Business
WhiteHorse Finance, Inc. Issues Business Update Letter to Stakeholders
NEW YORK, April 2, 2020 /PRNewswire/ -- WhiteHorse Finance, Inc. (the "Company") (Nasdaq: WHF) today issued the following business update letter to
About this update from Whitehorse Finance, Inc.
[{"type":"text","content":"NEW YORK, April 2, 2020 /PRNewswire/ -- WhiteHorse Finance, Inc. (the \"Company\") (Nasdaq: WHF) today issued the following business update letter to stakeholders in light of evolving market conditions amid the coronavirus disease (\"COVID-19\") pandemic. The full text of the letter follows: \nDear Stakeholder,\nI hope that all of you are safe and healthy as we go through this unprecedented time in the world. WhiteHorse Finance, Inc. (\"WHF\") management would like to share an update to provide increased transparency during this uncertain time. The H.I.G. WhiteHorse Direct Lending team, which manages the WHF portfolio of assets, has been working remotely for several weeks now and is taking advantage of the H.I.G. Capital (\"H.I.G.\") communication networks and tools that are in place to keep the business operating smoothly in the face of disruptions from COVID-19.\nOver the past four years, management of WHF has communicated to shareholders a strategy and investment philosophy that was designed to create stability in the face of a market downturn. The specific actions we have shared with you and have executed include the following:\n1) Reducing the concentration of second lien loans in the portfolio to approximately 10%. Historically, second lien loans experienced higher valuation volatility and loss severity than first lien loans in times of economic stress. At this time, WHF has exposure to only three second lien loans, and we believe that each of these, as listed in our public disclosures, has very low cycle risk. \n2) Increasing the diversity of the portfolio of loans so that no new asset is more than 3% of cost within the portfolio. We expect this greater diversity to insulate WHF from downside risk on any one or two assets experiencing credit challenges. As of year-end December 31, 2019, WHF had investments in 51 portfolio companies, with an average investment size of $10.0 million, or 1.9% of our debt portfolio, based on fair value.\n3) Underwriting to a repeat of the Great Recession. In the underwriting cases for each loan we consider, we have included a downside case which mirrors that company's performance during 2008 and 2009. Until the onset of the COVID-19 crisis, we believed that this downside case was more severe than what the economy was likely to experience during our investment horizon. We now believe that in c...