Q3 2024 Investcorp Credit Management BDC Inc Earnings Call

May 15, 2024

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Operator: Welcome to the call. May I have your first and last name, please? Rachel Smith, and the name of the company you're with, a e r o a i e r e, last letter, A for Alpha. I am so sorry, A-I-E-R E. Oh, thank you. Thank you. Okay, I'm placing you back on the call.

Speaker Change: Welcome to the call May I have your first and last name. Please.

Rachel Smith: Rachel Smith and the name of the company here with.

Speaker Change: H E R O.

Speaker Change: A I E R E.

I am so sorry, eight I E R.

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Operator: You will now be placed into the conference. You are muted on this call. This call is being recorded.

Suhail Shaikh: will now serve as the sole chief investment officer of the advisors. It is an honor to be named CEO at this time, when the current lending environment favors alternative lenders such as business development companies. And we are positioned well to execute our business strategy in the current market. Mike will continue to remain chairman of the board of directors and has been appointed as vice chairman of private credit at Investcorp. I look forward to our continued partnership to grow our private credit platform. With that, I will now turn over the call to Michael.

Speaker Change: Adam will now serve as the sole chief investment officer of the adviser.

Speaker Change: It is an honor to be named CEO at this time, where the current lending environment favors our derivative lenders such as business development companies and we are positioned well to execute our business strategy and the current market micro continuing to remain chairman of the board of directors and has been appointed as Vice chairman of private credit at Investcorp.

Speaker Change: I look forward to our continued partnership to grow our private credit platform with that I will now turn over the call to Mike.

Michael Charles Mauer: Thanks, Suhail. And thank you to everyone for joining us on our third quarter fiscal year 2024 earnings call. It's been a pleasure to serve as CEO of ICMB. I'm proud of the lending platform we've built over the years and look forward to supporting Suhail, the board, and the investment team as they seek to grow Investcorp's private credit platform. On today's call, I will provide an update regarding our performance in the quarter, the market, commentary on our non-accrual investments, our leverage, the dividend, and our outlook. Suhail will walk through our investment activity during the March quarter and after quarter end. Peter will then go through our financial results, and, as always, we'll end with Q&A.

Thanks, Sue Hill, and thank you to everyone for joining us on our third quarter fiscal year 2024 earnings call better places to serve as CEO of Icmp I'm proud of the lending platform. We've built over the years and look forward to supporting Sue Hill the board.

Speaker Change: <unk> and the investment team as they seek to grow invest corp's private credit platform.

Michael Charles Mauer: During the quarter ended March 31, our net investment income was $2.1 million, or 14 cents per share. This was an increase of approximately 32% from the previous quarter's net investment income. Additionally, net asset value per share increased approximately 0.2% to $5.49 per share from $5.48 per share at the end of the prior quarter. The increase in NAV was driven by an increase in capital gains.

Speaker Change: On today's call I will provide an update regarding our performance during the quarter the market commentary on our non accrual investments our leverage the dividend and our outlook through Hell will walk through our investment activity during the March quarter and after quarter end.

Speaker Change: Peter will then go through our financial results and as always we'll end with Q&A.

Speaker Change: During the quarter ended March 31, our net investment income was $2 1 million or <unk> 14 per share. This was an increase of approximately 32% from the previous quarter's net investment income.

Peter: Additionally, net asset value per share increased approximately 2% to $5 49 per share from $5 48 per share.

Peter: At the end of the prior quarter the increase in NAV was driven by an increase in capital gains.

Michael Charles Mauer: As mentioned last quarter, we continue to remain highly focused on portfolio management and risk mitigation, especially for our borrowers that are experiencing periods of stress. We did not add any new positions to non-accrual this quarter, and our positions on non-accrual declined to 3.9% as a percentage of the total fair value of the portfolio, compared to 4.6% as of the previous quarter. We continue to make progress with rotating the portfolio and expect progress on the remaining non-accruals over the next 12 months.

Peter: As mentioned last quarter, we continue to remain highly focused on portfolio management and risk mitigation, especially for our borrowers that are experiencing periods of stress, we did not add any new positions to non accrual this quarter and our positions on nonaccrual declined to 349.

