Q3 2019 Earnings Call
Good morning, and welcome to the Pen Park investment corporations third quarter.
Fiscal quarter 20, Itineraries conference call.
This conference is being recorded.
At this time all participants are in place in listen only mode.
The call will be open for question and answer session. Following the speakers remarks.
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It is now my pleasure to turn the call over to Mr. Art Penn.
Chairman and Chief Executive Officer of 10 Park Investment Corporation Mr. Penn You May now begin your conference.
Thank you and good morning, everyone I'd like to welcome your dependent Park investment Corporation's third fiscal quarter 2019 earnings Conference call.
I'm joined today by Veeva for our Chief Financial Officer.
Please start off by disclosing some general conference call information and included discussion about forward looking statements.
Thank you art I'd like to remind everyone that today's call is being recorded. Please note that this call is a property of Kinda Park investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited.
Audio replay of the call is available by using the telephone numbers and pin.
Providing aren't in our earnings press release as well as on our website.
I'd also like to call your attention to the customary safe Harbor disclosure in our press release regarding forward looking information.
Today's conference call May also include forward looking statements and projections.
If you refer to our most recent filings with actually see foreign born in the doctors that could cause actual results to differ materially from these projections.
We do not undertake to update our forward looking statements unless required by law.
Don't think copies of our latest SEC filings. Please visit our website at the Pennantpark Dot com local loss at two one to 905 1000.
At this time I'd like to turn the call back to our chairman and Chief Executive Officer Art Penn.
Thank you leave.
I'm going to provide an update on the business starting with financial highlights.
Followed by discussion of the overall market the portfolio investment activity the financials and then open it up for Q1 day.
For the quarter ended June 32019, we invested 116 million and primarily first lien secured debt at an average yield of 10.3%.
Net investment income was 17 cents per share.
And I I was temporary allow temporarily lower this past quarter as we continue to reposition the portfolio.
Remember that last quarter, we actually did a large high yielding second lien position at an attractive return.
As we've discussed we're generally moving into first lien secured positions higher in the capital structure and into a more diversified portfolio.
As of June Thirtyth first lien exposure was nearly 60% of the portfolio up from 43% a year ago.
Along with a lower risk portfolio, we intend to prudently target higher leverage.
Overtime, we are targeting a regulatory debt to equity ratio of 1.1 to 1.5 times, we will not reach this target overnight, we will continue to carefully invest and it may take us several quarters to reach this new target.
A careful and prudent increase in leverage against a primarily first lien portfolio should lead to higher earnings.
We're also actively assessing other options for increased earnings, including another SP I see and the senior loan joint venture similar to the successful joint venture that we have a P.F.L.T.
Additionally, as of last September Thirtyth, we had a taxable spillover of 30 cents per share, which provide significant dividend cushion.
Our primary business financing middle market sponsors has remained robust we manage relationships with about 400 private equity sponsors across the country from our offices in New York, Los Angeles, Chicago and Houston.
And we've done business with about 180 sponsors.
Due to the wide funnel of deal flow that we receive relative to the size of our vehicles. We will continue to be extremely selective with our investments.
You will recall that in 2007, just asked today PNNT. He was focused on financing middle market financial sponsors our performance through the global financial crisis and recession was solid.
Prior to the onset of the global financial crisis in September 2008, we initiated investments, which ultimately aggregated $480 million, we invested well.
Average EBITDA of the underlying portfolio companies fell about 7% at the bottom of the recession. According to Bloomberg North American high yield index. The average high yield company EBITDA was down about 40% during that timeframe.
As a result, we have few defaults and attractive recoveries on that portfolio. The IR of those underlying investments it was 8% even though they were done prior to the financial crisis and recession.
We are proud of this downside case track record.
We've had only 13 companies going non accrual out of 229 investments since inception 12 years ago.
Further we are proud that even when we have had those non accruals weve been able to preserve capital for our shareholders.
As of June Thirtyth 2019, we continue to have one non accrual, which represents 1.5% of our overall portfolio at cost and 0.7% at market.
