SuRo Capital Corp. (“SuRo Capital” or the
“Company”) (Nasdaq:SSSS) today announced its financial
results for the quarter ended June 30, 2020. Net assets
totaled approximately $192.7 million, or $11.84 per share, at June
30, 2020, compared to $10.22 per share at March 31, 2020 and $10.75
per share at June 30, 2019.
“This quarter, SuRo Capital reported the highest
dividend-adjusted net asset value per share in five years. On
July 29, 2020, we were pleased to declare a $0.15 per share
dividend. The quarter was highlighted by several significant
financings for existing portfolio companies and investments in new
opportunities,” said Mark Klein, President and Chief Executive
Officer of SuRo Capital. “The companies in our portfolio
demonstrated strong growth and resilience this quarter despite the
ongoing impact of the COVID-19 outbreak. We believe our
portfolio is well-positioned given the current market
conditions.”
“We are also excited to announce the closing of
two new investments during the second quarter: a $5.0 million
equity investment in Rent the Runway, Inc. and a $6.9 million
collateralized loan to Palantir Lending Trust. SuRo Capital
also made follow-on, pro rata investments in Lime during the second
quarter and Coursera subsequent to quarter-end. We continue to see
more opportunities to deploy capital in credit investments. We have
also been exploring opportunities in pre-business combination
private investments in public equity (“PIPEs”) associated with the
special-purpose acquisition company (“SPAC”) asset class.”
Investment Portfolio as of June 30,
2020
At June 30, 2020, SuRo Capital held positions in
24 portfolio companies with an aggregate fair value of
approximately $199.0 million. As a result of the Company’s
continued strategy to increase the size of its investments in
individual portfolio companies, SuRo Capital has consolidated its
investment portfolio around its top positions. The Company’s
top five portfolio company investments accounted for approximately
68% of the total portfolio at fair value as of June 30, 2020.
Top Five Investments as of June 30,
2020
$ in millions |
|
Cost Basis |
|
Fair Value |
|
% of Total Portfolio |
Coursera,
Inc. |
|
$ |
14.5 |
|
$ |
49.9 |
|
25.1 |
% |
Course Hero, Inc. |
|
|
5.0 |
|
|
33.2 |
|
16.7 |
|
Palantir Technologies, Inc. |
|
|
16.2 |
|
|
30.5 |
|
15.3 |
|
Ozy Media, Inc. |
|
|
10.9 |
|
|
11.3 |
|
5.7 |
|
Nextdoor.com, Inc. |
|
|
10.0 |
|
|
10.5 |
|
5.3 |
|
Total (rounded) |
|
$ |
56.6 |
|
$ |
135.4 |
|
68.1 |
% |
|
|
|
|
|
|
|
|
|
|
Second Quarter 2020 Investment Portfolio
Activity
During the three months ended June 30, 2020,
SuRo Capital funded the following new and follow-on investments,
excluding capitalized transaction costs:
Portfolio Company |
Investment |
Transaction Date |
Investment |
Neutron Holdings, Inc. (d/b/a Lime) |
Junior
Preferred Convertible Note |
5/11/2020 |
$0.5
million |
Rent the Runway, Inc. |
Preferred
Stock |
6/17/2020 |
$5.0
million |
Palantir Lending Trust |
Collateralized Loan |
6/19/2020 |
$6.9
million |
|
|
|
|
Subsequent to quarter-end, through August 5,
2020, SuRo Capital funded the following follow-on investment:
Portfolio Company |
Investment |
Transaction Date |
Investment |
Coursera, Inc. |
Preferred Shares, Series F |
7/15/2020 |
$2.8 million |
|
|
|
|
Second Quarter 2020 Financial
Results
|
Quarter EndedJune 30, 2020 |
Quarter EndedJune 30, 2019 |
|
|
|
|
$ in millions |
per share(1) |
$ in millions |
per share(1) |
|
|
|
|
|
Net investment loss (2) |
$ |
(4.7 |
) |
$ |
(0.28 |
) |
$ |
(2.8 |
) |
$ |
(0.14 |
) |
|
|
|
|
|
Net
realized gain/(loss) on investments |
|
(0.0 |
) |
|
- |
|
|
13.6 |
|
|
0.69 |
|
|
|
|
|
|
Net
change in unrealized appreciation/(depreciation) of investments,
net of tax effects |
|
26.5 |
|
|
1.62 |
|
|
(11.4 |
) |
|
(0.58 |
) |
|
|
|
|
|
Net
increase/(decrease) in net assets resulting from operations –
basic(3) |
$ |
21.8 |
|
$ |
1.34 |
|
$ |
(0.7 |
) |
$ |
(0.03 |
) |
|
|
|
|
|
Repurchase of common stock(4) |
|
(3.6 |
) |
|
0.16 |
|
|
(0.7 |
) |
|
0.03 |
|
|
|
|
|
|
Stock-based compensation(2) |
|
2.0 |
|
|
0.12 |
|
|
- |
|
|
- |
|
|
|
|
|
|
Increase/(decrease) in net asset value |
$ |
20.2 |
|
$ |
1.62 |
|
$ |
(1.4 |
) |
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
- Based on weighted-average number of
shares outstanding for the relevant period
- For the quarter ended June 30,
2020, this balance includes $2.0 million of accelerated recognition
of compensation cost related to the cancellation of all vested and
unvested options on April 28, 2020.
