UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
To Section 13 Or 15(d) of The Securities Exchange Act of 1934
|
Date
of report (Date of earliest event reported): May 22,
2008
|
||
|
GSC
Investment Corp.
|
||
|
(Exact
name of registrant
as
specified in charter)
|
||
|
Maryland
|
001-33376
|
20-8700615
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
|
888
Seventh Ave, New York, NY 10019
|
||
|
(Address
of principal executive offices)
|
||
|
Registrant’s
telephone number, including area code: (212) 884-6200
|
||
|
N/A
|
||
|
(Former
name or former address, if changed since last
report)
|
||
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
2.02 Results
of Operations and Financial Condition.
On May 22, 2008, we issued a press
release announcing our financial results for the period ended February 29, 2008.
A copy of the press release, together with the related financial schedules, are
attached hereto as Exhibit 99.1, the text of which are incorporated by reference
herein. This press release, together with the related financial
schedules, are not to be deemed “filed” for purposes of Section 18 of the
Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing, or to form a part of our public disclosure in the United States
or otherwise.
Item
9.01 Financial Statements and Exhibits.
|
Exhibit
No.
|
Description
|
||
|
99.1
|
Press
Release dated May 22, 2008
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
GSC
Investment Corp.
|
||||||
|
Date:
|
June
4, 2008
|
By:
|
/s/
David L. Goret
|
|||
|
Name:
|
David
L. Goret
|
|||||
|
Title:
|
Vice
President and Secretary
|
|||||
| Exhibit 99.1 | |
 |
Investor
Contacts: Carl J. Crosetto
GSC
Group
973-437-1007
Michael
H. Yip
GSC
Group
973-593-5424
|
GSC
Investment Corp. Announces Fourth Quarter and Fiscal Year 2008
Financial
Results
__________________________________________
NEW YORK,
May 22, 2008 – GSC Investment Corp. (NYSE:GNV), a business development company,
today announced results for the fourth quarter and fiscal year ended February
29, 2008.
Fiscal Year
2008 Highlights
|
·
|
Completed IPO in March
2007
|
|
·
|
Entered into a $100 million
three-year revolving credit facility in April
2007
|
|
·
|
Purchased over $325 million of
assets in fiscal 2008
|
|
·
|
Closed $400 million collateralized
loan obligation fund in January
2008
|
|
·
|
Net investment income of $10.7
million or $1.38 per share (weighted average basic and diluted) for the
fiscal year; net investment income of $2.56 million, or $0.31 per share
(weighted average basic and diluted ) for the three months ending
February 29, 2008
|
|
·
|
Adjusted net investment income of
$2.9 million or $0.36 per share for the three months ending February 29,
2008
|
|
·
|
Realized gains and net investment
income of $1.89 per share (weighted average basic and
diluted) for the
fiscal year
|
|
·
|
Declared
$1.55 per share in dividends for the fiscal year; declared regular fourth
quarter dividend of $0.39 per share and a special dividend of $0.18 per
share
|
|
·
|
No
non-performing or delinquent investments at the end of the fiscal
year
|
Operating
Results
“We are
pleased with our first year operating results, particularly during this
challenging period in the credit market,” said CEO Thomas V.
Inglesby. “We were able to pay an attractive and high quality
dividend by rapidly leveraging the capital from our IPO with
long-term
financing and using our investment sourcing ability to quickly assemble a
diversified portfolio of seasoned, income producing assets.”
For the full fiscal year, GSC Investment
Corp. reported a net loss of $5.5 million or $0.70 per share. These
losses were primarily due to $20.1 million of unrealized depreciation in
the Company’s portfolio due to write-downs in the fair value of the Company’s
investments. Net investment income for the fiscal year was $10.7
million or $1.38 per share.
For the fourth quarter, GSC Investment
Corp. reported a net loss of $9.4 million or $1.13 per share. Net
investment income of $2.56 million or $0.31 per share for the quarter was offset
by net loss on investments of $12 million or $1.44 per
share. The net loss on investments was due primarily to $12.8
million of net unrealized depreciation in the Company’s portfolio due to
write-downs in the fair value of the Company’s investments.
Adjusted
net investment income was $2.9 million or $0.36 per share for the fourth
quarter. The adjustments included a $0.1 million add back of federal
excise taxes and a $0.3 million add back of the write-off of deferred financing,
which is a non-recurring charge.
Net asset
value was $11.80 per share as of February 29, 2008.
