PNNT 8-K
Pennantpark Investment Corp (PNNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): November 19, 2020
PennantPark Investment Corporation
(Exact Name of Registrant as Specified in Charter)
| Maryland | 814-00736 | 20-8250744 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 590 Madison Avenue, 15th Floor, New York, NY 10022 |
| (Address of Principal Executive Offices) (Zip Code) |
212-905-1000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
| Common Stock, par value $0.001 per share | PNNT | The Nasdaq Stock Market LLC |
| 5.50% Notes due 2024 | PNNTG | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On November 19, 2020, PennantPark Investment Corporation issued a press release announcing its financial results for the fourth quarter and fiscal year ended September 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report pursuant to Item 2.02 on Form 8-K and Regulation FD.
The information in this report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of such section. The information in this report on Form 8-K shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Act, or under the Exchange Act, except as shall be expressly set forth by specific reference in such filing. For information concerning the COVID-19 pandemic and its impact on the Company’s business and operating results, see the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Item 1A. Risk Factors” therein.
Forward-Looking Statements
This report on Form 8-K, including Exhibit 99.1 furnished herewith, may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Investment Corporation files under the Exchange Act. All statements other than statements of historical facts included in this report on Form 8-K are forward-looking statements and 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 from time to time in filings with the Securities and Exchange Commission as well as changes in the economy and risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism, natural disasters or pandemics such as COVID-19. PennantPark Investment Corporation undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.
PennantPark Investment Corporation may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from its historical experience and present expectations.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
99.1 Press Release of PennantPark Investment Corporation dated November 19, 2020
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PennantPark Investment Corporation | ||
| Date: November 19, 2020 | By: | /s/ Aviv Efrat |
| Aviv Efrat | ||
| Chief Financial Officer & Treasurer | ||
EXHIBIT 99.1
PennantPark Investment Corporation Announces Financial Results for the Fourth Quarter and Fiscal Year Ended September 30, 2020
NEW YORK, Nov. 19, 2020 (GLOBE NEWSWIRE) -- PennantPark Investment Corporation (NASDAQ: PNNT) announced today financial results for the fourth quarter and fiscal year ended September 30, 2020.
HIGHLIGHTS
Quarter ended September 30, 2020
($ in millions, except per share amounts)
| Assets and Liabilities: | ||||
| Investment portfolio (1) | $ | 1,081.8 | ||
| Net assets | $ | 525.7 | ||
| GAAP net asset value per share | $ | 7.84 | ||
| Increase in GAAP net asset value per share | 0.3 | % | ||
| Adjusted net asset value per share (2) | $ | 7.59 | ||
| Increase in adjusted net asset value per share (2) | 1.7 | % | ||
| Truist Credit Facility | $ | 368.7 | ||
| 2024 Notes | $ | 83.8 | ||
| SBA Debentures | $ | 115.8 | ||
| Regulatory Debt to Equity | 0.93x | |||
| Regulatory Net Debt to Equity (3) | 0.88x | |||
| GAAP Net Debt to Equity (4) | 1.03x | |||
| Yield on debt investments at quarter-end | 8.9 | % |
| Quarter Ended September 30, 2020 | Year Ended September 30, 2020 | |||||||
| Operating Results: | ||||||||
| Net investment income | $ | 7.3 | $ | 38.7 | ||||
| GAAP net investment income per share | $ | 0.11 | $ | 0.58 | ||||
| Non-recurring net PSLF transaction costs per share | $ | 0.03 | $ | 0.03 | ||||
| Core net investment income per share (5) | $ | 0.14 | $ | 0.61 | ||||
| Distributions declared per share | $ | 0.12 | $ | 0.60 | ||||
| Portfolio Activity: | ||||||||
| Purchases of investments | $ | 27.1 | $ | 319.3 | ||||
| Sales and repayments of investments | $ | 48.6 | $ | 162.7 | ||||
| Number of new portfolio companies invested | 3 | 25 | ||||||
| Number of existing portfolio companies invested | 7 | 58 | ||||||
| Number of ending portfolio companies | 80 | 80 | ||||||
| ____________ | |
| (1) | Includes investments in PennantPark Senior Loan Fund, LLC, or PSLF, an unconsolidated joint venture, totaling $99.3 million, at fair value. |
| (2) | This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of the $17.0 million unrealized loss on our multi-currency, senior secured revolving credit facility with Truist Bank, as amended, or the Truist Credit Facility, and, together with our credit facility with BNP Paribas, as amended, the Credit Facilities. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. |
| (3) | This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance net of $25.8 million of cash and equivalents. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. |
| (4) | This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance including the impact of the $17.0 million unrealized loss on the Truist Credit Facility, Small Business Act, or SBA, Debentures and net of $25.8 million of cash and equivalents. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. |
| (5) | Core net investment income is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management because it reflects the Company’s financial performance excluding $2.2 million of expenses related to the PSLF transaction. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. |
CONFERENCE CALL AT 10:00 A.M. EST ON NOVEMBER 20, 2020
PennantPark Investment Corporation (“we,” “our,” “us” or the “Company”) will host a conference call at 10:00 a.m. (Eastern Standard Time) on Friday, November 20, 2020 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (866) 548-4713 approximately 5-10 minutes prior to the call. International callers should dial (323) 794-2093. All callers should reference conference ID #2765446 or PennantPark Investment Corporation. An archived replay of the call will be available through December 4, 2020 by calling toll-free (888) 203-1112. International callers please dial (719) 457-0820. For all phone replays, please reference conference ID #2765446.
