Logan Ridge Finance Corp (LRFC) 2015 Q4 法說會逐字稿

At this time, I would like to welcome everyone to the Capitala Finance Corp. conference call for the quarter ended December 31, 2015. All participants are in a listen-only mode. A question-and-answer session will follow the Company's formal remarks. Today's call is being recorded and a replay will be available approximately three hours after the conclusion of the call on the Company's website at www.capitalagroup.com under the investor relations section.

Today's hosts for the call are Capitala Finance Corp. Chairman and Chief Executive officer, Joe Alala; Chief Operating Officer, Treasurer and Secretary, Jack McGlinn; and Chief Financial Officer, Steve Arnall. Capitala Financial Corp. issued a press release on March 8, 2016 with details of the Company's quarterly financial operating results. A copy of the press release is available on the Company's website.

Please note that this call contains forward-looking statements that provide information other than historical information, including statements regarding the Company's goals, beliefs, strategies, future operating results and cash flows. Although the Company believes these statements are reasonable, actual results could differ materially from those projected in these forward-looking statements. These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks, including those disclosed under the sections titled risk factors and forward-looking statements in the Company's annual report on Form 10-K. Capitala undertakes no obligation to update or revise any forward-looking statements. At this time, I would like to turn the meeting over to Joe Alala.

Thank you, operator. Good morning, everyone. Thank you for joining us. Basically, for the fourth quarter, we covered the distribution with net investment income. That's two quarters in a row we've done that with NII. Proud of that. We also early in January announced the voluntary waiver of incentive fees, further demonstrating management's commitment to shareholder alignment. The incentive fee waiver helps offset the impact of nonperforming loans, mostly energy-related.

For 2015, we had a solid year. Just a recap of 2015. We closed over $260 million of new investments with very attractive yields and reasonable leverage under 4X. We completed a secondary equity offering in April generating $64.1 million in gross proceeds. We expanded our credit facility from $50 million last year to the end of the year; $120 million this year. We actually repurchased approximately 5% of outstanding shares in the stock buyback program. We paid $2.38 of distributions for the year, $1.88 of regular distributions and $0.50 of special. We did cover the regular distributions for the year with NII and realized cap gains. There was no return of capital.

We had net realized gains of $5.4 million or $0.36 per share. We also completed the equity rotation strategy that we had been pursuing for quite some time. At IPO, we had 36% of the portfolio in equity securities. We rotated that down to approximately 17%. In that process, we generated substantial capital gains and we redeployed those into yield.

Looking ahead for 2016, we will continue to focus on distribution coverage. We are actively engaged in portfolio monitoring focusing on energy and non-accrual investments. We actually expect to have further monetizations of our equity positions. We will generate significant capital gains if that were to happen and we can redeploy those gains into yields, which will help reduce the reliance on incentive fee waiver to cover the distribution. We will continue to maintain shareholder alignment and trust with fee waiver and insider purchases. We are evaluating a private credit fund and other sources of liquidity to complement the BDC investment strategy. And we will continue with our direct origination investment strategy making quality investments with proper risk-adjusted returns.

At this point, I would like to turn the meeting over to Steve and Jack to provide additional comments on our operating and financial performance.

Thanks, Joe. Good morning, everyone. As previously mentioned, on March 8, we filed a press release with our fourth-quarter and full-year 2015 earnings. In addition, we also posted a fourth-quarter 2015 investor update to our website, providing additional details about the Company, the investment portfolio and other financial-related trends.

I'd like to take a few minutes to highlight a few items within the earnings release, which can be found on the investor relations section of our website. During the fourth quarter of 2015, total investment income was $16.5 million, an increase of $3.1 million over the same period in 2014. Total interest and fee income was $2.5 million higher in the fourth quarter of 2015 compared to 2014 driven by a larger investment portfolio. All other income increased by approximately $0.6 million.

Total expenses for the fourth quarter of 2015 were $9.1 million compared to $8.4 million in 2014. The increase is attributable to, one, an increase in interest and financing expenses of $0.4 million related to advances under our senior secured line of credit; two, an increase of $0.4 million in management fees; three, an increase in incentive fees of approximately $0.5 million noting that the fourth quarter of 2015 was the first quarter of our recently announced incentive fee waiver and that incentive fees were not earned during the fourth quarter of 2014; and lastly, a decrease of approximately $0.5 million in general and administrative expenses.

