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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 |
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
| · | Net investment income of $3.2 million or $0.39 per share |
| · | Declared regular dividend of $0.39 per share |
| · | Net asset value of $11.75 per share |
| · | Completed investing GSC Investment Corp. CLO 2007, Ltd. (“GSCIC CLO”), a $400 million collateralized loan obligation fund managed by the Company |
| · | No non-performing or delinquent investments during the quarter |
| · | 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 |
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. | |
| | | | | | | |
| Consolidated Balance Sheets | |
| | | | | | | |
| | | As of | |
| | | May 31, 2008 | | | February 29, 2008 | |
| | | (unaudited) | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Investments at fair value | | | | | | |
| Non-control/non-affiliate investments (amortized cost of $146,510,329 and $162,888,724, respectively) | | $ | 127,162,754 | | | $ | 143,745,269 | |
| Control investments (amortized cost of $30,000,000 and $30,000,000, respectively) | | | 29,194,602 | | | | 29,075,299 | |
| Affiliate investments (amortized cost of $0 and $0, respectively) | | | 16,233 | | | | 16,233 | |
| Total investments at fair value (amortized cost of $176,510,329 and $192,888,724, respectively) | | | 156,373,589 | | | | 172,836,801 | |
| Cash and cash equivalents | | | 1,963,407 | | | | 1,072,641 | |
| Cash and cash equivalents, securitization accounts | | | 10,120,045 | | | | 14,580,973 | |
| Outstanding interest rate cap at fair value (cost of $131,000 and $131,000, respectively) | | | 64,735 | | | | 76,734 | |
| Interest receivable | | | 3,710,453 | | | | 2,355,122 | |
| Due from manager | | | 44,567 | | | | 940,903 | |
| Management fee receivable | | | 738,653 | | | | 215,914 | |
| Other assets | | | 89,508 | | | | 39,349 | |
| Receivable from unsettled trades | | | 493,125 | | | | - | |
| Deferred credit facility financing costs, net | | | 678,784 | | | | 723,231 | |
| | | | | | | | | |
| Total assets | | $ | 174,276,866 | | | $ | 192,841,668 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| | | | | | | | | |
| Revolving credit facility | | $ | 60,650,000 | | | $ | 78,450,000 | |
| Payable for unsettled trades | | | 10,996,930 | | | | 11,329,150 | |
| Dividend payable | | | 3,233,640 | | | | 3,233,640 | |
| Management and incentive fees payable | | | 1,088,606 | | | | 943,061 | |
| Accounts payable and accrued expenses | | | 586,418 | | | | 713,422 | |
| Interest and credit facility fees payable | | | 245,388 | | | | 292,307 | |
| Due to manager | | | 29,236 | | | | 11,048 | |
| Total liabilities | | $ | 76,830,218 | | | $ | 94,972,628 | |
| | | | | | | | | |
| 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 | | | 116,218,966 | | | | 116,218,966 | |
| Accumulated undistributed net investment income | | | 417,409 | | | | 455,576 | |
| Accumulated undistributed net realized gain from investments and derivatives | | | 1,012,448 | | | | 1,299,858 | |
| Net unrealized depreciation on investments and derivatives | | | (20,203,004 | ) | | | (20,106,189 | ) |
| Total stockholders' equity | | | 97,446,648 | | | | 97,869,040 | |
| | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 174,276,866 | | | $ | 192,841,668 | |
| | | | | | | | | |
| NET ASSET VALUE PER SHARE | | $ | 11.75 | | | $ | 11.80 | |
| | | | | | | | | |
| GSC Investment Corp. | |
| | | | | | | |
| Consolidated Statement of Operations | |
| | | | | | | |
| | | For the three months ended May 31, 2008 | | | For the three months ended May 31, 2007 | |
| | | (unaudited) | | | (unaudited) | |
| INVESTMENT INCOME | | | | | | |
| Interest from investments | | | | | | |
| Non-Control/Non-Affiliate investments | | $ | 4,459,124 | | | $ | 3,680,845 | |
| Control investments | | | 635,386 | | | | - | |
| Total interest income | | | 5,094,510 | | | | 3,680,845 | |
| Interest from cash and cash equivalents | | | 66,689 | | | | 21,051 | |
| Management fee income | | | 522,739 | | | | 383,562 | |
| Other income | | | 31,423 | | | | 16,603 | |
| Total investment income | | | 5,715,361 | | | | 4,102,061 | |
| | | | | | | | | |
| EXPENSES | | | | | | | | |
| Interest and credit facility financing expenses | | | 833,198 | | | | 720,765 | |
| Base management fees | | | 748,499 | | | | 360,488 | |
| Professional fees | | | 345,459 | | | | 542,616 | |
| Administrator expenses | | | 248,398 | | | | - | |
| Incentive management fees | | | 340,107 | | | | 359,368 | |
| Insurance | | | 167,486 | | | | 118,041 | |
| Directors fees | | | 66,609 | | | | 96,090 | |
| General & administrative | | | 65,037 | | | | 45,692 | |
| Other expense | | | 3,208 | | | | - | |
| Cost of acquiring management contract | | | - | | | | 144,000 | |
| Organizational expense | | | - | | | | 22,868 | |
| Expenses before manager expense waver and reimbursement | | | 2,818,001 | | | | 2,409,928 | |
| Expense waver and reimbursement | | | (298,113 | ) | | | (265,766 | ) |
| Total expenses net of expense waver and reimbursement | | | 2,519,888 | | | | 2,144,162 | |
| | | | | | | | | |
| NET INVESTMENT INCOME | | | 3,195,473 | | | | 1,957,899 | |
| | | | | | | | | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
| Net realized gain/(loss) from investments | | | (287,410 | ) | | | 1,021,068 | |
| Net unrealized appreciation/(depreciation) on investments | | | (84,817 | ) | | | 750,801 | |
| Net unrealized depreciation on derivatives | | | (11,998 | ) | | | (50,020 | ) |
| Net gain/(loss) on investments | | | (384,225 | ) | | | 1,721,849 | |
| | | | | | | | | |
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 2,811,248 | | | $ | 3,679,748 | |
| | | | | | | | | |
| WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE | | $ | 0.34 | | | $ | 0.59 | |
| | | | | | | | | |
| WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED | | | 8,291,384 | | | | 6,218,763 | |
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