BCP Investment Corp. (BCIC) Earnings Call Transcript & Summary

Welcome to Portman Ridge Finance Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. An earnings press release was distributed yesterday, March 13, after market close. 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 by 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; Jason Roos, Chief Financial Officer; Patrick Schafer, Chief Investment Officer; and Brandon Satoren, Chief Accounting Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Portland Ridge.

Good morning, and thanks, everyone, for joining our fourth quarter and full year 2023 earnings call. I'm joined today by our Chief Financial Officer, Jason Roos; our Chief Investment Officer, Patrick Schafer; and our Chief Accounting Officer, Brandon Satoren. I'll provide brief highlights on the company's performance and activities for the year. Patrick will provide commentary on our investment portfolio and our markets, and Jason will discuss our operating results and financial condition in greater detail. Yesterday, Portman Ridge announced its fourth quarter and full year 2023 results and we are pleased with the solid earnings power of the portfolio despite operating in a somewhat challenging market conditions. During the year, we saw a 10% increase in total investment income and a 16% increase in core investment income year-over-year. Additionally, our net asset value per share increased from $22.65 per share to $22.76 per share quarter-over-quarter. Credit quality also improved in the quarter with a reduction in nonaccruals on a cost, market value and company account basis. We continued our accretive repurchase program, purchasing 101,680 shares at an average cost of approximately $1.8 million during the fourth quarter. Due to the continued strong performance this past quarter, the Board of Directors was able to approve another strong dividend for the first quarter of 2024 in the amount of $0.69 per share, a level that represents a 12.1% annualized return on net asset value. For the full year 2023, total dividends distributed to shareholders amounted to $2.75 per share, representing a 7.4% increase as compared to the dividend distributed in 2022. Turning to conditions in our primary market, new deal activity began picking up in late Q4 and while our primary market has been consistently active for most of 2024 so far, deal activity during 2023 as a whole was meaningfully down relative to 2022 and 2021. On the sponsor finance front, the fourth quarter deal activity began to tick up through a combination of valuation expectations being more reasonable and a belief by most industry participants that interest rates have either reached their peak or near enough that new buyers could reasonably estimate their cost of capital. In both the sponsor and non-sponsor activity, we continue to find the investment opportunities to be very attractive, given the combination of higher benchmark rates, lower leverage on new deals, higher equity contributions from sponsors and better documentation. As has been the case for the last couple of quarters, we continue to be very selective on new investment opportunities and have overall found investments in existing portfolio companies more attractive in new borrowers. To that end, during the fourth quarter, 55% of our capital deployed was in existing portfolio companies as compared to 45% being deployed into new borrowers, 3 new borrowers to be specific. Our goal continues to be to maintain an exceptionally diversified portfolio and invest in companies that potential -- have the potential to provide strong returns for our shareholders. Refocusing on Portman Ridge, we continue to believe our buyback -- our stock remains undervalued throughout 2023 and consistently repurchased shares under a renewed stock purchase program. During the year, we repurchased an incremental 224,933 shares for an aggregate cost of approximately $4.4 million. This compares to an aggregate cost of $3.8 million for full year 2022. Consistent with prior years, the company's Board of Directors renewed our $10 million stock buyback program for another year. And with that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Thanks, Ted. Turning now to Slide 5 of our presentation and the sensitivity of our earnings to interest rates, as of December 31, 2023, approximately 90% of our debt portfolio were either floating rate -- were floating rate to either a spread -- were either floating rate with a spread to the interest rate index such as SOFR or prime rate, with substantially all of these being linked to SOFR. As you can see from the chart, the underlying benchmark rates of our assets during the quarter lagged the prevailing market rates and still remain below the SOFR rates as of March 8, 2024, but between the market transition last year from LIBOR to SOFR and the recent pause from the Fed, the gap is the narrowest it has been since the onset of the Fed rate hike cycle. For illustrative purposes, if all of our assets were to reset to a 3-month SOFR rate, we would expect to generate an incremental $86,000 of quarterly income. Having said that, Slide 7 shows the aggregate impact to NII on a run rate basis of both our assets and liabilities as of December 31, 2023. Given the relatively shallow benchmark curve and limited financial impact of this analysis, we will likely be retiring this slide going forward from our earnings presentations as we have been relatively in equilibrium for the past few quarters. Skipping down to Slide 11. Originations for the fourth quarter remained at a lower level than prior year fourth quarter as well as below the repayment levels, resulting in net repayments and sales of approximately $30.1 million. Our new investments made during the quarter are expected to yield a spread to SOFR of 780 -- 798 basis points on par value, and the investments were purchased at a cost of approximately 96.3% of par. Our investment securities portfolio at the end of the fourth quarter remained highly diversified. We ended the year with investments spread across 27 different industries and 100 different entities, all while maintaining an average par balance per entity of approximately $3.1 million. Turning to Slide 12, an aggregate securities on nonaccrual status remained relatively low and decreased to 7 investments at the end of the fourth quarter of 2023 as compared to 8 investments on nonaccrual status as of September 30, 2023, as one of our borrowers emerged from bankruptcy in Q4 and our restructured loan returned to cash pay. These 7 investments on nonaccrual status at the end of the fourth quarter of 2023 represent 1.3% and 3.2% of the company's investment portfolio at fair value and amortized cost, respectively. On Slide 13, excluding our nonaccrual investments, we have an aggregate debt securities fair value of $373 million, which represents a blended price of 94.3% of par and is 88% comprised of foreseeing loans at par value. Assuming a par recovery, our December 31, 2023, fair values reflect a potential of $29.2 million of incremental net value, a 13.7% increase or $3.12 per share, excluding any recovery on nonaccrual investments. If we were to overlay an illustrative 10% default rate and 70% recovery to the entire debt securities portfolio, again, excluding nonaccrual investments, the incremental NAV value potential would be $1.83 per share or an 8% increase to NAV per share as of December 31, 2023. Finally, turning to Slide 14. If you aggregate the 3 portfolios acquired over the last 3 years, we have purchased a combined $434.8 million of investments and have realized over 82% of these investments at a combined realized and unrealized mark of 102% of fair value at the time of closing the respective mergers. I'll now turn the call over to Jason to further discuss our financial results for the period.

