Good afternoon, ladies and gentlemen, and welcome to the Kohlberg Capital Corporation First Quarter 2008 Earnings Conference Call. An earnings press release was distributed yesterday after the close of the market. If you did not receive a copy, the release is available at the company’s website at www.kohlbergcapital.com in the Investor Relations section. At this time, all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded today, Thursday, May 8, 2008. This call is also being hosted on a live webcast, which can be accessed at our company’s website at www.kohlbergcapital.com in the Investor Relations section under Events. In addition, if you would like to be added to the company’s distribution list for news events, including earnings releases, please contact Denise Rodriguez at 212-455-8316. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kohlberg Capital Corporation believes that expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks such as those described in the Risk Factor Section of our 10-K and sections of our Form 10-Q and other SEC documents we have filed during the course of the year could cause actual results to differ materially from expectations. Now at this time for opening remarks ,I would like to introduce Chris Lacovara, Chairman. Please go ahead sir.

Thanks very much, and thank you all for joining us this morning for this discussion of our financial results, business activities, and our progress for the first quarter of 2008. As we typically do, I'll begin with some general commentary on our activities for the quarter on the balance sheet, lending activities as well as with our Asset Management Business, Katonah Debt Advisors or KDA. I’ll then turn the call over to Dayl Pearson, our Chief Executive Officer who will discuss our middle market investment activities in more detail and then our CFO, Mike Wirth will provide a brief recap of our first quarter financial results and additional discussion of financial performance. And then at the end, as always, we will open the call for questions. For the first quarter of 2008, Kohlberg Capital reported earnings per share of $0.45, which represents our fifth consecutive quarter of sequential earnings growth since our IPO in December 2006. All of our earnings per share for the quarter were generated by net investment income, and this is of course consistent with our strategy of not relying on potentially volatile capital gains to support the dividend. In the quarter, Kohlberg Capital posted a modest 2.8% reduction in net asset value to just under $14 per share, and as it indicates in previous quarters, this reduction was due entirely to the reduced trading value of certain loans inline with general credit market condition. That said, our investment loan portfolio continues to perform quite well and today we have experienced only one single issuer default and have had no realized credit losses. To start with just a few reminders about our company and our strategy, first of all, long-term investors and we plan to realize the value paid for our loan investments, so unrealized mark-to-market losses…

Thank you, Chris. At the end of the first quarter, our debt securities, not including our CLO investments, totaled approximately $363 million as with the past first lien loans represented. The majority of this is 59%, second lien loans represented another 30% and only 11% of our loans were in mezzanine unsecured loans and bonds. So over 89% of that $363 million is in secured assets. Again, middle market investments are diversified across 26 industries and 86 different entities, made almost 100 different loans, specific loans. The average balance per [exposure] is still less than $5 million and our top 10 exposures within that portfolio, which excludes our best and obviously in KDA represent approximately 18% of total investments and we think that is a very well diversified compared to other BDCs, and we do think diversity particularly as it relates to across industries, which eliminates correlation of defaults is credit quality and the current credit environment. Our yield as of March 31 was approximately 5.1% of our LIBOR, which compares favorably to the 3.5% of our LIBOR that we had at IPO. In addition, a lot of the loans as we have new loans coming on, or if we have amendments to current loans, LIBOR floor have been inserted, so for taxes it gets further downside and LIBOR going forward. That and the fact that our liabilities are also based upon LIBOR, which we really don’t have a significant exposure to LIBOR at risk. Approximately 7.5% of our debt securities are fixed rate, and the average fixed rate is little under 12%. Again, as we say every time we can, we do not have any RMBS or ABS loan exposure, consumer lending or lenders. The current pipeline is continuing to grow. It was a bit slow in the first…

