WhiteHorse Finance, Inc. Announces Third Quarter 2021 Earnings Results and Declares Quarterly Distribution of $0.355 Per Share

NEW YORK, Nov. 9, 2021 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (Nasdaq: WHF) today announced its financial results for the quarter ended September 30, 2021. In addition, the Company's board of directors has declared a distribution of $0.355 per share with respect to the quarter ending December 31, 2021. The distribution will be payable on January 4, 2022 to stockholders of record as of December 20, 2021.

Third Quarter 2021 Summary Highlights

• Net Asset Value of $323.7 million, or $15.46 per share
• Investment portfolio⁽¹⁾ totaling $687.1 million
• STRS JV investment portfolio totaling $239.0 million
• Gross investment deployments⁽²⁾ of $122.5 million for the third quarter, including new originations of $47.9 million and $74.6 million of fundings for refinancings and add-ons to existing investments
• Net investment income of $7.6 million, or $0.366 per share
• Core net investment income of $7.8 million, or $0.372 per share⁽³⁾
• Third quarter distribution of $0.355 per share

Recent Developments

Subsequent to the end of the quarter, the Company issued 1,900,000 shares of its common stock in a public offering at an offering price of $15.81 per share (the "Offering"). The Offering generated net proceeds of approximately $29.4 million. Under the existing underwriting agreement, the underwriters executed the option to purchase an additional 282,300 shares, generating another $4.3 million of net proceeds. The Company's aggregate net proceeds of the Offering were approximately $33.7 million, inclusive of underwriting discounts and commissions and before offering expenses.

Stuart Aronson, WhiteHorse Finance's Chief Executive Officer, commented, "Gross capital deployments remained strong in the third quarter, offset in part by continuing repayments and refinancings within the portfolio, and we maintained a high level of origination activity. In anticipation of continuing rapid capital deployment, we completed a follow-on equity offering earlier this month, netting approximately $34 million in proceeds. Our pipeline remains very healthy, and this new capital should enable us to continue to grow WhiteHorse Finance through disciplined deal sourcing. Although the lending market has become more competitive in some segments, where pricing, leverage and documentation terms have returned to pre-COVID levels, we believe that our relationship with the leading H.I.G. platform and our differentiated three-tier sourcing capabilities will continue to drive growth. Notwithstanding the competitive backdrop, we believe that we can continue to identify and close deals that meet our rigorous underwriting standards and generate strong cash flow to support our dividend and create value for our shareholders."

Portfolio and Investment Activity

As of September 30, 2021, the fair value of WhiteHorse Finance's investment portfolio was $687.1 million, compared with $670.5 million as of June 30, 2021. The portfolio as of September 30, 2021 consisted of 99 positions across 65 companies with a weighted average effective yield of 9.3% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV (as defined below)) was $7.3 million with the overall portfolio comprised of approximately 82.3% first lien secured loans, 4.3% second lien secured loans, 2.9% equity and 10.5% in investments in STRS JV. Almost all loans were variable rate investments (primarily indexed to the London Interbank Offered Rate) with fixed rate securities representing only 0.4% of loans at fair value. Nearly all performing floating rate investments have interest rate floors.

During the three months ended September 30, 2021, WhiteHorse Finance made investments in four new portfolio companies totaling $47.9 million, added a total of $34.8 million to existing portfolio companies, exclusive of refinancing, and made net fundings of $0.9 million to revolver loans. Proceeds from sales and repayments, exclusive of refinancing, totaled approximately $26.1 million for the quarter ended September 30, 2021, driven by two full realizations in LS GFG Holdings Inc. and Connexity, Inc. In addition, the Company refinanced three first lien investments: NNA Services, LLC, EducationDynamics, LLC and Source Code Midco, LLC, resulting in net repayments of approximately $7.3 million.  Gross receipts from refinancings were $47.1 million and gross deployments from refinancings were $39.8 million.

In addition to the transactions discussed above, during the three months ended September 30, 2021, WhiteHorse Finance transferred assets comprised of two new portfolio companies, three add-ons and the remaining portions of four previously transferred deals totaling $45.7 million to STRS JV in exchange for a net investment in STRS JV of $9.4 million as well as cash proceeds of $36.3 million.

WHF STRS Ohio Senior Loan Fund LLC

As of September 30, 2021, STRS JV's portfolio totaled $239.0 million, consisted of 27 portfolio companies and had a weighted average effective yield of 8.0% on its portfolio.

Results of Operations

For the three months ended September 30, 2021, the Company's net investment income was approximately $7.6 million, compared with approximately $5.9 million for the same period in the prior year, representing an increase of approximately 28.8%. The increase in net investment income for the year-over-year period was primarily attributable to accelerated accretion and nonrecurring fee income recognized due to higher repayment activities as well as lesser capital gains incentive fee accrued, and partially offset by higher interest expense incurred due to higher leverage balances for the quarter ended September 30, 2021. For the three months ended September 30, 2021, the Company's investment in STRS JV generated an annualized, gross investment yield of approximately 12.6%.

For the three months ended September 30, 2021, core net investment income⁽³⁾ was $7.8 million, or $0.372 per share, compared with $7.8 million, or $0.380 per share, for the same period in the prior year.

