the the return it period. the in of that a these on to other majority don't, take If if and first that. over companies back all the NAV we companies to to they ability invest And that if the more certainly the valuation of does help to get through COVID improvement assets remain these par owners of these lien even ends So we and assets, are to we of very and about see assets it side

experts have the We restructuring in Company.

do turn for a the choose equity have and Company. our Company We the not that. run private And investors professionals around existing the the in to have owners we company to wherewithal do if

Mickey Schleien

appreciate helpful. there of of and as a getting lot your Stuart. the yield-hungry And Well, companies, there's a remarks, that really That's out plenty I mentioned attention. in you've strong debt on color, And flip are of side, lot all they're capital private there.

you would how portfolio? risk So in your the characterize prepayment

Stuart Aronson

I get an see as prepaid. non-COVID-affected months wasn't a sold good ago, performing that a Three at very or very price. on multiple equity. was markup the told credit going did four is invested evidenced I of have will that strongly. was I the would was company COVID, yet, equity, Vesco, add-on we our acquisition during you a a anything And that investment and which Mickey, to by It And gain make amount a the original as is in on mentioned,

on several based have. does remain are and repayments. seen we between have the the not many it COVID-affected as if year end of outside data the on of next economy most of we half number strong We could recent current sold as a borrowers is year. see the the There first that portfolio more in the now expect we areas But review, get our based

a get repaying So of That years times to especially very to we churn. being are extent for strive the portfolio some And we markets leverage our typically strong of non-sponsor our the are is that are and outstandings. protection. penalties. to to strong, prepayment see loans within we then X.XX level strong, these get origination them prepayment we do on there's that chance three said, And do companies, have made, going

prepayment off a a paid them this deals several and had the paid QX, had including which also that penalty off JV, have in Vesco the of On prepayment prepayment penalties, penalty. did in quarter Acumen,

Mickey Schleien

interesting, That's understand. I Stuart.

Is that there about management next be year, there are new expect impacting allocate for terms thinking health portfolio the that new or new a employ such into how will you looking forward? that capital going In administration know and as to going to any or policies perhaps of you're now to start alternative themes we new segments, may President care important energy. have some

Stuart Aronson

based on parameters adjusted investing of change months already the had a nine We ago possibility in our administration.

health in the care adapted doing of been or any of the to democratic sectors administration. potential affected what infrastructure a already we've been that or anything think risks So we has are

since change fact beginning downsides that based has a our on now really we've that not because the there's the thinking incorporated won the on right year. of risk into portfolios already of So all our Biden really

Mickey Schleien

opposite mean, can the right? opportunities? that How I you advantage to as about Do there's you is of? change going well, some you think in provide that the administration opportunities take

Stuart Aronson

debt investing from is Mickey, the my downside. about avoiding perspective, in

were and number well, the when the two, in mindset like we've and money Vesco to those X we that investments, there go a is yourself the that stronger of there equity a million co-investments on we a years upside increase do of million, four, share. $X.XXX And with are lose we many so LIBOR shareholders, they and economy, on we is our upside? poorly obviously, made to $X looking Our five our do BDC $X.X co-investments well. LIBOR times in starting And in of, do X we the only X, is so or three, to only we we if made LIBOR small equity are equity likely more ago, a to $X.XX see frankly, investments did advice the couple analysts make of at size we based where and some

co-invest our see do upside on what the side, see piece certainly, you but we that's investment overall, a equity numbers. we as of from small So can

Mickey Schleien

any context Any the pandemic. more resolving shareholders Stuart, make certainly the just about in can last today or of hopefully, have us more government. that a can on, share end now lot we're the with understand. of that issue? affiliated clarity markets comment you the the And equity you thoughts comments terms strong. the I getting question, stock the in There's My the overhang from been about in clarity

Stuart Aronson

have the to time, it nothing than at we focus are, focused of fact make The concentration situation, stability that in we we there's shares much, have a share ago. lower that on And are that an Bayside were this Mickey. of I can beyond a much try years but to that course, sure they ongoing couple

Operator

you. Thank

Your Robert James. from is question next Dodd Raymond of

Robert Dodd

And your can you real of accurate million -- prepared if if and A, the quick income particular that B, nonaccrual, me if cost it below income income given first quarter? at tell cost? decided you to with I'm that that? that why wrong I'm can you remarks instead here. to this on asset back $X.X me, And did take of to So Kings. on all loan AG interest the line that the us tell into you for along applying is can I marked I bits recognized Correct you that lien, go basis

Stuart Aronson

Joyson, can that you pass I question?

