Medley Capital's (MCC) CEO Brook Taube on Q1 2016 Results - Earnings Call Transcript

| About: Medley Capital (MCC)

Medley Capital Corporation (NYSE:MCC)

Q1 2016 Earnings Conference Call

February 9, 2016 10:00 AM ET

Executives

Sam Anderson – Head-Capital Markets and Risk Management

Brook Taube – Chief Executive Officer and Chairman-New York

Rick Allorto – Chief Financial Officer and Secretary-New York

Analysts

Mickey Schleien – Ladenburg

Kyle Joseph – Jeffery

Troy Ward – KBW

Jonathan Bock – Wells Fargo Securities

Josh Bolton – Credit Suisse

Christopher Testa – National Securities Corp

Christopher Nolan – FBR & Company

Operator

Welcome and thank you for joining the Medley Capital Corporation’s Fiscal First Quarter 2016 Conference Call. I like to remind everyone that today’s call is being recorded. Please note that this call is property of Medley Capital Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN provided in the Company’s earnings press release. At this time, all participants are in a listen-only mode, but will be prompted for a question-and-answer section following the prepared remarks.

And now, I would like to introduce Sam Anderson, Medley’s Head of Capital Markets and Risk Management, who will host this morning’s conference call. Mr. Anderson, you may begin.

Sam Anderson

Thank you, operator. Good morning everyone and thank you for joining us today for our first fiscal quarter 2016 earnings conference call. I’m joined today by Brook Taube, our CEO; and Rick Allorto, our CFO.

Before we begin, I want to call your attention to the customary Safe Harbor disclosure in our press release, regarding forward-looking information. Today’s conference call may also include forward-looking statements and projections, which are subject to risks and uncertainties.

Any statement other than the statement of historical fact may constitute a forward-looking statement. Please note that the company’s actual results could differ materially from those expressed by any forward-looking statements for any reason, such as those disclosed in our most recent filing with the SEC.

We do not undertake to update our forward-looking statements unless required by law. To obtain copies of our latest SEC filings and press release, please visit our website at www.medleycapitalcorp.com.

In addition, our first fiscal quarter 2016 investor presentation is available in our Investor Relations section in the Events/Investor Presentations section of the company’s website.

I would now like to turn the call over to Brook.

Brook Taube

Thank you, Sam. And welcome everyone to our call this morning. Today we announce the financial results for the quarter ending December 31. And we reported net investment income of $0.28 per share and net asset value per share of $10.01. As we announced in our press release the Board of Directors approved the dividend of $0.30 for the quarter ended December 31 [ph]. This dividend will be payable on March 18 to shareholders of record on the February 24.

During the quarter ended 12/31, we repurchased a 143,000 of our shares at a weighted average price of $7.68 and that brings the total shares repurchased to 2.5 million. Our most recent round of share repurchases was completed by our $50 million 10b5-1 repurchase program. And as we previously stated this 10b5-1 program repurchases stock up to our most recently published NAV per share on a programmatic basis. And the amount of repurchases during any given quarter will depend on liquidity that’s primarily driven by the role of our existing portfolio.

During the quarter, we raised $70.8 million of five-year 6.5% senior notes from both institutional and retail investors. And subject to the quarter end the underwriters exercised $3.3 million of the greenshoe, bringing the total capital raised in this note to $74.1 million.

Turning now to the portfolio, $1.1 billion portfolio remains diversified, it consists of approximately 91% senior secured loans across 68 portfolio companies and over 20 industries. In addition, we remain diversified geographically across the U.S. Our energy exposure is limited to four positions and represents approximately 5% of the portfolio. Specifically, these four borrowers are service providers across multiple geographies both domestically and globally. The loan positions are senior secured first lien and benefit from credit protections including covenants, amortization and excess cash flow sweeps.

Clearly, the energy markets remains challenging and the borrowers are feeling this impact. We are in active dialog with all of the borrowers and continue to monitor each of these positions very closely.

As of December 31, non-accruals represented approximately 4.2% of the fair value of our portfolio and that consisted of seven positions. During the 12/31 quarter, we added four loans to the non-accrual status and these include AAR which is one of the energy names, as well as Essex Crane, Lydel, URT.

We’re working closely with each of these portfolio companies to affect a beneficial outcome for MCC shareholders. We continue to see opportunity in the market today, however at this point we see enormous value in MCC stock and are committed to prioritizing the share repurchase program as it provides immediate value to the MCC share holders.