For the three months ended September 30, 2021, WhiteHorse Finance reported net realized and unrealized gains on investments and foreign currency transactions of $0.6 million. This compares with net realized and unrealized gains on investments and foreign currency transactions of $15.7 million for the three months ended September 30, 2020. The decrease for the year-over-year period was primarily attributable to higher prior-year unrealized gains generated on markups in the portfolio as a result of the market's continuing recovery from the COVID-19 pandemic.

WhiteHorse Finance reported a net increase in net assets resulting from operations of approximately $8.3 million for the three months ended September 30, 2021, which compares with a net increase of $21.6 million for the three months ended September 30, 2020.

WhiteHorse Finance's net asset value was $323.7 million, or $15.46 per share, as of September 30, 2021, as compared with $319.6 million, or $15.42 per share, as of June 30, 2021.

Liquidity and Capital Resources

As of September 30, 2021, WhiteHorse Finance had cash and cash equivalents of $16.6 million, as compared with $17.8 million as of June 30, 2021, inclusive of restricted cash. As of September 30, 2021, the Company also had $25.4 million of undrawn capacity under its revolving credit facility.

Distributions

The Company's Board of Directors has declared a distribution of $0.355 per share with respect to the quarter ending December 31, 2021. The distribution will be payable on January 4, 2022 to stockholders of record as of December 20, 2021. In addition, previously on October 14, 2021, the Company declared a special distribution of $0.135 per share, which will be payable on December 10, 2021 to stockholders of record as of October 29, 2021.

On August 9, 2021, the Company declared a distribution of $0.355 per share for the quarter ended September 30, 2021, consistent with distributions declared for the thirty-sixth consecutive quarter since the Company's initial public offering. The distribution was paid on October 4, 2021 to stockholders of record as of September 20, 2021.

Distributions are paid from taxable earnings and may include return of capital and/or capital gains. The specific tax characteristics of the distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year and in the Company's periodic reports filed with the Securities and Exchange Commission.

Conference Call

WhiteHorse Finance will host a conference call to discuss its third quarter results at 2:00 p.m. ET on Tuesday, November 9, 2021. To access the teleconference, please dial 877-876-9177 (domestic and international) approximately 10 minutes before the teleconference's scheduled start time and reference Conference ID #WHFQ321. Investors may also access the call on the investor relations portion of the Company's website at www.whitehorsefinance.com. 

If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call's completion through November 16, 2021. The teleconference replay can be accessed by dialing 888-566-0150 (domestic and international). A webcast replay will also be available on the investor relations portion of the Company's website at www.whitehorsefinance.com.

About WhiteHorse Finance, Inc.

WhiteHorse Finance is a business development company that originates and invests in loans to privately held, lower middle market companies across a broad range of industries. The Company's investment activities are managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, LLC, ("H.I.G. Capital"). H.I.G. Capital is a leading global alternative asset manager with over $45 billion of capital under management⁽⁴⁾ across a number of funds focused on the small and mid-cap markets. For more information about H.I.G. Capital, please visit http://www.higcapital.com. For more information about the Company, please visit http://www.whitehorsefinance.com.

Forward-Looking Statements

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 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. 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.

(1) Includes investments in WHF STRS Ohio Senior Loan Fund LLC ("STRS JV"), an unconsolidated joint venture, totaling $72.1 million, at fair value.
(2) Excludes investments made in STRS JV.
(3) "Core net investment income" is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management because it reflects the Company's financial performance excluding (i) the net impact of costs associated with the refinancing of the Company's indebtedness, (ii) the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and (iii) excise and other income taxes related to such net realized gains and losses (net of incentive fees). 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. Additional information on core net investment income and a reconciliation of core net investment income to its most directly comparable GAAP financial measure, net investment income, are set forth in Schedule 1 hereto.
(4) Based on total capital commitments managed by H.I.G. Capital and affiliates.

SCHEDULE 1

As a supplement to GAAP financial measures, the Company has provided information relating to core net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income determined in accordance with GAAP. The Company's non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted to exclude the net impact of costs associated with the refinancing of the Company's indebtedness, the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and excise or other income taxes related to such net realized gains and losses (net of incentive fees). There were no excise or other income taxes related to net realized gains and losses nor did the Company incur any costs with refinancing any of its indebtedness for the quarters ended September 30, 2021 and September 30, 2020.

The following table provides a reconciliation of net investment income to core net investment income for the three months ended September 30, 2021 and September 30, 2020 (in thousands, except per share data):

		September 30, 2021								September 30, 2020
		Amount				Per Share				Amount				Per Share
						Amounts								Amounts
Net investment income		$	7,639			$	0.366			$	5,930			$	0.289
Net impact of costs associated with refinancing of indebtedness			-				-				-				-
Accrual for capital gains incentive fee			127				0.006				1,870				0.091
Net impact of excise tax expense related to net realized gains and losses			-				-				-				-
Core net investment income		$	7,766			$	0.372			$	7,800			$	0.380

 

