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):
July 31, 2012
SOLAR
CAPITAL LTD.
(Exact
name of registrant as specified in its charter)
| Maryland | 814-00754 | 26-1381340 | ||
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(State or other jurisdiction of incorporation) |
(Commission File Number)
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(I.R.S. Employer Identification No.)
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500 Park Avenue
New York, NY 10022
(Address of
principal executive offices and zip code)
Registrant’s telephone number, including area code: (212) 993-1670
Check the appropriate box below if the Form 8-K 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))
Item 2.02 Results of Operations and Financial Condition
On July 31, 2012, the registrant issued a press release announcing its financial results for the quarter ended June 30, 2012. The text of the press release is included as Exhibit 99.1 to this Form 8-K.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
| (a) | Not applicable. | |
| (b) | Not applicable. | |
| (c) | Not applicable. | |
| (d) | Exhibits. |
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Exhibit No. |
Description |
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| 99.1 | Press release, dated July 31, 2012 |
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.
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Date: |
July 31, 2012 |
SOLAR CAPITAL LTD. |
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By: |
/s/ Richard Peteka |
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Richard Peteka |
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Chief Financial Officer |
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Exhibit 99.1
Solar Capital Announces June 30, 2012 Financial Results; 18% Investment Portfolio Increase; Declares Quarterly Dividend of $0.60 per Share
NEW YORK--(BUSINESS WIRE)--July 31, 2012--Solar Capital Ltd (NASDAQ: SLRC), today reported earnings of $16.1 million, or $0.44 per share, and net investment income of $14.4 million, or $0.39 per share, for the quarter ended June 30, 2012. Excluding expenses incurred relating to the Company’s new $485 million credit facility, $75 million private notes, and other non-recurring expenses, net investment income would have been $20.5 million, or $0.56 per share. At June 30th, net asset value (NAV) was $824.9 million, or $22.51 per share.
Solar Capital also announced that its Board of Directors has declared a third quarter dividend of $0.60 per share, payable on October 2, 2012 to stockholders of record on September 20, 2012. The Company expects the dividend to be paid from taxable earnings with specific tax characteristics reported to stockholders after the end of the 2012 calendar year.
| Balance Sheet Highlights | ||||||
| ($ in millions, except per share amounts) | ||||||
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June 30, 2012 |
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December 31, 2011 |
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| Investment Portfolio | $ | 1,193.6 | $ | 1,045.0 | ||
| Total Assets | $ | 1,219.9 | $ | 1,079.4 | ||
| Net Assets | $ | 824.9 | $ | 805.9 | ||
| NAV per share | $ | 22.51 | $ | 22.02 | ||
|
Weighted Average Yield on Fair Value |
13.9% | 14.2% | ||||
| Income Highlights | |||||||||||||||
| ($ in millions, except per share amounts) | |||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||
|
June 30, 2012 |
June 30, 2011 |
||||||||||||||
| Total | Per Share |
Total |
Per Share | ||||||||||||
| Investment Income | $ | 34.8 | $ | 0.95 | $ | 35.3 | $ | 0.97 | |||||||
| Net Investment Income (NII) | $ | 14.4* | $ | 0.39* | $ | 21.4 | $ | 0.59 | |||||||
| Net Realized and Unrealized Gain (Loss) | $ | 1.7 | $ | 0.05 | $ | (9.0 | ) | $ | (0.25 | ) | |||||
| Net Income | $ | 16.1 | $ | 0.44 | $ | 12.4 | $ | 0.34 | |||||||
* Excluding expenses incurred relating to the Company’s new $485 million credit facility, the $75 million private notes, and other non-recurring expenses, net investment income would have been $20.5 million, or $0.56 per share.
“During the quarter, we significantly enhanced our liability structure and expanded our investment portfolio,” said Michael Gross, Chairman & CEO of Solar Capital Ltd. “Through these two strategic transactions, we increased our debt capacity, extended the average maturity, and reduced our overall borrowing costs. We also grew our investment portfolio by over $185 million, or 18%--a record volume for our franchise. Due to the ordinary course lag in timing between commitment and funding, the full benefit of our originations has not been reflected in second quarter’s NII. Based upon our current visibility, we expect third quarter recurring net investment income on the larger average investment portfolio to cover our dividend.”
Portfolio and Investment Activity
During the three months ended June 30, 2012, we invested approximately $192.3 million in five new portfolio companies and one existing portfolio company. We received proceeds from principal repayments of approximately $6 million. There were no sales or other exits during the quarter. During the six months ended June 30, 2012, we originated approximately $254.2 million of new investments in five new and five existing portfolio companies. Principal repayments and sales totaled approximately $141.7 million.
