FULL Full Circle Capital Corp. (MM)

Full Circle Capital Corporation (Nasdaq: FULL) (the “Company”) today announced its financial results for the second quarter of fiscal 2013 ended December 31, 2012.

Financial Highlights for the Second Quarter of Fiscal 2013

• Net asset value was $8.03 per share at December 31, 2012.
• Total investment income was $3.1 million, including income from fees, dividends and other sources of $0.5 million.
• Net investment income was $1.5 million, or $0.22 per share.
• Monthly distributions of $0.077 per share were paid on November 15, 2012, December 14, 2012 and January 15, 2013, totaling $0.23 per share for the quarter.
• Net realized losses were $(3.2) million, or $(0.49) per share, and net unrealized gains were $1.3 million, or $0.20 per share, and combined with net investment income, resulted in a net decrease in net assets from operations of $(0.4) million, or $(0.06) per share.
• Total portfolio investments at December 31, 2012 were $77.6 million (excluding U.S. treasury bills of $22.0 million), compared to $75.5 million (excluding U.S. treasury bills of $25.0 million) at September 30, 2012.
• Weighted average portfolio interest rate was 12.55% at December 31, 2012.
• New originations were $3.9 million, consisting of a new debt facility to SOLEX Fine Foods, LLC. Additional funding to existing borrowers totaled $1.6 million (excluding regular borrowing under revolvers).
• At December 31, 2012, 88% of portfolio company investments were first lien senior secured loans.
• At December 31, 2012, debt outstanding was $20.0 million consisting of $16.6 million drawn under the Company’s $35.0 million senior credit facility and $3.4 million of senior unsecured notes.
• On November 27, 2012 the Company raised $10.1 million of net equity capital through a public offering of 1.35 million common shares priced at $7.90 per share.

On February 5, 2013, the Board of Directors declared monthly distributions for the fourth quarter of fiscal 2013 as follows:

Record Date               Payment Date               Per Share Amount April 30, 2013               May 15, 2013               $0.077 May 31, 2013 June 14, 2013 $0.077 June 28, 2013               July 15, 2013               $0.077  

These distributions equate to a $0.924 annualized distribution rate, or a current annualized yield of 11.9%, based on the closing price of the Company’s common stock of $7.76 per share on February 8, 2013.

Management Commentary

“Net investment income per share increased 10% sequentially to $0.22, marking the second consecutive quarter of such growth. While growing net investment income, we have continued to increase our investment portfolio which totaled $77.6 million at quarter end, the largest level since our IPO in 2010,” said John Stuart, Chairman and Chief Executive Officer of Full Circle Capital Corp. “Our primary strategy of investing in first lien senior secured loans to smaller and lower middle-market companies with a desirable yield continues to produce highly competitive portfolio metrics. We now have debt investments in 18 companies with first lien senior secured loans comprising 88% of the total investment portfolio. The weighted average yield on the portfolio was 12.55% for the quarter, within our current target range. Our positions are further supported by a loan-to-value ratio of 59%, with floating rate flexibility in 84% of our investments.”

“With the capital raised during the quarter, we have additional resources to continue to expand our investment portfolio. Originations and additional funding to existing borrowers totaled $5.5 million for the second quarter and subsequent to the end of the quarter we added, net of payoffs, a $2.0 million investment to our portfolio. Our flexible uni-tranche lending solutions continue to attract quality credit opportunities allowing us to remain highly selective in the current market environment.”

Second Quarter Fiscal 2013 Results

The Company’s net asset value at December 31, 2012 was $8.03 per share. During the quarter, the Company generated $2.6 million of interest income, of which 100% was paid in cash. Income from fees, dividends and other sources totaled $0.5 million. The Company recorded net investment income of $1.5 million, or $0.22 per share. Net realized losses were $(3.2) million, or $(0.49) per share, and unrealized gains were $1.3 million, or $0.20 per share, both primarily related to the disposition of one investment. Net decrease in net assets from operations was $(0.4) million, or $(0.06) per share. Per share amounts for the quarter ended December 31, 2012 are based on approximately 6.7 million weighted average shares outstanding.

