show menu
close menu
LinkedIn icon
2014
  • All Years
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
  • 2010
  • 2009
  • 2008
  • 2007
  • 2006
  • 2005
  • 2004

Dec 10, 2014

NewStar Leads Financing for Integro

BOSTON, Dec. 10, 2014 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS), a specialized commercial finance company, announced today that it served as Lead Arranger and Administrative Agent for Senior Credit Facilities provided to Integro Ltd. ("Integro" or the "Company"), a leading specialty insurance brokerage and risk management firm. The credit facilities were comprised of a revolving line of credit, which was undrawn at closing, and a combination of funded and delayed draw term loans. The transaction also included an accordion feature, which could significantly increase the size of the facilities at the Company's request subject to lender approval.  The initial proceeds from the financing were used to refinance existing debt with significant undrawn borrowing capacity remaining available to support the Company's future funding needs related to its growth strategy. "As we approach our tenth anniversary, Integro is poised for exceptional growth both organic and through continued acquisition of specialty businesses," said President William Goldstein. "The relationship with NewStar ensures that we have ready access to the resources to deliver on a growth strategy that includes an expanded geographic footprint and the addition of new products and specialties to Integro."  Launched in 2005, Integro has grown to become one of the top 25 brokers in the U.S., providing insurance products and services to a wide range of clients - from Fortune 500 companies to high net worth individuals. The Company's core product offerings include traditional property and casualty, marine, personal, employee benefits and aviation insurance lines, as well as reinsurance products. Integro is organized into client-centric divisions focused on companies with activities in key markets and a variety of industries in which it specializes, including healthcare, media/entertainment, hospitality, technology, construction, food and consumer products, real estate, aviation, professional services and waste management.  Headquartered in New York City, the company operates from offices across the United States, Canada, Bermuda and the United Kingdom.  "We are very excited by the opportunity to back one of the leading independent insurance brokerage firms in the world as it continues to execute its strategic growth plan.  With the ability to provide financing solutions up to $300 million, we believe that we will be able to partner with Integro for many years to come as they continue to grow the business organically and through acquisitions," said Jason Wendorf, a senior banker at NewStar. The deal team for the transaction included Robert Milordi, Kevin Mulcahy and Marty Loew.About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $50 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, New York, NY, San Francisco CA, and Portland OR. For more detailed information, please visit our website at www.newstarfin.com.CONTACT: Corporate Inquiries: NewStar Financial Robert K. Brown 617.848.2558 rbrown@newstarfin.com
Read

Dec 04, 2014

NewStar Closes on $200 Million Initial Investment as Part of Strategic Relationship With Blackstone's GSO Capital and Franklin Square

Issued $200 million of subordinated notes with warrants exercisable into 9.5 million shares of common stock   Part of broader strategic relationship that is already driving significant benefits in origination volumes, loan yields and asset management activities   Additional $100 million of investment capital will be drawn over next year to support growth strategy   Additional warrants exercisable into 2.5 million shares of common stock to be issued, subject to stockholder approval BOSTON, NEW YORK and PHILADELPHIA, Dec. 4, 2014 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) ("NewStar" or the "Company"), a specialized commercial finance company, GSO Capital Partners ("GSO"), the credit division of the Blackstone Group (NYSE:BX), and Franklin Square Capital Partners, the largest manager of business development companies, announced today that they have completed the initial closing of an investment of long-term capital as part of a broader strategic relationship to help expand the Company's lower middle market lending and asset management activities. NewStar previously announced that it had entered into an investment agreement (the "Investment Agreement") with FS Investment Corporation, FS Investment Corporation II, and FS Investment Corporation III (collectively the "Franklin Square Funds") as of November 4, 2014 to issue $300 million of 8.25% subordinated notes due 2024 (the "Subordinated Notes") and warrants exercisable into 12 million shares of common stock at an exercise price of $12.62 (the "Warrants"). In an initial closing on December 4, 2014, the Franklin Square Funds purchased $200 million of 10-year Subordinated Notes and the first tranche of Warrants exercisable for 9.5 million shares of NewStar common stock at an exercise price of $12.62, which reflected a premium to the Company's prior day closing stock price of $10.88. The Franklin Square Funds have also committed to purchase an additional $100 million of Subordinated Notes within one year of the initial purchase in one or more tranches of not less than $25 million each as requested by the Company. A second tranche of Warrants exercisable for 2.5 million shares of NewStar common stock is subject to stockholder approval and is scheduled to close following a special stockholders' meeting at which the Company will request such approval. The Company has entered into separate voting agreements with certain stockholders, which include management, in which they have committed to vote their shares in favor of the issuance of the second tranche of Warrants.  NewStar expects to use the proceeds from the transaction to enhance its ability to originate and lead transactions across all of its business lines and, as a result, significantly increase origination volume and asset growth. The strategic relationship between the firms is already contributing materially to NewStar's growth, while extending GSO and Franklin Square's access to the lower middle market.     The Subordinated Notes rank junior to the Company's existing and future senior debt. They bear interest at 8.25% payable semi-annually and include a Payment-in-Kind ("PIK-Toggle") feature that allows the Company, at its option, to elect to have interest accrued at a rate of 8.75% added to the principal of the Subordinated Notes instead of paying it in cash. The Subordinated Notes have a ten year term and will mature on December 4, 2024. They are callable during the first three years with payment of a make-whole premium. The prepayment premium decreases to 103% and 101% after the third and fourth anniversaries of the closing, respectively. They are callable at par after year five. Events of default under the Subordinated Notes include failure to pay interest or principal when due subject to applicable grace periods, material uncured breaches of the terms of the Subordinates Notes and bankruptcy/insolvency events.  The Warrants will expire in ten years and may be exercised in whole, or in part, by payment in cash of the aggregate exercise price or pursuant to net share settlement provisions. The Warrants also include customary anti-dilution provisions.   In addition to the investment, the relationship has already begun to generate cross-referral and co-lending opportunities, which are providing NewStar with access to new channels of origination, while enabling the Company to provide larger capital commitments and a more complete set of financing options to its clients. GSO and Franklin Square, separately, are also considering investments of additional capital in lending vehicles managed by NewStar, which is anticipated to drive growth in assets under management. "Our relationship with GSO and Franklin Square is a powerful partnership that is already exceeding our expectations," said Tim Conway, NewStar's CEO. "Our investment styles and credit culture are very compatible and we are working together effectively to provide larger capital commitments to our clients and open up new channels of origination through the broader Blackstone, GSO and Franklin Square platforms. As a result, it is already contributing materially to our loan origination volume, asset yields and asset management activities." Additional Information and Where to Find It The Company plans to call a special meeting of its stockholders to vote on approval of the issuance of the second tranche of Warrants and in connection with that meeting has filed a preliminary Proxy Statement with the SEC and intends to file and mail a definitive Proxy Statement to its stockholders. The Proxy Statement will contain important information about the Company, the Franklin Square Funds, the Investment Agreement and related matters. Investors and security holders are urged to read the Proxy Statement and any amendment or supplements thereto carefully when it is available. Investors and security holders can obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Proxy Statement from the Company by contacting NewStar Financial, Inc., 500 Boylston Street, Boston, MA 02116, Attn: Investor Relations or by calling (617) 848-2500.Investors and security holders are urged to read all relevant documents filed with the SEC, including the Proxy Statement, because they will contain important information about the proposed transaction. Participants in Solicitation The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's stockholders with respect to the proposed issuance of the second tranche of Warrants. Information regarding the Company's directors and executive officers is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and its proxy statement dated April 18, 2014, each of which are filed with the SEC. Additional information regarding the interests of the participants in the solicitation of proxies in connection with the special stockholders meeting will be included in the Proxy Statement.This announcement is neither an offer to sell nor a solicitation of an offer to buy any securities. The Subordinated Notes and the Warrants subject to the Investment Agreement have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.Forward-Looking Statements This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our anticipated strategic relationship with GSO, Franklin Square and their affiliates, our expectations regarding expansion of our middle market lending and asset management activities, our ability to implement our accelerated growth strategy, access new origination channels and provide a broader set of financing options to our clients, including through potential investments of additional capital in lending vehicles managed by NewStar by GSO and Franklin Square. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, strategic plans, objectives, future performance, financing plans and business. As such, they are subject to material risks and uncertainties, including our ability to successfully execute on our growth strategy, our limited operating history; the general state of the economy; our ability to compete effectively in a highly competitive industry; and the impact of federal, state and local laws and regulations that govern non-depository commercial lenders and businesses generally. Additional information about these and other risk factors can be found in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2013 Annual Report on Form 10-K, as may be updated or supplemented by any Risk Factors contained in our subsequent Quarterly Reports on Form 10-Q. NewStar is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance and asset management company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing a range of corporate debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $50 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.About Blackstone and GSO Blackstone is one of the world's leading investment and advisory firms with approximately $284 billion in assets under management as of September 30, 2014. It seeks to create positive economic impact and long-term value for investors, the companies it invests in, the companies it advises and the broader global economy. Blackstone does this through the commitment of extraordinary people and flexible capital. Blackstone's alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-focused funds and closed-end funds. GSO, a division of Blackstone, is a leading credit-focused alternative asset manager, with approximately $70 billion of assets under management as of September 30, 2014. GSO has a global footprint with approximately 250 professionals among its offices in New York, Dublin, London and Houston. Further information is available at www.blackstone.com. Follow on Twitter @Blackstone.About Franklin Square Franklin Square is a leading manager of alternative investment funds designed to enhance investors' portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm's funds offer "endowment-style" investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients. Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry's first non-traded BDC. The firm managed approximately $13.6 billion in assets as of September 30, 2014. Franklin Square distributes its non-traded funds through its affiliated broker-dealer, FS2 Capital Partners, LLC.CONTACT: Media Contact: Tom Johnson Abernathy MacGregor (212) 371-5999
Read