As of June 30, 2012, our portfolio was comprised of debt and equity investments in 41 portfolio companies across 22 industries. Our income producing assets, which represented 94.0% of our total portfolio, had a weighted average annualized yield on a fair value basis of approximately 13.9%, compared to 14.2% at December 31, 2011. At June 30th, 98.2% of our portfolio is performing on a fair value basis.
Results of Operations
Gross investment income was $34.8 million and $35.3 million for the three months ended June 30, 2012 and 2011, respectively. Prepayment income was lower in the 2012 period, due to lower redemptions.
Net investment income was $14.4 million or $0.39 per share and $21.4 million or $0.59 per share for the three months ended June 30, 2012 and 2011, respectively. We elected to use the fair value option of accounting for the new $485 million credit facility and $75 million private notes, resulting in the associated fees and expenses being recognized for GAAP purposes during the quarter. Excluding these expenses and other non-recurring expenses, net investment income would have been $20.5 million or $0.56 per share. These expenses also reduced the NAV for the second quarter.
The net realized and unrealized gain of $1.7 million for the three months ended June 30, 2012 was primarily due to an increase in the fair value of our portfolio due to improved market conditions.
Conference Call and Webcast
We will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Wednesday, August 1, 2012. All interested parties may participate in the conference call by dialing (877) 299-4454 approximately 5-10 minutes prior to the call, international callers should dial (617) 597-5447. Participants should reference Solar Capital Ltd. and the participant passcode of 53006021 when prompted. 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 Solar Capital’s website, http://www.solarcapltd.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, an archived replay of the call will be available approximately one hour after the end of the conference through August 17, 2012 to domestic callers by dialing (888) 286-8010 and to international callers by dialing (617) 801-6888. For all replays, please reference passcode 34487459. An archived replay will also be available on the webcast link located on the home page of our website.
Financial Statements and Tables
| SOLAR CAPITAL LTD. | ||||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited) | ||||||||
| June 30, | ||||||||
| 2012 | December 31, | |||||||
| (unaudited) | 2011 | |||||||
| Assets | ||||||||
| Investments at value: | ||||||||
| Companies less than 5% owned (cost: $983,442 and $1,062,844 respectively) | $ | 920,579 | $ | 955,769 | ||||
| Companies 5% to 25% owned (cost: $220,411 and $41,819, respectively) | 212,385 | 35,820 | ||||||
| Companies more than 25% owned (cost: $59,158 and $47,910, respectively) | 60,638 | 53,454 | ||||||
| Total investments (cost: $1,263,011 and $1,152,573, respectively) | 1,193,602 | 1,045,043 | ||||||
| Cash and cash equivalents | 12,019 | 11,787 | ||||||
| Interest and dividends receivable | 11,417 | 9,763 | ||||||
| Deferred credit facility costs | 1,172 | 3,635 | ||||||
| Deferred offering costs | 659 | 469 | ||||||
| Receivable for investments sold | 630 | 3,225 | ||||||
| Fee revenue receivable | — | 4,379 | ||||||
| Unrealized appreciation on interest rate caps and foreign exchange contracts | 94 | 649 | ||||||
| Prepaid expenses and other receivables | 290 | 481 | ||||||
| Total Assets | 1,219,883 | 1,079,431 | ||||||
| Liabilities | ||||||||
| Payable for investments purchased | 124,653 | 22,443 | ||||||
| Revolving credit facilities | 119,860 | 201,355 | ||||||
| Senior secured notes | 75,000 | — | ||||||
| Term loan | 35,000 | 35,000 | ||||||
| Dividend payable | 21,984 | — | ||||||
| Investment advisory and management fee payable | 5,673 | 5,277 | ||||||
| Performance-based incentive fee payable | 3,591 | 5,203 | ||||||
| Interest payable | 1,323 | 1,063 | ||||||
| Income taxes payable | 1,035 | 720 | ||||||
| Administrative services fee payable | 1,022 | 1,069 | ||||||
| Unrealized depreciation on foreign exchange contracts | 721 | — | ||||||
| Deferred fee revenue | — | 318 | ||||||
| Other accrued expenses and payables | 5,098 | 1,042 | ||||||
| Total Liabilities | 394,960 | 273,490 | ||||||
| Net Assets | ||||||||
|
Common stock, par value $0.01 per share 36,640,094 and 36,608,038 shares issued |
||||||||
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and outstanding, 200,000,000 authorized |
