Good day, ladies and gentlemen, and welcome to the Quarter One 2013 Solar Senior Capital Limited Earnings Conference Call. My name is Matthew and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. And now I would like to turn the call over to Mr. Michael Gross, Chairman and CEO. Please proceed sir.

Thank you very much and good morning. Welcome to Solar Senior Capital Limited’s earnings call for the quarter ended March 31, 2013. I am joined here today by Bruce Spohler, our Chief Operating Officer and Richard Peteka, our Chief Financial Officer. Rich, could you please start off by covering the webcast and forward-looking statements.

Of course, thank you Michael. I would like to remind everyone that today’s call and webcast are being recorded. Please note that they are the property of Solar Senior Capital Limited, and that any unauthorized broadcast, in any form are strictly prohibited. This conference call is being webcast on our website at www.solarseniorcap.com. Audio replay of this call will also be made available later today as disclosed in our press release. I would like to call your attention to the customary disclosures in our press release regarding forward-looking information. Statements made in today’s conference call and webcast may constitute forward-looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance, financial condition or results and involve a number of risks and uncertainties. Actual results may differ materially as a result of a number of factors including those described from time-to-time in our filings with the SEC. Solar Senior Capital limited undertakes not duty to update any forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website or call us at 212-993-1670. At this time, I would like to turn the call back to our Chairman and Chief Executive Officer, Michael Gross.

Thank you, Rich. At Solar Senior Capital, as credit investors, who invest not only our shareholders money but our own, we believe our long-term success is measured as much by the loans we pass on as is by the loans in which we invest. In the first quarter of this year, total liquid loan volume climbed to $185 million, just shy of the second quarter 2007 record of $188 million. The bulk of this activity supports refinancings, repricings and dividend recap rather than new leverage buyouts. By the end of the quarter, the average new issue clearing the old liquid leverage loan had fallen 90 basis points from December 2012, resulting in an average new issue yield of just 5%. Although, the sloppy market conditions are not as pronounced in the middle market with the average new issue yield over 70 basis points higher than that available in the more liquid loan market, we exercised restrain. We invested only in those loans with acceptable credit risk and yield commensurate with that risk. As a result of established relationships with sponsors and extensive familiarity with repeat issuers, we were able to source several new investments that met our stringent underwriting criteria during the first quarter of 2013, resulting in management portfolio growth that increased the defensive nature and diversification of our overall portfolio. This trend is continuing into the second quarter as we speak. Due to the strong prepayment activity we experienced in the fourth quarter of 2012, our average earnings assets in the first quarter were lower than in the fourth quarter, resulting in net investment income per share of $0.28. The prepayment fees and acceleration to always be in the repayments in Q4 provided excess cash for earnings which allowed us to more than fully cover our first quarter…

Thank you, Michael. Solar Senior Capital’s net asset value at March 31, 2013 was $210.1 million or $18.25 per share compared to a $174.1 million or $18.33 per share at December 31, 2012. Our investment portfolio had a fair market value of $239.6 million on March 31st, an increase of approximately 13% when compared to our investment portfolio of $212.6 million at December 31st. At March 31, 2013, we had investments in 33 portfolio companies, in 20 industries. The weighted average yield on our income producing portfolio of investments with 7.0% at March 31, 2013 measured at fair value. For Q1, 2013, gross investment income was $4.5 million versus $6.1 million for Q4 2012. The decline was primarily driven by greater repayment activity in the Q4 of 2012 quarter, which had generated significant income in that period. Expenses totaled $1.3 million for the first quarter compared to $2.7 million in Q4 of 2012. The decrease primarily stems from the recognition in Q4 of approximately $1 million of one-time charges related to our credit facility amendment to which we extended the maturity and reduced pricing. For the three months ended March 31, 2013, our net investment income was $3.1 million or $0.28 per share versus $3.4 million or $0.36 per share for Q4, 2012. Net realized and unrealized losses for Q1 2013 totaled $223,000. The net unrealized loss was primarily attributable to one investment, Engineering Solutions & Products which we've decided to place on non-accrual status during the quarter. At March 31, this investment represented approximately 2% of the fair value of our investment portfolio. For Q4, net realized and unrealized losses totaled $2.7 million. Ultimately, our net increase in net assets resulting from operations totaled $2.9 million for the quarter ended March 31, 2013, [versus] an increase of $0.8 million for Q4. Earnings per share totaled $0.26 per share for the March quarter compared to $0.08 per share for Q4 2012. At this time, I would like to turn the call over to our Chief Operating Officer, Bruce Spohler.

