UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2007

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

GSC Investment Corp.

Maryland		20-8700615
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

12 East 49^th Street, Suite 3200
New York, New York 10017
(Address of principal executive offices)

(212) 884-6200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

		Name of each exchange
Title of each class		on which registered
Common Shares, par value $0.0001 per share		The New York Stock Exchange

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES þ  NO o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o                    Accelerated filer  o                    Non-accelerated filer  þ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o  NO þ

     The number of outstanding common shares of the registrant as of July [11], 2007 was [8,291,384].

 

 

TABLE OF CONTENTS

				Page
PART I. Financial Information
Item 1.		Financial Statements
•		Consolidated Balance Sheets as of May 31, 2007 (unaudited) and February 28, 2007			1
•		Consolidated Statement of Operations for the three months ended May 31, 2007 (unaudited)			2
•		Consolidated Schedule of Investments as of May 31, 2007 (unaudited)			3
•		Consolidated Statement of Changes in Net Assets for the three months ended May 31, 2007 (unaudited)			5
•		Consolidated Statement of Cash Flows for the three months ended May 31, 2007 (unaudited)			6
•		Notes to Consolidated Financial Statements (unaudited)			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			25
Item 4T.		Controls and Procedures			26
PART II. OTHER INFORMATION
Item 1.		Legal Proceedings			26
Item 1A.		Risk Factors			26
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 3.		Defaults Upon Senior Securities			27
Item 4.		Submission of Matters to a Vote of Security Holders			27
Item 5.		Other Information			27
Item 6.		Exhibits			27
SIGNATURES					29

PART I. FINANCIAL INFORMATION

Item 1.		Financial Statements

GSC Investment Corp.

Consolidated Balance Sheets

		As of
		May 31, 2007				February 28, 2007
		(Unaudited)
ASSETS
Investments at fair value (amortized cost of $208,010,746 and $0, respectively)
Non-control/non-affiliate investments		$	205,938,745			$	—
Control investments			2,583,634				—
Affiliate investments			239,168				—
Total investments at fair value			208,761,547				—
Cash and cash equivalents			2,265,303				1,030
Cash, securitization accounts			3,590,672				—
Interest receivable			4,441,802				—
Receivable from open trades			410,586				—
Due from manager			673,662				—
Other assets			976,132
Deferred financing costs, net			1,171,612				—
Deferred offering costs			—				808,617
Total assets		$	222,291,316			$	809,647
LIABILITIES
Debt		$	100,208,119			$	—
Accounts payable and accrued expenses			554,550				105,000
Interest and credit facility fees payable			690,312				—
Management and incentive fees payable			719,856				—
Dividend payable			1,989,932				—
Accrued offering cost			266,883				760,000
Due to affiliate			—				73,810
Total liabilities		$	104,429,652			$	938,810
STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, par value $.0001 per share, 100,000,000 common shares authorized, 8,291,384 and 66 2/3 common shares issued and outstanding, respectively			829				—
Capital in excess of par value			114,311,250				1,000
Accumulated undistributed net investment income (loss)			1,827,736				(130,163	)
Accumulated net realized gain on sale of investments			1,021,068				—
Net unrealized appreciation on investments and derivatives			700,781				—
Total stockholders’ equity (deficit)			117,861,664				(129,163	)
Total liabilities and stockholders’ equity (deficit)		$	222,291,316			$	809,647
NET ASSET VALUE PER SHARE		$	14.21				n/a

GSC Investment Corp.

Consolidated Statement of Operations

		For the three months
		ended May 31, 2007
		(unaudited)
INVESTMENT INCOME
Interest from investments		$	3,680,845
Interest from cash and cash equivalents			21,051
Management fee income			383,562
Other income			16,603
Total investment income			4,102,061
EXPENSES
Interest and credit facility expenses			720,765
Professional fees			542,616
Base management fees			360,488
Incentive management fees			359,368
Insurance			118,041
Directors fee			96,090
Administrative			45,692
Cost of acquiring management contract			144,000
Organizational expense			22,868
Expenses before manager reimbursement			2,409,928
Expense reimbursement			(265,766	)
Total expenses net of expense reimbursement			2,144,162
NET INVESTMENT INCOME			1,957,899
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on sale of investments			1,021,068
Net change in unrealized appreciation on investments			750,801
Unrealized depreciation on derivatives			(50,020	)
Net gain (loss) on investments			1,721,849
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	3,679,748
BASIC AND DILUTED EARNINGS PER COMMON SHARE		$	0.44
COMMON STOCK OUTSTANDING—BASIC AND DILUTED			8,291,384

GSC Investment Corp.

Consolidated Schedule of Investments

May 31, 2007

(Unaudited)

Company		Industry		Investment		Principal				Cost				Fair Value
Non-control/Non-affiliated investments — 174.7%
ABP Corporation		Restaurants		Second lien term loan 9.86%, 7/15/2010		$	5,940,000			$	5,940,000			$	5,940,000
Advanced Lighting Technologies, Inc.		Electronics		Unsecured notes 11.00%, 3/31/2009			6,978,400				6,945,252				6,978,400
Ainsworth Lumber		Natural Resources		Unsecured notes 7.25%, 10/01/2012			100,000				74,308				77,813
Atlantis Plastics Films, Inc.		Packaging		First lien term loan 9.35%, 9/22/2011			6,566,497				6,536,623				6,517,249
Bankruptcy Management Solutions, Inc.		Financial Services		Second lien term loan 11.60%, 7/31/2013			1,990,000				2,009,476				2,024,825
CFF Acquisition LLC		Consumer Services		First lien term loan 9.08%, 7/31/2013			4,896,000				4,896,000				4,896,000
Cortz, Inc.		Consumer Services		First lien term loan 9.11%, 11/30/2010			1,506,292				1,506,292				1,506,292
Energy Alloys, LLC		Oil and Gas		Second lien term loan 12.32%, 10/05/2012			6,200,000				6,200,000				6,200,000
EuroFresh Inc.		Agriculture		Unsecured notes 11.50%, 1/15/2013			5,000,000				4,884,450				5,062,500
Flavor and Fragrance Group Holdings, Inc.		Manufacturing		First lien term loan 9.35%, 6/30/2010			720,443				720,443				720,443
				First lien term loan 9.85%, 6/30/2011			2,109,445				2,109,445				2,109,445
				First lien term loan 12.35%, 12/31/2011			1,188,000				1,188,000				1,188,000
											4,017,888				4,017,888
GFSI Inc		Apparel		Senior secured notes 11.50%, 6/01/2011			18,925,000				18,882,111				19,019,625
Grant U.S. Holdings LLP		Natural Resources		Second lien term loan 11.86%, 9/20/2013			1,000,000				1,000,000				990,830
Group Dekko		Electronics		Second lien term loan 11.57%, 1/20/2012			4,000,000				4,000,000				4,000,000
Hopkins Manufacturing Corporation		Consumer Products		Second lien term loan 12.36%, 1/26/2012			3,250,000				3,244,985				3,244,800
IDI Acquisition Corp.		Healthcare Services		Senior secured notes 10.75%, 12/15/2011			3,800,000				3,542,087				3,572,000
Insight Pharmaceuticals LLC		Consumer Products		First lien term loan 9.62%, 3/31/2011			1,096,711				1,091,406				1,091,227
				First lien term loan 9.99%, 3/31/2012			1,128,140				1,122,646				1,122,499
											2,214,052				2,213,726
Jason Incorporated		Manufacturing		Unsecured notes 13.00%, 11/01/2008			12,000,000				12,000,000				12,000,000
				Unsecured notes 13.00%, 11/01/2008			3,400,000				3,400,000				3,400,000
											15,400,000				15,400,000
Legacy Cabinets, Inc.		Building Products		First lien term loan 9.13%, 8/18/2012			1,885,750				1,857,369				1,878,678
				Second lien term loan 12.88%, 8/18/2013			2,400,000				2,350,959				2,391,000
											4,208,328				4,269,678

Company		Industry		Investment		Principal				Cost				Fair Value
McMillin Companies LLC		Home Buildings		Senior secured notes 9.53%, 4/30/2012			11,000,000				10,170,399				10,156,300
Miller Heiman Acquisition Corp.		Business Services		First lien term loan 9.10%, 6/01/2012			1,796,789				1,796,789				1,796,789
NE Restaurant Co.		Restaurants		Unsecured notes 10.75%, 7/15/2008			16,930,000				16,897,695				16,940,581
Network Communications, Inc.		Publishing		Unsecured notes 10.75%, 12/01/2013			5,000,000				5,105,880				5,303,125
New World Restaurant Group, Inc.		Restaurants		Second lien term loan 12.13%, 1/26/2012			9,500,000				9,539,816				9,618,750
PRACS Institute, LTD		Healthcare Services		Second lien term loan 13.25%, 4/17/2013			3,000,000				3,000,000				3,000,000
Redwood Toxicology Laboratory, Inc.		Healthcare Services		First lien term loan 9.32%, 2/27/2012			978,024				970,883				970,689
SILLC Holdings, LLC		Automotive		Second lien term loan 12.11%, 5/24/2011			23,049,210				22,822,250				22,818,718
Sportcraft, LTD		Leisure Equipment		Second lien term loan 13.10%, 3/31/2012			9,000,000				7,221,893				7,200,000
Stronghaven, Inc.		Packaging		Second lien term loan 11.00%, 10/31/2010			6,500,000				6,500,000				6,500,000
Switch & Data Holdings, Inc.		Telecommunications		First lien term loan 9.60%, 3/31/2011			4,208,940				4,205,493				4,198,417
Targus Group International, Inc.		Consumer Products		Second lien term loan 12.86%, 5/22/2013			5,000,000				4,721,833				4,762,500
Terphane Holdings Corp.		Packaging		Senior secured notes 12.50%, 6/15/2009			2,800,000				2,787,708				2,800,000
				Senior secured notes 12.50%, 6/15/2009			2,621,250				2,609,743				2,621,250
				Senior secured notes 15.05%, 6/15/2009			500,000				497,684				500,000
											5,895,135				5,921,250
Transportation Aftermarket Enterprises, Inc.		Automotive		Second lien term loan 12.60%, 6/30/2012			1,025,000				985,055				984,000
USS Mergerco, Inc.		Environmental		Second lien term loan 9.60%, 6/29/2013			5,960,000				5,813,834				5,811,000
X-Rite, Incorporated		Electronics		Second lien term loan 10.35%, 6/30/2013			4,000,000				4,039,137				4,025,000
Sub Total Non-control/Non-affiliated investments											205,187,944				205,938,745
Control investments — 2.2%
GSC CDO III, LLC		Financial Services		100% membership interest							2,583,634				2,583,634
Affiliate investments — 0.2%
GSC Partners CDO GP III, LP		Financial Services		6.24% Partnership interest							239,168				239,168
TOTAL INVESTMENT ASSETS — 177.1%										$	208,010,746			$	208,761,547

GSC Investment Corp.

Consolidated Statements of Changes in Net Assets

		For the three months
		ended May 31, 2007
		(Unaudited)
Operations:
Net operating income before investment gains and losses		$	1,957,899
Net realized gain on sale of investments			1,021,068
Net unrealized appreciation on investments			750,801
Unrealized depreciation on derivatives			(50,020	)
Net increase in net assets resulting from operations			3,679,748
Shareholder distributions:
Distributions declared			(1,989,932	)
Net decrease in net assets resulting from shareholder distributions			(1,989,932	)
Capital share transactions:
Issuance of common stock, net			116,301,011
Net increase in net assets resulting from capital share transactions			116,301,011
Total increase in net assets			117,990,827
Net assets at beginning of period			(129,163	)
Net assets at end of period		$	117,861,664
Net asset value per common share		$	14.21
Common shares outstanding at end of period			8,291,384

GSC Investment Corp.

