8-K
Sixth Street Specialty Lending, Inc. (TSLX)
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): August 4, 2020
Sixth Street Specialty Lending, Inc.
(Exact name of registrant as specified in charter)
| Delaware | 001-36364 | 27-3380000 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
| 2100 McKinney Avenue, Suite 1500<br><br><br>Dallas, TX | 75201 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (zip code) |
Registrant’s telephone number, including area code: (469) 621-3001
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 (see General Instruction A.2 below):
| ☐ | 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 $0.01 per share | TSLX | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 August 4, 2020, the registrant issued a press release announcing its financial results for the quarter ended June 30, 2020. The text of the press release is included as Exhibit 99.1 to this Form 8-K.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Item 7.01 – Regulation FD Disclosure
On August 4, 2020, the registrant issued a press release, included herewith as Exhibit 99.1, announcing the declaration of a third quarter 2020 base dividend per share of $0.41 to shareholders of record as of September 15, 2020, payable on October 15, 2020.
The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Item 9.01 – Financial Statements and Exhibits
(d) Exhibits:
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press Release, dated August 4, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SIXTH STREET SPECIALTY LENDING, INC.<br><br><br>(Registrant) | ||
|---|---|---|
| Date: August 4, 2020 | By: | /s/ Ian Simmonds |
| Ian Simmonds | ||
| Chief Financial Officer |
tslx-ex991_25.htm
Exhibit 99.1
Second Quarter 2020 Earnings Results
Sixth Street Specialty Lending, Inc. Reports Second Quarter Net Investment Income Per Share of $0.59 and NAV Per Share of $16.08; Declares a Third Quarter Base Dividend Per Share of $0.41
NEW YORK—August 4, 2020— Sixth Street Specialty Lending, Inc. (NYSE: TSLX, or the “Company”) today reported net investment income of $39.5 million, or $0.59 per share, and net income of $95.9 million, or $1.43 per share, for the second quarter ended June 30, 2020. These results correspond to an annualized return on equity (ROE) on net investment income and net income of 15.6% and 38.0%, respectively, and an annualized year-to-date ROE on net investment income and net income of 13.1% and 7.6%, respectively. The Company’s net investment income this quarter was supported by elevated prepayment and other fee activity in the portfolio, and the Company’s strong net income this quarter was primarily driven by unrealized gains from the impact of credit spread tightening on the valuation of the Company’s portfolio.
Reported net asset value (NAV) per share was $16.08 at June 30, 2020 as compared to reported NAV per share of $15.57 at March 31, 2020, or adjusted NAV per share of $15.07 at March 31, 2020 (which accounts for the impact of the 50 cents aggregate special dividends per share that were paid during Q2). The leading driver of this quarter’s NAV per share growth was $0.72 per share of unrealized gains from the impact of credit spread tightening on the valuation of the Company’s investments.
The Company announced that its Board of Directors has declared a third quarter 2020 base dividend of $0.41 per share for shareholders of record as of September 15, 2020, payable on October 15, 2020. No supplemental dividends were declared relating to Q2 earnings as a result of the NAV test on the Company’s dividend framework, which specifies that no supplemental dividends are declared if pro forma NAV per share (adjusted for the impact of any supplemental dividends) over the current and preceding quarter declines by more than 15 cents per share. Any downward impact to NAV per share as a result of special dividends are added back for the purposes of this NAV test.
Based on the Company’s current outlook and assuming no material declines to NAV per share as a result of exogenous events (like the market volatility observed in March), the Company would expect to resume declaring supplemental dividends on over-earnings in Q3, provided that reported NAV per share at September 30, 2020 is greater than $14.92.
| Net Investment Income | |
|---|---|
| Q2 2020 ($MM): | $39.5 |
| Q2 2020 (per share): | $0.59 |
| Net Income | |
| --- | --- |
| Q2 2020 ($MM): | $95.9 |
| Q2 2020 (per share): | $1.43 |
| NAV | |
| --- | --- |
| Q2 2020 ($MM): | $1,083 |
| Q2 2020 (per share): | $16.08 |
| Dividend (per share) | |
| --- | --- |
| Q2 2020 (Base): | $0.41 |
| LTM Q2’20 (Base): | $1.60 |
| LTM Q2’20 (Supp/Special): | $0.64 |
| LTM Q2’20 (Total): | $2.24 |
Exhibit 99.1
Portfolio and Investment Activity
For the quarter ended June 30, 2020, new investment commitments totaled $89.2 million. This compares to $134.0 million for the quarter ended March 31, 2020.
