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2018-08-09 23:20 CEST
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Medley Capital Corporation Announces June 30, 2018 Financial Results; Board Declares Dividend of $0.10 Per Share for the Fiscal Third Quarter of 2018

NEW YORK, NY (August 9, 2018) - Medley Capital Corporation (NYSE: MCC) (TASE: MCC) (the "Company") today announced financial results for its fiscal third quarter ended June 30, 2018.

Third Quarter Highlights

  • Net asset value ("NAV") of $6.43 per share
  • Declared a dividend of $0.10 per share
  • Net investment income of $0.02 per share
  • Legacy Assets declined from 20.4% to 10.9%

Portfolio Investments

The total value of our investments was $634.9 million at June 30, 2018. During the quarter ended June 30, 2018, the Company originated $29.8 million of investments and had $117.7 million of repayments resulting in net repayments of $87.9 million. As of June 30, 2018, the Company had investments in securities of 62 portfolio companies with approximately 63.7% consisting of senior secured first lien investments, 7.5% consisting of senior secured second lien investments, 0.2% in unsecured debt, 12.3% in MCC Senior Loan Strategy JV and 16.3% in equities / warrants. As of June 30, 2018, the weighted average yield based upon the cost basis of our income bearing portfolio investments, excluding cash and cash equivalents, was 10.0%.

Results of Operations

For the three months ended June 30, 2018, the Company reported net investment income per share and net loss per share of $0.02 and $(0.49), respectively, calculated based upon the weighted average shares outstanding. For the nine months ended June 30, 2018, the Company reported net investment income per share and net loss per share of $0.21 and $(1.60), respectively, calculated based upon the weighted average shares outstanding. As of June 30, 2018, the Company's NAV was $6.43 per share.

Investment Income

For the three months ended June 30, 2018, total investment income was $13.9 million and consisted of $11.2 million of portfolio interest income, $1.9 million of dividend income, and $0.8 million of fee income.

For the nine months ended June 30, 2018, total investment income was $51.6 million and consisted of $42.9 million of portfolio interest income, $5.5 million of dividend income, and $3.2 million of fee income.

Expenses

For the three months ended June 30, 2018, total expenses were $13.0 million and consisted of the following: base management fees of $3.5 million, interest and financing expenses of $6.8 million, professional fees of $0.7 million, administrator expenses of $0.9 million, directors' fees of $0.5 million, and other general and administrative related expenses of $0.6 million.

For the nine months ended June 30, 2018, total expenses net of the voluntary base management fee waiver were $39.8 million and consisted of the following: base management fees net of fees waived under the voluntary waiver of $11.0 million, interest and financing expenses of $21.0 million, professional fees of $1.8 million, administrator expenses of $2.8 million, directors' fees of $0.9 million, and other general and administrative related expenses of $2.3 million.

Net Investment Income

For the three and nine months ended June 30, 2018, the Company reported net investment income of $0.9 million and $11.7 million, respectively, or $0.02 and $0.21, respectively, on a weighted average per share basis.

Net Realized and Unrealized Gains/Losses

For the three and nine months ended June 30, 2018, the Company reported net realized losses from investments of $(35.0) million and $(58.4) million, respectively.

For the three and nine months ended June 30, 2018, the Company reported a loss on extinguishment of debt of $(10,848) and $(1.2) million, respectively.

For the three months ended June 30, 2018, the Company reported net unrealized appreciation on investments of $7.2 million, respectively.

For the nine months ended June 30, 2018, the Company reported net unrealized depreciation on investments of $(40.0) million, respectively.

Liquidity and Capital Resources

As of June 30, 2018, the Company had a cash balance of $144.0 million, of which, $71.9 million was held in Medley SBIC, LP.

As of June 30, 2018, the Company had $1.5 million of total debt outstanding under its $150.0 million senior secured revolving credit facility, $150.0 million outstanding in SBA-guaranteed debentures, $74.0 million outstanding in aggregate principal amount of 6.5% unsecured notes due 2021, $89.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023, and $121.1 million of 5.30% unsecured notes due 2024.