INCENTIVE FEE WAIVER EXTENSION
We have concluded, in consultation with our board, to extend the incentive fee waiver for an additional quarter through December 31, 2020.
PORTFOLIO AND INVESTMENT ACTIVITY
“We are pleased with the solid performance of our portfolio through the challenging economic conditions of the last few quarters,” said Arthur Penn, Chairman and CEO. “We are particularly pleased with the upsizing of our PSLF JV with Pantheon as well as substantial equity positions in several high growth companies which are solidifying and bolstering NAV.”
As of September 30, 2020, our portfolio totaled $1,081.8 million and consisted of $439.0 million of first lien secured debt, $220.8 million of second lien secured debt, $113.6 million of subordinated debt (including $63.0 million in PSLF) and $308.3 million of preferred and common equity (including $36.3 million in PSLF). Our debt portfolio consisted of 93% variable-rate investments. As of September 30, 2020, we had two portfolio companies on non-accrual, representing 4.9% and 3.4% of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $83.8 million as of September 30, 2020. Our overall portfolio consisted of 80 companies with an average investment size of $13.5 million, had a weighted average yield on interest bearing debt investments of 8.9% and was invested 41% in first lien secured debt, 20% in second lien secured debt, 10% in subordinated debt (including 6% in PSLF) and 29% in preferred and common equity (including 3% in PSLF). As of September 30, 2020, all of the investments held by PSLF were first lien secured debt. For more information on how the COVID-19 pandemic has affected our business and results of operations, see our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Item 1A. Risk Factors” therein.
As of September 30, 2019, our portfolio totaled $1,219.4 million and consisted of $695.3 million of first lien secured debt, $269.3 million of second lien secured debt, $61.2 million of subordinated debt and $193.7 million of preferred and common equity. Our debt portfolio consisted of 87% variable-rate investments and 13% fixed-rate investments. As of September 30, 2019, we had no portfolio companies on non-accrual. Overall, the portfolio had net unrealized depreciation of $37.6 million as of September 30, 2019. Our overall portfolio consisted of 67 companies with an average investment size of $18.2 million, had a weighted average yield on interest bearing debt investments of 9.8% and was invested 57% in first lien secured debt, 22% in second lien secured debt, 5% in subordinated debt and 16% in preferred and common equity.
For the three months ended September 30, 2020, we invested $27.1 million in three new and seven existing portfolio companies with a weighted average yield on debt investments of 7.0%. Sales and repayments of investments for the same period totaled $48.6 million. This compares to the three months ended September 30, 2019, in which we invested $38.8 million in three new and 11 existing portfolio companies with a weighted average yield on debt investments of 8.4%. Sales and repayments of investments for the same period totaled $100.9 million.
For the year ended September 30, 2020, we invested $319.3 million in 25 new and 58 existing portfolio companies with a weighted average yield on debt investments of 8.4%. Sales and repayments of investments for the same period totaled $162.7 million.
For the year ended September 30, 2019, we invested $533.6 million in 24 new and 49 existing portfolio companies with a weighted average yield on debt investments of 9.4%. Sales and repayments of investments for the same period totaled $426.5 million.
