8-K
0001383414false00013834142022-11-162022-11-16

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): November 15, 2023

PennantPark Investment Corporation

(Exact name of registrant as specified in its charter)

 

Maryland

(State or Other Jurisdiction of Incorporation)

814-00736

(Commission File Number)

20-8250744

(IRS Employer Identification Number)

 

1691 Michigan Avenue,

Miami Beach, Florida

(Address of Principal Executive Offices)

33319

(Zip Code)

 

(786) 297-9500

(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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

PNNT

The New York Stock Exchange

 

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.

 

28435281.2.BUSINESS


Item 2.02. Results of Operations and Financial Condition

On November 15, 2023, PennantPark Investment Corporation, or the Company, issued a press release announcing its financial results for the fourth quarter and fiscal year ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report pursuant to Item 2.02 on Form 8-K and Regulation FD. A copy of the Company's schedule of investments as of September 30, 2023 and 2022 are furnished as Exhibit 99.2 to this report pursuant to Item 2.02 on Form 8-K and Regulation FD.

The Company is completing its assessment of the effectiveness of its internal control over financial reporting as of September 30, 2023. Based on currently available information, the Company expects to report certain material weaknesses in internal control over financial reporting in Item 9A of its Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the "2023 Annual Report"). The material weaknesses identified to date relate to the control environment over the Company's review process of its cash and par reconciliations and its interest income analysis. The material weaknesses are not expected to impact the accuracy of the Company's financial statements to be reported in the 2023 Annual Report. Because the Company has not completed the preparation of its consolidated financial statements for the year ended September 30, 2023, the preliminary unaudited results presented in the press release as of and for the fourth quarter and year ended September 30, 2023 are based on current expectations and are subject to adjustment.

The information in this report on Form 8-K, including Exhibits 99.1 and 99.2 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of such section. The information in this report on Form 8-K shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Act, or under the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Forward-Looking Statements

This report on Form 8-K, including Exhibits 99.1 and 99.2 furnished herewith, may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Investment Corporation files under the Exchange Act. All statements other than statements of historical facts included in this report on Form 8-K are forward-looking statements and are not guarantees of future performance or results, and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. PennantPark Investment Corporation undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

PennantPark Investment Corporation may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from its historical experience and present expectations.

Item 9.01. Financial Statements and Exhibits

(a) Financial statements:

None

(b) Pro forma financial information:

None

(c) Shell company transactions:

None

(d) Exhibits

 

99.1

Press Release of PennantPark Investment Corporation dated November 15, 2023

99.2

Schedule of Investments as of September 30, 2023 and 2022

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

28435281.2.BUSINESS


SIGNATURE

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

 

Dated: November 15, 2023

PENNANTPARK INVESTMENT CORPORATION

 

 

 

 

By:

/s/ Richard T. Allorto, Jr.

 

 

Richard T. Allorto, Jr.

 

 

Chief Financial Officer & Treasurer

 

28435281.2.BUSINESS


EX-99.1

EXHIBIT 99.1

https://cdn.kscope.io/7daa0b62a8fb39b5dcd7c3c328e6d815-img10714785_0.jpg 

 

PennantPark Investment Corporation Announces Financial Results for the Fourth Quarter and

Fiscal Year Ended September 30, 2023

 

Miami, Florida — (GLOBE NEWSWIRE – November 15, 2023) — PennantPark Investment Corporation (NYSE: PNNT) announced today financial results for the fourth quarter and fiscal year ended September 30, 2023.

 

HIGHLIGHTS

Year ended September 30, 2023 - Unaudited

($ in millions, except per share amounts)

Assets and Liabilities:

 

 

 

 

 

 

Investment portfolio (1)

 

 

 

$

1,001.9

 

 

Net assets

 

 

 

$

502.2

 

 

Adjusted net asset value per share (2)

 

 

 

$

7.70

 

 

Quarterly increase in adjusted net asset value per share (2)

 

 

 

 

0.4

%

 

GAAP net asset value per share

 

 

 

$

7.70

 

 

Quarterly decrease in GAAP net asset value per share

 

 

 

 

(0.3

)%

 

 

 

 

 

 

 

 

Credit Facility

 

 

 

$

206.9

 

 

2026 Notes

 

 

 

$

147.7

 

 

2026-2 Notes

 

 

 

$

162.2

 

 

Regulatory Debt to Equity

 

 

 

1.05x

 

 

Weighted average yield on debt investments at quarter-end

 

 

 

 

13.0

%

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

Year Ended

 

 

 

September 30, 2023

 

 

September 30, 2023

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

Operating Results:

 

 

 

 

 

 

Net investment income

$

15.6

 

 