Dividend Declaration

On August 2, 2018, the Company's Board of Directors declared a dividend of $0.10 per share, payable on September 20, 2018, to stockholders of record at the close of business on September 5, 2018. The Company has identified 31%, or $0.0306 per share, of this distribution as an interest-related dividend generally exempt from U.S. nonresident withholding tax. This information is subject to change and the specific tax characteristics of the distribution will be reported to stockholders on Form 1099 after the end of the Calendar year.

Webcast/Conference Call

The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on August 10, 2018.

All interested parties may participate in the conference call by dialing (888) 637-5728 approximately 10-15 minutes prior to the call. International callers should dial (484) 747-6636. Participants should reference Medley Capital Corporation and the Conference ID: 5269769. Following the call you may access a replay of the event via audio webcast. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through the Company's website, http://www.medleycapitalcorp.com. To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Company's website.

Financial Statements

Medley Capital Corporation

Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)

  June 30, 2018   September 30, 2017
  (unaudited)    
ASSETS      
Investments at fair value      
Non-controlled/non-affiliated investments (amortized cost of $421,439 and $625,108, respectively) $ 358,757     $ 575,496  
Affiliated investments (amortized cost of $98,688 and $91,027, respectively) 98,014     90,071  
Controlled investments (amortized cost of $231,810 and $197,918, respectively) 178,097     171,424  
Total investments at fair value 634,868     836,991  
Cash and cash equivalents 144,002     108,572  
Interest receivable 4,701     9,371  
Other assets 4,075     3,322  
Fees receivable 618     765  
Deferred offering costs 355     307  
Receivable for dispositions and investments sold 150     232  
Total assets $ 788,769     $ 959,560  
       
LIABILITIES      
Revolving credit facility payable (net of debt issuance costs of $1,151 and $1,777, respectively) $ 349     $ 66,223  
Term loan payable (net of debt issuance costs of $0 and $1,046, respectively) -     100,954  
Notes payable (net of debt issuance costs of $8,818 and $4,123, respectively) 276,330     172,752  
SBA debentures payable (net of debt issuance costs of $2,422 and $2,846, respectively) 147,578     147,154  
Management and incentive fees payable 3,533     4,312  
Interest and fees payable 7,012     3,760  
Accounts payable and accrued expenses 2,087     1,864  
Administrator expenses payable 950     860  
Deferred tax liability 438     912  
Deferred revenue 179     259  
Due to affiliate 152     81  
Total liabilities $ 438,608     $ 499,131  
       
NET ASSETS      
Common stock, par value $0.001 per share, 100,000,000 common shares authorized, 54,474,211 and 54,474,211 common shares issued and outstanding, respectively $ 54     $ 54  
Capital in excess of par value 705,046     705,046  
Accumulated undistributed net investment income (1,688 )   9,528  
Accumulated net realized gain/(loss) from investments (236,183 )   (176,663 )
Net unrealized appreciation/(depreciation) on investments, net of deferred taxes (117,068 )   (77,536 )
Total net assets 350,161     460,429  
Total liabilities and net assets $ 788,769     $ 959,560  
       
NET ASSET VALUE PER SHARE $ 6.43     $ 8.45  


Medley Capital Corporation

Consolidated Statements of Operations
(in thousands, except share and per share data)

  For the three months ended June 30   For the nine months ended June 30
  2018   2017   2018   2017
  (unaudited)   (unaudited)   (unaudited)   (unaudited)
INVESTMENT INCOME:              
Interest from investments              
Non-controlled/non-affiliated investments:              
Cash $ 7,736     $ 16,029     $ 31,793     $ 51,064  
Payment-in-kind 687     2,506     3,201     8,192  
Affiliated investments:              
Cash 538     462     1,605     1,493  
Payment-in-kind 829     102     2,448     304  
Controlled investments:              
Cash 456     621     1,313     1,317  
Payment-in-kind 896     1,009     2,430     4,052  
Total interest income 11,142     20,729     42,790     66,422  
Dividend income, net of provisional taxes ($0 and $0, respectively) 1,925     1,050     5,541     2,745  
Interest from cash and cash equivalents 65     46     123     109  
Fee income 813     1,870     3,157     4,832  
Total investment income 13,945     23,695     51,611     74,108  
               
