Apollo Investment Corporation
Q4 2015 Earnings Call Transcript

Published: 19 May 2015

[Operator:]

Good morning and welcome to Apollo Investment Corporation's Earnings Conference Call for the period ending March 31, 2015. At this time all participants have been placed in listen-only mode. The call will be opened for a question-and-answer session following the speakers' prepared remarks. [Operator Instructions] I will now turn the call over to Elizabeth Besen, Investor Relations Manager for Apollo Investment Corporation.

[Elizabeth Besen:]

Thank you, operator and thank you everyone for joining us today. With me today are Jim Zelter, Chief Executive Officer; Ted Goldthorpe, President and Chief Investment Officer; and Greg Hunt, Chief Financial Officer. I'd like to advise everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Investment Corporation and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking information. Today's conference call and webcast may include forward-looking statements. Forward-looking statements involve risks and uncertainties, including but not limited to statements as to our future results, our business prospects and the prospects of our portfolio companies. You should refer to our registration statement and shareholder reports for risks that apply to our business and may adversely affect any forward-looking statements we make. We do not undertake to update our forward-looking statements or projections, unless required by law. To obtain copies of our SEC filings please visit our website at www.apolloic.com. I'd also like to remind everyone that we've posted a supplement financial information package on our website, which contains information about the portfolio as well as the Company's financial performance. At this time I'd like to turn the call over to Jim Zelter.

[Jim Zelter:]

Thank you, Elizabeth. This morning we reported earnings for the quarter and fiscal year ended March 31, 2015 and filed our 10-K. I will begin with a brief overview of our results for the quarter and the year and discuss some additional business highlights. Then I'll turn the call over to Ted who will discuss the market environment and our investment activity for the quarter and finally, Greg will close out overviewing financial results in greater he detail. We will then open the call up to questions. We were very active in fiscal year 2015. During the year, we invested $2.2 billion consisting of $1.3 billion in 16 new portfolio companies and approximately $900 million in 47 existing portfolio companies. We remain selective in our approach with a focus on secure debt which we believe offers the most attractive risk adjusted return and accounted for 60% of our activity in our portfolio at the end of March compared to 56% a year ago. We experienced significant repayment activity in our portfolio, which provide approximately $844 million of liquidity for us to reinvest during the year. We took advantage of periods of strength in the market during the year to de-risk the portfolio by monetizing select investments and reduce certain larger legacy exposure. We also took advantage of periods of volatility during the year to deploy capital and improve overall returns, which Ted will address. Despite the market environment of yield compression throughout much of the year, we were generally able to maintain our overall portfolio yield. We achieved this by continuing to execute on our portfolio optimization strategy of rotating out of lower yielding investments and redeploying into less liquid, higher yielding investments, which we believe offer more attractive risk adjusted returns. In total, we sold $1.4 billion of investments during the year. The yield on assets sold during the year was 9.8% and the weighted average yield on our debt portfolio at the end of year was 11.2%, up 10 basis points from a year ago. At the end of March 2015, we had diversified $3.3 billion portfolio consisting of investments in 105 companies in 35 different industries. Turning to our financial results, we reported net investment income of $0.22 per share for the quarter and $0.96 per share for the year, exceeding our quarterly and annualized dividend, respectively. At the end of March, net asset value per share was $8.18, down 3% from the end of December and down 5.7% year-over-year. Despite that decline in NAV, we are comfortable with the overall fundamentals and credit quality of our portfolio. Looking ahead, we are optimistic regarding the opportunities for providers of flexible capital such as ourselves, particularly as new bank regulations impact lending by banks to certain segments of the market. We believe the collective scale of our platform enables us to participate and yet be selective in the marketplace today. We will continue to execute on our strategy of selectively deploying capital and actively monetizing select investments to improve the existing portfolio's overall returns. We will also seek to monetize non-yielding positions and redeploy those proceeds into income producing assets, again a point Ted will the highlight later in his discussion. During the year, we also continued to focus on the right side of our balance sheet by diversifying our liabilities and reducing our borrowing costs. Greg will address our recent capital raising activities in more detail. In March, the board of directors reapproved the investment advisory and management agreement with Apollo Investment Management under the same terms and with the same waivers as last year. Inclusive of the waivers, our effective base management fee is 1.77% and our effective incentive fee rate is 17.7% based on the current number of shares outstanding. Also, and finally, the board approved a $0.20 dividend for shareholders of record as of June 19, 2015. With that, I will turn the call over to Ted.