Since inception, PNNT has made 229 investments, which totaled about $5.5 billion at an average yield of 12.1%.
This compares to an annualized loss ratio, including both realized and unrealized losses of about 30 basis points annually.
This strong track record includes both our energy investments as well as our primarily subordinated debt investments made prior to the financial crisis.
At this point in time, our underlying portfolio indicates a strong us economy and no signs of a recession.
We remain focused on long term value and making investments that will perform well over an extended period of time and can withstand different business cycles.
We are a first call for middle market financial sponsors management teams and they're Gonna media Aries, one consistent and credible capital.
As an independent provider free of conflicts or affiliations, we are trusted financing partner for our clients.
In general our overall portfolio is performing well, we have a cash interest coverage ratio of 2.5 times and debt to EBITDA ratio 4.7 times at cost on our cash flow loans.
With regard to our energy exposure there generally been no material change since last quarter.
On a mark to market basis positive movements in the value of wheel pros Ram energy and mid Ocean Jane F were offset by valuation declines in Hollander ATX in us well on an overall basis and maybe it was down nine cents per share due to valuation.
In terms of new investments, we've known these particular companies for a while have studied the industries or have a strong relationship with the sponsor.
Lets walk through some of the highlights we purchased $20 million for the first lien term loan 2.5 million of our revolver and 0.5 million of preferred and common equity of merit direct.
The company is a provider of BTB database products mound good capital is the sponsor.
Signature systems is a designer and manufacturer of ground protection products, we purchased $15 million of a first lien term loan and 1.4 million of preferred and common equity Center rock capital is the sponsor.
We purchased $8.6 million of a first lien term loan and $1.6 million of our revolver of Tw S. acquisition Corporation.
Cws is a for profit provider of post secondary education focused on technical careers and skilled trades Halifax group is the sponsor.
Turning to the outlook, we believe that the remainder of 2019, we will be active due to growth in M&A driven financings.
Due to our strong sourcing network and client relationships, we're seeing active deal flow.
Let me now turn the call over to leave our CFO to take us through the financial results.
Thank you Mark.
For the quarter ended June Thirtyth 2019, net investment income totaled 17 cents per share, including two cents per share of other income.
Looking at some of the expense categories management fees totaled $7.1 million.
General and administrative expenses totaled $1.2 million and interest expense totaled $7.8 million.
Foreign investment loss of eight cents per share on a mark to market basis.
Our dividend exceeded our GAAP net investment income by one cents per share.
Consequently.
Entity per share went from $8.83 to pay dollar 74 cents per share.
As a reminder, our entire portfolio credit facility and senior notes are mark to market by our board of directors each quarter using the exit price provided by independent valuation firms security and exchanges or independent broker dealer quotes when active markets are up.
Available under C. 820, and 825.
In cases, where broker dealer quotes are inactive we use independent valuation firms to value the investments.
Our overall debt portfolio has a weighted average yield of 10.1%.
On June Thirtyth, our portfolio consisted of 68 companies across 28 different industries.
The portfolio was invested 59% in first lien senior secured debt.
23% in second lien secured debt.
4% in subordinated debt and 14% in preferred and common equity.
88% of the portfolio had floating rate now let me turn the call back to armed activities to conclude we want to reiterate our mission.
Our goal is to generate attractive risk adjusted returns.
Through income coupled with long term preservation of capital.
Everything we do is aligned to that goal, we try to find less risky middle market companies that have high free cash flow conversion, we capture that free cash flow primarily in debt instruments, and we pay out those contractual cash flows in the form of dividends to our shareholders.
In closing I'd like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your continued investment and confidence in us that concludes our remarks at this time.
I would like to open up the call to questions.
Thank you.
I would like to ask a question. Please signal what pressing star one on your telephone keypad.
For using a speaker phone. Please make sure mute function is turned off to allow your signal to reach or equipment.
I got press Star one to pose a question, we'll pause for just a moment to allow everyone an opportunity for questions.
We'll take our first question from Carl Joel Joseph of Jefferies. Please go ahead.
