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): January 10,
2008
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GSC
Investment Corp.
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(Exact
name of registrant
as
specified in charter)
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Maryland
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001-33376
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20-8700615
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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888
Seventh Ave, New York, NY 10019
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(Address
of principal executive offices)
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Registrant’s
telephone number, including area code: (212) 884-6200
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12
East 49th Street, New York, NY 10017
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(Former
name or former address, if changed since last report)
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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):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
2.02 Results
of Operations and Financial Condition.
On
January 10, 2008, we issued a press
release announcing our financial results for the period ended November 30,
2007.
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 January 10, 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.
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GSC
Investment Corp.
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Date:
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January
10, 2008
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By:
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/s/
David L. Goret
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Name:
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David
L. Goret
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Title:
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Vice
President and Secretary
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 |
Investor
Contacts: Carl J. Crosetto
GSC
Group
973
437-1007
Michael
H. Yip
GSC
Group
973-593-5424
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GSC
Investment Corp. Announces Third Quarter 2008 Financial
Results
__________________________________________
NEW
YORK,
January 10, 2008 – GSC Investment Corp. (NYSE:GNV), a business development
company, today announced results for the quarter ended November 30,
2007.
Third
Quarter 2008
Highlights
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·
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Adjusted
net investment income of
$3.1 million, or $0.37 per share (basic and diluted )
for the three months ending
November 30, 20071
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·
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Net
asset value of $13.51 per
share as of November 30, 2007
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·
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Declared
a $0.38 per share dividend for the
quarter
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Operating
Results
For
its third
quarter of operations, GSC Investment
Corp. reported net income
of $1.1 million or $0.13 per share. The adjusted net investment
income of $3.1 million or $0.37 per share for the quarter, was offset by
adjusted net loss on investments of $2 million or $0.24 per share.1 Net
asset value was $13.51 per share as of November 30, 2007.
“We
continue to be pleased with the performance of the portfolio, which is comprised
of over 80% in secured loans and notes, and that we were able to pay our
quarterly dividend entirely from net investment income,” said CEO Thomas V.
Inglesby.
“We
were
able to generate our results during a quarter which featured especially
challenging market conditions, as loan prices in November approached their
summer lows. A confluence of events has contributed to this weakness
including large new issue transactions, year end dealer selling, and decreased
purchases from non-traditional loan investors. In particular, loans
with weak covenants and aggressive capital structures have been affected
most
significantly,” said Mr. Inglesby. “Despite the decline in the
leveraged loan market, we remain confident in the overall credit quality
of our
portfolio.”
Portfolio
and
Investment Activity
As
of November
30, 2007, the
Company’s
portfolio consisted of $199.7
million in aggregate principal amount
of investments. The Company
had 43
investments in 36 portfolio
companies with a median
investment size of $4.3
million and a weighted average life of
4.7
years. The median investment
in each portfolio company is $5.2
million. The
overall portfolio composition consisted of 14.5%
first lien term loans, 42.2%
second lien term loans,
23.1%
senior secured notes, 13.6%
unsecured notes, 6.4%
structured finance
securities and 0.2%
equity/limited partnership
interests.
During
the quarter,
GSC
Investment Corp. made investments in
an aggregate
principal amount of $14.6
million. Also during the
quarter,
the
Company had $20
million in exits and repayments
resulting
in net repayments
of $5.4
million for the period. For the quarter, the
Company
had $1.7 million in net realized gains, primarily as a result of the repayment
of Sportcraft, LTD second lien loan. Sportcraft LTD was one of the
Company’s
top 10 positions and was repaid at
par.
In
November, the Company engaged an
investment bank to structure and raise a collateralized loan
obligation fund
(“CLO”). The
CLO priced on
December 21, 2007, and
is expected to close by the end of January.
“The
CLO provides us
with an efficient
structure
to
purchase first lien senior secured
loans where the market dislocation has been most severe,”
said Mr.
Inglesby. “The
CLO also allows us
to leverage the core competency of GSC
Group,
which manages seven U.S.
CLOs.”
As
of November 30,
2007, the weighted average current yields
on the Company’s
first lien term loans, second lien term
loans, senior secured notes,
unsecured notes and other/structured
finance
securities were
9.5%,
12.2%,
11.8%,
13.3%
and 11.4%, respectively,
which results in an
aggregate weighted
current yield of 11.8%. As
of November 30, 2007, 40%
or $74
million of its interest-bearing
portfolio
was fixed rate debt with
a
weighted average current yield of 12.2%
and 60%
or $111.3
million of its interest-bearing
portfolio was floating rate debt
with a weighted average current spread
of LIBOR plus 6.3%. There
were no non-performing or
delinquent investments.
