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ABDC: Excellent Q4 Results Allows Special Dividend to Be Paid

By Lisa Thompson


- Alcentra Capital is a business development company (NASDAQ:ABDC) with a disciplined portfolio approach lending to middle market companies. Its excellent Q4 results just reported allowed it to pay a special $0.03 dividend.

- We believe that Alcentra should be able to capitalize on the improving US economic outlook as companies seek to ramp growth with an improving regulatory environment and potential corporate tax cuts spurring demand.

- At $12.96, the shares trade at a 5.5% discount to the company’s $13.72 NAV (net asset value) per share versus peers that trade at a 3% premium.

- The company has a valuation near its peers, and a best-in-class management fee structure for investors. We believe that ABDC is worth $14.00 per share and should trade at a dividend rate closer to the average yield of its competitors of 9.7%

Q4 2016 Earnings

For the fourth quarter of 2016, the company reported total investment income of $10.9 million versus $8.7 million last year, a gain of 26%. Adjusted and net investment income was $6.1 million, or $0.45 per share versus $4.5 and $0.27 per share last year.

During the three months ended December 31, 2016, Alcentra realized a loss on investments of $5.9 million and an increase in unrealized assets of $7.1 million. Net asset value (NAV) was $288 million, or $13.72 per share as of December 31, 2016 versus $14.52 per share, on September 30, 2016 and $14.43 on December 31, 2015. During Q4 the company received proceeds from repayments of $29.6 million and invested $22.8 million, including investments in three new deals.


Events that have already occurred in Q1 2017:

On January 3, 2017, Alcentra sold its equity interest in Wholesome Sweeteners in a secondary sale for $3.7 million.

On January 5, 2017, Alcentra invested an additional $2.7 million in LRI Energy Solutions.

On January 31, 2017, Alcentra invested $10.2 million in Pharmalogics Recruiting (10.25% 1st Lien Debt and common equity).

On February 1, 2017, Alcentra invested an additional $0.402 million in Black Diamond Rentals and a further $0.064 million on February 28, 2017.

On February 21, 2017, Duke Finance, LLC repaid their investment in the amount of $7.5 million.

On February 27, 2017, Alpine Waste repaid their investment in the amount of $11.0 million.

On February 28, 2017, Alcentra invested an additional $2.1 million in Pharmalogic Holdings Corporation.


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