$

65.5

 

 

Net investment income per share

$

0.24

 

 

$

1.00

 

 

Core net investment income per share (3)

$

0.24

 

 

$

0.84

 

 

Distributions declared per share

$

0.21

 

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio Activity:

 

 

 

 

 

 

Purchases of investments

$

61.1

 

 

$

275.4

 

 

Sales and repayments of investments

$

138.2

 

 

$

418.6

 

 

 

 

 

 

 

 

 

PSLF Portfolio data:

 

 

 

 

 

 

PSLF investment portfolio

$

804.2

 

 

$

804.2

 

 

Purchases of investments

$

56.9

 

 

$

176.2

 

 

Sales and repayments of investments

$

52.6

 

 

$

106.6

 

 

1.
Includes investments in PennantPark Senior Loan Fund, LLC ("PSLF"), an unconsolidated joint venture, totaling $164.4 million, at fair value.
2.
This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of unrealized gain on our multi-currency, senior secured revolving credit facility with Truist Bank, as amended, the “Credit Facility." The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
3.
Core net investment income ("Core NII") is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company's financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the year ended September 30, 2023, Core NII excluded: i) $10.6 million of dividend income related to our equity investment in Dominion Voting Systems; ii) $3.1 million of accelerated amortization income with early repayment of one of our loans; iii) $0.6 million of non-recurring divided from PennantPark-TSO Senior Loan Fund II, LP, iv) $1.8 million of accrued excise taxes, and an addback of $2.2 million of incentive fee expenses.

 

 


CONFERENCE CALL AT 12:00 P.M. EST ON NOVEMBER 16, 2023

 

PennantPark Investment Corporation (“we,” “our,” “us” or the “Company”) will also host a conference call at 12:00 p.m. (Eastern Time) on Thursday, November 16, 2023 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (646) 828-8193. All callers should reference conference ID #8396733 or PennantPark Investment Corporation. An archived replay will also be available on a webcast link located on the Home page of the Investor section of PennantPark’s website.

 

 

PORTFOLIO AND INVESTMENT ACTIVITY

 

“We are pleased to announce another quarter of solid performance from both a NAV and Net Investment Income perspective. Earnings are in excess of our dividend by a healthy margin,” said Arthur Penn, Chairman and CEO. “Our earnings stream continues to be robust due to strong credit performance and the excellent returns generated by our PSLF Joint Venture."

 

As of September 30, 2023, our portfolio totaled $1,001.9 million, which consisted of $527.7 million of first lien secured debt, $80.4 million of second lien secured debt, $156.2 million of subordinated debt (including $102.3 million in PSLF) and $237.6 million of preferred and common equity (including $62.1 million in PSLF). Our debt portfolio consisted of 95% variable-rate investments and 5% fixed-rate investments. As of September 30, 2023, we had one portfolio company on non-accrual, representing 1.2% and zero of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2023, the portfolio had net unrealized depreciation of $16.3 million. Our overall portfolio consisted of 129 companies with an average investment size of $7.8 million, and a weighted average yield on interest bearing debt investments of 13.0%.

As of September 30, 2022, our portfolio totaled $1,226.3 million and consisted of $631.0 million of first lien secured debt, $129.9 million of second lien secured debt, $141.3 million of subordinated debt (including $88.0 million in PSLF) and $324.1 million of preferred and common equity (including $51.1 million in PSLF). Our interest bearing debt portfolio consisted of 96% variable-rate investments and 4% fixed-rate investments. As of September 30, 2022, we had one portfolio company on non-accrual, representing 1.2% and zero percent of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2022, the portfolio had net unrealized depreciation of $75.7 million. Our overall portfolio consisted of 123 companies with an average investment size of $10.0 million, and a weighted average yield on interest bearing debt investments of 10.8%.

For the three months ended September 30, 2023, we invested $61.1 million in two new and 31 existing portfolio companies at a weighted average yield on debt investments of 12.3%. For the three months ended September 30, 2023, sales and repayments of investments totaled $138.2 million, including $47.6 million of sales to PSLF. For the year ended September 30, 2023, we invested $275.4 million in 17 new and 69 existing portfolio companies at a weighted average yield on debt investments of 12.0%. For the year ended September 30, 2023, sales and repayment totaled $418.6 million, including $127.8 million of sales to PSLF.

For the three months ended September 30, 2022, we invested $134.4 million in five new and 27 existing portfolio companies at a weighted average yield on debt investments of 10.2%. Sales and repayments of investments for the three months ended September 30, 2022 totaled $175.6 million, including $143.9 million of sales to PSLF. For the year ended September 30, 2022, we invested $933.8 million in 40 new and 122 existing portfolio companies at a weighted average yield on debt investments of 8.4%. Sales and repayment of investments for the year ended September 30, 2022 totaled $911.6 million, including $395.3 million of sales to PSLF.

