WhiteHorse Finance Inc (WHF) 2025 Q3 法說會逐字稿

Good afternoon. My name is Chloe, and I will be your conference operator today. At this time, I would like to welcome everyone to the WhiteHorse Finance third-quarter 2024 earnings conference call. Our hosts for today's call are Stuart Aronson, Chief Executive Officer; and Joyson Thomas, Chief Financial Officer.

午安.我叫克洛伊，今天我將擔任你們的會議接線生。在此，我謹代表 WhiteHorse Finance 歡迎各位參加 2024 年第三季財報電話會議。今天電話會議的主持人是首席執行官斯圖爾特·阿倫森和首席財務官喬伊森·托馬斯。

Today's call is being recorded and will be made available for replay beginning at 4:00 PM Eastern Time. The replay dial-in number is 402-220-2572. No passcode required. (Operator Instructions)

今天的電話會議正在錄音，並將於美國東部時間下午 4:00 開始提供回放。重播撥入號碼為 402-220-2572。無需密碼。（操作說明）

It is now my pleasure to turn the floor over to Robert Brinberg of Rose & Company. Please go ahead.

現在我很高興把發言權交給 Rose & Company 的 Robert Brinberg。請繼續。

Thank you, Chloe, and thank you everyone for joining us today to discuss WhiteHorse Finance's third-quarter 2025 earnings results.

謝謝 Chloe，也謝謝大家今天與我們一起討論 WhiteHorse Finance 2025 年第三季的收益結果。

Before we begin, I'd like to remind everyone that certain statements which are not based on historical facts made during this call, including any statements relating to financial guidance may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

在開始之前，我想提醒大家，本次電話會議中某些並非基於歷史事實的陳述，包括任何與財務指導相關的陳述，都可能被視為 1995 年《私人證券訴訟改革法案》意義上的前瞻性陳述。

Because these forward-looking statements involve known and unknown risks and uncertainties, these are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. WhiteHorse Finance assumes no obligation or responsibility to update any forward-looking statements. Today's speakers may refer to material from the WhiteHorse Finance third quarter 2025 earnings presentation, which was posted on our website this morning.

由於這些前瞻性陳述涉及已知和未知的風險和不確定性，因此這些是可能導致實際結果與這些前瞻性陳述所表達或暗示的結果有重大差異的重要因素。WhiteHorse Finance不承擔更新任何前瞻性聲明的義務或責任。今天的演講者可能會參考 WhiteHorse Finance 2025 年第三季收益簡報中的資料，該簡報已於今天早上發佈在我們的網站上。

With that, allow me to introduce WhiteHorse Finance's CEO, Stuart Aronson. Stuart, you may begin.

接下來，請容許我介紹 WhiteHorse Finance 的執行長 Stuart Aronson。斯圖爾特，你可以開始了。

Thank you, Rob, and good afternoon, everybody. Thank you for joining us today. As you’re aware, we issued our earnings this morning before market open, and I hope you’ve had a chance to review our results for the period ending September 30, 2025, which can also be found on our website. On today’s call, I will begin by addressing our third quarter results and current market conditions. Joyson Thomas, our Chief Financial Officer, will then discuss our performance in greater detail, after which we will open the floor for questions.

謝謝你，羅布，大家下午好。感謝您今天蒞臨。如您所知，我們今天早上在市場開盤前發布了收益報告，希望您有機會查看我們截至 2025 年 9 月 30 日的業績，該業績報告也可在我們的網站上找到。在今天的電話會議上，我將首先談談我們第三季的業績和當前的市場狀況。接下來，我們的財務長喬伊森·托馬斯將更詳細地討論我們的業績，之後我們將開放提問環節。

Our results for Q3 of 2025 were disappointing and reflect the onset of interest rate cuts, continued pressure on market spreads, as well as the impact of material markdowns on some credits that we have previously discussed. Q3 GAAP net investment income and core NII was $6.1 million, or $0.263 per share, compared with Q2 GAAP and core NII of $6.6 million, or $0.282 per share. NAV per share at the end of Q3 was $11.41, representing approximately a 3.6% decrease from the prior quarter. In addition to the approximate $0.12 shortfall in NII coverage of our Q3-based distribution, NAV per share was also impacted by net realized and unrealized losses in our portfolio, totaling $6.7 million, or approximately $0.29 per share, which I’ll discuss later in the call.

我們 2025 年第三季的業績令人失望，反映了降息的開始、市場利差的持續壓力，以及我們之前討論過的某些信貸產品大幅減損的影響。第三季 GAAP 淨投資收益和核心 NII 為 610 萬美元，即每股 0.263 美元，而第二季 GAAP 和核心 NII 為 660 萬美元，即每股 0.282 美元。第三季末每股淨資產為 11.41 美元，較上一季下降約 3.6%。除了第三季淨利息收入覆蓋率缺口約為 0.12 美元外，每股淨值還受到我們投資組合中已實現和未實現淨虧損的影響，總計 670 萬美元，即每股約 0.29 美元，我將在稍後的電話會議中討論這一點。

As a result of these earnings and current market conditions, I have three important announcements. First, given the current earnings power of the BDC, as well as our expectations for lower interest rates and continued spread compression in challenging market conditions, our Board of Directors has taken the prudent measure to reset our quarterly-based distribution to $0.25 per share. This adjusted distribution rate represents an implied 8.8% annualized yield based on the company’s ending NAV per share as of the end of the third quarter. This was a difficult but necessary decision. Ultimately, we believe the reset puts us in a better position to earn our base distribution going forward, given management’s expected earnings power of the BDC, future base rate movements, as well as current market conditions.

鑑於這些收益和當前的市場狀況，我有三個重要公告要發布。首先，鑑於 BDC 目前的獲利能力，以及我們對利率走低和在充滿挑戰的市場環境下利差持續收窄的預期，我們的董事會採取了審慎的措施，將我們按季度分配的股息調整為每股 0.25 美元。根據該公司截至第三季末的每股淨值計算，此調整後的分配率隱含年化報酬率為 8.8%。這是一個艱難但必要的決定。最終，我們認為，鑑於管理層對 BDC 的預期盈利能力、未來基準利率變動以及當前市場狀況，此次調整將使我們更有能力在未來獲得基本分紅。

We will continue our distribution policy framework that was previously announced during our Q1 2023 earnings call on May 9, 2023, where the company intends to distribute its base distribution as well as make potential supplemental distributions above the base level in the future pursuant to this distribution policy. To the extent our non-accrual and other troubled situations in our portfolio result in recoveries, or if current market conditions improve and/or base rates increase, and any of these factors lead to additional earnings, we will be prepared to share those incremental earnings with investors in the form of supplemental or special distributions. Joyson will provide a refresher on how our supplemental distribution policy gets calculated when he speaks in a little while.

