Good morning, ladies and gentlemen and welcome to the Q3 2020 Solar Senior Capital Limited 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 would now like to turn the call over to your host, Mr. Michael Gross, Chairman, and Co-CEO. Sir?

Thank you very much and good morning. Welcome to Solar Senior Capital’s earnings call for the fiscal quarter ended September 30, 2020. I am joined here today by Bruce Spohler, our Co-Chief Executive Officer; and Richard Peteka, our Chief Financial Officer. Rich, would you please start off by covering the webcast and forward-looking statements?

Of course. Thanks, Michael, I’d 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 replays of this call will be made available later today as disclosed in our press release. I would 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 condition. These statements are not guarantees of our future performance, financial condition, or results and involve a number of risks and uncertainties, including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies in the global economy. Additionally, past performance is not indicative of future results. 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 is at 212-993-1670. At this time, I’d like to turn the call back to our Co-CEO, Michael Gross.

Thank you very much, Rich. The Solar Senior team hopes to find you and your family, friends, and colleagues healthy and safe. Our thoughts remain with all of our stakeholders, including the dedicated employees across Solar Capital and the Company’s investment advisor Solar Capital Partners. We would like to express our gratitude to all the healthcare and other frontline essential workers and we continue to send our sincere condolences to those families who have lost loved ones. I am pleased to report that Solar Senior Capital or SUNS’ portfolio is 100% performing for the third quarter which is supportive of our investment thesis that asset-based loans in niche markets and first lien cash flow loans to upper-middle market companies provide meaningful downside protection during challenging economic periods. Our portfolio companies are proving to have resilient business models and access to liquidity that we believe will enable them to successfully weather the current economic recovery. We attribute our healthy portfolio foundation to our disciplined and conservative underwriting, the deep experience of our investment teams, and SUNS’ diversified origination platform across cash flow, asset-based lending, and life science verticals. Credit market valuations continue to improve in the third quarter and our portfolio companies benefited from the gradual reopening of the economy and the proactive steps taken by management teams and sponsors to morph liquidity, reduce cost throughout the downturn. For SUNS’ net asset value improved by $0.24 per share or approximately 2% compared to the prior quarter. At September 30, our fair value marks represented an approximately 70% recovery of the unrealized depreciation recorded at March 31st. Importantly, we currently anticipate that our existing investments will result, in Solar Senior Capital ultimately receiving their expected returns in 100% of par in repayments. At September 30, over 98% of our comprehensive investment portfolio…

Thank you, Michael. Solar Senior Capital Limited’s net asset value at September 30, 2020 was $253.4 million, or $15.79 per share. This compares to a net asset value of $249.5 million, or $15.55 per share at June 30, 2020. Solar Senior’s balance sheet investment portfolio at September 30, 2020, had a fair market value of $389.5 million in 44 portfolio companies operating in 19 industries compared to a fair market value of $416.4 million in 46 portfolio companies operating in 21 industries at June 30. Turning to our funding profile and leverage, SUNS continues to have a very strong balance sheet, which we believe is serving us well in the current downturn. At September 30, 2020, SUNS had $139.3 million of debt outstanding and net leverage of 0.52x, down from 0.68x in the prior quarter. SUNS, has no near-term debt maturities, having termed out both its primary $225 million credit facility and the secondary $75 million credit facility to 2023 and 2024 respectively. In addition, SUNS has $85 million of unsecured notes with the maturity of March 31, 2025. Solar Senior Capital has over $250 million available to fund portfolio growth subject to borrowing base limits. As a reminder, Solar Senior’s target leverage is 1.25x to 1.5x debt to equity under the reduced asset coverage requirement. As of September 30, 2020, the company is unfunded revolver commitments of approximately $4.1 million that can be fully drawn by the borrowers. Some significant liquidity allows us to be opportunistic in our originations during this market dislocation. From a P&L perspective, gross investment income for the 3 months ended September 30, 2020, totaled $7.9 million consistent with the $7.9 million for the 3 months ended June 30. Net expenses for the 3 months ended September 30 was $3.1 million compared to $2.8 million…

Thank you, Rich. Most importantly SUNS portfolio has remained 100% performing throughout the current economic slowdown in early stages of recovery. This performance is a tremendous complement to the financial sponsors and portfolio companies and management teams that we have invested in. In addition, SUNS defensive portfolio and performance supports our underwriting thesis of minimizing risk of loss by investing in first-lien loans at the top of the capital structure, in non-cyclical industries as well as allocating a significant portion of our exposure to collateralized loans to our specialty finance verticals. At quarter end, the weighted average investment risk rating of our portfolio improved to 1.9 based on our 1 to 4 risk rating scale with 1 representing the least amount of risk. SUNS comprehensive portfolio totaled $522 million at quarter end and was highly diversified encompassing over 200 borrowers across 120 industries. Roughly 50% of the portfolio was invested in first lien asset-based and life science loans with the remaining 50% in senior secured first lien cash flow loans. Our largest industry exposures were healthcare services, professional services, and insurance services. The average investment per issuer was $2.5 million or less than 0.5% of the total portfolio. At September 30, approximately 100% of our portfolio consisted in senior secured loans comprised of 98.4% in first lien and 1.5% in second lien secured loans. Approximately 87% of our portfolio has a LIBOR floor and at quarter end, all of our borrowers made their interest rate payments. We believe that our efforts to position this portfolio to first lien loans, which carry less risk than second lien and subordinated loans, will result in greater capital preservation during the ongoing economic recovery. At quarter end, our weighted average asset level yield was 9.4% at fair value. By focusing on our commercial finance…

Thank you, Bruce. At this time let me offer a few concluding remarks. From inception, we have endeavored to make the right decisions to preserve and enhance long-term shareholder value. Our priority has always been to create and maintain a portfolio that can generate a steady income for our shareholders and protect capital. We remain disciplined in the face of significant spread compression, higher leverage and loose structures, all of which have elevated the risk of principal loss in middle-market leveraged finance over an extended period of time. As a result, we have positioned SUNS defensively diversified portfolio across cash flow and specialty finance, first lien senior secured loans to manage downside risk. We have operated well under target fund leverage and we have preserved liquidity. We believe we have taken the appropriate steps to navigate successfully to what we anticipate to be a prolonged and difficult period. Throughout we have maintained alignment of interest with our shareholders by owning a significant amount of SUNS stock. With over $250 million available capital and a strong foundation given our defensive portfolio and low leverage, we believe the company’s position to originate attract new investments, while also supporting our existing portfolio companies as needed. Our patience and willingness to remain under-invested provides us the foundation to be opportunistic. Given the magnitude of the economic disruption and expected uneven recovery, we believe that the improved investment opportunity set will persist for a number of quarters as companies require financing solutions for liquidity, working capital, and growth initiatives. Sponsor activity is definitely on the upswing and the PE industry is onto significant dry powder. We believe SUNS in a great position to capitalize on this opportunity. We hope that all of you are in good health. We would like to thank you for your time today and your support of our company. Operator, please open the phone up for questions if there are any questions at this time.

Well, thank you, operator. Since there are no questions at this time, we will bid adieu and thank you for your time and support and we look forward to talking to you again soon. Thank you.

Thank you, presenters. Ladies and gentlemen, this concludes today’s conference call. Thank you all for participating. You may now disconnect.