 

PennantPark Senior Loan Fund, LLC

 

As of September 30, 2023, PSLF’s portfolio totaled $804.2 million, consisted of 90 companies with an average investment size of $8.9 million and had a weighted average yield on debt investments of 12.1%.

 

As of September 30, 2022, PSLF's portfolio totaled $730.1 million, consisted of 80 companies with an average investment size of $9.1 million and had a weighted average yield on debt investments of 9.4%.

 

For the three months ended September 30, 2023, PSLF invested $56.9 million (including $47.6 million purchased from the Company) in five new and 18 existing portfolio companies at a weighted average yield on debt investments of 11.8%. PSLF’s sales and repayments of investments for the same period totaled $52.6 million. For the year ended September 30, 2023, PSLF invested $176.2 million (including $127.8 million purchased from the Company) in 21 new and 23 existing portfolio companies at a weighted average yield on debt investments of 11.8%. PSLF's sales and repayments of investments for the same period totaled $106.6 million.

For the three months ended September 30, 2022, PSLF invested $152.6 million (including $143.9 million purchased from the Company) in 10 new and nine existing portfolio companies at a weighted average yield on debt investments of 8.5%. PSLF’s sales and repayments of investments for the same period totaled $27.5 million. For the year ended September 30, 2022, PSLF invested $431.2 million (including $395.3 million purchased from the Company) in 39 new and 28 existing portfolio companies at a weighted average yield on debt investment of 7.8%. PSLF's sales and repayments of investments for the same period totaled $100.5 million.

 


 

RESULTS OF OPERATIONS

 

Set forth below are the results of operations during the three months and year ended September 30, 2023 and 2022.

 

Investment Income

 

For the three months and year ended September 30, 2023, investment income was $34.0 million and $145.4 million, respectively, which was attributable to $24.5 million and $97.2 million from first lien secured debt, $2.9 million and $13.8 million from second lien secured debt, $1.3 million and $4.7 million from subordinated debt and $5.4 million and $29.7 million from preferred and common equity, respectively. For the three months and year ended September 30, 2022, investment income was $28.9 million and $105.0 million, respectively, which was attributable to $22.2 million and $74.4 million from first lien secured debt, $3.3 million and $17.0 million from second lien secured debt, $1.1 million and $3.7 million from subordinated debt and $2.4 million and $9.9 million from preferred and common equity, respectively. The increase in investment income compared to the same periods in the prior year was primarily due to an increase in SOFR base rates.

 

Expenses

 

For the three months and year ended September 30, 2023, expenses totaled $18.4 million and $79.8 million, respectively, and were comprised of $9.0 million and $39.4 million of debt related interest and expenses, $3.9 million and $16.5 million of base management fees, $3.3 million and $13.9 million of incentive fees, $1.6 million and $5.7 million of general and administrative expenses and $0.7 million and $4.3 million of provision for excise taxes. For the three months and year ended September 30, 2022, expenses totaled $19.7 million and $61.0 million, respectively, and were comprised of $13.7 million and $33.8 million of debt related interest and expenses, $4.9 million and $19.8 million of base management fees, zero and $2.7 million of incentive fees, $1.0 million and $3.9 million of general and administrative expenses and $0.2 million and $0.8 million of provision for excise taxes, respectively. The increase in expenses over the prior year was primarily due to an increase in debt related interest and other financing expenses and an increase in incentive fees.

 

Net Investment Income

 

For the three months and year ended September 30, 2023, net investment income totaled $15.6 million and $65.5 million, or $0.24 per share and $1.00 per share, respectively. For the three months and year ended September 30, 2022, net investment income totaled $9.2 million and $43.9 million, or $0.14 per share and $0.66 per share, respectively. The increase in net investment income per share compared to the prior year was primarily due to an increase in investment income.

 

Net Realized Gains or Losses

 

For the three months and year ended September 30, 2023, net realized gains (losses) totaled $(5.2) million and $(156.8) million, respectively. For the three months and year ended September 30, 2022 net realized gains (losses) totaled $(38.7) million and $34.8 million, respectively. The change in realized gains or losses was primarily due to changes in the market conditions of our investments and the values at which they were realized, primarily due to realization of RAM Energy Holdings LLC, and the fluctuations in the market and in economy.

