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Welcome, and thank you for joining the Medley Capital Corporation's Fiscal First Quarter 2019 Conference Call. The company would like to remind everyone that today's call is being recorded. Please note that this call is the property of Medley Capital Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and pin provided in the company's earnings press release. [Operator Instructions] Participating on the call today from Medley Capital Corporation are Brook Taube, CEO; Rick Allorte -- Rick Allorto, CFO; Dean Crowe, Head of Investing; and Sam Anderson, Head of Capital Markets. Before we begin, the company would like to call your attention to the customary safe harbor disclosure in the company's press release regarding forward-looking information. Today's conference call may also include forward-looking statements and projections, which are subject to risks and uncertainties. Any statement other than the statement of historical fact may constitute a forward-looking statement. Please note that the company's actual results could differ materially from those expressed by any forward-looking statements for any reasons, such as those disclosed in the company's most recent filings with the SEC. The company does not undertake to update their forward-looking statements unless required by law. To obtain copies of the company's latest SEC filings and press release, please visit the company's website at www.medleycapitalcorp.com. In addition, the company's fiscal first quarter 2019 investor presentation is available in the Investor Relations section of the Events/Investor Presentations section of the company's website. During the call, the company may make statements regarding the proposed merger of the company, Sierra, and MDLY. The company encourages you to carefully read the proxy statement filed with the SEC by the company on December 21, 2018, as well as any amendments or supplements to those documents in their entirety because they contain important information about the company, Sierra, and MDLY, the proposed transactions and related matters. I would now like to turn the call over to Mr. Brook Taube. You may begin.
Thank you, operator, and welcome, everyone, to Medley Capital Corporation's quarterly call. Last night, we announced our financial results for the quarter ended December 31, 2018. We reported net investment income per share of $0.05, adjusted for expenses associated with the pending merger, and net asset value per share of $5.61. As announced last night, our Board of Directors approved a dividend of $0.05 per share for the quarter. This dividend will be payable on March 12 to shareholders of record on February 22. Before I provide an update on the announced merger, I'd like to briefly comment on our investment activity during the calendar fourth quarter, a period obviously of significant volatility in overall asset markets. As you are undoubtedly aware, during the fourth quarter, the S&P was down approximately 14%, the broadly syndicated loan prices fell 4.8% and the average price of the high-yield index was down more than 5%. During the 12/31 quarter, the portion of the decline in our NAV related to credit and market volatility was approximately 3.8%. The remaining 1.1% decline in the NAV was primarily related to a distribution of capital to shareholders in excess of the quarter's NII. We do continue to position the portfolio in anticipation of a Q1 closing of our announced merger. We're targeting investment opportunities that protect downside risk and generate durable income in a rising rate environment. In that regard, we're primarily focused on larger sponsor-backed borrowers that are well capitalized, have sensible structures and attractive deal terms. We do expect this trend to continue post-merger as we position the balance sheet for growth in NII and NAV over time. At this point, I'd like to turn the call over to Rick to briefly review the financial results.
Thank you, Brook. For the 3 months ended December 31, the company reported net investment income of $1.8 million or $0.03 per share and a net loss of $10.1 million or $0.18 per share. Net investment income per share was $0.05, adjusted for expenses associated with the pending merger. The net asset value per share was $5.61 at December 31 compared to $5.90 at September 30. For the quarter, total investment income was $14.2 million and was comprised of $11.6 million of interest income, $0.5 million of fee income and $2.1 million of dividend income. For the quarter, total operating expenses were $12.4 million, consisting of $3.2 million in base management fees; $6 million in interest and financing expenses; and $3.2 million in professional fees, administrator and general and administrative expenses. For the quarter, the company reported net unrealized appreciation of $45 million and a net realized loss of $56.7 million. As of December 31, the company's total debt outstanding equaled approximately $407 million, including $272 million in notes payable and $135 million in SBA debentures. The company's debt-to-equity ratio, excluding SBIC debt, was 0.87x at December 31. Additionally, during the period, the company redeemed $12 million in aggregate principal amount of 6.25% (sic) [ 6.125% ] unsecured notes due 2023 and $1.1 million in aggregate principal amount of 5.55% unsecured notes due 2024. That concludes my financial review. I'll now turn the call back over to Brook.
Thanks, Rick. This quarter, we've been hard at work on the investment portfolio, and obviously, on our announced merger plan. I'm sure many of you saw on our press release recently announcing the adjournment of the February 8 meeting -- of special meeting of shareholders, and as we stated, we were unable to hold a vote on the merger transaction in light of the recent government shutdown. The meeting is scheduled to reconvene on March 8, 2019. And we continue to expect to close the transaction in the calendar Q1. I would like to briefly highlight a few of the key benefits of the merger. First, accretion to earnings. The combination is expected to result in significant accretion to net investment income per share for MCC shareholders. That's significant. Second, increased dividends. On a pro forma basis, the per share dividend for an MCC shareholder is now expected to increase from the current $0.05 per share to $0.13 per share after accounting for the exchange. That's a 166% increase in the comparable dividend per share for each MCC shareholder today. Third, a stronger balance sheet. We expect the transaction will result in a stronger and more diversified balance sheet with less relative exposure to non-accruing loans. We do believe that the merger will result in better credit ratings over time, which will result, we believe it, in lower financing costs. And I think these combined positives for the balance sheet suggest meaningfully lower balance sheet risk versus MCC as a stand-alone entity. Fourth, enhanced liquidity for shareholders. With a substantially larger equity capital base and corresponding total shares outstanding, we believe there is potential for significantly greater market liquidity in the stock, which would benefit all shareholders. Fifth important point is we have the ability to grow NII and NAV from the asset management subsidiary. The combined entity will operate Medley's existing asset management business as a wholly owned subsidiary. A continued growth is expected to add to NII and NAV of the combined entity over time. It's expected to come from new product growth as well as growth of our existing institutional and retail distribution channels. And I think sixth, which is really a summary and one of the compelling reasons for the combination, is we have the potential for a premium valuation. If you look at the combination of increased NII and distributions over time, increased scale and diversification and internalization of our asset manager, that provides the potential for the combined platform to trade at a premium valuation that is in line with internally managed BDC peers over time. Now we looked at this carefully and it's made public that over a 1-, 3- and 5-year period, the internally managed BDC peer group has demonstrated a consistent premium valuation of as much as 60% premium versus externally managed BDC peers. Upon closing of the merger, I just want to reiterate that the surviving entity will be Sierra Income Corporation. It's expected to be the second largest internally managed and the ninth largest publicly traded BDC in the market. And simultaneous with closing, Sierra will be listed on the New York Stock Exchange and trade under the ticker symbol SRA, that's S-R-A, the new ticker symbol, and that'll trade on the New York Stock Exchange. For a complete description, obviously, of the proposed mergers, we all encourage you to read the proxy statement that was filed with the SEC by the company on December 21 of 2018. And while the disclosure in the proxy statement and subsequent filings that we've made to date have been robust, if you have any specific questions, feel free to call myself or Sam Anderson directly. We do continue to receive very positive feedback from a number of institutional and retail investors about the merits of the announced merger plan. We do thank you for your continued support. And operator, we can now open the line for questions.
[Operator Instructions] And I'm currently not showing any questions. I would now like to turn the call back over to our speakers.
Thank you all for your time today. Again, we remain committed to the portfolio. Our team is hard at work. We have the intention of closing the announced merger plan in the first quarter. And as I mentioned, feel free to reach out directly to me or Sam with any further inquiries that you have. Thanks again for the time. And we'll talk to you again soon.
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.