Hey, good morning, guys and thanks for taking my questions.
Art seven back in looking at things from a macro perspective, I know you you talked about your credit still stable and you're not seeing any signs of a recession, but in terms of revenue and EBITDA.
Growth at your portfolio companies have you seen any sort of shift as as macro volatility has picked up a bit in recent months.
It's a good question Kyle we just did a portfolio review internally last week and it looks like on average EBITDA us on average are up 5% to 8%.
Obviously, there's some some that are doing a little bit better some are doing a little bit worse, but that's our latest kind of monthly snapshot.
We can't predict where we're going to be six months from today, but we do track this stuff monthly and.
Based on that we're feeling fine about the economy at this point.
Got it and then obviously, we're in kind of a new rate environment. These days.
Can you give us a sense for your outlook on margins given the strategy shift on the asset side.
And then also you recently kind of read on your balance sheet. So how it looks on the liability side if rates continue to decline.
Yes, you know asset side.
It's going to be interesting you know as as LIBOR has gone down.
How much the market.
Prices.
On spread versus absolute our spreads are going to widen.
Or our spreads are going to stay the same and absolutely yields are going to come down we don't have a clear picture at this point other than.
As far as the first lien business, we are doing it is.
It is kind of stable from a spread standpoint.
Over LIBOR, we're not seeing any tightening the question at our way or are we going to see widening.
If people price to an absolute yield but at this point spreads have not tightened.
But absolutely yields of course have now we move to the liability side.
Penalties liabilities at this point.
Our.
Our primarily floating rate RSP I see financing is fixed rate at a very low cheap rate.
You know, we're going to assess fixed rate up we're going to assess.
Other options of financing.
Over time, we talked about SP I see financing in the in the script, we were thinking about another joint venture like them when we did it pflp.
Maybe we think about unsecured bonds again at some point, if thats going to help us.
Diversify our funding sources and really maximize.
Our flexibility on the senior side, so everything's on.
Everything's on the table from the standpoint of the liability side in terms of.
How we can best optimize getting to the slightly higher leverage ratio.
That were targeting but we have not seen to back to your question, which was have we seen.
Spreads have we seen any difference in spreads or margins or yields and at this point, we have and it's kind of still pricing at a spread to LIBOR.
Got it thanks very much for answering my questions.
The next question from Michael reviews from Suntrust. Please go ahead.
Good morning, guys. Thanks for taking our questions.
I guess, so regarding a potential new senior loan JV would you have any updates on finding the right partner and could you. Please help us understand what you would like to see in regards to contribution to both our OE and I from the JV.
So look I think first of all in process, we're just getting going.
Assessing our options there.
It's been it's been a very nice partnership over it pflp with Kemper and that's worked very well.
Along with our lender capital one.
So we're just getting going in evaluating.
Evaluating options for PNM.
I would think it would look pretty similar to what we are doing a PFS LTE, which is a very nice steady or are we contribution too.
Two PNNT T., we hope with that kind of profile of a loan within that that JV, but we're just getting going.
Okay, Great that's helpful.
I guess, one last one if I may.
So I guess, we've talked about this before but while we understand that could be difficult to predict.
Could you give us a sense of repayment activity over the next year and.
Basically, especially in regards to with the prospect of lower short term interest rate.
Coupled with a strong.
Economic background backdrop for your portfolio companies.
If there is a potential for them to sort of repay just because the company is doing better or frankly refinance that loan just because.
Nobody is doing better and there is a potential for troops lower short term interest rate.
Yes, it's a good question and something we need to spend some time thinking about and you know we have LIBOR floors in.
90, 95% of our loans as LIBOR floors are typically 1% occasionally there 1.5%.
You may see more LIBOR floors getting structured back into deals are higher LIBOR floors.
For sure.
Where we tend to get refinances, where companies get get kind of big enough.
Where they can access the broadly syndicated market.
And where they can get covenant light financing and it hasn't been as yields or spreads have come down that has not really been the driver of revise its been as the companies grow and we hope as they grow.
They can get.
They can get it move into the DSL Covenant light world. So.
