Saratoga Investment Corp. Joint Venture Prices $400 million New CLO

Rhea-AI Summary

Saratoga Investment Corp. (NYSE:SAR) has successfully priced a $400 million CLO, named Saratoga Investment Corp Senior Loan Fund 2022-1 Ltd. (SLF 2022), as of September 30, 2022. This fund is a subsidiary of Saratoga Senior Loan Fund I JV LLC, co-managed by Saratoga Investment and TJHA JV I LLC. The anticipated closing date is October 28, 2022. The CLO structure includes various classes of notes, with a total of $400 million in par value and varying expected ratings from Aaa to Ba3. This transaction boosts Saratoga's CLO assets to over $1 billion.

Positive

• Successful pricing of a $400 million CLO enhances funding sources.
• CLO assets totalling over $1 billion signify strong market positioning.

Negative

• Interest rate volatility and uncertain economic conditions could impact future CLO transactions.

NEW YORK, Oct. 03, 2022 (GLOBE NEWSWIRE) -- Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced that it has priced a $400 million CLO called Saratoga Investment Corp Senior Loan Fund 2022-1 Ltd. (“SLF 2022”) on September 30, 2022. SLF 2022 is a wholly owned subsidiary of Saratoga Senior Loan Fund I JV LLC (“SLF JV”), and under joint control and co-managed by Saratoga Investment and TJHA JV I LLC (“TJHA”). SLF JV was formed on October 26, 2021 for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second lien term loans or bonds in the primary and secondary markets.  

The transaction is structured as follows:
Saratoga Investment Corp. Senior Loan Fund 2022-1 Ltd. (Saratoga Senior Loan Fund I JV LLC)
Class	Par Amount	Expected Ratings (Moody's)	Coupon
A-1	$240M	Aaa	SOFR+175
A-2	$16M	Aaa	SOFR+260
B	$48M	Aa	SOFR+350
C	$20M	A3	SOFR+400
D	$24M	BBB-	SOFR+661
E	$14M	Ba3	SOFR+855
Subordinated Notes	$40.1M	NR

The non-call period expires in April 2025 on the Class A-1, A-2, B and C Notes, and expires in October 2024 on the Class D and E Notes. The reinvestment period expires in October 2025, and the legal final date is in October 2033.

The anticipated closing date is October 28, 2022.

Saratoga Investment will own 87.5% of the E Notes and SLF JV will own 100% of the Subordinated Notes on the closing date. Saratoga Investment owns 87.5% of the unsecured loans and the membership interests of the SLF JV.

The Notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

“We are pleased to have completed the financing of this new $400 million CLO together with our joint venture partners, especially in these challenging capital markets conditions in which interest rate volatility and uncertain economic prospects have disrupted credit markets, resulting in both a significant reduction in the number of CLOs being completed, as well as many attractive secondary loans offered for sale under face value,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “This will bring our total CLO assets, either managed or co-managed by Saratoga, to over $1 billion. We remain confident in our experienced management team, high underwriting standards and ability to maintain quality and investment performance over the long-term. This CLO investment and successful financing continues to expand the breadth and diversity of our investment base and funding sources.”

About Saratoga Investment

Saratoga Investment Corp. 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 Corp.’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 Corp. 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 Corp. owns three SBIC-licensed subsidiaries, manages a $650 million collateralized loan obligation (“CLO”) fund and co-manages a joint venture (“JV”) fund that owns a $400 million collateralized loan obligation (“JV CLO”) fund.  It also owns 52% of the Class F and 100% of the subordinated notes of the CLO, 87.5% of both the unsecured loans and membership interests of the JV and 87.5% of the Class E notes of the JV CLO.  The Company’s diverse funding sources, combined with a permanent capital base, enable Saratoga Investment Corp. to provide a broad range of financing solutions.

FORWARD LOOKING STATEMENTS

This press release contains certain forward-looking statements about the business and investments of Saratoga Investment, including the benefits of CLO and JV investments. Forward-looking statements are statements that are not historical statements and can often be identified by words such as "will," "believe," "expect" and similar expressions and variations or negatives of these words. These statements are based on management's current expectations, assumptions and beliefs. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment makes with the SEC. They are not guarantees of future results and are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. Saratoga Investment undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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

FAQ

What is the latest CLO deal by Saratoga Investment Corp?

Saratoga Investment Corp. has priced a $400 million CLO called SLF 2022 as of September 30, 2022.

What are the expected ratings for the new CLO issued by SAR?

The CLO has expected ratings from Aaa to Ba3 for its different classes of notes.

When is the anticipated closing date for the Saratoga CLO?

The anticipated closing date for the CLO is October 28, 2022.

How much CLO assets does Saratoga Investment Corp. now manage?

Post-transaction, Saratoga Investment's CLO assets exceed $1 billion.