Fifth Street Finance Corp. Releases Its June 2014 Newsletter: Using the
Platform to Drive Transactions
WHITE PLAINS, NY, June 19, 2014 (GLOBE NEWSWIRE) -- Fifth Street Finance Corp.
(NASDAQ:FSC) ("FSC") released its June 2014 newsletter today.
Origination Platform Driving Deal Flow
FSC continues to benefit from the power of the Fifth Street platform, one of
only a handful of leading middle market sponsor finance origination platforms.
The platform allows us to source "proprietary" transactions where sponsors
desire certainty of close and/or specific pricing. In these instances, a
sponsor may only want to work with existing lenders or with a select group of
lenders.In other situations, we work with multiple sponsors who are competing
for the same asset, which increases the likelihood of FSC closing a
transaction.The trust that private equity firms have in Fifth Street to
execute on transactions is a testament to our flexibility, reputation and
Managing Liquidity and Positioning for Growth
During the March quarter, we operated our business with strong average
leverage and ended the quarter with a debt-to-equity ratio slightly over
0.8x.We are still comfortable operating within a higher than normal leverage
range based on our visibility into anticipated repayments of several larger
loans, one of which has already occurred in the June quarter.We carefully
manage anticipated repayments and work directly with sponsors on their plans
for new fundings.
We and our partner continue to actively ramp assets into Senior Loan Fund JV 1
("SLF JV 1"). Once SLF JV 1 is fully funded, it should be accretive to
earnings and generate a higher return on equity than FSC's current portfolio
due to additional leverage and management fees being charged on net assets,
not gross assets.We look forward to providing future updates on our progress
funding the joint venture, and are optimistic that SLF JV 1 should be fully
funded by the end of the September quarter.
In addition to SLF JV 1, we are in active discussions with several other third
parties about additional SLF partnerships. We have plenty of capacity to grow
SLV JV 1 and other similar joint ventures. The ability to attract experienced
institutional investors as partners is a further vote of confidence in Fifth
Street's origination platform, underwriting and portfolio management
February Bond Issuance Reflects Positive Fundamentals
In February, we issued $250 million of 5-year unsecured institutional term
notes with a coupon of 4.875%.The notes have traded higher since the issuance
and are now priced above par at 104, with an implied yield-to-maturity close
to 4%.We are pleased with the performance of our inaugural institutional bond
issuance and believe it provides an attractive benchmark for future issuances.
The multiple steps taken to diversify our liability structure and improve the
quality of our assets were also recently recognized by Standard & Poor's
Ratings Services, when they revised our investment grade unsecured debt rating
outlook to "Positive."
Share Buyback in Place
Our Board of Directors previously authorized a $100 million stock repurchase
program.We executed a portion of the repurchase program on December 13, 2013
at an average price per share of approximately $8.98.We maintain the
flexibility to continue to use capacity under our stock repurchase program if
shares trade at a meaningful discount to net asset value per share.
Board Plans to Declare Dividends in July
Our Board of Directors previously declared monthly dividends of 8.33 cents per
share through August of 2014.The Board understands the importance of
providing shareholders with visibility on the dividend, and plans on declaring
additional monthly dividends at its upcoming Board meeting in July.
The Fifth Street Team
About Fifth Street Finance Corp.
Fifth Street Finance Corp. is a leading specialty finance company that
provides custom-tailored financing solutions to small and mid-sized companies,
primarily in connection with investments by private equity sponsors. The
company originates and invests in one-stop financings, first lien, second
lien, mezzanine debt and equity co-investments. The company's investment
objective is to maximize its portfolio's total return by generating current
income from its debt investments and capital appreciation from its equity
investments. The company has elected to be regulated as a business
development company and is externally managed by Fifth Street Management LLC.
Named 2013 "Lender Firm of the Year" by The M&A Advisor, Fifth Street
Management is an SEC-registered investment adviser and leading alternative
asset manager with over $4 billion in assets under management. With a track
record of more than 15 years, Fifth Street's nationally recognized platform
has the ability to hold loans up to $150 million, commit up to $250 million
and structure and syndicate transactions up to $500 million. FSC's website
can be found at fsc.fifthstreetfinance.com.
This press release may contain certain forward-looking statements, including
statements with regard to the future performance of the company.Words such as
"believes," "expects," "estimates," "projects," "anticipates," and "future" or
similar expressions are intended to identify forward-looking statements.These
forward-looking statements are subject to the inherent uncertainties in
predicting future results and conditions.Certain factors could cause actual
results to differ materially from those projected in these forward-looking
statements, and these factors are identified from time to time in the
company's filings with the Securities and Exchange Commission.The company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
CONTACT: Investor Contact:
Dean Choksi, Executive Director of Finance
& Head of Investor Relations
(212) 279-3115 ext. 252
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