UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 5, 2019 (November 5, 2019)
 
 
Apollo Investment Corporation
(Exact Name of Registrant as Specified in Charter)
 
 
 
 
 
 
 
 
Maryland
 
814-00646
 
52-2439556
(State or Other
Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
9 West 57th Street,
New York, NY 10019
(Address of Principal Executive Offices) (Zip Code)
(212) 515-3450
(Registrant’s telephone number, including area code)
None
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 




¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
 
Emerging growth company [ ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]


Item 2.02
Results of Operations and Financial Condition
On November 5, 2019, Apollo Investment Corporation (the “Registrant”) issued a press release announcing its financial results for the quarter ended September 30, 2019.  The text of the press release is included as Exhibit 99.1 to this Form 8-K.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits
(d) Exhibits


Exhibit
Number

Exhibit
Press Release, dated November 5, 2019.






SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
APOLLO INVESTMENT CORP.
 
 
By:
 
/s/ Joseph D. Glatt
 
 
Name: Joseph D. Glatt
 
 
Title:   Chief Legal Officer and Secretary
Date: November 5, 2019


Exhibit



Apollo Investment Corporation
Reports Financial Results for the Quarter Ended September 30, 2019


Fiscal Second Quarter and Other Recent Highlights:
•
Net investment income per share for the quarter was $0.53 compared to $0.50 for the quarter ended June 30, 2019

•
Net asset value per share as of the end of the quarter was $18.69 compared to $19.00 as of June 30, 2019
◦
$0.22 cents of the decline was from our oil and gas investments due to the decline in the price of oil
◦
$0.06 cents of the decline was attributable to the early redemption of our 2043 Notes(1) 

•
Continued to successfully execute portfolio growth strategy with core strategies(2) representing 85% of the portfolio(3) as of the end of the quarter
◦
Increased first lien debt exposure to 77% of the corporate lending portfolio and reduced second lien debt exposure to 22%(3) 
◦
Reduced shipping exposure to 5.0% of the portfolio(3) 
◦
Reduced exposure to Merx Aviation to 12.9% of the portfolio(3) 

•
Gross corporate lending commitments made during the quarter totaled $377 million
•
Gross fundings during the quarter totaled $358 million(4) and net fundings totaled $207 million(5) 
•
Net leverage(6) as of the end of the quarter was 1.24x, compared to 1.03x as of June 30, 2019
•
Declared a distribution of $0.45 per share
•
Repurchased 0.9 million shares of common stock for an aggregate cost of $14.2 million during the quarter
•
Redeemed $150 million of 6.875% senior unsecured notes due 2043 during the quarter(1)

New York, NY — November 5, 2019 — Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its second fiscal quarter ended September 30, 2019. The Company’s net investment income was $0.53 per share for the quarter ended September 30, 2019, compared to $0.50 per share for the quarter ended June 30, 2019. The Company’s net asset value (“NAV”) was $18.69 per share as of September 30, 2019, compared to $19.00 as of June 30, 2019.
On November 5, 2019, the Board of Directors declared a distribution of $0.45 per share payable on January 6, 2020 to shareholders of record as of December 20, 2019.
___________________
(1)
On August 12, 2019, the Company redeemed $150 million of 6.875% senior unsecured notes due 2043. The Company recognized a realized loss on the extinguishment of these notes of approximately $(4.4) million or $(0.06) per share during the three months ended September 30, 2019.
(2)
Core strategies include corporate lending, aviation, life sciences, asset based and lender finance.
(3)
On a fair value basis.
(4)
Excludes $8 million of gross fundings for Merx Aviation and $111 million of gross fundings for revolvers.
(5)
Includes $18 million net repayment from Merx Aviation and $24 million net fundings for revolvers.
(6)
The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.

1


Mr. Howard Widra, Apollo Investment’s Chief Executive Officer commented, “During the quarter, we continued to successfully implement our plan to prudently grow our portfolio. We had a strong origination quarter and grew our portfolio 7% by increasing our exposure to first lien floating rate corporate loans sourced by the Apollo Direct Origination platform. Consistent with our plan, we also successfully reduced our exposure to second lien corporate loans, shipping assets and aircraft leasing. We believe the shift in the composition of our portfolio and the resultant improvement in our ratios and metrics illustrate that we have meaningfully improved the risk profile of our portfolio.” Mr. Widra continued, “The 31 cent net reduction in NAV per share was due in part to a 22 cent decline in the value of our oil and gas investments due to the decline in the price of oil, and a 6 cent loss due to the extinguishment of our 2043 baby bonds.”






