Apollo Investment Corporation (AINV)

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Apollo Investment Corp. (AINV)

F3Q10 (Qtr End 12/31/09) Earnings Call

February 9, 2010 10:00 am ET


James C. Zelter - Chief Executive Officer, Director

Patrick J. Dalton - President, Chief Operating Officer

Richard L. Peteka - Chief Financial Officer, Treasurer


Sanjay Sakhrani – KBW

Faye Elliot - Bank of America Merrill Lynch

Vernon Plack - BB&T Capital Markets

Matthew Howlett - Macquarie Securities

Chris Harris - Wells Fargo

Greg Mason - Stifel Nicolaus

Scott Valentin - FBR Capital Markets

John Stilmar - SunTrust

Aaron Siganovitch (ph) - Ladenburg Thalmann



Good morning, ladies and gentleman and welcome to the Apollo Investment Corporation 2010 earnings conference call. The call will be open for a question and answer session following the speaker’s remarks. (Operator’s instructions). It is now my pleasure to turn the call over to Mr. James C. Zelter, Chief Executive Officer of Apollo Investment Corporation. Mr. Zelter, you may (break in audio).

James C. Zelter

Thank you and good morning. I’m joined today by Patrick Dalton, Apollo Investment Corporation’s President and Chief Operation Officer and Richard Peteka our Chief Financial Officer.

Rich, before we begin, would you start off by disclosing some general conference call information and include the comments about forward looking statements.

Richard Dalton

Certainly. Thanks, Jim. I’d like to remind everyone that today’s call and webcast are being recorded. Please note that they are the property of Apollo Investment Corporation and that any unauthorized broadcasts in any form be strictly prohibited. Information about the audio replay of this call is available in our earnings press release.

I’d also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward looking information. Today’s conference call and webcast may include forward looking statements and projections. And we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections.

We do not undertake to update our forward looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit our website at, or call us at 212-515-3450.

At this time I’d like to turn the call back to our Chief Executive Officer, James C. Zelter.

James C. Zelter

Thank you, Rich. Activity in the credit markets was especially strong during the fourth quarter of 2009. Demand was driven by continued institutional and retail inflows and an improving economic backdrop. As results increased two wave trading flow developed in the loan and high yield bond (break in audio) yield spreads further and improving overall liquidity.

Such improved market conditions also create a spill over into the high quality larger end of the mezzanine market where more issuers saw an additional alternative to the traditional high yield market.

Overall, the fourth quarter ended with significant market liquidity, a tighter high yield index and more investors searching for primary and secondary paper.

Certainly many commercial and investment banks, among other financial institutions, benefited from these improving conditions. And with certain banks feeling significantly better we recognize an opportunity for Apollo Incorporation to pro actively seek an extension of our own credit facility.

We believe this important benefit was open only to a select group of followers with broad based platforms and proven track records of transparency, liquidity and overall credit quality. Accordingly, we believe that our performance and behavior through the cycle led to our ability to successfully and proactively amend and extend our multi currency revolving credit facility out to April 2013. Well after its scheduled maturity in April 2011.

With this extension we believe Apollo Incorporation retains the largest and most flexibly revolving credit facility in the sector. Affording us the ability to continue to grow our business as we further move into this recovery.

(Inaudible) our amended bank facility was another successful capital market’s issuance. During the quarter raising $108 million of additional equity capital. With this raise and at December 31, 2009, Apollo Incorporation had more than $600 million of available capital to invest.

We believe this places us in a position in of strength for our current pipeline of investment opportunities. Therefore, we believe that by proactively extending our revolving credit facility with our banks and growing it fortifying again, our equity capital base, we have accomplished two significant strategic initiatives that will afford Apollo Incorporation the opportunity to continue to move forward into 2010 and beyond.

Other December quarterly activity included realizing some of our pipeline late in the quarter, investing $212 million for the three months. In the end, we closed the calendar year with a (break in audio) measured at fair market value, which represents 70 different companies in 33 different industries.

Other quarterly highlights include a continuation of our stable net investment income and our low leverage level of 0.52-1 debt to equity. Furthermore and even after considering our two recent new share issuances, which affect per share results, both net investment income and earnings per share each remains strong totally $0.30 per share and $0.48 respectively.

We are pleased with these results. And with our portfolio again beginning to build we believe we can further grow our harvest of undistributed taxable income that provides significant visibility and cushion to our quarterly dividends to shareholders.

Before I turn the call over to Rich, I’d like to again reiterate that we take our leadership role within the sector very seriously and remain committed to our investment discipline as we seek to grow our business during 2010.

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