For the quarter ended June 30, 2020, the principal amount of new investments funded was $76.5 million in six new portfolio companies and six existing portfolio companies. For this period, the Company had $210.7 million aggregate principal amount in exits and repayments. For the quarter ended March 31, 2020, the principal amount of new investments funded was $80.3 million in three new portfolio companies and four existing portfolio companies. For this period, the Company had $211.9 million aggregate principal amount in exits and repayments.
As of June 30, 2020 and March 31, 2020, the Company had investments in 65 and 62 portfolio companies, respectively, with an aggregate fair value of $1,983.8 million and $2,045.6 million, respectively. As of June 30, 2020, the average investment size in each portfolio company was $30.5 million based on fair value.
As of June 30, 2020, the Company’s portfolio based on fair value consisted of 95.7% first-lien debt investments, 0.4% second-lien debt investments, 0.4% mezzanine investments, and 3.5% equity and other investments. As of March 31, 2020, the Company’s portfolio based on fair value consisted of 97.1% first-lien debt investments, 0.2% second-lien debt investments, 0.1% mezzanine investments, and 2.6% equity and other investments.
As of June 30, 2020 and March 31, 2020, approximately 96.1% and 97.3% of the portfolio was invested in secured debt, respectively.
As of June 30, 2020, 98.8% of debt investments based on fair value in the portfolio bore interest at floating rates (when including investment specific hedges), with 98.5% of these subject to a weighted average LIBOR floor of approximately 1.15%. The Company’s credit facilities also bear interest at floating rates. In connection with the Company’s Convertible Notes and other Notes, which bear interest at fixed rates, the Company entered into fixed-to-floating interest rate swaps in order to align the nature of the interest rates of its liabilities with its investment portfolio.
As of June 30, 2020 and March 31, 2020, the weighted average total yield of debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 10.0% and 10.2%, respectively, and the weighted average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 10.0% and 9.9%, respectively.
As of June 30, 2020, 99.6% of the portfolio at fair value was meeting all payment and covenant requirements. The increase in this quarter’s non-accrual status was driven by the Company’s Neiman Marcus 1st lien term loan (not ABL FILO term loan) and the residual non-DIP roll up portions of the Company’s J.C. Penney 1st lien term loan and secured notes. Given expectations for less-than-par recoveries, the Company has applied the regularly scheduled cash interest payments it received to the amortized cost of these positions, all of which were acquired at prices less than par.
| Commitments | |
|---|---|
| $89.2MM | |
| Fundings / Net Fundings (Paydowns) | |
| --- | |
| $76.5MM / ($134.1MM) | |
| Average Investment Size | |
| --- | |
| $30.5MM<br>(1.5% of the portfolio at fair value) | |
| First Lien Debt Investments (% FV) | |
| --- | |
| 95.7% | |
| Secured Debt Investments (% FV) | |
| --- | |
| 96.1% | |
| Floating Rate Investments (% FV) | |
| --- | |
| 98.8% | |
| Weighted Average Yields | |
| --- | --- |
| Yield at Fair Value: | 10.0% |
| Yield at Amortized Cost: | 10.0% |
Exhibit 99.1
Results of Operations for the Three Months Ended June 30, 2020
Total Investment Income
For the three months ended June 30, 2020 and 2019, investment income totaled $70.3 million and $62.4 million, respectively. The increase in total investment income primarily resulted from an increase in accelerated amortization of upfront fees from unscheduled paydowns, prepayment fees and other income.
Net Expenses
Net expenses totaled $29.8 million and $30.3 million for the three months ended June 30, 2020 and 2019, respectively. The decrease in expenses was driven by lower interest expense resulting from a decrease in the average debt outstanding and a decrease in the average interest rate on debt outstanding.
Debt and Capital Resources
As of June 30, 2020, the Company had $15.9 million in cash and cash equivalents (including $12.8 million of restricted cash), total principal value of debt outstanding of $874.9 million, and $1,080.4 million of undrawn capacity on its revolving credit facility, subject to borrowing base and other limitations. The Company’s weighted average interest rate on debt outstanding was 3.3% and 3.9% for the three months ended June 30, 2020 and March 31, 2020, respectively. At June 30, 2020, the Company’s debt to equity ratio was 0.81x, compared to 0.96x at March 31, 2020. Average debt to equity was 0.87x and 0.99x during the three months ended June 30, 2020 and March 31, 2020, respectively.
