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
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Date
of report (Date of earliest event reported): July 14,
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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N/A
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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 July 14, 2008, we issued a press
release announcing our financial results for the first quarter ended May 31,
2008. A copy of the press release, together with the related financial
schedules, are attached hereto as Exhibit 99.1, the text of which 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 July 14, 2008 |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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GSC
Investment Corp.
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Date:
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July
15, 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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| Exhibit 99.1 | |
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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 First Quarter 2009 Financial Results
__________________________________________
NEW YORK,
July 14, 2008 – GSC Investment Corp. (NYSE:GNV), a business development company,
today announced results for the first quarter ended May 31, 2008.
First
Quarter 2009 Highlights
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·
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Net investment income of $3.2
million or $0.39 per share
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·
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Declared regular dividend of $0.39
per share
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·
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Net asset value of $11.75 per
share
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·
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Completed investing GSC Investment
Corp. CLO 2007, Ltd. (“GSCIC CLO”), a $400 million collateralized loan
obligation fund managed by the
Company
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·
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No non-performing or delinquent
investments during the
quarter
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·
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Repayment of single largest
corporate exposure, SILLC Holdings, LLC (“Strategic Industries”) second
lien term loan, generated $23 million of deployable cash, reversed $2.6
million unrealized loss and generated $0.2 million realized
gain
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Operating
Results
For the quarter ended May 31, 2008, GSC
Investment Corp. reported net earnings of $2.8 million or $0.34 per
share. Net investment income was $3.2 million or $0.39 per share for
the quarter. Net asset value was $11.75
per share as of May 31, 2008.
“We are
pleased with the steps taken to diversify our investment portfolio during the
quarter. Our investment strategy of pursuing investments senior in
the capital structure gives us a layer of protection in the current credit
environment. We expect our dividend to be supported by the net
investment income generated by our investment portfolio,” said CEO Thomas V.
Inglesby.
Portfolio
and Investment Activity
As of May 31, 2008, the value of the Company’s portfolio was $156.4 million. The Company had 47 investments in 39 portfolio companies with an aver
age investment size of $3.3 million and a weighted average
maturity of 3.8 years. The average investment in each portfolio
company was $4.0 million. The overall portfolio composition
consisted of 17.8% first lien term loans, 31.1% second lien term loans, 18.3% senior secured notes, 13.9% unsecured notes,
18.6% subordinated notes of GSCIC CLO and 0.3% equity/limited partnership
interests.
During the
first quarter, no portfolio investment was non-performing or delinquent on any
payment obligation or was being accounted for on a non-accrual
basis. During the quarter two investments were added to the Company’s
watchlist, bringing the total to four watchlist investments constituting 11% of
the Company’s investment portfolio.
During
the first
quarter,
GSC
Investment Corp. made 11
investments
in an aggregate principal amount of $19.3 million and
had $34.5 million
in aggregate principal amount
of exits and repayments, resulting
in $15.2 million
in net
exits and repayments by
aggregate
principal amount. The most
significant realization during
this period was the repayment of the
Strategic
Industries second
lien
term
loan. As
of the end of the
quarter,
no
corporate
debt investment
accounts for
more
than
10% of the Company’s
investment
portfolio. The
proceeds from the
exits and
repayment
are
expected to be reinvested in a
number of new investments during the second quarter of fiscal year
2009 and
in the
interim were used to pay down the
Company’s revolving credit facility.
“With the repayment of Strategic Industries, we have
dramatically reduced
our exposure to the
automotive industry,” said Mr. Inglesby. “We expect to reinvest the
proceeds in attractive risk-adjusted investment opportunities which will further diversify and enhance our portfolio.”
During the quarter, the Company
completed investing GSCIC CLO. As of May 31, 2008, GSCIC CLO had
assets of $414.3 million consisting of predominantly senior secured first lien
loans. The Company is entitled to management
fees of 0.50% of the outstanding principal amount of GSCIC CLO’s assets and owns its entire $30 million subordinated note tranche,
which receives all residual cash flows. No investment in the GSCIC CLO portfolio was
in payment default or delinquent.
“We are pleased to have fully invested the CLO. We were able to purchase assets at
prices lower than we had originally modeled and expect the CLO to be accretive to the
Company’s earnings. We expect to realize the full income effects from
the CLO during the third quarter of our fiscal
year,” said Mr. Inglesby.
As of May 31, 2008, the weighted average current yield on
the Company’s first lien term loans, second lien term
loans, senior secured
notes, unsecured notes and the GSCIC CLO subordinated notes were 7.7%, 10.1%, 11.5%, 12.2% and 8.4%, respectively, which results in an aggregate weighted average current yield of 10.0%.