WhiteHorse Finance, Inc. Consolidated Statements of Assets and Liabilities (in thousands, except share and per share data)
			September 30, 2021			December 31, 2020
			(Unaudited)
Assets
Investments, at fair value
Non-controlled/non-affiliate company investments		$	608,213		$	623,777
Non-controlled affiliate company investments			6,800			15,717
Controlled affiliate company investments			72,110			51,241
Total investments, at fair value (amortized cost $695,047 and $695,429, respectively)			687,123			690,735
Cash and cash equivalents			9,579			8,062
Restricted cash and cash equivalents			6,749			7,549
Restricted foreign currency (cost of $241 and $319, respectively)			241			333
Interest and dividend receivable			7,227			6,532
Amounts receivable on unsettled investment transactions			15,489			4,717
Escrow receivable			1,827			—
Prepaid expenses and other receivables			1,162			1,061
Unrealized appreciation on foreign currency forward contracts			186			—
Total assets		$	729,583		$	718,989
Liabilities
Debt		$	379,757		$	384,880
Distributions payable			7,433			7,294
Management fees payable			3,508			3,354
Incentive fees payable			7,404			6,117
Amounts payable on unsettled investment transactions			3,380			497
Interest payable			2,201			1,870
Accounts payable and accrued expenses			1,680			1,708
Advances received from unfunded credit facilities			496			372
Total liabilities			405,859			406,092
Commitments and contingencies
Net assets
Common stock, 20,936,874 and 20,546,032 shares issued and outstanding, par value $0.001 per share, respectively, and 100,000,000 shares authorized			21			21
Paid-in capital in excess of par			305,972			300,002
Accumulated earnings			17,731			12,874
Total net assets			323,724			312,897
Total liabilities and total net assets		$	729,583		$	718,989
Number of shares outstanding			20,936,874			20,546,032
Net asset value per share		$	15.46		$	15.23

 

WhiteHorse Finance, Inc. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share data)
			Three months ended September 30,						Nine months ended September 30,
			2021			2020			2021			2020
Investment income
From non-controlled/non-affiliate company investments
Interest income		$	15,199		$	14,222		$	44,159		$	39,506
Fee income			1,224			741			2,344			1,571
Dividend income			35			21			144			101
From non-controlled affiliate company investments
Dividend income			76			263			1,042			800
From controlled affiliate company investments
Interest income			905			682			2,362			1,913
Dividend income			939			568			3,638			961
Total investment income			18,378			16,497			53,689			44,852
Expenses
Interest expense			3,842			2,770			11,456			9,661
Base management fees			3,508			3,069			10,209			9,110
Performance-based incentive fees			2,069			3,819			6,739			5,571
Administrative service fees			171			171			512			512
General and administrative expenses			896			601			2,592			2,212
Total expenses			10,486			10,430			31,508			27,066
Net investment income before excise tax			7,892			6,067			22,181			17,786
Excise tax			253			137			845			513
Net investment income after excise tax			7,639			5,930			21,336			17,273
Realized and unrealized gains (losses) on investments and foreign currency transactions
Net realized gains (losses)
Non-controlled/non-affiliate company investments			109			635			7,714			1,069
Non-controlled affiliate company investments			—			—			—			—
Foreign currency transactions			(206)			(1)			(209)			66
Foreign currency forward contracts			1			(25)			(3)			(25)
Net realized gains (losses)			(96)			609			7,502			1,110
Net change in unrealized appreciation (depreciation)
Non-controlled/non-affiliate company investments			(1,370)			12,659			(3,937)			6,303
Non-controlled affiliate company investments			792			999			1,112			(131)
Controlled affiliate company investments			860			1,526			591			(1,316)
Translation of assets and liabilities in foreign currencies			263			(92)			161			251
Foreign currency forward contracts			187			3			186			—
Net change in unrealized appreciation (depreciation)			732			15,095			(1,887)			5,107
Net realized and unrealized gains (losses) on investments and foreign currency transactions			636			15,704			5,615			6,217
Net increase in net assets resulting from operations		$	8,275		$	21,634		$	26,951		$	23,490
Per Common Share Data
Basic and diluted earnings per common share		$	0.40		$	1.06		$	1.30		$	1.15
Dividends and distributions declared per common share		$	0.36		$	0.36		$	1.07		$	1.07
Basic and diluted weighted average common shares outstanding			20,851,435			20,546,032			20,677,545			20,546,032

 

