FULL Full Circle Capital Corp. (MM)

- Strategic Alternatives Review Proceeding - - Receives $29.3 Million in Repayments - - Net Investment Income of $1.7 Million or $0.08 per Share -

Full Circle Capital Corporation (Nasdaq:FULL) (the “Company”) today announced its financial results for the fiscal third quarter ended March 31, 2016.

Financial Highlights for the Fiscal Third Quarter Ended March 31, 2016:

• Received $29.3 million in repayments.
• Total investment income of $3.7 million, compared with $4.3 million for the prior-year quarter.
• Net investment income (“NII”) was $1.7 million, or $0.08 per share, compared with $2.0 million, or $0.17 per share, in the prior-year quarter.
• Net unrealized losses were $2.8 million, consisting of net unrealized losses on investments of $4.5 million, partially offset by net unrealized gains on an open swap contract of $1.7 million. Net realized gains were $0.1 million.
• Net decrease in net assets from operations was $1.0 million, or $0.04 per share.
• Per share amounts are based on approximately 22.5 million weighted average shares outstanding for the third quarter of fiscal 2016, compared to approximately 12.0 million weighted average shares outstanding for the third quarter of fiscal 2015.  The increase in weighted average shares outstanding reflects share issuances completed during calendar 2015 offset by share repurchases during the first and second quarters of fiscal 2016.

As of March 31, 2016:

• Net asset value was $3.61 per share and aggregate investment portfolio fair value was $91.3 million
• Weighted average portfolio interest rate was 10.27%.
• 89% of portfolio company investments were first lien senior secured loans.

Update on Strategic Alternatives

As noted previously, in November 2015, the Company’s Board of Directors formed a Special Committee, composed solely of independent directors Mark C. Biderman, Edward H. Cohen and Thomas A. Ortwein, Jr., to consider various strategic alternatives potentially available to the Company.  The process being conducted by the Special Committee is ongoing.

In order to maximize the types of potential strategic alternatives available to the Company, the Company has opted not to reinvest any cash proceeds received by the Company in connection with loan repayments and sales and has limited its origination activities.  As a result of this change in investment strategy, the Company’s loan assets and related investment income have declined.  Accordingly, the Board of Directors suspended the declaration of any future distributions to stockholders.  

Third Quarter Fiscal 2016 ResultsThe Company’s net asset value at March 31, 2016 was $3.61 per share. During the quarter, the Company generated $3.4 million of interest income compared to $4.3 million in the third quarter of fiscal 2015, a decrease of 19.1%. Income from fees and other sources in the quarter totaled $0.2 million, compared to $0.1 million in the prior-year quarter.

The Company produced NII of $1.7 million, or $0.08 per share, in the quarter ended March 31, 2016 compared to $2.0 million, or $0.17 per share, in the quarter ended March 31, 2015. 

Net unrealized losses of $2.8 million were comprised of $6.3 million of net unrealized depreciation on equity investments, $1.8 million of net unrealized appreciation on debt investments and $1.7 million of net unrealized appreciation on an open swap contract. Realized gains on investments were $0.1 million.  Net decrease in net assets resulting from operations was $1.0 million, or $0.04 per share.

Since the beginning of calendar 2016, the Company has restructured terms with respect to two of its portfolio companies and received approximately $37 million in repayments.

At March 31, 2016, the Company’s portfolio included debt investments in 25 companies at an average of $3.6 million per investment.  The weighted average interest rate on all outstanding debt investments was 10.27% at March 31, 2016, while the weighted average interest rate of the Company’s performing debt investments was 11.93%. At fair value, 88.5% of portfolio investments were first lien loans, 11.2% were second lien loans and 0.3% were equity investments. Approximately 76% of the debt investment portfolio, at fair value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 63% at March 31, 2016, compared to 66% at March 31, 2015. 

Subsequent Events

On April 6, 2016, the senior secured note to Fuse, LLC was sold for total proceeds of approximately $5.5 million.  At March 31, 2016 the Company had unrealized losses of approximately $1.7 million which were realized on April 6, 2016.

On April 11, 2016, Modular Process Control, LLC completed a restructuring whereby the loans and warrant were extinguished for consideration including $0.8 million in cash and $0.8 million of an unsecured promissory note.  At March 31, 2016, the Company had unrealized losses of approximately $6.4 million, of which approximately $5.5 million were realized as part of the restructuring on April 11, 2016.