- Daily average debt outstanding during the quarter divided by the daily average net assets during the quarter. Daily average net assets is calculated by starting with the prior quarter end net asset value and adjusting for capital activity during the quarter (adding common stock offerings / DRIP contributions).
| Total Investment Income | |
|---|---|
| $70.3MM | |
| Net Expenses | |
| --- | |
| $29.8MM | |
| Total Principal Debt Outstanding | |
| --- | |
| $874.9MM | |
| Debt-to-Equity Ratio | |
| --- | --- |
| Q2 2020 Quarter End: | 0.81x |
| Q2 2020 Average^1^: | 0.87x |
Exhibit 99.1
LIQUIDITY AND FUNDING PROFILE
Liquidity
The following tables summarizes the Company’s liquidity at June 30, 2020 and changes to unfunded commitments since March 31, 2020.
| Revolving Credit Facility^1^ | |
|---|---|
| Revolver Capacity | $1,315 |
| Drawn on Revolver | ($235) |
| Unrestricted Cash Balance | $3 |
| Total Liquidity (Pre Unfunded Commitments) | $1,083 |
| Available Unfunded Commitments | ($73) |
| Total Liquidity (Burdened for Unfunded Commitments) | $1,010 |
| Unfunded Commitment Activity | |
| --- | --- |
| Unfunded Commitments (See Note 8 in 3/31/20 10-Q) | $193 |
| Extinguished Unfunded Commitments | ($46) |
| New Unfunded Commitments | $32 |
| Drawdown of Unfunded Commitments | ($27) |
| Total Unfunded Commitments | $152 |
| Unavailable Unfunded Commitments^1^ | ($79) |
| Available Unfunded Commitments | $73 |
- Commitments may be subject to limitations on borrowings set forth in the agreements between the Company and the applicable portfolio company. As a result, portfolio companies may not be eligible to borrow the full commitment amount on such date. Note: May not sum due to rounding. As of June 30, 2020, the Company had an additional unfunded commitment of $65.0 million to fund investments to a new borrower that was not a current portfolio company as of June 30, 2020.
Funding Profile
At June 30, 2020, the Company’s funding mix was comprised of 73% unsecured and 27% secured debt. As illustrated in the charts below, the Company’s earliest debt maturity is in August 2022 at $143 million, and the weighted average remaining life of investments funded with debt was 2.2 years, compared to a weighted average remaining maturity on debt of 4.2 years.
- Net of Deferred Financing Costs and Interest Rate Fair Value Hedging. Deferred Financing Costs total $16.8M at 6/30/19, $15.6M at 9/30/19, $18.5M at 12/31/19, $21.4M at 3/31/20 and $19.7M at 6/30/20. Fair value hedge on interest rate swaps related to the 2024 notes total -$1.7 M at 12/31/19, $17.0M at 3/31/20 and $19.3M at 6/30/20.
- Weighted by amortized cost of debt investments. Investments are financed by debt and permanent equity capital. This analysis assumes longer-dated investments are currently funded by permanent equity capital (54% of investments) and the remaining (shorter-dated) investments (46% of investments) are currently funded by debt financing. Permanent equity capital is defined as 6/30/20 net assets. Excludes unfunded commitments.
- Weighted by gross commitment amount. Note: Numbers may not sum to 100% due to rounding.
