THLCredit Reports Fourth Quarter 2015 Financial Results And Declares A Dividend Of $0.34 Per Share -

THLCredit Reports Fourth Quarter 2015 Financial Results And Declares A Dividend Of $0.34 Per Share

Mar 10, 2016Jeremy ParkinsonFinance0

BOSTON, March 10, 2016 (GLOBE NEWSWIRE) — THL Credit, Inc. (NASDAQ:TCRD) (“THL Credit”), a direct lender to lower middle market companies, today announced financial results for its fourth fiscal quarter ended Dec. 31, 2015.Additionally, THL Credit announced that its Board of Directors has declared a first fiscal quarter 2016 dividend of $0.34 per share payable on March 31, 2016, to stockholders of record as of March 21, 2016.

PORTFOLIO AND INVESTMENT ACTIVITY

In the fourth quarter, THL Credit closed on three new investments totaling $43.3 million and an additional $15.0 million in follow-on investments in five existing portfolio companies.

New investments, including follow-on investments, for the fourth quarter included:

$17.0 million second lien term loan in Granicus Inc., a provider of fully hosted, cloud-based technology solutions to government entities;

$15.5 million first lien senior secured term loan and $0.8 common equity in Constructive Media, LLC and affiliated entities, an educational and game website operator;

$10.0 million first lien senior secured term loan in American Achievement Corporation, a supplier of K-12 and college graduation and affinity products;

$5.3 million first lien senior secured term loan in Charming Charlie, LLC;

$5.0 million equity contribution to THL Credit Logan JV, LLC (“Logan JV”); and

Total of $4.7 million to fund revolver and/or follow-on investments in Hart Intercivic, Inc., A10 Capital, Inc., and Gryphon Partners 3.5 L.P.

Notable realizations for the quarter included:

$9.0 million from the repayment of a first lien senior secured term loan in Embarcadero Technologies, Inc., including a prepayment premium;

$12.7 million from the sale of the remaining second lien investments in Expert Global Solutions, Inc.; and

$4.3 million from the sale of a remaining second lien investment in BBB Industries, Inc.

These transactions bring the total fair value of THL Credit’s investment portfolio to $754.2 million across 55 portfolio investments at the end of the fourth quarter. As of Dec. 31, 2015, THL Credit’s investment portfolio at fair value was allocated 49 percent in first lien debt, which includes unitranche investments, 23 percent in second lien debt, 9 percent in subordinated debt, 6 percent in Logan JV, 4 percent in other income-producing securities and 9 percent in equity securities. The weighted average yield on new investments made in the fourth quarter of 2015 was 10.5 percent. As of Dec. 31, 2015, the weighted average yield of the debt and income-producing securities in the investment portfolio at their current cost basis was 11.2 percent (11.3 percent including Logan JV).The weighted average yield on the debt investments alone at their current cost basis was 11.0 percent.As of Dec. 31, 2015, THL Credit had two loans on non-accrual status with an aggregate amortized cost of $25.0 million and fair value of $13.9 million, or 3.3 percent and 1.8 percent of the portfolio’s amortized cost and fair value, respectively. As of Dec. 31, 2015, 78 percent of its debt investments bore interest based on floating rates (subject to interest rate floors), such as LIBOR, and 22 percent bore interest at fixed rates.

For purposes of comparison, the portfolio as of Dec. 31, 2014, had a fair value of $784.2 million across 60 investments allocated 50 percent in first lien debt, which includes unitranche investments, 22 percent in second lien debt, 13 percent in subordinated debt, 6 percent in other income-producing equity securities, 2 percent in Logan JV and 7 percent in equity securities. The weighted average yield of the debt and other income-producing securities in the investment portfolio at their cost basis as of Dec. 31, 2014 was 11.7 percent. The weighted average yield on the debt investments alone at their cost basis as of Dec. 31, 2014 was 11.6 percent. As of Dec. 31, 2014, THL Credit had no loans on non-accrual status. As of Dec. 31, 2014, 72 percent of its debt investments bore interest based on floating rates (subject to interest rate floors), such as LIBOR, and 28 percent bore interest at fixed rates.

RESULTS OF OPERATIONS

Investment income

Total investment income for the three months ended Dec. 31, 2015 and 2014 was $23.6 million and $24.1 million, respectively, and consisted of $18.7 million and $20.5 million of interest income on debt securities (which included PIK interest of $1.0 million and $0.6 million and prepayment premiums of $0.1 million and $0.2 million, respectively), $2.3 million and $0.1 million of dividend income, $1.7 million and $2.0 million of interest income on other income-producing securities, and $0.9 million and $1.5 million of other income, primarily related to fees from THL Credit’s managed vehicles, respectively.

The decrease in investment income was primarily due to the contraction of the portfolio between the respective periods as a result of prepayments and sales as well as lower other income related to THL Credit’s managed vehicles. This was offset by $0.9 million of one-time interest income from the recognition of deferred revenue from a prior investment and dividend income from Logan JV and other portfolio investments.

Total investment income for the years ended Dec. 31, 2015 and 2014 was $94.2 million and $91.9 million, respectively, and consisted of $75.7 million and $76.6 million of interest income on debt securities (which included PIK interest of $3.9 million and $2.3 million and prepayment premiums of $0.3 million and $2.5 million, respectively), $4.9 million and $3.1 million of dividend income, $7.8 million and $7.2 million of interest income on other income-producing securities and $5.8 million and $5.0 million of other income, primarily related to fees from THL Credit’s managed vehicles, respectively.

The increase in investment income from 2014 to 2015 was due primarily to the increase in dividend income related to the Logan JV and other income related to fees earned on certain portfolio investments. This increase was offset by lower fees from THL Credit’s managed funds.