Saratoga Investment Corp. Closes New $50 Million Senior Secured Revolving Credit Facility with Encina Lender Finance

Rhea-AI Summary

Saratoga Investment Corp. (NYSE:SAR) announced the closing of a new $50 million senior secured credit facility with Encina Lender Finance, enhancing its financial flexibility. The facility, effective October 4, 2021, allows for a potential increase to $75 million within the first two years. It mandates a minimum draw of $12.5 million initially, rising to at least $25 million thereafter. The interest rate is LIBOR plus 4.0%. The company repaid its existing revolving credit facility with Madison Capital Funding, marking a significant move in restructuring its capital.

Positive

• Secured a $50 million senior secured credit facility with Encina Lender Finance.
• Facility allows for potential increase to $75 million, enhancing capital flexibility.
• Repayment and termination of existing revolving credit facility with Madison Capital Funding improves financial structure.

Negative

• None.

NEW YORK, Oct. 06, 2021 (GLOBE NEWSWIRE) -- Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced that its wholly-owned subsidiary, Saratoga Investment Funding II LLC (“SIF II”), an entity formed for purposes of entering into this financing arrangement, closed a new $50.0 million senior secured credit facility (the “Facility”) with Encina Lender Finance, LLC (“Encina”). The Facility will be supported by loans held by SIF II and pledged to Encina under the terms of the credit agreement.

The Facility closed on October 4, 2021. SIF II may request an increase in the commitment amount to up to $75.0 million during the first two years. The terms of the Facility require a minimum drawn amount of $12.5 million at all times during the first six months, which increases to the greater of $25.0 million or 50% of the commitment amount in effect at any time thereafter.  The term of the Facility is three years.  The interest rate on the borrowings under the Facility is LIBOR plus 4.0%, with LIBOR having a floor of 0.75%. Concurrently with the closing of this Facility, all remaining amounts outstanding on the Company’s existing revolving credit facility with Madison Capital Funding, LLC were repaid and the facility terminated.

“We are pleased to close this credit facility with Encina, which provides the Company with a great deal of flexibility as we assess our needs and seek to optimize our overall capital structure. Encina has been an excellent partner in this process, and we appreciate the opportunity to establish this new relationship with them,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment.

“Encina Lender Finance is pleased that Saratoga Investment has selected us as a key senior debt capital partner,” said Luke Graham, Chief Executive Officer of Encina.  “The Company’s management team has a long and distinguished track record of success, and we look forward to supporting them in achieving Saratoga Investment’s future goals and objectives.”

About Saratoga Investment

Saratoga Investment is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in senior and unitranche leveraged loans and mezzanine debt, and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors.  Saratoga Investment’s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.  Saratoga Investment has elected to be regulated as a business development company under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies.  Saratoga Investment owns two SBIC-licensed subsidiaries and manages a $650 million collateralized loan obligation ("CLO") fund. It also owns 52% of the Class F and 100% of the subordinated notes of the CLO. The Company's diverse funding sources, combined with a permanent capital base, enable Saratoga Investment to provide a broad range of financing solutions.

About Encina Lender Finance

Headquartered in Atlanta, Encina Lender Finance offers revolving lines of credit and term loans ranging in size from $10 to $150 million to specialty finance companies (sponsored and non-sponsored) across a wide range of asset classes including, but not limited to, asset-based lending, factoring, equipment leasing, floorplan financing, commercial real estate bridge lending, tax lien/deed financing, venture debt lending, SMB lending & merchant cash advance, middle-market private credit, charged-off debt buyers, rent-to-own consumer leasing, unsecured consumer lending and specialized student lending. Encina’s customers use financing proceeds primarily to fund the origination of new finance contracts and to refinance existing debt, and Encina’s loans are secured by portfolios of notes, loans and/or leases. For additional information, please visit Encina’s website at https://lenderfinance.encinacapital.com.

Forward Looking Statements

Statements included herein contain certain “forward-looking statements” within the meaning of the federal securities laws, including statements with regard to the Company’s Notes offering and the anticipated use of the net proceeds of the offering. Forward-looking statements can be identified by the use of forward looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or negative versions of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward-looking statements are based on our beliefs, assumptions and expectations of future events and our future performance, taking into account all information currently available to us. These statements are not guarantees of future events, performance, condition 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 but not limited to the impact of the COVID-19 pandemic and the pandemic’s impact on the U.S. and global economy, as well as those described from time to time in our filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. Saratoga Investment Corp. undertakes no duty to update any forward-looking statements made herein, whether as a result of new information, future developments or otherwise, except as required by law.

Contact: Henri Steenkamp
Saratoga Investment Corp.
212-906-7800

FAQ

What is the significance of Saratoga Investment's new credit facility?

The new $50 million credit facility improves financial flexibility and allows for potential increases, enhancing capital management for Saratoga Investment.

When was the credit facility with Encina Lender Finance closed?

The credit facility closed on October 4, 2021.

What are the terms of the new credit facility for Saratoga Investment?

The facility has a minimum draw of $12.5 million initially, which increases to at least $25 million thereafter, at an interest rate of LIBOR plus 4.0%.

How does the new credit facility affect Saratoga Investment's existing debts?

Saratoga Investment repaid all outstanding amounts of its previous revolving credit facility with Madison Capital Funding, terminating that arrangement.