Hello ladies and gentlemen and welcome to the Portman Ridge Second Quarter 2019 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder this conference call is being recorded. I would like to turn the conference call over to your host Mr. Ted Goldthorpe, Chief Executive Officer.

Thank you operator and good morning. Thank you for joining us on our earnings call. Today Portman Ridge announced its second quarter 2019 financial results. As you know on April 1st, we closed an externalization transaction and at that time an affiliate of BC Partners Advisors LP became the external manager of Portman Ridge Finance Corporation. Additionally on August 1st we announced that Portman Ridge has entered into a definitive agreement under which OHA Investment Corporation will merge with and into Portman Ridge. The transaction is subject to OHAI shareholder vote and to the extend approved is expected to close in the fourth quarter of this year. For details about the merger please refer to the press release issued on August 1st which is available on the Portman Ridge website and the replay of a shareholder call hosted on the same day. We are excited about this opportunity as it embodies an important step in our vision for the BDC space and is expected to be an accretive transaction for both OHAI and Portman stockholders.I will begin with a few comments about the market and our strategy and then turn the call over to Ted Gilpin our CFO for brief overview of the financial results. And then Patrick Schafer, our Chief Investment Officer for a review of investment activity before concluding the call with some additional remarks.The market has seen increased competitiveness over the last few quarters so we are being very selective in general. Specifically within the unit tranche asset class which has been in the preferred structure in the sponsor universe for some time now. There has been a recent trend for unit tranches to be increasingly clubbed up amongst few lenders versus going with one solution. And as a result our hit rate for that product has increased. We are continuing to find value in our non-sponsored vertical as well as in stretch senior deals. These stretch senior deals have materially less leverage than unit tranches with only a minor reduction spread.We're pursuing junior capital solutions in only the most attractive of circumstances and only in companies with economically resilient business models. Over the next few quarters we will look to continue to reduce our CLO equity exposure and replace it with investments in our senior and unit tranche joint ventures which we continue to believe provide attractive risk adjusted returns. With that I will hand it off to Ted Gilpin to review the second quarter financial results.

Thank you, Ted and good morning everyone. Net investment income for the quarter was approximately 880,000 or $0.02 per basic share compared with net investment income of 2.5 million or $0.07 per share in the quarter ended June 30, 2018 and a net investment loss of 2.2 million or negative $0.06 per basic share in the first quarter of 2019. During the quarter we were required to take a non-recurring, non-cash, non deductible impairment charge to write down the lease rate of used asset for office space previously occupied by the company that resulted in a hit to NII of approximately 1.4 million or $0.04 per basic share. Without the lease impairment charge NII would have been 2.3 million or $0.06 per basic share.Although net asset value per share declined by $0.12 to $3.73 per share during the second quarter, a significant portion or approximately $0.08 of the decline was attributable to the aforementioned lease impairment and a stockholder distribution in excess of net investment income earned during the quarter. The remaining $0.04 per share or 1% of NAV was driven by realized and unrealized losses in the underlying portfolio mostly in our structured products portfolio.Investment income from debt securities in the quarter was approximately 3.8 million compared with approximately 2.9 million in the first quarter of 2019 and approximately 4.3 million in the second quarter of 2018. Investment income on CLO fund securities in the second quarter of 2019 was approximately 1.7 million compared with approximately 1.8 million in the first quarter and 1.5 million in the second quarter of 2018. Investment income from joint ventures both the Great Lakes JV as well as S3C JV increased in the second quarter of 2019 to approximately 1.3 million from approximately 1.1 million in the first quarter 2019 and approximately 700,000…

Thanks Ted. I'd like to now discuss the current state of the portfolio and how we have begun to reshape it since the externalization. During the quarter we made investments into 12 borrowers four of which were into the existing portfolio companies and eight of which were brand new borrowers. In aggregate these investments totaled $46 million of face value, 27% of which were first lien securities and 63% of which were second lean securities with the remaining investments being add-ons to the Great Lakes joint venture and a small preferred equity investment. The weighted average spread on these first lien securities was 534 basis points and the weighted average spread on the second lien securities was 897 basis points.Additionally over the course of the quarter we exited 12 legacy KCAP positions at an aggregate carrying value of $22 million for aggregate gain of $236,000 relative to their carrying value as of March 31st. The largest gain was related to the pay down of Verdesian Life Sciences which is marked at 90% of par as of Q1 2019 and was repaid at this time all participants are in a listen-only mode. With respect to the portfolio as a whole there were no incremental non-accruals during the quarter nor any material credit events as evidenced by the relatively limited realized and unrealized losses Ted Gilpin highlighted.Finally post quarter we have committed to $21.7 million of face value loans all of which are first lien securities at a weighted average spread of 564 basis points and we continue to have a strong pipeline of opportunities both sponsor and non-sponsor that the team is actively pursuing. With that I'll turn the call back over to Ted Goldthorpe.

