NEW YORK, Oct. 15 /PRNewswire-FirstCall/ -- GSC Investment Corp.
(NYSE: GNV), a business development company, today announced
financial results for the fiscal second quarter ended August 31,
2009. Operating Results For the quarter ended August 31, 2009, GSC
Investment Corp. reported net investment income of $1.1 million, or
$0.13 per share, and net loss on investments of $17.2 million, or
$2.07 per share, resulting in a net decrease in net assets from
operations of $16.2 million, or $1.94 per share. $16.1 million of
the net loss was due to unrealized depreciation. Net asset value
was $6.91 per share as of August 31, 2009 as compared to $8.85 per
share as of May 31, 2009. "The unrealized depreciation in our
portfolio during the second quarter primarily reflects the
combination of adverse credit events with several of our corporate
debt investments and changes in our modeling assumptions regarding
default, recovery and prepayment rates for our CLO investment,"
said Chief Executive Officer Seth M. Katzenstein. "While recent
signs of stabilization in the credit markets are encouraging,
corporate deficits accumulated during the recent recession continue
to stress our investments. As a result, we expect that adverse
credit events in our portfolio will continue." Portfolio and
Investment Activity As of August 31, 2009, the value of the
Company's investment portfolio was $100.0 million, principally
invested in 33 portfolio companies and one collateralized loan
obligation fund ("CLO"). The overall portfolio composition
consisted of 17.4% first lien term loans, 34.3% second lien term
loans, 27.1% senior secured notes, 7.7% unsecured notes, 13.3%
subordinated notes of GSCIC CLO and 0.2% equity/limited partnership
interests. During the second quarter, GSC Investment Corp. made no
investments in new or existing portfolio companies. For the
quarter, the Company had $4.6 million in aggregate amount of exits
and repayments, resulting in net repayments of $4.6 million. As of
August 31, 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 7.4%, 9.5%, 11.6%, 12.3% and 0.1%, respectively, which
resulted in an aggregate weighted average current yield of 8.2%. As
of August 31, 2009, 42.7%, or $37.0 million, of the Company's
interest-bearing portfolio was fixed rate debt with a weighted
average current coupon of 11.7% and 57.3%, or $49.7 million, of its
interest-bearing portfolio was floating rate debt with a weighted
average current spread of LIBOR plus 6.8%. Liquidity and Capital
Resources At August 31, 2009, the Company had $49.6 million in
borrowings under its credit facility and an asset coverage ratio of
216%. On July 30, 2009, an ongoing borrowing base deficiency in the
Company's credit facility became an event of default. Adverse
credit conditions affecting the Company's portfolio investments
have continued throughout the second quarter and have resulted in a
$14.5 million deficiency in the Company's August 31, 2009 borrowing
base, which exceeds the Company's unrestricted cash and cash
equivalents of $6.6 million at August 31, 2009. 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 Company and its lender
continue to discuss possible solutions to the event of default and
the lender has elected not to accelerate the obligation to date,
but has reserved the right to do so. "The adverse economic
environment that persists in the marketplace continues to have a
negative effect on several of our portfolio companies. Some
portfolio companies have experienced worse than expected declines
in operating performance, while others have been unable to
refinance maturing debt," said Mr. Katzenstein. "We believe that
the best way to maximize the value of underperforming and stressed
investments is to actively manage them through the workout process
leveraging the experience of our investment adviser GSC Group and
the common ownership of other GSC Group-managed funds." 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 The
Company's Board of Directors has decided not to declare a dividend
for the second quarter of fiscal year 2010. 2010 Second Quarter
Conference Call/Webcast Information When: Friday, October 16, 2009,
10:00 a.m. Eastern Time (ET) Call: Interested parties may
participate by dialing (877) 681-3372 (U.S. and Canada) or (719)
325-4923 (outside U.S. and Canada). A replay of the call will be
available from 1:00 p.m. ET on Friday, October 16, 2009 through
11:59 p.m. ET on Wednesday, October 28, 2009 by dialing (888)
203-1112 (U.S. and Canada) or (719) 457-0820 (outside U.S. and
Canada), passcode for both replay numbers: 5269467. 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 16, 2009 through 11:59 p.m. ET, Wednesday, October
28, 2009. 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." Contact: Carl J. Crosetto GSC Group 973-437-1007 GSC
Investment Corp. Consolidated Balance Sheets As of -------- August
31, 2009 February 28, 2009 --------------- -----------------
(unaudited) ASSETS Investments at fair value
Non-control/non-affiliate investments (amortized cost of
