Q1 2025 Portman Ridge Finance Corp Earnings Call
Unknown Executive: www.portmanridge.com in the investor relations section and should be reviewed in conjunction with the company's form 10-Q filed yesterday with the FEC.
Well go to rich China's Corporation's first quarter ended March 31, 25 earnings Conference call and earnings Press release was distributed yesterday may eight Chinese quantified after the close of the market a.
Unknown Executive: As a reminder, this conference call is being recorded for replay purposes.
Unknown Executive: Please note that today's conference call may contain forward-looking statements which 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 in the company's file list with the S&P. assumes no obligation to update any such forward-looking statements unless required by law.
A copy of the release along with an earnings presentation is available on the company's website at www dot quite big Red Dot com in the Investor Relations section and should be reviewed in conjunction to the company's Form 10-Q filed yesterday with the S. E C. As a reminder, this conference.
Call is being recorded for replay purposes.
Please note that todays conference call may contain forward looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties.
Ted Goldthorpe: Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President and Director of Portman Ridge Finance Corporation.
Actual results may differ materially from those in the forward looking statements.
Resolved, okay number of factors, including those described in the company's filings with the S. E C.
Unknown Executive: Chief Financial Officer, and Patrick Schafer, Chief Investment Officer.
Ted Goldthorpe: With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Portman Ridge. Good morning.
Portman Ridge Finance Corporation assumes no obligation to update any such forward looking statements unless required by law.
On today's call will be tagged Goldberg, Chief Executive Officer, President and director of Parkland, Rich Finance Corporation, Brandon Wang Chief Financial Officer, and Patrick Schafer, Our Chief investment officer with that I would now like to turn the call over to Tad Goldfarb.
Ted Goldthorpe: Welcome to our first quarter 2025 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satoren and our Chief Investment Officer, Patrick Schafer.
Ted Goldthorpe: Following my opening remarks on the company's performance and activities during the first quarter, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail. During the first quarter, despite operating under unpredictable macro and economic environment, we continue to execute our discipline investment strategy, deploying approximately $17.5 million into strong defensively positioned opportunities in our pipeline. We also had $15.7 million of repayments and sales during the quarter, resulting in our return to net deployers of capital.
Speaker Change: She executive officer of Wideband Reg.
Good morning, welcome to our first quarter 2025 earnings call.
Speaker Change: And today by our Chief Financial Officer Brendan.
Speaker Change: Our Chief investment Officer, Patrick Schafer.
Speaker Change: Following my opening remarks on the company's performance and activities during the first quarter, Patrick will provide commentary on our investment portfolio and our markets Brandon will discuss our operating results and financial condition in greater detail.
Ted Goldthorpe: Additionally, we are enthusiastic about the strategic benefits the combination with Logan Ridge provides. This merger represents a meaningful step forward for the company with the potential to provide increased scale, improved liquidity, and greater operational efficiency, all key drivers in enhancing long-term shareholder value.
Speaker Change: During the first quarter, despite operating under unpredictable macro and economic environment, we continue to execute our disciplined investment strategy deploying.
Speaker Change: Approximately $17 $5 million into strong essentially position opportunities in our pipeline.
Speaker Change: We also had $15 $7 million of repayments and sales during the quarter, resulting at R. R.
Ted Goldthorpe: We encourage all shareholders to attend the meeting and vote for the proposed merger as recommended by the board of directors of both companies. We're excited about the road ahead and look forward to sharing more updates soon.
Speaker Change: Returns and that's a part of the capital.
Speaker Change: Additionally, we are enthusiastic about the strategic benefits the combination with Morgan rigs provide.
Unknown Executive: The Board of Directors approved a base distribution of $0.47 per share.
Speaker Change: This merger represents a meaningful step forward for the company.
Ted Goldthorpe: Of note, earlier this year, we modified our dividend policy and introduced a stable base distribution of $0.47 per share, which is anticipated to be sustainable across marketplace. Looking ahead, the current macro economic backdrop shaped by shifting trade dynamics, inflation, and ever evolving monetary policy continues to drive uncertainty in the market. These dynamics highlight the importance of taking a long-term approach grounded in disciplined credit selection and prudent risk management, and we view this period as an opportunity to further differentiate through thoughtful deployment and rigorous underwriting. I remain confident in our ability to drive the best outcome for shareholders and, most importantly, credit quality of the overall portfolio.
To provide increased scale improved liquidity and greater operational efficiency, all key drivers enhancing long term shareholder value.
Speaker Change: We encourage all shareholders to attend the meeting and vote for the proposed merger.
Speaker Change: The board of directors of both companies.
Speaker Change: We're excited about the road ahead and look forward to sharing more updates.
Speaker Change: Our order board of directors approved a base distribution 47 per share of note earlier. This year, we modified our given policy and introduced a stable base.
Speaker Change: Distribution of 47 cents per share, which is anticipated to be sustainable across market cycles.
Speaker Change: Looking ahead, the current macro economic backdrop shaped by shifting trade dynamics inflation and ever evolving monetary policy continues to drive uncertainty the market. These dynamics highlight the importance of taking a long term ground.
Ted Goldthorpe: Overall, we're excited about the opportunities ahead on the Portman side, in addition to the new opportunities that should arise. following the proposed merger with Logan Bridge due to scale, expected synergies, and cost-savings benefits. We anticipate being active in the market, and with a healthy pipeline, fortified balance sheet, prudent investment strategy, and experienced management team, we remain confident in our ability to generate strong returns. Risk Adjustment Returns and derive long term value for our shareholder.
Speaker Change: Grounded in disciplined credit selection.
Speaker Change: Credit risk management, which we view this period as an opportunity to further differentiate with thoughtful deployment first underwriting.
Speaker Change: <unk> confident in our ability to drive the best outcome for shareholders and most importantly credit quality of the overall portfolio.
Speaker Change: Overall, we're excited about the opportunities ahead on the corporate side. In addition to the new opportunities that should arise.
Patrick Schafer: With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity. Thanks, Ted. Turn now to slide five of our presentation, Insensitivity of our Earnings to Interest. As of March 31st, 2025, approximately 88.5% of our debt securities portfolio was based on a floating rate with a spread pegged to an interest rate index such as SOFR or prime rate, with substantially all of these being linked together. As you can see from the chart, SOFR rates have slightly decreased over the last few quarters, impacting the current quarter net investment income.
Speaker Change: Following the proposed merger of our slogan for age due to scale expected synergies and cost savings benefits we.
Speaker Change: We anticipate being active in the market and with a healthy pipeline fortified balance sheet prudent investment strategy and experienced management team, we remain confident in our ability to generate strong returns.
