Saratoga Investment Corp.
GSC INVESTMENT CORP. (Form: 8-K, Received: 10/15/2008 14:38:31)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 

 
FORM 8-K
 
CURRENT REPORT
Pursuant To Section 13 Or 15(d) of The Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): October 14, 2008
 
GSC Investment Corp.
(Exact name of registrant
as specified in charter)
 
     
     
 
Maryland
001-33376
20-8700615
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
888 Seventh Ave, New York, NY 10019
(Address of principal executive offices)
 
     
Registrant’s telephone number, including area code: (212) 884-6200
 
N/A
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

Item 2.02
Results of Operations and Financial Condition.

On October 14, 2008, we issued a press release announcing our financial results for the second quarter ended August 31, 2008. A copy of the press release, together with the related financial schedules, are attached hereto as Exhibit 99.1, the text of which is incorporated by reference herein.  This press release, together with the related financial schedules, are not to be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing, or to form a part of our public disclosure in the United States or otherwise.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.          Description

99.1                      Press Release dated October 14, 2008




 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
   
GSC Investment Corp.
 
       
       
Date:
October 15, 2008
 
By:
/s/ David L. Goret
 
       
Name:
David L. Goret
 
       
Title:
Vice President and Secretary
 


 
Exhibit 99.1
 
 
Contacts :    Carl J. Crosetto
               GSC Group
             212-884-6192

Michael H. Yip
GSC Group
212-884-6216
                       

GSC Investment Corp. Announces Second Quarter 2009 Financial Results
__________________________________________

NEW YORK, October 14, 2008 – GSC Investment Corp. (NYSE:GNV), a business development company, today announced results for the second quarter ended August 31, 2008.

Second Quarter 2009 Highlights
 
·   
Net investment income of $3.5 million or $0.42 per share
 
·   
Declared regular dividend of $0.39 per share
 
·   
Net asset value of $11.05 per share
 
Operating Results
 
For the quarter ended August 31, 2008, GSC Investment Corp. reported net investment income of $3.5 million or $0.42 per share for the quarter.  Net investment income was offset by a net loss on investments of $6.0 million or $0.73 per share, resulting in a net decrease in net assets resulting from operations of $2.6 million or $0.31 per share for the quarter.   Net asset value was $11.05 per share as of August 31, 2008.
 
While we are disappointed by the unrealized losses in the portfolio, i t is a testament to the fundamental strength of our strategy that, in the midst of unprecedented price declines and illiquidity in the corporate debt market, we were able to fully support our quarterly dividend of $0.39 per share out of net investment income,” said CEO Seth M. Katzenstein.
 
“We are mindful of the   continued stress in the economy and have worked to diversify our investment portfolio to insulate it from credit events associated with any single company or industry,” said Mr. Katzenstein.  “ And we continue to closely monitor the performance of all our portfolio companies .
 
Portfolio and Investment Activity
 
As of August 31, 2008, the value of the Company’s investment portfolio was $153.8 million.   The overall portfolio composition consisted of 1 7. 2 % first lien term loans,
 

 
 
3 2. 3 % second lien term loans, 1 9 . 8 % senior secured notes, 1 3. 7 % unsecured notes , 1 6 . 7 % sub ordinated note s of GSCIC CLO and   0. 3 % equity/limited partnership interests.
 
The Company had one portfolio investment that was being accounted for on a non-accrual basis as a result of filing for bankruptcy during the quarter.  All other portfolio investments were performing.
 
During the   second quarter , GSC Investment Corp. made four   investments in an aggregate amount of $ 9.2 million consisting of $ 6.4 million in new portfolio companies and $ 2.8 million in existing portfolio companies.  For the quarter, the C ompany had $6. 0 million in aggregate amount of exits and repayments , resulting in net investments of $3. 2 million in   aggregate amount.
 
In today's challenging environment, we will continue to be selective and only pursue investments that are high in the ca pital structure and offer an attractive risk-adjusted return ,” said Mr. Katzenstein.
 
