OHA Investment Corporation
OHA Investment Corp (Form: 8-K, Received: 08/10/2017 17:01:36)
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): August 10, 2017  

OHA INVESTMENT CORPORATION
(Exact Name of Registrant as Specified in Charter)

Maryland 814-00672 20-1371499
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)

 

1114 Avenue of the Americas, 27th Floor, New York, New York 10036
(Address of Principal Executive Offices) (Zip Code)

(212) 852-1900
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  [ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

          On August 10, 2017, the Registrant issued a press release (the “Press Release”) announcing its financial results for the second quarter of 2017. The text of the Press Release is included as Exhibit 99.1 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits.

          (d) Exhibits

                    99.1 Press Release dated August 10, 2017.

          The information in this current report on Form 8-K, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  OHA INVESTMENT CORPORATION
     
   
Date: August 10, 2017 By:  /s/ Cory E. Gilbert        
    Cory E. Gilbert
    Chief Financial Officer
   


EXHIBIT INDEX

Exhibit Number   Description
     
99.1   Press Release dated August 10, 2017.

EXHIBIT 99.1

OHA Investment Corporation Announces Second Quarter 2017 Results

NEW YORK, Aug. 10, 2017 (GLOBE NEWSWIRE) -- OHA Investment Corporation (NASDAQ:OHAI) (the “Company”) today announced its financial results for the quarter ended June 30, 2017. Management will discuss the Company's results summarized below on a conference call on Friday, August 11, 2017, at 10:00 a.m. (Eastern Time).

Summary results for the quarter ended June 30, 2017:
Total investment income:  $2.5 million, or $0.12 per share
Net investment income:  $0.1 million, or $0.01 per share
Net realized and unrealized losses:  $5.0 million, or $0.25 per share
Net asset value:  $55.7 million, or $2.76 per share
New portfolio investments during the quarter:  $1.4 million
Fair value of portfolio investments:  $84.5 million
Investment in Castex Energy 2005, LP written down by $4.7 million, or $0.23 per share

Portfolio Activity
The fair value of our investment portfolio was $84.5 million at June 30, 2017, decreasing 4.7% compared to March 31, 2017. During the second quarter of 2017, the Company had realizations totaling $1.4 million and made one new investment in the amount of $1.4 million. The concentration of our investment portfolio in the energy sector at June 30, 2017 was 18%. The current weighted average yield of our portfolio based on the cost and fair value of our yielding investments was 12.6% and 13.0%, respectively, as of June 30, 2017.

During the second quarter, we added $1.4 million of second lien term loan to PAE Holding Corporation, or PAE, adding to our $5.5 million position that was previously acquired in November 2016.  The $1.4 million PAE loan was purchased at a 1% discount and earns interest payable in cash at a rate of 10.50% per annum (LIBOR+9.50% with a 1% floor) and matures in October 2023.

In April 2017, we received $0.9 million remittance from our investment in Gramercy Park CLO Ltd., which we applied to our cost basis.

In May 2017, Talos Production, LLC repaid a portion of its senior unsecured notes in the amount of $0.5 million at par.

Operating Results
Investment income totaled $2.5 million for the second quarter of 2017, decreasing 43.4% compared to $4.4 million in the corresponding quarter of 2016. The decrease was primarily attributable to a $1.5 million decrease in investment income related to non-accruals assets and a decrease in average portfolio balance.

Operating expenses for the second quarter of 2017 were $2.3 million, a decrease of $0.7 million, or 22.9%, compared to operating expenses for the second quarter of 2016. The decrease in operating expenses is related to lower base management and incentive fees, professional fees and other general and administrative expenses.

The resulting net investment income was $0.1 million or $0.01 per share, for the second quarter of 2017, compared to $1.3 million, or $0.06 per share, for the second quarter of 2016.

We recorded net realized and unrealized losses on investments totaling $5.0 million, or $0.25 per share, during the second quarter of 2017, compared to $1.1 million, or $0.06 per share, during the second quarter of 2016. Total losses recorded in the second quarter of 2017 was driven primarily by the $4.7 million write-down in Castex, a legacy energy portfolio investment.

Overall, we experienced a net decrease in net assets resulting from operations of $4.9 million, or $0.24 per share, for the second quarter of 2017. After declaring a quarterly dividend during the period of $0.02 per share, our net asset value decreased 8.6%, from $3.02 per share as of March 31, 2017 to $2.76 per share as of June 30, 2017.

Liquidity and Capital Resources
At June 30, 2017, we had cash and cash equivalents totaling $12.0 million. The total amount outstanding under our credit facility at June 30, 2017 was $40.5 million with $16.0 million available to draw.