 

Unrealized Appreciation or Depreciation on Investments and Debt

 

For the three months ended and year ended September 30, 2023, net change in unrealized appreciation (depreciation) on investments was $2.5 million and $59.6 million, respectively. For the three months and year ended September 30, 2022, net change in unrealized appreciation (depreciation) on investments was $(11.0) million and $(110.0) million, respectively. As of September 30, 2023 and September 30, 2022, our net unrealized appreciation (depreciation) on investments totaled $(16.3) million and $(75.7) million, respectively. The net change in unrealized appreciation or depreciation on our investments for the year ended September 30, 2023 compared to the prior year was primarily due to changes in the capital market of our investments and the value at which they were realized, as well as due to the realization of RAM Energy Holdings LLC and the fluctuation in the market and in the economy.

For the three months and year ended September 30, 2023, our Credit Facility had a net change in unrealized (appreciation) depreciation of $(1.3) million and $(3.8) million, respectively. For the three months and year ended September 30, 2022, the Credit Facility had a net change in unrealized (appreciation) depreciation of $(1.7) million and $7.5 million, respectively. As of September 30, 2023 and September 30, 2022, the net unrealized depreciation on the Credit Facility totaled $5.5 million and $9.2 million, respectively. The net change in unrealized appreciation or depreciation compared to the same periods in the prior year was primarily due to changes in the capital markets.

 

 


Net Increase (Decrease) in Net Assets Resulting from Operations

 

For the three months and year ended September 30, 2023, net increase (decrease) in net assets resulting from operations totaled $12.3 million and $(33.8) million, or $0.19 per share and $(0.52) per share, respectively. For the three months and year ended September 30, 2022, net increase (decrease) in net assets resulting from operations totaled $(34.9) million and $(24.7) million, or $(0.52) and $(0.37) per share, respectively. The increase or decrease for the year ended September 30, 2023 compared to the prior year was primarily due to depreciation of the portfolio primarily driven by changes in market conditions.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.

 

As of September 30, 2023 and 2022, we had $212.4 million and $385.9 million in outstanding borrowings under the Credit Facility, respectively, and the weighted average interest rate was 7.7% and 5.3%, respectively. As of September 30, 2023 and 2022, we had $262.6 million and $114.1 million of unused borrowing capacity under the Credit Facility, respectively, subject to leverage and borrowing base restrictions.

As of September 30, 2023 and 2022, we had cash and cash equivalents of $134.4 million and $52.7 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allow us to effectively operate our business.

For the year ended September 30, 2023, our operating activities provided cash of $320.7 million and our financing activities used cash of $239.2 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily to fund repayments under the Credit Facility.

For the year ended September 30, 2022, our operating activities used cash of $19.4 million, and our financing activities provided cash of $52.0 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily due to net repayment under the Credit Facility and SBA debentures and proceeds from our 2026-2 Notes.

 

DISTRIBUTIONS

 

During the three months and year ended September 30, 2023, we declared distributions of $0.21 and $0.76 per share, for total distributions of $13.7 million and $49.6 million, respectively. For the three and year ended September 30, 2022, we declared distributions of $0.15 and $0.56 per share, for total distributions of $9.8 million and $36.6 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

 

RECENT DEVELOPMENTS

 

For the period subsequent to September 30, 2023 through November 10, 2023, we invested $126.7 million in 4 new and 19 existing portfolio companies at a weighted average yield on debt investments of 11.9%.

 

AVAILABLE INFORMATION

 

The Company makes available on its website its annual report on Form 10-K filed with the SEC and stockholders may find the report on our website at www.pennantpark.com.

 


PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

September 30, 2023
(Unaudited)

 

 

September 30, 2022

 

Assets

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost—$716,987 and $882,513, respectively)

 

$

731,058

 

 

$

932,155

 

Non-controlled, affiliated investments (amortized cost—$55,787 and $37,612, respectively)

 

 

54,771

 

 

 

34,760

 

Controlled, affiliated investments (amortized cost—$245,386 and $381,904, respectively)

 

 

216,068

 

 

 

259,386

 

Total investments (amortized cost—$1,018,160 and $1,302,029, respectively)

 

 

1,001,897

 

 

 

1,226,301

 

Cash and cash equivalents (cost—$134,454 and $52,844, respectively)

 

 

134,427

 

 

 

52,666

 

Interest receivable

 

 

6,818

 

 

 

3,593

 

Receivable for investments sold

 

 

-

 

 

 

29,494

 

Distribution receivable

 

 

5,079

 

 

 

2,420

 

Prepaid expenses and other assets

 

 

4,656

 

 

 

4,036

 

Total assets

 

 

1,152,877

 

 

 

1,318,510

 

Liabilities

 

 

 

 

 

 

Payable for cash equivalents purchased

 

 

99,768

 

 

 

 

Payable for investment purchased

 

 

180

 