[Ted Goldthorpe:]

Thank you, Jim. I will begin my comments with current market conditions and then discuss our investment activity for the quarter. During the quarter, the leverage loan asset class experienced light supply, moderating retail outflows and strong CLO issuances. The lackluster level of new issuance activity and strong technicals resulted in lower clearing yields and higher secondary prices in the liquid credit markets. That said, the middle market lending environment, while not immune, is generally insulated from trends in the broadly syndicated market. During the period, middle market yields rose following a similar increase in large cap yields in the December quarter. Based on data from S&P Cap IQ, the premium for middle market loans compared to large institutional loans, increased during the period from 77 basis points to 103 basis points. We believe the middle market currently offers lenders superior risk-adjusted returns as the overall demand for capital for middle market companies exceed supply. We believe the current higher yielding environment presents opportunities for us to reposition our existing portfolio without compromising credit quality. With this backdrop, our origination pace was seasonally slow as we invested $372 million during the quarter in eight new portfolio of companies and 15 existing companies. We continue to focus on secured debt opportunities. During the quarter, we exited $476 million of investments, of which 71% were proactive sales as we continue to rotate that of lower yielding assets. Floating rate assets represented 52% of the debt portfolio on a fair value basis at the end of the quarter, up from 42% a year ago. We also continue to focus on non-sponsor activities, which accounted for 52% of investments made during the quarter. Non-sponsor investments accounted for 57% of the portfolio at the end of the quarter, up from 47% a year ago. Moving to investment activity. During the quarter, Merx, our aircraft leasing subsidiary purchased a portfolio of aircraft from one of the largest aircraft lessors. The majority of the purchase price was internally funded by Merx and we funded the remaining $18 million. The portfolio includes 11 aircraft with an average age of six years with staggered lease maturities and eight different lessees. Merx has been able to generate liquidity from the sale of aircraft as well as from earnings to fund much of this transaction. At the end of March, Merx owned 77 aircraft and aviation accounted for 15.4% of the fair value of our portfolio. Our overall allocation target for this vertical is 15% to 20%. We also invested $25 million in the secured debt of ChyronHego in connection with its acquisition by a financial sponsor. ChyronHego provides broadcast graphics creation play out in real-time data visualization solutions for live television, news and sports production. We also invested $33 million in secured debt of Telestream in connection with its acquisition by a sponsor. Telestream is the market leader of providing transcoding software solutions that enable the delivery of video content to any format to any audience regardless of how it's created, distributed or viewed. We also invested $10 million in the secured debt of Saba Software in connection with its acquisition by a sponsor. Saba is the lean provider of learning and talent management enterprise solutions. Regarding our exposure to oil and gas, most of our borrowers have reduced CapEx and several companies have raised equity during the period providing with additional liquidity. At the end of the quarter, oil and gas represented 13.9% of the portfolio on a fair value basis compared to 13.6% at the end of December. Secured debt accounted for 74% of the total oil and gas portfolio at the end of the period. As with all our investments, we continue to monitor these investments closely. Exits, which includes sales, repayments and revolver pay downs totaled $476 million for the quarter. We're continuing to sell lower-yielding assets and the weighted average yield for investments sold was 10%. Sales totaled $336 million for the quarter, including a full exit of our positions in U.S. Renal and American Energy - Utica. We also reduced our exposure to other investments, including the partial sale of our investments in Hunt Companies, Chronus, Walter Energy amongst others. We continue to see a few of our investments get refinanced with new deals. Repayments for the quarter totaled $121 million, including our investments in American Tire, Panda Temple and Niacet amongst others. Revolver pay downs totaled $18 million. Overall, we believe our credit quality remains strong. The portfolio's weighted average risk ratings were unchanged and remained at 2.2 on a cost basis and 2.1 on a fair value basis. Our Holdco unsecured debt investment in Denver Parent or Venoco was placed on non-accrual status for the quarter. At the end of March, non-accrual investments represented 0.1% of the fair value of the portfolio compared to 0.3% at the end of December. On a cost basis, these investments represented 1.3% of the portfolio at the end of March compared to 1% at the end of December. As you may have seen, Magnetation, one of our portfolio companies, filed for bankruptcy earlier this month and as a result, this investment will be placed on non-accrual status for the June quarter. The weighted average net leverage of our investments increased slightly to 5.5 times, up from 5.4 times and the weighted average interest coverage improved to 2.6 times, up from 2.5 times. Before, I turn the call over to Greg, I'd like to briefly discuss the transaction that was just announced last night. We recently entered into agreement to sell our investment in PlayPower to a private equity firm. Our investment in PlayPower accounted for 3.4% of the total portfolio at fair value by the end of March and included a preferred investment and non-yielding common equity investment. Importantly the sale will reduce the amount of equity in the portfolio as well as the amount of PIK income as we expect to redeploy the proceeds from the sale into cash producing assets. For the March quarter, PIK income accounted for 9% of total investment income, and excluding PlayPower would have accounted for 7% of total income. As a result, we expect our cash dividend coverage to improve. This transaction is subject to customary closing conditions as it's expected to close by the end of June. With that, I will turn over the call to Greg, and he will discuss financial performance for the quarter.

