8-K: WhiteHorse Finance Amends Investment Advisory Agreement, Reducing Management Fees

WhiteHorse Finance has amended its investment advisory agreement, reducing the base management fee to 1.75% of consolidated gross assets, effective January 1, 2024.

Summary

• WhiteHorse Finance, Inc. has entered into a Second Amended and Restated Investment Advisory Agreement with H.I.G. WhiteHorse Advisers, LLC.
• The new agreement reduces the base management fee to an annual rate of 1.75% of the company's consolidated gross assets.
• This rate includes cash, cash equivalents, and assets purchased with borrowed funds.
• The reduced fee is effective as of January 1, 2024.
• The full agreement is available as an exhibit to this report.

Sentiment

Score: 7

Explanation: The document indicates a positive change with the reduction of management fees, which is generally favorable for investors. There are no negative aspects mentioned.

Positives

• The reduction in the base management fee to 1.75% is a positive development for the company.
• The lower fee will likely reduce operating expenses for WhiteHorse Finance.
• The change is effective from the start of the year, providing immediate benefit.

Industry Context

This change reflects a trend in the financial industry where investors are increasingly focused on lower fees and cost efficiency. It is common for investment firms to adjust their fee structures to remain competitive and attract investors.

Comparison to Industry Standards

• Many Business Development Companies (BDCs) charge management fees in the range of 1.5% to 2.0% of gross assets, so the new 1.75% fee is within the typical range.
• Some BDCs have moved to lower fee structures to attract investors, so this move by WhiteHorse Finance is in line with that trend.
• Comparible companies include Ares Capital Corporation (ARCC) and Main Street Capital (MAIN), which have similar fee structures, although the exact details vary.

Stakeholder Impact

• Shareholders will likely benefit from the reduced management fee, potentially leading to higher net income.
• The reduced fee may improve the company's competitiveness in the market.

Key Dates

Keywords

Investment Advisory Agreement, Management Fee, WhiteHorse Finance, H.I.G. WhiteHorse Advisers, Financial Services, Asset Management