Thank you, Rich. In general, the operating performance helped steady or improved across our portfolio of companies at SUNS. We remain pleased with the overall credit quality of the SUNS portfolio. Our growth during Q1 further diversified our portfolio, with investments in 33 issuers across 20 industry groups. Our average investment size is approximately $6.8 million. In light of this recent spread compression in the new issue market, I would like to reiterate our patient and prudent investment philosophy. We will continue to be disciplined in deploying our available credit capacity and to only those investments that meet our strict underwriting standards. The weighted average investment risk across our portfolio measured at fair market value at the end of Q4 has remained steady at Q1 at approximately 2 based on our 1-to-4 risk rating scale with 1 representing the least amount of risk. The weighted average yield of our portfolio based on fair value was 7% on March 31, as compared to 7.8% at 12/31. The impact of the reduction in yield is somewhat offset by the 25 basis points reduction in our borrowing costs on our underlying credit facility, which was reduced as part of our November 2012 amendment. In the portfolio secured loans account for approximately 97% of fair value at the end of the quarter and 98% plus of the assets at fair value bear interest at a floating rate. For our first net investments, the weighted average leverage to our investment charge is in the mid 3 times and the average cash interest coverage across our portfolio is a healthy 3.3 times. As Rick mentioned during the quarter, we placed ESP on non-accrual. At quarter end, the investment had a fair value of 4.9 million representing 2% of our portfolio’s total fair value. ESP provides mission-critical…

Thank you, Bruce. As evidenced by Bruce's commentary, on our first quarter portfolio activity, the middle market senior secured loan space has been robust with near record volumes in the first quarter, a large portion of which was issuance in connection with refinancing. In periods of heightened activity like these, we believe manager discipline is even more crucial. When the issuer in our portfolio refinances, we use the transaction as an opportunity to re-underwrite the credit or reinvest all in the new loan if the investments’ risk reward profile continues to be compelling. Our total knowledge of these companies in relationships with management and the sponsors including our experience at Solar Capital gives us an edge on the underwriting process. In situations where we don't feel the deal term appropriately compensated the credit risk we pass new investment opportunity. We believe the refinancing wave is lessening as rates at absolute lows. In the event of a market dislocation we stand ready to reap, leverage our familiarity with the credits which we passed under new refinancing by buying on that better value in the secondary market. Since inception our new investments have averaged approximately $50 million per quarter and with our current capital base we are comfortable with a pace of approximately $200 million in annual originations. Importantly we have sufficient dry powder from the January equity raise and assess toward delayed draw feature of the credit facility to fund portfolio growth. Although spreads have tightened in credit with the (inaudible) we continued to find attractive opportunities in the senior secured space for commercial banks to become less active. We believe middle market loans continue to be mis-priced relative to syndicated bank loans and high yield. Year-to-date the 20 (inaudible) of inflows into floating rate, bank loan mutual funds equate to…

Thank you. (Operator Instructions) And your first question comes from the line of Mickey Shlen from Ladenburg. Please proceed.

Help me understand the trajectory of NOI per share. I comprehend raising equity capital when the window opens and sometimes the window opens because the market is frothy like we saw in the first quarter but the downside is that there are apparently not enough investments opportunities in the quarter for you to put all the money to work. So we saw your debt to equity drop to only 0.1 times. So in my model, I can’t see how SUNS can earn its dividend from NOI without meaningfully increasing its leverage, but given the current spreads in the market, where and how faster we go from here and are you more inclined to increase leverage or to adjust the dividend to reflect the portfolios earnings power?

The answer is more inclined, showing to be more inclined to increased leverage and a couple of examples I wanted in Q1, when we just went through there, we were able to increase the portfolio by 13%, at yield that we thought were quite attractive 6.2% compared to leverage, liquid loan market of 5%. That’s trend continued again this quarter, so you should expect to see similar portfolio growth, so we think we will grow back into similar portfolio level that we experienced at year-end really rapidly and get NII back close to (inaudible).

The other thing I would mention Mickey is that as you know as part of our equity raise we also have already pre-matched that with available credit capacity under our delay drop facility. So our expectation when we raise this capital in January with the position the company to continue to increase the leverage as we continue to invest the portfolio over the course of this year. So as Michael mentioned we are comfortable with what we have done in Q1 and Q2 to-date, and you should see that trend continue. I think that the repayment activity we saw in Q4 which was outstanding relative to any other quarter, at SUNS has also abated. So we expect that portfolio growth and as you know in the meantime, given the substantial NII beat in Q4, we do have carry over taxable income to cover the dividend, while we ramp in the portfolio.

Bruce, what portion of the deal flow in the first quarter would you consider broadly syndicated loans, of the loans that you invested in?

