alcentra capital corporation...4th quarter net investment income of $4.0 million, or $0.28 per share...
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Alcentra Capital Corporation
Alcentra Capital Corporation Q4 & Fiscal Year 2017 Investor Presentation March 14, 2018NASDAQ: ABDC
1
Alcentra Capital Corporation
Forward‐Looking StatementsThis presentation has been prepared for informational purposes only from information supplied by Alcentra Capital Corporation (“ABDC” or the “Company”) and from third‐party sources indicated herein. Such third‐party information has not been independently verified. The Company makes no representation or warranty, expressed or implied, as to the accuracy or completeness of such information.
This presentation contains forward‐looking statements which are based on current expectations and assumptions about future events. Forward‐looking statements describe future financial or business performance, strategies, or expectations, and are generally identified by words or phrases such as “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “plan,” “potential,” “project,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future of conditional verbs such as “will,” “would,” “could,” “should,” “may,” or similar expressions. You are cautioned that such statements are subject to a multitude of risks and uncertainties. Actual results could differ materially from those expressed or implied in the forward‐looking statements, and future results could differ materially from historical performance. These forward‐looking statements are subject to risks that include, but are not limited to, the following:
― Future opera ng results, including the performance of our exis ng loans and warrants;
― Business prospects and the prospects of our por olio companies;
― The affect of investments that we expect to make;
― Contractual arrangements and rela onships with third par es;
― Actual and poten al conflicts of interest with our investment adviser, Alcentra NY, LLC (the “Adviser”);
― The dependence of our future success on the general economy and its effect on the industries in which we invest;
― The ability of our por olio companies to achieve their objec ves;
― The use of borrowed money to finance a por on of our investments;
― The adequacy of our financing sources and working capital;
― The ming of cash flows, if any, from the opera ons of our por olio companies;
― The ability of our investment adviser (“the Adviser”) to locate suitable investments for us and to monitor and administer our investments;
― The ability of the Adviser to a ract and retain highly talented professionals;
― The ability to qualify and maintain our qualifica on as a regulated investment company and a business development company; and
― Other risks and uncertain es described in our SEC filings.
You should consider these factors in evaluating the forward‐looking statements included herein, and not place undue reliance on such statements. The forward looking statements speak only as of the date they are made, and we undertake no obligation to update such statements.
This presentation supplements, and should be read in conjunction with the Company’s earnings release and Form 10‐K for the year ended December 31, 2017
2
Alcentra Capital Corporation
Alcentra Capital Corporation (“ABDC”) operates as an Business Development Company (BDC) Publicly traded on the NASDAQ: ABDC
Regulated by the SEC 1940 Act
Advised by Alcentra NY, LLC, a majority owned indirect subsidiary of The Bank of New York Mellon Corporation
We originate and invest in both the lower middle market and middle market companies Typical EBITDA and revenue $5 ‐ $75 million and $10 ‐ $250 million respectively
The current portfolio includes 29 companies that we oversee and manage
Aligned with our shareholders Certain members of the Board and the Management team have invested in ABDC
The Advisor has waived $3.0 million in management fees since 2014
Regulated Investment Company (RIC) tax structure Eliminates corporate level income tax and capital gains tax
This allows us to provide greater yield to investors
Must distribute at least 90% of our net taxable income
Company Overview
3
Alcentra Capital Corporation
The Board of Directors declared a dividend on March 8, 2018 of $0.18 per share to shareholders of record March 30, 2018 and payable April 4, 2018 → reduc on from prior quarter’s dividend of $0.25 per share
2018 Plan Reposition the portfolio