Consolidated Statements of Cash Flows

		For the three months
		ended May 31, 2007
		(Unaudited)
Operating activities
Net increase in net assets from operations		$	3,679,748
Adjustments to reconcile net increase in net assets from operations to net cash from operating activities:
Net realized gain from investments			(1,021,068	)
Net unrealized appreciation on investments			(750,801	)
Net accretion of discount on securities			(376,683	)
Amortization of deferred financing costs			30,452
Proceeds from sale and redemption of investments			46,987,424
Purchase of investments			(237,980,658	)
Changes in operating assets and liabilities:
Cash, securitization accounts			(3,590,672	)
Deferred offering costs			808,617
Interest receivable			(4,441,802	)
Due from manager			(747,472	)
Receivable from open trades			(410,586	)
Other assets			(976,132	)
Accrued deferred offering costs			(493,117	)
Accounts payable and accrued expenses			449,550
Interest and credit facility fees payable			690,312
Management and incentive fees payable			719,856
Net cash used in operating activities			(197,423,032	)
Financing activities
Net proceeds from issuance of common stock			100,681,250
Borrowings on debt			114,708,119
Paydowns on debt			(14,500,000	)
Credit facility financing cost			(1,202,064	)
Net cash provided by financing activities			199,687,305
CHANGE IN CASH AND CASH EQUIVALENTS			2,264,273
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			1,030
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	2,265,303
Supplemental information:
Interest paid during the period		$	—
Dividends declared during the period		$	1,989,932
Supplemental non-cash information
Issuance of common stock		$	15,619,761
Purchase of investments		$	15,619,761

GSC INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of May 31, 2007
(Unaudited)

1. Organization and Basis of Presentation

GSC Investment Corp. (the “Company”, “we” and “us”) is a non-diversified closed end management investment company incorporated in Maryland that has elected to be treated and is regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). We commenced operations on March 23, 2007 and completed our initial public offering (“IPO”) on March 28, 2007. The Company intends to file an election and to qualify to be treated for tax purposes as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) commencing with our first taxable year as a corporation. We expect to continue to qualify and to elect to be treated for tax purposes as a RIC. Our investment objectives are to generate both current income and capital appreciation through debt and equity investments by primarily investing in private middle market companies and select high yield bonds.

We are externally managed and advised by our investment adviser, GSCP (NJ), L.P. (individually and collectively with its affiliates, “GSC Group” or the “Manager”), pursuant to an investment advisory and management agreement.

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U. S. generally accepted accounting principles and include the accounts of the Company and its special purpose financing subsidiaries, GSC Investment Funding, LLC and GSC Investment Funding II, LLC. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation.

Interim consolidated financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of financial statements for the interim period have been included. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending February 29, 2008.

2. Summary of Significant Accounting Policies

Use of Estimates in the Preparation of Financial Statements

The preparation of the accompanying consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at

the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market fund. Cash and cash equivalents are carried at cost which approximates fair value.

Cash, Securitization Accounts

Cash, securitization accounts includes amounts held in designated bank accounts representing payments received on securitized investments or other reserved amounts associated with the Company’s securitization facilities. The Company is required to use a portion of these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the related securitization agreements.

Investment Classification and Valuation

Classification

The Company classifies it investments in accordance with the requirements of the 1940 Act. Under the 1940, “Control Investments” are defined as investments in companies in which we own more than 25% of the voting securities or maintain greater than 50% of the board representation. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which we own between 5% and 25% of the voting securities. Under the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments or Affiliated Investments.

Valuation

Investments for which market quotations are readily available are valued at such market quotations subject to any decision by our board of directors to make a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as determined in good faith by our board of directors based on input from our Manager, our audit committee and, if our board or audit committee so request, a third party independent valuation firm. Determinations of fair value may involve subjective judgments and estimates. The types of factors that may be considered in a fair value pricing include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. The determination of fair value by our board of directors may differ materially from the values that would have been used if a ready market for these investments existed. Our net asset value could be adversely affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments.

“opted out” of our dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving the cash dividends.

New Accounting Pronouncements

In September 2006, the FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”), which provides companies with an option to report selected financial assets and liabilities at fair value. The objective of SFAS 159 is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company’s choice to use fair value on its earnings. SFAS 159 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. SFAS 159 does not eliminate disclosure requirements of other accounting standards, including fair value measurement disclosures in SFAS 157. This Statement is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of Statement 157. At this time, the Company is evaluating the implications of SFAS No. 159, and its impact in the consolidated financial statements has not yet been determined.

3. Investments

The composition of our investments as of May 31, 2007, at cost and fair value was as follows:

										Fair Value
						Investments at Fair				Percentage of Total
		Investments at Cost				Value				Portfolio
First lien term loans		$	28,001,389			$	27,995,728				13.41	%
Second lien term loans			89,389,238				89,511,423				42.88	%
Senior secured notes			38,489,732				38,669,175				18.52	%
Unsecured notes			49,307,585				49,762,419				23.84	%
Equity/Limited partnership interest			2,822,802				2,822,802				1.35	%
Total		$	208,010,746			$	208,761,547				100.00	%

4. Agreements

On March 21, 2007, the Company entered into an investment advisory and management agreement (the “Management Agreement”) with GSC Group. The initial term of the Management Agreement is two years, with automatic, one-year renewals at the end of each year subject to certain approvals by our board of directors and/or our stockholders. Pursuant to the Management Agreement, our investment adviser implements our business strategy on a day-to-day basis and performs certain services for us, subject to oversight by our board of directors. Our investment adviser is responsible for, among other duties, determining investment criteria, sourcing, analyzing and executing investments transactions, asset sales, financings and performing asset management duties. Under the Management Agreement, we have agreed to pay our investment adviser a management fee for investment advisory and management services consisting of two components — a base management fee and an incentive fee.

On May 18, 2007, our board of directors approved an amendment to the Management Agreement providing that the base management fee and incentive fee shall be computed with reference to the fiscal year of the Company rather than the calendar year (in order to align the fee calculation dates with our financial reporting cycle).

The base management fee is calculated based on the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters, and appropriately adjusted for any share issuances or repurchases during the applicable fiscal quarter. For the current fiscal quarter, the base management fee was calculated based upon the initial value of our total assets after giving effect to the initial asset purchase from CDO Fund III without giving effect to subsequent asset purchases made during the quarter. The base management fee was prorated for the period from March 28, 2007 to May 31, 2007.

The incentive fee consists of the following two parts:

The first, payable quarterly in arrears, equals 20% of our pre-incentive fee net investment income, expressed as a rate of return on the value of the net assets at the end of the immediately preceding quarter (including interest that is accrued but not yet received in cash), that exceeds a 1.875% quarterly (7.5% annualized) hurdle rate measured as of the end of each fiscal quarter. Under this provision, in any fiscal quarter, our investment adviser receives no incentive fee unless our pre-incentive fee net investment income exceeds the hurdle rate of 1.875%. Amounts received as a return of capital are not included in calculating this portion of the incentive fee. Since the hurdle rate is based on net assets, a return of less than the hurdle rate on total assets may still result in an incentive fee.

The second, payable at the end of each fiscal year equals 20% of our net realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation, in each case on a cumulative basis, less the aggregate amount of capital gains incentive fees paid to the investment adviser through such date.

For the three months ended May 31, 2007, we incurred $360,488, in base management fees, $155,154 in incentive fees related to pre-incentive fee net investment income and $204,214 incentive fees related to net realized capital gains. As of May 31, 2007, $719,856 was unpaid and included in fees due to Manager in the accompanying consolidated balance sheet.

On March 21, 2007, the Company entered into a separate administration agreement (the “Administration Agreement”) with GSC Group, pursuant to which our administrator has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide managerial assistance on our behalf to those portfolio companies to which we are required to provide such assistance. Our allocable portion is based on the proportion that our total assets bears to the total assets administered by our administrator.

GSC Group has agreed not to bill the Company for any expenses under the Administration Agreement until the Company’s total assets exceeds $500 million. Therefore, for the three months ended May 31, 2007, we did not accrue or incur any administrative fees and there were no outstanding fees payable to the administrator.

5. Borrowings

As a BDC, we are only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.

On April 11, 2007, we formed GSC Investment Funding LLC (“GSC Funding”), a wholly owned consolidated subsidiary of the Company, through which we entered into a revolving securitized credit facility (the “Revolving Facility”) with Deutsche Bank AG, as administrative agent, under which we may borrow up to $100 million, which amount may be increased to $130 million subject to certain conditions. The Revolving Facility is secured by collateral that we currently own and the collateral acquired by us with the advances under the Revolving Facility. Under the Revolving Facility, funds are borrowed from or through certain lenders at prevailing commercial paper rates or, if the commercial paper market is at any time unavailable, at prevailing LIBOR rates, plus 0.70% payable monthly. As of May 31, 2007, there was $74.5 million outstanding under the Revolving Facility and the Company continues to be in compliance with all of the limitations and requirements of the Revolving Facility.

On May 1, 2007, we formed GSC Investment Funding II LLC (“GSC Funding II”), a wholly owned consolidated subsidiary of the Company, through which we entered into a $25.7 million term securitized credit facility (the “Term Facility” and, together with the Revolving Facility, the “Facilities”) with Deutsche Bank AG, as administrative Agent, which was fully drawn at closing. The Term Facility bears interest at prevailing commercial paper rates or, if the commercial paper market is at any time unavailable, at prevailing LIBOR rates, plus 0.70%, payable quarterly. As of May 31, 2007, there was $25.7 million outstanding under the Term Facility and the Company continues to be in compliance with all of the limitations and requirements of the Term Facility.

Each of the Facilities contain limitations as to how borrowed funds may be used, such as restrictions on geographic and industry concentrations, asset size, payment frequency and status, average life, collateral interests and investment ratings. In addition, our financing relies on Rule 3a-7 under the 1940 Act which prohibits us from, among other things, directing either of the Facilities to acquire, or dispose of investments for the primary purpose of recognizing gains or decreasing losses resulting from market

value changes, which our investment advisor may otherwise do absent such restrictions. We are also subject to regulatory restrictions on leverage which may affect the amount of funding that we can obtain under the Facilities. The Facilities also includes certain requirements relating to portfolio performance the violation of which could result in the early amortization of the Facilities, limit further advances (in the case of the Revolving Facility) and, in some cases, result in an event of default.

For the three months ended May 31, 2007, the interest expense accrued under the Revolving Facility and the Term Facility was $557,126 and $133,187, respectively.

6. Interest Rate Cap Agreements

In April and May 2007, pursuant to the Revolving Facility agreement, the Company entered into two interest rate cap agreements with notional amounts of $34 million and $6 million at costs of $75,000 and $12,000, respectively, with Deutsche Bank AG. The agreements provide for a payment to the Company in the event LIBOR exceeds 8%, mitigating our exposure to increases in LIBOR. The interest rate cap agreements expire in February 2014.

In May 2007, pursuant to the Term Facility agreement, the Company entered into an interest rate cap agreement with a notional amount of $60.9 million at a cost of $44,000 with Deutsche Bank AG. The agreements provide for a payment to the Company in the event LIBOR exceeds 8%, mitigating our exposure to increases in LIBOR. The interest rate cap agreements expire in November 2013.

The total notional amount for all interest rate cap agreements is $100.9 million with a fair value of $80,980 which is recorded in other assets on the Company’s consolidated balance sheet at May 31, 2007. The Company records changes in the fair value of the interest rate cap agreements monthly based on the current market valuation at month end as unrealized depreciation or appreciation on derivative in the Company’s consolidated statement of operations.

7. Stockholders’ Equity

On March 20, 2007, the Company issued 1,041,317 shares of common stock, priced at $15.00 per share, to GSC Group, in exchange for the general partnership interest and a limited partnership interest in GSC Partners CDO III, GP, LP, collectively valued at $15,619,761.

On March 28, 2007, the Company completed its IPO of 7,250,000 shares of common stock, priced at $15.00 per share, before underwriting discounts and commissions. Total proceeds received from the IPO, net of the underwriter’s discount and commissions, were approximately $101.6 million.

