Stellus Capital Investment Corp (NYSE: SCM)

Stellus Capital Investment Corporation is an externally managed closed end non diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The company was organized as a Maryland corporation on May 8 2012 and commenced operations on November 7 2012. It originates and invests primarily in private United States lower middle market companies with EBITDA between five million and fifty million dollars through first lien including unitranche second lien and unsecured debt financing often accompanied by equity co investments. The investment activities are managed by Stellus Capital Management an advisory firm led by Robert T Ladd and its senior investment professionals.

The company generates revenue primarily from interest income on its debt investments including paid in kind and original issue discount components. It also receives dividend income from equity holdings and various fees such as commitment origination structuring and managerial assistance fees paid by portfolio companies. Additionally capital gains from the sale of equity positions contribute to total returns for shareholders.

Stellus Capital Investment Corporation operates in a competitive landscape that includes other business development companies private debt funds commercial and investment banks and specialized finance firms. Its competitive advantages stem from an experienced investment team whose senior professionals average over thirty seven years of investing corporate finance restructuring consulting and accounting experience. The firm employs disciplined underwriting standards and has the ability to structure investments across the full capital structure. It leverages a broad network of relationships with private equity sponsors financial institutions and intermediaries to source proprietary deal flow. The company seeks to act as the lead or largest investor in transactions typically committing between five million and thirty million dollars per investment.

The company provides financing to private lower middle market enterprises across a range of industries including business services general industrial government services healthcare software and specialty finance. It does not disclose specific borrower names but serves companies that typically have EBITDA between five million and fifty million dollars and demonstrate strong business fundamentals and predictable cash flows.