Add senior secured floating unitranche loans to stabilize NAV and mitigate interest rate risk
Focus on larger companies and a select smaller sponsored‐backed companies where there is a clear buy and build growth thesis
Reduce focus on lower middle market unsecured subordinated debt
Reduce non‐performing loans Stabilize portfolio and work with portfolio company management to maximize value
Harvest and reinvest proceeds primarily into less volatile, interest generating, senior secured floating rate loans
Boost ROE Pursue opportunities to generate additional income through optimizing our 30% basket in non‐qualified
Capital Allocation Maintain pragmatic capital allocation through balancing a responsible share repurchase program and use our cash and
repayment proceeds to maintain leverage to target range of 0.7x – 0.8x
Regulatory 1:1 debt limits and financial covenants with our lenders prevent us from incurring certain levels of leverage
Optimize our debt financing Engaging 3rd party advisor to assist us with this process
Dividend Announcement & 2018 Plan
4
Alcentra Capital Corporation
Declared regular dividend on November 2, 2017 of $0.25 per share to shareholders of record on December 29, 2017 and paid January 4, 2018
On November 16, 2017 the Board of Directors approved to expand the open market stock repurchase program to $5.0 million
Invested $36.8 million of capital into one new investment, one refinancing, and one add on investment
4th quarter Net Investment Income of $4.0 million, or $0.28 per share
Net Asset Value (“NAV”) of $11.09 per share as of December 31, 2017
Of the 29 portfolio companies, there were three write‐ups and ten write‐downs this quarter resulting in a net decrease in net assets of $13.4 million
Fourth Quarter 2017 Summary
5
Alcentra Capital Corporation
Total investment income of $33.4 million Net Investment income of $18.3 million, or $1.32 per share Net decrease in net assets resulting from operations of ($19.1) million Invested $135.3 million in debt and equity securities, including investments in 4 new
portfolio companies Received proceeds from repayments of $90.1 million Paid quarterly dividends totaling $1.30 per share (including $0.03 special dividend)
Full Year 2017 Summary
6
($000s) Q1 17 Q2 17 Q3 17 Q4 17 2017
Core Investment Income 7,611 7,311 7,013 7,282 29,218
Nonrecurring Fees 1,370 588 377 653 2,988
Recurring Fees 221 439 220 266 1,146
Total 9,201 8,338 7,611 8,201 33,352
Alcentra Capital Corporation
Invested in a new portfolio company Cirrus Medical Staffing
Invested $19.3 million in L+8.25% 1st lien secured debt
Incremental investments ($17.5mm of capital invested) Healthcare Associates of Texas (HCAT)
Refinanced our 2nd lien debt with $15.0 million of 1st lien secured debt at L+8.0% Medsurant
Add on investment of $2.5 million 2nd lien secured debt at 13.0% for an acquisition
Repayments ($15.7mm of capital returned) Nation Safe Drivers (NSD)
$11.7 million of 2nd lien debt resulting in an MOIC(1) 1.30x Graco Supply
$4.0 million of 2nd lien debt resulting in an MOIC(1) 1.31x
(1) Multiple of Invested Capital
Q4 2017 Portfolio Activity
7
Alcentra Capital Corporation8
Post Q4 2017 Activity
Company Sold Syndicated Repaid Invested Net Total
Stancor $4.1 ($4.1)
IGT $7.8 ($7.8)
Cirrus $8.6 $1.4 ($7.2)
HCAT $1.5 $1.5
MPP $8.3 ($8.3)
NextCare $15.9 ($15.9)
BayMark $7.0 $7.0
Battery Solutions $1.3 ($1.3)
Total $11.9 $8.6 $25.5 $9.9 ($36.1)(in millions of dollars)
Sold two smaller credits at par that did not fit current strategy
Syndicated a larger position in a buy and build sponsor backed platform company
Two add‐on financings for buy and build sponsor backed platforms
New 2nd Lien investment in healthcare addiction treatment business
Alcentra Capital Corporation
38% 35%44% 43%
48%
62%
0%
31%23% 20%
19%
5%
33%
27% 28% 28% 24% 23%
29%
8% 8% 9% 9% 10%
As ofIPO
As ofQ4 16
As ofQ1 17
As ofQ2 17
As ofQ3 17
As ofQ4 17
Equity
Subordinated Debt
2nd Lien Debt
1st Lien/unitrancheDebt
12.2%
11.7% 11.7% 11.6% 11.5%11.3%
WA Yield
Portfolio is shifting towards senior secured debt
76% increase in the dollar value of 1st lien debt
Portfolio Characteristics
9
$ million Q1 17 Q2 17 Q3 17 Q4 17
Portfolio Fair Value $283.3 $271.4 $282.3 $287.6
Weighted Average Debt Portfolio Yield 11.7% 11.6% 11.5% 11.3%
Weighted Average Leverage1 3.65x 3.68x 3.59x 3.30x1 Weighted average leverage figures exclude My Alarm, Black Diamond, XGS, and does not include equity positions.
