PART I [Business](index=3&type=section&id=Item%201.%20Business) Apollo Investment Corporation (AIC) is an externally managed BDC and RIC, aiming for income and capital appreciation through debt and equity investments in private middle-market companies - The company's investment objective is to generate current income and capital appreciation, primarily through debt investments in private middle-market companies with annual revenues between **$50 million and $2 billion**[14](index=14&type=chunk)[15](index=15&type=chunk) - Portfolio Composition and Yields (as of March 31, 2021) | Metric | Value | | :--- | :--- | | **Portfolio Composition (Fair Value)** | | | Secured Debt | 88% | | Unsecured Debt | 1% | | Preferred Equity | 1% | | Common Equity/Interests & Warrants | 10% | | **Weighted Average Yields (Cost Basis)** | | | Total Debt Portfolio | 8.0% | | Total Portfolio | 6.5% | - Investment Activity (Year Ended March 31, 2021) | Activity | Amount | | :--- | :--- | | Investments Made | $0.6 billion | | Investments Sold or Repaid | $1.0 billion | | New Portfolio Companies | 14 | | Existing Portfolio Companies Invested In | 75 | - The company is externally managed by Apollo Investment Management, L.P. (AIM) for investment advisory services and Apollo Investment Administration, LLC (AIA) for administrative services, both affiliates of Apollo Global Management (AGM)[20](index=20&type=chunk)[22](index=22&type=chunk) - A multi-step valuation process is used for investments without readily available market quotes, involving the Investment Adviser, senior management, independent valuation firms, and the Audit Committee, with final determination by the Board of Directors[41](index=41&type=chunk)[46](index=46&type=chunk) - The company uses a **1-to-5 investment rating system** to monitor the credit risk of its portfolio investments, where a grade of 1 represents the least risk and 5 indicates the most significant risk with expected loss of principal[46](index=46&type=chunk)[47](index=47&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks across environmental, business, structural, investment, and market categories [Risks Relating to the Current Environment](index=19&type=section&id=Risks%20Relating%20to%20the%20Current%20Environment) Operations and financial condition are exposed to macroeconomic and market risks, including COVID-19, interest rate fluctuations, and regulatory changes - The COVID-19 pandemic has adversely impacted the company's investment portfolio valuations and the financial health of its portfolio companies, creating increased credit and liquidity risk[95](index=95&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) - The phase-out of LIBOR, expected by the end of 2021, presents a significant risk as a material amount of the company's debt investments and borrowings are linked to LIBOR, potentially requiring costly amendments and creating market instability[124](index=124&type=chunk)[125](index=125&type=chunk) - On April 4, 2018, the Board of Directors approved reducing the company's required asset coverage ratio from **200% to 150%**, effective April 4, 2019, which allows for increased leverage but also increases associated risks[118](index=118&type=chunk)[158](index=158&type=chunk) - Changes in interest rates pose a risk to the company's net investment income, as it depends on the spread between the rate at which it borrows funds and the rate its investments yield[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Risks Relating to our Business and Structure](index=27&type=section&id=Risks%20Relating%20to%20our%20Business%20and%20Structure) The company's business model and structure are subject to inherent risks, including dependence on key personnel, market competition, and leverage - The company is highly dependent on the key personnel of its Investment Adviser (AIM) and their access to the deal flow and professionals of the broader Apollo Global Management (AGM) platform[132](index=132&type=chunk) - Failure to maintain RIC status would subject the company to corporate-level income tax, substantially reducing net assets and income available for distribution, requiring distribution of at least **90% of its taxable income annually**[139](index=139&type=chunk)[140](index=140&type=chunk) - The company's use of leverage magnifies the potential for both gains and losses, with the asset coverage requirement reduced from **200% to 150%** as of April 4, 2019, permitting increased leverage and risk[144](index=144&type=chunk)[152](index=152&type=chunk)[158](index=158&type=chunk) - Significant potential conflicts of interest exist with the Investment Adviser and its affiliates concerning the allocation of investment opportunities, management of time, and allocation of expenses, which could adversely affect investment returns[170](index=170&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - A large portion of the portfolio is valued in good faith by the Board of Directors, as market quotations are not readily