我們將繼續執行先前在 2023 年 5 月 9 日舉行的 2023 年第一季度收益電話會議上宣布的分配政策框架，公司計劃按照該分配政策分配基本分配，並在未來進行高於基本水平的潛在補充分配。如果我們的投資組合中非應計項目和其他不良情況得到改善，或者當前市場狀況有所改善和/或基準利率上升，並且這些因素中的任何一個導致額外收益，我們將準備以補充或特別分配的形式與投資者分享這些新增收益。喬伊森稍後會發言，屆時他將簡要介紹我們的補充分配政策是如何計算的。

Second, on the big topics, as a result of recent disappointing results and as a part of our ongoing commitment to align interests of the advisor with those of our shareholders, the advisor has voluntarily agreed to reduce the incentive fee on net investment income from its stated annual rate of 20% to 17.5% for the next two fiscal quarters ending December 31, 2025, and March 31, 2026, respectively. This temporary 2.5-point reduction in our income-based incentive fee will provide additional financial support for our quarterly distributions to shareholders. The advisor may extend this voluntary reduction, however, the duration and extent of future reductions are uncertain and will be subject to ongoing discussions with the Board.

其次，關於重大議題，由於近期業績令人失望，並且作為我們持續致力於使顧問的利益與股東的利益保持一致的一部分，顧問已自願同意將淨投資收益的激勵費用從其規定的年利率 20% 降低至 17.5%，該降低期限分別為截至 2025 年 12 月 31 日和 2026 年 3 月 31 日的兩個財務季度。我們將暫時降低 2.5 個百分點的收入激勵費用，這將為我們每季向股東分紅提供額外的財務支持。顧問可能會延長這種自願減薪期限，但是未來減薪的持續時間和幅度尚不確定，並將取決於與董事會的持續討論。

Finally, given the discount of the company’s stock price relative to its book value, the Board has approved a share buyback program of up to $15 million. Under the share repurchase program, the company may, but is not obligated to, repurchase its outstanding common stock in the open market from time to time at the then current market prices at the discretion of WhiteHorse Finance’s management team. The company’s current share price level implies a discount to its current book value of more than 40%, which we believe will result in very accretive share repurchases.

最後，鑑於公司股價相對於其帳面價值的折價，董事會已批准一項高達 1,500 萬美元的股票回購計畫。根據股份回購計劃，公司可以（但沒有義務）不時地在公開市場上以當時的市場價格回購其流通在外的普通股，具體回購由 WhiteHorse Finance 的管理團隊酌情決定。該公司目前的股價水準意味著其目前的帳面價值折讓超過 40%，我們認為這將導致非常有利的股票回購。

Turning now to portfolio activity, we had gross deployments of $19.3 million in Q3, which was more than offset by elevated repayments and sales of $50.5 million, resulting in net repayments of $31.2 million. Gross capital deployments consisted of two new originations totaling $14.3 million, and the remaining amounts were deployed to fund two add-ons to existing investments. In addition, there was $500,000 in net fundings made on revolver commitments.

現在來看投資組合活動，第三季總投資額為 1,930 萬美元，但被 5,050 萬美元的較高償還額和銷售額所抵消，淨償還額為 3,120 萬美元。總資本投入包括兩項新投資，總額為 1,430 萬美元，其餘資金用於為現有投資的兩項追加投資提供資金。此外，也透過循環信貸承諾淨注資 50 萬美元。

Our new originations in Q3 included one non-sponsor and one sponsor deal at an average leverage of approximately 3.5 times EBITDA. All of our Q3 deals were first lien loans at an average spread of 612 basis points. Total repayments and sales were driven by complete or partial realizations in five portfolio positions, including BBQGuys, Lab Logistics, Power Plant Services, Coastal TV, and Ross-Simon. At the end of Q3, 99.2% of our debt portfolio was first lien, senior secured, and our portfolio ownership mix was approximately 65% sponsor and 35% non-sponsor.

第三季度，我們新增的貸款包括一筆非擔保人貸款和一筆擔保人貸款，平均槓桿率約為 EBITDA 的 3.5 倍。我們第三季的所有交易都是優先擔保貸款，平均利差為 612 個基點。總還款額和銷售額的驅動因素是五個投資組合中全部或部分變現，包括 BBQGuys、Lab Logistics、Power Plant Services、Coastal TV 和 Ross-Simon。第三季末，我們的債務組合中有 99.2% 是第一順位優先擔保債務，我們的投資組合所有權構成中，發起人佔比約為 65%，非發起人佔比約為 35%。

The weighted average effective yield on our income-producing debt investments decreased to 11.6% as of the end of Q3, compared to 11.9% in Q2, mainly due to lower spreads and lower base rates. The weighted average effective yield on our overall portfolio also decreased slightly to 9.5% at the end of Q3, compared to approximately 9.8% at the end of Q2.

截至第三季末，我們收益型債務投資的加權平均有效收益率降至 11.6%，而第二季為 11.9%，主要原因是利差和基準利率下降。截至第三季末，我們整體投資組合的加權平均有效收益率也略微下降至 9.5%，而第二季末約為 9.8%。

During the quarter, the BDC transferred one new deal and four existing investments to the STRS JV. At the end of Q3, the STRS JV portfolio had an aggregate fair value of $341.5 million and an average effective yield of 10.3%, compared with 10.6% from Q2. We continue to successfully utilize the STRS JV and believe WhiteHorse Finance’s equity investment in the JV continues to provide attractive returns for our shareholders. After net repayments and JV transfer activity, as well as the net realized and unrealized losses recognized during the quarter, total investments decreased from the prior quarter by $60.9 million to $568.4 million. This compares to our portfolio’s fair value of $629.3 million at the end of Q2.

