Monroe Capital Corporation (MRCC) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Monroe Capital Corp. I will now turn the call over to your host, Ted Koenig, Chairman and CEO. You may begin, sir.

Good afternoon. Will the meeting please come to order. My name is Ted Koenig, and I'm Chairman of the Board and Chief Executive Officer. Welcome to the 2020 Annual Meeting of the Stockholders of Monroe Capital Corporation. This meeting is being webcast live. Welcome to those stockholders participating by webcast. An agenda that outlines the order of business for the meeting has been made available. The matters on which the stockholders represented at the meeting are voting on today are as follows: one, to elect 3 Class II Directors; two, to approve a proposal to allow us to sell shares of our common stock during the next 12 months at a price below our then current net asset value per share; and three, to transact such other business as may properly come before the meeting or any adjournments or postponements thereof. I would like to begin the meeting by introducing the current members of the company's Board of Directors. I am Chairman of the Board, and joining me today via this webcast are the following: Aaron Peck, Director, Chief Financial Officer and Chief Investment Officer and a Director nominee; Tom Allison, Director and Chair of our Audit Committee; Robert Rubin, Director and Chair of our Compensation Committee; Jeffrey Golman, Director and Chairman of our Nominating and Corporate Governance Committee and a Director nominee; Jeffrey Steele, Director; Jorde Nathan, Director and a Director nominee. On behalf of the company and the Board of Directors, I would like to welcome the stockholders who have joined us today. I would also like to welcome the representatives of RSM US LLP, our independent auditors; and Charles Zade, a representative of American Election Services, LLC, the official tabulator of ballots at this meeting. Mr. Peck will serve as secretary of the meeting and record the proceedings. He has delivered an affidavit of Broadridge Financial Solutions, Inc., as to the mailing of the notice of the meeting, which states that on April 22, 2020, notice of the meeting, together with the related proxy materials was mailed to all stockholders of record as of the close of business on April 1, 2020, the record date for the meeting. This affidavit is available if any stockholder wishes to examine it and will be filed with the minutes of this meeting. Mr. Peck will now discuss the procedure for transacting the business of the meeting.

Good afternoon. The agenda has been posted on the website for the virtual meeting. The meeting will take place as described in the agenda. When an item of business on the agenda is before the meeting for consideration, questions and comments should be limited to that item. If a stockholder has a question or comment not related to a business item on the agenda, an opportunity to raise other questions and comments will be provided after voting on the proposals described in the proxy statement. The rules of conduct have been posted on the website for the virtual meeting. Stockholders will have the opportunity to make a statement about any resolution pending on the floor. If you wish to make a statement, please submit your statement via the Q&A function on the website, and your statement will be read aloud. Please keep your statements brief and limited to the specific item for -- up for discussion. If any statement is too long or not relevant to the item up for discussion, it will not be read aloud. If you desire to vote during the meeting, you may vote by using the voting function on the website that is hosting the annual meeting. Any ballot not received when called for will not be counted. While the votes are being tabulated, Chairman and CEO, Ted Koenig, will give a brief presentation about the company and our business. At that time, we will accept general questions from the stockholders or proxy holders. [Operator Instructions] When the report of the inspector of elections is complete, we will announce the results. If any stockholder has any matter of individual concern, please raise it after the meeting.

Thank you, Mr. Peck. I hereby appoint Charles Zade of American Election Services, LLC as inspector of elections for the meeting and any adjournment or postponement of this meeting. He has signed an oath to act as inspector of elections, and this oath will be filed with the minutes of the meeting. Inspector has a stockholder list of the company as of the close of business on April 1, 2020, the record date for the meeting, which shows the stockholders and their respective number of shares entitled to vote at this meeting. This list is available if any stockholder wishes to examine it and will be filed with the minutes of this meeting. Mr. Peck, do you have a report regarding the existence of a quorum?

The shareholder list shows 20,440,564 shares of common stock are entitled to vote at this meeting. We are informed by the inspector of elections that there are represented, at the meeting or by proxy, at least 10,677,056 shares of common stock or approximately 52.2% of all shares entitled to vote at the meeting. This constitutes a quorum for the purpose of transacting business.

Mr. Peck has advised us that a quorum is present at the meeting, so I declare the meeting duly and lawfully convened. The meeting is now open and ready for business. The first item of business is the election of 3 Class II Directors of the company. The proxy statement sent to you earlier listed our nominees for Director. The candidates for Director who have been nominated to serve as Class II Directors by the company's Nominating and Corporate Governance Committee and Board of Directors are Jeffrey A. Golman, Jorde M. Nathan, and Aaron D. Peck. In accordance with the bylaws of the company, stockholders are required to provide advanced notice of their intent to nominate candidates for Directors. No such notice was received, therefore, I declare the nominations for Directors closed. A motion to elect 3 Directors as described in the proxy statement is now in order.

My name is Karina Stahl, and I am a stockholder of the company. I hereby move that each of Jeffrey A. Golman, Jorde M. Nathan and Aaron D. Peck be elected as Directors to serve until the 2023 Annual Meeting of Stockholders or until their respective successors are elected and qualified.