WhiteHorse Finance, Inc. Consolidated Schedule of Investments (Unaudited) September 30, 2021 (in thousands)
Issuer		Investment Type(1)		Floor		Spread Above Index(2)		Interest Rate(3)		Acquisition Date(10)		Maturity Date		Principal/ Share Amount		Amortized Cost			Fair Value(11)			Fair Value As A Percentage of Net Assets
North America
Debt Investments
Advertising
SmartSign Holdings LLC		First Lien Secured Term Loan		1.00%		L+ 7.50%		8.50%		08/21/20		10/11/24		7,686		$	7,573		$	7,686		2.37%
														7,686			7,573			7,686		2.37
Air Freight & Logistics
Access USA Shipping, LLC		First Lien Secured Term Loan		1.50%		L+ 8.00%		9.50%		02/08/19		02/08/24		5,010			4,975			5,010		1.55
Motivational Marketing, LLC		First Lien Secured Term Loan		1.00%		L+ 6.25%		7.25%		07/12/21		07/12/26		11,818			11,592			11,590		3.58
Motivational Marketing, LLC(7)(12)		First Lien Secured Revolving Loan		1.75%		L+ 5.92%		7.67%		07/12/21		07/12/26		906			889			888		0.27
														17,734			17,456			17,488		5.40
Application Software
Atlas Purchaser, Inc (dba Aspect Software)		Second Lien Secured Term Loan		0.75%		L+ 9.00%		9.75%		05/03/21		05/07/29		15,000			14,572			14,700		4.54
Newscycle Solutions, Inc		First Lien Secured Term Loan		1.00%		L+ 7.00%		8.00%		06/14/19		12/29/22		3,221			3,198			3,208		0.99
Newscycle Solutions, Inc(7)		First Lien Secured Revolving Loan		1.00%		L+ 7.00%		8.00%		06/14/19		12/29/22		169			168			168		0.05
TaxSlayer LLC		First Lien Secured Term Loan		1.00%		L+ 6.00%		7.00%		12/31/20		12/31/26		6,762			6,643			6,666		2.06
TaxSlayer LLC(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.00%		7.00%		12/31/20		12/31/26		—			—			3		—
														25,152			24,581			24,745		7.64
Automotive Retail
Team Car Care Holdings, LLC(12)		First Lien Secured Term Loan		1.03%		Base rate+ 7.99%		9.02%		02/16/18		06/28/24		15,516			15,413			15,392		4.75
														15,516			15,413			15,392		4.75
Building Products
Drew Foam Companies Inc		First Lien Secured Term Loan		1.00%		L+ 6.25%		7.25%		11/05/20		11/05/25		7,225			7,104			7,153		2.21
LHS Borrower, LLC		First Lien Secured Term Loan		1.00%		L+ 6.75%		7.75%		09/30/20		09/30/25		9,506			9,336			9,436		2.91
LHS Borrower, LLC(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.75%		7.75%		09/30/20		09/30/25		—			—			6		—
Trimlite Buyer LLC(5)(13)		First Lien Secured Term Loan		1.00%		C+ 6.50%		7.50%		07/27/21		07/27/26		23,122			18,070			17,900		5.53
Trimlite Buyer LLC(5)(7)(13)		First Lien Secured Revolving Loan		1.00%		C+ 6.50%		7.50%		07/27/21		07/27/26		—			—			—		—
														39,853			34,510			34,495		10.65
Cable & Satellite
Bulk Midco, LLC(15)		First Lien Secured Term Loan		1.00%		L+ 7.34%		8.34%		06/08/18		06/08/23		15,000			14,924			14,419		4.45
														15,000			14,924			14,419		4.45
Construction & Engineering
Tensar Corp		First Lien Secured Term Loan		1.00%		L+ 6.75%		7.75%		11/20/20		08/20/25		6,948			6,805			6,948		2.15
														6,948			6,805			6,948		2.15
Construction Materials
Claridge Products and Equipment, LLC		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		12/30/20		12/29/25		7,659			7,529			7,521		2.32
Claridge Products and Equipment, LLC(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.50%		7.50%		12/30/20		12/29/25		—			—			—		—
														7,659			7,529			7,521		2.32
Commodity Chemicals
Flexitallic Group SAS		First Lien Secured Term Loan		1.00%		L+ 7.50%		8.50% (8.00% Cash + 0.50% PIK)		10/28/19		10/29/26		15,742			15,038			15,191		4.69
														15,742			15,038			15,191		4.69
Consumer Finance
Maxitransfers Blocker Corp		First Lien Secured Term Loan		1.00%		L+ 8.50%		9.50%		10/07/20		10/07/25		8,701			8,535			8,701		2.69
Maxitransfers Blocker Corp(4)(7)		First Lien Secured Revolving Loan		1.00%		L+ 8.50%		9.50%		10/07/20		10/07/25		—			—			20		0.01
														8,701			8,535			8,721		2.70
Data Processing & Outsourced Services
Escalon Services Inc		First Lien Secured Term Loan		1.00%		L+ 13.50%		14.50% (13.00% Cash + 1.50% PIK)		12/04/20		12/04/25		8,035			7,442			7,932		2.45
FPT Operating Company, LLC/ TLabs Operating Company, LLC		First Lien Secured Term Loan		1.00%		L+ 8.25%		9.25%		12/23/16		06/07/24		24,156			23,953			24,028		7.42
														32,191			31,395			31,960		9.87
Department Stores
Mills Fleet Farm Group, LLC		First Lien Secured Term Loan		1.00%		L+ 6.25%		7.25%		10/24/18		10/24/24		13,538		$	13,320		$	13,538		4.18%
														13,538			13,320			13,538		4.18
Distributors
Crown Brands, LLC(19)		Second Lien Secured Term Loan		1.50%		L+ 10.50%		12.00%		12/15/20		01/08/26		4,380			4,293			3,504		1.08