We don't see a wave I don't see wave at this point of refinancings.
But you know, we'll we'll keep barriers to the ground.
Okay perfect. Thanks for taking my question guys.
Q.
Thank you next question from Ryan Lynch of Keefe, Bruyette and Woods. Please go ahead.
Hey, good morning, Thanks for taking my questions.
First one.
And over the last several years you guys have been investing in the people on the platform Cross permanent Park.
Opening a few new offices as such.
I was just wondering can you kind of talk about.
Good deal flow you guys have been seeing over the last several quarters are you guys starting to see any sort of a different deal flow from different sponsors are different areas. As you guys continue to invest in the platform.
Yes, Thanks, Brian Yes, we have started four years ago we.
Brought some very senior people into the firm, who we worked with and prior.
In prior lives, who we trusted and we've opened up offices in Chicago, Houston, Los Angeles, and we beefed up New York.
And what that has allowed us to do is really expand the the number and variety of deals that we've seen as we expand the sponsor relationships and as I look at the highlighted deals in the script earlier.
All of these transactions came from new sponsors.
That we didn't have relationships with a few years ago, whether that we have in Denver sponsors Chicago sponsor.
Dallas sponsor.
Kind of highlighted.
And my comments a moment ago so.
That's it's nice to see new relationships, but as importantly, or more importantly for our investors.
It's about seeing more options. So that we can then be highly selective about what comes into.
The portfolio so.
It's been a really really positive thing for us to be increasingly selective.
In this market develop these relationships and then hopefully build up even a broader more diversified and.
And safer portfolio so.
We're pleased that it's come along and then the senior folks we've hired again folks we worked with for a long time and there is a lot of trust built up.
When you open up a regional office.
We want them to be the line of first defense.
And to be skeptical just to be clear no. One gets paid a commission at Pennantpark to bring a deal in.
Or to Jamba deal through investment Committee, we first want to hear why we shouldn't do a deal before we hear why we might want to so when we hire senior people to help expand our reach they really become our line of first defense.
To be able to be highly selective about what comes into the portfolio.
That's helpful and there is no doubt.
Having a wider funnel.
It's definitely.
A better way to execute the question is if you are originating deals with with new sponsors if you havent done deals with in the past.
How do you get comfortable with participating in a deal with the new sponsor I mean, when you have an existing sponsor you know their track record you've probably work with them you might have had.
You know some bumps in the road along the way you see how they how they work through deals you don't have any of that sort of background when you're taking on a new sponsors. So how do you get comfortable with that and is there a higher bar. When you guys are originating new loans with a new sponsor.
Thats a great question and we go back to the.
Saying, the three CS of credit cash flow collateral and character of character probably being the most important of the three.
So we underwrite the people we underwrite to sponsor we do reference checks.
We look at their past performance, we look at how they've dealt with lenders and challenging investments in the past.
And information is pretty easy to come by in our world. So just like they are underwriting same theres, a mutual underwriting going on we're underwriting them their underwriting us.
And you can get to the bottom of peoples reputation in their behavior pretty quickly in this world that we're in today. So it's a thorough vetting that then we go through before we take on.
Take on new clients.
Okay.
And then.
You mentioned earlier about.
Just in the very beginning stages of exploring a potential JV similar what you having tfl team.
I was just curious obviously those sort of structures use off balance sheet leverage.
So to generate enhance return.
Currently PNNT T has.
Leverage target of 1.1 to 1.5.
Do you guys. How do you guys view your guys' current leverage target.
In conjunction with and some sorta JV that uses leverage its off balance sheet would you guys view that as.
Obviously, that's not going to affect your regulatory leverage, but if you do any sort of looks through levers that obviously is increasing the leverage.
On a look through basis, so does that affect your your guys' view of how you view leverage.
Sure you know you have to you have to be sensible that how you use leverage I mean, we're getting smarter about the CLL world.
We just talked about on the plc call there were looking at securitization technology for PFS LTE and.
Certainly.
It looks like the market can.
Comfortably financed middle market first lien.