8. Earnings per share

The following information sets forth the computation of basic and diluted net increase in net assets per share resulting from operations for the three months ended May 31, 2007:

Basic and diluted
Net increase in net assets resulting from operations		$	3,679,748
Total common shares outstanding			8,291,384
Earnings per common share-basic and diluted		$	0.44

9. Dividend

On May 21, 2007, the Company declared a dividend, for the three months ended May 31, 2007, of $0.24 per share for a total of $1,989,932 to shareholders of record as of May 29, 2007 and payable on June 6, 2007.

10. Financial Highlights

The following is a schedule of financial highlights for the three months ended May 31, 2007:

Per share data:
Net asset value at beginning of period		$	(0.02	)
Issuance of common stock, net			14.03
Net investment income			0.24
Net realized gains on investments			0.12
Net unrealized appreciation on investments			0.08
Net increase in stockholders’ equity			0.44
Distributions declared from net investment income			(0.24	)
Distributions from net realized capital gains			0.00
Total distributions to stockholders			(0.24	)
Net asset value at end of period		$	14.21
Per share market value at end of period		$	13.76
Total return based on market value (1)			(6.67	%)
Total return based on net asset value (2)			3.14	%
Shares outstanding at end of period			8,291,761

Ratio/Supplemental data:
Net assets at end of period		$	117,861,664
Ratio of net investment income to average net assets (3)			8.13	%
Ratio of operating expenses to average net assets (3)(4)			6.39	%
Ratio of incentive management fees to average net assets (3)			1.73	%
Ratio of credit facility related expenses to average net assets (3)			3.46	%
Ratio of total expenses to average net assets (3) (4)			11.58	%

11. Related Party Transactions

On March 20, 2007, the Company issued 1,041,317 shares of common stock, priced at $15.00 per share, to GSC Group, in exchange for the general partnership interest and a limited partnership interest in GSC Partners CDO III, GP, LP, collectively valued at $15,619,761. Additionally, GSC Group assigned its rights to act as collateral manager for GSC Partners CDO Fund III, Limited to the Company. The Company paid GSC Group $144,000 to acquire the rights to act as collateral manager.

12. Subsequent events

In June, 2007, we made 3 investments in an aggregate principal amount of $8.7 million of which $1.5 million were to a new portfolio company and $7.2 million to existing portfolio companies. Also, 3 investments in an aggregate principal amount of $17.7 million have been exited or redeemed.

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this quarterly report. In addition to historical information, the following discussion and other parts of this quarterly report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed in Item 1A of Part II hereof and Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended February 28, 2007.

     The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements.

     The forward-looking statements contained in this quarterly report include statements as to:

	•		our future operating results;
	•		our business prospects and the prospects of our portfolio companies;
	•		the impact of investments that we expect to make;
	•		our contractual arrangements and relationships with third parties;
	•		the dependence of our future success on the general economy and its impact on the industries in which we invest;
	•		the ability of our portfolio companies to achieve their objectives;
	•		our expected financings and investments;

	•		our regulatory structure and tax treatment, including our ability to operate as a business development company and a regulated investment company;
	•		the adequacy of our cash resources and working capital;
	•		the timing of cash flows, if any, from the operations of our portfolio companies; and
	•		the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments.

     You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this quarterly report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this quarterly report.

Overview

     GSC Investment Corp. is a newly-incorporated Maryland corporation that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). Our investment objectives are to generate both current income and capital appreciation through debt and equity investments by primarily investing in private middle market companies and select high yield bonds. We intend to file an election to be treated as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code commencing with our first taxable year as a corporation. We commenced operations on March 23, 2007 and completed our initial public offering (“IPO”) on March 28, 2007. We are externally managed and advised by our investment adviser, GSCP (NJ), L.P.

     We used the net proceeds of our IPO to purchase approximately $100.7 million in aggregate principal amount of debt investments from GSC Partners CDO Fund III, Limited (“CDO Fund III”) a CDO managed by our investment adviser. We used borrowings under our Facilities (as defined below) to purchase approximately $115.1 million in aggregate principal amount of debt investments in April and May 2007 from CDO Fund III and GSC Partners CDO Fund Limited (“CDO Fund I”), another CDO managed by our investment adviser.

     Our portfolio is comprised primarily of investments in first and second lien term loans and mezzanine debt issued by private middle market companies and high yield bonds. We are seeking to create a diversified portfolio by investing up to 5% of our total assets in each investment, although the investment sizes may be more or less than the targeted range. These investments are sourced through a network of relationships with commercial finance companies, commercial and investment banks, and financial sponsors. The capital that we provide is generally used to fund buyouts, acquisitions, growth, recapitalizations and other types of financings. First and second lien loans are generally senior debt instruments that rank ahead of subordinated debt of the portfolio company. These loans also have the benefit of security interests on the assets of the portfolio company, which may rank ahead of, or be junior to, other security interests. Mezzanine debt and high yield bonds are typically subordinated to leveraged loans and generally unsecured, though a substantial amount of the high yield bonds that we currently own are secured. Substantially all of the debt investments held in our portfolio hold a non-investment grade rating by Moody’s Investors Service and/or Standard & Poor’s or, if not rated, would be rated below investment grade if rated. High yield bonds rated below investment grade are commonly referred to as “junk bonds.” We also anticipate making equity investments in private middle market companies. For purposes of this quarterly report, we generally use the term “middle market” to refer to companies with annual EBITDA of between $5 million and $50 million. EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization.

     While our primary focus is to generate both current income and capital appreciation through investments in debt and equity securities of private middle market companies and high-yield bonds, we intend to invest up to 30% of our assets in opportunistic investments. Opportunistic investments may include investments in distressed debt, debt and equity securities of public companies, credit default swaps, emerging market debt, and structured finance vehicles, including collateralized debt obligations (“CDO”) holding debt, equity or synthetic securities. As part of this 30%, we may also invest in debt of private middle market companies located outside the United States. Given our primary investment focus on first and second lien loans and mezzanine debt in private companies and high yield bonds, we believe our opportunistic investments will allow us to supplement our core investments with other investments that are within our investment adviser’s expertise that we believe offer attractive yields and/or the potential for capital appreciation.

     As a BDC, we are required to comply with certain regulatory requirements. For instance, we have to invest at least 70% of our total assets in “qualifying assets,” including securities of private U.S. operating companies or public U.S. companies whose securities are not listed on a national securities exchange registered under the Exchange Act (i.e., New York Stock Exchange, American Stock Exchange and The NASDAQ Global Market), cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, we are only allowed to borrow money such that our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowing, with certain limited exceptions. The amount of our borrowing will depend on our investment adviser’s assessment of market conditions and other factors.

     Revenues

     We generate revenue in the form of interest income and capital gains on the debt investments that we hold and capital gains, if any, on equity interests that we may acquire in portfolio companies. We expect our debt investments, whether in the form of first and second lien leveraged loans, mezzanine debt or high yield bonds, to have terms of up to ten years, and to bear interest at either a fixed or floating rate. Interest on debt will be payable generally either quarterly or semi-annually. In some cases our debt investments may provide for a portion of the interest payable to be paid-in-kind. To the extent interest is paid-in-kind, it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and possibly consulting fees. Any such fees will be generated in connection with our investments and recognized as earned. We may also invest in equity securities, which may, in some cases, include preferred securities that pay dividends on a current basis.

     Additionally, pursuant to an agreement with our investment adviser entered into on October 17, 2006, prior to becoming a BDC, we acquired the right to act as investment adviser to CDO Fund III and collect the management fees related thereto from March 20, 2007 until the liquidation of the CDO Fund III assets. We paid our investment adviser a fair market price of $144,000 for the right to act as investment advisor to CDO Fund III.

     Expenses

     Our primary operating expenses include the payment of investment advisory and management fees, professional fees, insurance, fees paid to independent directors and overhead expenses, including, at such time that we have $500 million in total assets, our allocable portion of our administrator’s overhead under the administration agreement. Our allocable portion is based on the proportion that our total assets bears to the total assets administered by our administrator. Our investment advisory and management fees compensate our investment adviser for its work in

identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions, including those relating to: organization; calculating our net asset value (including the cost and expenses of any independent valuation firm); expenses incurred by our investment adviser payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies; interest payable on debt, if any, incurred to finance our investments; offerings of our common stock and other securities; investment advisory and management fees; administration fees; fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments; transfer agent and custodial fees; registration fees; listing fees; taxes; independent directors’ fees and expenses; costs of preparing and filing reports or other documents of the SEC; the costs of any reports, proxy statements or other notices to stockholders, including printing costs; to the extent we are covered by any joint insurance policies, our allocable portion of the insurance premiums for such policies; direct costs and expenses of administration, including auditor and legal costs; and all other expenses incurred by us or our administrator in connection with administering our business. For a period of 12 months beginning March 23, 2007, we will be reimbursed by the manager for operating expenses to the extent that our total annual operating expenses (other than investment advisory and management fees and interest and credit facility expenses) exceed an amount equal to 1.55% of our net assets attributable to common stock.

     Pursuant to the investment advisory and management agreement, we pay our investment adviser a fee for investment advisory and management services consisting of two components — a base management fee and an incentive fee.

     The base management fee is calculated based on the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters, and appropriately adjusted for any share issuances or repurchases during the applicable fiscal quarter.

     The incentive fee has two parts, as follows:

     The first, payable quarterly in arrears, equals 20% of our pre-incentive fee net investment income, expressed as a rate of return on the value of the net assets at the end of the immediately preceding quarter (including interest that is accrued but not yet received in cash), that exceeds a 1.875% quarterly (7.5% annualized) hurdle rate measured as of the end of each fiscal quarter. Under this provision, in any fiscal quarter, our investment adviser receives no incentive fee unless our pre-incentive fee net investment income exceeds the hurdle rate of 1.875%. Amounts received as a return of capital are not included in calculating this portion of the incentive fee. Since the hurdle rate is based on net assets, a return of less than the hurdle rate on total assets may still result in an incentive fee.

     The second, payable at the end of each fiscal year, equals 20% of our net realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation, in each case on a cumulative basis, less the aggregate amount of capital gains incentive fees paid to the investment adviser through such date.

     On May 18, 2007, our board of directors approved a ministerial amendment to the investment advisory and management agreement providing that the base management fee and incentive fee shall be computed with reference to the fiscal year of the Company rather than the calendar year (in order to align the fee calculation dates with our financial reporting cycle).

     To the extent that any of our loans are denominated in a currency other than U.S. dollars, we may enter into currency hedging contracts to reduce our exposure to fluctuations in currency exchange rates. We may also enter into interest rate hedging agreements. Such hedging activities, which will be subject to compliance with applicable legal requirements, may include the use of

interest rate caps, futures, options and forward contracts. Costs incurred in entering into or settling such contracts will be borne by us.

PORTFOLIO AND INVESTMENT ACTIVITY

     As of May 31, 2007, our portfolio consisted of $208.9 million in aggregate principal amount of investments. As of May 31, 2007, we invested in excess of 5% of total assets in 4 of our 41 investments, but in each case less than 10.3% of our total assets, and our five largest investments represented approximately 36.5% of our total assets. We also anticipate making equity investments in private middle market companies.

     During the three months ended May 31, 2007, we made 99 investments in an aggregate principal amount of 243.1 million of which $112.9 million were to new portfolio companies and $130.2 million to existing portfolio companies. Also during the three months ended May 31, 2007, we had $34.2 million in exits and repayments resulting in net investments of $208.9 million for the period.

     As of May 31, 2007, we had 41 investments in 34 portfolio companies with an average investment size of $5.1 million and a weighted average life of 3.9 years. The overall portfolio composition consisted of 13.4% first lien term loans, 42.9% second lien term loans, 18.5% senior secured notes, 23.8% unsecured notes, and 1.4% equity/limited partnership interests.

     As of May 31, 2007, the weighted average current coupon on our first lien term loans, second lien term loans, senior secured notes and unsecured notes were 9.5%, 11.8%, 11.1% and 11.6% respectively. At May 31, 2007, 45% or $95.0 million of our interest -bearing portfolio is fixed rate debt with a weighted average current coupon of 11.3% and 55% or $113.9 million of our interest-bearing portfolio is floating rate debt with a weighted average current spread of LIBOR plus 5.6%.

