Golub Capital BDC, Inc. Declares Fourth Fiscal Quarter Dividend of $0.31 Per Share and Announces Quarter and Fiscal Year Ended September 30, 2010 Financial Results

CHICAGO, Dec. 13, 2010 /PRNewswire-FirstCall/ -- Golub Capital BDC, Inc., a business development company (Nasdaq: GBDC), today announced its financial results for the fourth quarter and fiscal year ended September 30, 2010.  

Except where the context suggests otherwise, the terms "we," "us," "our," and "Company," refer to Golub Capital BDC, Inc. and its Subsidiaries.  "GC Advisors" refers to GC Advisors, LLC, our investment advisor.

Portfolio and Investment Activities

At September 30, 2010, the Company had investments in 94 portfolio companies, with a total fair value of $344.9 million.  The portfolio consisted of $227.1 million of senior secured loans, $90.4 million of unitranche loans, $11.4 million of second lien loans, $13.4 million of subordinated debt and $2.6 million of common equity investments.   For the three months ended September 30, 2010, the Company originated $83.7 million in new investment commitments.  Of the $83.7 million in new investment commitments, 59% were senior secured loans, 27% were unitranche loans, 11% were subordinated loans and 3% were equity securities.  Sales and repayments on investments for the same period totaled $13.5 million. The Company expects to continue to invest in a mix of mezzanine and senior secured loans to obtain a high level of current income and to preserve capital.

For the quarter ended September 30, 2010, the weighted average annualized interest income yield (which excludes income resulting from amortization of fees and discounts) and weighted average annualized investment income yield (which includes interest income and amortization of fees and discounts) on the fair value of investments in the Company's portfolio was  8.1% and 9.8%, respectively.  As of September 30, 2010, 59.2% of the Company's portfolio at fair value had interest rate floors that limit minimum interest rates on such loans.

Consolidated Results of Operations

Total investment income for the three months ended September 30, 2010 and June 30, 2010 was $7.4 million and $7.2 million, respectively.  Investment income increased by $0.2 million, or 2.8%, for the three months ended September 30, 2010 as compared to the three months ended June 30, 2010. This increase was primarily attributable to higher average invested assets during the three months ended September 30, 2010.

Total expenses for the three months ended September 30, 2010 and June 30, 2010 were $3.1 million and $2.4 million, respectively.  Total expenses increased by $0.7 million, or 29.2%, for the three months ended September 30, 2010 as compared to the three months ended June 30, 2010. This increase was primarily due to an increase in interest expense as a result of higher debt outstanding and higher interest rates on our outstanding debt.    

Total expenses for the year ended September 30, 2010 and September 30, 2009 were $9.8 million and $7.9 million, respectively.  Total expenses increased by $1.9 million, or 24.5%, for the year ended September 30, 2010 as compared to the year ended September 30, 2009.  This increase was primarily due to non-recurring organizational costs associated with our initial public offering, as well as an increase in professional fees, management fees, and administrative service fees.  These increases were partially offset by a decrease in interest and other credit facility expenses.  

During the three months ended September 30, 2010 and June 30, 2010, the Company had $(40,000) and $0 of net realized losses on investments, respectively.  During the three months ended September 30, 2010 and June 30, 2010, the Company recorded net unrealized appreciation of $1.9 million and net unrealized depreciation of  $(0.1) million, respectively.  

During the years ended September 30, 2010 and September 30, 2009, the Company had $(40,000) and $(4.0) million of net realized losses on investments, respectively.  During the years ended September 30, 2010 and September 30, 2009, the Company recorded net unrealized appreciation of $2.9 million and net unrealized depreciation of $(1.5) million, respectively.  

"I am pleased to report that we had a solid 9/30/10 quarter and that we continue to see strong momentum in new originations. Based on new deals already completed and our current pipeline, we expect new originated investments for the 12/31/2010 quarter will exceed originations in the 9/30/2010 quarter," said Golub Capital BDC, Inc. CEO David Golub.