Assets at four to one or five to one that's not what we're aiming at here, but it seems like there is a market for that both for for debt and equity investors.
So as we take what we think are going to be safe middle market first lien loans and think about how to optimize an aura we prudently.
There's certainly an opportunity with the JV, there's certainly opportunity on balance sheet.
Certainly the SP I see.
Financing and we're still in dialogue with the SBA on Sps C is attractive financing as well.
SP I see financing is not counted in regulatory debt.
Hey, JV would not be counted in regulatory debt. So we're evaluating all these options.
With the thought that as we move up capital structure as we at this point in time for PNM C.
Find a safer.
In a more diversified portfolio, what's the best way to finance and generate an attractive ROI we prudently.
For our shareholders. So thats. This is all part of the mix, we're going through right now the JV Pflp has worked really really well.
And we're proud of that and we're just saying to you that thats worked really really well how can that be applicable to PNM today.
And how can we how can we use that type of technology to enhance and solidify our OE for PMT shareholders.
Okay. That's helpful color those are all my questions I appreciate the time today.
Thank you.
Well now take our next question Rick Shane of JP Morgan. Please go ahead.
Hey, guys. Thanks for taking my questions. This morning.
Wanted to talk about dividend and incentive fees on that spill over a little bit.
Are you talking about the 30 cents of spillover.
And.
Use that as a signal for the stability of the dividend and I appreciate that but the reality is that.
If you pay the dividend to the extent you're paying the dividend in a quarter, where you don't cover it erodes book value or else sees me in a day.
I am curious as we move forward and you're sort of in this transition period.
On the balance sheet will you provide any sort of relief on the incentive or management fees too.
Protect the to protect and Avi outside of marks.
As you sort of go through that transition.
Yes, so thats a good question Rick Thank you.
In terms of the earnings versus the dividends, we have said, we under earn the dividend one penny this quarter we.
We believe that is temporary as we transition from.
From kind of the second lien portfolio, we had a big in a nice exit last quarter on park.
And oversized position, we got a nice exit on we're taking those proceeds and gradually and thoughtfully reinvesting them in first lien with with higher leverage. So we view this quote unquote under earning of the dividend has just kind of a.
Temporary phenomenon with regard to the fees as you know.
As we move above one to one leverage our management fee goes down.
From 1.5% to 1% and we are just we will shortly be doing that so shareholders will be getting a benefit as we do move over over one to one leverage and as we've been talking about you've seen that over time, we just talked about in the pflp call as our platform gets bigger.
Gionee has been getting more and more optimized and down over time as our fixed cost of our.
Our finance accounting team and ops team is deployed over more vehicles greater assets. So as we get bigger there will be higher and there's hopefully be higher ROI based on a lower fee as we go above one to one based on more optimized gionee and of course, having the benefit of slightly higher leverage so.
We think the underwriting of the dividend is a temporary phenomenon, it's a quarter or two or whatever it ends up being as worth going through this.
As we're going through this transitory timeframe.
Got it but I would point out that those are all structural tailwinds on the headwind being lower base rates and the asset sensitivity of the portfolio.
And so there are going to be some offsets there you can go through that transition.
Yes, certainly if yields if we go through a low yield environment, which we a lower yield environment, which we may go through.
It's going to hurt you know its going for everybody.
And the incentive fee will.
Well obviously.
Kind of be variable with that and aligned to that.
Terrific. Thank your.
Thank you.
I'll take a next question from Mike you Celine from Ladenburg. Please go ahead.
Good morning, everyone.
Art.
Clearly I understand that by design PNNT tea is a higher risk portfolio than pflp and so it has about a third of the portfolio and second liens and sub debt.
With more signs that the economy slowing could you tell us about your investment philosophy for these investments compared to first liens.
Particularly interested in understanding whether you look for larger companies more equity cushions et cetera second liens.
Yes, it's a great question, Mickey and look the AR.
The our investment team that knows that in this environment for us to do.
Secondly, intermezzo deal its got to be awfully compelling.