“Our
investment philosophy is to buy and hold income producing investments with solid
credit fundamentals,” said Mr. Inglesby. “As a low levered finance
company, we have the ability to withstand short-term mark-to-market volatility
while pursuing our investment objective of generating current income from a
stable and diversified portfolio.”
Portfolio
and Investment Activity
“The
credit quality of our portfolio remains strong, despite the ongoing challenges
in the credit market,” said Mr. Inglesby.
As of the
end of the fiscal year, all 46 of the Company’s investments were current on
their principal and interest payments, and were being accounted for on an
accrual basis. During the fiscal year, there were no payment defaults
in the Company’s portfolio; two investments became delinquent during the fiscal
year but cured prior to default.
As of
February 29, 2008, the value of the Company’s portfolio was $172.8
million. The Company had 46 investments in 38 portfolio companies
with an average investment size of $3.8 million and a weighted average maturity
of 3.8 years. The average investment in each portfolio company is
$4.5 million. The overall portfolio composition consisted of 15.3%
first lien term loans, 36.1% second lien term loans, 18.3% senior secured notes,
13.5% unsecured notes, 16.7% structured finance securities and 0.1%
equity/limited partnership interests.
During the fiscal year, GSC Investment Corp. made investments in
an aggregate principal amount of $327.1 million and experienced $129 million in aggregate
principal amount of
2
exits and repayments, resulting in $198.1 million in
net investments by
aggregate principal
amount.
For the fiscal year, the Company had
approximately $3.9 million of net realized gains. The most
significant realized gains for the year were $1.0 million and $1.7 million
attributable to the repayment of the Strategic Industries’ Second Lien Term Loans and the repayment of the Sportcraft,
LTD Second Lien Term Loans, respectively.
During the fourth quarter, the Company received cash proceeds
of $3.5 million in respect
of a 30% partial repayment, at par plus all accrued interest, of its investment in the McMillin Companies
LLC senior secured notes; this repayment resulted in a reversal of unrealized
loss of $0.6 million and a realized gain of $0.2 million with respect to the repaid
portion of the investment.
In January 2008, the Company purchased
the entire $30 million subordinated notes
tranche of GSC Investment
Corp. CLO 2007, Ltd., a
$400 million CLO that the Company manages. As of February
29, 2008, the GSC Investment Corp. CLO had $372.9 million in aggregate principal
amount of investments and $40.3 million in uninvested cash.
“GSC
Investment Corp. is able to utilize the CLO’s low priced, long-term financing to
invest in a portfolio of high quality income producing assets at attractive
prices,” said Mr. Inglesby. “We were very pleased to be able to
leverage the GSC Investment Corp. and GSC Group platforms to raise a CLO during
this market dislocation. Over the past 12 months only a small number
of such funds have closed.”
In
April
2008, one of the
Company’s
portfolio companies, SILLC
Holdings (“SILLC”), entered
into an agreement
to sell 100% of
its
subsidiary, GST
AutoLeather, Inc., to a
third party. On
May 21, 2008, we received a notification of repayment, at par, of the SILLC
Second Lien Term Loan (of which the Company holds $23 million in aggregate
principal amount). Such repayment will result in the reversal of the
$2.6 million unrealized depreciation recorded in fiscal year 2008 and a realized
gain of $0.2 million in the first quarter of fiscal year 2009.
After the retirement of SILLC’s second lien term loan, the Company will have only two investments, excluding
its CLO, that account for greater than 5% of
the Company’s investment portfolio.
As of February 29, 2008, the weighted average current yield on
the Company’s first lien term loans, second lien term
loans, senior secured notes, unsecured notes and structured finance
securities were
8.1%, 10.8%, 11.5%, 12.2% and 8.2%, respectively, which results in an aggregate weighted current yield of 10.3%. As of February 29, 2008, 33% or $57 million of its interest-bearing
portfolio was fixed rate debt with a weighted average current coupon of 11.7% and 50.2% or $86.8 million of its interest-bearing portfolio was floating rate
debt with a weighted average current spread of LIBOR plus 5.8%.
3
Liquidity and Capital
Resources
As of
February 29, 2008, the
Company had borrowed an aggregate
of $78.5 million under its revolving facility and had $21.5 million of undrawn
commitments remaining. During the fourth quarter, the Company
consolidated its credit facilities to allow for additional borrowing capacity
and expensed $0.3 million of unamortized deferred financing costs associated
with the terminated facility. These expenses are non-cash and are
non-recurring.
