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NEW YORK, Oct 11, 2007 (BUSINESS WIRE) -- GSC Investment Corp. (NYSE:GNV), a business development company, today announced results for the quarter ended August 31, 2007.
Second Quarter 2008 Highlights
-- Adjusted net investment income of $2.95 million, or $0.36 per share (basic and diluted) for the three months ending August 31, 2007(1)
-- Net asset value of $13.76 per share as of August 31, 2007
-- No non-performing or delinquent investments during the quarter
-- Paid a $0.36 per share dividend on August 31, 2007 for the quarter
Operating Results
For its second quarter of operations, GSC Investment Corp. reported a net loss of $0.8 million or $0.09 per share, primarily due to net unrealized depreciation on investments for the quarter of $4.4 million. The net unrealized depreciation on investments was partially offset by net realized gain on sale of investments of $0.4 million, resulting in an adjusted net loss on investments of $3.7 million or $0.45 per share for the quarter, and adjusted net investment income of $2.95 million or $0.36 per share for the quarter.(1) Net asset value was $13.76 per share as of August 31, 2007. There were no non-performing or delinquent investments for this period.
"We are pleased with the growth of our dividend and net investment income during a challenging period in the global credit market," said CEO Thomas V. Inglesby. "Once again, we were able to fund our dividend completely out of net investment income, demonstrating the strength of our long-term strategy of buying high yielding credits in underserved markets that meet our rigorous credit criteria."
"While our net asset value per share sustained a modest reduction primarily due to the repricing of credits in the broader market, we believe that the underlying credit quality of our investment portfolio remains strong and that the portfolio will continue to perform and generate sufficient net investment income to support our dividend going forward," said Mr. Inglesby. "Because our strategy relies on funding dividends primarily from net investment income, we believe that the repricing of our portfolio will not affect our ability to generate an attractive dividend for our investors."
The Company carries its investments at fair value as determined in good faith by its board. As of August 31, 2007, 45% of the Company's investments were valued based upon market quotations. Of the remaining 55% of the Company's investments, 26% were valued based upon valuations provided by an independent valuation firm at August 31, 2007.
"At a time of significant price volatility, we take great comfort from the fact that over 70% of our portfolio is valued at market prices or by an independent, third-party valuation firm," Mr. Inglesby stated. "While such valuations may cause volatility in the amount of our net unrealized losses and gains, we believe that reflecting current market conditions in our valuations provides greater transparency into our portfolio and lowers the risk that losses may be hidden or obscured by less reliable methodologies."
Portfolio and Investment Activity
As of August 31, 2007, the Company's portfolio consisted of $205.0 million in aggregate principal amount of investments. The Company had 46 investments in 38 portfolio companies with an average investment size of $4.2 million and a weighted average life of 4.8 years. The overall portfolio composition consisted of 14.9% first lien term loans, 43.9% second lien term loans, 23.4% senior secured notes, 13.8% unsecured notes, 3.8% structured finance securities and 0.2% equity/limited partnership interests.
During the quarter, GSC Investment Corp. made investments in an aggregate principal amount of $43.8 million. Also during the quarter, the Company had $47.7 million in repayments and sales of investments resulting in net repayments of $3.9 million for the period.
"We were pleased with the investments we were able to make in a difficult credit environment," said Mr. Inglesby. "In addition, we observed some stabilization during the quarter following the market correction, and we are now sourcing investment opportunities with attractive pricing and conservative capital structures, which we believe will benefit GSC Investment Corp."
As of August 31, 2007, the weighted average current yields on the Company's first lien term loans, second lien term loans, senior secured notes, unsecured notes and other/structured finance securities were 9.1%, 12.6%, 11.7%, 12.5% and 12.4%, respectively, which results in an aggregate weighted current yield of 11.8%. As of August 31, 2007, 40.4% or $78.3 million of its interest-bearing portfolio was fixed rate debt with a weighted average current yield of 11.9%, and 59.6% or $115.5 million of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 6.2%. There were no non-performing or delinquent investments.
