Good morning, and welcome to the THL Credit's earnings conference call for its third fiscal quarter of 2013. It is now my pleasure to turn the call over to Ms. Stephanie Sullivan, General Counsel of THL Credit. Ms. Sullivan, you may begin. Stephanie Paré Sullivan: Thank you, operator. Good morning, and thank you for joining us. With me today are Jim Hunt, our Chief Executive Officer; and Terry Olson, our Chief Operating Officer and Chief Financial Officer. Before we begin, please note that statements made on this call may constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended. Such statements reflect various assumptions by THL Credit concerning anticipated results, are not guarantees of future performance and are subject to known and unknown certainties and other factors that cause actual results to differ materially from such statements. The uncertainties and other factors are, in some ways, beyond management's control, including the factors described from time to time in our filings with the Securities and Exchange Commission. Although we believe that the assumptions on which any forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate; and as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. THL Credit undertakes no duty to update any forward-looking statements made herein. All forward-looking statements speak only as of the date of this call. A webcast replay of this call will be available until November 12, 2013, starting approximately 2 hours after we conclude this morning. To access the replay, please visit our website at www.thlcredit.com. With that, I'll turn the call over to Jim.

Thank you, Stephanie. Good morning, and thank you for joining this morning's call covering THL Credit's third quarter of 2013. Our earnings announcement and 10-Q were released yesterday afternoon, copies of which can be found on our website, along with a Q3 investor presentation that we will refer to during this call. On today's call, we will provide an overview of THL Credit's investment activities and financial highlights for the third quarter of 2013. We will also offer our views on the current investment environment. We completed Q3 with 49 investments with a fair value of $572 million after investing $100 million during the quarter in 5 new transactions, as well as a follow-on investments in 4 existing portfolio companies. Also during the quarter, we had realizations of $32 million through sales and repayments. Approximately $86 million of our investments made during the quarter were either first or second lien investments with our overall portfolio invested 59% in first and second lien investments as of September 30, which amounts to an increase of 34% from December 31, 2012. We continue to see security investments offering the most attractive risk-adjusted returns in this slowly improving economic environment. Overall, the credit quality of our investment portfolio remains strong. Prudent investment selection and rigorous investment oversight remain a hallmark of our performance to date. Based upon fair value as of September 30, 85% of our investments have received either a 1 or 2 credit score on a scale of 5, which means that they are either meeting or exceeding expectations. During the quarter, we placed 1 additional 4-rated investment on nonaccrual. The 2 nonaccrual loans accounted for 3.7% of the cost basis of our investment portfolio. For each of our investments rated as a 3 or 4, we continue to closely monitor their…

Thanks, Jim, and good morning, everyone. I want to start by describing our 5 new investment transactions, as well as follow-on investments in existing companies this quarter and provide you with a little color on each. First, in July, we made a $21 million investment in the second lien term loan of Specialty Brands Holdings. Specialty Brands company formed to consolidate the controlling interest of Papa Gino's and D'Angelo restaurants and the Smith & Wollensky Restaurant Group. The company is headquartered in Boston. We made a $13.2 million investment in the senior secured term loan of Key Brand Entertainment, an online operator of one of the largest third-party online ticketing agency for broadway and developer producer and distributor of live theater events in North America. The company is headquartered in New York. We made a $26.7 million investment in the senior secured term loan of NCM Group Holdings. NCM is a provider of demolition and environmental remediation services. The company is headquartered in Brea, California. We made a $10 million investment in the subordinated notes of Dryden Senior Loan Fund, a collateralized loan obligation managed by Prudential. We also made a $23.9 million investment in the second lien term loan of Oasis Legal Finance. Oasis is a consumer legal finance company and is headquartered in Northbrook, Illinois. And lastly, we made follow-on investments totaling $5.4 million with the most notable being a $4.2 million investment in the subordinated notes of The Studer Group. If you refer to the Pages 13 through 18 of our Q3 investor presentation, you'll see additional -- you'll see details on our portfolio investments, specifically the composition, credit profile and yields. The weighted average yield on all investments made in Q3 was 11.9% with yields of 12.1% on first lien loans, 11.2% on second lien loans,…

Thanks, Terry. In summarizing our formal remarks, we are pleased with $100 million of investment closings and the $68 million of net growth in the portfolio and the strong credit quality across the portfolio. The additional $85 million of capacity on our credit facility and the increasing Greenway II commitments to $187 million provides us with ample capacity to take advantage of new and accretive investment opportunities. We'd like to now open the line for questions, operator.

[Operator Instructions] And first question is from Jonathan Bock of Wells Fargo.

Jim, real quick as it relates to the pipeline. I know you mentioned some subsequent event numbers. How would you, overall, characterize the current investment environment to date in the fourth quarter and whether or not you feel it's elevated related to the -- or in relation to the number of repayments one could be seeing in this quarter? Maybe some broad brush strokes around those 2 comments, because it's quite important as you guys continue to deploy capital in this environment.