Thanks, Patrick. As both Ted and Patrick previously mentioned, our results for the fourth quarter and full year 2023 reflect strong financial performance. Our total investment income for the full year 2023 was $76.3 million, of which $63.5 million was attributable to interest income from the debt securities portfolio. This compares to total investment income for the full year 2022 of $69.6 million, of which $55.8 million was attributable to interest income from the debt securities portfolio. The increase was largely due to growth in the previously discussed interest income, PIK dividend and fee income. Excluding the impact of purchase price accounting, our core investment income for the year was $74.5 million, an increase of $10.3 million as compared to core investment income of $64.2 million in 2022. Our net investment income for the full year 2023 was $34.8 million or $3.66 per share. As of December 31, 2023, and December 31, 2022, the weighted average contractual interest rate on our interest-earning debt securities was approximately 12.5% and 11.1%, respectively. We continue to believe the portfolio remains well positioned to generate incremental revenue in future quarters due to the current rate environment. Total expenses for the year ended December 31, 2023, were $46.8 million compared to total expenses of $40.7 million for the full year 2022. This increase was largely due to an increase in interest and amortization of debt issuance costs, which was largely driven by the increase in interest rates on the company's liabilities. Our net asset value for the fourth quarter of 2023 was $213.5 million or $22.76 per share, an increase of $0.11 per share as compared to $214.8 million or $22.65 per share in the third quarter of 2023. The quarter-over-quarter increase in NAV per share, despite total NAV decreasing slightly, was predominantly driven by the repurchase of 101,680 shares during the fourth quarter. Turning to the liability side of the balance sheet. As of December 31, 2023, we had a total of $325.7 million par value of borrowings outstanding at a current weighted average interest rate of 7%. This balance was comprised of $92 million in borrowings under our revolving credit facility, $108 million or 4.875% notes due 2026 and $125.7 million in secured notes due 2029. As of the end of the year, we had $23 million of available borrowing capacity under the senior secured revolving credit facility and no remaining borrowing capacity under the 2018-2 notes as the reinvestment period ended shortly after our draw on November 20, 2022. As of December 31, 2023, our leverage ratio was 1.5x on a gross basis and 1.2x on a net basis. From a regulatory perspective, our asset coverage ratio at year-end was 165%. Finally, as announced on March 13, 2024, a quarterly distribution of $0.69 per share was approved by the Board and declared payable on April 2, 2024, to stockholders of record at the close of business on March 25, 2024. This is a $0.01 per share distribution increase as compared to the first quarter of 2023. Total stockholder distributions for 2023 amount to $2.75 per share. With that, I will turn the call back over to Ted.

