Good day, ladies and gentlemen, and welcome to the Q3 2017 Solar Senior Capital Earnings 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] I’ll now like to turn the call over to Michael Gross, Chairman and Chief Executive Officer, please go ahead.

Thank you very much and good morning. Welcome to Solar Senior Capital’s earnings call for the quarter ended September June 30, 2017. I am joined here today by Bruce Spohler, our Chief Operating Officer; and Rich Peteka, our Chief Financial Officer. Rich, would you please start off by covering the webcast and forward-looking statements?

Of course. Thanks, 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 Ltd. 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 replays of this call will be made available later today as disclosed in our press release. I'd also 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 conditions. 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 no 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. The third quarter of 2017 another solid quarter of operating performance for Solar Senior Capital. Our diversified portfolio of senior secured floating rate loans continues to perform well and is 100% performing at September 30, 2017. Net asset value was up $0.02 per share to $16.81, and GAAP net investment income up $0.35 per share fully covered our distributions. The third quarter saw the continuation of recent trends with the leverage loan market supported by capital inflows, low interest rates and stable issuer fundamentals. The lack of new money opportunities combined with below average default rates and slow but steady economic growth, have extended the issuer friendly underwriting environment. Against this backdrop, we were able to essentially maintain our portfolio size by reinvesting the proceeds from repayments into senior secured first lien loan that met our stringent underwriting criteria. In this extended period of elevated repayments and frothy credit markets, Solar Senior has remained disciplined. Our priorities have not changed. First and foremost is to preserve capital and protect net asset value. Second, is the user available capital to source senior secured investments that meet our strict underwriting criteria and grow net investment income. Third is the leverage of the strategic initiative to enhance our weighted average yield. Fourth is to continue to seek investment opportunities that expand our specialty finance capabilities in senior secured lending hedges that are less competitive, offer attractive risk adjusted returns and have lower correlation to the liquid leverage loan market. And finally, to invest these principles aligned with our fellow shareholders and focus on building long term value. Furthering our strategic objectives Solar Senior Capital recently announced on October 24, that it acquired North Mill Capital which is a leading commercial finance company that provides asset-backed financing to U.S. based small…

Thank you, Michael. Solar Senior Capital Limited's net asset value at September 30, was $269.5 million or $16.81 per share. This compares to a net asset value of $269.1 million, or $16.79 per share at June 30. Solar Senior's investment portfolio at September 30, 2017 had a fair market value of $368 million in 46 portfolio companies operating in 22 industries compared to a fair market value of $375.3 million in 48 portfolio companies operating in 21 industries at June 30. At September 30, 2017, the weighted average yield on our income producing portfolio was 8.3% measured at fair value, up from 8.2% for the prior quarter and 100% of our portfolio of investments is performing. At September 30, 2017, net leverage decreased to 0.32 times from 0.39 times at June 30, and Solar Senior's target leverage continues to be at 0.8 times. Pro forma for the North Mill acquisition net leverage would have been approximately 0.5 times at September 30. From a P&L perspective, gross investment income for the three months ended September 30, 2017 totaled $8.0 million versus $7.7 million for the three months ended June 30, 2017. Net expenses for the three months ended September 30, 2017 were $2.3 million compared to $2.0 million for the three months ended June 30. In our third quarter 2017, the Investment Advisor waived $0.7 million of management and performance-based incentive fees versus $0.8 million for the second quarter of 2017. On a cumulative basis, since SUNS’ IPO in 2011, the Investment Advisor has waived management and performance-based incentive fees and covered equity offering costs totaling approximately $9.6 million. Ultimately, net investment income for the quarter ended September 30, 2017 was $5.7 million or $0.35 per average share versus $5.7 million or $0.35 per average share for the prior quarter. Below the line, Solar Senior had net realized and unrealized gains for the third fiscal quarter totaling $0.4 million compared to $0.4 million of net realized and unrealized loss for the quarter ended June 30. Accordingly, Solar Senior had a net increase in net assets resulting from operations of $6.0 million or $0.37 per average share for the three months ended September 30. This compares to a net increase in net assets resulting from operations of $5.2 million or $0.33 per average share for the three months ended June 30. Now at this time, I would like to turn the call over to our Chief Operating Officer, Bruce Spohler.