We've -- the investment environment has really been dominated by refinancing demand. I think that it feels like change of control activity could be growing, but it -- we're so bespoke in terms of each investment that sometimes it's hard to go up to the forest and say it's going to be pressure on refinancing will exceed demand for either new refinancings, recaps or change of control transactions. But the -- the sense we get in speaking to middle market intermediaries, those representing companies for sale, is that their pipeline has been building for some time. But there's no particular year-end pressure this year, so it's hard to say right now if it's going to be a very active fourth quarter. I'd say that last year we did see a bit of a surge right after Thanksgiving, and, happily, we were able to consummate those investments. But right now, we're feeling that the pipeline is comfortable. It's currently running at about 80% sponsored, which is a reflection that, perhaps, sponsors are seeing prices comfortable relative to their expectations for those companies.

I appreciate that. And then turning to the actual Q3 investments this quarter, just an oddity. Looking at that yields that you're getting on your first lien debt relative to second lien debt, we can see that first lien debt's now yielding -- or you're exceeding [ph] 12.1% versus 11.2%. On second lien, the obvious question is second lien, in many cases, is considered a higher levered piece of paper, and some might argue higher risk, yet, in this case, ones taking a lower return relative to the first lien debt. Can you maybe compare and contrast why that's the case between those 2 that you -- Q3 investments?

Yes. What it really depends on, without calling any specific investment, is first lien debt includes unitranche, so the -- I'd like to think that we have a logical continuum of risk-adjusted return, but given that first lien debt includes unitranche, which can include a higher attachment point, if it is, in fact, at its higher attachment point, we should price accordingly.

Okay. Now, maybe jumping into second lien transactions. As we see it in the current environment, second lien, generally, has become more of a preferable piece of paper to straight mezz, and that's pushed down the returns on second lien and has also elevated the leverage profile. While we understand that, that is a broadly -- more broadly or larger kind of credit phenomena, it still doesn't mean that the middle market is not immune to such pressures. And yet, despite that increase in potential risk profile, we've seen a percentage of second lien as your portfolio in 2012 was at 17%. That's grown to about 27% at the end of this quarter. Can you contrast the focus on second lien debt and maybe give us some data points as to how you're getting comfortable with that potentially increased risk profile in this environment?

It's interesting. As I'm looking across the portfolio while you were asking your question, Jon, it is -- oftentimes, it's more typical to have second lien associated with a larger company. I think our investment teams, headed by Sam Tillinghast, Hunter Stropp, Chris Flynn, I think they would say that the market is -- seems to be returning to more mezzanine, and we'll see if that's in fact the case in the fourth quarter and the first quarter. So we're agnostic. It's more typical to the larger company, a higher EBITDA company would have a second lien execution than a mezzanine execution in this market. But I -- we think it'll be transitory over quarters, and this is not necessarily a secular shift to more of a second lien marketplace. But it is reflective of larger issuers.

Okay. Just 2 more, and then I'll be done. So to the extent that you're focused on larger issuer -- well, just the byproduct of the pipeline, maybe a bias towards larger issuers as a result of second lien. Maybe a sense of refinanced risk would also be helpful, because, generally, it's those larger companies that are able to refinance at lower spreads in a shorter time frame. How would you characterize repayment risk in the portfolio right now? Where are you with call protection as it relates to 2011 and '12 investments?

It's interesting. We continue to call protect all investments. I can't think of an exception to that, Jon. And the -- a cold [ph] investment, there's 2 edges to the sword. On the one hand, it reflects a strong investment, and we -- even though the non-call period or the period with particularly high call protection may have burned off, receiving the investment back at 103 and having confidence in our origination platform to replace that investment, it's not all bad. And the -- I wouldn't say that we have the schizophrenia of some investors that the day they put it out, they want the capital back. But certainly, realizations are a very positive part of our investment cycle. And the -- and I think we've had -- we've enjoyed great success with picking good investments where we've received that call premium, which has led to 2 of our 3 special dividends.

I'd also like to add to that, Jon, just in terms of you think about repayment activity, what we've been successful in doing as well is defending this -- the high-performing credits in our portfolio. There's been several companies we've been in for a while, including Surgery, Cydcor, Food Holdings, Studer, which we've been able to defend our positions as the company has performed and stayed in the credit as part of our financings.

Great. And then maybe a last question on the new nonaccrual, maybe just a brief discussion as to what are the factors that led to that credit going on nonaccrual, more importantly, where you're -- how you're looking at remedying the situation without disclosing too much on that particular investment.

I would say that we're highly focused on it. We've brought in additional resources in and outside the firm to staff up, in this particular case, in terms of resources supporting the company's evolution. I would say that nonaccrual is part of working through a process, which, hopefully, will have a pay [ph] positive outcome at the end. The -- it's appropriate that the discount rate we use in the valuation process is reflective of what a buyer would want to take that risk today, and I think we expect more positive outcome than that discount rate reflects. So the -- but I've got a lot of confidence in the team working these through. They've got the skills, the prior experience to do so, and what I'm pleased with is they are maintaining our constructive, collegial problem-solving approach to the credit. And I think that the constituents, they are pulling at the oars together with -- it's good progress.

