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): August 5, 2020
PennantPark Floating Rate Capital Ltd.
(Exact Name of Registrant as Specified in Charter)
| Maryland | 814-00891 | 27-3794690 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 590 Madison Avenue, 15th Floor, New York, NY 10022 |
| (Address of Principal Executive Offices) (Zip Code) |
212-905-1000
(Registrant's telephone number, including area code)
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)) | |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
| Common Stock, par value $0.001 per share | PFLT | The Nasdaq Stock Market LLC |
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 August 5, 2020, PennantPark Floating Rate Capital Ltd., or the Company, issued a press release announcing its financial results for the third fiscal quarter ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report pursuant to Item 2.02 on Form 8-K and Regulation FD. The information in this report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of such section. The information in this report on Form 8-K shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Act, or under the Exchange Act, except as shall be expressly set forth by specific reference in such filing. For information concerning the COVID-19 pandemic and its potential impact on the Company’s business and operating results, see the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Part II - Other Information – Item 1A. Risk Factors” therein. Forward-Looking Statements This report on Form 8-K, including Exhibit 99.1 furnished herewith, may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Floating Rate Capital Ltd. files under the Exchange Act. All statements other than statements of historical facts included in this report on Form 8-K are forward-looking statements and are not guarantees of future performance 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 filings with the Securities and Exchange Commission as well as changes in the economy and risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism, natural disasters or pandemics such as COVID-19. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made. PennantPark Floating Rate Capital Ltd. may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from its historical experience and present expectations.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
99.1 Press Release of PennantPark Floating Rate Capital Ltd. dated August 5, 2020
SIGNATURE
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.
| PennantPark Floating Rate Capital Ltd. | ||
| Date: August 5, 2020 | By: | /s/ Aviv Efrat |
| Aviv Efrat | ||
| Chief Financial Officer & Treasurer | ||
EXHIBIT 99.1
PennantPark Floating Rate Capital Ltd. Announces Financial Results for the Quarter Ended June 30, 2020
NEW YORK, Aug. 05, 2020 (GLOBE NEWSWIRE) -- PennantPark Floating Rate Capital Ltd. (NASDAQ: PFLT) (TASE: PFLT) announced today financial results for the third fiscal quarter ended June 30, 2020.
HIGHLIGHTS
Quarter ended June 30, 2020
($ in millions, except per share amounts)
| Assets and Liabilities: | ||
| Investment portfolio (1) | $ | 1,104.4 |
| PSSL investment portfolio | $ | 458.5 |
| Net assets | $ | 471.3 |
| GAAP net asset value per share | $ | 12.16 |
| Increase GAAP net asset value per share | 0.3% | |
| Adjusted net asset value per share (2) | $ | 11.44 |
| Increase in adjusted net asset value per share (2) | 3.1% | |
| Credit Facility | $ | 340.9 |
| 2023 Notes | $ | 121.9 |
| 2031 Asset-Backed Debt | $ | 224.7 |
| Regulatory Debt to Equity | 1.62x | |
| Regulatory Net Debt to Equity (3) | 1.50x | |
| GAAP Net Debt to Equity (4) | 1.35x | |
| Yield on debt investments at quarter-end | 7.4% | |
| Operating Results: | ||
| Net investment income | $ | 10.2 |
| Net investment income per share | $ | 0.26 |
| Distributions declared per share | $ | 0.285 |
| Portfolio Activity: | ||
| Purchases of investments | $ | 14.4 |
| Sales and repayments of investments | $ | 104.1 |
| Number of new portfolio companies invested | 1 | |
| Number of existing portfolio companies invested | 18 | |
| Number of ending portfolio companies | 104 |
(1) Includes investments in PennantPark Senior Secured Loan Fund I LLC, or PSSL, an unconsolidated joint venture, totaling $159.4 million, at fair value.
(2) This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of the $27.8 million unrealized loss on our multi-currency senior secured revolving credit facility, as amended and restated with Truist Bank (formerly SunTrust Bank) and other lenders, or the Credit Facility, and our 4.3% Series A notes due 2023, or the 2023 Notes. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
(3) This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance net of $53.4 million of cash and equivalents. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
(4) This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance including the impact of the $27.8 million unrealized loss on the Credit Facility and the 2023 Notes net of $53.4 million of cash and equivalents. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
CONFERENCE CALL AT 10:00 A.M. ET ON AUGUST 6, 2020
PennantPark Floating Rate Capital Ltd. (“we,” “our,” “us” or the “Company”) will host a conference call at 10:00 a.m. (Eastern Time) on Thursday, August 6, 2020 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (866) 548-4713 approximately 5-10 minutes prior to the call. International callers should dial (323) 794-2093. All callers should reference conference ID #6656028 or PennantPark Floating Rate Capital Ltd. An archived replay of the call will be available through August 20, 2020 by calling toll-free (888) 203-1112. International callers please dial (719) 457-0820. For all phone replays, please reference conference ID #6656028.
