Joe Alala - Chairman and CEO Jack McGlinn - COO, Treasurer and Secretary Steve Arnall - CFO.

Mickey Schleien - Ladenburg Jonathan Bock - Wells Fargo Christopher Nolan - FBR & Co. Ryan Lynch - KBW Terry Ma - Barclays John Hecht - Jefferies.

At this time, I would like to welcome everyone to the Capitala Finance Corp Conference Call for the Quarter Ended December 31, 2015. All participants are in a listen-only mode. A question-and-answer session will follow the Company’s formal remarks.

Today’s call is being recorded and a replay will be available approximately three hours after the conclusion of the call on the Company’s website at www.capitalagroup.com under the Investor Relations section.

Today’s hosts for the call are Capitala Finance Corp Chairman and Chief Executive Officer, Joe Alala; Chief Operating Officer, Treasurer and Secretary, Jack McGlinn; and Chief Financial Officer, Steve Arnall. Capitala Finance Corp issued a press release on March 8, 2016 with the details of the Company’s quarterly financial operating results.

A copy of the press release is available on the Company’s website. Please note that this call contains forward-looking statements that provide information other than historical information, including statements regarding the Company’s goals, beliefs, strategies, future operating results, and cash flows.

Although the Company believes these statements are reasonable, actual results could differ materially from those projected in these forward-looking statements.

These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks, including those disclosed under the section titled Risk Factors and Forward-Looking Statements in the Company’s annual report on Form 10-K. Capitala undertakes no obligation to update or revise any forward-looking statements.

At this time, I would like to turn the meeting over to Joe Alala..

Thank you, operator. Good morning everyone. Thank you for joining us. Basically, for the fourth quarter, we covered the distribution with net investment income. That’s two quarters in a row we’ve done that with NII, proud of that.

We also, early in January, announced the voluntarily wavier of incentive fees, further demonstrating management commitment to shareholder alignment. The incentive fee waiver helped offset impact of non-performing loans, mostly energy related. For 2015, we had a solid year.

Just a recap of 2015, we closed over $260 million of new investments with very attractive yields and reasonable leverage under 4x. We completed secondary equity offering in April, generating $64.1 million in gross proceeds. We expanded our credit facility from $50 million last year to the end of the year $120 million this year.

We actually repurchased approximately 5% of outstanding shares in the stock buyback program. We paid $2.38 of distributions for the year, $1.88 of regular distributions and $0.50 of special. We did cover the regular distributions for the year with NII and realized cap gains. There was no return of capital.

We had net realized gains of $5.4 million or $0.36 per share. We also completed the equity rotation strategy that we had been pursuing for quite some time. At IPO, we had 36% of the portfolio and equity securities. We rotated that down to approximately 17%. In that process, we generated substantial capital gains and we redeployed those into yields.

Looking ahead for 2016, we’ll continue to focus on distribution coverage. We’re actively engaged in portfolio monitoring, focusing on energy and non-accrual investments. We actually expect further monetization of our equity positions.

We’ll generate significant capital gains if that were to happen and we can redeploy those gains into yields, which will help reduce the reliance on incentive fee waiver to cover the distributions. We’ll continue to maintain shareholder alignment with -- and trust with fee waiver and insider purchases.

We are evaluating a private credit fund and other sources of liquidity to complement the BDC investment strategy. And we will continue with our direct origination investment strategy, making quality investments with proper risk adjusted returns.

At this point, I would like to turn the meeting over to Steve and Jack to provide additional comments on our operating and financial performance..

Thanks, Joe. Good morning, everyone. As previously mentioned, on March 8th, we filed a press release with our fourth quarter and full year 2015 earnings. In addition, we also posted a fourth quarter 2015 investor update to our website, providing additional details about the Company, the investment portfolio and other financial related trends.

I’d like to take a few minutes to highlight a few items within the earnings release, which can be found on the Investor Relations section of our website. During the fourth quarter 2015, total investment income was $16.5 million, an increase of $3.1 million over the same period of 2014.

Total interest and fee income was $2.5 million higher in the fourth quarter of 2015 compared to 2014, driven by larger investment portfolio. All other income increased by approximately $0.6 million. Total expenses for the fourth quarter of 2015 were $9.1 million compared to $8.4 million in 2014.

The increase is attributable to, one; an increase in interest and financing expenses of $0.4 million related to advances under our senior secured line of credit; two, an increase of $0.4 million in management fees; three, an increase in incentive fees of approximately $0.5 million, noting that the fourth quarter of 2015 was the first quarter of our recently announced incentive fee waiver and that incentive fees were not earned during the fourth quarter of 2014; and lastly, a decrease of approximately $0.5 million in general and administrative expenses.

