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Form 8-K Medley Capital Corp For: Aug 09

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August 9, 2018 5:24 PM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2018
 
Medley Capital Corporation
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
Delaware
 
 
1-35040
 
(State or other jurisdiction of incorporation)
 
27-4576073
(Commission File Number)
 
 
 
(I.R.S. Employer Identification No.)
280 Park Avenue, 6th Floor East
New York, NY 10017
(Address of Principal Executive Offices and Zip Code)
Registrant’s telephone number, including area code: (212) 759-0777
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02    Results of Operations and Financial Condition.

On August 9, 2018, Medley Capital Corporation issued a press release announcing its financial results for the fiscal quarter ended June 30, 2018. The press release is included as Exhibit 99.1 to this Form 8-K.

Item 9.01     Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

Exhibit No.
 
Description
 
 
 
99.1
 



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 9, 2018
 
MEDLEY CAPITAL CORPORATION
 
 
 
 
By:
/s/ Richard T. Allorto, Jr.
 
Name:
Richard T. Allorto, Jr.
 
Title:
Chief Financial Officer



Exhibit 99.1

Medley Capital Corporation Announces June 30, 2018 Financial Results; Board Declares Dividend of $0.10 Per Share for the Fiscal Third Quarter of 2018

NEW YORK, NY (August 9, 2018) - Medley Capital Corporation (NYSE: MCC) (TASE: MCC) (the “Company”) today announced financial results for its fiscal third quarter ended June 30, 2018.

Third Quarter Highlights

•
Net asset value (“NAV”) of $6.43 per share
•
Declared a dividend of $0.10 per share
•
Net investment income of $0.02 per share
•
Legacy Assets declined from 20.4% to 10.9%

Portfolio Investments

The total value of our investments was $634.9 million at June 30, 2018. During the quarter ended June 30, 2018, the Company originated $29.8 million of investments and had $117.7 million of repayments resulting in net repayments of $87.9 million. As of June 30, 2018, the Company had investments in securities of 62 portfolio companies with approximately 63.7% consisting of senior secured first lien investments, 7.5% consisting of senior secured second lien investments, 0.2% in unsecured debt, 12.3% in MCC Senior Loan Strategy JV and 16.3% in equities / warrants. As of June 30, 2018, the weighted average yield based upon the cost basis of our income bearing portfolio investments, excluding cash and cash equivalents, was 10.0%.

Results of Operations

For the three months ended June 30, 2018, the Company reported net investment income per share and net loss per share of $0.02 and $(0.49), respectively, calculated based upon the weighted average shares outstanding. For the nine months ended June 30, 2018, the Company reported net investment income per share and net loss per share of $0.21 and $(1.60), respectively, calculated based upon the weighted average shares outstanding. As of June 30, 2018, the Company’s NAV was $6.43 per share.

Investment Income

For the three months ended June 30, 2018, total investment income was $13.9 million and consisted of $11.2 million of portfolio interest income, $1.9 million of dividend income, and $0.8 million of fee income.

For the nine months ended June 30, 2018, total investment income was $51.6 million and consisted of $42.9 million of portfolio interest income, $5.5 million of dividend income, and $3.2 million of fee income.

Expenses

For the three months ended June 30, 2018, total expenses were $13.0 million and consisted of the following: base management fees of $3.5 million, interest and financing expenses of $6.8 million, professional fees of $0.7 million, administrator expenses of $0.9 million, directors’ fees of $0.5 million, and other general and administrative related expenses of $0.6 million.

For the nine months ended June 30, 2018, total expenses net of the voluntary base management fee waiver were $39.8 million and consisted of the following: base management fees net of fees waived under the voluntary waiver of $11.0 million, interest and financing expenses of $21.0 million, professional fees of $1.8 million, administrator expenses of $2.8 million, directors’ fees of $0.9 million, and other general and administrative related expenses of $2.3 million.

Net Investment Income

For the three and nine months ended June 30, 2018, the Company reported net investment income of $0.9 million and $11.7 million, respectively, or $0.02 and $0.21, respectively, on a weighted average per share basis.

Net Realized and Unrealized Gains/Losses

For the three and nine months ended June 30, 2018, the Company reported net realized losses from investments of $(35.0) million and $(58.4) million, respectively.





For the three and nine months ended June 30, 2018, the Company reported a loss on extinguishment of debt of $(10,848) and $(1.2) million, respectively.

For the three months ended June 30, 2018, the Company reported net unrealized appreciation on investments of $7.2 million, respectively.

For the nine months ended June 30, 2018, the Company reported net unrealized depreciation on investments of $(40.0) million, respectively.

