Press Release: Saratoga Investment Corp. to Report Second Quarter 2018 Financial Results and Hold Conference Call

NEW YORK, September 20, 2017 – Saratoga Investment Corp. (NYSE:SAR), a business development company, will report its financial results for the quarter ended August 31, 2017 on October 11, 2017, after market close. A conference call to discuss the financial results will be held on October 12, 2017. Details for the conference call are provided below.

Who:         

  • Christian L. Oberbeck, Chairman and Chief Executive Officer
  • Michael J. Grisius, President and Chief Investment Officer
  • Henri J. Steenkamp, Chief Financial Officer and Chief Compliance Officer

When:

Thursday, October 12, 2017

10:00 a.m. Eastern Time (ET)

How:         Call: Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada).

A replay of the call will be available from 1:00 p.m. ET on

Thursday, October 12, 2017 through 1:00 p.m. ET on Thursday, October 19, 2017 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 89176553.

Webcast: Interested parties may access a simultaneous webcast of the call and find the Q2 2018 presentation by going to the “Events & Presentations” section of Saratoga Investment Corp.’s investor relations website, http://www.saratogainvestmentcorp.com/investor.html

Information: Saratoga Investment Corp.’s Form 10-Q for the fiscal quarter ended August 31, 2017 will be filed on October 11, 2017 with the Securities and Exchange Commission.

 

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in mezzanine debt, senior and unitranche leveraged loans and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors. Saratoga Investment Corp.’s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments. Saratoga Investment Corp. has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies. Saratoga Investment Corp. owns an SBIC-licensed subsidiary and manages a $300 million Collateralized Loan Obligation (CLO) fund. It also owns 100% of the subordinated notes of the CLO. These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to provide a broad range of financing solutions.

Press Release: Saratoga Investment Corp. Increases Quarterly Dividend to $0.48 per Share

NEW YORK, August 28, 2017 – Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced that its Board of Directors has declared an increased quarterly dividend of $0.48 per share for the fiscal quarter ended August 31, 2017, payable on September 26, 2017, to all stockholders of record at the close of business on September 15, 2017.

This increase is the twelfth sequential increase to the Company’s quarterly dividends. It has continued to pay quarterly dividends regularly throughout fiscal year 2018, including $0.46 per share for the quarter ended February 28, 2017, and $0.47 per share for the quarter ended May 31, 2017. These steady increases follow total dividends of $1.98 per share for the fiscal period ending February 28, 2017, representing four quarters’ dividends and one special dividend.

“We continue to grow assets under management and improve credit quality which has allowed us to continue paying increased quarterly dividends,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “These positive dynamics are driven by an investment pipeline that remains robust despite a difficult market environment, an income yield that continues to grow, and the availability of liquidity and capital that is supportive of continued growth.”

Strong financial performance has enabled Saratoga Investment to increase regular quarterly dividends each quarter for the past twelve quarters from $0.18 per share for the third quarter of fiscal 2015 to $0.47 per share for the first quarter of fiscal 2018. Actual dividends paid in fiscal year 2017 were $0.43 per share for the quarter ended May 31, 2016, $0.44 per share for the 2 quarter ended August 31, 2016, $0.45 per share for the quarter ended November 30, 2016 and $0.46 per share for the quarter ended February 28, 2017. In addition, Saratoga Investment paid a special dividend of $0.20 per share on September 5, 2016.

Shareholders will have the option to receive payment of the dividend in cash, or receive shares of common stock pursuant to the Company’s dividend reinvestment plan (“DRIP”). Saratoga Investment shareholders who hold their shares with a broker must affirmatively instruct their brokers prior to the record date if they prefer to receive this dividend and future dividends in common stock. The number of shares of Common Stock to be delivered shall be determined by dividing the total dollar amount by 95% of the average of the market prices per share at the close of trading on the ten (10) trading days immediately preceding (and including) the payment date.

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in mezzanine debt, senior and unitranche leveraged loans and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors. Saratoga Investment Corp.’s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments. Saratoga Investment Corp. has elected to be regulated as a business development company under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies. Saratoga Investment Corp. owns an SBIC-licensed subsidiary and manages a $300 million collateralized loan obligation (“CLO”) fund. It also owns 100% of the subordinated notes of the CLO. These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to provide a broad range of financing solutions.

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press 3 release and the filings Saratoga Investment Corp. makes with the SEC. Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Christian Oberbeck and Saratoga Investment Corporation on Wall Street Week

 

Chris Oberbeck discusses potential recession, Saratoga Investment Corporation seeing substantial BDC asset growth, and “if stocks are the place to be” with Maria Bartiromo on Fox Business News’ “Wall Street Week.”

She begins: “Most analysts argue it is too early to raise recession red flags over these slowdowns, as booming markets and strong corporate earnings are still making it easy to raise capital. Joining us right now is Chris Oberbeck, he is the CEO of Saratgoa Investment Corporation, a publicly-traded Business Development Corporation. (Commonly referred to as a BDC)”

Chris Oberbeck is the Chairman and Chief Executive Officer at Saratoga Investment Corp., a publicly traded business development company. Mr. Oberbeck brings over 25 years of experience in leveraged finance, from distressed debt to private equity, to his position. Learn more at chrisoberbeck.com

Saratoga Investment’s (SAR) CEO Christian Oberbeck on Q1 2018 Results – Earnings Call Transcript

Q1: 07-09-17 Earnings Summary
EPS of $0.5 beats by $0.03
Revenue of $8.7M (+ 10.0% Y/Y) beats by $0.34M

Saratoga Investment Corp (NYSE:SAR)

Q1 2018 Earnings Conference Call

July 13, 2017 10:00 ET

Executives

Henri Steenkamp – Chief Financial and Compliance Officer

Christian Oberbeck – Chairman and Chief Executive Officer

Michael Grisius – President and Chief Investment Officer

Analysts

Casey Alexander – Compass Point Research

Mickey Schleien – Ladenburg

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investment Corp.’s Fiscal First Quarter 2018 Financial Results Conference Call. Please note that today’s call is being recorded. During today’s presentation, all parties will be in a listen-only mode. Following the management’s prepared remark, we will open the line for questions.

