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NEW YORK, May 28, 2010 /PRNewswire via COMTEX News Network/ -- GSC Investment Corp. (NYSE: GNV), a business development company, today announces financial results for the fiscal fourth quarter and fiscal year ended February 28, 2010.
Operating Results
For the fiscal year ended February 28, 2010, GSC Investment Corp. reported net investment income of $5.7 million, or $0.54 per share. Net investment income was offset by net realized and unrealized losses on investments of $16.2 million, or $1.52 per share, resulting in a net decrease in net assets from operations of $10.5 million, or $0.99 per share. The $16.2 million net loss on investments was comprised of $9.5 million in net unrealized depreciation on investments and $6.7 million net realized losses on investments. Net asset value was $3.27 per share as of February 28, 2010.
For the fiscal quarter ended February 28, 2010, GSC Investment Corp. reported net investment income of $1.2 million, or $0.07 per share. Net investment income was offset by net realized and unrealized losses on investments of $10.1 million or $0.59 per share resulting in a net decrease in net assets from operations of $8.9 million, or $0.52 per share. The $10.1 million of the net loss on investments was comprised of $5.0 million in net unrealized depreciation on investments and $5.1 million in net realized losses on investments.
Portfolio and Investment Activity
As of February 28, 2010, the value of the Company's investment portfolio was $89.4 million, principally invested in 27 portfolio companies and one collateralized loan obligation fund ("CLO"). The overall portfolio composition consisted of 18.6% first lien term loans, 22.7% second lien term loans, 31.0% senior secured notes, 6.4% unsecured notes, 18.7% subordinated notes of GSCIC CLO and 2.6% common stocks and limited partnership interests.
During the fourth quarter, GSC Investment Corp. made no investments in new or existing portfolio companies. For the quarter, the Company had $4.2 million in aggregate amount of exits and repayments, resulting in net repayments of $4.2 million.
As of February 28, 2010, the weighted average current yield on the Company's first lien term loans, second lien term loans, senior secured notes, unsecured notes and the GSCIC CLO subordinated notes were 8.6%, 8.1%, 11.6%, 12.2% and 8.3%, respectively, which resulted in an aggregate weighted average current yield of 9.3%.
As of February 28, 2010, 46.9%, or $33.0 million, of the Company's interest-bearing portfolio was fixed rate debt with a weighted average current coupon of 11.6% and 53.1%, or $37.4 million, of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 7.6%.
Liquidity and Capital Resources
At February 28, 2010, the Company had $37.0 million in borrowings under its credit facility and an asset coverage ratio of 250%.
On July 30, 2009, an unremedied borrowing base deficiency became an event of default, which is currently continuing. During the continuance of an event of default, the lender has the ability to terminate the facility and sell the underlying collateral necessary to satisfy outstanding borrowings. On April 14, 2010, the Company announced that Saratoga Investment Advisors, LLC and CLO Partners LLC agreed to purchase a minority stake in the Company as part of a $55 million recapitalization plan to enable the Company to cure its existing event of default. In connection with the proposed transaction, the Company and its lender entered into a forbearance agreement, subject to certain milestones. The Company has been in default under its credit facility since last July. Including $3.2 million of repayments made subsequent to February 28, 2010, the Company has repaid $22.0 million of outstanding borrowings since the event of default consisting of $14.8 million of proceeds from asset sales and repayments and $7.2 million from cash interest received in excess of interest expense.
About GSC Investment Corp.
GSC Investment Corp. is a specialty finance company that invests primarily in leveraged loans and mezzanine debt issued by U.S. middle-market companies, high yield bonds and collateralized loan obligations. It has elected to be treated as a business development company under the Investment Company Act of 1940. The Company may also opportunistically invest in distressed debt, debt issued by non-middle market companies, and equity securities issued by middle and non-middle market companies. 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 Investment Corp. is traded on the New York Stock Exchange under the symbol "GNV."
Contact: Debbie Lombardi
GSC Group
973-593-5438
GSC Investment Corp.
