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Executives

Dean Choksi - SVP, Finance & Head of Investor Relations

Leonard Tannenbaum - Chairman & CEO

Bernard Berman - President

Alexander Frank - CFO

Analysts

Stephen Laws - Deutsche Bank

Robert Dodd - Raymond James

Greg Mason - Stifel Nicolaus

Casey Alexander - Gilford Securities

Jonathan Bock - Wells Fargo

Fifth Street Finance Corporation (FSC) Q1 2013 Earnings Call February 7, 2013 11:00 AM ET

Operator

Good day ladies and gentlemen and welcome to the First Quarter 2013 Fifth Street Finance Corporation Earnings Conference Call. My name is Regina and I’ll be your conference operator for today. At this time, all participants are in listen-only mode. Later, we will be conducting a question-and-answer session. (Operator Instructions) As a reminder, today's event is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Dean Choksi, Senior Vice President of Finance and Head of Investor Relations. Please go ahead Dean.

Dean Choksi

Thank you, Regina. Good morning and welcome to Fifth Street Finance Corp.’s fiscal first quarter 2013 earnings call. I am Dean Choksi, Senior Vice President of Finance and Head of Investor Relations at Fifth Street. I am joined this morning by Leonard Tannenbaum, Chief Executive Officer; Bernard Berman, President and Alexander Frank, Chief Financial Officer.

Before I begin, I would like to point out that this call is being recorded. Replay information included in our January 15, 2013, press release and is posted on our website, www.fifthstreetfinance.com. Please note that this call is property of Fifth Street Finance Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited.

Today’s conference call includes forward-looking statements and projections and we ask you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. We do not undertake to update our forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website or call Investor Relations at 914-286-6855.

The format for today’s call is as follows; Len will provide an overview of our results and outlook; Bernie will provide an update on our capital structure and Alex will summarize the financials. And I will provide some high level commentary on the BDC sector. Then we will open the line for Q&A.

I’ll now turn the call over to our CEO, Len Tannenbaum.

Leonard Tannenbaum

Thank you, Dean. First I want to thank the entire team at Fifth Street who is very busy during December quarter working on our largest investment pipeline ever and ultimately closing a record $422 million in gross originations. Our December quarterly results demonstrated our focus on just in time capital where we narrowed the gap between raising and deploying capital to minimize earnings solution in the short-term while adding assets with attractive risk adjusted returns for the long-term.

We are pleased to deliver strong results of $0.28 of investment income in our first quarter of fiscal 2013 which is one penny higher than consensus. The Board is confident in our ability to maintain the dividend and declare monthly dividends through May at it’s January meeting equivalent to $1.15 annualized dividend payout.

We predicted M&A volumes would continue to increase through 2012. Although, overall industry M&A volumes were less than we expected the prospect for higher tax rates in 2013 which ultimately proved true, drove a significant increase in activities particularly dividend recapitalizations and refinances. Our overall pipeline continue to strengthen with activity accelerating in early November after the US election.

In late summer, we began positioning the balance sheet for a stronger pipeline through the end of the year by raising a combination of debt and equity to help pre-fund our pipeline. We're able to take advantage of frothy credit markets by utilizing our investment grade ratings to increase availability, reduce costs and extend maturities of our debt capital.

One, we issued $75 million in 12 year senior unsecured notes at 5.875% in October, which helped to ladder our debt maturities. Two, we expanded our syndicated credit facility to a current size of $425 million with 12 participating banks. And three, we lowered the cost of credit by 25 basis points and improved the terms in that facility.

We are committed to increasing leverage over long-term to our target of 0.6 to 0.7 times debt to equity excluding SBA debt by using a combination of revolving bank credit and using the unsecured debt market. We believe a mix of bank debt and longer-term unsecured debt is a prudent way for BDC to increase leverage.

Our first baby bond trades on the New York Stock Exchange under the Ticker Symbol FSCE and complements our existing bank debt due to it's longer maturity. The baby bonds are attractive sources of long-term capital, but we may issue unsecured debt in the future if market conditions warrant with different maturities to diversify our debt structure.

Our growth is creating attractive opportunities that were not available, but are now available to many of our peers and were not available to Fifth Street a couple of years ago. Our deep sponsor relationships formed over prior deals are leading to repeat business. As was evident at the end of 2012 when sponsors often chose to work with lenders they knew and trusted, given the end of the year deadline. These established relationships with equity sponsors are creating attractive lending opportunities for us.