PennantPark Senior Loan Fund, LLC
As of September 30, 2020, PSLF’s portfolio totaled $353.4 million, consisted of 37 companies with an average investment size of $9.6 million and had a weighted average yield on debt investments of 7.3%.
For the period ended July 31, 2020 (inception) through September 30, 2020, PSLF invested $5.7 million in one new portfolio company with a weighted average yield on debt investments of 7.5%. PSLF’s sales and repayments of investments for the same period totaled $11.1 million.
RECENT DEVELOPMENTS
Effective October 31, 2020, certain entities and managed accounts of the private credit investment manager of Pantheon Ventures (UK) LLP, or Pantheon, our joint-venture partner, contributed an additional $27.5 million to PSLF, bringing their total contribution to $62.5 million. Pantheon’s additional investment came in at the then current net asset value. At the same time, the Company has also invested an additional $1.8 million in PSLF. As a result, the Company currently owns 60.5% of the joint venture. Additionally, in connection with this transaction, BNP Paribas has increased the size of PSLF’s credit facility from $250.0 million to $275.0 million.
Subsequent to September 30, 2020, our portfolio company, Cano Health, LLC (ITC Rumba, LLC), entered into a business combination agreement with Jaws Acquisition Corp (“JWS”), a special purpose acquisition vehicle, and other parties, subject to certain closing conditions, with an expected closing late first quarter or early second quarter 2021. Based on the closing stock price of JWS on November 13, 2020, our $18.8 million common stock fair valuation as of September 30, 2020 would increase to an estimated $72.3 million, which includes a combination of cash and stock, assuming the transaction closes based on the agreed terms. This would represent a net asset value increase of $0.80 per share, as of November 13, 2020. Our shares are owned by a limited partnership controlled by the financial sponsor and are subject to customary lock up restrictions. As a result, the fair value on December 31, 2020, may likely include an illiquidity discount not in the public trading values indicated above. There can be no assurance that the implied value of our equity interest will be representative of the value ultimately realized on our equity investment.
RESULTS OF OPERATIONS
Set forth below are the results of operations for the years ended September 30, 2020 and 2019.
Investment Income
Investment income for the three months ended September 30, 2020 and 2019 was $21.3 million and $27.9 million, respectively, and was primarily attributable to $12.3 million and $17.0 million from first lien secured debt, $5.3 million and $8.7 million from second lien secured debt and $3.7 million and $2.2 million from subordinated debt and preferred and common equity, respectively.
Investment income for the years ended September 30, 2020 and 2019 was $100.2 million and $112.1 million, respectively, and was attributable to $63.4 million and $62.6 million from first lien secured debt, $25.9 million and $41.4 million from second lien secured debt and $10.9 million and $8.1 million from subordinated debt and preferred and common equity, respectively. The increase in investment income over the prior year was primarily due to an increase in our portfolio at cost.
Expenses
Net expenses for the three months ended September 30, 2020 and 2019 totaled $14.0 million and $18.3 million, respectively. Base management fee totaled $4.4 million and $4.6 million, debt related interest and other financing costs totaled $8.2 million (including one-time costs of $2.2 million associated with the PSLF transaction) and $12.2 million (including one-time debt related costs of $4.4 million), general and administrative expenses totaled $1.2 million and $1.2 million and provision for taxes totaled $0.3 million and $0.3 million, respectively, for the same periods.
Net expenses for the years ended September 30, 2020 and 2019 totaled $61.5 million and $67.5 million, respectively. Base management fee totaled $18.6 million and $18.2 million, incentive fee totaled $2.7 million (after an incentive fee waiver of $1.9 million) and $5.1 million, debt related interest and other financing expenses totaled $34.4 million (including one-time costs of $2.2 million associated with the PSLF transaction) and $38.2 million (including one-time debt related costs of $9.2 million), general and administrative expenses totaled $4.7 million and $4.7 million and provision for taxes totaled $1.2 million and $1.2 million, respectively, for the same periods. The decrease in expenses over the prior year was primarily due to a decrease in debt related expenses as well as the incentive fee waiver.
Net Investment Income
Net investment income totaled $7.3 million, or $0.11 per share, and $9.6 million, or $0.14 per share, for the three months ended September 30, 2020 and 2019, respectively.
