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Apollo Investment (AINV)

Q4 2012 Earnings Call

May 23, 2012 10:00 am ET


Elizabeth Besen

James Charles Zelter - Chief Executive Officer, Chief Investment Officer and Director

Edward Goldthorpe

Eileen Patrick

Gene Donnelly - Chief Financial Officer; Interim Chief Financial Officer and Treasurer of Apollo Investment Corporation

Patrick J. Dalton - President and Chief Operating Officer at Apollo Investment Corporation


Arren Cyganovich - Evercore Partners Inc., Research Division

Richard B. Shane - JP Morgan Chase & Co, Research Division

Greg Mason - Stifel, Nicolaus & Co., Inc., Research Division

Kannan Venkateshwar - Barclays Capital, Research Division

Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division

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Good morning, and welcome to Apollo Investment Corporation's Earnings Conference Call for its fourth fiscal quarter ended March 31, 2012. [Operator Instructions] It is now my pleasure to turn the call over to Elizabeth Besen, Investor Relations Manager for Apollo Investment Corporation.

Elizabeth Besen

Thank you, operator, and good morning, everyone. I'm joined on the call this morning by Jim Zelter, Chief Executive Officer; Ted Goldthorpe, President and Chief Investment Officer; Eileen Patrick, Executive Vice President of Corporate Strategy; and Gene Donnelly, Interim Chief Financial Officer.

I'd like to advice everybody -- 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 disclosures in our press release regarding forward-looking information. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those statements and projections. We do not undertake to update our forward-looking statements or projections unless required by law.

To obtain copies of our latest SEC filings, please visit our website at

At this time, I'd like to turn the call over to Jim Zelter.

James Charles Zelter

Thank you, Elizabeth. This morning, we issued our press -- earnings press release and filed our annual Form 10-K with the Securities and Exchange Commission. I'll begin my remarks today with some financial highlights for the quarter followed by a review of some other recent business highlights. Following my remarks, Ted will provide a brief overview of the current market environment and we'll then review investment portfolio activity for the quarter. Eileen will then discuss some of our recent strategic accomplishments. And finally, Gene will discuss our financial results in detail. We will then open the call to questions.

Consistent with our philosophy of improving transparency and disclosures, we have posted a financial supplemental presentation on our website this morning. Gene will briefly discuss this presentation in his remarks later this morning.

Moving to financial highlights, we are pleased to report fourth quarter net investment income per share of $0.21 for the quarter ended March 31, 2012. Net asset value per share rose 5% to $8.55 at the end of the March quarter compared to $8.16 at the end of December 2011. The increase was driven primarily by unrealized appreciation. During the quarter, we invested $147 million and received proceeds from sales and prepayments of $340 million. Our investment portfolio ended the quarter at $2.68 billion at March 31 compared to $2.70 billion -- $2.78 billion at the end of December. In addition to reporting earnings, we made a couple of other important announcements this morning. First, we are extremely pleased to announce that we have entered into a new 4-year $1.14 billion facility, senior secured credit facility. This facility replaces our existing facility and bears an interest rate of LIBOR plus 225 basis points, which is 75 basis points lower than our existing facility. The new facility has a 4-year maturity of May 2016, which includes a 3-year revolving period that ends in May 2015. This new facility provides us with substantial long-term liquidity and in a very favorable rate.

Second, we are also very pleased to announce today that we have named Greg Hunt as Chief Financial Officer and Treasurer of Apollo Investment Corporation. Greg has an extensive finance background and has been a CFO for several companies, including a number of Apollo Global Management private equity portfolio companies. We are excited to have Greg on the senior management team of Apollo Investment Corporation. We'd also -- we and the team would also like to thank Gene for serving as Interim CFO and Treasurer for the company for the last several months.

Moving to some other recent highlights. In our last call, we said that we were considering raising additional equity capital. We spoke with many of you and heard your concerns and concluded that raising equity through either a marketed transaction or rights offering was not -- was currently not in the best interest of our shareholders. Apollo Global Management then decided to make a $50 million common equity investment in Apollo investment Corporation and net asset value. Our investment advisor is waving the base management and incentive fees associated with equity capital for a 1 year period. We believe this investment and the fee waiver demonstrates explicit support from Apollo for this flagship private debt vehicle.

Also in early April, we announced that we made an investment in the senior loan vehicle managed by Madison Capital. This investment helps us achieve our objective of expanding into additional investment strategies and having greater exposure to proprietarily originated senior secured loans and asset class, which we believe will be an important part of our portfolio going forward. Eileen will discuss this investment in greater detail.

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