Joyson Thomas

of so Sure, Kings, our Robert, position did that super convert the dip. in last you portion about if into absolutely. a priority loan out think

written-off $X.X was about prior that $X.X accrued. in purchase, as with million had, to received previously interest a again, we bankruptcy of we of previously that the accounted payments, filing So as of our prior million purchased received accounted also think allocated last-out as a million in way to interest about cost basis. the the that for of income reduction we That's the for in debt connection to our cash that was secondary had that $X.X quarter the interest as then portion that approximately the excess we

Robert Dodd

Got it.

Joyson Thomas

Then...

Robert Dodd

Go ahead.

Joyson Thomas

sorry. I'm No,

received we filing, pre-petition the as dip that payments. post then both loan another amongst $XXX,XXX and last-out the priority about interest super term So

Robert Dodd

you. Thank Understood. it. it, Got got

on two you in the exposure is a How given like, trouble, you even things, have obviously potential other it looking BDCs than Can looks morning's is deals. QX, evaluating? pipeline, the how of -- potential strong and at injections and most there a number QX. for that outlook evaluating really deals equity you're non-sponsored quite a pipeline pipeline, now, doing to give the this reduced between us greater obviously the sensor to with perhaps just the news. in that uncertain, still are contrast risks you Obviously, access if deals Just isn't for right non-sponsored closed any then yes, color

sponsored right versus you are the environment non-sponsored evaluating how So in now?

Stuart Aronson

Sure.

than more done So that non-sponsored do the documents made that tighter on deals always conservative Robert, with conservative covenants we've are deals. sponsor more case much And much we much terms in to done non-sponsored and the the lower as that marketplace put forth market it's at that when much, as firm much lending performance a through we've in individuals strong leverage experience, our disruptions. and both our results

As disruption, prior Grupo the severe COVID-impact is mark we've COVID a is and bucket that market that our only COVID. HIMA. in is high asset, Grupo tell you had on as hit non-sponsor issues from And had we've asset to that the very HIMA could

or to EBITDA, And XX%, on So The is XX% starting because able debt still our taken than in their XX%, deals. even is decreases on had the rates are our modest. strongly if the fees performed non-sponsor has happened companies these more service increased leverage average is companies load. while we've covenant book we've violations, have book what's really the sponsor experienced much leverage these so lower that XX%,

pipeline the because the are. are sponsor in than cases, especially our of well, competitive loans the pipeline, for, sponsor much So performing than non-sponsor been in And many extremely on be better the less a is our average to continues sidelined. that midst loans crisis, have experience banks non-sponsor our

prepared we my have that from And are that that X.XX mentioned as I to so non-sponsored pricing remarks, are working we're working X.X deals in X L XX. ranges times on, L on to leverage

we leverage is deals, at call if deals, low on the all normally, the some these get of loans bank were these might protection. But X.XX. of LIBOR so be operating these that And banks

away to get do the loans we repaid, six if and normal these months get if us. from banks get will very so we And in penalties back go significant call

credits the our pipeline the those love loans are of is we put on aggressively return more non-sponsor risk and So if good to if are and trying books the appropriate.