Crown Brands, LLC(19)		Second Lien Secured Delayed Draw Loan		1.50%		L+ 10.50%		12.00%		12/15/20		01/08/26		650			650			520		0.16
														5,030			4,943			4,024		1.24
Diversified Chemicals
Sklar Holdings, Inc		First Lien Secured Term Loan		1.00%		L+ 7.75%		8.75%		11/13/19		05/13/23		7,429			7,323			7,429		2.29
														7,429			7,323			7,429		2.29
Diversified Support Services
NNA Services, LLC		First Lien Secured Term Loan		1.00%		L+ 6.75%		7.75%		08/27/21		08/27/26		11,667			11,524			11,522		3.56
														11,667			11,524			11,522		3.56
Education Services
EducationDynamics, LLC		First Lien Secured Term Loan		1.00%		L+ 7.00%		8.00% (7.50% Cash + 0.50% PIK)		09/15/21		09/14/26		13,385			13,119			13,118		4.05
EducationDynamics, LLC(7)		First Lien Secured Delayed Draw Loan		1.00%		L+ 7.00%		8.00% (7.50% Cash + 0.50% PIK)		09/15/21		09/14/26		—			—			—		—
EducationDynamics, LLC(7)		First Lien Secured Revolving Loan		1.00%		L+ 7.00%		8.00% (7.50% Cash + 0.50% PIK)		09/15/21		09/14/26		—			—			—		—
EducationDynamics, LLC(4)		Subordinated Unsecured Term Loan		N/A		4.00%		4.00%		09/15/21		03/15/27		167			167			167		0.05
														13,552			13,286			13,285		4.10
Electronic Equipment & Instruments
LMG Holdings, Inc		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		04/30/21		04/30/26		6,819			6,694			6,704		2.07
LMG Holdings, Inc(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.50%		7.50%		04/30/21		04/30/26		—			—			1		—
														6,819			6,694			6,705		2.07
Health Care Facilities
Epiphany Dermatology		First Lien Secured Term Loan		1.00%		L+ 7.50%		8.50%		12/04/20		06/22/23		3,474			3,415			3,446		1.06
Epiphany Dermatology(7)		First Lien Secured Revolving Loan		1.00%		L+ 7.50%		8.50%		12/04/20		06/22/23		—			—			4		—
Epiphany Dermatology(7)		First Lien Secured Delayed Draw Loan		1.00%		L+ 7.50%		8.50%		12/04/20		06/22/23		1,195			1,175			1,202		0.37
Grupo HIMA San Pablo, Inc(8)		First Lien Secured Term Loan A		N/A		L+ 9.00%		9.13%		05/05/19		04/30/19		3,855			3,855			1,927		0.60
Grupo HIMA San Pablo, Inc(8)		First Lien Secured Term Loan B		1.50%		L+ 9.00%		10.50%		02/01/13		04/30/19		13,511			13,511			6,756		2.09
Grupo HIMA San Pablo, Inc(8)		Second Lien Secured Term Loan		N/A		L+ 15.75%		15.75% (13.75% Cash + 2.00% PIK)		02/01/13		07/31/18		1,028			1,024			—		—
														23,063			22,980			13,335		4.12
Health Care Services
CHS Therapy, LLC		First Lien Secured Term Loan A		1.50%		L+ 9.00%		10.50% (10.00% Cash + 0.50% PIK)		06/14/19		06/14/24		7,281			7,206			7,281		2.25
CHS Therapy, LLC		First Lien Secured Term Loan C		1.50%		L+ 9.00%		10.50% (10.00% Cash + 0.50% PIK)		10/07/20		06/14/24		895			882			895		0.28
DCA Investment Holding, LLC		First Lien Secured Term Loan		0.75%		L+ 6.25%		7.00%		03/12/21		03/12/27		7,042			6,946			6,944		2.15
DCA Investment Holding, LLC(7)		First Lien Secured Delayed Draw Loan		0.75%		L+ 6.25%		7.00%		03/12/21		03/12/27		340			337			337		0.10
IvyRehab Intermediate II, LLC		First Lien Secured Term Loan		1.00%		L+ 6.75%		7.75%		12/04/20		12/04/24		17,410			17,143			17,280		5.34
IvyRehab Intermediate II, LLC(7)		First Lien Secured Delayed Draw Loan		1.00%		L+ 6.75%		7.75%		12/04/20		12/04/24		1,553			1,529			1,553		0.48
IvyRehab Intermediate II, LLC(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.75%		7.75%		12/04/20		12/04/24		—			—			9		—
Lab Logistics, LLC		First Lien Secured Term Loan		1.00%		L+ 7.25%		8.25%		10/16/19		09/25/23		1,158			1,141			1,155		0.36
Lab Logistics, LLC		First Lien Secured Delayed Draw Loan		1.00%		L+ 7.25%		8.25%		10/16/19		09/25/23		5,197			5,177			5,197		1.61
PG Dental New Jersey Parent, LLC		First Lien Secured Term Loan		1.00%		L+ 9.00%		10.00% (8.75% Cash + 1.25% PIK)		11/25/20		11/25/25		15,398			15,110			14,782		4.57
PG Dental New Jersey Parent, LLC(7)		First Lien Secured Revolving Loan		1.00%		L+ 9.00%		10.00% (8.75% Cash + 1.25% PIK)		11/25/20		11/25/25		—			—			(20)		(0.01)
														56,274			55,471			55,413		17.13
Heavy Electrical Equipment
PPS CR Acquisition, Inc (dba Power Plant Services)		First Lien Secured Term Loan		1.00%		L+ 6.25%		7.25%		06/25/21		06/25/26		11,151		$	10,940		$	10,940		3.38%
PPS CR Acquisition, Inc (dba Power Plant Services)(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.25%		7.25%		06/25/21		06/25/24		104			103			100		0.03
														11,255			11,043			11,040		3.41
Home Furnishings
Sure Fit Home Products, LLC		First Lien Secured Term Loan		1.00%		L+ 9.75%		10.75%		04/12/21		07/13/23		4,947			4,848			4,419		1.37
