Patriot Capital Funding, Inc. (NasdaqGS: PCAP) (�Patriot Capital
Funding� or the �Company�), a specialty finance company providing
flexible financing solutions to small- to mid-sized companies
primarily in transactions initiated by private equity sponsors,
today announced results for the three- and nine-month periods ended
September 30, 2008. 2008 Third Quarter Summary Total investment
income of $10.2 million Net investment income of $6.6 million, or
$0.32 per basic and diluted share Net loss of $316,000, or $0.02
per basic and diluted share Net asset value per share of common
stock at September 30, 2008 was $9.74, versus $10.08 at June 30,
2008 Portfolio Activity We originated a $21.0 million one-stop
financing, comprised of senior and subordinated debt, and a $1.0
million equity co-investment, in connection with the
recapitalization of Boxercraft Incorporated (�Boxercraft�) by River
Associates Investments, LLC and Boxercraft�s management. Boxercraft
is a supplier of specialty apparel, including spiritwear and
licensed college apparel. We funded a $5.5 million debt investment,
comprised of a senior secured revolving line of credit and a
secured term loan, in L.A. Spas, Inc., an existing portfolio
company. We made a $1.1 million equity investment in Specialty
Tools, Inc. (�Specialty Tools�), the parent company of Nupla
Corporation (�Nupla�), an existing portfolio company. The equity
infusion was utilized to support the acquisition of Hisco, Inc., a
manufacturer of professional, high-grade fiberglass-handled
striking and digging tools, by Specialty Tools. We funded a $2.0
million senior secured term loan debt investment in Cengage
Learning Acquisitions, Inc., a marketer of highly customized
learning solutions. We funded a $6.5 million senior secured term
loan debt investment in Label Corp Holdings, Inc., a supplier of
prime labels. We funded a $7.5 million senior secured term loan
debt investment in Hudson Products Holdings, Inc., a designer and
manufacturer of air-cooled heat exchange equipment. We funded a
$2.0 million senior secured term loan debt investment in CDW
Corporation, a marketer of computers and computer peripheral
equipment. We funded a $2.0 million senior secured term loan debt
investment in Texas Competitive Electric Holdings Company, LLC, a
marketer of electricity to residential and commercial customers. In
addition, during the 2008 third quarter: We received proceeds of
$12.9 million in conjunction with the full repayment of our senior
secured loan and subordinated debt investment in Vince &
Associates Clinical Research, Inc. Additionally, we received $1.0
million in conjunction with the sale of our equity co-investment in
this company and realized a gain of approximately $458,000. We
earned an internal rate of return of approximately 16.8% on our
entire debt investment and in excess of 130% on our equity
investment. We received proceeds of $8.4 million in conjunction
with the full repayment of our senior secured revolving line of
credit and senior secured term loans in Smart, LLC. Additionally,
we converted $500,000 of convertible subordinated debt to
membership interests in this portfolio company. Subsequent to the
2008 third quarter: We acted as lead arranger and administrative
agent on a $32.5 million financing to a leading provider of
services for the biomedical research industry. We committed $22.5
million to the financing, which was comprised of senior and
subordinated debt and an equity investment, and we syndicated the
remaining $10.0 million, which was comprised of senior secured
debt, to another financial institution. We received proceeds of
$1.4 million in conjunction with the sale of our senior secured
term loan in a publisher of textbooks and educational materials. We
realized a loss of approximately $450,000 upon the sale. �During
the 2008 third quarter, we experienced a continuation of the
unfavorable market conditions and trends that we have been seeing
in recent reporting periods,� stated Patriot Capital Funding
President and Chief Executive Officer Richard Buckanavage.
�Although leverage multiples have recently come down and the cost
of debt has risen significantly over the last several months, these
trends are now of the magnitude that they are negatively impacting
returns for private equity sponsors. As a result, there is a dearth
of attractive transactions in the lower end of the middle market.
In our view, current purchase price multiples will need to fall
materially in order to make many of these transactions economically
viable for sponsors. That process will take time and accordingly,
we do not expect to initiate many additional proprietary
investments during the remainder of 2008 and well into 2009.�
�Despite the challenging economic environment, credit quality in
our investment portfolio was once again a bright spot for us.