Thank you, Jason. Ahead of questions, I'd like to reemphasize that we believe we are well positioned to take advantage of the current market environment throughout 2023. Through our prudent investment strategy, we believe we will be able to deliver strong returns to our shareholders in 2024. Thank you once again to all of our shareholders for your ongoing support. This concludes our prepared remarks, and I'll turn over the call for any questions.

[Operator Instructions] Your first question comes from the line of Christopher Nolan with Ladenburg.

What's the onetime reimbursement expense related to, please?

Yes. Chris, this is Jason. That's a reimbursement to the fund related to and for administrative transition services paid to personnel of OHAI, Garrison and HCAP following the acquisition of those BDCs.

Okay. Then given the 2018-2 secured notes are no longer in their reinvestment period and given the slow cautious investment perspective, you guys are taking on new investments, how should we look at the balance sheet growing or not growing in coming quarters?

Yes. Chris, it's Patrick. So I'd say I think the way I would frame it is I think relative to December 31. I think you could reasonably expect a more of a reduction in terms of our liabilities, as you saw at the end of the quarter. We had something like $70 million of cash on the balance sheet. I think it's reasonable to assume a chunk of that is ultimately going to go towards debt repayment. But I would say kind of absent that, we would expect kind of generally speaking, over the course of the year, I would imagine to be in a relatively stable place. I mean if you assume, again, some chunk of that is repaid, you'd probably be down to something like somewhere between 1.3 and 1.4x gross leverage and probably on the lower end from a net leverage perspective, like the same net leverage that we have for the quarter. And that kind of is right within our wheelhouse in terms of what we said our kind of target leverage range is on a long-term basis. So I think from that point forward, you could reasonably expect relatively consistent portfolio size, again, obviously, kind of timing around when things are repaid versus new investments. But I think generally speaking, we're probably on the tail end of sort of our kind of decrease in our portfolio in favor of debt repayment.

Got you. And then final question is on the driver. I noticed that ATP oil is no longer nonaccrual. Was the exit from that the driver for the realized losses?

So no, I don't think ATP was ever on nonaccrual. It's an equity position. So it's not -- it doesn't have like a sort of stated coupon or anything to otherwise have it accrue. So I don't think that...

Let me -- the realized losses you're seeing there, Chris, are related to primarily a couple of CLOs that were called this last quarter. And as a result, we flipped previously recognized unrealized losses and to realize this quarter.

Got you. And you guys are holding the equity strips on those CLOs, right?

Correct. I mean, again, as Jason mentioned, I think 1 or 2 of them, yes, finally got called. So no. But broadly speaking, when you look at our CLO bucket, that is the equity strips.

Our next question comes from the line of Paul Johnson with KBW.

[indiscernible] on the reimbursement. I'm just curious -- I mean are those expenses that the adviser essentially reimbursed for this quarter. Are those expenses done and over with at this point? Or do you expect there will be more of those next -- this year? Or where do those stand?

No. No, that was a onetime expense reimbursement. And I would say for a good run rate on the administrative expenses, you should look at the quarter amount for that being roughly the $400,000, $450,000, that's the quarterly run rate going forward. So you should see that.

Got you. Okay. And then -- yes, as far as the realization, I mean, it sounds like most of that is driven by CLOs this quarter, getting called away. I mean were those -- were most of those realized losses you took from that? I mean that obviously [indiscernible] position. Were those already marked? Or was there any sort of extra markdown in those?

Yes, about -- so you're seeing total like 15.6% total realized loss, about 14.4% of that was flipped from unrealized to realized, then the remainder was incremental this quarter related to a couple of other CLO positions that we still hold.

Got you. Okay. Appreciate that. That's helpful. And then, in terms of just kind of leverage and the portfolio, obviously, you got -- you're seeing the biggest spot on the net leverage-based, I mean, kind of where you'd like to have the portfolio sort of running going forward around these levels. Or do you feel comfortable actually adding a little leverage into the year?