available, creating uncertainty as these valuations may differ materially from realized values[165](index=165&type=chunk) [Risks Relating to our Investments](index=40&type=section&id=Risks%20Relating%20to%20our%20Investments) Investments in private middle-market companies are speculative, involving high credit loss risk, economic vulnerability, and sector-specific challenges - Investments in middle-market companies are speculative and carry a high degree of risk, as these companies often have limited financial resources, are vulnerable to economic downturns, and may be highly leveraged[200](index=200&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk) - The portfolio's limited number of companies subjects the company to a greater risk of significant loss if one or more of these investments perform poorly or default[212](index=212&type=chunk) - The incentive fee structure, based on both net investment income and realized capital gains, may create an incentive for the Investment Adviser (AIM) to make riskier or more speculative investments to increase returns[220](index=220&type=chunk)[221](index=221&type=chunk) - The company has investments in sectors with specific risks, including the energy sector (commodity price volatility), aviation (environmental regulations, economic downturns), and healthcare/pharmaceuticals (extensive government regulation and policy changes)[201](index=201&type=chunk)[236](index=236&type=chunk)[240](index=240&type=chunk) [Risks Relating to our Debt Instruments](index=47&type=section&id=Risks%20Relating%20to%20our%20Debt%20Instruments) The company faces risks related to its debt financing, including maturity, liquidity, and market fluctuations of its publicly issued debt - The senior secured credit facility matures in December 2025 and the 2025 Notes mature in March 2025, with failure to renew, extend, or replace this debt potentially impacting liquidity, investment funding, and distributions[241](index=241&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - The trading market and value of the company's debt securities are subject to fluctuation based on interest rates, economic conditions, and credit ratings, and a liquid trading market may not be available[246](index=246&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk) [Risks Relating to an Investment in our Common Stock](index=49&type=section&id=Risks%20Relating%20to%20an%20Investment%20in%20our%20Common%20Stock) Investing in the company's common stock is highly speculative, with no guarantee of distributions, potential trading at a discount to NAV, and dilution risks - Investing in the company's securities is highly speculative and involves a high degree of risk, including the potential for loss of principal[250](index=250&type=chunk) - Shares of BDCs like Apollo Investment may trade at a market price that is less than the net asset value (NAV) per share, a risk separate from the risk of NAV decline[253](index=253&type=chunk) - Stockholders who do not participate in the dividend reinvestment plan may experience dilution over time, as cash distributions to other stockholders are automatically reinvested into additional shares[257](index=257&type=chunk) [Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[262](index=262&type=chunk) [Properties](index=52&type=section&id=Item%202.%20Properties) The company does not own any real estate or other material physical properties, with its principal executive offices in New York, NY - The company does not own any material physical properties and its principal executive offices are located at 9 West 57th Street, New York, NY 10019[263](index=263&type=chunk) [Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) The company is a defendant in a lawsuit alleging fraudulent conveyance, with a global settlement agreement pending Bankruptcy Court approval - The company is a defendant in a complaint by the bankruptcy trustee of DSI Renal Holdings, alleging "fraudulent conveyance" and seeking damages, of which the company's potential share is approximately **$41 million** plus interest[266](index=266&type=chunk) - On April 8, 2021, the parties reached a global settlement agreement to resolve all claims in the litigation, which is currently awaiting approval from the Bankruptcy Court[269](index=269&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[270](index=270&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, often at a discount to NAV, with quarterly distributions and an active share repurchase program - Quarterly Stock Performance (Fiscal Year 2021) | Quarter Ended | NAV Per Share | High Sales Price | Low Sales Price | High Price to NAV | Low Price to NAV | Distributions Declared | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mar 31, 2021 | $15.88 | $14.94 | $10.40 | (5.9)% | (34.5)% | $0.36 | | Dec 31, 2020 | $15.59 | $11.98 | $7.33 | (23.2)% | (53.0)% | $0.36 | | Sep 30, 2020 | $15.44 | $10.40 | $7.95 | (32.6)% | (48.5)% | $0.36 | | Jun 30, 2020 | $15.29 | $11.94 | $5.25 | (21.9)% | (65.7)% | $0.45 | - The company maintains an "opt out" dividend reinvestment plan, where cash distributions are automatically reinvested in additional shares unless stockholders elect to receive cash[277](index=277&type=chunk) - Share Repurchase Plan Status (as of March 31, 2021) | Metric | Amount (in millions) | | :--- | :--- | | Total Authorized | $250.0 | | Total Repurchased | $223.1 | | Remaining Authorization | $26.9 | - During fiscal year 2020, the company repurchased **1,286,565 shares** in March 2020 at an average price of **$11.62 per share**[287](index=287&type=chunk) [Selected Financial Data](index=65&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is no longer required as the company has early adopted a relevant SEC rule change - The company has elected to early adopt the SEC's rule change eliminating the requirement for selected financial data[310](index=310&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=66&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total investment income decreased to **$216.7 million** in FY2021, while net assets increased by **$111.9 million** due to positive unrealized gains [Results of Operations](index=75&type=section&id=Results%20of%20Operations) FY2021 saw a **$60.2 million** decrease in investment income and a **$24.9 million** decrease in net expenses, leading to a **$111.9 million** net increase in net assets - Operating Results Comparison (in millions) | Metric | FY 2021 | FY 2020 | Change | | :--- | :--- | :--- | :--- | | Total Investment Income | $216.7 | $276.9 | $(60.2) | | Net Expenses | $106.7 | $131.6 | $(24.9) | | **Net Investment Income** | **$110.0** | **$145.3** | **$(35.3)** | | Net Realized Gains (Losses) | $(21.5) | $(6.3) | $(15.2) | | Net Change in Unrealized Gains (Losses) | $23.3 | $(255.0) | $278.3 | | **Net Increase (Decrease) in Net Assets** | **$111.9** | **$(116.0)** | **$227.9** | - The decrease in investment income was primarily driven by a lower average yield on the total debt portfolio (**8.4% in FY2021 vs. 9.4% in FY2020**) and a smaller income-bearing investment portfolio[357](index=357&type=chunk) - The decrease in net expenses was mainly due to lower interest and debt expenses, resulting from a reduction in net leverage (**1.36x vs. 1.71x**) and a lower weighted average interest cost (**3.04% vs. 4.42%**)[358](index=358&type=chunk) - Significant net realized losses in FY2021 included KLO Holdings, LLC (**$8.5 million**) and ZPower, LLC (**$6.1 million**)[360](index=360&type=chunk) - Significant net changes in unrealized gains/(losses) in FY2021 included gains from KLO Holdings, LLC (**$11.9 million**) and losses from Spotted Hawk (**$(11.6) million**) and Dynamic Product Tankers (**$(11.1) million**)[361](index=361&type=chunk) [Liquidity and Capital Resources](index=80&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by cash, the Senior Secured Facility, and operating cash flows, with total debt obligations of **$1.47 billion** as of March 31, 2021 - The company believes its current cash, available borrowing capacity, and anticipated cash flows are adequate to meet its needs for at least the next twelve months[364](index=364&type=chunk) - Contractual Debt Maturities (as of March 31, 2021) | Obligation | Total (in millions) | Due in 3 to 5 Years | | :--- | :--- | :--- | | Senior Secured Facility | $1,119.2 | $1,119.2 | | 2025 Notes | $350.0 | $350.0 | | **Total Debt Obligations** | **$1,469.2** | **$1,469.2** | - As of March 31, 2021, the Senior Secured Facility had **$690.6 million** of unused capacity[367](index=367&type=chunk) - Distributions paid to stockholders during the fiscal year ended March 31, 2021, totaled **$105.7 million**, or **$1.62 per share**[369](index=369&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=82&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to investment valuation and interest rate risks, with a hypothetical 100 basis point LIBOR increase decreasing net investment income by **$5.0 million** - The company faces significant investment valuation risk because a majority of its portfolio investments do not have readily available market values and are valued in good faith by the board of directors[378](index=378&type=chunk) - As of March 31, 2021, all of the company's debt portfolio investments bore interest at variable rates, making its net investment income sensitive to changes in interest rates like LIBOR[380](index=380&type=chunk) - Interest Rate Sensitivity Analysis (as of March 31, 2021) | Basis Point Change | Estimated Annual Impact on Net Investment Income (in millions) | Estimated Annual Impact Per Share | | :--- | :--- | :--- | | Up 200 bps | $0.8 | $0.012 | | Up 100 bps | $(5.0) | $(0.077) | | Up 50 bps | $(3.9) | $(0.059) | | Down 25 bps | $0.4 | $0.006 | [Financial Statements and Supplementary Data](index=84&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes audited financial statements for FY2021, with an unqualified auditor opinion and detailed schedules of investments - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the financial statements and on the effectiveness of internal control over financial reporting as of March 31, 2021[394](index=394&type=chunk) - The auditor identified the valuation of Level 3 investments as a critical audit matter due to the significant management judgment involved in determining their fair value using unobservable inputs[401](index=401&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk) - Key Financial Statement Balances (as of March 31, 2021) | Account | Amount (in thousands) | | :--- | :--- | | Total Investments at Fair Value | $2,449,151 | | Total Assets | $2,544,489 | | Total Liabilities | $1,508,159 | | **Net Assets** | **$1,036,330** | | **Net Asset Value Per Share** | **$15.88** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=190&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[777](index=777&type=chunk) [Controls and Procedures](index=190&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal controls - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[778](index=778&type=chunk) - No changes in internal control over financial reporting occurred during the fourth fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[781](index=781&type=chunk) [Other Information](index=190&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[782](index=782&type=chunk) PART III [Directors, Executive Officers, Corporate Governance, Compensation, and Related Matters](index=191&type=section&id=Items%2010-14) Information for Items 10-14 is incorporated by reference from the company's 2021 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accounting fees is incorporated by reference from the company's 2021 Proxy Statement[785](index=785&type=chunk)[786](index=786&type=chunk)[787](index=787&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=192&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including financial statements, corporate documents, and certifications - The financial statements are referenced under Item 8, and no separate financial statement schedules are filed[793](index=793&type=chunk) - Exhibits filed with the report include key corporate governance and operational documents, debt agreements, and required CEO/CFO certifications[793](index=793&type=chunk)

APOLLO Investment Corporation | --- | --- | |-------------------------------|-------| | | | | APOLLO INVESTMENT CORPORATION | | | Investor Presentation | | | March 2021 | | Unless otherwise noted, information as of December 31, 2020 It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments shown in this document. Disclaimers, Definitions, and Important Notes Forward-Looking Statements We make forward-looking statements in this presentati ...

APOLLO APOLLO INVESTMENT CORPORATION Third Quarter Fiscal Year 2021 Earnings Three Months Ended December 31, 2020 February 4, 2021 Disclaimers, Definitions, and Important Notes Forward-Looking Statements We make forward-looking statements in this presentation and other filings we make with the Securities and Exchange Commission ("SEC") within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements ar ...

Apollo Investment (AINV) Q3 2021 Earnings Conference Call February 4, 2021 5:00 PM ET Company Participants Elizabeth Besen ??? Investor Relations Manager Howard Widra ??? Chief Executive Officer Tanner Powell ??? President and Chief Investment Officer Greg Hunt ??? Chief Financial Officer Conference Call Participants Kyle Joseph ??? Jefferies Casey Alexander ??? Compass Point Finian O???Shea ??? Wells Fargo Securities Melissa Wedel ??? JPMorgan Ryan Lynch ??? KBW Robert Dodd ??? Raymond James Operator Good ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 814-00646 APOLLO INVESTMENT CORPORATION (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employe ...

APOLLO APOLLO INVESTMENT CORPORATION Second Quarter Fiscal Year 2021 Earnings Three Months Ended September 30, 2020 November 5, 2020 Disclaimers, Definitions, and Important Notes Forward-Looking Statements We make forward-looking statements in this presentation and other filings we make with the Securities and Exchange Commission ("SEC") within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements ...

Apollo Investment Corp (AINV) Q2 2021 Earnings Conference Call November 5, 2020 5:00 PM ET Company Participants Elizabeth Besen - IR Manager Howard Widra - CEO & Director Tanner Powell - President Gregory Hunt - CFO & Treasurer Conference Call Participants Kenneth Lee - RBC Capital Markets Kyle Joseph - Jefferies Matthew Tjaden - Raymond James & Associates Finian O'Shea - Wells Fargo Securities Operator Good afternoon, and welcome to the Apollo Investment Corporation's Earnings Conference Call for the perio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended September 30, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 814-00646 APOLLO INVESTMENT CORPORATION FORM 10-Q Washington, D.C. 20549 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smal ...

