Good afternoon. And welcome to the Golub Capital BDC Inc. June 30, 2011 Quarterly Earnings Conference Call. Before we begin, I would like to take a moment to remind our listeners that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than the statements of historical facts made during this call may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time-to-time in the Golub Capital BDC, Inc.’s filings with the Securities and Exchange Commission. For a slide presentation that we intend to refer to on the earnings conference call, please visit the Events and Presentations link on our homepage of our website, www.golubcapitalbdc.com and click on the Investor Presentation’s link to find the June 30, 2011 investor presentation. Golub Capital BDC’s earnings release is also available on the company’s website in the Investor Relations section. I will now turn the call over to David Golub, Chief Executive Officer of Golub Capital BDC. Please go ahead, sir.

Thank you Tom. Good morning, everybody and thanks for joining us today. I am joined today by Ross Teune, our Chief Financial Officer. I hope you’ve had a chance to review our earnings release in our investor presentation that we posted on our website. I mean to refer to the presentation and Ross will as well as go through the call today. I am going to start giving you an overview of the June 30th quarterly financial results, Ross is going to then take you through the results in more detail and then I’m going to come back and give you an update on our new credit facility with Wells Fargo and the additional SBIC debenture commitments, which we recently received approval for. So let me get started. We had in solid quarter in the period ending June 30 with EPS of $0.31 a share. In addition, we made particular progress on four of the key goals that I outlined in our last quarterly conference and I want to review each of those. The first was strong originations. As expected, we had strong originations in net asset growth for this quarter. I’ve highlighted on page 4, you can see our new investment commitments for the quarter were $135.8 million that is up from $54.6 million in the prior quarter. If you look at the $135.8 million, a $113.8 were new investments in middle market loan and equities while the remaining $22 million represented, what I view as a temporary investments in broadly syndicated bonds that we bought shortly after the follow-on offering. After you take into account sales and pre-payments, net earnings growth was $49.5 million, plus about $11.5 million for our new total returns. I’ll talk more about the total returns later. We account for that per GAAP on…

Thanks David. I will be starting on slide 3 of the Investor Presentation. As David mentioned, earnings per share for the quarter was $0.31 per share. This was down from $0.33 per share last quarter. Earnings per share for the quarter, was consistent with our expectations, taking in to account, dilution from the additional shares that we issued to the follow-on offering back in April. Net investment income for the quarter was $0.28 per share down a $0.01 from $0.29 per share last quarter and net realized and unrealized gains on investments was $0.03 per share also down a $0.01 from last quarter. This is our fourth straight quarter of positive, net realized and unrealized gains on the portfolio of investments or what we sometimes refer to negative credit losses. Our net asset value remained unchanged for the quarter at $14.75 per share. And lastly on this page as noted at the bottom of the slide, the fair value of our loans as a percentage of principle continues to churn up and it is 98.1% of the par value at the end of June 30th. Turning the slide over to portfolio highlights. David mentioned that we closed the new investment commitments totaling $135.8 million for the quarter, of which $13.8 was new commitments in middle market loans and equity securities. This was up significantly from the $54.6 million from the last quarter. Exits from repayments and sales totaled $79.6 million for the quarter for overall net funds growth in loans and equities securities of $49.5 million. As David also mentioned, we invested $11.5 million in cash collateral account as part of total return swap transactions. So our net increase in total investments was $61 million. As shown in the asset mix table, kind of in middle from the bottom of…

Thanks Ross. As Ross noted in his balance sheet review our liquidity position at June 30th was solid with 73 million in unrestricted and restricted cash and cash equivalents. We recently increased our debt capacity to provide additional capital to fund new investment opportunities. I want to give you some details on that. On July 21st, we closed on a $75 million senior secured revolving credit facility with Wells Fargo. The key terms of that facility are as follows: It’s got an advanced rate of 60% on new first lien loans including unitranche loans and 40% for last out loans. It’s got a 15 month reinvestment period from the closing date and after the reinvestment period principal collections are going to be used to pay down borrowings. It’s got a five-year maturity and the interest on rate the loan is LIBOR plus 2.25% during the reinvestment period and LIBOR plus 2.75% thereafter. It would be our target year to amend this facility to increase it in size and to increase and to lengthen the reinvestment period overtime. In addition to the Wells facility on July 21st we also received approval from the SBA for an additional 51.7 million in debentures. So if you add our currently outstanding debentures of 48.3 and these newly approved one’s, we have authority now for a total SBIC borrowing of up to 100 million of which we’ve drawn 48.3 million. Last on June 17th, we entered in to a total return swap with Citi. The purpose of the total return swap was to provide us some more efficient way to gain exposure to broadly syndicated loans. Under the terms of the total return swap, we have the ability to recommend purchases of loans subject to Citi’s approval rights. The maximum size of the total return…

(Operator Instructions) Our first question comes from the line of Joel Houck from Wells Fargo.

