Solar Capital Ltd. Acquires Nations Equipment Finance; Continuation of Strategic Plan to Diversify and Expand Specialty Finance Platform

NEW YORK, NY--(Marketwired - Aug 1, 2017) - Solar Capital Ltd. (NASDAQ: SLRC) ("Solar" or the "Company") announced that on July 31, 2017, it acquired NEF Holdings, LLC ("NEF"), which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC. NEF is an independent equipment finance company that provides senior secured financings to U.S. based companies. Solar invested approximately $210 million to effect the transaction.

The acquisition is another important step in Solar's commitment to expand its direct lending investment channels and provide differentiated sources of growth. The addition of NEF, with its infrastructure and experienced underwriting team, further enhances Solar's platform as a diversified specialty finance company. Solar directly sources and underwrites cash flow, asset-based, life science and now senior secured equipment financings. Pro forma for the NEF acquisition, approximately two-thirds of Solar's comprehensive portfolio is expected to be comprised of specialty finance investments with the remainder from directly originated investments in senior secured cash flow loans to sponsor-owned companies. 

NEF was founded in 2010 by former GE Capital equipment finance professionals, and has underwritten approximately $1.0 billion of equipment financings since inception. The portfolio is highly diversified, with an average funded exposure per borrower of $2.3 million. Collateral securing the portfolio consists of long-life, essential-use assets such as trucks and trailers, machine tools and equipment, which can be readily liquidated.

Solar acquired NEF for a modest premium to tangible book value. NEF is expected to distribute substantially all of its earnings to Solar on a quarterly basis. Solar anticipates its investment in NEF will generate a cash yield consistent with its other specialty finance assets and expects the acquisition to be immediately accretive to investment income in Q3 2017. Based on NEF's existing portfolio, the investment would currently generate quarterly net investment income for Solar of approximately $0.04 to $0.05 per share. Pro forma for the acquisition and based on debt outstanding at June 30, 2017, Solar's leverage would have been 0.55x debt-to-equity.