														4,947			4,848			4,419		1.37
Household Products
The Kyjen Company, LLC (dba Outward Hound)		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		04/05/21		04/05/26		11,432			11,277			11,348		3.51
The Kyjen Company, LLC (dba Outward Hound)(7)		First Lien Secured Revolving Loan		1.00%		L+ 6.50%		7.50%		04/05/21		04/05/26		385			380			385		0.12
														11,817			11,657			11,733		3.63
Interactive Media & Services
What If Media Group, LLC		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		10/02/19		10/02/24		18,972			18,709			18,857		5.83
														18,972			18,709			18,857		5.83
Internet & Direct Marketing Retail
BBQ Buyer, LLC		First Lien Secured Term Loan		1.50%		L+ 8.00%		9.50%		08/28/20		08/28/25		12,634			12,382			12,846		3.97
Luxury Brand Holdings, Inc		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		12/04/20		06/04/26		5,955			5,854			5,955		1.84
Marlin DTC-LS Midco 2, LLC		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		08/06/21		07/01/25		4,277			4,194			4,193		1.30
Potpourri Group, Inc		First Lien Secured Term Loan		1.50%		L+ 8.25%		9.75%		07/03/19		07/03/24		17,263			17,048			17,263		5.33
														40,129			39,478			40,257		12.44
Investment Banking & Brokerage
JVMC Holdings Corp (f/k/a RJO Holdings Corp)		First Lien Secured Term Loan		1.00%		L+ 6.75%		7.75%		02/28/19		02/28/24		12,946			12,884			12,946		4.00
														12,946			12,884			12,946		4.00
IT Consulting & Other Services
AST-Applications Software Technology LLC		First Lien Secured Term Loan		1.00%		L+ 8.00%		9.00% (8.00% Cash + 1.00% PIK)		01/10/17		01/10/23		3,973			3,954			3,973		1.23
Core BTS, Inc		First Lien Secured Term Loan		1.50%		L+ 6.75%		8.25%		02/01/21		08/30/25		3,317			3,260			3,279		1.01
Core BTS, Inc		First Lien Secured Delayed Draw Loan		1.50%		L+ 6.75%		8.25%		02/01/21		08/30/25		1,658			1,627			1,623		0.50
														8,948			8,841			8,875		2.74
Leisure Facilities
Honors Holdings, LLC(16)		First Lien Secured Term Loan		1.00%		L+ 7.81%		8.81% (8.31% Cash + 0.50% PIK)		09/06/19		09/06/24		9,440			9,307			9,213		2.85
Honors Holdings, LLC(16)		First Lien Secured Delayed Draw Loan		1.00%		L+ 7.60%		8.60% (8.10% Cash + 0.50% PIK)		09/06/19		09/06/24		4,649			4,609			4,537		1.40
Lift Brands, Inc (aka Snap  Fitness Holdings, Inc)		First Lien Secured Term Loan A		1.00%		L+ 7.50%		8.50%		06/29/20		06/29/25		5,645			5,579			5,556		1.72
Lift Brands, Inc (aka Snap  Fitness Holdings, Inc)		First Lien Secured Term Loan B		N/A		9.50%		9.50% (0.00% Cash + 9.50% PIK)		06/29/20		06/29/25		1,249			1,227			1,227		0.38
Lift Brands, Inc (aka Snap  Fitness Holdings, Inc)(9)		First Lien Secured Term Loan C		N/A		9.50%		9.50% (0.00% Cash + 9.50% PIK)		06/29/20		NA		1,268			1,265			1,218		0.38
														22,251			21,987			21,751		6.73
Leisure Products
PlayMonster LLC		First Lien Secured Term Loan		1.00%		L+ 6.00%		7.00%		06/07/21		06/07/26		6,000			5,888			5,580		1.72
PlayMonster LLC(7)		First Lien Secured Delayed Draw Loan		1.00%		L+ 6.00%		7.00%		06/07/21		06/07/26		—			—			(158)		(0.05)
														6,000			5,888			5,422		1.67
Office Services & Supplies
American Crafts, LC		First Lien Secured Term Loan		1.00%		L+ 8.50%		9.50%		05/28/21		05/28/26		8,392		$	8,280		$	8,278		2.56%
Empire Office, Inc		First Lien Secured Term Loan		1.50%		L+ 6.75%		8.25%		04/12/19		04/12/24		12,868			12,700			12,786		3.95
Empire Office, Inc(7)		First Lien Secured Delayed Draw Loan		1.50%		L+ 6.75%		8.25%		08/17/21		04/12/24		—			—			(2)		—
														21,260			20,980			21,062		6.51
Packaged Foods & Meats
Lenny & Larry's, LLC(17)		First Lien Secured Term Loan		1.00%		L+ 8.40%		9.40% (7.68% Cash + 1.72% PIK)		05/15/18		05/15/23		11,094			11,025			10,814		3.34
														11,094			11,025			10,814		3.34
Personal Products
Inspired Beauty Brands, Inc		First Lien Secured Term Loan		1.00%		L+ 7.00%		8.00%		12/30/20		12/30/25		12,397			12,185			12,397		3.83
Inspired Beauty Brands, Inc(7)		First Lien Secured Revolving Loan		1.00%		L+ 7.00%		8.00%		12/30/20		12/30/25		—			—			9		—
														12,397			12,185			12,406		3.83
Property & Casualty Insurance
Policy Services Company, LLC (5)		First Lien Secured Term Loan		1.00%		L+ 6.00%		7.00%		03/06/20		05/31/24		6,046			5,854			5,562		1.72
														6,046			5,854			5,562		1.72
Research & Consulting Services
ALM Media, LLC		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		11/25/19		11/25/24		14,372			14,191			14,134		4.37