Percent as a percentage of the total fair value of the portfolio compared to four 6% as of the previous quarter we.

Peter: We continue to make progress rotating the portfolio and expect progress on the remaining non accruals over the next 12 months.

Michael Charles Mauer: We partially realized our position in 1888, as the company was sold during the quarter, and the majority of the consideration was received in cash at close. The remainder was deferred non-contingent payments spread over the next 24 months. Other than a discount on the receivables due to the delayed payment, there has not been any material adjustment to the prior carrying value.

We partially realized our position in 18 88 as the company was sold during the quarter. The majority of the consideration was received in cash at closing the remainder is deferred non contingent payments spread over the next 24 months.

Peter: Other than a discount on the receivables due to the delayed payment there has not been any material adjustment to the prior carrying value.

Michael Charles Mauer: We covered our March quarterly dividends, not including the supplemental dividend with Net Investment Income. We expect the company to earn its dividend through the next quarter end, June 30.

Peter: We covered our March quarterly dividend.

Peter: Not including the supplemental dividend with.

Peter: Net investment income, we expect the company to earn its dividend through the next quarter end.

Peter: June 30th.

Michael Charles Mauer: We are pleased to announce that on April 12, 2024, the Board of Directors declared a distribution for the quarter ended June 30, 2024 of 12 cents per share, as well as a supplemental distribution of three cents per share, both payable on June 14, 2024, to stockholders of record as of May 26, 2024. Our gross leverage for this quarter was 1.52. Our net leverage was 1.36, gross leverage was slightly above the range, the target range, and net leverage was squarely in the target range of 1.25 to 1.5. I'll now briefly discuss market trends. We saw transaction bonds decline since the previous quarter.

Speaker Change: We are pleased to announce that on April 12, 2024, the board of directors declared a distribution for the quarter ended June 30th 2024 of <unk> 12 per share.

Speaker Change: As well as a supplemental distribution of <unk> <unk> per share both payable on June 14th 2024 to stockholders of record as of May 26, 2024.

Speaker Change: Our gross leverage this quarter was 1.5 to our net leverage was 1.36 gross leverage was slightly above the range the target range and net leverage was squarely in the target range of 1.25 to 1.5.

Speaker Change: I'll now briefly discuss market trends.

Speaker Change: We saw a transaction volumes decline since the previous quarter. However, in this environment, our investment diligence has not wavered and we continue to be focused primarily on lending to companies that have reasonable leverage.

Michael Charles Mauer: However, in this environment, our investment diligence has not wavered, and we continue to be focused primarily on lending to companies that have reasonable leverage and are supported by strong middle market sponsors. We also continue to take advantage of attractive opportunities in the sector. As we look at borrower operating performance, the credit quality of our portfolio continues to remain solid. Our weighted average loan-to-value ratio for our performing debt investments is approximately 52 percent, an increase from 50 percent last quarter.

Speaker Change: And just are supported by strong middle market sponsors. We also continue to take advantage of attractive opportunities in the secondary.

Speaker Change: As we look at borrowers operating performance the credit quality of our portfolio continues to remain solid our.

Speaker Change: Our weighted average loan to value ratio for our portfolio performing debt investments is approximately 52% an increase from 50% last quarter.

Michael Charles Mauer: We continue rotating and diversifying the portfolio. Our portfolio diversification has improved since the prior year. During the quarter, we had investments in 40 borrowers across 22 industries, which is up compared to 34 borrowers and 20 industries in the prior year's March quarter. Suhail will now walk through our investment activity during the March quarter and after the quarter end. With that, I'll turn it back over to Suhail.

We continue rotating and diversifying the portfolio our portfolio diversification has improved since the prior year during the quarter. We had investments in 40 borrowers across 22 industries, which is up compared to 34 borrowers in 20 industries and the prior year's March quarter.

Suhail: Suhail will now walk through our investment activity during the March quarter and after the quarter end.

Suhail: With that I'll turn it back over to Sunil.