[Greg Hunt:]

Thank you, Ted. Total investment income for the quarter was $102.1 million, down 7% from last quarter and up 6% year-over-year. The decrease quarter-over-quarter was mainly due to lower prepayment income and lower fee income. Interest income for the March quarter included $4.4 million of prepayment income compared to $9.3 million in the December quarter and $5.5 million in the year-ago quarter. For the full year, interest income included $44 million of prepayment income. The portfolio yield improved to 11.2% at the end of the quarter, slightly above the prior quarter and a year-ago. Expenses for the March quarter totaled $50 million, compared to $53.4 million last quarter and $46.8 million for the year-ago quarter. The sequential decrease was due to lower incentive fees associated with decreased level of investment income generated during the period as well as lower management fees associated with the decrease in the average portfolio. The decrease was partially offset by a slight increase in interest expense associated with the $350 million of debt issued during the quarter, which I will discuss in a few minutes. Net investment income was $52.1 million or $0.22 per share for the quarter. This compares to $56.7 million or $0.24 per share for the December quarter and $49.6 million or $0.22 per share for the year-ago quarter. For the quarter, the net loss on the portfolio totaled $63.8 million or $0.27 per share compared to a net loss of $76.1 million or $0.33 per share for the December quarter and a net gain of $20.3 million or $0.09 a share for the year-ago quarter. The portfolio's net realized loss for the quarter was $53.6 million compared to a net realized loss of $74.7 million for the December quarter and a net realized gain of $17.3 million for the year-ago quarter. The unrealized loss for the March 2015 quarter was driven by both our quoted and non-quoted investments. Approximately half of the net loss for the quarter is attributable to equity investments, which can fluctuate due to changes in the level of company earnings and valuation multiples. Negative contributors for the quarter included our equity investments in LVI and PlayPower as well as our debt investment in Avaya, among others. Positive contributors to the performance for the quarter included our investment in Generation Brands and gains on a handful of quoted positions. The net loss for the quarter included approximately $10.2 million of net realized losses, although most of the amount was previously recognized in earnings. Realized losses related to our investments in Walter Energy, Molycorp and PetroBakken. In total, our quarterly results decreased net assets by $11.8 million or $0.05 per basic share compared to a decrease of $19.5 million or $0.09 per share for the December quarter and an increase of $69.9 million or $0.31 per share for the year-ago quarter. On the liability side of the balance sheet, we had $1.5 billion of debt outstanding at the end of the quarter, down slightly from $1.6 billion at the end of December. The company's net leverage ratio, which includes cash and unsettled transactions, was 0.72 at the end of March, down from 0.74 at the end of December. As Jim mentioned, we continue to focus on the right side of our balance sheet. During the quarter, we issued $350 million of ten-year unsecured debt with a coupon of 5.25%. The issuance was our first public unsecured institutional debt offering and had participations from over 20 institutions. We are appreciative of their support. While the immediate use of proceeds was to pay down borrowings under our revolver, the debt substantially replaces debt that is maturing in the next several quarters. The weighted average stated interest rate on our outstanding debt today is approximately 5.08%. Pro forma for our upcoming debt maturities and assuming the same amount of debt outstanding, our blended average borrowing rate should improve by 100 basis points. We also continue to receive strong support from our banks in our credit facility. Subsequent to year-end, we amended our revolving credit facility to extend the maturity by 18 months to April 2020 and increased total commitments by $40 million for a total facility of $1.3 billion. In addition, the stated interest rate on the facility was changed from LIBOR plus 200 to a formula-based calculation based on a minimum borrowing base, resulting in a stated interest rate of either LIBOR plus 1.75% or LIBOR plus 200 bps. As of today, under this formula, the stated interest rate on the facility is LIBOR plus 200. We are appreciate of our lenders and for their support. This concludes our prepared remarks and operator you may open the call to questions.