The overall credit quality of portfolio remains healthy, although two assets did slipped to a three ranking and one asset went on picking on accrual. The total amounts of assets ranked three, four and five continues to be small at about 2% of the portfolio at fair value. These three assets along with the reduction in the fair value of Coll Materials led to a small decline in NAV from the September quarter. We initiated legal action related to Coll Materials so I am limited making further comments.

The March quarter is starting off slow which is an ordinary based upon prior years. Our origination teams remain active and we currently expect to be within our guidance range of $100 million to $300 million in gross originations per quarter despite the slow start. The demand for senior debt is very strong as banks and institutional investors are desperate for yields. This is creating attractive second lien in mezzanine opportunities as we have discussed on previous calls.

As a result, our portfolio shifted towards mezzanine and second lien with first lien assets ending the December quarter at the lower end of our target range of 60% to 80%. The mezzanine and second lien assets we are adding are larger, more established companies. These loans should generate attractive risk adjustment returns.

We anticipate staying within our target range of 60% to 80% first lien assts. Between these active senior market and our larger balance sheet, we are updating our guidance for anticipated quarterly prepayments to between $50 million and $100 million from between $25 million and $75 million per quarter.

As our balance sheet grows, we are able to originate larger deals and expand our product offer. We recently expanded our maximum hold size over $100 million from $75 million for certain sponsors. Our new larger hold size is about 6% of the current portfolio and will enable us to enter a market segment with fewer competitors and more attractive risk adjusted returns. We are also developing syndication relationships through capital markets desk which will enable us to create additional value to restructuring first lien last out securities for our balance sheet.

We also have expanded our emphasis on capital market transactions where our sponsor relationships underwriting expertise and market reputation create opportunities for us to agent and syndicate deals with a track of risk adjusted returns.

In 2012, Fifth Street agent hit $1.7 billion in transactions. We are excited about the opportunities in 2013 and beyond, we believe we are well positioned with solid asset performance and diversified low cost liability structure and institutional processes and platform. We believe there are opportunities for larger more sophisticated BDCs to gain market share in the upcoming years. We continue to focus on hiring and developing the right people to capitalize on these opportunities, and to utilize our substantial available investment capacity to fund them.

And now I will turn the call over to our President, Bernard Berman.

Bernard Berman

Thank you, Len. As we promised in our last earnings call, we closed the Material amendment through our ING-led credit facility. The amendment was closed on November 30th, with several subsequent amendments that added new lenders and increased the size of the facility.

As of today, we have 12 lenders in the facility and $425 million of committed capacity. When combined with our Wells Fargo and Sumitomo facilities, we have $775 million in flexible low cost bank credit. The amended facility features a 25 basis point reduction in the spread over LIBOR, higher advance rates across multiple classes of and securities and greater flexibility on eligible collateral, concentration limits and financial covenants. The improved terms are a reflection of the growth in the size of Fifth Street’s platform, the quality of our portfolio and our two investment grade credit ratings from Standard & Poor’s and Fitch.

We continue to work on reducing our cost of capital as well as improving the terms of and our access to debt capital. We ended the December quarter with leverage roughly flat versus the September quarter at 0.39 times debt-to-equity excluding SBA debentures. We continue to target leverage of 0.6 to 0.7 times debt-to-equity excluding SBA debentures.

We are making progress on deploying the leverage in our second SBIC fund. As of December 31, 2012; we had drawn $32 million of leverage under the second license. The interest rate on that $32 million as well as any additional amounts we draw over the next month will lock in March and be fixed for 10 years.

I'm now going to turn it over to our CFO, Alex Frank.

Alexander Frank

Thank you, Bernie. We ended the 2012 calendar year with total assets of $1.65 billion, an increase of $258 million or 18.6% quarter-over-quarter reflecting a record quarter of approximately $400 million of funded investments. Investments were $1.58 billion at fair value and we had available cash on hand of $37 million.

Net asset value per share was stable at $9.88 at calendar year end. For the three months ended December 31, 2012; total investment income was $51.8 million. The level of payment in kind interest, a key indicator of earnings quality remained a low percentage of total income at 7.2% of total investment income or $3.7 million as compared to 8.6% for the year ago period.