Alcentra Capital Corporation
Portfolio Risk Snapshot
10
1 The investment has an acceptable level of risk and the company is generally performing with risk factors being neutral to favorable. All investments in new investments and certain restructured investments are initially assessed a grade of 1.
2 The investment is performing with risk factors being neutral to slightly unfavorable since the time of underwriting.
3 The investment is performing below expectations. With respect to debt investments, the company is generally out of compliance with certain covenants, current or future interest payments could be impacted. With respect to equity investments, dividend payments orreturn of capital could be impacted.
4 The investment is performing materially below expectations. With respect to debt investments, debt covenants are out of compliance and interest payments are, or expected to be, delinquent and the principal amount of the debt investment is not expected to be repaid in full. With respect to equity investments, dividend payments are not expected to be paid and the principal amount of the equityinvestment is not expected to be returned.
5 The investment is performing substantially below expectations. With respect to debt investments, interest payments are not being made and the investment is on non‐accrual. With respect to equity investments, dividend payments are not being paid or accrued and principal amount of the equity investment is not expected to be returned.
Notes: GST Autoleather has declared bankruptcy and is not included in the above charts Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third‐party assessment of any of our investments.
61%28%
9%2%
Fair Market Value
12
9
3
13
Number of Companies In Q3 2017 we instituted and disclosed a risk rating system to modify our risk management procedures while providing investors with increased transparency into the portfolio
This has been the basis for management’s decision to expand and modify ABDC’s portfolio construction along with changes in the debt capital markets
Alcentra Capital Corporation
Above/Below $10 million of EBITDA
Portfolio Characteristics
11
Fixed vs Floating rates
Note: The above charts only include debt securities.(1) Excludes GST and Show Media
18 60%
12 40%
Number of Companies
$120,27147%
$138,15753%
Fair Market Value
Fixed
Floating
$180,726 63%
$106,828 37%
Fair Market Value
Below $10mm
Above $10mm
1250%12
50%
Number of Companies (1)
Alcentra Capital Corporation
0.34
0.37 0.38
0.35 0.34
0.41
0.44
0.35
0.45
0.34 0.34 0.34
0.28
0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34
0.37
0.34 0.34
0.25
$‐
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Adjusted Net Investment Income/Share Dividends
433 3 3
Adjusted Net Investment Income1 & Dividends Paid Per Share2
(1) Adjusted net investment income, which is a non‐GAAP measure, represents net investment income excluding any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses.(2) Per share data is based on shares outstanding at the end of each period.(3) A portion of the Management Fee was waived to pay the dividend.(4) Special dividend of $0.03 declared from spill over income.
12
Management Fee Waiver by Adviser
Alcentra Capital Corporation
Net Asset Value Per Share and Dividends Paid
(1) Includes special dividend of $0.03.
13
Portfolio Size
21
24
28 2829 29
3231
33
35
3231
30 3029
0
5
10
15
20
25
30
35
40
$‐
$50
$100
$150
$200
$250
$300
$350
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
Num
ber o
f Portfolio Com
panies
$ Millions
Cost Fair Market Value # of Portfolio Companies
14.87 14.90 15.03 14.92 14.43 14.41 14.16 13.69 13.72 13.4312.73 12.27
11.09
0.86 1.20 1.54 1.88 2.22 2.56 2.90 3.24 3.58 3.954.29 4.63
4.88
15.73 16.1016.57 16.80 16.65 16.97 17.06 16.93 17.30 17.38 17.02 16.90
15.97
$‐
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