Suhail Shaikh: Thank you, Mike. Our investment activity in new portfolio companies this quarter declined compared to the previous quarter as we saw broader market activity slow down. Sponsored Middle Market Direct Lending New Money Volume in the Quarter Ending March 31 was down almost 10% from the quarter ended December 31. This quarter's portfolio activity was largely driven by investments in existing portfolio companies through M&A, add-ons, and dividend recaps in high-performing credits, where we maintain a relationship with the sponsors.

Thank you, Mike our investment activity in your portfolio companies this quarter declined compared to the previous quarter as we saw broader market activity slowdown.

Sunil: Sponsored middle market direct lending new money volume in the quarter ending March 31st was down almost 10% for the quarter ended December 31st.

Sunil: This quarter's portfolio activity was largely driven by investments in existing portfolio companies through M&A add ons and dividend recaps and high performing credits, where we maintain a relationship with the sponsors.

Suhail Shaikh: We're continuing to execute our portfolio rotation strategy that we've mentioned over the past year. In this time frame, we've rotated about a third of our portfolio, and the weighted average EBITDA of the portfolio went from $42.6 million as of March 31, 2023, to $63.5 million this quarter. Over the same period, the weighted average net leverage of the portfolio increased from 3.8 times to 4.6 times as we continue shifting towards larger, more stable credit. As part of this ongoing rotation, we aim to invest generally in larger credits that are backed by sponsors we know. We're also diligently managing our watchlist names, including ArborWorks, American Nuts, and Klein Hersh.

Sunil: We are continuing to execute our portfolio rotation strategy that we have mentioned over the past year.

Sunil: And this timeframe, we've rotated about a third of our portfolio. The weighted average EBITDA of the portfolio went from $42 $6 million hasn't lost 30, plus 2023 to $63 $5 million. This quarter over the same period the weighted average net leverage for the portfolio increased from $3 eight.

Sunil: Times to four six times as we continue shifting towards larger more stable credits.

Sunil: As part of this ongoing rotation, we aim to invest generally and larger credits that are backed by sponsors right. Now. We are also diligently managing our watch list names, including Abo ups American nuts and client Hush.

Suhail Shaikh: During the quarter and at March 31, we invested in four existing portfolio companies. Funding for new investments totaled approximately $8.9 million at cost, with a weighted average yield of approximately 12.49%. In the same period, we fully realized six portfolio company investments, totaling $21.2 million in proceeds, with an IRR of approximately 17.09%. First, we participated in the Amendment to Extend of PureStar, which can be found on our SOI as AMCP Clean Acquisition Company. PureStar is the largest pure play commercial laundry provider to the hospitality industry in the U.S. P.O.

Speaker Change: During the quarter ended March 31st we invested in Florida existing portfolio companies fundings for new investments total approximately $8 $9 million at cost with a weighted average yield of approximately $12 four 9% in the same period, we fully realized six portfolio company investments totaling 21.

Speaker Change: $2 million in proceeds with an IRR of approximately 17.0 or 9%.

Speaker Change: First we participated in the amend to extend or <unk>, which can be found on our soi as MCP clean acquisition company <unk> is the largest pure play <unk>.

Speaker Change: Laundry provided to the hospitality industry in the U S.

<unk> is an example of a proprietary so steel from the sponsor our yield at cost is approximately 11, 2%.

Suhail Shaikh: Star is an example of a proprietary source deal from the sponsor. A yielded cost is approximately 11.2%. We made another investment in the first lien term loan of Victra, also known as F9 Atlantis Holdings, LLC. As mentioned last quarter, our team has had a long-standing history with this name.

Speaker Change: We made another investment in the first lien term loan of Victor also known as L. S. F. Nine Atlantis Holdings LLC as mentioned last quarter. Our team has had a long standing history with this name victory has the largest exclusive independent retailer.

Suhail Shaikh: Victra is the largest exclusive independent retailer for Verizon World. We purchased Victor in the secondary market at an attractive price. Our yield at cost is approximately 11.9%. We also upsized our investment in an existing portfolio company, Amerit Fleet Solutions. Amerit is one of the largest independent providers of commercial fleet maintenance.

