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): October 11,
2007
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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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12
East 49th Street, New York, NY 10017
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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
October
11, 2007, we issued a press release announcing our financial results for the
period ended August 31, 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 October 11, 2007
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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||||||
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Date:
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October
11, 2007
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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 Second Quarter 2008 Financial
Results
__________________________________________
NEW
YORK,
October 11, 2007 – GSC Investment Corp. (NYSE:GNV), a business development
company, today announced results for the quarter ended August 31,
2007.
Second
Quarter 2008
Highlights
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·
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Adjusted
net investment income of
$2.95 million, or $0.36 per share (basic and diluted )
for the three months ending
August 31, 20071
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·
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Net
asset value of $13.76 per
share as of August 31, 2007
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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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Paid
a $0.36 per share dividend on August 31, 2007 for the
quarter
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Operating
Results
For
its second quarter of operations,
GSC Investment Corp. reported a net loss of $0.8 million
or $0.09 per
share, primarily due to net unrealized depreciation on investments for the
quarter of $4.4 million. The net unrealized depreciation on
investments was partially offset by net realized gain on sale of investments
of
$0.4 million, resulting in an adjusted net loss on investments of $3.7 million
or $0.45 per share for the quarter, and adjusted net investment
income of $2.95 million
or $0.36 per
share for the quarter.1 Net
asset value was $13.76 per share as of August 31, 2007. There were no
non-performing or delinquent investments for this period.
“We
are
pleased with the growth of our dividend and net investment income during a
challenging period in the global credit market,” said CEO Thomas V.
Inglesby. “Once again, we were able to fund our dividend completely
out of net investment income, demonstrating the strength of our long-term
strategy of buying high yielding credits in underserved markets that meet our
rigorous credit criteria.”
“While
our
net asset value per share sustained a modest reduction primarily due to the
repricing of credits in the broader market, we believe that the underlying
credit quality of our investment portfolio remains strong and that the portfolio
will continue to perform
and
generate sufficient net investment income to support our dividend going forward”
said Mr. Inglesby. “Because our strategy relies on funding dividends
primarily from net investment income, we believe that the repricing of our
portfolio will not affect our ability to generate an attractive dividend for
our
investors.”
The
Company carries its investments at fair value as determined in good faith by
its
board. As of August 31, 2007, 45% of the Company’s investments were
valued based upon market quotations. Of the remaining 55% of the
Company’s investments, 26% were valued based upon valuations provided by an
independent valuation firm at August 31, 2007.
“At
a time
of significant price volatility, we take great comfort from the fact that over
70% of our portfolio is valued at market prices or by an independent,
third-party valuation firm,” Mr. Inglesby stated. “While such
valuations may cause volatility in the amount of our net unrealized losses
and
gains, we believe that reflecting current market conditions in our valuations
provides greater transparency into our portfolio and lowers the risk that losses
may be hidden or obscured by less reliable methodologies.”
Portfolio
and
Investment Activity
As
of August
31, 2007, the Company’s
portfolio consisted of $205.0
million in aggregate principal amount
of investments. The Company
had 46
investments in 38
portfolio companies with an average
investment size of $4.2
million and a weighted average life of
4.8
years. The overall portfolio
composition consisted of 14.9%
first lien term loans, 43.9%
second lien term loans,
23.4%
senior secured notes, 13.8%
unsecured notes, 3.8% structured finance
securities and 0.2%
equity/limited partnership
interests.
During
the quarter,
GSC
Investment Corp. made investments in
an aggregate
principal amount of $43.8
million. Also during the
quarter,
the
Company had
$47.7
million in repayments and sales of investments
resulting
in net repayments
of $3.9
million for the
period.
“We
were pleased
with
the investments we were able to make in a
difficult credit environment,”
said Mr. Inglesby. “In
addition, we observed some stabilization during the quarter following the market
correction, and we are now sourcing investment opportunities with attractive
pricing and conservative capital structures, which we believe will benefit
GSC
Investment Corp.”
