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): October 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
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Results
of Operations and Financial
Condition.
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On October 14, 2008, we issued a press
release announcing our financial results for the second quarter ended August 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 is
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 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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October
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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Contacts: Carl
J. Crosetto
GSC
Group
212-884-6192
Michael
H. Yip
GSC
Group
212-884-6216
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GSC
Investment Corp. Announces Second Quarter 2009 Financial Results
__________________________________________
NEW YORK,
October 14, 2008 – GSC Investment Corp. (NYSE:GNV), a business development
company, today announced results for the second quarter ended August 31,
2008.
Second
Quarter 2009 Highlights
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·
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Net investment income of $3.5
million or $0.42 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 $11.05 per
share
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Operating
Results
For the quarter ended August 31, 2008,
GSC Investment Corp. reported net investment income of $3.5 million or $0.42 per
share for the quarter. Net investment income was offset by a net loss
on investments of $6.0 million or $0.73 per share, resulting in a net decrease
in net assets resulting from operations of $2.6 million or $0.31 per share for
the quarter. Net asset value was $11.05 per share as of August
31, 2008.
“While we are disappointed by the
unrealized losses in the portfolio, it is a testament to the fundamental
strength of our strategy that, in the midst of unprecedented price declines and
illiquidity in the corporate debt market, we were able to fully support our quarterly
dividend of $0.39 per share out of net investment income,” said CEO Seth M.
Katzenstein.
“We are mindful of the continued stress in the economy and have worked
to diversify our investment portfolio to insulate it from credit events
associated with any single company or industry,” said Mr.
Katzenstein. “And we continue to closely monitor the
performance of all our portfolio companies.”
Portfolio
and Investment Activity
As of August 31, 2008, the
value of the Company’s investment portfolio was $153.8
million. The
overall portfolio composition consisted of 17.2% first lien term loans,
32.3% second lien term loans, 19.8% senior secured notes, 13.7% unsecured notes, 16.7% subordinated notes of GSCIC CLO and 0.3% equity/limited partnership
interests.
The
Company had one portfolio investment that was being accounted for on a
non-accrual basis as a result of filing for bankruptcy during the
quarter. All other portfolio investments were
performing.
During the second quarter, GSC Investment Corp. made four investments in an aggregate amount of
$9.2 million consisting of $6.4 million in new portfolio companies and
$2.8 million in existing portfolio
companies. For the quarter, the Company had $6.0 million in aggregate amount of exits and
repayments, resulting in net investments of $3.2 million in aggregate amount.
“In today's challenging environment, we will continue to be
selective and only
pursue investments that are
high in the capital
structure and offer an
attractive risk-adjusted return,” said Mr.
Katzenstein.
As of August 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 7.8%, 9.9%, 11.6%
, 12.2% and 20.2%, respectively, which results in an aggregate weighted average current yield of 11.9%.
As of August 31, 2008, 42%, or $53.7 million, of the Company’s interest-bearing portfolio was fixed
rate debt with a weighted
average current coupon of 11.6% and 58%, or $74.1 million, of its interest-bearing portfolio was
floating rate debt with a weighted average current
spread of LIBOR plus 5.7%.
Liquidity
and Capital Resources
As of
August 31, 2008, the Company had $66.3 million in borrowings under its $100
million revolving credit facility. Based on the fair value and
characteristics of the pledged collateral, the facility had limited availability
remaining. The Company’s asset coverage ratio was 238%.
Dividend
On August
19, 2008, GSC Investment Corp. declared a first quarter dividend of $0.39 per
share payable on September 15, 2008, to common shareholders of record on August
19, 2008.
2009 Second Quarter
Conference Call/Webcast Information
When: Wednesday, October 15, 2008,
10:00 a.m. Eastern Time
(ET)
Call: Interested parties may
participate by dialing (877) 627-6590 (U.S. and Canada) or (719) 325-4852
(outside U.S. and Canada).
A replay
of the call will be available from 1:00 p.m. ET on Wednesday, October 15, 2008
through midnight Wednesday, October 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: 9618747.