On April 19, 2016, the senior secured revolving term loan to ProGrade Ammo Group, LLC was repaid for net proceeds of approximately $1.6 million.  At March 31, 2016, the Company had unrealized losses of approximately $5.4 million which were realized on April 19, 2016.

Conference Call Details

The Company will not be holding an earnings call for this quarter.

About Full Circle Capital CorporationFull Circle Capital Corporation (www.fccapital.com) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s website www.fccapital.com.

Forward-Looking StatementsThis press release contains forward-looking statements which relate to future events or Full Circle's future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,” “should,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Full Circle's filings with the Securities and Exchange Commission. Full Circle undertakes no duty to update any forward-looking statements made herein.                       

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
				March 31, 2016						June 30, 2015
				(Unaudited)
Assets
Control Investments at Fair Value (Cost of $408,606 and $11,409,596, respectively)				$		130,000				$		5,812,064
Affiliate Investments at Fair Value (Cost of $20,003,978 and $24,434,726, respectively)						3,787,728						16,019,272
Non-Control/Non-Affiliate Investments at Fair Value (Cost of $98,216,482 and $136,351,581, respectively)						87,357,234						130,282,423
Total Investments at Fair Value (Cost of $118,629,066 and $172,195,903, respectively)						91,274,962						152,113,759
Cash						19,778,639						3,736,563
Interest Receivable						1,098,038						1,903,606
Principal Receivable						27,578						23,287
Distributions Receivable						-						15,141
Due from Affiliates						246,929						605,749
Due from Portfolio Investments						256,340						180,300
Receivable on Open Swap Contract						-						1,081
Receivable for Investments Sold						2,849,194						-
Prepaid Expenses						148,547						66,105
Other Assets						28,483						1,483,578
Deferred Offering Expenses						367,807						328,168
Deferred Credit Facility Fees						50,624						267,645
Total Assets						116,127,141						160,724,982
Liabilities
Due to Affiliates						716,479						1,052,489
Accrued Liabilities						289,282						179,378
Deposit from Swap Counterparty						-						10,380,000
Payable for Investments Acquired						-						15,020,000
Distributions Payable						786,529						813,240
Interest Payable						45,062						57,605
Other Liabilities						187,826						305,957
Accrued Offering Expenses						-						7,258
Notes Payable 8.25% due June 30, 2020 (plus unamortized premium of $141,218 and $158,504 and less deferred debt issuance costs of $714,453 and $833,541, respectively)						33,072,290						32,970,488
Total Liabilities						35,097,468						60,786,415
Commitments and contingencies						-						-
Net Assets				$		81,029,673				$		99,938,567
Components of Net Assets
Common Stock, par value $0.01 per share (100,000,000 authorized; 22,472,243 and 23,235,430 issued and outstanding, respectively)				$		224,722				$		232,354
Paid-in Capital in Excess of Par						130,072,314						132,487,067
Distributions in Excess of Net Investment Income						(763,276	)					(119,318	)
Accumulated Net Realized Losses						(21,149,983	)					(12,579,392	)
Accumulated Net Unrealized Losses						(27,354,104	)					(20,082,144	)
Net Assets				$		81,029,673				$		99,938,567
Net Asset Value Per Share				$		3.61				$		4.30