Consolidated Statement of Assets and Liabilities
As of
-----
February 28, February 28,
2010 2009
------------- -------------
ASSETS
Investments at fair value
Non-control/non-affiliate
investments (amortized cost
of $117,678,275 and
$137,020,449, respectively) $72,674,847 $96,462,919
Control investments (cost of
$29,233,097 and $29,905,194,
respectively) 16,698,303 22,439,029
Affiliate investments (cost of
$0 and $0, respectively) - 10,527
--- ------
Total investments at fair
value (amortized cost of
$146,911,372 and
$166,925,643, respectively) 89,373,150 118,912,475
Cash and cash equivalents 3,352,434 6,356,225
Cash and cash equivalents,
securitization accounts 225,424 1,178,201
Outstanding interest rate cap
at fair value (cost of
$131,000 and $131,000,
respectively) 42,147 39,513
Interest receivable, net of
reserve 3,473,961 3,087,668
Deferred credit facility
financing costs, net - 529,767
Management fee receivable 327,928 237,370
Other assets 140,272 321,260
------- -------
Total assets $96,935,316 $130,662,479
=========== ============
LIABILITIES
Revolving credit facility $36,992,222 $58,994,673
Management and incentive fees
payable 3,071,093 2,880,667
Accounts payable and accrued
expenses 1,111,081 700,537
Interest and credit facility
fees payable 267,166 72,825
Due to manager 15,602 -
------ ---
Total liabilities $41,457,164 $62,648,702
=========== ===========
NET ASSETS
Common stock, par value $.0001
per share, 100,000,000 common
shares authorized, 16,940,109
and 8,291,384 common shares
issued and outstanding,
respectively $1,694 $829
Capital in excess of par value 128,339,497 116,943,738
Accumulated undistributed net
investment income (loss) (2,846,135) 6,122,492
Accumulated net realized loss
from investments and
derivatives (12,389,830) (6,948,628)
Net unrealized depreciation on
investments and derivatives (57,627,074) (48,104,654)
----------- -----------
Total Net Assets 55,478,152 68,013,777
---------- ----------
Total liabilities and Net
Assets $96,935,316 $130,662,479
=========== ============
NET ASSET VALUE PER SHARE $3.27 $8.20
===== =====
GSC Investment Corp.
Consolidated Statements of Operations
For the year For the year For the year
ended ended ended
February 28, February 28, February 29,
2010 2009 2008
------------- ------------- -------------
INVESTMENT INCOME
Interest from
investments
Non-control/Non-
affiliate investments $10,902,482 $16,572,973 $20,115,301
Control investments 2,397,514 4,393,818 262,442
--------- --------- -------
Total interest income 13,299,996 20,966,791 20,377,743
Interest from cash and
cash equivalents 23,624 175,567 366,312
Management fee income 2,057,397 2,049,717 599,476
Other income 236,259 195,135 42,548
------- ------- ------
Total investment
income 15,617,276 23,387,210 21,386,079
---------- ---------- ----------
EXPENSES
Interest and credit
facility financing
expenses 4,096,041 2,605,367 5,031,233
Base management fees 1,950,760 2,680,231 2,938,659
Professional fees 2,071,027 1,166,111 1,409,806
Administrator expenses 670,720 960,701 892,112
Incentive management
fees 327,684 1,752,254 711,363
Insurance 869,969 682,154 586,784
Directors fees and
expenses 294,932 295,017 313,726
General &
administrative 265,575 289,477 261,653
Cost of acquiring
management contract - - 144,000
Organizational expense - - 49,542
--- --- ------
Expenses before
expense waiver and
reimbursement 10,546,708 10,431,312 12,338,878
---------- ---------- ----------
Expense reimbursement (670,720) (1,010,416) (1,789,028)
-------- ---------- ----------
Total expenses net of
expense waiver and
reimbursement 9,875,988 9,420,896 10,549,850
--------- --------- ----------
NET INVESTMENT INCOME
BEFORE INCOME TAXES 5,741,288 13,966,314 10,836,229
Income tax expense,
including excise tax (27,445) (140,322) (88,951)
------- -------- -------
NET INVESTMENT INCOME 5,713,843 13,825,992 10,747,278
--------- ---------- ----------
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized gain/
(loss) from
investments
Non-Control/Non-
Affiliate investments (6,653,983) (7,173,118) 2,707,402
Control investments - - 428,673
Affiliate investments - - 39,147
Net realized gain from
derivatives - 30,454 732,526
Net unrealized
depreciation on
investments (9,525,054) (27,961,244) (20,051,923)
Net unrealized
appreciation/
(depreciation) on
derivatives 2,634 (37,221) (54,266)
----- ------- -------
Net loss on
investments (16,176,403) (35,141,129) (16,198,441)
----------- ----------- -----------
NET DECREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $(10,462,560) $(21,315,137) $(5,451,163)
============ ============ ===========
WEIGHTED AVERAGE -
BASIC AND DILUTED
EARNINGS (LOSS) PER
COMMON SHARE $(0.99) $(2.57) $(0.70)
WEIGHTED AVERAGE
COMMON STOCK
OUTSTANDING -BASIC
AND DILUTED 10,613,507 8,291,384 7,761,965
SOURCE GSC Investment Corp.
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