Thank you, Dayl. Good morning everyone. For the first quarter of 2008, we reported net investment income excluding unrealized gains of $8 million, $0.45 per share as compared to $4.9 million or $0.27 per share for the first quarter of 2007. Net investment income excluding unrealized losses is also one of the benchmarks used to determine our quarterly dividend. For the first quarter of 2008, we paid $.0.41 per share dividend as compared to $0.29 for the first quarter of ‘07. For the first quarter our net investment income excluding unrealized gains or losses covered our dividend payments with no return of capital. We believe an important distinction in the quality of our earnings and the result of dividend is that they are more dependent on net interest is that or that they are more dependent on net interest and dividend income rather than on capital gains on sales of investments. We believe that the income stream on interest and dividends is well predictable, well recurring and less volatile than relying on capital gains to earn the dividend, particularly in the current market environment. I will now highlight the components of our net investment income. Total gross investment income, which consists of interest, dividend and fee income, was $14.3 million for the three months ended March 31, 2008. For the three months ended March 31, 2008, Katonah Debt Advisors, our wholly owned portfolio company, and after-tax net income of approximately $1 million. Of this 1 million, the quarterly earnings Katonah Debt Advisors $350,000 was distributed in form of the dividends to KCAP and those contributed to KCAP’s gross investment income for the quarter. The remaining $600,000 of undistributed net income of Katonah Debt Advisors for the quarter is part of a $2.9 million of accumulated undistributed net income of Katonah…

Thank you. (Operator Instructions). And our first question comes from John Hecht with JMP Securities.

Good morning guys. Thanks for taking my questions. Dayl, you mentioned two loans of pay down since the end of the quarter, can you give us sort of the amount of the pay downs?

There are two loans pay down in March, the total pay downs was about $10 million. We expect to have another prepayment during May, which would be -- it’s going to be small, it’s 2 or $3 million, and we had normal amortization in March. Again, all these pay off at par of around $5 million I believe.

Okay. Have you guys mentioned the spread over LIBOR, at the time the IPOs was 3.50, and I think you referred to a 5 to 10 spread now, is that the mix of spread or is that the spread that if you were to buy assets in the market right now?

As the spread on the par value of our loans.

So, what are spreads right now if you were to buy the same type of mix of assets in the market today, what do you think spreads would be?

Middle market firstly in spreads would generally someway are in the mid to high 4s, 4.50, 4.75 over LIBOR. They would also have a LIBOR floor and that sort of varies from loan to loan, some are between 3% and 4% generally. Second lien loans, there really hasn’t been a lot of settling activity in that market seems to have really, really dried up to some extent. There are few that we see and generally they are sort of that 7.50 to 8.50 range. In mezzanine if compared to when we were assembling the portfolio it would have been towards 6.50 or 7.50. And mezzanine which is probably 12% cash and 2% pick, now probably more 12% cash and 4% pick maybe 5% pick.

Okay. And the -- on the quarter there is a reasonably large pick up in the capital structuring service fees. Obviously part of that was related to this, I imagine the COO you guys structure in the first quarter. What’s a normalized rate for that and is there anything else going on in that line item?

Typically you would see about of that $1.1 million that you saw in the first quarter, about $800,000 was related to a component 2007-1 as you guessed. Typically you would see fee income during any particular quarter ranging anywhere from a $100,000 to $200,000.

$100,000 to what was that?

$100,000 to $200,000.

Okay. And then last question before I get back in the queue is the $350,000 dividend from the KDA is that a -- it appears that that’s a lower than the kind of potential rate of dividend given the assets or the earnings power of that company. But is that reasonable number to assume going forward coming out on a quarterly basis?

The company and the Board will evaluate that on a quarter-by-quarter basis. Again, KDA earned in the first quarter just under $1 million and only distributed 350 up to KCAP. I think part of it would be looking at the, trying to maintain a very nice stable but not growing dividend. So, you may see that 350. I don’t think that 350 is necessarily a run rate per se.

Okay, thank you guys very much to answer my questions.

Thank you. And we will now move to our next question which will be with Robert Bloomberg with State Capital Advisors.

