I posted this on valueforum and thought this would be of interest here. Although there is as much discussion of NGPC as there is here.

NGPC conference call --

I first recommended NGPC to this board after their earnings report in June when it was at $5.60. I again recommended it in August when they raised their dividend 25% and they were at $6.50. Today I am again pounding the table when it is now at $7.40, after a very good earnings report Thursday.

Disclosure: I have a full position in NGPC, in fact, more than a full position as I added a few days ago when it was at $6.60 as a trade.

They are a BDC which specializes in mezzanine loans to energy companies, mostly in gas and oil, but also in coal.

NGPC was selling at $14 or so last summer and was paying a dividend of $0.40 up the first of the year. Then in February, they cut it to $0.20 and of course the stock tanked as low as $4 during the sell-off in March. I sold out in January, when I exited all of my BCD's. I had a small capital loss, but a total profit with dividends. They lowered the dividend to $0.12 in June, which was lower than their NOI; and I got back in and recommended it to the board. They raised the recent dividend to $0.15.

They restructured their credit facility last month, which reduced their facility by 25% and at a higher interest rate. It was suggested that it was bad news, but I commented that it was good news. Their old facility had only one year left on it, and they make loans for 3 years, so they couldn't use it. Their restructured facility which has about $67M to it, is for 3 years, so they can actually use it. They also repaid all of their debt last month and now have $100M available to invest currently (after having just invested $15 in APL.) They made this same point on the conference call. They said that 3 of the 4 banks they use would only make less money available.

When asked if they planned to go to the capital markets to raise more cash via a stock offering, they were frank in their answer. They said of course when they use up their $100M they'd need more capital. However, they hoped that it would be at a premium to book, as they didn't anticipate needing it until at least a year from now. Their NAV actually went up last quarter and is not $11.53 (lower than it was in Dec 2008 at $12.29). So they are selling at a discount to NAV of 67% or so. S-N lists them as one of the more stock holder friendlier management teams.

As an interesting tax play, they are essentially writing off their investment in NightHawk, which is now in Chapter 7 and is liquidating. They were not senior in this investment and had no say in any restructuring. However, they anticipate a lost per share of about $0.65. They already have paid $0.47 in dividends this year. However, so the dividend money could be construed as a return of capital (because of the loss in NightHawk), and hence wouldn't be subject to income tax. Of course, it would constitute a lowering of your basis, so you'd pay taxes, but as a capital gain when you sell it.