- Total may not sum, due to
rounding.
- During the quarters ended June 30,
2020 and 2019, the Company repurchased 594,637 and 115,801 shares
of SuRo Capital common stock, for approximately $3.6 million and
$0.7 million in cash, respectively, under its Share Repurchase
Program. The use of cash in connection with the repurchases
decreased net asset value as of period end; however, the reduction
in shares outstanding as of period end resulted in an increase in
the net asset value per share.
Weighted-average common basic shares outstanding
were approximately 16.4 million and 19.7 million for the quarters
ended June 30, 2020 and 2019, respectively.
SuRo Capital’s liquid assets were approximately
$23.3 million as of June 30, 2020, consisting of cash and
restricted cash.
Dividend Declaration for Second Quarter
2020
On July 29, 2020, SuRo Capital’s Board of
Directors declared a dividend of $0.15 per share payable on August
25, 2020 to the Company’s common stockholders of record as of the
close of business on August 11, 2020. The dividend will be paid in
cash.
Share Repurchase Program
During the quarter ended June 30, 2020, SuRo
Capital repurchased 594,637 shares under its Share Repurchase
Program for an aggregate purchase price of $3.6 million. The
dollar value of shares that may yet be purchased by the Company
under the Share Repurchase Program is approximately $2.7
million.
Under the publicly announced Share Repurchase
Program and the Modified Dutch Auction Tender Offer, as of August
5, 2020, the Company has repurchased 5,901,324 shares of its common
stock for approximately $37.3 million since the Share Repurchase
Program was announced in August 2017.
Conference Call and Webcast
Management will hold a conference call and
webcast for investors on August 5, 2020 at 2:00 p.m. PT (5:00 p.m.
ET). The conference call access number for U.S. participants is
323-794-2093, and the conference call access number for
participants outside the U.S. is 866-548-4713. The conference ID
number for both access numbers is 3811592. Additionally, interested
parties can listen to a live webcast of the call from the "Investor
Relations" section of SuRo Capital’s website at www.surocap.com. An
archived replay of the webcast will also be available for 12 months
following the live presentation.
A replay of the conference call may be accessed
until 5:00 p.m. PT (8:00 p.m. ET) on August 12, 2020 by dialing
888-203-1112 (U.S.) or +1 719-457-0820 (International) and using
conference ID number 3811592.
Certain Information Regarding the
Dividend
The date of declaration and amount of the
dividend are subject to the sole discretion of SuRo Capital’s Board
of Directors. The aggregate amount of the dividend declared
and paid by SuRo Capital will be fully taxable to
stockholders. The tax character of SuRo Capital’s dividends
cannot be finally determined until the close of SuRo Capital’s
taxable year (December 31). SuRo Capital will report the
actual tax characteristics of each year’s dividends annually to
stockholders and the IRS on Form 1099-DIV subsequent to
year-end.
Registered stockholders with questions regarding
declared dividends may call American Stock Transfer at
800-937-5449.
Forward-Looking Statements
Statements included herein, including statements
regarding SuRo Capital's beliefs, expectations, intentions or
strategies for the future, may constitute "forward-looking
statements". SuRo Capital cautions you that forward-looking
statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected
or implied in these statements. All forward-looking
statements involve a number of risks and uncertainties, including
the impact of the COVID-19 pandemic and any market volatility that
may be detrimental to our business, our portfolio companies, our
industry, and the global economy, that could cause actual results
to differ materially from the plans, intentions and expectations
reflected in or suggested by the forward-looking statements. Risk
factors, cautionary statements and other conditions which could
cause SuRo Capital's actual results to differ from management's
current expectations are contained in SuRo Capital's filings with
the Securities and Exchange Commission. SuRo Capital undertakes no
obligation to update any forward-looking statement to reflect
events or circumstances that may arise after the date of this press
release.