Speaker Change: Adjusted returns and drive long term value for our shareholders.
Speaker Change: I will turn the call over to Patrick Schafer, Our Chief investment Officer for a review of our investment activity.
Patrick Schafer: Skipping down to slide 10, originations for the quarter were higher than last quarter and above the current quarter repayment and sales levels, resulting in net deployment of approximately $1.8 million. Overall yield on par value of new investors during the quarter was 10.6%, slightly below the yield of the overall portfolio at 11.0% on par value. Our investment portfolio at year-end remained highly diversified. We entered the first quarter with a debt investment portfolio when excluding our investments in CLO funds, equities, and joint ventures spread across 24 different industries with an average par balance of $2.6 million. Turning to slide 11, in aggregate, we had six investments on non-equal status at the end of the first quarter of 2025, representing 2.6% and 4.7% of the company's investment portfolio at fair and cost value respectively.
Patrick Schafer: Thanks Ted.
Speaker Change: Turning now to slide five of our presentation and sensitivity of our earnings to interest rates.
Speaker Change: As of March 31, 2025, approximately 88, 5% of our debt Securities portfolio was based on a floating rate with a spread.
Speaker Change: Interest rate index, such as sofa or primary with substantially all of these being linked to so.
Speaker Change: As you can see from the chart separate them slightly decreased over the last few quarters impacting the current quarter net investment income.
Speaker Change: Skipping down for 10 originations for the quarter were higher than last quarter and above the current quarter repayment in sales levels, resulting in that deployment of approximately $1.8 million.
Speaker Change: Overall yield on par value of new investments during the quarter was 10, 6% slightly below the yield of the overall portfolio at 11.0% on par value.
Speaker Change: Our investment portfolio at year end remained highly diversified we ended the first quarter with a debt investment portfolio when excluding our investment in CLO funds equities and joint ventures spread across 24 different industries with an average par balance of $2 $6 million.
Patrick Schafer: This compares to six investments on non-approval status as of December 31st, 2024, representing 1.7% and 3.4% of the company's investment portfolio at fair value and cost respectively. On slide 12, excluding our non-accrual investments, we have an aggregate debt investment portfolio of $314.1 million at fair value, which represents a blended price of 90.5% on par value and is 91.1% comprised of first-time loans at par value. Soon after recovery, on March 31st, 2025, for values like a potential of $32.8 million of incremental net value, or an 18.3% increase to net. When applying an illustrative 10% default rate and 70% recovery rate, our debt portfolio would generate an incremental $2.43 per share of NAB, or a 12.5% increase as it rose.
Speaker Change: Turning to slide 11 in aggregate, we had six investments on nonaccrual status at the end of the first quarter of 2020, representing.
Speaker Change: Representing two 6% and four 7% of the company's investment portfolio, there and cost value respectively.
Speaker Change: This compares to six investments on nonaccrual status as of December 31, 2024, representing $1 seven and three 4% the company's investment portfolio at fair value and cost respectively.
Speaker Change: On slide 12, excluding our nonaccrual lessons, we have an aggregate debt investment portfolio.
Speaker Change: $314 $1 million of fair value, which represents the blended price of 95% on par value and is 91, 1% comprised of first lien loans at par.
Patrick Schafer: Finally, turning to slide 13, if you aggregate the last three portfolios, we have purchased a combined $435 million in investments, and have realized approximately 86% of these investments at combined realized and unrealized marks of 101% fair value at the time of closing with respect to the merger. As of Q1 2025, we've fully exited the Acquired Oak Hill portfolio and are down to a combined $22 million of the Acquired HCaP and Initial KCaP portfolio.
Speaker Change: So even if our recovery our March 31, 2025 for values, but the potential of $32 $8 million of incremental net value or an 18, 3% increase to NAV.
Speaker Change: When applying an illustrative, 10% default rate and 70% recovery rate on that portfolio would generate an incremental $2 43 per share of that.
Unknown Executive: And I'll turn the call over to Brandon to further discuss our financial results for the Thanks, Patrick.
Speaker Change: 12, 5% increase as it rotates.
Brandon Satoren: For the quarter ended March 31, 2025, Portman Ridge generated $12.1 million in investment income, a decrease of $2.3 million or 25 cents per share compared to $14.4 million reported for the quarter ended December 31, 2024. The decrease in investment income from the prior quarter was primarily driven by one, a decrease of 0.6 million or seven cents per share as a result of lower non-recurring pay down and fee income. to a decrease of $0.6 million or $0.07 per share as a result of placing the company's first lien firm loan to Sundance on non-accrual status, of which $0.05 is the non-recurring one-time impact earnings as a result of writing off the prior quarter's interest receivable balance through current period income.
Speaker Change: Finally, turning to slide 13, if you aggregate the last three portfolios, we purchased a combined $435 million investments and approximately 86% of these investments and combined realized unrealized marks modern ones at fair value at the time of closing with respect to mergers.
Speaker Change: As of Q1 2025, we fully exited the Bard Alco portfolio.
So combined $22 million from the acquired <unk> and then it will kick out portfolios and I will turn the call over to Brandon further discuss our financial results for the generic.
Speaker Change: Thanks, Patrick for the quarter ended March 31, 2020, Fives Portman Ridge generated $12 1 million in investment income.
Speaker Change: A decrease of $2 $3 million or 25 per share compared to $14 4 million recorded for the quarter ended December 31 2024.
Speaker Change: The decrease in investment income from the prior quarter was primarily driven by one a decrease of <unk> 6 million or <unk> <unk> per share as a result of lower nonrecurring Paydown NC income.
Brandon Satoren: 3. A decrease of $0.4 million or $0.04 per share as a result of lower base rate. for a decrease of $0.4 million or $0.04 per share as a result of the majority of the current quarter's deployment occurring in the second half of the quarter relative to the timing of repayments and sales. and then five lower income from CLOs of $0.1 million or one cent per share.
Speaker Change: Two a decrease of zero point $6 million or <unk> <unk> per share as a result.
Speaker Change: Please see the company's first lien term loan to Sundance on non accrual status of which <unk> is the nonrecurring one time impact to earnings as a result of writing off the prior quarter's interest receivable balance through current period income.
Brandon Satoren: For the quarter ended March 31st, 2025, total expenses were $7.8 million, a $1.1 million decrease, or $0.12 per share, as compared to $8.9 million reported for the prior quarter. The decrease in expenses relative to the prior quarter was primarily driven by lower interest expense of $0.3 million, or $0.03 per share. lower management and incentive fees of $3 million or $0.04 per share, as well as lower general and administrative expenses of $0.4 million or $0.04 per share.
