HIGHLIGHTS
For the quarter ended June 30, 2007
(in millions, except per share amounts)
Net investment income: $3.2
Net investment income per share: $0.15
Dividends to shareholders per share: $0.14
Equity capital raised: $294.1
Credit facility closed: $300.0
Amount drawn under credit facility: -0-
Total investment portfolio:
1st lien secured debt portfolio: $175.4
2nd lien secured debt, subordinated debt
and common equity portfolio: $99.6
Weighted average yield on total debt
portfolio: 9.3%
Weighted average yield on 1st lien secured
debt portfolio: 7.6%
Weighted average yield on 2nd lien secured
and subordinated debt portfolio: 12.2%
Net assets: $289.3
Net asset value per share: $13.74
CONFERENCE CALL AT 10:00 A.M. ET ON AUGUST 10, 2007
The Company will host a conference call at 10:00 a.m. (Eastern Time) on
Friday, August 10, 2007 to discuss its quarter results. All interested
parties are welcome to participate. You can access the conference call by
dialing (866) 226-1799 approximately 5-10 minutes prior to the call.
International callers should dial (416) 340-2218. All callers should
reference "PennantPark Investment Corporation" or "conference ID #3230743."
An archived replay of the call will be available through August 24, 2007 by
calling (800) 408-3053. International callers please dial (416) 695-5800.
For all replays, please reference pin #3230743.
PORTFOLIO AND INVESTMENT ACTIVITY
Since the closing of our initial public offering on April 24, 2007, we
completed our first quarter of operations on June 30, 2007 with our
portfolio invested $42.2 million in subordinated debt, $54.4 million in 2nd
lien secured debt, $3.0 million in common equity and $175.4 million in 1st
lien secured debt. Our portfolio of subordinated debt, 2nd lien secured
debt and common equity totaled $99.6 million and consisted of investments
in seven different companies with an average investment size of $14 million
per company. The weighted average yield on our subordinated debt and 2nd
lien secured portfolio was 12.2%. Our 1st lien secured portfolio totals
$175.4 million and consisted of 30 different companies with an average
investment size of $6 million. The weighted average yield on the 1st lien
investments was 7.6%. The portfolio had unrealized depreciation of $5.1
million due to softness in the overall leveraged finance credit market.
"We are pleased with the progress we have made since our IPO in April in
setting up our business to capture the opportunity in the marketplace
today. We are well positioned through the combination of our substantial
sourcing network, significant long-term capital resources and our
disciplined, value orientation," said Arthur Penn, Chairman and Chief
Executive Officer. "Accordingly, we have the opportunity to selectively
deploy capital on increasingly attractive terms and provide strong
dividends to our shareholders."
RESULTS OF OPERATIONS
Results comparisons are for the quarter ended June 30, 2007 and since
inception.
Investment Income
For the quarter ended June 30, 2007 and since inception, gross investment
income totaled $5.4 million and $6.2 million, respectively.
Expenses
For the quarter ended June 30, 2007 and since inception, net expenses
totaled $2.2 million and $3.2 million, respectively, of which approximately
$786,000 was for base management fees, $862,000 and $1,603,000,
respectively, were interest and other credit facility expenses, and $24,000
and $307,000, respectively, were non-recurring, primarily legal and
corporate tax expenses. Expenses exclusive of base management fees,
interest and other credit facility and non-recurring expenses for the
quarter ended June 30, 2007 and since inception were approximately
$545,000.
Net Investment Income
The Company's net investment income totaled $3.2 million and $3.0 million,
respectively, for the quarter ended June 30, 2007 and since inception.
Net Realized Gains
The Company had investment sales and paydowns totaling $84.6 million and
$92.7 million, respectively, for the quarter ended June 30, 2007 and since
inception. Net realized losses for the quarter ended June 30, 2007 and
since inception were approximately $35,000 and $15,000, respectively.
Net Unrealized Depreciation on Investments
For the quarter ended June 30, 2007 and since inception, net unrealized
depreciation on the Company's investments decreased $5.1 million. The
decrease in net unrealized depreciation was primarily due to softness in
the overall leveraged finance credit markets.