366 | 366 | ||||||
| Paid-in capital in excess of par | 928,891 | 928,180 | ||||||
| Undistributed net investment income | — | 2,245 | ||||||
| Distributions in excess of net investment income | (6,236 | ) | — | |||||
| Accumulated net realized losses | (28,368 | ) | (18,379 | ) | ||||
| Net unrealized depreciation | (69,730 | ) | (106,471 | ) | ||||
| Total Net Assets | $ | 824,923 | $ | 805,941 | ||||
| Number of shares outstanding | 36,640,094 | 36,608,038 | ||||||
| Net Asset Value Per Share | $ | 22.51 | $ | 22.02 | ||||
| SOLAR CAPITAL LTD. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||||
| (in thousands, except shares) | ||||||||||||||||
| Three months | Three months | Six months | Six months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
|
June 30, 2012 |
June 30, 2011 |
June 30, 2012 |
June 30, 2011 |
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| INVESTMENT INCOME: | ||||||||||||||||
| Interest and dividends: | ||||||||||||||||
| Other interest and dividend income | $ | 27,819 | $ | 34,530 | $ | 63,046 | $ | 66,129 | ||||||||
| Companies 5% to 25% owned | 5,652 | — | 5,652 | — | ||||||||||||
| Companies more than 25% owned | 1,362 | 753 | 2,444 | 1,448 | ||||||||||||
| Total investment income | 34,833 | 35,283 | 71,142 | 67,577 | ||||||||||||
| EXPENSES: | ||||||||||||||||
| Interest and other credit facility expenses | 9,051 | 1,895 | 11,746 | 3,932 | ||||||||||||
| Investment advisory and management fees | 5,673 | 5,096 | 10,951 | 10,083 | ||||||||||||
| Performance-based incentive fees | 3,591 | 5,269 | 8,866 | 10,057 | ||||||||||||
| Other general and administrative expenses | 995 | 1,376 | 2,004 | 2,270 | ||||||||||||
| Administrative services fees | 1,128 | 279 | 1,824 | 717 | ||||||||||||
| Total operating expenses | 20,438 | 13,915 | 35,391 | 27,059 | ||||||||||||
| Net investment income before income tax expense | 14,395 | 21,368 | 35,751 | 40,518 | ||||||||||||
| Income tax expense | 26 | — | 283 | — | ||||||||||||
| Net investment income | 14,369 | 21,368 | 35,468 | 40,518 | ||||||||||||
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, |
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DERIVATIVES AND FOREIGN CURRENCIES: |
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| Net realized loss: | ||||||||||||||||
| Investments: | ||||||||||||||||
| Companies more than 25% owned | (687 | ) | — | 10,315 | — | |||||||||||
| Companies less than 5% owned | (19,635 | ) | 2,304 | (20,360 | ) | 5,106 | ||||||||||
| Net realized gain (loss) on investments | (20,322 | ) | 2,304 | (10,045 | ) | 5,106 | ||||||||||
| Derivatives | 1,730 | (4,872 | ) | 786 | (9,235 | ) | ||||||||||
| Foreign currencies | (563 | ) | (242 | ) | 55 | (314 | ) | |||||||||
| Net realized loss before income taxes | (19,155 | ) | (2,810 | ) | (9,204 | ) | (4,443 | ) | ||||||||
| Income tax expense | — | — | 785 | — | ||||||||||||
| Net realized loss | (19,155 | ) | (2,810 | ) | (9,989 | ) | (4,443 | ) | ||||||||
| Net change in unrealized gain (loss): | ||||||||||||||||
| Investments: | ||||||||||||||||
| Companies less than 5% owned | 17,646 | (8,478 | ) | 44,210 | 22,389 | |||||||||||
| Companies more than 25% owned | 1,508 | 1,478 | (4,063 | ) | 3,103 | |||||||||||
| Companies 5% to 25% owned | 132 | (430 | ) | (2,027 | ) | (690 | ) | |||||||||
| Net change in unrealized gain (loss) on investments | 19,286 | (7,430 | ) | 38,120 | 24,802 | |||||||||||
| Derivatives | 159 | 473 | (1,276 | ) | 214 | |||||||||||
| Foreign currencies | 1,403 | 783 | (103 | ) | 311 | |||||||||||
| Net change in unrealized gain (loss) on investments | 20,848 | (6,174 | ) | 36,741 | 25,327 | |||||||||||
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Net realized and unrealized gain (loss) on investments, |
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|
derivatives and foreign currencies |
1,693 | (8,984 | ) | 26,752 | 20,884 | |||||||||||
| Net Increase in Net Assets Resulting From Operations | $ | 16,062 | $ | 12,384 | $ | 62,220 | $ | 61,402 | ||||||||
| Earnings per share | $ | 0.44 | $ | 0.34 | $ | 1.70 | $ | 1.69 | ||||||||
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. The Company 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 constitute “forward-looking statements,” which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Solar Capital Ltd. undertakes no duty to update any forward-looking statements made herein.
CONTACT:
Solar Capital Ltd.
Richard Pivirotto, 212-994-8543