PORTFOLIO AND INVESTMENT ACTIVITY
“We are pleased that we accomplished several key goals this past quarter. We achieved a 3% increase in adjusted NAV as well as reduced leverage and increased liquidity,” said Arthur Penn, Chairman and CEO. “We believe our rigorous underwriting process and disciplined investment approach has successfully positioned us to manage through this environment.”
As of June 30, 2020, our portfolio totaled $1,104.4 million and consisted of $993.6 million of first lien secured debt (including $123.4 million in PSSL), $31.7 million of second lien secured debt and $79.0 million of preferred and common equity (including $36.0 million in PSSL). Our debt portfolio consisted of 99% variable-rate investments. As of June 30, 2020, we had three portfolio companies on non-accrual, representing 2.2% and 1.8% of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $49.9 million. Our overall portfolio consisted of 104 companies with an average investment size of $10.6 million, had a weighted average yield on debt investments of 7.4%, and was invested 90% in first lien secured debt (including 11% in PSSL), 3% in second lien secured debt and 7% in preferred and common equity (including 3% in PSSL). As of June 30, 2020, 98% of the investments held by PSSL were first lien secured debt. For more information on how the COVID-19 pandemic has affected our business and results of operations, see the “Effects of COVID-19” section below.
As of September 30, 2019, our portfolio totaled $1,081.7 million and consisted of $944.9 million of first lien secured debt (including $122.2 million in PSSL), $34.4 million of second lien secured debt and $102.4 million of preferred and common equity (including $50.0 million in PSSL). Our debt portfolio consisted of 99% variable-rate investments. As of September 30, 2019, we had one portfolio company on non-accrual, representing 0.4% and zero of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $3.5 million. Our overall portfolio consisted of 95 companies with an average investment size of $11.4 million, had a weighted average yield on debt investments of 8.7%, and was invested 87% in first lien secured debt (including 11% in PSSL), 3% in second lien secured debt and 10% in preferred and common equity (including 5% in PSSL). As of September 30, 2019, 97% of the investments held by PSSL were first lien secured debt.
For the three months ended June 30, 2020, we invested $14.4 million in one new and 18 existing portfolio companies with a weighted average yield on debt investments of 8.1%. Sales and repayments of investments for the three months ended June 30, 2020 totaled $104.1 million. For the nine months ended June 30, 2020, we invested $421.4 million in 18 new and 86 existing portfolio companies with a weighted average yield on debt investments of 8.0%. Sales and repayments of investments for the nine months ended June 30, 2020 totaled $347.2 million.
For the three months ended June 30, 2019, we invested $182.7 million in eight new and 14 existing portfolio companies with a weighted average yield on debt investments of 9.3%. Sales and repayments of investments for the three months ended June 30, 2019 totaled $66.6 million. For the nine months ended June 30, 2019, we invested $499.5 million in 22 new and 60 existing portfolio companies with a weighted average yield on debt investments of 8.9%. Sales and repayments of investments for the nine months ended June 30, 2019 totaled $400.1 million.
PennantPark Senior Secured Loan Fund I LLC
As of June 30, 2020, PSSL’s portfolio totaled $458.5 million, consisted of 49 companies with an average investment size of $9.4 million and had a weighted average yield on debt investments of 6.8%. As of September 30, 2019, PSSL’s portfolio totaled $488.5 million, consisted of 45 companies with an average investment size of $10.9 million and had a weighted average yield on debt investments of 7.6%.
For the three months ended June 30, 2020, PSSL made zero new or follow-on investments. Sales and repayments of investments for the three months ended June 30, 2020 totaled $28.3 million. For the nine months ended June 30, 2020, PSSL invested $87.1 million (including $86.7 million purchased from the Company) in 11 new and two existing portfolio companies with a weighted average yield on debt investments of 7.4%. Sales and repayments of investments for the nine months ended June 30, 2020 totaled $102.6 million.