 

 

 

Distributions payable

 

 

13,697

 

 

 

9,784

 

Truist Credit Facility payable, at fair value (cost—$212,420 and $385,920, respectively)

 

 

206,940

 

 

 

376,687

 

2026 Notes payable, net (par— $150,000)

 

 

147,669

 

 

 

146,767

 

2026 Notes-2 payable, net (par— $165,000)

 

 

162,226

 

 

 

161,373

 

SBA debentures payable, net (par—zero and $20,000, respectively)

 

 

 

 

 

19,686

 

Base management fee payable

 

 

3,915

 

 

 

4,849

 

Incentive fee payable

 

 

3,310

 

 

 

 

Interest payable on debt

 

 

6,231

 

 

 

6,264

 

Accounts payable and accrued expenses

 

 

6,754

 

 

 

6,639

 

Deferred tax liability

 

 

 

 

 

896

 

Total liabilities

 

 

650,690

 

 

 

732,945

 

Commitments and contingencies

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

Common stock, 65,224,500 shares issued and outstanding,
   Par value $0.001 per share and 100,000,000 shares authorized

 

 

65

 

 

 

65

 

Paid-in capital in excess of par value

 

 

746,466

 

 

 

748,169

 

Accumulated deficit

 

 

(244,344

)

 

 

(162,669

)

Total net assets

 

$

502,187

 

 

$

585,565

 

Total liabilities and net assets

 

$

1,152,877

 

 

$

1,318,510

 

Net asset value per share

 

$

7.70

 

 

$

8.98

 

 


PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

 

 

 

Three Months Ended
September 30,

 

 

Year Ended
September 30,

 

 

 

2023
(Unaudited)

 

 

2022

 

 

2023
(Unaudited)

 

 

2022

 

Investment income:

 

 

 

 

 

 

 

 

 

 

 

 

From non-controlled, non-affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

21,240

 

 

$

21,022

 

 

$

93,420

 

 

$

66,995

 

Payment-in-kind

 

 

1,221

 

 

 

434

 

 

 

1,236

 

 

 

4,505

 

Dividend Income

 

 

1,028

 

 

 

 

 

 

13,945

 

 

 

 

Other income

 

 

888

 

 

 

411

 

 

 

2,316

 

 

 

8,461

 

From non-controlled, affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

1,361

 

 

 

73

 

 

 

1,361

 

Payment-in-kind

 

 

308

 

 

 

 

 

 

625

 

 

 

 

From controlled, affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

4,527

 

 

 

3,283

 

 

 

15,425

 

 

 

10,586

 

Payment-in-kind

 

 

446

 

 

 

 

 

 

2,596

 

 

 

3,983

 

Dividend Income

 

 

4,386

 

 

 

2,420

 

 

 

15,730

 

 

 

9,075

 

Total investment income

 

 

34,044

 

 

 

28,931

 

 

 

145,366

 

 

 

104,966

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Base management fee

 

 

3,915

 

 

 

4,850

 

 

 

16,549

 

 

 

19,827

 

Incentive fee

 

 

3,310

 

 

 

 

 

 

13,901

 

 

 

2,657

 

Interest and expenses on debt

 

 

8,953

 

 

 

8,638

 

 

 

39,408

 

 

 

28,760

 

Administrative services expenses

 

 

469

 

 

 

250

 

 

 

1,843

 

 

 

1,000

 

General and administrative expenses

 

 

1,129

 

 

 

723

 

 

 

3,837

 

 

 

2,892

 

Expenses before provision for taxes and financing costs

 

 

17,776

 

 

 

14,461

 

 

 

75,538

 

 

 

55,136

 

Provision for taxes on net investment income

 

 

663

 

 

 

200

 

 

 

4,295

 

 

 

800

 

Credit facility amendment and debt issuance costs

 

 

 

 

 

5,087

 

 

 

 

 

 

5,087

 

Total expenses

 

 

18,439

 

 

 

19,748

 

 

 

79,833

 

 

 

61,023

 

Net investment income

 

 

15,605

 

 

 

9,183

 

 

 

65,533

 

 

 

43,943

 

Realized and unrealized gain (loss) on investments and debt:

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investments and debt:

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(2,676

)

 

 

(38,585

)

 

 

(18,418

)

 

 

(31,382

)

Non-controlled and controlled, affiliated investments

 

 

 

 

 

 

 

 

(133,098

)

 

 

75,243

 

Debt extinguishment

 

 

 

 

 

(121

)

 

 

(289

)

 

 

(2,922

)

Provision for taxes on realized gain on investments

 

 

(2,535

)

 

 

 

 

 

(4,952

)

 

 

(6,183

)