Net investment income totaled $7.4 million or $0.47 per share for the fourth quarter of 2015 compared to $5.1 million or $0.39 per share for the same period last year. As previously mentioned by Joe, net investment income and the coverage of the quarterly distribution remain our highest priority.

Net realized losses totaled $3.7 million or $0.23 per share for the fourth quarter of 2015 compared to net gains of $2.2 million for the same period last year. Net unrealized depreciation for the fourth quarter of 2015 was $12.6 million compared to depreciation of $18.5 million last year.

Energy investments accounted for $9.2 million of this amount while the remainder of the portfolio depreciated by approximately $3.4 million. The net decrease in net assets resulting from operations during the fourth quarter of 2015 totaled $8.9 million of $0.57 per share compared to a decrease of $11.2 million or $0.86 per share last year.

Total net assets of $268.8 million at December 31, 2015 equate to $17.04 per share compared to $18.56 per share at December 31, 2014. During the fourth quarter of 2015, the Company repurchased 150,808 shares of common stock under the Board approved repurchase program, approximately 1% of the shares outstanding at year-end.

As a result of the share purchases during the fourth quarter, we have utilized the $12 million authorized by the Board in March of 2015. From a liquidity standpoint, we had cash and cash equivalents of $34.1 million at December 31, 2015 compared to $55.1 million at December 31, 2014.

SBA debentures outstanding at December 31, 2015 totaled $184.2 million with an annual weighted average interest rate of 3.45%. In addition, the Company has $113.4 million of notes outstanding bearing a fixed rate of interest of 7.125%.

Lastly, the Company has $70 million drawn and $50 million available under its senior secured revolving credit facility and regulatory leverage ratio of 0.68 at year end. At December 31, 2015, the Company’s balance sheet and future net investment income will not be materially impacted by changes in short-term interest rates.

Please see Form 10-K for detailed information on the Company’s interest rate sensitivity. At this point, I’d like to turn the call over to Jack..

Thanks Steve. During the fourth quarter, we had gross deployments of $35 million with a 12.1% yield on debt securities. Net deployments amounted to $18.9 million. And our total weighted average yield on our debt portfolio excluding non-accruals is 12.3%.

Realized losses of $3.7 million were recognized during the quarter, mostly related to $3.4 million loss recognized upon the restructuring of the Sparus Holdings notes. Net unrealized depreciation was $12.6 million and consisted of $21 million of depreciated positions, net $8.8 million of appreciated positions.

Approximately 70% of the gross depreciation was related to energy investments and widening spreads. As of the end of the third quarter, the Capitala portfolio consisted of 57 companies with a fair market value of $592.5 million on a cost basis of $570.2 million.

Senior debt investments represent 36.9% of the portfolio, senior subordinated debt 43.3%, senior liquid loan fund 3%, and equity/warrant value of 16.8%.

In regards to portfolio quality, we continue to maintain a sub two internal weighted average risk rating at 1.83, an improvement from the prior quarter, while average leverage at the portfolio level improved to 3.8x.

At the end of the quarter, there were five investments on non-accrual with a fair value and cost basis of $28 million and $47.1 million respectively. Most significant change to non-accruals was the addition of TCE Holdings and a movement of Abutec from PIK non-accrual to full non-accrual. Both of these companies are oil industry related.

As a further update on our investments in the energy space, the five investments with fair value totaled $52 million or 8.8% of the portfolio. We continue to mark down the value of these investments and have them collectively valued 70% of cost; 55% of cost for oil industry investments.

It’s worth noting that for the full year 2015, we recognized unrealized depreciation on our energy investments of $16.5 million and the total was $16.9 million total depreciation. In regards to market conditions, we continue to see strong proprietary deal flow despite the overall reduction in M&A activity in the market.

In line with our liquidity position, our underwriting has become more selective, as we identify the best risk adjusted returns. With that, I’ll turn it back to Joe..

Thanks Jack, thanks Steve. With that, we just want to reiterate, we continue to focus on distribution coverage with NII and we will continue to waive incentive fee to help NII cover the distribution. We’re focusing on energy investments and reducing our exposure to our energy non-accrual investments.

And we continue to focus on our direct origination platform where we’re still seeking and sourcing strong high quality deal flow and focusing on high risk adjusted returns. And with that, we are ready to address questions..