Nov 05, 2014

Blackstone's GSO Capital Backs NewStar Financial With Strategic Investment by Franklin Square

Franklin Square to provide long-term investment capital and take equity position to support accelerated growth strategy Investment in NewStar extends Franklin Square's reach into the lower middle market with senior debt focused platform Relationship positions NewStar to provide larger capital commitments and more complete financing options to clients BOSTON, NEW YORK and PHILADELPHIA, Nov. 5, 2014 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) ("NewStar" or the "Company"), a specialized commercial finance company, GSO Capital Partners ("GSO"), the credit division of Blackstone (NYSE:BX), and Franklin Square Capital Partners, the largest manager of business development companies, announced today that they have formed a strategic relationship to help expand the Company's lower middle market lending and asset management activities. The relationship includes an investment of long-term capital from funds managed by Franklin Square Capital Partners (which are sub-advised by GSO) to help fund the Company's growth strategy and expand the scale of its lower middle market lending activity. Under the terms of the investment, funds managed by Franklin Square have committed to purchase $300 million of 10-year subordinated notes and warrants exercisable into 12 million shares of common stock at an exercise price of $12.62. NewStar expects to use the proceeds from the transaction to enhance its ability to originate and lead transactions across all of its business lines and, as a result, significantly increase origination volume and facilitate asset growth. The strategic relationship between the firms is anticipated to contribute materially to NewStar's growth, while extending GSO and Franklin Square's access to the lower middle market. It also allows Franklin Square's funds and GSO to offer their portfolio companies other financing solutions such as equipment leases and asset-based loans from a market leader. In addition to the investment, the scope of the relationship is expected to result in cross-referral and co-lending opportunities, which are anticipated to provide NewStar with access to new channels of origination, while enabling the Company to provide larger capital commitments and a more complete set of financing options to its clients through its relationship with GSO and Franklin Square. GSO and Franklin Square, separately, may also consider investing additional capital in future lending vehicles managed by NewStar. "This strategic relationship is nothing short of a game changer for NewStar," said Tim Conway, NewStar's CEO. "I consider both GSO and Franklin Square to be the absolute 'best-in-class' at what they do and we are thrilled to have their backing and Blackstone's support. With $300 million of long-term capital and a significant equity stake in NewStar, I believe that our goals and objectives are perfectly aligned. Our investment styles and credit culture are very compatible and we are already working together effectively to provide larger capital commitments to our clients and open up new channels of origination through the broader GSO and Franklin Square platforms." Bennett Goodman, Senior Managing Director and Co-Founder of GSO commented on the relationship: "NewStar is widely recognized as a leader in middle market commercial lending. I have known Tim Conway and Peter Schmidt-Fellner, NewStar's CEO and Chief Investment Officer, respectively, for many years. They have managed the firm extremely well and their investment style and credit philosophy are completely consistent with ours." Michael Forman, Chairman and CEO of Franklin Square added, "We believe that our long-term capital commitment, together with the new strategic relationship between NewStar and Franklin Square, will help NewStar accelerate the growth of one of the best lending platforms in the middle market."Terms of the Transaction NewStar entered into an investment agreement (the "Investment Agreement") with FS Investment Corporation, FS Investment Corporation II, and FS Investment Corporation III (collectively the "Franklin Square Funds") as of November 4, 2014 to issue up to $300 million of 8.25% subordinated notes due 2024 (the "Subordinated Notes") and warrants exercisable into 12 million shares of common stock at an exercise price of $12.62 (the "Warrants"). The strategic investment is expected to be completed in multiple closings. The Franklin Square Funds have committed to purchase $200 million of the Subordinated Notes upon the satisfaction of certain customary conditions in an initial closing on or before, December 31, 2014 and an additional $100 million of Subordinated Notes within one year of the initial purchase in one or more tranches of not less than $25 million as requested by the Company. The Warrants will be issued and sold in two tranches. The first tranche of warrants exercisable for approximately 9.5 million shares of NewStar common stock, which represents 19.9% of the Company's outstanding shares immediately prior to the execution of the Investment Agreement, is scheduled to close with the initial issuance of Subordinated Notes. The second tranche of warrants exercisable into approximately 2.5 million shares of NewStar common stock is subject to shareholder approval and is scheduled to close following a special stockholders' meeting at which the Company will request such approval. The Company has entered into separate voting agreements with certain stockholders, which include management, in which they have committed to vote their shares in favor of the issuance of the second tranche of warrants. The Subordinated Notes will rank junior to the Company's existing and future senior debt. They will bear interest at 8.25% payable semi-annually and include a Payment-in-Kind ("PIK-Toggle") feature that allows the Company, at its option, to elect to have interest accrued at a rate of 8.75% added to the principal of the notes instead of paying it in cash. The notes have a ten year term and will mature on the tenth anniversary of the initial issuance of notes. They are callable during the first three years with payment of a make-whole premium. The prepayment premium decreases to 103% and 101% after the third and fourth anniversaries of the closing, respectively. They are callable at par after year five. Events of default under the Subordinated Notes include failure to pay interest or principal when due subject to applicable grace periods, material uncured breaches of the terms of the Subordinates Notes and bankruptcy/insolvency events.  The Warrants are exercisable for 12 million shares of the Company's common stock at an exercise price of $12.62, which represented the Company's book value per share as of June 30, 2014. The Warrants will expire in ten years from the date of the initial issuance and may be exercised in whole, or in part, by payment in cash of the aggregate exercise price or pursuant to net share settlement provisions. The Warrants also include customary anti-dilution provisions.  Advisors Credit Suisse is acting as the financial advisor to NewStar on the investment and related strategic considerations and Simpson Thacher and Bartlett LLP is acting as NewStar's counsel.Additional Information and Where to Find It The Company plans to call a special meeting of its stockholders to vote on approval of the issuance of the second tranche of warrants and in connection with that meeting will file with the SEC and mail to its stockholders a Proxy Statement. The Proxy Statement will contain important information about the Company, the Franklin Square Funds, the issuance of the second tranche of warrants and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Proxy Statement from the Company by contacting NewStar Financial, Inc., 500 Boylston Street, Boston, MA 02116, Attn: Investor Relations or by calling (617) 848-2500.Investors and security holders are urged to read all relevant documents filed with the SEC, including the Proxy Statement, because they will contain important information about the proposed transaction. Participants in Solicitation The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's stockholders with respect to the proposed issuance of the second tranche of warrants. Information regarding the Company's directors and executive officers is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and its proxy statement dated April 18, 2014, each of which are filed with the SEC. Additional information regarding the interests of the participants in the solicitation of proxies in connection with the Investment Agreement will be included in the Proxy Statement.This announcement is neither an offer to sell nor a solicitation of an offer to buy any securities. The Subordinated Notes and the Warrants subject to the Investment Agreement have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.Forward-Looking Statements This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our anticipated strategic relationship with GSO and the Franklin Square Funds, our expectations regarding expansion of our middle market lending and asset management activities, our ability to implement our accelerated growth strategy, access new origination channels and provide a broader set of financing options to our clients. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, strategic plans, objectives, future performance, financing plans and business. As such, they are subject to material risks and uncertainties, including our ability to successfully execute on our growth strategy; the general state of the economy; our ability to compete effectively in a highly competitive industry; and the impact of federal, state and local laws and regulations that govern non-depository commercial lenders and businesses generally. More detailed information about these and other risk factors can be found in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2013 Annual Report on Form 10-K, as may be updated or supplemented by any Risk Factors contained in our subsequent Quarterly Reports on Form 10-Q. NewStar is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance and asset management  company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing a range of corporate debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $50 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.About Blackstone and GSO Blackstone is one of the world's leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with almost $300 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone. GSO Capital Partners LP is the global credit and distressed investment platform of Blackstone. With approximately $70 billion of assets under management, GSO is one of the largest alternative managers in the world focused on the leveraged-finance, or non-investment grade related, marketplace. GSO seeks to generate attractive risk-adjusted returns in its business by investing in a broad array of strategies including mezzanine debt, distressed investing, leveraged loans and other special-situation strategies. Its funds are major providers of credit for small and middle-market companies and they also advance rescue financing to help distressed companies.About Franklin Square Franklin Square is a leading manager of alternative investment funds designed to enhance investors' portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm's funds offer "endowment-style" investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients. Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry's first non-traded business development company. The firm managed approximately $12.4 billion in assets as of June 30, 2014. Franklin Square distributes its non-traded funds through its affiliated broker-dealer, FS2 Capital Partners, LLC.CONTACT: Media Contact: Tom Johnson Abernathy MacGregor (212) 371-5999
Read

Nov 05, 2014

Blackstone's GSO Capital Backs NewStar Financial With Strategic Investment by Franklin Square

