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): February 4, 2020 (February 4, 2020)
 
 
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 February 4, 2020, Apollo Investment Corporation (the “Registrant”) issued a press release announcing its financial results for the quarter ended December 31, 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 February 4, 2020.







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: February 4, 2020


Exhibit



Apollo Investment Corporation
Reports Financial Results for the Quarter Ended December 31, 2019


Fiscal Third Quarter and Other Recent Highlights:
Net investment income per share for the quarter was $0.54 compared to $0.53 for the quarter ended September 30, 2019

Net asset value per share as of the end of the quarter was $18.27 compared to $18.69 as of September 30, 2019, a decrease of 2.3%
95% of net losses incurred during the quarter were attributable to non-core and legacy assets(1) 

Continued to successfully execute our prudent portfolio growth strategy by increasing our exposure to core assets(2) and reducing our exposure to non-core and legacy assets,(1) as well as second lien loans
Core assets(2) increased to 88%(3) of the portfolio and non-core and legacy assets(1) decreased to 12%(5) of the portfolio as of the end of the quarter
Non-core and legacy asset(1) sales and repayments totaled $46 million during the quarter
Second lien sales and repayments totaled $62 million during the quarter

Gross corporate lending commitments made during the quarter totaled $491 million
Gross fundings during the quarter totaled $399 million(4) and net fundings totaled $171 million(5) 
Net leverage(6) as of the end of the quarter was 1.43x, compared to 1.24x as of September 30, 2019
Declared a distribution of $0.45 per share
Repurchased 0.5 million shares of common stock for an aggregate cost of $7.8 million during the quarter

New York, NY — February 4, 2020 — Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its third fiscal quarter ended December 31, 2019. The Company’s net investment income was $0.54 per share for the quarter ended December 31, 2019, compared to $0.53 per share for the quarter ended September 30, 2019. The Company’s net asset value (“NAV”) was $18.27 per share as of December 31, 2019, compared to $18.69 as of September 30, 2019.
On February 4, 2020, the Board of Directors declared a distribution of $0.45 per share payable on April 6, 2020 to shareholders of record as of March 20, 2020.
___________________
(1)
Non-core assets include oil & gas, structured credit, renewables, shipping and commodities.
(2)
Core assets include leveraged lending, life sciences, asset based, lender finance and aviation.
(3)
On a fair value basis.
(4)
Excludes $131 million of gross fundings for revolvers.
(5)
Includes $1 million net fundings for revolvers and a $2 million repayment from Merx Aviation.
(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 with first lien floating rate corporate loans sourced by the Apollo Direct Origination platform, while continuing to reduce our exposure non-core and legacy assets as well as second lien loans. We believe the risk profile of our portfolio continues to improve which allows us to operate at a higher leverage ratio.” Mr. Widra continued, “In addition, this quarter was an important inflection point in the makeup of our non-core portfolio. The non-core portfolio decreased by approximately $67 million through the combination of repayments and unrealized losses, reducing non-core assets to 12% of the portfolio. In addition, the risk attributable to our remaining non-core portfolio has decreased due to the successful restructuring of our investment in Carbonfree Chemicals. The combination of this restructuring and the accretive impact of the reinvestment of the proceeds received from non-core and legacy repayments has allowed us to have a smaller and better collateralized non-core portfolio while improving the overall earnings profile of Apollo Investment.”



2



FINANCIAL HIGHLIGHTS
($ in billions, except per share data)
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Total assets
$
3.06

 
$
2.89

 
$
2.70

 
$
2.50

 
$
2.38

Investment portfolio (fair value)
$
2.97

 
$
2.80

 
$
2.62

 
$
2.41

 
$
2.31

Debt outstanding
$
1.79

 
$
1.58

 
$
1.35

 
$
1.13

 
$
0.99

Net assets
$
1.22

 
$
1.25

 
$
1.29

 
$
1.31

 
$
1.32

Net asset value per share
$
18.27

 
$
18.69

 
$
19.00

 
$
19.06

 
$
19.03

 
 
 
 
 
 
 
 
 
 
Debt-to-equity ratio
1.47
 x
 
1.26
 x
 
1.05
 x
 
0.86
 x
 
0.76
 x
Net leverage ratio (1)
1.43
 x
 
1.24
 x
 
1.03
 x
 
0.83
 x
 
0.74
 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 December 31,

Nine Months Ended December 31,
(in millions)*
2019

2018

2019

2018
Investments made in portfolio companies
$
530.0


$
305.3


$
1,442.0


$
1,027.8

Investments sold
(14.9
)

(16.3
)

(44.5
)