     The following table shows the portfolio composition by industry grouping at fair value as of May 31, 2007.

Portfolio composition by industry grouping at fair value as of May 31, 2007

		May 31, 2007
		Investments at				Percentage of
		Fair Value				Total Portfolio
Restaurants		$	32,499,331				15.57	%
Automotive			23,802,718				11.40	%
Manufacturing			19,417,888				9.30	%
Apparel			19,019,625				9.11	%
Packaging			18,938,499				9.07	%
Electronics			15,003,400				7.18	%
Consumer Products			10,221,026				4.90	%
Homebuilding			10,156,300				4.87	%
Healthcare Services			7,542,689				3.61	%
Leisure Equipment			7,200,000				3.45	%
Consumer Services			6,402,292				3.07	%
Oil and Gas			6,200,000				2.97	%
Environmental			5,811,000				2.78	%
Publishing			5,303,125				2.54	%
Agriculture			5,062,500				2.43	%
Financial Services			4,847,627				2.32	%
Building Products			4,269,678				2.05	%
Telecommunications			4,198,417				2.01	%
Business Services			1,796,789				0.86	%
Natural Resources			1,068,643				0.51	%
Total		$	208,761,547				100.00	%

     The following table shows the portfolio composition by geographic location at fair value as of May 31, 2007. The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Portfolio composition by geographic location at fair value as of May 31, 2007

		May 31, 2007
		Investments at				Percentage of
		Fair Value				Total Portfolio
Midwest		$	55,158,116				26.42	%
West			42,860,353				20.53	%
Mid Atlantic			39,073,134				18.72	%
Southeast			35,988,470				17.24	%
Northeast			28,691,581				13.74	%
International			6,989,893				3.35	%
Total		$	208,761,547				100.00	%

Operations

     Investment Income

     Total investment income for the three months ended May 31, 2007 consisted of approximately $3.7 million in interest income from investments, $21,051 in interest income from cash and cash equivalents, $383,562 in fees from managing CDO Fund III and $16,603 in other income. We will not earn fees pertaining to the management of CDO Fund III in future quarters. No interest was paid-in-kind.

     Operating Expenses

     Total operating expenses before manager reimbursement for the three months ended May 31, 2007 consisted of $720,765 in interest and credit facility expense, $542,616 in professional fees, $360,488 in base management fees, $144,000 in costs associated with the acquisition of the management contract, $118,041 in insurance expenses, $359,368 in incentive management fees, $96,090 in director fees, $45,692 in administrative expenses, and $22,868 in organizational expenses. Our professional fees included $225,915 in expenses related to the initial valuation of our portfolio and $110,000 related to the preparation of our first 10-K. We expect portfolio valuation and public filing preparation expenses to be lower in future quarters. The base management fee for the quarter was prorated for the period from March 28^th through May 31^st and was calculated based upon the initial value of the Company’s total assets after giving effect to the initial assets purchased from CDO Fund III, without giving effect to subsequent asset purchases during the quarter. The base management fee would have been greater had it been calculated based on the average value of our total assets at the beginning and end of the quarter, which will be the case in future quarters, and is not representative of the base management fee we expect to incur in future quarters.

     The Manager has agreed to reimburse the Company for operating expenses to the extent that the total annual operating expenses (other than investment advisory and management fees and interest and credit facility expense) exceeds an amount equal to 1.55% of our net assets attributable to our common stock. For the three months ended May 31, 2007, we recorded $265,766 in expense reimbursement from the Manager based upon our total estimated annual operating expenses.

     Net Realized Gains/Losses on Sales of Investments

     For the three months ended May 31, 2007, the Company had approximately $1.0 million of net realized gains, approximately $982,725 of which was attributable to the repayment of the Strategic Finance Company Senior Notes.

     Net Unrealized Gains/Losses on Investments

     For the three months ended May 31, 2007, the Company’s investments had an increase in net unrealized appreciation of $750,801, primarily due to a $197,245 gain on Network Communications, Inc., a $178,051 gain on Eurofresh, Inc., a $137,514 gain on GFSI, Inc. and a $78,933 gain on New World Restaurant Group.

     Net Unrealized Gains/Losses on Derivatives

     For the three months ended May 31, 2007, the Company recorded unrealized depreciation on derivatives of $50,020 relating to a decline in value of the interest rate caps purchased pursuant to the Facilities.

     Changes in Net Asset Value from Operations

     We recorded a $3.7 million net increase in net assets resulting from operations for the three months ended May 31, 2007. Based on 8,291,384 common shares outstanding as of May 31, 2007, our net per share increase in net assets resulting from operations was $0.44.

Financial condition, liquidity and capital resources

     The Company’s liquidity and capital resources have been generated primarily from the net proceeds of its IPO, advances from the Revolving Facility and the Term Facility (each as

defined below), as well as cash flows from operations. On March 28, 2007, we completed our IPO and issued 7,250,000 common shares and received net proceeds of $101.7 million.

     On April 11, 2007, we entered into a revolving securitized credit facility (the “Revolving Facility”) pursuant to which we may borrow up to $100 million, which amount may be increased to $130 million subject to certain conditions. Advances under the Revolving Facility were used to purchase $55.8 million in aggregate principal amount of debt investments from CDO Fund III. Future advances under the Revolving Facility may be used to purchase additional investments as they become available. The Revolving Facility is secured by collateral that we currently own and the collateral acquired by us with advances thereunder. Under the Revolving Facility, funds are borrowed from or through certain lenders at prevailing commercial paper rates or, if the commercial paper market is at any time unavailable, at prevailing LIBOR rates, plus 0.70%, payable monthly.

     On May 1, 2007, we entered into a $25.7 million term securitized credit facility (the “Term Facility” and, together with the Revolving Facility, the “Facilities”), which was fully drawn at closing. The proceeds of term facility, together with additional advances under our Revolving Facility, were used to purchase $59.3 million in aggregate principal amount of debt investments from CDO Fund I. The Term Facility bears interest at prevailing commercial paper rates or, if the commercial paper market is at any time unavailable, at prevailing LIBOR rates, plus 0.70%, payable quarterly.

     As of May 31, 2007, we have borrowed an aggregate of $100.2 million under the Facilities and have $25.5 million of undrawn commitments remaining. As of May 31, 2007, our asset coverage ratio, as defined in the 1940 Act, was 218%.

     As of May 31, 2007 the fair value of investments and cash and cash equivalents, cash, Facilities accounts, and outstanding borrowings under the Facilities were as follows:

						Percent
		Fair Value				Of Total
Cash and cash equivalents		$	2,265,303				1.1	%
Cash, Facilities accounts			3,590,672				1.7	%
First lien term loans			27,995,728				13.0	%
Second lien term loans			89,511,423				41.7	%
Senior secured notes			38,669,175				18.0	%
Unsecured notes			49,762,419				23.2	%
Equity/Limited Partnership Interests			2,822,802				1.3	%
Total		$	214,617,522				100.0	%
Outstanding borrowings		$	100,208,119

     On May 21, 2007, our Board of Directors declared a dividend of $0.24 per share payable on June 6, 2007 to common stockholders of record on May 29, 2007. The dividend was for the “stub” fiscal quarter beginning March 28, 2007 (the completion date of our IPO) and ending May 31, 2007.

Off-Balance Sheet Arrangements

     None.

Item 3.		Quantitative and Qualitative Disclosures about Market Risk

     Our business activities contain elements of market risk. We consider our principal market risks to be fluctuations in interest rates and the valuations of our investment portfolio. Essential to our business is managing these risks. Accordingly, we have systems and procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds and to continually monitor these risks and thresholds by means of administrative and information technology systems and other policies and processes.

     Interest Rate Risk

     Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility including relative changes in different interest rates, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our interest bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire loans and securities and the value of our investment portfolio.

     Our investment income is affected by fluctuations in various interest rates, including LIBOR and the prime rate. We expect that a large portion of our future portfolio will be comprised of floating rate investments that utilize LIBOR. Our interest expense is affected by fluctuations in the commercial paper rate or, if the commercial paper market is unavailable, LIBOR. As of May 31, 2007, we had $100.2 million of borrowings outstanding at a floating rate tied to the prevailing commercial paper rate plus a margin of 0.70%.

     In April and May 2007, pursuant to the Facilities, the Company entered into three interest rate cap agreements with notional amounts of $34 million, $6 million and $60.9 million. These agreements provide for a payment to the Company in the event LIBOR exceeds 8%, mitigating our exposure to increases in LIBOR.

     We have analyzed the potential impact of changes in interest rates on interest income net of interest expense. Assuming that our balance sheet as of May 31, 2007 were to remain constant and no actions were taken to alter the existing interest rate sensitivity, a hypothetical change of 1% in interest rates would cause a corresponding change of approximately $11,000 to net assets from operations over a one year period.

     Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size and composition of the assets on the balance sheet and other business developments that could magnify or diminish our sensitivity to interest rate changes. Accordingly no assurances can be given that actual results would not materially differ from the potential outcome simulated by this estimate.

     Portfolio Valuation

     We carry our investments at fair value, as determined in good faith by our Board of Directors. Investments for which market quotations are readily available are valued at such market quotations. We value investments for which market quotations are not readily available at fair value as determined in good faith by our board under our valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments, and the differences could be material. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations that are

assigned. The types of factors that we may take into account in fair value pricing of our investments include, as relevant, the nature and realizable value of any collateral, third party valuations, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly-traded securities, recent sales of or offers to buy comparable companies, and other relevant factors.

Item 4T. Controls and Procedures

     Evaluation of Controls and Procedures.

     The Company’s management, under the supervision and with the participation of various members of management, including our CEO and our CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, our CEO and CFO have concluded that our current disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

     Changes in Internal Controls.

     There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) that occurred during the three months ended May 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings

     Neither we nor any of our subsidiaries are currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us or our subsidiaries.

Item 1A.		Risk Factors

     There were no material changes from the risk factors previously disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended February 28, 2007 except as follows:

     The lack of liquidity in our investments and recent market volatility may adversely affect our business.

     We will generally make investments in private companies. Substantially all of these investments will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we or an affiliated manager of GSC Group has material non-public information regarding such portfolio company. Recent market volatility in the corporate debt markets may adversely affect our investment portfolio in the event that, among other things, such volatility affects demand for loans to middle market companies and other debt securities, reduces the market value of our investments (including our illiquid investments), impairs our ability to sell such investments and impairs our ability to borrow under the Facilities.

     We may experience fluctuations in our quarterly results.

     We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt investments we make, the default rate on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods. Recent market volatility in the corporate debt markets may adversely affect our investment portfolio in the event that, among other things, such volatility affects demand for loans to middle market companies and other debt securities, reduces the market value of our investments (including our illiquid investments), impairs our ability to sell such investments and impairs our ability to borrow under our Facilities.

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

     None.

Item 3.		Defaults Upon Senior Securities

     None.

Item 4.		Submission of Matters to a Vote of Security Holders

     None.

Item 5.		Other Information

     None.

Item 6.		Exhibits

Exhibit
Number				Description
	3.1			Articles of Incorporation of GSC Investment Corp.
	4.1			Registration Rights Agreement dated March 27, 2007 between GSC Investment Corp., GSC CDO III L.L.C., GSCP (NJ) L.P. and the other investors party thereto.
	10.1			Investment Advisory and Management Agreement dated March 21, 2007 between GSC Investment LLC and GSCP (NJ) L.P.
	10.2			Custodian Agreement dated March 21, 2007 between GSC Investment LLC and U.S Bank National Association.
	10.3			Administration Agreement dated March 21, 2007 between GSC Investment Corp. and GSCP (NJ) L.P.
	10.4			Trademark License Agreement dated March 21, 2007 between GSC Investment Corp. and GSCP (NJ) L.P.
	10.5			Portfolio Acquisition Agreement dated March 21, 2007 between GSC Investment Corp. and GSC Partners CDO Fund III, Limited.
	10.6			Notification of Fee Reimbursement dated March 21, 2007.
	10.7			Assignment and Assumption Agreement dated March 20, 2007 among GSCP (NJ), L.P. and GSC Investment LLC.
	10.8			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Richard T. Allorto, Jr., as Chief Financial Officer of GSC Investment LLC.