Yes, it's a great question. I mean we provided guidance on where we want to be in terms of target leverage range on a net basis, rather were below the low end of that. The investment environment today is very attractive, like we're seeing very wide spreads and obviously, high SOFR. So it is a decent deployment environment. But we're continuing to be pretty prudent about investing money. So I don't think you're going to see a big spike in leverage. But I think we are operating at the low end of our target range.

Okay. And then just last one for me, a simple one, but on the share repurchases for the quarter, do you guys have any on hand and estimation of how -- what sort of per share basis that was accretive to NAV this quarter?

Yes, we'll have to get back to you on that one. I don't have it on hand.

Next question comes from the line of Steven Martin with Slater.

Most of my questions have been asked and answered. Can you talk about the trends in PIK for the quarter? And also, I know you've talked about the portfolio for the quarter, but your -- we're close to the end of the quarter. Can you say anything about deployments and repayments so far or where you expect?

Yes. I think starting with your latter question, look, I think probably where we sit today, we might be a little bit down still for the quarter, but there's a couple of things that we're working on just from an investment perspective. So as I kind of mentioned to Christopher Nolan, like just kind of depending on whether that -- some of those things ultimately hit in March versus get kind of finalized in early April, obviously, affects a little bit of that. But I would say we're probably still sort of a slight net repayer.

Okay. And on the PIK?

Yes. On the PIC, look, I wouldn't expect there to be sort of meaningful trends in any direction. As we've kind of talked about before, there are lots of instances where like we -- as we are thinking about an investment in the security, sort of we're taking the combination of cash and PIK and thinking about it as kind of an aggregate investment. So from our perspective, if we think we can structure a higher overall returning piece of paper, but at a small component of that is PIK, we think that's an attractive opportunity to do so. Obviously, there are small instances where we intentionally go into a transaction with an all PIK security. But I'd say, generally speaking, if you look at our PIK investment, our PIK income as a whole, broadly, it's sort of in situations where there is a mix of cash and PIK component to the securities.

Okay. And can you talk about the portfolio restructurings, leverage ratio within the portfolio, what you're expecting in trends.

Yes, I think we -- no, no, great question. I think we -- the -- it's somewhere on our slide. I think our leverage ratios are kind of roughly flat from the portfolio quarter-over-quarter. Again, I think, generally speaking, we've mentioned this trend, but new positions tend to be sort of, I could say, lower levered than perhaps legacy positions just because of the interest coverage and sort of how borrowers are thinking about that. But I would say, again, on the whole, like if you look like at our market as well as our kind of BDCs broadly, like underlying performance of companies kind of continues to hold up. People are still seeing somewhat decent revenue and EBITDA trend. So I'd say on the margin, we probably would expect kind of flat to decreasing leverage over the whole of our portfolio.

And amendment...

Credit quality, like you saw this last quarter, I think nonaccruals were down, I think you're going to -- I think credit quality, as we sit here today, is stable across the portfolio.

And what about amendments and extensions?

I would say I -- there's probably still a little bit of an uptick in extension activity in general just because, again, as we've kind of mentioned some of these trends, like the M&A market is coming back, but I think generally speaking, sponsors obviously try and get themselves as much flexibility as they can in terms of when they might want to exit a portfolio. So we're definitely seeing sort of still like kind of some reasonable amount of sort of amendment -- extension activity just because, look, we like the credit, the company is performing fine. We're happy to give the borrower sort of -- the sponsorer sort of 2 more years to decide whether they want to exit the company. But I wouldn't say there's kind of any uptick in sort of forced extensions and things like that. I think it's generally a relatively stable/average type of environment for that sort of activity.

And in the past, you've said you were getting paid for those? Or would you still make the same comment?

Yes. We still either get a fee or some type of pricing. Again, the market right now, we are seeing where we sit today, like broadly speaking, spreads coming in as a whole in terms of new deals. So sometimes keeping the spread the same is the same -- is an economic benefit to us as opposed to some type of repricing transaction. But yes, I'd say generally speaking, those activities are not for free. But again, in a situation where a company has meaningfully delevered and they want an incremental 2 or 3 years, keeping it, let's say, at 650 as opposed to getting priced down to -- at 600, is it actually an economic benefit to us. So I would say you're still getting paid for it, but it sometimes depending on the characteristics, it's a little bit less obvious how you're getting paid.

Next question comes from the line of David Miyazaki with Confluence Investment Management.