For the three months ended June 30, 2019, PSSL invested $8.4 million in one new and three existing portfolio companies with a weighted average yield on debt investments of 9.0%. PSSL’s sales and repayments of investments for the three months ended June 30, 2019 totaled $39.7 million. For the nine months ended June 30, 2019 PSSL invested $176.0 million (including $57.7 million purchased from the Company) in 11 new and 13 existing portfolio companies with a weighted average yield on debt investments of 8.1%. PSSL’s sales and repayments of investments for the nine months ended June 30, 2019 totaled $128.2 million.
RESULTS OF OPERATIONS
Set forth below are the results of operations for the three and nine months ended June 30, 2020 and 2019.
Investment Income
Investment income for the three and nine months ended June 30, 2020 was $22.8 million and $73.7 million, respectively, and was attributable to $21.0 million and $67.5 million from first lien secured debt and $1.8 million and $6.2 million from other investments, respectively. This compares to investment income for the three and nine months ended June 30, 2019, which was $22.9 million and $69.1 million, respectively, and was attributable to $19.9 million and $62.0 million from first lien secured debt and $3.0 million and $7.0 million from other investments, respectively. The increase in investment income compared to the same periods in the prior year was primarily due to the growth of our portfolio.
Expenses
Expenses for the three and nine months ended June 30, 2020 totaled $12.6 million and $40.7 million, respectively. Base management fee for the same periods totaled $2.9 million and $8.7 million, incentive fee totaled $2.0 million and $7.2 million, debt related interest and expenses totaled $6.7 million and $21.6 million and general and administrative expenses totaled $1.0 million and $2.9 million, respectively. This compares to expenses for the three and nine months ended June 30, 2019 which totaled $11.5 million and $35.0 million, respectively. Base management fee for the same periods totaled $2.6 million and $7.5 million, incentive fee totaled $2.4 million and $3.7 million (including $(1.4) million on realized and unrealized gains accrued but not payable), debt related interest and expenses totaled $5.7 million and $20.8 million (including $4.5 million in Credit Facility amendment costs), and general and administrative expenses totaled $1.0 million and $3.0 million, respectively. The increase in expenses for the three and nine months ended June 30, 2020 compared to the same periods in the prior year was primarily due to the growth of our portfolio.
Net Investment Income
Net investment income totaled $10.2 million and $33.1 million, or $0.26 and $0.85 per share, for the three and nine months ended June 30, 2020, respectively. Net investment income totaled $11.3 million and $34.1 million, or $0.29 and $0.88 per share, for the three and nine months ended June 30, 2019, respectively.
Net Realized Gains or Losses
Sales and repayments of investments for the three and nine months ended June 30, 2020 totaled $104.1 million and $347.2 million, respectively, and net realized losses totaled $7.4 million and $8.0 million, respectively. Sales and repayments of investments for the three and nine months ended June 30, 2019 totaled $66.6 million and $400.1 million, respectively, and net realized losses totaled $18.4 million and $16.4 million, respectively. The change in realized gains/losses was primarily due to changes in the market conditions of our investments and the values at which they were realized.
Unrealized Appreciation or Depreciation on Investments, the Credit Facility and the 2023 Notes
For the three and nine months ended June 30, 2020, we reported net change in unrealized appreciation (depreciation) on investments of $21.9 million and $(46.4) million, respectively. For the three and nine months ended June 30, 2019, we reported net change in unrealized appreciation (depreciation) on investments of $11.9 million and $(13.2) million, respectively. As of June 30, 2020 and September 30, 2019, our net unrealized depreciation on investments totaled $49.9 million and $3.5 million, respectively. The net change in unrealized depreciation on our investments compared to the same periods in the prior year was primarily due to changes in the capital market conditions as well as the financial performance of certain portfolio companies primarily driven by the market disruption caused by the COVID-19 pandemic and the uncertainty surrounding its continued adverse economic impact. For more information on how the COVID-19 pandemic has affected our business and results of operations, see the “Effects of COVID-19” section below.
For the three and nine months ended June 30, 2020, the Credit Facility and the 2023 Notes had a net change in unrealized (appreciation) depreciation of $(12.2) million and $22.7 million, respectively. For the three and nine months ended June 30, 2019, the Credit Facility and the 2023 Notes had a net change in unrealized appreciation of $0.4 million and $0.4 million, respectively. As of June 30, 2020 and September 30, 2019, the net unrealized depreciation on the Credit Facility and the 2023 Notes totaled $27.4 million and $4.7 million, respectively. The net change in net unrealized depreciation compared to the same period in the prior year was primarily due to changes in the capital markets.
