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): January 14,
2010
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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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500
Campus Drive, Suite 220
Florham
Park, New Jersey 07932
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(Address
of principal executive offices)
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Registrant’s
telephone number, including area code: (973)-437-1000
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888
Seventh Ave, New York, NY 10019
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(Former
name or former address, if changed since last report)
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______________________
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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
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Results
of Operations and Financial
Condition.
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On January 14, 2010, we issued a press
release announcing our financial results for the fiscal third quarter ended
November 30, 2009. 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.
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Item
9.01
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Financial
Statements and Exhibits.
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Exhibit
No.
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Description
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99.1
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Press
Release dated January 14, 2010
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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
15, 2010
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By:
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/s/
Eric Rubenfeld
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Name:
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Eric
Rubenfeld
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Title:
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Vice
President and Secretary
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Exhibit
99.1
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Contact: Debbie
Lombardi
GSC
Group
973-593-5438
Roland
Tomforde
Broadgate
Consultants, LLC
212-232-2222
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GSC
Investment Corp. Announces Third Quarter 2010 Financial Results
__________________________________________
NEW YORK,
January 14, 2010 – GSC Investment Corp. (NYSE:GNV), a business development
company, today announced financial results for the fiscal third quarter ended
November 30, 2009.
Operating
Results
For the
quarter ended November 30, 2009, GSC Investment Corp. reported net investment
income of $0.9 million, or $0.10 per share, and net gain on investments of $8.3
million, or $0.91 per share, resulting in a net increase in net assets from
operations of $9.1 million, or $1.01 per share. $8.8 million of the net gain was
due to unrealized appreciation. Net asset value was $3.80 per share as of
November 30, 2009 as compared to $6.91 per share as of August 31, 2009. The
decrease in NAV per share from August 31, 2009 was primarily the result of the
distribution of 8.6 million shares of common stock on December 31, 2009 for the
stock portion of the dividend declared on November 13, 2009. In accordance with
generally accepted accounting principals, the number of shares outstanding used
to calculate NAV per share as of November 30, 2009 was retroactively adjusted to
reflect the additional shares issued as a result of the stock dividend.
Excluding the issuance of these additional shares, the NAV per share would have
been $7.76 as of November 30, 2009.
Portfolio and Investment
Activity
As of
November 30, 2009, the value of the Company's investment portfolio was $103.3
million, principally invested in 29 portfolio companies and one collateralized
loan obligation fund (“CLO”). The overall portfolio composition consisted of
15.4% first lien term loans,
29.1%
second lien term loans, 27.5% senior secured notes, 7.1% unsecured notes, 20.8%
subordinated notes of GSCIC CLO and 0.1% equity/limited partnership
interests.
During
the third quarter, GSC Investment Corp. made no investments in new or existing
portfolio companies. For the quarter, the Company had $5.7 million in
aggregate amount of exits and repayments, resulting in net repayments of $5.7
million.
As of
November 30, 2009, 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 7.8%, 8.0%, 11.6%, 12.3% and 11.0%,
respectively, which resulted in an aggregate weighted average current yield of
9.8%.
As of
November 30, 2009, 43.2%, or $35.3 million, of the Company's interest-bearing
portfolio was fixed rate debt with a weighted average current coupon of 11.7%
and 56.8%, or $46.5 million, of its interest-bearing portfolio was floating rate
debt with a weighted average current spread of LIBOR plus 7.1%.
Liquidity and Capital
Resources
At
November 30, 2009, the Company had $43.8 million in borrowings under its credit
facility and an asset coverage ratio of 247%.
On July
30, 2009, an unremedied borrowing base deficiency became an event of default,
which is currently continuing. During the continuance of an event of default,
the lender has the ability to terminate the facility and sell the underlying
collateral necessary to satisfy outstanding borrowings. The lender has elected
not to accelerate the obligation to date, but has reserved the right to do so.
Including $6.3 million of repayments made subsequent to November 30, 2009, the
Company has repaid $18.3 million of outstanding borrowings since the event of
default consisting of $11.6 million of proceeds from asset sales and repayments
and $6.7 million from cash interest received in excess of interest
expense.
