NEW YORK, July 13 /PRNewswire-FirstCall/ -- GSC Investment Corp.
(NYSE: GNV), a business development company, today announced
financial results for the fiscal first quarter ended May 31, 2009.
Operating Results For the quarter ended May 31, 2009, GSC
Investment Corp. reported net investment income of $2.6 million, or
$0.31 per share, and net unrealized appreciation on its investment
portfolio of $2.8 million, or $0.34 per share, resulting in a net
increase in net assets from operations of $5.4 million, or $0.65
per share. There were no material realized gains or losses on
investments during the quarter. Net asset value was $8.85 per share
as of May 31, 2009 as compared to $8.20 per share as of February
28, 2009. "The unrealized appreciation in our portfolio during the
first quarter is a welcome occurrence and reflects some
stabilization in the credit markets after a period of unprecedented
volatility," said Chief Executive Officer Seth M. Katzenstein.
"While we are encouraged by the rebound in the credit markets, the
effects of the recession are still working their way through our
portfolio companies, and we expect that adverse credit events in
our portfolio companies will continue to occur. Accordingly, we
continue to stand by our conservative strategy of investing at
high-attachment points in the capital structure and will continue
to preserve capital and reduce debt in order to maximize long-term
shareholder value." Portfolio and Investment Activity As of May 31,
2009, the value of the Company's investment portfolio was $121.2
million, principally invested in 35 portfolio companies and one
collateralized loan obligation fund ("CLO"). The overall portfolio
composition consisted of 16.3% first lien term loans, 33.7% second
lien term loans, 23.6% senior secured notes, 10.5% unsecured notes,
15.8% subordinated notes of GSCIC CLO and 0.1% equity/limited
partnership interests. During the first quarter, GSC Investment
Corp. made no investments in new or existing portfolio companies.
For the quarter, the Company had $0.3 million in aggregate amount
of exits and repayments, resulting in net repayments of $0.3
million. As of May 31, 2009, 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 7.7%, 9.3%, 11.6%, 12.3% and 11.2%, respectively, which
resulted in an aggregate weighted average current yield of 10.3%.
As of May 31, 2009, 42.6%, or $43.4 million, of the Company's
interest-bearing portfolio was fixed rate debt with a weighted
average current coupon of 11.7% and 57.4%, or $58.6 million, of its
interest-bearing portfolio was floating rate debt with a weighted
average current spread of LIBOR plus 6.4%. Liquidity and Capital
Resources In January 2009, the Company's revolving credit facility
began a two-year amortization period during which all payments of
principal on, and sale proceeds from, the collateral (substantially
all of the Company's portfolio, excluding its CLO investment) are
used to repay outstanding borrowings. At May 31, 2009, the Company
had $57.8 million in borrowings under the facility and an asset
coverage ratio of 227%. Following the end of the first quarter,
several portfolio investments were either downgraded or experienced
adverse events that resulted in a $17.4 million deficiency in the
Company's June 30, 2009 borrowing base, which exceeds the Company's
unrestricted cash and cash equivalents of $10.3 million at May 31,
2009. If the Company is unsuccessful in obtaining a waiver and the
borrowing base deficiency continues for 30 days, an event of
default will occur and the lender will have the option to terminate
the facility and sell the underlying collateral. "We are currently
engaged in constructive discussions with our lender regarding a
waiver of the borrowing base deficiency," said Mr. Katzenstein. "We
have historically been able to work constructively with our lender,
but these discussions are ongoing." "The adverse economic
environment and tight credit market have had a negative effect on
several of our portfolio companies. Some portfolio companies have
experienced worse than expected declines in operating performance,
while others have been unable to refinance maturing debt," said Mr.
Katzenstein. "We believe that the best way to maximize the value of
underperforming and stressed investments is to actively manage them
through the workout process. Our investment adviser, GSC Group, has
significant experience in workouts of middle market companies. In
many cases, other GSC Group-managed funds also own these
investments, and we believe that GSC Group will be able to leverage
both its expertise and these combined ownership positions to
positively influence the workout process." As the Company announced
in connection with its fiscal year 2009 earnings, it has retained
the investment banking firm of Stifel, Nicolaus & Company to
help identify and evaluate strategic and financing opportunities.