Yeah, hi guys. I had a question about -- I noticed there is some insider ownership of the BDC which I would like to see. But there wasn’t much ownership among some of the people like Dayl Pearson and E. A. Kratzman who seem to be managing the day-to-day assets of the firm. And I just wondered if you could comment if the shares are so cheap, when you were trading with this huge discount, why are we not seeing more insight or buying at this point?

All right, I think you did see insight of buying in December when the window was open. You also saw insight there is exercising their rights in the writes off for any and I think of selectively based upon people’s ability to invest, they will invest as the window opens.

And actually it has been somewhat difficult at times because we have a very narrow trading window per policy, and often times at least during last year we were in the middle of a registration statement or something like that, which pretty much precluded opening the window or awaits to buy shares.

Do you anticipate buying more share in the future if it continues to trade at this -- I mean, specifically I guess sale and I have noticed that like in case of Mr. Kratzman, he actually has been failed, which I was surprised to see and I wondered if there was a reason for that and going forward do you expect to do more buying?

I mean, I think it’s all sort of comment and I think individual people’s situations actually also dictate buying regardless of buying and selling, regardless of what they see as the opportunity. So, it’s really hard to comment on that. But again, I think there is good level, I think part of the problem frankly is that the level of ownership by the management, which I think is substantial, it’s a little bit dwarfed by the ownership by the corporate facility, it’s just because we received shares in the transaction for assets that we contributed. So, I think all in the board is very satisfied with us. So, buying -- and I would expect people will buy even if the stock remains at these level.

I also wonder if you could comment a little bit about maybe the differences in how FASB applies to your company versus some of these older BDCs that was started much earlier than you and I am sure. I don’t if you want to mention names, I am sure you know which names I mean.

Well, without mentioning names, I mean, and without jump -- talking about FASB, let me give a little interpretation. I think what you have in some of the older BDCs is a big difference from our company, not so much as the applicability of the rules as how their balance sheets are constructed. Many of the older BDC in order to drive growth have diversified much more heavily into private equity and/or assets management than we have. I mean, our -- but we really -- KCAP really has no private equity portfolio and no equity portfolio at all other than it’s a investment in the KDA affiliate, which is a valuation that’s very stable because the assets and revenues there are lot we apply metrics just to those -- into those numbers. I think what you have with the other BDCs where they have lots of affiliates where they put valuation on those affiliates and regulatory touch we have variable values and then they have large private equity portfolios. There is a lot of volatility particularly in the current economic conditions and even more volatility frankly is applied due to FAS 157. It’s my foresight, FAS 157 really isn’t a big event for our company because we don’t have a lot of hard to value equity assets, but I do think that that’s going to raise some issues for BDCs that have a lot more equity portfolio in individual companies and/or lots of affiliates that they are trying to value.

As far as the rights offering goes, I didn’t -- may be I missed it, but has the dilution affected that and already factored in or because it was done I guess after March 31, it will be factored in the next quarterly by NAV.

Yeah, that correct, you will see it in -- you will see the NAV impact in the next quarter and the diluted impact if any, the short-term diluted impact if any towards EPS in the next quarter. Those shares will be averaged in the second quarter --

That’s right.

And I would imagine it won’t be very great because the offering we saw wasn’t a large offering?

Exactly, we very consciously raised did a one for six as opposed to one for three, which I guess is the maximum we could have done because of the dilutive impact, because we think the stock is frankly too cheap and to minimize with dilution.

And I wondered -- do you have any stat on what is the latest -- the expenses as a percentage of classifier at this point, as for BDC?

2.2 for the quarter.

That was…

Non-interest expense.

2.2?

I think that what -- let me double check here. Non-interest expense to average net asset was actually 3.5%, total expense was 8.7 that’s also including interest expense.

It’s 2.2 million.

Hey, again it was 2.2 million, that’s right. But as percentage of average net assets it was 3.5%.

Is that going up or -- it seems like you guys in the past have like somewhere around 2.6 percent or something?

