Good afternoon, ladies and gentlemen and welcome to the KCAP Financial Incorporated Conference Call. An earnings press release was distributed today. If you did not receive a copy, the release is available on the company’s website at www.kcapfinancial.com in the Investor Relations section. As a reminder, this conference call is being recorded today, Thursday, May 4, 2017. This call is also being hosted on a live webcast, which can be accessed at our company’s website at www.kcapfinancial.com in the Investor Relations section under Events. Today’s conference call includes forward-looking statements and projections and we ask that you refer to KCAP Financial’s most recent filings with the SEC for important factors that could cause actual results to differ materially from these projections. KCAP Financial does not undertake to update its forward-looking statements unless required by law. I would now like to introduce your host for today’s conference, Mr. Dayl Pearson, President and Chief Executive Officer of KCAP Financial. Mr. Pearson, you may begin.

Thank you. Good morning or good afternoon, and thank you for joining KCAP Financial for a review of our first quarter 2017 results. Today, I will review some of the important highlights and activities from the quarter as well as provide some context of our direct lending business and the performance of our asset manager affiliates. I will then turn the call over to Chief Financial Officer, Ted Gilpin, who will provide a brief recap of our first quarter operating results and our financial condition at the end of the quarter. We will then open the line for your questions at the end of the call. A presentation outlining a few of our key accomplishments during the quarter can be found on the IR section of our website. To start, let me provide a brief recap of some of the important highlights from the quarter, which are summarized on Slide 3 of our earnings presentation. For the first quarter 2017, our NII was $0.09 per share, and our taxable distributable income was $0.06 per share. As a reminder, we also reported a non-GAAP metric resources available for distribution, which is a good proxy for cash available to shareholders as well as what is a sustainable dividend. Resources available for distribution, was $0.10 per share in the quarter-end. Our first quarter shareholder distribution was $0.12 per share consistent with the $0.12 paid in the fourth quarter of 2016. At the end of the quarter, KCAP had approximately $25 million in investable cash due to repayments over the past few months. We expect to invest this cash over the next few months, which will have a significant impact on income going forward. I would now like to discuss the performance of our loan and securities business and asset manager affiliates in more…

Thank you, Dayl. Good afternoon everyone. As of March 31, 2017, net asset value stood at $5.14, down from $5.24 at the end of the fourth quarter of 2016, down from $5.50 on March 31, 2016. The company declared a $0.12 distribution in the first quarter of 2017 consistent with the fourth quarter of 2016. Net investment income was $3.2 million or $0.09 per basic share for the first quarter of 2017 down from $4.8 million or $0.13 per basic share for the first quarter of 2016, down from $4.1 million and $0.11 per basic share for the fourth quarter of 2016, primarily attributable to uninvested cash and higher first quarter expenses. Interest income on our debt securities for the quarter ended March 31, 2017 was $4.6 million, slightly down compared with $4.7 million for the fourth quarter of 2016. Interest income on our debt securities was $5.7 million for the first quarter of 2016. Our debt securities portfolio contribution to total investment income for the year was 59% at the end of the first quarter of 2017 which compares with approximately 58% contribution in the fourth quarter, and 60% for the first quarter of 2016. Investment income from CLO fund securities was $3.1 million in the first quarter of 2017 compared with $3.2 million in both the fourth quarter of 2016 and in the first quarter of 2016. Received distribution from our asset manager affiliates of $650,000 in the first quarter of 2017. Asset distribution is in excess of the AMA’s estimated taxable earnings and profits and is therefore treated as return on capital. The AMA has distributed $1.1 million in the first quarter of 2016, $550,000 of which was returned to capital. Company recorded net realized and unrealized depreciation on investments of approximately $2.8 million, $0.08 per basic…

[Operator Instructions] And our first question comes from Troy Ward from Ares Management. Your line is open.

Great, thank you and good afternoon Dayl and team. Dayl if you could just comment a little bit more on you talked about being active in the reset market with several Trimaran transactions, hopefully by the end of this year. What are the steps and/or hurdles to be active in that reset market and get something done on your Trimaran transactions?

Well, these are all private placements. So we have to be careful in terms of what we say, but we have several 2.0 transactions, and it really involves getting the current majority equity holders to agree to essentially extend the maturity and extend the reinvestment period and also if we can to increase the amount of the CLO. Clearly there is plenty of activity among the debt securities, and obviously the other thing we have to do is we then also have to solve risk retention because now these vehicles are risk retention compliant, but we do have several ways to solve risk retention since we already own a significant portion of the equity and there are other ways to get to the 5% total through incremental vertical strips or incremental equity.