Liquidity and Capital Resources

As of September 30, 2010, the Company had cash and cash equivalents of $61.2 million, restricted cash of $31.8 million and $174.0 million of total debt outstanding.

Through our wholly owned subsidiary, GC SBIC IV, L.P., the Company may obtain leverage by issuing SBA-guaranteed debentures, subject to issuance of a capital commitment by the SBA and customary procedures. See recent developments below for information pertaining to commitments available under the SBA debenture program.  

On December 8, 2010, the Company's board of directors declared a quarterly dividend of $0.31 per share payable on December 30, 2010 to holders of record as of December 20, 2010.

Portfolio and Asset Quality

GC Advisors regularly assesses the risk profile of each of the Company's investments and rates each of them based on the following categories:

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of September 30, 2010 and June 30, 2010:

Recent Developments

On October 8, 2010, GC SBIC IV, L.P. received a $22 million debt commitment from the SBA.  The commitment may be drawn upon subject to customary SBA procedures.  Through December 10, 2010, the Company had drawn $10 million of the commitment.  

The company also announced today the promotion of Ross A. Teune as Chief Financial Officer.  Mr. Teune joined an affiliate of our investment advisor in November 2007 and, prior to being elected our Chief Financial Officer, served as Senior Vice President of Finance for an affiliate of our investment advisor, where he had responsibility for the financial reporting for its private debt funds managed.  Prior thereto, Mr. Teune was Vice President of Finance at Antares Capital Corporation, where he was responsible for overseeing operations and financial reporting.  Mr. Teune also served as the primary liaison to the tax, treasury, external reporting and market risk departments of Massachusetts Life Insurance Company, Antares Capital's parent company.  Mr. Teune also worked at Heller Financial Corporation and KPMG LLP.  

Sean K. Coleman, who is stepping down as Chief Financial Officer, will continue as a Managing Director of our investment advisor, focusing on origination and underwriting of new investments.  Golub Capital BDC, Inc. CEO David Golub said, "We are excited to bring Ross A. Teune's enormous talents to the Company. We thank Sean for his extraordinary efforts in connection with the initial public offering and the Company's early success."

Conference Call

The Company will host an earnings conference call at 1:00 p.m. (Eastern Time) on Monday, December 13, 2010.  All interested parties may participate in the conference call by dialing (800) 891-3448 approximately 15 minutes prior to the call; international callers should dial (212) 231-2921. Participants should reference Golub Capital BDC, Inc. when prompted. For a slide presentation that we intend to refer to on the earnings conference call, please visit the Events and Presentations link on the homepage of our website (www.golubcapitalbdc.com) and click on the Investor Presentations link to find the 9/30/10 Investor Presentation. An archived replay of the call will be available shortly after the call until 3:00 p.m. (Eastern Time) on December 27, 2010. To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140. For all replays, please reference program ID number 21489419.

ABOUT GOLUB CAPITAL BDC, INC.

Golub Capital BDC, Inc., (NASDAQ: GBDC, www.golubcapitalbdc.com), a business development company, principally invests in senior secured, unitranche, mezzanine and second lien loans of middle-market companies that are, in most cases, sponsored by private equity investors. Golub Capital BDC, Inc.'s investment activities are managed by its investment adviser, GC Advisors LLC, an affiliate of the Golub Capital group of companies ("Golub Capital").

ABOUT GOLUB CAPITAL

Golub Capital, founded in 1994, is a leading lender to middle-market companies. In 2009, Golub Capital was named "Middle Market Lender of the Year" by Buyouts Magazine and "Debt Financing Agent of the Year" and "Mezzanine Financing Agent of the Year" by M&A Advisor.  As of September 30, 2010, Golub Capital managed over $4.0 billion of capital, with a team of investment professionals in New York, Chicago and Atlanta.

FORWARD-LOOKING STATEMENTS

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance 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 the Company's filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

SOURCE Golub Capital BDC, Inc.