As of May 31, 2008, 33.6%, or $52.5 million, of the Comp
any’s interest-bearing portfolio was fixed
rate debt with a weighted average current coupon of 11.7% and 47.6%, or $74.4 million, of its interest-bearing portfolio was
floating rate debt with a weighted average current spread of LIBOR plus
6.1%.
Liquidity and Capital
Resources
As of May
31, 2008, the Company had borrowed an aggregate of $60.7 million under its
revolving credit facility and had $39.3 million of undrawn commitments
remaining. The Company’s asset coverage ratio as of the same date was
261%. The decline in the Company’s leverage from the prior quarter
was due primarily to the pay down of the revolving credit facility with the
Strategic Industries repayment. The Company expects to draw on the
revolving credit facility during the second quarter of fiscal year 2009 to make
additional investments.
Dividend
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.
2009 First Quarter
Conference Call/Webcast Information
When: Tuesday, July 15, 2008, 10:00 a.m. Eastern Time
(ET)
Call: Interested parties may
participate by dialing (877) 440-5788 (U.S. and Canada) or (719) 325-4864
(outside U.S. and Canada).
A replay
of the call will be available from 1:00 p.m. ET on Tuesday, July 15, 2008
through midnight Tuesday, July 29, 2008 by dialing (888) 203-1112 (U.S. and
Canada) or (719) 457-0820 (outside U.S. and Canada), passcode for both replay
numbers: 4801565.
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 Tuesday, July 15,
2008 through midnight Tuesday, August 5, 2008.
About GSC Investment
Corp.
GSC
Investment Corp. is a specialty finance company that invests primarily in
leveraged loans and mezzanine debt issued by U.S. middle-market companies, high
yield bonds and collateralized loan obligations. It has elected to be treated as
a business development company under the Investment Company Act of 1940. The
Company may also opportunistically invest in distressed debt, debt issued by
non-middle market companies, and equity securities issued by middle and
non-middle market companies. The Company draws upon the support and investment
advice of its external manager, GSC Group, an alternative asset investment
manager that focuses on complex, credit-driven strategies.
GSC
Investment Corp. is traded on the New York Stock Exchange under the symbol
“GNV.”
GSC
Investment Corp.’s filings with the Securities and Exchange Commission, press
releases, earnings releases and other financial information are available on its
website at www.gscinvestmentcorp.com.
Forward Looking
Statements
Information
provided in this press release, including valuation of certain of our
investments, may contain statements relating to current expectations, estimates,
forecasts and projections about future events that are forward-looking
statements. These forward-looking statements generally relate to GSC
Investment Corp.’s plans, objectives and expectations for future operations and
are based upon management’s current estimates and projections of future results
or trends. Actual future results may differ materially from those
projected as a result of certain risks and uncertainties. For a
discussion of such risks and uncertainties, see “Note About Forward-Looking
Statements” included in the Company’s 10-Q which has been filed with the U.S.
Securities and Exchange Commission. These forward-looking statements
are made only as of the date hereof, and GSC Investment Corp. undertakes no
obligation to update or revise the forward-looking statements, whether as a
result of the new information, future events or otherwise.
####
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GSC Investment
Corp.