Thank you, Patrick. During the second quarter we began to reposition the portfolio including reducing the company's exposure to CLOs as a portion of total investments and then a net asset value. And we'll continue to seek opportunities in the middle market lending space to prospectively enhance net investment income. We're excited about our recently announced proposed merger with OHA Investment Corporation which demonstrates BC Partners commitment to pursue attractive opportunities in the market. If approved by OHAI stockholders the combined company will be managed by Sierra Crest Investment Management and is expected to increase total assets by approximately 20% allowing for larger hold sizes on the portfolio and increasing earnings per share by spreading out our public company costs over a larger base.As Patrick mentioned in his remarks since April 1st we have deployed or committed to deploy 67.7 million of capital in predominantly first lien securities. Most of these investments were proprietarily sourced through the BC Partners platform and the ability of Portman Ridge to co-invest alongside other BC Partners entities pursuant to the co-investment order previously discussed at the time of the externalization, will allow us to compete with other major market participants in a way that the fund historically could not.Going forward we will continue to work towards reducing non-core and low yielding assets including opportunistically exiting our structured credit exposure. In short we believe the portfolio is trending in the right direction and we are looking forward to continuing our repositioning work. We'll continue to reposition the portfolio in subsequent quarters based on the long-term objectives of net investment income growth and NAV stability for which the restructuring of the dividend policy approved by the Board on August 5th was a key element. Right sizing the dividend to track more closely to the earnings power of the company will improve NAV stability and allow us to deploy more capital and high yielding illiquid investments generated by the broader BC platform.We also believe that the expenses incurred due to the externalization have been realized and expect more earnings stability going forward. Thank you for your support. And with that we'd like to turn over the call to questions.

[Operator Instructions]. Your first response is from Paul Johnson of KBW. Please go ahead.

Good morning guys. Thanks for taking my questions. Just had a couple today. I was going to ask as far as the higher G&A cost this quarter, I imagine some of that is due to probably the OHA merger transaction. Is that what drove the higher G&A and do you expect any of that to continue in the coming quarters?

Well, there really was not a lot related to OHA yet. There are still some noise in the expenses related to the externalization, mostly related to sort of insurance costs and obviously the lease impairment and other lease associated expenses. But I think generally speaking and a little bit of professional fees still associated with putting that altogether. But I think one of the reasons the OHA transaction is so attractive is that you're going to be able to spread our G&A cost, semi fixed across a bigger platform. So, I think that you'll see them moderate a little bit. But as Ted said we have watched through a lot of the key cap externalization expenses now through this quarter.

Okay, so you're saying you expect G&A expense to be relatively kind of where they're at today than going forward, maybe moderating a little bit?

Yeah, it should moderate a little bit and you'll see some relief on some of the other lines like insurance expenses.

Yeah, so as we mentioned in the last call and publicly the last couple of months there was some lingering expenses that -- externalization. So those are now through the system and those mostly manifest themselves as legal bills. The OHA expenses there's nothing in here related to OHA and so that's not what drove it. And obviously you saw the lease impairment which is non-cash, really an accounting issue. It had nothing to do with cash or anything else. And so it's a new accounting pronouncement that just came out in the last quarter. So that to me is just a non-cash accounting issue, that doesn't represent the core earnings power of the vehicle.

Okay, thanks for that color. Secondly, the Board obviously sets the dividend while you guys come to my [ph] earning as I sort of look at your earnings today I know there's obviously the onetime lease impairment charge of $0.04, I think you guys made $0.02 this quarter that is roughly $0.06 kind of maybe a run rate from here today, I am just curious, do you guys see path going forward for earnings to get maybe higher than a dividend to comfortably cover that dividend. So I mean can you walk through some of the steps to get there?