Company Overview - Apollo Investment Corporation (AINV) has invested $214 billion since its IPO in 2004 through June 30, 2020[9] - As of June 30, 2020, AINV's investment portfolio totaled $267 billion across 149 companies[9] - Apollo Global Management's AUM is approximately $414 billion[9, 11] - AINV's distribution yield at market price is 140% based on the base distribution and 163% based on the base plus supplemental distribution[10] Portfolio Composition & Strategy - As of June 30, 2020, core assets represented 91% of AINV's investment portfolio, while non-core and legacy assets accounted for 9%[26] - First lien debt exposure was 85% of the corporate lending portfolio as of June 30, 2020[26] - Floating rate debt exposure was 100% of the corporate lending portfolio as of June 30, 2020[26] - Investments made pursuant to the co-investment order represented 77% of the corporate lending portfolio as of June 30, 2020[26] Credit Quality - As of June 30, 2020, investments on non-accrual status were 61% of total investments at amortized cost and 17% at fair value[44, 45]

Financial Data and Key Metrics Changes - Net investment income for the quarter was $0.43 per share, reflecting a smaller portfolio and lower contribution from Merx [16][49] - The portfolio had a net loss of $25.2 million or $0.39 per share, driven by non-core and legacy assets, partially offset by a net gain on corporate lending [17][51] - Net asset value per share at the end of June was $15.29, a 2.6% decline quarter-over-quarter [18][52] - Total investment income was $56.7 million for the quarter, with a decline in interest income due to reduced income from Merx and non-accrual investments [46] Business Line Data and Key Metrics Changes - The corporate lending portfolio, representing 79% of the total portfolio, had a net gain of $4.7 million or $0.07 per share during the quarter [11][51] - Non-core and legacy assets had a net loss of $25.6 million or $0.39 per share due to carbon-free legacy positions in shipping and oil investments [51] - New corporate lending commitments for the quarter were only $17 million across two companies, with total exits of $233 million [29] Market Data and Key Metrics Changes - Leveraged loan prices have recovered since the March lows, and loan spreads have tightened significantly, positively impacting the fair value of the corporate lending portfolio [25] - Mid-cap leveraged loan revolvers were 23% utilized before the pandemic, peaking at 70% in mid-April and declining to 48% [15] Company Strategy and Development Direction - The company plans to further reduce leverage to within a target range of 1.4 to 1.6 times over the coming quarters [13] - The Board expects to declare a base distribution of $0.31 per share and a supplemental distribution of $0.05 per share, reflecting the long-term earning power of the core portfolio [23][21] - The company is focused on preserving liquidity and has not made any stock repurchases during the quarter [59] Management's Comments on Operating Environment and Future Outlook - Management believes the corporate lending portfolio demonstrates resiliency and quality despite significant economic headwinds from the COVID-19 pandemic [10] - There is visibility into meaningful additional repayments in the upcoming quarters, which will allow for new commitments as market activity resumes [30] - The company anticipates continued need for covenant relief in the portfolio over the next few quarters [44] Other Important Information - The company has made considerable progress in deleveraging the balance sheet, exiting approximately $233 million of assets [12] - At the end of June, the investment portfolio had a fair value of $2.67 billion across 149 companies in 29 different industries [58] Q&A Session Summary Question: Visibility into investment repayments - Management indicated that there are several companies in strategic transactions that are either pending or committed, providing comfort around visibility for repayments [63] Question: Supplemental dividend guidance - Management explained that the base dividend was set based on expected earnings from the corporate portfolio and Merx, with potential for supplemental dividends based on various income sources [66][70] Question: Capital allocation and new investment opportunities - Management stated that new investments would focus on both existing portfolio companies and new opportunities, depending on market conditions [74] Question: Corporate lending portfolio performance - Management noted that the corporate lending portfolio did not recover as much as competitors due to a more conservative approach to valuations based on fundamentals [108] Question: Merx's ability to cover interest expenses - Management expressed optimism about Merx's cash flow recovery, noting that early experiences with lessees have exceeded expectations [113]