Thank you, Rich. Let me begin by providing an update on the credit fundamentals of our portfolio. Overall, financial health of our portfolio remains sound reflecting our disciplined underwriting and focused on downsize protection. At the end of the third quarter, the weighted average EBITDA across our portfolio was just over $80 million. Additionally, our fair value weighted average basis leveraged to our investment was 4.2 times and interest coverage was approximately 3 times, both consistent with the prior quarter. On September 30, the weighted average latest 12 months revenue and EBITDA had grown approximately 5.5% and 7% respectively. As evidenced by these portfolio metrics, our underlying companies continue to have lower risk profile than those in the liquid leverage loan market. Measured at fair value a 100% of our portfolio is performing at September 30. We continue to have no direct exposure to the oil and gas or commodity sectors. And our internal risk assessment continues to be two on September 30 on a fair market value basis based on our one to four risk rating scale with one being the least amount of risk. Also at quarter end the weighted average yield of our portfolio was 8.3% up from 8.2% the prior quarter. At September 30, our $437 million comprehensive portfolio had loans to 52 issuers across 23 industries with an average investment of $8.4 million or 1.9% of the overall portfolio. Virtually a 100% of the comprehensive portfolio is invested in senior secured loans including our investments in Gemino with portfolio consistent entirely of senior secured loans. Including Gemino 97% of our income producing portfolio is floating rate. The senior secured and floating rate loan composition is defensively positioned to protect capital in a rising rate environment. Before I give an update on strategic initiatives, I would…

Thank you, Bruce. At the beginning of the call, I reiterated our long term priorities for Solar Senior Capital. From the inception of SUNS' almost seven years ago, our investment and management decisions have consistently been focused on building long term value, protecting capital and maintaining in-line with the shareholders. We have been conservative in the faith of sustained frothy credit market and have remained patient and disciplined and not compromising credit quality for yield. Given the challenging environment and persistently low rate and elevated risk and sponsored cash flow lending we pursue strategic initiatives that have provided SUNS with the resources of both enhanced and diversified the earnings power of SUNS' or maintaining our strict investment discipline. We formed the first lien loan program and strategic partnership with the institute investor allowing us to invest in first lien senior secured cash flow loans while using modestly higher leverage in the vehicle to generate a more attract on return on equity for SUNS. We also diversified into specialty finance verticals of asset base lending through investments in Gemino healthcare finance and now North Mill Capital which has broaden our platform and enabled us to source senior secured collateral base floating-rate loans and specially niches that are less competitive than traditional cash flow lending. With the acquisition of North Mill SUNS has further evolved to a more diversified specialty finance company with expertise in several market niches including cash flow senior secured lending and asset based lending in the form of senior secured loan collateralized under first lien basis primarily by current assets. The specialty finance strategies are less correlated to the liquid credit markets and have a differentiated risk return profile that is complementary to our cash flow lending. The diversified strategies afford us a greater flexibility to stick to…

[Operator Instruction] Our first question is from Jonathan Bock with Wells Fargo Securities. Your line is now open.

Good morning Joe Mazzoli filling in for Jonathan Bock. The first question it relates to the acquisition of North Mill and no doubt this seems to be a very attractive business. So I was just curious if you could provide some color around the acquisition process. I mean, given the returns available on an asset-backed basis it seems that this might be a competitive process?