Net investment income increased 27% to $26.6 million for the quarter as compared to $21 million in the same quarter the previous year. We had five portfolio company refinancings during the quarter, all of which were exited at or above par.

Net unrealized losses, net of realized gains resulted in the decline of $8.7 million for the quarter or 0.6% of the investment portfolio. The weighted average yield on our debt investments was relatively stable at 11.99%. The cash component of the yield increased slightly in the quarter to 11.01%.

The average size of portfolio debt investment increased from $19.7 million at the prior quarter to $20 million at December 31, 2012. We originated $422 million of investments in the quarter in 20 new and eight existing portfolio companies, bringing the total companies in our portfolio to 92 at December 31, 2012. This compares to $95 million of deal closings in seven new and one existing portfolio company in the year ago period.

During the quarter, we also received $50 million in connection with the exits of five of our portfolio companies. This level of repayments is in line with our current expectation of approximately $50 million to $100 million per quarter, reflecting the increase in the size and diversification of our portfolio.

Approximately 96% of the portfolio by fair value consisted of debt investments, 62% of the total was in first lien loans and 70% of the debt portfolio was at floating interest rates. The investment portfolio continues to be well diversified by industry sponsor and individual company.

Our largest single exposure is to healthcare including pharmaceuticals at 21% of the total portfolio. The largest single individual company exposure is a low 3.2% of total assets and our top 10 investments represent 29% of total assets.

The investment portfolio continues to be of high credit quality and the credit profile was stable versus the prior quarter. We rank our investments in a one to five ranking scale and highest performing one in two rank securities were 97.6% of our portfolio versus 99.5% in the previous quarter and 98.1% a year ago.

During the quarter end at December 31, 2012; we had two investments in the portfolio Coll Materials and transfer a term loan B on which we had stopped deferring income as compared to one at September 30, 2012 and four at December 31, 2011.

Our board of directors has declared monthly dividends for March of 2013 through May of 2013 of $0.0958 per share reflecting a continuing annual rate of $1.15 per share.

Now, I'll turn it back to Dean.

Dean Choksi

Thank you, Alex. In the December quarter, we made multiple improvements in our liability structure, which is among the most diversified in our sector. However, based on past conversations with investors and (inaudible), I did not believe in differentiate BDCs much based on liability structure. On today's call I am going to talk briefly about why diversified capital structure is important. One, it enables the BDC to offer a multiple debt financing solutions and two, risk management. Having multiple sources of debt capital enables a lender like Fifth Street to operate different financing solutions while optimizing returns.

For example, each of our five funding sources has different costs, collateral requirements and advanced rates. Our Wells Fargo credit facility is sometimes the most efficient way to finance first lien loans. Another facility may be more efficient to finance mezzanine because it offers higher advance rates against mezzanine assets.

By utilizing multiple funding sources, we are able to create different ways to optimally fund our assets which means we can be more competitive on pricing loans for our sponsors while generating higher returns for our shareholders.

Our investment grade credit ratings are also important because they enable us to issue attractively priced unsecured debt like our recent 12-year baby bonds. They also reduced the cost of our bank credit facilities because the bank’s capital charge is less for an investment grade borrower than a non-investment grade borrower. This provides us a cost of funding advantage over our non-rated peers. Combined, these attributes help make Fifth Street a choice lending partner for leading sponsors.

Risk management is the other reason to have a diversified capital structure and BDC have struggled the most through the credit crisis with where they were too reliant on one lender or the intuitional debt market and were unable to roll their debt at maturity. BDC can minimize funding risk. They are working with multiple lenders and maintaining excess debt capacity. Debt maturities should also be staggered in the event that capital markets are not open at attractive prices at maturity.

Thank you for participating on today’s call. Regina, please open the line for Q&A.

Question-and-Answer Session

Operator

(Operator Instructions) Gentlemen your first question today is from the line of Stephen Laws with Deutsche Bank.

Stephen Laws - Deutsche Bank

I guess in the one question follow-up, I will just put two out there right now and let you guys set, but can you talked about the competitive landscape maybe as you move to the slightly larger deals does it change materially ahead of the returns kind of develop as you are able to take advantage of being a larger platform and sourcing larger opportunities? And then the touch on the baby bond as you know kind of, as you look out going forward what do you guys view as kind of an optimal capital structure for the company as you look to grow from here? I appreciate your time. Thanks again.