At this time, I would like to turn the call over to Saratoga Investment Corp.’s Chief Financial and Compliance Officer, Mr. Henri Steenkamp. Sir, please go ahead.

Henri Steenkamp

Thank you. I would like to welcome everyone to Saratoga Investment Corp.’s fiscal first quarter 2018 earnings conference call. Today’s conference call includes forward-looking statements and projections. We ask you to refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. We do not undertake to update our forward-looking statements unless required to do so by law.

Today, we will be referencing a presentation during our call. You can find our fiscal first quarter 2018 shareholder presentation in the Events & Presentations section of our Investor Relations website. A link to our IR page is in the earnings press release distributed last night. A replay of this conference call will be available from 1 p.m. today through July 20. Please refer to our earnings press release for details.

I would now like to turn the call over to our Chairman and Chief Executive Officer, Christian Oberbeck, who will be making a few introductory remarks.

Christian Oberbeck

Thank you, Henri and welcome everyone. Most recent fiscal quarter reflects the continued success of our efforts and activities in pursuit of credit quality, growth and earnings. In addition, we have continued to strengthen our capital structure to further expand and enhance our capabilities. The completion of which will now benefit us for many years. Saratoga Investment is risen to and continues at the top of the industry in terms of key performance indicators and in many categories far outpaces our competitors. Importantly, we have accomplished this in a highly competitive and challenging market environment. We continue to progress towards our long-term objective of increasing the quality and size of our asset base with the ultimate purpose of building Saratoga Investment Corp. into a best-in-class BDC generating meaningful and consistent returns for our shareholders.

Slide 2 highlights our continued progress and achievements during the past quarter. To briefly recap, first, we continued the strengthening of our financial foundation this year by maintaining a high level of investment credit quality, with 96.3% of our loan investments having our highest rating, up from 94.1% last quarter generating return on equity of 7.1% on a trailing 12-month basis. Excluding our legacy investments in Targus Group International and Elyria Foundry Company LLC that predates Saratoga’s management of the BDC as well as the various impacts related to the extinguishment of our 2020 baby bonds.

Our return on equity for this last 12-month period ended May 31, 2017 was 7.9%. This LTM ROE is net of a $5.3 million unrealized loss on our My Alarm Center investment, which we will discuss later in the call. Total unrealized losses on the whole portfolio for Q1 was $2.6 million reflecting the fact that the remainder of the portfolio had a $2.7 million unrealized gain in Q1 and we maintained a gross unlevered IRR of 12.2% on our total unrealized portfolio, with gross unlevered IRR increasing to 16.2% on total realizations of $210 million.

Saratoga Investment Corp. Increases Quarterly Dividend to $0.47 per Share

NEW YORKMay 30, 2017 /PRNewswire/ — Saratoga Investment Corp. (NYSE: SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced that its Board of Directors has declared an increased quarterly dividend of $0.47 per share for the fiscal quarter ended May 31, 2017, payable on June 27, 2017 to all stockholders of record at the close of business on June 15, 2017.

This increase is the eleventh sequential increase to the Company’s quarterly dividends and follows total dividends of $1.98 per share for the fiscal period ending February 28, 2017, representing four quarters’ dividends and one special dividend.

“The combination of growth in assets under management and strong credit quality allows us to continue to pay an increasing and healthy quarterly dividend,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “At the same time, we continue to over-earn our dividend due to an investment pipeline that continues to be productive in a difficult market environment, a growing income yield generated from our prudently increasing high quality portfolio, and levels of available liquidity and capital resources supporting continued growth.”

Strong financial performance has enabled Saratoga Investment to increase regular quarterly dividends each quarter for the past eleven quarters from $0.18 per share for the third quarter of fiscal 2015 to $0.47 per share for the first quarter of fiscal 2018. Actual dividends paid in fiscal year 2017 were $0.43 per share for the quarter ended May 31, 2016$0.44 per share for the quarter ended August 31, 2016$0.45 per share for the quarter ended November 30, 2016 and $0.46 per share for the quarter ended February 28, 2017. In addition, Saratoga Investment paid a special dividend of $0.20 per share on September 5, 2016.

Shareholders will have the option to receive payment of the dividend in cash, or receive shares of common stock pursuant to the Company’s dividend reinvestment plan (“DRIP”). Saratoga Investment shareholders who hold their shares with a broker must affirmatively instruct their brokers prior to the record date if they prefer to receive this dividend and future dividends in common stock.  The number of shares of Common Stock to be delivered shall be determined by dividing the total dollar amount by 95% of the average of the market prices per share at the close of trading on the ten (10) trading days immediately preceding (and including) the payment date.

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses.  The Company invests primarily in mezzanine debt, senior and unitranche leveraged loans and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors.  Saratoga Investment Corp.’s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.  Saratoga Investment Corp. has elected to be regulated as a business development company under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies.  Saratoga Investment Corp. owns an SBIC-licensed subsidiary and manages a $300 million collateralized loan obligation (“CLO”) fund.  It also owns 100% of the subordinated notes of the CLO.  These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to provide a broad range of financing solutions.