Net realized gain (loss) on investments and debt

 

 

(5,211

)

 

 

(38,706

)

 

 

(156,757

)

 

 

34,756

 

Net change in unrealized appreciation (depreciation) on:

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(1,928

)

 

 

10,485

 

 

 

(35,440

)

 

 

(182,863

)

Non-controlled and controlled, affiliated investments

 

 

4,400

 

 

 

(21,438

)

 

 

95,034

 

 

 

72,819

 

Provision for taxes on unrealized appreciation (depreciation) on investments

 

 

680

 

 

 

7,231

 

 

 

1,576

 

 

 

(896

)

Debt appreciation (depreciation)

 

 

(1,279

)

 

 

(1,682

)

 

 

(3,753

)

 

 

7,501

 

Net change in unrealized appreciation (depreciation) on investments and debt

 

 

1,873

 

 

 

(5,404

)

 

 

57,417

 

 

 

(103,439

)

Net realized and unrealized gain (loss) from investments and debt

 

 

(3,338

)

 

 

(44,110

)

 

 

(99,340

)

 

 

(68,683

)

Net increase (decrease) in net assets resulting from operations

 

$

12,267

 

 

$

(34,927

)

 

$

(33,807

)

 

$

(24,740

)

Net increase (decrease) in net assets resulting from operations per common share

 

$

0.19

 

 

$

(0.52

)

 

$

(0.52

)

 

$

(0.37

)

Net investment income per common share

 

$

0.24

 

 

$

0.14

 

 

$

1.00

 

 

$

0.66

 

 

ABOUT PENNANTPARK INVESTMENT CORPORATION

PennantPark Investment Corporation is a business development company which invests primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. PennantPark Investment Corporation is managed by PennantPark Investment Advisers, LLC.

ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

PennantPark Investment Advisers, LLC is a leading middle market credit platform, managing $6.8 billion of investable capital, including potential leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami and has offices in New York, Chicago, Houston, and Los Angeles.

 

 

 


FORWARD-LOOKING STATEMENTS AND OTHER

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Investment Corporation files under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the SEC. PennantPark Investment Corporation undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.

The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.

The Company is completing its assessment of the effectiveness of its internal control over financial reporting as of September 30, 2023. Based on currently available information, the Company expects to report certain material weaknesses in internal control over financial reporting in Item 9A of its Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the "2023 Annual Report"). The material weaknesses identified to date relate to the control environment over the Company's review process of its cash and par reconciliations and its interest income analysis. The material weaknesses are not expected to impact the accuracy of the Company's financial statements to be reported in the 2023 Annual Report. Because the Company has not completed the preparation of its consolidated financial statements for the year ended September 30, 2023, the preliminary unaudited results presented in the press release as of and for the fourth quarter and year ended September 30, 2023 are based on current expectations and are subject to adjustment.

 

Contact:

Richard T. Allorto, Jr.

 

PennantPark Investment Corporation

 

(212) 905-1000

 

www.pennantpark.com

 


EX-99.2

 

EXHIBIT 99.2

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2023

(In thousands, except share data)

(Unaudited)

 

Issuer Name

 

Maturity / Expiration

 

Industry

 

Current
 Coupon

 

 

Basis Point
 Spread Above
 Index
(4)

 

 

Par /
 Shares

 

 

Cost

 

 

Fair Value (3)

 

Investments in Non-Controlled, Non-Affiliated Portfolio Companies—145.6% of Net Assets (1), (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Lien Secured Debt—93.2% of Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A1 Garage Merger Sub, LLC

 

12/22/2028

 

Personal, Food and Miscellaneous Services

 

 

11.99

%

 

3M SOFR+660

 

 

 

5,144

 

 

$

5,073

 

 

$

5,119

 

A1 Garage Merger Sub, LLC - Unfunded Term Loan

 

12/21/2024

 

Personal, Food and Miscellaneous Services

 

 

 

 

 

 

 

 

1,788

 

 

 

 

 

 

18

 

A1 Garage Merger Sub, LLC (Revolver) (7)

 

12/22/2028

 

Personal, Food and Miscellaneous Services

 

 

 

 

 

 

 

 

2,532

 

 

 

 

 

 

(13

)

Ad.net Acquisition, LLC (Revolver)

 

05/07/2026

 

Media

 

 

11.65

%

 

3M SOFR+626

 

 

 

222

 

 

 

222

 

 

 

221

 

Ad.net Acquisition, LLC (Revolver) (7)

 

05/07/2026

 

Media

 

 

 

 

 

 

 

 

222

 

 

 

 

 

 

(1

)

Anteriad, LLC (f/k/a MeritDirect, LLC)