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 Wednesday,
October 15, 2008 through midnight Wednesday, November 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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August 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 $150,104,717 and $162,888,724,
respectively)
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$ | 127,857,819 | $ | 143,745,269 | ||||
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Control investments (amortized
cost of $30,000,000 and $30,000,000, respectively)
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25,899,553 | 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 $180,104,717 and $192,888,724,
respectively)
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153,773,605 | 172,836,801 | ||||||
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Cash and cash
equivalents
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4,858,988 | 1,072,641 | ||||||
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Cash and cash equivalents,
securitization accounts
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6,264,386 | 14,580,973 | ||||||
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Outstanding interest rate cap at
fair value (cost of $131,000 and $131,000,
respectively)
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48,408 | 76,734 | ||||||
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Interest
receivable
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2,885,148 | 2,355,122 | ||||||
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Due from
manager
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- | 940,903 | ||||||
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Deferred credit facility financing
costs, net
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634,337 | 723,231 | ||||||
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Management fee
receivable
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229,736 | 215,914 | ||||||
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Other
assets
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135,050 | 39,349 | ||||||
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Total
assets
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$ | 168,829,658 | $ | 192,841,668 | ||||
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LIABILITIES
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Revolving credit
facility
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$ | 66,250,000 | $ | 78,450,000 | ||||
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Payable for unsettled
trades
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4,667,738 | 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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2,008,875 | 943,061 | ||||||
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Accounts payable and accrued
expenses
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821,626 | 713,422 | ||||||
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Interest and credit facility fees
payable
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198,210 | 292,307 | ||||||
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Due to
manager
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3,982 | 11,048 | ||||||
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Total
liabilities
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$ | 77,184,071 | $ | 94,972,628 | ||||
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STOCKHOLDERS'
EQUITY
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Common stock, par value $.0001 per
share, 100,000,000 common shares
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authorized, 8,291,384 and
8,291,384 common shares issued and outstanding,
respectively
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829 | 829 | ||||||
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Capital in excess of par
value
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116,218,966 | 116,218,966 | ||||||
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Accumulated undistributed net
investment income
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639,002 | 455,576 | ||||||
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Accumulated undistributed net
realized gain from investments and derivatives
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1,200,493 | 1,299,858 | ||||||
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Net unrealized depreciation on
investments and derivatives
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(26,413,703 | ) | (20,106,189 | ) | ||||
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Total stockholders'
equity
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91,645,587 | 97,869,040 | ||||||
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Total liabilities and
stockholders' equity
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$ | 168,829,658 | $ | 192,841,668 | ||||
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NET ASSET VALUE PER
SHARE
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$ | 11.05 | $ | 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 August
31
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For the six months ended August
31
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2008
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2007
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2008
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2007
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(unaudited)
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(unaudited)
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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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$ | 4,144,437 | $ | 5,725,983 | $ | 8,603,561 | $ | 9,406,828 | ||||||||
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Control
investments
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1,111,003 | - | 1,746,389 | - | ||||||||||||
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Total
interest income
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5,255,440 | 5,725,983 | 10,349,950 | 9,406,828 | ||||||||||||
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Interest from cash and cash
equivalents
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36,008 | 154,946 | 102,697 | 175,997 | ||||||||||||
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Management fee
income
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489,148 | - | 1,011,887 | 383,562 | ||||||||||||
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Other
income
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54,279 | 695 | 82,494 | 17,298 | ||||||||||||
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Total investment
income
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5,834,875 | 5,881,624 | 11,547,028 | 9,983,685 | ||||||||||||
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EXPENSES
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Interest and credit facility
financing expenses
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623,611 | 1,450,870 | 1,456,809 | 2,171,635 | ||||||||||||
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Base management
fees
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705,532 | 918,157 | 1,454,031 | 1,278,645 | ||||||||||||
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Professional
fees
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315,130 | 321,678 | 660,589 | 864,294 | ||||||||||||
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Administrator
expenses
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260,946 | - | 509,344 | - | ||||||||||||
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Incentive management
fees
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407,027 | (18,546 | ) | 747,134 | 340,822 | |||||||||||
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Insurance
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177,162 | 157,388 | 344,648 | 275,429 | ||||||||||||
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Directors
fees
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73,276 | 82,750 | 139,885 | 178,840 | ||||||||||||
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General &
administrative
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77,904 | 130,213 | 142,941 | 175,905 | ||||||||||||
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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
waiver and reimbursement
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2,640,588 | 3,042,510 | 5,455,381 | 5,452,438 | ||||||||||||
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Expense
reimbursement
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(260,946 | ) | (317,676 | ) | (559,059 | ) | (583,442 | ) | ||||||||
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Total expenses net of expense
waiver and reimbursement
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2,379,642 | 2,724,834 | 4,896,322 | 4,868,996 | ||||||||||||
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NET INVESTMENT
INCOME
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3,455,233 | 3,156,790 | 6,650,706 | 5,114,689 | ||||||||||||
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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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173,681 | 424,187 | (129,819 | ) | 1,445,255 | |||||||||||
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Net realized gain from
derivatives
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14,364 | - | 30,454 | - | ||||||||||||
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Net unrealized depreciation on
investments
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(6,194,371 | ) | (4,369,060 | ) | (6,279,188 | ) | (3,618,259 | ) | ||||||||
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Net unrealized
appreciation/(depreciation) on derivatives
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(16,328 | ) | 5,973 | (28,326 | ) | (44,047 | ) | |||||||||
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Net loss on
investments
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(6,022,654 | ) | (3,938,900 | ) | (6,406,879 | ) | (2,217,051 | ) | ||||||||
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NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS
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$ | (2,567,421 | ) | $ | (782,110 | ) | $ | 243,827 | $ | 2,897,638 | ||||||
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WEIGHTED AVERAGE - BASIC AND
DILUTED EARNINGS PER COMMON SHARE
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$ | (0.31 | ) | $ | (0.09 | ) | $ | 0.03 | $ | 0.37 | ||||||
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WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING - BASIC AND DILUTED
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8,291,384 | 8,291,384 | 8,291,384 | 7,938,438 | ||||||||||||