Franklin Square to provide long-term investment capital and take equity position to support accelerated growth strategy Investment in NewStar extends Franklin Square's reach into the lower middle market with senior debt focused platform Relationship positions NewStar to provide larger capital commitments and more complete financing options to clients BOSTON, NEW YORK and PHILADELPHIA, Nov. 5, 2014 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) ("NewStar" or the "Company"), a specialized commercial finance company, GSO Capital Partners ("GSO"), the credit division of Blackstone (NYSE:BX), and Franklin Square Capital Partners, the largest manager of business development companies, announced today that they have formed a strategic relationship to help expand the Company's lower middle market lending and asset management activities. The relationship includes an investment of long-term capital from funds managed by Franklin Square Capital Partners (which are sub-advised by GSO) to help fund the Company's growth strategy and expand the scale of its lower middle market lending activity. Under the terms of the investment, funds managed by Franklin Square have committed to purchase $300 million of 10-year subordinated notes and warrants exercisable into 12 million shares of common stock at an exercise price of $12.62. NewStar expects to use the proceeds from the transaction to enhance its ability to originate and lead transactions across all of its business lines and, as a result, significantly increase origination volume and facilitate asset growth. The strategic relationship between the firms is anticipated to contribute materially to NewStar's growth, while extending GSO and Franklin Square's access to the lower middle market. It also allows Franklin Square's funds and GSO to offer their portfolio companies other financing solutions such as equipment leases and asset-based loans from a market leader. In addition to the investment, the scope of the relationship is expected to result in cross-referral and co-lending opportunities, which are anticipated to provide NewStar with access to new channels of origination, while enabling the Company to provide larger capital commitments and a more complete set of financing options to its clients through its relationship with GSO and Franklin Square. GSO and Franklin Square, separately, may also consider investing additional capital in future lending vehicles managed by NewStar. "This strategic relationship is nothing short of a game changer for NewStar," said Tim Conway, NewStar's CEO. "I consider both GSO and Franklin Square to be the absolute 'best-in-class' at what they do and we are thrilled to have their backing and Blackstone's support. With $300 million of long-term capital and a significant equity stake in NewStar, I believe that our goals and objectives are perfectly aligned. Our investment styles and credit culture are very compatible and we are already working together effectively to provide larger capital commitments to our clients and open up new channels of origination through the broader GSO and Franklin Square platforms." Bennett Goodman, Senior Managing Director and Co-Founder of GSO commented on the relationship: "NewStar is widely recognized as a leader in middle market commercial lending. I have known Tim Conway and Peter Schmidt-Fellner, NewStar's CEO and Chief Investment Officer, respectively, for many years. They have managed the firm extremely well and their investment style and credit philosophy are completely consistent with ours." Michael Forman, Chairman and CEO of Franklin Square added, "We believe that our long-term capital commitment, together with the new strategic relationship between NewStar and Franklin Square, will help NewStar accelerate the growth of one of the best lending platforms in the middle market."Terms of the Transaction NewStar entered into an investment agreement (the "Investment Agreement") with FS Investment Corporation, FS Investment Corporation II, and FS Investment Corporation III (collectively the "Franklin Square Funds") as of November 4, 2014 to issue up to $300 million of 8.25% subordinated notes due 2024 (the "Subordinated Notes") and warrants exercisable into 12 million shares of common stock at an exercise price of $12.62 (the "Warrants"). The strategic investment is expected to be completed in multiple closings. The Franklin Square Funds have committed to purchase $200 million of the Subordinated Notes upon the satisfaction of certain customary conditions in an initial closing on or before, December 31, 2014 and an additional $100 million of Subordinated Notes within one year of the initial purchase in one or more tranches of not less than $25 million as requested by the Company. The Warrants will be issued and sold in two tranches. The first tranche of warrants exercisable for approximately 9.5 million shares of NewStar common stock, which represents 19.9% of the Company's outstanding shares immediately prior to the execution of the Investment Agreement, is scheduled to close with the initial issuance of Subordinated Notes. The second tranche of warrants exercisable into approximately 2.5 million shares of NewStar common stock is subject to shareholder approval and is scheduled to close following a special stockholders' meeting at which the Company will request such approval. The Company has entered into separate voting agreements with certain stockholders, which include management, in which they have committed to vote their shares in favor of the issuance of the second tranche of warrants. The Subordinated Notes will rank junior to the Company's existing and future senior debt. They will bear interest at 8.25% payable semi-annually and include a Payment-in-Kind ("PIK-Toggle") feature that allows the Company, at its option, to elect to have interest accrued at a rate of 8.75% added to the principal of the notes instead of paying it in cash. The notes have a ten year term and will mature on the tenth anniversary of the initial issuance of notes. They are callable during the first three years with payment of a make-whole premium. The prepayment premium decreases to 103% and 101% after the third and fourth anniversaries of the closing, respectively. They are callable at par after year five. Events of default under the Subordinated Notes include failure to pay interest or principal when due subject to applicable grace periods, material uncured breaches of the terms of the Subordinates Notes and bankruptcy/insolvency events.  The Warrants are exercisable for 12 million shares of the Company's common stock at an exercise price of $12.62, which represented the Company's book value per share as of June 30, 2014. The Warrants will expire in ten years from the date of the initial issuance and may be exercised in whole, or in part, by payment in cash of the aggregate exercise price or pursuant to net share settlement provisions. The Warrants also include customary anti-dilution provisions.  Advisors Credit Suisse is acting as the financial advisor to NewStar on the investment and related strategic considerations and Simpson Thacher and Bartlett LLP is acting as NewStar's counsel.Additional Information and Where to Find It The Company plans to call a special meeting of its stockholders to vote on approval of the issuance of the second tranche of warrants and in connection with that meeting will file with the SEC and mail to its stockholders a Proxy Statement. The Proxy Statement will contain important information about the Company, the Franklin Square Funds, the issuance of the second tranche of warrants and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Proxy Statement from the Company by contacting NewStar Financial, Inc., 500 Boylston Street, Boston, MA 02116, Attn: Investor Relations or by calling (617) 848-2500.Investors and security holders are urged to read all relevant documents filed with the SEC, including the Proxy Statement, because they will contain important information about the proposed transaction. Participants in Solicitation The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's stockholders with respect to the proposed issuance of the second tranche of warrants. Information regarding the Company's directors and executive officers is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and its proxy statement dated April 18, 2014, each of which are filed with the SEC. Additional information regarding the interests of the participants in the solicitation of proxies in connection with the Investment Agreement will be included in the Proxy Statement.This announcement is neither an offer to sell nor a solicitation of an offer to buy any securities. The Subordinated Notes and the Warrants subject to the Investment Agreement have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.Forward-Looking Statements This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our anticipated strategic relationship with GSO and the Franklin Square Funds, our expectations regarding expansion of our middle market lending and asset management activities, our ability to implement our accelerated growth strategy, access new origination channels and provide a broader set of financing options to our clients. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, strategic plans, objectives, future performance, financing plans and business. As such, they are subject to material risks and uncertainties, including our ability to successfully execute on our growth strategy; the general state of the economy; our ability to compete effectively in a highly competitive industry; and the impact of federal, state and local laws and regulations that govern non-depository commercial lenders and businesses generally. More detailed information about these and other risk factors can be found in NewStar's filings with the Securities and Exchange Commission (the "SEC"), including Item 1A ("Risk Factors") of our 2013 Annual Report on Form 10-K, as may be updated or supplemented by any Risk Factors contained in our subsequent Quarterly Reports on Form 10-Q. NewStar is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance and asset management  company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing a range of corporate debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $50 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.About Blackstone and GSO Blackstone is one of the world's leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with almost $300 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone. GSO Capital Partners LP is the global credit and distressed investment platform of Blackstone. With approximately $70 billion of assets under management, GSO is one of the largest alternative managers in the world focused on the leveraged-finance, or non-investment grade related, marketplace. GSO seeks to generate attractive risk-adjusted returns in its business by investing in a broad array of strategies including mezzanine debt, distressed investing, leveraged loans and other special-situation strategies. Its funds are major providers of credit for small and middle-market companies and they also advance rescue financing to help distressed companies.About Franklin Square Franklin Square is a leading manager of alternative investment funds designed to enhance investors' portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm's funds offer "endowment-style" investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients. Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry's first non-traded business development company. The firm managed approximately $12.4 billion in assets as of June 30, 2014. Franklin Square distributes its non-traded funds through its affiliated broker-dealer, FS2 Capital Partners, LLC.CONTACT: Media Contact: Tom Johnson Abernathy MacGregor (212) 371-5999
Read

Nov 05, 2014

NewStar Reports Third Quarter Net Income of $5.0 Million, or $0.10 Per Diluted Share

