GSC Investment Corp. Announces Third Quarter 2010 Financial Results

Jan 14, 2010, 17:26 ET from GSC Investment Corp.

NEW YORK, Jan. 14 /PRNewswire-FirstCall/ -- GSC Investment Corp. (NYSE: GNV), a business development company, today announced financial results for the fiscal third quarter ended November 30, 2009.

Operating Results

For the quarter ended November 30, 2009, GSC Investment Corp. reported net investment income of $0.9 million, or $0.10 per share, and net gain on investments of $8.3 million, or $0.91 per share, resulting in a net increase in net assets from operations of $9.1 million, or $1.01 per share. $8.8 million of the net gain was due to unrealized appreciation. Net asset value was $3.80 per share as of November 30, 2009 as compared to $6.91 per share as of August 31, 2009. The decrease in NAV per share from August 31, 2009 was primarily the result of the distribution of 8.6 million shares of common stock on December 31, 2009 for the stock portion of the dividend declared on November 13, 2009. In accordance with generally accepted accounting principals, the number of shares outstanding used to calculate NAV per share as of November 30, 2009 was retroactively adjusted to reflect the additional shares issued as a result of the stock dividend. Excluding the issuance of these additional shares, the NAV per share would have been $7.76 as of November 30, 2009.

Portfolio and Investment Activity

As of November 30, 2009, the value of the Company's investment portfolio was $103.3 million, principally invested in 29 portfolio companies and one collateralized loan obligation fund ("CLO"). The overall portfolio composition consisted of 15.4% first lien term loans, 29.1% second lien term loans, 27.5% senior secured notes, 7.1% unsecured notes, 20.8% subordinated notes of GSCIC CLO and 0.1% equity/limited partnership interests.

During the third quarter, GSC Investment Corp. made no investments in new or existing portfolio companies.  For the quarter, the Company had $5.7 million in aggregate amount of exits and repayments, resulting in net repayments of $5.7 million.  

As of November 30, 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 7.8%, 8.0%, 11.6%, 12.3% and 11.0%, respectively, which resulted in an aggregate weighted average current yield of 9.8%.  

As of November 30, 2009, 43.2%, or $35.3 million, of the Company's interest-bearing portfolio was fixed rate debt with a weighted average current coupon of 11.7% and 56.8%, or $46.5 million, of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 7.1%.

Liquidity and Capital Resources

At November 30, 2009, the Company had $43.8 million in borrowings under its credit facility and an asset coverage ratio of 247%.

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. The lender has elected not to accelerate the obligation to date, but has reserved the right to do so. Including $6.3 million of repayments made subsequent to November 30, 2009, the Company has repaid $18.3 million of outstanding borrowings since the event of default consisting of $11.6 million of proceeds from asset sales and repayments and $6.7 million from cash interest received in excess of interest expense.

The Company continues to work with the investment banking firm of Stifel Nicolaus & Company as it actively evaluates strategic alternatives to maximize long-term shareholder value.

Dividend

On November 13, 2009, the Company's Board of Directors declared a dividend of $1.825 per share is payable on December 31, 2009, to shareholders of record as of November 25, 2009. Shareholders had until December 17, 2009 to elect whether to receive the dividend in cash (up to an aggregate maximum cash amount of approximately $2.1 million or approximately 13.7% of the total dividend paid) or in shares of common stock. The dividend consisted of $2.1 million in cash and 8,648,725 shares of common stock or 104% of GSC Investment Corp's outstanding shares prior to the dividend. The dividend included the balance of the Company's fiscal year 2009 taxable income and a significant portion of the Company's fiscal year 2010 taxable income including a component for the third quarter of fiscal year 2010.  

2010 Third Quarter Conference Call/Webcast Information

When:  Friday, January 15, 2010, 10:00 a.m. Eastern Time (ET)

Call: Interested parties may participate by dialing (877) 852-6561 (U.S. and Canada) or (719) 325-4900 (outside U.S. and Canada).

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, January 15, 2010 through 11:59 p.m. ET, Wednesday, January 27, 2010.