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment Corp. makes with the SEC. Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Reuters Brief: Saratoga Investment entered into third amendment to senior secured revolving credit facility

BRIEF-Saratoga Investment entered into third amendment to senior secured revolving credit facility

May 18 Saratoga Investment Corp

* Saratoga Investment Corp says on May 18, 2017 entered into third amendment to senior secured revolving credit facility with Madison Capital Funding Llc

* Saratoga Investment Corp says amendment to extend commitment termination date from September 17, 2017 to September 17, 2020- SEC filing

* Saratoga Investment Corp – amendment to extend final maturity date of credit facility from September 17, 2022 to September 17, 2025

* Saratoga Investment Corp – amendment to reduce floor on base rate borrowings from 2.25% to 2.0%, reduce floor on LIBOR borrowings from 1.25% to 1.00% Source text for Eikon: (bit.ly/2qBNUQG) Further company coverage:

Saratoga Investment Corp. Announces Fiscal Year End and Fourth Quarter 2017 Financial Results

NEW YORK, May 16, 2017 /PRNewswire/ — Saratoga Investment Corp. (NYSE: SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced financial results for its 2017 fiscal year end and fourth quarter.

Summary Financial Information

The Company’s summarized financial information is as follows:

 

For the year

ended and as of

February 28, 2017

For the year

ended and as of

February 29, 2016

($ in thousands except per share)

AUM

292,661

283,996

NAV

127,295

125,150

Investment Income

33,157

30,051

Net Investment Income per share

1.68

1.91

Adjusted Net Investment Income per share

2.01

1.90

Earnings per share

1.98

2.09

Return on Equity – last twelve months

9.0%

9.4%

For the quarter

ended February

28, 2017

For the quarter

ended November

30, 2016

For the quarter

ended February

29, 2016

($ in thousands except per share)

AUM

292,661

277,570

283,996

NAV

127,295

127,680

125,150

Investment Income

8,358

8,442

7,795

Net Investment Income per share

0.19

0.60

0.54

Adjusted Net Investment Income per share

0.49

0.53

0.45

Earnings per share

0.22

0.27

(0.07)

Return on Equity – last twelve months

9.0%

7.7%

9.4%

 

“In fiscal year 2017 we maintained our focus on expanding assets under management, maintaining our strong investment quality, broadening our investor base, diversifying sources of low-cost liquidity and increasing our pipeline of available deal sources,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “We achieved market-leading results. In fiscal year 2017, we continued to increase our quarterly dividend by 12% while increasing it every quarter, paying a total of $1.93 per share through a special dividend and our regular quarterly dividends. Our investments in our business development and origination team enabled us to keep apace of heavy redemptions, putting a record $127 million in new capital to work. AUM and NAV continue to grow. Total shareholder return for the most recent twelve months is almost 50%, and we remain at the top of the BDC space in terms of total return performance, both short- and long-term. In addition, we are well structured for a potential higher interest rate environment, with over 80% of our investments having floating rate interest rates and all of our currently outstanding debt fixed-rate and long-term. This has been another strong year for Saratoga Investment, and we are extremely pleased with the strong and leading risk-adjusted investment performance we have delivered for our shareholders.”

Michael J. Grisius, President and Chief Investment Officer, added, “During fiscal year 2017, the steady expansion of our asset base continued, with a year-on-year increase in our investments at fair value of 3%, and a 208% increase since 2012. Despite a market environment defined by reduced transaction volumes and high levels of repayments, we were able to review an increased amount of deal opportunities and deploy capital at a pace sufficient to grow AUM. Furthermore, we were able to do so generally at multiples below the market average. We continue to see demand for financing in the markets we serve and believe that our investments in new business development and origination capabilities will result in a continued robust and productive pipeline.”

As of February 28, 2017, Saratoga Investment increased its assets under management (“AUM”) to $292.7 million, an increase of 3.1% from $284.0 million as of February 29, 2016, and an increase of 5.4% from $277.5 million as of November 30, 2016. This increase reflects the record originations of $126.9 million new investments during the year ended February 28, 2017, offset by significant repayments of $121.2 million during fiscal year 2017, generating a gross unlevered IRR of 17.0% for the fiscal year. These investments and repayments for the year are inclusive of the $41.1 million in originations and $26.5 million in repayments during the quarter ended February 28, 2017. Saratoga Investment’s portfolio has continued to grow this quarter and remains strong, with a continued high level of investment quality in loan investments with 94.1% of our loans at our highest internal rating for this quarter.

As a result, both the year and quarter ended February 28, 2017 benefitted from higher investment income as compared to the prior period – investment income increased to $33.2 million for the year ended February 28, 2017, up 10.3% from $30.1 million for the year ended February 29, 2016, and up to $8.4 million from $7.8 million for the same quarterly periods, a 7.2% increase. This increased investment income was generated from an investment base that has grown by 3.1% since last year, resulting in both higher interest income and other income. The investment income increase was offset by (i) increased debt and financing expenses from higher outstanding Notes payable and SBA debentures this year reflective of the growing investment and asset base, (ii) increased base and incentive management fees generated from the management of this larger pool of investments, and (iii) increased total expenses, excluding interest and debt financing expenses, base management fees and incentive fees, reflecting higher administrator and deal research fees.

Net investment income on a weighted average per share basis was $1.68 and $0.19 for the year and quarter ended February 28, 2017, respectively. Adjusted for (i) the incentive fee accrual related to net unrealized capital gains, (ii) the loss on extinguishment of our 2020 notes, and (iii) the interest on the 2020 notes during the call notice period while the 2023 notes were already issued and outstanding, the net investment income on a weighted average per share basis was $2.01 and $0.49, respectively. This compares to adjusted net investment income per share of $1.90 and $0.45 for the year and quarter ended February 29, 2016, reflecting an increase of 5.8% and 8.9%, respectively.

Net investment income yield as percentage of average net asset value (“Net Investment Income Yield”) was 7.6% and 3.5% for the year and quarter ended February 28, 2017, respectively. Adjusted for (i) the incentive fee accrual related to net unrealized capital gains, (ii) the loss on extinguishment of our 2020 notes, and (iii) the interest on the 2020 notes during the call notice period while the 2023 notes were already issued and outstanding, the Net Investment Income Yield was 9.1% and 8.8%, respectively. In comparison, Net Investment Income Yield was 8.6% and 9.8% for the year and quarter ended February 29, 2016, respectively. Adjusted Net Investment Income Yield was 8.6% and 8.0% for the year and quarter ended February 29, 2016, respectively.