Net investment income totaled $7.4 million or $0.47 per share for the fourth quarter of 2015 compared to $5.1 million or $0.39 per share for the same period last year. As previously mentioned by Joe, net investment income and the coverage of the quarterly distribution remain our highest priority.

Net realized losses totaled $3.7 million or $0.23 per share for the fourth quarter of 2015 compared to net gains of $2.2 million for the same period last year. Net unrealized depreciation for the fourth quarter of 2015 was $12.6 million compared to depreciation of $18.5 million last year. Energy investments accounted for $9.2 million of this amount while the remainder of the portfolio depreciated by approximately $3.4 million.

The net decrease in net assets resulting from operations during the fourth quarter of 2015 totaled $8.9 million or $0.57 per share compared to a decrease of $11.2 million or $0.86 per share last year. Total net assets of $268.8 million at December 31, 2015 equate to $17.04 per share compared to $18.56 per share at December 31, 2014. During the fourth quarter of 2015, the Company repurchased 150,808 shares of common stock under the Board-approved repurchase program, approximately 1% of the shares outstanding at year-end. As a result of the share purchases during the fourth quarter, we have utilized the $12 million authorized by the Board in March of 2015.

From a liquidity standpoint, we have cash and cash equivalents of $34.1 million at December 31, 2015 compared to $55.1 million at December 31, 2014. SBA debentures outstanding at December 31, 2015 totaled $184.2 million with an annual weighted average interest rate of 3.45%. In addition, the Company has $113.4 million of notes outstanding earning a fixed rate of interest of 7 1/8%. Lastly, the Company has $70 million drawn and $50 million available under its senior secured revolving credit facility and a regulatory leverage ratio of 0.68% at year-end.

At December 31, 2015, the Company's balance sheet and future net investment income will not be materially impacted by changes in short-term interest rates. Please see Form 10-K for detailed information on the Company's interest rate sensitivity. At this point, I'd like to turn the call over to Jack.

Thanks, Steve. During the fourth quarter, we had gross deployments of $35 million with a 12.1% yield on debt securities. Net deployments amounted to $18.9 million and our total weighted average yield on our debt portfolio, excluding non-accruals, is 12.3%. Realized losses of $3.7 million were recognized during the quarter, mostly related to a $3.4 million loss recognized upon the restructuring of the Sparus Holdings notes.

Net unrealized depreciation was $12.6 million. That consisted of $21 million of depreciated positions net of $8.8 million of appreciated positions. Approximately 70% of the gross depreciation was related to energy investments and widening spreads.

As of the end of the third quarter, the Capitala portfolio consists of 57 companies with a fair market value of $592.5 million on a cost basis of $570.2 million. Senior debt investments represent 36.9% of the portfolio; senior subordinated debt, 43.3%; senior liquid loan fund, 3%; and equity warrant value of 16.8%.

In regards to portfolio quality, we continue to maintain a sub 2 internal weighted average risk rating at 1.83, an improvement from the prior quarter, while average leverage at the portfolio level improved to 3.8X. At the end of the quarter, there were five investments on non-accrual with a fair value and cost basis of $28 million and $47.1 million respectively. The most significant change to non-accruals was the addition of TCE Holdings and the movement of [ABITEC] from PIK non-accrual to full non-accrual. Both of these companies are oil industry-related.

As a further update on our investments in the energy space, the five investments at fair value totaled $52 million or 8.8% of the portfolio. We continue to mark down the value of these investments and have them collectively valued at 70% of cost, 55% of cost for oil industry investments. It is worth noting that, for the full-year 2015, we recognized unrealized depreciation on our energy investments of $16.5 out of a total of $16.9 million total depreciation.

In regards to market conditions, we continue to see strong proprietary deal flow despite the overall reduction in M&A activity in the market. In line with our liquidity position, our underwriting has become more selective as we identify the best risk-adjusted returns. And with that, I will turn it back to Joe.

Thank you, Jack. Thanks, Steve. With that, we just want to reiterate we continue to focus on distribution coverage with NII and we will continue to waive incentive fees to help NII cover the distribution. We are focusing on energy investments and reducing our exposure to our energy and non-accrual investments. And we continue to focus on our direct origination platform where we are still seeking and sourcing strong high-quality deal flow and focusing on high risk-adjusted returns. And with that, we are ready to address questions.

(Operator Instructions). Mickey Schleien, Ladenburg.

