Stellus Capital Investment Corporation (NYSE:SCM) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 11:00 am ET

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Stellus Capital Investment Corporation (NYSE:SCM) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Robert Dodd

you have, I mean, I'll put you on the spot. Would you expect, based on everything today, obviously, to be declaring any components of your dividends -- remaining dividends this year in stock or would you right now expect to be able to declare all of those in cash?

Executive
Robert Ladd

We would expect to declare them all in cash.

Analyst
Robert Dodd

Got it. Got it. I mean one of your points earlier, Rob, in your prepared remarks was about the refinancing repayment activity coming back in, kind of picking up by Q4. Are those discussions that are underway already or is that just kind of an assessment of, obviously, spreads of that -- they're 50 to 100 wider now, but that's a lot higher than they were back in three months ago. So is that actual discussions or is it just kind of a sense of where things are moving given relative compression in spreads over the last three months?

Executive
Robert Ladd

And Robert, I'm sorry, is the question with respect to our yield -- overall yield?

Analyst
Robert Dodd

No, no, I'm talking about when you talked about refinancing and repayment activity within the portfolio in the latter part of this year. [Speech Overlap] Because obviously, that would be a considerable -- potential considerable source of liquidity on top of the liquidity you already have.

Executive
Robert Ladd

Yes. So this would be based on actual discussions that we're having or they are occurring? And then in the near term what we're finding is, they at least so far, are more SBIC assets versus the regular way, SCIC assets. So it creates more liquidity for reinvesting, whereas at the parent, it would be more liquidity generally. So -- but we expect -- we're seeing it on both fronts.

Analyst
Robert Dodd

Okay. Got it. And then one last one, if I can. Just on the dividend again. I mean basically, all the dividend payments so far this year, obviously, have come out of actually spillover from last year, which means you're currently likely to head into next year with a substantial spillover balance.

Has there been any consideration about -- what's the strategy there or are you happy to continue running those very large relative spillover balances or would you prefer to moderate that down or not? And if you've got a particular opinion on that, how would you go about it?

Executive
W. Todd Huskinson

Yeah. So Robert, I'm not sure if we lost Rob there. Go ahead, but I would -- yes, no, I would say, at this point, I think we're happy to carry the spillover balance. And if you think about where it is likely to be for next year, our forecast would show you it would be maybe a little over $20 million of book income, taxable income, maybe a little bit less than that, I mean different than that, I would say, but roughly that amount.

And so, I think at this point, until we have better visibility going forward, we probably carry that. And we really haven't made any kind