Dividend
On March
10, 2008, GSC Investment Corp. paid a dividend of $0.39 per
share. During the 2008 fiscal year, the Company declared $1.55 in
dividends, including a special dividend of $0.18 paid on January 28,
2008.
On May 22,
2008, GSC Investment Corp. declared a first quarter dividend of $0.39 per share
payable on June 13, 2008, to common shareholders of record on May 30,
2008.
2008 Fourth Quarter
Conference Call/Webcast Information
When: Friday, May 23, 2008, 10:00 a.m. Eastern Time
(ET)
Call: Interested parties may participate by
dialing (877) 440-5804 (U.S. and Canada) or (719) 325-4941 (outside
U.S. and Canada).
A replay of the call will be available
from 1:00 p.m. ET on
Friday, May 23, 2008 through midnight Friday, June 6, 2008 by dialing
(888) 203-1112
(U.S. and Canada) or (719) 457-0820 (outside U.S. and Canada), passcode for both replay numbers:
5877946.
Webcast: Interested parties may also access a
simultaneous webcast of the call by going to http://ir.gscinvestmentcorp.com/events.cfm. A replay of the webcast will be
available from 1:00 p.m. ET on Friday, May 23, 2008, through midnight Friday, June 20,
2008.
About GSC Investment
Corp.
GSC
Investment Corp. is a specialty finance company that invests primarily in first
and second lien loans and mezzanine debt of private, U.S. middle-market
companies and high yield bonds. It has elected to be treated as a business
development company under the Investment Company Act of 1940. The Company also
opportunistically invests in distressed debt, the debt and equity securities of
public companies, and collateralized loan obligation vehicles. The Company draws
upon the support and investment advice of its external manager, GSC Group, an
alternative asset investment manager that focuses on complex, credit-driven
strategies. GSC Investment Corp. is traded on the New York Stock Exchange under
the symbol “GNV.”
Forward Looking
Statements
Information
provided in this press release, including valuation of certain of our
investments, may contain statements relating to current expectations, estimates,
forecasts
4
and
projections about future events that are forward-looking
statements. These forward-looking statements generally relate to GSC
Investment Corp.’s plans, objectives and expectations for future operations and
are based upon management’s current estimates and projections of future results
or trends. Actual future results may differ materially from those
projected as a result of certain risks and uncertainties. For a
discussion of such risks and uncertainties, see “Note About Forward-Looking
Statements” included in the Company’s 10-K which has been filed with the U.S.
Securities and Exchange Commission. These forward-looking statements
are made only as of the date hereof, and GSC Investment Corp. undertakes no
obligation to update or revise the forward-looking statements, whether as a
result of the new information, future events or otherwise.
5
GSC
Investment Corp.
Consolidated
Balance Sheets
|
As of
|
||||||||
|
February 29,
2008
|
February 28,
2007
|
|||||||
|
ASSETS
|
||||||||
|
Investments at fair
value
|
||||||||
|
Non-control/non-affiliate
investments (amortized cost of $162,888,724)
|
$ | 143,745,269 | $ | - | ||||
|
Control investments (amortized
cost of $30,000,000)
|
29,075,299 | - | ||||||
|
Affiliate investments (amortized
cost of $0)
|
16,233 | - | ||||||
|
Total investments at fair value
(amortized cost of $192,888,724 and $0,
respectively)
|
172,836,801 | - | ||||||
|
Cash and cash
equivalents
|
1,072,641 | 1,030 | ||||||
|
Cash and cash equivalents,
securitization accounts
|
14,580,973 | - | ||||||
|
Outstanding interest rate cap at
fair value (cost of $131,000 and $0, respectively)
|
76,734 | - | ||||||
|
Interest
receivable
|
2,355,122 | - | ||||||
|
Due from
manager
|
940,903 | - | ||||||
|
Management fee
receivable
|
215,914 | - | ||||||
|
Other
assets
|
39,349 | - | ||||||
|
Deferred credit facility financing
costs, net
|
723,231 | - | ||||||
|
Deferred offering
costs
|
- | 808,617 | ||||||
|
Total
assets
|
$ | 192,841,668 | $ | 809,647 | ||||
|
LIABILITIES
|
||||||||
|
Revolving credit
facility
|
$ | 78,450,000 | $ | - | ||||
|
Payable for unsettled
trades
|
11,329,150 | - | ||||||
|
Dividend
payable
|
3,233,640 | - | ||||||
|
Management and incentive fees
payable
|
943,061 | - | ||||||
|
Accounts payable and accrued
expenses
|
713,422 | 105,000 | ||||||
|
Interest and credit facility fees
payable
|
292,307 | - | ||||||
|
Due to
affiliate
|
11,048 | 73,810 | ||||||
|
Accrued offering
cost
|
- | 760,000 | ||||||
|
Total
liabilities
|
$ | 94,972,628 | $ | 938,810 | ||||
|
STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
|
Common stock, par value $.0001 per
share, 100,000,000 common shares
|
||||||||
|
authorized, 8,291,384 and 67
common shares issued and outstanding, respectively
|
829 | - | ||||||
|
Capital in excess of par
value
|
116,218,966 | 1,000 | ||||||
|
Accumulated undistributed net
investment income
|
455,576 | (130,163 | ) | |||||
|
Accumulated undistributed net
realized gain on sale of investments and
derivatives
|
1,299,858 | - | ||||||
|
Net unrealized depreciation on
investments and derivatives
|
(20,106,189 | ) | - | |||||
|
Total stockholders' equity
(deficit)
|
97,869,040 | (129,163 | ) | |||||
|
Total liabilities and
stockholders' equity
|
$ | 192,841,668 | $ | 809,647 | ||||
|
NET ASSET VALUE PER
SHARE
|
$ | 11.80 | n/a | |||||
See
accompanying notes to consolidated financial statements.