About SuRo Capital Corp.
SuRo Capital Corp. (Nasdaq:SSSS) is a publicly
traded investment fund that seeks to invest in high-growth,
venture-backed private companies. The fund seeks to create a
portfolio of high-growth emerging private companies via a
repeatable and disciplined investment approach, as well as to
provide investors with access to such companies through its
publicly traded common stock. SuRo Capital is headquartered in San
Francisco, CA. Connect with the company on Twitter, LinkedIn, and
at www.surocap.com ContactSuRo Capital Corp.(650)
235-4769IR@surocap.com
Media ContactBill
DouglassGotham Communications, LLCCommunications@surocap.com
SURO CAPITAL CORP. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
ASSETS AND LIABILITIES (UNAUDITED)
|
June 30, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Investments at fair
value: |
|
|
|
Non-controlled/non-affiliate investments (cost of $99,121,577 and
$90,567,041, respectively) |
$ |
168,700,422 |
|
|
$ |
152,866,112 |
|
Non-controlled/affiliate
investments (cost of $52,857,243 and $52,857,243,
respectively) |
29,438,698 |
|
|
37,944,268 |
|
Controlled investments (cost
of $7,161,412 and $7,161,412, respectively) |
860,198 |
|
|
775,198 |
|
Total Portfolio Investments |
198,999,318 |
|
|
191,585,578 |
|
Investments in U.S. Treasury
bills (cost of $99,999,611 and $49,996,667, respectively) |
100,000,000 |
|
|
50,000,000 |
|
Total Investments (cost of
$259,139,843 and $200,582,363, respectively) |
298,999,318 |
|
|
241,585,578 |
|
Cash |
22,385,073 |
|
|
44,861,263 |
|
Restricted cash |
900,000 |
|
|
— |
|
Escrow proceeds
receivable |
67,135 |
|
|
265,303 |
|
Interest and dividends
receivable |
70,274 |
|
|
84,630 |
|
Deferred financing costs |
11,382 |
|
|
11,382 |
|
Prepaid expenses and other
assets(1) |
1,197,711 |
|
|
1,755,933 |
|
Total Assets |
323,630,893 |
|
|
288,564,089 |
|
LIABILITIES |
|
|
|
Accounts payable and accrued
expenses(1) |
1,933,219 |
|
|
1,143,923 |
|
Payable to executive
officers |
— |
|
|
1,369,873 |
|
Accrued interest payable |
475,000 |
|
|
475,000 |
|
Dividends payable |
— |
|
|
2,107,709 |
|
Payable for securities
purchased |
89,499,611 |
|
|
44,746,660 |
|
Income tax payable |
38,965 |
|
|
— |
|
4.75% Convertible Senior Notes
due March 28, 2023(2) |
38,991,657 |
|
|
38,803,635 |
|
Total Liabilities |
130,938,452 |
|
|
88,646,800 |
|
|
|
|
|
Net
Assets |
$ |
192,692,441 |
|
|
$ |
199,917,289 |
|
NET
ASSETS |
|
|
|
Common stock, par value $0.01 per share (100,000,000 authorized;
16,279,679 and 17,564,244 issued and outstanding,
respectively) |
$ |
162,797 |
|
|
$ |
175,642 |
|
Paid-in capital in excess of
par |
173,199,798 |
|
|
178,550,374 |
|
Accumulated net investment
loss |
(33,351,303 |
) |
|
(25,679,362 |
) |
Accumulated net realized gain
on investments |
12,821,670 |
|
|
5,867,417 |
|
Accumulated net unrealized
appreciation/(depreciation) of investments |
39,859,479 |
|
|
41,003,218 |
|
Net Assets |
$ |
192,692,441 |
|
|
$ |
199,917,289 |
|
Net Asset Value Per Share |
$ |
11.84 |
|
|
$ |
11.38 |
|
|
|
|
|
|
|
|
|
__________________________________________________
- This balance includes a right of
use asset and corresponding operating lease liability,
respectively.
- As of June 30, 2020 and December
31, 2019, the 4.75% Convertible Senior Notes due March 28, 2023 had
a face value of $40,000,000.
