PennantPark Floating Rate Capital Ltd. Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>PennantPark Floating Rate Capital Ltd. filed its Q3 2023 10-Q, detailing a portfolio heavily weighted towards First Lien Senior Secured Debt and Preferred Equity in non-controlled companies.</b>

AI Summary

PennantPark Floating Rate Capital Ltd. (PFLT) filed a Quarterly Report (10-Q) with the SEC on February 7, 2024. PennantPark Floating Rate Capital Ltd. filed a 10-Q for the period ending December 31, 2023. The filing includes details on investments in non-controlled, non-affiliated portfolio companies, representing 148.1% of investments as of December 31, 2023. Key investments include First Lien Senior Secured Debt in Lash OpCo, LLC with a current coupon of 12.48% and maturity on 02/18/2027. The company also holds Preferred Equity in UniTek Global Services, Inc. with a current coupon of 20.00%. Related Party PSSL First Lien Secured Debt is noted, with an example being Medina Health, LLC with a current coupon of 11.60% and maturity on 10/20/2028.

Why It Matters

For investors and stakeholders tracking PennantPark Floating Rate Capital Ltd., this filing contains several important signals. The filing provides a snapshot of PFLT's investment portfolio composition, highlighting its exposure to various debt and equity instruments within its portfolio companies. Specific details on individual investments, including issuer names, industries, coupon rates, and maturity dates, offer insight into the company's lending and investment strategy.

Risk Assessment

Risk Level: medium — PennantPark Floating Rate Capital Ltd. shows moderate risk based on this filing. The company's investment strategy relies on floating rate debt, which can be sensitive to interest rate fluctuations, and a significant portion of its investments are in non-controlled, non-affiliated companies, indicating potential concentration risk.

Analyst Insight

Investors should review the detailed breakdown of portfolio investments in the 10-Q to assess the credit quality and diversification of PennantPark Floating Rate Capital Ltd.'s holdings.

Key Numbers

• 148.1% — Investments in Non-Controlled, Non-Affiliated Portfolio Companies (as of December 31, 2023)
• 12.48% — Current Coupon (Lash OpCo, LLC)
• 02/18/2027 — Maturity Date (Lash OpCo, LLC)
• 20.00% — Current Coupon (UniTek Global Services, Inc.)
• 11.60% — Current Coupon (Medina Health, LLC)
• 10/20/2028 — Maturity Date (Medina Health, LLC)
• 11.68% — Current Coupon (One Stop Mailing, LLC)
• 5/7/2027 — Maturity Date (One Stop Mailing, LLC)

Key Players & Entities

• PennantPark Floating Rate Capital Ltd. (company) — Filer of the 10-Q
• Lash OpCo, LLC (company) — Issuer of First Lien Senior Secured Debt
• UniTek Global Services, Inc. (company) — Issuer of Preferred Equity
• Medina Health, LLC (company) — Issuer of Related Party PSSL First Lien Secured Debt
• One Stop Mailing, LLC (company) — Issuer of Related Party PSSL First Lien Secured Debt
• Smile Brands Inc. (company) — Issuer of First Lien Senior Secured Debt
• Mars Intermediate Holdings II, Inc. (company) — Issuer of Preferred Equity
• Crane 1 Acquisition Parent Holdings, L.P. (company) — Issuer of Common Equity/Warrants

Forward-Looking Statements

• PFLT will continue to prioritize first lien senior secured debt in its portfolio to maintain stable income. (PennantPark Floating Rate Capital Ltd.) — high confidence, target: 2024-09-30
• The company's dividend yield will remain attractive due to its high-coupon debt investments. (PennantPark Floating Rate Capital Ltd.) — medium confidence, target: 2024-09-30

FAQ

Risk Factors

• Credit Risk [high — financial]: The company is exposed to credit risk on its investments, which could result in realized losses.
• Interest Rate Risk [high — financial]: As a floating rate investment fund, the company's net investment income is sensitive to changes in interest rates.

Key Financial Figures

• $0.001 — ch Registered Common Stock, par value $0.001 per share PFLT The New York Stock E
• $301.4 million — LC; "Debt Securitization" refers to the $301.4 million term debt securitization completed by t

Filing Documents

• pflt-20231231.htm (10-Q) — 13143KB
• pflt-ex31_1.htm (EX-31.1) — 13KB
• pflt-ex31_2.htm (EX-31.2) — 13KB
• pflt-ex32_1.htm (EX-32.1) — 7KB
• pflt-ex32_2.htm (EX-32.2) — 7KB
• 0000950170-24-012187.txt (&nbsp;) — 52991KB
• pflt-20231231.xsd (EX-101.SCH) — 1670KB
• pflt-20231231_htm.xml (XML) — 12500KB