Yeah, why don't I start and my partners can weigh in. You know I think number one is, I mean we obviously see a path towards earnings growth. Number one just the just the natural reposition of the portfolio if you look at where we've been monetizing assets and where we have been originating assets, we're picking up a decent amount of spreads. So I think you'll get some NII expansion. We have been hurt by the LIBOR reduction and I think that's probably going to be an issue for a lot of BCs. Obviously we don't have matched funding, part of our funding is fixed. So that's been a bit of an earnings headwind and to extent we're able to close the OHAI transaction. Clearly that's very accretive for shareholders on NII basis. So we try to set the dividend at a level where we really felt we were well covered by operating earnings. And we think we can actually grow earnings off of where we are today.

Okay. And then just to make sure you guys are still committed to waiving the fees to about $0.10 dividend level basically through I think first quarter 2019, is that correct or first quarter 2020, is that correct?

Yes. So let me just take a step back and explain the NII guarantee. The NII guarantee was set at a level that gets adjusted for any known accruals that happened before April 1st. So, if you run the math through it we are still doing that and still committed to doing it. It's contractual. But the actual guarantee is now around $0.33 cents.

Okay, and then lastly I just was hoping that you could provide a little bit more color, I don't think I'm quite as familiar with BDC Great Lakes JV, can you just kind of remind me exactly what that is and what the plans are for that in the future?

Yeah, so we have a unit tranche joint venture with a large bank whereby when we do a unit tranche it goes into the vehicle very, very similar to a lot of the other SSLPs that you've seen other BDCs do. The difference between this one and most of the other ones is this bank has a lot of origination. So we get to leverage off their origination. We can veto any deal and so last year I think we saw 180 unit tranches and approved six. So we've been pretty selective about what goes into the vehicle. So it's not just a play -- it's not just a pure leverage play like you've seen some of the joint ventures, this actually is a true partnership where we get to leverage off of big banks originations.

Also are you guys putting leverage into that vehicle?

Yes, the vehicle itself is again similar to the Antares [ph] main vehicle or the Aries [ph] vehicle well before it's a kind of first out last out unit tranche structure in kind of a fund dynamic. So it's no different. We do a unit tranche, oftentimes we'll sell a first out piece. It's basically a whole bunch. It's basically selling one big first out piece against a unit tranche portfolio. So leverage is pretty low, like it's CLO equities probably five times more levered than this vehicle and the returns are kind of similar. So we actually think it's very good risk reward for our shareholders.

Okay, thanks for that. That was all my questions.

Okay, thanks.

Thank you. Your next response is from Christopher Nolan of Ladenburg Thalmann. Please go ahead.

Hi, Ladenburg Thalmann. Either Ted, is there a target ROE for Portman Ridge now?

I think listen, I think over time obviously you have to adjust -- you have the overhang of low rates right now, the 10 year treasury [ph] is below 1.78 which is pretty amazing. I think we should be striving to have a double digit ROE. I mean that's where we need to be. I think if you look at our projections and earnings models I think there's a path to achieve that both through all these initiatives you talked about and to the extent that when interest rates rise we greatly benefit from that. So absent a rise in rates our goal should be to hit a double-digit ROE. And today we're tracking -- today we're tracking like high single-digits.

Okay, great. And then so it sounds like on that the current dividend, the new $0.06 a quarter dividend sort of implies roughly a 9.7% ROE according to my back of the envelope calculation, so assuming that you're able to hit the high single-digits that success should be pretty stable?

Yeah, I mean we want to set dividend policy at a place where we don't have to talk to you guys about it ever because we want to set a level that we know we can hit. So again we feel very comfortable that the new dividend policy is going to be stable. And then again we want to be in a situation where we can create earnings and NAV stability. And again we've been over distributing income vis-à-vis our earnings power for quite some time. So we think this actually achieves the dual objectives of not forcing us to stretch for yield, allowing us to pay a nice distribution to shareholders, and still maintain a very high dividend yield. Therefore we can potentially have upside appreciation in the stock but at the same time stabilize NAV. We are kind of in a situation where NAV just continues to go down because we're over distributing income?

Understood. Okay, turning to the balance sheet that your unsecured notes I believe are callable in September. What's the thinking around that?

Yeah, I mean they're callable in September to the extent that we want the flexibility to go above the 1 to 1 leverage that we could either try to restructure those or call them and issue new debt. Whether that would be fixed through baby bonds or through other types of structures we're not sure yet but I think the thinking is that eventually we'll put ourselves in a situation where we have more flexibility.

Is the inclination towards another debt issuance or to expand the revolver?