Liquidity and Capital Resources
As of August 31, 2007, the Company had borrowed an aggregate of $85.7 million under its credit facilities and had $26 million of undrawn commitments remaining.
Dividend
On August 31, 2007, GSC Investment Corp. paid a dividend of $0.36 per share.
2008 First Quarter Conference Call/Webcast Information
When: Friday, October 12, 2007, 10:00 a.m. Eastern Time (ET)
Call: Interested parties may participate by dialing (888) 801-6504 (U.S. and Canada) or (913) 312-1383 (outside U.S. and Canada).
A replay of the call will be available from 1:00 p.m. ET on Friday, October 12, 2007 through midnight Friday, October 19, 2007 by dialing (888) 203-1112 (U.S. and Canada) or (719) 457-0820 (outside U.S. and Canada), passcode for both replay numbers: 6264413.
Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.gscinvestmentcorp.com/events.cfm. A replay of the webcast will be available from 1:00 p.m. ET on Friday, October 12, 2007 through midnight Friday, October 19, 2007.
About GSC Investment Corp.
GSC Investment Corp. is a specialty finance company externally managed by GSC Group that invests primarily in first and second lien term loans and mezzanine debt of private, U.S. middle-market companies and high yield bonds. It has elected to be treated as a business development company under the Investment Company Act of 1940. The Company also may opportunistically invest in distressed debt; debt and equity securities of public companies; credit default swaps; emerging market debt; and collateralized debt obligation vehicles holding debt, equity or synthetic securities. The Company draws upon the support and investment advice of its external manager, GSC Group, an alternative asset investment manager that focuses on complex, credit-driven strategies. GSC Group's corporate credit group manages approximately $8.1 billion of assets(2) in leveraged loans, high yield bonds and mezzanine debt. GSC Investment Corp. is traded on the New York Stock Exchange under the symbol "GNV."
Forward Looking Statements
Information provided in this press release, including valuation of certain of our investments, may contain statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking statements. These forward-looking statements generally relate to GSC Investment Corp.'s plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, see "Note About Forward-Looking Statements" included in the Company's 10-K which has been filed with the U.S. Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and GSC Investment Corp. undertakes no obligation to update or revise the forward-looking statements, whether as a result of the new information, future events or otherwise.
(1) Basic and diluted adjusted net investment income per share and
adjusted net gain on investments per share are non-GAAP
financial measures. Adjusted net investment income per share
is the per share increase in net assets from operations less
realized and unrealized gains and losses, and any incentive
management fees attributable to such net realized gains and
losses. Adjusted net gain on investments per share is the net
gain on investments per share less any incentive management
fees attributable to such net realized gains and losses. The
most directly comparable GAAP financial measure is the net per
share increase in net assets from operations, which is
reflected above as GAAP net income under the heading "Second
Quarter 2008 Highlights." GSC Investment Corp. believes that
adjusted net investment income per share and adjusted net gain
on investments per share provide useful information to
investors regarding financial performance because it is one
method GSC Investment Corp. uses to measure its financial
condition and results of operations. The presentation of this
additional information is not meant to be considered in
isolation or as a substitute for financial results prepared in
accordance with GAAP. Reconciliations of basic and diluted
adjusted net investment income per share and adjusted net gain
on investments per share to the most directly comparable GAAP
financial measure are set forth in Schedule 1 hereto.
(2) As of June 30, 2007. Includes leverage and warehoused assets.
GSC Investment Corp.