Liquidity and Capital Resources

As of June 30, 2018, the Company had a cash balance of $144.0 million, of which, $71.9 million was held in Medley SBIC, LP.

As of June 30, 2018, the Company had $1.5 million of total debt outstanding under its $150.0 million senior secured revolving credit facility, $150.0 million outstanding in SBA-guaranteed debentures, $74.0 million outstanding in aggregate principal amount of 6.5% unsecured notes due 2021, $89.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023, and $121.1 million of 5.30% unsecured notes due 2024.

Dividend Declaration

On August 2, 2018, the Company’s Board of Directors declared a dividend of $0.10 per share, payable on September 20, 2018, to stockholders of record at the close of business on September 5, 2018. The Company has identified 31%, or $0.0306 per share, of this distribution as an interest-related dividend generally exempt from U.S. nonresident withholding tax. This information is subject to change and the specific tax characteristics of the distribution will be reported to stockholders on Form 1099 after the end of the Calendar year.

Webcast/Conference Call

The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on August 10, 2018.

All interested parties may participate in the conference call by dialing (888) 637-5728 approximately 10-15 minutes prior to the call. International callers should dial (484) 747-6636. Participants should reference Medley Capital Corporation and the Conference ID: 5269769. Following the call you may access a replay of the event via audio webcast. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through the Company's website, http://www.medleycapitalcorp.com. To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Company's website.




Financial Statements

Medley Capital Corporation

Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
 
June 30, 2018
 
September 30, 2017
 
(unaudited)
 
 
ASSETS
 

 
 

Investments at fair value
 

 
 

Non-controlled/non-affiliated investments (amortized cost of $421,439 and $625,108, respectively)
$
358,757

 
$
575,496

Affiliated investments (amortized cost of $98,688 and $91,027, respectively)
98,014

 
90,071

Controlled investments (amortized cost of $231,810 and $197,918, respectively)
178,097

 
171,424

Total investments at fair value
634,868

 
836,991

Cash and cash equivalents
144,002

 
108,572

Interest receivable
4,701

 
9,371

Other assets
4,075

 
3,322

Fees receivable
618

 
765

Deferred offering costs
355

 
307

Receivable for dispositions and investments sold
150

 
232

Total assets
$
788,769

 
$
959,560

 
 
 
 
LIABILITIES
 

 
 

Revolving credit facility payable (net of debt issuance costs of $1,151 and $1,777, respectively)
$
349

 
$
66,223

Term loan payable (net of debt issuance costs of $0 and $1,046, respectively)
—

 
100,954

Notes payable (net of debt issuance costs of $8,818 and $4,123, respectively)
276,330

 
172,752

SBA debentures payable (net of debt issuance costs of $2,422 and $2,846, respectively)
147,578

 
147,154

Management and incentive fees payable
3,533

 
4,312

Interest and fees payable
7,012

 
3,760

Accounts payable and accrued expenses
2,087

 
1,864

Administrator expenses payable
950

 
860

Deferred tax liability
438

 
912

Deferred revenue
179

 
259

Due to affiliate
152

 
81

Total liabilities
$
438,608

 
$
499,131

 
 
 
 
NET ASSETS
 

 
 

Common stock, par value $0.001 per share, 100,000,000 common shares authorized, 54,474,211 and 54,474,211 common shares issued and outstanding, respectively
$
54

 
$
54

Capital in excess of par value
705,046

 
705,046

Accumulated undistributed net investment income
(1,688
)
 
9,528

Accumulated net realized gain/(loss) from investments
(236,183
)
 
(176,663
)
Net unrealized appreciation/(depreciation) on investments, net of deferred taxes
(117,068
)
 
(77,536
)
Total net assets
350,161

 
460,429

Total liabilities and net assets
$
788,769

 
$
959,560

 
 
 
 
NET ASSET VALUE PER SHARE
$
6.43

 
$
8.45





Medley Capital Corporation

Consolidated Statements of Operations
(in thousands, except share and per share data)
 
For the three months ended June 30
 
For the nine months ended June 30
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
INVESTMENT INCOME:
 
 
 
 
 

 
 

Interest from investments
 
 
 
 
 

 
 

Non-controlled/non-affiliated investments:
 

 
 

 
 

 
 

Cash
$
7,736

 
$
16,029

 
$
31,793

 
$
51,064

Payment-in-kind
687

 
2,506

 
3,201

 
8,192

Affiliated investments:
 
 
 
 
 
 
 
Cash
538

 
462

 
1,605

 
1,493

Payment-in-kind
829

 
102

 
2,448

 
304

Controlled investments:
 
 
 
 
 
 
 
