Portman Ridge Finance Corporation (NASDAQ:PTMN) Q4 2024 Earnings Call Transcript

Portman Ridge Finance Corporation (NASDAQ:PTMN) Q4 2024 Earnings Call Transcript March 14, 2025

Operator: Welcome to Portman Ridge Finance Corporation’s Fourth Quarter and Full Year ended December 31, 2021 Earnings Conference Call. An earnings press release was distributed yesterday, March 13, 2025, after the close of the market. A copy of the release, along with an earnings presentation is available on the company’s website at www.portmanridge.com in the Investor Relations section and should be reviewed in conjunction with the company’s Form 10-K filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today’s conference call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties.

Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company’s filings with the SEC. Portman Ridge Finance Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today’s call will be Ted Goldthorpe, Chief Executive Officer, President and Director of Portman Ridge Finance Corporation; Brandon Satoren, Chief Financial Officer; and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Portman Ridge.

Edward Goldthorpe: Good morning, and welcome to our fourth quarter and full year 2024 earnings call. I’m joined today by our Chief Financial Officer, Brandon Satoren; and our Chief Investment Officer, Patrick Schafer. Following my opening remarks on the company’s performance and activities during the fourth quarter, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail. While 2024 had several positive developments for Portman, including the potential for an accretive combination with Logan Ridge announced just after year-end, the company’s financial results were impacted by certain idiosyncratic challenges within our investment portfolio.

We will continue to focus on our underperforming credits, and I remain confident in our ability to drive the best outcome for shareholders and most importantly, in the credit quality of the portfolio overall. As far as the combination with Logan Ridge is concerned, the next critical step towards completion is the Special Meeting of Shareholders where investors will be asked to approve the transaction, which is scheduled — will be scheduled once the [ N14 ] is declared effective by the SEC. This transformative transaction marks a significant milestone in our long-term growth strategy and underscores our commitment to finding creative ways to continue to grow the company’s balance sheet and generate shareholder value. We believe the combination of these 2 BDCs create a stronger, more competitive combined company with increased scale, significant operational efficiencies and enhanced trading liquidity.

We invite our shareholders to vote for the merger when they receive the proxy card. Both Portman and Logan, Board of Directors have unanimously recommended that shareholders vote for the merger. The proposed merger with Morgan Ridge is a testament to the strategic actions we have taken to position Portman Ridge for long-term success. In support of this transaction, our external adviser, Sierra Crest has agreed to wave up to $1.5 million of incentive fees over the next 8 quarters following the merger’s closing, further aligning interests with our shareholders. During the year, we executed our disciplined capital management strategy through prudent capital and portfolio management initiatives. I’m very pleased with the work we did on the right side of the balance sheet and substantial improvements we made to the company’s debt capital structure.

This is highlighted by the refinancing of the 2018-2 Secured Notes and the amendment and extension of our JPMorgan Chase bank credit facility, which we upsized and termed out. which resulted in net spread savings of that we truly benefited fully in the fourth quarter of 2024. Complementary to these efforts, we continue to strengthen our portfolio by reducing nonaccrual investments from [ 9 ] as of September 30, 2024, to [ 6 ] as of December 31, 2024, improving the overall asset quality. In light of both the benchmark rate environment as well as the general market spread compression, Board of Directors has approved the modification of Portman’s dividend policy to introduce regularly, [ quarterly ] based distribution and a quarterly supplemental distributions, which will approximately 50% of net investment income in excess of our quarterly base distribution.

For the first quarter of 2025, the Board of Directors approved a base distribution of $0.47 per share and a supplemental cash distribution of $0.07 a share. Additionally, during the year, we continue to believe our stock remains undervalued and thus, the company repurchased 202,357 shares of its common stock in the open market under its renewed stock repurchase program for an aggregate cost of approximately $3.8 million, which was accretive to NAV by $0.07 per share, reinforcing our commitment to increasing shareholder value. Looking ahead, we are excited about the opportunities the proposed merger will create. Entering 2025, we anticipate being active in the market and net deployers of capital, which we anticipate will restore net investment income to more normalized levels.

