WhiteHorse Finance , Inc. (NASDAQ:WHF) has entered into an amendment to its existing loan agreement, extending a key investment period by one month. The amendment, effective as of November 21, 2024, pertains to the company's subsidiary, WhiteHorse Finance Credit I, LLC, and involves major financial institutions including JPMorgan Chase (NYSE:JPM) Bank and Citibank.
Specifically, the amendment extends the "Reinvestment Period" definition's prong (i) from November 22, 2024, to December 22, 2024. This adjustment allows for an additional month during which WhiteHorse Credit can reinvest in its portfolio under the terms of the amended loan agreement.
The loan agreement in question is the Fifth Amended and Restated Loan Agreement, originally dated April 28, 2021, and subsequently modified on several occasions. The most recent amendment, known as the Eighth Amendment, includes WhiteHorse Credit as the borrower, JPMorgan Chase Bank as the lender and administrative agent, Citibank as the collateral agent and securities intermediary, WhiteHorse Finance as the portfolio manager, and Virtus Group LP as the collateral administrator.
This strategic move by WhiteHorse Finance comes as part of its ongoing financial management efforts. The company has not disclosed any further details regarding the reasons for the extension or its future investment strategies.
WhiteHorse Finance, Inc. is a publicly traded business development company that primarily invests in secured loans and other types of debt securities. The company's activities are aimed at generating attractive risk-adjusted returns for its investors, primarily through dividends and capital appreciation.
This news is based on a press release statement and a copy of the Eighth Amendment, which is filed with the Securities and Exchange Commission. The amendment to the Amended Loan Agreement can be found as Exhibit 10.1 in the current 8-K report. WhiteHorse Finance has made no further comments on the forward-looking implications of this amendment.
In other recent news, WhiteHorse Finance's performance has been the subject of scrutiny by Oppenheimer and Raymond (NS:RYMD) James, following the company's third-quarter results for 2024. Oppenheimer downgraded WhiteHorse Finance's stock rating from Outperform to Perform and lowered the price target to $12, citing a loss of $0.30 per share and a negative 9.0% return on equity (ROE) for the third quarter. The company's net losses totaled $16.0 million, largely due to markdowns in investments such as American Craft, Honors Holdings, and Telestream.
Raymond James also adjusted its stance on WhiteHorse Finance, downgrading its rating from Outperform to Market Perform. This decision was influenced by WhiteHorse Finance's earnings and net asset value per share falling short of projections, raising concerns about its credit outlook. Both firms have raised doubts about the sustainability of the company's base dividend, currently set at $0.385 per share each quarter.
Despite these concerns, WhiteHorse Finance's Q2 2024 earnings disclosed a net investment income exceeding the company's base dividend, despite a slight dip in net asset value per share. The company reported gross capital deployments totaling $55.8 million in Q2, with a fair value of the investment portfolio standing at $660 million. Raymond James anticipates the dividend to be fully covered due to spillover income, which is substantial enough to maintain the dividend through at least the summer of 2025.
InvestingPro Insights
WhiteHorse Finance's recent amendment to extend its reinvestment period aligns with several key financial metrics and trends highlighted by InvestingPro. The company's dividend yield stands at an impressive 17.05%, supporting the InvestingPro Tip that WHF "pays a significant dividend to shareholders." This high yield is particularly noteworthy given that the company "has maintained dividend payments for 13 consecutive years," as another InvestingPro Tip reveals.
The extension of the reinvestment period could be a strategic move to address some challenges. InvestingPro Data shows a revenue decline of 5.91% over the last twelve months, with a more pronounced quarterly revenue drop of 11.66% in Q3 2024. This context makes the additional month for reinvestment crucial for potentially improving the company's financial performance.
Despite these challenges, WHF remains profitable, with a gross profit of $97.44 million over the last twelve months, matching its revenue figure and indicating a 100% gross profit margin. This profitability aligns with the InvestingPro Tip stating that WHF is "profitable over the last twelve months."
For investors seeking more comprehensive analysis, InvestingPro offers additional insights with 7 more tips available for WhiteHorse Finance, providing a deeper understanding of the company's financial position and market performance.
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