本季度，BDC 將一項新交易和四項現有投資轉移給了 STRS 合資企業。第三季末，STRS 合資投資組合的總公允價值為 3.415 億美元，平均有效收益率為 10.3%，而第二季為 10.6%。我們繼續成功利用 STRS 合資企業，並相信 WhiteHorse Finance 對該合資企業的股權投資將繼續為我們的股東帶來可觀的回報。扣除淨償還款和合資企業轉讓活動，以及本季確認的已實現和未實現淨虧損後，總投資額較上一季減少 6,090 萬美元，至 5.684 億美元。相較之下，我們投資組合在第二季末的公允價值為 6.293 億美元。

During the quarter, we recognized $1.8 million in net realized losses and approximately $4.9 million of net unrealized losses for an aggregate total of $6.7 million in net realized and unrealized losses in Q3. Our mark-to-market losses were primarily driven by write-downs in Alveria, which was formerly known as Aspect Software, and in Camarillo Fitness, also formerly known as Honors Holdings. Alveria has continued to underperform and has struggled to service its existing debt levels.

本季度，我們確認了 180 萬美元的淨已實現虧損和約 490 萬美元的淨未實現虧損，第三季度淨已實現和未實現虧損合計為 670 萬美元。我們的市值計價損失主要源自於 Alveria（前身為 Aspect Software）和 Camarillo Fitness（前身為 Honors Holdings）的減損。Alveria 的業績持續不佳，難以償還現有債務。

At the end of the third quarter, we marked down our position in Alveria by approximately $1.7 million based on our expectations of a multi-tiered restructuring to occur in Q4. Subsequent to the quarter end, a lender group, including WhiteHorse, completed a restructuring of the transaction in which we extinguished our existing debt position for cash and equity consideration equal to approximately the aggregate fair value we marked to as of the end of September 30.

第三季末，我們根據對 Alveria 將在第四季度進行多層次重組的預期，將我們在 Alveria 的持股減少了約 170 萬美元。季度末之後，包括 WhiteHorse 在內的貸款機構集團完成了交易重組，我們以現金和股權對價清償了現有債務，對價大致等於我們截至 9 月 30 日末的公允價值總額。

Camarillo Fitness, which is the largest franchisee of Orangetheory Fitness, also continues to underperform. At the end of the third quarter, we marked down our position by approximately $4.4 million in the aggregate. We’re making every effort to optimize Camarillo to be well-positioned for new year sign-up period, which could give the business a boost in performance.

Camarillo Fitness 是 Orangetheory Fitness 最大的加盟商，但其業績也持續不佳。第三季末，我們累計減持了約 440 萬美元的持股。我們正在盡一切努力優化 Camarillo，使其在新的一年註冊期做好充分準備，這可能會提升業務表現。

As a partial offset to the markdowns this quarter, we were able to provide an incremental add-on to Motivational Marketing subsequent to the end of the quarter, to help effectuate the merging of that portfolio company with another portfolio company. As part of the add-on, the sponsor contributed a fresh amount of additional equity cushion behind the debt. As a result, that has taken leverage of Motivational Marketing down significantly and led to a slight markup of approximately $0.7 million on that asset.

為了部分抵銷本季的降價，我們在本季結束時向 Motivational Marketing 提供了一項增量附加服務，以幫助實現該投資組合公司與另一家投資組合公司的合併。作為追加融資的一部分，發起人為債務追加了一筆新的股權緩衝資金。因此，激勵行銷的槓桿作用大幅下降，導致該資產略微增值約 70 萬美元。

The BDC also recognized $2.1 million in realized losses, which was partially offset by a reversal of approximately $1.7 million in previously recorded unrealized losses from the restructuring of MSI Information Systems. With the restructuring of MSI, the restructured debt investments returned back to accrual status as we expected it would. Non-accrual investments now represent 2.7% of the debt portfolio at fair value, an improvement compared with 4.9% of the debt portfolio in the prior quarter.

BDC 也確認了 210 萬美元的已實現損失，但部分被 MSI 資訊系統重組中先前記錄的約 170 萬美元未實現損失的衝回所抵消。隨著 MSI 的重組，重組後的債務投資也如我們預期的那樣恢復了應計狀態。非應計投資目前佔債務組合公允價值的 2.7%，較上一季的 4.9% 有所改善。

Other deals on non-accrual are likely to remain that way for some period of time. We are continuing to actively work on getting deals off non-accrual, leveraging the expertise of our five-person dedicated WhiteHorse restructuring team and the resources of HIG Capital. Aside from the credits on non-accrual, our portfolio is performing quite well.

其他不計息協議可能會在一段時間內保持這種狀態。我們正在繼續積極努力，爭取讓交易擺脫非應計債務，利用我們五人組成的 WhiteHorse 重組專責團隊的專業知識和 HIG Capital 的資源。除了非應計利息外，我們的投資組合表現相當不錯。

Turning to the lending market, M&A activity has not picked up as much as the investment banks and private equity shops had hoped for, although there has been a steady trickle of improvement. There is still plenty of capital available to serve the reduced supply of new financings in the market, and the environment remains extremely competitive, particularly for companies that are non-cyclical and do not have meaningful international sales exposure.

再來看貸款市場，併購活動並沒有像投資銀行和私募股權公司所希望的那樣大幅回升，儘管情況一直在穩步改善。儘管市場上新增融資供應減少，但仍有大量資金可供使用，而且市場環境仍然極具競爭性，尤其是對於那些非週期性且沒有顯著國際銷售業務的公司而言。

Lenders in the sponsor markets are being very aggressive, while the non-sponsor markets continue to be less competitive. In the mid-market, pricing for sponsor deals is pretty solidly in the SOFR 450-500 range, as competition has compressed spreads, and OID is typically a point to a point and a half. Lower mid-market sponsor deals are pricing in the 475-575 spread over SOFR, at least a range of that.