Strategic Initiatives - Announced a strategic relationship with Blackstone's GSO Capital and Franklin Square Capital Partners to expand the Company's lending and asset management platforms supported by a long-term investment of $300 million by funds managed by Franklin Square Capital Partners and sub-advised by GSO.New Loan Volume - Originated new loan volume of $409 million, up $83 million or 25% from the prior quarter and $125 million from the same period last year.Asset Growth - Increased total assets under management by $119 million from the prior quarter to more than $2.5 billion.Credit Costs - Provision for credit losses decreased by $9.3 million, or 73%, from the prior quarter to $3.4 million as credit costs returned to levels more consistent with the current stage of the business cycle following elevated levels of specific charges taken in the prior quarter.Asset Quality - Asset quality was stable as NPAs remained consistent with the prior quarter in both dollar and percentage terms.Net Interest Margin - Margin widened to 3.24% for the third quarter from 3.04% in the prior quarter due primarily to the exclusion of Arlington Fund interest expense and other expenses related to debt repayment of the Arlington Fund that negatively impacted the margin in the second quarter and did not recur in the third quarter.Funding - Completed $21.8 million of share repurchases year to date through the third quarter and redeemed at par all outstanding bonds issued through the term debt securitization completed in 2006. BOSTON, Nov. 5, 2014 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) ("NewStar" or the "Company"), a specialized commercial finance company, today reported a net income of $5.0 million, or $0.10 per diluted share for the third quarter of 2014. These results compare to a consolidated net loss of $1.9 million, or $0.04 per diluted share in the second quarter of 2014 and consolidated net income of $6.4 million, or $0.12 per diluted share in the third quarter of 2013. Operating income (loss) before income taxes was $8.5 million for the third quarter of 2014 compared to $(3.1) million for the second quarter of 2014 and $9.9 million in the third quarter of 2013. In a separate press release issued today, NewStar also announced the formation of a strategic relationship with GSO Capital ("GSO"), the credit division of Blackstone (NYSE:BX), and Franklin Square Capital Partners ("Franklin Square"), the largest manager of business development companies, to help expand the Company's lending and asset management platforms. The relationship includes a long-term strategic investment by funds managed by Franklin Square and sub-advised by GSO of $300 million in 8.25% subordinated notes due 2024 and warrants exercisable for 12 million shares of NewStar common stock at an exercise price of $12.62, which represents a premium to the 30-day volume weighted average price ("VWAP") of NewStar common stock and equals the Company's book value per share as of June 30, 2014. The transaction is expected to be accretive to the Company's book value per share by an amount equal to the fair value of the warrants issued at closing divided by the then outstanding number of shares. Tim Conway, NewStar's Chairman and Chief Executive Officer commented on the Company's quarterly results and its announcement of the strategic relationship with GSO and Franklin Square: "Third quarter loan volume was up strongly, continuing a favorable trend through what is typically the seasonally slow part of the year. The growth reflected a combination of market share gains and larger credit commitments provided to customers. Credit costs returned to levels more typical for this stage of the business cycle, as expected, and our financial results for the quarter were solid, led by net loan growth and margin improvement. While I am pleased with these results, I am also excited about the strategic relationship we announced today. I believe this will be a 'game-changer' for us. Both GSO Capital and Franklin Square are the absolute 'best-in-class' at what they do and we are thrilled to have the support and backing of Blackstone. With $300 million of long-term capital and a significant equity stake in NewStar, I believe that our goals and objectives are perfectly aligned with GSO's. Our investment styles and credit culture are very compatible and we are already working together effectively to provide larger capital commitments to our clients and open up new channels of origination through the broader Blackstone platform. This is expected to be the start of an exciting new phase of the company's development."Managed and Owned Loan Portfolios Total new funded loan volume was approximately $409 million in the third quarter, up from $326 million in the prior quarter and $284 million in the third quarter of the prior year. Higher volumes reflected consistent demand for acquisition financing from financial sponsors combined with larger credit commitments and related hold positions in the Leveraged Finance business, as well as, continued strong contributions from the Company's asset-based lending unit. Trailing twelve month origination volume exceeded $1.3 billion. Loans outstanding increased slightly from the prior quarter, but were up 13% from the third quarter of 2013, excluding loans in the Arlington Fund at September 30, 2013, reflecting solid new loan volume in 2014. The Leveraged Finance loan portfolio was flat compared to the second quarter of 2014 at $1.8 billion, while asset-based loans in our Business Credit portfolio increased 14% to $226 million. Assets managed for third party institutional investors, including the Arlington Program and its predecessor, increased to $386 million at September 30, 2014 from $288 million at June 30, 2014. Asset-based lending originated approximately $32 million and the equipment finance business originated approximately $10 million in the third quarter of 2014, or 16% of new loan volume retained on the balance sheet. The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. As of September 30, 2014, no outstanding borrowings by a single obligor represented more than 1.6% of total loans outstanding, and the ten largest obligors comprised approximately 10.3% of the loan portfolio.Net Interest Income / Margin Net interest income was consistent with the prior quarter at $19.6 million and up slightly from $19.5 million in the third quarter of 2013. The portfolio yield was also consistent at 6.13% in the third quarter of 2014 compared to 6.14% in the prior quarter, and down from 6.33% in the third quarter of 2013, reflecting the impact of lower yields on new loan volume. Net interest margin widened to 3.24% for the third quarter of 2014 compared to 3.04% for the second quarter of 2014 as interest expense decreased $2.2 million from the second quarter due to the elimination of ongoing interest expense at the Arlington Fund resulting from the deconsolidation of the fund at the end of the second quarter and other Arlington Fund debt repayment expenses in the second quarter which did not recur in the third quarter.Non-Interest Income Non-interest income was $3.3 million for the third quarter of 2014 up from $1.7 million for the second quarter of 2014, and down from $5.1 million for the third quarter of 2013. The change from the second quarter was due primarily to a $0.5 million increase