2
The
Company continues to work with the investment banking firm of Stifel Nicolaus
& Company as it actively evaluates strategic alternatives to maximize
long-term shareholder value.
Dividend
On
November 13, 2009, the Company’s Board of Directors declared a dividend of
$1.825 per share is payable on December 31, 2009, to shareholders of record as
of November 25, 2009. Shareholders had until December 17, 2009 to elect whether
to receive the dividend in cash (up to an aggregate maximum cash amount of
approximately $2.1 million or approximately 13.7% of the total dividend paid) or
in shares of common stock. The dividend consisted of $2.1 million in cash and
8,648,725 shares of common stock or 104% of GSC Investment Corp’s outstanding
shares prior to the dividend. The dividend included the balance of the Company’s
fiscal year 2009 taxable income and a significant portion of the Company’s
fiscal year 2010 taxable income including a component for the third quarter of
fiscal year 2010.
2010 Third Quarter
Conference Call/Webcast Information
When: Friday, January 15,
2010, 10:00 a.m. Eastern Time (ET)
Call: Interested parties may
participate by dialing (877) 852-6561 (U.S. and Canada) or (719) 325-4900
(outside U.S. and Canada).
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 15, 2010 through 11:59 p.m. ET,
Wednesday, January 27, 2010.
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
3
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."
4
GSC Investment Corp.
Consolidated Balance
Sheets
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As of
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November 30,
2009
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February 28,
2009
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ASSETS
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(unaudited)
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Investments at fair
value
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Non-control/non-affiliate
investments (amortized cost of $126,612,792 and $137,020,449,
respectively)
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$ | 81,805,383 | $ | 96,462,919 | ||||
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Control investments (cost of
$29,233,097 and $29,905,194, respectively)
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21,464,041 | 22,439,029 | ||||||
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Affiliate investments (cost of $0
and $0, respectively)
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318 | 10,527 | ||||||
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Total investments at fair value
(amortized cost of $155,845,889 and $166,925,643,
respectively)
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103,269,742 | 118,912,475 | ||||||
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Cash and cash
equivalents
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5,459,780 | 6,356,225 | ||||||
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Cash and cash equivalents,
securitization accounts
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839,290 | 1,178,201 | ||||||
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Outstanding interest rate cap at
fair value (cost of $131,000 and $131,000, respectively)
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72,593 | 39,513 | ||||||
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Interest receivable, net of
reserve
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3,122,764 | 3,087,668 | ||||||
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Deferred credit facility financing
costs, net
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- | 529,767 | ||||||
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Management fee
receivable
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1,058,861 | 237,370 | ||||||
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Other
assets
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113,150 | 321,260 | ||||||
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Receivable from
unsettled
trades
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600,036 | - | ||||||
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Total
assets
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$ | 114,536,216 | $ | 130,662,479 | ||||
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LIABILITIES
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Revolving credit
facility
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$ | 43,840,749 | $ | 58,994,673 | ||||
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Dividend
payable
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2,073,066 | - | ||||||
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Management and incentive fees
payable
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3,093,400 | 2,880,667 | ||||||
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Accounts payable and accrued
expenses
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827,707 | 700,537 | ||||||
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Interest and credit facility fees
payable
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357,455 | 72,825 | ||||||
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Total
liabilities
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$ | 50,192,377 | $ | 62,648,702 | ||||
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NET ASSETS
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Common stock, par value $.0001 per
share, 100,000,000 common shares authorized, 16,940,109 and 8,291,384 common
shares issued and outstanding, respectively
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1,694 | 829 | ||||||
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Capital in excess of par
value
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130,001,583 | 116,943,738 | ||||||
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Accumulated undistributed net
investment income (loss)
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(4,496,445 | ) | 6,122,492 | |||||
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Accumulated net realized loss from investments and
derivatives
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(8,528,440 | ) | (6,948,628 | ) | ||||
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Net unrealized depreciation on
investments and derivatives
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(52,634,553 | ) | (48,104,654 | ) | ||||
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Total Net
Assets
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64,343,839 | 68,013,777 | ||||||
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Total liabilities and Net
Assets
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$ | 114,536,216 | $ | 130,662,479 | ||||
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NET ASSET VALUE PER
SHARE
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$ | 3.80 | $ | 8.20 | ||||
5
GSC Investment Corp.