Net Asset Value (“NAV”) increased $2.1 million from $125.1 million as of February 29, 2016 to $127.3 million as of February 28, 2017.

  • For the twelve months ended February 28, 2017$11.1 million of dividends were declared, while $11.4 million was earned ($9.7 million of net investment income and $1.7 million of net realized and unrealized gains). There were also $5.1 million of stock dividend distributions made through the Company’s dividend reinvestment plan (“DRIP”), representing four quarters’ dividend payments and one special dividend; these issuances were partially offset by $3.3 million in share repurchases.

NAV per share was $21.97 as of February 28, 2017, compared to $22.06 as of February 29, 2016 and $22.21 as of November 30, 2017.

  • The decrease in NAV per share includes the $1.5 million, or $0.25 per share loss associated with the extinguishment of our 2020 notes.
  • During these twelve months, NAV per share decreased by $0.09 per share, primarily reflecting the $0.3 million, or $0.06 per share increase in net assets (net of the $1.93 dividend paid during fiscal year 2017), offset by the dilutive impact of the 122,373 shares issued during the year. These shares consisted of 315,447 shares issued pursuant to the DRIP, representing four quarters’ dividend payments and a special dividend, offset by 193,074 shares that were shares repurchased during the year.

Return on equity for the year and quarter ended February 28, 2017 was 9.0% and 3.9%, respectively, compared to 9.4% and -1.3% for the comparable periods last year.

  • Excluding the $1.6 million realized and unrealized losses on our legacy investments in Targus Group International (“Targus”) and Elyria Foundry Company, LLC (“Elyria”) over the past twelve months, as well as the loss associated with the extinguishment of our 2020 notes and the interest on the 2020 notes during the call notice period, the return on equity for the last twelve months ended February 28, 2017 was 11.3%. Both Targus and Elyria are legacy investments that pre-date Saratoga’s management of the Company.

Earnings per share for the year and quarter ended February 28, 2017 was $1.98 (including $1.7 million net gain on investments) and $0.22 (including $0.2 million net gain on investments), respectively, compared to earnings per share of $2.09 and loss per share of $(0.07) for the year and quarter ended February 29, 2016, respectively.

Investment portfolio activity for the year ended February 28, 2017

  • Cost of investments made during the period: $126.9 million
  • Principal repayments during the period: $121.2 million

Investment portfolio activity for the quarter ended February 28, 2017

  • Cost of investments made during the period: $41.1 million
  • Principal repayments during the period: $26.5 million

Additional Financial Information

For the fiscal year ended February 28, 2017, Saratoga Investment reported net investment income of $9.7 million, or $1.68 on a weighted average per share basis, and a net gain on investments of $1.7 million, or $0.30 on a weighted average per share basis, resulting in a net increase in net assets from operations of $11.4 million, or $1.98 on a weighted average per share basis. Net investment income reflected a one-time $1.5 million loss associated with the extinguishment of Saratoga Investment’s 2020 notes. The $1.7 million net gain on investments was comprised largely of $12.4 million in net realized gain on investments offset by $10.6 million in net unrealized depreciation on investments. The net realized gains primarily relate to realized gains on our investments in Take 5 Oil Change, LLC and Legacy Cabinets, Inc during the year. The net unrealized loss was due primarily to (i) $9.8 million change in unrealized depreciation related to these two realizations, with unrealized appreciation being adjusted to zero resulting in a change in unrealized depreciation for the year, and (ii) $1.6 million unrealized depreciation in our legacy Elyria investment. This compared to the fiscal year ended February 29, 2016 with net investment income of $10.7 million, or $1.91 on a weighted average per share basis, and a net gain on investments of $1.0 million, or $0.17 on a weighted average per share basis, resulting in a net increase in net assets from operations of $11.6 million, or $2.09 on a weighted average per share basis. The $1.0 million net gain on investments consisted of $0.2 million in net realized gains on investments and $0.7 million unrealized depreciation.

Adjusted for (i) the incentive fee accrual related to net unrealized capital gains, (ii) the loss on extinguishment of our 2020 notes, and (iii) the interest on the 2020 notes during the call notice period while the 2023 notes were already issued and outstanding, the net investment income was $11.5 million and $10.6 million for the years ended February 28, 2017 and February 29, 2016, respectively – this is an increase of $0.9 million year-over-year, or 8.3%.

For the quarter ended February 28, 2017, Saratoga Investment reported net investment income of $1.1 million, or $0.19 on a weighted average per share basis, and a net gain on investments of $0.2 million, or $0.03 on a weighted average per share basis, resulting in a net increase in net assets from operations of $1.3 million, or $0.22 on a weighted average per share basis. The $0.2 million net gain on investments was largely comprised of $0.09 million in net unrealized appreciation on investments offset by $0.07 million in net realized losses. This compared to the quarter ended February 29, 2016 with net investment income of $3.1 million, or $0.54 on a weighted average per share basis, and a net loss on investments of $3.5 million, or $0.62 on a weighted average per share basis, resulting in a net decrease in net assets from operations of $0.4 million, or $0.07 on a weighted average per share basis. The $3.5 million net loss on investments consisted of $4.0 million in net realized losses, offset by $0.5 million in net unrealized appreciation on investments.

Adjusted for (i) the incentive fee accrual related to net unrealized capital gains, (ii) the loss on extinguishment of our 2020 notes, and (iii) the interest on the 2020 notes during the call notice period while the 2023 notes were already issued and outstanding, the net investment income was $2.8 million and $2.5 million for the quarters ended February 28, 2017 and February 29, 2016, respectively – this is an increase of $0.3 million year-over-year, or 10.6%.

Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, increased from $4.2 million for the year ended February 29, 2016 to $4.3 million for the year ended February 28, 2017, remaining consistent at 1.4% of average total assets for both years. For the quarters ended February 28, 2017 and February 29, 2016, these total expenses decreased from $1.25 million to $1.16 million.

Portfolio and Investment Activity

As of February 28, 2017, the fair value of Saratoga Investment’s portfolio was $292.7 million (excluding $22.1 million in cash and cash equivalents), principally invested in 28 portfolio companies and one collateralized loan obligation fund (“CLO”). The overall portfolio composition consisted of 54.3% of first lien term loans, 30.0% of second lien term loans, 5.3% of subordinated notes in a CLO, 3.4% of syndicated loans, and 7.0% of common equity.

For the fiscal year ended February 28, 2017, Saratoga Investment invested $126.9 million in new or existing portfolio companies and had $121.2 million in aggregate amount of exits and repayments, resulting in net investments of $5.7 million for the year.  For the quarter ended February 28, 2017, Saratoga Investment invested $41.1 million in new or existing portfolio companies, and had $26.5 million in aggregate amount of exits and repayments, resulting in net investments of $14.6 million for the quarter.

As of February 28, 2017, the weighted average current yield on Saratoga Investment’s portfolio for the twelve months ended was 10.8%, which was comprised of a weighted average current yield of 10.5% on first lien term loans, 11.7% on second lien term loans, 12.7% on CLO subordinated notes, and 5.3% on syndicated loans.

As of February 28, 2017, 83.1% of Saratoga Investment’s portfolio is in floating rate debt, with many of these investments having floors. For most of these investments, the relevant 1-month or 3-month LIBOR rate is currently above the floors. Saratoga Investment has analyzed the potential impact of changes in interest rates on interest income from investments, and assuming that the investments as of February 28, 2017 were to remain constant for a full fiscal year and no actions were taken to alter the existing interest rate terms, a hypothetical change of 1.0% in interest rates would cause a corresponding increase of approximately $2.2 million to interest income.

Portfolio Update:

During the quarter ended February 28, 2017, Saratoga Investment increased its first lien investment in Easy Ice, LLC to $26.7 million to facilitate a change of control transaction at the company. Concurrent with this transaction, it also invested $8.0 million in a significant preferred equity position. As part of a further recapitalization that is currently in advanced stages, there is expected to be a repayment of a significant portion of the first lien investment in the near term.

Liquidity and Capital Resources

As of February 28, 2017, Saratoga Investment had $0.0 million in outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC. At the same time, Saratoga Investment had $112.7 million outstanding of SBA debentures, $74.5 million of Baby Bonds (fair value of $77.1 million) and an aggregate of $22.1 million in cash and cash equivalents.

With the $45.0 million credit facility and the $37.3 million additional borrowing capacity at the SBIC subsidiary, as well as the $22.1 million of cash and cash equivalents, Saratoga Investment has a total of $104.4 million of undrawn borrowing capacity and cash and cash equivalents available as of February 28, 2017. The proceeds from the DRIP totaled $5.1 million of equity investments in fiscal year 2017. Saratoga Investment also has the ability to issue additional baby bonds through the existing shelf registration statement.

On December 21, 2016, the Company issued $74.5 million in aggregate principal amount of our 6.75% fixed-rate notes due 2023 (the “2023 Notes”) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance included the exercise of substantially all of the underwriters’ option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15June 15September 15 and December 15, at a rate of 6.75% per year, beginning March 30, 2017. The 2023 Notes mature on December 30, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes, which amounts to $61.8 million, and for general corporate purposes in accordance with Saratoga Investment’s investment objective and strategies. The 2023 Notes are listed on the NYSE under the trading symbol “SAB” with a par value of $25.00 per share.

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which Saratoga may offer for sale, from time to time, up to $30.0 million of its common stock through an ATM offering. As of May 15, 2017, the Company sold 60,679 shares for gross proceeds of $1.4 million at an average price of $22.49 for aggregate net proceeds of $1.3 million (net of transaction costs).

Share Repurchase Plan

In fiscal year 2015, the Company announced the approval of an open market share repurchase plan that allows it to repurchase up to 200,000 shares of its common stock at prices below its NAV as reported in its then most recently published financial statements. During fiscal year 2017, this share repurchase plan was extended for another year, through October 2017, and increased to 600,000 of common stock.

As of February 28, 2017, we purchased 218,491 shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan.

Dividend

During fiscal year 2017, Saratoga Investment declared and paid dividends of $1.93 per share, composed of $0.41 for the quarter ended February 29, 2016$0.43 per share for the quarter ended May 31, 2016$0.44 per share for the quarter ended August 31, 2016$0.45 per share for the quarter ended November 30, 2016, and a special dividend of $0.20 per share in the second quarter of fiscal year 2017. In addition, on February 28, 2017, Saratoga Investment announced a dividend of $0.46 per share for the fiscal quarter ended February 28, 2017, paid on March 28, 2017 to all stockholders of record at the close of business on March 15, 2017.

2017 Fiscal Year End and Fourth Quarter Conference Call/Webcast Information

When:             Wednesday, May 17, 201710:00 a.m. Eastern Time (ET)

Call:                Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada).

A replay of the call will be available from 1:00 p.m. ET on Wednesday, May 17, 2017 through 1:00 p.m. ET on Wednesday, May 24, 2017 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 11205097.

Webcast:        Interested parties may access a simultaneous webcast of the call and find the FY2017 presentation by going to the “Events & Presentations” section of Saratoga Investment’s investor relations website, http://www.saratogainvestmentcorp.com/investor.html

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses.  The Company invests primarily in senior and unitranche leveraged loans, mezzanine debt, and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors.  Saratoga Investment Corp.’s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.  Saratoga Investment Corp. has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies.  Saratoga Investment Corp. owns an SBIC-licensed subsidiary and manages a $300 million Collateralized Loan Obligation (CLO) fund.  It also owns 100% of the subordinated notes of the CLO.  These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to provide a broad range of financing solutions.

