Full Circle Capital (FULL) 8-K Fourth Quarter and Full Year Fiscal 2015 Results

 

FULL CIRCLE CAPITAL CORPORATION ANNOUNCES

FOURTH QUARTER AND FULL YEAR FISCAL 2015 RESULTS

- Net Investment Income Grows 64.8% to $2.4 Million-

-Closed $38.1 Million in New Investments Thus Far in Calendar 2015-

- Announces Authorization of Two Million Share Repurchase Program -

Greenwich, Connecticut – September 14, 2015 –Full Circle Capital Corporation (Nasdaq: FULL) (the “Company”) today announced its financial results for the fiscal fourth quarter and full year ended June 30, 2015.

Financial Highlights for the Fiscal Fourth Quarter Ended June 30, 2015:

➢ Originated $26.1 million in new investments.

➢ Increased total investment income by 30.0% to $4.4 million, compared with $3.4 million for the prior-year quarter.

➢ Net investment income (“NII”) grew by 64.8% to $2.4 million, or $0.11 per share, compared with $1.5 million, or $0.15 per share, in the prior-year quarter.

➢ Net realized and unrealized losses were $3.0 million, consisting of net unrealized gains on investments of $0.2 million and net realized losses on investments of $3.2 million.

➢ Net decrease in net assets from operations was $0.5 million, or $0.02 per share.

➢ Per share amounts are based on approximately 23.2 million weighted average shares outstanding compared to 10.3 million weighted average shares outstanding for the fourth quarter of fiscal 2014, reflecting share issuances completed during calendar 2014 and 2015.

As of June 30, 2015:

➢ Net asset value was $4.30 per share and portfolio fair value was $152.1 million

➢ Weighted average portfolio interest rate was 9.99%

➢ 81% of portfolio company investments were first lien senior secured loans

On August 4, 2015, the Board of Directors declared monthly distributions for the second quarter of fiscal 2016 of $0.035 per share payable in November and December 2015, and January 2016. These distributions equate to a $0.42 annualized amount or a current annualized yield of 13.4%, based on the closing price of the Company’s common stock of $3.13 per share on September 11, 2015.

Stock Repurchase Program

In August 2015, the Company’s board of directors authorized an increase in the amount of shares of its common stock that may be repurchased under its existing stock repurchase program from one million shares to two million shares. The shares may only be repurchased in the open market and at prices below the then most recently reported net asset value per share of the shares.

Full Circle Capital intends to enter into and implement a Rule 10b5-1 repurchase plan shortly after today’s earnings announcement to implement the stock repurchase program.Depending upon market conditions and other factors, Full Circle Capital’s management also has the discretion to make open market repurchases in addition to any made pursuant to the Rule 10b5-1 repurchase plan.

“Our fiscal fourth quarter was focused on the deployment of our available capital, which resulted in the origination of $26.1 million in investments during the quarter, and an additional $10.0 million in investments subsequent to the quarter end, spread among a diverse group of companies,” said Gregg Felton, President and Chief Executive Officer of Full Circle Capital Corporation.“We believe we have taken considerable care in selecting and funding these investments, and that they will provide a proper alignment of reward and acquired risk.”

 

“The waiver by our investment adviser of a portion of the base management and incentive fees in the quarter contributed toward ensuring that we were able to cover our monthly distributions with sufficient net investment income,” added Mr. Felton. “Looking ahead, we believe the recent investments of our available capital from the equity issuance earlier this year, combined with continued portfolio growth, position us to generate the necessary investment income over time to enable us to cover the monthly distributions absent any fee waivers; however, to further demonstrate management’s and our investment adviser’s commitment to shareholders’ interests, the waiver will remain in place through the end of fiscal 2016.”

“Finally, to further align our interests with that of our shareholders, our Board has recently increased the number of shares that we can repurchase from one million to two million and we plan to enter into a 10b5-1 plan very shortly to begin implementing the share buyback. With our currently available investment capacity, we believe this is a prudent use of our capital that will be accretive to shareholders while still maintaining significant funds to deploy into additional investments and further grow the Company,” concluded Mr. Felton.