[Operator Instructions] Our first question comes from Mickey Schleien with Ladenburg..

Yes, good morning everyone. I’m not sure who to address this question to. But I’m curious about the lifecycle of the SBIC licenses with respect to the third -- potential for a third license.

Can you just walk us through how the old licenses will roll off and if you apply for new license, the timing of all of that?.

Mickey, this is Joe. I will talk about -- Steve will talk about the rolling off of the existing two SBIC licenses that we have in the BDC. To obtain additional SBA leverage, once existing license is fully drawn, which those two are that are currently in the BDC, you have to go through a licensing process.

And that involves submitting a different application and getting approved and then going through that whole procedure with SBA. That’s sort of step one. Step two would be, you actually have to, in that process, prove that you have the cash/liquidity to fund a new SBIC license.

So, the reality of our obtaining a new SBIC license in the near future is not high, because we cannot demonstrate that the parent has enough liquidity to prefund the license. And that really has to do with their regulatory definition of private capital.

And if you are committing to an SBIC fund and your commitment is more than 10% of your liquidity; that is really not regulatory capital. So, what in essence happens is you have to pretty fund the SBIC.

So, what we would have to do, for example, if we wanted to do any license and prefund, we have to prefund to say 50 million and then the SBIC would, subject to their approval, grant you another one tier of leverage at 50 million.

The reality of our situation, the Capitala, is we do not have the liquidity to prefund 50 million into the new SBIC license right now. And that step two, which is sort of separate from the whole licensing process, but we’ve obtained four SBIC licenses over the past 15 years. We know that process. The reality now is we can’t prefund a new SBIC license.

But I’ll have Steve address some of the runoff of the current SBIC licenses, debt maturity..

Mickey, if you look at our 10-K and the debt we put on the website, we’ve got -- this year, we’ve got $13.5 million of debt maturing of the $184 million. Once we pay that back, which we’ve already paid $2 million back on March 1st, that’s not, it cannot be redrawn. So, majority of those maturities are 2020 and later.

But you will see us this year repay $13.5 million. So, we’ll just have less outstanding in that regard..

I understand.

Joe, do you -- has management already asked the Board and do you intend to ask the Board for additional share purchase authority?.

Yes. This is Steve. We have not reaffirmed our repurchase program for ‘16 at this point. Our limited liquidity will be utilized -- we’d like to fund attractive investment opportunities. If our liquidity situation changed, so I think we’d be in a position to revaluate with our Board.

And finally, as a reminder, the cash, our SBIC subs, which is at the end of the year, which is about half of our cash, cannot be used for share repurchase purposes. So, it’s restricted. So, at this point, we have not reaffirmed that, but we will reevaluate that kind of as the next few months transpire..

Okay. Just a couple of final questions, any update on the CION joint venture, and Sierra Hamilton was marked down, in line with your prepared remarks, but it’s still on accrual.

So, if you could just talk about how that company’s performance developing?.

Mickey, this is Joe and I’ll talk about the CĪON joint venture. So, the market has materially changed over the past quarters that we were pursuing the CĪON joint venture. We did receive SEC approval for that. But then there were some things that were happening on their side of relationship that delayed it.

During those quarters, the markets have changed and we have jointly decided that they’re very attractive directly originated loans that we can get high pricing and low debt and have a lot more control over through our covenants and direct origination that we have decided not to pursue that liquid loan strategy at this time and really focused on our core of directly originated loans at high yields and low leverage.

With that I am going to turn it over to Jack to talk about Sierra..

On Sierra, I mean like all our other portfolio companies that’s going through our independent valuation process and of course that is in the oil and industry space and there is continued decrease in pricing there and there is decreased operations at Sierra, they continue to operate though. And liquidity is still good; they’re still paying us on time.

So, that’s what I have on Sierra..

Just one follow-up then, Joe, on given what you just sound CĪON, do you have any intent or can you even unwind the Kemper JV or is that just going to stay in place the way it is?.

I think for the short term, it’s going to stay in place. It’s really only the second dividend we’ve paid in the fourth quarter. It’s fully ramped now and performing for the two equityholders. So, I think in the short term, we’ll let that stand as it is..

Our next question comes from Jonathan Bock with Wells Fargo..

Good morning, guys. And thank you for taking my questions. And, it’s a testament to your integrity as also your support for shareholders in that fee waiver, Joe, that’s quite a return at this valuation. And so, I can speak as just an industry student to say that is unique and very, very shareholder friendly. So, thank you.