Could you just remind us what your longer-term plan is for your CLO investments? You're around about looks like about $9 million now that you're holding. Where do you plan to take this in the future?

Yes. I mean the plan is to take it to 0. I mean we're trying to wind down the portfolio and get the CLOs called. So the plan is to take it to 0.

Okay. That was my thought on that. And does that affect kind of where your target leverage ratio is, as that winds down, that do you feel like you have more capacity to take the balance sheet leverage up higher?

My opinion, not particularly, again, it's kind of $8 million. It doesn't have kind of a meaningful impact on the asset side. We generally feel like we want to be in the 1.25 to 1.4x net leverage. So I wouldn't say that, that necessarily has a meaningful impact on how we think about leverage for the portfolio as a whole. And how we think about either taking up or down that leverage or a little bit. I'd say we probably would be more focused on sort of the macro in terms of where we think sort of the economy is broadly as well as how attractive we think the investing environment is that would probably be more so driving our leverage decisions as opposed to the CLO portfolio itself.

Okay. Great. And then if I just kind of step back and widen the lens a little bit, I mean, Ted, you and the team have had a lot of experience in the middle market. And one of the things that managers in the industry tend to do is talk about the ideal kind of borrower profile to go after. And it's almost always whatever they happen to be working on. And since you work in the upper middle market and you've worked with some of these acquisitions that have been from the lower middle market, at $100 million, it looks like in EBITDA, it's been kind of your home kind of neighborhood as far as what your weighted average EBITDA is. Is that pretty close to what your, say, the median would be? And how do you feel about where you are? Do you like that neighborhood? Or do you think that you should be going up bigger? Is one of the trends you hear about? Or do you like sticking in the middle or lower side where you have more bargaining power?

Yes, I think the latter. I mean our franchise is really what I'd call big enough. So we don't want to lend to companies below $15 million of EBITDA. Our weighted average EBITDA in our portfolio, I think it's a little misleading. It's skews high versus where I think our real franchise is. I mean the reality is some of our peers are competing head to head with the syndicated markets and the banks, which we are not. And just given our size as a platform, we just think like you can see our average spread to LIBOR is L750 versus a market at the large cap end of like L525. So our credit quality is very stable. Nonaccrual is really low. So we think as long as the company is big enough, we think we get paid extra return, and we don't see a discernible difference in credit quality. So I would say that weighted average EBITDA always looks high, if you really think about our core franchise, and it's driven by a couple of outliers.

Okay. Yes. That often tend to be one of the limitation of looking at weighted averages.

Yes. And so to that point, like there's a lot of instances where if we get involved in a roll-up acquisition strategy at $40 million of EBITDA, that might be $180 million of EBITDA now. But obviously, our original investment was $40 million and that's kind of how we look at it. And so to, we tend to be a little bit more active in sort of, I would say, "the syndicated market," but more so like in periods of stress where we're looking at acquiring assets off of bank balance sheets and things like that, and those would tend to skew higher EBITDA, but that is more of an opportunistic purchasing as opposed to, as Ted said, kind of the core of our franchise.

Right. Okay. Last topic. I like Slide 14, it's always -- I mean, it's just good to kind of see the history of how you've marched through acquiring assets. And the industry kind of has a mixed bag of outcomes with regard to acquiring portfolios of loans from other managers. And I mean what can you kind of say about how your realizations or even what it used to kind of ongoing wind downs have been relative to your expectations? And when we look at the larger amounts that are still held, are you getting to a point where the proportion of difficult loans and conditions is higher now because the end of the portfolio is harder to wind down? Or do you think that the progress is going to be relatively linear?

I think the latter. It's a great question, actually. I mean the reality is if you look at that Slide 14, I mean the Oakhill portfolio were basically out of harvest for less than $10 million of exposure. And we don't -- it's not on here because that's like the original platform was KCAP and we're down to a very small number in KCAP too. So really, the legacy loans relate to Garrison. A number of those loans some are more challenged than not, but most of them are lower yielding. And so Garrison had an on-balance sheet CLO structure. So those are the types of loans. Those lower spreading loans tend to be the ones that get refinanced later. That being said, we closed the Garrison transaction end of 2020. So we're 3.5 years into that portfolio. So a lot of those legacy loans are coming up on maturities and other things. One suggestion that a very smart shareholder said to us yesterday is we may want to break out of that $69 million, how much we've extended because, again, we tend to be -- in the Garrison portfolio specifically, we tend to be a small player. So we usually take the realization. There has been some instances of us extending because we like the credit and we could get more spread. And so we should break that out for people around proactive extensions versus what else is in the portfolio. And then we should also break out for you guys, what's like low yielding as a percentage of the remaining $69 million.