Exhibit 99.1
Conference Call and Webcast
Conference Call Information:
A conference call to discuss the Company’s financial results will be held live at 8:30 a.m. Eastern Time on August 5, 2020. Please visit TSLX’s webcast link located on the Events & Presentations page of the Investor Resources section of TSLX’s website http://www.sixthstreetspecialtylending.com for a slide presentation that complements the Earnings Conference Call. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
Domestic: (877) 359-9508
International: +1 (253) 237-1122
Conference ID: 1749355
All callers will need to enter the Conference ID followed by the # sign and reference “Sixth Street Specialty Lending” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
Replay Information:
An archived replay will be available from approximately 12:00 p.m. Eastern Time on August 5 through August 12 via a webcast link located on the Investor Resources section of TSLX’s website, and via the dial-in numbers listed below:
Domestic: (855) 859-2056
International: +1 (404) 537-3406
Conference ID: 1749355
Exhibit 99.1
Financial Highlights
(Amounts in millions, except per share amounts)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | |||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | |||||||
| Investments at Fair Value | 1,983.8 | 2,045.6 | 2,060.5 | ||||||
| Total Assets | 2,018.6 | 2,081.7 | 2,089.7 | ||||||
| Net Asset Value Per Share | 16.08 | ||||||||
| Supplemental Dividend Per Share | 0.00 | 0.00 | 0.04 | ||||||
| Special Dividend Per Share ^(1)^ | 0.00 | 0.50 | 0.00 | ||||||
| Pro Forma Net Asset Value Per Share ^(2)^ | 16.08 | 15.07 | 16.64 | ||||||
| Investment Income | 62.4 | ||||||||
| Net Investment Income | |||||||||
| Net Income (Loss) | (53.1 | ) | |||||||
| Net Investment Income Per Share | |||||||||
| Net Realized and Unrealized Gains (and Losses) Per Share | 0.84 | (1.31 | ) | ||||||
| Net Income (Loss) Per Share | (0.80 | ) | |||||||
| Annualized Return on Equity (Net Investment Income)^(^^3^^)^ | 15.6 | % | 12.0 | % | 11.6 | % | |||
| Annualized Return on Equity (Net Income (Loss))^(^^3^^)^ | 38.0 | % | (18.9 | )% | 17.7 | % | |||
| Weighted Average Yield of Debt and Income Producing Securities at Fair Value | 10.0 | % | 10.2 | % | 11.2 | % | |||
| Weighted Average Yield of Debt and Income Producing Securities at Amortized Cost | 10.0 | % | 9.9 | % | 11.4 | % | |||
| Percentage of Debt Investment Commitments at Floating Rates^(^^4^^)^ | 98.8 | % | 99.4 | % | 99.4 | % |
All values are in US Dollars.
Reflects special dividends that were declared in Q1 2020 and paid in Q2 2020.
Pro forma net asset value per share gives effect to the supplemental dividend declared related to earnings in the applicable period and/or special dividends.
Return on equity is calculated using prior period’s ending net asset value per share.
Includes one or more fixed rate investments for which the Company entered into an interest rate swap agreement to swap to floating rate.
Exhibit 99.1
Financial Statements and Tables
Sixth Street Specialty Lending, Inc. Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| December 31, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| Assets | |||||
| Investments at fair value | |||||
| Non-controlled, non-affiliated investments (amortized cost of 1,880,904 and 2,099,781, respectively) | 1,898,241 | $ | 2,147,876 | ||
| Non-controlled, affiliated investments (amortized cost of 48,928 and 49,445, respectively) | 52,536 | 50,136 | |||
| Controlled, affiliated investments (amortized cost of 88,685 and 88,811, respectively) | 33,067 | 47,916 | |||
| Total investments at fair value (amortized cost of 2,018,517 and 2,238,037, respectively) | 1,983,844 | 2,245,928 | |||
| Cash and cash equivalents (restricted cash of 12,815 and 9,315, respectively) | 15,937 | 14,143 | |||
| Interest receivable | 9,821 | 13,055 | |||
| Prepaid expenses and other assets | 8,994 | 7,805 | |||
| Total Assets | 2,018,596 | $ | 2,280,931 | ||
| Liabilities | |||||
| Debt (net of deferred financing costs of 19,712 and 18,471, respectively) | 872,509 | $ | 1,094,467 | ||
| Management fees payable to affiliate | 7,666 | 8,234 | |||
| Incentive fees payable to affiliate | 8,372 | 7,161 | |||
| Dividends payable | 27,496 | 25,927 | |||
| Other payables to affiliate | 3,123 | 1,948 | |||
| Other liabilities | 16,829 | 23,897 | |||
| Total Liabilities | 935,995 | 1,161,634 | |||
| Commitments and contingencies | |||||
| Net Assets | |||||
| Preferred stock, 0.01 par value; 100,000,000 shares authorized; no shares<br>issued and outstanding | — | — | |||
| Common stock, 0.01 par value; 400,000,000 shares authorized, 67,638,457 and 66,613,671 shares issued, respectively; and 67,342,413 and 66,524,591 shares outstanding, respectively | 676 | 666 | |||
| Additional paid-in capital | 1,024,045 | 1,009,270 | |||
| Treasury stock at cost; 296,044 and 89,080 shares held, respectively | (4,291 | ) | (1,359 | ) | |
| Distributable earnings | 62,171 | 110,720 | |||
| Total Net Assets | 1,082,601 | 1,119,297 | |||
| Total Liabilities and Net Assets | 2,018,596 | $ | 2,280,931 | ||
| Net Asset Value Per Share | 16.08 | $ | 16.83 |
All values are in US Dollars.