I’d like to turn the call over to Rick now to review our financial results for the quarter.

Rick Allorto

Thank you, Brook. For the three months ended December 31, the Company reported net investment income of $15.7 million, or $0.28 per share and a net loss of $39.2.6 million, or $0.70 per share. The net asset value per share was $10.01 at December 31, compared to $11 at September 30.

For the quarter, total investment income was $34.4 million and was comprised of $31.4 million of interest income, and $3 million of fee income.

Total operating expenses were $18.8 million, consisting of $9.3 million in base and incentive management fees, $7 million in interest and financing expenses, and $2.5 million in professional fees, administrator expenses and general and administrative expenses.

For the quarter, the Company reported net unrealized depreciation including the provision for income taxes of $60.2 million and a net realized gain from investments of $5.4 million.

As of December 31, the Company’s total debt outstanding equalled $587.5 million, including $89.2 million outstanding on a revolving credit facility, $174 million term loan payable, $174.3 million in notes payable and $150 million of SBA debentures. The Company’s debt to equity ratio excluding SBIC debt was 0.76 times at 12/31.

That concludes my financial review. I’ll now turn the call back over to Brook.

Brook Taube

Thanks, very much Rick. We can now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question will come from the line of Mickey Schleien, Ladenburg.

Mickey Schleien

Good morning, Brook and Rick. My first question is, sort of a high level question, we’re getting such mixed signals on the economy, while most of the BDC Management teams, I speak to have indicated that their borrowers are generally doing, okay apart from energy and to fall see [ph] manageable also apart from energy. But on the other hand the credit and equity markets are pointing to a sharp slowdown in the economy. So I understand that you will always under right to a slow economy or even a recession. But has your perception of where we are in the credit cycle, changed in the last few months? And if it has, has that affected what type of credits you’re more interested in now than perhaps a few quarters ago.

Brook Taube

Sure Mickey, this is Brook. I think it’s fair to say that we do share the view that the credit markets have changed on the margin. I think the way we’re looking at that as we look at new originations include a few things: one is, borrowers that have durable revenues and earnings that we’ve seen perhaps through prior cycles or that we’re comfortable with, less aggressive structuring, as well as more participation on the equity side. These I think would be considered naturals steps if you are looking forward in a more defensive manner. We haven’t changed our view that it appears to be a sensible time to underwrite capital is clearly less available. We’ve yet to seen to see some of the pricing dynamics filter through. Now that is to say that appears to still be capital in the middle market our view is that the amount is going to be less not more and there typically is a lag.

So some of the price action and then the overall yields in the public market have not flowed through completely yet to the middle market, but we’re being careful and holding our dry powder in anticipation of more favorable opportunities as we look out in the quarters ahead.

Mickey Schleien

Okay, I appreciate that. And a couple of sort of more specific questions. Can you give us some background on what happened at Essex Crane to drive it to non-accrual, because it was marked almost at par last quarter. And my last question is what exist caused, or exists caused the realized gain this quarter?

Brook Taube

Sure let me start with the Essex and then I’ll have Rick take you through the detail. Obviously this is a substantial discount from prior quarter on the mark. We see that the companies de listing. They’ve experienced defaults and they’re currently operating under an amended credit agreement, that we are party to. All the lenders are working with the company and its Chief Restructuring Officer, as well as the advisors there to improve the operating and financial performance. And then also there’s obviously strategic initiatives underway there that we support to maximize our value.

But in the prior quarter as the Company’s financial position and the overall market environment deteriorated, so too was the sort of the expected value of our recovery here.

Rick Allorto

And Mickey, this is Rick regarding the realized gain for the quarter, that was entirely, almost entirely driven from our realization of Meridian. That is small equity position as well as a loan that we paid and the equity was existed at a gain.

Mickey Schleien

Thanks Rick. Those are all my questions. Thank you for taking them.

Rick Allorto

Thanks, Mickey

Operator

Your next question will be from a line of Kyle Joseph, Jeffery.

Kyle Joseph

Good morning guys, thanks for taking my questions. Just out of hand, turn around turn off key, in terms of the unrealized depreciation on the quarter, how much of that is just related to sort of credit spread movements versus actual performance of the company and is the vast majority related to those that you placed on non-accrual in the quarter?