Good morning, everyone. I'm not sure who to address this question to, but I'm curious about the lifecycle of the SBIC licenses with respect to the potential for a third license. Can you just walk us through how the old licenses will roll off and if you apply for a new license, the timing of all of that?

Mickey, this is Joe. Steve will talk about the rolling off of the existing two SBIC licenses that we have in the BDC. To obtain additional SBA leverage once an existing license is fully drawn, which those two are that are currently in the BDC, you have to go through a licensing process and that involves submitting a different application and getting approved and then going through that whole procedure with SBA. That's sort of step one.

Step two would be you actually have to, in that process, prove that you have the cash/liquidity to fund a new SBIC license. So the reality of our obtaining a new SBIC license in the near future is not high because we cannot demonstrate that the parent has enough liquidity to pre-fund a license and that really has to do with their regulatory definition of private capital. And if you are committing to an SBIC fund and your commitment is more than 10% of your liquidity, that is really not regulatory capital. So what in essence happens is you have to pre-fund the SBIC.

So what we would have to do -- for example, if we wanted to do a new license and pre-fund, we would have to pre-fund with say $50 million and then the SBIC would, subject to their approval, grant you another one tier of leverage at $50 million. The reality of our situation at Capitala is we do not have the liquidity to pre-fund $50 million into a new SBIC license right now and that's step two, which is separate from the whole licensing process, but we've obtained four SBIC licenses over the past 15 years. We know that process, but the reality now is we can't pre-fund a new SBIC license, but I will have Steve address some of the runoff of the current SBIC license's debt maturity.

Mickey, if you look at our 10-K in the deck we put on the website, we've got -- this year, we've got $13.5 million of debt maturing of the $184 million. Once we pay that back, which we've already paid $2 million back on March 1, that cannot be redrawn. And so the majority of those maturities are 2020 and later, but you will see us this year repay $13.5 million, so we will just have less outstanding in that regard.

I understand. Joe, has management already asked the Board or do you intend to ask the Board for additional share repurchase authority?

Yes, this is Steve. We have not reaffirmed our repurchase program for 2016 at this point. Our limited liquidity will be utilized really to fund attractive investment opportunities. If our liquidity situation changes, I think we would be in a position to reevaluate with our Board. And finally, as a reminder, the cash at our SBIC subs, which, at the end of the year, was about half of our cash, cannot be used for share repurchase purposes, so it's restricted. So at this point, we have not reaffirmed that, but we will reevaluate that as the next few months transpire.

Okay. Just a couple of final questions. Any update on the CION joint venture and CR Hamilton was marked down in line with your prepared remarks, but it's still in accruals, so if you could just talk about how that company's performance is developing.

Mickey, this is Joe and I will talk about the CION joint venture. You saw the markets have materially changed over the past quarters that we were pursuing the CION joint venture. We did receive SEC approval for that. But then there are some things that were happening on their side of a relationship that delayed it. During those quarters, the markets have changed and we have jointly decided that they are very attractive, directly-originated loans that we can get high pricing and low debt and have a lot more control over through our covenants and direct origination that we have decided not to pursue that liquid loan strategy at this time and really focus on our core of directly originating loans at high yields and low leverage. With that, I'm going to turn it over to Jack to talk about Sierra.

Yes, on Sierra, like all our other portfolio companies, it's gone through our independent valuation process and of course, that is in the oil industry space and the continued decrease in pricing there has decreased operations at Sierra. They continue to operate though and their liquidity is still good. They are still paying us on time. That's what I have on Sierra.

Okay. Just one follow-up then, Joe. Given what you just said on CION, do you have any intent or can you even unwind the Kemper JV, or is that just going to stay in place the way it is?

I think for the short term it's going to stay in place. Really it's only the second dividend we've paid in the fourth quarter. It's fully ramped now and performing for the two equityholders. So I think in the short term, we will let that stand as it is.

Okay. That's it for me. Thanks for your time this morning.

Jonathan Bock, Wells Fargo.

Good morning, guys; and thank you for taking my questions. And it's a testament to your integrity, also your support for shareholders in that fee waiver, Joe. That's quite a return at this valuation and so I can speak as just an industry student to say that is unique and very, very shareholder-friendly, so thank you.

My question relates to your remaining book in equity to date because as we look at the potential for redeployment, that's also additional upside that can enure to the benefit of both yourselves in terms of the fee waiver, but also to shareholders over time. And so I'm kind of curious on how you look at that monetization and its likelihood over the tumultuous start that we've had to 2016. More color there would be helpful.