EXPENSES:              
Base management fees 3,533     4,450     11,376     13,461  
Incentive fees -     -     -     896  
Interest and financing expenses 6,754     7,321     20,983     24,238  
Administrator expenses 950     1,075     2,774     2,988  
General and administrative 474     424     1,903     1,904  
Professional fees 679     616     1,821     1,930  
Directors fees 521     152     919     472  
Insurance 130     99     394     298  
Expenses before management and incentive fee waivers 13,041     14,137     40,170     46,187  
Management fee waiver -     (11 )   (380 )   (48 )
Incentive fee waiver -     -     -     (44 )
Total expenses net of management and incentive fee waivers 13,041     14,126     39,790     46,095  
Net investment income before excise taxes 904     9,569     11,821     28,013  
Excise tax expense -     -     (158 )   (267 )
NET INVESTMENT INCOME 904     9,569     11,663     27,746  
               
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:              
Net realized gain/(loss) from investments              
Non-controlled/non-affiliated investments (35,000 )   (33,924 )   (58,352 )   (40,213 )
Affiliated investments -     -     -     -  
Controlled investments -     (21,159 )   -     (21,158 )
Net realized gain/(loss) from investments (35,000 )   (55,083 )   (58,352 )   (61,371 )
Net unrealized appreciation/(depreciation) on investments              
Non-controlled/non-affiliated investments 15,079     21,687     (13,070 )   10,667  
Affiliated investments 927     1,063     282     3,047  
Controlled investments (8,759 )   24,980     (27,218 )   16,660  
Net unrealized appreciation/(depreciation) on investments 7,247     47,730     (40,006 )   30,374  
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments 194     783     474     783  
Loss on extinguishment of debt (11 )   -     (1,168 )   (456 )
Net gain/(loss) on investments (27,570 )   (6,570 )   (99,052 )   (30,670 )
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (26,666 )   $ 2,999     $ (87,389 )   $ (2,924 )
               
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE $ (0.49 )   $ 0.06     $ (1.60 )   $ 0.05  
WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE $ 0.02     $ 0.18     $ 0.21     $ 0.51  
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED 54,474,211     54,474,211     54,474,211     54,474,211  
DIVIDENDS DECLARED PER COMMON SHARE $ 0.10     $ 0.16     $ 0.42     $ 0.60  

ABOUT MEDLEY CAPITAL CORPORATION

Medley Capital Corporation is a closed-end, externally managed business development company ("BDC") that trades on the New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE: MCC). Medley Capital Corporation's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. Our portfolio generally consists of senior secured first lien loans and senior secured second lien loans. Medley Capital Corporation is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. For additional information, please visit Medley Capital Corporation at www.medleycapitalcorp.com.

ABOUT MCC ADVISORS LLC

MCC Advisors LLC is a subsidiary of Medley Management Inc. (NYSE: MDLY, "Medley"). Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley's national direct origination franchise, is a premier provider of capital to the middle market in the U.S. Medley has over $5 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE: MCC) (TASE: MCC) and Sierra Income Corporation, a credit interval fund, Sierra Total Return Fund (NASDAQ: SRNTX) and several private investment vehicles. Over the past 15 years, Medley has provided capital to over 400 companies across 35 industries in North America.1 For additional information, please visit Medley Management Inc. at www.mdly.com.

Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the New York Stock Exchange under the symbols (NYSE:MDLX) and (NYSE:MDLQ). Medley Capital Corporation is dual-listed on the New York Stock Exchange (NYSE:MCC) and the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on both the New York Stock Exchange under the symbols (NYSE:MCV), (NYSE:MCX) and the Tel Aviv Stock Exchange under the symbol (TASE: MCC.B1).

FORWARD-LOOKING STATEMENTS

Statements included herein may contain "forward-looking statements". Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission. Except as required by law, the Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

SOURCE: Medley Capital Corporation

Investor Relations Contact:
Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777

Media Contact:
Erin Clark
Teneo Strategy
646-214-8355

[1] Medley Management Inc. is the parent company of Medley LLC and several registered investment advisors (collectively, "Medley"). Assets under management refers to assets of our funds, which represents the sum of the net asset value of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). Assets under management are as of June 30, 2018.

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