 

05/23/2024

 

Media

 

 

12.04

%

 

3M SOFR+665

 

 

 

1,237

 

 

 

1,223

 

 

 

1,221

 

Anteriad, LLC (f/k/a MeritDirect, LLC) (Revolver) (7)

 

05/23/2024

 

Media

 

 

 

 

 

 

 

 

1,612

 

 

 

 

 

 

(28

)

Any Hour Services

 

07/21/2027

 

Personal, Food and Miscellaneous Services

 

 

11.22

%

 

3M SOFR+585

 

 

 

3,023

 

 

 

3,014

 

 

 

2,962

 

Any Hour Services (Revolver) (7)

 

07/21/2027

 

Personal, Food and Miscellaneous Services

 

 

 

 

 

 

 

 

1,147

 

 

 

 

 

 

(23

)

Apex Service Partners, LLC

 

07/31/2025

 

Personal, Food and Miscellaneous Services

 

 

10.77

%

 

3M SOFR+525

 

 

 

1,330

 

 

 

1,330

 

 

 

1,327

 

Apex Service Partners, LLC Term Loan C

 

07/31/2025

 

Personal, Food and Miscellaneous Services

 

 

10.79

%

 

3M SOFR+525

 

 

 

1,863

 

 

 

1,850

 

 

 

1,859

 

Apex Service Partners, LLC (Revolver)

 

07/31/2025

 

Personal, Food and Miscellaneous Services

 

 

10.79

%

 

3M SOFR+525

 

 

 

582

 

 

 

583

 

 

 

581

 

Apex Service Partners, LLC (Revolver) (7)

 

07/31/2025

 

Personal, Food and Miscellaneous Services

 

 

 

 

 

 

 

 

350

 

 

 

 

 

 

(1

)

Applied Technical Services, LLC

 

12/29/2026

 

Environmental Services

 

 

11.54

%

 

3M SOFR+615

 

 

 

824

 

 

 

818

 

 

 

808

 

Applied Technical Services, LLC (Revolver)

 

12/29/2026

 

Environmental Services

 

 

13.25

%

 

3M SOFR+475

 

 

 

400

 

 

 

400

 

 

 

392

 

Applied Technical Services, LLC (Revolver) (7)

 

12/29/2026

 

Environmental Services

 

 

 

 

 

 

 

 

600

 

 

 

 

 

 

(12

)

Arcfield Acquisition Corp. (Revolver)

 

08/03/2029

 

Aerospace and Defense

 

 

11.62

%

 

1M SOFR+615

 

 

 

8,090

 

 

 

7,970

 

 

 

8,009

 

Arcfield Acquisition Corp. (Revolver) (7)

 

08/04/2028

 

Aerospace and Defense

 

 

 

 

 

 

 

 

3,521

 

 

 

 

 

 

(35

)

Berwick Industrial Park

 

11/02/2023

 

Buildings and Real Estate

 

 

11.50

%

 

 

 

 

 

4,000

 

 

 

4,030

 

 

 

3,924

 

Beta Plus Technologies, Inc.

 

07/01/2029

 

Business Services

 

 

11.14

%

 

3M SOFR+575

 

 

 

4,950

 

 

 

4,869

 

 

 

4,604

 

BioDerm, Inc. (Revolver)

 

01/31/2028

 

Healthcare, Education and Childcare

 

 

11.81

%

 

1M SOFR+650

 

 

 

107

 

 

 

107

 

 

 

107

 

BioDerm, Inc. (Revolver) (7)

 

01/31/2028

 

Healthcare, Education and Childcare

 

 

 

 

 

 

 

 

964

 

 

 

 

 

 

(5

)

Blackhawk Industrial Distribution, Inc.

 

09/17/2026

 

Distribution

 

 

11.79

%

 

3M SOFR+640

 

 

 

1,851

 

 

 

1,833

 

 

 

1,823

 

Blackhawk Industrial Distribution, Inc.(7)

 

09/17/2026

 

Distribution

 

 

 

 

 

 

 

 

3,354

 

 

 

 

 

 

(34

)

Blackhawk Industrial Distribution, Inc.

 

09/17/2026

 

Distribution

 

 

11.79

%

 

3M SOFR+640

 

 

 

343

 

 

 

343

 

 

 

338

 

Blackhawk Industrial Distribution, Inc. (Revolver) (7)

 

09/17/2026

 

Distribution

 

 

 

 

 

 

 

 

3,089

 

 

 

 

 

 

(46

)

Broder Bros., Co.