With a healthy pipeline, fortified balance sheet, prudent investment strategy and experienced management team, we remain confident in our ability to generate strong risk-adjusted returns and drive long-term value for our shareholders. With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Patrick Schafer: Thanks, Ted. Turning now to Slide 5 of our presentation and the sensitivity of our earnings to interest rates. As of December 31, 2024, approximately 90.1% of our debt securities portfolio was floating rate with spread peg to an interest rate index such as SOFR or primary with substantially all of these being linked to SOFR. As you can see from the chart, SOFR rates have declined in the past 2 quarters, impacting the current quarter’s net investment income. Skipping down to Slide 10. Originations for the quarter were higher than last quarter but were below the current quarter repayment and sales levels, resulting in net repayments and sales of approximately $19.2 million. Of note, approximately $12 million of this was due to the repayment of critical nurse on the last day of the year.

Subsequent to year-end, we have successfully deployed the critical notes proceeds through add-on to multiple existing portfolio companies and investment in a new borrower that is expected to close in the near term. Overall, yield on par value of new investments during the quarter was 11.4%, slightly above the yield of the overall portfolio at 11.3% on par value. Our investment portfolio at year-end remained highly diversified. We ended the fourth quarter with a debt investment portfolio when excluding our investments in CLO funds, equities and joint ventures, spread across 26 different industries with an average par balance of $2.5 million. Turning to Slide 11. In aggregate, we had 6 investments on nonaccrual status at the end of the fourth quarter of 2024, representing 1.7% and 3.4% of the company’s investment portfolio at fair value and cost, respectively.

This compares to 9 investments on nonaccrual status as of September 30, 2024, representing 1.6% and 4.5% of the company’s investment portfolio at fair value and cost, respectively. On Slide 12, excluding our nonaccrual investments, we have an aggregate debt investment portfolio of $320.7 million at fair value, which represents a blended price of 90.7% of par value and is 90.2% comprised of first lien loans at par value. So in a par recovery, our December 31, 2024 fair values, [ bucked ] a potential of $16.4 million of incremental net value or a 16.4% increase to now. When applying an illustrative 10% default rate and 70% recovery rate, our debt portfolio would generate an incremental $2.36 per share of NAV or an 11.1% increase as it rotates.

Finally, turn to Slide 13, to aggregate the 3 portfolios acquired over the last 3 [ years ], we have purchased a combined $435 million of investments and have realized approximately 85% of these investments at a combined realized and unrealized mark of 101% of fair value at the time of closing of those respective mergers. As of Q4 2024, we have fully exited the acquired Oakville portfolio and are down to a combined only $27 million of the acquired HGAAP and initial KCAP portfolios. I’ll now turn the call over to Brandon to further discuss our financial results for the period.

Brandon Satoren: Thanks, Patrick. Turning to our financial results for the quarter ended December 31, 2024. For the quarter ended December 31, 2024, Portman generated $14.4 million of investment income, a $0.8 million decrease as compared to $15.2 million reported for the quarter ended September 30, 2024. The quarter-over-quarter decrease was primarily due to lower investment income due to net repayments and sales during the quarter of $19.2 million as well as decreases in base rates. For the quarter ended December 31, 2024, total expenses were $8.9 million, a $0.5 million decrease as compared to $9.4 million reported for the quarter ended September 30, 2024. The quarter-over-quarter decrease was primarily due to lower average debt outstanding during the quarter as well as a full quarter’s benefit of the 30 basis point reduction in spread on the JPMorgan credit visibility, which was effective August 2, 2024.

Accordingly, our net investment income for the fourth quarter of 2024 was $5.5 million or $0.60 per share, a decrease of $0.3 million or $0.03 per share from the prior quarter. Our net asset value as of December 31, 2024, was $178.5 million, representing a $9.5 million decrease as compared to prior quarter net asset value of [ $180 million ]. On a per share basis, net asset value was per share as compared — as of December 31, 2024, representing a $0.95 decrease per share as compared to [ 2036 ] in the prior quarter. The decline in NAV was driven by a combination of under-earning the distribution in Q4, the wind-down of 2 of our JMP CLO investments and mark-to-market declines in a small handful of portfolio companies. As of December 31, 2024 and September 30, 2024, our gross leverage ratios were 1.5x and 1.3x, respectively.

For the same period, our leverage ratio, net of cash, was 1.4x and 1.3x. Specifically, as of December 31, 2024, we had a total of $267.5 million of borrowings outstanding with a current weighted average contractable interest rate of 6.2%. This compares to the same borrowings outstanding as of the prior quarter, the weighted average contractual interest rate of 6.7%. The company finished the quarter with $40.5 million of available borrowing capacity under the senior secured revolving credit facility. With that, I will turn the call back over to Ted.