Speaker Change: Three a decrease of <unk> 4 million or four cents per share as a result of lower base rates for a decrease of zero point $4 million or <unk> <unk> per share as a result of the majority of the current quarter's deployment occurring in the second half of the quarter relative to the timing of repayments and sales.
Speaker Change: And then five lower income from C. L OS of 0.1 million or <unk> <unk> per share.
Brandon Satoren: The decrease in the general and administrative expenses was primarily driven by a lower than anticipated tax liability for the prior year.
Speaker Change: For the quarter ended March 31, 2025, total expenses were $7 8 million or $1 $1 million decrease or <unk> 12 per share as compared to $8 9 million reported for the prior quarter.
Brandon Satoren: Accordingly, our net investment income for the first quarter of 2025 was $4.3 million, or $0.47 per share, which constitutes a $1.2 million, or $0.13 per share, decrease from $5.5 million, or $0.60 per share, reported for the prior year.
Speaker Change: The decrease in expenses relative to the prior quarter was primarily driven by lower interest expense of zero point $3 million or <unk> <unk> per share.
Speaker Change: Lower management and incentive fees of $3 million or <unk> <unk> per share as well as lower general and administrative expenses of 0.4 million or four cents per share. The decrease in the general and administrative expenses was primarily driven by lower than anticipated tax liabilities for the prior year.
Brandon Satoren: Our net asset value as of March 31st, 2025 was $173.5 million, representing a $5 million decrease as compared to the prior quarter net asset value of $178.5 million as of December 31st, 2024. On a per share basis, net asset value was $18.85 per share as of March 31st, 2025. representing a $0.56 per share decrease as compared to $19.41 per share as of December 31, 2020.
Speaker Change: Accordingly, our net investment income for the first quarter of 2025 was $4 3 million or <unk> 47 per share, which which constitutes a $1 2 million or 13 cents per share decrease from $5 5 million or <unk> 60 per share reported for it.
Brandon Satoren: The decline in net asset value was driven by unrealized depreciation on the portfolio, as well as the company's March dividend exceeding the company's first quarter net investment income.
Speaker Change: The prior quarter.
Speaker Change: Our net asset value as of March 31, 2025 was $173 5 million, representing a $5 million decrease as compared to the prior quarter net asset value of $1 78.5.
Brandon Satoren: As of March 31st, 2025, our gross and net leverage ratios were flat to the prior quarter at 1.5 times and 1.3 times respectively. Specifically, as of March 31st, 2025, we had a total of $255.4 million of borrowings outstanding with a weighted average contractual interest rate of 5.9%. This compares to $267.5 million of borrowings outstanding as of the prior quarter with a weighted average contractual interest rate of 6.2%. The company finished the quarter with $52.6 million of available borrowing capacity under the Senior Secured Revolving Credit Facility.
Speaker Change: As of December 31, 2024 on a per share basis net asset value was $18 85 per share as of March 31st 2025.
Speaker Change: Representing a 56 cents per share decrease as compared to $19 41 per share as of December 31 2024.
Speaker Change: Klein and net asset value was driven by unrealized depreciation on the portfolio as well as the company's March dividend exceeding the company's first quarter net investment income.
Speaker Change: As of March 31, 2025, our gross and net leverage ratios were flat to the prior quarter at one five times and one three times respectively.
Ted Goldthorpe: With that, I will turn the call back over to Deb. Thank you, Brandon. Ahead of questions, I'd like to re-emphasize how excited we are about the opportunities the proposed merger will create.
Speaker Change: Spitz, specifically as of March 31, 2025, we had a total of $255 4 million of borrowings outstanding with a weighted average contractual interest rate of five 9%.
Ted Goldthorpe: Additionally, with a robust pipeline, prudent investment strategy, and an experienced management team, we believe we are well positioned to take advantage of the current market environment and be able to deliver strong returns to our shareholders through 2025. Thank you once again to all of our shareholders for your ongoing support.
Speaker Change: This compares to $267 5 million of borrowings outstanding as of the prior quarter with a weighted average contractual interest rate of six 2%.
Unknown Executive: This concludes our prepared remarks, and I'll turn the call over for any questions.
Speaker Change: The company finished the quarter with $52 6 million of available borrowing capacity under the senior secured revolving credit facility.
Unknown Executive: At this time, I would like to remind everyone to, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
Deb: With that I will turn the call back over to Deb.
Deb: Thank you Brandon ahead of questions I'd like to reemphasize, how excited we are about the opportunities. The proposed merger will create additionally, the robust pipeline prudent investment strategy and an experienced management team. We believe we are well positioned to take advantage of the current market environment, we'll be able to deliver strong returns to our shareholders through 2025.
Eric Zwick: Your first question comes from the line of Eric Zwick with Lucid Capital Markets. Your line is now open. Please go ahead. Thank you. Good morning all. First, just maybe a follow up to make sure I got it down right. Brandon, in your comments, I think you gave that the reversal of interest for Sundance was five cents per share. Did you have that on a, I guess I could kind of back into that, did you have it on a dollar basis? Yeah, so the out of period impact is about 450 grand, give or take, I could give you the exact numbers.
Deb: Thank you once again to all of our shareholders for your ongoing support. This concludes our prepared remarks, and I'll turn the call over for any questions.
Speaker Change: At this time I would like to remind everyone in order to ask a question has the star then the number one on your telephone keypad.
Deb: We will pause for just gentlemen.
Speaker Change: The Q&A roster.
Eric Zwick: Okay, that's helpful. That's about what I was calculating as well.
Eric Zwick: And I guess my follow-up to that is I was trying to look at the kind of what a normalized level of investment income would have been for the period without reversal. And I guess kind of one of the factors I'm looking at here, you know, PIC income has continued to grow over the past quarter or two, and it's without, you know, 24% or so of total income at this point. So just kind of curious what, you know, this is a trend that's developing here and some companies that you're, you know, working with and granting PIC, and what is the outlook for returning these companies back to cash pay?
Speaker Change: Your first question comes from the line of Erik Zwick with listed capital markets. Your line is now open. Please go ahead.
Erik Zwick: Thank you good morning, I'll first just maybe a follow up to make sure make sure I've got it downright Brandon in your comments I think you gave that the reversal of interest for Sundance was five cents per share did you have that on a I guess I can kind of back into that did you have it on a dollar basis.
Erik Zwick: Yeah. It was it so the out of period impact is about 450 Grand.
Erik Zwick: Give or take I can give you the exact numbers separately.
Erik Zwick: Okay. That's helpful. That's about what I was calculating as well.