	10.9			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Peter K. Barker, as director of GSC Investment LLC.
	10.10			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Robert F. Cummings, Jr., as director of GSC Investment LLC.
	10.11			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and David L. Goret, as Vice President and Secretary of GSC Investment LLC.
	10.12			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Richard M. Hayden, as Chairman of the Board of Directors of GSC Investment LLC.
	10.13			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Thomas V. Inglesby, as Chief Executive Officer of GSC Investment LLC.
	10.14			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Steven M. Looney, as director of GSC Investment LLC.
	10.15			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Michael J. Monticciolo, as Chief Compliance Officer of GSC Investment LLC.
	10.16			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Charles S. Whitman III, as director of GSC Investment LLC.
	10.17			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and G. Cabell Williams, as director of GSC Investment LLC.
	10.18			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Daniel I. Castro, Jr., as member of the investment committee of GSCP (NJ), LP.
	10.19			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Robert F. Cummings, Jr., as member of the investment committee of GSCP (NJ), LP.
	10.20			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Richard M. Hayden, as member of the investment committee of GSCP (NJ), LP.
	10.21			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Thomas V. Inglesby, as member of the investment committee of GSCP (NJ), LP.
	10.22			Indemnification Agreement dated March 20, 2007 between GSC Investment LLC and Thomas J. Libassi, as member of the investment committee of GSCP (NJ), LP.
	31.1			Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2			Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1			Chief Executive Officer and Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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, thereunto duly authorized.

Exhibit 3.1

GSC INVESTMENT CORP.

ARTICLES OF INCORPORATION

ARTICLE I

INCORPORATOR

     The undersigned, David L. Goret, whose address is 300 Campus Drive, Florham Park, New Jersey 07932, being at least 18 years of age, does hereby form a corporation under the general laws of the State of Maryland.

ARTICLE II

NAME

     The name of the corporation (the “Corporation”) is:

GSC Investment Corp.

ARTICLE III

PURPOSE

     The purposes for which the Corporation is formed are to conduct and carry on the business of a business development company, subject to making an election under the Investment Company Act of 1940, as amended, and the rules promulgated thereunder (the “1940 Act”), and to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE IV

PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

     The address of the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The name and address of the resident agent of the Corporation are The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation.

ARTICLE V

PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

     Section 5.1 Number, Classification and Election of Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation is seven, which number may be increased or decreased only by the Board of Directors pursuant to the Bylaws of the Corporation (the “Bylaws”), but shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”). The names of the directors who shall serve until the first meeting of stockholders and until their successors are duly elected and qualify are:

Peter K Barker
Robert F. Cummings, Jr.
Richard M. Hayden
Thomas V. Inglesby
Steven M. Looney
Charles S. Whitman III
G. Cabell Williams

     These directors may increase the number of directors and may fill any vacancy, whether resulting from an increase in the number of directors or otherwise, on the Board of Directors occurring before the first annual meeting of stockholders in the manner provided in the Bylaws.

     The Corporation elects, at such time as it becomes eligible to make the election provided for under Section 3-802(b) of the MGCL, that, subject to any requirements of the 1940 Act applicable to the Corporation and except as may be provided by the Board of Directors in setting the terms of any class or series of stock pursuant to Section 6.4 hereof, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is duly elected and qualifies.

     On the first date on which the Corporation shall have more than one stockholder of record, the directors (other than any director elected solely by holders of one or more classes or series of stock established pursuant to Section 6.4 hereof) shall be classified, with respect to the terms for which they severally hold office, into three classes, as nearly equal in number as possible as determined by the Board of Directors, one class to hold office initially for a term expiring at the next succeeding annual meeting of stockholders, another class to hold office initially for a term expiring at the second succeeding annual meeting of stockholders and another class to hold office initially for a term expiring at the third succeeding annual meeting of stockholders, with the members of each class to hold office until their successors are duly elected and qualify. At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be elected to hold office for a term expiring at the

annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify.

     Section 5.2 Extraordinary Actions. Except as specifically provided in Section 5.9 (relating to removal of directors), and in Section 7.2 (relating to certain actions and certain amendments to the charter), notwithstanding any provision of the MGCL requiring any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of Directors and taken or approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter.

     Section 5.3 Election of Directors. Except as otherwise provided in the Bylaws, directors shall be elected by the affirmative vote of the holders of a majority of the shares of stock outstanding and entitled to vote thereon.

     Section 5.4 Quorum. The presence in person or by proxy of the holders of shares of stock of the Corporation entitled to cast a majority of the votes entitled to be cast (without regard to class) shall constitute a quorum at any meeting of stockholders, except with respect to any such matter that, under applicable statutes or regulatory requirements, requires approval by a separate vote of one or more classes of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast a majority of the votes entitled to be cast by each such class on such a matter shall constitute a quorum.

     Section 5.5 Authorization by Board of Stock Issuance. The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the

Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the charter of the Corporation (the “Charter”) or the Bylaws.

     Section 5.6 Preemptive Rights. Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 6.4 or as may otherwise be provided by contract approved by the Board of Directors, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell.

     Section 5.7 Appraisal Rights. No holder of stock of the Corporation shall be entitled to exercise the rights of an objecting stockholder under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, upon the affirmative vote of a majority of the Board of Directors, shall determine that such rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

     Section 5.8 Determinations by Board. The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the Charter shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other net profit, net assets in

excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or distributions, qualifications or terms or conditions of redemption of any class or series of stock of the Corporation; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation or of any shares of stock of the Corporation; the number of shares of stock of any class of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation or required or permitted by applicable law, the Charter or Bylaws or otherwise to be determined by the Board of Directors.

     Section 5.9 Removal of Directors. Subject to the rights of holders of one or more classes or series of stock established pursuant to Section 6.4 hereof to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time only for cause and only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.

ARTICLE VI

STOCK

     Section 6.1 Authorized Shares. The Corporation has authority to issue 100,000,000 shares of stock, initially consisting of 100,000,000 shares of Common Stock, $0.0001 par value per share (“Common Stock”). The aggregate par value of all authorized shares of stock having par value is $10,000. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to this Article VI, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. The Board of Directors, with the approval of a majority of the entire Board of Directors and without any action by the stockholders of the Corporation, may amend the Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

     Section 6.2 Common Stock. Except as may otherwise be specified in the terms of any class or series of Common Stock, each share of Common Stock shall entitle the holder thereof to one vote. The Board of Directors may reclassify any unissued shares of Common Stock from time to time in one or more classes or series of stock.

     Section 6.3 Preferred Stock. The Board of Directors may classify any unissued shares of stock and reclassify any previously classified but unissued shares of stock of

any class or series from time to time, in one or more classes or series of preferred stock (“Preferred Stock”).

     Section 6.4 Classified or Reclassified Shares. Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”). Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 6.4 may be made dependent upon facts or events ascertainable outside the Charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary or other charter document.

     Section 6.5 Inspection of Books and Records. A stockholder that is otherwise eligible under applicable law to inspect the Corporation’s books of account or stock ledger or other specified documents of the Corporation shall have no right to make such inspection if the Board of Directors determines that such stockholder has an improper purpose for requesting such inspection.

     Section 6.6 Charter and Bylaws. The rights of all stockholders of the Corporation, and the terms of all shares of stock in the Corporation, are subject to the provisions of the Charter and the Bylaws. The Board of Directors of the Corporation shall have the exclusive power to make, alter, amend or repeal the Bylaws.

ARTICLE VII

AMENDMENTS; CERTAIN EXTRAORDINARY TRANSACTIONS

     Section 7.1 Amendments Generally. The Corporation reserves the right from time to time to make any amendment to the Charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any shares of outstanding stock. All rights and powers conferred by the Charter on stockholders, directors and officers are granted subject to this reservation.

     Section 7.2 Approval of Certain Extraordinary Actions and Charter Amendments.

          (a) Required Votes. The affirmative vote of the holders of shares entitled to cast at least two-thirds of the votes entitled to be cast on the matter, each voting as a separate class, shall be necessary to effect:

               (i) Any amendment to the Charter to make the Common Stock a “redeemable security” or to convert the Corporation, whether by merger or otherwise, from a “closed-end company” to an “open-end company” (as such terms are defined in the 1940 Act);

               (ii) The liquidation or dissolution of the Corporation and any amendment to the Charter to effect any such liquidation or dissolution; and

               (iii) Any amendment to Section 5.1, Section 5.2, Section 5.9, Section 7.1 or this Section 7.2;

provided, however, that, if the Continuing Directors (as defined herein), by a vote of at least two-thirds of such Continuing Directors, in addition to approval by the Board of Directors, approve such proposal or amendment, the affirmative vote of the holders of a majority of the votes entitled to be cast shall be required to approve such matter.

          (b) Continuing Directors. “Continuing Directors” means the directors identified in Article V, Section 5.1 and the directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the Continuing Directors then on the Board.

ARTICLE VIII

LIMITATION OF LIABILITY; INDEMNIFICATION AND ADVANCE OF EXPENSES

     Section 8.1 Limitation of Liability. To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages.

     Section 8.2 Indemnification and Advance of Expenses. The Corporation shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, manager,

member or trustee of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her service in such capacity. The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation.

     Section 8.3 1940 Act. The provisions of this Article VIII shall be subject to the limitations of the 1940 Act applicable to the Corporation.

     Section 8.4 Amendment or Repeal. Neither the amendment nor repeal of this Article VIII, nor the adoption or amendment of any other provision of the Charter or Bylaws inconsistent with this Article VIII, shall apply to or affect in any respect the applicability of the preceding sections of this Article VIII with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

[SIGNATURE PAGE FOLLOWS]

     IN WITNESS WHEREOF, I have signed these Articles of Incorporation and acknowledge the same to be my act as of this 21^st day of March, 2007.

		/s/ David L. Goret   David L. Goret

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

DATED AS OF MARCH 27, 2007

AMONG

GSC INVESTMENT LLC,

GSC CDO III L.L.C.,

GSCP (NJ), L.P.,

AND

THE OTHER INVESTORS PARTY HERETO

     This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) dated as of March [ ], 2007 by and among GSC Investments LLC, a Maryland limited liability company (the “Company”), GSC CDO III, L.L.C., a Delaware limited liability company (the “Class A Investor”) and the persons identified below (collectively, the “Class B Investors,” together with the Class A Investor, the “Investors”) and GSCP (NJ), L.P., a Delaware limited partnership (the “Manager,” together with the Company and the Investors, the “Parties”).

     WHEREAS the Parties entered into the Contribution and Exchange Agreement dated October 17, 2006 (as amended on March 26, 2007, the “Contribution Agreement”) with respect to the contribution (the “Contribution”) to the Company (i) of certain general partner and limited partner interests in GSC Partners CDO GP III, L.P., a Cayman Islands exempted limited partnership ( “CDO III GP”), by the Investors and the Manager, and (ii) of the rights and obligations of the Manager under the Collateral Management Agreement dated as of November 5, 2001 (the “Collateral Management Agreement”) in exchange for common shares of the Company (“Common Shares”);

     WHEREAS, in order to induce the Investors to effect the Contribution pursuant to the Contribution Agreement, the Parties hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register the Common Shares issued to them.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, all parties hereto agree as follows:

ARTICLE 1
Certain Definition

     As used in this Agreement, the following terms shall have the following respective meanings:

     “Commission” means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar Federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

     “Holder” means any Investor holding Registrable Securities, or any person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 5.10 hereof.

     “Initiating Holders” means any Holder or Holders who, in the aggregate, hold not less than 50% of the Registrable Securities outstanding.

