Andrew McGloin - Prosek Partners Jay Carvell - Chief Executive Officer Gerhard Lombard - Chief Financial Officer

Good morning. My name is Crystal and I will be your conference operator today. At this time, I would like to welcome everyone to the WhiteHorse Finance Third Quarter Earnings Teleconference. Our hosts for today’s call are Jay Carvell, Chief Executive Officer and Gerhard Lombard, Chief Financial Officer. Today’s call is being recorded and will be available for replay beginning at 1 PM Eastern. The replay dial-in number is 404-537-3406 and the pin number is 64841910. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Mr. Andrew McGloin with Prosek Partners.

Thank you, operator and thank you everyone for joining us today to discuss WhiteHorse Finance third quarter 2015 earnings results. Before we begin, I would like to remind everyone that certain statements made during this call, which are not based on historical facts, including any statements relating to financial guidance, maybe deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, these are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. WhiteHorse Finance assumes no obligation or responsibility to update any forward-looking statements. With that, allow me to introduce WhiteHorse Finance CEO, Jay Carvell. Jay, you may begin.

Thank you, Andrew. Good morning. Thank you for joining us today. As you know, our press release was issued this morning before market opened and I hope you have had a chance to review our results. I am going to take you through our third quarter operating performance and then Gerhard will review our financial results. At the end of our prepared remarks, I will review some of the details of our rights offering plan that was announced in October 20 and is currently underway. After my comments, we will then take your questions. Turning now to the third quarter, from our perspective, the highlight was our strong earnings which covered the dividend for the third consecutive quarter. NII per share was $0.38. As you are aware, our dividend has been consistent at $0.355 per share for 12 consecutive quarters going back to our IPO. On last quarter’s call, I stated our clear understanding of the dividend’s importance to shareholders and we are well aware of the focus it receives by the analyst community. The dividend policy is constantly being reviewed by our board, which makes a determining decision each quarter. While management is unable to speak for the board, given where we are from the financial and operational perspective, we have no expectation that it will change from its current level. We continue to see meaningful year-over-year growth in NII. This quarter, we are reporting a 40% increase in NII over third quarter last year. Our ability to generate NII and steadily cover the dividend is a result of a few items. The primary driver is our continued focus on sourcing opportunities with attractive risk-adjusted returns. We have been consistent in pursuing this strategy since our IPO three years ago. Second, we remained focused on risk by primarily participating…

Thanks, Jay. Let’s begin with our results for the quarter ended September 30, 2015. Net investment income was $5.7 million compared with $5.9 million reported in the second quarter of 2015 and $4 million reported in the third quarter of 2014. This translates to NII per share of $0.38 for Q3 2015. And as you are aware, our quarterly dividend has been consistent at $0.355 per share. Our investment income continues to consist primarily of recurring cash interest. Third quarter fee income was approximately $681,000 compared to second quarter fee income of $724,000. Net realized and unrealized losses on investments were $4.1 million during the third quarter of 2015 compared with net realized and unrealized gains of $136,000 reported during the second quarter of 2015. Jay mentioned the main driver of this is mark-to-market and not an impairment of our investments. As a result, we reported net assets from operations of $1.4 million or $0.10 per share for the third quarter of 2015 compared with $5.8 million or $0.38 per share for the second quarter of 2015. Expenses for the quarter totaled $6 million, a slight decrease from the $6.3 million of expenses reported during the second quarter. Third quarter expenses consisted primarily of interest expense on our credit facilities of $1.7 million and base management fees and performance-based incentive fees of $3.5 million. As of September 30, 2015, net asset value was $221.4 million, or $14.77 per share as compared with $225.2 million, or $15.03 per share reported as of June 30, 2015. Switching over to portfolio and investment activity, as Jay mentioned, as of September 30, the fair value of WhiteHorse Finance’s investment portfolio was $376.1 million, less than 32 positions across 26 companies and consistent with previous quarters is primarily composed of senior secured debt. The weighted…

Thank you, Gerhard. I want to spend a couple of minutes talking about our rights offering, explaining the intent of the plan, its structure, and most importantly, the impact on both the company and its shareholders. The details of the plan itself can be found in the perspective. So, let me focus on the plans, rationale and timing. First and foremost, the decision to proceed with the rights offering is an integral part of the capital plan toward the long-term profitability of our shareholders. The additional capital will provide the company the opportunity to grow NII per share by sourcing investments through our traditional channels as well as by pursuing other strategic options. Secondly, the company in consultation with its board chose to raise capital through our rights offering which allows all shareholders ability to participate on an equal basis. Management spent an extensive amount of time working with our bankers and underwriters and believes that this approach is the best on several fronts. And importantly, based on the offering price, there is minimal dilution involved for shareholders with current expectations of approximately 1% to 2%. Finally, as detailed in the offering prospectus, funds affiliated with HRG have indicated their intent to subscribe for their proportion of shares, including any unsubscribed shares, which gives us a high level of confidence that this offering will be successful. We remain confident in maintaining our historical pace of originations due to the opportunities in the market. We believe that the results of this rights offering will be the ability to continue to execute on our origination strategy as well as open the door to other opportunities such as larger size deals or strategic partnerships. However, I want to reiterate that this additional capital will not have a stray from the disciplined investment approach…

[Operator Instructions] Thank you. Our first question comes from the line of William James [ph].

Hello?

[Operator Instructions] At this time, there are no questions.

Alright. Well, thanks everyone for joining us today. We look forward to speaking to you next quarter. Operator, we will turn it back to you.

That does conclude today’s teleconference. Thank you for your participation. You may now disconnect at this time.