Brook Taube

Yes Kyle this is Brook. Yes the majority did relate to Essex, URT, Lydell, AAR it’s hard to calculate specifically what was related to credit versus market. But I would characterize the move the majority were related to credit specific events. Although there certainly was an impact overall due to rising yields in the market. Market yields are an input overall, but the majority – a majority of it was related specifically to the credits we mentioned and a couple others.

Kyle Joseph

All right. And then can you give us an idea for how much buyback capacity you guys have left and how your outlook for buyback changes as a result of rising spreads in the market?

Brook Taube

Sure. We’ve repurchased approximately $22 million under our buyback program currently at the $50 million 10b5-1, we intend to complete that. And we expect to have that capacity as we look forward in the quarters ahead.

Kyle Joseph

Great, thanks for answering my questions. That’s helpful.

Operator

The next question will come from the line of Troy Ward, KBW.

Troy Ward

Great, thank you. Brook you talked about the new non-accruals and you mentioned URT, I show that is already being on non-accrual, I think the fourth one would be Brantley Transportation is that sound right a new one for the quarter?

Brook Taube

That's correct.

Troy Ward

Okay and then. One of the questions I had and again I was going back to make it a little bit the big write down we saw in a couple of these Essex being the biggest one. The footnote that you have on there, on a lot of your first liens footnote 12 was a portion is sold via participation agreement, when you're selling off those participation, are you selling out into a lashed out position? So you're actually lowering your priority on those first liens.

Rick Allorto

No, we're not, Troy. This is Rick. That’s associated with the co-investment with a private – one of the private vehicles. So Medley Capital Corporation is taking the – as an example $10 million position and then through a participation discharging, for example, purposes [Audio Gap] $5 million out to one of our private funds.

Troy Ward

Okay. So just through co-investment and so and when we see a senior secured first lien in those, your true first lien, you're not last out in any of your first liens.

Rick Allorto

That's correct.

Troy Ward

Okay, great. And then just on the income statement this quarter obviously with all the new non-accruals just a couple of questions. Where all of the new non-accruals on for the whole December quarter so effectively we got no income from those? And also where there any – was there any interest income in the quarter that was reversed out from prior quarter? Just trying to get a feel for kind of was it a clean number on the topline from interest income perspective?

Rick Allorto

The first question Troy is yes, there was non-accrual for the full quarter. And then the second question, there was just a time very small, small amount of reversal in the current quarter related to prior periods.

Troy Ward

Okay. So materially it’s a pretty clean number.

Rick Allorto

Correct.

Troy Ward

Okay. And then lastly just obviously you made a lot of changes to the management agreement in October, I think, it was and just again applauded the team for taking those tough steps and the board for making those decisions especially putting back it, now putting in the total return hurdle on the incentive fees. So thanks for the time guys.

Brook Taube

Thanks, Troy.

Rick Allorto

Thank you, Troy.

Operator

The next question will be from a line of Jonathan Bock, Wells Fargo Securities.

Jonathan Bock

Good morning and thank you for taking my questions. And my apologies if this was asked. But Brook, when we look at unrealized losses today, the kind of transpired, would it make sense that near-term maybe as you were valuing the portfolio kind of late in December that these marks would closely coming to fruition. And so you were absolutely proactive in choosing to align the NOI incentive fee starting the January 1, 2016, any view as to whether or not you would be willing to make those NOI incentive fee changes retroactive to 930 considering shareholders just lost $1 in unrealized depreciation on NAV?

Brook Taube

Sorry, Jonathan. I’m not sure what the question is specifically.

Jonathan Bock

Okay. So you plan to align the NOI incentive fee starting January 1, 2016. Yet I am under the impression that the losses investors experienced as of 12/31, right in the fourth quarter, those losses will not be considered in the NOI incentive fee, am I correct?

Brook Taube

Yes, that is correct, Jonathan.

Jonathan Bock

Why wouldn't you want to go ahead and make that retroactive? Or start the NOI incentive fee alignment as of 930, to allow shareholders the benefit that comes with that depreciation in the form of a lower incentive fee because you’re doing it anyway?

Brook Taube

Sure. I think I understand, what your commenting from, and just to clarify, the evaluation process that we go through was basically happens at the end of the year and into January. And so just to clarify we didn't really have visibility.

Jonathan Bock

That’s it fair enough. My apologies just as the markets were trading down and things [Audio Dip], I just think it in general and maybe [Audio Dip] we could just start today would it make sense if you're aligning the fee henceforth and forever more to just include last quarter's to give your shareholders the additional benefit.