Speaker Change: Wireless.

Speaker Change: We purchased victory on the secondary Maarten market at an attractive price a yield at cost is approximately 11, 9%.

Speaker Change: We also upsized our investment in an existing portfolio company Amerisafe solutions, Amanda just one of the largest independent providers of commercial fleet maintenance.

Suhail Shaikh: We supported the sponsor in right-sizing the capital structure. Yield at cost is approximately 15.5%. Lastly, we invested in the first interim loan of Xcelerate, also known as America's auto auction. Xcelerate is the nation's second largest independent full service used car auction provider.

Speaker Change: We supported the sponsor and right sizing the capital structure yield at cost is approximately 15, 5% lastly.

Speaker Change: Lastly, we invested in the first lien term loan of accelerating also known as Americas auto auction accelerate as the nation's second largest independent full service use sky auction provide.

Suhail Shaikh: We purchased Accelerate in the secondary market at an attractive price. Our yielded cost is approximately 11%. Our team has had a longstanding relationship with Accelerate across the platform.

Speaker Change: We budgeted purchased accelerate in the secondary market and attractive price a yield at cost is approximately 11%.

Speaker Change: Our team has had a longstanding relationship with the same across the platform.

Suhail Shaikh: Additionally, we had six portfolio company realizations during the quarter. First, we fully realized a position in the first lean term loan. In Evergreen North America Acquisitions LLC, I realized an IRR of approximately 13.8%. As Mike mentioned, 1888 was sold during the quarter, and we partially realized a full position, which included the term loan A, the term loan C, the revolver, and our equity position. The majority of our position was received in cash, and the remainder was deferred non-contingent payments that we expect to receive over the next 24 months. We also sold our position in the first clean term loan of Victra to take advantage of an attractive trade opportunity in the secondary market. Our realized IRR for Victra was approximately 14.8%.

Speaker Change: Additionally, we had six portfolio company realizations during the quarter first we fully realize our position in the first lien term loan.

Speaker Change: And Evergreen North America acquisitions, LLC, our realized IRR was approximately 13, 8%.

Mike: Mike mentioned 18, 88 was sold during the quarter and were partially realized in a pole position, which includes the terminal only the term loan C that evolve or not and our equity position.

Mike: The majority of our position was received in cash and the remainder is deferred non contingent payments that we expect to receive over the next 24 months.

Mike: We also sold our position in the first lien term loan of vector to take advantage of an attractive opportunity in the secondary market unrealized hierarchical victory was approximately 14, 8%.

Mike: Our position in the first lien term loan of C. H F is also saw during the quarter and a secondary trade for this trade exit IRR was 10, 8%.

Suhail Shaikh: Our position in the first clean term loan of AHF was also sold during the quarter in a secondary trade. For this trade, our exit IRR was 10.8%. Our position in PureStar was refinanced during the quarter as part of the Amend to Extend transaction. As mentioned earlier, we participated in the new transaction; our realized IRR for the or transaction of pure service was approximately 28.2%. Lastly, our position in the first term loan of Ameriquip was refinanced; however, we did not participate in the refinancing as the loan was refinanced at a significantly lower rate.

Mike: Our position in <unk> was refinanced during the quarter as part of the amend to extend transaction as mentioned earlier, we have participated in the new transaction a realized IRR.

Speaker Change: The old transaction of salvage approximately 28, 2%.

Speaker Change: Lastly, our position in the first lien term loan of met equipped with refinance you did not participate in the refinancing as the loan was refinanced at a significantly lower rate, we continue to maintain discipline around our investment strategy.

Suhail Shaikh: We continue to maintain discipline around our investment strategy, as evidenced by this trade. Our realized IRR was approximately 13.3%. After the quarter end, we invested in one new portfolio company and two existing portfolio companies. We also took a position in one portfolio company. After the quarter-end, we invested in the first-linked term loan of the Crisis Prevention Institute, or CPI, to support the refinancing of the company's capital structure. CPI provides de-escalation training and consulting for human care professionals.