I think by name Asurion is the one asset that is clearly broadly syndicated given that they have a $4 billion of capital structure, the other is more mid-market and as we highlighted a couple of situations like ABB were situations where we were existing investors and we under rode, things like the Asurion we have been investors, we touched on since ‘07 and really in Asurion this was an opportunity to get an asset that if that was issued in the 99 that is currently quoted north of one of one, and as we mentioned in Q1 we exited five of that $15 million and we will continue to transition out of that, that’s a good transition asset given our history with the company and really our value there was given our strong relationship with the company we were given allocation that others were not able to get even though it is a large liquid loan. So today if you want to buy Asurion you have to come to us and paid close to one or one and a half and we are on that two points lower, but long term that is lower yield and so we will transition out of that. But beyond that we see it is mid-market when ABB and ATI were re-underwriting interesting credits where the new names of the portfolio.

Okay, just quick follow up question perhaps for Rich, can you give us the sense of how much fee income was included in the fourth quarter and in the first quarter as oppose to straight interest income?

Fourth quarter Mickey was really a mixed bag, there was the $80 million that came out that did generate significant amount of call premiums, but we also had the refinancing of our own credit facility which had a lot of one time cost to which kind of offset that.

But Rich if I recall in Q4 before the repayment of the credit facility cost we were up in the 40s.

We had $0.10 of loan and charges related to that credit facility. So while we finished at $0.36 or $0.46 without that. So we did have significant much higher than where our dividend $0.10. So a huge percentage increase. For Q1 I think it was more normal activity, every quarter we will have a little bit. We had a 22 million come out this quarter of the 22 I should say 17 came out all the way, 5 was from sales maturity that Bruce mentioned, but that equates to about $0.03 [$0.035] for Q1.

(Operator Instructions) And your next question comes from the line of Jonathan Bock from Wells Fargo Securities. Please proceed.

To follow up on Mickey’s point of leveraged use and may be just looking back historically understands that your target leverage is 0.8, which makes total sense given the collateral and we’ve been no where near that amount which hopefully now time is changed right, and you’ve got attractive opportunities in your drilling. The question is not really if you will end up covering the dividend, eventually you can if you lever but more of a function of when, and is it reasonable to assume that one might see leverage and portfolio go to a point where this dividend could be covered in two quarters or is it four to six quarters.

I think just to step back as you know as we’ve ramped this portfolio, we have always covered the dividend. We walked this dividend up to manage and match our growth in the portfolio given that this was a approval cash when we closed the original IPO. And so we've continued to walk it up and have always covered it. And I think the anomaly here is that in Q4 as Rich just took you through, we had $0.10 of prepayment fee income that flow through the NII in connection with that $80 million of repayments. So fortunately that did give us excess taxable that is allowing us to rebuild the portfolio. I think that as Michael mentioned, we continue to think the $200 million a year origination pace, call it $50 million on average across the quarter with $60 million in Q4. It was in the 40s in Q1. So I think that's a fair pace as we think about the ramp here and really the thing that's a little bit unpredictable is that repayment activity which was closer to $20 million in Q1 which we see is more normalized. It’s our expectation that at some point later this year we will have rebuild this to the point that it’s back to the [11.75] and depending on market yields, you should see an opportunity to even grow beyond that.

Jonathan, this is Rich. I'll just add to that, keep in mind that given the asset class and the size of SUNS, we do get upfront fees which we’re amortizing, but for tax in taxable income we are getting the cash in the door day one, that's taxable income, that supports the dividend, but for GAAP we are amortizing that. And then again just to reiterate, this is the first quarter I think the midst and I think that's just timing due to the repays in Q4. So this is a different asset class. We feel good about the portfolio growth. I think we talked about it in some of the other parts of the script.

And be mindful also now that we are larger we can take larger investment sizes in each investment, which also accelerates the pace of rebuild here. As we started with a pool of cash, we're investing $4 million and $5 million on average today, our investment size is 10 plus and so you will see us deploy that remaining capital, I think rather consistently.

I appreciate that. And Rich, I completely agree that amortizing upfront fees over the life loan, obviously a very conservative practice and happy to see that. I guess the question was essentially historically in terms of how you cover the dividend, but the fact that a capital rate at such a low level of leverage close to point when you have significant repayments kind of puts you a little further behind the Apple, but I guess what you are saying now is that there is an ability now that you have a little bit more scale to grow beyond that and maybe raise at that level while it might not necessarily be earnings accretive immediately can end up benefiting people over time. Is that a fair statement?

Yeah, I think that’s a fair statement. Obviously it was accretive from an ad perspective issuing above book and I think in any quarter, it's going to be difficult to replace your capital. I would argue you don’t want your management team doing that, you wanted to be patient particularly in this environment, but we believe that we set the balance sheet for the year and that you will continue to see more growth as we did in Q1.

And I think it's pretty typical of [BDC] to raise capital as they expect, given their pipelines to be able to deploy in the short to medium term, generally one to two months but some other things that happen, but from our perspective, we're comfortable with that timeframe.

Thanks for your question. I would now like to turn the call back over to Michael Gross for closing remarks.

Thank you all for your time this morning. We look forward to talking to at the end of next quarter or if you have questions in turn, please give us a call. Thanks.