NEW YORK, Nov. 9, 2015 (GLOBE NEWSWIRE) -- OHA Investment Corporation (NASDAQ:OHAI) (the "Company") today announced its financial results for the third quarter of 2015, which included net investment income of $2.1 million, or $0.10 per share. Management will discuss the quarterly results summarized below on a conference call on Tuesday, November 10, 2015, at 10:00 a.m. Eastern Time.
Summary results for the quarter ended September 30, 2015:
Total investment income: $5.1 million, or $0.25 per share
Net investment income: $2.1 million, or $0.10 per share
Net realized and unrealized losses: $8.7 million, or $0.43 per share
Net asset value: $135.4 million, or $6.71 per share
New portfolio investments during the quarter: $8.9 million
Fair value of portfolio investments: $193.1 million
Portfolio Activity
The fair value of our investment portfolio was $193.1 million at September 30, 2015, increasing 10% compared to December 31, 2014. During the third quarter of 2015, the Company made $8.9 million of new investments, all outside the energy industry, and had realizations totaling $5.4 million. The concentration of our investment portfolio in the energy sector decreased to 47% at September 30, 2015, compared to 64% at December 31, 2014 and 74% at September 30, 2014. The current weighted average yield of our portfolio based on the cost and fair value of our investments was 8.5% and 10.1%, respectively, as of September 30, 2015.
Our new investments added in the third quarter included a $4.2 million purchase of first lien senior secured notes issued by Synarc-BioCore Holdings, known as Bioclinica, a provider of specialty outsourced services to pharmaceutical sponsors, contract research organizations and biotechnology companies, a $3.1 million addition to our investment in a second lien term loan to Appriss Holdings, and a $1.8 million purchase of senior unsecured notes issued by TIBCO Software, a software company focused on middleware, event processing and business intelligence and analytics.
We placed our investment in ATP Oil & Gas Corporation/Bennu Oil & Gas LLC on non-accrual during the quarter, with income recognized to the extent of cash received.
Realizations during the quarter totaled $5.4 million and consisted of the full repayment of our Huff Energy Holdings senior secured term loan, ORRI and warrants in the amount of $5.0 million and scheduled amortization on existing investments.
Operating Results
Investment income totaled $5.1 million for the third quarter of 2015, decreasing 8.7% compared to $5.6 million in the corresponding quarter of 2014. The decrease in investment income during the third quarter of 2015 was primarily as a result of two of our investments being placed on non-accrual status during the fourth quarter of 2014 and a lower weighted average yield on portfolio investments. The current weighted average yield on portfolio investments, on a cost basis, decreased to 8.5% at September 30, 2015 from 10.4% at September 30, 2014. Our average portfolio balance, on a cost basis, increased to $229.1 million during the third quarter of 2015 from $175.5 million during the third quarter of 2014, primarily as a result of volume of new investments exceeding the volume of realizations in 2015.
Operating expenses for the third quarter of 2015 were $3.0 million, a decrease of $5.3 million, or 64.0%, compared to operating expenses for the third quarter of 2014. The decrease was attributable to one-time charges incurred in 2014 and lower management fees in 2015, partially offset by higher borrowing costs. Expenses in the third quarter of 2014 included $5.4 million of costs related to our strategic alternatives review process that did not recur in 2015. Management and incentive fees in the third quarter of 2015 were $0.5 million, or 39.6%, lower than in the third quarter of 2014, reflecting the lower fee structure of our investment advisory agreement with Oak Hill Advisors, L.P., as compared to the fee structure with our previous investment advisor. The decrease in expenses were partially offset by $0.6 million in higher borrowing costs in the third quarter of 2015.
The resulting net investment income was $2.1 million, or $0.10 per share, for the third quarter of 2015, compared to $2.8 million of net investment loss, or $0.14 per share, for the third quarter of 2014.
We recorded net realized and unrealized losses on investments totaling $8.7 million, or $0.43 per share, during the third quarter of 2015, compared to $3.3 million, or $0.16 per share, during the third quarter of 2014. Losses recorded in the third quarter of 2015 totaled $9.2 million. Major components of the losses were reductions in the fair value of our investments in the Castex Energy 2005 redeemable preferred units, the Talos Production senior unsecured notes, the limited-term overriding royalty interest in certain oil and gas properties operated by Bennu Oil and Gas (formerly operated by ATP Oil & Gas Corporation) and the Contour Highwall senior secured term loan.
Overall, we experienced a net decrease in net assets resulting from operations of $6.6 million, or $0.33 per share, for the third quarter of 2015. After declaring a quarterly dividend during the period of $0.12 per share, our net asset value decreased 6.3%, from $7.16 per share as of June 30, 2015 to $6.71 per share as of September 30, 2015.
Stock Repurchase Plan
In March 2015, our Board of Directors authorized the Company to repurchase up to $2.4 million of the Company's common stock. For the three months ended September 30, 2015, we repurchased 74,214 shares of our common stock in the open market at a weighted average price of $5.72 per share, totaling $0.4 million. For the nine months ended September 30, 2015, we repurchased a total of 444,030 shares for $2.4 million at a weighted average price of $5.46 per share. Repurchases under the program were accretive to beginning of the year NAV by $.04 per share. This completes the stock repurchase program and represents the maximum amount of stock repurchases permitted by the Company's credit facility.
Repurchases initiated after March 31, 2015 were made pursuant to a plan executed in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.