Speaker Change: As evidenced by the strained our realized IRR was approximately 13, 3%.

Speaker Change: After the quarter end, we invested in one new portfolio company and two existing portfolio companies. We also realize that position on portfolio company. After the quarter end, we invested in the first lien term loan of crisis Prevention Institute of CPI and to support the refinancing of the company's capital structure CPI provides D escalation.

Speaker Change: Training and consulting for human can professionals Cps Ventas group portfolio company I yield at cost is approximately 10, 3%.

Suhail Shaikh: CPI is a rental group portfolio company; the yielded cost is approximately 10.3%. We also increased our existing position in the first lean terminal of multicolor corp., also known as label, to take advantage of an attractive price in the secondary market. Our yielded cost is approximately 10.9%. We have also participated in the refinancing of an existing portfolio company, Northstar. Our yielded cost there is 10.2%. And lastly, we realized our first interim loan position in Empire Office, which was refinanced during the quarter.

Speaker Change: We also increased our existing position in the first lien term loan of multi color Corp. Also known as label to take advantage of an attractive price in the secondary market yield at cost is approximately 10, 9%.

Speaker Change: We also participated in the refinancing of an existing portfolio company Northstar yielded cost there is 10, 2%.

Speaker Change: And lastly, we realized our first lien term loan position in Empire office, which was refinanced during the quarter. We have been invested in Empire office. Since April 2019, I realized IRR was approximately 13, 3%.

Suhail Shaikh: We've been invested in Empire Office since April 2019, and our realized IRR was approximately 13.3%. As of March 31, the largest industry concentrations were trading company and distributors at 14.6%, commercial services and supplies at 11.6%, professional services at 9.9%, containers and packaging at 7.6%, followed by internet and direct marketing retail at 4.6%, and IT services at 4.5. Our portfolio companies and 22 GICS industries as of quarter end, including our equity in one position, which is a decrease of three industries from the previous quarter. I would now like to turn the call over to Peter to discuss the financial results.

Speaker Change: As of March 31st largest industry concentrations.

Speaker Change: Trading company and distributors at 14, 6% commercial services and supplies at 11, 6% professional services at nine 9% containers and packaging at seven 6%, followed by Internet and direct marketing and retail at four 6% and service.

Speaker Change: Says at four 5%.

Speaker Change: But for your companies and 22 G Ics industries as of quarter end.

Speaker Change: Our equity and warrant positions, which is a decrease of three industries from the previous quarter.

Peter: I would now like to turn the call over to Peter to discuss our financial results.

Peter Sattelmair: Thanks, Suhail. So the quarter ended March 31, 2024. Our net investment income was 2.1 million or 0.14 cents per share, an increase of approximately 32% from the previous quarter's net investment income of 1.6 million or 11 cents per share. The fair value of our portfolio was $192.2 million compared to $207.4 million on December 31st. Our net assets were $79.1 million, an increase of $0.3 million from the prior quarter. Our portfolio's net increase in net assets from operations this quarter was approximately 2.4 million.

Peter T. Sattelmair: Thanks, Suhail. So the quarter ended on March 31, 2024. Our net investment income was 2.1 million, or 0.14 cents per share, an increase of approximately 32% from the previous quarter's net investment income of 1.6 million, or 11 cents per share. The fair value of our portfolio was $192.2 million compared to $207.4 million on December 31st. Our net assets were $79.1 million, an increase of $0.3 million from the prior quarter. Our portfolio's net increase in net assets from operations this quarter was approximately 2.4 million.

Peter: Thanks, Danielle for the quarter ended March 31, 2024, our net investment income with $2 1 million or <unk> <unk> per share an increase of approximately 32% from the previous quarter's net investment income of $1 6 million or <unk> 11 per share.

Peter: Fair value of our portfolio was $192 2 million compared to $207 4 million on December 31.

Peter: Our net assets were $79 1 million, an increase of <unk> 3 million from the prior quarter.

Danielle: Our portfolio's net increase and net assets from operations. This quarter was approximately $2 4 million.