(194.4
)
Net activity before repaid investments
515.1


289.0


1,397.5


833.4

Investments repaid
(344.2
)

(274.4
)

(804.6
)

(740.2
)
Net investment activity
$
170.9


$
14.6


$
593.0


$
93.2









Portfolio companies at beginning of period
139


98


113


90

Number of new portfolio companies
16


14


51


30

Number of exited portfolio companies
(4
)

(9
)

(13
)

(17
)
Portfolio companies at end of period
151


103


151


103









Number of investments made in existing portfolio companies
42


26


59


35


____________________
* Totals may not foot due to rounding.

3



OPERATING RESULTS

 
Three Months Ended December 31,
 
Nine Months Ended December 31,
(in millions)*
2019
 
2018
 
2019
 
2018
Net investment income
$
36.2

 
$
31.5

 
$
106.5

 
$
95.2

Net realized and change in unrealized gains (losses)
(35.9
)
 
(32.7
)
 
(75.3
)
 
(55.1
)
Net increase in net assets resulting from operations
$
0.3

 
$
(1.2
)
 
$
31.2

 
$
40.1

 
 
 
 
 
 
 
 
(per share)* (1)
 
 
 
 
 
 
 
Net investment income on per average share basis
$
0.54

 
$
0.45


1.58

 
$
1.34

Net realized and change in unrealized gain (loss) per share
(0.54
)
 
(0.47
)
 
(1.11
)
 
(0.77
)
Earnings per share — basic
$

 
$
(0.02
)
 
$
0.46

 
$
0.56

____________________
* 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 December 31, 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. During the period from January 1, 2020 through February 3, 2020, the Company did not repurchase any shares. Since the inception of the share repurchase program and through February 3, 2020, 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 FEBRUARY 4, 2020
The Company will host a conference call on Tuesday, February 4, 2020 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 #9180437 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 February 25, 2020 by dialing (800) 585-8367; international callers please dial (404) 537-3406, reference Conference ID #9180437 . 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 December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018 were as follows:


 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Portfolio composition, at fair value:
 
 
 
 
 
 
 
 
 
First lien secured debt
78%
 
74%
 
69%
 
66%
 
64%
Second lien secured debt
14%
 
17%
 
21%
 
23%
 
24%
Total secured debt
92%
 
91%
 
90%
 
89%
 
88%
Unsecured debt
 
 
 
 
Structured products and other
0%
 
2%
 
2%
 
2%
 
3%
Preferred equity
1%
 
1%
 
1%
 
1%
 
1%
Common equity/interests and warrants
7%
 
6%
 
7%
 
8%
 
8%
Weighted average yields, at amortized cost (1):
 
 
 
 
 
 
 
 
 
First lien secured debt (2)
8.7%
 
9.0%
 
9.3%
 
9.9%
 
10.4%
Second lien secured debt (2)
10.7%
 
11.0%
 
11.3%
 
11.4%
 
11.4%
Total secured debt (2)
9.1%
 
9.4%
 
9.8%
 
10.2%
 
10.7%
Unsecured debt portfolio (2)
 
 
 
 
Total debt portfolio (2)
9.1%
 
9.4%
 
9.8%
 
10.2%
 
10.7%
Total portfolio (3)
8.6%
 
8.9%
 
9.2%
 
9.6%
 
9.6%
Interest rate type, at fair value (4):
 
 
 
 
 
 
 
 
 
Fixed rate amount

 

 
 
 
Floating rate amount

$2.2
 billion
 

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

 

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

 

 
 
 
Floating rate amount

$2.3
 billion
 

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



(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)
 
December 31, 2019
 
March 31, 2019
 
(Unaudited)
 
 
Assets
 
 
 
Investments at fair value:
 
 
 
Non-controlled/non-affiliated investments (cost — $2,285,650 and $1,654,322, respectively)
$
2,256,200

 
$
1,627,406

Non-controlled/affiliated investments (cost — $133,246 and $67,072, respectively)
93,732

 
49,681

Controlled investments (cost — $656,560 and $736,717, respectively)
617,265

 
731,045

Cash and cash equivalents
36,310

 
36,280

Foreign currencies (cost — $5,839 and $4,963, respectively)
5,916

 
4,909

Receivable for investments sold
5,686

 
336

Interest receivable
18,936

 
24,280

Dividends receivable
4,702

 
3,748

Deferred financing costs
16,797

 
19,776

Prepaid expenses and other assets
4,480

 
336

Total Assets
$
3,060,024

 
$
2,497,797

 
 
 
 
Liabilities
 
 
 
