UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 7, 2017
Medley Capital Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware | ||||
1-35040 | (State or other jurisdiction of incorporation) | 27-4576073 | ||
(Commission File Number) | (I.R.S. Employer Identification No.) | |||
280 Park Avenue, 6th Floor East
New York, NY 10017
New York, NY 10017
(Address of Principal Executive Offices and Zip Code)
Registrant’s telephone number, including area code: (212) 759-0777
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On December 7, 2017, Medley Capital Corporation issued a press release announcing its financial results for the fiscal year ended September 30, 2017. The press release is included as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
Exhibit No. | Description | |
99.1 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 7, 2017 | MEDLEY CAPITAL CORPORATION | |
By: | /s/ Richard T. Allorto, Jr. | |
Name: | Richard T. Allorto, Jr. | |
Title: | Chief Financial Officer | |
Exhibit 99.1
Medley Capital Corporation Announces Fourth Quarter and Fiscal Year Ended September 30, 2017 Financial Results
NEW YORK, NY (December 7, 2017) - Medley Capital Corporation (NYSE: MCC) (the "Company") today announced financial results for the quarter and year ended September 30, 2017.
Fourth Quarter Highlights
• | Declared a dividend of $0.16 per share |
• | Net investment income of $0.16 per share |
• | Net asset value (NAV) of $8.45 per share |
Portfolio Investments
The total value of our investments was $837.0 million at September 30, 2017. During the quarter ended September 30, 2017, the Company originated $58.0 million of new investments and had $82.0 million of repayments resulting in net repayments of $24.0 million. The majority of new investments were in 7 directly originated senior secured loans to sponsor backed borrowers. As of September 30, 2017, the Company had investments in securities of 64 portfolio companies with approximately 67.5% consisting of senior secured first lien investments, 16.2% consisting of senior secured second lien investments, and 16.3% in equities / warrants. As of September 30, 2017, the weighted average yield based upon the cost basis of our income bearing portfolio investments, excluding cash and cash equivalents, was 10.8%.
Results of Operations: Three Months Ended September 30, 2017
For the three months ended September 30, 2017, the Company reported net investment income per share and net loss per share of $0.16 and $0.22, respectively, calculated based upon the weighted average shares outstanding. As of September 30, 2017, the Company’s NAV was $8.45 per share.
Investment Income
For the three months ended September 30, 2017, gross investment income was $22.1 million and consisted of $18.8 million of portfolio interest income, $1.5 million of dividend income, and $1.8 million of fee income.
Expenses
For the three months ended September 30, 2017, total expenses were $13.5 million and consisted of the following: base management fees of $4.3 million, interest and financing expenses of $7.2 million, professional fees of $0.3 million, administrator expenses of $0.9 million, directors fees of $0.2 million, and other general and administrative related expenses of $0.6 million.
Net Investment Income
For the three months ended September 30, 2017, the Company reported net investment income of $8.6 million, or $0.16, on a weighted average per share basis.
Net Realized and Unrealized Gains/Losses
For the three months ended September 30, 2017, the Company reported a net realized loss of $11.7 million and net unrealized depreciation, including the provision for income taxes on unrealized depreciation on investments, of $8.4 million.
For the three months ended September 30, 2017, the Company reported a loss on extinguishment of debt of $0.6 million.
Results of Operations: Year Ended September 30, 2017
The Company reported net investment income and net loss of $0.67 per share and $0.28 per share, respectively, calculated based upon the weighted average shares outstanding, for the year ended September 30, 2017.
Investment Income
For the year ended September 30, 2017, gross investment income was $96.3 million and consisted of $85.5 million of portfolio interest income, $4.2 million of dividend income, and $6.6 million of fee income.
Expenses
For the year ended September 30, 2017, total expenses, net of management and incentive fee waivers, were $59.6 million and consisted of the following: base management fees, net of waiver, of $17.7 million, incentive fees, net of waiver, of $0.9 million, interest and financing expenses of $31.4 million, professional fees of $2.2 million, administrator expenses of $3.8 million, directors fees of $0.6 million, and other general and administrative related expenses of $3.0 million.
Net Investment Income
For the year ended September 30, 2017, the Company reported net investment income of $36.4 million, or $0.67, on a weighted average per share basis.
Net Realized and Unrealized Gains/Losses
For the year ended September 30, 2017, the Company reported a net realized loss on investments of $73.1 million and net unrealized appreciation, including the provision for income taxes on unrealized depreciation on investments, of $22.7 million.
For the year ended September 30, 2017, the Company reported a loss on extinguishment of debt of $1.1 million.
Liquidity and Capital Resources
On September 1, 2017, the Company voluntarily prepaid $72.0 million of its senior secured term loan credit facility (the “Term Loan Facility,”) which reduced the balance to $102.0 million from $174.0 million.
As of September 30, 2017, the Company had a cash balance of $108.6 million and $68.0 million of total debt outstanding under its $200.0 million senior secured revolving credit facility.