My question relates to your remaining book in equity today, because as we look at the potential for redeployment, that’s also additional upside that can inure to the benefit of both yourselves in terms of the fee waiver but also to shareholders over time.

And so, I am kind of curious on how you look at that monetization and its likelihood over the too tumultuous start that we’ve had to 2016, more color there would be helpful..

Thanks for the comments, especially about the voluntary fee waiver, because we do feel it here especially around bonus time. On the equity rotations, we have a long track record of generating best in class total returns on the credit strategy. And a lot of those returns have come from equity monetizations, about 40% of those returns.

And we have a nice 17% of the portfolio around 100 million fair value. We have several nice positions in that portfolio that have been around for a while and have experienced some significant appreciation through our costs.

And these are larger companies that are our forecast is they will take advantage of the still current solid environment to sell a company. So, we’re seeing things that we saw this time last year right before we monetized over $30 million of equity gains.

And the things we can see and forecast is our investment bank’s being hired to go monetize the investments or things being filed and communicated to shareholders that some monetization has been expected in the next quarter or two. We are seeing those things.

And we expect that we will monetize a nice amount of these equity participations this year and we can redeploy those into yield, and that can really help offset the non-accruals from our energy investments. And, we really want to see that happen because we want to cover an NII without having to do incentive fee waivers to make that happen.

And really the path to that that we see in 2016 is the monetization of these equity investments and redeployment into solid yield. So that, I mean we are fully aligned on that strategy because that’s how this management team can really get away from having to permanently waive incentive fees to cover our distribution.

So, we think that’s going to happen; we expect that to happen; and it’s really been part of our strategy over the past 15-18 years. And unless something really happens in the M&A markets in 2016, we’re forecasting capital gains to redeploy..

And in terms of the small business administration, just your views. We’ve heard on multiple occasions, there is the ability to draw down more and lever, and certainly with the passage of that bill, thanks to your involvement.

The question is what’s the right level of economic leverage on your portfolio, right? So, let’s forget about whether one can draw and fund et cetera for a moment.

But just interested in whether or not it’s appropriate to take what would be that remaining SBIC that you could get eventually and what’s kind of the long-term right level of leverage? I know at times, many managers will say more and higher, but in this case, what’s your view in terms of the risk of adding on that additional turn of leverage over time, what’s an appropriate level of economic leverage for you in the long run?.

Well, I’ll let Steve talk about, so the appropriate optimal level of leverage at the BDC level. My comments about the SBA additional leverage, at this point, we don’t actually foresee that happening in the near future. So, we’re not sort of forecasting that into any kind of capital allocation.

We just think with our communications of the SBA, trading below book, their sort of comments and then really the reality of how regulatory capital is defined, and we don’t have the capital to fund in new SBIC, we’re sort of not forecasting any additional SBA leverage.

But I’ll let Steve speak, because we talk about this all the time internally and I’ll let Steve speak to sort of what is our optimal leverage at the BDC inclusive of the SBIC leverage excluded from regulatory..

I think, Joe kind of hit the nail on the head. We really aren’t forecasting taking any of this money down in the short-term, meaning probably this year.

And so to that end, I think for the BDC, for 2016, we’ve got some availability under our credit facility that we can maybe draw another 30 million to 50 million, probably not the whole amount, that we put our regulatory leverage that 0.75, 0.8 depending on the fair value adjustments, that’s probably a good spot for us all in at that point.

And unless the markets change and we have access to do some additional fields, but in the short-term, I just don’t see us moving up past another $30 million of debt this year..

Okay. Thank you..

All other things equal, all other things equal..

Understood and I appreciate that. And then just one last question, more kind of platform overall; I mean Joe, Capitala has got a lot of different pockets and a lot of BDCs over time and it’s just a function of the markets, whether they are up or below book value.

Your views on private capital, and private capital raised, as a complement to what you are doing. We’ve seen a number of sidecar funds et cetera.

And just your views on capital raising in a private context and whether or not you’d expect that to greatly complement the CPTA origination franchise while the BDC is where it is, which is just a function of the market..

Well, thank you. We do have -- we already currently manage other private funds that are sort of different strategies than the BDC strategies.

We are actively seeking to raise a private credit fund that would complement the BDC strategy by improving liquidity in that strategy, where the BDC could co-invest with a private credit fund to sort of maintain, sort of strategy liquidity. We applied for SEC exemptive relief to co-invest several months ago.

We believe that -- we’ve had comments back that that should be approved in the near future. We wanted that to be in place before we -- we believe and our Board believes that we wanted that in place before we began to co-invest in the strategy. And we think that is imminent.