To answer your very last question, we continue -- we think it's going to continue to be linear because a lot of these are coming up on 2 years or 18 months from the maturity date.

Okay. Yes, that's very helpful. I think that you probably have one of the best, if not the best perspective on taking over portfolios and working them out. And you've had a lot of success in recycling this capital and seemingly not come across big surprises to the downside in what you're doing. So it's helpful to have some granularity on how that's actually unfolded and what's left. So I appreciate that.

It's good feedback. That's good feedback. We got similar feedback from somebody yesterday. And I think it's good feedback.

Next question comes from the line of Deepak Sarpangal with Repertoire Partners.

Ted, Patrick and team, appreciate another solid quarter. Yes, it seemed like more further progress on both the portfolio management side in terms of improvements in leverage and portfolio quality. And also definitely on the capital allocation side, I know you've been buying back shares for a few years now, but kind of seems to be increasing in size of that as well, given the accretion that it's creating. A few questions on each of those. One, on the buyback and capital allocation, I know that you've been pretty consistent in repurchasing shares and you've talked about senior stock is undervalued, but you've also talked about the environment increasingly becoming a pretty attractive place to invest. How do you think about balancing those 2 alternatives in where to deploy your capital, especially because it looked like maybe in the previous year, you leaned into some of the weakness in the credit market. And appropriately so had a lot more deployments than repayments on a net basis. And then I think also similarly now, as there was a little bit of an improvement, you've seen now more repayments or pay downs, but maybe one, if you could talk because I know it looks like some of the newer investments are yielding quite a high number upfront and other good terms. So that was kind of like the first question just on the capital allocation side. And then on the portfolio management side, it seems like we don't have the full details, obviously, in terms of gross versus net by industry, but it seemed like there was either an exit or reduction in some of the areas that are probably those that you viewed as less attractive, whether it's automotive, consumer, energy. I know you already have pretty low exposures there, but can you maybe talk about if there's anything that we can't see in that data in terms of industry breakdown? And then finally, it looked like there were some interesting new investments. Just curious to learn more about, in particular, I think the newer ones were Murray, CineMedia, media -- or CineMedia holdings and tactical air systems. And then I think there were some follow-on investments, metalworks, and [indiscernible]. We'd love to hear more about those.

Okay. Why don't I start and Patrick can chime in as well. I mean the new investments that we're doing were like are incredibly attractive. And you can see it, we've picked up on like a portfolio basis, 75 basis points of incremental spread over even just 2 quarters and then, obviously, SOFR is higher. The post regional banking crisis, the -- there's just no one lending last year. And so we were able to do really low-levered, wide-spreading deals. So we're really excited about that vintage. I would tell you that it's gotten more competitive. So like spreads have definitely come down year-to-date starting about February, particularly on generic sponsor finance. Just supply demand, there are just not that many good LBOs out there. So our new investments we're very excited about. On the exit side, yes, you brought it up. I mean we had a stressed auto supplier that we picked up in one of our acquisitions that we were taken out of this quarter. And I'll tell you, we're very excited to be taken out in many different ways. And so that was good. And away from that, I think a lot of the exit activity was relatively normal course. But yes, the auto supplier in particular, was something we were very excited to not have in our portfolio anymore. And then on capital allocation, I would say, like this last year was the first year that I've run a BDC ever, where it made -- for the first time ever, the math made more sense for us to deploy capital than to buy back stock. But I think our philosophy is we should always be buying back stock, particularly when we're trading below NAV because we believe that NAV is NAV, and we think you heard Patrick's comments, we think there's like 10-plus percent NAV upside in just things maturing to par. So we just think it's a good discipline to always be buying back stock regardless of what the math says. But the math for the first time and basically in a long, long time, would support actually new deployment as well as buy back stock. So as you said, we've increased our buy back program, but we're also finding really good things to invest our money in.