A s of August 31 , 200 8 , the weighted average current yield on the C ompany s first lien term loans, second lien term loans, senior secured notes , unsecured notes and the GSC IC CLO   subordinated note s were 7.8 %, 9.9 %, 11. 6 % , 12.2 % and 20.2 % , respectively , which results in   a n aggregate weighted average current yield of   1 1.9 %.
 
As of August 31 , 2008 , 42 % , or $ 5 3. 7   million , of the Company s interest-bearing portfolio was fixed ra te debt with a weighted average current coupon of 11. 6 % and 58 % , or $ 74. 1   million , of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 5.7%.
 
 
Liquidity and Capital Resources
 
As of August 31, 2008, the Company had $66.3 million in borrowings under its $100 million revolving credit facility.  Based on the fair value and characteristics of the pledged collateral, the facility had limited availability remaining.  The Company’s asset coverage ratio was 238%.

 
Dividend
 
On August 19, 2008, GSC Investment Corp. declared a first quarter dividend of $0.39 per share payable on September 15, 2008, to common shareholders of record on August 19, 2008.
 
2009 Second Quarter Conference Call/Webcast Information
 
When: Wednesday, October 15, 2008, 10:00 a.m. Eastern Time (ET)
 
Call:   Interested parties may participate by dialing (877) 627-6590 (U.S. and Canada) or (719) 325-4852 (outside U.S. and Canada).
 

 
 
A replay of the call will be available from 1:00 p.m. ET on Wednesday, October 15, 2008 through midnight Wednesday, October 29, 2008 by dialing (888) 203-1112 (U.S. and Canada) or (719) 457-0820 (outside U.S. and Canada), passcode for both replay numbers: 9618747.
 
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 Wednesday, October 15, 2008 through midnight Wednesday, November 5, 2008.
 

 
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.’s filings with the Securities and Exchange Commission, press releases, earnings releases and other financial information are available on its website at www.gscinvestmentcorp.com.
 

 
Forward Looking Statements
 
Information provided in this press release, including valuation of certain of our investments, may contain statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking statements.  These forward-looking statements generally relate to GSC Investment Corp.’s plans, objectives and expectations for future operations and are based upon management’s current estimates and projections of future results or trends.  Actual future results may differ materially from those projected as a result of certain risks and uncertainties.  For a discussion of such risks and uncertainties, see “Note About Forward-Looking Statements” included in the Company’s 10-Q which has been filed with the U.S. Securities and Exchange Commission.  These forward-looking statements are made only as of the date hereof, and GSC Investment Corp. undertakes no obligation to update or revise the forward-looking statements, whether as a result of the new information, future events or otherwise.
 

 
####
 

 
GSC Investment Corp.
 
             
Consolidated Balance Sheets
 
             
   
As of
 
   
August 31, 2008
   
February 29, 2008
 
   
(unaudited)
       
ASSETS
           
             
Investments at fair value
           
Non-control/non-affiliate investments (amortized cost of $150,104,717 and $162,888,724, respectively)
  $ 127,857,819     $ 143,745,269  
Control investments (amortized cost of $30,000,000 and $30,000,000, respectively)
    25,899,553       29,075,299  
Affiliate investments (amortized cost of $0 and $0, respectively)
    16,233       16,233  
Total investments at fair value (amortized cost of $180,104,717 and $192,888,724, respectively)
    153,773,605       172,836,801  
Cash and cash equivalents
    4,858,988       1,072,641  
Cash and cash equivalents, securitization accounts
    6,264,386       14,580,973  
Outstanding interest rate cap at fair value (cost of $131,000 and $131,000, respectively)
    48,408       76,734  
Interest receivable
    2,885,148       2,355,122  
Due from manager
    -       940,903  
Deferred credit facility financing costs, net
    634,337       723,231  
Management fee receivable
    229,736       215,914  
Other assets
    135,050       39,349  
                 