發起人市場的貸款機構非常積極進取，而非發起人市場的競爭則相對緩和。在中端市場，贊助商交易的定價相當穩定在 SOFR 450-500 範圍內，因為競爭壓縮了價差，而 OID 通常為 1 到 1.5 點。中低階市場贊助商的交易定價中已包含 SOFR 475-575 的價差，至少在這個範圍內。

Leverage multiples are between four and six times, and partial PIK features are being used selectively to make cash flows work on upper mid-cap and large-cap deals. The non-sponsor market remains much less competitive and has a significant pricing premium compared to the sponsor market. We are generally seeing non-sponsor deals pricing at SOFR plus 600 and above. OID is still generally two points or higher compared to sponsor deals. Leverage levels on non-sponsor deals have been consistently lower and more stable than the sponsor-backed deals.

槓桿倍數在四到六倍之間，部分實物支付條款被選擇性地用於使中大型市值交易的現金流發揮作用。非贊助市場競爭遠不如贊助市場激烈，且價格溢價顯著。我們通常看到非贊助商交易的價格在 SOFR 加 600 以上。與贊助商交易相比，OID 通常仍然高出兩點或更多。非贊助商支持的交易的槓桿水平一直比贊助商支持的交易的槓桿水平更低、更穩定。

To put the attractiveness of the non-sponsor market in context, our non-sponsor mandates are still levered only three to five and a half times, and the highest deal we have priced recently is at SOFR 650-plus a warrant. We continue to focus significant resources on the non-sponsor market, where there are better risk returns in many cases and much less competition than what we were seeing, especially in the on-the-run sponsor market.

為了更好地理解非發起人市場的吸引力，我們的非發起人委託投資的槓桿率仍然只有三到五倍半，而我們最近定價的最高交易是每份認股權證的 SOFR 650 以上。我們繼續將大量資源投入到非贊助商市場，因為在許多情況下，該市場的風險回報更高，競爭也比我們之前看到的要小得多，尤其是在快速贊助商市場。

We currently have 22 originators covering 13 regional markets. Given market conditions, these originators are primarily focused on sourcing off-the-run sponsor deals and non-sponsor deals as we look for value and good risk return in a market where there is limited deal flow and a lot of aggressiveness. Subsequent to quarter end, the BDC has closed on one new deal and one add-on investment totaling $16.2 million and had one full repayment totaling $22.2 million. Following the net deployment activity to date in Q4, the BDC’s remaining capacity is approximately $40 million, and proforma for several transactions that we anticipate to close in Q4 of 2025, the BDC’s capacity for new assets is approximately $20 million.

我們目前有 22 位發起人，涵蓋 13 個區域市場。鑑於市場狀況，這些發起機構主要專注於尋找非常規贊助商交易和非贊助商交易，因為我們在交易量有限且競爭激烈的市場中尋求價值和良好的風險回報。在季度末之後，BDC 完成了一筆新交易和一筆追加投資，總額為 1,620 萬美元，並完成了一筆總額為 2,220 萬美元的全額還款。根據第四季迄今的淨部署活動，BDC 的剩餘產能約為 4,000 萬美元，預計在 2025 年第四季完成的幾筆交易，BDC 的新資產產能約為 2,000 萬美元。

At the end of Q4, the STRSJV’s remaining capacity was approximately $20 million, and proforma for recently mandated deals to eventually be transferred in, the JV’s capacity is fully deployed. Our pipeline remains lower than normal for this time of year. We currently have six new mandates and are working on three add-ons to existing deals. Our six mandates comprise of two non-sponsor deals and four sponsor deals. While there can be no assurances that any of these deals will close, all of these credits would fit into the BDC or our JV should we elect to transact.

截至第四季末，STRSJV 的剩餘產能約為 2,000 萬美元，加上最近強制執行的交易最終將轉移過來，該合資企業的產能已全部投入使用。我們的管道建設進度仍然低於往年同期水準。我們目前有六項新的委託，並且正在努力為現有交易增加三項條款。我們的六項委託包括兩項非贊助協議和四項贊助協議。雖然不能保證這些交易都能完成，但如果我們選擇進行交易，所有這些信貸都將納入 BDC 或我們的合資企業。

All of the non-sponsor mandates have pricing of 600 over SOFR or better and would be targeted to go into the BDC’s balance sheet. Several of these mandates are large and will help us with asset balances in the BDC. The sponsor mandates have pricing of 425-550 over SOFR.

所有非發起人委託投資的定價均高於 SOFR 600 或更高，並將納入 BDC 的資產負債表。這些委託金額較大，將有助於我們管理 BDC 的資產餘額。贊助商的定價為 SOFR 加 425-550。

With that, I’ll turn the call over to Joyson for additional performance details and a review of our portfolio composition. Joyson?

接下來，我將把電話轉給 Joyson，請他提供更多業績詳情並回顧我們的投資組合組成。均勝？

Thanks, Stuart, and thanks everyone for joining today’s call. During the quarter, we recorded GAAP net investment income and core NII of $6.1 million or $0.263 per share. This compares with Q2 GAAP NII and core NII of $6.6 million or $0.282 per share, as well as our previously declared Q3-based distribution of $0.385 per share. Q3 fee income was only approximately $0.1 million and was lower than historical quarters due to lower amendment and prepayment fee activity.

謝謝斯圖爾特，也謝謝大家參加今天的電話會議。本季度，我們錄得 GAAP 淨投資收益和核心 NII 為 610 萬美元，即每股 0.263 美元。這與第二季度 GAAP NII 和核心 NII 660 萬美元或每股 0.282 美元，以及我們先前宣布的第三季度每股 0.385 美元的分紅相比，有所不同。第三季手續費收入僅約 10 萬美元，低於歷史季度，原因是修改費和預付款活動減少。

For the quarter, we reported a net decrease in net assets resulting from operations of $0.6 million. Our risk ratings during the quarter showed that approximately 81.8% of our portfolio positions either carried a one or two rating, an increase from 76.8% reported in the prior quarter. Upgrades during the quarter included positions in Motivational Marketing and Educational Dynamics, which were both upgraded to a two, and positions in Telestream, which was upgraded to a three.