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment Corp. makes with the SEC.  Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Financials

 

 

 

Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities

 As of  

February 28, 2017

February 29, 2016

ASSETS

Investments at fair value

Non-control/Non-affiliate investments (amortized cost of $251,198,896 and $268,145,090, respectively)

$            242,531,514

$           271,168,186

Control investments (cost of $49,283,536 and $13,030,751, respectively)

50,129,799

12,827,980

Total investments at fair value (amortized cost of $300,482,432 and $281,175,841, respectively)

292,661,313

283,996,166

Cash and cash equivalents

9,306,543

2,440,277

Cash and cash equivalents, reserve accounts

12,781,425

4,594,506

Interest receivable (net of reserve of $157,560 and $728,519, respectively)

3,294,450

3,195,919

Management fee receivable

171,106

170,016

Other assets

183,346

350,368

Receivable from unsettled trades

253,041

300,000

Total assets

$            318,651,224

$           295,047,252

LIABILITIES

Revolving credit facility

$                               -

$                             -

Deferred debt financing costs, revolving credit facility

(437,183)

(515,906)

SBA debentures payable

112,660,000

103,660,000

Deferred debt financing costs, SBA debentures payable

(2,508,280)

(2,493,303)

Notes payable

74,450,500

61,793,125

Deferred debt financing costs, notes payable

(2,689,511)

(1,694,586)

Dividend payable

-

875,599

Base management and incentive fees payable

5,814,692

5,593,956

Accounts payable and accrued expenses

852,987

855,873

Interest and debt fees payable

2,764,237

1,552,069

Payable for repurchases of common stock

-

20,957

Directors fees payable

51,500

31,500

Due to manager

397,505

218,093

Total liabilities

$            191,356,447

$           169,897,377

NET ASSETS

Common stock, par value $.001, 100,000,000 common shares

authorized, 5,794,600 and 5,672,227 common shares issued and outstanding, respectively

$                       5,795

$                      5,672

Capital in excess of par value

190,483,931

188,714,329

Distribution in excess of net investment income

(27,737,348)

(26,217,902)

Accumulated net realized loss from investments and derivatives

(27,636,482)

(40,172,549)

Accumulated net unrealized appreciation (depreciation) on investments and derivatives

(7,821,119)

2,820,325

Total net assets

127,294,777

125,149,875

Total liabilities and net assets

$            318,651,224

$           295,047,252

NET ASSET VALUE PER SHARE

$                       21.97

$                      22.06

Asset Coverage Ratio

271.0%

302.5%

 

 

Saratoga Investment Corp.

Consolidated Statements of Operations

For the year ended
February 28, 2017

For the year ended
February 29, 2016

For the year ended
February 28, 2015

INVESTMENT INCOME

Interest from investments

Non-control/Non-affiliate investments

$                  26,413,986

$                23,165,823

$                      20,790,324

Payment-in-kind interest income from Non-control/Non-affiliate investments

652,847

1,039,398

1,186,657

Control investments

2,281,397

2,665,648

2,707,230

     Total interest income

29,348,230

26,870,869

24,684,211

Interest from cash and cash equivalents

31,151

5,420

3,801

Management fee income

1,499,001

1,494,779

1,520,205

Other income

2,278,770

1,679,602

1,167,144

Total investment income

33,157,152

30,050,670

27,375,361

OPERATING EXPENSES

Interest and debt financing expenses

9,888,127

8,456,467

7,375,022

Base management fees

4,898,657

4,528,589

4,156,955

Professional fees

1,243,400

1,336,214

1,301,713

Administrator expenses

1,366,667

1,175,000

1,000,000

Incentive management fees

2,947,543

2,232,188

2,547,773

Insurance

275,787

330,867

337,335

Directors fees and expenses

235,422

204,000

210,761

General & administrative

1,121,594

995,205

478,299

Excise tax expense 

44,770

113,808

293,653

Other expense

19,780

-

-

Total operating expenses

22,041,747

19,372,338

17,701,511

Loss on extinguishment of debt

1,454,595

-

-

NET INVESTMENT INCOME

9,660,810

10,678,332

9,673,850

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain from investments

12,368,115

226,252

3,276,450

Net unrealized appreciation (depreciation) on investments

(10,641,444)

740,974

(1,942,936)

Net gain on investments

1,726,671

967,226

1,333,514

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$                  11,387,481

$                11,645,558

$                      11,007,364

WEIGHTED AVERAGE – BASIC AND DILUTED EARNINGS PER COMMON SHARE

$                             1.98

$                           2.09

$                                 2.04

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

5,740,450

5,582,453

5,385,049

 

 

Saratoga Investment Corp.

Consolidated Statements of Operations

For the three

months ended 

February 28, 2017

For the three

months ended

February 29, 2016

INVESTMENT INCOME

Interest from investments

Non-control/Non-affiliate investments

$            6,444,137

$          6,204,079

Payment-in-kind interest income from Non-control/Non-affiliate investments

170,160

43,933

Control investments

693,472

645,347

     Total interest income

7,307,769

6,893,359

Interest from cash and cash equivalents

14,725

2,646

Management fee income

375,442

373,493

Other income

660,532

525,764

Total investment income

8,358,468

7,795,262

OPERATING EXPENSES

Interest and debt financing expenses

2,781,258

2,215,521

Base management fees

1,248,790

1,161,850

Professional fees

251,677

305,598

Administrator expenses

375,000

325,000

Incentive management fees

616,302

71,416

Insurance

65,486

70,972

Directors fees and expenses

43,000

51,000

General & administrative

379,851

256,961

Excise tax expense 

44,770

237,146

Other expense

(1,867)

