PhenixFIN (PFX) 10 Aug 182018 Q3 Earnings call transcript

Welcome and thank you for joining the Medley Capital Corporation's Fiscal Third Quarter 2018 Conference Call. The Company would like to remind everyone that today's call is being recorded. Please note that this call is the property of Medley Capital Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone number and PIN provided in the Company's earnings press release. At this time, all participants are in a listen-only mode, but will be prompted for a question-and-answer session following the prepared remarks. Markets. from CFO, Corporation Investing Dean Anderson, of call CEO, Brook and today’s Head Allorto, Rick Crowe, Capital on Medley are Capital Taube, Sam Participating Head of

Company's does actual such to statements latest the to Before any as website materially forward-looking projections release, call than Safe we statements undertake forward-looking these statements not historical disclosure Company's the information. and most forward-looking required the risks those which may reason Any forward-looking in constitute press release please disclosed in Company visit expressed with other the Company's may to Today's law. begin, would Company’s conference Harbor update results your by the to could call unless and To the differ obtain fact the those recent uncertainties. www.medleycapitalcorp.com. attention SEC statements any of Company statements by Company's forward-looking that customary and regarding statements The subject Please statement. press for filings are filings the from like also include SEC. at a note

of section In the is available to Mr. Relations Investor addition, Events/Investor third Presentation like Company's the I Investor Presentations the the XXXX in would website. call over fiscal quarter the section now turn Company's in to Brook Taube.

value dividend specifically MCC. of Directors of I talk of constant reported XXth decline the call. quick we announced out first, a a just quarterly $X.XX.The morning and this quarter night, will $X.XX Last an held of the of But shareholders payments June the like The to that $X.XX operator, you, share payable to asset earnings approved NII that’s prepared of in to September X% transaction to on welcome do results Board XXth. and point involving to for strategic quarterly that Thank for The net NAV. we like of I’d quarter in excess dividend and the review ended remarks. MCC. on was per record MCC’s I’d dividend at Xth. everybody important the This the the contributed will be September share quarter over in per for about

of complete we be XXXX, targeted we throughout repositioning dividend the the to by into the that and portfolio NII As have look has time. over covered a potential XXXX,

our during the $XX front, investing to remainder million, went we million was the and companies. the approximately existing $XX support On in of invested SBIC quarter, towards new which portfolio loans portfolio

quarter assets that over from to consists and that quarter XX% XX.X%, the will X, that the million X/XX we’ve of as rated that of I legacy from X to or that’s referred this portfolio, quarter-over-quarter XX.X% XX% Importantly, X.X% non-accruals the million $XX.X during assets are at $XX.X end. the out decline internally legacy declined of now point comprise down X.

We and for priority half, on generating on each approximately remaining asset at end currently the are under remains repositioning complete from or are repositioning reposition the with every end. rated liquidity we they of does by available assets. liquidity then legacy to do scale. team year where of certain at X are work X.X% are just and include on XX% the and on and intend hard these So marked sales that calendar positions continue It the X/XX these our portfolio otherwise X internal rated success. X to stabilizing the at par this The at generating and XXXX. quarter the long-term or asset at The X

the to turn the transaction, results. strategic to call get to review briefly I I’d Before the financial to Rick comments about like

Thank you Brook.

$XX.X one-time of $X.XX a write-off XX, months Net which June per $X.X at investment or income of per $X.XX million value income XX, million was reported March For $X.XX investment net $X.XX of compared The net net $X.XX, to the share June interest company three included was at receivables. ended share XX. or share per asset loss the share. and per

write-off, investment net income was $X.XX. the Excluding

comprised income For $X.X investment income the interest was fee $XX.X and million quarter, million total and million $XX.X of dividend income. $X.X was of of million of income,

and the million million interest in and administrative $XX management in million, and total quarter, $X.X expenses, professional For $X.X base operating fees, of expenses $X.X financing million consisting were and in administrator fees, general expenses.

notes of XX, was $X.X company's outstanding concludes million ratio June X.XX debt total outstanding the the financial revolving Brook. my now at The million $XXX.X debt-to-equity $XXX.X review. to on company's million call I back excluding over payable in equaled June of times turn SBA XX. including $XXX debentures. As and debt facility, million That the credit SBIC