Net Change in Net Assets Resulting from Operations
Net change in net assets resulting from operations totaled $12.6 million and $1.4 million, or $0.32 and $0.04 per share, respectively, for the three and nine months ended June 30, 2020. This compares to a net change in net assets resulting from operations of $4.5 million and $4.0 million, or $0.12 and $0.10 per share, respectively, for the three and nine months ended June 30, 2019. The increase in the net change in net assets from operations for the three months ended June 30, 2020 compared to the same period in the prior year was primarily due to changes in the capital markets. The decrease in the net change in net assets from operations for the nine months ended June 30, 2020 compared to the same period in the prior year was primarily due to depreciation of the portfolio primarily driven by the market disruption caused by the COVID-19 pandemic and the uncertainty surrounding its continued adverse economic impact. For more information on how the COVID-19 pandemic has affected our business and results of operations, see the “Effects of COVID-19” section below.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources are derived primarily from proceeds of securities offerings, debt capital and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives. For more information on how the COVID-19 pandemic may impact our ability to comply with the covenants of the Credit Facility, see the “Effects of COVID-19” section below.
The annualized weighted average cost of debt for the nine months ended June 30, 2020 and 2019, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 3.9% and 5.3%, respectively (excluding amendment and debt issuance costs, amounts were 3.9% and 4.4%, respectively). As of June 30, 2020 and September 30, 2019, we had $168.4 million and $254.7 million of unused borrowing capacity under the Credit Facility, respectively, subject to leverage and borrowing base restrictions.
As of June 30, 2020 and September 30, 2019, PennantPark Floating Rate Funding I, LLC had $351.6 million and 265.3 million of outstanding borrowings under the Credit Facility, respectively. The Credit Facility had a weighted average interest rate of 2.2% and 4.1%, exclusive of the fee on undrawn commitments as of June 30, 2020 and September 30, 2019, respectively.
As of June 30, 2020 and September 30, 2019, we had cash equivalents of $53.4 million and $63.3 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to take advantage of market opportunities.
Our operating activities used cash of $63.0 million for the nine months ended June 30, 2020, and our financing activities provided cash of $53.1 million for the same period. Our operating activities used cash primarily for our investment activities and our financing activities provided cash primarily from draws on our Credit Facility, partially offset by distributions paid to stockholders.
Our operating activities used cash of $96.0 million for the nine months ended June 30, 2019 and our financing activities provided cash of $48.4 million for the same period. Our operating activities used cash primarily for our investment activities and our financing activities provided cash primarily from draws on Credit Facility, partially offset by for distributions paid to stockholders.
DISTRIBUTIONS
During the three and nine months ended June 30, 2020 and 2019, we declared distributions of $0.285 and $0.855 per share, respectively, for total distributions of $11.1 and $33.2 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the Securities and Exchange Commission.
EFFECTS OF COVID-19
The spread of COVID-19 has had a significant impact on the U.S. economy and has resulted in governmental orders imposing travel restrictions and prolonged closures of many corporate offices, retail stores, manufacturing facilities, factories and other common places of public congregation around the world. These restrictions and “stay-at-home” orders have essentially resulted in the shutdown of all non-essential businesses, as defined by each governmental authority imposing the respective orders. The COVID-19 pandemic has had, and continues to have, an adverse impact on our operating results and the operating results of our portfolio companies. Any future impact to our business and results of operations will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to reduce the spread of the virus, all of which are beyond our control.
We had a significant reduction of our net asset value as of June 30, 2020 as compared to our net asset value as of September 30, 2019. This reduction resulted from an increase in the overall net unrealized depreciation of the Company’s portfolio, including unrealized depreciations in the Company's investments, the Credit Facility and the 2023 Notes as of June 30, 2020, which was primarily due to the immediate adverse economic impact of the COVID-19 pandemic, the continuing uncertainty surrounding its long-term effects as well as the re-pricing of credit risk in the broadly syndicated credit market. As of June 30, 2020, we are in compliance with asset coverage requirements under the Investment Company Act of 1940, as amended. In addition, we are not in default of any asset coverage requirements under the Credit Facility as of June 30, 2020. However, any continued increase in unrealized depreciation of our investment portfolio or further significant reductions in our net asset value, as a result of the effects of the COVID-19 pandemic or otherwise, increases the risk of breaching the relevant covenants. As such, we may run into liquidity issues in the future if we are unable to draw on the unused borrowing capacity under our Credit Facility due the breach of financial covenants.