Consolidated Statements of
Operations
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For the three months
ended
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For the nine months
ended
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November 30
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November 30
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2009
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2008
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2009
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2008
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INVESTMENT
INCOME
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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Interest from
investments
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Non-control/Non-affiliate
investments
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$ | 2,593,082 | $ | 4,269,985 | $ | 8,566,587 | $ | 12,873,546 | ||||||||
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Control
investments
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368,374 | 1,452,237 | 1,686,088 | 3,198,626 | ||||||||||||
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Total interest
income
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2,961,456 | 5,722,222 | 10,252,675 | 16,072,172 | ||||||||||||
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Interest from cash and cash
equivalents
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2,752 | 38,377 | 22,934 | 141,074 | ||||||||||||
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Management fee
income
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511,236 | 517,875 | 1,549,167 | 1,529,762 | ||||||||||||
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Other
income
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54,699 | 82,189 | 155,111 | 164,683 | ||||||||||||
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Total investment
income
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3,530,143 | 6,360,663 | 11,979,887 | 17,907,691 | ||||||||||||
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EXPENSES
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Interest and credit facility
financing expenses
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1,126,162 | 693,830 | 3,174,603 | 2,150,639 | ||||||||||||
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Base management
fees
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462,755 | 653,995 | 1,515,813 | 2,108,026 | ||||||||||||
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Professional
fees
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714,789 | 272,196 | 1,396,567 | 932,785 | ||||||||||||
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Administrator
expenses
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171,861 | 241,317 | 515,583 | 750,661 | ||||||||||||
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Incentive management
fees
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- | 542,231 | 322,183 | 1,289,365 | ||||||||||||
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Insurance
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220,059 | 173,353 | 649,535 | 518,001 | ||||||||||||
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Directors fees and
expenses
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71,989 | 72,490 | 217,125 | 212,375 | ||||||||||||
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General & administrative
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65,298 | 65,289 | 191,223 | 208,230 | ||||||||||||
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Expenses before expense waiver and
reimbursement
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2,832,913 | 2,714,701 | 7,982,632 | 8,170,082 | ||||||||||||
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Expense
reimbursement
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(171,861 | ) | (241,317 | ) | (515,583 | ) | (800,376 | ) | ||||||||
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Total expenses net of expense
waiver and reimbursement
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2,661,052 | 2,473,384 | 7,467,049 | 7,369,706 | ||||||||||||
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NET INVESTMENT
INCOME
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869,091 | 3,887,279 | 4,512,838 | 10,537,985 | ||||||||||||
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REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
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Net realized loss from
investments
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(549,864 | ) | (7,293,875 | ) | (1,579,812 | ) | (7,423,694 | ) | ||||||||
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Net realized gain from
derivatives
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- | - | - | 30,454 | ||||||||||||
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Net unrealized
appreciation/(depreciation) on
investments
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8,825,100 | (4,142,827 | ) | (4,562,979 | ) | (10,422,015 | ) | |||||||||
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Net unrealized
appreciation/(depreciation) on
derivatives
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(16,754 | ) | (1,419 | ) | 33,080 | (29,745 | ) | |||||||||
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Net gain/(loss) on
investments
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8,258,482 | (11,438,121 | ) | (6,109,711 | ) | (17,845,000 | ) | |||||||||
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS
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$ | 9,127,573 | $ | (7,550,842 | ) | $ | (1,596,873 | ) | $ | (7,307,015 | ) | |||||
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WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS
(LOSS) PER COMMON
SHARE
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$ | 1.01 | $ | (0.91 | ) | $ | (0.19 | ) | $ | (0.88 | ) | |||||
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WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING -
BASIC AND
DILUTED
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9,051,711 | 8,291,384 | 8,542,983 | 8,291,384 | ||||||||||||
6