     “Registrable Securities” means the Common Shares issued or issuable in respect of any of the foregoing upon any conversion, stock split, stock dividend, recapitalization, or similar event; provided, however, that securities shall only be treated as Registrable Securities if and so long as (i) they have not been registered or sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction and (ii) the registration rights with respect to such securities have not terminated pursuant to Section 5.11.

     The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

     “Registration Expenses” shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 5.01, 5.02 and 5.03 hereof, including without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular

employees of the Company which shall be paid in any event by the Company). Registration Expenses shall also include the fees and disbursements for one special counsel to the selling stockholders, not to exceed $___ per registration.

     “Restricted Securities” shall mean the securities of the Company required to bear the legends set forth in Article 3 hereof.

     “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar Federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

     “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders and, except as set forth in Registration Expenses, all fees and disbursements of counsel for any Holder.

ARTICLE 2
Restrictions On Transferability

     The Common Shares, and any other securities of the Company issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger, or similar event, shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act.

ARTICLE 3
Restrictive Legend

     Each certificate representing the Common Shares, or any other securities of the Company issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger, or similar event, shall be stamped or otherwise imprinted with legends in substantially the following form (in addition to any legends required by agreement or by applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES GENERALLY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM

THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

ARTICLE 4
Notice Of Proposed Transfers

     Prior to any proposed sale, assignment, transfer or pledge of any of the Company’s Common Shares, unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder’s intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and, if requested by the Company, the holder shall also provide, at such holder’s expense, either (i) a written opinion addressed to the Company of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company, to the effect that the proposed transfer of the Common Shares may be effected without registration under the Securities Act, or (ii) a “no action” letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Common Shares shall be entitled to transfer such Common Shares in accordance with the terms of the notice delivered by the holder to the Company; provided, however, that the Company shall not request an opinion of counsel or “no action” letter with respect to (i) a transfer not involving a change in beneficial ownership, (ii) a transaction involving the distribution without consideration of Common Shares by the holder to its constituent partners or members in proportion to their ownership interests in the holder, or (iii) a transaction involving the transfer without consideration of Common Shares by an individual holder during such holder’s lifetime by way gift or on death by will or intestacy.

ARTICLE 5
Registration

     Section 5.01. Requested Registration.

     (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration with respect to shares of Registrable Securities, the Company will:

     (i) promptly give written notice of the proposed registration to all other Holders; and

     (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations), as part of a firm commitment underwritten public offering with underwriters reasonably acceptable to the Initiating Holders and the Company, as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request by delivering a written notice to such effect to the Company within 20 days after the date of such written notice from the Company.

     Notwithstanding the foregoing, the Company shall not be obligated to take any action to effect or complete any such registration pursuant to this Section 5.01:

     (A) Prior to the date six months after the effective date of the Company’s first registered public offering of its Common Shares;

     (B) Unless the aggregate offering price of all Registrable Securities sought to be registered by all Holders, net of underwriting discounts and commissions, would exceed $___;

     (C) During the period starting with the date ninety (90) days prior to the Company’s estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; and provided, further, that if the Company’s registration is for an offering that does not include any equity securities or securities convertible into equity securities, then the Company shall not be obligated to take any action to effect or complete any requested registration under this Section 5.01 during the period starting sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date three (3) months immediately after the effective date of such registration statement.

     (D) After the Company has effected one registration pursuant to this subparagraph 5.01(a); or

     (E) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company for a registration statement to be filed in the near future, in which case, the Company’s obligation to use its best efforts to register, qualify or comply under this Section 5.01(a) shall be deferred for a period not to exceed 180 days from the date of receipt of the written request from the Initiating Holders, provided that the Company may not exercise this deferral right more than once in any twelve month period.

     Subject to the foregoing clauses (A) through (E), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders.

          (b) Underwriting. In the event of a registration pursuant to Section 5.01, the Company shall advise the Holders as part of the notice given pursuant to Section 5.01(a)(i) that the right of any Holder to registration pursuant to Section 5.01 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 5.01, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein.

     The Company shall, together with all Holders proposing to distribute their securities through such underwriting, enter into an underwriting agreement in customary form with the managing underwriter reasonably acceptable to the Company and a majority in interest of the Initiating Holders. Notwithstanding any other provision of this Section 5.01, if the managing underwriter advises the Company in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders requesting to be included in the registration and underwriting and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement; provided that in the event of such limitation on the number of shares to be underwritten, then no shares of stock to be registered for sale by the Company shall be included unless all shares of Registrable Securities requested by the Investors to be included in such underwriting are so included. No Registrable Securities excluded from the underwriting by reason of the

underwriter’s marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company.

     Section 5.02. Company Registration.

     (a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its equity securities, either for its own account or the account of a Holder (other than pursuant to this Agreement) or other holders, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Rule 145 transaction, or (iii) a registration in which the only equity security being registered is common stock issuable upon conversion of convertible debt securities which are also being registered, the Company will:

     (i) promptly give to each Holder written notice thereof; and

     (ii) include in such registration (and any related qualifications including compliance with Blue Sky laws), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after the date of such written notice from the Company, by any Holder.

     (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 5.02(a)(i). In such event, the right of any Holder to registration pursuant to Section 5.02 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting shall be limited to the extent provided herein.

     All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 5.02, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration (i) in the case of the Company’s initial public offering, to zero, and (ii) in the case of any other offering, to an amount no less than 25% of all shares to be included in such offering. The Company shall so advise all Holders requesting to be included in

the registration and underwriting and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all the Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company.

     (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 5.02 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.

     Section 5.03. Subsequent Registration Rights.

     (a) Without the consent of any holder of Registrable Securities hereunder, the Company may grant to any holder of securities of the Company registration rights inferior to or pari passu with those granted hereunder.

     (b) The Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights superior to the rights granted the Investors hereunder without the written consent of the holders of at least a majority of the Registrable Securities.

     Section 5.04. Expenses Of Registration. All Registration Expenses shall be borne by the Company. Notwithstanding the foregoing, in the event that Holders cause the Company to begin a registration pursuant to Section 5.01, and the request for such registration is subsequently withdrawn by such Holders or such registration is not completed due to failure to meet the net proceeds requirement set forth in such section or is otherwise not successfully completed due to no fault of the Company, all Holders shall be deemed to have forfeited their right to one registration under Section 5.01 for a period of six (6) months, as applicable, unless (a) the Holders requesting such registration pay for, or reimburse the Company for, the Registration Expenses incurred in connection with such withdrawn or incomplete registration or (b) the withdrawal, failure to meet the net proceeds requirement or other failure to be completed is based upon material adverse information concerning the Company known to the Company at the time of the initial request for such registration by the Holders of which the Holders initiating the registration request were not aware of at the time of such request. All Selling Expenses relating to securities registered on behalf of the Holders and all other registration expenses shall be borne by the Holders of such

securities pro rata on the basis of the number of shares so registered or proposed to be so registered.

     Section 5.05. Registration Procedures. In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will:

     (a) Prepare and file with the Commission a registration statement and such amendments and supplements as may be necessary and use its best efforts to cause such registration statement to become and remain effective for at least 180 days or until the distribution described in the registration statement has been completed, whichever first occurs;

     (b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.

     (c) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

     (d) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

     (e) Use its best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters.

     Section 5.06. Indemnification and Contribution.

     (a) The Company will indemnify each Holder, each of its officers, directors, partners and former partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular, issuer free writing prospectus, or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers, directors, partners and former partners and each person controlling such Holder within the meaning of Section 15 of the Securities Act, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in such Registration Statement, prospectus, offering circular, issuer free writing prospectus, or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder or controlling person, and stated to be specifically for use therein.

     (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors and officers, each person who controls the Company within the meaning of Section 15 of the Securities Act, and each other holder of the Company’s securities covered by such registration statement, each of such other holder’s, officers, directors, partners and former partners and each person controlling such other holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular, issuer free writing prospectus or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of the Securities Act, the Exchange

Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other holders, such directors, officers, partners or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular, issuer free writing prospectus or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this Section 5.06(b) shall be limited to an amount equal to the amount by which the aggregate proceeds from the offering received by such Holder exceeds the amount paid (including underwriters discounts and commission, if any) by such Holder in connection with such registration.

     (c) Each party entitled to indemnification under this Section 5.06 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement except to the extent the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

     (d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such

proportion as is appropriate to reflect the relative benefits received by the Company from the offering of the Restricted Securities, on the one hand, and by the Holders from receiving Restricted Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and the Holders on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holders and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

     (e) The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5.06 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 5.06, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Restricted Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 5.06 are several and not joint.

     (f) The remedies provided for in this Section 5.06 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

     Section 5.07. Information By Holder. The Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holders, the Registrable Securities held by them and the distribution proposed by such Holders as the Company may request in writing

and as shall be required in connection with any registration referred to in this Agreement.

     Section 5.08. Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Shares of the Company, the Company agrees to use all reasonable efforts to:

     (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act;

     (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

     (c) So long as a Holder owns any Restricted Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration.

     Section 5.09. Transfer Of Registration Rights. The rights granted Holders under this Article 5 may be assigned to a transferee or assignee, not a competitor of the Company, in connection with any transfer or assignment of Registrable Securities by the Holder provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement, (ii) such assignee or transferee acquires at least ___shares (as adjusted for stock splits, stock dividends, stock combinations and the like) of Registrable Securities from the transferor, (iii) written notice is promptly given to the Company and (iv) such assignee or transferee agrees to be bound by the provisions of this Agreement. Notwithstanding the foregoing, the rights to cause the Company to register securities may be assigned without compliance with item (ii) above to (x) any constituent partner or member of a Holder which is a partnership or limited liability company, or an affiliate (as such term is defined in Rule 405 of the Securities Act) of a Holder, or (y) a family member or trust for the benefit of a Holder who is an individual, or a trust for the benefit of a family member of such a Holder.

     Section 5.10. Termination Of Registration Rights. The rights granted pursuant to Sections 5.01, 5.02 and 5.03 of this Agreement shall terminate as to any Holder upon the earlier of (i) the date five years after the effective date of the Company’s initial public offering and (ii) provided that the Company’s shares are traded on a national stock exchange, such time as the Registrable Securities held by the Holder represent less than 1% of the outstanding capital stock of the Company and such Holder may sell all of such Registrable Securities in any single three-month period under Rule 144.

ARTICLE 6
Aggregation Of Shares

     All shares of the Company’s stock held by affiliated entities or persons shall be aggregated together for purposes of determining the availability of any rights under this Agreement.

ARTICLE 7
Amendment

     Except as otherwise provided above, additional parties may be added to this Agreement, any provision of this Agreement may be amended or the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of a majority of the Registrable Securities then outstanding. Notwithstanding the foregoing, no amendment shall be made to this Agreement which by its terms adversely affects, or which was motivated primarily by an intent to adversely affect, a particular class of Holders in a manner differently from the other Holders without the written consent of a majority of the Registrable Securities held by the Holders in such adversely affected class. Any amendment or waiver effected in accordance with Section 5.03 or Article 8, as applicable, shall be binding upon each Investor or Holder of Registrable Securities at the time outstanding, each future holder of any of such securities, and the Company.

ARTICLE 8
Governing Law

     This Agreement shall be governed in all respects by the internal laws of the State of New York without regard to conflict of laws provisions.

ARTICLE 9
Entire Agreement

     This Agreement constitutes the full and entire understanding and Agreement among the parties regarding the matters set forth herein. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon the successors, assigns, heirs, executors and administrators of the parties hereto.

ARTICLE 10
Notices, Etc.

     All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed duly given if (a) delivered personally, (b) mailed, certified or registered mail with postage prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent by telecopy or telegram, and in each case, addressed to such party at the address set forth below:

     If to GSC Investment LLC:

GSC Investment LLC
12 E. 49th Street, Suite 3200
New York, NY 10017

     If to GSC CDO III, L.L.C.:

GSC CDO III, L.L.C.
c/o GSC Group
12 E. 49th Street, Suite 3200
New York, NY 10017

     If to GSCP (NJ), L.P.:

GSCP (NJ), L.P.
500 Campus Drive, Suite 220
Florham Park, NJ 07932

     If to the Class B Investors:

c/o GSC Group
12 E. 49th Street, Suite 3200
New York, NY 10017

ARTICLE 11
Counterparts

     This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

     [Remainder of Page Intentionally Left Blank]

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

Exhibit 10.1

INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
BETWEEN
GSC INVESTMENT LLC
AND
GSCP (NJ), L.P.

