Harvest Capital Credit Corporation
Harvest Capital Credit — Merger or Acquisition (December 2020)
21 slides from Harvest Capital Credit's merger presentation, Dec 28, 2020
Slide 1: Harvest Capital Credit Corp. to Merge Into Portman Ridge
Investor Presentation December 24, 2020 Harvest Capital Credit Corp. to Merge Into Portman Ridge
Slide 2: Important Information: Forward-Looking Statements
2 Important Information Forward - Looking Statements This Presentation may contain forward - looking statements that involve substantial risks and uncertainties, including statements regarding the completion of the transaction between Harvest Capital Credit Corporation (“HCAP”) and Portman Ridge Fin
Slide 3: Transaction Overview
3 Transaction Overview ▪ Harvest Capital Credit Corporation (NASDAQ: HCAP) and Portman Ridge Finance Corporation (Nasdaq: PTMN) (the “Company” or “PTM N”) announced today that they have entered into a definitive agreement under which HCAP will merge with and into PTMN, a business development com pan
Slide 4: Key Transaction Highlights
4 Key Transaction Highlights Management Agreement Payment to Stockholders Ongoing Equity Investment by Manager ▪ Sierra Crest will continue to be the investment manager of the combined company through its existing investment advisory agreement. ▪ HCAP stockholders will receive a direct cash payment
Slide 5: Compelling Transaction for PTMN & HCAP Stockholders
5 Compelling Transaction for PTMN & HCAP Stockholders Fully Integrated Platform with BC Partners Focused Investment Strategy Demonstrated M&A Ability Scale Benefits ▪ The combined Company will be able to access the full range of resources of a leading asset management firm. ▪ Partnership with a larg
Slide 6: Illustrative Transaction Analysis for HCAP Stockholders
$5.91 $1.80 $7.71 $2.41 $10.11 HCAP Current Stock Price Per Share Premium to HCAP Stock Price Transaction Value at PTMN Current Stock Price Potential Upside if PTMN Trades to 9/30/20 Pro Forma NAV Transaction Value at PTMN 9/30/20 Pro Forma NAV (in millions, except per share) At PTMN Current Stock P
Slide 7: About Portman Ridge
▪ Focus on direct origination of senior secured debt investments to the middle market ▪ Experienced, strategic management team centered on execution and delivering NII growth ▪ Three strategic transactions closed since 2019 with portfolio repositioning continuing successfully ▪ Strong shareholder al
Slide 8: Achieving Scale
Achieving Scale ▪ Founded as Kohlberg Capital Corporation (“KCAP”) ▪ IPO in December 2006 ▪ Acquired KCAP management contract ▪ Name changed to Portman Ridge Finance Corporation ▪ Transition to external management through Sierra Crest, an affiliate of BC Partners ▪ BC Partners agreed to use up to $1
Slide 9: Appendix
PORTMAN RIDGE Ap pendix
Slide 10: BC Partners Credit Platform
10 BC Partners Credit Platform 1. Reflects commitments to commingled funds, IMAs, signed term sheets. Figures are subject to completion of certain agreements BC PARTNERS CREDIT: A FULL CREDIT CYCLE INVESTMENT PLATFORM ▪ Mandate to invest where other capital is retrenching due to limited duration and
Slide 11: BC Partners Differentiators
Ability to serve as a strategic lender by sharing best practices from BC Partners’ private equity operations team and existing portfolio companies; 30 years of private market investing provides an edge in sourcing and diligence Stand - alone credit platforms cannot offer the same resources to borrow
Slide 12: BC Platform and Flexible, Differentiated Strategy
1 For more information on Mr. Goldthorpe’s role in respect of AINV and CION, please refer to the Important Information at the en d of this presentation. BC PLATFORM ▪ Access to deal flow and sourcing through fully integrated model ▪ BCP Operations team supports our ability to add value to portfolio
Slide 13: Integration with BC Partners Platform
150 + EMPLOYEES 60+ PE investment professionals including 7 - member Operations Team 12 Investor Relations professionals 41 Support professionals 10 OPERATING ADVISORS $23 BILLION IN PE AUM across commingled funds and co - investment commitments $37 BILLION in annual revenue across current PE portfo
Slide 14: BCP Approach to Credit Investing
BCP Credit has been formed to take advantage of attractive risk - adjusted return opportunities and dislocations in the U.S. and European credit markets ▪ Target opportunities across the credit spectrum where other capital is retrenching due to limited duration and regulatory res tri ctions ▪ Apply
Slide 15: Financial Highlights
* Year over year comparisons with Q3 2019 may not be directly comparable. The OHAI merger was completed on December 18, 2019. 1. Net of incentive fee waivers of $102 thousand and $459 thousand in Q1 and Q2 2020, respectively. 15 Financial Highlights ($ in ‘000s) Q3 2019 * Q4 2019 Q1 2020 Q2 2020 Q3
Slide 16: Net Asset Value Rollforward
($ in ‘000s) Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 NAV, Beginning of Period $139,178 $132,723 $152,199 $120,370 $120,714 Realized Gains (Losses) from Investments (1,176) (1,326) (1) (1,048) (882) (1,890) Unrealized Gains (Losses) (5,317) (2,649) (1) (30,924) 1,565 7,512 Net Investment Income 2,242
Slide 17: Portfolio Composition
1. At Fair Value. Does not include activity in short - term investments. 17 Portfolio Composition (1) Investment Portfolio ($ in ‘000s) Q4 2019 Q1 2020 Q2 2020 Q3 2020 First Lien Debt $87,522 $105,379 $117,265 $114,022 Second Lien Debt 95,188 83,926 78,366 79,851 First Lien Last Out 500 8,050 7,619
Slide 18: Portfolio Trends
18 Portfolio Trends (1) ($ in ‘000s) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Portfolio Sourcing (at Fair Value): Sierra Crest Investment Management 104,223 133,315 149,246 148,289 Legacy KCAP 133,686 106,241 100,653 104,023 Legacy OHAI 35,781 30,303 28,757 26,547 Portfolio Summary: Total portfolio, at fair
Slide 19: Credit Quality
19 Credit Quality As shown below, the percentage of non - accrual assets (both on a cost and fair value basis) as a percentage of total has been dec reasing on a quarter over quarter basis ($ in ‘000s) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Investments on Non - Accrual Status Number of Non - Accrual Invest
Slide 20: Corporate Leverage & Liquidity
Cash and Short - term Investments ▪ Unrestricted cash and short - term investments totaled $10.9 million at September 30, 2020 ▪ Restricted cash of $4.9 million at September 30, 2020 represents cash held in our revolving credit facility Debt Summary ▪ Balanced mix between unsecured and secured borro
Slide 21: Corporate Information
21 Corporate Information Board of Directors Senior Management Research Coverage Ted Goldthorpe Chairman of the Board Ted Goldthorpe Chief Executive Officer Ryan Lynch Keefe Bruyette & Woods Graeme Dell Director Edward “Ted” Gilpin Chief Financial Officer Chris Nolan Ladenburg Thalmann Robert Warshau
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