OHA Investment Corporation
Nov 6, 2014

OHA Investment Corporation Announces Third Quarter Financial Results and Presentation of New Investment Strategy

NEW YORK, Nov. 6, 2014 (GLOBE NEWSWIRE) -- OHA Investment Corporation (Nasdaq:OHAI) (the "Company") today announced its financial results for the third quarter of 2014. Oak Hill Advisors, L.P. became the Company's new investment advisor on September 30, 2014.

Management will present the Company's new investment strategy and future plans, along with a discussion of the quarterly results summarized below, on a webcast today at 11:00 a.m. Eastern Time.

Highlights for the quarter ended September 30, 2014:
Operating results:
Total investment income: $5.6 million, or $0.27 per share
Costs related to strategic alternatives review: $5.4 million, or $0.26 per share
Net investment loss: $2.8 million, or $0.14 per share
Net asset value: $167.2 million, or $8.11 per share
Quarterly dividends declared: $0.16 per share
 
Portfolio and investment activity:
New investments in portfolio securities during the quarter: $1.0 million
Realization of portfolio securities during the quarter: $11.4 million
Fair value of portfolio investments at September 30, 2014: $171.0 million
Weighted average yield on portfolio investments at September 30, 2014: 10.4% at cost; 11.3% at current fair value
Number of portfolio companies at September 30, 2014: 13

Operating Results

Investment income totaled $5.6 million for the third quarter of 2014, decreasing 7% compared to $6.0 million in the corresponding quarter of 2013. The decline in 2014 was primarily a result of a decrease in the size of our investment portfolio due to realizations in excess of new investments between the two periods. Our portfolio balance, on a cost basis, decreased from $227.8 million at September 30, 2013 to $186.5 million at September 30, 2014, primarily as a result of realizations in excess of new portfolio investments.

Operating expenses for the third quarter of 2014 were $8.3 million, an increase of $5.0 million, compared to operating expenses for the third quarter of 2013. The increase was primarily attributable to $5.4 million, or $0.26 per share, of costs related to our strategic alternatives review that resulted in the appointment of Oak Hill Advisors, L.P. as our new investment advisor.

The resulting net investment loss was $2.8 million, or $0.14 per share, for the third quarter of 2014, compared to $2.6 million of net investment income, or $0.13 per share, for the third quarter of 2013.

We recorded net realized and unrealized losses on investments totaling $3.3 million, or $0.16 per share, during the third quarter of 2014, compared to net realized and unrealized gains on investments totaling $2.4 million, or $0.12 per share, during the third quarter of 2013. Third quarter 2014 losses were primarily driven by a reduction in the fair value of our Senior Secured Term Loan and equity investment in Contour Highwall Holdings, LLC ("Contour"), by $3.9 million to an aggregate value of $7.5 million. We recorded this adjustment in value to reflect the current weak industry conditions in the highwall coal mining market, and their impact on Contour's operations, cash flows and underlying value of its assets.

Overall, we experienced a net decrease in net assets resulting from operations of $6.1 million for the third quarter of 2014. As a result, and after declaring dividends during the period of $0.16 per share, our net asset value decreased from $8.57 per share as of June 30, 2014 to $8.11 per share as of September 30, 2014.

Subsequent Portfolio Activity

On November 4, 2014, in connection with a refinancing, Nekoosa Coated Products Holdings, Inc. ("Nekoosa"), prepaid its Second Lien Term Loan in the amount of $18.4 million. This prepayment included a 2%, or $0.4 million, call premium, and we will record previously unamortized original issue discount of $0.3 million as additional interest income in the fourth quarter as a result of this prepayment. This investment was initiated in April 2013 and generated an internal rate of return of 19.6% and a return on investment of 1.3x.

Webcast at 11:00 a.m. Eastern Time on November 6, 2014

We invite all interested persons to participate in our webcast on Thursday, November 6, 2014 at 11:00 a.m. Eastern Time. The webcast will be accessible via the internet, on our Investor Relations page at www.ohainvestmentcorporation.com. 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.

 
 
OHA INVESTMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
     
  September 30, December 31,
  2014 2013
  (Unaudited)  
Assets    
Investments in portfolio securities at fair value     
Control investments     
(cost: $28,655 and $27,459, respectively)   $ 14,953  $ 24,218
Affiliate investments     
(cost: $17,855 and $17,510, respectively)   16,970  17,043
Non-affiliate investments     
(cost: $140,004 and $176,988, respectively)   139,033  170,110
Total portfolio investments     
(cost: $186,514 and $221,957, respectively)   170,956  211,371
Investments in U.S. Treasury Bills at fair value     
(cost: $30,610 and $46,000, respectively)   30,610  46,000
Total investments  201,566  257,371
Cash and cash equivalents  55,602  29,298
Accounts receivable and other current assets  881  464
Interest receivable  675  2,397
Prepaid assets  1,807  3,093
Total current assets  58,965  35,252
Total assets  $ 260,531  $ 292,623
     