Peter T. Sattelmair: The weighted average yield of our debt portfolio was 12.36% compared to 11.46% for the quarter ended December 31. As of March 31st, our portfolio consisted of 40 borrowers. Approximately 83.82% of our investments were first lien, and the remaining 16.18% was invested in equity, warrants, and other positions. 99.6% of our debt portfolio was invested in floating rate instruments and 0.4% in fixed rate investments. The average floor in our debt investments was 1%.

Danielle: The weighted average yield of our debt portfolio was 12, 36% compared to 11.46% for the quarter ended December 31st.

Speaker Change: As of March 31, our portfolio consisted of 40 borrowers approximately 80, 382% of our investments were first lien and the remaining $16. One 8% is invested in equity warrants and other conditions.

99, 6% of our debt portfolio was invested in floating rate instruments and 0.4% in fixed rate investments.

Speaker Change: The average floor on our debt investments was 1%.

Peter T. Sattelmair: Our average portfolio company position on an F&B basis was approximately $4.8 million, and our largest portfolio company investment on an F&B basis was Bioplan at $14.6 million. We had a gross leverage of 1.52x and a net leverage of 1.36x as of March 31st, compared to 1.70x gross and 1.51x net, respectively, for the previous quarter. With respect to our liquidity, as of March 31, we had approximately $12.9 million in cash, of which approximately $10.2 million was restricted cash, with $42.5 million of capacity under our revolving credit facility with capital. Additional information regarding the composition of our portfolio With that, I would like to turn the call back over to Mike.

Speaker Change: Our average portfolio company position on F&B basis was approximately 4.8 million and our largest portfolio company investment on a F N b basis Bioclean at $14 6 million.

Speaker Change: We had a gross leverage of one five to <unk> and a net leverage of one three <unk> as of March 31, compared to $1 seven I'll ask growth and 1.5 onex net respectively in the previous quarter.

With respect to our liquidity at March 31, we had approximately $12 9 million in cash of which approximately $10 $2 million with restricted cash with $42 $5 million of capacity under our revolving credit facility with capital one.

Speaker Change: Additional information regarding the composition of our portfolio is included in our Form 10-Q, which was filed yesterday with that I would like to turn the call back over to Mike. Thank you Peter.

Michael Charles Mauer: Thank you, Peter. As we look towards the last quarter of our fiscal year, our top priority is focused on capital preservation and maintaining a stable dividend. As Suhail mentioned, we are actively working to rotate and diversify the portfolio into more stable credits. We're confident in our pipeline and our capacity to invest our capital in high-quality opportunities. Our approach to credit selection continues to be disciplined, and we're committed to maintaining the quality of our portfolio. That concludes our prepared remarks. Operator, please open the line for Q&A.

Speaker Change: As we look towards the last quarter of our fiscal year. Our top priority is focused on capital preservation and maintaining a stable dividend as Sue mentioned, we are actively working to rotate and diversify the portfolio into a more stable credits, we're confident in our pipeline and our capacity to invest our capital in the high <unk>.

Quality opportunities our approach to credit selection continues to be disciplined and we're committed to maintaining the quality of our portfolio.

Speaker Change: That concludes our prepared remarks, operator, please open the line for Q&A.

Operator: Ladies and gentlemen, at this time, we will conduct a question and answer session. If you would like to state a question, please press 7 pounds on your phone now, and you will be placed in the queue in the order received. Or press 7 pounds at any time to remove yourself from the queue. Please listen for your name to be announced and be prepared to ask your question when prompted. We are now ready to begin. I see our first question comes from Mr. Christopher Nolan of Ladenburg-Talman.

Speaker Change: Ladies and gentlemen at this time, we will conduct a question and answer session. If you would like to state. A question. Please press seven pound on your phone now and you will be placed in the queue in the order received our press seven pound at anytime to remove yourself from the queue.

Speaker Change: Please listen for your name to be announced and be prepared to ask your question when prompted.

Speaker Change: We are now ready to begin.

Speaker Change: I see our first question comes from Mr. Christopher Nolan with Ladenburg Thalmann.