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Consolidated Balance
Sheets
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As of
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May 31,
2008
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February 29,
2008
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(unaudited)
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ASSETS
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Investments at fair
value
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Non-control/non-affiliate
investments (amortized cost of $146,510,329 and $162,888,724,
respectively)
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$ | 127,162,754 | $ | 143,745,269 | ||||
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Control investments (amortized
cost of $30,000,000 and $30,000,000, respectively)
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29,194,602 | 29,075,299 | ||||||
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Affiliate investments (amortized
cost of $0 and $0, respectively)
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16,233 | 16,233 | ||||||
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Total investments at fair value
(amortized cost of $176,510,329 and $192,888,724,
respectively)
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156,373,589 | 172,836,801 | ||||||
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Cash and cash
equivalents
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1,963,407 | 1,072,641 | ||||||
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Cash and cash equivalents,
securitization accounts
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10,120,045 | 14,580,973 | ||||||
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Outstanding interest rate cap at
fair value (cost of $131,000 and $131,000,
respectively)
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64,735 | 76,734 | ||||||
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Interest
receivable
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3,710,453 | 2,355,122 | ||||||
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Due from
manager
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44,567 | 940,903 | ||||||
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Management fee
receivable
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738,653 | 215,914 | ||||||
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Other
assets
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89,508 | 39,349 | ||||||
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Receivable from unsettled
trades
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493,125 | - | ||||||
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Deferred credit facility financing
costs, net
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678,784 | 723,231 | ||||||
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Total
assets
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$ | 174,276,866 | $ | 192,841,668 | ||||
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LIABILITIES
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Revolving credit
facility
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$ | 60,650,000 | $ | 78,450,000 | ||||
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Payable for unsettled
trades
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10,996,930 | 11,329,150 | ||||||
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Dividend
payable
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3,233,640 | 3,233,640 | ||||||
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Management and incentive fees
payable
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1,088,606 | 943,061 | ||||||
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Accounts payable and accrued
expenses
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586,418 | 713,422 | ||||||
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Interest and credit facility fees
payable
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245,388 | 292,307 | ||||||
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Due to
manager
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29,236 | 11,048 | ||||||
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Total
liabilities
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$ | 76,830,218 | $ | 94,972,628 | ||||
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STOCKHOLDERS'
EQUITY
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Common stock, par value $.0001 per
share, 100,000,000 common shares
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authorized, 8,291,384 and
8,291,384 common shares issued and outstanding,
respectively
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829 | 829 | ||||||
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Capital in excess of par
value
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116,218,966 | 116,218,966 | ||||||
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Accumulated undistributed net
investment income
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417,409 | 455,576 | ||||||
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Accumulated undistributed net
realized gain from investments and derivatives
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1,012,448 | 1,299,858 | ||||||
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Net unrealized depreciation on
investments and derivatives
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(20,203,004 | ) | (20,106,189 | ) | ||||
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Total stockholders'
equity
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97,446,648 | 97,869,040 | ||||||
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Total liabilities and
stockholders' equity
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$ | 174,276,866 | $ | 192,841,668 | ||||
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NET ASSET VALUE PER
SHARE
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$ | 11.75 | $ | 11.80 | ||||
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GSC Investment
Corp.
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Consolidated Statement of
Operations
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For the three months ended May 31,
2008
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For the three months ended May 31,
2007
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(unaudited)
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(unaudited)
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INVESTMENT
INCOME
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Interest from
investments
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Non-Control/Non-Affiliate
investments
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$ | 4,459,124 | $ | 3,680,845 | ||||
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Control
investments
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635,386 | - | ||||||
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Total
interest income
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5,094,510 | 3,680,845 | ||||||
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Interest from cash and cash
equivalents
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66,689 | 21,051 | ||||||
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Management fee
income
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522,739 | 383,562 | ||||||
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Other
income
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31,423 | 16,603 | ||||||
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Total investment
income
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5,715,361 | 4,102,061 | ||||||
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EXPENSES
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Interest and credit facility
financing expenses
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833,198 | 720,765 | ||||||
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Base management
fees
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748,499 | 360,488 | ||||||
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Professional
fees
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345,459 | 542,616 | ||||||
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Administrator
expenses
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248,398 | - | ||||||
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Incentive management
fees
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340,107 | 359,368 | ||||||
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Insurance
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167,486 | 118,041 | ||||||
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Directors
fees
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66,609 | 96,090 | ||||||
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General &
administrative
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65,037 | 45,692 | ||||||
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Other
expense
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3,208 | - | ||||||
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Cost of acquiring management
contract
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- | 144,000 | ||||||
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Organizational
expense
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- | 22,868 | ||||||
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Expenses before manager expense
waver and reimbursement
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2,818,001 | 2,409,928 | ||||||
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Expense waver and
reimbursement
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(298,113 | ) | (265,766 | ) | ||||
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Total expenses net of expense
waver and reimbursement
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2,519,888 | 2,144,162 | ||||||
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NET INVESTMENT
INCOME
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3,195,473 | 1,957,899 | ||||||
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REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
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Net realized gain/(loss) from
investments
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(287,410 | ) | 1,021,068 | |||||
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Net unrealized
appreciation/(depreciation) on investments
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(84,817 | ) | 750,801 | |||||
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Net unrealized depreciation on
derivatives
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(11,998 | ) | (50,020 | ) | ||||
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Net gain/(loss) on
investments
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(384,225 | ) | 1,721,849 | |||||
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NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
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$ | 2,811,248 | $ | 3,679,748 | ||||
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WEIGHTED AVERAGE - BASIC AND
DILUTED EARNINGS PER COMMON SHARE
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$ | 0.34 | $ | 0.59 | ||||
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WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING - BASIC AND DILUTED
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8,291,384 | 6,218,763 | ||||||