Fourth Quarter Fiscal 2015 Results

The Company’s net asset value at June 30, 2015 was $4.30 per share. During the quarter, the Company generated $4.4 million of interest income compared to $2.9 million in the fourth quarter of fiscal 2014, an increase of 51.4%. Income from fees and other sources in the quarter totaled $0.1 million, compared to $0.5 million in the prior-year quarter.

The Company produced NII of $2.4 million, or $0.11 per share, in the quarter ended June 30, 2015 compared to $1.5 million, or $0.15 per share, in the quarter ended June 30, 2014.

Net realized and unrealized losses in the quarter were $3.0 million. Net unrealized appreciation of $0.2 million was comprised of $3.4 million of net unrealized appreciation on equity investments and $3.2 million of net unrealized depreciation on debt investments. Realized losses on investments were $3.2 million. Net decrease in net assets resulting from operations was $0.5 million, or $0.02 per share.

During the quarter ended June 30, 2015 the Company added $26.1 million in new investments in six new portfolio companies and two current portfolio companies.

At June 30, 2015, the Company’s portfolio included debt investments in 32 companies with an average of $4.2 million per investment. The weighted average interest rate on debt investments was 9.99% at June 30, 2015. At fair value, 80.7% of the Company’s portfolio investments were first lien loans, 7.3% were second lien loans and unsecured notes and 12.0% were equity investments. While gross exposure to equity investments is 12.0%, net exposure to equity investments is 5.5% as the net exposure to Granite Ridge, LLC is $2.6 million when taking the deposit on the swap contract into account. Approximately 73% of the debt investment portfolio, at fair value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 59% at June 30, 2015 compared to 60% at June 30, 2014.

Subsequent Events

Subsequent to June 30, 2015, the Company has closed $10.0 million in new investments in two new portfolio companies and one existing portfolio company, and received $12.8 million in repayments:

On July 1, 2015, the Company issued a $6.0 million mortgage note to 310E53RD, LLC, a real estate holding company. The note bears interest at LIBOR plus 10.00% with a LIBOR floor of 0.15% and has a final maturity of July 1, 2017.

On July 1, 2015, the senior secured credit facility and revolving commitment with Butler Burgher Group, LLC, was fully repaid at par plus accrued interest and fees for total proceeds of $8.6 million.

On July 17, 2015, the Company purchased $3.0 million of a $175.0 million senior secured term loan to Liquidnet Holdings, Inc., an equities trading platform, at 96.375% of par. The credit facility bears interest at LIBOR plus 6.75% with a LIBOR floor of 1.00% and has a final maturity of May 22, 2019.

On July 31, 2015, the Company purchased an additional $1.0 million of senior secured notes to Lee Enterprises, Incorporated. The notes bear interest at 9.50% and have a final maturity of March 15, 2022.

 

On September 3, 2015, the senior secured credit facility with GW Power, LLC and Greenwood Fuels WI, LLC was partially repaid for total proceeds of $2.2 million.

On September 4, 2015, Blackberry Ltd announced that it has entered into a definitive agreement to acquire Good Technology Corporation for $425 million in cash. Upon closing of the transaction, the Company is expected to receive an $11 million repayment on its first lien notes, which would reflect a 110% redemption on the Company’s initial investment. The Company has not received an indication of what value, if any, is expected to be received related to the warrants.

On September 10, 2015, the company sold the full $2.0 million of the second lien term loan with GK Holdings, Inc. for total proceeds of $1.96 million plus accrued interest.

Conference Call Details

Managementwill host a conference call on Tuesday, September 15, 2015 at 8:30 am ET to discuss results. A live webcast of the conference call and accompanying slide presentation will be available athttp://ir.fccapital.com. Please access the website approximately 10 minutes before the conference call begins.

To participate in the call, please call (888) 737-3713 (domestic toll-free) or (913) 312-6694 (international) and reference PIN: 1555289.

A webcast replay of the call, along with an archived copy of the presentation, will be available athttp://ir.fccapital.com for one year following the call.

An audio replay will also be available until September 22, 2015, by dialing (877) 870-5176 (toll-free) or (858) 384-5517 (international), PIN: 1555289.