Speaker Change: Go ahead please.

Christopher Whitbread Patrick Nolan: Hi Suhail, congratulations on your elevation. And Mike, it was good working with you. I look forward to continuing working with you. A couple of questions. First, what change is there?

Speaker Change: Hi, so he'll congratulations on your elevation.

Speaker Change: Mike It was good working with you.

Speaker Change: Looking forward to continue working with you a couple of questions first on the change in the yields in the portfolio what was the driver for that please.

Yes.

Suhail Shaikh: Chris, thank you for the comments. Largely just the market, as we're seeing, basically, we're seeing spreads start to tighten, and I'm sure you're hearing this from others as well. I mean, the market has gotten competitive. Generally, a lack of deal flow and lack of supply in the marketplace for new platform transactions. So we're starting to see some yield compression.

Speaker Change: Great. Thank you.

Speaker Change: Thank you for the comments.

Speaker Change: Large largely just the market.

Speaker Change: Basically we're seeing spreads start to tighten.

Speaker Change: And.

Speaker Change: I'm sure you're hearing this from others as well I mean, the market has gotten competitive.

Speaker Change: Generally a lack of deal flow and lack of supply in the marketplace.

Speaker Change: Platform.

Speaker Change: Transactions.

Speaker Change: We're starting to see some yield compression.

Christopher Whitbread Patrick Nolan: Okay. And then I guess Klein Hirsch, which is one of your larger non-non-accrual properties. Any update you can provide on that?

Speaker Change: Okay.

Speaker Change: And then I guess.

Klein Hirsch: Klein Hirsch, which.

Klein Hirsch: Which is one of your larger none.

Klein Hirsch: Hmm.

Klein Hirsch: Non accruals.

Speaker Change: Any update you can provide on that.

Suhail Shaikh: Not at this moment. We are actively working on the situation. It's a live discussion going on. We believe we're in a pretty good place, but we'll have more to share on that as, you know, restructuring gets finalized.

Klein Hirsch: Not at this moment.

Klein Hirsch: We are actively.

Klein Hirsch: Working on the situation.

Speaker Change: It's a life discussion going on.

Speaker Change: We believe we're in a pretty good place.

Speaker Change: But we'll have more to share on that.

Yes.

Speaker Change: Restructuring gets finalized.

Christopher Whitbread Patrick Nolan: And then, Mike, on your comments that you expect that the earnings will cover the dividend in the June quarter, should we read that as covering the base dividend or the entire base end supply?

Speaker Change: And then Mike on your comments that you expected the earnings will cover the dividend in the June quarter shall.

Mike: Should we read that as covering the base dividend or the entire base and supplement.

Michael Charles Mauer: Yeah, Chris, at this point, the base, the supplement, I'm not sure that we will cover at this point. We'll see how that plays out.

Yeah, Chris at this point the base.

Speaker Change: Couple of man I'm not sure of it.

Speaker Change: We will cover at this point, we will see how that plays out.

Christopher Whitbread Patrick Nolan: Okay, and the final question, and I know it's a little far out, but, you know, looking at the 2026 notes, which have a pretty attractive coupon of 4.875%, I know it's early days, but, If you were to refinance, it would probably be a much higher coupon. What are your thoughts in terms of your strategy for that, or are you still in a wait-and-see mode?

Speaker Change: Okay, and then final question and I know, it's a little far out, but you know looking at the 'twenty 'twenty six notes, which have a pretty attractive coupon of four 875%.

Speaker Change: I know, it's early days, but.

Speaker Change: If you were to refinance it would be probably a much higher coupon.

Speaker Change:

Speaker Change: What are your thoughts in terms of your strategy for that or are you still in a wait and see mode.

Michael Charles Mauer: We've been talking about it, but we are developing a strategy around it. As you've seen, we've brought down our net leverage and our total leverage over time. So that'll be part of our discussions as we get closer and closer to that. Okay, thank you for taking my question.

Speaker Change: We are we've been talking about it but we are developing strategy around it as you've seen we've brought down our net leverage and our total leverage over time, so that'll be part of our discussions as we get closer and closer to that okay.