And we have drafted private fund docs and are in the market and we will be seeking to raise private capital this quarter and hopefully have a first close summertime. And that would really enhance the liquidity of that strategy, because right now the BDC is really in recycle mode.

And it’s hard to really with our six offices, directly originate some great deals. We want a clearer path to known liquidity. Right now, it’s more stop and go, stop and go with recycle. So, we really think having a private credit fund would provide that sort of investment pace, knowledge on liquidity and that’s something we’re actively pursuing.

And if anyone wants a copy of our PPM, they are free to contact me and I will get you one..

Our next question comes from Christopher Nolan with FBR & Co..

Hi, guys.

The comment I think Jack made in terms of wider spreads contributing to the depreciation charges, were those wider spreads at 12/31, or were they subsequent to that?.

That was a 12/31..

And, Jack, as a follow-up, given spreads have widened a bit since then and have come in a little bit, do you expect the spread issue to persist into first quarter, even more?.

I don’t think, it will be as significant as it has been over the last two quarters. There seems to be some stabilization there, of course we still have some time left in the quarter. So hopefully, it won’t be as much of an issue..

Got you.

And for TCE Holdings, I guess since it’s on non-accrual now, I presume that’s just because EBITDA has eroded there, or is that a combination of lower EBITDA as well as wider spreads?.

It’s a combination of performance and then also just the ability of the company to pay our interest which they have been able to do up until the end of the year and then not so going forward. It’s combination of those things. I mean obviously, the ongoing low oil prices, continues to impact their business and less drilling activity has impacted them.

So, they’ve put up a good fight but the decrease in price has just gone on for quite a long time now..

Also on the equity marks, most of them are for privately held or private equity type of investments.

Do you anticipate, if you liquidate those, you will see any gain or it’s just really just create some liquidity that you can roll into yielding investments?.

This is Joe. When you say gain to the fair value mark or the…..

Yes, to the fair value..

Well, I think over time, those fair value marks aren’t accurate reflection of what fair value is over time. Sometimes you get a little bit above fair value; sometimes you get little bit low. A lot of times on the deals that we are in minority equity position, we don’t control that ultimate sale process; it’s out of control of our hands.

But over time, those fair values have been pretty accurate. And we think that we do a rigorous evaluation process when we do it through third party. And they do a great job we believe at forecasting the values of these equity positions in these privately held companies. So, over time, they should approximate fair value..

And I want to echo the -- I’m applauding the mentioned fee waivers, big job. And nice to see a management really focused on making sure the dividends coverage. So that’s it from me. Thank you..

Our next question comes from Ryan Lynch with KBW..

First off, I just want to reiterate as couple other callers have, the fee, voluntary fee waiver; that’s a great benefit for shareholders and really appreciate you guys voluntarily implementing that.

My first question, have you guys looked at your portfolio and specifically companies that are maybe not directly in the oil and gas industry but maybe have some customers that are in the oil and gas industry or maybe have operations that are significantly focused in some oil and gas geographies? And if you’ve looked at those companies, are you seeing any deterioration in performance of any of those portfolio companies?.

This is Jack. I mean we obviously think a lot about that and have drilled down. There is really not a significant secondary level of exposure there. We were recently just talking about our remaining holding in Boot Barn. I mean yes, they had retail outlets in the Houston area and Oklahoma and such.

So, there’d be some residual affect from that but nothing real significant. But, we do look at that and probably more on underwriting standpoint as we look at new deals we look at that. But, it’s good question. We do spend a lot of time looking into it.

We do have a couple of companies where they have parts of their business that are decreased because of that. But no other -- we don’t have I guess housing deal up in South Dakota or something that would be impacted by it..

And then, you guys senior loan fund, it looked like you had roughly $2 million of depreciation in the quarter.

Was that just all mark to market from widening spreads or were there any correct issues that caused that write down in the quarter?.

All mark to market, no credit issues..

And then just one final last one, it goes to valuation and fair value portfolio marks. That’s been a big focus now that portfolios are getting written down; investors are heavily focused on fair value marks and valuation processes, not just with your guys’ portfolio but with the whole industry.

And so, can you maybe just walk through what you guys do on a quarterly or annual basis to value your investment portfolio?.

This is Steve. Annually, it would be 12/31, we have a de minimis amount of 1% of assets, everything greater than that gets independently reviewed by a third party. Inclusive of that, there is a team within the Company that sits down and reviews all the portfolio of companies quarterly as well. So, it’s a two pronged approach.