Edward Goldthorpe: Thank you, Brandon. [ Ahead ] of questions, I’d like to emphasize how excited we are about the opportunities the proposed merger will create. Additionally, with a robust pipeline, prudent investment strategy and experienced management team, we believe we are well positioned to take advantage of the current market environment and will be able to deliver strong returns to our shareholders throughout 2025. Thank you once again to all of our shareholders for your ongoing support. This concludes our prepared remarks, and I’ll turn the call over for any questions.

Q&A Session

Operator: [Operator Instructions] And your first question comes from the line of Chris Nolan with Ladenburg.

Christopher Nolan: What was the generator of the realized loss in the quarter, please?

Unknown Executive: Yes, it was primarily our former nonaccrual investments in [ Robertshaw and Palmer ] as well as the CLOs. Those were the biggest drivers. A company called STG Logistics, that was not on nonaccrual. It was also a contributor. However, most of that — most of those realized losses were previously reflected in our NAV, about $10 million of the [ $10.8 million ].

Christopher Nolan: And how much of the repurchases that to NAV in the quarter?

Unknown Executive: So it was accretive. It was about 40 basis points in change in net per share quarter-over-quarter.

Christopher Nolan: I guess going forward, given the lower base rates in the spread compression. Where are you guys thinking in terms of controlling costs what sort of levers are you thinking about in terms of how to improve returns.

Edward Goldthorpe: Good question. So obviously, a big driver of the Logan Portman merger is cost savings. So obviously, less board fees, less audit fees, less tax, all that kind of stuff. So that’s actually a really low-hanging fruit from us. And then number 2 is, obviously, as we grow, you’re spreading our various back office and financial functions over a larger base, which will lead to lower per share admin costs. So I think with a couple of things we’re hoping to do over the next 6 to 9 months, you should see continued cost savings. And the other thing I’d highlight is, obviously, as part of this Logan Portman merger, we’re waiving some incentive fees. So that should obviously help with run rate NII.

Operator: And your next question comes from the line of Eric Zwick with Lucid Capital Markets.

Unknown Analyst: [ Justin Marks ] on for Eric today. It sounds like the pipeline is healthy. Curious if you could give us any detail on the current mix, new versus add-ons and if you are seeing any better risk-adjusted return opportunities in any particular industries?

Edward Goldthorpe: I’ll go first, which is, I’d say, coming into the year, so post the election, there is a massive wave. Our pipeline increased dramatically for obvious reasons. Business-friendly, less concerned about antitrust more feeling that the economy would be on better footing. And then ironically, given I just said, over the last 6 weeks, I would say a lot of our deal flow has been put on hold unsurprisingly. It’s very, very hard to buy companies in certain sectors with some of the volatility around tariffs. I mean the good news for us, I don’t want to give you too long an answer, but the good news for us is many of the sectors that we’re focused on just are less directly impacted by this. So we really have very little in the way consumer exposure, very little way on the retail exposure.

So we actually feel like we’re relatively insulated from some of these potential risks directly. Now that is obviously indirect impact. And I would say our pipeline has actually picked up this last 1.5 weeks. And so we’ve gone from what I would call a mediocre pipeline to a less mediocre pipeline probably over the last 10 days.

Patrick Schafer: Yes. I’d just add to that, I’d say as a blanket statement, we would much rather provide incremental opportunity to our existing portfolio companies because they’re names that we’ve been in for a while. We understand the management teams will understand the financial reporting, there’s less surprises. So in general, I think we would always try and skew towards an incremental that you tend to be able to get a little bit stickier pricing there just because there’s an ease of use around a smaller incremental with your existing [indiscernible] versus going out doing a whole new facility. So again, tend down the margin get a little bit better pricing and feel a lot better about the diligence and sort of the core of the portfolio of company you’re underwriting.

So again, as I alluded to in a little bit of my comments, at least so far through Q1, most of the investments we’ve had have been to existing portfolio companies as opposed to new borrowers. Again, just because you tend to be able to feel a lot better about the diligence process and underwriting those names.

Unknown Analyst: Makes sense. And last one for me. Curious how the nonaccrual resolutions came to fruition and if you have any line of sight into additional resolution opportunities for the companies that remain on nonaccrual today?

Patrick Schafer: Yes. Just to take the last one first. Again, we’re kind of like continuously going through working closely with those portfolio companies to try and come to resolutions. Oftentimes, they take sort of twist and turns and take a while. So just a simple example of that is in the Getronics Pomeroy nonaccruals, this ultimately, there have been a transaction we are working on with the company for probably the better part of a year that finally came to fruition in Q4, where we actually acquired and merged an additional company to gain scale. And at that time, it made sense to convert in some amount of our debt into reinstated debt that is lowly levered and accruing and then the residual of our exposure, we took in form of equity in the pro forma company.

