Good morning, ladies and gentlemen, and welcome to the Kohlberg Capital Corporation 2012 First Quarter Earnings conference call. An earnings press release was distributed yesterday, Thursday, May 10, 2012. If you did not receive a copy, the release is available on the company's website at www.kohlbergcapital.com in the Investor Relations section. [Operator Instructions] As a reminder, this conference is being recorded today, Friday, May 11, 2012. This call is also being hosted on a live webcast, which can be accessed at our company's website, www.kohlbergcapital.com in the Investor Relations section under Events. In addition, if you would like to be added to the company's distribution list for news, events, including earnings releases, please contact Denise Rodriguez at (212) 455-8300. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kohlberg Capital Corporation believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks, such as those described in the Risk Factors section of our 10-K and sections of our Forms 10-Q, and other SEC documents filed during the course of the year could cause the actual results to differ materially from expectations. Now, at this time, for opening remarks, I would like to introduce Dayl Pearson, CEO. Dayl, please go ahead.

Thank you, and thank all of you for joining Kohlberg Capital for a review of the company's first quarter 2012 financial results. I will open the call with some broad commentary about our activities during the quarter, including the impact of the acquisition of Trimaran Advisors, and we'll then discuss our investment portfolio in more detail. At that point, I will turn the call over to our Chief Financial Officer, Mike Wirth, who will provide a recap of our first quarter financial results and performance. We will then open the line up to your questions. First, let me provide a brief recap of recent events. On February 29, 2012, the company closed on the acquisition of Trimaran Advisors, and much of March was spent on integrating that acquisition into our Asset Management platform. As you will recall, as part of the acquisition, we purchased equity positions in 4 CLO funds managed by Trimaran for a cash purchase price of approximately $12 million. These funds contributed approximately $470,000 to our total revenues for the quarter. Obviously, we only realized one month's benefit of these distributions and full quarter dividend income for these incremental CLO fund securities will be realized starting with the second quarter. Over the next 12 months, we expect these funds to continue to generate cash distributions of close to 40% on fair market value. The remainder of the purchase price relates to the purchase of Trimaran Advisors Asset Management business. As part of the acquisition, key employees of Trimaran continue to be involved in managing those funds, including the 2 Principals, the Portfolio Manager and other key investment professionals. This strategic acquisition allows us to realize substantial economies of scale in operations and now that we have fully integrated the platform in the second quarter, KCAP should see…

Thank you, Dayl. Good morning, everyone. For the quarter ended March 31, 2012, we reported a net investment income of approximately $3.6 million or $0.15 per share, compared to approximately $5 million or $0.22 per share for 2011. Subtracting the onetime $2 million settlement we received from our lenders in the first quarter of 2011, the prior year's first quarter net investment income would have been $0.13 per share. Our total investment income for the 3 months ended March 31, 2012 was approximately $7.4 million, as compared to approximately $7.3 million for the same 2011 period. Although reflective of a slight increase in the first quarter year-over-year total revenues, the increase is more dramatic if compared to first quarters are normalized, by excluding the effects of a litigation settlement income in 2011, and our first quarter 2012 acquisition of Trimaran. The first quarter 2011 total revenues, excluding the onetime litigation settlement we received, were normalized approximately $5.3 million. If we backed out one month incremental effects of the Trimaran acquisition, the first quarter 2012 revenues of $7.4 million would be reduced by approximately $720,000 to a normalized $6.7 million. The $720,000 incremental debt of Trimaran, which is again for one month, includes approximately $470 million of income related to the Trimaran CLO funds, and $250,000 of dividends from the Trimaran Asset Manager Affiliates. The first quarter year-over-year investment income from debt securities increased 27% to approximately $2.5 million from approximately $2 million in 2011. This increase was primarily due to an increase in the size of our loan portfolio and thus, higher average investment balances in which interest is earned. The increase in the par amounts of debt securities held at March 31, 2012 of approximately $159 million, was a 27% increase from the $125.6 million par value to debt…

[Operator Instructions] I am showing our first question comes from Troy Ward from Stifel, Nicolaus.

Can you just talk briefly about the kind of the movements in the portfolio, both on the originations and the exit front. What did you see? How much of that -- from the exits in particular, how much of that was kind of stuff that you were looking to move out? And how much activity do you see coming from the market? And then also, it looked like the yield on the portfolio took a step down. Can you speak to what you're seeing on the yield side?

Yes, I think that one of the reasons the yield in the portfolio went down, I'll answer that question first, is we did add, as I mentioned, about $30 million of new broadly syndicated loan assets, which will go, once they're funded into the credit facility. But when we calculate the yield, those are already -- because we -- the loans have been purchased, although not settled, they actually show up on our portfolio. And so that drove the yield down, we got almost no income from that in the quarter. So it's a bit of an anomaly at this point. But again, the weighted average yield should be down a little bit because we do have these first lien loans. But again they're going to be funded by our credit facility with a lower cost base. So, but in terms of activity, we had -- not a lot. We had some small repayments during the quarter, primarily one sort of large one was a freescale semiconductor which was a bond position. We had that paid off at $105 million. And we had some smaller prepayments and normal amortization payments, but it was not a large amount of money, it was right about $5 million, Mike? Yes, about $5 million. We do expect to see some more activity in the second quarter against lower yielding -- on one lower yielding loan, which well we saw as an increase of our liquidity of about $7 million, which will really be redeployed and some of these new loans that were closing. So that will actually result in an uptick in our net interest margin, and our weighted average yield. And we also -- there's a potential for a repayment at one of our second lien loans, which will -- could, which would if it happens, result in a fairly large prepayment penalty on the order of $800,000 or $900,000. But again, that money will be redeployed fairly quickly.