in management fees resulting from the growth in assets under management and a $0.3 million increase in placement and structuring fees. Other non-interest income in the third quarter of 2014 was centered in $0.5 million of unused fees on revolving credit commitments, $0.3 million of amendment and exit fees, and $0.2 million of other fees generated by Business Credit. It also included approximately $0.9 million of revenue related to OREO currently being managed by the Company, which was offset by related OREO costs included in general and administrative expenses.Credit Performance Total credit costs (including provision for credit losses and losses on OREO or interests retained in connection with workouts of impaired loans) in the third quarter of 2014 decreased by $9.3 million to $3.4 million from $12.7 million in the prior quarter primarily due to an elevated level of expense in the prior period centered in $9.2 million of specific provisions in connection with three impaired loans. Total specific provision expense in the third quarter was approximately $1.8 million, down sharply from $13.9 million in the prior quarter. The allowance for credit losses was $41.9 million, or 1.99% of consolidated loans and approximately 54% of NPLs, at September 30, 2014, compared to $39.1 million, or 1.87% of loans and approximately 50% of NPLs, at June 30, 2014. Non-performing assets were consistent at $90.0 million at September 30, 2014 compared to $90.4 at the end of the prior period. At September 30, 2014, loans with an aggregate outstanding balance of $77.1 million (net of charge-offs), or 3.67% of loans, were on non-accrual status compared to loans with an aggregate outstanding balance of $77.5 million (net of charge-offs), or 3.70% of consolidated loans at June 30, 2014. Non-performing assets, net of charge-offs were $90.0 million, or 4.25% of loans as of September 30, 2014.Expenses Operating expenses declined 7% to $11.0 million in the third quarter of 2014 as compared to the second quarter of 2014 due primarily to lower general and administrative expenses and deconsolidation of expenses related to the Arlington Fund. Excluding non-cash equity compensation1, operating expenses were $10.4 million in the third quarter compared to $11.3 million in the second quarter of 2014, or 1.7% of average assets on an annualized basis for each period. The efficiency ratio excluding non-cash equity compensation2 in the third quarter of 2014 was 45.9% compared to 52.9% in the prior quarter, reflecting lower operating expenses, primarily due to lower general and administrative expenses and elimination of Arlington Fund expenses. The Company had 98 full-time employees at September 30, 2014 and as of June 30, 2014.Income Taxes Deferred income taxes increased to $25.4 million as of September 30, 2014 compared to $24.2 million as of June 30, 2014 due primarily to the increase in our allowance for credit losses. Approximately $18.4 million and $8.2 million of the deferred tax asset as of September 30, 2014 were related to our allowance for credit losses and equity compensation, respectively.Funding and Capital Total cash and equivalents as of September 30, 2014 were $243.4 million, of which $111.6 million was unrestricted. Unrestricted cash increased from approximately $53.3 million at June 30, 2014 due primarily to the timing of cash distributions from CLO trusts. Restricted cash decreased to approximately $131.8 million at September 30, 2014 from approximately $166.1 million as of June 30, 2014 due primarily to timing differences in settlement dates of CLO trusts and other non-recourse, secured financing arrangements. Advances under credit facilities increased by approximately $135 million during the third quarter due primarily to increases in new loan origination volume and advances used to fund the redemption of the 2006 CLO. Redeemed at par all outstanding bonds issued through the CLO completed in 2006. Term debt decreased by approximately $107 million to $1.5 billion at September 30, 2014 due primarily to the redemption of CLO bonds and the repayment of CLO notes from principal collections on loans held in amortizing CLO trusts. Total debt increased by approximately $28.4 million to $1,805.9 million at September 30, 2014, which led to an increase in balance sheet leverage to 3.0x from 2.9x at June 30, 2014. The increase was due primarily to higher advances under the credit facilities with Wells Fargo and DZ Bank, partially offset by the redemption of CLO bonds and run-off of loans held in amortizing CLO trusts.Equity During July 2014, the company completed the $20 million stock repurchase program which was authorized on May 5, 2014. The company purchased approximately 1.5 million shares of its common stock under this program in the aggregate at a weighted average price per share of $13.13. On August 13, 2014, the Board of Directors authorized the repurchase of up to $10 million of the company's common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares purchased will be determined by the company's management based on its evaluation of market conditions and other factors. The repurchase program, which will expire on August 15, 2015 unless extended by the Board of Directors, may be suspended or discontinued at any time without notice. As of September 30, 2014, the company had purchased another $1.8 million of its common stock under this program. Book value per share was $12.73 at the end of the third quarter of 2014, up $0.11 from $12.62 at the end of the prior quarter primarily due to retained earnings and option exercise activity. Average diluted shares outstanding were 50.8 million shares for the quarter, and total outstanding shares at September 30, 2014 were 47.8 million, down from 48.3 million at June 30, 2014.1 Operating expenses excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Financial Measures" at the end of this press release and page 13 for reconciliation of non-GAAP to GAAP measurements.2 Efficiency ratio excluding non-cash equity compensation is a non-GAAP measure. See "Non-GAAP Financial Measures" at the end of this press release and page 13 for reconciliation of non-GAAP to GAAP measurements.Conference Call and Webcast NewStar will host a webcast/conference call to discuss the results today at 10:00 am Eastern Time. All interested parties are invited to participate via telephone or webcast, which will be hosted through the Investor Relations section at www.newstarfin.com. Please visit the website to register for the webcast and test your connection prior to the call. You can also access the conference call by dialing 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial." For convenience, an archived replay of the call will be available through November 12, 2014 by dialing 855-859-2056. International callers should call 404-537-3406. For all replays, please use the passcode 23751969. The audio replay will also be available through the Investor Relations section at www.newstarfin.com.About NewStar Financial NewStar Financial Inc. (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $50 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, New York, NY, Portland OR and San Francisco CA. For more detailed information, please visit our website at www.newstarfin.com.Forward-Looking Statements This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, includi
Read