So that ultimately just came to fruition in Q4, but that was a year of work behind the scenes to kind of try and have to come to fruition. So on Robert Shawn STG, both simple examples — sorry, similar cases, STG, there was a that wasn’t a nonaccrual. The Robert Shwan was — that one was in a bankruptcy and [indiscernible] bankruptcy in Q4. So we got some amount of reinstated debt. There was no real NAV impact to that, but it finally kind of — there was a final resolution of that name.

Operator: And your next question comes from the line of Evan Slater (sic) [ Steve Slater ] with Slater Capital Management.

Steven Martin: Well, guys, they got the name wrong, but that’s okay. It’s Steve.

Unknown Executive: I felt like it was pretty good that it was you, Steve.

Steven Martin: A couple of questions. Can you be a little more elaborative about the dividend policy, how you got there and how you win what drove the restructuring of the dividend policy?

Edward Goldthorpe: Yes. I’d say — I mean, listen, we’ve been pretty resistant to make a change in our dividend policy. I would say well over half the BDCs have gone in this direction. And I think that there’s 4 or 5 more that announced this quarter. And so it seems to be where the industry is going. And so this base plus supplemental with all the volatility in short-term rates and spreads, means that all of this compared to our base dividend and then whatever the overage is at the overage. So historically, I mean, I’ve said it publicly, I’ve been — I historically have not like special dividends. I would say it’s where the industry is going. So in consultation with our Board and when you look across the industry and the comp sheet, I mean, this is kind of becoming the norm across the industry.

Patrick Schafer: Yes. And Steve, so I’d just add on to that. We did a pretty extensive sort of benchmark analysis of where of the other BDCs who have this kind of policy where they set base, how they, to the extent that they guide, how they guide on the supplementals, and so what we endeavored to do was strike a base rate that was on the higher end of the, let’s say, the comp set we used the basebook supplemental. And then, generally speaking, not everyone guides to how they think about the supplemental, but those that do guide us somewhere between 50% and 75% of the overage going towards the supplemental. So that would be the more elaborative answer of. It was a full benchmarking of those that have done it how they’ve done it, where those metrics are and try to ensure as we have been historically that we’re on the higher end of sort of our peers in terms of distributions.

Steven Martin: Well, how did you arrive at the $0.47 base given that, that’s substantially lower than your quarterly NII for quite a while going far back.

Patrick Schafer: Yes. I mean if you look at all of the BDCs that have it based us supplemental and you analyze their base, I’ll get the numbers a little bit wrong because I’m going off the top of my head, but there’s somewhere in like the 8.5%, 9% at the low end to maybe like 10% on the high end. And with the average being a little bit below 9.5%, probably something like 9.3%, 9.4%, give or take. So the number that we arrived to is obviously a full cent per share, but it works out to about 9.7% as a percentage of NAV. And again, that’s on sort of the higher end of the [ 18%, 19% ] or so BDCs that have this structure. And as I said, on the supplemental, again, what we were able to again, a lot of folks don’t actually give any guidance whatsoever, but those that do specify or give somewhere around 50% to 75% of the overage in terms of their supplemental.

Steven Martin: Okay. So it was basically a return on NAV as your base?

Unknown Executive: Correct.

Steven Martin: Okay. Let’s talk about deployments. The whole industry has had a hard time deploying. You guys seem to — you haven’t had a positive deployment in probably almost 4 quarters. You never — I don’t have to tell you something you don’t already know. I mean it’s hard to generate NII if your portfolio shrunk 20% last year. Are you being too tight And/or what do you think about net deployments this quarter, recognizing many changes have occurred in the political landscape.

Edward Goldthorpe: Yes. I mean it’s a fair question. I mean what I would say is, obviously, we’re focused on good deployment versus deployment. And obviously, spreads have tightened quite dramatically over the last 12 months. I mean I think the way we think about it is very simple, which is private — new capital activity is very muted. So if you actually look at where deployment is happening, a lot of it is in refinancings and repricings and not in new deals. And so as I mentioned earlier, Steve, we had a really big pipeline coming into this year. So we’re kind of saving some dry powder for some of those deals. And a number of those deals unsurprisingly to you have either been put on hold or are moving a little bit slower. So we feel pretty good about our deployment prospects this year. But obviously, this last 6 weeks has not been great for our deal pipeline.