Thanks for the comments, especially about the voluntary fee waiver, because we do feel it here, especially around bonus time. On the equity rotations, we have a long track record of generating best-in-class total returns on a credit strategy and a lot of those returns have come from equity monetizations, about probably 40% of those returns. And we have a nice -- 17% of the portfolio, around $100 million fair value, we have several nice positions in that portfolio that have been around for a while and have experienced some significant appreciation through our costs and these are larger companies that our forecast is they will take advantage of the still current solid environment to sell a company.

So we are seeing things that we saw this time last year right before we monetized over $30 million of equity gains and the things we can see and sort of forecast is our investment bank is being hired to go monetize the investments, are things being filed and communicated to shareholders that some monetization is being expected in the next quarter or two. We are seeing those things and we expect that we will monetize a nice amount of these equity participations this year and we can redeploy those into yield, and that can really help offset the non-accruals from our energy investments and we really want to see that happening because we want to cover NII without having to do incentive fee waivers to make that happen and really the path to that that we see in 2016 is a monetization of these equity investments and redeployment into solid yield.

We are fully aligned on that strategy because that's how this management team can really get away from having to permanently waive incentive fees to cover our distribution. So we think that's going to happen. We expect that to happen and it's really just been part of our strategy over the past 15 to 18 years. And unless something really happens in the M&A markets in 2016, we are forecasting capital gains to redeploy.

Got it. And in terms of the Small Business Administration, just your reviews -- we've heard on multiple occasions there is the ability to draw down more and lever and certainly with the passage of that bill, thanks to your involvement, the question is what's the right level of economic leverage on your portfolio? So let's forget about whether one can draw and fund, etc. for a moment, but just interested in whether or not it's appropriate to take what would be that remaining SBIC that you could get eventually and what's the long-term right level of leverage? I know at times many managers will say more and higher, but in this case what is -- what's your view in terms of the risk of adding on that additional turn of leverage over time? What's an appropriate level of economic leverage for you in the long run?

Well, I'm going to let Steve talk about the appropriate optimal level of leverage at the BDC level. My comments about the SBA additional leverage, at this point, we don't actually foresee that happening in the near future, so we are not forecasting that into any kind of capital allocation. We just think with our communications with the SBA, trading below book, their comments and then really the reality of how regulatory capital is defined and we just don't have the capital to be funding new SBIC. We are not forecasting any additional SBA leverage, but I will let Steve speak because we talk about this all the time internally and I will let Steve speak to what is our optimal leverage at the BDC inclusive of the SBIC leverage even though it's excluded for regulatory reasons.

Yes, I think Joe kind of hit the nail on the head. We really aren't forecasting taking any of this money down in the short term, meaning probably this year. And so to that end, I think, for the BDC for 2016, we've got some availability under our credit facility that we can maybe draw another $30 million to $50 million, probably not the whole amount. That would put our regulatory leverage at 0.75 to 0.8 dependent on fair value adjustments. That's probably a good spot for us all in at that point unless the markets change and we have access to do some additional deals. But in the short term, I just don't see us moving up past another $30 million of debt this year.

Okay. Thank you.

All other things equal, all other things equal.

Understood and appreciate that. And then just one last question, more kind of platform overall. Joe, Capitala has got a lot of different pockets and a lot of BDCs over time and it's just a function of the markets, whether they are up or below book value. Your views on private capital and private capital raised as a complement to what you are doing. We've seen a number of sidecar funds, etc., and just your views on capital raising in a private context and whether or not you'd expect that to greatly complement the CPTA origination franchise while the BDC is where it is, which is just a function of the market.

We already currently manage other private funds that are different strategies than the BDC strategy. We are actively seeking to raise a private credit fund that would complement the BDC strategy by improving liquidity in that strategy where the BDC could co-invest with a private credit fund to maintain strategy liquidity. We applied for SEC exemptive relief to co-invest several months ago. We believe that -- we've had comments back that that should be approved in the near future.

We wanted that to be in place before we -- we believe and our Board believes that we wanted that in place before we began a co-investment strategy and we think that is imminent. And we have drafted private fund docs and are in the market and we will be seeking to raise private capital this quarter and hopefully have a first close summertime. And that would really enhance the liquidity of that strategy because right now the BDC is really in recycle mode and it's hard to really, with our six offices, directly originate some great deals. We want a clearer path to known liquidity. Right now, it's more of a stop and go, stop and go where you recycle. So we really think having a private credit fund would provide that investment pace knowledge on liquidity and that's something we are actively pursuing, and if anyone wants a copy of our PPM, they are free to contact me and I will get you one.