Cash
456

 
621

 
1,313

 
1,317

Payment-in-kind
896

 
1,009

 
2,430

 
4,052

Total interest income
11,142

 
20,729

 
42,790

 
66,422

Dividend income, net of provisional taxes ($0 and $0, respectively)
1,925

 
1,050

 
5,541

 
2,745

Interest from cash and cash equivalents
65

 
46

 
123

 
109

Fee income
813

 
1,870

 
3,157

 
4,832

Total investment income
13,945

 
23,695

 
51,611

 
74,108

 
 
 
 
 
 
 
 
EXPENSES:
 

 
 

 
 

 
 

Base management fees
3,533

 
4,450

 
11,376

 
13,461

Incentive fees
—

 
—

 
—

 
896

Interest and financing expenses
6,754

 
7,321

 
20,983

 
24,238

Administrator expenses
950

 
1,075

 
2,774

 
2,988

General and administrative
474

 
424

 
1,903

 
1,904

Professional fees
679

 
616

 
1,821

 
1,930

Directors fees
521

 
152

 
919

 
472

Insurance
130

 
99

 
394

 
298

Expenses before management and incentive fee waivers
13,041

 
14,137

 
40,170

 
46,187

Management fee waiver
—

 
(11
)
 
(380
)
 
(48
)
Incentive fee waiver
—

 
—

 
—

 
(44
)
Total expenses net of management and incentive fee waivers
13,041

 
14,126

 
39,790

 
46,095

Net investment income before excise taxes
904

 
9,569

 
11,821

 
28,013

Excise tax expense
—

 
—

 
(158
)
 
(267
)
NET INVESTMENT INCOME
904

 
9,569

 
11,663

 
27,746

 
 
 
 
 
 
 
 
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
 

 
 

 
 

 
 

Net realized gain/(loss) from investments
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
(35,000
)
 
(33,924
)
 
(58,352
)
 
(40,213
)
Affiliated investments
—

 
—

 
—

 
—

Controlled investments
—

 
(21,159
)
 
—

 
(21,158
)
Net realized gain/(loss) from investments
(35,000
)
 
(55,083
)
 
(58,352
)
 
(61,371
)
Net unrealized appreciation/(depreciation) on investments
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
15,079

 
21,687

 
(13,070
)
 
10,667

Affiliated investments
927

 
1,063

 
282

 
3,047

Controlled investments
(8,759
)
 
24,980

 
(27,218
)
 
16,660

Net unrealized appreciation/(depreciation) on investments
7,247

 
47,730

 
(40,006
)
 
30,374

Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments
194

 
783

 
474

 
783

Loss on extinguishment of debt
(11
)
 
—

 
(1,168
)
 
(456
)
Net gain/(loss) on investments
(27,570
)
 
(6,570
)
 
(99,052
)
 
(30,670
)
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
$
(26,666
)
 
$
2,999

 
$
(87,389
)
 
$
(2,924
)
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE
$
(0.49
)
 
$
0.06

 
$
(1.60
)
 
$
0.05

WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE
$
0.02

 
$
0.18

 
$
0.21

 
$
0.51

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED
54,474,211

 
54,474,211

 
54,474,211

 
54,474,211

DIVIDENDS DECLARED PER COMMON SHARE
$
0.10

 
$
0.16

 
$
0.42

 
$
0.60





ABOUT MEDLEY CAPITAL CORPORATION

Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that trades on the New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE: MCC). Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Our portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.

ABOUT MCC ADVISORS LLC

MCC Advisors LLC is a subsidiary of Medley Management Inc. (NYSE: MDLY, “Medley”). Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise, is a premier provider of capital to the middle market in the U.S. Medley has over $5 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE: MCC) (TASE: MCC) and Sierra Income Corporation, a credit interval fund, Sierra Total Return Fund (NASDAQ: SRNTX) and several private investment vehicles. Over the past 15 years, Medley has provided capital to over 400 companies across 35 industries in North America.1 For additional information, please visit Medley Management Inc. at www.mdly.com.

Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE:MDLX) and (NYSE:MDLQ). Medley Capital Corporation is dual-listed on the New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on both the New York Stock Exchange under the symbols (NYSE:MCV), (NYSE:MCX) and the Tel Aviv Stock Exchange under the symbol (TASE: MCC.B1).

FORWARD-LOOKING STATEMENTS

Statements included herein may contain "forward-looking statements". 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 assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission. Except as required by law, 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.

SOURCE: Medley Capital Corporation

Investor Relations Contact:
Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777

Media Contact:
Erin Clark
Teneo Strategy
646-214-8355



1 Medley Management Inc. is the parent company of Medley LLC and several registered investment advisors (collectively, “Medley”). Assets under management refers to assets of our funds, which represents the sum of the net asset value of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). Assets under management are as of June 30, 2018.



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