Oct 22, 2014

NewStar Financial Schedules Release of Results for the Third Quarter of 2014

BOSTON, Oct. 22, 2014 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) announced today that it will report results for the third quarter of 2014 on Wednesday, November 5, 2014 before the markets open. NewStar will also host a webcast/conference call to discuss the results on Wednesday, November 5, 2014 at 10:00am Eastern Time. All interested parties are invited to participate via telephone or webcast, which will be hosted through the Investor Relations section of the website at www.newstarfin.com. Please visit the website to register for the webcast and test your connection prior to the call. You can also access the conference call by dialing 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial." For convenience, an archived replay of the call will be available through November 12, 2014 by dialing 855-859-2056. International callers should call 404-537-3406. For all replays, please use the passcode 23751969. The audio replay will also be available through the Investor Relations section of the website at www.newstarfin.com.About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Darien CT, Atlanta GA, Chicago IL, Dallas TX, Los Angeles CA, New York NY, San Francisco CA, and Portland OR. For more detailed transaction and contact information, please visit our website at www.newstarfin.com.CONTACT: Corporate Inquiries: NewStar Financial Robert K. Brown 617.848.2558 rbrown@newstarfin.com NewStar Financial Brian J. Fischesser 617.848.2512 bfischesser@newstarfin.com
Read

Aug 13, 2014

NewStar Authorizes New Share Repurchase Program

BOSTON, Aug. 13, 2014 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS), a specialized commercial finance company, announced today that its Board of Directors has authorized the repurchase of up to $10 million of the company's common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by the company's management based on its evaluation of market conditions and other factors.  The repurchase program, which will expire on August 15, 2015 unless extended by the Board of Directors, may be suspended or discontinued at any time.  The company may also establish from time to time 10b5-1 trading plans that will provide flexibility as it buys back its shares.  Commenting on the stock repurchase program, NewStar CEO Tim Conway said, "This buyback program reflects our strong belief in the intrinsic value of the company and demonstrates our commitment to improving the investment value of our stock as we continue to build the business and capitalize on strategic market opportunities."About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The company specializes in providing a range of senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The company targets 'hold' positions of up to $35 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.Forward-looking Statements Statements in this press release regarding the company's intention to repurchase shares of its common stock from time to time under the stock repurchase program are forward looking statements. There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the market price of the company's stock prevailing from time to time, the company's cash flows from operations, general economic conditions, and other factors identified in the company's Annual Report on Form 10‑K and most recent Quarterly Reports on Form 10-Q filed with the SEC.CONTACT: Corporate Inquiries: NewStar Financial Robert K. Brown (617) 848-2558
Read