Okay. Guys, thank you for taking my questions.

Christopher Nolan, FBR & Co.

Hey, guys. The comment I think Jack made in terms of wider spreads contributing to the depreciation charges, were those wider spreads at 12/31, or were they subsequent to that?

That was at 12/31.

And, Jack, as a follow-up, given spreads have widened a bit since then and have come in a little bit, do you expect the spread issue to persist into first quarter even more?

I don't think it will be as significant as it has been over the last two quarters. There seems to be some stabilization there. Of course, we still have some time left in the quarter, so hopefully it won't be as much of an issue.

Got you. And then for TCE Holdings, I guess since it's on non-accrual now, I presume that's just because EBITDA has eroded there, or is that a combination of lower EBITDA as well as wider spreads?

It's a combination of performance and then also just the ability of the Company to pay our interests, which they had been able to do up until the end of the year and then not so going forward. But the combination -- the combination of those things. Obviously, the ongoing low oil prices continues to impact their business and less drilling activity has impacted them, so they've put up a good fight, but the decrease in prices has gone on for quite a long time now.

Yes, no, I hear you. Also on the equity marks, most of them are for privately held or private equity type of investments. Do you anticipate, if you liquidate those, you'll see any sort of gain, or is this really just create some that you can roll into yielding investments?

This is Joe. When you say gain, do you mean gain to the fair value mark, or the [call]?

Yes, to the fair value.

Well, I think over time those fair value marks are an accurate reflection of what fair value is over time. Sometimes you get a little bit above fair value. Sometimes you get a little bit below. A lot of times on the deals where we are a minority equity position, we don't control that ultimate sales process. It's out of control of our hands. But over time, those fair values have been pretty accurate and we think that we do a rigorous valuation process and we do it through third-party and they do a great job, we believe, at forecasting the values of these equity positions in these privately held companies. So over time, they should approximate fair value.

Okay. And I want to echo the applauding the management fee waivers. A big help, and nice to see a management really focus on making sure the dividend is covered. That's it for me. Thank you.

Ryan Lynch, KBW.

Good morning. First off, I just want to reiterate as a couple other callers have, the voluntary fee waiver, that's a great benefit for shareholders and I really appreciate you guys voluntarily implementing that. My first question, have you guys looked at your portfolio and specifically companies that are maybe not directly in the oil and gas industry, but maybe have some customers that are in the oil and gas industry or maybe have operations that are significantly focused in some oil and gas geographies? And if you've looked at those companies, are you seeing any deterioration in performance of any of those portfolio companies?

This is Jack. We, obviously, think a lot about that and have drilled down. There's really not a significant secondary level of exposure there. We were recently just talking about our remaining holding in Boot Barn. Yes, they have retail outlets in the Houston area and Oklahoma and such, so there would be some residual effect from that, but nothing real significant. But we do look at that and probably more on an underwriting standpoint as we look at new deals, we look at that. But it's a good question. We do spend a lot of time looking into it. We do have a couple companies where they have parts of their business that have decreased because of that, but no other -- we don't have like a housing deal up in South Dakota or something that would be impacted by it.

Okay. And then your guys' Senior Loan Fund, it looked like it had roughly $2 million of depreciation in the quarter. Was that just all mark-to-market from widening spreads, or were there any credit issues that caused that writedown in the quarter?

All mark to market. No credit issues.

Okay, yes. And then just one final last one. It goes to valuation and fair value of portfolio marks. That's been kind of a big focus now that portfolios are getting written down, investors are heavily focused on fair value marks and valuation processes, not just with your guys' portfolio, but with the whole industry. And so can you maybe just walk through what you guys do on a quarterly or annual basis to value your investment portfolio?

Yes, this is Steve. Annually, would be 12/31, we have a de minimis amount of 1% of assets. Everything greater than that gets independently reviewed by a third-party. Inclusive of that, there's a team within the Company that sits down and reviews all the portfolio companies quarterly as well, so there's a two-pronged approach. There's a third party looking at everything over 1% of assets. That's presented to management. Management reviews every investment. And then we collectively come up with the recommendation to take to the valuation committee of the Board and that third party actually visits with the Board at that meeting to present their recommendations and their ranges and then the valuation committee of the Board would hopefully at that point take a recommendation to the full Board of Directors at its quarterly meeting to approve those marks.