Liquidity
and Capital Resources
As
of
November 30, 2007, the
Company
had borrowed an aggregate
of $84.4 million under its credit facilities and had $21.9 million of undrawn
commitments remaining. Subsequent to the end of the quarter, GSC
Investment Corp. consolidated its credit facilities to allow for additional
borrowing capacity. As a result of this consolidation, the Company
expensed the remaining $0.3 million balance of unamortized deferred financing
costs associated with the facility. These expenses are non-cash and
are non-recurring.
Dividend
On
December 3, 2007, GSC Investment Corp. paid a dividend of $0.38 per
share. Subsequent to the quarter end, the Company declared a special
dividend of $0.18 per share payable on January 28, 2008, to common shareholders
of record on January 18, 2008. The special dividend is a partial
distribution of realized capital gains. Since its IPO in March 2007,
the Company has declared $1.16 in dividends.
2008
Third Quarter Conference Call/Webcast Information
When:
Friday,
January
11, 2008, 10:00
a.m. Eastern Time
(ET)
Call: Interested
parties may participate by
dialing (877)
545-1409 (U.S.
and Canada)
or (719) 325-4848
(outside U.S.
and Canada).
A
replay of the call will be available
from 1:00 p.m.
ET on Friday, January 11,
2008 through midnight Friday,
January 25, 2008 by dialing (888)
203-1112 (U.S.
and Canada)
or (719) 457-0820
(outside U.S.
and Canada),
passcode for both replay numbers:
6284410.
Webcast:
Interested
parties may also access a
simultaneous webcast of the call by going to http://ir.gscinvestmentcorp.com/events.cfm.
A replay of the webcast will be
available from 1:00 p.m. ET on Friday, January 11, 2008,
through midnight
Friday, January 25,
2008.
About
GSC Investment Corp.
GSC
Investment Corp. is a specialty finance company externally managed by GSC
Group
that invests primarily in first and second lien term 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 may opportunistically invest in
distressed debt; debt and equity securities of public companies; credit default
swaps; emerging market debt; and collateralized debt obligation vehicles
holding
debt, equity or synthetic securities. 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 Group's corporate
credit
group manages approximately $8.1 billion of assets2
in leveraged loans, high
yield bonds and mezzanine debt. 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 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.
####
_______________________
1
Basic and diluted adjusted net investment income per share and adjusted
net gain/(loss) on investments per share are non-GAAP financial
measures. Adjusted net investment income per share is the per share
increase in net assets from operations less realized and unrealized gains
and
losses, and any incentive management fees attributable to such net realized
gains and losses. Adjusted net gain/(loss) on investments per share
is the net gain/(loss) on investments per share less any incentive management
fees attributable to such net realized gains and losses. The most
directly comparable GAAP financial measure is the net per share increase
in net
assets from operations, which is reflected above as net income under
the heading “Operating Results.” GSC Investment Corp. believes that
adjusted net investment income per share and adjusted net gain/(loss) on
investments per share provide useful information to investors regarding
financial performance because it is one method GSC Investment Corp. uses
to
measure its financial condition and results of operations. The
presentation of this additional information is not meant to be considered
in
isolation or as a substitute for financial results prepared in accordance
with
GAAP. Reconciliations of basic and diluted adjusted net investment
income per share and adjusted net gain/(loss) on investments per share to
the
most directly comparable GAAP financial measure are set forth in Schedule
1
hereto.
2 As
of September 30, 2007. Includes leverage and warehoused
assets.
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Schedule
1
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For
the three months ended
November
30,
2007
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For
the nine months ended
November
30,
2007
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|||||||
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(unaudited)
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(unaudited)
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|||||||
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Net
investment income per share,
basic and diluted
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$ |
0.37
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$ |
0.99
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Incentive
fees attributed to
gains
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$ |
-
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$ |
-
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||||
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Adjusted
net investment income per
share, basic and diluted
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$ |
0.37
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$ |
0.99
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||||
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Net
loss on investments per share,
basic and diluted
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$ | (0.24 | ) | $ | (0.51 | ) | ||
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Incentive
fees attributed to
gains
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$ |
-
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$ |
-
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||||
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Adjusted
net loss on investments
per share, basic and diluted
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$ | (0.24 | ) | $ | (0.51 | ) | ||
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Basic
and diluted GAAP
EPS
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$ |
0.13
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$ |
0.48
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GSC
Investment
Corp.