Robert Dodd

I doing know I really you're a hit by you kept double-digit it's if one, I and historically HIMA, One on that problems getting first can. didn't appreciate And it. because get Grupo color, it yield lien, okay. hurricanes. Got yes, you a got I final mean, had

why quarter, about the high for your that it necessitates this Has mix, is quarter, it to the switch or this into of has can term, high you What changed before? quarter? better put point, a the this wasn't it us patient tell just something category. in that but For -- why you lack

Stuart Aronson

COVID got severe. impact worse was in Puerto And Rico. more hospitals on the also the

in that going if go to disruptions the hospitals And government that that last through just there we the found that is, is these procedures elective So of other of will that was support asset from forward looking owners at hope flows is being the prudent the quarter, we more continue everything but support certainty of this was as stalled. to because government the happening It at will point. Grupo as cash down to and they're you to will the the is the no it's hope, having, uncertainty typical it hospitals the mark that government country. flow and and government to the at when providing what across active been has know, everybody thing COVID the a do pace. pre-COVID cash there hospitals normalize support therefore, back And HIMA our disruption, the on face of of

Operator

question And Rick is Instructions] your JPMorgan. next of [Operator Shane from

Richard Shane

not non-recurring? nonaccruals that appreciate sort should do I there interest reversal income sure think missed as helpful. anything the but Is of income that all, of of the if a excellent this, very and off? as of line I'm was first I interest disclosure And through we there came flows is

Stuart Aronson

have this instances on any But quarters, reversed in given been have yet. where credits quarter that not had prior been would anything and nonaccrual. additional out amounts that wouldn't Rick, balance on didn't have could the there we there been put received sheet we

Richard Shane

that the anything interest meant actually in was that income added opposite with to coming was the back? added down, question there this I quarter the nonaccruals

Stuart Aronson

post that there Is originally that the was were Joyson $X.X pieces I'm more interest But AG on Kings that Kings, had was interest And for -- AG rolled petition. confirm two the had million piece is were accrued, mentioned ongoing sorry, now that I of. Kings part million was been Kings $X.X AG and on that plus of that both pre-petition that we off. super right? that's paid me, the and amount written up that. a asset in collecting dip, priority are AG cash been

Joyson Thomas

That's correct.

Richard Shane

it. Got

the investor love understand it's with just tricky to But terms Okay. more issues That's issue and terms NAV. are float. again, share XX% the at repurchases. wanting of -- same in liquidity, that just of question investors are then, there helpful. a discount associated of I shares And to of in at a sort And some revisit that trading time,

little vehicle for in to that be there? portfolio pointed strikes some have think you investing and the You highly sense, to known aggressive more that path be array there's opportunity lot of it's you'd you It that a cost. me seems a towards that not of places bit investments accretion realization with in where make why the back a a within to

Stuart Aronson

our discount. the Rick, all a But stock marking it of Board. as with much The tell been out we that point fear. liquidity to marketplace the have with correction, assets very happened we traded larger that lenders, were all because with at it of you frankly, shared shares had out that had we to both including market and I moment can going focused in of most as reaction interesting JP through and where conversation Morgan, you time, down was to a what a is on maintaining the might our were in shareholders, have was do major

the our make be not have a downturn the severe dividend. to no sure we that to would wanted matter we disruptionin so and how seemed that shareholders, create liquidity problem not would we a And for

$X, were or we So when the certainly that conversation. shares $X have

the is it decide to up trade a back hope things much will Board and makes as will once sense that and market, in normalize good as the to again If convene repurchase the the shares better level. with to they to use if whether don't, information marketplace. share Our the we shares liquidity

Richard Shane

you No, need consider also I at look can we'd all time that to maintain stocks acted, that that. but we liquidity own to sort and appreciate bottom guys some responsibility tech we as which again, our in And of of at well. and back sentiment terms the have

So that. I appreciate

Operator

Thank you.

of from Oppenheimer. Your is question Kotowski next Chris

Chris Kotowski

going I kind much interest about a if to thinking secured correctly, if I kind make as priority on catch-up go-forward $XX it the into that's And I back earlier okay, but that guess about go stays just took this is, million you got there AG about quarter, have the it, quarter. say, of I loan, basis, everything understand to a so I is. income it $X.X Kings' super Yes. you to am of $XXX,XXX million just coupon, XX% an would mean so be how the sure question back hate situation. to I want -- I

the So that quarter in interest kind income somewhere thinking million. I around Am about right? of this $X.X was extra

Stuart Aronson

Joyson, sound right to does that you?