So it's a pretty robust process. We've got a good relationship with our third party that does that work. And then on a quarterly basis, when we are not at year-end, the third party reviews a little bit less on a quarterly basis, but still the management is reviewing every investment and taking all those to the valuation committee.

When you say the third party reviews a little bit less on a quarterly basis, approximately how many -- what percentage of your portfolio does a third party review on a quarterly basis?

If we have 60 investments as a round number, at the end of the year, they might look at 40. On a quarterly basis, they might look at 10.

Okay. Great. That's all.

There's some duplicity there, so some investments that were looked at at the end of the year, when we get to March 31, they will look at some of the same ones and we will direct them to ones that we think -- where we get the most benefit of that independent review, some of the more complicated ones, some of the distressed ones.

Got you.

And, Ryan, what I would add -- this really sort of answers both of your questions -- is general default rates -- I think a lot of our unrealized depreciation has been related to oil and our exposure to the oil investments. But if you look at our leverage ratio at the portfolio level, it's been consistent or fairly consistent over the past many quarters. When you start seeing a portfolio leverage ratio rise, that's really when you are going to start having more default in general occurring across that portfolio.

So if all of a sudden your leverage ratios have been trailing at a range, call it, 4X for many quarters, if they start going to 5, 5.5, 6X, that's when you can probably detect underlying rise in default rates unless there's been a strategy shift. So we have not seen that rise in our portfolio leverage rates over the past many quarters. We really think most of our unrealized depreciation is related to energy.

Great. That's all for me. Thanks, guys.

Terry Ma, Barclays.

Hey, guys. I think most of my questions have been answered, but can you maybe just give us a sense on the equity monetizations, how much could potentially monetize this year?

I know from a modeling standpoint, I wish we could give you some clearer guidance on dollars and timing. That's just not something we are in a position to do, Terry.

Okay, got it.

Too much uncertainty.

Got it. And then just maybe can you talk about the EBITDA and revenue growth trends of your portfolio ex-energy and how those are trending?

I would say, and I think it's pretty similar to the comments I made last quarter. There is a percentage of the portfolio -- the top third is having nice EBITDA growth. There's probably a more significant part of the portfolio that is level EBITDA with some slight improvements. And then there are some laggards that are decreased that we spend more time on from a portfolio monitoring standpoint.

All right. Got it. That's it for me. Thanks.

John Hecht, Jefferies.

Hey, guys, a lot of my questions have been asked. But, I guess, Joe, you just mentioned leverage. I'm wondering can you talk about both margins and leverage ratios of say more recent deals you've done versus deals that are prepaying or repaying.

John, we are pulling that data. We got it. All right, we found the data. Here comes Jack.

On new deals, one new one was probably in the 3X range, a little bit higher. It was a group deal where we also had some of the equity too, so it was more in the 3.5 range. The subsequent event one we just did was in the 4X range. Although that one we did have a significant equity -- it wasn't a warrant technically, but we did receive equity for that higher debt range, so we have a nice equity position in that. We also did a significant add-on investment in Medical Depot that was $10 million. So the leverage there is higher, but it's a large distributor, so it's a significant amount of assets, AR and inventory, that allow us to go to a higher leverage on that. But as we underwrite and we look at future deals, we are still keeping it sub 4X from a leverage perspective. There weren't any real significant prepayments. I think there was one and that was probably at a 3X level.

Are you seeing terms migrate given the ABS markets, (inaudible) markets and just general sentiment out there in the market at this point in time, or are you seeing signals that that may change?

Pricing wise?

Yes.

Yes, we have seen an improved pricing market, so we are definitely -- and as I think everybody else too -- looking at higher yields on deals and lower debt multiples too.

As noted in the subsequent event deal, at LIBOR 300 -- 1300.

Yes.

Yes, I saw that one. Okay. Appreciate that, guys. Thanks very much.

I'm not showing any further questions at this time. I'd like to turn the call back over to our hosts.

Thank you, everyone, for participating. If you have any further questions, we are around all day. Please contact us. And if you want to see a copy of our offering documents for Capitala Private Credit Fund V just give me a holler and we will send them out to you. Thank you for your participation.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.