We will continue to monitor the rapidly evolving situation surrounding the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities, and may take further actions based on their recommendations. There may be developments outside our control requiring us to adjust our plans accordingly. While we are closely monitoring this situation, we cannot predict the impact of COVID-19 on our future financial condition, results of operations or cash flows with any level of certainty. However, we expect that the COVID-19 pandemic will continue to have a material adverse impact on our future net investment income, the fair value of our portfolio investments, and the results of operations and financial condition of our portfolio companies. For information concerning the COVID-19 pandemic and its potential impact on our business and our operating results, see our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Part II - Other Information – Item 1A. Risk Factors” therein.
AVAILABLE INFORMATION
The Company makes available on its website its report on Form 10-Q filed with the SEC and stockholders may find the report on its website at www.pennantpark.com.
PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
| June 30, 2020 | September 30, 2019 | ||||||
| (unaudited) | |||||||
| Assets | |||||||
| Investments at fair value | |||||||
| Non-controlled, non-affiliated investments (cost—$956,767,973 and $886,955,156, respectively) | $ | 935,279,231 | $ | 889,113,264 | |||
| Non-controlled, affiliated investments (cost—$21,136,074 and $23,645,693, respectively) | 9,677,605 | 20,430,565 | |||||
| Controlled, affiliated investments (cost—$176,312,500 and $174,562,500, respectively) | 159,396,415 | 172,163,080 | |||||
| Total of investments (cost—$1,154,216,547 and $1,085,172,349, respectively) | 1,104,353,251 | 1,081,706,909 | |||||
| Cash and cash equivalents (cost—$53,473,103 and $63,367,237, respectively) | 53,405,925 | 63,337,728 | |||||
| Receivable for investments sold | 8,441,713 | 2,997,546 | |||||
| Interest receivable | 3,626,998 | 3,892,292 | |||||
| Distribution receivable from controlled, affiliated investment | 1,225,000 | — | |||||
| Prepaid expenses and other assets | 614,370 | 441,337 | |||||
| Total assets | 1,171,667,257 | 1,152,375,812 | |||||
| Liabilities | |||||||
| Distributions payable | 3,683,347 | 3,683,347 | |||||
| Payable for investments purchased | — | 12,033,794 | |||||
| Credit Facility payable, at fair value (cost—$351,598,500 and $265,307,500, respectively) | 340,926,080 | 263,988,583 | |||||
| 2023 Notes payable, at fair value (par—$138,579,858) | 121,853,269 | 135,240,084 | |||||
| 2031 Asset-Backed Debt, net (par—$228,000,000) | 224,708,624 | 224,321,845 | |||||
| Interest payable on debt | 2,644,746 | 3,275,481 | |||||
| Base management fee payable | 2,872,725 | 2,728,019 | |||||
| Performance-based incentive fee payable | 1,975,831 | 2,532,205 | |||||
| Accrued other expenses | 1,668,257 | 1,514,943 | |||||
| Total liabilities | 700,332,879 | 649,318,301 | |||||
| Commitments and contingencies | |||||||
| Net assets | |||||||
| Common stock, 38,772,074 shares issued and outstanding Par value $0.001 per share and 100,000,000 shares authorized | 38,772 | 38,772 | |||||
| Paid-in capital in excess of par value | 538,632,828 | 538,632,828 | |||||
| Distributable income | (67,337,222 | ) | (35,614,089 | ) | |||
| Total net assets | $ | 471,334,378 | $ | 503,057,511 | |||
| Total liabilities and net assets | $ | 1,171,667,257 | $ | 1,152,375,812 | |||
| Net asset value per share | $ | 12.16 | $ | 12.97 | |||
PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Investment income: | |||||||||||||||
| From non-controlled, non-affiliated investments: | |||||||||||||||
| Interest | $ | 17,543,157 | $ | 16,670,408 | $ | 56,760,434 | $ | 50,888,582 | |||||||
| Other income | 820,997 | 974,760 | 2,734,600 | 2,971,768 | |||||||||||
| From non-controlled, affiliated investments: | |||||||||||||||
| Interest | 195,904 | 305,217 | 655,029 | 1,082,208 | |||||||||||
| Other income | 36,170 | 109,863 | 36,170 | 124,734 | |||||||||||