Cumulative Dividend Per Share Since Inception (May 2014) Total
1
Alcentra Capital Corporation
31 portfolio investments realized since IPO – Gross Unlevered Returns
Realizations Since Inception to March 13th 2018
Table excludes secondary sale of equity
(1) See disclosures at end of presentation14
Realized Investments Security Type Repayment Gross IRR(1)
Gross MOIC(1)
GTT Communications Debt 6,324 47.50% 1.10x
Wholesome Sweeteners Debt 8,846 19.78% 1.06x
Acis Offshore Warrants 953 34.30% 1.20x
American Addiction Centers Debt 8,248 19.13% 1.14x
Choice Cable Debt 7,575 12.95% 1.12x
WellBiz Brands Debt 7,830 15.34% 1.16x
Datascan Debt 3,050 12.67% 1.15x
NARL Marketing Debt 15,337 16.87% 1.10x
Net Access Corporation Debt & Equity 14,684 19.98% 1.23x
HealthFusion Debt & Warrants 8,038 30.86% 1.51x
DRC Debt & Equity 1,695 ‐56.09% 0.55x
Response Team 1 Debt & Equity 10,368 1.58% 1.03x
Dentistry for Children Debt 14,880 14.19% 1.26x
ACT Lighting Debt & Warrants 13,804 31.04% 1.49x
Radiant Logistics Debt 10,300 17.58% 1.17x
City Carting Preferred Equity 12,504 8.87% 1.18x
Realized Investments Security Type Repayment Gross IRR(1)
Gross MOIC(1)
DBI Debt & Warrants 27,340 39.13% 2.02x
Aphena Pharma Solutions Debt 1,100 11.65% 1.24x
Bioventus Debt 12,000 13.73% 1.27x
Triton Technologies, Inc. Debt 1,200 12.53% 1.24x
Limbach Debt 15,340 64.53% 1.23x
Vectra (Duke Finance) Debt 7,500 37.20% 1.25x
Alpine Waste Debt 11,000 12.74% 1.25x
A2Z Debt 14,451 19.18% 1.15x
NWN Debt 3,896 12.89% 1.17x
Nation Safe Drivers Debt 11,721 10.79% 1.30x
Graco Supply Debt 4,000 15.06% 1.31x
IGT Debt 7,783 11.26% 1.30x
Stancor Debt 4,106 10.07% 1.27x
Metal Powder Products Debt 8,345 17.47% 1.29x
NextCare Debt 15,934 21.81% 1.31x
Total ($000) $290,151
Alcentra Capital Corporation
As of December 31, 2017, portfolio consisted of 29 companies representing 18 industry sectorsIndustry and Geographic Concentration
15
Canada: 8%
West: 17%
South: 17%
Southeast 27%
Midwest: 12% Northeast: 19%
19%
18%
10%8%
7%
6%
5%
5%
4%
7%
3%3%
2% 2% 1%
Healthcare Services
Business Services
Industrial Services
Technology & Telecom
Wholesale
Telecommunications
Retail
Security
Oil & Gas Services
High Tech Industries
Industrial Manufacturing
Environmental Services
Media: Advertising, Printing &PublishingTransportation and Logistics
Waste Services
Media & Entertainment
Education
Automotive
Alcentra Capital Corporation
Since IPO• Leverage Up• Yield Compression continues
Market Snapshot
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018
75th Percentile Median 25th Percentile
Externally Managed BDC Index – Median Dividend Yield
Source: Bloomberg L.P. Data as of 3/6/2018.Note: Externally Managed BDC Index includes all currently publicly traded externally managed BDCs. Excludes senior floating rateBDCs and those not paying a consistent cash dividend.
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
120.0%
1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018
75th Percentile Median 25th Percentile
Externally Managed BDC Index – Median Price / NAV
Source: Bloomberg L.P. and SNL Financial. Data as of 3/6/2018.Note: Externally Managed BDC Index includes all currently publicly traded externally managed BDCs. Excludes senior floating rate BDCs and those not paying a consistent cash dividend.
12.7% 13.3% 13.9% 14.0% 14.4%13.3% 13.3% 13.6%
12.5% 13.1%12.4% 12.3% 11.8% 11.6% 11.8% 12.1%
11.3% 11.9% 12.1% 11.6% 11.5% 11.5% 11.6% 11.9%11.0% 11.2% 11.0% 11.3%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
The BDC Environment
Source: SNL Financial. Data as of 12/31/2017.Note: Data includes medians for all currently publicly traded externally managed BDCs. Excludes senior floating rate BDCs and those not paying a consistent cash dividend. Data points reported in periods before public equity listing are excluded from the analysis.