The next question is from Troy Ward of KBW. Troy L. Ward - Keefe, Bruyette, & Woods, Inc., Research Division: Real quick. A couple of questions on the Greenway relationships. On Greenway I, I know $150 million of capital was committed and called. However, we know that the investments in Greenway mirror that of the portfolio. So as you have repayments, does -- is Greenway I winding down? And if so, what is the amount of capital outstanding in Greenway I today?

Well, Greenway is winding down, I believe it's about 1/3 of the capital, original capital is remaining, maybe just a little north. And as we continue to move through time, and think those investments come, it'll go away. Obviously, as that's happening, Greenway II capital is being called concurrent with the investments we're making. So I think what you'll see, obviously, is a -- if you kind of think about the fee stream that Greenway has brought us of about, I don't know, ranging anywhere from 650 to, say, 850 [ph] on average per quarter, I would project something in that range going forward, Troy, as 1 winds down and 1 comes online. Troy L. Ward - Keefe, Bruyette, & Woods, Inc., Research Division: Great, that's what our expectations were. And then on Greenway II, I know a $186 million of capital was committed. How much of that has been called? And then the 10-Q, it talks about, for the 9 months ended September 30, you've sold a portion of 7 investments for proceeds of $19.5 million from the portfolio into Greenway II. Was that done this quarter? And how much of that -- would you anticipate anymore of that?

We took several positions as we are in the process of sizing Greenway to its current size. We took some positions on the balance sheet. They're a little more outsized to our typically hold position within the public vehicle. And so components of those down in Q1 and Q2 to both Greenway and the related separate account, and we do not anticipate needing to do that going forward. Troy L. Ward - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And then of the $186 million of capital committed, how much of that is being called in Greenway II?

We've called about 40% of it. Troy L. Ward - Keefe, Bruyette, & Woods, Inc., Research Division: Great. And then one final one, C & K Market, which was, of course, the new nonaccrual in the quarter, can you speak to kind of where you are in the capital structure, where is your last dollar through? And also, I believe it was last week when the company announced that they were divesting their 15 pharmacy locations. Will that potential divestiture be sufficient to take your debt out?

We don't comment on the specific credit metrics in a portfolio. We regarded the pharmacy sale as successful. It is -- they were a subordinated debt investor, so that the senior debt will be the beneficiary of those that capital, but it's -- it is one step in several that are anticipated with a strong team at the company working through the rationalization of the business. Troy L. Ward - Keefe, Bruyette, & Woods, Inc., Research Division: So would it be expected, though, that the capital -- whatever capital is raised, if the pharmacy locations are divested, would be used to lower leverage as a whole, obviously starting with the senior, but it would be -- the proceeds will be used to retire leverage?

Correct.

[Operator Instructions] The next question is from Chris York of JMP Securities.

Just one of them this morning. Given the changes in the portfolio and new investments towards first and second lien loans and expansion of capacity and your revolver, how you are guys thinking about balance sheet leverage; is that 0.6x your maximum level?

That's what we've said in the past, which is as we built the business, we were more of a junior capital investor than we are today. But I think our leverage will continue to be in that 0.6, 0.7 range, consistent with a junior capital bias to the portfolio. But with the -- certainly, with the expansion of the credit facility it's -- we're comfortably financed for a period of time.

And the next question is from Vernon Plack of BB&T. Vernon C. Plack - BB&T Capital Markets, Research Division: Most of my questions have been answered, but just in terms of portfolio turnover, you've obviously made a lot of investments here the past -- in the past 4 quarters. And Jim, just wanted to get a sense for at least of the velocity that we've seen. Do you expect that level of velocity to continue in terms of payments versus repayments? Should we continue to see pretty decent portfolio turnover from your perspective at this point?

The answer is I think, yes, and we probably think a steady-state level is about 40% of our portfolio -- 40% of originations in a quarter are repayments. So there's about that ratio of a little over $2 invested for $1 of return. That just seems to be the way that the math is working out. In terms of pace of deployment, I mentioned that we have added individual, sort of, teams so that it's significantly leveraging Sam, Hunter, Chris in their availability to continue to source, select, structure and supervise transactions. So if -- the one very positive aspect about our origination, we now have a broad stable of relationships where we have done one or more transactions very successfully. In some cases, we've worked through a little bit of stress together and come out very positively. And that's leading to what we think is a very positive momentum to our pipeline. It's -- we're thrilled to be covering Chicago directly from Chicago with the team headed by Dan Letizia. And I think that's going to -- that could take us from the 5 in the third quarter to increasingly more transactions and then with that, roughly 1/3 to 40% of what we invest in a quarter coming back from prior investments.

And, Vernon, we alluded to this in the comments. Just in terms of absolute dollar amount over the last 6 quarters, it's been about net $45-ish million of growth, about $90 million [ph] of originations.

There are no further questions at this time. I'll turn the call back over for closing remarks.

Thanks, everybody, for joining today. We look forward to seeing you either in person or at our call covering the fourth quarter. Have a good day, and many thanks.