Medley’s MCC in or – Thanks, into regulators, include excuse a and joined Rick. merge MDLY. early other definitive be me, information certain Corporation to customary this and the also and business transaction or may for morning, agreement into MDLY’s had approval of will end is that’s closing And conditions. and this a will you at close the night early X call with Asset by the merger announced Sierra The end and XXXX of to we Management that overview do of part shareholders, Sierra’s acquisition that of those MCC expect We that of who of some subject entered A.M. business XXXX. this Income XXXX Last combination redundant. by hope Sierra,

information to second exciting combined receive financial for and given publicly is reported shareholders consideration and pro on quarter opportunity sheet. assets transformative SIC BDC and internally under Sierra, seventh assets This and will the in will and as for managed managed $X be As effect largest Corporation. end overall as X.XXX MCC’s have well an MCC, is as will internally the MCC Sierra will for as include shareholders combined the traded billion June and These MDLY. shares of the of the the market. based entity in and on forma. largest over billion The XX Sierra management the known $X be MDLY the Income are that company merger, expected of numbers Sierra balance upon of

We bring high we bring meaningful to are the and and at a all stakeholders level. about the benefits to believe they excited comment - combination I’ll potential

increased we shareholders First, expect is will listed. Sierra of moment. liquidity of But consummation this the Sierra. traded do the for not be at will and transaction, Sierra – with public

larger, of the transaction Stock shares the be New public occur again and more does listing will for shareholders increase have the as So share Exchange. the the there the as liquid will MDLY. business York a well of will on MCC believe, we scale Sierra. traded close simultaneous with This

efficiencies few believe we file of reduction from be and that MCC. accretive we both be And combination the Second, the will to costs. comes certain earnings operational this this a expect There will to more duplicative in on within weeks. and proxies detail this the Sierra in

Third, the will current we us give the broader lower larger portfolio. of also and expect more improve diversified to the access This may and over strengthen combination diversification sheet sheet versus balance balance the capital the costs. the businesses potential results meaningfully borrowing markets time MCC portfolio and to enable

we a the drive combined growth Sierra will ability NAV operate continue management grow will then wholly-owned NII over transaction, of expect and and to the Medley’s the in and that as of to contemplation entity part subsidiary. business that asset has time. That is As existing the

the the is we enable combination about market will scale, line the today. create continued businesses. seventh expectation Sierra internally excited complementary three internally can bringing its that BDC questions. open the and This and diversification, the management appreciate to these We call for Again, managed the managed the and together asset in second in Our BDC portfolio support the BDC we business largest are in of growth trade now will with peers. largest

And comes from first from Kyle our Instructions] Jefferies. Joseph [Operator question

Your open. line is now

Good morning taking for Thanks questions. my guys.

for overall? how to transaction combined Are think the Or running Just get thinking sort guys the MCC you independent going you until an about ahead and a think you portfolio company are about trying businesses. it up potentially get continue the closes? about are to or of want of to as sense

question, beyond, but business think sponsor backs. assets, about The been all the That’s from run. is also and the a thinking and Kyle. management, been from balance of risk we XXXX rate management, it’s independently run businesses we origination has and said about portfolio holistically consistently been how sheet do floating prior cetera, MCC et we’ve Look, good these migrating portfolio That us focus has borrowers, larger SIC. a on focused management, of

approach continued have and converge. to and these So, portfolios strategies

at is fair to we to continue we think have look these independently, it say to are going to. I because that

are to the from again, SEC. required we approval We are get –

We are required get to approval. shareholder

certain. believe we this given it’s transformative that expect not But how beneficial do is we So, this likely. is and

But independently. them operate very question. will a we fair So it’s

a eye parallel going look are how next they our will on path We the over months. several on to have combined

me. Yes. And then, from one last one

have you merger guys the entities. the you combined of closes, for and thoughts to runrate the me the on just answer, proxies, right Assuming the but that’s wait can – dividend tell

plan as are is by the place policy. to what these on said change call, stay planned the no Let going several we saying, There first next to during dividend months. me as answer dividends in deal the

entity. in to the reviewed comes it as As is obviously combined dividend. by entity, the expect board That relates pay the to together will continue be likely to we of to a policy combined it anticipation

board the to would me pay But that’s for is will going think we’ve it the So, to premature intend to – historically. is with dividend exceed or time the we tell the can that you we to we and plan board what used that meet going over NII be combined entity. view how a

Got sense. answering questions. my Thanks for it. makes That

you. Thank Kyle. Okay,

the am for I Thank Taube, like would showing further time. you. [Operator remarks. call any Instructions] Brook now this questions back I CEO further to to no at turn And Mr.

operator, and opportunity is continued entities. This mentioned outset. three and an the as we Thank the exciting at you, for support I the appreciate transformative

will look positioning Thank the much and significant MCC, is on in support. the of the upside. terms the larger to in next the earnings market portfolio think direction terrific We end. you MCC’s accretive continued versus in right talking scale best. is diversification current quarter step substantially earnings. everybody For We for scale. entity of to you a this the the pro very forward The Wish the a forma combined be benefit of you

concludes This gentlemen, conference. and today’s in for program. you participation your today's Ladies thank

day. You great may have a all Everyone, disconnect.