On Monday, Hercules Technology Growth Capital (HTGC) announced that it has entered into a loan contract with Reply.com to provide $15 million in venture debt. The loan agreement will allow Reply.com to consider appropriate acquisition opportunities.
Hercules Tech is a well-capitalized specialty finance company providing debt and equity growth capital to technology and life science companies for all stages of development. Hercules continues to build its investment portfolio with new companies and technologies by providing the growth capital required to expand their businesses. The loan to Reply.com serves to add a new portfolio and increase its revenue base.
Reply.com, a leader in locally targeted online marketing, enables advertisers to acquire regional and category-specific consumers on a cost-per-lead basis.
Reply.com has also announced the acquisition of certain assets of Contractors.com to further enhance its home improvement-related offerings enabling it to reach companies and professionals in that industry. Though the company has no near-term acquisition target, it is optimistic that it will be able to use the loan for future acquisitions.
Last week, Hercules Tech had announced additional five new closed commitments for a total value of approximately $111 million to new and existing portfolio companies. These exclude new commitments of $33 million that were announced on May 5, 2010. To date, in the second quarter of 2010, Hercules Tech has closed new and follow-on commitments of about $144 million to existing portfolio companies.
In addition, the company has also received non-binding signed term sheets of approximately $200 million, which generally translates into closed commitments within approximately 45 to 60 days of signing. These non-binding sheets are subjected to due diligence, legal review, investment committee approval and negotiation of definitive documentation with the prospective portfolio company. All the signed term sheets are not expected to close.
Hercules Technology’s first-quarter 2010 change in net assets of 16 cents per share was slightly short of the Zacks Consensus Estimate of 19 cents. However, this compares favorably with the change in net assets of 14 cents in the prior-year quarter. Results for the reported quarter benefited primarily from a 22.3% year-over-year decrease in operating expenses, which were more than offset by a 38.8% decrease in top line.
As with the gradual recovery of the overall economic condition, many technology companies are surpassing others with respect to earnings. Hercules has also started growing with an improvement in valuation of its portfolio companies.
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