本季度，我們報告稱，由於經營活動，淨資產淨減少了 0.6 百萬美元。本季我們的風險評級顯示，我們投資組合中約 81.8% 的部位評級為 1 或 2，高於上一季報告的 76.8%。本季評等提升包括 Motivational Marketing 和 Educational Dynamics 的評等均提升至 2，以及 Telestream 的評等提升至 3。

As a reminder, a one rating indicates that a company has seen its risk of loss reduced relative to initial expectations, and a two rating indicates that a company is performing according to such initial expectations. Regarding the JV specifically, we continue to grow our investment. As Stuart mentioned earlier in the call, we transferred one new deal and four existing investments during Q3 to the STRSJV, totaling $24.2 million.

提醒一下，1 級評級表示公司損失風險相對於最初預期有所降低，2 級評級表示公司表現符合最初預期。具體到合資企業方面，我們將繼續增加投資。正如 Stuart 在先前的電話會議中提到的，我們在第三季將一筆新交易和四項現有投資轉移到了 STRSJV，總計 2,420 萬美元。

As of September 30, 2025, the JV’s portfolio held positions in 43 portfolio companies with an aggregate fair value of $341.5 million, compared to 43 portfolio companies with an aggregate fair value of $330.2 million as of June 30, 2025. Leverage for the JV at the end of Q3 was approximately 1.24 times compared with 1.16 times at the end of the prior quarter. The investment in the JV continues to be accretive for the BDC’s earnings, generating a mid-teens return on equity.

截至 2025 年 9 月 30 日，該合資企業的投資組合持有 43 家投資組合公司的股份，總公允價值為 3.415 億美元，而截至 2025 年 6 月 30 日，該合資企業的投資組合持有 43 家投資組合公司的股份，總公允價值為 3.302 億美元。第三季末合資企業的槓桿率約為 1.24 倍，而上一季末為 1.16 倍。對合資企業的投資持續為 BDC 帶來收益成長，產生了 15% 左右的股本回報率。

During Q3, income recognized from our JV investment aggregated to approximately $3.6 million, a slight increase from the $3.4 million reported in Q2. As we have noted in prior calls, the yield on our investment in the JV may fluctuate period over period as a result of a number of factors, including the timing and amount of additional capital investments, the changes in asset yields in the underlying portfolio, as well as the overall credit performance of the JV’s investment portfolio.

第三季度，我們從合資企業投資中獲得的收入總計約為 360 萬美元，比第二季報告的 340 萬美元略有增加。正如我們在先前的電話會議中所提到的，由於多種因素的影響，我們在合資企業中的投資收益率可能會隨時間波動，這些因素包括額外資本投資的時間和金額、基礎投資組合中資產收益率的變化，以及合資企業投資組合的整體信用表現。

Turning to our balance sheet, we had cash resources of approximately $45.9 million at the end of Q3, including $36.4 million in restricted cash and $100 million of undrawn capacity under a revolving credit facility. Following elevated repayments during the quarter, we repaid in full the $40 million of unsecured notes paying 5.375% interest that were due to mature on October 20. As of September 30, 2025, the company’s asset coverage ratio for borrowed amounts, as defined by the 1940 Act, was 180.7%, which was above the minimum asset coverage ratio of 150%. Our Q3 net effective debt-to-equity ratio, after adjusting for cash on hand, was approximately 1.07 times compared with 1.22 times from the prior quarter.

從資產負債表來看，截至第三季末，我們擁有約 4,590 萬美元的現金資源，其中包括 3,640 萬美元的受限現金和 1 億美元的循環信貸額度（尚未提取）。由於本季還款額增加，我們全額償還了 4,000 萬美元的無擔保票據，這些票據的年利率為 5.375%，將於 10 月 20 日到期。截至 2025 年 9 月 30 日，該公司的借款資產覆蓋率（以 1940 年法案的定義）為 180.7%，高於 150% 的最低資產覆蓋率。在調整現金餘額後，我們第三季的淨有效負債權益比率約為 1.07 倍，而上一季為 1.22 倍。

Before I conclude and open up the call to questions, I’d like to discuss our distribution policy. This morning, we announced that our Board declared a fourth quarter based distribution of $0.25 per share. To supplement Stuart’s earlier comments, I note the company still has the ability, under our existing distribution framework, to issue supplemental distributions.

在結束演講並開放提問環節之前，我想先討論一下我們的分銷政策。今天上午，我們宣布董事會決定派發第四季每股0.25美元的股息。為了補充 Stuart 先前的評論，我指出，根據我們現有的分銷框架，公司仍然有能力發行補充分銷。

Each quarter, the Board will utilize this framework to determine if a supplemental distribution should be made in addition to the regular base quarterly distribution. The framework the Board will use to determine a supplemental distribution, if any, will be calculated as the lesser of: one, 50% of the quarter’s earnings that is in excess of the quarterly base distribution; and two, an amount that results in no more than a $0.15 per share decline in NAV over the current quarter and preceding quarter. Earnings for the purpose of measuring the excess over the quarter’s base distribution is net investment income. The NAV decline measurement is inclusive of the supplemental distribution calculated, and to be clear, is measured over the two most recently completed quarters.

每個季度，董事會將利用此框架來決定是否應在常規季度分配之外進行補充分配。董事會將採用以下框架來確定是否需要進行補充分配：計算方法為以下兩者中的較小者：一、季度收益超過季度基本分配額的 50%；二、導致本季度和上一季每股淨資產值下降不超過 0.15 美元的金額。為衡量超過季度基本分配額的收益，淨投資收益為淨投資收益。淨資產值下降的衡量標準包括計算的補充分配，需要明確的是，它是根據最近完成的兩個季度來衡量的。

We believe this formulaic supplemental distribution framework allows us to maximize distributions to our shareholders while preserving the stability of our NAV, a factor that we do believe to be an important driver of shareholder economics over time. The upcoming $0.25 distribution will be payable on January 5, 2026, to stockholders of record as of December 22, 2025.

我們相信，這種公式化的補充分配框架能夠讓我們在維持淨值穩定的同時，最大限度地向股東分配收益。我們認為，淨值穩定是長期股東收益的重要驅動因素。即將發放的每股 0.25 美元股息將於 2026 年 1 月 5 日支付給截至 2025 年 12 月 22 日登記在冊的股東。

As we said previously, we will continue to evaluate our quarterly distribution both in the near and medium term based on the core earnings power of our portfolio, in addition to other relevant factors that may warrant consideration. In addition to our quarterly distribution, we elected to declare a special distribution of $0.035 per share for stockholders of record as of October 31, 2025. The distribution will be payable on December 10, 2025. This distribution was related to undistributed taxable income that was earned last year, which would have otherwise been taxable.