Exhibit 99.1
Sixth Street Specialty Lending, Inc.
Consolidated Statements of Operations
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||
| Income | ||||||||||||
| Investment income from non-controlled, non-affiliated investments: | ||||||||||||
| Interest from investments | $ | 61,115 | $ | 57,632 | $ | 121,881 | $ | 104,155 | ||||
| Dividend income | 445 | — | 876 | — | ||||||||
| Other income | 6,439 | 1,940 | 9,227 | 4,018 | ||||||||
| Total investment income from non-controlled, non-affiliated investments | 67,999 | 59,572 | 131,984 | 108,173 | ||||||||
| Investment income from non-controlled, affiliated investments: | ||||||||||||
| Interest from investments | 1,245 | 1,351 | 2,482 | 3,762 | ||||||||
| Other income | 19 | 19 | 37 | 50 | ||||||||
| Total investment income from non-controlled, affiliated investments | 1,264 | 1,370 | 2,519 | 3,812 | ||||||||
| Investment income from controlled, affiliated investments: | ||||||||||||
| Interest from investments | 971 | 1,481 | 1,998 | 2,920 | ||||||||
| Other income | — | 4 | 3 | 8 | ||||||||
| Total investment income from controlled, affiliated investments | 971 | 1,485 | 2,001 | 2,928 | ||||||||
| Total Investment Income | 70,234 | 62,427 | 136,504 | 114,913 | ||||||||
| Expenses | ||||||||||||
| Interest | 9,851 | 12,724 | 22,760 | 23,094 | ||||||||
| Management fees | 7,666 | 7,373 | 15,831 | 13,995 | ||||||||
| Incentive fees | 8,372 | 6,606 | 15,513 | 12,256 | ||||||||
| Professional fees | 1,979 | 1,897 | 3,624 | 3,191 | ||||||||
| Directors’ fees | 195 | 129 | 423 | 264 | ||||||||
| Other general and administrative | 1,702 | 1,556 | 3,212 | 3,033 | ||||||||
| Total expenses | 29,765 | 30,285 | 61,363 | 55,833 | ||||||||
| Management and incentive fees waived | — | — | — | — | ||||||||
| Net Expenses | 29,765 | 30,285 | 61,363 | 55,833 | ||||||||
| Net Investment Income Before Income Taxes | 40,469 | 32,142 | 75,141 | 59,080 | ||||||||
| Income taxes, including excise taxes | 1,000 | 1,000 | 2,010 | 1,300 | ||||||||
| Net Investment Income | 39,469 | 31,142 | 73,131 | 57,780 | ||||||||
| Unrealized and Realized Gains (Losses) | ||||||||||||
| Net change in unrealized gains (losses): | ||||||||||||
| Non-controlled, non-affiliated investments | 62,002 | 15,253 | (30,757 | ) | 28,067 | |||||||
| Non-controlled, affiliated investments | 4,310 | 109 | 2,916 | 536 | ||||||||
| Controlled, affiliated investments | (1,215 | ) | (4,299 | ) | (14,723 | ) | (7,966 | ) | ||||
| Translation of other assets and liabilities in foreign currencies | (8,379 | ) | (764 | ) | 5,420 | (2,196 | ) | |||||
| Interest rate swaps | 516 | 6,124 | 9,698 | 9,443 | ||||||||
| Total net change in unrealized gains (losses) | 57,234 | 16,423 | (27,446 | ) | 27,884 | |||||||
| Realized gains (losses): | ||||||||||||
| Non-controlled, non-affiliated investments | — | 276 | 75 | 455 | ||||||||
| Controlled, affiliated investments | (1,539 | ) | — | (3,636 | ) | 570 | ||||||
| Extinguishment of debt | 739 | — | 739 | — | ||||||||
| Foreign currency transactions | (33 | ) | (46 | ) | (92 | ) | (148 | ) | ||||
| Total net realized gains (losses) | (833 | ) | 230 | (2,914 | ) | 877 | ||||||
| Total Net Unrealized and Realized Gains (Losses) | 56,401 | 16,653 | (30,360 | ) | 28,761 | |||||||
| Increase in Net Assets Resulting from Operations | $ | 95,870 | $ | 47,795 | $ | 42,771 | $ | 86,541 | ||||
| Earnings per common share—basic and diluted | $ | 1.43 | $ | 0.72 | $ | 0.64 | $ | 1.32 | ||||
| Weighted average shares of common stock outstanding—basic and diluted | 66,957,883 | 65,982,373 | 66,807,081 | 65,789,976 |
Exhibit 99.1
The Company’s investment activity for quarter ended June 30, 2020 and 2019 is presented below (information presented herein is at par value unless otherwise indicated).