Joyson Thomas

Yes, Chris.

I to look think the clarify So it. that is at that to right point, way

be priority last well That on as have to would We in dip. our the it's paid interest bankruptcy, super nonaccrual. out while expectation the is in that piece addition said,

So to for but last interest and potentially that QX, in, the our additional is dip expectation remaining record piece, relating only amounts also let's recover again we say, of out. would not

Chris Kotowski

the a yes. But right. but the priority difference, yes, piece All I mean, dip delta -- Okay. piece, just versus is

kind I Okay. the encouraging and is I'm much -- of greater in in you about BDCs A most of loan are of loan Is what most more And volumes do it opportunities recover. down just sooner it them I see quarter-on-quarter. experienced concentration mean, you guess demand? other curious then lot or than attribute that? either just I general? guess, you Or of your flat non-sponsor or it you better had And demand

Stuart Aronson

financing were in them. one to based they offers XX% we who opinion. things, -- of in business, March, Number would XX% they were one, the I were there no putting I even on a of were illogical, like down. in you could of claiming were our shut shut forth tell April, take It's lenders down May. that people though couple what And didn't The saw,

our but origination So were shutting super, have And position good like deals in retrospect, a to local everybody we then just in attractive. enhanced time, markets And in deals we by find direct down, really market. allows that the us that And not super At we syndicated couple million deal deals bank look not did landed a deals. right was working a the they we afraid, coming of overall of are deals are have mechanism that through we're intermediaries several for sort are EBITDA that companies banker working no in of some on now And competition. on chain. finding -- we literally cases, have, well, is have that not sourced that $XX that $XX the million, that directly.

them of three is One times. levered

One to are is deals. we levered times of that fact directly EV. And these of pricing of Both worth reflective we are the X commanding the XX them that companies X.X has times times. originated

XX%. So my our the down marketplace pipeline, to heard bottom-COVID I is the what from were XX% compatriots at in Pipelines

X%. And Our pipeline when morning, transaction review than had fell pipeline. our never we XXX in our this did I more deals

small fraction closed. something a I same around But around course, year of the Now, XXX or deals last those that. like very was time, think of it

stayed have They So budget. lot has lenders back. this and us a so and in to allowed continue prepared weren't forX direct I the mechanism very come origination way it's just well. And the of in remarks. having they're my discipline. behind in months, it marketplace But to us market, positioned lending way, have sponsored mentioned

pretty look, And we walk And certain see away things just don't to need situations. frankly, lenders we're so chase. We those from that able desperate. to doing

even have. do to quarter, the the to core the deals, up Again, can't diligence. because solid asset most strides we'll having will leverage deals a close drives the luxury income of midst the I all portfolio. nice lot make of But be due and a base of of if that our close a them the it's on for any getting that mandated So we sure of in mandated of we're target mandated deals X.XX% toward or levels

Operator

you. Thank

Rowe National Securities. question from Bryce of next is Your

Bryce Rowe

of pipeline balance for and by clearly, you're to I mean, target. I the relates very here it wanted to encouraged ask a some little the pipeline leverage growth the bit how sheet in and kind more about potential the portfolio. the

about So with you X should mind offering, a -- the down and the balance the context the notes want you XX target? of that accordion? in that as expand of you continue you mean, percentage, with new what kind are do think I'm unsecured with hit and curious you X I structure of how to notes XX? then unsecured taking towards credit to possibly it comfortable facility work as that Or expanding the the capital