     Agreement made this 21st day of March 2007, by and between GSC Investment LLC, a Maryland limited liability company (the “Company”), and GSCP (NJ), L.P., a Delaware limited partnership (the “Investment Adviser”).

     WHEREAS, the Company is a newly organized limited liability company that expects to merge (the “Merger Transaction”) with and into GSC Investment Corp., a Maryland corporation (the “Corporation”) that in turn expects to file an election to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and to elect to be taxable as a regulated investment company (“RIC”) commencing with its taxable year ending December 31, 2007. Unless the context otherwise requires, references to the “Company” included herein shall mean both GSC Investment LLC prior to the closing of the Merger Transaction and GSC Investment Corp. on or after such closing.

     WHEREAS, the Investment Adviser is an investment adviser that has registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and, with certain of its affiliates, does business as GSC Group; and

     WHEREAS, the Company desires to retain the Investment Adviser to furnish investment advisory services to the Company on the terms and conditions hereinafter set forth, and the Investment Adviser wishes to be retained to provide such services.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows:

     1. Duties of the Investment Adviser.

     (a) The Company hereby employs the Investment Adviser to act as the investment adviser to the Company and to manage the investment and reinvestment of the assets of the Company, subject to the supervision of the board of directors of the Company (the “Board”), for the period and upon the terms herein set forth,

     (i) in accordance with the investment objectives, policies and restrictions that are determined by the Board from time to time and disclosed to the Investment Adviser, which objectives, policies and restrictions shall initially be those set forth

in the Company’s preliminary Prospectus dated March 8, 2007, as may be amended, supplemented or modified by the final Prospectus, relating to its initial public offering of its common stock,

     (ii) in accordance with the Investment Company Act,

     (iii) during the term of this Agreement in accordance with all other applicable federal and state laws, rules and regulations, and the Company’s operating agreement, or charter and by-laws, as applicable, and

     (iv) following the Merger Transaction, in accordance with the RIC rules (within the meaning of Section 851(a) of the Internal Revenue Code of 1986, as amended).

     Without limiting the generality of the foregoing, the Investment Adviser shall, during the term and subject to the provisions of this Agreement,

     (i) determine the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes;

     (ii) identify, evaluate and negotiate the structure of the investments made by the Company;

     (iii) close and monitor the Company’s investments;

     (iv) determine the securities and other assets that the Company will purchase, retain, or sell;

     (v) perform due diligence on prospective portfolio companies;

     (vi) provide the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds; and

     (vii) notify the Company of any admission or removal of a general partner of the Investment Adviser within a reasonable amount of time after such admission or removal.

     The Investment Adviser shall have the power and authority on behalf of the Company to effectuate investment decisions for the Company, including the execution and delivery of all documents relating to the Company’s investments

and the placing of orders for other purchase or sale transactions on behalf of the Company. In the event that the Company determines to incur debt financing, the Investment Adviser will arrange for such financing on the Company’s behalf, subject to the oversight and approval of the Board. If it is necessary for the Investment Adviser to make investments on behalf of the Company through a special purpose vehicle, the Investment Adviser shall have authority to create or arrange for the creation of such special purpose vehicle and to make such investments through such special purpose vehicle in accordance with the Investment Company Act.

     (b) The Investment Adviser hereby accepts such engagement and agrees during the term hereof to render the services described herein for the compensation provided herein.

     (c) Subject to the requirements of the Investment Company Act, the Investment Adviser is hereby authorized to enter into one or more sub-advisory agreements with other investment advisers (each, a “Sub-Adviser”) pursuant to which the Investment Adviser may obtain the services of the Sub-Adviser(s) to assist the Investment Adviser in providing the investment advisory services required to be provided by the Investment Adviser under Section 1(a) of this Agreement. Specifically, the Investment Adviser may retain a Sub-Adviser to recommend specific securities or other investments based upon the Company’s investment objectives and policies, and work, along with the Investment Adviser, in structuring, negotiating, arranging or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the Company, subject to the oversight of the Investment Adviser and the Company. The Investment Adviser, and not the Company, shall be responsible for any compensation payable to any Sub-Adviser. Any sub-advisory agreement entered into by the Investment Adviser shall be in accordance with the requirements of the Investment Company Act and other applicable federal and state law. Nothing in this subsection (c) will obligate the Investment Adviser to pay any expenses that are the expenses of the Company under Section 2.

     (d) The Investment Adviser and any Sub-Adviser shall for all purposes herein provided each be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent the Company in any way or otherwise be deemed an agent of the Company.

     (e) The Investment Adviser shall keep and preserve for the period required by the Investment Company Act any books and records relevant to the provision of its investment advisory services to the Company and shall specifically maintain all books and records with

respect to the Company’s portfolio transactions and shall render to the Board such periodic and special reports as the Board may reasonably request. The Investment Adviser agrees that all records that it maintains for the Company are the property of the Company and will surrender promptly to the Company any such records upon the Company’s request, provided that the Investment Adviser may retain a copy of such records.

     2. Company’s Responsibilities and Expenses Payable by the Company. All investment professionals of the Investment Adviser and its staff, when and to the extent engaged in providing investment advisory services required to be provided by the Investment Adviser under Section 1(a), and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by the Investment Adviser and not by the Company. The Company will bear all costs and expenses of its operations and transactions, including those relating to:

	•		the Company’s organization;
	•		calculating the Company’s net asset value (including the cost and expenses of any independent valuation firm);
	•		expenses incurred by the Investment Adviser payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Company and in monitoring the Company’s investments and performing due diligence on its prospective portfolio companies;
	•		interest payable on debt, if any, incurred to finance the Company’s investments;
	•		offerings of the Company’s common shares and other securities;
	•		investment advisory and management fees;
	•		fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments;
	•		transfer agent and custodial fees;
	•		federal and state registration fees;
	•		all costs of registration and listing the Company’s common shares on any securities exchange;

	•		federal, state and local taxes;
	•		independent directors’ fees and expenses;
	•		costs of preparing and filing reports or other documents required by governmental bodies (including the Securities and Exchange Commission (the “SEC”));
	•		costs of any reports, proxy statements or other notices to common shareholders including printing costs;
	•		the Company’s allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
	•		direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and
	•		administration fees and all other expenses incurred by the Company or, if applicable, the Administrator in connection with administering the Company’s business (including payments under the administration agreement to be entered into by the Company and the Investment Adviser (the “Administration Agreement”) based upon the Company’s allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the Company’s officers and their respective staffs (including travel expenses)).

     3. Compensation of the Investment Adviser. The Company agrees to pay, and the Investment Adviser agrees to accept, as compensation for the services provided by the Investment Adviser hereunder, a base management fee (“Base Management Fee”) and an incentive fee (“Incentive Fee”) as hereinafter set forth. The Company shall make any payments due hereunder to the Investment Adviser or to the Investment Adviser’s designee as the Investment Adviser may otherwise direct. To the extent permitted by applicable law and provided the Company is permitted to deduct any accrued but unpaid fees, the Investment Adviser may elect, or the Company may adopt a deferred compensation plan pursuant to which the Investment Adviser may elect, to defer all or a portion of its fees hereunder for a specified period of time.

     (a) The Base Management Fee shall be 1.75% per annum of the Company’s total assets (other than cash or cash equivalents but including assets purchased with borrowed funds). For services rendered

during the period commencing from March 28, 2007 (the “Commencement Date”), through and including June 30, 2007, the Base Management Fee will be payable on June 30, 2007. For services rendered after such time, the Base Management Fee will be payable quarterly in arrears. Until the Company has completed its first full calendar quarter of operations, the Base Management Fee will be calculated based on the initial value of the Company’s total assets after giving effect to the purchase of the portfolio assets (the “Portfolio”) as contemplated by the Portfolio Acquisition Agreement, dated as of March 23, 2007, by and between the Company and GSC Partners CDO Fund III, Limited (other than cash or cash equivalents but including assets purchased with borrowed funds). Subsequently, the Base Management Fee will be calculated at the end of each calendar quarter based on the average value of the Company’s total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) as of the end of such calendar quarter and the end of the immediate prior calendar quarter. Base Management Fees for any partial month or quarter will be appropriately pro rated.

     (b) The Incentive Fee shall consist of two parts, as follows:

     (i) One part will be calculated and payable quarterly in arrears based on the Pre-Incentive Fee net investment income for the quarter. “Pre-Incentive Fee net investment income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial and consulting fees or other fees that the Company receives from portfolio companies) accrued by the Company during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Base Management Fee, expenses payable under the Administration Agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee).

     Pre-Incentive Fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, debt instruments with payment-in-kind interest, preferred stock with payment-in-kind dividends and zero coupon securities), accrued income that has not yet been received in cash. Pre-Incentive Fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

     Pre-Incentive Fee net investment income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less liabilities) at the

end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 1.875% per quarter (7.5% annualized). The Company will pay the Investment Adviser an Incentive Fee with respect to the Company’s pre-Incentive Fee net investment income in each calendar quarter as follows:

     (A) no Incentive Fee in any calendar quarter in which the Company’s pre-Incentive Fee net investment income does not exceed the hurdle rate; and

     (B) 20% of the amount of the Company’s pre-Incentive Fee net investment income, if any, that exceeds 1.875% in any calendar quarter (7.5% annualized).

     These calculations will be appropriately pro rated for any period of less than three months.

     (ii) The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable as of the end of each calendar year (or upon termination of this Agreement as set forth below), commencing with the calendar year ending on December 31, 2007, and is calculated at the end of each applicable year by subtracting (1) the sum of the Company’s cumulative aggregate realized capital losses and cumulative aggregate unrealized capital depreciation from (2) the Company’s cumulative aggregate realized capital gains, in each case calculated from the Commencement Date. If such amount is positive at the end of such year, then the Capital Gains Fee for such year is equal to 20.0% of such amount, less the cumulative aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee for such year. If this Agreement shall terminate as of a date that is not a calendar year end, the termination date shall be treated as though it were a calendar year end for purposes of calculating and paying a Capital Gains Fee.

For purposes of this Section 3(b)(ii):

The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.

The cumulative aggregate realized capital losses are calculated as the sum of the differences, if negative, between (a) the net sales

price of each investment in the Company’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.

The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company’s portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.

     (iii) Payment of any Incentive Fee otherwise earned by the Investment Adviser shall be deferred (“Deferred Incentive Fees”) if, during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made, the sum of (a) the Company’s aggregate distributions to its shareholders and (b) the change in the Company’s net assets (before taking into account any Incentive Fees payable during that period) is less than 7.5% of the Company’s net assets at the beginning of such period. These calculations will be appropriately pro rated for the first three calendar quarters after the date of this Agreement and adjusted for any share issuances or repurchases during the relevant period. Such Deferred Incentive Fees shall become payable on the next date on which such test has been satisfied for the most recent four full calendar quarters.

     4. Covenants of the Investment Adviser. The Investment Adviser represents that it is registered as an investment adviser under the Advisers Act and agrees that its activities will at all times be in compliance in all material respects with all applicable federal and state laws governing its operations and investments.

     5. Excess Brokerage Commissions. The Investment Adviser is hereby authorized, to the fullest extent now or hereafter permitted by law, to cause the Company to pay a member of a national securities exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of such exchange, broker or dealer would have charged for effecting that transaction, if the Investment Adviser determines in good faith, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities, that such amount of commission is reasonable in relation to the value of the brokerage and/or research services provided by such member, broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Company’s portfolio, and constitutes the best net results for the Company.