Patriot Capital Funding�s weighted average risk rating remained
essentially flat again during the third quarter with a 2.09 rating
at September 30, 2008, versus 2.08 at June 30, 2008 and 2.11 at
December 31, 2007. More than 79 percent of our investments were in
the top two ratings categories, up from 75 percent following Q2,
and the fair value of our loan portfolio was more than 93 percent
of cost at quarter-end,� concluded Mr. Buckanavage. Portfolio Yield
The weighted average yield on all of our debt investments for the
three months ended September 30, 2008 was 12.6%, compared to 12.3%
for the three months ended September 30, 2007. The weighted average
balance of our debt investment portfolio for the three months ended
September 30, 2008 was $313.8 million, compared to $302.2 million
for the three months ended September 30, 2007. Portfolio Asset
Quality We utilize the following investment rating system for our
entire portfolio of debt investments: Investment Rating 1 �
Investments that exceed expectations and/or a capital gain is
expected. Investment Rating 2 � Investments that are generally
performing in accordance with expectations. Investment Rating 3 �
Investments that require closer monitoring. Investment Rating 4 �
Investments performing below expectations where a higher risk of
loss exists. Investment Rating 5 � Investments performing
significantly below expectations where we expect a loss. At
September 30, 2008, the distribution of our debt investments on the
1 to 5 investment rating scale at fair value was as follows:
Investment Rating 1 investments totaled $67.0 million (21.3% of the
total portfolio). Investment Rating 2 investments totaled $181.7
million (57.9% of the total portfolio). Investment Rating 3
investments totaled $44.4 million (14.2% of the total portfolio).
Investment Rating 4 investments totaled $10.1 million (3.2% of the
total portfolio). Investment Rating 5 investments totaled $10.7
million (3.4% of the total portfolio). We recorded net unrealized
depreciation on our investments in the amount of approximately $7.1
million during the 2008 third quarter. A portion of this amount,
approximately $1.4 million, resulted from quoted market prices on
our syndicated loan portfolio, approximately $4.5 million resulted
from a decline in cash flows of our portfolio companies, and
approximately $1.2 million resulted from the adoption of Statement
of Financial Accounting Standards No. 157 � Fair Value
Measurements. During the 2008 third quarter, we had two loans on
non-accrual status. Liquidity and Capital Resources At September
30, 2008, we had cash and cash equivalents of $1.0 million, total
assets of $366.3 million and net assets of $201.6 million. We had
$154.2 million of borrowings outstanding at September 30, 2008
under our $225 million securitization revolving credit facility. At
September 30, 2008, the interest rate on our securitization
revolving credit facility was 5.2%, up from 4.5% at June 30, 2008.
Our regulatory asset coverage was 231%, down from 280% at June 30,
2008 and 234% at December 31, 2007. We are required to maintain
regulatory asset coverage of at least 200%. In addition, the
securitization revolving credit facility contains certain
requirements and covenants, including limiting our borrowing
capacity to the amount of our stockholders� equity. As of September
30, 2008, we were in compliance with all such requirements and
covenants. Since the turmoil in the financial markets, which began
in mid-2007, we have taken a number of steps to help ensure the
continued availability of liquidity. First, we increased the
borrowing availability under our securitization revolving credit
facility from $175 million to $225 million in April 2008. Second,
we obtained stockholder approval at our 2008 annual meeting of
stockholders to, subject to approval from our board of directors,
(i) issue securities to subscribe to, convert to, or purchase
shares of our common stock and (ii) sell shares of our common stock
below the then current net asset value per share. However, in light
of the recent worsening of the conditions in the financial markets
and the U.S. economy overall, we have, subsequent to quarter end,
already sold one portfolio investment and are actively seeking to
opportunistically sell other selected portfolio investments and
have decided to lower our quarterly dividend. Because we believe
improvement in the financial markets is several quarters out, we
are also considering other measures to ensure adequate liquidity,
including forming and licensing a Small Business Investment Company