Alcentra Capital Corporation
Appendix
17
Alcentra Capital Corporation
Corporate Headquarters
Securities Listing Transfer Agent
Research Coverage
Corporate Counsel
Accounting
Interested DirectorsPaul HatfieldChairman of the Board
David ScopellitiPresident & Chief Executive Officer
Independent DirectorsSteven H. Reiff Lead Independent Director; Chair of the Valuation CommitteeT. Ulrich BrechbuhlChair of the Compensation CommitteeDouglas J. GreenlawChair of the Nominating CommitteeEdward GrebowChair of the Audit Committee
Executive TeamDavid ScopellitiPresident & Chief Executive Officer
Ellida McMillanChief Financial & Operating Officer
200 Park Avenue 7th FloorNew York, NY 10166www.alcentracapital.com
NASDAQ: “ABDC”
Keefe, Bruyette, & Woods
Raymond James & Associates
Oppenheimer & Co.
Zacks Investment Research
Janney Montgomery
Computershare Inc.250 Royall StreetCanton, Massachusetts 02021
Eversheds Sutherland LLP
State Street Bank & Trust
18
AdviserAlcentra NY, LLCwww.alcentra.com
Alcentra Capital Corporation
Notes: Information on this page summarizes the financial statements of Alcentra Capital Corporation contained in the Quarterly Reports (10‐Q) and the Annual Report (10‐K). All quarterly and annual reports are filed with the SEC and can be accessed on the SEC website, www.sec.gov.
19
As of December 31, 2015
As of March 31, 2016
As of June 30, 2016
As of September 30, 2016
As of March 31, 2017
As of June 30, 2017
As of September 30,
2017
As of December 31, 2017
Portfolio investments, at fair valueNon‐controlled / non‐affiliated investments 221,349,073 205,364,448 228,320,326 269,067,466 246,605,747 235,723,168 246,751,971 252,325,403
Non‐controlled / affiliated investments 59,243,999 62,734,755 50,927,904 23,066,462 21,952,856 20,377,820 20,143,071 19,972,905
Controlled / affiliated investments 15,748,539 14,291,727 14,390,754 13,814,627 14,770,075 15,269,000 15,443,922 15,256,237
Total Portfolio Investments 296,341,611 282,390,930 293,638,984 305,948,555 283,328,678 271,369,988 282,338,964 287,554,545
Cash 4,866,972 3,831,847 5,038,752 6,708,245 4,719,733 3,802,620 4,925,485 13,882,956
Other Assets 6,287,224 6,031,457 5,860,596 10,608,526 5,843,705 4,892,344 11,848,448 296,443,194
Total Assets 307,495,807 292,254,234 304,538,332 323,265,326 293,892,116 280,064,952 299,112,897 310,326,150
Credit facility payable 63,504,738 42,709,057 51,685,846 70,872,238 46,933,273 35,133,273 59,783,273 89,703,273 Notes payable (net of deferred offering costs) 40,000,000 44,120,163 50,130,063 53,451,176 53,600,991 53,563,720 53,667,447 53,747,835
Other Liabilities 8,958,858 10,856,828 11,634,887 14,283,719 12,939,409 10,092,355 10,841,431 9,160,867
Total Liabilities 112,463,596 97,686,048 113,450,796 138,607,133 113,473,673 98,789,348 124,292,151 152,611,975
Net Assets 195,032,211 194,568,186 191,087,536 184,658,193 180,418,443 181,275,604 174,820,746 157,714,175
Shares Outstanding 13,516,766 13,506,257 13,490,636 13,490,636 13,437,059 14,245,220 14,245,220 14,222,945
NAV per Share 14.43 14.41 14.16 13.69 13.43 12.73 12.27 11.09
Alcentra Capital Corporation
Notes: Information on this page summarizes the financial statements of Alcentra Capital Corporation contained in the Quarterly Reports (10‐Q) and the Annual Report (10‐K). All quarterly and annual reports are filed with the SEC and can be accessed on the SEC website, www.sec.gov.(1) On a supplemental basis, we provide information relating to adjusted net investment income, which is a non‐GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses.