Net investment income totaled $38.7 million, or $0.58 per share, and $44.6 million, or $0.66 per share, for the years ended September 30, 2020 and 2019, respectively. The decrease in net investment income per share compared to the prior year was primarily due to a decrease in LIBOR.
Net Realized Gains or Losses
Sales and repayments of investments for the three months ended September 30, 2020 and 2019 totaled $48.6 million and $100.9 million, respectively, and net realized losses totaled $10.1 million and $18.4 million, respectively, for the same periods.
Sales and repayments of investments for the years ended September 30, 2020 and 2019 totaled $162.7 million and $426.5 million, respectively, and net realized losses totaled $20.8 million and $108.5 million, respectively. The change in realized gains/losses was primarily due to changes in the market conditions of our investments and the values at which they were realized, including the net realized loss on Superior Digital Displays, LLC during the year ended September 30, 2019.
Unrealized Appreciation or Depreciation on Investments, Credit Facilities, and the 2019 Notes
For the three months ended September 30, 2020 and 2019, we reported a net change in unrealized appreciation on investments of $21.3 million and $21.2 million, respectively. For the years ended September 30, 2020 and 2019, we reported net change in unrealized (depreciation) appreciation on investments of ($46.2) million and $74.1 million, respectively. As of September 30, 2020 and 2019, our net unrealized depreciation on investments totaled $83.8 million and $37.6 million, respectively. The net change in unrealized appreciation/depreciation on our investments for the year ended September 30, 2020 compared to the prior year was primarily due to changes in the capital market conditions as well as the financial performance of certain portfolio companies primarily driven by the market disruption caused by the COVID-19 pandemic and the uncertainty surrounding its continued adverse economic impact. For more information on how the COVID-19 pandemic has affected our business and results of operations, see our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Item 1A. Risk Factors” therein.
For the three months ended September 30, 2020 and 2019, our Credit Facilities had a net change in unrealized appreciation of $9.0 million and $4.2 million, respectively. For the years ended September 30, 2020 and 2019, our Credit Facilities and our 4.5% notes due 2019, or the 2019 Notes, had a net change in unrealized depreciation of $12.3 million and $5.7 million, respectively. As of September 30, 2020 and 2019, our net unrealized depreciation on our Credit Facilities and, prior to their redemption, the 2019 Notes totaled $19.6 million and $7.2 million, respectively. The net change in unrealized depreciation for the year ended September 30, 2020 compared to the prior year was primarily due to changes in the capital markets.
Net Change in Net Assets Resulting from Operations
Net change in net assets resulting from operations totaled $9.5 million, or $0.14 per share, and $8.2 million, or $0.13 per share, for the three months ended September 30, 2020 and 2019, respectively.
Net change in net assets resulting from operations totaled ($16.0) million, or ($0.24) per share, and $15.9 million, or $0.24 per share, for the years ended September 30, 2020 and 2019, respectively. The decrease in net assets from operations for the year ended September 30, 2020 compared to the prior year was primarily due to depreciation of the portfolio primarily driven by the market disruption caused by the COVID-19 pandemic and the uncertainty surrounding its continued adverse economic impact. For more information on how the COVID-19 pandemic has affected our business and results of operations, see our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Item 1A. Risk Factors” therein.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources are derived primarily from proceeds of securities offerings, debt capital and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives. For more information on how the COVID-19 pandemic may impact our ability to comply with the covenants of the Credit Facilities, see the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020, including “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – COVID-19 Developments” and “Item 1A. Risk Factors” therein.
The annualized weighted average cost of debt for the years ended September 30, 2020 and 2019, inclusive of the fee on the undrawn commitment and amendment costs on the Credit Facilities, amortized upfront fees on SBA debentures and debt retirement and issuance costs, was 4.0% and 6.0%, respectively. As of September 30, 2020 and 2019, we had $86.7 million and $173.4 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions.
As of September 30, 2020 and 2019, we had $388.3 million and $301.6 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 2.5% and 4.2%, respectively, exclusive of the fee on undrawn commitment, as of September 30, 2020 and 2019.
As of September 30, 2020 and 2019, we had cash and cash equivalents of $25.8 million and $59.5 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to take advantage of market opportunities.