Total assets
  $ 168,829,658     $ 192,841,668  
                 
LIABILITIES
               
Revolving credit facility
  $ 66,250,000     $ 78,450,000  
Payable for unsettled trades
    4,667,738       11,329,150  
Dividend payable
    3,233,640       3,233,640  
Management and incentive fees payable
    2,008,875       943,061  
Accounts payable and accrued expenses
    821,626       713,422  
Interest and credit facility fees payable
    198,210       292,307  
Due to manager
    3,982       11,048  
Total liabilities
  $ 77,184,071     $ 94,972,628  
                 
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
    116,218,966       116,218,966  
Accumulated undistributed net investment income
    639,002       455,576  
Accumulated undistributed net realized gain from investments and derivatives
    1,200,493       1,299,858  
Net unrealized depreciation on investments and derivatives
    (26,413,703 )     (20,106,189 )
Total stockholders' equity
    91,645,587       97,869,040  
                 
Total liabilities and stockholders' equity
  $ 168,829,658     $ 192,841,668  
                 
NET ASSET VALUE PER SHARE
  $ 11.05     $ 11.80  
 
 

 
 
GSC Investment Corp.
 
                         
Consolidated Statement of Operations
 
                         
   
For the three months ended August 31
   
For the six months ended August 31
 
   
2008
   
2007
   
2008
   
2007
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
INVESTMENT INCOME
                       
Interest from investments
                       
Non-Control/Non-Affiliate investments
  $ 4,144,437     $ 5,725,983     $ 8,603,561     $ 9,406,828  
Control investments
    1,111,003       -       1,746,389       -  
     Total interest income
    5,255,440       5,725,983       10,349,950       9,406,828  
Interest from cash and cash equivalents
    36,008       154,946       102,697       175,997  
Management fee income
    489,148       -       1,011,887       383,562  
Other income
    54,279       695       82,494       17,298  
Total investment income
    5,834,875       5,881,624       11,547,028       9,983,685  
                                 
EXPENSES
                               
Interest and credit facility financing expenses
    623,611       1,450,870       1,456,809       2,171,635  
Base management fees
    705,532       918,157       1,454,031       1,278,645  
Professional fees
    315,130       321,678       660,589       864,294  
Administrator expenses
    260,946       -       509,344       -  
Incentive management fees
    407,027       (18,546 )     747,134       340,822  
Insurance
    177,162       157,388       344,648       275,429  
Directors fees
    73,276       82,750       139,885       178,840  
General & administrative
    77,904       130,213       142,941       175,905  
Cost of acquiring management contract
    -       -       -       144,000  
Organizational expense
    -       -       -       22,868  
Expenses before manager expense waiver and reimbursement
    2,640,588       3,042,510       5,455,381       5,452,438  
Expense reimbursement
    (260,946 )     (317,676 )     (559,059 )     (583,442 )
Total expenses net of expense waiver and reimbursement
    2,379,642       2,724,834       4,896,322       4,868,996  
                                 
NET INVESTMENT INCOME
    3,455,233       3,156,790       6,650,706       5,114,689  
                                 
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
                               
Net realized gain/(loss) from investments
    173,681       424,187       (129,819 )     1,445,255  
Net realized gain from derivatives
    14,364       -       30,454       -  
Net unrealized depreciation on investments
    (6,194,371 )     (4,369,060 )     (6,279,188 )     (3,618,259 )
Net unrealized appreciation/(depreciation) on derivatives
    (16,328 )     5,973       (28,326 )     (44,047 )
Net loss on investments
    (6,022,654 )     (3,938,900 )     (6,406,879 )     (2,217,051 )
                                 
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
  $ (2,567,421 )   $ (782,110 )   $ 243,827     $ 2,897,638  
                                 
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE
  $ (0.31 )   $ (0.09 )   $ 0.03     $ 0.37  
                                 
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED
    8,291,384       8,291,384       8,291,384       7,938,438