So thats first of all that's the that's the message that we're giving our own people, which is it's got to be a truly compelling transaction for us to consider doing something thats not first lien. So what does that mean Latino safe and low leverage a wonderful company with a great growth trajectory terrific.
Return characteristics. Good covenants. So the words that we use internally there's got to be compelling so.
Cutthroat customer, we're not really doing much of that these days every once in a while something comes along where might be an add on to an existing credit thats doing very very well.
We may do a little bit sub secondly, them as but the the kind of trend is worried about 60% first lien today.
That's good that's going to continue to go up over time, and secondly, the mezz rolls off unless we find some really compelling transactions and.
Don't see that happening.
And occasionally we will do an add on to an existing.
Existing deal I think this past quarter, we added a little onto Deepak.
And we'll pro and you can see where those equity co invest are marked.
On that those companies are doing very well.
But those were small little add on.
Add on amounts to existing core positions.
I understand.
So we look at the existing portfolio and consider that you're really not adding much to the second lien and mezzanine buckets.
Trying to gauge the risk profile in the second lien bucket are these generally larger borrowers.
Is it how does the leverage compare for your second liens tier attachments versus first liens is there a big difference in sponsorship.
No I mean, it's it's a good question. It's the same types of sponsors that we've known for a long time.
If you look at for instance, the two that I just mentioned wheel pro now those over 100 million of EBITDA do you go back I think it's going over 40 of EBITDA.
And you can see in the equity co invest the trajectory of those companies is has been very positive.
And because they're they have had a positive trajectory.
Debt to EBITDA is lower so.
When companies grow that's very nice and particularly when we have an equity co invest but its nice because.
And then from there reduces risk so.
We're not really doing second lien and mezz of smaller companies right now if we would ever if we would do much of it at all.
And the second liens that you have did these borrowers exists in overweight on nine in other words could you underwrite their EBITDA with a high level of confidence in a recession or well. That's a good question because I know these particular borrowers did not but the style of underwriting was the same.
Which is.
Companies have a real reason to be a real reason to exist does anyone care. If they go away high barriers to entry excellent management teams reasonable growth prospects high free cash flow high free cash flow conversion, which will mean deleveraging in de risking.
And if you look at the second lien and Mezz book that we had in 2007 2008.
It was the same type of book.
Again larger larger borrowers.
In the world of the middle market. So.
Same style of underwriting.
Frankly, I think Thats one of the reasons are first lien track record.
It's been so strong both for PNM team Pflp is.
We take a mezzanine style of underwriting approach and apply it to first lien so.
If you look at our first lean track record and annualized loss of eight basis points a year now for eight years, if you take a look at.
Kinda, PNNT tea, which will call across the capital structure, including second lien and some as in like 30 basis points, a year and that includes the financial crisis the energy downturn.
Et cetera. So.
Just kind of style of underwriting is the start of that we'll use up and down the balance sheet.
That's helpful.
Those are all my questions I appreciate your time thank you.
Thank you.
We will now take our next question from Robert Dude.
From Raymond James Please go ahead.
Hi, guys.
On on.
All end.
Could you give us an update obviously I mean, you've got historically a good track record of recoveries. When when you do have a nonaccrual that many and you have a track record of being very patient.
In order to get that that recovery. So Orlando, obviously, it's now filed chapter 11, you've got a dip in that there's a debt to equity conversion proposal I think in the restructuring I mean can you give us any any outlook on on whats going on whether the objections.
Within.
The credit is or is that likely to how exactly that's likely to evolve yes.
Yes, so it's a good question it's in the sauces factory as we speak.
So I can only give you I can what is public information, but I can kind of give you directionally.
What's going on so.
That's good that's going through the bankruptcy process now there is there a stalking horse bids that are being.
Or being cultivated outside of the creditors.
We will see where the stalking horse bids come we'll see what the creditors do.
We are not the largest lender here, there's a there's another well known lender is larger than us who.
You know who.
Who is in this who is going to be a driver of the.
Of the big driver of the ultimate outcome. So that's an independent entity from us. So we have we can't really control them, we can control our our capital so.
Unclear.
