Portman Ridge Finance Corporation

excuse me ladies and gentlemen this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience Good day and thank you for standing by and welcome to the second quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I want to hand today's conference over to your speaker, Jihei Linford. Please go ahead.

Thank you. Good morning and welcome to Portman Ridge Finance Corporation's second quarter 2021 earnings conference call. An earnings press release was distributed yesterday, August 5th, after market closed. A copy of the release, along with an earnings presentation, is available on the company's website at www.portmanridge.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements which 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 in the company's filings with the SEC. Portman Ridge Finance Corporation assumes no obligation to update any such forward-looking statements unless required by law. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Portman Ridge. Please go ahead, Ted.

Good morning, and thanks, everyone, for joining our second quarter earnings call. I'm joined today by our Chief Financial Officer, Jason Ruse, and our Chief Investment Officer, Patrick Schaefer. I'll provide brief highlights on the company's performance and activities this quarter. Patrick will provide commentary on our investment portfolio and our markets. and Jason will discuss our operating results and financial conditions in greater detail. Yesterday afternoon, Portman Ridge announced its second quarter 2021 results. We had an active quarter highlighted by the strong financial results and a successful closing of the merger with Harvest Capital Corporation, which was completed on June 9th, 2021. On the corporate front, we were pleased to reinstitute our share repurchase program following the closing of the harvest transaction. During the quarter, we repurchased $380,000 of shares and subsequent to quarter end, we've repurchased an additional $1.2 million of shares. We also announced yesterday that the board has approved a one for 10 reverse stock split that we expect to complete during the third quarter with an effective date to be announced in the coming weeks. Beginning with our second quarter results, we generated net investment income per share of 15 cents and earnings per share of 14 cents. Net asset value per share increased to $2.93 per share as of June 30th, an improvement of one cent from the first quarter and marks the fifth straight quarter that we've increased NAV per share. The increase reflected continued favorable market conditions, including ongoing tightening of credit spreads and was offset partially by approximately two cents per share of one-time HCAP transaction costs. We also had an active quarter in terms of origination and repayment. We successfully invested a total of $62 million during the quarter that generated a weighted average spread of 691 basis points and fully exited or repaid on investments with a carrying value of $70 million. Patrick will provide more detail in his commentary, but we note that our new originations are consistently being underwritten at higher yields, higher than those of our existing debt portfolio investments. implying future increased returns for our shareholders on a risk-adjusted basis. On June 9th, we closed our merger with Harvest, which resulted in a number of benefits to Portman Ridge and shareholders that we have discussed at length in previous calls. These benefits include the adding of size and diversification to the existing platform, the leveraging of public company expenses across a broader asset base, the capability and flexibility to speak for larger deals in the longer term, and this prospect for overall improved trading and liquidity in our stock. The harvest portfolio added complimentary, primarily first-line assets to our investment portfolio, and also resulted in net deleveraging to the tune of about 0.1 turns on both a gross and net basis. We expect the merger to be earnings accretive for shareholders, both in the short and long term, driven by cost synergies across the platform, particularly with respect to public company expenses, but we also expect to benefit from lower financing fees and a lower blended fee structure. On this note, during this quarter, we took the opportunity to reduce our long-term senior unsecured cost of debt by issuing $108 million of four spot 875% senior notes. The proceeds from these notes will be used to redeem in full the $76.7 million of six and an eighth notes during the quarter, and the $28.75 million of HCAP's 6 and 8th notes, which were deemed subsequent to the quarter. Accordingly, this refinancing will result in substantial interest rate savings over time. As we've stated in the past, we expect these interest savings and other cost efficiencies stemming from our consolidation activities to more fully emerge as we continue to spread fixed costs over a significantly larger asset base. In corporate news, we are pleased to report that following the closing of the HCAP transaction, we resumed active participation in our stock repurchase program. As a reminder, on March 11th, 2021, the company's board of directors reauthorized the company to repurchase up to an aggregate of $10 million of its shares in the open market until March 31st, 2022. Also, as previously announced, the company entered a Rule 10b-5-1 stock trading plan to facilitate the repurchase of up to $2.5 million of its shares under the share repurchase program. Since the closing of the HCAP merger and to date, we've purchased approximately a total of $1.6 million of shares. We continue to conduct buybacks under the program throughout the remainder of the year based on market conditions and other factors. We also announced yesterday that the Board of Directors has approved a one for 10 reverse stock split of the company's outstanding common stock, which we expect to complete in the third quarter. This is something we've been talking about for a while, as we believe having the shares undergo a reverse stock split may provide greater flexibility for a wider range of shareholders, and thus ultimately generating value for the benefit of all shareholders. We will make an announcement in the coming weeks regarding the effective date and further details around the reverse stock split. In summary, we feel very good about the first half of 2021, having accomplished a number of key objectives. Our portfolio is performing well, and we are pleased that overall much of the heavy lifting is complete in terms of proactive monetizations and deleveraging. Marketing conditions are strong, with transaction levels remaining high and liquidity is abundant. With our leverage at the lower end of our target range, we have ample capacity to expand investment activity as we continue to rebuild and shift the portfolio composition to BC Partners' originated assets. Internally, we remain very focused on generating cost savings in all areas of the company, in order to maximize value for our shareholders. With that, I will turn the call over to our CIO, Patrick Schaefer, for review of our investment activity.