Webcast / Conference Call at 10:00 a.m. Eastern Time on November 10, 2015
We invite all interested persons to participate in our conference call on Tuesday, November 10, 2015 at 10:00 a.m. Eastern Time. The dial-in number for the call is (877) 303-7617. International callers can access the conference by dialing (760) 666-3609. Callers are encouraged to dial in at least 5-10 minutes prior to the call. The presentation materials for the call will be accessible on the Investor Relations page of the Company's website at www.ohainvestmentcorporation.com.
| OHA INVESTMENT CORPORATION | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except share and per share amounts) | ||
| September 30, 2015 | December 31, 2014 | |
| (unaudited) | ||
| Assets | ||
| Investments in portfolio securities at fair value | ||
| Control investments (cost: $28,608 and $28,661, respectively) | $2,000 | $6,275 |
| Affiliate investments (cost: $18,385 and $17,986, respectively) | 19,087 | 17,430 |
| Non-affiliate investments (cost: $185,616 and $153,100, respectively) | 171,973 | 152,458 |
| Total portfolio investments (cost: $232,609 and $199,747, respectively) | 193,060 | 176,163 |
| Investments in U.S. Treasury Bills at fair value (cost: $50,001 and $30,600, respectively) | 50,001 | 30,600 |
| Total investments | 243,061 | 206,763 |
| Cash and cash equivalents | 15,516 | 31,455 |
| Accounts receivable and other current assets | 518 | 316 |
| Interest receivable | 1,978 | 2,090 |
| Deferred loan costs and other prepaid assets | 724 | 1,551 |
| Total current assets | 18,736 | 35,412 |
| Total assets | $261,797 | $242,175 |
| Liabilities | ||
| Current liabilities | ||
| Accounts payable and accrued expenses | $2,156 | $1,908 |
| Management and incentive fees payable | 758 | 695 |
| Distributions payable | 2,421 | 3,299 |
| Income taxes payable | 56 | 109 |
| Repurchase agreement | 49,000 | — |
| Short-term debt | 72,000 | 30,000 |
| Total current liabilities | 126,391 | 36,011 |
| Long-term debt | — | 52,000 |
| Total liabilities | 126,391 | 88,011 |
| Commitments and contingencies | ||
| Net assets | ||
| Common stock, $.001 par value, 250,000,000 shares authorized; 20,172,392 and 20,616,422 shares issued and outstanding, respectively | 20 | 21 |
| Paid-in capital in excess of par | 242,048 | 244,473 |
| Undistributed net investment loss | (5,133) | (4,565) |
| Undistributed net realized capital loss | (65,099) | (65,298) |
| Net unrealized depreciation on investments | (36,430) | (20,467) |
| Total net assets | 135,406 | 154,164 |
| Total liabilities and net assets | $261,797 | $242,175 |
| Net asset value per share | $6.71 | $7.48 |
| OHA INVESTMENT CORPORATION | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (in thousands, except per share data) | ||
| (unaudited) | ||
|
For the three months ended September 30, |
||
| 2015 | 2014 | |
| Investment income: | ||
| Interest income: | ||
| Interest income | $4,065 | $4,500 |
| Dividend income | 1,010 | 1,010 |
| Royalty income, net of amortization | 11 | 32 |
| Other income | 2 | 31 |
| Total investment income | 5,088 | 5,573 |
| Operating expenses: | ||
| Interest expense and bank fees | 957 | 405 |
| Management and incentive fees | 758 | 1,254 |
| Costs related to strategic alternatives review | — | 5,352 |
| Professional fees | 509 | 210 |
| Other general and administrative expenses | 777 | 1,123 |
| Total operating expenses | 3,001 | 8,344 |
| Income tax provision, net | 6 | 17 |
| Net investment income | 2,081 | (2,788) |
| Net realized capital gain on investments | (33) | 962 |
| Net unrealized depreciation on investments | (8,695) | (4,253) |
| Net decrease in net assets resulting from operations | $(6,647) | $(6,079) |
| Net decrease in net assets resulting from operations per common share | $(0.33) | $(0.30) |
| Distributions declared per common share | $0.12 | $0.16 |
| Weighted average shares outstanding - basic and diluted | 20,177 | 20,500 |
| Per Share Data (1) | ||
| Net asset value, beginning of period | $7.16 | $8.57 |
| Net investment income | 0.10 | (0.14) |
| Net realized and unrealized loss on investments | (0.43) | (0.16) |
| Net decrease in net assets resulting from operations | (0.33) | (0.30) |
| Distributions to common stockholders | ||
| Distributions from net investment income | (0.12) | (0.16) |
| Net decrease in net assets from distributions | (0.12) | (0.16) |
| Effect of shares repurchased, gross | — | — |
| Net asset value, end of period | $6.71 | $8.11 |
| (1) Per share data is based on weighted average number of common shares outstanding for the period. | ||
About OHA Investment Corporation
OHA Investment Corporation (NASDAQ:OHAI) is a specialty finance company designed to provide its investors with current income and capital appreciation. OHAI focuses primarily on providing creative direct lending solutions to middle market private companies across industry sectors. OHAI is externally managed by Oak Hill Advisors, L.P., a leading independent investment firm (www.oakhilladvisors.com). Oak Hill Advisors has deep experience in direct lending, having invested approximately $3 billion in nearly 100 direct lending investments over the past 12 years.
OHAI was formerly known as NGP Capital Resources Company prior to Oak Hill Advisors assuming the external manager role for the Company on September 30, 2014. OHAI has elected to be regulated as a business development company under the Investment Company Act of 1940.
Forward-Looking Statements
This press release may contain forward-looking statements. We may use words such as "anticipates," "believes," "intends," "plans," "expects," "projects," "estimates," "will," "should," "may" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to various risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with the timing or likelihood of transaction closings, changes in interest rates, availability of transactions, the future operating results of our portfolio companies, regulatory factors, changes in regional or national economic conditions and their impact on the industries in which we invest, other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the Securities and Exchange Commission (the "SEC"). You should not place undue reliance on such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update our forward-looking statements made herein, unless required by law.