About Full Circle Capital Corporation

Full Circle Capital Corporation (www.fccapital.com) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s websitewww.fccapital.com.

Forward-Looking Statements

This press release contains forward-looking statements which relate to future events or Full Circle's future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,”“should,”“plans,”“anticipates,”“expects,”“estimates”and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Full Circle's filings with the Securities and Exchange Commission. Full Circle undertakes no duty to update any forward-looking statements made herein.

Company Contact:	Investor Relations Contacts:
Gregg J. Felton, President and Chief Executive Officer	Garrett Edson/Brad Cohen
John Stuart, Chairman	ICR, LLC
Full Circle Capital Corporation	(203) 682-8200
(203) 900 –2100
info@fccapital.com

 

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	June 30, 2015			June 30, 2014
Assets
Control Investments at Fair Value (Cost of $11,409,596 and $20,253,149, respectively)	$	5,812,064		$	17,539,057
Affiliate Investments at Fair Value (Cost of $24,434,726 and $20,177,115, respectively)		16,019,272			14,588,417
Non-Control/Non-Affiliate Investments at Fair Value (Cost of $136,351,581 and $123,605,311, respectively)		130,282,423			118,063,285
Total Investments at Fair Value (Cost of $172,195,903 and $164,035,575, respectively)		152,113,759			150,190,759
Open Swap Contract Asset, at Fair Value		-			-
Cash		3,736,563			-
Deposit with Broker		-			2,525,000
Interest Receivable		1,903,606			1,016,726
Principal Receivable		23,287			207,233
Distributions Receivable		15,141			-
Due from Affiliates		605,749			4,273
Due from Portfolio Investments		180,300			135,288
Receivable on Swap Contract		1,081			-
Prepaid Expenses		66,105			57,470
Other Assets		1,483,578			750,326
Deferred Offering Expenses		328,168			-
Deferred Credit Facility Fees		267,645			449,350
Total Assets		160,724,982			155,336,425
Liabilities
Due to Affiliates		1,052,489			891,966
Bank Overdraft		-			821,316
Accrued Liabilities		179,378			184,857
Deposit from Swap Counterparty		10,380,000
Due to Broker		-			25,000,221
Payable for Investments Acquired		15,020,000			24,900,172
Distributions Payable		813,240			766,683
Interest Payable		57,605			45,254
Other Liabilities		305,957			1,076,800
Accrued Offering Expenses		7,258			35,828
Line of Credit		-			8,435,463
Notes Payable 8.25% due June 30, 2020 (plus unamortized premium of $158,504 and $0 and less deferred debt issuance costs of $833,541 and $947,937, respectively.		32,970,488			20,197,588
Total Liabilities		60,786,415			82,356,148
Commitments and contingencies		-			-
Net Assets	$	99,938,567		$	72,980,277
Components of Net Assets
Common Stock, par value $0.01 per share (100,000,000 authorized; 23,235,430 and 11,443,034 issued and outstanding, respectively)	$	232,354		$	114,430
Paid-in Capital in Excess of Par		132,487,067			92,103,666
Distributions in Excess of Net Investment Income		(119,318	)		(131,251	)
Accumulated Net Realized Losses		(12,579,392	)		(5,261,752	)
Accumulated Net Unrealized Losses		(20,082,144	)		(13,844,816	)
Net Assets	$	99,938,567		$	72,980,277
Net Asset Value Per Share	$	4.30		$	6.38

 