Debt
$
1,785,637

 
$
1,128,686

Payable for investments purchased
800

 
677

Distributions payable
29,946

 
31,040

Management and performance-based incentive fees payable
10,414

 
8,880

Interest payable
8,138

 
5,818

Accrued administrative services expense
2,576

 
2,983

Other liabilities and accrued expenses
6,631

 
7,086

Total Liabilities
$
1,844,142

 
$
1,185,170

 
 
 
 
Net Assets
$
1,215,882

 
$
1,312,627

 
 
 
 
Net Assets
 
 
 
Common stock, $0.001 par value (130,000,000 and 400,000,000 shares authorized; 66,545,741 and 68,876,986 shares issued and outstanding, respectively)
$
66

 
$
69

Capital in excess of par value
2,118,652

 
2,155,836

Accumulated under-distributed (over-distributed) earnings
(902,836
)
 
(843,278
)
Net Assets
$
1,215,882

 
$
1,312,627

 
 
 
 
Net Asset Value Per Share
$
18.27

 
$
19.06



8



APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2019
 
2018
 
2019
 
2018
Investment Income
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments:
 
 
 
 
 
 
 
Interest income (excluding Payment-in-kind (“PIK”) interest income)
$
49,809

 
$
39,494

 
$
148,303

 
$
123,523

Dividend income
264

 
2

 
331

 
2

PIK interest income
1,224

 
643

 
6,662

 
2,709

Other income
1,193

 
3,748

 
4,315

 
6,961

Non-controlled/affiliated investments:
 
 
 
 
 
 
 
Interest income (excluding PIK interest income)
161

 

 
161

 

Dividend income
322

 
298

 
954

 
904

PIK interest income
515

 

 
515

 

Other income

 

 

 

Controlled investments:
 
 
 
 
 
 
 
Interest income (excluding PIK interest income)
11,449

 
15,061

 
36,358

 
44,627

Dividend income
2,651

 
3,300

 
5,102

 
10,550

PIK interest income
894

 
1,495

 
2,615

 
4,390

Other income

 

 

 

Total Investment Income
$
68,482

 
$
64,041

 
$
205,316

 
$
193,666

Expenses
 
 
 
 
 
 
 
Management fees
$
10,342

 
$
8,720

 
$
30,071

 
$
26,851

Performance-based incentive fees
71

 
7,409

 
1,983

 
21,190

Interest and other debt expenses
18,200

 
14,217

 
54,445

 
42,697

Administrative services expense
1,542

 
1,657

 
4,810

 
5,152

Other general and administrative expenses
2,205

 
2,564

 
7,814

 
8,621

Total expenses
32,360

 
34,567

 
99,123

 
104,511

Management and performance-based incentive fees waived

 
(1,852
)
 

 
(5,542
)
Expense reimbursements
(98
)
 
(161
)
 
(295
)
 
(500
)
Net Expenses
$
32,262

 
$
32,554

 
$
98,828

 
$
98,469

Net Investment Income
$
36,220

 
$
31,487

 
$
106,488

 
$
95,197

Net Realized and Change in Unrealized Gains (Losses)
 
 
 
 
 
 
 
Net realized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
$
(537
)
 
$
(12,421
)
 
$
(6,245
)
 
$
(22,140
)
Non-controlled/affiliated investments
(1,820
)
 

 
(731
)
 
2,007

Controlled investments

 

 

 

Option contracts

 
(6,475
)
 

 
(29,995
)
Foreign currency transactions
6,200

 
(55
)
 
5,014

 
(80
)
Extinguishment of debt

 

 
(4,375
)
 

Net realized gains (losses)
3,843

 
(18,951
)
 
(6,337
)
 
(50,208
)
Net change in unrealized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
8,972

 
2,235

 
(2,534
)
 
(8,603
)
Non-controlled/affiliated investments
(21,371
)
 
(7,124
)
 
(22,123
)
 
(11,084
)
Controlled investments
(10,858
)
 
(18,883
)
 
(33,623
)
 
(8,911
)
Option contracts

 
8,787

 

 
19,146

Foreign currency translations
(16,520
)
 
1,271

 
(10,688
)
 
4,564

Net change in unrealized gains (losses)
(39,777
)
 
(13,714
)
 
(68,968
)
 
(4,888
)
Net Realized and Change in Unrealized Gains (Losses)
$
(35,934
)
 
$
(32,665
)
 
$
(75,305
)
 
$
(55,096
)
Net Increase (Decrease) in Net Assets Resulting from Operations
$
286

 
$
(1,178
)
 
$
31,183

 
$
40,101

Earnings Per Share — Basic
$

 
$
(0.02
)
 
$
0.46

 
$
0.56



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