Speaker Change: Thank you for taking my questions.

Speaker Change: Thank you very much.

Speaker Change: Yes.

Christopher Whitbread Patrick Nolan: Thank you very much. Our next question comes from Sean Paul Adams with Raymond James. And again, if you have any questions, please press 7. Okay.

Speaker Change: Thank you very much. Our next question comes from Sean Paul Adams with Raymond James and if you have any questions. Please spread seven.

Sean Paul Adams: It looks like 1888 Industrial Services was sold off from the portfolio. Can you touch on and provide a little bit more color on kind of the resolution timeframe for the other non-accruals in the portfolio? Additionally, kind of talk about the overall.

Operator: Go ahead. Hey guys, good morning.

Speaker Change: Go ahead, hey, guys good.

Speaker Change: Good morning.

Speaker Change: Looks like.

Speaker Change: 888, industrial services was sold off from the portfolio.

Speaker Change: Can you touch and provide a little bit more color on kind of the resolution timeframe for the other non accruals in the portfolio.

Speaker Change: Additionally, kind of talk about the overall health of the credit portfolio looking forward.

Suhail Shaikh: I think the overall health of the portfolio; we're actually pretty pleased with generally all the names. I think you've seen, as I mentioned on the watch list names, Arbor Works, American Nuts, and Klein Hersh.

Mike: Sure, Mike why don't I start maybe jump in.

Speaker Change: I think overall health of the portfolio, we're actually pretty pleased with generally all the names I think.

Speaker Change: You have seen as I mentioned on the watch list names.

Speaker Change: <unk> nuts client Hush, we're actively working on those.

Suhail Shaikh: We're actively working on those situations, they're evolving, and from where we have those positions marked and where we think the outcome is going to be, we feel pretty good about the portfolio. There's nothing imminent, Sean, as far as we can tell from the portfolio. There are one or two names that are developing. But there's nothing, I think, at this point, alarming in the portfolio that we would say are going to be problems coming down the pike, other than perhaps one or two situations that are developing in real time.

Speaker Change: Those situations.

Speaker Change: They are evolving.

Speaker Change: From where we have the port those positions Mark and Bob.

Speaker Change: Outcome is going to be we feel pretty good about.

Speaker Change: The portfolio.

Sean: Nothing imminent Sean.

Speaker Change: And as far as we can.

Speaker Change: One or two names that are developing.

Speaker Change: And there's nothing I think.

Speaker Change: At this point alarming in the portfolio.

Speaker Change: Sam I think.

Speaker Change: Problems coming down the pike other than perhaps one or two situations that are.

Speaker Change: Developing over time.

Michael Charles Mauer: Yeah, I would. I'd be the only thing I did expand on there is the watch list that we talked about, the existing non-accruals. I think we have constructive dialogues going on, and we have very good lender groups on all those, so

Speaker Change: Yes.

Speaker Change: The only thing that I did expand on there is that.

Speaker Change: The watch list that we talked about the existing non accruals I think we have constructive dialogues going on and we have.

Speaker Change: Very good lender groups on all of those so.

Sean Paul Adams: Got it. Thank you for the color. I appreciate it.

Speaker Change: Got it thank you for the color I appreciate it.

Operator: Thank you very much. And again, if you have any questions, please press seven pounds, and we will open up your line. I don't see any other questions. I'd like to thank everyone.

Speaker Change: Thank you very much and again, if you have any questions. Please.

Speaker Change: Please press seven pounds, and we will open up your lines.

Speaker Change: Okay.

Speaker Change: I don't see any other questions.

Michael Charles Mauer: I'd like to thank everyone and appreciate all of your time. And with that, we will talk to you soon.

Operator: Thank you, everyone. And this concludes today's conference call. Thank you for attending.

Speaker Change: I'd like to thank everyone and appreciate all of your time and with that we will talk to you soon.

Speaker Change: Thank you everyone.

Speaker Change: Thank you everyone and this concludes today's conference call. Thank you for attending.

Speaker Change: Okay.

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