As
of August 31,
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
9.1%,
12.6%,
11.7%,
12.5% and 12.4%, respectively,
which results in an
aggregate
weighted current yield of 11.8%. As
of August
31, 2007, 40.4%
or $78.3
million of its
interest-bearing portfolio
was fixed rate debt with
a
weighted average current yield of 11.9%,
and 59.6%
or $115.5
million of its interest-bearing
portfolio was floating
rate debt with a weighted average
current spread of LIBOR plus 6.2%. There
were no non-performing
or delinquent
investments.
Liquidity
and Capital Resources
As
of
August 31, 2007, the Company
had borrowed an aggregate
of $85.7 million under its credit facilities and had $26 million of undrawn
commitments remaining.
Dividend
On
August
31, 2007, GSC Investment Corp. paid a dividend of $0.36 per share.
2008
First Quarter Conference Call/Webcast Information
When:
Friday,
October
12, 2007, 10:00
a.m. Eastern Time
(ET)
Call: Interested
parties may participate by
dialing (888)
801-6504 (U.S.
and Canada)
or (913) 312-1383
(outside U.S.
and Canada).
A
replay of the call will be available
from 1:00 p.m.
ET on Friday, October 12, 2007
through
midnight Friday, October 19, 2007
by
dialing (888) 203-1112
(U.S.
and Canada)
or (719) 457-0820
(outside U.S.
and Canada),
passcode for both replay numbers:
6264413.
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, October 12,
2007 through midnight
Friday, October 19,
2007.
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
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 on investments per share is the net gain 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 GAAP net income under the heading “Second
Quarter 2008 Highlights.” GSC Investment Corp. believes that adjusted
net investment income per share and adjusted net gain 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 on investments per share to the most directly comparable GAAP financial
measure are set forth in Schedule 1 hereto.
2 As
of June 30, 2007. Includes
leverage and warehoused assets.
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GSC
Investment
Corp.
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Consolidated
Balance
Sheets
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As
of
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August
31,
2007
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February
28,
2007
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(Unaudited)
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ASSETS
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Investments
at fair value
(amortized cost of $197,817,296 and $0,
respectively)
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Non-control/non-affiliate investments
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$ |
193,822,981
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$ |
-
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Control
investments
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344,250
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-
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Affiliate
investments
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31,806
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-
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Total
investments at fair value
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194,199,037
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-
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||||||
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Cash
and cash
equivalents
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2,849,824
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1,030
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Cash,
securitization
accounts
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4,552,160
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-
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Interest
receivable
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3,505,927
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-
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Due
from
manager
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583,442
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-
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Other
assets
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455,109
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Deferred
financing costs,
net
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1,128,528
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-
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Deferred
offering
costs
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-
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808,617
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Total
assets
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$ |
207,274,027
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$ |
809,647
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LIABILITIES
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Debt
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$ |
85,728,965
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$ |
-
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||||
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Management
and incentive fees
payable
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1,619,467
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-
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||||||
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Payable
from open
trades
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4,709,375
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-
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||||||
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Accounts
payable and accrued
expenses
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659,747
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105,000
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||||||
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Interest
and credit facility fees
payable
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461,817
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-
|
||||||
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Accrued
offering
cost
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-
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760,000
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||||||
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Due
to
affiliate
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-
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73,810
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||||||
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Total
liabilities
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$ |
93,179,371
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$ |
938,810
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STOCKHOLDERS'
EQUITY
(DEFICIT)
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||||||||
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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 67 common shares issued and outstanding,
respectively
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829
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-
|
||||||
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Capital
in excess of par
value
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116,301,182
|
1,000
|
||||||
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Accumulated
undistributed net
investment income (loss)
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9,696
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(130,163 | ) | |||||
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Accumulated
net realized gain on
sale of investments
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1,445,255
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-
|
||||||
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Net
unrealized appreciation on
investments and derivatives
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(3,662,306 | ) |
-
|
|||||
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Total
stockholders' equity
(deficit)
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114,094,656
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(129,163 | ) | |||||
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Total
liabilities and
stockholders' equity (deficit)
|
$ |
207,274,027
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$ |
809,647
|
||||
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NET
ASSET VALUE PER
SHARE
|
$ |
13.76
|
n/a
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|||||
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GSC
Investment
Corp.