$132,206,257 and $137,020,449, respectively) $86,689,407
$96,462,919 Control investments (cost of $29,233,097 and
$29,905,194, respectively) 13,348,381 22,439,029 Affiliate
investments (cost of $0 and $0, respectively) 318 10,527
--------------- ----------------- Total investments at fair value
(amortized cost of $161,439,354 and $166,925,643, respectively)
100,038,106 118,912,475 Cash and cash equivalents 6,643,998
6,356,225 Cash and cash equivalents, securitization accounts
434,918 1,178,201 Outstanding interest rate cap at fair value (cost
of $131,000 and $131,000, respectively) 89,347 39,513 Interest
receivable, net of reserve 2,514,815 3,087,668 Deferred credit
facility financing costs, net - 529,767 Management fee receivable
650,062 237,370 Other assets 596,870 321,260 ---------------
----------------- Total assets $110,968,116 $130,662,479
================ ================= LIABILITIES Revolving credit
facility $49,580,451 $58,994,673 Management and incentive fees
payable 3,135,958 2,880,667 Accounts payable and accrued expenses
547,739 700,537 Interest and credit facility fees payable 408,695
72,825 Due to manager 5,942 - --------------- -----------------
Total liabilities $53,678,785 $62,648,702 ================
================= STOCKHOLDERS' EQUITY Common stock, par value
$.0001 per share, 100,000,000 common shares authorized, 8,291,384
and 8,291,384 common shares issued and outstanding, respectively
829 829 Capital in excess of par value 116,943,738 116,943,738
Accumulated undistributed net investment income 9,766,239 6,122,492
Accumulated undistributed net realized loss from investments and
derivatives (7,978,576) (6,948,628) Net unrealized depreciation on
investments and derivatives (61,442,899) (48,104,654)
--------------- ----------------- Total stockholders' equity
57,289,331 68,013,777 --------------- ----------------- Total
liabilities and stockholders' equity $110,968,116 $130,662,479
================ ================= NET ASSET VALUE PER SHARE $6.91
$8.20 --------------- ----------------- GSC Investment Corp.
Consolidated Statement of Operations For the three For the six
months ended months ended August 31 August 31 -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- (unaudited)
(unaudited) (unaudited) (unaudited) INVESTMENT INCOME Interest from
investments Non-Control/Non- Affiliate investments $2,654,665
$4,144,437 $5,973,505 $8,603,561 Control investments 449,485
1,111,003 1,317,714 1,746,389 ----------- --------- ----------
--------- Total interest income 3,104,150 5,255,440 7,291,219
10,349,950 Interest from cash and cash equivalents 6,991 36,008
20,182 102,697 Management fee income 516,939 489,148 1,037,931
1,011,887 Other income 57,278 54,279 100,412 82,494 -----------
--------- ---------- --------- Total investment income 3,685,358
5,834,875 8,449,744 11,547,028 ----------- --------- ----------
--------- EXPENSES Interest and credit facility financing expenses
1,405,548 623,611 2,048,441 1,456,809 Base management fees 505,314
705,532 1,053,058 1,454,031 Professional fees 341,998 315,130
681,778 660,589 Administrator expenses 171,861 260,946 343,722
509,344 Incentive management fees - 407,027 322,183 747,134
Insurance 223,459 177,162 429,476 344,648 Directors fees and
expenses 63,136 73,276 145,136 139,885 General & administrative
66,145 77,904 125,925 142,941 -------- --------- ----------
--------- Expenses before manager expense waiver and reimbursement
2,777,461 2,640,588 5,149,719 5,455,381 ----------- ---------
---------- --------- Expense reimbursement (171,861) (260,946)
(343,722) (559,059) ----------- --------- ---------- ---------
Total expenses net of expense waiver and reimbursement 2,605,600
2,379,642 4,805,997 4,896,322 ----------- --------- ----------
--------- NET INVESTMENT INCOME 1,079,758 3,455,233 3,643,747
6,650,706 ----------- --------- ---------- --------- REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain/(loss)
from investments (1,024,796) 173,681 (1,029,948) (129,819) Net
realized gain from derivatives - 14,364 - 30,454 Net unrealized
depreciation on investments (16,157,371) (6,194,371) (13,388,079)
(6,279,188) Net unrealized appreciation/ (depreciation) on
derivatives 14,147 (16,328) 49,834 (28,326) ----------- ---------
---------- --------- Net loss on investments (17,168,020)
(6,022,654) (14,368,193) (6,406,879) ----------- ---------
---------- --------- NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(16,088,262) $(2,567,421)$(10,724,446)
$243,827 ============ =========== ============ ======== WEIGHTED
AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE
$(1.94) $(0.31) $(1.29) $0.03 WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING - BASIC AND DILUTED 8,291,384 8,291,384 8,291,384
8,291,384 DATASOURCE: GSC Investment Corp. CONTACT: Carl J.
Crosetto of GSC Group, +1-973-437-1007; or Roland Tomforde of
Broadgate Consultants, LLC, +1-212-232-2222 Web Site:
http://ir.gscinvestmentcorp.com/events.cfm
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