-

Total operating expenses

5,804,267

4,695,464

Loss on extinguishment of debt

1,454,595

NET INVESTMENT INCOME

1,099,606

3,099,798

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain from investments

68,216

(4,004,754)

Net realized loss from derivatives

-

-

Net unrealized appreciation (depreciation) on investments

86,678

501,620

Net unrealized appreciation on derivatives

-

-

Net gain on investments

154,894

(3,503,134)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$            1,254,500

$           (403,336)

WEIGHTED AVERAGE – BASIC AND DILUTED EARNINGS PER COMMON SHARE

$                     0.22

$                 (0.07)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

5,755,750

5,688,697

Supplemental Information Regarding Adjusted Net Investment Income, Adjusted Net Investment Income Yield and Adjusted Net Investment Income per share

On a supplemental basis, we provide information relating to adjusted net investment income, adjusted net investment income yield and adjusted net investment income per share, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, net investment income, net investment income yield and net investment income per share. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or reversal attributable to unrealized gains. The management agreement with our advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses for such year. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income, adjusted net investment income yield and adjusted net income per share is a useful indicator of operations exclusive of any capital gains incentive fee expense or reversal attributable to unrealized gains. In addition, adjusted net investment income also excludes the loss on extinguishment of our 2020 notes, and the interest expense related to the 2020 notes during the call notice period while the 2023 notes were already issued and outstanding. Both these expenses are directly attributable to the issuance of the 2023 notes and the subsequent repayment of the 2020 notes, and are deemed to be non-recurring in nature and not representative of the operations of Saratoga Investment. 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. The following table provides a reconciliation of net investment income to adjusted net investment income, net investment income yield to adjusted net investment income yield and net investment income per share to adjusted net investment income per share for the year and quarter ended February 28, 2017 and February 29, 2016.

 

 

 

For the three months ended

February 28 and 29

For the years ended

February 28 and 29

2017

2016

2017

2016

Net Investment Income

$       1,099,606

$   3,099,798

$ 9,660,810

$  10,678,332

Changes in accrued capital gains incentive fee expense/reversal

(18,053)

(563,081)

133,937

(45,777)

Loss on extinguishment of debt

1,454,595

-

1,454,595

-

Interest on 2020 notes during call period(3)

268,895

-

268,895

-

Adjusted net investment income

2,805,043

2,536,717

11,518,237

10,632,555

Net investment income yield

3.5%

9.8%

7.6%

8.6%

Changes in accrued capital gains incentive fee expense/reversal

(0.1%)

(1.8%)

0.1%

0.0%

Loss on extinguishment of debt

4.6%

-

1.2%

-

Interest on 2020 notes during call period(3)

0.8%

-

0.2%

-

Adjusted net investment income yield (1)

8.8%

8.0%

9.1%

8.6%

For the three months ended

February 28 and 29

For the year ended

February 28 and 29

2017

2016

2017

2016

Net investment income per share

$ 0.19

$ 0.54

$ 1.68

$ 1.91

Changes in accrued capital gains incentive fee expense/reversal

(0.0)

(0.09)

0.03

( 0.01)

Loss on extinguishment of debt

0.25

-

0.25

-

Interest on 2020 notes during call period(3)

0.05

-

0.05

-

Adjusted net investment income per share (2)

$ 0.49

$ 0.45

$ 2.01

$ 1.90

 

(1)   Adjusted net investment income is calculated as adjusted net investment income divided by average net asset value.

(2)   Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.

(3)   Interest on 2020 notes during call period is presented net of the incentive fee accrual

SOURCE Saratoga Investment Corp.

Related Links

http://www.saratogainvestmentcorp.com

 

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that invests primarily in leveraged loans and mezzanine debt issued by privately owned U.S. middle-market businesses, which the Company defines as companies having annual EBITDA (earnings before interest, taxes, depreciation and amortization) of between $5 million and $50 million, both through direct lending and through participation in loan syndicates. Saratoga Investment Corp.’s objective is to generate current income and, to a lesser extent, capital appreciation from our investments. Saratoga Investment Corp. has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, a New York-based investment firm affiliated with Saratoga Partners, a middle market private equity investment firm. Within the BDC, Saratoga Investment Corporation manages both an SBIC-licensed subsidiary and a Collateralized Loan Obligation (CLO) fund. The Company believes these diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to offer a broad range of financing solutions.

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.

Four Closed-End Funds to Feel Good About Even if Rates Rise

Four Closed-End Funds to Feel Good About Even if Rates Rise

Don’t let fears of a Federal Reserve rate hike scare you away from these four promising closed-end funds

The Street’s Gregg Greenberg spoke with special guest and nationally recognized closed-end fund expert John Cole Scott about four closed-end funds that are poised to do well even if rates rise. See John discuss the MFS High Income Municipal Trust (CXE), the Calamos Global Dynamic Income Fund (CHW), The Cushing MLP Total Return Fund (SRV) and the Saratoga Investment Corp. (SAR).

Watch full video on TheStreet.  


Will highly leveraged closed-end funds (CEF) be slammed by a December interest rate hike?

“A rate hike will likely impact highly leveraged closed-end funds in the short run, however the lower for longer environment will make them attractive over the long term,” said said John Cole Scott, chief investment officers at Closed-End Fund Advisors.

 One of Scott’s current favorite closed-end funds is the MFS High Income Municipal Trust (CXE) . The muni CEF trades at a 4% discount to its net asset value and currently sports a yield of 5.5%. The three year average discount for the CXE is 8.7%. Leverage in the fund is 36% and it has a duration of 7.2, which is low for funds in this category.

“The CXE is a good equity hedge in an uncertain market environment and the tax-equivalent yield of around 9% is hard to beat,” said Scott.