Brook Taube

Sure. Now I see where we’re coming from, sorry. So look, we began our dialog internally on this overall matter of appropriate level of fees. And also I think the core issue that you're referring to which is alignment.

Jonathan Bock

Yes.

Brook Taube

Of interest to use your word. And just to kind of to remind you, when we did our IPO five years ago, we had a fee agreement that’s obviously as you know highly disclosed and what I would call at the market, it still seems to be the majority so our legacy fee structure. So we embarked on a strategic plan to consider that. We looked at it carefully. It’s a process we went through internally as well as with the Board. And we chose to implement it effective Jan 1. And we communicated that and messaged that prior – early in December. But the plan was put in place before that.

So I would just say our intention was clear, our plan was clear, the message was clear. And we’re following through on the commitment that we've made.

Jonathan Bock

That's fair. And the shareholders do appreciate the move Brook. And please don't want to take away from that, it is very valuable and a very shareholder-friendly proactive move. And sometimes markets just move against it. That's just the nature of the business. And then the next is questions as it relates to some of these near-term maturities that are still kind of head to par, close to par, RCS, Aurora [ph], Merchant Cash. Just as we get a bit closer to that maturity date, these are relatively high rates it's a bit of a volatile environment, how would you describe the liquidity situation at several of those companies that are nearing maturity?

Brook Taube

Sure. So look I just take that at a high level, I don't know if you had a specific question on the name. But if I look at our 2016 maturities, that’s approximately $100 million by memory. We’re obviously in active dialog with all the credits those are included. I expect those to payback on time. I can’t predict the future but in those specific credits to the extent that there was a refinancing of any kind and we were a participant in any way as we look here today we do not expect that a financing where we were or were not a participant would at this moment looking for a result in any kind of a mark either.

Jonathan Bock

Okay.

Brook Taube

So just to clarify, we do expect to get payback to the extent that the refinancings look different. And I would not want to make any assumptions about availability of credit, et cetera. This obviously is more challenging now than it was even a quarter ago, the overall markets. But just want to make that one clarifying point.

Jonathan Bock

I appreciate that. And just to the last question. So from a sponsors right effectively which it's a non-sponsored transaction but to describe it for folks this would be where a portfolio company that a BDC would lend to but basically you’re lending to it on a senior secured basis you take that, you have the collateral. And then eventually you'd be waiting for an equity check to come into the company from a PE firm that is effectively starting, right.

And the question that we have is Brook, are you familiar with the fund list sponsor concept clearly you our but have you funded fund list sponsored deals? And understand I’m not saying a non-sponsored deal, I know you can bifurcate between what a non-sponsored deal is and a fund list sponsored deal is, they're both one and the same your underlying Company, your first lien, you're getting a high rate. But any clarity, or discussion or balance you can give us on the fund lists sponsor concept within the portfolio?

Brook Taube

Yes, that's a good question, Jonathan. I did actually take a look at the report you wrote. And just to clarify and to be specific, I'm going to use a high-level comment which is to say we do have fund list sponsors that we look to do business with. And as I think about a few that are in the portfolio today, the characteristics are fund list sponsor, 60 deals, 30-year track record. So not an equity check. But backing a group – does this – that’s how we think about it.

With respect to your piece, I took a quick glance at it and I think if I remember from recollection, you referenced 12 investments. And I checked on that nine of those 12 have a traditional sponsor.

Jonathan Bock

Okay.

Brook Taube

So it would be like three of them would be fund lists but those three of those nine had track records. One of those was an asset based loan, so I think it's not relevant given the sponsor versus non-sponsor and then two other companies where we have meaningful equity positions today. So I see where you're coming from the fund list sponsor business for us is not an equity business, it's backing a group that has experience. That’s the strategy, doesn’t always work out. In one case I said we do have a meaningful – two positions we have meaningful equity and we’re looking, those look positive to us as we look forward.

Rick Allorto

And we appreciate it, Brooke as the balance that we were given is you just kind of look and say what first lien investments have higher than average rates depending on what average is and there that’s kind of the list. So thanks for the clarity and we’ll kind of put this, I mean non-sponsored lending is a great focus for your business. No one taking – a lot of money can be made there. And so we appreciate the additional clarity and do understand that there’s a lot of returns to be gained from investing there smartly. So thanks again.

Brook Taube

Thanks Jonathan.

Operator

Your next question will be from a line of Douglas Harter, Credit Suisse.