Our operating activities used cash of $129.6 million for the year ended September 30, 2020, and our financing activities provided cash of $95.8 million for the same period. Our operating activities used cash primarily for our investment activities and our financing activities provided cash primarily for net borrowings under our Credit Facilities.
Our operating activities provided cash of $81.1 million for the year ended September 30, 2019, and our financing activities provided cash of $121.1 million for the same period. Our operating activities provided cash from sales and repayments on our investments and our financing activities provided cash primarily for net borrowings under our Credit Facilities as well as the issuance of our 5.5% notes due 2024, partially offset by cash used by our stock repurchase program.
DISTRIBUTIONS
During the year ended September 30, 2020 and 2019, we declared distributions of $0.60 and $0.72 per share, for total distributions of $40.2 million and $48.4 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the Securities and Exchange Commission, or the SEC.
AVAILABLE INFORMATION
The Company makes available on its website its annual report on Form 10-K filed with the SEC and stockholders may find the report on our website at www.pennantpark.com.
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
| September 30, 2020 | September 30, 2019 | |||||||
| Assets | ||||||||
| Investments at fair value | ||||||||
| Non-controlled, non-affiliated investments (cost—$713,683,209 and $922,304,099, respectively) | $ | 735,674,666 | $ | 936,632,099 | ||||
| Non-controlled, affiliated investments (cost—$77,628,920 and $77,600,816, respectively) | 27,753,893 | 49,349,338 | ||||||
| Controlled, affiliated investments (cost—$374,260,162 and $257,117,800, respectively) | 318,342,859 | 233,451,359 | ||||||
| Total of investments (cost—$1,165,572,291 and $1,257,022,715, respectively) | 1,081,771,418 | 1,219,432,796 | ||||||
| Cash and cash equivalents (cost—$25,801,087 and $59,546,438, respectively) | 25,806,002 | 59,516,236 | ||||||
| Interest receivable | 5,005,715 | 6,226,539 | ||||||
| Distribution receivable | 1,393,716 | — | ||||||
| Prepaid expenses and other assets | 376,030 | 662,442 | ||||||
| Total assets | 1,114,352,881 | 1,285,838,013 | ||||||
| Liabilities | ||||||||
| Distributions payable | 8,045,413 | 12,068,119 | ||||||
| Payable for investments purchased | 5,461,508 | — | ||||||
| BNP Credit Facility payable, at fair value (cost—zero and $171,000,000, respectively) | — | 170,145,000 | ||||||
| Truist Credit Facility payable, at fair value (cost—$388,252,000 and $301,636,000, respectively) | 368,701,972 | 295,245,214 | ||||||
| 2024 Notes payable, net (par—$86,250,000 and $75,000,000, respectively) | 83,837,560 | 72,256,607 | ||||||
| SBA debentures payable, net (par—$118,500,000 and $150,000,000, respectively) | 115,772,677 | 146,111,055 | ||||||
| Base management fee payable, net | 4,369,637 | 4,641,480 | ||||||
| Interest payable on debt | 2,022,614 | 2,895,695 | ||||||
| Accrued other expenses | 432,648 | 569,175 | ||||||
| Total liabilities | 588,644,029 | 703,932,345 | ||||||
| Commitments and contingencies | ||||||||
| Net assets | ||||||||
| Common stock, 67,045,105 and 67,045,105 shares issued and outstanding, respectively. Par value $0.001 per share and 100,000,000 shares authorized | 67,045 | 67,045 | ||||||
| Paid-in capital in excess of par value | 787,625,031 | 788,192,159 | ||||||
| Accumulated distributable loss | (261,983,224 | ) | (206,353,536 | ) | ||||
| Total net assets | $ | 525,708,852 | $ | 581,905,668 | ||||
| Total liabilities and net assets | $ | 1,114,352,881 | $ | 1,285,838,013 | ||||
| Net asset value per share | $ | 7.84 | $ | 8.68 | ||||
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years Ended September 30, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| Investment income: | ||||||||||||
| From non-controlled, non-affiliated investments: | ||||||||||||
| Interest | $ | 77,453,276 | $ | 88,060,418 | $ | 83,255,593 | ||||||
| Payment in kind | 7,233,317 | 6,445,122 | 5,645,535 | |||||||||