During the quarter, the Company originated a $3.9 million new loan facility, which was fully funded at closing. Additional funding to existing borrowers, excluding regular borrowing under revolvers, was $1.6 million during the quarter.

At December 31, 2012, the Company’s portfolio included investments in 21 companies, of which 18 were debt investments. The average portfolio company debt investment at December 31, 2012 was $4.0 million. The weighted average interest rate on investments was 12.55%. At fair value, 88% of portfolio investments were first lien loans, 4% were second lien loans and 8% were equity investments. Approximately 84% 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 December 31, 2012 compared to 62% at September 30, 2012.

Subsequent Events

On January 31, 2013 the Company received a full payoff of its senior secured term loan to The Selling Source, LLC, receiving $2.4 million in principal, interest and fees. On February 1, 2013, the Company invested $4.0 million in a new senior secured term loan to The Selling Source, LLC, bearing interest at 12.50% and maturing February 1, 2017.

Conference Call Details

Management will host a conference call to discuss these results on Tuesday, February 12, 2013 at 10:00 a.m. ET. To participate in the conference call, please call 866-305-6438 (domestic call-in) or 706-679-7161 (international call-in) and reference code # 96405426.

A live webcast of the conference call and the accompanying slide presentation will be available at http://ir.fccapital.com/CorporateProfile.aspx?iid=4151676. All participants should call or access the website approximately 10 minutes before the conference begins.

A telephone replay of the conference call will be available from 1:00 p.m. ET on February 12, 2013 until 11:59 p.m. ET on February 14, 2013 by calling 855-859-2056 (domestic) or 404-537-3406 (international) and entering confirmation # 96405426. An archived replay of the conference call and slide presentation will also be available in the investor relations section of the company’s website.

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 smaller and 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 web site www.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,” “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.

            FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES   December 31, 2012 June 30, 2012 (Unaudited)

(Audited)

Assets

Control Investments at Fair Value (Cost of $18,137,713 and

$6,639,648, respectively)

$ 18,570,697 $ 6,777,511

Affiliate Investments at Fair Value (Cost of $11,296,481 and

$6,802,017, respectively)

9,282,442 5,112,142

Non-Control/Non-Affiliate Investments at Fair Value (Cost of

$72,151,382 and $85,181,617, respectively)

  71,765,827     82,957,117  

Total Investments at Fair Value (Cost of $101,585,576 and

$98,623,282, respectively)

99,618,966 94,846,770   Cash 304,077 639,149 Deposit with Broker 2,250,000 2,350,000 Interest Receivable 848,630 902,711 Principal Receivable 251,751 513,372 Dividends Receivable 72,493 - Due from Portfolio Investment 364,535 11,140 Receivable for Investments Sold 1,126,196 - Prepaid Expenses 107,717 43,053 Other Assets 10,550 25,499 Deferred Offering Expenses - 67,685 Deferred Credit Facility Fees   100,000     50,000   Total Assets   105,054,915     99,449,379     Liabilities Due to Affiliate 710,556 580,353 Accounts Payable 19,337 115,741 Accrued Liabilities 47,455 79,651 Due to Broker 22,000,733 22,500,041 Dividends Payable 582,842 478,892 Interest Payable 100,479 142,518 Other Liabilities 759,692 140,458 Accrued Offering Expenses - 19,697 Line of Credit 16,622,598 18,544,660 Distribution Notes   3,404,583     3,404,583   Total Liabilities   44,248,275     46,006,594     Net Assets $ 60,806,640   $ 53,442,785   Components of Net Assets Common Stock, par value $0.01 per share (100,000,000 authorized; 7,569,382 and 6,219,382 issued and outstanding, respectively) $ 75,694 $ 62,194 Paid-in Capital in Excess of Par 67,420,152 57,455,232 Distributions in Excess of Net Investment Income (500,122 ) (122,763 ) Accumulated Net Realized Losses (4,222,474 ) (175,366 ) Accumulated Net Unrealized Losses   (1,966,610 )   (3,776,512 ) Net Assets $ 60,806,640   $ 53,442,785   Net Asset Value Per Share $ 8.03   $ 8.59                        