subsidiary and further operating expense reductions. Although we
believe that these measures should provide us with sufficient
sources of liquidity to support our operations, we cannot provide
any assurance that these measures will be sufficient given the
unprecedented instability in the financial markets and weakening of
the U.S. economy. Dividend Information We announced today that our
board of directors has declared a cash dividend of $0.25 per share
for the fourth quarter of 2008. The dividend is payable as follows:
Record date: December 22, 2008 Payment date: January 15, 2009 Our
board has decided to lower our quarterly per share dividend to
$0.25 from $0.33. The reduction reflects our belief that the
remainder of 2008 and much of 2009 will be characterized by
substantially lower closed deal volume. We also expect further
capital deployment to be hindered by our inability currently to
access the public equity markets and limitations on our ability to
use leverage to fund our investment activities. In addition to
lower expected revenue over the next 12 months, we also expect
borrowing costs to rise as well. The liquidity facility associated
with our securitization revolving credit facility matures in April
2009. We fully expect a meaningful increase in our borrowing costs
in connection with its extension. Our dividend is paid from taxable
income. Our board of directors determines the dividend based on
annual estimates of taxable income, which differs from book income
due to changes in unrealized appreciation and depreciation of
investments and due to temporary and permanent differences in
income and expense recognition. We have adopted a dividend
reinvestment plan (�DRIP�) that provides for reinvestment of our
dividends on behalf of our stockholders, unless a stockholder
elects to receive cash. As a result, if we declare a cash dividend,
then our stockholders who have not �opted out� of our dividend
reinvestment plan will have their cash dividends automatically
reinvested in additional shares of our common stock, rather than
receiving the cash dividends. If your shares of our common stock
are held through a brokerage firm or other financial intermediary
and you wish to participate in the DRIP, please contact your broker
or other financial intermediary. 2008 Third Quarter Conference
Call/Webcast Information � Conference Call: � Today - November 7,
2008 at 10:30 a.m. EST Dial-in Number: 800/954-1051 Call Replay
Until: November 9, 2008 at 12:30 p.m. EST Replay Number:
800/633-8284 Replay Access Code: 21398592 Webcast:
www.patcapfunding.com Web Replay: 30 days About Patriot Capital
Funding, Inc. Patriot Capital Funding, Inc. (www.patcapfunding.com)
is a specialty finance company providing customized financing
solutions primarily to private equity sponsors focused on making
investments in small- to mid-sized companies. Patriot Capital
Funding typically invests in companies with annual revenues ranging
from $10 million to $100 million that operate in diverse industry
sectors. Investments usually take the form of senior secured loans,
junior secured loans, and/or subordinated debt investments � which
may contain equity or equity-related instruments. Patriot Capital
Funding also offers "one-stop" financing, which typically includes
a revolving credit line, one or more senior term loans and a
subordinated debt investment. Patriot Capital Funding also makes
equity co-investments of generally up to $3.0 million and, to a
lesser extent, investments in broadly syndicated loans.
Forward-Looking Statements This press release may contain certain
forward-looking statements, including statements with regard to the
future performance of Patriot Capital Funding. Words such as
"believes," "expects," "projects," and "future" or similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. Certain
factors could cause actual results to differ materially from those
projected in these forward-looking statements, and some of these
factors are enumerated in Patriot Capital Funding's Form 10-K for
the year ended December 31, 2007, and other filings with the
Securities and Exchange Commission. Patriot Capital Funding
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. (financial statements follow) Patriot
Capital Funding, Inc. Consolidated Balance Sheets � � September 30,
December 31, 2008 � 2007 ASSETS (unaudited) Investments at fair
value: Non-control/non-affiliate investments (cost of $237,216,503
� 2008, $294,686,727 - 2007) $ 231,061,072 $ 290,225,759 Affiliate
investments (cost of $74,483,309 � 2008, $86,577,905 � 2007)
64,840,631 85,171,605 Control investments (cost of $43,270,552 �
2008, $6,980,389 � 2007) � 35,171,524 � � � 9,328,389 � Total
investments 331,073,227 384,725,753 Cash and cash equivalents
999,248 789,451 Restricted cash 30,297,325 10,487,202 Interest
receivable 1,521,448 1,758,954 Other assets � 2,386,211 � � �
617,448 � � TOTAL ASSETS $ 366,277,459 � � $ 398,378,808 � �
LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Borrowings $
154,200,000 $ 164,900,000 Interest payable 486,807 821,124
Dividends payable 6,894,520 6,814,650 Accounts payable, accrued
expenses and other � 3,107,060 � � � 4,245,350 � � TOTAL
LIABILITIES � 164,688,387 � � � 176,781,124 � � STOCKHOLDERS'
EQUITY Preferred stock, $.01 par value, 1,000,000 shares
authorized; no shares issued and outstanding - - Common stock, $.01
par value, 49,000,000 shares authorized; 20,702,485 and 20,650,455
shares issued and outstanding at September 30, 2008 and December
31, 2007, respectively 207,024 206,504 Paid-in capital 234,802,443
233,722,593 Accumulated net investment loss (1,912,061 ) (1,912,061
) Distributions in excess of net investment income (3,603,262 )
(2,824,651 ) Net realized loss on investments (3,149,227 )
(3,171,365 ) Net unrealized depreciation on investments (24,028,252
) (3,660,971 ) Net unrealized depreciation on interest rate swaps �
(727,593 ) � � (762,365 ) � TOTAL STOCKHOLDERS' EQUITY �
201,589,072 � � � 221,597,684 � � TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 366,277,459 � � $ 398,378,808 � � NET ASSET
VALUE PER COMMON SHARE $ 9.74 � � $ 10.73 � ��Patriot Capital
Funding, Inc. Consolidated Statements of Operations (unaudited) � �
Three Months Ended Nine Months Ended September 30, September 30, �
2008 � � � 2007 � � 2008 � � � 2007 � INVESTMENT INCOME � �
Interest and dividends: Non-control/non-affiliate investments $
6,477,906 $ 8,049,366 $ 21,909,910 $ 23,163,971 Affiliate
investments 1,994,624 1,329,525 7,007,546 3,047,798 Control
investments � 966,986 � � � 176,361 � � 1,645,111 � � � 292,202 �
Total interest and dividend income � 9,439,516 � � � 9,555,252 � �
30,562,567 � � � 26,503,971 � Fees: Non-control/non-affiliate
investments 105,464 161,325 343,550 731,050 Affiliate investments
282,518 19,054 358,966 49,944 Control investments � 72,487 � � �
6,250 � � 113,737 � � � 99,763 � Total fee income � 460,469 � � �
186,629 � � 816,253 � � � 880,757 � Other investment income:
Non-control/non-affiliate investments 17,833 11,001 300,076 435,130
Affiliate investments 307,245 - 307,245 - Control investments �
4,357 � � � - � � 142,383 � � � - � Total other investment income �
329,435 � � � 11,001 � � 749,704 � � � 435,130 � Total Investment
Income � 10,229,420 � � � 9,752,882 � � 32,128,524 � � � 27,819,858
� � EXPENSES Compensation expense 834,779 1,332,087 3,440,278
3,883,585 Interest expense 1,789,755 2,067,467 5,774,508 5,216,188
Professional fees 340,388 250,706 1,011,119 664,377 General and
administrative expense � 706,715 � � � 601,637 � � 2,140,238 � � �
1,817,737 � Total Expenses � 3,671,637 � � � 4,251,897 � �
12,366,143 � � � 11,581,887 � � Net Investment Income � 6,557,783 �
� � 5,500,985 � � 19,762,381 � � � 16,237,971 � � NET REALIZED GAIN
AND NET UNREALIZED DEPRECIATION Net realized gain (loss) on
investments � non-control/non- affiliate (2,500 ) 7,500 (86,267 )
91,601 Net realized gain on investments � affiliate 458,405 -
458,405 - Net realized loss on investments � control - - (350,000 )
- Net unrealized depreciation on investments �
non-control/non-affiliate (2,054,709 ) (1,259,232 ) (10,684,608 )
(1,624,182 ) Net unrealized depreciation on investments � affiliate
(2,808,033 ) (1,317,300 ) (8,470,041 ) (1,077,100 ) Net unrealized
appreciation (depreciation) on investments � control (2,285,030 )
1,456,600 (1,212,632 ) 1,694,200 Net unrealized appreciation
(depreciation) on interest rate swaps � (182,011 ) � � (381,680 ) �
34,772 � � � (259,536 ) Net Realized Gain and Net Unrealized
Depreciation � (6,873,878 ) � � (1,494,112 ) � (20,310,371 ) � �
(1,175,017 ) NET INCOME (LOSS) $ (316,095 ) � $ 4,006,873 � $
(547,990 ) � $ 15,062,954 � Earnings (loss) per share, basic $
(0.02 ) � $ 0.22 � $ (0.03 ) � $ 0.84 � Earnings (loss) per share,
diluted $ (0.02 ) � $ 0.22 � $ (0.03 ) � $ 0.83 � Weighted average
shares outstanding, basic � 20,702,485 � � � 18,284,737 � �
20,682,167 � � � 18,024,294 � Weighted average shares outstanding,
diluted � 20,702,485 � � � 18,476,049 � � 20,682,167 � � �
18,215,606 �
Patriot Capital Funding (MM) (NASDAQ:PCAP)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Patriot Capital Funding (MM) (NASDAQ:PCAP)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024