Brandon Satoren: So I think I'll let Patrick speak to the portfolio itself. But just as it relates to the percentages this quarter, I think you've got two things at play. One is a denominator effect, just inherently lower investment income with about a $600,000 increase quarter over quarter in PIC. However, with that said, we do have the $0.05 reversal. the impact of the late deployment during the quarter, etc. That is artificially decreasing that total investment income number.
Erik Zwick: And I guess my follow up to that is that I was trying to look at the.
Erik Zwick: Kind of what kind of normalized level of investment income would have been for the period without reversal in I guess, Canada.
Erik Zwick: One of the factors I'm looking at here pick income has continued to grow.
Erik Zwick: Over the past quarter or two.
Erik Zwick: Without their 24% or so of total income at this point, so just kind of curious what you know.
Erik Zwick: This is a trend thats developing here in terms of some companies that sure.
Erik Zwick: We're working with and granting pick in and what is the outlook for returning needs. These companies back to to cash pay.
Patrick Schafer: Further, in the big line item, and we tried to highlight this in the financial statements, there's about, there's an amendment fee, that's about 200 grand, and then there's about another 150 of Non-recurring items flown through PIC this quarter that we would expect to normalize in the coming Yeah, on the portfolio in general, as I kind of said before, we don't have all that many names that sort of have converted to full pick through underperformance, a good chunk of it is, is sort of, you know, I don't want to say preplanned, but sort of, you know, embedded in sort of the investment thesis, you know, from from the time the investment.
Erik Zwick: So I think.
Patrick Schafer: I'll, let Patrick speak to the portfolio itself, but just as it relates to the percentages.
Erik Zwick: This quarter I think you've got to.
Speaker Change: Two things at play one is a denominator effect just inherently lower investment income.
Speaker Change: With about 600000 dollar increase quarter over quarter and Vic.
Speaker Change: However.
Speaker Change: With that said, we do have the <unk> reversal.
Speaker Change: The impact of the late deployment during the quarter.
Speaker Change: Cetera that is artificially decreasing that total investment income number further in the big line item and we tried to highlight this in the financial statements.
Patrick Schafer: And having said that, we probably have three names I can think of that that are picking that we are you know, that have been underperforming that, you know, we are working with the company on either sort of getting them to a place to reverse the cash and or exiting the positions. I think we're hopeful that we'll have some some realizations on that front, you know, this year for a couple names. But, you know, there's certainly, you know, a handful names that sort of had challenges over the last sort of two years that, you know, at least we feel like we're seeing the other side.
Speaker Change: There is about there.
Speaker Change: Or is it an amendment fee that's about 200 Grand and then there's about another 150.
Speaker Change: Nonrecurring items flow through pick this quarter that we would expect to normalize.
Speaker Change: In the coming quarter.
Speaker Change: On the portfolio in general as we can.
Speaker Change: I said before we don't have.
Speaker Change: All of that many names that sort of have converted to full pick through underperforming a good chunk of it is.
Is sort of you know.
Speaker Change: I don't want to say pre land, but sort of.
Speaker Change: Embedded in sort of the investment thesis.
Ted Goldthorpe: Got it, I appreciate the commentary there. And then Ted, in your prepared remarks, I think you used both the words healthy and robust to describe the pipeline today. So wondering if you could maybe just expand on that a little bit in terms of, you know, how it's composed in terms of new versus add-on opportunities, as well as any industries where you're seeing particularly attractive opportunities to invest today. Yeah, good question. I mean, I think, I mean, overall market activity is way down, particularly post-liberation day. So I think, I think activity, broadly speaking, is pretty anemic.
Speaker Change: From the time, the investment and having said that we probably have.
Speaker Change: Three named I can think of that that are picking that we are.
Speaker Change: That had been underperforming that you know we are working with the company on.
Speaker Change: Either sort of getting them to a place to reverse to cash <unk>.
Speaker Change: Exiting the position that I think we're hopeful.
Speaker Change: That will have some some realizations on that front this year.
Speaker Change: For a couple of names.
Speaker Change: But they are certainly.
Speaker Change: A handful of names that sort of had challenges over the last sort of two years at least we feel like we're seeing the other side of.
Ted Goldthorpe: We have a, we have a actually a decent pipeline, but a lot of it's stuff that we sourced, kind of pre-liberation day, and, you know, are working their way through the system. So I'd say like, in terms of like new deals coming in, I would say it's down probably, you know, a lot. But we do have a decent pipeline of things we've been working on for a while that are closing. And so I would say we're very, very, very cautious. You know, we feel like we're, the economy is not going to get better, let's put it that way.
Speaker Change: Got it I appreciate the commentary there.
Speaker Change: And then Ted in your prepared remarks, I think you used the words healthy and robust to describe the.
Speaker Change: The pipeline today. So wondering if you could maybe just expand on that a little bit in terms out.
Speaker Change: How it.
Speaker Change: Posed in terms of new versus add on opportunities as well as any industry is where you're seeing particularly attractive opportunities to at your investor day.
Ted Goldthorpe: And lots of things can happen the next six months, but we feel a lot of demand has been pulled forward. I think we're pretty cautious on the environment. So despite infill flow being down, I don't think we're that worried about it because, you know, we're not like overly bullish right now anyway. Yeah, that's a good point. And I guess, you know, has the, you know, potential impacts of the tariffs and maybe reductions in government agencies? Has that changed at all how I guess you are underwriting or the type of companies you might look to add to the portfolio in the future?
Speaker Change: Yeah. Good question I mean, I think overall market activity is way down, particularly post liberation day. So I think I think activity broadly speaking is pretty anemic.
Speaker Change: We have had we have actually a decent pipeline, but a lot of it's stuff that we source.
Speaker Change: Kind of pre Liberation day and are working their way through the system. So I would say like in terms of like new deals coming in and I would say it's down probably.
Speaker Change: A lot.
Speaker Change: But we do have a decent pipeline of things have been working on for a while they are closing.
Speaker Change: And so I would say, we're very very very cautious we feel like where the economy is not going to get better let's put it that way and lots of things can happen in the next six months, but we feel a lot of demand and pull forward. So I think we're pretty well.
Ted Goldthorpe: Yeah, good question. So, you know, again, like, we have very, very, very little in the way of direct consumer exposure. I mean, Brandon in his comments mentioned Sundance, which is probably our, you know, one of the very few companies that has direct exposure. And that was an inherited position from an acquisition. You have like one or two other companies that have direct tariff exposure, but quite frankly, we're, they're very under levered. And we're not that worried about it. You know, our big question for all of our companies is second and third order of effects. Like, you know, if you go into a recession, you know, there's other things that could impact our business indirectly because of tariffs.