Stuart Aronson

It's great question, Yes. Bryce. a

of shared any We period, to dividend won't X problems. very not look we sure is downside the to liquidity Needless borrow a nature we and do a we to again, if We an done. that the continue on make we things that but disruption on be the than a and there's evaluate secured based say, into make marketplace. are issued. the you continue a attractive on April, have just repeat investors April, it And rate our before room March, run where, hopefully, happen, May want lower have investors. of during situation in to to the X/X% unsecured of even we to basis, we sure pricing downside at to scenarios March, what basis Again, successfully in opportunity with to the able scenario, at had much did COVID, we at tons

other in several did. the know, you players As marketplace

more don't to by on mix was do we right We pricing felt we take amount that And do the that take we a but X.XX%, unsecured minimizing we unsecured. move need unsecured. on of of revolver we the so have. exposure secured, by towards And as would more we that if

it occur. will of the So to as decision the capital an really be opportunistic deployment continues

Bryce Rowe

correctly, would thinking months three sooner have months or would Am than Okay. you we're That's happened discussion have it helpful. talk now And to that than about pipeline to I would that I ago. here? it happen or having it getting ago, relative three X the to about like four seems given that thought guess XX, four that could

Stuart Aronson

as three that ago. no, we thought, were delighted And We in months saw. six absolutely that not deal to year, we activity frankly, the It's surge that been. and August, the to that of I'm in you're October, balance deal predict has sure. September, see activity We did but through would the very from not well, limited be hearing strong, others it very

clients, of the frankly, good could in shared you we and could more those those of the some mandated and towards question get be if that could I've way a we getting make our close or becomes win? that deals, with deal the you beyond percentage our there's I good by closed. deals deals things hopefully, But of into as and have flow direction mandated So to mid-November, progress how mandated how year-end, break X.XX. quasi many do many And

Bryce Rowe

Okay.

great. That's Okay.

Stuart Aronson

income I accretive sheet. balance could highly are also as good this credits priced -- We the that all which senior also keep should JV the junior capital generally And market, deals returns. in on secured that don't just very mention go also do we to use into do And JV. that so and in is JV our L directly X.XX below, you our double-digit are know, assets the JV. that returns I any

Bryce Rowe

of Okay. Yes, of questioning or of that that of my your continued next would pace was JV the the understand and line be to of originations what into trying pace to the be kind at going kind it. investments least

XX to you'll months, $XX next million that over like hit sounds So it the perhaps? X

Stuart Aronson

increase over next the moment, the if the what decision a that allocation full make our could could JV, the We that And at to accretive to certainly X on shareholders. like into depending look hit we utilization was the economics months. XX to

Bryce Rowe

Okay.

And of, guess, kind question. modeling I then one Okay.

the talked Arcole You getting into equity. restructured about

help the size So loss what like we look you'll financials? quarter And fourth me take see might equity investment as a debt. -- Joyson, can you realized what I'm this. equity of the the on the But investment maybe, the with curious,

Stuart Aronson

to can asset numbers it it. Joyson, in of that So that The Arcole there dollars And has underlying be, with Joyson, let at before in is how very time COVID me many over strong. you effect. I Company upside pass potentially significant believe share company had equity period the not own any look terms we it that you to choose of we to performance just turns share But the the is that that out good like?

Joyson Thomas

Yes.

the obviously, in regards a the thoughts that transaction. the think it's I accounting But accounting for to our preliminary transaction. nontaxable haven't treatment, finalized are QX think I we

basis we'll common the shares. be overall so into cost And rolling equity

ownership And units. of through believe or overall, have I XX% so essentially is, would represented kind understanding common preferred it's we my Stuart, XX% any in

Operator

over for to additional this have no time. remarks. the I further questions closing will management now at We any call turn or back

Stuart Aronson

again, prior Everyone, time can you that that always spent there are each I our we you. let things are up, us try all COVID so quarter, with the we But prepared call If if of more marketplace us. I strive through that calls appreciate to the incorporate flows crisis. to know come prior the to encourage that's I there And are useful, with you transparent. please the the can to remarks. everyone And that that with into have. we Thank information share does we rest be and hope well you

Operator

Thank conclude today's does This call. you. conference

You may now disconnect.

WhiteHorse Finance (WHF) 9 Nov 202020 Q3 Earnings call transcript