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  

November 30, 2009

February 28, 2009

(unaudited)

ASSETS

Investments at fair value

Non-control/non-affiliate investments (amortized cost of $126,612,792 and $137,020,449, respectively)

$          81,805,383 

$        96,462,919 

Control investments (cost of $29,233,097 and $29,905,194, respectively)

21,464,041 

22,439,029 

Affiliate investments (cost of $0 and $0, respectively)

318 

10,527 

Total investments at fair value (amortized cost of $155,845,889 and $166,925,643, respectively)

103,269,742 

118,912,475 

Cash and cash equivalents

5,459,780 

6,356,225 

Cash and cash equivalents, securitization accounts

839,290 

1,178,201 

Outstanding interest rate cap at fair value (cost of $131,000 and $131,000, respectively)

72,593 

39,513 

Interest receivable, net of reserve

3,122,764 

3,087,668 

Deferred credit facility financing costs, net

529,767 

Management fee receivable

1,058,861 

237,370 

Other assets

113,150 

321,260 

Receivable from unsettled trades

600,036 

Total assets

$        114,536,216 

$      130,662,479 

LIABILITIES

Revolving credit facility

$          43,840,749 

$        58,994,673 

Dividend payable

2,073,066 

Management and incentive fees payable

3,093,400 

2,880,667 

Accounts payable and accrued expenses

827,707 

700,537 

Interest and credit facility fees payable

357,455 

72,825 

Total liabilities

$          50,192,377 

$        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

130,001,583 

116,943,738 

Accumulated undistributed net investment income (loss)

(4,496,445)

6,122,492 

Accumulated net realized loss from investments and derivatives

(8,528,440)

(6,948,628)

Net unrealized depreciation on investments and derivatives

(52,634,553)

(48,104,654)

Total Net Assets

64,343,839 

68,013,777 

Total liabilities and Net Assets

$        114,536,216 

$      130,662,479 

NET ASSET VALUE PER SHARE

$                     3.80 

$                   8.20 

GSC Investment Corp.

Consolidated Statements of Operations

For the three months ended November 30

For the nine months ended November 30

2009

2008

2009

2008

(unaudited)

(unaudited)

(unaudited)

(unaudited)

INVESTMENT INCOME

Interest from investments

Non-control/Non-affiliate investments

$ 2,593,082 

$  4,269,985 

$  8,566,587 

$ 12,873,546 

Control investments

368,374 

1,452,237 

1,686,088 

3,198,626 

    Total interest income

2,961,456 

5,722,222 

10,252,675 

16,072,172 

Interest from cash and cash equivalents

2,752 

38,377 

22,934 

141,074 

Management fee income

511,236 

517,875 

1,549,167 

1,529,762 

Other income

54,699 

82,189 

155,111 

164,683 

Total investment income

3,530,143 

6,360,663 

11,979,887 

17,907,691 

EXPENSES

Interest and credit facility financing expenses

1,126,162 

693,830 

3,174,603 

2,150,639 

Base management fees

462,755 

653,995 

1,515,813 

2,108,026 

Professional fees

714,789 

272,196 

1,396,567 

932,785 

Administrator expenses

171,861 

241,317 

515,583 

750,661 

Incentive management fees

542,231 

322,183 

1,289,365 

Insurance

220,059 

173,353 

649,535 

518,001 

Directors fees and expenses

71,989 

72,490 

217,125 

212,375 

General & administrative

65,298 

65,289 

191,223 

208,230 

Expenses before expense waiver and reimbursement

2,832,913 

2,714,701 

7,982,632 

8,170,082 

Expense reimbursement

(171,861)

(241,317)

(515,583)

(800,376)

Total expenses net of expense waiver and reimbursement

2,661,052 

2,473,384 

7,467,049 

7,369,706 

NET INVESTMENT INCOME

869,091 

3,887,279 

4,512,838 

10,537,985 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized loss from investments

(549,864)

(7,293,875)

(1,579,812)

(7,423,694)

Net realized gain from derivatives

30,454 

Net unrealized appreciation/(depreciation) on investments

8,825,100 

(4,142,827)

(4,562,979)

(10,422,015)

Net unrealized appreciation/(depreciation) on derivatives

(16,754)

(1,419)

33,080 

(29,745)

Net gain/(loss) on investments

8,258,482 

(11,438,121)

(6,109,711)

(17,845,000)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$ 9,127,573 

$ (7,550,842)

$ (1,596,873)

$ (7,307,015)

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE

$          1.01 

$          (0.91)

$          (0.19)

$          (0.88)

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED

9,051,711 

8,291,384 

8,542,983 

8,291,384 

Contact:

Debbie Lombardi

GSC Group

973-593-5438

SOURCE GSC Investment Corp.