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
			Three Months Ended March 31,										Nine Months Ended March 31,
			2016					2015					2016					2015
Investment Income
Interest Income from Non-Control/Non-Affiliate Investments			$		3,164,723			$		3,310,605			$		9,804,079			$		9,486,149
Interest Income from Affiliate Investments					143,205					629,108					1,093,647					1,835,289
Interest Income from Control Investments					134,619					317,431					464,244					1,280,177
Dividend Income from Control Investments					13,351					-					33,998					-
Other Income from Non-Control/Non-Affiliate Investments					119,661					19,148					1,696,484					524,990
Other Income from Affiliate Investments					933					625					4,314					94,667
Other Income from Control Investments					94,385					12,500					119,385					37,500
Other Income from Non-Investment Sources					(880	)				19,108					23,801					48,597
Total Investment Income					3,669,997					4,308,525					13,239,952					13,307,369
Operating Expenses
Management Fee					451,381					545,564					1,612,167					1,699,451
Incentive Fee					246,879					419,559					1,263,241					1,335,651
Total Advisory Fees					698,260					965,123					2,875,408					3,035,102
Allocation of Overhead Expenses					58,161					53,511					166,183					127,028
Sub-Administration Fees					57,539					65,195					196,268					194,999
Officers’ Compensation					76,306					75,913					228,919					227,739
Total Costs Incurred Under Administration Agreement					192,006					194,619					591,370					549,766
Directors’ Fees					34,750					49,750					119,250					138,446
Interest Expenses					931,933					1,119,639					2,910,262					3,299,116
Professional Services Expense					218,058					149,698					771,583					509,292
Bank Fees					7,396					8,910					23,197					30,099
Other					118,845					142,326					414,686					402,720
Total Gross Operating Expenses					2,201,248					2,630,065					7,705,756					7,964,541
Fee Waivers and Expense Reimbursement					(246,879	)				(299,476	)				(967,372	)				(830,523	)
Total Net Operating Expenses					1,954,369					2,330,589					6,738,384					7,134,018
Net Investment Income					1,715,628					1,977,936					6,501,568					6,173,351
Net Change in Unrealized Gain (Loss) on:
Investments					(4,446,098	)				3,165,547					(7,271,960	)				(6,474,247	)
Open Swap Contract					1,650,000					-					-					-
Net Change in Unrealized Gain (Loss)					(2,796,098	)				3,165,547					(7,271,960	)				(6,474,247	)
Net Realized Gain (Loss) on:
Non-Control/Non-Affiliate Investments					1,851,853					(3,458,023	)				(2,607,787	)				(4,186,132	)
Affiliate Investments					(348,339	)				44,461					1,363,984					44,461
Control Investments					661,613					(71,953	)				(5,444,394	)				(242,389	)
Open Swap Contract					(2,085,281	)				-					(1,882,293	)				-
Foreign Currency Transactions					-					-					(101	)				(1,248	)
Net Realized Gain (Loss)					79,846					(3,485,515	)				(8,570,591	)				(4,385,308	)
Net Increase (Decrease) in Net Assets Resulting from Operations			$		(1,000,624	)		$		1,657,968			$		(9,340,983	)		$		(4,686,204	)
Earnings (Loss) per Common Share Basic and Diluted			$		(0.04	)		$		0.14			$		(0.41	)		$		(0.39	)
Net Investment Income per Common Share Basic and Diluted			$		0.08			$		0.17			$		0.29			$		0.52
Weighted Average Shares of Common Stock Outstanding Basic					22,472,243					11,949,034					22,726,053					11,925,027
Weighted Average Shares of Common Stock Outstanding Diluted					22,472,243					11,990,011					22,726,053					11,925,027

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
		Three months ended March 31, 2016						Three months ended March 31, 2015						Nine months ended March 31, 2016					Nine months ended March 31, 2015
		(Unaudited)						(Unaudited)						(Unaudited)					(Unaudited)
Per Share Data (1) :
Net asset value at beginning of period		$		3.76				$		5.48				$		4.30			$		6.38
Accretion (dilution) from offerings (2)				-						(0.96	)					-					(0.92	)
Accretion from share repurchases(3)				-						-						0.03					-
Offering costs				-						(0.06	)					-					(0.06	)
Net investment income (loss)(4)				0.08						0.17						0.29					0.52
Net change in unrealized gain (loss)				(0.12	)					0.29						(0.31	)				(0.52	)
Net realized gain (loss)				0.00						(0.29	)					(0.38	)				(0.37	)
Dividends from net investment income				(0.08	)					(0.17	)					(0.29	)				(0.52	)
Return of capital				(0.03	)					(0.03	)					(0.03	)				(0.08	)
Net asset value at end of period		$		3.61				$		4.43				$		3.61			$		4.43

	(1	)	Financial highlights are based on weighted average shares outstanding.
	(2	)	Accretion and dilution from offering(s) is based on the net change in net asset value from each follow-on offering.
	(3	)	Accretion from share repurchases during the period is based on the net change in net asset value from the share repurchases.
	(4	)	Net investment income (loss) per share is calculated based on the beginning of year and end of year shares outstanding.

 

Company Contact:
Gregg J. Felton, President and Chief Executive Officer
Michael J. Sell, Chief Financial Officer, Treasurer and Secretary
Full Circle Capital Corporation
(203) 900 - 2100        
info@fccapital.com

Investor Relations Contacts:
Garrett Edson/Brad Cohen
ICR, LLC
(203) 682-8200