Well, we're looking at both. I mean I think that there's room to do another debt issuance but we are constantly looking at revolver possibilities whether it's expanding it or doing something similar. But I don't think either one is off the table.

Got you, and then final question, the impact from the -- on earnings from the recent Fed move, do you guys have any guidance as to how much that might hit earnings?

Yeah, I mean you'll see that -- you'll see the exact [indiscernible] laid out in our 10-Q, yes, we would provide you guys that information. I mean the reality is, the reality is we don't have a -- okay, we're not match funded. So cuts and short term interest rates definitely affect earnings but again we -- that's all factored into our earnings models and dividend policy. So I think in the Q it's on page 35, so you can see obviously cuts and short term rates are not good for the BDC sector and then you always ask a question like why are they cutting rates. Again, the good news is the BDC sector is usually they cut rates in an environment where we're in a recession or the economy is very weak. You know the middle market, the U.S. economy is still very strong. So things like Chinese tariffs and currency moves and trade wars have a much bigger impact on multinational companies than the company that we service. So, you are -- the credit quality is still very, very good in our portfolio and our companies continue to hold pretty well.

Great, okay, thank you for taking my -- I'm sorry, that's it for me. Thank you.

Thank you. Your next response is from Chris York of JMP Securities. Please go ahead.

Good morning guys and thanks for taking my questions. And also forgive me if they have been asked as I am managing a couple of calls. So Ted I have a couple of strategic questions about the advisor this morning. So given the BDCs co-investment exemption and the advisors management of Mount Logan in Canada and then a growing demand for debt capital by the cannabis industry. I'm curious if the advisors are evaluating the investment in any cannabis companies or the industry for a bigger picture and then how are you thinking about this potential specialty funding niche?

Good question. I think it's a -- listen for Portman Ridge shareholders it is not a vertical that we're going to pursue. I think the risk reward sector actually is pretty interesting. But we are limited being a NASDAQ listed company and Federal related company on what we can and cannot do in that sector. So as you know there is -- just because its state legal doesn't mean it's federally legal. And so we have -- we are -- we have some restrictions around what we do, even if we love the sector and we thought it was the greatest place to lend it would be very difficult for us to do it out of Portman Ridge. And then vis-à-vis Mount Logan in this vehicle there's limited circumstances we'll co-invest. I mean the reality is that their cost of capital and where we need to be from an hourly perspective just doesn't allow us to do low yielding first lanes, just hard. And Mount Logan allows us to do that. So when we're talking to a sponsor or a family about doing a deal together we are able to offer them a full suite of products and to extent that securities to are yielding for our [indiscernible] shareholders that might work for our Mount Logan shareholders. So Mount Logan is basically a lower yielding, higher levered vehicle.

Kind of makes lot of sense. And then switching gears so BC Partners confirmed a strategic minority investment by Blackstone this week which was quite a positive announcement. So the terms weren't disclosed but I think the Journal reported it being about 500 million Euros. So should investors expect that BC Partners credit could receive some of this investment to grow your credit business and how may this strategic investment help BDC?

Another great question. So yeah this was just announced a couple of days ago. What it provides us is a balance sheet and credit to expand our business. You know obviously in direct lending there is some benefits to scale. This allows us to scale our business and invest alongside our piece. So this is undoubtedly good for Portman Ridge shareholders. We are much better capitalized BC Partners the partnership. And now we've got a pool of capital that we can invest in different credit vehicles and products. So as the head of our credit business I can't be more excited about the transaction and over time I think Portman Ridge shareholders will see the benefits of the transaction.

Got it and then is it may be reasonable to think that you could be investing in the team and then maybe could you remind us of your team size in terms of originators or investment professionals?

Yes, so I mean that's obviously part of the process. So today we've got 16 investment professionals and a very large non-investment professional operation and that's for a company of our size. So obviously we are built to grow and build to be bigger. And we are firmly of the belief that the bigger the funnel we can create the better risk reward opportunities our shareholders will see. So, yes, I mean this is not a transaction that is like us cashing in, this is a transaction meant to help grow and strategically elevate our business.

Got it, those were my questions. So thanks for the time and insight Ted.

I am showing no further questions in the queue at this time. I would like to turn the call back over to Ted Goldthorpe.

Great. Well, thank you very much for dialing in to our call and thank you very much for your continued support and we look forward to continuing engaging with our shareholders over the next couple of months. Thank you.

Ladies and gentlemen this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.