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in millions) | June 30, 2020 | June 30, 2019 | ||||
| New investment commitments: | ||||||
| Gross originations | $ | 441.4 | $ | 1,495.4 | ||
| Less: Syndications/sell downs | 352.2 | 1,099.2 | ||||
| Total new investment commitments | $ | 89.2 | $ | 396.2 | ||
| Principal amount of investments funded: | ||||||
| First-lien | $ | 62.9 | $ | 340.0 | ||
| Second-lien | 5.0 | 3.7 | ||||
| Mezzanine | 3.8 | — | ||||
| Equity and other | 4.8 | 0.3 | ||||
| Total | $ | 76.5 | $ | 344.0 | ||
| Principal amount of investments sold or repaid: | ||||||
| First-lien | $ | 210.7 | $ | 126.8 | ||
| Second-lien | — | 0.8 | ||||
| Mezzanine | — | — | ||||
| Equity and other | — | 0.5 | ||||
| Total | $ | 210.7 | $ | 128.1 | ||
| Number of new investment commitments in<br><br><br>new portfolio companies | 6 | 12 | ||||
| Average new investment commitment amount in<br><br><br>new portfolio companies | $ | 9.5 | $ | 30.8 | ||
| Weighted average term for new investment<br><br><br>commitments in new portfolio companies<br><br><br>(in years) | 4.7 | 4.9 | ||||
| Percentage of new debt investment commitments<br><br><br>at floating rates ^(1)^ | 87.0 | % | 98.0 | % | ||
| Percentage of new debt investment commitments<br><br><br>at fixed rates | 13.0 | % | 2.0 | % | ||
| Weighted average interest rate of new<br><br><br>investment commitments | 10.2 | % | 10.6 | % | ||
| Weighted average spread over LIBOR of new<br><br><br>floating rate investment commitments ^(1)^ | 9.9 | % | 8.3 | % | ||
| Weighted average interest rate on investments<br><br><br>fully sold or paid down | 9.1 | % | 11.0 | % |
- Includes one fixed rate investment for the three months ended June 30, 2020, for which TSLX entered into an interest rate swap agreement to swap to floating rates.
Exhibit 99.1
About Sixth Street Specialty Lending
Sixth Street Specialty Lending is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or a BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. The Company is externally managed by Sixth Street Specialty Lending Advisers, LLC, an affiliate of Sixth Street and a Securities and Exchange Commission (“SEC”) registered investment adviser. The Company leverages the deep investment, sector, and operating resources of Sixth Street, a global investment firm with approximately $34 billion of assets under management as of March 31, 2020. For more information, visit the Company’s website at www.sixthstreetspecialtylending.com.
About Sixth Street
Sixth Street is a global investment firm with approximately $34 billion in assets under management and committed capital as of March 31, 2020. Sixth Street operates eight diversified, collaborative investment platforms across our growth investing, adjacencies, direct lending, fundamental public strategies, infrastructure, special situations, agriculture and par liquid credit businesses. Our long-term oriented, highly flexible capital base and “One Team” cultural philosophy allow us to invest thematically across sectors, geographies and asset classes. Founded in 2009, Sixth Street has more than 275 team members including over 140 investment professionals operating from nine locations around the world. For more information, visit www.sixthstreet.com.
Forward-Looking Statements
Statements included herein may constitute “forward-looking statements,” which relate to future events or the Company’s future performance or financial condition, including expectations with respect to future dividends. These statements are not guarantees of future performance, conditions 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 the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update any such forward-looking statements.
Investors:
Lucy Lu, 212–601-4753 Sixth Street Specialty Lending IRTSL@tssp.com
Media:
Patrick Clifford, 617-793-2004 Sixth Street PClifford@tssp.com
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