正如我們之前所說，我們將繼續根據我們投資組合的核心獲利能力，以及其他可能需要考慮的相關因素，來評估我們近期和中期的季度分紅。除了季度分紅外線，我們還決定向截至 2025 年 10 月 31 日登記在冊的股東發放每股 0.035 美元的特別分紅。該筆款項將於2025年12月10日支付。此次分配與去年獲得的未分配應稅收入有關，否則這部分收入將需要繳稅。

With that, I’ll now turn the call over to the operator for your questions. Operator?

那麼，我現在將把電話轉交給接線員，回答您的問題。操作員？

(Operator Instructions) Melissa Wedel, JPMorgan.

（操作說明）梅麗莎·韋德爾，摩根大通。

Good afternoon. Thanks for taking my questions today. I wanted to start with the dividend and understand how you’re approaching it with the announcement for the 4Q level of $0.25 a share. Should we be thinking about that as the new base level, or is this going to be something that will fluctuate a little bit more quarter to quarter outside of the supplemental component?

午安.謝謝您今天回答我的問題。我想先談談股息問題，了解你們是如何看待第四季每股 0.25 美元的股息的。我們應該將其視為新的基準水平，還是說，除了補充部分之外，這個數字會在每個季度之間略有波動？

Melissa, we took a look at where interest rates are, what interest rates are supposed to do in the future, where deployments are, what the current market spreads are, and the earnings power of the BDC, given some losses on accounts that we’ve taken, both realized and unrealized losses. We came up with a sensitivity analysis that caused us to work with the Board to set a new base dividend that should be a long-term dividend if our projections as to market conditions and interest rates are correct. We set that at a level that we believe we can earn on a quarterly basis reliably, even if interest rates do continue to decline in alignment with the current yield curve.

梅麗莎，我們研究了利率現狀、未來利率走勢、投資部署情況、當前市場利差以及 BDC 的盈利能力，同時考慮到我們經手的帳戶出現了一些損失，包括已實現損失和未實現損失。我們進行了敏感度分析，結果促使我們與董事會合作，設定了一個新的基本股息，如果我們對市場狀況和利率的預測是正確的，那麼這應該是一個長期股息。我們把收益設定在我們認為能夠按季度穩定獲利的水平，即使利率繼續按照當前的殖利率曲線下降。

As a follow-up, I wanted to touch on the fee waiver. I’m curious about, I guess, two aspects of it: the level going to 17.5% from 20% and the two quarters for 4Q and 1Q that that will apply to. I guess the question behind both is why that level and why that time frame? Is there a longer-term consideration the Board was taking under advisement? Thank you.

作為後續補充，我想談談費用豁免的問題。我比較好奇的是兩個方面：一是利率從 20% 降至 17.5%，二是這一降幅將適用於第四季和第一季這兩個季度。我想這兩個問題背後的共同點是：為什麼是這個等級？為什麼是這個時段？董事會是否正在考慮某種更長遠的因素？謝謝。

The Board and the manager discussed what we should do vis-à-vis providing some cushion to the earnings capability of the BDC, and it was agreed that we would waive the 2.5% amount for or forgive the 2.5% amount for the next two quarters. Then, based on the performance of the BDC going forward, the Board and the manager will discuss whether additional forgiveness is warranted and appropriate. Two quarters are done, and going forward, it’ll be based on discussions between the Board and the manager and linked to the results of the BDC.

董事會和經理討論了我們應該如何為 BDC 的盈利能力提供一些緩衝，並一致同意在接下來的兩個季度中免除或豁免 2.5% 的金額。然後，根據 BDC 未來的業績，董事會和經理將討論是否有必要和適當地給予額外的債務豁免。兩個季度已經過去，接下來將以董事會和經理之間的討論為基礎，並與 BDC 的業績掛鉤。

Robert Dodd, Raymond James.

Robert Dodd，Raymond James。

Hi, guys. Looking at the BDC and the JV, to your comments, Stuart, it sounds like you’re about to be really close to full capacity in terms of investments. Unless, obviously, there’s recoveries from some of these stressed assets. I appreciate all the color you gave us on the situation at some of these businesses. Can you give us any more thoughts on -- and obviously, some of these turnarounds, they don’t happen quick.

嗨，大家好。斯圖爾特，根據你對 BDC 和合資企業的評論，聽起來你們的投資金額即將接近飽和。除非，很顯然，這些不良資產中的某些部分能夠回收。感謝您詳細介紹了其中一些企業的狀況。您能否再給我們一些其他的想法——顯然，有些轉變並非一朝一夕就能發生。

To your point, Camarillo, maybe it gets through Q1 and there’s a rebound in activity. What are your long-term realistic expectations about fair value recovery from these troubled assets? Obviously, that’s one of the tools that would potentially be reinvestable, maybe rebound the dividend, maybe give the BDC a bit more capacity. Any thoughts on what you can tell us on the real prospects there?

卡馬裡奧，你說得對，也許能撐過第一季度，經濟活動會反彈。您對這些不良資產的長期合理價值回收有何預期？顯然，這是可以再投資的工具之一，也許可以提高股息，也許可以為 BDC 增加一些能力。您能否透露一下那裡的實際前景？

Yeah. Robert, the deals that are on non-accrual right now, as I indicated in the prepared remarks, are likely to remain on non-accrual for at least the next 12-24 months. In a number of cases, we have taken over the management of those companies, and our five-person restructuring team works cooperatively with HIG Capital private equity operating professionals to make sure that we’re getting optimal management teams into those companies, cutting costs where appropriate, and driving growth strategies.

是的。羅伯特，正如我在準備好的演講稿中所述，目前處於非應計狀態的交易，很可能至少在未來 12-24 個月內仍將處於非應計狀態。在許多情況下，我們已經接管了這些公司的管理，我們五人重組團隊與 HIG Capital 私募股權營運專業人員合作，以確保我們為這些公司引入最佳管理團隊，在適當的時候削減成本，並推動成長策略。

The turnaround of those credits, for the most part, is a multi-year effort. In certain circumstances, as it regards a credit like Play Monster, we have taken it, and that was a credit where there was fraud originally, and we found out that the EBITDA of the company was actually pretty strongly negative. We have turned that company around, and the EBITDA is now positive.