Just on the total return slab you know if you look in the queue, it looks like the language implied with the vast majority of loans originated by Golub, is that the case in how in order of the other loans are in the total return slab from what kind of degree of control if any do you guys have on, what gets put in there.

Yeah no question, it makes that terrific financial economic sense though that’s helpful and then in terms of the accounting, is the, is everything, both the income as well as the capital gains and losses flow below the line on this TRS?

Good question. So Ross correct me if I have the technical accounting wrong on this but currently we showed the TRS in two places on the balance sheet. There is a gain loss that is in the investments account and there is a cash collateral account representing the cash collateral. So from an income statement standpoint we would show gains or loss on the position through our investments account, Ross from an income statement standpoint, am I correct in saying that would be in unrealized.

Yeah, there's unrealized and realized activity, but it all flows below the line kind of in that net gain or loss on the income statement.

Okay, but the interest and fees you received less than what you pay to Citi, that cash component, is that also below the line?

That's also below the line as well, correct.

And so it offloads into the net change and unrealized depreciation or appreciation on investments?

That's correct.

We will proceed to our next question from the line of Greg Mason from Stifel Nicolaus.

Good afternoon gentlemen, this is Troy Ward. Following up on Joel’s questions about the assets coming off of your balance sheet into TRS, can you just speak to the level of pre-payment activity that you anticipate outside obviously of what you saw this quarter coming out of GRS and will you have any additional assets coming off your balance sheet into the TRS one?

Let me answer both of those questions. In respect of the first one which is what kind of repayment activity do we anticipate seeing in the portfolio outside of the TRS, my expectation based on market conditions right now is that we are going to see some slowdown in repayment activity. It’s been running at a relatively high rate over the course of the period since our IPO, my expectation is in the context still of a challenging securities market that the degree of refinancing activity is going to slow and so we’re going to see more repayments that are the result of new deal activity. It is our experience that for a really extended period that our loans average of roughly three-year weighted average life. So my expectation would be in the near-term that we see that lengthen out a bit, probably end up between three years and four years, so that would put us at an annualized rate of repayments on the middle market portfolio up between 25% and 33%. With respect to your second question, are there other assets that we anticipate pulling off of the balance sheet and putting into the TRS, not material.

Okay and then I think I saw 46 million in the Q came off with the balance sheet into the TRS, is that correct and what was the timing of that, when were those sold out of the balance sheet?

You are correct that we sold roughly $46 million of loans in June and that a corresponding portfolio was purchased into the total return slot at that time. So that’s all reflected in our June 30th financials.

Okay and then one last one just on the environment. You’ve seen any big changes may be intra, even as much as intra-quarter or post quarter, as specifically in the market and may be the spreads on unitranche and subordinate debts?

We are in the process right now of having our market digest recent events and I think it’s important for me in the context of answering your question provided I just point out the obvious which is, today with what debt markets have been doing over the course of the last week, I think the answer to your question part is, we don’t know yet. My expectation is that we are going to see an environment where there will be some modest widening of spreads on middle market senior and probably a somewhat more pronounced widening of spreads on middle market subordinated debt. But it’s very early to be prognosticated.

Great, thanks David.

Thank you very much. (Operator’s Instructions) And our next question comes from the line of Dean Choksi from UBS. Please go ahead.

Good afternoon gentleman. Just have a question on the total return swap. I mean, how does that impact your leverage calculation and can you just talk about the numbers we should be looking out there?

Sure. Under GAAP the total return swap is accounted for as a derivative. So it shows up on the balance sheet as I mentioned earlier two ways as a cash collateral, in a cash collateral account, it’s called a due from broker. And in a mark-to-market of the position, that is in our investment’s account. Those are the accounts that are then factored into the leverage calculation. So in terms of the go forward period it is $100 million total returns swap in total. So we have relatively small amount of incremental assets that we can build in that facility under its current terms.

And that how would be treated for, against the RIC, that BDC leverage test?

Yes. GAAP and RIC.

And just on the line, the new credit facility. Did you mention like unused facility fees or any sort of origination fees around the line?

Yes, we can. There was the usual, which is to say that there were both kinds of those fees. There was a fee upon creation of the facility and there is an arrangement under the facility for Wells Fargo to get compensated for unused amounts. We will get back to you with the specifics on it. The unused calculation is little bit complicated.

Okay. And the final question is, you have done a good job kind of like freeing up some balance sheet capacity with the TRS and then acquired some resources of debt capital. What we can refer about the pipeline of new deals, granted these things were done in weeks past and the market has changed a little bit but how should we think about that the growth opportunities going forward?