Yes. Good question. So I think consistent with a number of our specialty finance businesses that we have been fortunate enough to bring on our platform at Solar across Solar Senior as well as Solar Capital this was a company that we got to know a few years ago when they were looking to potentially exit the business. The owners tend to in these businesses be short term capital providers either private equity funds or hedge funds in this case North Mill was owned by a private equity firm. So we knew that at some point they would exit. We waited because we felt the price was little bit rich although we were extremely attracted to the team and stayed close for them. As you know, we have an investment team here that is focused on specialty finance full time and they did what they do so well which is stay in touch with the team and forge real relationships and the business came back around this summer. They were about to be sold to a bank and one thing that most of these management teams have in common that we have been fortunate enough to partner with is they don't want to go work for a bank. They are looking for an entrepreneurial platform that has long term in entrepreneurial patient capital that allows them to build at the appropriate time to build and we were fortunate enough to have that relationship with the management team in North Mill and move very quickly at the time that they were actually willing to sell. So while we are very pleased with the price, it came down a little bit over the time but they have really executed and as Michael mentioned have phenomenal track record not only a prudent growth, but not losing money.

That's really helpful. Thank you and so we have known this and you mentioned that cash flow sponsored lending business has become extremely competitive. And then, when I look at your investment in Gemino it's been stable. It's been about $32 million. So where do you see growth occurring maybe over the next 12 months as you work towards the 0.8 times debt to equity of course, with the understanding that adding North Mill to the portfolio already gets you to 0.5 times, but is there further ability to grow North Mill or to grow Gemino from that $32 million?

Yes, I think that's great question. We do see the opportunity has some selected growth at Gemino, but Gemino is more of a relationship lender providing credit facilities and as you know, focused just on the healthcare sector. So a little bit of a narrower target market opportunity for them whereas North Mill is broader and that they go across the number of industries other than healthcare. And since we have been talking to them over the years they have grown from $80 million or $90 million up to the current $120 million plus. So we do see the opportunity to continue to scale that platform. And from our perspective the irony is the returns are extremely attractive more so than senior cash flow loans that we are seeing at Solar Senior in today's market and yet they have lower risk profiles because they are fully collateralized. So we will continue to invest in North Mill and be opportunistic around Gemino and cash flow senior loans.

I think, we do think there is real growth opportunity for North Mill having been owned by private capital, where capital is limited to them, their buy size was limited because of the diversification of their balance sheet, now it's fund with larger balance sheet we can pick up bigger deals than have done historically.

That's very helpful. That's it from me. Thank you.

Thank you.

[Operator Instruction] Our next question is from Mickey Schleien with Ladenburg, your line is now open.

Yes, food morning everyone. Just a quick high level question in terms of the -- on balance sheet portfolio. Could you give us a sense of the breakdown between first lien unit tranche and second lien and also what is the average EBITDA of the borrowers?

Yes. Good question. Average EBITDA is over $80 million of the borrowers. Obviously it's smaller in our EBL businesses but that's where we are fully collateralized typically by accounts receivable. But yes, the cash flow it's over $80 million. I am sorry, your prior question.

Yes, on balance sheet between first lien unit tranche and second lien?

So it is predominately first lien, there is not much stretch, first lien we do most of that over the Solar platform. And the second lien as you know, we have been very focused given that we have been investing in Gemino and North Mill and cycling out of second lien because we can get comparable returns from our specialty finance first lien as the base businesses. So we continue to strength that second lien book. We are down pro forma for secures, which was just announced that it was repaid. That was our last largest second lien position. So we are down under $15 million, $18 million in total of second lien. So it's predominately first lien and again not much in the way of stretch first, Mickey.

Okay. That's very helpful. Thank you.

Thank you, Mickey.

Thank you. And I am showing no further questions. I will now like to turn, I am sorry. [Operator Instruction] And I am showing no further questions. I will now like to turn the conference back to Michael Gross, Chairman and Chief Executive Officer for any further remarks.

Thank you. We have nothing more to add at this time and then just thank you all for your participation this morning and thank you for your continued patience and support as our long term shareholders and partners. Thank you. Bye, bye.