Question-and-Answer Session
Operator
Thank you. (Operator Instructions). We’ll go first to Henry Coffey with Ferris, Baker, Watts.
Henry Coffey – Ferris, Baker, Watts, Inc.
Good morning, guys. Congratulations on a strong quarter. A couple of questions. The realized, the unrealized losses that you reported, without pure just market-to-market adjustments against the syndicated loan bids or what was the source of those changes?
Thomas V. Inglesby
Henry, they were primarily market-to-market losses. There were a few companies that had slightly weaker results during the quarter and they had quotes of some sort in the markets which were lower and we marked them down to those quotes. We added two names to our watch list during the quarter. But the bulk of the, by far the largest portion of the market-to-market was reflected on the climb of the market in the latter of November.
Henry Coffey – Ferris, Baker, Watts, Inc.
How do you stand in terms of how many companies you do have on the watch list and things like loans that are just delinquent or loans that are in default of significant covenants?
Thomas V. Inglesby
We have no loans we’ll not accrue. We have one loan which is in its grace period where we expect the loan to make its payment by the middle of January. But (inaudible) and they did not make the payment. We have three companies on our watch list.
Henry Coffey – Ferris, Baker, Watts, Inc.
And that one loan that didn’t make your payment, you’re looking for a cheque this January?
Thomas V. Inglesby
Yes, yeah. We recently spent a significant amount of time with the company. They have an equity sponsor. We expect the equity sponsor to put money into the company. The company has a temporary issue with their costs and they expect it to be resolved. They expect the company to improve during the year.
Henry Coffey – Ferris, Baker, Watts, Inc.
Now, the CLO, obviously that’s going to be a good way to deploy capital. Where does the cash for making that initial investment come from? The liquidation of current holdings or are you going to sell loans into the fund or how is it going to work?
Thomas V. Inglesby
I would say, speaking generally, we have been husbanding our cash during the end of the quarter to come up with the cash necessary to make the investment.
Henry Coffey – Ferris, Baker, Watts, Inc.
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