Leonard Tannenbaum

So the first question, we are finding if there is a bit of a whole between $125 million or $150 million whole size, we call it $200 million, so $1 to $200 million whole size. And the reason our whole developed is not many firms have the investment capacity and balance sheet to be able to hold that size deal and then syndicated down, most are $25 million or $30 million players, they play for an agency or agency fee but the equity sponsor would rather pay another 50 to 100 basis points not have the potential flex, and know that they are done at that whole size.

So, we’ve always wanted to enter that market. It’s a terrific risk adjustment return. We are able to provide different leverage alternatives in that type of size; we are talking about EBITDA about a $30 million company; so it’s a very stable large established company. And we are very pleased to be able to do one or two of those at a time. Of course, lumpy transactions it’s like hunting elephants. So, they come, they can come in groups and they can come not at all in the quarter. So it may create a bit more lumpiness in terms of gross originations.

The second question was what's the optimal right size of the balance sheet capital structure. I think we are actually little bit behind the curve in issuing baby bonds compared to some of our larger peers. Aries has been very aggressive issuing unsecured debt of different maturity levels, Apollo did some. I that it’s a great idea for anybody who thinks rates are going to go up eventually. The other great thing about unsecured debt is it will add additional collateral for our secured debt facilities, so it gives us a lot more leverage options, leverage flexibility, advanced rate flexibility.

But I think the most important thing as you prepare for another cycle in the next five or six or seven years, this is the type of debt one can feel very comfortable with in cycle because there's no covenant, there no recourse, its unsecured debt and you can feel comfortable with that type of leverage versus I know that everyone’s commented that we've been slightly levered through today and one of the reasons as we didn't have access as we do today to good unsecured debt possibilities at attractive interest rates.

Operator

Your next question today comes from the line of Robert Dodd with Raymond James.

Robert Dodd - Raymond James

Just two on the credit side, I know you love these kinds of questions. The first one simple trends rate term you put it on picking non-accrual, schedule of investments listed as a 12% cash flow and can you clarify.

Leonard Tannenbaum

Alex?

Alexander Frank

Yeah, the terms of the loan have been amended to a [take security], so we are working with the company to allow for that but we are not accruing the take into interest, into income currently.

Bernard Berman

Robert if you look right below the schedule of investments you will see a listing of the amended terms on the loans in the schedule and transfers listed there.

Robert Dodd - Raymond James

Second one just again on the two that moved to level three especially (inaudible) hospitals both of those were originated in the third calendar quarter 2010 and that's about third of the capital, those originated in that quarter. I mean is there any connection between the two, I mean were they at the same of the same originator. I mean the question obviously is a systematic problem with that quarter or just coincidence.

Leonard Tannenbaum

I think its more of a coincidence.

Operator

Your next question is from the line of Greg Mason with Stifel Nicolaus.

Greg Mason - Stifel Nicolaus

Actually just a follow-up on Robert’s question the credit trends, can you give more kind of your general perception of the credit trends in the portfolio, what are you seeing in terms of revenues and EBITDA movements overall for the portfolio.

Leonard Tannenbaum

First of all I will comment that one of the really good things about the problems today versus the problems years ago is on both of the deals that we just mentioned. We don't feel that they are zeros or anything close to zeros. We are looking actually at very high recoveries if not full recovery on both of those loans. We just don't know yet and so we are being a little bit cautious and placing them into the watch list category. And that's very different than many than a bunch of years ago when our EBITDA was $3 million and some of these loans and that goes to $2 million at the end of the company. So we are cautiously optimistic that we've got a very strong portfolio team that so far this past year led by Brian Finkelstein has really done a terrific job of making sure the portfolio is very proactively safe. As for credit trends, most of the companies by the vast majority are doing quite well.

Unfortunately, some of them are doing too well and we're getting replaced out by cheap banks financing when EBITDA does extremely well in some of the companies, and so you are going to see some repayments. The good news about these companies that were getting repayments on this, fortunately for us, we want some equity and so the equity really starts jumping in value when the high cost debt gets replaced by [L400] debt. So even though credit trends are doing well, I feel like finally we are having some equity that’s doing well enough to hopefully generate some capital gains in the near future.