Speaker Change: So the environment. So despite deal flow being down I don't think were that worried about it because.
Speaker Change: We're not like overly bullish right now anyways.
Speaker Change: Yes, that's a good point and I guess has the potential impacts of the tariffs and maybe reductions in government agencies has that changed at all how I guess you are underwriting or the type of companies you might might look too.
Patrick Schafer: So I think our whole sector, not just Portman, but I think generally speaking, we're all pretty light on consumer. Some BDCs have more than others, like we have very, very little. So in terms of direct impacts, I think we have, we don't have a lot. We're looking for businesses that have, you know, obviously, ability to pass on price increases, those who have very, very, very high gross margins. So like think software. But I think, as I said, I think we're, I think we're very, very focused on, you know, we're kind of planning for the worst and maybe something better happens, but I think that's what we're modeling right now.
Speaker Change: To add to the portfolio in the future.
Speaker Change: Yeah. Good question. So again like we have a very very very little in the way of direct consumer exposure I mean, brannen and his comments section Sundance, which is probably our <unk>.
Speaker Change: One of the very few companies that has direct exposure and that was an inherited position from an acquisition.
Speaker Change: Do you have like one or two other companies that have direct tariff exposure, but quite frankly, we're very under levered and we're not that worried about it our big question for all of our companies is second and third order effects like if you go into a recession.
Patrick Schafer: Yeah, I think on the diligence and underwriting side, I mean, the reality is, you know, if you're a private equity firm or, you know, a family office or whomever trying to buy a company, it's, you know, it's going to be really tough to sort of meet in the middle on a buyer and seller with companies that have direct tariff exposure. So just from a pipeline perspective, the things that we're working on, you know, they tend to be a lot more weighted toward service-related businesses, healthcare, software, you know, things like that, that are pretty obviously don't have the first order effect.
Speaker Change: There's other things that could impact our business indirectly because of tariff. So I think our whole sector, such as Portland, but thank.
Speaker Change: Generally speaking, we're all pretty light on consumer <unk>.
Speaker Change: PDC is it more than others like we have very very little.
Speaker Change: In terms of direct impacts I think we we don't have a lot.
Speaker Change: Alright, we're looking for businesses that have obviously ability to pass on price increases.
Speaker Change: Those who have very very very high gross margins. So quick think software.
Patrick Schafer: And then, as Ted said, we're really focused on kind of second and third order and how they perform, you know, during a recessionary environment.
So I think as I said I think we're I think we're very very focused on.
Eric Zwick: That's all very helpful. That's it for me. Thanks for taking my question.
Speaker Change: We're proud of them.
Speaker Change: Planning for the worst and maybe something better happens, but I think that's what we're modeling right now, yes, I think on the diligence underwriting side I mean, the reality is.
Christopher Nolan: Your next question comes from the line of Christopher Nolan with Leidenberg of Holland. Please go ahead. Unknown Speaker Hey guys, first on the dividend, last quarter you guys are hinting that the seven cents supplemental dividend would be quarter I didn't see it this quarter, so am I correct that it's not? Yeah, so Chris, I think what we laid out was a dividend policy where we would where we set the base at 47 cents, and then we would pay 50, approximately 50% of the incremental NII above the base each quarter. So this quarter with the Sundance out of period impact, being about five cents, as well as some of the other items we laid out in our investment income, we, we didn't have incremental NII in excess of the base.
Speaker Change: If you're a private equity firm or a family office or whomever trying to buy a company.
Speaker Change: It's going to be really tough to sort of meet in the middle on a buyer and seller with companies that have direct tariff exposure. So just from a pipeline perspective and things that we're working on.
Speaker Change: There are 10, they tend to be a lot more weighted toward service related businesses health care software.
Speaker Change: Things like that that are obviously, you don't have the first order factored in as Ted said, we're really focused on kind of second and third order and how they perform during a recessionary environments.
Speaker Change: That's all very helpful. That's it for me thanks for taking my questions.
Speaker Change: Your next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please go ahead.
Christopher Nolan: So that's why there was no supplemental. However, if you run our earnings, you'll see we are very much, you know, we should be paying supplementals going forward. And it would be consistent with that framework 50% of the incremental NII above the base distribution of Given that you guys are sort of sensitive to the LBO market and private equity and so forth.
Christopher Nolan: Hey, guys first on the dividend.
Speaker Change: Last quarter, you guys are hinting that the seven supplemental dividend would be quarterly.
Speaker Change: And I didn't see it this quarter, so am I correct that it's not.
Speaker Change: In the first quarter earnings.
Speaker Change: Yes, so Chris I think what we laid out was a dividend policy, where we would where we set the base at 47, and then we would pay 50.
Speaker Change: Approximately 50% of the incremental NII above the base.
Christopher Nolan: You know, what's the risk that your private equity sponsors will not step in with additional support for the companies in terms of more I mean, I think we always live with that risk. You know, again, our portfolio is predominantly first lane. What we've seen actually is in our market, which is more of the middle market, sponsors have been a little bit more supportive than the large cap market. And generally speaking, it's because middle market funds have less companies in their portfolio. And therefore, you know, the risk of loss is much higher than a very, very like these big, big, big funds that don't back.
Speaker Change: Each quarter, so this quarter with the Sundance out of period impact being about five.
As well as some of the other items, we laid out in our investment income.
Speaker Change: We didn't have incremental NII in excess of the base. So that's why there wasn't a supplemental however, if your run rate our earnings Youll see we are very.
Speaker Change: Very much.
Speaker Change: We should be paying supplemental going forward.
Speaker Change: And it would be consistent with that framework, 50% of the incremental NII above the base distribution of 47.
Ted Goldthorpe: So we've really, I don't know, we've been really Sponsors have been very constructive actually, and I've actually, the negotiations on situations for the money have actually been relatively non-controversial, I would put it that way.
Speaker Change: Thanks, Brandon and I guess.
Speaker Change: I mean, given that you guys are sort of sensitive to the LBO market in private equity and so forth.
Speaker Change: Whats the risk that your private equity sponsors will not step in with additional support from the companies in terms of more equity.
Ted Goldthorpe: Now again, that might change if this prolongs. Obviously it's a lot harder for these guys to sell the company. So, you know, we've been in a very long, probably the longest in my career, prolonged period of no repayments, because A, there's just not a lot of velocity of capital, there's not a lot of businesses being sold. And number two, with higher rates, no one wants to refi. We'll get some natural refinancing to our portfolio in the next 12-18 months, but it probably means we're not going to get, you know, a whole bunch of sales done.