My name is David Jacobson. I am a stockholder of the company. I second the motion.

Are there any questions or comments on this motion? If so, please submit them on the website.

All right. Hang on, Ted, I'll look and see if any questions come up. Give us 1 second. I see no questions submitted, Ted.

Okay. I hereby call the question and declare the polls open to vote on the motion. Any stockholders desiring to vote during the meeting should do so at this time. If you wish to vote during the meeting, please submit your vote via the website at this time.

We'll just give it a minute to vote. [Voting]

Okay, please carry on.

I now declare the polls closed on this motion. While the ballots are being collected, we will proceed with the agenda. The second proposal set forth in our proxy statement is to grant flexibility for the company, subject to approval of our Board of Directors, to sell shares of our common stock during the next 12 months at a price below the then current net asset value per share, subject to certain conditions. This proposal is discussed in the proxy statement that was sent to you earlier. A motion to vote on this flexibility for the company, as described in the proxy statement is now in order.

My name is Karina Stahl, and I am a stockholder. I hereby move that the company be authorized to sell shares of its common stock during the next 12 months at a price below the company's then current net asset value per share as described in the proxy statement.

My name is David Jacobson, and I am a stockholder. I second the motion.

Are there any questions or comments on this motion? [Operator Instructions]

Okay. I'm checking for questions now. Please hold. I see no questions on the website, Ted.

Okay. If you wish to vote during the meeting, please submit your vote via the website at this time. [Voting]

Okay.

There being no one else who wishes to vote during the meeting, I now declare the polls closed on this motion. While the ballots are being tabulated, we will proceed with the agenda.

The inspector of elections will report on the results of the voting later in the meeting after tabulation has been completed. While the inspector of elections is tabulating the votes, our Chairman and CEO, Ted Koenig, will offer some brief remarks about the company and our business.

Thank you, Aaron. We continue to see positive signs of the economy recovering post-COVID. Businesses are reopening. Supply chains are starting to fill, and the consumer appears to be coming back to most parts of the economy. Unemployment still remains high, and we're very, very guarded in what we're looking at today. We're very focused on our portfolio. We are, as an organization, working remote for the most part for the last 90 days. And we're just starting to come back to the office. I envision that will be a slow process over the next 60 days. We've -- our treasury functions, our portfolio management functions, underwriting functions are all working, using our remote workforce. And I'm happy to report that it's been pretty much business as usual with the company. We're optimistic that come third quarter and fourth quarter, we'll see a recovery. And we'll see an expansion. But as of yet, right now, the deal market is relatively slow, and most of our companies and most of our people are focused on making sure that businesses have enough liquidity and the staying power to get through the current circumstances. So with that, I'm going to go back to the meeting. At this time, I would like to open the meeting to any questions that stockholders may have. If you have any question regarding the company but not the matters already voted on at the meeting, you may raise them while the vote is being tabulated. Only matters that may concern all stockholders should be raised at this time. Any manner of individual concern to a stockholder should be raised after the meeting when representatives of the company will respond to your questions. [Operator Instructions]

Okay. Ted, we're polling for questions. Just pause briefly, and we'll see if anybody had any on the website. Okay. I don't see any questions coming through the website, Ted, and I believe the tabulation has been completed, so you can move on with the rest of the script.

I understand that the votes have been counted and the preliminary report of the inspector of elections has been delivered to the company. Mr. Peck, will you please announce the results of the stockholders' vote?

The preliminary report of the inspector of elections indicates that Jeffrey A. Golman, Jorde M. Nathan, and Aaron D. Peck have been elected as Directors by the stockholders. Each candidate received the affirmative vote of at least 8,581,104 votes, representing more than a plurality of the votes cast at the meeting and by proxy. Approval of the company to sell its shares below net asset value during the next 12 months has been approved by the stockholders by both the affirmative vote of at least 8,764,425 shares representing a majority of the outstanding shares of our common stock and a majority of the outstanding shares of our common stock not held by affiliated persons of ours. For the purpose of this calculation, a majority of outstanding shares means the lesser of 67% of the common stock present or represented at the meeting by proxy or 50% of the outstanding common stock of the company.

I hereby request that the final report of the inspector of elections be filed with the minutes of this meeting. We have now heard the results of the voting, and this completes the business to be conducted at this meeting. Since there are no other matters to come before the meeting, a motion to adjourn the meeting is now in order.

My name is Karina Stahl, and I'm a stockholder. I hereby move that this meeting be adjourned.

My name is David Jacobson, and I am a stockholder. I second the motion.

All in favor of the motion of adjournment, please signify by saying aye.

Aye.

Aye.

Those opposed, please signify by saying no. The motion is carried. I hereby declare this meeting adjourned. If you would like -- I would like to take this opportunity to thank you for your attendance and interest. We will speak to you again soon.

This now concludes the meeting. Thank you for joining, and have a pleasant day.