Patrick Schafer: Yes. And again, I’d just add the small quark, we are a little bit subject to timing on some of the stuff where critical nurse, which was like a $12 million, $13 million position, we got repaid on the last day of the quarter. So it significantly skews our net deployments. We still would have been slightly under deployed for the quarter because we have a deal that’s been working through the pipeline that is still in the process of closing. But we do occasionally get burned by that from a deployment perspective where a large unexpected thing happens towards the end of the quarter. And candidly, it takes a month, 2 months for us to be able to find attractive credit quality portfolio companies that also meet a rate of return necessary to pay out and above an above-market dividend rate, which we’ve historically been doing and tried to endeavor to do.

So that’s — again, there are some lags around the timing, as I mentioned in my results. we’ve more than been deployed that $12 million where we sit today. And we look to kind of continue. We have a couple of more things in the pipeline that hopefully will close in the next 2 weeks. So some of it is a little bit around timing. But as Ted said, I think we have always tried to be a little bit more prudent on how we deploy capital. And our strategy historically is to try and focus as much as we can on non-sponsor founder-backed businesses, those tended have more twists and turns along the way from term sheet to closing and a little bit more difficult to sort of time properly as opposed to if we want to just be in the sponsor deal flow, you can look at a lot of our peers who are in that business and their returns on assets are probably 9.5% to 10% versus 11.5% but they have a little bit easier time refilling the funnel because they can just lean into the next L 500 deal, which is a little bit more difficult for us to lean into.

So again, long wind way of saying, it’s a very valid point, Steve, we’re trying to everything we can to minimize that, but there do tend to be some timing impacts here or there.

Steven Martin: So what do you view as would that NAV having declined, like looking at a snapshot at December 31, what would you have viewed your incremental capacity to be on a net basis? I’m not sure I’m asking the question in the right…

Edward Goldthorpe: I know you’re asking, is your question basically how much dry powder do we have given our leverage facility.

Steven Martin: That was the question.

Unknown Executive: Yes. I mean the — I’ll say it in a couple of different — I’ll give you a couple of different I don’t have the exact number of the top of my head. So I can only give you sort of how we think about it. But I would say — the obvious thing would be the net deployment of $19 million is absolutely can be redeployed. The other thing I would say is, again, like our NAV and the things that move our credit facility and the availability under their credit facility are 2 different things. As an example, our silo equity has no impact on our ability to draw under the JPMorgan facility because it’s all sitting outside of the JPMorgan facility. So mark-to-market movements or realized losses in steel equities have absolutely 0 impact to our JPMorgan facility.

There’s a number of assets that we have that are just generally outside of them. Those don’t have any movement. Candidly, like the way that our assets in collateral values in JPMorgan is not the same as how we reflected on our balance sheet. So there’s often times where we have something marked at 99%, and it might only have 97% credit in the JP facility because that’s just how they do it or we have something marked at 92% and we have a 95% credit for it in JPMorgan because that’s just how they do it. So they’re a little bit — they’re not entirely linked in terms of our actual NAV and our borrowing base availability under our facility.

Steven Martin: And do I understand correctly that you unwound closed out did something to some of the JMP CLOs?

Unknown Executive: Yes. We in — I think it would have been — maybe late October or mid-November, we actually started the process to unwind those vehicles by issuing B Wix, it takes a long time to settle. So we still have the positions on our balance sheet at the end of the year from an SOI perspective, but we have flowed out those trades. We have sold and priced the collateral. So those should be off our SOI in Q1, and I don’t believe they should have any impact to NAV in Q1 in terms of how they get unwound. But yes, just — it tends to take a couple of months between when you actually go and sell the assets and then they all need to get assigned and cash come in the door and pay down the liabilities and then get the residual. So Brandon might be able to say whether they actually [ gave the door ] as of where we sit today, but it is a little bit of a process.

Steven Martin: If those were outside the credit agreement, does cleaning those up, therefore, create incremental capacity.

Unknown Executive: Yes. You could take those that — let’s — I’d pick a random number. You could take $5 million and contribute into the facility, and that would give you probably something in the area of like $8 million or $9 million of investing capacity. Again, so too, we tend to have some cash on our balance sheet. We could always contribute some millions from our balance sheet into the JP facility, get incremental capacity to invest. So yes, that would give us incremental investing capacity as we get back to cash.

Operator: And your next question comes from the line of Paul Johnson with KBW.

Paul Johnson: Maybe just in terms of the watch list your internal watch list investments this quarter. Was there any — I mean it was pretty flat quarter-over-quarter, but is there any internal changes are there any new investments added and the like?