Okay, and then…

Before you go on, doing a reset is a much simpler and shorter transaction because obviously if you have a $450 million CLO, and you are upsizing it, let us say to whatever, $600 million, $575 million, whatever, you don't have to go and find $450 million of assets in warehouse for a lengthy period of time. So, it is much easier and much quicker to get a reset done and yet from an economic perspective, it is just as powerful for the manager.

So that is part of the thought process when you think you can be active in what you said was several by the end of the year?

Correct.

Versus kind of the one CLO we have seen annually over the last couple of years.

Correct.

Okay, and then all else equal, how would the reset of these transactions impact the fair value of the asset manager?

Well, obviously it is going to have a positive impact exactly how positive it is going to be is in terms of if we increase them and by how much we increase them, and assuming we can extend for an additional four years, we feel that adding four more years of management fees going forward and potentially incremental management fees based upon upsizing deals. So, it is going to obviously have a positive impact. I can't really tell you what that is going to be, but it is going to be positive and it also should have a positive impact on the CLO equity positions because again you are extending it out, and you are going to get more cash flows in the CLO equity as they don't delever in the outyears.

But would you have to give up anything – any type of the percentage of the fees that you receive now in order to meet the 5% holding, your required amount of each transaction, does anything change with the math on the fees?

The arithmetic may change, but the bottom line is it is net-net positive in dollars and percentage terms.

Okay, and then just one last one, obviously we are looking at the value of the asset manager this quarter relative to the 12/31 mark, it was down it looks like 8% or 9%, can you just speak to what were the changes in the fair value there of the asset manager?

Hi Troy. Mostly that was attributable to one of our older 1.0 deals getting called and making its final distribution – incentive fee distribution to us of around $3 million.

Okay, great. Thanks.

Thank you. Our next question comes from Ryan Lynch from KBW. Your line is open.

Following up on Troy’s question about the value of the asset manager, I mean, over the last couple of years, 2016 and 2015, that write-down for the asset manager as well as the first quarter of 2017; you mentioned the most recent write-down was due to a 1.0 CLO rolling off with probably some higher fees. I think you mentioned you only had one CLO 1.0 remaining in your portfolio, I guess two questions was the majority of the decrease in the value of the asset manager over the past several years from higher management fee payings CLO 1.0 is rolling off, and number two, if you only have one CLO 1.0 remaining, does that mean that we should expect to see much more stabilization in the asset manager value going forward?

Hi, Ryan. So most of the decrease has been because not necessarily because of higher management fees, although past deals could have been slightly higher, mostly due to the older 1.0 deals were paying incentive fees. So a lot of them had triggered – in 1.0 we have five deals paying incentive fees at once. And all of those incentive fees now have been washed through the system over the last couple of years. And so that leaves you, with the 2.0 deals, which have not triggered any incentive fees yet. Some may, and we haven't taken any of that into account, and so yes, just to be stable in that regard, the remaining 1.0 deals is one of the lower fee structures. So they won't have as big an impact as it winds down, but yes, I think generally speaking and if we can do the resets though you can get more stable, stay out longer.

Okay, and then, when I look at fees from paid out from the asset manager, it looks like, in the most recent quarter there is a distribution of about 650,000 in the first quarter now, that was all deemed as a return of capital as the previous – since the third quarter of 2016 those have all been deemed as return of capital. So, when I look at you guys, when I was actually looking at the 10-K it looks like there was about $11 million of unamortized tax basis goodwill from the KDA acquisition, and then about $7.5 million of unamortized goodwill from the Trimaran acquisition, are those the numbers – do those basically have to be amortized down before you can start to record taxable income in the asset manager and then those distributions to KCAP will then be taxed, not tax distributions but actually be income generation opposed to return of capital number one, and if that is the case, to me these are being amortized over a 15 year straight-line periods, I would then – if that is the case I would expect – we shouldn't expect to receive any income from the asset manager affiliate for several years going forward?

Yes, I mean I think that you are right on the amounts and the 15-year straight-line and that if the asset managers don't grow or get significant incentive fees over the next several periods then that is correct. It will come up as return of capital if there is excess cash. If they grow and/or have incentive fees, then obviously some of it will trip into the taxable earnings and profits pocket, which is sort of the goal.

Or if we raise other types of vehicles at the asset manager, which should be fee generating vehicles. So, I mean there are a number of ways. All of that would result in growing AUM and income from the asset manager. But you are correct; if we didn't grow the asset manager at all your analysis will be correct.

Okay, thanks. Those are all the questions from me.

Thanks Ryan.

Thank you and I am showing no further questions from our phone lines. I would now like to turn the conference back over to Mr. Dayl Pearson for any closing remarks.

Thank you all very much, and we will talk to you next quarter. Thank you very much.