2


FINANCIAL HIGHLIGHTS
($ in billions, except per share data)
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Total assets
$
2.89

 
$
2.70

 
$
2.50

 
$
2.38

 
$
2.39

Investment portfolio (fair value)
$
2.80

 
$
2.62

 
$
2.41

 
$
2.31

 
$
2.32

Debt outstanding
$
1.58

 
$
1.35

 
$
1.13

 
$
0.99

 
$
0.95

Net assets
$
1.25

 
$
1.29

 
$
1.31

 
$
1.32

 
$
1.37

Net asset value per share
$
18.69

 
$
19.00

 
$
19.06

 
$
19.03

 
$
19.40

 
 
 
 
 
 
 
 
 
 
Debt-to-equity ratio
1.26
 x
 
1.05
 x
 
0.86
 x
 
0.76
 x
 
0.69
 x
Net leverage ratio (1)
1.24
 x
 
1.03
 x
 
0.83
 x
 
0.74
 x
 
0.68
 x
___________________
(1)
The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.

PORTFOLIO AND INVESTMENT ACTIVITY


Three Months Ended September 30,

Six Months Ended September 30,
(in millions)*
2019

2018

2019

2018
Investments made in portfolio companies
$
476.7


$
363.6


$
912.0


$
722.5

Investments sold
(20.0
)

(163.2
)

(29.6
)

(178.1
)
Net activity before repaid investments
456.7


200.3


882.4


544.4

Investments repaid
(249.7
)

(372.1
)

(460.4
)

(465.8
)
Net investment activity
$
207.1


$
(171.7
)

$
422.1


$
78.6









Portfolio companies at beginning of period
129


96


113


90

Number of new portfolio companies
14


9


35


16

Number of exited portfolio companies
(4
)

(7
)

(9
)

(8
)
Portfolio companies at end of period
139


98


139


98









Number of investments made in existing portfolio companies
48


16


54


24


____________________
* Totals may not foot due to rounding.

3


OPERATING RESULTS

 
Three Months Ended September 30,
 
Six Months Ended September 30,
(in millions)*
2019
 
2018
 
2019
 
2018
Net investment income
$
35.7

 
$
32.2

 
$
70.3

 
$
63.7

Net realized and change in unrealized gains (losses)
(28.7
)
 
(4.1
)
 
(39.4
)
 
(22.4
)
Net increase in net assets resulting from operations
$
7.1

 
$
28.0

 
$
30.9

 
$
41.3

 
 
 
 
 
 
 
 
(per share)* (1)
 
 
 
 
 
 
 
Net investment income on per average share basis
$
0.53

 
$
0.45


$
1.03

 
$
0.89

Net realized and change in unrealized gain (loss) per share
(0.43
)
 
(0.06
)
 
(0.58
)
 
(0.31
)
Earnings per share — basic
$
0.10

 
$
0.39

 
$
0.45

 
$
0.58

____________________
* Totals may not foot due to rounding.
(1) Based on the weighted average number of shares outstanding for the period presented.    




4


SHARE REPURCHASE PROGRAM
During the three months ended September 30, 2019, the Company repurchased 880,001 shares at a weighted average price per share of $16.15, inclusive of commissions, for a total cost of $14.2 million. During the period from October 1, 2019 through November 4, 2019, the Company repurchased 501,611 shares at a weighted average price per share of $15.65 inclusive of commissions, for a total cost of $7.8 million. Since the inception of the share repurchase program and through November 4, 2019, the Company repurchased 12,368,013 shares at a weighted average price per share of $16.83, inclusive of commissions, for a total cost of $208.1 million, leaving a maximum of $41.9 million available for future purchases under the current Board authorization of $250 million.

* Share figures have been adjusted for the one-for-three reverse stock split which was completed after market close on November 30, 2018.






5


CONFERENCE CALL / WEBCAST AT 5:00 PM EST ON NOVEMBER 5, 2019
The Company will host a conference call on Tuesday, November 5, 2019 at 5:00 p.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call; international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID #5252608 when prompted. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Events Calendar in the Shareholder section of our website at www.apolloic.com. Following the call, you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available approximately two hours after the live call and through November 26, 2019 by dialing (800) 585-8367; international callers please dial (404) 537-3406, reference Conference ID #5252608. A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Events Calendar in the Shareholder section of the Company’s website at www.apolloic.com.
SUPPLEMENTAL INFORMATION
The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available in the Shareholders section of the Company’s website under Presentations at www.apolloic.com.