 

12/04/2025

 

Consumer Products

 

 

11.65

%

 

3M SOFR+626

 

 

 

9,838

 

 

 

9,838

 

 

 

9,838

 

Cartessa Aesthetics, LLC

 

06/14/2028

 

Distribution

 

 

11.39

%

 

3M SOFR+600

 

 

 

34,056

 

 

 

33,496

 

 

 

34,056

 

Cartessa Aesthetics, LLC - (Revolver)

 

06/14/2028

 

Distribution

 

 

11.39

%

 

3M SOFR+600

 

 

 

1,265

 

 

 

1,265

 

 

 

1,265

 

Cartessa Aesthetics, LLC - (Revolver) (7)

 

06/14/2028

 

Distribution

 

 

 

 

 

 

 

 

2,297

 

 

 

 

 

 

 

CF512, Inc.

 

08/20/2026

 

Media

 

 

11.59

%

 

3M SOFR+600

 

 

 

6,592

 

 

 

6,524

 

 

 

6,460

 

CF512, Inc.(Revolver) (7)

 

08/20/2026

 

Media

 

 

 

 

 

 

 

 

909

 

 

 

 

 

 

(18

)

Compex Legal Services, Inc.

 

02/09/2026

 

Business Services

 

 

10.94

%

 

3M SOFR+555

 

 

 

949

 

 

 

939

 

 

 

949

 

Compex Legal Services, Inc. (Revolver)

 

02/07/2025

 

Business Services

 

 

10.94

%

 

3M SOFR+555

 

 

 

66

 

 

 

66

 

 

 

66

 

Compex Legal Services, Inc. (Revolver) (7)

 

02/07/2025

 

Business Services

 

 

 

 

 

 

 

 

590

 

 

 

 

 

 

 

Connatix Buyer, Inc. (Revolver) (7)

 

07/13/2027

 

Media

 

 

 

 

 

 

 

 

1,875

 

 

 

 

 

 

(66

)

Confluent Health, LLC

 

11/30/2028

 

Healthcare, Education and Childcare

 

 

12.82

%

 

3M SOFR+750

 

 

 

1,990

 

 

 

1,855

 

 

 

2,000

 

Crane 1 Services, Inc. (Revolver)

 

08/16/2027

 

Personal, Food and Miscellaneous Services

 

 

10.90

%

 

3M SOFR+551

 

 

 

117

 

 

 

117

 

 

 

116

 

Crane 1 Services, Inc. (Revolver) (7)

 

08/16/2027

 

Personal, Food and Miscellaneous Services

 

 

 

 

 

 

 

 

175

 

 

 

 

 

 

(1

)

Dr. Squatch, LLC

 

08/31/2027

 

Personal and Non-Durable Consumer Products

 

 

11.23

%

 

3M SOFR+585

 

 

 

8,276

 

 

 

8,190

 

 

 

8,276

 

Dr. Squatch, LLC (7)

 

08/27/2026

 

Personal and Non-Durable Consumer Products

 

 

 

 

 

 

 

 

2,000

 

 

 

 

 

 

20

 

Dr. Squatch, LLC (Revolver) (7)

 

08/31/2027

 

Personal and Non-Durable Consumer Products

 

 

 

 

 

 

 

 

2,326

 

 

 

 

 

 

 

DRS Holdings III, Inc.

 

11/03/2025

 

Consumer Products

 

 

11.79

%

 

3M SOFR+640

 

 

 

7

 

 

 

7

 

 

 

7

 

DRS Holdings III, Inc. (Revolver) (7)

 

11/03/2025

 

Consumer Products

 

 

 

 

 

 

 

 

1,783

 

 

 

 

 

 

(21

)

EDS Buyer, LLC

 

12/22/2028

 

Aerospace and Defense

 

 

11.64

%

 

3M SOFR+625

 

 

 

6,219

 

 

 

6,133

 

 

 

6,125

 

EDS Buyer, LLC - Unfunded Term Loan

 

12/22/2028

 

Aerospace and Defense

 

 

 

 

 

 

 

 

5,625

 

 

 

 

 

 

(14

)

EDS Buyer, LLC - (Revolver) (7)

 

12/22/2028

 

Aerospace and Defense

 

 

 

 

 

 

 

 

1,688

 

 

 

 

 

 

(25

)

ETE Intermediate II, LLC (Revolver) (7)

 

05/25/2029

 

Personal, Food and Miscellaneous Services

 

 

 

 

 

 

 

 

1,656

 

 

 

 

 

 

(28

)

Exigo Intermediate II, LLC

 

03/15/2027

 

Business Services

 

 

11.17

%

 

3M SOFR+585

 

 

 

24,375

 

 

 

24,097

 

 

 

23,888

 

Exigo Intermediate II, LLC (Revolver) (7)

 

03/15/2027