WhiteHorse Finance, Inc. Reports Second Quarter 2013 Earnings Results

  WhiteHorse Finance, Inc. Reports Second Quarter 2013 Earnings Results

Business Wire

NEW YORK -- August 13, 2013

WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the "Company") (NASDAQ: WHF)
today reported its financial results for the quarter ended June 30, 2013.

Summary Highlights

  *New investments of $73.5 million in the first six months of 2013, $20.5
    million in the second quarter
  *Net investment income of $4.9 million in the second quarter, an increase
    of 21.0% over the prior quarter
  *$30.0 million bond offering of 6.50% senior notes due July 31, 2020
    completed
  *Second quarter distribution of $0.355 per share

Jay Carvell, WhiteHorse Finance’s Chief Executive Officer commented, “Since
our initial public offering late in 2012, we have been active on several
fronts as we grow our business and progress as a public company. We continue
to add high quality, attractive, risk-adjusted returning investments to our
portfolio. In particular, we have originated $73.5 million of new credit
investments over the last six months, $20.5 million of which was invested in
the second quarter, keeping us on track with our planned expansion and
diversification of the portfolio. This primarily drove the increase in our net
investment income by 21.0% over the prior quarter. Finally, we were also able
to refinance a portion of our short-term floating rate debt with long-term
fixed rate debt; this action provides us long-term financial flexibility to
originate and invest in loans that advance our investment objectives.
Specifically, in July, we completed a public offering of $30.0 million of
6.50% senior notes. We continue to identify and invest in new attractive
opportunities consistent with our investment strategy.”

Portfolio and Investment Activity

As of June 30, 2013, the fair value of WhiteHorse Finance’s investment
portfolio was $237.7 million and comprised of an attractive mix of assets.
Specifically, as of June 30, 2013, the portfolio consisted of 84.8%, or $201.5
million, of first lien secured debt investments. Additionally, WhiteHorse
Finance’s portfolio consisted of 80.1% variable-rate investments (indexed to
LIBOR), which positions our portfolio well for a potential rising interest
rate environment. The overall portfolio consisted of 15 positions across 12
companies with an average investment size of $15.8 million and a weighted
average cash yield of 14.0%.

As of December 31, 2012, the fair value of WhiteHorse Finance’s investment
portfolio was $180.5 million.

For the three months ended June 30, 2013, WhiteHorse Finance invested $20.5
million across four companies. Proceeds from sales and repayments totaled
$14.6 million for the same period. For the six months ended June 30, 2013, the
Company invested $73.5 million in ten portfolio companies with a weighted
average cash yield of 11.3%. Proceeds from sales and repayments totaled $14.8
million for the same period.

On June 28, 2013, the Company amended its agreement with GMT Global, extending
the maturity date of the loan by one year to June 30, 2014 and receiving
additional security enhancements. The annual interest rate on the Company’s
loan to GMT Global remains unchanged at 25.0%.

Results of Operations

For the three and six months ended June 30, 2013, WhiteHorse Finance reported
net investment income of $4.9 million and $8.9 million, respectively, for a
quarter to quarter increase of 21.0%.

For the three and six months ended June 30, 2013, WhiteHorse Finance reported
unrealized depreciation of investments of $1.7 million and $2.2 million,
respectively.

For the three and six months ended June 30, 2013, WhiteHorse Finance reported
a net increase in net assets of $3.2 million and $6.7 million, respectively.

The Company’s NAV was $225.1 million as of June 30, 2013, resulting in an NAV
per share of $15.04, as compared with $229.0 million, or $15.30 per share,
reported as of December 31, 2012.

Liquidity and Capital Resources

As of June 30, 2013, WhiteHorse Finance had cash and cash equivalents of
$103.3 million, compared with $187.8 million as of December 31, 2012,
inclusive of restricted cash and cash equivalents. The decrease in cash on
hand was primarily due to new investments (net of repayments) of $58.7
million. In addition, the company reduced its outstanding borrowings under its
revolving credit facility by $30 million.

As of June 30, 2013, the Company had $21.3 million in outstanding borrowings
under its $150.0 million revolving credit facility and $90.0 million
outstanding under its unsecured term loan.

Distributions

On May 22, 2013, the Company declared a distribution of $0.355 per share for
the quarter ended June 30, 2013. The distribution was payable on July 3, 2013
to stockholders of record as of June 21, 2013. This marks the third
consecutive quarter that the Company has declared a distribution at this rate.

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.

Recent Developments

On July 16, 2013, WhiteHorse Finance priced an offering of $30.0 million of
aggregate principal amount of senior notes (the “Notes”), the net proceeds of
which were used to reduce outstanding obligations under the Company’s
unsecured term loan. The Notes mature on July 31, 2020. The underwriters may
exercise their option to purchase up to an additional $4.5 million aggregate
principal amount of Notes from the Company to cover over-allotments, if any,
on or before August 15, 2013. The Notes began trading on The NASDAQ Global
Select Market under the symbol “WHFBL” on July 22, 2013.