     6. Limitations on the Employment of the Investment Adviser. The services of the Investment Adviser to the Company are not exclusive, and the Investment Adviser may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having investment objectives similar to those of the Company, and nothing in this Agreement shall limit or restrict the right of any member, manager, partner, officer or employee of the Investment Adviser to engage in any other business or to devote his or her time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the Company’s portfolio companies, subject to applicable law). So long as this Agreement or any extension, renewal or amendment remains in effect, the Investment Adviser shall be the only investment adviser for the Company, subject to the Investment Adviser’s right to enter into sub-advisory agreements. The Investment Adviser assumes no responsibility under this Agreement other than to render the services called for hereunder. It is understood that directors, officers, employees or shareholders of the Company are or may become interested in the Investment Adviser and its affiliates, as directors, officers, employees, partners, stockholders, members, managers or otherwise, and that the Investment Adviser and directors, officers, employees, partners, stockholders, members and managers of the Investment Adviser and its affiliates are or may become similarly interested in the Company as shareholders or otherwise.

     7. Responsibility of Dual Directors, Officers and/or Employees. If any person who is a member, manager, partner, officer or employee of the Investment Adviser or the Administrator is or becomes a director, officer and/or employee of the Company and acts as such in any business of the Company, then such member, manager, partner, officer and/or employee of the Investment Adviser or the Administrator shall be deemed to be acting in such capacity solely for the Company, and not as a member, manager, partner, officer or employee of the Investment Adviser or the Administrator or under the control or direction of the Investment Adviser or the Administrator, even if paid by the Investment Adviser or the Administrator.

     8. Limitation of Liability of the Investment Adviser; Indemnification. The Investment Adviser, its partners and their respective officers, managers, partners, agents, employees, controlling persons, members and any other person affiliated with any of them (collectively, the “Indemnified Parties”), shall not be liable to the Company for any action taken or omitted to be taken by the Investment Adviser in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Company, except to the extent specified in Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the

same is finally determined by judicial proceedings) with respect to the receipt of compensation for services and except to the extent such action or omission constitutes gross negligence, willful misfeasance, bad faith or reckless disregard of its duties and obligations under this Agreement. The Company shall indemnify, defend and protect the Indemnified Parties (each of whom shall be deemed a third party beneficiary hereof) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of or otherwise based upon the performance of any of the Investment Adviser’s duties or obligations under this Agreement or otherwise as an investment adviser of the Company. Notwithstanding the foregoing provisions of this Section 8 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against, or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of any Indemnified Party’s duties or by reason of the reckless disregard of the Investment Adviser’s duties and obligations under this Agreement (as the same shall be determined in accordance with the Investment Company Act and any interpretations or guidance by the SEC or its staff thereunder). For the avoidance of doubt, none of the Indemnified Parties will be liable for trade errors, such as errors in the investment decision-making process (e.g., a transaction was effected in violation of the Company’s investment guidelines) or in the trade process (e.g., a buy order was entered instead of a sell order, or the wrong security was purchased or sold, or a security was purchased or sold in an amount or at a price other than the correct amount or price), other than those trade errors resulting from an Indemnified Party’s gross negligence, willful misfeasance, bad faith or reckless disregard of its duties and obligations under this Agreement.

     9. Effectiveness, Duration and Termination of Agreement.

     (a) This Agreement shall become effective as of the first date above written. This Agreement shall remain in effect for two years after such date, and thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by

     (i) the vote of the Board, or by the vote of shareholders holding a majority of the outstanding voting securities of the Company, and

     (ii) the vote of a majority of the Company’s Directors who are not parties to this Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act) of any party to this Agreement, in accordance with the requirements of the Investment Company Act.

     (b) This Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, by the vote of shareholders holding a majority of the outstanding voting securities of the Company, or by the vote of the Company’s Directors or by the Investment Adviser.

     (c) This Agreement will automatically terminate in the event of its “assignment” (as such term is defined for purposes of Section 15(a)(4) of the Investment Company Act); provided that the parties hereto acknowledge and agree that this Agreement will not terminate when, in connection with the closing of the Merger Transaction, the Corporation automatically becomes a party to this Agreement and assumes the obligations of the Company hereunder.

     (d) The provisions of Section 8 of this Agreement shall remain in full force and effect, and the Investment Adviser and the other Indemnified Parties shall remain entitled to the benefits thereof, notwithstanding any termination of this Agreement. Further, notwithstanding the termination or expiration of this Agreement as aforesaid, the Investment Adviser shall be entitled to any amounts owed under Section 3 through the date of termination or expiration.

     10. Assignment. The rights and obligations of the Investment Adviser under this Agreement shall not be assigned by the Investment Adviser without (i) the prior written consent of the Company and (ii) the prior written consent of the majority of the outstanding voting securities of the Company; provided, however, that the Investment Adviser may assign its obligations under this Agreement to an affiliate of the Investment Adviser without obtaining the consents specified in the preceding clauses (i) and (ii), so long as such assignment does not constitute an “assignment” under the Investment Company Act or the Advisers Act. Upon any such assignment, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming such assignee as Investment Adviser. Upon the execution and delivery of such a counterpart by the assignee, the Investment Adviser shall be released from further obligation pursuant to this Agreement, except with respect to its obligations arising under this Agreement prior to surviving such a termination. The Investment Adviser acknowledges and agrees that upon the closing of the Merger Transaction, the Corporation shall automatically become a party to this Agreement and assume the rights and obligations of the Company hereunder.

     11. Amendments of this Agreement. This Agreement may not be amended or modified except by an instrument in writing signed by all parties hereto, but the consent of the Company must be obtained in conformity with the requirements of the Investment Company Act.

     12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including without limitation Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b), and the applicable provisions of the Investment Company Act, if any. To the extent that the applicable laws of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, if any, the latter shall control. The parties unconditionally and irrevocably consent to the exclusive jurisdiction of the courts located in the State of New York and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

     13. No Waiver. The failure of either party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such party thereafter to enforce such provisions, and no waiver shall be binding unless executed in writing by all parties hereto.

     14. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

     15. Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

     16. Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original instrument and all of which taken together shall constitute one and the same agreement.

     17. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service (with signature required), by facsimile, or by registered or certified mail (postage prepaid, return receipt requested) to the

respective parties at their respective principal executive office addresses, c/o Chief Financial Officer.

     18. Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the parties with respect to such subject matter.

     19. Certain Matters of Construction.

     (a) The words “hereof”, “herein”, “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular Section or provision of this Agreement, and reference to a particular Section of this Agreement shall include all subsections thereof.

     (b) Definitions shall be equally applicable to both the singular and plural forms of the terms defined, and references to the masculine, feminine or neuter gender shall include each other gender.

     (c) The word “including” shall mean including without limitation.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.

Exhibit 10.2

CUSTODIAN AGREEMENT

By and between

GSC INVESTMENT LLC,

and

U.S. BANK NATIONAL ASSOCIATION

Dated as of March 21, 2007

TABLE OF CONTENTS

				Page
1.		DEFINITIONS			1
2.		APPOINTMENT OF CUSTODIAN AND DESIGNATION OF ACCOUNTS			4
3.		DUTIES OF THE CUSTODIAN			5
4.		REPORTING			12
5.		COMPENSATION OF CUSTODIAN			13
6.		APPOINTMENT OF AGENTS			13
7.		DEPOSIT IN U.S. SECURITIES SYSTEMS			13
8.		SECURITIES HELD OUTSIDE OF THE UNITED STATES			14
9.		RESPONSIBILITY OF CUSTODIAN			17
10.		SECURITY CODES			21
11.		TAX LAW			21
12.		EFFECTIVE PERIOD, TERMINATION AND AMENDMENT			22
13.		REPRESENTATIONS AND WARRANTIES			23
14.		PARTIES IN INTEREST; NO THIRD PARTY BENEFIT			23
15.		NOTICES			24
16.		CHOICE OF LAW AND JURISDICTION			24
17.		ENTIRE AGREEMENT AND COUNTERPARTS			24
18.		AMENDMENT; WAIVER			24
19.		SUCCESSOR AND ASSIGNS			25
20.		SEVERABILITY			25
21.		INSTRUMENT UNDER SEAL; HEADINGS			25
22.		REQUEST FOR INSTRUCTIONS			26
23.		OTHER BUSINESS			26
24.		REPRODUCTION OF DOCUMENTS			26
25.		SHAREHOLDER COMMUNICATIONS			26

     THIS CUSTODIAN AGREEMENT (this “Agreement”) is dated as of March 20, 2007 and is entered into by and among GSC INVESTMENT LLC, a Maryland limited liability company (the “Company”), having a business address at 12 East 49^th Street, Suite 3200, New York, NY 10017, and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Custodian”), having a place of business at 214 N. Tryon Street, 12^th Floor, Charlotte, NC 28202.

     WHEREAS, the Company is a newly organized limited liability company that expects to merge (the “Merger Transaction”) with and into GSC Investment Corp., a Maryland corporation (the “Corporation”) that in turn expects to file an election to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and to elect to be taxable as a regulated investment company commencing with its taxable year ending December 31, 2007. Unless the context otherwise requires, references to the “Company” included herein shall mean both GSC Investment LLC prior to the closing of the Merger Transaction and GSC Investment Corp. on or after such closing.

     WHEREAS, the Company desires to engage the Custodian to act as custodian for the Company with respect to the Company’s acquisition of certain investments to be made by the Company, subject to the terms of this Agreement; and

     WHEREAS, the Custodian is willing to act in such capacity as custodian under and subject to the terms of this Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1. DEFINITIONS

     1.1 The following words have these meanings as used in this Agreement:

“Account” or “Accounts” shall mean, collectively the Cash Account and the Securities Account.

“Authorized Person” shall have the meaning assigned in Section 3.10(a).

“Business Day” means a day on which the Custodian or the relevant sub-custodian, including a Foreign Sub-custodian, is open for business in the market or country in which a transaction is to take place.

“Cash Account” shall have the meaning set forth in Section 2.2(b).

“Company” shall mean both GSC Investment LLC, prior to the closing of the merger transaction with and into GSC Investment Corp., and GSC Investment Corp., on and after such closing.

“Delivery Date” means such date or dates on which Securities may be delivered to the Custodian (including the relevant sub-custodian) from time to time pursuant to the terms of this Agreement (it being hereby expressly acknowledged that there will be more than one Delivery Date).

“Eligible Investments” means any investment that at the time of its acquisition is one or more of the following:

	(a)		United States government and agency obligations;
	(b)		commercial paper having a rating assigned to such commercial paper by Standard & Poor’s Rating Services or Moody’s Investor Service, Inc. (or, if neither such organization shall rate such commercial paper at such time, by any nationally recognized rating organization in the United States of America) equal to one of the two highest ratings assigned by such organization, it being understood that as of the date hereof such ratings by Standard & Poor’s Rating Services are “AAAm” and “Aam” and such ratings by Moody’s Investor Service, Inc. are “Aaa” and “Aa”;
	(c)		interest bearing deposits in United States dollars in United States or Canadian banks with an unrestricted surplus of at least U.S. $250,000,000, maturing within one year; and
	(d)		money market funds (including funds of the Custodian or its affiliates) or United States government securities funds designed to maintain a fixed share price and high liquidity.

“Eligible Securities Depository” has the meaning set forth in Section (b)(1) of Rule 17f-7 under the Investment Company Act.

“Federal Reserve Bank Book-Entry System” means a depository and securities transfer system operated by the Federal Reserve Bank of the United States on which are eligible to be held all United States Government direct obligation bills, notes and bonds.

“Foreign Intermediary” means a Foreign Sub-custodian and Eligible Securities Depository.

“Foreign Sub-custodian” means and includes (i) any branch of a “U.S. Bank,” as that term is defined in Rule 17f-5 under the Investment Company Act, (ii) any “Eligible Foreign Custodian,” as that term is defined in Rule 17f-5 under the Investment Company Act, having a contract with the Custodian which the Custodian has determined will provide reasonable care of assets of the Company based on the standards specified in Section 8.7 below.

“Foreign Securities” means Securities for which the primary market is outside the United States.