CONSOLIDATED FINANCIAL INFORMATION

PART I. CONSOLIDATED FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Consolidated Statements of Assets and Liabilities as of December 31, 2023 (unaudited) and September 30, 2023 4 Consolidated Statements of Operations for the three months ended December 31, 2023 and 2022 (unaudited) 5 Consolidated Statements of Changes in Net Assets for the three months ended December 31, 2023 and 2022 (unaudited) 6 Consolidated Statements of Cash Flows for the three months ended December 31, 2023 and 2022 (unaudited) 7 Consolidated Schedules of Investments as of December 31, 2023 (unaudited) and September 30, 2023 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 20 Report of Independent Registered Public Accounting Firm (PCAOB ID 49) 39

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 41

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 55

Controls and Procedures

Item 4. Controls and Procedures 55

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 57

Risk Factors

Item 1A. Risk Factors 57

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 58

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 58

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 58

Other Information

Item 5. Other Information 58

Exhibits

Item 6. Exhibits 59

—CONSOLIDATED FINANCIAL INFORMATION

PART I—CONSOLIDATED FINANCIAL INFORMATION We are filing this Quarterly Report on Form 10-Q, or the Report, in compliance with Rule 13a-13 as promulgated by the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In this Report, except where the context suggests otherwise, the terms "Company," "we," "our" or "us" refers to PennantPark Floating Rate Capital Ltd. and its wholly-owned consolidated subsidiaries; "Funding I" refers to PennantPark Floating Rate Funding I, LLC; "Taxable Subsidiary" refers to PFLT Investment Holdings, LLC; "PSSL" refers to PennantPark Senior Secured Loan Fund I LLC, an unconsolidated joint venture; "PTSF" refers to PennantPark-TSO Senior Loan Fund, LP, an unconsolidated limited partnership; "PennantPark Investment Advisers" or "Investment Adviser" refer to PennantPark Investment Advisers, LLC; "PennantPark Investment Administration" or "Administrator" refers to PennantPark Investment Administration, LLC; "2023 Notes" refers to our 4.3% Series A notes due 2023; "2026 Notes" refers to our 4.25% Notes due 2026; "1940 Act" refers to the Investment Company Act of 1940, as amended; "SBCAA" refers to the Small Business Credit Availability Act; "Code" refers to the Internal Revenue Code of 1986, as amended; "RIC" refers to a regulated investment company under the Code; "BDC" refers to a business development company under the 1940 Act; "Credit Facility" refers to our multi-currency senior secured revolving credit facility, as amended from time to time, with Truist Bank and other lenders, or the "Lenders," entered into on August 12, 2021; "Securitization Issuer" refers to PennantPark CLO I, Ltd.; "Securitization Issuers" refers to the Securitization Issuer and PennantPark CLO I, LLC; "Debt Securitization" refers to the $301.4 million term debt securitization completed by the Securitization Issuers; "2031 Asset-Backed Debt" refers to (i) the issuance of the Class A-1 Senior Secur

Consolidated Financial Statements

Item 1. Consolidated Financial Statements PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS O F ASSETS AND LIABILITIES (in thousands, except share and per share data) December 31, 2023 September 30, 2023 (unaudited) Assets Investments at fair value Non-controlled, non-affiliated investments (amortized cost— $ 965,446 and $ 768,240 , respectively) $ 974,595 $ 772,178 Controlled, affiliated investments (amortized cost— $ 325,032 and $ 324,639 , respectively) 296,332 294,996 Total investments (amortized cost— $ 1,290,478 and $ 1,092,878 , respectively) 1,270,927 1,067,174 Cash and cash equivalents (cost— $ 75,809 and $ 100,555 , respectively) 75,826 100,555 Interest receivable 11,636 10,423 Distributions receivable 508 565 Due from affiliate 142 — Prepaid expenses and other assets 20 894 Total assets 1,359,059 1,179,611 Liabilities Credit Facility payable, at fair value (cost— $ 260,855 and $ 9,400 , respectively) 260,917 9,400 2031 Asset-Backed Debt, net (par—$ 228,000 ) 226,917 226,759 2026 Notes payable, net (par—$ 185,000 ) 183,248 183,054 Interest payable on debt 6,520 8,615 Distributions payable 6,020 6,020 Payable for investments purchased 5,578 4,905 Incentive fee payable 4,863 4,628 Base management fee payable 2,951 2,759 Deferred tax liability 1,794 1,794 Accounts payable and accrued expenses 1,746 1,287 Due to affiliates 492 566 2023 Notes payable, at fair value (par—$ 0 and $ 76,219 , respectively) — 76,219 Total liabilities 701,046 526,006 Commitments and contingencies (See Note 11) Net assets Common stock, 58,734,702 and 58,734,702 shares issued and outstanding, respectively Par value $ 0.001 per share and 100,000,000 shares authorized 59 59 Paid-in capital in excess of par value 765,187 765,187 Accumulated deficit ( 107,233 ) ( 111,641 ) Total ne

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View this 10-Q filing on SEC EDGAR