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

		Three Months Ended June 30,						Year Ended June 30,
		2015			2014			2015			2014
Investment Income
Interest Income from Non-Control/Non-Affiliate Investments		$	3,558,167		$	1,647,626		$	13,044,316		$	6,486,729
Interest Income from Affiliate Investments			610,424			716,812			2,445,713			2,701,361
Interest Income from Control Investments			184,892			511,258			1,465,069			1,963,407
Dividend Income from Control Investments			36,247			-			36,247			114,704
Other Income from Non-Control/Non-Affiliate Investments			27,174			521,407			542,164			2,487,959
Other Income from Affiliate Investments			4,004			4,436			98,671			16,592
Other Income from Control Investments			12,500			12,500			50,000			50,000
Other Income from Non-Investment Sources			8,566			2,941			67,163			2,941
Total Investment Income			4,441,974			3,416,980			17,749,343			13,823,693
Operating Expenses
Management Fee			580,607			475,595			2,280,058			1,631,694
Incentive Fee			462,349			370,132			1,798,000			1,511,362
Total Advisory Fees			1,042,956			845,727			4,078,058			3,143,056
Allocation of Overhead Expenses			44,531			38,422			171,559			180,737
Sub-Administration Fees			61,237			50,000			256,236			200,000
Officers’ Compensation			75,913			75,529			303,652			301,925
Total Costs Incurred Under Administration Agreement			181,681			163,951			731,447			682,662
Directors’ Fees			43,750			41,250			182,196			127,625
Interest Expenses			1,006,442			630,917			4,305,558			2,693,487
Professional Services Expense			191,032			143,252			700,324			610,362
Bank Fees			9,832			10,775			39,931			56,184
Other			116,880			100,581			519,600			479,596
Total Gross Operating Expenses			2,592,573			1,936,453			10,557,114			7,792,972
Management Fee Waiver and Expense Reimbursement	��		(590,319	)		-			(1,420,843	)		-
Total Net Operating Expenses			2,002,254			1,936,453			9,136,271			7,792,972
Net Investment Income			2,439,720			1,480,527			8,613,072			6,030,721
Net Change in Unrealized Gain (Loss) on Investments			236,919			(9,006,140	)		(6,237,328	)		(12,704,614	)
Net Realized Gain (Loss) on:
Non-Control/Non-Affiliate Investments			130,823			(1,152	)		(4,055,309	)		(947,601	)
Affiliate Investments			276,933			-			321,394			-
Control Investments			(3,600,000	)		-			(3,842,390	)		-
Swap Contract			1,081			-			1,081			-
Foreign Currency Transactions			-			(63	)		(1,248	)		(901	)
Net Realized Gain (Loss)			(3,191,163	)		(1,215	)		(7,576,472	)		(948,502	)
Net Increase (Decrease) in Net Assets Resulting from Operations		$	(514,524	)	$	(7,526,828	)	$	(5,200,728	)	$	(7,622,395	)
Earnings (Loss) per Common Share Basic and Diluted		$	(0.02	)	$	(0.73	)	$	(0.35	)	$	(0.88	)
Net Investment Income per Common Share Basic and Diluted		$	0.11		$	0.15		$	0.63		$	0.71
Weighted Average Shares of Common Stock Outstanding Basic and Diluted			23,224,818			10,269,882			14,803,637			8,698,814

 

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

 FINANCIAL HIGHLIGHTS 

	Year Ended June 30, 2015			Year Ended June 30, 2014			Year Ended June 30, 2013			Year Ended June 30, 2012			For the period from August 31, 2010 (commencement of operations) to June 30, 2011
Per Share Data (1)(2) :
Net asset value at beginning of period	$	6.38		$	8.01		$	8.59		$	9.08		$	9.40
Accretion (dilution) from offering(s) (3)		(0.92	)		0.03			(0.18	)		-			-
Offering costs		(0.06	)		(0.04	)		(0.02	)		-			(0.04	)
Net investment income (loss) (4)		0.63			0.71			0.77			0.78			0.70
Net change in unrealized gain (loss)		(0.51	)		(1.36	)		0.37			(0.32	)		(0.29	)
Net realized gain (loss)		(0.51	)		(0.11	)		(0.60	)		(0.03	)		0.06
Dividends from net investment income		(0.63	)		(0.69	)		(0.78	)		(0.80	)		(0.75	)
Return of capital		(0.08	)		(0.17	)		(0.14	)		(0.12	)		-
Net asset value at end of period	$	4.30		$	6.38		$	8.01		$	8.59		$	9.08

(1) Financial highlights are based on weighted average shares outstanding.

(2) Financial highlights for the period from April 16, 2010 (inception) through June 30, 2010 are not presented as the Company’s operations were limited to organization and offering activities only.

(3) Accretion and dilution from offering(s) is based on the net change in net asset value from each follow-on offering.

(4) Net investment income (loss) per share is calculated based on the beginning of year and end of year shares outstanding.