NEW YORK--(BUSINESS WIRE)--Jul. 24, 2013--
Solar Capital Ltd. (NASDAQ:SLRC) (“Solar Capital” or the “Company”)
today announced that DSW Group, Inc. has entered into a definitive sale
agreement. The Company expects to receive approximately $150 million in
gross proceeds for its second lien loan to DS Waters of America, Inc.
and its preferred investments in DSW Holding Company, LLC (together, “DS
Waters”). Additionally, the Company has received notice that its
investment in Midcap Financial Intermediate Holdings, LLC (“Midcap
Financial”) will be redeemed at a premium to par for gross proceeds of
approximately $87 million. Solar Capital expects estimated total
proceeds received from these monetizations to be approximately $237
million, which it intends to use to reduce Solar Capital’s outstanding
revolving indebtedness, pending prudent reinvestment.
“We are pleased with the outcome of these two legacy investments,” said
Bruce Spohler, Chief Operating Officer of Solar Capital. “Our full exit
of DS Waters is expected to result in an internal rate of return, or
IRR, of approximately 10.3% since our initial investment almost six
years ago and a 1.5x multiple on our invested capital. The repayment of
our subordinated loan to MidCap Financial is expected to result in an
IRR of approximately 16.5% since our initial investment three years ago,
and will mark the culmination of another successful underwriting.”1
As a result of these significant monetizations, and pending
re-investment of these proceeds in new portfolio investments, the
Company expects to generate significantly reduced investment income in
the near-term. Accordingly, the Company currently anticipates net
investment income to be in the range of $0.41 to $0.43 per share for the
quarter ended June 30, 2013. Net asset value per share at June 30, 2013
is also expected to be in the range of $22.35 to $22.40. In order to
better align the quarterly dividend with expected near-term earnings,
the board of directors of Solar Capital has declared a reduced quarterly
dividend of $0.40 per share, beginning with the Company’s third fiscal
quarter ending September 30, 2013.
“We believe these divestitures meaningfully improve our overall
investment portfolio composition by reducing issuer concentration,
increasing our percentage investment in secured and floating rate debt
securities, and eliminating substantially all of our payment-in-kind, or
PIK, income,” said Michael Gross, Chairman and CEO of Solar Capital Ltd.
“We believe the third fiscal quarter dividend approximates the run-rate
earnings of our portfolio post these monetizations. We intend to seek to
grow our investment income, and correspondingly our dividend, through
the deployment of our over $500 million of available capital, which
includes the proceeds from these monetizations.”
The DS Waters transaction is subject to customary closing conditions and
is expected to close in the next 90 days. Our Midcap Financial
investment is expected to be repaid in July 2013.
The third quarter dividend will be paid on October 2, 2013 to
stockholders of record on September 19, 2013. The specific tax
characteristics will be reported to stockholders on Form 1099 after the
end of the calendar year.
The Company will release its financial results for the quarter ended
June 30, 2013 on Wednesday, July 31, 2013, after the close of the
financial markets, and will host an earnings conference call and audio
webcast at 10:00 a.m. (Eastern Time) on Thursday, August 1, 2013.
ABOUT SOLAR CAPITAL LTD.
Solar Capital Ltd. is a closed-end investment company that has elected
to be treated as a business development company under the Investment
Company Act of 1940. Solar Capital invests primarily in leveraged,
middle market companies in the form of senior secured loans, mezzanine
loans, and equity securities.
FORWARD-LOOKING STATEMENTS
Statements included herein may contain “forward-looking statements”,
which relate to our future operations, future performance or our
financial condition. Forward-looking statements are not guarantees of
future performance, condition or results and involve a number of risks
and uncertainties. Actual results and outcomes may differ materially
from those anticipated in the forward-looking statements as a result of
a variety of factors, including those described from time to time in our
filings with the Securities and Exchange Commission or factors that are
beyond our control. Solar Capital Ltd. undertakes no obligation to
publically update or revise any forward-looking statements made herein.
All forward-looking statements speak only as of the time of this press
release.
1 The internal rate of return, or IRR, is calculated using
the XIRR function in Excel, based on the actual dates for all cash
outflows and inflows associated with the investment, including cash
interest payments, amendment fees, origination fees, expected escrow
payments, and principal repayments.
Source: Solar Capital Ltd.
Solar Capital Ltd.
Richard Pivirotto, 212-994-8543