| From controlled, affiliated investments: | |||||||||||||||
| Interest | 2,944,290 | 3,240,760 | 9,169,399 | 9,273,287 | |||||||||||
| Dividend | 1,225,000 | 1,575,000 | 4,375,000 | 4,725,000 | |||||||||||
| Total investment income | 22,765,518 | 22,876,008 | 73,730,632 | 69,065,579 | |||||||||||
| Expenses: | |||||||||||||||
| Base management fee | 2,872,725 | 2,564,074 | 8,651,825 | 7,481,546 | |||||||||||
| Performance-based incentive fee | 1,975,831 | 2,350,270 | 7,228,690 | 3,671,908 | |||||||||||
| Interest and expenses on debt | 6,653,045 | 5,663,183 | 21,586,859 | 16,284,841 | |||||||||||
| Administrative services expenses | 350,000 | 350,000 | 1,050,000 | 1,200,000 | |||||||||||
| Other general and administrative expenses | 616,077 | 616,077 | 1,848,230 | 1,848,229 | |||||||||||
| Expenses before amendment costs, debt issuance costs and provision for taxes: | 12,467,678 | 11,543,604 | 40,365,604 | 30,486,524 | |||||||||||
| Credit Facility amendment costs and debt issuance costs | — | — | — | 4,517,292 | |||||||||||
| Provision for taxes | 100,000 | — | 300,000 | — | |||||||||||
| Total expenses | 12,567,678 | 11,543,604 | 40,665,604 | 35,003,816 | |||||||||||
| Net investment income | 10,197,840 | 11,332,404 | 33,065,028 | 34,061,763 | |||||||||||
| Realized and unrealized gain (loss) on investments and debt: | |||||||||||||||
| Net realized loss on investments: | |||||||||||||||
| Non-controlled, non-affiliated investments | (1,694,710 | ) | (11,230,236 | ) | (2,281,683 | ) | (9,227,422 | ) | |||||||
| Non-controlled and controlled, affiliated investments | (5,683,145 | ) | (7,164,304 | ) | (5,683,145 | ) | (7,164,304 | ) | |||||||
| Net realized loss on investments | (7,377,855 | ) | (18,394,540 | ) | (7,964,828 | ) | (16,391,726 | ) | |||||||
| Net change in unrealized appreciation (depreciation) on: | |||||||||||||||
| Non-controlled, non-affiliated investments | 13,962,606 | 8,492,044 | (23,662,521 | ) | (9,292,141 | ) | |||||||||
| Controlled and non-controlled, affiliated investments | 7,931,471 | 3,444,481 | (22,751,006 | ) | (3,892,061 | ) | |||||||||
| Debt (appreciation) depreciation | (12,158,917 | ) | (355,573 | ) | 22,740,317 | (443,549 | ) | ||||||||
| Net change in unrealized appreciation (depreciation) on investments and debt | 9,735,160 | 11,580,952 | (23,673,210 | ) | (13,627,751 | ) | |||||||||
| Net realized and unrealized gain (loss) from investments and debt | 2,357,305 | (6,813,588 | ) | (31,638,038 | ) | (30,019,477 | ) | ||||||||
| Net increase in net assets resulting from operations | $ | 12,555,145 | $ | 4,518,816 | $ | 1,426,990 | $ | 4,042,286 | |||||||
| Net increase in net assets resulting from operations per common share | $ | 0.32 | $ | 0.12 | $ | 0.04 | $ | 0.10 | |||||||
| Net investment income per common share | $ | 0.26 | $ | 0.29 | $ | 0.85 | $ | 0.88 | |||||||
ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD.
PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market companies in the form of floating rate senior secured loans, including first lien secured debt, second lien secured debt and subordinated debt. From time to time, the Company may also invest in equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC.
ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC
PennantPark Investment Advisers, LLC is a leading middle market credit platform, which has approximately $3.6 billion of assets under management. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in New York and has offices in Chicago, Houston and Los Angeles.
FORWARD-LOOKING STATEMENTS
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance 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 filings with the Securities and Exchange Commission as well as changes in the economy and risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism, natural disasters or pandemics such as COVID-19. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.
We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.
| CONTACT: | Aviv Efrat | |
| PennantPark Floating Rate Capital Ltd. | ||
| (212) 905-1000 | ||
| www.pennantpark.com |