Saratoga Investment boasts plenty of dry powder, $12.7 million of cash in fiscal Q1

By Lisa Kerner

Charlotte, N.C., July 15 – Saratoga Investment Corp. ended its 2015 fiscal first quarter with significant dry powder available, according to a presentation on Tuesday.

“With the $40.3 million available on the credit facility, $86 million additional borrowing capacity at our SBA subsidiary and $12.7 million in cash and cash equivalents, we had a total of $139 million of available borrowing capacity or liquidity at our disposal as of May 31, 2014,” said chief financial officer Henri Steenkamp during the company’s earnings conference call.

As of May 31, Saratoga Investment had $4.7 million in outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC, $64 million outstanding of SBA debentures and $48.3 million outstanding of baby bonds.

Steenkamp said he is pleased with Saratoga’s liquidity position, which is about 64% of its investment value. As a result, the company has the ability to “substantially” grow its assets without the need for external financing.

Financial highlights

Saratoga reported net investment income of $2.1 million, or $0.38 on a weighted average per share basis, and a net loss on investments of $303,000, or $0.05 on a weighted average per share basis. This resulted in a net increase in net assets from operations of $1.8 million, or $0.33 on a weighted average per share basis.

This compared to net investment income of $2.5 million, or $0.52 on a weighted average per share basis, and a net gain on investments of $1.3 million, or $0.28 on a weighted average per share basis, resulting in a net increase in net assets from operations of $3.8 million, or $0.80 on a weighted average per share basis for the prior-year quarter.

The fair market value of Saratoga’s portfolio at quarter-end was $218.7 million, excluding $12.7 million in cash and cash equivalents, principally invested in 40 portfolio companies and one collateralized loan obligation fund.

The overall portfolio composition consisted of 14.7% of middle-market loans, 40.1% of first-lien term loans, 15% of second-lien term loans, 13.4% of senior secured notes, 2.5% of unsecured notes, 9.2% of subordinated notes in a CLO and 5.1% of common equity, according to the news release.

“We continue to pursue a long-term strategy of expanding the size and quality of our assets under management, attracting new investors and adding talented senior management and professionals to our team,” said chairman and chief executive officer Christian L. Oberbeck.

“Market conditions, competition and asset pricing remain challenging, but the outlook for future financing demand in our markets remains positive.”

Saratoga Investment is a New York-based business development company that provides financing for U.S. middle-market companies.

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