[Operator:]

[Operator Instructions] We have a question from the line of Robert Dodd with Raymond James.

[Robert Dodd:]

Hi guys, a couple of questions. First of all on the oil and gas side, on Caza and Miller, both of which if I look at the equities, the public equities as I look are highly stressed, if we look at Caza, obviously I think you preferred a covenant test until September, yet neither of them have any substantial on the material at all incremental markdowns this quarter. Can you just give us a bit more background on that and if there are parameters where -- what would need to happen for you to feel the markdowns would be necessary on those two assets?

[Jim Zelter:]

Okay, yes, so well, I mean, listen, we don't want to go into a whole bunch of detail about individual portfolio companies, but what I'd say is, both companies exhibit what a lot of our oil and companies have, they have full covenants, they have -- both Caza and Miller are both secured debt with small RBL carve outs and we continue to believe that we are covered by the asset value. So every quarter we update our valuation, our valuations we do every single quarter and send it out to private valuation firms and each quarter we are reevaluating the engineering underlying our asset coverage and on both of these we feel -- and if we feel that there is a big change, we obviously have reflected in the marks.

[Robert Dodd:]

Okay, got it. One housekeeping, the deployment number in the quarter 370, if I go to the cash flow statement, the investments made -- funded in the quarter was 480, so can you just reconcile that as a timing issue or a payable or what am I missing there?

[Greg Hunt:]

So the cash flow is for the full year.

[Robert Dodd:]

Well, obviously I took the delta between the full year and the nine months.

[Greg Hunt:]

So it could be just we exclude, we often exclude revolvers, some are deployment numbers, because that we're in and out of those, so we could exclude that, we'll take a look at it.

[Robert Dodd:]

Okay, got it, thank you. And then one final one if I can on the waiver, and obviously you've extended that for another year but even if I look at the two years where it's been in place. On the pre-incentive fee GAAP net income, if I can, the management fees, a 36% of that, I mean the bottom line question is, is that waiver big enough given the level of losses unrealized in some cases, but realized losses are greater over the last two years than the net unrealized. So if you can give us any more thoughts on what it would take to make a greater adjustment on that management fee, either the waiver or just the base management fee on a permanent basis?

[Jim Zelter:]

I would say that the board and management go through a pretty rigorous process at year-end. When we look at the industry, the corporation, the strategic objectives that we achieved and the board has voted this as the fee ongoing with the waivers as you've mentioned. And we collectively believe that this is the right structure for our company and it will be addressed next March on a subsequent year as all BDCs are. I'd say, one overriding aspect is, there is a whole host of strategic objectives that were put forth when this management team came on several years ago and notwithstanding a very challenging market, this management team has done a very nice job of achieving a lot of those in the board's eye. So, really believe that that's the right structure for us to move forward at this point in time.

[Robert Dodd:]

Okay, great. Thank you.

[Operator:]

Our next question comes from Greg Mason with KBW.

[Greg Mason:]

Great. Good morning. First, on the $20 million write-down in the PlayPower equity, I assume that should be relatively close to your exit value on the sale of that asset post quarter end?

[Jim Zelter:]

Yeah. So, just taking a huge step back, right, again when you look at the mark-to-market this quarter, a lot of it was driven by legacy equity positions. Obviously a big focus of the management team is to exit some of these older vintage private equity investments and redeploy that into earning assets. And so we announced the sale of PlayPower last night. Obviously we marked it. We knew we had pretty good idea of where the bid was at quarter end. And collectively we decided to sell it and redeploy those assets into yielding assets. So it should long term, as we mentioned in the comments that, A, it reduces the amount of PIK income in our portfolio pretty materially and number two, it allows us -- it's pretty accretive from an NII basis for us, because we can redeploy non-earning assets into earning assets.

[Greg Mason:]

Okay, great. And on the energy write-downs in the quarter, fairly broad based. It looks like what would you say is the portion of those that are just mark-to-market versus credit impairment and have those changed post quarter end with the rebound in oil?

