PennantPark Investment Corporation (NYSE:PNNT) Q1 2024 Earnings Call Transcript

Art Penn: We don’t call the bad asset bucket. We say, it’s a good asset bucket. But it’s the 30% asset bucket, opportunistic bucket. So our JV — just to be clear, our JV has been really successful. It’s been really accretive for PNNT shareholders. And we like — that’s part of our 30% bucket. And we like having room in that. We might grow the JV, we might do another JV. Keeps a very good option for the company open to optimize that 30% bucket.

Melissa Wedel: Okay. That’s helpful. I appreciate it. Separate question, it seemed like there was a lot of activity both to new companies and existing companies in the December quarter. I was just curious, if you’re — what you’re seeing in terms of sort of existing companies and how they’re using proceeds of incremental borrowings. Any trends — anything worth noting?

Art Penn: Yeah. Look, it’s — a lot of what we do is start off with companies as a platform in a particular sector where the private equity sponsor says, hey, this is our platform company. We’re going to go execute a strategy of doing add-on acquisitions. And we finance them either with delayed draws or just add-ons and incrementals. And it’s part of our normal flow. Again, this is where our equity co-invest can be helpful where we’re helping them grow the platform, and we can participate in the upside. So, nothing really dramatic. It just we were active in that calendar Q4, and that activity included existing portfolio of companies.

Melissa Wedel: Okay. So that was companies drawing down on existing facilities or you’re seeing some incremental add-on acquisition?

Art Penn: Well, in most cases there’s a delayed draw term loan that’s structured at the beginning of a deal. And that delay draw is meant to be relatively easy for the borrower to access to do add-on acquisitions or grow subject to certain thresholds. So, much of that is delay draw delay draw term loan facilities being drawn. Occasionally, it’s an incremental that’s not as delayed draw but much of it is a delay draw that’s being drawn.

Melissa Wedel: Got it. Thanks Art.

Operator: And we have no further questions. I’d like to turn the floor back to Mr. Art Penn for any additional or closing remarks.

Art Penn: Thanks everybody for being on the call today. We look forward to speaking to you next in May. Have a great day.

Operator: This concludes today’s conference. We thank you for your participation. You may disconnect your lines at this time.