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

  Three Months Ended Six Months Ended December 31, December 31, 2012

2011

2012

 

2011

Investment Income Interest Income from Non-Control/Non-Affiliate Investments $ 1,974,071 $ 2,104,779 $ 3,994,055 $ 3,930,042 Interest Income from Affiliate Investments 280,567 - 560,508 234,864 Interest Income from Control Investments 319,411 227,071 598,584 254,644 Dividend Income from Control Investments 72,493 1,823 106,590 1,823 Other Income from Non-Control/Non-Affiliate Investments 384,553 64,992 528,580 376,449 Other Income from Affiliate Investments 56,004 - 59,585 54,086 Other Income from Control Investments 12,500   -   25,000   105,000   Total Investment Income 3,099,599   2,398,665   5,872,902   4,956,908     Operating Expenses Management Fee 345,126 300,690 679,162 586,650 Incentive Fee 365,430   274,674   673,362   646,276   Total Advisory Fees 710,556   575,364   1,352,524   1,232,926     Allocation of Overhead Expenses 84,552 89,207 141,308 174,892 Sub-Administration Fees 50,000 78,115 123,429 156,229 Officers’ Compensation 75,160   71,629   150,354   117,553  

Total Costs Incurred Under Administration Agreement

209,712   238,951   415,091   448,674     Directors’ Fees 33,125 26,125 61,750 54,250 Interest Expense 438,587 244,405 835,082 366,965 Professional Services Expense 109,902 93,806 275,063 314,679 Bank Fees 5,230 3,285 8,320 6,966 Other 126,837   118,089   221,177   203,258   Total Gross Operating Expenses 1,633,949 1,300,025 3,169,007 2,627,718   Management Fee Waiver and Expense Reimbursement -   -   -   (313,792 ) Total Net Operating Expenses 1,633,949   1,300,025   3,169,007   2,313,926     Net Investment Income 1,465,650 1,098,640 2,703,895 2,642,982 Net Change in Unrealized Gain (Loss) on Investments 1,292,589 (846,865 ) 1,809,902 (917,680 ) Net Realized Gain (Loss) on Investments (3,186,441 ) 766   (4,047,108 ) 126,572  

Net Increase (Decrease) in Net Assets Resulting

from Operations

$ (428,202 ) $ 252,541   $ 466,689   $ 1,851,874     Earnings (Loss) per Common Share Basic and Diluted $ (0.06 ) $ 0.04 $ 0.07 $ 0.30 Net Investment Income per Common Share Basic and Diluted $ 0.22 $ 0.18 $ 0.42 $ 0.43

Weighted Average Shares of Common Share

Outstanding Basic and Diluted

6,732,969 6,219,382 6,476,175 6,219,382             FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited)  

 

Three months ended

Three months ended

Six months ended Six months ended December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Per Share Data 1 :           Net asset value at beginning of period $ 8.51 $ 9.11 $ 8.59 $ 9.08 Dilution from offering 2 (0.17 ) - (0.17 ) - Offering costs (0.01 ) - (0.01 ) - Net investment income 0.22 0.18 0.42 0.43 Change in unrealized gain (loss) 0.20 (0.14 ) 0.28 (0.15 ) Realized gain (loss) (0.49 ) - (0.62 ) 0.02 Dividends declared   (0.23 )   (0.23 )   (0.46 )   (0.46 ) Net asset value at end of period $ 8.03   $ 8.92   $ 8.03   $ 8.92                 1 Financial highlights are based on weighted average shares outstanding.   2 Dilution from offering is based on the change in net asset value from the secondary offering on November 27, 2012.