Okay. And then can you just give us, Dayl, a little bit of background in Trimaran acquisition. Kind of how long have you known the group? And how did the transaction kind of come into being? And why did -- why was KCAP, kind of the person to consummate the transaction? Were there other players that are looking for these guys, as well?

Well, I think, first of all, I've known the principles of Trimaran Advisors for close to 20 years. And actually, I used to work with them in a previous life. So I think there was -- the first is a result, sort of a comfort level in terms of how we look at the world and credit culture, et cetera. I think, I know they had talked to other folks as well, but they didn't really want to get sold for cash. They saw the CLO business as a business that could grow. But they saw it difficult to grow in a small platform without a significant equity partner, who could take down a portion of future equity tranches and new CLOs, and so they saw the opportunity to sell the business. But obviously you got a significant piece of the upside of the business going forward by taking that substantial share acquisition in KCAP. And I don't think anyone else -- most other people they had talked to probably were just looking to buy them out for cash.

Okay. And then, you talked about the possibility or maybe the hope that as you've spoke -- you're speaking to dealers throughout 2012 to do another CLO, how important or how vital is that to the success of the transaction? I mean, what if the market doesn't -- what if Europe continues to throw us curve balls and such, or other JP Morgan events continue to happen and the CLO market doesn't come back in 2012, how will that impact this acquisition in how you view the space?

In the short-term, it's not going to impact the acquisition because again, we're not looking for a substantial amount of growth in fees or AUM's, or income in the short-term. I mean obviously, we think that over the long term, it's an important part of the acquisition. And we do think the CLO market will -- well probably won't be as robust as it once was, will continue to be there. I mean, I think a number of -- but sort of -- how the CLO market back over the last year or two has been the lack of investors in the AAA class. Generally, there've been 1 or 2 parties willing to take down AAA tranches, which is about 70% of the capital structure of a CLO. That has changed fairly dramatically over the last year. And now you have as many as a half a dozen people looking to invest in those assets. And that's in a very attractive asset class, certainly at LIBOR 120 or 130, which is where those are currently getting done. So we do think that the market for new CLOs will be there. Will it be volatile like all financial markets? Yes. But we do think we will get new CLOs done. Obviously there's no guarantee we're going to get something done in 2012, but based upon, sort of the current marketplace, we believe that there are a high probability we can get something done in 2012.

Yes and can you just give us a little bit of color on that CLO market that you see today, compared to 3 or 4 years ago, from a pricing standpoint, and also a leverage standpoint, what that new CLO market looks like today?

Yes, I think, if you just sort of dial back to sort of mid-2007, the leverage is not substantially worse. It's a little bit lower leverage, but not lower, maybe 10x, instead of 11x. The big difference is in the pricing of the AAA's. The pricing in the AAA's in Katonah X I believe, was LIBOR 23 or LIBOR 24. Now we're talking about LIBOR 120 to 130. Obviously, the -- on the asset side, those yields are very different, too. Instead of LIBOR 200 or 225, for broadly syndicated loans, now there's higher than that, and most new loans still have LIBOR floor so the yield comes somewhat higher. So the arbitrage still works. I think it's more, obviously, more difficult and more dependent upon managing these things very, very well, which was one of the attractions for the Trimaran acquisition.

Okay. And then just one last one. On the professional fees in the quarter. How much did you say was related to Trimaran and will there be any additional fees, kind of onetime fees, hitting in the second quarter?

The -- directly at KCAP, it was about $130,000, and then at the affiliate level, the Trimaran affiliate which would pay up a dividend to KCAP, it was about $400,000 and...

It's a little over $600,000, the impact, or almost $700,000 is the impact on it. And we don't really see much in the way of additional fees in the sales of [indiscernible]. We tried to get as much as we could in the first quarter, just because we knew there was going to be a lot of noise, as there was in the first quarter last year. So we expect the run rate fees to sort of, return to the normal. If you look at the fourth quarter of last year...

$495,000?

$400,000 as opposed to $900,000. And again, also some of that, as Mike said, was at the Trimaran levels. So that -- those -- that just reduced the distribution we got from Trimaran and KDA, so.

Okay and then one last one on KDA. If, I think I have the number right here, $825 million was brought in through the lines this quarter, how much capital is being retained down at KDA for future dividends?

There is some capital down at the KDA level. I don't know what the number is off the top of my head, I believe it's about $1 million that hasn't been distributed.

But again that will probably go up as we start to see additional fee -- see income, coming in from Trimaran. So we sort of look at it as a combined asset management business, technically separate legal entities. So that will start to grow, based upon how much we decided -- distributed. As I said, last year, it was about, well over $2 million of net income at KDA. For the next 4 quarters, we were expecting that to continue to around $2 million, and then you'll add in what we talked about earlier, a sort of $3 million to $3.5 million from Trimaran, assuming no CLOs. We obviously continue the ability to upstream that as we need to support the dividend at KCAP.

[Operator Instructions] And I'm showing no further question.

Okay. Well, thank you all very much. And we look forward to talking to you on our second quarter conference call. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the conference, and you may now disconnect. Everyone, have a wonderful day.