Speaker Change: If this cycle sort of prolonged itself.
Speaker Change: Yes, I mean, I think we always look at that risk.
Speaker Change: Again, our portfolio is predominantly first lien.
Speaker Change: What we've seen actually is in our market, which is more of the middle market sponsors have been a little bit more supportive than large cap market and generally speaking, it's just middle market funds have bus companies in our portfolio and therefore, the risk of loss is much higher than a very very big big Big funds. So we've gone back so.
Unknown Executive: A final question and I missed it. Have you guys announced the vote the data the shareholder vote for Yeah, so you're you're very timely. So that should go out later today. It'll be a record date will be May 6, June 6 will be the initial date for the shareholder meeting.
Speaker Change: We've really.
Speaker Change: We've been really.
Speaker Change: Sponsors have been very constructive actually and have actually the negotiations on situations that are putting money and you've actually been relatively.
Speaker Change: Noncontroversial I'll put it that way okay.
Speaker Change: That might change if this prolongs.
Unknown Executive: Subscribe! Thank you.
Speaker Change: Obviously, it's a lot harder for these guys to sell their companies.
Speaker Change: We've been a very long <unk> long as my career prolonged period of no repayments because a that's.
Steven Martin: Our next question comes from the line of Steven Martin with Slater Capital. Your line is open.
Speaker Change: It's just not a lot of velocity of Cabozantinib businesses being sold and number two with higher rates no. One wants to refi, we'll get some natural refinancing through our portfolio in the next 12 to 18 months, but it probably means we're not going to get a whole bunch of sales done.
Steven Martin: Two questions, and they're sort of related.
Steven Martin: Can you talk about the composition of non-accruals and what the prospect is of, and you dealt, you did deal with this a little, but what the prospect is of those A, becoming accrual, you know, current pay, and what the upside might be? And second, Patrick, you, you, every quarter, you talk about the embedded unrealized losses that could be recovered. But when you look through, there's a couple of big ones that are basically marked to zero.
Speaker Change: Our final question and I missed it have you guys announced the date of the shareholder vote for Logan.
Speaker Change: Yes, so ed.
Speaker Change: Youre very timely so that should go out later today it'll be so record date will be may six June six.
Steven Martin: which I don't think, you know, would fall into your calculation of what is recoverable.
Speaker Change: The initial.
Speaker Change: For the shareholder meetings.
Speaker Change: Sounds good.
Patrick Schafer: So of the of the unreal, the unrealized losses embedded in the portfolio, what is actually possible to Yeah, so um, I'll take your first one first, Steve. So we really on the non accruals, I would say we have kind of two I see two main positions within the non-accruals that are kind of worth talking about, one being Naveega, one being Sundance. I would say kind of Sundance just recently, obviously this past quarter, went on non-accrual. And so I would say it's tough to kind of estimate what the pathway is to sort of turning back on.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Steven Martin with Slater Capital. Your line is open.
Steven Martin: Two questions and they're sort of related.
Steven Martin: Can you talk about the composition of non accruals and what the prospect is of.
Steven Martin: You you did deal with this a little but what the prospect is of those.
Steven Martin: Becoming accrual.
Steven Martin: Current pay and what the upside might be.
Speaker Change: Second Patrick you every quarter, you talk about the embedded unrealized losses that could be recovered.
Speaker Change: But when you look through there is there are a couple of big ones that are basically mark to zero.
Patrick Schafer: We kind of do lay out, I guess, kind of, in theory, the upside would sort of have been laid out in Brandon's comments, which is it's about, on an ongoing basis, about two cents a share of sort of ongoing income from Sundance. So that theoretically is the upside there. But again, having said that, you know, it just recently went on. So, you know, I think that is a little bit less clear. On Naveega, we've been doing a number of things with the company. It's about similarly sized to Sundance. So I don't have exact number, but I would think of it as a fairly similar, you know, potential impact, you know, call it, you know, I need to start at two cents a share.
Speaker Change: I don't think would fall into your calculation of what is recoverable so all of the.
Speaker Change: All of the Unreal.
Speaker Change: Unrealized losses embedded in the portfolio what is actually possible to recover.
Speaker Change: So.
Speaker Change: I'll take the first one first Steve so we.
Speaker Change: We really on the non accruals I would say we have kind of two <unk>.
Speaker Change: I see two main positions within the non accruals that are kind of worth talking about one being the Vega, one being Sundance I would say.
Speaker Change: Sundance just recently, obviously this past quarter went on non accrual and so I would say, it's tough to kind of estimate.
Patrick Schafer: And for that one, The company is positive cash flow, January cash flow. We have sort of taken a fairly conservative position as a lender group and kind of working through that. I would say there is a fairly good prospect for turning back on cash interest. But having said that, there's a different analysis of whether that ultimately comes in as income versus NAV recovery or cost recovery, depending on what we think about on the prospects there. But I would say that there's definitely a line of sight for cash interest being turned back on, but that doesn't necessarily mean it's going to impact through, have an impact through the income.
Speaker Change: Estimate what the.
Speaker Change: The pathway is to just sort of turning turning back on we kind of do lay out.
Speaker Change: Kind of in theory, the upside would sort of have been laid out and in brandon's comments, which is about on an ongoing basis about <unk> <unk> a share.
Speaker Change: Sort of ongoing income.
Speaker Change: Sundance <unk> upside there, but again, having said that just recently went on so I think that is a little bit less clear on the Vega.
Speaker Change: We've been doing a number of things with the company. It's about similar size of Sundance. So I don't have the exact number but I would think of it as a fairly similar.
Patrick Schafer: Yeah, so when we look at NAV upside, Steve, we break out for the board and we break it up for ourselves. You know, kind of like stress names and names that are performing, and the performing names, there is a lot of embedded upside in just those names. So like, I think you're making the right point. The right point is you can't, you can't take a lot of embedded upsides on something marked at zero. Like, yeah, again, we think that's fair. So what we do is we break out two things. We have like a watch list, and then we have our performing credits.
Speaker Change: Potential impact call it decided to share.
Speaker Change: And for that one.
Speaker Change: The company is positive cash flow generate cash flow, we have sort of taken a fairly conservative position as a lender group and kind of working through that.
I would say there is a fairly good prospect for turning back on cash interest, but having said that there's a different analysis of whether that ultimately comes in as income versus versus NAV recovery cost recovery, depending on what we think about on the prospects there.