The Company also had $102.0 million of debt outstanding under the Term Loan Facility, $150.0 million outstanding in SBA-guaranteed debentures, $74.0 million outstanding in aggregate principal amount of 6.5% senior notes due 2021 and $102.8 million outstanding in aggregate principal amount of 6.125% senior notes due 2023.
Dividend Declaration
On October 31, 2017, the Company’s Board of Directors declared a dividend of $0.16 per share payable on December 22, 2017 to stockholders of record at the close of business on November 22, 2017. The specific tax characteristics of the dividend will be reported to stockholders on Form 1099 after the end of the calendar year.
Webcast/Conference Call
The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Thursday, December 7, 2017.
All interested parties may participate in the conference call by dialing (888) 637-5728 approximately 5-10 minutes prior to the call, international callers should dial (484) 747-6636. Participants should reference Medley Capital Corporation and the Conference ID: 99307854. Following the call you may access a replay of the event via audio webcast. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through the Company's website, http://www.medleycapitalcorp.com. To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Company's website.
Financial Statements
Medley Capital Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
September 30, 2017 | September 30, 2016 | ||||||
ASSETS | |||||||
Investments at fair value | |||||||
Non-controlled/non-affiliated investments (amortized cost of $625,108 and $813,814, respectively) | $ | 575,496 | $ | 767,302 | |||
Affiliated investments (amortized cost of $91,027 and $10,000, respectively) | 90,071 | 10,000 | |||||
Controlled investments (amortized cost of $197,918 and $189,077, respectively) | 171,424 | 136,882 | |||||
Total investments at fair value | 836,991 | 914,184 | |||||
Cash and cash equivalents | 108,572 | 104,485 | |||||
Interest receivable | 9,371 | 8,982 | |||||
Other assets | 3,322 | 893 | |||||
Fees receivable | 765 | 1,404 | |||||
Deferred offering costs | 307 | 243 | |||||
Receivable for dispositions and investments sold | 232 | 689 | |||||
Total assets | $ | 959,560 | $ | 1,030,880 | |||
LIABILITIES | |||||||
Revolving credit facility payable (net of debt issuance costs of $1,777 and $3,590, respectively) | $ | 66,223 | $ | 10,410 | |||
Term loan payable (net of debt issuance costs of $1,046 and $2,197, respectively) | 100,954 | 171,803 | |||||
Notes payable (net of debt issuance costs of $4,123 and $4,630, respectively) | 172,752 | 172,883 | |||||
SBA debentures payable (net of debt issuance costs of $2,846 and $3,525, respectively) | 147,154 | 146,475 | |||||
Management and incentive fees payable | 4,312 | 4,559 | |||||
Interest and fees payable | 3,760 | 1,714 | |||||
Accounts payable and accrued expenses | 1,864 | 2,663 | |||||
Deferred tax liability | 912 | 2,004 | |||||
Administrator expenses payable | 860 | 990 | |||||
Deferred revenue | 259 | 370 | |||||
Due to affiliate | 81 | 90 | |||||
Total liabilities | $ | 499,131 | $ | 513,961 | |||
NET ASSETS | |||||||
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 | $ | 54 | $ | 54 | |||
Capital in excess of par value | 705,046 | 705,326 | |||||
Accumulated undistributed net investment income | 9,528 | 10,812 | |||||
Accumulated net realized gain/(loss) from investments | (176,663 | ) | (99,000 | ) | |||
Net unrealized appreciation/(depreciation) on investments, net of deferred taxes | (77,536 | ) | (100,273 | ) | |||
Total net assets | 460,429 | 516,919 | |||||
Total liabilities and net assets | $ | 959,560 | $ | 1,030,880 | |||
NET ASSET VALUE PER SHARE | $ | 8.45 | $ | 9.49 | |||
Medley Capital Corporation
Consolidated Statements of Operations
(in thousands, except share and per share data)
For the three months | For the years | ||||||||||||||
ended September 30 | ended September 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
INVESTMENT INCOME: | |||||||||||||||
Interest from investments | |||||||||||||||
Non-controlled/non-affiliated investments: | |||||||||||||||
Cash | $ | 14,334 | $ | 21,155 | $ | 65,399 | $ | 98,057 | |||||||
Payment-in-kind | 1,779 | 1,862 | 9,970 | 8,010 | |||||||||||
Affiliated investments: | |||||||||||||||
Cash | 458 | 167 | 1,950 | 667 | |||||||||||
Payment-in-kind | 416 | — | 775 | — | |||||||||||
Controlled investments: | |||||||||||||||
Cash | 728 | 44 | 2,046 | 950 | |||||||||||
Payment-in-kind | 1,103 | 1,234 | 5,100 | 4,531 | |||||||||||
Total interest income | 18,818 | 24,462 | 85,240 | 112,215 | |||||||||||
Dividend income, net of provisional taxes | 1,487 | 713 | 4,232 | 1,047 | |||||||||||
Interest from cash and cash equivalents | 54 | 16 | 164 | 32 | |||||||||||