[Jim Zelter:]

I mean, I think the vast majority of the markdowns we took this past quarter, again it's always very hard to forecast where oil prices are going to go, but we still feel very, very good about the coverage on lot of these. We mark them down pretty broad based to be prudent. But obviously with oil coming back this quarter and again just with our coverage statistics and everything else we continue to feel pretty good about the credit quality of this portfolio. So it was more broad based link to what I would say is -- they weren't company-specific issues. It was much more -- it was more broad based energy issues.

[Greg Mason:]

Okay. And then on the revenue side, dividend income popped this quarter after running, call it, $7 million for the last several quarters up to $11 million this quarter. Any color on the dividend income this quarter and how we should think about that going forward.

[Greg Hunt:]

Yeah, we are starting to receive on -- as you know, we were investing in some of our solar investments and those are now starting to generate dividends, so that's the primary piece of that. And then we also received a special dividend from ADT during the quarter.

[Greg Mason:]

And can you quantify that special dividend so we can think about a run rate going forward?

[Greg Hunt:]

Yeah, the special dividend was about $1.4 million.

[Greg Mason:]

Great. So do you think a $10 million run rate is the kind of the way we should.

[Greg Hunt:]

Yeah, $10 million run rate is -- we do have -- we have numerous investments that we've made at both our solar business and also in shipping, then have ultimately started to build dividend capacity. But at this point, that's a fine run rate.

[Greg Hunt:]

Maybe go – if you go through it name by name by name, the vast majority of this is more recurring, there is only that's one special for me ATD [ph] which was a small part of the total amount.

[Greg Mason:]

Okay. And then one final question. Just following up on Robert's question on the waiver, I appreciate you doing that again, but do you think the market gives you credit for the more attractive fee structure that you've made given that it doesn't – it's not permanent, you guys have been expanding each year, but do you think you could get more credit if you just made it permanent. And what do you think changes to where you wouldn't actually waive that going forward?

[Greg Hunt:]

You know, I think that's a good question, I think that we have a lot of dialog with our investors, our shareholders and our stakeholders and I think they appreciate that the commitment that Apollo has made in terms of buying back stock and making the fee waivers. And we feel that we have the right incentives and alignment of interest in coming up with this structure. Certainly there has – it seems that in the last year or two, there has been a bit more discussion on the topic. I think we feel good about where we have ended up in terms of what we've done and what we've delivered, but certainly I can't speak for the overall marketplace in aggregate, but we feel that our investors appreciate what we have done and we are working hard on their behalf to perform.

[Greg Mason:]

Great. I think with the waiver, a 1.7 base fee and 17 carry is attractive, but I just don't know that the market appreciates a given – all the documents still state 2 and 20 and uncertainty about the future around that. So I appreciate the comments, guys. Thanks.

[Jim Zelter:]

Thank you.

[Greg Hunt:]

Thanks.

[Operator:]

[Operator Instructions] Our next question comes from Jonathan Bock with Wells Fargo Securities.

[Jonathan Bock:]

Hi, good morning and thank you for taking my question. Real quick, just looking at additional name in the portfolio, Ted, so when I look at SquareTwo Financial, I see that it was marked roughly $0.90 on the $1.00 as of the end of the quarter. Yet, if you look at where the marks are today, it's obviously down a bit more. Could you give us kind of an update, people understand that there is going to be volatility and equity or volatility in perhaps energy investments as a result of the markets. Yet, when you look at a financial services company, which SquareTwo is, it would be helpful for the market to understand perhaps if this is an idiosyncratic issue and really what the problems were so as to not assume that credit losses may potentially tick up if performance like in that loan continues. Just an update there would be helpful, Ted, if you could.

[Ted Goldthorpe:]

Sure. So yeah, again that one is a marked security, it's been a portfolio for a long time. We know this company very well and it's been – Apollo has been around this company for a very long time. They buy basically distress receivables from large banks and there is obviously those regulatory change, it's kind of slowed down their originations. And we continue to think there is a lot of asset value there backed by receivables and you can kind of go through it. But it's not a typical financial services company, I mean, they are busy buying – they are buying distressed credit card receivables and working amount. And so we continue to think there is a lot of asset value and again it's a quoted security. So it's subject to mark-to-market. I mean, what I see broadly on some of these more liquid securities, which is obviously a much smaller part of our portfolio today is, there is a lot more volatility given the lack of liquidity in markets today and this whole theme of lower inventory of broker dealer or something else is really manifest and stuff. So there is a name that really doesn't trade that often, but the quotes move around quite a bit.