Liabilities and net assets    
Current liabilities    
Accounts payable and accrued expenses  $ 1,718  $ 1,313
Management and incentive fees payable  1,254  1,387
Dividends payable  3,299  3,280
Income taxes payable  56  91
Short-term debt  30,000  45,000
Total current liabilities  36,327  51,071
Long-term debt  57,000  53,000
Total liabilities  93,327  104,071
Commitments and contingencies    
Net assets    
Common stock, $.001 par value, 250,000,000 shares authorized; 20,616,422 and 20,499,188 shares issued and outstanding  21  20
Paid-in capital in excess of par  248,758  247,759
Undistributed net investment income (loss)  (9,843)  (583)
Undistributed net realized capital gain (loss)  (59,292)  (51,176)
Net unrealized appreciation (depreciation) on investments  (12,440)  (7,468)
Total net assets  167,204  188,552
Total liabilities and net assets  $ 260,531  $ 292,623
Net asset value per share  $ 8.11  $ 9.20
 
 
OHA INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
         
  For The Three Months Ended For The Nine Months Ended
  September 30, September 30,
  2014 2013 2014 2013
Investment income        
Interest income:        
Control investments  $ 456  $ 546  $ 1,480  $ 1,439
Affiliate investments  630  513  1,700  4,568
Non-affiliate investments  3,414  3,896  10,510  12,356
Dividend income:        
Non-affiliate investments  1,010  1,005  2,992  2,983
Royalty income, net of amortization:        
Control investments  22  19  63  34
Non-affiliate investments  10  16  65  16
Other income (loss)  31  (29)  134  (14)
Total investment income  5,573  5,966  16,944  21,382
Operating expenses        
Interest expense and bank fees  405  655  1,569  2,468
Management and incentive fees  1,254  1,405  3,906  4,602
Costs related to strategic alternatives review  5,352  --   6,017  -- 
Professional fees  210  271  777  830
Insurance expense  187  180  545  539
Other general and administrative expenses  936  811  3,476  2,478
Total operating expenses  8,344  3,322  16,290  10,917
Income tax provision, net  17  11  56  49
Net investment income (loss)  (2,788)  2,633  598  10,416
Net realized capital gain (loss) on investments        
Control investments  --   --   (325)  (464)
Affiliate investments  --   --   95  (250)
Non-affiliate investments  962  --   (7,886)  1,550
Benefit (provision) for taxes on realized gain (loss)  --   (53)  --   (53)
Total net realized capital gain (loss) on investments  962  (53)  (8,116)  783
Net unrealized appreciation (depreciation) on investments        
Control investments  (3,644)  (459)  (10,460)  (3,469)
Affiliate investments  666  189  (418)  270
Non-affiliate investments  (1,275)  2,741  5,906  (7,044)
Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments  --   --   --   1
Total net unrealized appreciation (depreciation) on investments  (4,253)  2,471  (4,972)  (10,242)
         
Net increase (decrease) in net assets resulting from operations  $ (6,079)  $ 5,051  $ (12,490)  $ 957
         
Net increase (decrease) in net assets resulting from operations per common share  $ (0.30)  $ 0.25  $ (0.61)  $ 0.05
         
Dividends declared per common share  $ 0.16  $ 0.16  $ 0.48  $ 0.48
Weighted average shares outstanding - basic and diluted  20,500  20,499  20,500  20,764
 
 
OHA INVESTMENT CORPORATION
PER SHARE DATA 
(Unaudited)
         
  For The Three Months Ended For The Nine Months Ended
  September 30, September 30,
Per Share Data (1) 2014 2013 2014 2013
         
Net asset value, beginning of period  $ 8.57  $ 9.13  $ 9.20  $ 9.57
         
Net investment income (loss)  (0.14)  0.13  0.03  0.50
Net realized and unrealized gain (loss) on investments  (0.16)  0.12  (0.64)  (0.45)
Net increase (decrease) in net assets resulting from operations  (0.30)  0.25  (0.61)  0.05
         
Dividends declared  (0.16)  (0.16)  (0.48)  (0.48)
Other (2)  --   --   --   0.08
         
Net asset value, end of period  $ 8.11  $ 9.22  $ 8.11  $ 9.22
         
(1) Per Share Data is based on weighted average number of common shares outstanding for the period.
(2) Represents the impact of common stock repurchases. 

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, or a BDC, 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, national, or international 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.

Persons considering an investment in OHA Investment Corporation should consider the investment objectives, risks, and charges and expenses of the Company carefully before investing. Such information and other information about us is available in our annual report on Form 10-K, in our quarterly reports on Form 10-Q, in our current reports on Form 8-K, and in prospectuses we issue from time to time in connection with our offering of securities. Such materials are filed with the SEC and copies are available on the SEC's website, www.sec.gov, and in the Investor Relations section of our website at www.ohainvestmentcorporation.com. Prospective investors should read such materials carefully before investing.

CONTACT: Bob Long, President & Chief Executive Officer

         Scott Biar, Interim Chief Financial Officer

         & Chief Compliance Officer

         OHAICInvestorRelations@oakhilladvisors.com



         For media inquiries, contact Kekst and Company, (212) 521-4800

         Jeremy Fielding - Jeremy-Fielding@kekst.com

         James David - James-David@kekst.com
Source: OHA Investment Corporation

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