Yeah, typically we are in the 2 range. A part of it is a function of the denominator with values being marked down to market levels. In the end also there is you will see it probably spread out during the course of the year closer to the mid to low 2% range.

I think like you guys have – I think internally manage BDC then have a better expense structure than it externally one I don’t know if you have any thoughts on that but it seems like you do?

That’s a very interesting question. I mean, some of the larger internally managed ones actually have much higher expense ratios could they have very large origination and credit functions, and the externally managed BDC basically have to operate within their fee structure. So, I’m not sure that the case, our goal is always been to be at the low end even within internally managed BDC because our origination is more kind of the club type where we are not, we don’t have 50 people in branch offices in Dallas and Atlanta beating the bushes for small companies we are using senior relationship for private equities sponsors and other middle market lenders to source and that eliminates a lot of origination cost.

Well, thank you guys. I don’t want to take any more time. Thanks a lot.

Thank you.

Thank you.

Thank you. We will now move on to Dean Choksi with Lehman Brothers.

Good morning.

We can’t…

Dean?

Hi, can you hear me now?

Yeah, it will be a much better.

The investment in Katonah 07-1 was bit larger than your past CLO equity investments, can you kind of talk about the rational for that and what your target and estimates since CLO equity is going forward?

Sure. It was margin I mean typically being we have been doing sort of $5 million to $10 million, the larger size was a function of really a few things, first of all, the investment pumps us out in a big way, because the interest cost in that fund is actually going to end up quite a bit lower than what’s current in the market but of course, they are buying assets in the low 90s at investment spreads that are huge for CLO. So, we actually like the investment. Number 2 in essence some of the capital in there was taking the place of a couple of funds that we had expected to get done in ‘07 and didn’t. So, we actually as our budget suggested that we would have been about $60 million at the year end and we were at about 30. So, we actually had room and again as we said our general goal is to keep that around 10% and that probably we are worried at the end of Q2. The third thing, I was in many ways the most important it was a very opportunistic purchase what happened was Katonah was actually approached by a AAA investor who wanted to do a deal as people may know the difficulty in CLO market now isn’t so much fun in the equity is finding the AAA, we get many AAA investors who are also heavily exposed to sub-prime and ADS and they are out of the market and this AAA investor was willing to underwrite, essentially purchase the entire senior capital structure of the fund at a very low rate. And so, we will actually at that point we are marketing equity we’re syndicating it, we weren’t sure we could hold that investor or the six…

Okay, and then on the I guess is the spotted loan I guess they were typically in the middle market kind of how long is that take together recovery and what timeframe would you recognize the loss?

Well, it really depends upon the situation, it can be anywhere from 3 months to 18 months as it works its way through, this is a fairly, this particular situation is actually somewhat larger well, and we would anticipate the fact that if we would have to actually realize a loss wouldn’t be until very late this year or early next year.

And, it’s on loan marked at time you are expected recovery value?

Yes.

Okay. And then the final question is on the net income from KDA was 1 million, is that inclusive of the $800 or $1,000 restructuring fee?

No, because we took a 100% on the equity position, we kind of able chose to put that 800/1000 structure in fee actually at the KCAP level. As, as we took some that as income and basically offset the loss on the asset that we transferred in and then some of we just frankly took it discount on the purchase.

So, it was not a KDA income was almost a $1 million this not include that fee.

That’s right.

It’s the question I think John had that $1 million KDA income for the quarter is a lot closer to what we think is the run rate quarterly income of KDA then the 350 that we actually distributed.

That’s correct.

And there is 2.8 as I mentioned also there is $2.8 billion undistributed accumulated undistributed income sitting at KDA yet to be dividend out in the future take out.

Okay, great. Thanks guys.

(Operator Instructions). And it appears that we have no further questions for today. And I will turn the conference back over to you for closing remarks.

Great. I will just thank you all for joining us this morning. I will look forward to talking with you in the future.

Thanks and this ends today’s conference call. Thank you for your participation. Have a great day.