| Other income | 4,821,510 | 3,122,988 | 6,981,507 | |||||||||
| From non-controlled, affiliated investments: | ||||||||||||
| Interest | — | — | 3,013,976 | |||||||||
| Payment in kind | — | — | 2,031,589 | |||||||||
| From controlled, affiliated investments: | ||||||||||||
| Interest | 3,387,858 | 9,381,881 | 4,499,350 | |||||||||
| Payment in kind | 7,328,846 | 4,319,300 | 2,850,498 | |||||||||
| Other income | — | 776,945 | — | |||||||||
| Total investment income | 100,224,807 | 112,106,654 | 108,278,048 | |||||||||
| Expenses: | ||||||||||||
| Base management fee | 18,636,039 | 18,225,229 | 17,468,376 | |||||||||
| Performance-based incentive fee | 4,579,660 | 5,146,696 | 11,492,928 | |||||||||
| Interest and expenses on debt | 32,167,755 | 28,943,312 | 22,818,492 | |||||||||
| Administrative services expenses | 2,075,080 | 2,113,895 | 2,086,500 | |||||||||
| Other general and administrative expenses | 2,573,920 | 2,637,820 | 2,504,853 | |||||||||
| Expenses before Management Fees waiver, provision for taxes and financing costs | 60,032,454 | 57,066,952 | 56,371,149 | |||||||||
| Management Fees waiver | (1,921,987 | ) | — | (1,427,253 | ) | |||||||
| Provision for taxes | 1,200,000 | 1,200,000 | — | |||||||||
| Make-whole premium | — | 2,162,526 | — | |||||||||
| PSLF transaction costs | 2,184,128 | — | — | |||||||||
| Credit facility amendment and debt issuance costs | — | 7,080,205 | — | |||||||||
| Net expenses | 61,494,595 | 67,509,683 | 54,943,896 | |||||||||
| Net investment income | 38,730,212 | 44,596,971 | 53,334,152 | |||||||||
| Realized and change in unrealized (loss) gain on investments and debt: | ||||||||||||
| Net realized (loss) gain on: | ||||||||||||
| Non-controlled, non-affiliated investments | (11,577,419 | ) | (51,940,526 | ) | 34,813,876 | |||||||
| Non-controlled and controlled, affiliated investments | — | (56,575,132 | ) | 11,042,330 | ||||||||
| Deconsolidation loss | (9,249,833 | ) | — | — | ||||||||
| Net realized (loss) gain on investments | (20,827,252 | ) | (108,515,658 | ) | 45,856,206 | |||||||
| Net change in change in unrealized (depreciation) appreciation on: | ||||||||||||
| Non-controlled, non-affiliated investments | 7,686,665 | 22,788,117 | (16,751,386 | ) | ||||||||
| Non-controlled and controlled, affiliated investments | (53,863,620 | ) | 51,361,260 | (38,586,621 | ) | |||||||
| Debt depreciation | 12,304,242 | 5,694,116 | 3,861,111 | |||||||||
| Net change in unrealized (depreciation) appreciation on investments and debt | (33,872,713 | ) | 79,843,493 | (51,476,896 | ) | |||||||
| Net realized and change in unrealized loss from investments and debt | (54,699,965 | ) | (28,672,165 | ) | (5,620,690 | ) | ||||||
| Net (decrease) increase in net assets resulting from operations | $ | (15,969,753 | ) | $ | 15,924,806 | $ | 47,713,462 | |||||
| Net (decrease) increase in net assets resulting from operations per common share | $ | (0.24 | ) | $ | 0.24 | $ | 0.68 | |||||
| Net investment income per common share | $ | 0.58 | $ | 0.66 | $ | 0.75 | ||||||
ABOUT PENNANTPARK INVESTMENT CORPORATION
PennantPark Investment Corporation is a business development company which invests primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. PennantPark Investment Corporation is managed by PennantPark Investment Advisers, LLC.
ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC
PennantPark Investment Advisers, LLC is a leading middle market credit platform, which today has more than $3.5 billion of assets under management. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in New York and has offices in Chicago, Houston and Los Angeles.
FORWARD-LOOKING STATEMENTS
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and 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 from time to time in filings with the SEC as well as changes in the economy and risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism, natural disasters or pandemics such as COVID-19. The Company undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.
We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.
CONTACT:
Aviv Efrat
PennantPark Investment Corporation
(212) 905-1000
www.pennantpark.com