20
Quarter ended December 31,
2015
Quarter endedMarch 31, 2016
Quarter endedJune 30, 2016
Quarter endedSeptember 30,
2016
Quarter ended December 31,
2016
Quarter ended March 31, 2017
Quarter ended June 30, 2017
Quarter endedSeptember 30,
2017
Quarter ended December 31,
2017
Total Investment Income 8,676,914 9,946,391 10,639,969 9,116,468 10,899,771 9,201,448 8,338,109 7,610,521 8,201,431
Management Fee 1,302,213 1,289,036 1,283,763 1,335,294 1,301,591 1,249,569 1,229,648 1,230,961 1,265,171
Incentive Fee ‐ Ordinary Income 521,295 790,727 926,158 607,739 930,543 653,911 ‐ (15,667) ‐
Incentive Fee ‐ Capital Gains ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Incentive Fee 521,295 790,727 926,158 607,739 930,543 653,911 ‐ (15,667) ‐
Other Expenses 2,323,804 2,261,736 2,531,702 2,386,642 2,548,482 2,705,352 2,434,611 2,712,748 4,156,658
Total Expenses 4,147,312 4,341,499 4,741,623 4,329,675 4,780,616 4,608,832 3,664,259 3,928,042 4,156,658
Management Fee Waiver ‐ ‐ ‐ ‐ ‐ ‐ (169,524) (1,160,896) ‐
Incentive Fee Waiver ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐Waiver of management and incentive fees ‐ ‐ ‐ ‐ ‐ ‐ (169,524) (1,160,896) ‐
Net Expenses 4,147,312 4,341,499 4,741,623 4,329,675 4,780,616 4,608,832 3,494,735 2,767,146 4,156,658
Net Investment Income 4,529,602 5,604,892 5,898,346 4,786,793 6,119,155 4,592,616 4,843,374 4,843,375 4,044,773
NII per share 0.34 0.41 0.44 0.35 0.45 0.34 0.36 0.34 0.28
Capital Gains Incentive Fee (Reversal) Expense ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Adjusted Net Investment Income1 4,529,602 5,604,892 5,898,346 4,786,793 6,119,155 4,592,616 4,843,374 4,843,375 4,044,773
Adjusted NII per share1 0.34 0.41 0.44 0.35 0.45 0.34 0.36 0.34 0.28
Alcentra Capital Corporation
Portfolio Investments as of December 31, 2017
($ in thousands)Notes: Total Unrealized Investments in Alcentra Capital Corporation (ABDC) as of December 31, 2017.
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Portfolio Company Industry Security Type Maturity Fixed/ Floating Coupon Structure Cost Basis Market Value CountryBattery Solutions Environmental Services Class E units 11/6/2021 Fixed 8.0% PIK 4,139 4,139 USABattery Solutions Environmental Services Class A & F units ‐ ‐ 1,058 1,277 Battery Solutions Environmental Services Senior Subordinated Notes 11/6/2021 Fixed 6.0% Cash / 8.0% PIK 2,405 2,405 Black Diamond Oil & Gas Services Senior Secured 7/9/2018 Fixed 12.0% Cash / 2.0% PIK 5,938 4,876 USABlack Diamond Oil & Gas Services Senior Subordinated Notes 7/9/2018 Fixed 4.0% Cash 8,009 4,005 Black Diamond Oil & Gas Services Senior Secured Tranche C 7/9/2018 Fixed 4.0% Cash / 10.0% PIK 2,247 2,288 Carlton Group Business Services Tranche A 9/30/2022 Fixed 8% Cash 9,676 9,768 CanadaCarlton Group Business Services Tranche B 10/2/2023 Fixed 12.5% Cash 13,303 13,432 Champion ONE Technology & Telecom Common Equity ‐ ‐ 1,125 984 USAChampion ONE Technology & Telecom Senior Secured 3/17/2022 Floating L + 10.5% (100bps floor) 7,020 7,078 Cirrus Medical Staffing Business Services Revolver 10/19/2022 Floating L + 8.25% (100bps floor) ‐ ‐ USACirrus Medical Staffing Business Services Senior Secured 10/19/2022 Floating L + 8.25% (100bps floor) 18,511 18,600 Conisus Media: Advertising, Printing & Publishing Common Equity ‐ ‐ ‐ ‐ USA