Patrick Schafer: And we have a pretty long list of performing credits with an average price in like low 90s or something that are covered. So, you know, I think we feel very good about that portion of the portfolio. Yeah, to be clear, we strip out and all those numbers that I give strip out all of our non-accruals, which, again, tend to be your lower priced in some zeros, like a pro air or things like that in there. And then the second thing is, as Tim mentioned, I mean, just I'll give you just a simple example, and it's relatively small, but probably about half-ish of those numbers that I gave out, maybe a little bit less than half, are from liquid names.
Speaker Change: But I would say that there is definitely line of sight for.
For cash interest being being turned back on but I'll, just add that that that doesn't necessarily mean, it's going to impact through.
Speaker Change: Having an effective income yes, so when we look at NAV upside, Steve we breakout for the board and we break it out for ourselves.
Patrick Schafer: And we feel, you know, good about them to varying degrees. But there was one, you know, one name, you know, on the list, I can for, you know, the better part of the last year, and it's now back up to 62, 63 cents, where we sit today. So I think if you would have that conversation, you know, a couple quarters ago, you would have been asking the same question, and we do see the recovery there. So again, we do try and strip out the very obvious names, the very obvious names like our non-accruals, and don't factor that into our NavOps side.
Speaker Change: Kind of like stress names and names that are performing and the performing names. There is a lot of embedded upside and just subsequent select.
I think you're making the right point requires you can't you can't save 11 been an Upsized also marked at zero.
Speaker Change: Yes, that's fair. So let me go here, we break out a few things we have like a watch list and then we have our performing credits and we have a pretty long list of performing credits with an average price and Mike both items are something that are covered so.
Speaker Change: I think we feel very good about about that portion of the portfolio yeah to be clear we strip out all of those numbers that I gave strip out all of our non accruals, which again tend to be.
Patrick Schafer: But again, even with some, you know, level of conservatism, you know, if we're giving out a 12 and a half percent, which is the number, obviously, there's a lot of room there to be to be off on that number and still have some fairly meaningful net.
Speaker Change: You are lower priced in some zeroes like like a pro air or things like that in there.
Speaker Change: And then second thing is is that Tim mentioned, let me just I'll give you just a simple example, and it's relatively small.
Speaker Change: But probably about half ish of those numbers that I gave out maybe a little bit less now are from liquid names and we feel good.
Steven Martin: Well, for instance, and I'm just looking at the schedule of investments, you know, you have KCAP Freedom marked from 25 to 11. You have, I don't know what asset management company is, but it's marked from 18 to zero.
Speaker Change: Good about them to varying degrees, but there was one one.
Speaker Change: One name on the list I can say about top my head Lifescan it have been trading at like $20 34.
Patrick Schafer: Yeah, Steve, sorry, I don't think we, sorry, maybe it wasn't clear in the, in the, in the conversation, we're specifically only focusing on the debt securities of our portfolio. So not any of our joint ventures, not our equity positions, strictly the debt portfolio. Got it.
Speaker Change: The better part of last year, and it's now back up to $62 63.
Speaker Change: We sit today. So I think if you would have that conversation a couple of quarters ago, you would've been asking the same question and we do see the recovery. There. So again, we do try and strip out the very obvious names there.
Steven Martin: Okay, I'll come back to you offline with some questions. Thank you.
Speaker Change: They are very <unk> like our non accruals and don't factor that into our NAV upside.
Speaker Change: But again, even with some level of.
Speaker Change: Of.
Speaker Change: Conservatism, if we're giving out a 12, 5% which is the number obviously there is a lot of room there to be to be off on that number and still have some some fairly meaningful NAV upside.
Lee Crockett: And our last question comes from the line of Lee Crockett, Private Investor. Thank you. Good morning. I had a couple of questions on KCAP Freedom 3. It looks like you haven't received a dividend for the past six quarters. One, is that correct? And then they could go into any detail as to why you haven't received that dividend. And then a couple of follow up questions would be, do you anticipate any dividend from that joint venture in this year? And does that joint venture have an end date? Yeah.
Speaker Change: Well for instance, and I'm just looking at the schedule of investments you have Keycap freedom marks from 25 to 11, you have I don't know what asset management company is but its mark from 18 today.
Speaker Change: Sure Steve.
Speaker Change: And sorry, maybe it wasn't clear in the in the.
Speaker Change: And the comments were specifically only focusing on the debt securities of our portfolio. So not any of our joint venture is not our equity positions strictly the debt portfolio.
Speaker Change: Got it.
Lee Crockett: So, Lee, I'll take a couple of them, and Brandon can follow up as necessary, but I think I'll cover it. The short answer is yes, we still receive dividends from it. But a little bit similar to the answer I gave Steve on Naviga, which is there's a different analysis when you receive the dividend from an accounting perspective, whether you recognize that as income through our P&L or a recovery of cost. And so, for the last, I don't know how many quarters, but a we have been, as we receive distributions from that joint venture, we are recognizing it as a recovery of cost as opposed to income.
Speaker Change: Okay.
Speaker Change: Come back to you offline with some questions.
Speaker Change: Yep.
Speaker Change: Thank you.
Speaker Change: And our last question comes from the line of Lee Crockett private Investor Your line is open.
Lee Crockett: Thank you good morning, I had a couple of questions on K cap freedom three it looks like you Havent received a dividend for the past six quarters.
Patrick Schafer: So, the short answer is yes, we still receive distributions on it, but from an accounting perspective, we recognize it as a return of capital as opposed to a return on capital. And then on the end date, there is not a stated, there is a stated end date. It is very far in the future. The reality is because of the way that's structured at some point, the liabilities, the liability costs will start to outweigh the income from the assets, in which case we would likely look to monetize or exit that portfolio, to your point on the dividends.
Lee Crockett: Is that correct and then they could go into any detail as to why you haven't received that.
Lee Crockett: Dividend and then a couple of follow up questions would be do you anticipate any dividend from that joint venture in this year and does that joint venture have an end date.
Lee Crockett: Yes so.
Lee Crockett: Lee I'll take couple of them and in brand can follow up as necessary, but I think I'll cover it. The short answer is yes, we still received dividends from it but.
Speaker Change: A little bit similar to the answer I gave Steve on the Vega, which is theres a different analysis. When you received the dividend from an accounting perspective, whether you recognize that as income through our P&L or a recovery of cost and so for the last I don't know how many orders, but decently long period of time, we have been call. It <unk>.
Patrick Schafer: But in the meantime, while we're still receiving dividends and repayments, in our opinion, it makes sense to kind of continue managing the vehicle.