Nelson Worldwide, LLC		First Lien Secured Term Loan		1.00%		L+ 10.25%		11.25% (10.25% Cash + 1.00% PIK)		01/09/18		01/09/23		10,333			10,268			10,230		3.16
														24,705			24,459			24,364		7.53
Specialized Consumer Services
HC Salon Holdings, Inc		First Lien Secured Term Loan		1.00%		L+ 8.00%		9.00%		09/30/21		09/24/26		11,667			11,433			11,433		3.53
HC Salon Holdings, Inc(7)		First Lien Secured Revolving Loan		1.00%		L+ 8.00%		9.00%		09/30/21		09/24/26		—			—			—		—
True Blue Car Wash, LLC		First Lien Secured Term Loan		1.00%		L+ 6.82%		7.82%		10/17/19		10/17/24		8,256			8,129			8,181		2.53
True Blue Car Wash, LLC(7)		First Lien Secured Delayed Draw Loan		1.00%		L+ 6.82%		7.82%		10/17/19		10/17/24		2,924			2,896			2,922		0.90
														22,847			22,458			22,536		6.96
Specialized Finance
Golden Pear Funding Assetco, LLC(5)		Second Lien Secured Term Loan		1.00%		L+ 10.50%		11.50%		09/20/18		03/20/24		10,938			10,839			10,938		3.38
WHF STRS Ohio Senior Loan Fund LLC(4)(5)(7)(9)(14)		Subordinated Note		N/A		L+ 6.50%		6.58%		07/19/19		N/A		57,297			57,297			57,297		17.70
														68,235			68,136			68,235		21.08
Systems Software
Arcstor Midco, LLC		First Lien Secured Term Loan		1.00%		L+ 7.00%		8.00%		03/16/21		03/16/27		19,403			19,050			19,179		5.92
														19,403			19,050			19,179		5.92
Technology Hardware, Storage & Peripherals
Source Code Midco, LLC		First Lien Secured Term Loan		1.00%		L+ 6.50%		7.50%		07/30/21		07/30/27		7,648			7,500			7,499		2.32
Source Code Midco, LLC(7)		First Lien Secured Delayed Draw Loan		1.00%		L+ 7.00%		8.00%		07/30/21		07/30/27		—			—			—		—
Telestream Holdings Corporation		First Lien Secured Term Loan		1.00%		L+ 8.75%		9.75%		10/15/20		10/15/25		15,117			14,725			14,966		4.62
Telestream Holdings Corporation(7)		First Lien Secured Revolving Loan		1.00%		L+ 8.75%		9.75%		10/15/20		10/15/25		371			361			382		0.12
														23,136			22,586			22,847		7.06
Total Debt Investments														675,942		$	661,368		$	652,122		201.45%
Equity Investments
Air Freight & Logistics
Motivational CIV, LLC (dba Motivational Marketing, LLC)(4)		Class B Units		N/A		N/A		N/A		07/12/21		N/A		1,250		$	1,250		$	1,250		0.39%
																	1,250			1,250		0.39
Data Processing & Outsourced Services
Escalon Services Inc(4)		Warrants		N/A		N/A		N/A		12/04/20		N/A		709		$	476		$	914		0.28%
																	476			914		0.28
Diversified Support Services
Quest Events, LLC(4)		Preferred Units		N/A		N/A		N/A		12/28/18		12/08/25		317			317			—		—
ImageOne Industries, LLC(4)		Common A Units		N/A		N/A		N/A		09/20/19		N/A		225			—			164		0.05
																	317			164		0.05
Education Services
EducationDynamics, LLC(4)		Preferred Units		N/A		N/A		N/A		09/15/21		N/A		167			167			167		0.05
																	167			167		0.05
Health Care Services
Lab Logistics(4)(20)		Preferred Units		N/A		14.00%		14.00% PIK		10/29/19		N/A		2			857			934		0.29
																	857			934		0.29
Interactive Media & Services
What If Media Group, LLC(4)		Common Units		N/A		N/A		N/A		07/02/21		N/A		8			850			850		0.26
																	850			850		0.26
Internet & Direct Marketing Retail
BBQ Buyer, LLC(4)		Shares		N/A		N/A		N/A		08/28/20		N/A		1,100			1,100			3,311		1.02
Ross-Simons Topco, LP(4)		Preferred Units		N/A		N/A		N/A		12/04/20		N/A		600			600			840		0.26
																	1,700			4,151		1.28
Investment Banking & Brokerage
Arcole Holding Corp.(4)(5)(6)(18)		Shares		N/A		N/A		N/A		10/01/20		N/A		—			6,944			6,800		2.10
																	6,944			6,800		2.10
IT Consulting & Other Services
CX Holdco LLC(4)		Common Units		N/A		N/A		N/A		05/04/21		N/A		660			660			660		0.20
Keras Holdings, LLC(4)		Shares		N/A		N/A		N/A		12/31/20		N/A		496			496			546		0.17
																	1,156			1,206		0.37
Leisure Facilities
Lift Brands, Inc (aka Snap Fitness Holdings, Inc)(4)		Class A Common Stock		N/A		N/A		N/A		06/29/20		N/A		2			1,955			184		0.06
Lift Brands, Inc (aka Snap Fitness Holdings, Inc)(4)		Warrants		N/A		N/A		N/A		06/29/20		06/28/28		1			793			75		0.02
																	2,748			259		0.08
Other Diversified Financial Services
SFS Global Holding Company(4)		Warrants		N/A		N/A		N/A		06/28/18		12/28/25		—			—			—		—
Sigue Corporation(4)		Warrants		N/A		N/A		N/A		06/28/18		12/28/25		22			2,890			3,493		1.08
																	2,890			3,493		1.08
Specialized Finance
WHF STRS Ohio Senior Loan Fund(4)(5)(7)(14)		LLC Interests		N/A		N/A		N/A		07/19/19		N/A		14,324			14,324			14,813		4.58
																	14,324			14,813		4.58
Total Equity Investments																$	33,679		$	35,001		10.81%
Total Investments																$	695,047		$	687,123		212.26%