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Consolidated
Balance
Sheets
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As
of
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November
30,
2007
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February
28,
2007
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|||||||
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(Unaudited)
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||||||||
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ASSETS
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||||||||
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Investments
at fair value
(amortized cost of $192,970,617 and $0,
respectively)
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||||||||
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Non-control/non-affiliate
investments
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$ |
185,301,056
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$ |
-
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||||
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Control
investments
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406,155
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-
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||||||
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Affiliate
investments
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37,525
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-
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||||||
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Total
investments at fair
value
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185,744,736
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-
|
||||||
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Cash
and cash
equivalents
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3,336,248
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1,030
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||||||
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Cash,
securitization
accounts
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5,549,171
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-
|
||||||
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Cash,
restricted
|
3,104,293
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-
|
||||||
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Interest
receivable
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3,973,870
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-
|
||||||
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Due
from
manager
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885,132
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-
|
||||||
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Other
assets
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277,494
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|||||||
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Deferred
financing costs,
net
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1,062,995
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-
|
||||||
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Deferred
offering
costs
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-
|
808,617
|
||||||
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Total
assets
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$ |
203,933,939
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$ |
809,647
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||||
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LIABILITIES
|
||||||||
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Debt
|
$ |
84,375,261
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$ |
-
|
||||
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Dividend
payable
|
3,150,726
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-
|
||||||
|
Management
and incentive fees
payable
|
1,089,805
|
-
|
||||||
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Payable
from open
trades
|
1,940,400
|
-
|
||||||
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Accounts
payable and accrued
expenses
|
798,756
|
105,000
|
||||||
|
Interest
and credit facility fees
payable
|
420,363
|
-
|
||||||
|
Due
to
affiliate
|
81,568
|
73,810
|
||||||
|
Unrealized
loss on derivative
investment
|
71,682
|
-
|
||||||
|
Accrued
offering
cost
|
-
|
760,000
|
||||||
|
Total
liabilities
|
$ |
91,928,561
|
$ |
938,810
|
||||
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STOCKHOLDERS'
EQUITY
(DEFICIT)
|
||||||||
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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
|
-
|
||||||
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Capital
in excess of par
value
|
116,301,182
|
1,000
|
||||||
|
Accumulated
deficit
|
(70,775 | ) | (130,163 | ) | ||||
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Accumulated
net realized gain on
sale of investments
|
3,120,236
|
-
|
||||||
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Net
unrealized depreciation on
investments and derivatives
|
(7,346,094 | ) |
-
|
|||||
|
Total
stockholders' equity
(deficit)
|
112,005,378
|
(129,163 | ) | |||||
|
Total
liabilities and
stockholders' equity
|
$ |
203,933,939
|
$ |
809,647
|
||||
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NET
ASSET VALUE PER
SHARE
|
$ |
13.51
|
n/a
|
|||||
|
GSC
Investment
Corp.
|
|||||
|
Consolidated
Statement of
Operations
|
|
For
the three months ended
November 30, 2007
|
For
the nine months ended November
30, 2007
|
|||||||
|
(unaudited)
|
(unaudited)
|
|||||||
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INVESTMENT
INCOME
|
||||||||
|
Interest
from
investments
|
$ |
5,777,855
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$ |
15,184,683
|
||||
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Interest
from cash and cash
equivalents
|
104,143
|
280,140
|
||||||
|
Management
fee
income
|
-
|
383,562
|
||||||
|
Other
income
|
-
|
17,298
|
||||||
|
Total
investment
income
|
5,881,998
|
15,865,683
|
||||||
|
EXPENSES
|
||||||||
|
Interest
and credit facility
expenses
|
1,371,155
|
3,542,790
|
||||||
|
Professional
fees
|
345,131
|
1,209,425
|
||||||
|
Base
management
fees
|
854,750
|
2,133,395
|
||||||
|
Incentive
management
fees
|
232,744
|
573,566
|
||||||
|
Administrator
expenses
|
384,000
|
384,000
|
||||||
|
Insurance
|
155,678
|
431,107
|
||||||
|
Directors
fees
|
63,000
|
241,840
|
||||||
|
General
and
administrative
|
52,887
|
228,792
|
||||||
|
Cost
of acquiring management
contract
|
-
|
144,000
|
||||||
|
Organizational
expense
|
26,674
|
49,542
|
||||||
|
Expenses
before manager
reimbursement
|
3,486,019
|
8,938,457
|
||||||
|
Expense
reimbursement
|
(674,276 | ) | (1,257,718 | ) | ||||
|
Total
expenses net of expense
reimbursement
|
2,811,743
|
7,680,739
|
||||||
|
NET
INVESTMENT
INCOME
|
3,070,255
|
8,184,944
|
||||||
|
REALIZED
AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
|
||||||||
|
Net
realized gain on sale of
investments
|
1,674,981
|
3,120,236
|
||||||
|
Net
unrealized depreciation on
investments
|
(3,607,622 | ) | (7,225,881 | ) | ||||
|
Net
unrealized depreciation on
derivatives
|
(76,166 | ) | (120,213 | ) | ||||
|
Net
loss on
investments
|
(2,008,807 | ) | (4,225,858 | ) | ||||
|
NET
INCREASE IN NET ASSETS FROM
OPERATIONS
|
$ |
1,061,448
|
$ |
3,959,086
|
||||
|
BASIC
AND DILUTED EARNINGS PER
COMMON SHARE
|
$ |
0.13
|
$ |
0.48
|
||||
|
COMMON
STOCK OUTSTANDING—BASIC AND
DILUTED
|
8,291,384
|
8,291,384
|
||||||