Josh Bolton

Hey guys this is actually Josh Bolton filling in for Doug. Just one quick housekeeping thing, looks like there was an uptick in prepayments in the quarter and I’m just curious any reason, specifically that you can point to on those and then maybe any guidance around how we should be thinking about prepayments going into the 2016? Thanks.

Rick Allorto

Sure, at a high level we obviously have some visibility on deals that are looking to refi. You look back into some of the positions that were in the back half of 2015. Nothing was a particular surprise other than the high level. I think it’s nice to see that there is continued activity refinancing as well as corporate activity. Whether that signals a more positive, backdrop than we’re seeing in liquid markets is a separate issue. It’s hard to read those tea leaves.

We said over time that our expected role would be around 15% of a portfolio, that maybe as high as 20% in any given year. Obviously there’s a range, so that sort of an expectation. It seems intuitive looking forward in a tight credit market that that would be on the lower end or maybe lower than expected, but also in markets like this we’re beginning to see more strategic activities at a high level you would say if M&A cycle on the lower and middle market you see people looking at small acquisitions, cost leverage, ex cetera.

So I don’t want to be ambiguous in the response, I think, our expectation will be to be at the lower end or maybe inside on the lower end of that range in terms of expected repayments, but there will still be some. And if it was, on average it wouldn’t surprise us.

Josh Bolton

Great, thanks.

Operator

The next question will come from the line of Christopher Testa, National Securities Corp.

Christopher Testa

Hi, good morning thanks for taking my questions. Just first, where does the pick up and amendment fees come from with portfolio company or companies was that attributable to?

Rick Allorto

Hi Chris, this is Rick. I don't have the detail directly in front of me I’ll follow-up with you.

Christopher Testa

Okay, great. And just as you have plenty of buybacks left to do given more the stock is on the NAV discount, even some of the new$10 per share, now that you reported. Are you planning on lowering the credit facility and term loan facility balanceactively this quarter, with repayments coming in an order to prioritize your purchases? Or are you looking to just kind of do that on a smaller more measured basis?

Rick Allorto

Chris let me just clarify, was your question would we use pay downs to buy stock and not amortize the credit facility?

Christopher Testa

Yes, If you would you pay downs to essentially lower the balance sheet leverage and also to use that to repurchase stock?

Rick Allorto

Sure, that’s a good. Yes that’s clear now. I think we said last quarter and I’ll reiterate it now, we intend to pursue the share repurchase. Again that will be based on liquidity. We also have the intention of lowering the overall leverage on the balance sheet.

Christopher Testa

Okay.

Rick Allorto

So we’re going to do both and I think you should expect to see both as we look forward in the quarters a head.

Christopher Testa

And I know this is more of a Board decision and you haven’t exhausted the repurchase program yet, but assuming that the stock remains heavily discounted, should we be anticipating as an analyst community renewal of a further authorization of repurchases?

Rick Allorto

Outside, did you say removal or renewal Chris?

Christopher Testa

Renewal, renewal.

Rick Allorto

Sure. We’ve commented in the past that we intend to pursue this $50 million. Our expectation as we look at the market when that’s complete and make a decision at that point, looking to stock is attractive, we’ve demonstrated a willingness to purchase it and we’re going to continue to do that and we’ll look at the future when we get there. And if it’s as attractive, would love the option of continuing

Christopher Testa

Given the concentration geographically and in the Southwest, would you characterize a lot of non-oil and gas companies as having an indirect exposure were as most of the employees of these companies are employed within oil and gas. How do you kind of assess that risk, its not oil and gas directly per se?

Rick Allorto

Good question. We do not, as we look at the portfolio have these – on these correlated risks that we see. They could extend to economic issue and a consumer issue; we are exposed to those like everyone else. But now and I would not infer from the geographic concentration that there’s underlying exposures there.

Christopher Testa

Okay. And my last question. Just with a couple of non-accruals Omnivere and United Road Towing their controlled positions, has there been any progress that you’re able to discuss here on the call with regards to some what you’re able to do to help those companies turnaround and what if any progress has been made with those?

Rick Allorto

Sure, with respect to URT, as we said on our prior call that continues there are weak industry conditions and there is litigation. I can't comment further for that reason on URT at this point. Other than to say we actually are hard at work, we’ve got a dedicated team and we’re focused on maximizing value there.