6
GSC
Investment Corp.
Consolidated
Statements of Operations
|
For the year ended February 29,
2008
|
For the period
from
May 12, 2006 (date of
inception)
to February 28,
2007
|
|||||||
|
INVESTMENT
INCOME
|
||||||||
|
Interest from
investments
|
||||||||
|
Non-Control/Non-Affiliate
investments
|
$ | 20,115,301 | $ | - | ||||
|
Control
investments
|
262,442 | - | ||||||
|
Total
interest and dividend income
|
20,377,743 | - | ||||||
|
Interest from cash and cash
equivalents
|
366,312 | 30 | ||||||
|
Management fee
income
|
599,476 | - | ||||||
|
Other
income
|
42,548 | - | ||||||
|
Total investment
income
|
21,386,079 | 30 | ||||||
|
EXPENSES
|
||||||||
|
Interest and credit facility
financing expenses
|
5,031,233 | - | ||||||
|
Base management
fees
|
2,938,659 | - | ||||||
|
Professional
fees
|
1,409,806 | 35,000 | ||||||
|
Administrator
expenses
|
892,112 | - | ||||||
|
Incentive management
fees
|
711,363 | - | ||||||
|
Insurance
|
586,784 | - | ||||||
|
Directors
fees
|
313,726 | - | ||||||
|
General &
administrative
|
261,653 | - | ||||||
|
Cost of acquiring management
contract
|
144,000 | - | ||||||
|
Organizational
expense
|
49,542 | 95,193 | ||||||
|
Expenses before manager
reimbursement
|
12,338,878 | 130,193 | ||||||
|
Expense
reimbursement
|
(1,789,028 | ) | - | |||||
|
Total expenses net of expense
reimbursement
|
10,549,850 | 130,193 | ||||||
|
NET INVESTMENT INCOME (LOSS)
BEFORE INCOME TAXES
|
10,836,229 | (130,163 | ) | |||||
|
Income tax expense, including
excise tax
|
(88,951 | ) | - | |||||
|
NET INVESTMENT INCOME
(LOSS)
|
10,747,278 | (130,163 | ) | |||||
|
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
|
||||||||
|
Net realized gain from
investments
|
||||||||
|
Non-Control/Non-Affiliate
investments
|
2,707,402 | - | ||||||
|
Control
investments
|
428,673 | - | ||||||
|
Affiliate
investments
|
39,147 | |||||||
|
Net realized gain from
derivatives
|
732,526 | - | ||||||
|
Net unrealized depreciation on
investments
|
(20,051,923 | ) | - | |||||
|
Net unrealized depreciation on
derivatives
|
(54,266 | ) | - | |||||
|
Net loss on
investments
|
(16,198,441 | ) | - | |||||
|
NET DECREASE IN NET ASSETS FROM
OPERATIONS
|
$ | (5,451,163 | ) | $ | (130,163 | ) | ||
|
WEIGHTED AVERAGE - BASIC AND
DILUTED EARNINGS PER COMMON SHARE
|
(0.70
|
) | n/a | |||||
|
WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING—BASIC AND DILUTED
|
7,761,965
|
67 | ||||||
See
accompanying notes to consolidated financial statements.
7