On July 19, 2013, WhiteHorse Finance amended the terms of its unsecured term
loan to lower the annual interest rate by 55 basis points, to LIBOR plus
2.20%. The amendment also extended the maturity date by one year to July 3,
2015.

Conference Call

WhiteHorse Finance will host a conference call to discuss its second quarter
earnings results at 10:00 a.m. ET on Tuesday, August 13, 2013. To access the
teleconference, please dial 706-758-9224 (domestic and international)
approximately 10 minutes before the teleconference’s scheduled start time and
reference ID# 14342688. Investors may also access the call on the investor
relations portion of the Company’s website at
http://phx.corporate-ir.net/phoenix.zhtml?c=251424&p=irol-IRHome.

If you are unable to access the live teleconference, a replay will be
available beginning approximately two hours after the call’s completion
through August 20, 2013. The teleconference replay can be accessed by dialing
404-537-3406 (domestic and international) and entering ID# 14342688. A webcast
replay will also be available on the investor relations portion of the
Company’s website at
http://phx.corporate-ir.net/phoenix.zhtml?c=251424&p=irol-IRHome.

About WhiteHorse Finance, Inc.

WhiteHorse Finance, Inc. is a business development company that originates and
invests in loans to privately held small-cap companies across a broad range of
industries. The Company’s investment activities are managed by its investment
adviser, H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital,
L.L.C. (“H.I.G. Capital”). H.I.G. Capital is a leading global alternative
asset manager managing approximately $13 billion of capital as of June 30,
2013 across a number of funds focused on the small-cap market. 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.

                          (Financial Tables Follow)

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)
                                                        
                                         June 30, 2013     December 31, 2012
                                         (Unaudited)
Assets
Investments, at fair value (cost         $  237,744        $    180,488
$239,817 and $180,377, respectively)
Cash and cash equivalents                   91,335              156,123
Restricted cash and cash equivalents        11,987              31,646
Interest receivable                         4,102               1,474
Deferred financing costs                    3,085               3,184
Prepaid expenses and other receivables     158                367
Total assets                             $  348,411        $    373,282
                                                                             
Liabilities
Credit facility                          $  21,250         $    51,250
Unsecured term loan                         90,000              90,000
Distributions payable                       5,313               1,616
Management fees payable                     2,757               306
Payable for investments purchased           3,532               -
Accounts payable and accrued expenses      461                1,061
Total liabilities                        $  123,313        $    144,233
                                                                             
Net assets
                                                                             
Common stock, par value $0.001 per
share, 14,965,624 shares issued and      $  15             $    15
outstanding,
100,000,000 authorized
Paid-in capital in excess of par            228,466             228,466
Capital distributions in excess of net      (603       )        -
income
Undistributed net investment income         -                   1,164
Net realized loss on investments            (71        )        (71          )
Net unrealized depreciation on             (2,709     )       (525         )
investments
Total net assets                         $  225,098        $    229,049
                                                             
Total liabilities and total net assets   $  348,411        $    373,282
                                                                             
Number of shares outstanding                14,965,624          14,965,624
Net asset value per share                $  15.04          $    15.30



WhiteHorse Finance, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)
                                                 
                       Three months ended June     Six months ended June 30,
                       30,
                       2013             2012       2013            2012
Investment income
Interest income      $ 9,498            $ 9,500      $ 17,880         $ 18,649
Total investment       9,498              9,500        17,880           18,649
income
                                                                        
Expenses
Interest expense     $ 1,304            $ -          $ 2,666          $ -
Organization costs     -                  -            -                96
Base management        1,244              -            2,321            -
fees
Performance-based      1,213              -            2,165            -
incentive fees
Administrative         389                -            778              -
service fees
General and
administrative         498                144          1,091            387
expenses
Total expenses       $ 4,648            $ 144        $ 9,021          $ 483
Net investment       $ 4,850            $ 9,356      $ 8,859          $ 18,166
income
                                                                        
Realized and
unrealized (loss)
gain on
investments
Net realized loss    $ -                $ -          $ -              $ -
on investments
Net change in
unrealized
(depreciation)         (1,683)            1,890        (2,184     )     2,090
appreciation on
investments
Net realized and
unrealized (loss)    $ (1,683)          $ 1,890      $ (2,184     )   $ 2,090
gain on
investments
Net increase in
net assets           $ 3,167            $ 11,246     $ 6,675          $ 20,256
resulting from
operations
Per Common Share
Data
Basic and diluted
earnings per         $ 0.212              N/A        $ 0.446            N/A
common share ^(1)
Dividends and
distributions        $ 0.355              N/A        $ 0.710            N/A
declared per
common share ^(1)
Basic and diluted
weighted average       14,965,624         N/A          14,965,624       N/A
common shares
outstanding ^(1)

(1) For the three and six months ended June 30, 2012, the Company did not have
common shares outstanding and therefore weighted average shares outstanding
information and per share data for this period are not provided.

Contact:

WhiteHorse Finance, Inc.
Alastair Merrick, 212-506-0500
amerrick@whitehorsefinance.com
or
Prosek Partners
Brian Schaffer, 212-279-3115
bschaffer@prosek.com
 
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