Scott is also recommending the Calamos Global Dynamic Income Fund (CHW) , a hybrid CEF that mixes global stocks and bonds. It currently trades at an 11% discount, close to its three year average, and has a leverage of 30%. Yield on the CHW is 11.4% at last check.

“Calamos has experienced active managers so investors can feel comfortable that they are in good hands,” said Scott.

The Cushing MLP Total Return Fund (SRV) pays an 8.4% yield and sports a 31% leverage ratio. The pipeline CEF trades at a discount of 13%, well below its three year average premium of 1%. Scott said the energy play is comprised of 71% midstream outfits so it is “less tied to the price of oil” than many other funds.

Finally, Scott is a fan of the Saratoga Investment Corp. (SAR) , a debt-based business development corporation trading at a 19% discount compared to its three year average of 28%. Saratoga yields a healthy 9.7% in a low-yield environment.

“Saratoga trades at a discount because it is small, not because it is poorly run,” said Scott.

 

Saratoga Investment Corp. Prices Public Offering of $65 Million 6.75% Notes Due 2023

NEW YORK, NY (December 13, 2016) – Saratoga Investment Corp. (the “Company”) (NYSE: SAR) today announced that it has priced an underwritten public offering of $65 million in aggregate principal amount of 6.75% unsecured notes due 2023. The notes will mature on December 30, 2023, and may be redeemed in whole or in part at any time or from time to time at Saratoga Investment Corp.’s option on or after December 21, 2019. The notes will bear interest at a rate of 6.75% per year payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning March 30, 2017.

The offering is expected to close on December 21, 2016, subject to customary closing conditions. The Company has granted the underwriters an option to purchase up to an additional $9.75 million in aggregate principal amount of notes.  The Notes are expected to be listed on the New York Stock Exchange and to trade thereon within 30 days of the original issue date under the trading symbol “SAB”.

Ladenburg Thalmann & Co. Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc. (NYSE MKT: LTS), BB&T Capital Markets, Compass Point and William Blair are acting as joint book-running managers.

The Company expects to use the net proceeds from this offering to repay all of the outstanding indebtedness under its 7.50% fixed-rate notes due 2020, which amounts to $61.8 million, and for general corporate purposes in accordance with its investment objective and strategies.

Investors are advised to consider carefully the investment objective, risks and charges and expenses of the Company before investing.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of, the Notes referred to in this press release in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction. A registration statement relating to these securities was filed and has been declared effective by the Securities and Exchange Commission.

The offering will be made only by means of a prospectus. Copies of the prospectus relating to the offering may be obtained for free by visiting the Securities and Exchange Commission’s website at www.sec.gov or may be obtained from of any of the following investment banks: Ladenburg Thalmann, Attn: Syndicate Department, 570 Lexington Avenue, 11th Floor New York, NY 10022, or by emailing prospectus@ladenburg.com (telephone number 1-800-573-2541); BB&T Capital Markets at 901 East Byrd Street, 3rd Floor, Richmond, VA 23219 Attn: Syndicate Dept. or via email request: prospectusrequests@bbandtcm.com; Compass Point Research & Trading, LLC 1055 Thomas Jefferson Street NW, Suite 303 Washington, D.C. 20007, or email at syndicate@compasspointllc.com; or William Blair & Company, L.L.C., Attention: Prospectus Department, 222 West Adams Street, Chicago, IL 60606, or by telephone at 1-800-621-0687 or email at prospectus@williamblair.com.

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that invests primarily in leveraged loans and mezzanine debt issued by privately owned U.S. middle-market businesses, which the Company defines as companies having annual EBITDA (earnings before interest, taxes, depreciation and amortization) of between $5 million and $50 million, both through direct lending and through participation in loan syndicates. Saratoga Investment Corp.’s objective is to generate current income and, to a lesser extent, capital appreciation from our investments. Saratoga Investment Corp. has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, a New York-based investment firm affiliated with Saratoga Partners, a middle market private equity investment firm. Within the BDC, Saratoga Investment Corporation manages both an SBIC-licensed subsidiary and a Collateralized Loan Obligation (CLO) fund. The Company believes these diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to offer a broad range of financing solutions.

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.

 

 

Saratoga Investment Corp.: Healthy Dividend, Lots of Dry Powder

This post was featured on Seeking Alpha December 9th, 2016. 

Summary

  • After speaking with Saratoga’s CFO earlier this week, we believe this BDC’s 9.2% dividend yield is healthy, and the company has lots of dry powder for continued growth.
  • Despite Saratoga’s recent strong price appreciation year-to-date, it still enjoys an attractive valuation, several important competitive advantages, and less exposure to the big risks facing the BDC industry.
  • According to Saratoga’s CFO, Henri Steenkamp, “We’re not afraid to not grow in a quarter, our most important thing is not to sacrifice credit quality”.

After speaking with the Chief Financial Officer (Henri Steenkamp) of Saratoga Investment Corp. (NYSE:SAR) for 40 minutes earlier this week, our main takeaway is that the 9.2% dividend yield of this small cap Business Development Company (BDC) is healthy (with room to grow) because the company continues to enjoy an attractive valuation (even after the shares’ strong rally so far this year), several important competitive advantages (for example, access to plenty of low-cost capital, aka “dry powder”), and may actually be less impacted by some of the big risks facing the BDC industry as a whole.

Overview

Saratoga Investment Corp. is a publicly traded BDC providing financing solutions to lower middle market companies through its SBIC-licensed subsidiary and a $300 million Collateralized Loan Obligation (CLO) fund. As the following chart shows, Saratoga’s portfolio is composed mainly of first and second liens, and the yields on these financing arrangements are significant (this is how Saratoga supports its healthy dividend).

Henri Steenkamp
Henri Steenkamp is a finance executive with over 15 years of experience in his field. Steenkamp serves as chief financial officer, treasurer and chief compliance officer of New York City based Saratoga Investment Corp. (NYSE: SAR) and Saratoga Investment Advisors, LLC.