Conisus Media: Advertising, Printing & Publishing Preferred Equity Fixed 12% PIK 12,678 6,678 FST Technical Services Technology & Telecom Senior Secured 6/30/2019 Fixed 12.0% Cash/ 5.0% PIK 14,000 14,000 USAFST Technical Services Technology & Telecom Preferred Equity Fixed 9% PIK 1,807 1,256 GST AutoLeather Automotive Senior Subordinated Notes 1/11/2021 Fixed 11.0% Cash / 2.0% PIK 8,496 ‐ USAHCAT Healthcare Services 1st Lien Debt 11/8/2022 Floating L + 8.0% (100bps floor) 20,234 20,234 USAHCAT Healthcare Services Delayed Draw 11/7/2022 Floating L + 8.0% (100bps floor) 1,500 1,500 HCAT Healthcare Services Revolver 11/8/2020 Floating L + 8.0% (100bps floor) 1,600 1,600 IGT Industrial Services Preferred Equity 12/10/2019 Fixed 11% PIK 1,111 ‐ USAIGT Industrial Services Common Equity ‐ ‐ 44 ‐IGT Industrial Services Class AA preferred 12/10/2019 Fixed 15% PIK 327 327 IGT Industrial Services Unitranche Debt 12/10/2019 Floating L+ 8.5% (100bps floor) 7,744 7,783 IGT Industrial Services Delayed Draw 12/10/2019 Floating L+ 8.5% (100bps floor) ‐ ‐LRI Industrial Services Preferred Equity ‐ ‐ ‐ 1,100 2,059 USALRI Industrial Services 1st Lien Debt 6/30/2022 Floating L + 9.25% (100bps floor) 19,437 19,500 Lugano Retail 1st Lien Debt 10/24/2021 Floating 5,349 5,484 USALugano Retail Warrant ‐ 667 1,000 Lugano Retail Delayed Draw 10/24/2021 Floating L + 10.0% (75bps floor) 2,000 2,000 Media Storm Media & Entertainment Senior Subordinated Notes 8/28/2019 Fixed 10% PIK 2,455 0 USA
Alcentra Capital Corporation
Portfolio Investments as of December 31, 2017
($ in thousands)Notes: Total Unrealized Investments in Alcentra Capital Corporation (ABDC) as of December 31, 2017.
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Portfolio Company Industry Security Type Maturity Fixed/ Floating Coupon Structure Cost Basis Market Value CountryMedsurant High Tech Industries 2nd Lien Debt 6/30/2020 Fixed 13.0% Cash 8,677 8,729 USA Metal Powder Products Industrial Manufacturing Senior Subordinated Notes 11/5/2021 Floating L + 11.25% (75bps floor) / 1.0% PIK 8,334 8,500 USA
Metal Powder Products Industrial Manufacturing Common Equity ‐ ‐ 500 719 My Alarm Center Security Senior Preferred Equity ‐ Fixed 8% PIK 2,862 2,862 USAMy Alarm Center Common Equity ‐ ‐ ‐ 257 ‐My Alarm Center Security Junior Preferred Equity ‐ ‐ ‐ 2,367 1,254 NextCare Healthcare Services Senior Subordinated Notes 12/31/2018 Fixed 10.0% Cash / 4.0% PIK 15,732 15,833 USANTI Telecommunications Unitranche Debt 3/30/2021 Floating L + 8.0% (100bps floor) 14,891 14,962 USANTI Telecommunications Warrant ‐ ‐ 225 1,036 NTI Telecommunications Preferred Equity ‐ ‐ 144 190 NTI Telecommunications Preferred Equity 1/0/1900 ‐ ‐ 403 1,489 NTI Telecommunications Delayed Draw 1/0/1900 Floating L + 8.0% (100bps floor) ‐ ‐Palmetto Moon Retail Common Equity ‐ ‐ 434 330 USAPalmetto Moon Retail 1st Lien Debt 10/31/2021 Fixed 11.5% Cash / 1.0% PIK 5,358 5,379 Pharmalogic Healthcare Services Subordinated Debt 9/1/2021 Fixed 12.0% Cash 16,094 16,122 USAPharmaLogic Recruiting Business Services Senior Secured Notes 1/31/2022 Fixed 10.25% Cash 9,845 9,925 USAPharmaLogic Recruiting Business Services Delayed Draw 1/31/2022 Fixed 10.25% Cash ‐ ‐ USAQRC High Tech Industries Subordinated Debt 11/19/2021 Fixed 12.25% Cash 10,000 10,000 USASafe Security Security Subordinated Debt 6/19/2020 Floating L + 13.0% (100bps floor)/0.34% PIK 9,874 10,020 USAShow Media Media & Entertainment Senior Secured 12/31/2018 Fixed 8% Cash / 3% PIK 4,153 0 USAShow Media Media & Entertainment Series A Preferred ‐ 3,747 ‐Southern Technical Education 2nd Lien Debt 12/2/2020 Fixed 15% PIK 8,451 0 USASouthern Technical Education Class SP‐1 Units 3/30/2026 Fixed 15.75% PIK 5,024 ‐Southern Technical Education Class A Units ‐ ‐ 2,167 ‐Southern Technical Education Penny Warrants ‐ ‐ 111 ‐Stancor Wholesale Unitranche Debt 8/19/2019 Floating L + 8.0% (75bps floor) 4,106 4,106 USASuperior Controls Wholesale Senior Secured Notes 3/22/2021 Floating L + 8.75% (100bps floor) 14,776 14,825 USASuperior Controls Wholesale Preferred Equity ‐ ‐ 400 754 Superior Controls Wholesale Delayed Draw 3/22/2021 Floating L + 8.75% (100bps floor) ‐ ‐Tunnel Hill Waste Services Common Units ‐ ‐ 2,529 2,772 XGS Transportation and Logistics 2nd Lien Debt 7/9/2020 Fixed 15.0% PIK 5,223 3,509 USAXGS Transportation and Logistics Warrant ‐ ‐ 489 ‐XGS Transportation and Logistics 2nd Lien Debt 7/9/2020 Floating L + 11.0% (100bps floor) 1,980 1,965 Total Investments $333,128 $287,555