Greg Mason - Stifel Nicolaus

Then for my follow up; the fee income was obviously very robust this quarter. If we think about that going forward, have you changed the way that you have looked at fees. I know, historically you amortized them over the life of the loans. With the new areas you are moving in to, is that changing the fees where you are able to take more upfront or just how should we think about that as we model out forward the volatility in the fee income lines?

Leonard Tannenbaum

Up market loans are different characteristic of fee recognition. There are still some amortization of fees. Some of them are structuring fees, so that you take them in to income. Sometimes when you flip a loan and this has been an interesting market for originators where we're able to originate loan at 98 and get out of it at 101 or 102 a week. The increase above 100 is not even income. It goes below the line. It’s a capital gain. So will need to see that in NII, but it's great for the shareholders, right. It's the way it rebuilds your NAV. So there’s all different types of characteristics, but as you move up market, yes, loans are definitely different.

Greg Mason - Stifel Nicolaus

So, we should expect more kind of upfront fees flowing into income as you move up market versus the amortized fee.

Leonard Tannenbaum

I think that it’s going to be consistent every quarter amount of fees. So people think that our fees are one-time event, no it’s just normal course of business and every quarter we can originate loans and every quarter we are going to get repayments and there is going to be fees in every single quarter.

Operator

Your next question is from the line of Casey Alexander with Gilford Securities.

Casey Alexander - Gilford Securities

Following kind of a similar line the, capital gains were fairly nominal but you say that you received about 50 million in exits which were exited at par or above and made 33 million in sales exited at par and above. Now some of that above par actually is showing up in fee income as oppose to capital gains?

Alexander Frank

That’s correct, Casey this is Alex that’s correct many of the transactions are structured so that repayments result in exit and repayment fees that are properly reflected under GAAP as fee income.

Casey Alexander - Gilford Securities

Okay, that explains that for me, thank you. Secondly, your pick interest as a percentage of the total investment income, can you tell me where that kind of compares with what you think is your peer group and sort of how do you attribute having a lower level as a percentage of total investment income. Is it in the manner in which you are structuring or just some color on that please.

Leonard Tannenbaum

Sure, I think it compares it’s among the lowest of our entire peer group and there are some reasons for that. One, some of our peers have large all PIK securities in the portfolio and magically accrue income of an all PIK security, obviously an all PIK security has no chance to fall almost that the interest rate of anything and it can last the long period of time.

We do not have any large all PIK securities in the portfolio. Two, most of our securities today are floating, 70% floating and a lot of them are upper middle market securities. And those types of securities really don't have a lot of pick them. There’s much more PIK income in smaller and lower middle market securities and lower market securities, so that's another reason.

Three, typically with the second leaner mezzanine loan and not really with the first lien loan and so it’s only 30% of our secured or 38% of our securities or either equity 4% or mezzanine or secondly debt, there’s far less securities that have a PIK opponent to them.

Operator

(Operator Instructions) Your next question is from the line of Jonathan Bock from Wells Fargo Securities.

Jonathan Bock - Wells Fargo

When looking at the new investment that you made this quarter, it’s obviously very active. Could you maybe give us a sense of the amount of loans that were directly originated? I know you built at a very large platform of direct originators relative to the number of deals that were perhaps maybe more syndicated or I use that loosely in the middle market, but say perhaps part of a larger debt syndicate that is all going to finance these portfolio companies?

Alexander Frank

Sure, that's an interesting differentiator, if you look at some of our peer group, it’s amazing to me that they don't have a lot of employees. We just crossed our 50th employee here at Fifth Street. We really have built a very robust origination platform and underwriting platform. And as you pointed out when you participate or even agents some of the larger deals, you don't need as many people. But if you are going to be the sole originator on a platform, you need a lot of people moderating, structuring and evaluating every single deal.

We’ve currently originating as almost as sole originator of our three to one over participations in middle market to upper middle markets transactions. So still the vast majority, call it 75% of our deals are originated versus originated solely versus agenting typically as you saw with $1.7 billion as agent in one of the larger facilities with terrific partners like Madison or NXT or GE, we are really doing a terrific job also (inaudible).

Jonathan Bock - Wells Fargo

Okay. So, the target again maybe three proprietary deals to every maybe one more clubbed out or clubbed that light if you will?