There is third party looking at everything over 1% of assets; that’s presented to management and management reviews every investment.

Then, we collectively come up with the recommendation to take the valuation committee of the board and that third party actually visits with the board at that meeting to present their recommendations and their ranges, and then the valuation committee and the board would hopefully at that point take a recommendation to the full Board of Directors at its quarterly meeting to approve those marks.

So, it’s a pretty robust process. We’ve got a good relationship with the third party that does that work. And then, on a quarterly basis, when we’re not at year end, the third party reviews a little bit less on a quarterly basis but still the management is reviewing every investment and taking all of those to the valuation committee..

When you say the third party reviews a little bit less on a quarterly basis, approximately how many -- what percentage of your portfolio does a third party review on a quarterly basis?.

If we have 60 investments, just as a round number, at the end of the year, they might look at 40 at the end of -- on a quarterly basis, they might look at 10..

Okay, great. That’s all..

There is some duplicity there. So, some investments that were looked at the end of the year, when we get to March 31, they will be looked at some of the same ones. And we will direct them to ones that we think where we get the most benefit of that independent review, some of the more complicated ones, some of the distressed ones..

Got you..

And Ryan, what I would add is really sort of answers both of your questions is general default rates, I think a lot of our unrealized depreciation has been related to oil and our exposure to the oil investments. But, if you look at our leverage ratio at the portfolio level, it’s been consistent or fairly consistent over the past many quarters.

When you start seeing a portfolio leverage ratio rise, that’s really when you’re going to start having more default in general occurring across that portfolio.

So, if all of a sudden your leverage ratios have been trailing at a range, call it 4x for many quarters, they start going to 5, 5.5, 6.6, that’s when you can probably detect underlying rise in default rates unless there has been a strategy shift. So, we have not seen that rise in our portfolio leverage rate over the past many quarters.

We really think most of our depreciation relates to energy..

Our next question comes from Terry Ma with Barclays..

Hi, guys.

I think most of my questions have been answered, but can you maybe just give us a sense on the equity monetizations; how much you could potentially monetize this year?.

I know from a modeling standpoint, I wish we could give you some clearer guidance on dollars and timing. That’s just not something we are in a position to do, Terry..

Okay, got it. And then….

Too much uncertainty..

And then, just maybe can you talk about the EBITDA and revenue growth trends of your portfolio, ex-energy and how those are trending?.

I would say, I think it’s pretty similar to the comments I made last quarter, there is a percentage of the portfolio, the top third is having nice EBITDA growth; there is a probably more significant part of the portfolio that is level EBITDA with some slight improvements; and then, there are some laggards that are decreased that we spend more time on from a portfolio monitoring standpoint..

Our next question comes from John Hecht with Jefferies..

Hi, guys; a lot of my questions have been asked. But, I guess Joe, you just mentioned leverage. I’m wondering could you talk about, both margins and leverage ratios of say more recent deals you’ve done versus deals that are prepaying or repaying..

John, we are pulling that data. We’ve got it. Alright, we found the data. Here comes Jack..

On new deals, they were -- one newer one was probably in the 3x range, a little bit higher. It was a group deal; we also had some of the equity too, so it was more in the say 3.5 range. The subsequent event, one we just did was in the 4x range.

Although that one we did had a significant equity, it wasn’t a warrant technically, but we did receive equity for that higher debt range. So, we have a nice equity position in that. We also did a significant add-on investment in Medical Depot that was 10 million. So, the leverage there is higher, but it’s a large distributor.

So, it’s a significant amount of assets, AR and inventory that allow us to go to a higher leverage on that. But, as we underwrite and we look at future deals, we’re still keeping it sub 4x from a leverage perspective. There weren’t any real significant repayments; I think there was one and that was probably at a 3x level..

Are you seeing terms migrate, given the ABS markets, overall funding, [ph] markets, just general sentiment out there in the market at this point in time, or are you seeing signals that that may change?.

Pricing wise?.

Yes..

Yes. We have seen improved pricing market. So, we are definitely -- and as I think everybody else too, I mean looking at higher yields on deals and lower debt multiples too..

As noted in the subsequent even deal, LIBOR 1,300..

And I am not showing any further questions at this time. I’d like to turn the call back over to our host..

Thank you everyone for participating. If you have any further questions, we’re around all day. Please contact us. And if you want to see a copy of our offering documents for Capitala Private Credit Fund V, just give me a holler and we’ll send them out to you. Thank you for your participation..

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day..