Patrick Schafer: I'll just add. We did receive a distribution in Q1 was about 360 grand. And then over the course of 2024, we got just shy of $2 million in distributions. Again, though, given the unrealized loss position that you highlighted in your question, we've been reducing the cost basis to reduce the realized loss, as opposed to recognizing that as an income distribution. Okay, you said you got 360 of distribution. I see that coming down in the cost basis from year end, but you took down the the fair market value by 1.6 million. Is there something going on there that other is that just mark to market?
Speaker Change: We received distributions from that joint venture we are recognizing it as a recovery of cost as opposed as opposed to income. So the short answer is yes, we still we still receive distributions on it but from an accounting perspective, we recognize it as a return of capital as opposed to a return on capital.
Speaker Change: And then on and then on the end dates.
Speaker Change: There is not a stated.
Speaker Change: There is a stated end date it is very far in the future. The reality is because of the way that's structured at some point the liabilities.
Speaker Change: The liability costs will start to outweigh the income from the assets in which case, we would likely look to monetize or exit that that portfolio to your point on the on the dividend, but in the meantime, while still receiving dividends and repayments.
Patrick Schafer: Yeah, this is smart to market. It's the joint venture is funded via a CLO structure. So it's like a senior loan fund that's funded with the CLO. And so this particular quarter, just given that it's kind of continued to be a smaller size deal from a valuation perspective, sort of the third party valuation sort of moved it from a, I'll call it a traditional cash flow CLO valuation model to what would be more like a NAV liquidation analysis. So there's a little bit of that going on in the market impact of the quarter.
Speaker Change: In our opinion it makes sense to kind of continue.
Speaker Change: Managing that managing the vehicle.
Speaker Change: I'll just add.
Speaker Change: We we did receive a distribution in Q1 was about 360 Grand and then over the course of 2024, we got just shy of $2 million in distributions again now given the unrealized loss position.
Speaker Change: That you highlighted.
Speaker Change: On your question, we have been reducing the cost basis to reduce the realized loss as opposed to recognizing that as an income distribution.
Patrick Schafer: Okay, and just any commentary you might have on the switching to the Great Lakes Joint Venture that looks like it's performing historically better than the KCAP Freedom III. That's a fair statement and or any commentary you might want to add there just I would say that's a fair statement. I would also just say they're differently structured. They're differently structured from a liability perspective and therefore the valuations are run a little bit differently. Great Lakes is sort of a, I'll call it has like a traditional evergreen credit facility as opposed to a CLO liability structure. So from a valuation perspective, it's literally a NAV buildup of we value every single one of the underlying assets at fair value and then reduce the cost of debt.
Speaker Change: Okay. You said, you got 360 of distribution I see that coming down and the cost basis from year end, but you took down the fair market value by $1 $6 million is there something going on there that.
Speaker Change: Or is it just mark to market.
Yes. This is mark to market as the joint venture is funded via a CLO structure. So it's a senior loan fund that funding with the CLO and so.
Speaker Change: In this particular quarter, just given that it's kind of continued to be a smaller.
Speaker Change: Smaller sized deal from evaluation perspective.
Speaker Change: The third party valuations and moved it from a I'll call it a traditional cash flow CLO.
Speaker Change: Valuation model to what would be more like a now liquidation analysis. So there is a little bit of that going on and in the mark to market impact of border.
Patrick Schafer: So reduce the amount of debt and that spits out what our value is on our balance sheet. So it's a little bit more straightforward to be honest. But that also is a continuous, we generally have a continuous investment period on that. So it was that structure Great Lakes had an original three-year investment period. We rolled it all into a new three-year investment period. That investment period is, initial investment period is coming up this summer. We would anticipate and anticipate rolling into a new three-year investment period this summer. So unlike the HICAP Freedom III joint venture where it's effectively running down, the structure of Great Lakes is more of an evergreen fund structure that has a continuous investment.
Speaker Change: Okay.
Speaker Change: Just any commentary you might have on the switching to the great Lakes joint venture that looks like it's performing.
Speaker Change: Historically better than the K cap freedom three is that that's a fair statement.
Speaker Change: Commentary you might want to add there just.
Speaker Change: I would say I would say that's a fair statement I would also just say they're differently structured.
Speaker Change: Theyre differently structured from a liability perspective.
Speaker Change: Therefore, the valuations or run a little bit differently.
Speaker Change: Great Lakes is sort of a.
Speaker Change: Also it has like a traditional evergreen credit facility as opposed to CLO liability structure. So from evaluation perspective, it's literally.
Patrick Schafer: and Lee, I would just highlight.
Lee Crockett: I think one important point here is the Great Lakes Joint Venture is a BC proprietary platform trade, whereas the KCAP Freedom III was a legacy position we inherited when we took over KCAP. Okay, thank you. Thank you.
Speaker Change: NAV buildup, we value every single one of the underlying assets at fair value and then reduce the cost of that sorry, reduce the amount of debt in that and that spits out what our.
Speaker Change: What are evaluated on our balance sheet, so it's a little bit more straightforward to be honest.
But that also is a continuous we generally have a continuous investment period on that so it was that that structure great Lakes had an original three year investment period we.
Unknown Executive: And that concludes the question and answer session.
Speaker Change: We rolled it all into a new three year investment period that investment periods and it'll just curious coming up this summer.
Ted Goldthorpe: I would like to turn the call back over to Mr. Goldthorpe for closing remarks. Thank you for attending our call. We will continue to provide our shareholders with updates about the proposed merger with Logan Ridge as those become available. As always, please reach out to us with any questions, which we're happy to discuss.
Speaker Change: We would anticipate and anticipate rolling into a new three year investment period. This summer so unlike the <unk> freedom three joint venture, where it's effectively running down.
Ted Goldthorpe: We look forward to speaking to you again in August when we announce our second quarter 2025 results. Thank you very much.
Speaker Change: The structure of Great Lakes is is more of an evergreen fund structure that has a continuous investment period.
Unknown Executive: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining and you may now
Speaker Change: I would just highlight.
Speaker Change: I think one important point here is the great Lakes joint ventures.
Speaker Change: <unk> proprietary platform trade, whereas they can't get freedom three was a legacy position we inherited when we took over.
Speaker Change: A catalyst.
Speaker Change: Okay, well thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: And that concludes our question and answer session I.
Speaker Change: I would like to turn the call back over to Mr. Goldberg for closing remarks.
Mr. Goldberg: Thank you for attending our call.
Speaker Change: We will continue to provide our shareholders with updates about the proposed merger with Logan British as those become available as always please reach out to us with any questions, which we're happy to discuss we.
Mr. Goldberg: We look forward to speaking to you again in August when we announce our second quarter 2025 results.
Mr. Goldberg: Very much.
Mr. Goldberg: Okay.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining and you may now disconnect.
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