Yes. And Deepak, taking some of your portfolio questions. So I'll hit a couple of them and apology if I don't get all of them since you listed [indiscernible] can't necessarily remember them all. But starting at the end, [indiscernible] that was -- it's actually a restructuring of a position we had in Lucky Bucks. The company emerged from bankruptcy, and we received debt and equity as part of a take back. So that's just kind of a restructuring in the quarter. Northeast Metal Works, I think, is dates back to Q2, it was a legacy harvest capital, HCAP portfolio. We actually did a refinancing with the company where we brought in another lender, reduced our exposure and sort of put in place a new facility. So that's really just kind of like, again, I'd call it a refinancing but shows up as different securities because we kind of brought in another person to reduce exposure there. On to your 3 new borrowers, again, just to give you kind of a bit of a flavor, Tactical Air. It's a defense business. They have 2 main segments. One is they actually work with the Air Force and the Navy to retrofit kind of older airplanes with their like weapon systems and cockpit technology and things like that. So that's one part of the business. And then -- and they're kind of one of the only folks that do that. And then -- the other part of the business is they actually, I forget the name of the -- the technical name of the segment, but they do what's called like the Red team. So they actually -- their teams, they have pilots and airplanes and they actually kind of train and help with training exercises for the Navy and the Air Force. I'm essentially acting as sort of the "enemy combatants" for kind of training simulation. So pretty good defensive business secured by pretty stable contracts. We really like that business. Murray -- and we did a first-lien term loan there. Murray Global Corporation, it actually provides -- it's a tech-enabled business that provides like legal solutions and consulting services. So a lot of what they do is around software implementation and ongoing maintenance for Fortune 500 companies within their kind of compliance and legal departments to help manage various different work streams between general legal paperwork as well as litigation and lawsuits and discovery. And again, it's a fairly large gamut of things that they support Fortune 500 companies with. That particular transaction, we actually -- it was -- the company was making an acquisition in a jurisdiction, and we structured a first lien loan with some warrants attached to it as well that we think is a pretty attractive overall investment and security. And then CineMedia, which would be the last one, that was a refinancing of an existing portfolio company of a large European private equity firm. It's a U.S. business, but it's a European private equity firm owns it. They do a couple of different things around sort of, I'll call it, like video services and technology. So part of what they do is they actually -- they have like -- it is there like cards and software that go into set-top boxes for kind of traditional broadcast technology. So you can think mostly in kind of Europe where you have sort of Sky TV SIM cards and things like that. That's a piece of their business. They also do -- they work with content providers to help them deliver their video and streams sort of between, call it, like a Netflix and sort of the Internet provider who's sort of piping into your homes. And then lastly, they actually -- they also work with video streaming in a different area, but they help with ad targeting content performance within applications and apps and sort of broadband management -- broadband device management and things like that. So it's a fairly diverse set of revenue streams. Again, we're a senior secured first lien loan. I think that's priced debt at [ 7.75 ] at [ 96.5 ]. So again, that's just kind of a flavor of that. And if you just kind of think about that at a higher level, we've got a defense business and 2 business services that we're kind of adding, which we feel like are pretty attractive industries and then Ted already alluded to it, but exited an automotive supplier, which we would have no intention of getting back into that industry.

That all sounds great. Yes, I mean, I certainly recognize that you already have most of your investments in business services, high-tech industries and health care and pharma, but it seems like kind of a continued progression, even more along that direction, which seems great. And then just a quick follow up. I don't have the details on the Lucky Bucks thing, but I had read something about how the company was -- they're suing or in litigation with the former promoter of that business for a pretty big number. Is that something that could be interesting upside? Or is it kind of immaterial given the size of your equity stake there?

I would not say it's immaterial, but what I would say in general is -- look, it's public, so I can talk to some extent on it, but -- it's -- I would say that the facts look pretty persuasive, but you kind of never know when you get involved in litigation. So I would say it feels pretty interesting to us, obviously, to be pursuing. But I would -- again, I would say that that's not kind of really baked into how we think about the equity position there. So again, you can't take that for its worth. But if you kind of read through the lawsuit, I'd say the facts are candidly pretty overwhelming. But having said that, like legal, I wouldn't want to handicap a legal process.

Sounds great. Keep up the great work.

There are no further questions at this time. Mr. Ted Goldthorpe, I turn the call back over to you.

Thank you very much. Thank you all for attending our call. And as per always, please reach out to us with any questions, which we're happy to discuss. We look forward to speaking to you again on our next call, and thank you so much.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.