[Jonathan Bock:]

And then also maybe just taking a moment to understand forward view of spreads and NOI, just looking at the churn this quarter, which obviously -- it's a significant amount of first lien, excellent, while also still maintaining your yield. The view that is permeated the market today is spreads continue to tighten, CLOs that did not have an ability to buy anything at one now are 101 and it's hard to make math work, there is a lot of signs of spread compression becoming even more acute than it was in the past. And so, question on maintaining yields -- your onboarding yields that you're putting on this quarter, which were very healthy, particularly at the first lien level in the future given the fact that this quarter you ran in place and keep the total that yielded at 10.2 [ph] relative to 10.4 [ph] that went off the books going forward. Just your view on spread compression.

[Ted Goldthorpe:]

The spread compression we've seen in the last couple of months has really been seen in the syndicated markets. Middle market spreads actually are pretty substantially wider today than syndicated spreads. Now, that's not always the case. There has been periods of time over the last 12 months where the illiquid markets, sponsor finance business spreads are either on top of or pretty close to syndicated spreads and today, I would agree with all of your comments. This syndicated market is very, very tight right now and things -- we've seen again sticky spreads in our middle market business. So, we go through periods of time, if we go through our origination activity, our sponsor business is I would say is relatively consistent and we're actually still seeing pretty decent not only flow at that business but also decent spreads at that business. And we're seeing very little value, it's not core to our strategy, but anyway if it was core to our strategy, we're seeing very little value in the syndicated markets. So, we're not buying CLO equity, we're not buying regular syndicated debt. We're not really seeing any value there today.

[Jonathan Bock:]

Great. And then one last question, conceptual in nature, but there are -- there is a larger middle market lender that's likely no longer going to be part of a banking institution that it was once a part of. I think someone referred to it as McDonald deceptively getting out of the hamburger business. The question here, there are few folks that could effectively even consider owning such a franchise and beyond who ends up with it, that's a question; lots of people have asked BDCs and executives. Really what happens, right, because the types of loans that GE does, does it necessarily impact some of the [indiscernible] situational credit opportunities that Apollo does. And queries on your thoughts of potential share pickup and more importantly really what the dynamic looks like in the future wherever this little market lender that's deceptively being sold, wherever it ends up and how it impacts your business on a go-forward basis would be helpful, Ted.

[Ted Goldthorpe:]

It's a real watershed event for our business, I mean, they are the 800-pound gorilla in our market. The announced asset sales are contemplating are three times a size of the BDC sector and so, we haven't really seen the impacts today. We have not seen it competitively. We thought we would, but we really haven't seen. I mean, they're very much in business and still competing with us every day and I think it remains to be seen, but I think it just highlights the macro, which is the -- these large regulated institutions, you have a very big sophisticated extremely smart operator deciding to exit a business that they've been in for a long time. And so, it's a real watershed moment for our business. So, it should improve the competitive dynamics in our business, but it's really hard to say at this point. We really haven't -- as of today, we really haven't seen the impact day-to-day in our competitive environment, but obviously, longer-term, it's inevitable that will have implications.

[Jonathan Bock:]

And Jim, just given you sit atop the credit franchise overall of Apollo, just a view on kind of competitive dynamic and where this sits, where it does not just generally speaking overall as one of the largest alternative credit providers in the space, kind of where GE could sit strategically for folks and where it could not?

[Jim Zelter:]

Well, I think the bigger picture, John, is when you step back, what was it really means for alternative capital providers and providers of illiquid capital vis-a-vis the broadly syndicated market. So, certainly I think that the growth of alternative asset firms, the growth of BDCs, the growth of the products that we provide to borrowers today has expanded over the last five years and we'll continue to expand and I think that whatever happens in the this whole process, it will create a dynamic that investors will ask folks like us and our peers to play more of a significant role in providing debt capital solutions to companies. So I think just as Ted said, certainly a major watershed event and the dynamic growth of variety of players will continue to expand.

[Jonathan Bock:]

Got it. Thank you for taking the questions.

[Greg Hunt:]

No problem. Look forward to it. Operator any other questions?

[Operator:]

No, there are no further questions at this time, I will turn it back over to Jim Zelter for any closing remarks.

[Jim Zelter:]

Well, once again we appreciate the forum to release our quarterly and yearly numbers. We appreciate the questions and the following from our shareholders and then the analyst who cover us and look forward to talking to you in the near future. Take care, thank you.

[Operator:]

Ladies and gentlemen, that does conclude today's conference call; you may now disconnect your lines.