這些學分的轉變，在很大程度上是一個多年的努力。在某些情況下，例如對於像 Play Monster 這樣的信貸，我們已經接受了，而這筆信貸最初存在欺詐行為，我們發現該公司的 EBITDA 實際上非常嚴重為負。我們已經扭轉了那家公司的局面，現在其 EBITDA 為正。

We believe we have a good management team, and we’re hoping for improved results not only this year but heading into next year. That would be a good example of an account that’s heading in the right direction. In order for us to get to a markup and a cash realization, we need to continue to turn that account around more than has already occurred so far.

我們相信我們擁有一支優秀的管理團隊，我們希望不僅今年，而且明年都能取得更好的表現。那將是一個很好的例子，說明一個帳戶正朝著正確的方向發展。為了實現利潤成長和現金流，我們需要繼續扭轉該帳戶的頹勢，而且比目前為止的進展更快。

The same is true for credits like ArcServe, which we’re still working on, and a couple of the other credits in the portfolio. In all the cases, except for Alveria and Camarillo Fitness, we’re seeing stabilization to improvement in the performance of the company. We do think it’s going to be a significant period of time, again, at least 12-24 months before those assets that are on a non-accrual come back onto accrual.

對於我們仍在開發的 ArcServe 以及產品組合中的其他一些項目來說，情況也是如此。除了 Alveria 和 Camarillo Fitness 之外，我們看到所有公司的業績都趨於穩定甚至有所改善。我們認為，非應計資產要恢復應計狀態，還需要相當長的時間，至少需要 12-24 個月。

Can you give us any kind of on the track record of performance sponsor versus non-sponsor? To your point, the sponsor deals carry meaningfully higher spreads, lower leverage. Obviously, if something does go wrong, it’s kind of on you to fix it rather than the sponsor to work through the process. Can you give us any kind of -- I mean, the returns are higher, but what’s the track record of the income returns are higher? The track record of outcomes between the two different deployment strategies?

您能否提供一些關於贊助商與非贊助商業績記錄的數據？正如你所指出的，贊助商交易的利差明顯更高，槓桿也更低。顯然，如果真的出了問題，解決就得靠你自己，而不是贊助商來處理整個流程。你能為我們提供一些東西——我的意思是，回報更高，但是收入回報更高的歷史記錄是什麼？兩種不同部署策略的過往成果如何？

Robert, in general, the leverage on the non-sponsor deals is anywhere from a turn to a turn and a half lower than on the sponsor deals. Our track record historically has been that we see fewer defaults -- sorry, fewer payment defaults on the non-sponsor deals. During COVID, we had a number of sponsor deals that went into payment default and needed equity support, but we did not have any non-sponsor deals that went into payment default during that COVID period. We’ve had one non-sponsor deal that has resulted in a significant loss. That was American Crafts, which is now fully resolved.

羅伯特，一般來說，非贊助商交易的槓桿作用比贊助商交易的槓桿作用低一到一輪半。從歷史數據來看，我們發現非贊助交易的違約率較低——抱歉，是付款違約率較低。在新冠疫情期間，我們有一些贊助商的交易出現付款違約，需要股權支持，但在新冠疫情期間，我們沒有任何非贊助商的交易出現付款違約。我們曾有過一次非贊助合作，結果造成了重大損失。那是美國工藝品公司的問題，現在已經徹底解決了。

As I think through the non-accruals -- and maybe Joyson, I’ll ask you to double-check me on this—but I believe all of the non-accrual accounts at this point are actually deals that were sponsor deals, and none of them currently are non-sponsor deals, which speaks to the relative strength of what we do in the non-sponsor market. And Joyson, am I right on that? Are any of the non-accrual deals non-sponsor deals?

當我仔細思考非應計專案時——也許喬伊森，我會請你幫我再核實一下——但我相信目前所有非應計帳戶實際上都是贊助商交易，而目前沒有非贊助商交易，這說明了我們在非贊助商市場所取得的相對優勢。喬伊森，我說的對嗎？這些非累積性交易中是否有非贊助性交易？

You’re right. I think if we’re including maybe non-income-producing restructured assets, Lift Brands might be one that we considered. I forgot if we considered that as a sponsor or non-sponsor deal.

你說得對。我認為，如果我們把不產生收入的重組資產也算進去，那麼 Lift Brands 可能是我們考慮過的公司之一。我忘了我們當時是把那件事算是贊助交易還是非贊助交易。

No, no, no. Lift Brands was a sponsor deal. That was a deal that during COVID, the private equity firm injected a significant amount of equity into turning around the company.

不，不，不。Lift Brands是贊助商。那筆交易是在新冠疫情期間達成的，私募股權公司向該公司注入了大量資金以扭轉其頹勢。

Let me double-check on the others, and I’ll come back on that. I think that is correct then. The only other one I could think of is potentially Sklar, again, another non-income-producing or a portion of the equity, which is non-income-producing.

讓我再核實一下其他的，稍後我會回覆你。我想那應該沒錯。我能想到的唯一其他選擇可能是 Sklar，但它同樣不會產生收入，或者說是部分股權，而股權本身也不產生收入。

I believe Sklar, which is non-sponsor, is on accrual. So that would not be on accrual.

我認為 Sklar（非贊助商）正在以累積方式運作。所以這不屬於權責發生製。

Yeah. So it’s not on accrual.

是的。所以它不是按權責發生製計算的。

Yeah. Sklar is also a company that we had to take control of. We have dramatically improved the performance of that credit since taking control of it. That is a credit that, if it hits its projected numbers for next year based on new customers that have been signed up and additional EBITDA we expect to be earning, that is a credit. Again, it is on accrual right now. The debt is paying interest in cash, but we own the equity, and there is potential for an equity gain upon the sale of that credit next year if we are able to hit our projected numbers.