This Company is actively considering and evaluating opportunities
to maximize long-term shareholder value. Dividend Consistent with
the Company's strategy of preserving capital and reducing debt, the
Company's Board of Directors has decided not to declare a dividend
for the first quarter of fiscal year 2010. The Board will consider
declaring a dividend at its next regularly scheduled meeting in
October, 2009. 2010 First Quarter Conference Call/Webcast
Information When: Tuesday, July 14, 2009, 10:00 a.m. Eastern Time
(ET) Call: Interested parties may participate by dialing (888)
312-9865 (U.S. and Canada) or (719) 325-2499 (outside U.S. and
Canada). A replay of the call will be available from 1:00 p.m. ET
on Tuesday, July 14, 2009 through 11:59 p.m. ET on Monday, July 27,
2009 by dialing (888) 203-1112 (U.S. and Canada) or (719) 457-0820
(outside U.S. and Canada), passcode for both replay numbers:
3510417. 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 Tuesday, July 14, 2009
through 11:59 p.m. ET, Monday, July 27, 2009. 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." GSC
Investment Corp. Consolidated Balance Sheets As of
--------------------------- May 31, February 28, 2009 2009 -------
------------ (unaudited) ASSETS Investments at fair value
Non-control/non-affiliate investments (amortized cost of
$137,234,017 and $137,020,449, respectively) $101,983,348
$96,462,919 Control investments (cost of $29,233,097 and
$29,905,194, respectively) 19,235,848 22,439,029 Affiliate
investments (cost of $0 and $0, respectively) 4,043 10,527 -----
------ Total investments at fair value (amortized cost of
$166,467,114 and $166,925,643, respectively) 121,223,239
118,912,475 Cash and cash equivalents 8,544,000 6,356,225 Cash and
cash equivalents, securitization accounts 2,028,951 1,178,201
Outstanding interest rate cap at fair value (cost of $131,000 and
$131,000, respectively) 75,200 39,513 Interest receivable, net of
reserve 3,067,955 3,087,668 Deferred credit facility financing
costs, net 483,447 529,767 Management fee receivable 237,306
237,370 Other assets 140,992 321,260 ------- ------- Total assets
$135,801,090 $130,662,479 ============ ============ LIABILITIES
Revolving credit facility $57,755,257 $58,994,673 Management and
incentive fees payable 3,750,594 2,880,667 Accounts payable and
accrued expenses 690,646 700,537 Interest and credit facility fees
payable 227,000 72,825 Total liabilities $62,423,497 $62,648,702
=========== =========== STOCKHOLDERS' EQUITY Common stock, par
value $.0001 per share, 100,000,000 common shares authorized,
8,291,384 and 8,291,384 common shares issued and outstanding,
respectively 829 829 Capital in excess of par value 116,943,738
116,943,738 Accumulated undistributed net investment income
8,686,481 6,122,492 Accumulated undistributed net realized loss
from investments and derivatives (6,953,780) (6,948,628) Net
unrealized depreciation on investments and derivatives (45,299,675)
(48,104,654) ----------- ----------- Total stockholders' equity
73,377,593 68,013,777 ---------- ---------- Total liabilities and
stockholders' equity $135,801,090 $130,662,479 ============
============ NET ASSET VALUE PER SHARE $8.85 $8.20 ----- ----- GSC
Investment Corp. Consolidated Statement of Operations For the For
the three months three months ended ended May 31, May 31, 2009 2008
------------- ------------- (unaudited) (unaudited) INVESTMENT
INCOME Interest from investments Non-Control/Non-Affiliate
investments $3,318,840 $4,459,124 Control investments 868,229
635,386 ------- ------- Total interest income 4,187,069 5,094,510
Interest from cash and cash equivalents 13,191 66,689 Management
fee income 520,992 522,739 Other income 43,134 31,423 ------ ------
Total investment income 4,764,386 5,715,361 --------- ---------
EXPENSES Interest and credit facility financing expenses 642,893
833,198 Base management fees 547,744 748,499 Professional fees
339,780 345,459 Administrator expenses 171,861 248,398 Incentive
management fees 322,183 340,107 Insurance 206,017 167,486 Directors
fees and expenses 82,000 66,609 General & administrative 59,780
65,037 Other expense - 3,208 Expenses before expense waiver and
reimbursement 2,372,258 2,818,001 --------- --------- Expense
reimbursement (171,861) (298,113) -------- -------- Total expenses
net of expense waiver and reimbursement 2,200,397 2,519,888
--------- --------- NET INVESTMENT INCOME 2,563,989 3,195,473
--------- --------- REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS: Net realized loss from investments (5,152) (287,410)
Net unrealized appreciation/ (depreciation) on investments
2,769,292 (84,817) Net unrealized appreciation/ (depreciation) on
derivatives 35,687 (11,998) ------ ------- Net gain/(loss) on
investments 2,799,827 (384,225) --------- -------- NET INCREASE IN
NET ASSETS RESULTING FROM OPERATIONS $5,363,816 $2,811,248
========== ========== WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS
PER COMMON SHARE $0.65 $0.34 WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING - BASIC AND DILUTED 8,291,384 8,291,384 Contact: Carl
J. Crosetto GSC Group 973-437-1007 DATASOURCE: GSC Investment Corp.
CONTACT: Carl J. Crosetto, GSC Group, +1-973-437-1007; or Roland
Tomforde, Broadgate Consultants, LLC, +1-212-232-2222 Web Site:
http://ir.gscinvestmentcorp.com/
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