Edward Goldthorpe: Yes. So I’ll go first, which is we really haven’t had a lot of negative credit surprises over the last 12 months. So the number of the names that we have highlighted this quarter has been challenging. It’s been challenging for a while, and a lot of them are not an inherited positions, but legacy positions that we bought in other vehicles. So I don’t think we’ve seen a lot of negative credit migration. Now again, with all the stuff going on now, we’ll seek some of a lot that’s trailing. But generally speaking, our companies are — 80% of our companies are growing, and we continue to be pretty healthy on a fixed charge coverage ratio.

Patrick Schafer: Yes. I’d say — again, I’d say there’s probably always 1 or 2 things that we’re watching that aren’t “underperforming”. The way this is done is based on our rating systems, 1 through 5. So names normally come on at a 2 which is like a regular way. And if there’s things that we’re watching, that’s a 3 and when they start to underperform and they can move to a 4 or 5, which is we expect a loss. So yes, we always have things fluctuate between 2 and 3 in terms of things that are under — are — from a financial perspective, underperforming, but that I wouldn’t — that’s not like based on a rating system is, hey, they had a down quarter or 2. There were some weather we need to kind of stay a little bit more on top of something — so those names fluctuate a little bit from 2 to 3 in a given time period.

As Ted said, over the course of 2024, I’d say it was generally characterized by the stuff that had been struggling has kind of continued to muddle along. And so again, with the rise of some of this tariff policy. We’ve been active in doing a deep dive on our portfolio and how they might or might not be impacted. I think in general, the sentiment is it’s relatively muted. But having said that, like the tariffs change week by week. And sometimes, they’re active, sometimes they’re not. And sometimes it changes to goods and services and all that. So it’s like a really tough pulls out to hit in terms of identifying that. So we’re trying to stay on top of it. But again, I would say we have names that we’ve kind of continued to be watching. And as Ted said we, have any wild surprises over the course of last year.

Paul Johnson: And then could you just give us a sense of maybe how much of the portfolio is a nonsponsored at this point.

Patrick Schafer: Let us get back to you. I know as like a platform, we are probably like close to 50-50 in terms of sponsor, not sponsor. I would say our BDCs tend to be a little bit more [ weighted ] sponsor just because I know I know I gave the previous comments to Steve, but the reality is it’s tough to run an entire permitting capital always need to be invested vehicle based on non-sponsor activity because it is so episodic. So I would say we probably have off the comps maybe more 60-40 in terms of our public BDCs because you need to have a little bit more of that flow business to stay invested. But we can — I can follow up if you want a more specific number, Paul, but I’d say our platform as a whole is 50-50 with a little bit more weighting towards sponsor in the BDCs just because of, let’s call it, working capital management.

Edward Goldthorpe: Yes. It would help you and our shareholders to publish every quarter, we can begin to do that.

Paul Johnson: Yes, sure. Yes. Thanks. It will be interesting to kind of see and track that. I mean, when I look at your portfolio, I look kind of at the watch list investments, the loans that are marked down, there’s a number of investments on there. I mean how many of those investments then, would you say that you’re, I guess, actively involved in the turnaround of the resolution process as a platform versus more of like a syndicated type of participation?

Patrick Schafer: Yes. I — sorry, I kind of want to pull something [indiscernible] But we really have 7 or so names that are like “syndicated” where we have varying levels of potential influence. I’d say, for the most part, we have — to the extent that there is something in our portfolio, we are very actively engaged in it. Again, like the list of stuff that we have that is truly like broadly syndicated is pretty small. I think the — probably the largest one that is below par would be a [indiscernible] and that is one where we have a decent holding across our platform. but that is a more broadly syndicated loan, and we still have involvement there. But I’d say the vast faster of our portfolio as a whole is either — we’re 1 of 2, 3 lenders were the same lender or it is not large enough that you can kind of ignore any of the lenders.

So that again, long winded way of saying, generally speaking, we’re pretty involved in all of our portfolio companies, and that would then translate into the ones that let’s say, would be on your watchlist, Paul.

Operator: There is no further question at this time. I would like to turn the conference back over to Ted Goldthorpe for closing remarks.

Edward Goldthorpe: Thank you all for attending our call. And as per always, reach out to us with any questions, which we’re happy to discuss — we look forward to speaking to you again in May when we announce our first quarter 2025 results. Thank you very much, and have a good weekend.

Operator: This concludes today’s conference call. You may now disconnect.