Fee income | 1,788 | 2,004 | 6,620 | 7,455 | |||||||||||
Total investment income | 22,147 | 27,195 | 96,256 | 120,749 | |||||||||||
EXPENSES: | |||||||||||||||
Base management fees | 4,312 | 4,589 | 17,773 | 19,470 | |||||||||||
Incentive fees | — | 1,633 | 896 | 11,492 | |||||||||||
Interest and financing expenses | 7,164 | 7,706 | 31,403 | 30,277 | |||||||||||
Administrator expenses | 860 | 990 | 3,848 | 3,915 | |||||||||||
General and administrative | 651 | 848 | 2,555 | 2,336 | |||||||||||
Professional fees | 262 | 450 | 2,192 | 2,277 | |||||||||||
Directors fees | 175 | 147 | 647 | 544 | |||||||||||
Insurance | 99 | 100 | 397 | 494 | |||||||||||
Expenses before management and incentive fee waivers | 13,523 | 16,463 | 59,711 | 70,805 | |||||||||||
Management fee waiver | — | (31 | ) | (48 | ) | (143 | ) | ||||||||
Incentive fee waiver | — | (1,633 | ) | (44 | ) | (3,504 | ) | ||||||||
Total expenses net of management and incentive fee waivers | 13,523 | 14,799 | 59,619 | 67,158 | |||||||||||
Net investment income before excise taxes | 8,624 | 12,396 | 36,637 | 53,591 | |||||||||||
Excise tax expense | — | — | (267 | ) | — | ||||||||||
NET INVESTMENT INCOME | 8,624 | 12,396 | 36,370 | 53,591 | |||||||||||
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: | |||||||||||||||
Net realized gain/(loss) from investments | |||||||||||||||
Non-controlled/non-affiliated investments | 434 | (15,684 | ) | (40,008 | ) | (39,383 | ) | ||||||||
Affiliated investments | 3,163 | — | 3,392 | — | |||||||||||
Controlled investments | (15,312 | ) | — | (36,470 | ) | — | |||||||||
Net realized gain/(loss) from investments | (11,715 | ) | (15,684 | ) | (73,086 | ) | (39,383 | ) | |||||||
Net unrealized appreciation/(depreciation) on investments | |||||||||||||||
Non-controlled/non-affiliated investments | (17,180 | ) | 2,598 | (7,611 | ) | (4,572 | ) | ||||||||
Affiliated investments | (2,553 | ) | — | 501 | — | ||||||||||
Controlled investments | 11,002 | (3,024 | ) | 28,754 | (37,685 | ) | |||||||||
Net unrealized appreciation/(depreciation) on investments | (8,731 | ) | (426 | ) | 21,644 | (42,257 | ) | ||||||||
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments | 309 | 486 | 1,092 | 87 | |||||||||||
Loss on extinguishment of debt | (640 | ) | — | (1,097 | ) | — | |||||||||
Net gain/(loss) on investments | (20,777 | ) | (15,624 | ) | (51,447 | ) | (81,553 | ) | |||||||
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (12,153 | ) | $ | (3,228 | ) | $ | (15,077 | ) | $ | (27,962 | ) | |||
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE | $ | (22.00 | ) | $ | 0.06 | $ | (0.28 | ) | $ | (0.50 | ) | ||||
WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE | $ | 0.16 | $ | 0.23 | $ | 0.67 | $ | 0.97 | |||||||
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED | 54,474,211 | 54,747,189 | 54,474,211 | 55,399,646 | |||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.16 | $ | 0.22 | $ | 0.76 | $ | 1.12 | |||||||
ABOUT MEDLEY CAPITAL CORPORATION
Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that trades on the New York Stock Exchange (NYSE: MCC). 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. In many of our investments, we receive warrants or other equity participation features, which we believe will increase the total investment returns. 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, with over 85 people, is a premier provider of capital to the middle market in the U.S. Medley has over $5 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE: MCC) and Sierra Income Corporation, a credit interval fund, Sierra Total Return Fund (NASDAQ:SRNTX) and several private investment vehicles. Over the past 15 years, we have provided capital to over 400 companies across 35 industries in North America1. For additional information, please visit Medley Management Inc. at www.mdly.com.
Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the NYSE under the symbols (NYSE:MDLX) and (NYSE:MDLQ). Medley Capital Corporation (NYSE:MCC) has outstanding bonds which trade on the NYSE under the symbols (NYSE:MCV) and (NYSE:MCX).
FORWARD-LOOKING STATEMENTS
Statements included herein may contain "forward-looking statements". Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission. Except as required by law, the Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
SOURCE: Medley Capital Corporation
Investor Relations Contact:
Sam Anderson
Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777
Medley Management Inc.
212-759-0777
Media Contact:
Erin Clark
Erin Clark
Teneo Strategy
646-214-8355
646-214-8355
_____________________________________
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 our 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 September 30, 2017.