Aug 06, 2014

NewStar Reports Second Quarter Consolidated Net Loss of $1.9 Million, or $0.04 Per Diluted Share

New Loan Volume - Originated new funded loan volume totaling $326 million, up $51 million or 19% from the prior quarter and up slightly from the same period last year.Asset Management - Expanded the Arlington Fund to $409 million with additional equity invested in connection with the securitization of the program's assets, which also resulted in the deconsolidation of the Fund's assets and liabilities from NewStar's financial statements as of June 26, 2014.Credit Costs - Provision for credit losses increased $6.8 million from the prior quarter to $12.7 million due primarily to $9.2 million of additional specific charges taken in connection with the final resolutions of three impaired loans. As a result, charge-offs were also elevated in the quarter at $13.1 million, up from $8.1 million in the prior quarter.Asset Quality - NPA balances remained flat at $90.4 million at the end of the second quarter, while the NPA rate increased to 4.3% from the prior quarter due primarily to a $203 million decrease in the loan portfolio resulting from the deconsolidation of the Arlington Fund.Net Interest Margin - Margin narrowed to 3.04% for the second quarter from 3.50% due primarily to the accelerated recognition of deferred financing costs in connection with the repayment of the Arlington Fund's credit facility in the second quarter and higher cost of funds from the term debt securitization completed in April 2014.Funding - Completed eighth loan securitization totaling $348 million in April 2014 with a weighted average interest rate of Libor + 232 bps.Stock Buyback Program - Repurchased $14.8 million of the Company's common stock under the repurchase program authorized on May 5, 2014.BOSTON, Aug. 6, 2014 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS), a specialized commercial finance company, today reported a consolidated net loss of $1.9 million, or $0.04 per diluted share for the second quarter of 2014. Net loss excluding the results of the Arlington Fund, a consolidated variable interest entity ("VIE"), was $1.3 million1. These results compare to net income of $6.2 million, or $0.12 per diluted share in the first quarter of 2014 and $5.6 million, or $0.11 per diluted share in the second quarter of 2013. Operating income (loss) before income taxes was $(3.1) million for the second quarter of 2014 compared to $9.4 million in the first quarter of 2014 and $9.3 million in the second quarter of 2013. "Credit costs were higher than expected this quarter due to the resolution of a handful of legacy impaired loans, which required us to take some higher than usual charges. Although those costs weighed on our financial performance, resulting in a small loss for the quarter, it allowed us to conclude several long term workouts," said Tim Conway, NewStar's Chairman and Chief Executive Officer. "Loan demand remained strong, however, and origination volume was up sharply from last quarter driven largely by loan demand derived from continued middle market M&A activity," he added. "Importantly, our current new business pipelines reflect a continuation of this positive trend into the typically slower summer months and the pricing environment remains relatively stable. The recent increase in the Arlington Senior Loan Program and our plans for further expansion of our asset management activities reflects our continued belief that middle market lending offers the best relative value among credit investment options and NewStar is among only a few independent commercial lenders positioned to capitalize on it," he concluded.Managed and Owned Loan Portfolios Total new funded loan volume was approximately $326 million in the second quarter compared to $275 million in the prior quarter and $319 million in the second quarter of the prior year. Higher volumes reflected somewhat higher demand for acquisition financing from financial sponsors compared to the prior quarter and increasing contributions from the Company's asset-based lending and leasing business units. Excluding loans in the Arlington Fund at March 31, 2014 and June 30, 2013, the owned loan portfolio was relatively consistent with the prior quarter, but up 17% from the second quarter of 2013, reflecting solid new loan volume in 2014. The Leveraged Finance loan portfolio, excluding loans in the Arlington Fund at March 31, 2014 and June 30, 2013, was down 3% from the first quarter of 2014 at $1.8 billion, while asset-based loans and leases in our Business Credit portfolio increased 16% to $279 million. Assets managed for third party institutional investors, including the Arlington Program and its predecessor, increased to $288 million at June 30, 2014 from $215 million at March 31, 2014. Asset-based lending originated approximately $35 million and the equipment finance business originated approximately $20 million in the second quarter of 2014, or 17% of new loan volume retained on the balance sheet. The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. As of June 30, 2014, no outstanding borrowings by a single obligor represented more than 1.6% of total loans outstanding, and the ten largest obligors comprised approximately 10.2% of the loan portfolio.Arlington Fund (Senior Loan Program) The size of the Arlington Fund was increased to $409 million from an original target size of $300 million through a planned recapitalization transaction in the second quarter that included investment of additional equity from third parties and the securitization of the Fund's loan assets to provide program leverage consistent with the fund's investment strategy. In connection with the transaction, the Arlington Fund was renamed NewStar Arlington Senior Loan Program (the "Arlington Program"). On June 26, 2014, the Arlington Program completed a $409.4 million term debt securitization backed by a portfolio of middle market loans comprised of all the loans held by the Arlington Fund as well as certain of the Company's loans designated as held-for-sale. A portion of the proceeds from the transaction was used to repay outstanding advances under the Class A and B Notes of the revolving credit facility. Following repayment of all outstanding loans, the Company's membership interests in Arlington Fund were also redeemed and new membership interests in the Arlington Program were issued to other equity investors. As a result, the Company no longer has any ownership or financial interests in the Arlington Fund or its successor, the Arlington Program, except to the extent that it receives management fees as collateral manager of the Arlington Program. Because the Company is not considered the primary beneficiary of the Arlington Program, it will not consolidate the Arlington Program's operating results or statements of financial position as of June 26, 2014 and the Company deconsolidated the Arlington Fund from its statement of financial position as of that date. Loans managed for the benefit of the Arlington Program (and its predecessor) increased to $239.4 million as of June 30, 2014 from $165 million as of March 31, 2014. At June 30, 2014, loans held-for-sale included $14.5 million of loans intended to be sold to the Arlington Program. The net results (after-tax) of the Fund included in NewStar's financial statements as a consolidated VIE were $0.02 million in the second quarter, down from $0.7 million in the first quarter of 2014. The Company does not expect to report further net results of the Fund in its financial statements as a consolidated VIE except as shown in prior periods.Net Interest Income / Margin Net interest income decreased to $19.6 million for the second quarter of 2014 compared to $21.8 million for the first quarter of 2014 and $25.2 million in the second quarter of 2013. The portfolio yield decreased to 6.14% in the second quarter of 2014 compared to 6.18% in the prior quarter, and 7.33% in the second