With respect to Omnivere we do have a majority position there in the company. I’ve said this in the past, I repeat it there are a leading provider of a eDiscovery and legal staffing services. So the clients for Omnivere includes major law firms Fortune 1000 companies, as well as to a lesser extent federal and state courts throughout the U.S.

This quarter, which is recently this was announced publicly, we supported their Omnivere’s acquisition of a company called Kiersted Systems. They’re a leading provider of the eDiscovery technology and services that’s a platform. They have certain certifications that are required as you go larger in the customer base. So this was to further enhance, Omnivere’s, I would call it a full service product offering in their market position. This remains a fast growing industry, we’re at hard at work with this management team and we’re going to continue to help drive value in the business, in a business that we think is attractive. And there remains a lot of private equity activity here.

So we have a lot of work to do at Omnivere, but we’re supporting it and looking forward to that position. And what upside there might be as we – as the company develops in the year over the course of this year and next.

Christopher Testa

Great, thanks for taking my questions.

Operator

Your next question will come from the line of Christopher Nolan, FBR & Company.

Christopher Nolan

Hi. Thanks for taking my questions. What is the peak that equity ratio you guys are looking at now?

Rick Allorto

Well we said previously and I will stick with it, that our target range is 0.6 to 0.7. It’s a peaked up a little bit this quarter as we’ve continued with the buyback as well as the adjustments in NAV. I think we were asked a question previously we expect to continue with the buyback and we also expect to reduce the leverage. That will be back down into that range as we look forward.

Christopher Nolan

Any update you can provide on the second SBA license?

Brook Taube

No, there’s no update at this point, they are working on it.

Christopher Nolan

My final question, I mean the stock has been trading at a discount to NAV for almost two years now and we’ve seen significant erosion NAV per share. As you’re talking to the board strategically I applaud the efforts to modify the management compensation agreement. But beyond that is the plan simply just to buyback stock until as long as it’s trading at material discount or is there anything else aside from that strategically, that’s going to change to possibly improve valuation multiples?

Brook Taube

There’s nothing beyond the performance, the initiatives we have at the company that relates to senior loan strategy, second SBIC license the team is hard to work always at maximizing NAV – NII and NAV. I think the share repurchase is the most powerful tool we have at our disposal, today. But with respect to other strategic initiatives, we are not – we have none underway.

Christopher Nolan

Given the erosion in NAV per share over the last two years, is there sort of – any sort of change in the approach of how you underwrite credits now?

Brook Taube

No, we’re sticking to our focus on senior. I think Jonathan alluded to the fact that on the smaller company and the non-sponsor have certain attendant risks. NAV per share the most recent mark was unrealized and we have, we’re hard at work at focusing on increasing it. Other than to say we’re always evaluating every part of the business which includes process, underwriting, people, et cetera. We do that on a continuous basis, but there have been no substantial or material changes in the overall strategy.

Christopher Nolan

Great. Final question, have you – for any of the private equity sponsors that you worked with, given the change in the financial markets, have you seen any sort of change or lower capability to step into some of the deals and provide additional equity?

Brook Taube

Well, the answer to that is no. I think our experience is that these firms have capital on balance. I think – our view is multiples are beginning to come down. So for the dry powder in that space their expectation, and I think we've heard it from them directly, is that it may be common increasingly attractive environment to put capital to work. I've said in the past, I don't – we don't go to work expecting sponsors to do things that are uneconomic to themselves. But we also have seen sponsors to step up and do the right thing in support of their borrowers.

So I think on balance this market environment is one where you have to manage existing portfolio and as we look forward at Medley we're seeing increased and interesting opportunities and as and when MCC is in a position to participate, the MCC platform will also be a participant in that deal flow.

Christopher Nolan

Great. Thanks for taking my questions.

Operator

The next question will be from the line of Troy Ward, KBW.

Troy Ward

Thanks, actually I was going to ask about the SBIC in your leverage range and Chris just asked that. So I'm going to – thanks guys.

Brook Taube

Okay thanks Troy.

Operator

And at this time I’m showing no further questions in queue, I will like turn the conference back to Mr. Brook Taube for any closing remarks

Brook Taube

Okay. Thank you very much, operator. We appreciate the time today and we look forward to speaking directly to many of you and also to the next call coming up on a short cycle. Considering that this one was later [indiscernible]. So we look forward to speaking when we get a chance, thanks very much.

Operator

Ladies and gentlemen, let’s conclude today’s conference, we thank you for your participation. You may now disconnect. Have a great day.

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