Alcentra Capital Corporation
BNY Alcentra Group Holdings Inc. is an indirect, wholly‐owned subsidiary of the Bank of New York Mellon Corporation. Alcentra Limited and Alcentra NY, LLC are majority owned subsidiaries of BNY Alcentra Group Holdings Inc. Assets under management include assets managed by both companies. Alcentra NY, LLC and Alcentra Limited are registered with the U.S. Securities & Exchange Commission under the Investment Advisers Act of 1940.BNY Mellon Asset Management is one of the world’s leading asset management organizations, encompassing BNY Mellon’s affiliated investment management firms and global distribution companies. BNY Mellon is the corporate brand for The Bank of New York Mellon Corporation.
An investor should consider the portfolio strategy’s investment objectives, risks, charges and expenses carefully before investing. Portfolios are subject to investment risks, including possible loss of the principal amount invested.Material in this publication is for general information only and is not intended to provide specific investment advice or recommendations for any purchase or sale of any specific security or commodity. Certain information contained herein is based on outside sources believed to be reliable, but its accuracy is not guaranteed.
Investments in sub‐investment grade debt are speculative and involve special risks, and there can be no assurance that an account’s investment objectives will be realized or that suitable investments may be identified. Many factors affect performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. An investor could lose all or a substantial portion of his or her investment. No investment process is free of risk and there is no guarantee that the investment process described herein will be profitable. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
The enclosed material is confidential and not to be reproduced or redistributed in whole or in part without the prior written consent of Alcentra. Any statements of opinion constitute only current opinions of Alcentra, which are subject to change and which Alcentra does not undertake to update. Nothing herein constitutes an offer to sell, or solicitation of an offer to purchase, any securities, nor does it constitute an endorsement with respect to any investment strategy or vehicle.
The information is not intended and should not be construed as legal, accounting or tax advice. Parties should independently investigate any investment strategy or manager, and should consult with qualified investment, legal, accounting and tax professionals before making any investment.All opinions and estimates in this report constitute the best judgment of Alcentra as of the date hereof, but are subject to change without notice, and do not necessarily represent the views of Alcentra.
Gross IRR represents an effective annualized rate of return calculated using realized and unrealized results as of December 31, 2017. The Gross IRR is calculated using the cash proceeds received from their underlying investments, and the Unrealized Value of each fund as of December 31, 2017.
MOIC or Multiple on Invested Capital = Realized Proceeds plus Unrealized Value appreciation divided by Total Investment.
Disclosures
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