Consolidated Balance Sheets
As of
---------------------------------
August 31, 2007 February 28, 2007
--------------- -----------------
(Unaudited)
ASSETS
Investments at fair value (amortized
cost of $197,817,296 and $0,
respectively)
Non-control/non-affiliate
investments $ 193,822,981 $ -
Control investments 344,250 -
Affiliate investments 31,806 -
--------------- -----------------
Total investments at fair value 194,199,037 -
Cash and cash equivalents 2,849,824 1,030
Cash, securitization accounts 4,552,160 -
Interest receivable 3,505,927 -
Due from manager 583,442 -
Other assets 455,109
Deferred financing costs, net 1,128,528 -
Deferred offering costs - 808,617
--------------- -----------------
Total assets $ 207,274,027 $ 809,647
=============== =================
LIABILITIES
Debt $ 85,728,965 $ -
Management and incentive fees
payable 1,619,467 -
Payable from open trades 4,709,375 -
Accounts payable and accrued
expenses 659,747 105,000
Interest and credit facility fees
payable 461,817 -
Accrued offering cost - 760,000
Due to affiliate - 73,810
--------------- -----------------
Total liabilities $ 93,179,371 $ 938,810
=============== =================
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.0001 per
share, 100,000,000 common shares
authorized, 8,291,384 and 67 common
shares issued and outstanding,
respectively 829 -
Capital in excess of par value 116,301,182 1,000
Accumulated undistributed net
investment income (loss) 9,696 (130,163)
Accumulated net realized gain on
sale of investments 1,445,255 -
Net unrealized appreciation on
investments and derivatives (3,662,306) -
--------------- -----------------
Total stockholders' equity (deficit) 114,094,656 (129,163)
--------------- -----------------
Total liabilities and stockholders'
equity (deficit) $ 207,274,027 $ 809,647
=============== =================
NET ASSET VALUE PER SHARE $ 13.76 n/a
--------------- -----------------
GSC Investment Corp.
Consolidated Statement of Operations
For the three months ended For the six months ended
August 31, 2007 August 31, 2007
-------------------------- ------------------------
(unaudited) (unaudited)
INVESTMENT INCOME
Interest from
investments $ 5,725,983 $ 9,406,828
Interest from cash
and cash
equivalents 154,946 175,997
Management fee
income - 383,562
Other income 695 17,298
-------------------------- ------------------------
Total investment
income 5,881,624 9,983,685
-------------------------- ------------------------
EXPENSES
Interest and
credit facility
expenses 1,450,870 2,171,635
Professional fees 321,678 864,294
Base management
fees 918,157 1,278,645
Incentive
management fees (18,546) 340,822
Insurance 157,388 275,429
Directors fees 82,750 178,840
Administrative 130,213 175,905
Cost of acquiring
management
contract - 144,000
Organizational
expense - 22,868
-------------------------- ------------------------
Expenses before
manager
reimbursement 3,042,510 5,452,438
-------------------------- ------------------------
Expense
reimbursement (317,676) (583,442)
-------------------------- ------------------------
Total expenses
net of expense
reimbursement 2,724,834 4,868,996
-------------------------- ------------------------
NET INVESTMENT
INCOME 3,156,790 5,114,689
-------------------------- ------------------------
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized gain
on sale of
investments 424,187 1,445,255
Net change in
unrealized
depreciation on
investments (4,369,060) (3,618,259)
Unrealized
appreciation
(depreciation) on
derivatives 5,973 (44,047)
-------------------------- ------------------------
Net loss on
investments (3,938,900) (2,217,051)
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS $ (782,110) $ 2,897,638
========================== ========================
BASIC AND DILUTED
EARNINGS PER
COMMON SHARE $ (0.09) $ 0.35
COMMON STOCK
OUTSTANDING--
BASIC AND DILUTED 8,291,384 8,291,384
Schedule 1 Reconciliation to Basic and diluted GAAP EPS
For the three months For the six months
ended August 31, 2007 ended August 31, 2007
---------------------- ----------------------
(unaudited) (unaudited)
Net investment income
per share, basic and
diluted $ 0.38 $ 0.62
Incentive fees
attributed to gains
(losses) $ (0.02) $ -
Adjusted net investment
income per share, basic
and diluted $ 0.36 $ 0.62
Net loss on investments
per share, basic and
diluted $ (0.47) $ (0.27)
Incentive fees
attributed to gains
(losses) $ 0.02 $ -
Adjusted net loss on
investments per share,
basic and diluted $ (0.45) $ (0.27)
Basic and diluted GAAP
EPS $ (0.09) $ 0.35
SOURCE: GSC Investment Corp.
Investors: GSC Group Carl J. Crosetto, 973-437-1007 OR Michael H. Yip, 973-593-5424
Copyright Business Wire 2007
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