|
||||||||
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Consolidated
Statement of
Operations
|
||||||||
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For
the three
months
ended
August 31,
2007
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For
the six
months
ended
August 31,
2007
|
|||||||
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(unaudited)
|
(unaudited)
|
|||||||
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INVESTMENT
INCOME
|
||||||||
|
Interest
from
investments
|
$ |
5,725,983
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$ |
9,406,828
|
||||
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Interest
from cash and cash
equivalents
|
154,946
|
175,997
|
||||||
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Management
fee
income
|
-
|
383,562
|
||||||
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Other
income
|
695
|
17,298
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||||||
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Total
investment
income
|
5,881,624
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9,983,685
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||||||
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EXPENSES
|
||||||||
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Interest
and credit facility
expenses
|
1,450,870
|
2,171,635
|
||||||
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Professional
fees
|
321,678
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864,294
|
||||||
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Base
management
fees
|
918,157
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1,278,645
|
||||||
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Incentive
management
fees
|
(18,546 | ) |
340,822
|
|||||
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Insurance
|
157,388
|
275,429
|
||||||
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Directors
fees
|
82,750
|
178,840
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||||||
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Administrative
|
130,213
|
175,905
|
||||||
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Cost
of acquiring management
contract
|
-
|
144,000
|
||||||
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Organizational
expense
|
-
|
22,868
|
||||||
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Expenses
before manager
reimbursement
|
3,042,510
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5,452,438
|
||||||
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Expense
reimbursement
|
(317,676 | ) | (583,442 | ) | ||||
|
Total
expenses net of expense
reimbursement
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2,724,834
|
4,868,996
|
||||||
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NET
INVESTMENT
INCOME
|
3,156,790
|
5,114,689
|
||||||
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REALIZED
AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
|
||||||||
|
Net
realized gain on sale of
investments
|
424,187
|
1,445,255
|
||||||
|
Net
change in unrealized
depreciation on investments
|
(4,369,060 | ) | (3,618,259 | ) | ||||
|
Unrealized
appreciation
(depreciation) on derivatives
|
5,973
|
(44,047 | ) | |||||
|
Net
loss on
investments
|
(3,938,900 | ) | (2,217,051 | ) | ||||
|
NET
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS
|
$ | (782,110 | ) | $ |
2,897,638
|
|||
|
BASIC
AND DILUTED EARNINGS PER
COMMON SHARE
|
$ | (0.09 | ) | $ |
0.35
|
|||
|
COMMON
STOCK OUTSTANDING—BASIC AND
DILUTED
|
8,291,384
|
8,291,384
|
||||||
|
Schedule
1 Reconciliation to Basic
and diluted GAAP EPS
|
||||||||
|
For
the three
months
ended
August 31,
2007
|
For
the six
months
ended
August 31,
2007
|
|||||||
|
(unaudited)
|
(unaudited)
|
|||||||
|
Net
investment income per share,
basic and diluted
|
$ |
0.38
|
$ |
0.62
|
||||
|
Incentive
fees attributed to gains
(losses)
|
$ | (0.02 | ) | $ |
-
|
|||
|
Adjusted
net investment income per
share, basic and diluted
|
$ |
0.36
|
$ |
0.62
|
||||
|
Net
loss on investments per share,
basic and diluted
|
$ | (0.47 | ) | $ | (0.27 | ) | ||
|
Incentive
fees attributed to gains
(losses)
|
$ |
0.02
|
$ |
-
|
||||
|
Adjusted
net loss on investments
per share, basic and diluted
|
$ | (0.45 | ) | $ | (0.27 | ) | ||
|
Basic
and diluted GAAP
EPS
|
$ | (0.09 | ) | $ |
0.35
|
|||