6


Our portfolio composition and weighted average yields as of September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018 were as follows:


 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Portfolio composition, at fair value:
 
 
 
 
 
 
 
 
 
First lien secured debt
74%
 
69%
 
66%
 
64%
 
57%
Second lien secured debt
17%
 
21%
 
23%
 
24%
 
27%
Total secured debt
91%
 
90%
 
89%
 
88%
 
84%
Unsecured debt
—
 
—
 
—
 
—
 
3%
Structured products and other
2%
 
2%
 
2%
 
3%
 
3%
Preferred equity
1%
 
1%
 
1%
 
1%
 
1%
Common equity/interests and warrants
6%
 
7%
 
8%
 
8%
 
9%
Weighted average yields, at amortized cost (1):
 
 
 
 
 
 
 
 
 
First lien secured debt (2)
9.0%
 
9.3%
 
9.9%
 
10.4%
 
10.4%
Second lien secured debt (2)
11.0%
 
11.3%
 
11.4%
 
11.4%
 
11.2%
Total secured debt (2)
9.4%
 
9.8%
 
10.2%
 
10.7%
 
10.7%
Unsecured debt portfolio (2)
—
 
—
 
—
 
—
 
11.0%
Total debt portfolio (2)
9.4%
 
9.8%
 
10.2%
 
10.7%
 
10.7%
Total portfolio (3)
8.9%
 
9.2%
 
9.6%
 
9.6%
 
9.7%
Interest rate type, at fair value (4):
 
 
 
 
 
 
 
 
 
Fixed rate amount
—

 
—
 
—
 
—
 
$0.1 billion
Floating rate amount

$2.0
 billion
 
$1.8 billion
 
$1.5 billion
 
$1.4 billion
 
$1.3 billion
Fixed rate, as percentage of total
—

 
1%
 
—
 
—
 
6%
Floating rate, as percentage of total
100
%
 
99%
 
100%
 
100%
 
94%
Interest rate type, at amortized cost (4):
 
 
 
 
 
 
 
 
 
Fixed rate amount
—

 
—
 
—
 
—
 
$0.1 billion
Floating rate amount

$2.0
 billion
 
$1.8 billion
 
$1.5 billion
 
$1.4 billion
 
$1.3 billion
Fixed rate, as percentage of total
—
 
1%
 
—
 
—
 
6%
Floating rate, as percentage of total
100
%
 
99%
 
100%
 
100%
 
94%



(1)
An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.
(2)
Exclusive of investments on non-accrual status.
(3)
Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status.
(4)
The interest rate type information is calculated using the Company’s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status.














7


APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)

September 30, 2019

March 31, 2019

(Unaudited)


Assets



Investments at fair value:





Non-controlled/non-affiliated investments (cost — $2,159,801 and $1,654,322, respectively)
$
2,121,375


$
1,627,406

Non-controlled/affiliated investments (cost — $67,304 and $67,072, respectively)
49,164


49,681

Controlled investments (cost — $662,657 and $736,717, respectively)
634,221


731,045

Cash and cash equivalents
31,637


36,280

Foreign currencies (cost — $4,860 and $4,963, respectively)
4,801


4,909

Receivable for investments sold
269


336

Interest receivable
28,692


24,280

Dividends receivable
4,381


3,748

Deferred financing costs
17,693


19,776

Prepaid expenses and other assets
729


336

Total Assets
$
2,892,962


$
2,497,797





Liabilities



Debt
$
1,584,128


$
1,128,686

Payable for investments purchased
—


677

Distributions payable
30,171


31,040

Management and performance-based incentive fees payable
12,101


8,880

Interest payable
3,666


5,818

Accrued administrative services expense
2,354


2,983

Other liabilities and accrued expenses
7,150


7,086

Total Liabilities
$
1,639,570


$
1,185,170

 





Net Assets
$
1,253,392


$
1,312,627





Net Assets



Common stock, $0.001 par value (130,000,000 and 400,000,000 shares authorized; 67,047,352 and 68,876,986 shares issued and outstanding, respectively)
$
67


$
69

Capital in excess of par value
2,126,502


2,155,836

Accumulated under-distributed (over-distributed) earnings
(873,177
)

(843,278
)
Net Assets
$
1,253,392


$
1,312,627







Net Asset Value Per Share
$
18.69


$
19.06








8


APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Investment Income
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments:
 
 
 
 
 
 
 
