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Fifth Street Finance CEO Discusses F1Q2011 Results - Earnings Call Transcript

The format for today’s call is as follows. Len will provide an overview, Bernie will provide an update on each of our lending facilities, and Bill will summarize the financials, and then we will open the line for Q&A.

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

Leonard Tannenbaum

Thank you Stacey. I appreciate all of your patience regarding this call which was somewhat delayed due to our very successful and oversubscribed equity offering. From an economic standpoint, we are witnessing a recovery. Although we have noticed that it’s not robust or rapid.

The growth in our earnings is due to both margin expansion and revenue growth. In addition, since September 30, 2010 we have additional refinancings totaling approximately $54 million. The refinancing of our second-lien position in (inaudible) retailer was with prepayment penalties and our first collection of a TICC [ph]. The transaction was executed apart. We also have continued to aggressively pursue remedies for our portfolio problem companies those rated three, four and five.

Turnover of investments is an important component of earnings for BDCs as refinancings typically raise short-term earnings for those companies like ours where amortize the origination points over the life of loan as we do. We expect this quarter to be another very strong quarter for originations. Quarter to-date, we’ve originated $123 million and expect more deals to close in the near future.

I believe we are seeing high growth in deal volume for several reasons. Private equity sponsor views as a top provider of one-stop middle market solutions. And we’ve gained significant momentum from our $273 million of investments during the first fiscal quarter of 2011. Our new Chicago office is starting to generate very positive results, and our relationships are spanned in the country. In addition, the ability to commit to an entire transaction and syndicate it down later provides us with some additional pricing power in this market.

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