Webcast / Conference Call at 10:00 a.m. Eastern Time on August 11, 2017
We invite all interested persons to participate in our conference call on Friday, August 11, 2017, 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. Conference ID is 61891354. 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)
 
    June 30, 2017   December 31, 2016
    (unaudited)    
Assets        
Investments in portfolio securities at fair value        
Affiliate investments  (cost: $21,386 and $19,724, respectively)   $ 18,350     $ 17,150  
Non-affiliate investments  (cost: $144,367 and $154,772, respectively)   66,151     87,855  
Total portfolio investments  (cost: $165,753 and $174,496, respectively)   84,501     105,005  
Investments in U.S. Treasury Bills at fair value  (cost: $44,994 and $39,997, respectively)   44,994     39,997  
Total investments   129,495     145,002  
Cash and cash equivalents   12,002     16,533  
Accounts receivable and other current assets   31     33  
Interest receivable   667     1,313  
Prepaid assets   1     17  
Total current assets   12,701     17,896  
    Total assets   $ 142,196     $ 162,898  
         
Liabilities        
Current liabilities        
Distributions payable   $ 403     $ 1,210  
Accounts payable and accrued expenses   1,760     1,999  
Due to affiliate   39     220  
Management and incentive fees payable   496     635  
Income taxes payable   12     28  
Repurchase agreement   44,093     39,200  
Short-term debt, net of debt issuance costs   39,694      
Total current liabilities   86,497     43,292  
Long-term debt, net of debt issuance costs       39,113  
   Total liabilities   86,497     82,405  
Commitments and contingencies        
Net assets        
Common stock, $.001 par value, 250,000,000 shares authorized; 20,172,392 and 20,172,392 shares issued and outstanding, respectively   20     20  
Paid-in capital in excess of par   235,703     235,703  
Undistributed net investment loss   (3,342 )   (2,873 )
Undistributed net realized capital loss   (98,543 )   (85,979 )
Net unrealized depreciation on investments   (78,139 )   (66,378 )
   Total net assets   55,699     80,493  
   Total liabilities and net assets   $ 142,196     $ 162,898  
Net asset value per share   $ 2.76     $ 3.99  



OHA INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
    Three months ended
June 30,
  Six months ended
June 30,
    2017   2016   2017   2016
Investment income:                
Interest income:                
Interest income   $ 2,465     $ 3,396     $ 4,869     $ 7,209  
Dividend income       970         2,283  
Other income   10     7     61     38  
Total investment income   2,475     4,373     4,930     9,530  
Operating expenses:                
Interest expense and bank fees   984     975     1,958     2,063  
Management and incentive fees   496     767     1,066     1,697  
Professional fees   401     669     672     1,389  
Other general and administrative expenses   377     538     759     1,044  
Director fees   62     62     123     123  
Total operating expenses   2,320     3,011     4,578     6,316  
Income tax provision, net   10     99     14     116  
Net investment income   145     1,263     338     3,098  
                 
Net realized capital gain on investments, net of tax   (12,659 )   (9,943 )   (12,564 )   (9,919 )
Total net realized capital gain (loss) on investments   (12,659 )   (9,943 )   (12,564 )   (9,919 )
                 
Net unrealized depreciation on investments, net of tax   7,618     8,795     (11,761 )   (4,728 )
Total net unrealized depreciation on investments   7,618     8,795     (11,761 )   (4,728 )
                 
Net increase (decrease) in net assets resulting from operations   $ (4,896 )   $ 115     $ (23,987 )   $ (11,549 )
                 
Net increase (decrease) in net assets resulting from operations per common share   $ (0.24 )   $ 0.01     $ (1.19 )   $ (0.57 )
                 
Distributions declared per common share   $ 0.02     $ 0.06     $ 0.04     $ 0.12  
Weighted average shares outstanding - basic and diluted   20,172     20,172     20,172     20,172  
                 
Per Share Data (1)                
Net asset value, beginning of period   $ 3.02     $ 4.85     $ 3.99     $ 5.49  
                 
Net investment income   0.01     0.06     0.01     0.15  
Net realized and unrealized loss on investments (2)   (0.25 )   (0.05 )   (1.21 )   (0.72 )
Net increase (decrease) in net assets resulting from operations   (0.24 )   0.01     (1.19 )   (0.57 )
Distributions to common stockholders                
Distributions from net investment income   (0.02 )   (0.06 )   (0.04 )   (0.12 )
Net decrease in net assets from distributions   (0.02 )   (0.06 )   (0.04 )   (0.12 )
                 
Net asset value, end of period   $ 2.76     $ 4.80     $ 2.76     $ 4.80  
                 
(1)  Per share data is based on weighted average number of common shares outstanding for the period.    
(2)   May include a balancing amount necessary to reconcile the change in net asset value per share with other per share presented.


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 over $4 billion in over 125 direct lending investments over the past 14 years.

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.

 

CONTACTS:
Steven T. Wayne – President and Chief Executive Officer
Cory E. Gilbert – Chief Financial Officer
Lisa R. Price - Chief Compliance Officer
OHAICInvestorRelations@oakhilladvisors.com

For media inquiries, contact Kekst and Company, (212) 521-4800
Jeremy Fielding – Jeremy-Fielding@kekst.com
Ethan Lyle – Ethan.Lyle@kekst.com