Interest income (excluding Payment-in-kind (“PIK”) interest income)
$
51,489

 
$
44,586

 
$
98,493

 
$
84,029

Dividend income
5

 
—

 
66

 
—

PIK interest income
732

 
816

 
5,438

 
2,066

Other income
2,185

 
1,810

 
3,122

 
3,213

Non-controlled/affiliated investments:
 
 
 
 
 
 
 
Interest income (excluding PIK interest income)
—

 
—

 
—

 
—

Dividend income
313

 
295

 
632

 
607

PIK interest income
—

 
—

 
—

 
—

Other income
—

 
—

 
—

 
—

Controlled investments:
 
 
 
 
 
 
 
Interest income (excluding PIK interest income)
12,271

 
15,075

 
24,910

 
29,565

Dividend income
2,451

 
1,985

 
2,451

 
7,250

PIK interest income
872

 
1,467

 
1,722

 
2,895

Other income
—

 
—

 
—

 
—

Total Investment Income
$
70,318

 
$
66,034

 
$
136,834

 
$
129,625

Expenses
 
 
 
 
 
 
 
Management fees
$
10,190

 
$
9,258

 
$
19,729

 
$
18,131

Performance-based incentive fees
1,911

 
6,359

 
1,911

 
13,782

Interest and other debt expenses
18,735

 
14,903

 
36,246

 
28,480

Administrative services expense
1,542

 
1,857

 
3,267

 
3,495

Other general and administrative expenses
2,305

 
3,524

 
5,609

 
6,056

Total expenses
34,683

 
35,901

 
66,762

 
69,944

Management and performance-based incentive fees waived
—

 
(1,834
)
 
—

 
(3,690
)
Expense reimbursements
(99
)
 
(196
)
 
(196
)
 
(339
)
Net Expenses
$
34,584

 
$
33,871

 
$
66,566

 
$
65,915

Net Investment Income
$
35,734

 
$
32,163

 
$
70,268

 
$
63,710

Net Realized and Change in Unrealized Gains (Losses)
 
 
 
 
 
 
 
Net realized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
$
(5,701
)
 
$
228

 
$
(5,710
)
 
$
(9,718
)
Non-controlled/affiliated investments
—

 
2,007

 
1,089

 
2,007

Controlled investments
—

 
—

 
—

 
—

Option contracts
—

 
(10,311
)
 
—

 
(23,520
)
Foreign currency transactions
(1,387
)
 
2

 
(1,185
)
 
(26
)
Extinguishment of debt
(4,375
)
 
—

 
(4,375
)
 
—

Net realized gains (losses)
(11,463
)
 
(8,074
)
 
(10,181
)
 
(31,257
)
Net change in unrealized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
(7,463
)
 
(5,717
)
 
(11,508
)
 
(10,839
)
Non-controlled/affiliated investments
(1,659
)
 
(3,094
)
 
(750
)
 
(3,960
)
Controlled investments
(13,069
)
 
1,393

 
(22,765
)
 
9,973

Option contracts
—

 
10,926

 
—

 
10,359

Foreign currency translations
4,988

 
432

 
5,833

 
3,293

Net change in unrealized gains (losses)
(17,203
)
 
3,940

 
(29,190
)
 
8,826

Net Realized and Change in Unrealized Gains (Losses)
$
(28,666
)
 
$
(4,134
)
 
$
(39,371
)
 
$
(22,431
)
Net Increase (Decrease) in Net Assets Resulting from Operations
$
7,068

 
$
28,029

 
$
30,897

 
$
41,279

Earnings Per Share — Basic
$
0.10

 
$
0.39

 
$
0.45

 
$
0.58


9





About Apollo Investment Corporation
Apollo Investment Corporation (NASDAQ: AINV) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company invests primarily in various forms of debt investments, including secured and unsecured debt, loan investments, and/or equity in private middle-market companies. The Company may also invest in the securities of public companies and structured products and other investments such as collateralized loan obligations and credit-linked notes. The Company seeks to provide private financing solutions for private companies that do not have access to the more traditional providers of credit. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc., a leading global alternative investment manager. For more information, please visit www.apolloic.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; our contractual arrangements and relationships with third parties; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.
We may use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; new strategic initiatives; the ability to reposition the investment portfolio; the market outlook; future investment activity; and risks associated with changes in business conditions and the general economy. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.
Contact
Elizabeth Besen
Investor Relations Manager
Apollo Investment Corporation
212.822.0625
ebesen@apollo.com

10