First Eagle Alternative Capital BDC, Inc.

Good morning and welcome to First Eagle Alternative Capital BDC, Inc.' 's earnings conference call for its third fiscal quarter ended September 30th, 2022. It is my pleasure to turn the call over to Sabrina Rusnack-Carlson of First Eagle Alternative Capital BDC, Inc. Ms. Rusnack-Carlson, you may begin.

Thank you, operator. Good morning and thank you for joining us. Joining me on today's call are Chris Flynn, President of First Eagle Alternative Credit, and Jen Wilson, our Chief Accounting Officer and Treasurer. Before we begin, please note that the statements made on this call may constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended. Such statements reflect various assumptions by First Eagle Alternative Capital BDC concerning anticipated results that are not guarantees of future performance and are subject to known and unknown uncertainties. and other factors that could cause actual results to differ materially from such statements. The uncertainties and other factors are, in some ways, beyond management's control and include the factors included in the section entitled Risk Factors in our most recent annual report on Form 10-K, as updated by our quarterly report on Form 10-Q and our periodic and other filings with the Securities and Exchange Commission. Although we believe that the assumptions on which any forward-looking statements are based on are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. First Eagle Alternative Capital undertakes no duty to update any forward-looking statements made herein unless required by law. All forward-looking statements speak only as to the date of this call. Our earnings announcements and 10Q were released yesterday afternoon, copies of which can be found on our website along with our Q3 earnings presentation that we may refer to during this call. A webcast replay of this call will be available until November 9th, 2023, starting approximately two hours after we conclude this morning. To access the replay, please visit our website at www.feacbdc.com. With that, I'll turn the call over to Chris.

Thanks, Sabrina. Good morning, and thank you for joining our earnings call. On today's call, we'll review our third quarter results and share some portfolio highlights. Then Jen Wilson will discuss our portfolio and the financial results in more detail. We know folks are interested in hearing our view on the transaction announcement. I'll address that at the end of the call. But first, let's cover the quarter. The results of the quarter were as expected. We saw some softness in the overall portfolio, given continued softness in the market, but nothing outside of expectations. The positive news is this quarter really showed the earnings power of the portfolio once all of our key areas were implemented. Lower cost of debt, more efficient financing in the Logan Joint Center, coupled with rising rates on a floating rate book. contributed to $0.13 a share at NII versus our dividend of $0.11. We ended the quarter with net asset value of $5.14 per share, down 3% on a quarter-over-quarter basis. The NAB decrease was driven primarily by three positions, the Logan Joint Venture, $0.08, Loadmaster, $0.07, Matilda Jane, $0.02. As of September 30th, FCRD's exposure to Logan's joint venture was 12.5% of our total investments, During the quarter, the Logan JV returned approximately $12.8 million of capital as a result of refinancing via the issuance of a middle market CLO. Interest income was about $200,000 higher than last quarter. This is the result of a combination of new investments in Q2 and Q3, plus increased yield due to rising benchmark rates. The Logan JV dividend was $2.1 million in the third quarter, representing a 24% increase from the Q1 dividend. which is the last dividend paid before the Logan JV refinance was done. The increase in the dividend income is directly correlated with the refinancing of the Logan Joint Venture Facility into a middle market CLO, coupled with increases in LIBOR and SOFR. As discussed in prior calls, one of the expected outcomes of the middle market CLO was a higher Logan JV dividend income to the BDC. As a reminder, the Logan JV is primarily comprised of first lien broadly syndicated CLO loans. From an origination perspective, the overall First Eagle direct lending platform remains robust, deploying over $490 million in first-link capital and middle-market sponsor-backed companies. Given the continued economic and geopolitical landscape, Q3 volume was driven by a mix of new investments and add-on activities. We maintain a cautious view in putting money to work and where new cash flow and asset-based lending deals arise. We are looking for recession-resistant businesses across our main industry verticals. which include healthcare, business and financial services, information and technology, and consumer services. In the third quarter, FCRD invested a total of $24.7 million, of which $12.1 million was in three new portfolio investments, with a remainder to follow on investments, including revolvers and delayed draw funding. We had run repayment of a tradable credit asset during the quarter, with total proceeds of $3.9 million. As I mentioned earlier, the Logan JV returned approximately $12.8 million of capital to its quarter as well. The SRD position portfolio ended the quarter with 73 investments. With that, I'll turn the call over to Jen.