In the coming weeks I think you know this process will roll through.
There will be clarity on it or we are hugely disappointed in obviously the performance of this company.
We think that given time. This company can can have a lot of value.
But we are not as much in control as we'd like to be in this particular situation. So.
We'll see we'll see where it's in a play out in the bankruptcy court in the coming weeks with a stalking horse and with the other lenders.
And that's all I can really tell you right now Robert.
Okay I appreciate that and the rest of my questions have been answered. Thanks.
Thanks.
Okay and last question from Casey Alexander from Compass point. Please go ahead.
Hi, good morning.
Yes. Your first loan has increased to 60% where does the math work out there is that.
You know that if you increase first lien exposure youre going to have some compression in yields so what percentage of the portfolio would you like to get first lien too and then what leverage ratio works when you get there.
Yes, that's a great question and.
Okay. So we'd be happy to work on your model with you offline here later in the day or tomorrow, if you'd like.
So.
It's hard to micromanage, where you're going to get too because we still have some secondly them as risk, which is going to get taken out when it gets taken out.
But I think that over time.
And this will end up being and in this environment. We have today, assuming this environment stays where it is some point environment could change and secondly, the minutes could be very attractive again, but in this environment I think we're going to end up getting up to 70% maybe 75%.
And then you.
You take our target leverage regulatory leverage of 1.1 to 1.5.
Obviously, if it's a more first lien portfolio you feel more comfortable at the upper end of that range.
You layer on I hope, we can get it another SP I see license you can layer on a joint venture.
And you know the the and the DNA continually continuing to be optimized the fee coming down to 1%.
Over one to one debt to equity.
You should have a very nice and hopefully safe are are we being generated for shareholders, but we're happy to walk through a model with you later today or tomorrow casing. Okay. Thank you and SP I see three are you at the Green light letter stage or no.
We are not there yet.
So we are still alive.
We're still we're still talking so we hope to get there are no assurances.
It's not done until it's done we've had a very nice relationship with the SP a it's been a good track record with MPN entity.
But we are hopeful so you can model it with Sps. So you can model without an SPC.
Looking at it both ways.
Okay, and what's the average EBITDA of your portfolio companies right now.
Average EBITDA was in the $25 million to $30 million range.
Okay and.
It is.
Looking through and I realize you have file that you don't have a part a partner, but when you think about the SLF would the SLF have different assets in it than what resides on balance sheet at PNM Ti or would they share some commonality of assets.
Yeah, I think it probably be a bunch of sharing I mean, there, it's something we need to debate and talk to with our partner.
Pf LT and its JV have a lot of overlap.
So that would be our thought but of course, it's subject to discussion with it we ultimately partner with.
Okay and then my last question Ive said that of the 17 cents of Eni two cents was other income.
Can you tell me what sort of drove the other income in the quarter.
It's it's it's amendment fees.
You know its agenting fee agency fees when when we.
When we bring other other investors in.
It was two cents I think if anything on any other color that no I think thats on normal other income growth run rate.
Fluctuates, one two or three each quarter, but that's nothing extraordinary in that.
That activity during the quarter.
All right well mine's, we've seen in our amines case should we think about averaging two cents a quarter. It's by over by Crook. It ends up being that sometimes once and sometimes three cents, but.
It's again, we can give you specific details on specific.
You know deals where it was but it was so it was some upfront fees I think as well as some amendment fees, yes, no thats, okay as long as there was nothing unusual onetime ish in there that it's something that happens on a reasonably regular basis Thats fine I. Appreciate you taking my questions.
Thank you Casey.
Yes.
First question and answer session.
Mr. I'd like to turn the conference back to you.
Great I want I appreciate everyone's interest today and their interest in PMT.
I hope everyone has a great end of summer a reminder, that our next quarterly conference call is going to be in mid November a little later than normal because it's our 10-K, which takes us a week or two extra to finalize.
But we're happy to talk to folks intra quarter, if they like in the meantime, I have a great end of summer. Thank you very much.
Now concludes today's call. Thank you for your participation you may now disconnect.