Medley Capital Corporation (NYSE: MCC) (TASE: MCC) (the “Company”) today announced financial results for the quarter ended March 31, 2020.

Second Quarter Summary

  • Net asset value (“NAV”) of $2.60 per share
  • Net investment loss of $(0.08) per share
  • The board of directors did not declare a dividend this quarter

Portfolio Investments

The total value of our investments was $255.9 million at March 31, 2020. During the quarter ended March 31, 2020, the Company originated $6.6 million of investments and had $20.4 million of repayments and sales, resulting in net repayments and sales of $13.8 million. As of March 31, 2020, the Company had investments in securities of 44 portfolio companies with approximately 41.4% consisting of senior secured first lien investments, 9.9% consisting of senior secured second lien investments, 0.6% consisting of unsecured debt, 16.4% in MCC Senior Loan Strategy JV and 31.7% in equities / warrants. As of March 31, 2020, the weighted average yield based upon the cost basis of our income bearing portfolio investments, excluding cash and cash equivalents, was 8.7%.

Results of Operations

For the three months ended March 31, 2020, the Company reported net investment loss per share and net loss per share of $(0.08) and $(1.45), respectively, calculated based upon the weighted average shares outstanding.

For the six months ended March 31, 2020, the Company reported net investment loss per share and net loss per share of $(0.02) and $(1.37), respectively, calculated based upon the weighted average shares outstanding.

Investment Income

For the three months ended March 31, 2020, total investment income was approximately $5.3 million and consisted of $3.5 million of portfolio interest income, $1.7 million of dividend income, and $0.1 million of fee income.

For the six months ended March 31, 2020, total investment income was approximately $12.8 million and consisted of $8.9 million of portfolio interest income, $3.5 million of dividend income, and $0.4 million of fee income.

Expenses

For the three months ended March 31, 2020, total expenses were approximately $9.5 million and consisted of the following: base management fees of $1.6 million, interest and financing expenses of $4.4 million, professional fees of $0.1 million, administrator expenses of $0.6 million, directors’ fees of $0.3 million, and other general and administrative related expenses of $2.5 million.

For the six months ended March 31, 2020, total expenses were approximately $13.9 million and consisted of the following: base management fees of $3.6 million, interest and financing expenses of $9.6 million, net professional fees of $(4.3) million, administrator expenses of $1.1 million, directors’ fees of $0.6 million, and other general and administrative related expenses of $3.3 million.

Net Investment Income/Loss

For the three months ended March 31, 2020, the Company reported net investment loss of $(4.2) million, or $(0.08), on a weighted average per share basis.

For the six months ended March 31, 2020, the Company reported net investment loss of $(1.1) million, or $(0.02), on a weighted average per share basis.

Net Realized and Unrealized Gains/Losses

For the three and six months ended March 31, 2020, the Company reported net realized losses of $(0.1) million and net unrealized depreciation of $(73.6) million and net realized losses of $(1.8) million and net unrealized depreciation of $(69.8) million, respectively.

For the three and six months ended March 31, 2019, the Company reported a loss on extinguishment of debt of $(0.9) million and $(1.8) million, respectively.

For the three and six months ended March 31, 2019, the Company reported a change in provision for deferred taxes on unrealized appreciation on investments of $(0.1) million.

Liquidity and Capital Resources

During the quarter ended March 31, 2020 the Company repaid a total of $34.9 million on its Series A Israeli Notes (the “Israeli Notes”), which consisted of its scheduled quarterly amortization payment and an additional pre-payment.

As of March 31, 2020, the Company had $74.0 million outstanding in aggregate principal amount of 6.50% unsecured notes due 2021, $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023, and $21.1 million outstanding in aggregate principal amount of the Israeli Notes.

As of March 31, 2020, the Company had a cash balance of $61.1 million.

On April 14, 2020 the Company repaid the remaining $21.1 million of Israeli Notes outstanding.

Dividend Declaration

The board of directors did not declare a dividend this quarter.

Financial Statements

 
Medley Capital Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
 
  March 31, 2020   September 30, 2019
  (unaudited)    
ASSETS      
Investments at fair value      
Non-controlled/non-affiliated investments (amortized cost of $143,310 and $204,736, respectively) $ 112,666     $ 189,895  
Affiliated investments (amortized cost of $96,626 and $108,310, respectively) 82,277     99,540  
Controlled investments (amortized cost of $156,552 and $154,601, respectively) 60,953     107,454  
Total investments at fair value 255,896     396,889  
Cash and cash equivalents 61,104     68,245  
Restricted cash     16,039  
Other assets 966     2,974  
Interest receivable 489     1,592  
Receivable for dispositions and investments sold 12     419  
Fees receivable 45     109  
Total assets $ 318,512     $ 486,267  
       
LIABILITIES      
Notes payable (net of debt issuance costs of $1,843 and $5,274, respectively) $ 171,173     $ 251,732  
Accounts payable and accrued expenses 2,258     11,957  
Interest and fees payable 802     2,905  
Management and incentive fees payable 1,641     2,231  
Administrator expenses payable 576     862  
Deferred revenue 38     103  
Due to affiliate 196     44  
Deferred tax liability 86      
Total liabilities $ 176,770     $ 269,834  
       
NET ASSETS      
Common stock, par value $0.001 per share, 100,000,000 common shares authorized,54,474,211 and 54,474,211 common shares issued and outstanding, respectively $ 54     $ 54  
Capital in excess of par value 673,533     673,533  
Total distributable earnings/(loss) (531,845 )   (457,154 )
Total net assets 141,742     216,433  
Total liabilities and net assets $ 318,512     $ 486,267  
       