quarter of 2013, reflecting the impact of lower yields on new loan volume and repricings and recognition of deferred interest income during the second quarter of 2013 on problem loans resolved during that quarter. Net interest margin narrowed to 3.04% for the second quarter of 2014 compared to 3.50% for the first quarter of 2014 as interest expense increased $2.6 million from the first quarter due to accelerated amortization of deferred fees from the repayment of the Arlington Fund's credit facility and higher cost of funds from the term debt securitization completed in April 2014. Excluding the Arlington Fund, the net interest margin would have been 3.30% in the second quarter.Non-Interest Income Non-interest income was $1.7 million for the second quarter of 2014, down from $6.7 million for the first quarter of 2014, and up slightly from $1.5 million for the second quarter of 2013. The change from the first quarter was due primarily to gains during the first quarter of 2014 totaling $6.5 million recognized from the sale of equity retained in prior debt restructurings, which were partially offset by a $1.6 million loss during the first quarter of 2014 recognized through equity method of accounting for interests in impaired borrowers. Other non-interest income in the second quarter of 2014 consisted primarily of $0.4 million of unused fees on revolving credit commitments, $0.2 million of amendment and exit fees, and $0.2 million of fees generated by Business Credit. It also included approximately $0.6 million of revenue related to OREO currently being managed by the Company, which was offset by related OREO costs included in general and administrative expenses.   Credit Performance Total credit costs (including provision for credit losses and losses on OREO or interests retained in connection with workouts of impaired loans) in the second quarter of 2014 increased by $6.8 million to $12.7 million from $5.8 million in the prior quarter primarily due to $9.2 million of specific provisions in connection with final resolutions of three impaired loans.    Total specific provision expense was approximately $13.9 million in the second quarter of 2014, up from $4.1 million in the prior quarter.  The allowance for credit losses was $39.1 million, or 1.87% of consolidated loans and approximately 50% of NPLs, at June 30, 2014, compared to $39.6 million, or 1.72% of loans and approximately 52% of NPLs, at March 31, 2014.  Non-performing assets were relatively consistent at $90.4 million at June 30, 2014 compared to $89.9 at the end of the prior period. Although two legacy impaired loans and one 2010 vintage loan totaling approximately $11.6 and $11.4 million, respectively, were placed on non-accrual in the quarter, they were offset by $9.3 million of repayments and net charge-offs of $13.2 million in the period.  At June 30, 2014, loans with an aggregate outstanding balance of $77.5 million (net of charge-offs), or 3.70% of loans, were on non-accrual status compared to loans with an aggregate outstanding balance of $76.6 million (net of charge-offs), or 3.33% of consolidated loans at March 31, 2014. Non-performing assets, net of charge-offs, specific reserves and other adjustments were $90.4 million, or 4.29% of loans as of June 30, 2014.Expenses Operating expenses declined 3% to $11.8 million in the second quarter of 2014 as compared to the first quarter of 2014. Excluding non-cash equity compensation2, operating expenses were $11.2 million in the second quarter compared to $11.5 million in the first quarter of 2014, or 1.8% of average assets on an annualized basis for each period. The efficiency ratio excluding non-cash equity compensation3 in the second quarter of 2014 was 52.92% compared to 40.39% in the prior quarter, reflecting lower net interest income due primarily to $1.2 million of accelerated amortization of deferred financing costs related to Arlington Fund. The Company had 98 full-time employees as of June 30, 2014 and March 31, 2014.Income Taxes Deferred income taxes decreased to $24.2 million as of June 30, 2014 compared to $27.6 million as of March 31, 2014 due primarily to charge-offs in the second quarter of 2014. Approximately $17.3 million and $7.6 million of the deferred tax asset as of June 30, 2014 were related to our allowance for credit losses and equity compensation, respectively.Funding and Capital Total cash and equivalents as of June 30, 2014 were $219.5 million, of which $53.3 million was unrestricted. Unrestricted cash increased from approximately $24.1 million at March 31, 2014 due primarily to the timing of cash distributions from CLO trusts. Restricted cash increased to approximately $166.1 million from approximately $103.6 million (excluding cash at the Arlington Fund) due primarily to timing differences in settlement dates of CLO trusts and other non-recourse, secured financing arrangements. Advances under credit facilities (excluding the Arlington Fund at March 31, 2014) decreased by approximately $151 million due primarily to repayment of advances from the proceeds of a new term debt securitization issuance. A credit facility provided by Wells Fargo used to fund asset based lending activity was amended during the quarter to increase the commitment amount by $25.0 million to $100.0 million with the addition of a new lender to the syndicate. Term debt increased by approximately $193 million to $1.6 billion at June 30, 2014 due primarily to the completion of a $348.4 million term debt securitization in April 2014 (see below), which was partially offset by the repayment of CLO notes from principal collections on loans held in amortizing CLO trusts that were completed during 2006 and 2007. The corporate credit facility was amended during the second quarter to increase the commitment and the amount borrowed by $10.0 million to $238.5 million. Completed eighth term debt securitization totaling $348.4 million in April 2014. All floating rate notes were priced at par to yield a weighted average spread of approximately Libor plus 232 bps. The Company placed various classes of rated notes totaling approximately $290 million with investors, which represented an advance rate of approximately 83% of the CLO trust's assets.  Total debt (excluding the Arlington Fund at March 31, 2014) increased by approximately $40.9 million to $1,777.5 million at June 30, 2014, which led to an increase in balance sheet leverage to 2.9x from 2.8x at March 31, 2014 (excluding the Arlington Fund at March 31, 2014). The increase was due primarily to the new CLO completed during April 2014, partially offset by run-off of loans held in CLOs completed in 2006 and 2007 and lower advances under the credit facilities with Wells Fargo.    Equity On May 5, 2014, the Board of Directors authorized the repurchase of up to $20 million of the company's common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares purchased will be determined by the company's management based on its evaluation of market conditions and other factors. The repurchase program, which will expire on April 30, 2015 unless extended by the Board of Directors, may be suspended or discontinued at any time without notice. As of June 30, 2014, the company had purchased $14.8 million of its common stock under the program, which was subsequently completed in July.  Book value per share was $12.62 at the end of the second quarter of 2014, down $0.14 from $12.76 at the end of the prior quarter primarily due to the net settlement of warrants to purchase common stock and net income (loss).  Average diluted shares outstanding would have been 52.1 million shares for the quarter, which was down slightly from 52.8 million shares for the prior quarter. Total outstanding shares at June 30, 2014 were 48.3 million, down from 48.9 mil
Read

Page 1 of 2 Arrow next icon

hex medium gray

Latest Corporate Information

Hex divider blue

Copyright 2017 NewStar Financial, Inc. All Rights Reserved. Terms of use.