 

WhiteHorse Finance, Inc. Consolidated Schedule of Investments (Unaudited) September 30, 2021 (in thousands)

Forward Currency Contracts

Counterparty

Currency to be sold

Currency to be purchased

Settlement date

Unrealized appreciation

Unrealized depreciation

Morgan Stanley

C$

24,385 CAD

$

19,440 USD

10/28/21

$

186

$

—

Total

$

186

$

—

(1)															Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the "1940 Act"), and provide collateral for the Company's credit facility.
(2)															The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate ("LIBOR" or "L"), which resets monthly, quarterly or semiannually, the Canadian Dollar Offered Rate ("CDOR" or "C"), or the U.S. Prime Rate as published by the Wall Street Journal ("Prime" or "P"). The one, three and six-month USD LIBOR were 0.08%, 0.13% and 0.16%, respectively, as of September 30, 2021. The CDOR and Prime was 0.45% and 3.25%, respectively, as of September 30, 2021.
(3)															The interest rate is the "all-in-rate" including the current index and spread, the fixed rate, and the payment-in-kind ("PIK") interest rate, as the case may be.
(4)															The investment or a portion of the investment does not provide collateral for the Company's credit facility.
(5)															Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 84.5% of total assets as of the date of the consolidated schedule of investments.
(6)															Investment is a non-controlled/affiliate investment as defined by the 1940 Act.
(7)															The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of September 30, 2021.
(8)															The investment is on non-accrual status.
(9)															Security is perpetual with no defined maturity date.
(10)															Except as otherwise noted, all of the Company's portfolio company investments, which as of the date of the consolidated schedule of investments represented 212.3% of the Company's net assets or 94.2% of the Company's total assets, are subject to legal restrictions on sales.
(11)															The fair value of each investment was determined using significant unobservable inputs.
(12)															The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Spread Above Index and Interest Rate presented represent the weighted average of both contracts.
(13)															Principal amount is non-USD denominated and is based in Canadian dollars.
(14)															Investment is a controlled affiliate investment as defined by the 1940 Act. On January 14, 2019, the Company entered into an agreement with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law ("STRS Ohio"), to create WHF STRS Ohio Senior Loan Fund, LLC ("STRS JV"), a joint venture, which invests primarily in senior secured first and second lien term loans.
(15)															In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 2.75% on its "last out" tranche of the portfolio company's senior term debt, which was previously syndicated into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.
(16)															In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.50% on its "last out" tranche of the portfolio company's senior term debt, which was previously syndicated into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.
(17)															In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.00% on its "last out" tranche of the portfolio company's senior term debt, which was previously syndicated into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.
(18)															On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company's investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.
(19)															At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 2.00% PIK.
(20)															Investment earns 14.00% that converts to PIK on an annual basis and is recorded in interest and dividend receivable in the consolidated statements of assets and liabilities.

 

 

Contacts

Stuart Aronson
WhiteHorse Finance, Inc.
212-506-0500
saronson@higwhitehorse.com

or

Joyson Thomas
WhiteHorse Finance, Inc.
305-379-2322
jthomas@higwhitehorse.com

or

Robert Brinberg
Rose & Company
212-257-5932
whitehorse@roseandco.com

 

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SOURCE WhiteHorse Finance, Inc.