Good morning, ladies and gentlemen, and welcome to the KCAP Financial, Incorporated Conference Call. An earnings press release was distributed yesterday. If you did not receive a copy, the release is available on the company's website at www.kcapfinancial.com in the Investor Relations section. As a reminder, this conference call is being recorded today, Thursday, August 4, 2016. This call is also being hosted on a live webcast, which can be accessed at our company's website at www.kcapfinancial.com in the Investor Relations section under Events. Today's conference call includes forward-looking statements and projections, and we ask that you refer to KCAP Financial's most recent filings with the SEC for important factors that will cause actual results to differ materially from these projections. KCAP Financial does not undertake to update its forward-looking statements unless required by law. I would now like to introduce your host for today's conference, Mr. Dayl Pearson, President and Chief Executive Officer of KCAP Financial. Mr. Pearson, you may begin.

Thank you, Ashley. Good morning, and thank you for joining KCAP Financial for a review of our second quarter 2016 results. Today, I will review some of the important highlights and activities from the second quarter, as well as provide some context for our direct lending business and the performance of our asset manager affiliates. I will then turn the call over to our Chief Financial Officer, Ted Gilpin, who will provide a brief recap of our second quarter operating results and our financial condition at the end of the quarter. We will then open the line for your questions at the end of the call. A presentation outlining a few of our key accomplishments during the quarter can be found on the IR section of our website. To start, let me provide a brief recap of some of the important highlights from the second quarter, which are summarized on Slide 3 of our earnings presentation. For the second quarter of 2016, our NII was $0.14 per share. Our second quarter shareholders distribution was $0.15 per share, consistent with the $0.15 paid in the first quarter as well as the fourth quarter of 2015. I would now like to discuss the performance of the securities business and asset manager affiliates in more detail. Turning to Slide 4. During the quarter, we invested approximately $10 million in new originations. This was primarily funded by repayments and sales of placeholder assets. These new loans had a yield generally comparable to the assets which they been replaced. Credit quality over the portfolio continues to be strong with only one nonaccrual loan representing less than 1% of the company's total investments at cost at June 30, 2016. At the end of the first quarter, we placed 1 new loan on nonaccrual. Subsequently, we decided…

Thank you, Dayl. Good morning, everyone. As of June 30, 2016, our net asset value stood at $5.45, down from $5.50 at the end of the first quarter of 2016 and down from $5.82 December 31, 2015. As mentioned, the company declared a $0.15 distribution in the second quarter of 2016 consistent with the first quarter as well as the fourth quarter of 2015. Net investment income was $5.1 million or $0.14 per basic share for the second quarter of 2016, up from $4.8 million or $0.13 per basic share for the first quarter of 2016, down from $5.8 million or $0.16 per basic share for the second quarter of 2015. At this point, I'd like to discuss the details of the second quarter results for 2016. Interest income on our debt securities for the quarter ended June 30, 2016, was $5.2 million compared to $5.7 million for the first quarter of 2016 and $5.9 million for the second quarter of 2015. Our debt securities portfolio contribution of total investment income currently stands at 54%. Investment income from CLO fund securities was $3.4 million in the second quarter of 2016 compared with $3.2 million in the first quarter of 2016 and $4 million in the second quarter of 2015. Dividend income for our asset manager affiliates was $850,000 in the second quarter of 2016, an increase of $300,000 from the first quarter of 2016. The asset manager affiliates did not return capital in excess of their tax basis earnings in the second quarter of 2016 compared with a return of capital of approximately $500,000 in the first quarter of 2016 and $1.1 million in the second quarter of 2015. The company recorded net realized and unrealized depreciation of approximately $2 million or $0.05 per basic share during the quarter ended…

[Operator Instructions] Our first question is from Andy Elmer of JMP Securities.

Dayl, I was hoping you could good provide a bit more color on your views of the CLO market and your ability to close the CLO this year given that CLO spreads have rallied and issuance has picked up.

Yes, I think that's a great point, Andy. The CLO market, as I mentioned, has improved dramatically since its lows in sort of February, early March of the first quarter. Spreads on AAAs have come in probably by 15 to 20 basis points. It was very difficult to market a deal in the fourth quarter, first quarter and even second quarter. I'll -- it's continued to improve since the beginning of the third quarter. And we -- obviously, our raising of a CLO is a private placement, so I can't really comment much on the status of what we're doing other than to say that we did upsize the warehouse by adding some additional first loss, which I think is a good indication of our thoughts of whether or not we think we can get something done in the near future.

At this time, I'm showing no further questions. Oh, I'm sorry. There's a question from the line of Troy Ward from Ares Management.

Dayl, just a quick follow-up on the last question regarding the CLOs. Can you speak a little bit to what potential changes the retention rules may make in your CLO ownership and your issuance from Trimaran?

Sure. I mean, I think as with everybody, we're working -- I think we have various solutions in place to deal with risk retention. I think part of the problem with actually dealing with risk retention is the final rules have still not been written. So I think people are reluctant to lock into a specific structure on deals today. So I think when you're in the market right now, people are looking for a deal that is risk-retention ready, not risk-retention compliant. And I think as we market deals, we have the ability to make that assertion given the fact that we do have a structure in place to do risk retention, which may or may not have to be changed once the final rules come out, assuming they do come out this year. There's been some speculation. We don't assume this to be the case. There's been some speculation that given that it's already August and no one's put the pen to paper yet, that like a lot of other things, these risk-retention guidelines may be pushed back. We're assuming they're not going to be.

With the structure that you are contemplating and have in place, does that imply any change in economics to KCAP on the ownership?

If there are changes, we think it will be marginal. But again, until we have sort of the final structure in place and the financing in place, it's hard to comment beyond the fact that we don't think it's going to be a major change.

At this time, I'm showing no further questions. I would now like to turn the call back over to Dayl Pearson. Sir?

Thank you very much, and thank you all for participating in the call and asking questions. And we will be talking to you again in November unless something comes up in the meantime. Thank you very much. Take care.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may all disconnect. Everyone, have a great day.