是的。Sklar也是我們必須接管的公司之一。自接管以來，我們已顯著改善了該信貸項目的表現。如果公司能夠實現明年根據新簽約客戶數量和我們預期獲得的額外 EBITDA 所預測的數字，那麼這將是一筆收益。目前它仍處於應計制狀態。債務以現金支付利息，但我們擁有股權，如果我們能夠達到預期目標，明年出售該債權時有可能獲得股權收益。

Got it. Thank you for all that detail. Appreciate it. There’s just one more if I can. On the pricing, to your point, I mean, even in the lower middle market for sponsor deals, pricing is pretty tight by historic standards. I mean, is that just -- I mean, I say just -- is that a consequence of more competition in terms of large market competitors coming down because there’s not enough activity at their end of the market, or is it just it’s your same long-term competitors just getting much more aggressive?

知道了。謝謝你提供的所有細節。謝謝。如果可以的話，再來一個。關於定價，正如你所指出的，我的意思是，即使在贊助交易的中低端市場，以歷史標準來看，定價也相當嚴格。我的意思是，這只是——我的意思是，我說只是——這是由於大型市場競爭對手因為市場活動不足而減少投入所導致的競爭加劇的結果，還是僅僅是你那些長期競爭對手變得更加咄咄逼人的結果？

It’s a really good question, Robert. The mid-market spread compression is a result, in many cases, of large market players not having enough volume and coming into the mid-market and creating additional supply of capital. In the mid-market, we’re typically seeing pricing of 450-500, and I would say that has definitely been impacted by the larger players coming down market. In the lower mid-market, we’re not really seeing the larger players, but there have been a number of new organizations that have been formed that don’t have a track record of relationships in the industry. Some of those shops are trying to buy market share by discounting price and/or doing higher leverage on deals.

羅伯特，這真是個好問題。中端市價差收窄在許多情況下是由於大型市場參與者交易量不足，於是進入中端市場並創造了額外的資金供應。在中端市場，我們通常看到的價格在 450-500 之間，我認為這肯定受到了大型廠商下沉市場的影響。在中低階市場，我們並沒有真正看到大型企業，但已經成立了許多新組織，這些組織在業界沒有建立關係的記錄。有些商家試圖透過降價和/或提高交易槓桿來獲取市場份額。

The lower mid-market, where frankly there are hundreds of private equity firms operating, is a much more variable market where we are seeing pricing anywhere from 475-575, depending on how much competition there is on any given deal and given on the complexity of the credit. I do not believe that lower mid-market spreads have been significantly impacted by the large shops. Again, when I talk lower mid-market, I’m talking about EBITDA below $30 million.

坦白說，中低端市場有數百家私募股權公司在運營，這是一個波動性更大的市場，我們看到定價在 475 到 575 之間，具體取決於任何特定交易的競爭程度以及信貸的複雜程度。我不認為中低端市場的價差受到了大型商店的顯著影響。再說一遍，當我談到中低階市場時，我指的是 EBITDA 低於 3,000 萬美元的公司。

(Operator Instructions) Christopher Nolan, Ladenburg Thalmann.

（操作說明）克里斯多福諾蘭，拉登堡塔爾曼。

Hi. Thank you for taking my question. It really revisits the incentive fee reduction. Once we’re beyond first quarter 2026, if the EPS continues to underperform, what’s the, I guess, state of mind or headspace in terms of lowering the incentive fee or continuing it?

你好。感謝您回答我的問題。它實際上重新審視了降低激勵費用的問題。一旦我們進入 2026 年第一季之後，如果每股盈餘繼續低於預期，那麼，在降低激勵費用或繼續支付激勵費用方面，公司會有什麼心態或想法呢？

The Board of Directors has provided us a perspective that the forgiveness of the incentive fee or the temporary reduction of the incentive fee is aligned with trying to make sure that we are earning the dividend. If there is underperformance in terms of core dividend earnings, I would expect that the Board would take a view that they would seek additional forgiveness or additional waiver of that 2.5% for additional quarters. Six months is a significant amount of time in the market, and we all need to see what is going on with M&A volume, spreads in the marketplace, and core interest rates in terms of what the Fed is doing to have a better sense of what earnings will be out three and four quarters or more from now.

董事會向我們闡述了這樣一個觀點：免除激勵費用或暫時減少激勵費用，是為了確保我們能夠獲得股利。如果核心股息收益表現不佳，我預計董事會將尋求對後續季度額外豁免或免除 2.5% 的股息。六個月在市場中是一個相當長的時間，我們都需要觀察併購交易量、市場利差以及美聯儲的核心利率政策，以便更好地了解未來三到四個季度甚至更長時間內的盈利情況。

Understood. I guess on the share repurchases, if I were to read your comments earlier, it seems like deal flow seems to be slow. Should we read into that that the company will be aggressive on share repurchases?

明白了。就股票回購而言，如果我沒理解錯你先前的評論，交易似乎進展緩慢。我們是否應該由此推斷該公司將積極回購股票？

Chris, we’re trading at a very significant discount to NAV, even off of the reduced NAV that I showed you today of $11.41. Buying back shares at levels anywhere around today’s price is highly accretive for shareholders, both in terms of NII and NAV. Given limitations in how many shares we can purchase in any given day or week, we felt a $15 million allocation made a lot of sense to recapture shareholder value if the shares did not materially trade higher. We, as a manager, are going to try to act in the interest of the shareholders and repurchase shares so long as there is a material benefit to the shareholders in doing so.

克里斯，即使按照我今天給你看的11.41美元的減損淨值計算，我們目前的交易價格也比淨值低很多。在今天價格附近的任何價位回購股票，對股東來說都是非常有利的，無論從淨利息收入或淨值來看都是如此。考慮到我們每天或每周可以購買的股票數量有限，我們認為，如果股票價格沒有大幅上漲，那麼分配 1500 萬美元來收回股東價值是非常有意義的。身為管理者，我們將努力維護股東的利益，只要回購股票能為股東帶來實質的好處，我們就會回購股票。

It does appear there are no further questions at this time. This does conclude today’s program. Thank you for your participation. You may disconnect at any time and have a wonderful afternoon.

目前看來沒有其他問題了。今天的節目到此結束。感謝您的參與。您可以隨時斷開連接，祝您下午愉快。

Thank you.

謝謝。