Net Decrease in Net Assets From Operations
For the quarter ended June 30, 2007 and since inception, the Company had a
decrease in net assets resulting from operations of $1.9 million and $2.2
million, respectively. The change in net assets from operations per share
was $0.09 and $0.10, respectively, for the quarter ended June 30, 2007 and
since inception.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital resources are generated primarily
through its senior secured, multi-currency, five-year, revolving credit
facility maturing in June 2012 as well as from cash flows from operations,
including investment sales and paydowns of 1st lien secured debt and income
earned from investments and cash equivalents. During the quarter ended
June 30, 2007, we issued 21,025,000 shares of common stock in an initial
public offering, a private placement and exercise of the underwriters'
over-allotment option, receiving an aggregate of $294.1 million in net
proceeds. During the quarter, we also entered into a $300.0 million senior
secured, multi-currency, five-year, revolving credit facility at LIBOR plus
a spread of 100 basis points. At June 30, 2007, the Company had not
borrowed any funds under the credit facility.
DIVIDENDS
Dividends paid to stockholders for the quarter ended June 30, 2007 and
since inception totaled $2.9 million or $0.14 per share.
PENNANTPARK INVESTMENT CORPORATION
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30,
2007
Assets
Investments, at fair value (cost-$280,155,544)(1) $275,043,692
Cash and cash equivalents (cost-$288,111,837) 288,104,949
Receivable for investments sold 13,574,352
Interest receivable 3,030,837
Prepaid expenses and other assets 1,469,254
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Total assets 581,223,084
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Liabilities
Payable for cash equivalents purchased 281,783,538
Unfunded investments 8,591,972
Interest payable 15,208
Accrued other expenses 1,580,604
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Total liabilities 291,971,322
Net Assets
Common stock, par value $.001 per share, 100,000,000
shares authorized and 21,046,883 shares issued and
outstanding 21,047
Paid-in capital in excess of par 294,351,807
Undistributed net investment income 12,999
Accumulated net realized loss (15,351)
Net unrealized depreciation on investments (5,118,740)
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Total net assets 289,251,762
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Total liabilities and net assets $581,223,084
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Net asset value per share $ 13.74
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(1) None of our portfolio companies is controlled by, or affiliated
with, PennantPark Investment Corporation as defined by the Investment
Company Act of 1940, as amended.
PENNANTPARK INVESTMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Period from
January 11, 2007
(inception)
For the through
Quarter Ended June 30,
June 30, 2007 2007
Investment Income:
Interest $ 5,425,279 $ 6,198,262
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Total Investment income 5,425,279 6,198,262
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Expenses:
Management fees 1,048,503 1,048,503
Interest and other credit facility
expenses 862,433 1,603,408
Administrative services expenses 192,584 192,584
Organizational expenses -- 207,126
Directors' fees 124,375 124,375
Other general and administrative
expenses 151,791 227,893
----------- -----------
Total expenses 2,379,686 3,403,889
----------- -----------
Net investment income before
management fee waiver and
income tax 3,045,593 2,794,373
Management fee waiver 262,126 262,126
Income tax expense (100,000) (100,000)
----------- -----------
Net investment income 3,207,719 2,956,499
----------- -----------
Realized and unrealized loss on
investments:
Net realized loss on investments (34,726) (15,351)
Change in net unrealized depreciation
on investments (5,117,039) (5,118,740)
----------- -----------
Net realized and unrealized loss
from investments (5,151,765) (5,134,091)
----------- -----------
Net decrease in net assets resulting
from operations $(1,944,046) $(2,177,592)
----------- -----------
Earnings per common share $ (.09) $ (.10)
----------- -----------
ABOUT PENNANTPARK INVESTMENT CORPORATION
PennantPark Investment Corporation is a business development company which
principally invests in private U.S. middle-market companies in the form of
senior secured loans, mezzanine loans and equity. From time to time, the
Company may also invest in public companies. PennantPark Investment
Corporation is managed by PennantPark Investment Advisers, LLC.
FORWARD-LOOKING STATEMENTS
This press release may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. 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 Securities and Exchange Commission.
The Company undertakes no duty to update any forward-looking statement made
herein. All forward-looking statements speak only as of the date of this
press release.
We may use words such as "anticipates," "believes," "expects," "intends,"
"will," "should," "may" 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. Undue reliance should
not be placed on such forward-looking statements as such statements speak
only as of the date on which they are made. We do not undertake to update
our forward-looking statements unless required by law.
Contact Information: Contact: Aviv Efrat PennantPark Investment Corporation (212) 307-3280 Or visit us at: www.pennantpark.com