Leonard Tannenbaum

No, I would say club that light and I would still point that these are sponsored; these are almost 90 plus percent sponsored transactions. We are still not really tapping the unsponsored universe. These are really coming out of our equity sponsors even the clubbed ones are the equity sponsors pushing for allocation and participation in these deals, so it’s still a sponsored driven.

Jonathan Bock - Wells Fargo

And I noticed in your credit quality ranking there was obviously a meaningful upside to number one investment, highlighting that as you mentioned deals were performing better than expectations, could you perhaps give us a sense of maybe prepayment or call protection on those investments is generally once these one investments increase that's usually a sign that repayments are typically do follow one or two quarters thereafter?

Leonard Tannenbaum

I agree, I think the one rated securities are good indicator of potential prepayments. And what I think we've seen is even though we have 101 or 102 or even 103 call protection, when these companies do well you are getting prepaid any (inaudible) which is they are happy to pay you and its just, that's the way it is. We do have exit fees; we do have equity in a lot of these different transactions. So there's another way for us to make money but we are never happy to lose a really good loan and that's just part of the business.

Operator

Your next question is a follow-up question from the line of Casey Alexander with Gilford Securities.

Casey Alexander - Gilford Securities

I'm sorry, I kind of fell asleep at one point in time, can you just repeat for me what, you mentioned about the level of originations in the existing quarter end and the level of repayments in sales?

Leonard Tannenbaum

I remember talking about you (inaudible) of the existing quarter being the March quarter?

Casey Alexander - Gilford Securities

Yeah.

Leonard Tannenbaum

We didn't mention anything till the…

Casey Alexander - Gilford Securities

Do you have any color on that?

Leonard Tannenbaum

We felt like and I think we did mention that we updated our range to $50 million to $100 million of repayments.

Casey Alexander - Gilford Securities

Right.

Leonard Tannenbaum

And we also felt like we are going to be within the range of our previous guidance of $100 million to $300 million of cost originations.

Casey Alexander - Gilford Securities

I got that I thought maybe you had thrown out some specific numbers to-date. So I apologize for that.

Operator

Your next question is follow-up question from the line of Jonathan Bock with Wells Fargo Securities.

Jonathan Bock - Wells Fargo Securities

Just one last question so when we talk about the seasoning of those number one rated investments, would you consider those investments perhaps more seasoned than the very typical loan to portfolio thus call protection diminished or maybe a little bit greater as these are deals that were priced higher and now in a floppy market will likely be taken out for a nice gain to you and your shareholders?

Leonard Tannenbaum

I think, actually the repayments were all over the board. One of them was a year old investment, where the EBITDA just start to do very well. One was a multi-year investment. There is really no rhyme or reason to it. Typically, we have stronger call protection in the first three years and then almost zero after that. So, I think there’s a rule of thumb that that’s a pretty good way to think about it.

Jonathan Bock - Wells Fargo Securities

And just maybe one last follow up. In terms of back end leverage, this is a phenomena that obviously select group has been able to utilize to the benefit of their shareholders overtime and we do get that. Can you speak to the opportunity that you are seeing for Fifth Street to perhaps backend lever some of your more senior, senior securities or is this a market perhaps you are going to layoff for a while as you are perhaps are a little bit more focused on second lien and subordinate investments, at least evidence by the last quarter.

Leonard Tannenbaum

I think backend leverage is a terrific way to use the yield of a first lien security, while keeping control of the first lien security. And I know, some of our peers have spoken very highly of it and I have to agree. Developing back leveraging partners, we've been working on for the last three to six month. We feel like we have three good partners that are ready to do that with us. It's a matter of finding the right deals. What it does allow you to do is reduce the rate. You need to charge for those steels. For example, you take a $30 million EBITDA company at 4.5 times deep, and you can charge 8% on that first lien loan and through back levering generate an attractive return to last out first lien. The asset that you will see in the book will vary depending on how much back leverage we've done. So you won't see any $120 million transaction. You will see a $60 million or $70 million transaction.

Operator

Ladies and gentlemen as there are no further questions in the queue at this time, this concludes the question and answer portion of today’s program. I would like to turn the call back over to management for any closing remarks they would like to make.

Leonard Tannenbaum

Thanks everyone and see you next quarter.

Operator

And with that ladies and gentlemen we will go ahead and close out. Thank you so much for your participation today. You may now disconnect have a great day.

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