SURO CAPITAL CORP. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
INVESTMENT
INCOME |
|
|
|
|
|
|
|
Non-controlled/non-affiliate
investments: |
|
|
|
|
|
|
|
Interest income |
$ |
61,126 |
|
|
$ |
198,175 |
|
|
$ |
216,211 |
|
|
$ |
336,672 |
|
Dividend income |
— |
|
|
— |
|
|
50,000 |
|
|
— |
|
Non-controlled/affiliate
investments: |
|
|
|
|
|
|
|
Interest income/(reversal of interest income accrual) |
(49,612 |
) |
|
60,127 |
|
|
(29,184 |
) |
|
119,593 |
|
Dividend income |
30,000 |
|
|
— |
|
|
56,250 |
|
|
— |
|
Controlled investments: |
|
|
|
|
|
|
|
Interest income |
— |
|
|
29,650 |
|
|
— |
|
|
58,937 |
|
Dividend income |
200,000 |
|
|
200,000 |
|
|
200,000 |
|
|
200,000 |
|
Total Investment Income |
241,514 |
|
|
487,952 |
|
|
493,277 |
|
|
715,202 |
|
OPERATING
EXPENSES |
|
|
|
|
|
|
|
Management fees(1) |
— |
|
|
— |
|
|
— |
|
|
848,723 |
|
Reversal of incentive fee
accrual(1) |
— |
|
|
— |
|
|
— |
|
|
(4,660,472 |
) |
Costs incurred under
Administration Agreement(1) |
— |
|
|
— |
|
|
— |
|
|
306,084 |
|
Compensation expense(2) |
3,005,524 |
|
|
469,944 |
|
|
3,930,440 |
|
|
632,108 |
|
Directors’ fees |
111,250 |
|
|
86,250 |
|
|
222,500 |
|
|
172,500 |
|
Professional fees |
678,472 |
|
|
1,310,028 |
|
|
1,817,838 |
|
|
3,371,950 |
|
Interest expense |
568,627 |
|
|
600,205 |
|
|
1,142,027 |
|
|
1,204,373 |
|
Income tax expense |
39,590 |
|
|
29,949 |
|
|
48,255 |
|
|
33,712 |
|
Other expenses |
505,439 |
|
|
796,807 |
|
|
1,004,158 |
|
|
991,753 |
|
Total Operating Expenses |
4,908,902 |
|
|
3,293,183 |
|
|
8,165,218 |
|
|
2,900,731 |
|
Net Investment Loss |
(4,667,388 |
) |
|
(2,805,231 |
) |
|
(7,671,941 |
) |
|
(2,185,529 |
) |
Realized
Gains/(Losses) on Investments: |
|
|
|
|
|
|
|
Non-controlled/non-affiliated
investments |
(23,987 |
) |
|
13,590,233 |
|
|
6,954,253 |
|
|
21,859,371 |
|
Non-controlled/affiliate
investments |
— |
|
|
— |
|
|
— |
|
|
(12,334,831 |
) |
Net Realized Gain/(Loss) on Investments |
(23,987 |
) |
|
13,590,233 |
|
|
6,954,253 |
|
|
9,524,540 |
|
Change in Unrealized
Appreciation/(Depreciation) of Investments: |
|
|
|
|
|
|
|
Non-controlled/non-affiliated
investments |
24,821,654 |
|
|
(6,751,196 |
) |
|
7,276,832 |
|
|
10,277,147 |
|
Non-controlled/affiliate
investments |
1,569,843 |
|
|
(1,220,012 |
) |
|
(8,505,571 |
) |
|
7,802,636 |
|
Controlled investments |
130,698 |
|
|
(4,469,112 |
) |
|
85,000 |
|
|
(9,820,352 |
) |
Net Change in Unrealized Appreciation/(Depreciation) of
Investments |
26,522,195 |
|
|
(12,440,320 |
) |
|
(1,143,739 |
) |
|
8,259,431 |
|
Provision for taxes on unrealized appreciation of investments |
— |
|
|
979,713 |
|
|
— |
|
|
885,566 |
|
Net Change in Net Assets Resulting from
Operations |
$ |
21,830,820 |
|
|
$ |
(675,605 |
) |
|
$ |
(1,861,427 |
) |
|
$ |
16,484,008 |
|
Net Change in Net
Assets Resulting from Operations per Common Share: |
|
|
|
|
|
|
|
Basic |
$ |
1.33 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.11 |
) |
|
$ |
0.84 |
|
Diluted(3) |
$ |
1.10 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.11 |
) |
|
$ |
0.70 |
|
Weighted-Average
Common Shares Outstanding |
|
|
|
|
|
|
|
Basic |
16,383,188 |
|
|
19,719,706 |
|
|
16,912,091 |
|
|
19,741,058 |
|
Diluted(3) |
20,300,980 |
|
|
19,719,706 |
|
|
16,912,091 |
|
|
23,472,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________________________________________________________________________________________________________
- This balance references a
related-party transaction.