NET ASSET VALUE PER SHARE $ 2.60     $ 3.97  
               

 
Medley Capital Corporation
Consolidated Statements of Operations
(in thousands, except share and per share data)
 
  For the three monthsended March 31   For the six monthsended March 31
  2020   2019   2020   2019
  (unaudited)   (unaudited)   (unaudited)   (unaudited)
INVESTMENT INCOME              
Interest from investments              
Non-controlled/non-affiliated investments:              
Cash $ 2,321     $ 7,510     $ 5,538     $ 15,587  
Payment-in-kind 128     606     327     1,178  
Affiliated investments:              
Cash 190     460     399     1,212  
Payment-in-kind 707     644     1,654     1,616  
Controlled investments:              
Cash 1     86     85     164  
Payment-in-kind 5     760     501     1,789  
Total interest income 3,352     10,066     8,504     21,546  
Dividend income 1,663     1,992     3,500     4,091  
Interest from cash and cash equivalents 154     211     372     373  
Fee income 132     318     416     779  
Total investment income 5,301     12,587     12,792     26,789  
               
EXPENSES              
Base management fees 1,641     3,084     3,649     6,270  
Incentive fees              
Interest and financing expenses 4,432     5,899     9,576     11,908  
General and administrative 2,083     2,881     2,600     3,485  
Administrator expenses 576     668     1,128     1,700  
Insurance 357     117     655     236  
Directors fees 297     376     612     669  
Professional fees, net 131     10,157     (4,285 )   11,357  
Expenses before management and incentive fee waivers 9,517     23,182     13,935     35,625  
Management fee waiver              
Incentive fee waiver              
Total expenses net of management and incentive fee waivers 9,517     23,182     13,935     35,625  
NET INVESTMENT INCOME (4,216 )   (10,595 )   (1,143 )   (8,836 )
               
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS              
Net realized gain/(loss) from investments              
Non-controlled/non-affiliated investments (100 )   (10,615 )   (158 )   (15,799 )
Affiliated investments              
Controlled investments         (1,687 )   (51,539 )
Net realized gain/(loss) from investments (100 )   (10,615 )   (1,845 )   (67,338 )
Net unrealized appreciation/(depreciation) on investments              
Non-controlled/non-affiliated investments (19,550 )   19,352     (15,802 )   20,164  
Affiliated investments (15,019 )   (3,079 )   (5,579 )   (5,474 )
Controlled investments (38,994 )   (19,672 )   (48,451 )   26,920  
Net unrealized appreciation/(depreciation) on investments (73,563 )   (3,399 )   (69,832 )   41,610  
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments (86 )       (86 )    
Net loss on extinguishment of debt (895 )       (1,784 )   (123 )
Net realized and unrealized gain/(loss) on investments (74,644 )   (14,014 )   (73,547 )   (25,851 )
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (78,860 )   $ (24,609 )   $ (74,690 )   $ (34,687 )
               
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE $ (1.45 )   $ (0.45 )   $ (1.37 )   $ (0.64 )
WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE $ (0.08 )   $ (0.19 )   $ (0.02 )   $ (0.16 )
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED 54,474,211     54,474,211     54,474,211     54,474,211  
DIVIDENDS DECLARED PER COMMON SHARE $     $ 0.05     $     $ 0.15  
                               

ABOUT MEDLEY CAPITAL CORPORATION

Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that has common stock which trades on the New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE: MCV) and (NYSE: MCX) . Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Our portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.

ABOUT MCC ADVISORS LLC

MCC Advisors LLC is a subsidiary of Medley Management Inc. (NYSE: MDLY, “Medley”). Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise is a premier provider of capital to the middle market in the U.S. Medley has $4.1 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE: MCC) (TASE: MCC) and Sierra Income Corporation, and several private investment vehicles. Over the past 18 years, we have provided capital to over 400 companies across 35 industries in North America.1 For additional information, please visit Medley Management Inc. at www.mdly.com.

Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE:MDLX) and (NYSE:MDLQ).

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking” statements, including statements regarding any potential exploration of strategic alternatives by the Company. Such forward-looking statements reflect current views with respect to future events and financial performance, and the Company may make related oral forward-looking statements on or following the date hereof. Statements that include the words “should,” “would,” “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “seek,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements in this material or similar oral statements for purposes of the U.S. federal securities laws or otherwise. Forward-looking statements include, but are not limited to, the introduction, withdrawal, success and timing of business initiatives and strategies; changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes in the value of our assets; the relative and absolute investment performance and operations of MCC Advisors LLC;  our business prospects and the prospects of our portfolio companies; uncertainties associated with the impact from the COVID-19 pandemic, including its impact on the global and U.S. capital markets and the global and U.S. economy, the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak, and the impact of the termination of the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and between the Company and Sierra Income Corporation (“Sierra”) and the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019, by and among Medley Management Inc., Sierra, and Sierra Management, Inc.,  on our business,  financial results, ability to pay dividends and distributions, if any, to our stockholders, and stock price. 

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the “Risk Factors” and other sections of the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. The forward-looking statements in this press release represent the Company’s views as of the date of hereof. The Company anticipates that subsequent events and developments will cause its views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company does not have any current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing the Company’s views as of any date subsequent to the date of this material.

SOURCE: Medley Capital Corporation

Investor Relations Contact:Sam AndersonHead of Capital Markets & Risk ManagementMedley Management Inc.212-759-0777

Media Contact:Jonathan Gasthalter/Nathaniel GarnickGasthalter & Co. LP212-257-4170

_________________________________________________________________________________________________________________1 Medley Management Inc. is the parent company of Medley LLC and several registered investment advisors (collectively, “Medley”). Assets under management refers to assets of Medley’s funds, which represents the sum of the net asset value of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). Assets under management are as of December 31, 2019.

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