So going in to the September 30th quarter our pipeline was strong and we were anticipating a robust quarter. I think to give you an honesty answer today, I would tell you my guess that we’re going to see, at least a significant chunk of that pipeline shift to the right because of the higher degree of uncertainty that’s in financial markets right now. So, I still think it will be a solid origination quarter but I think there is no question that we are going to see some shifting to the right of closings relative to what I would have anticipated as recently as a month ago.

Thank you.

Thank you very much. Our next question comes from the line of Ross Haberman from Haberman Management Corporation. Please go ahead.

Good morning. Good morning gentlemen, my questions have been answered. I appreciate it. Thank you very much.

Thank you. (Operator Instructions) We do have another follow-up question from the line of Greg Mason from Stifel Nicolaus. Please go ahead.

Great. Thanks guys. Just a follow-up a little more on the CRS. Can you talk about what your expectations are for your ROEs in this vehicle and then to follow up some more, just to make sure we get this accounting stuff right, as it comes below the line, is that going to be an unrealized or a realized impact when the actual cash transfers either from you or to CitiGroup?

Well, when the cash gets transferred, it does show as a realized event. But there is a kind of quarterly waterfall and so, when there was, the netting of the cash takes place, that shows up as a realized gain or loss.

And will that happen, like the very end of every quarter or will there be, or will it be intraquarter when that waterfall is calculated?

It doesn’t occur at the end of each fiscal quarter. It’s kind of intraquarter.

Okay.

At the exact waterfall day, but I can get that.

Great. And then David your expectation just kind of ROE on this TRS facility?

My expectation is a low double-digit yield.

Great, thank you.

Thank you very much. Our next question is from the line is J.G. Rogers with Janney Montgomery Scott. Please go ahead.

Hi good afternoon guys. I just wanted to get a sense of what you thought the willingness was on the part of private equity sponsors to do new deals now given the sort of increasing macroeconomic concerns and obviously recent events will take a while to filter through. But just wanted to get sense of what you guys potentially see of may be not this next month but three months or four months or six months out?

It’s a great question. It is a question that we spend some time in an internal deal meeting this morning talking about. I think the answer is, we’re not through yet. Our sense is that the fundamental dynamics that have led us to anticipate relatively high levels of middle market M&A by which I mean a group of buyers who have a lot of money to spend, sellers where there is some pent-up demand, those still remain. But one of the ingredients that we’ve talked about before that was an underpinning of increased middle market M&A activity was reasonably predictable EBIDTA and then expectation that it’s directionally getting better. So I think those last two are the two pieces that are more in the category of question marks at the moment. I think that if securities markets stabilize and we see this as a slowdown, but not as a new downturn, then there will be a relatively quick recovery in middle market M&A markets. But I think that in the near-term we are likely to look at a world where a significant number of the transactions in progress get delayed.

And then obviously credit quality has been very good, but sort of while we’re speaking what kind of trends are you seeing in portfolio company fundamentals scenario; is there a top-line growth, is there cash flow growth, just trying to get a sense of the actual fundamentals of your current portfolio and then maybe some of the deals that you've been looking at recently?

Obviously, every credit is unique, but I would say in terms of generalizations, we are seeing continued strong profit performance by our Obligors. We are not seeing signs in our Obligor’s performance that indicates a double-dip downturn. Now, it maybe that the securities markets are forecasting something that is coming and results are a lagging indicator, but we are not seeing securities markets responding to something that has already happened, at least not in our company. We are seeing continued solid profit performance.

Thank you. We do have another follow-up question from the line with Joel Houck from Wells Fargo. Please go ahead.

Actually two follow up. One, can you give us a sense for the average coupon in the TRS?

These are historic, the loans that we started out with and a few that we bought since that are at the low end of our range of typical pricing. So this would be, loans that would be in the double B and B2 range within the broadly syndicated world. So I don’t have an average to be able to give you, and I don’t want to pick a number, but this would I would say consistent with typical single B and double B broadly syndicated events.

The second follow-up was, what are the implications for taxable earnings ordinary income or otherwise, for the TRS if everything’s come in from a realized gain perspective, can you retain those there is still payout requirements under BDC rules.

I don’t know the answer to that, off the top of my head. I will tell you as a dividend policy matter that we intend to continue to have our dividend track to EPS. So we are not really focused on above the line, below the line the way that some other BDCs are. In fact, you’ve heard me give long speeches about how I don’t really believe in the distinction at the end of the day what shareholders get is EPS, not in [II] and some other BDCs like to play hide the ball and say our credit losses that happened between those two don’t matter. We managed the EPS. So I’ll get back to you on the technical matter, but I wanted to answer the question from a philosophical standpoint. The shareholders and analysts should look at our EPS path is the best indicator of our future dividend growth.

And Mr. Golub, we have no further questions at this time. I will turn the call back to you.

Well, thank you everyone for joining us on this call and as always, please feel free to get in touch if you have any further questions. We appreciate your partnership.

Thank you. Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation and ask that you disconnect your lines. Have a good day everyone.