- For the three and six months ended
June 30, 2020, this balance includes $1,962,431 of accelerated
recognition of compensation cost related to the cancellation of
unvested options on April 28, 2020.
- For the six months ended June 30,
2020 and the three months ended June 30, 2019, 3,917,792 and
3,731,344 potentially dilutive common shares, respectively, were
excluded from the weighted-average common shares outstanding for
diluted net increase in net assets resulting from operations per
common share because the effect of these shares would have been
anti-dilutive.
SURO CAPITAL CORP. AND
SUBSIDIARIESFINANCIAL HIGHLIGHTS
(UNAUDITED)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Per Basic Share
Data |
|
|
|
|
|
|
|
Net asset value at beginning of the period |
$ |
10.22 |
|
|
$ |
10.75 |
|
|
$ |
11.38 |
|
|
$ |
9.89 |
|
Net investment income/(loss)(1) |
(0.28 |
) |
|
(0.14 |
) |
|
(0.45 |
) |
|
(0.11 |
) |
Net realized gain/(loss) on investments(1) |
— |
|
|
0.69 |
|
|
0.41 |
|
|
0.48 |
|
Net change in unrealized appreciation/(depreciation) of
investments(1) |
1.62 |
|
|
(0.63 |
) |
|
(0.07 |
) |
|
0.42 |
|
Provision for taxes on unrealized appreciation of
investments(1) |
— |
|
|
0.05 |
|
|
— |
|
|
0.05 |
|
Repurchases of common stock(1) |
0.16 |
|
|
0.03 |
|
|
0.45 |
|
|
0.02 |
|
Stock-based compensation(1) |
0.12 |
|
|
— |
|
|
0.12 |
|
|
— |
|
Net asset value at end of
period |
$ |
11.84 |
|
|
$ |
10.75 |
|
|
$ |
11.84 |
|
|
$ |
10.75 |
|
Per share market value at end
of period |
$ |
8.47 |
|
|
$ |
6.40 |
|
|
$ |
8.47 |
|
|
$ |
6.40 |
|
Total return based on market
value(2) |
44.54 |
% |
|
(15.57 |
)% |
|
29.31 |
% |
|
22.61 |
% |
Total return based on net
asset value(2) |
15.85 |
% |
|
— |
% |
|
4.04 |
% |
|
8.70 |
% |
Shares outstanding at end of
period |
16,279,679 |
|
|
19,646,846 |
|
|
16,279,679 |
|
|
19,646,846 |
|
Ratios/Supplemental
Data: |
|
|
|
|
|
|
|
Net assets at end of
period |
$ |
192,692,441 |
|
|
$ |
211,125,048 |
|
|
$ |
192,692,441 |
|
|
$ |
211,125,048 |
|
Average net assets |
$ |
169,877,812 |
|
|
$ |
211,244,233 |
|
|
$ |
184,435,968 |
|
|
$ |
203,070,126 |
|
Ratio of gross operating
expenses to average net assets(3) |
8.19 |
% |
|
5.14 |
% |
|
7.83 |
% |
|
4.66 |
% |
Ratio of income tax provision
to average net assets |
— |
% |
|
(0.46 |
)% |
|
— |
% |
|
(0.44 |
)% |
Ratio of net operating
expenses to average net assets(3) |
8.19 |
% |
|
4.68 |
% |
|
7.83 |
% |
|
4.22 |
% |
Ratio of net investment
income/(loss) to average net assets(3) |
(7.61 |
)% |
|
(5.39 |
)% |
|
(7.29 |
)% |
|
(2.18 |
)% |
Portfolio Turnover Ratio |
— |
% |
|
— |
% |
|
5.88 |
% |
|
5.04 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
___________________________________________________
- Based on weighted-average number of
shares outstanding for the relevant period.
- Total return based on market value
is based on the change in market price per share between the
opening and ending market values per share in the year. Total
return based on net asset value is based upon the change in net
asset value per share between the opening and ending net asset
values per share.
- Financial Highlights for periods of
less than one year are annualized and the ratios of operating
expenses to average net assets and net investment loss to average
net assets are adjusted accordingly. Significant and material
non-recurring expenses are not annualized. For the three and six
months ended June 30, 2020, the Company excluded $1,962,431 and
$1,962,431, respectively of non-recurring expenses. For the three
and six months ended June 30, 2019, the Company excluded $617,536
and $(1,769,820), respectively, of non-recurring expenses and did
not annualize the income tax provision. Because the ratios are
calculated for the Company’s common stock taken as a whole, an
individual investor’s ratios may vary from these ratios.
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