Reports Net Investment Income of $0.25 Per
Share
Declares Monthly Distributions of $0.067 Per
Share for a Total of $0.20 Per Share for Fourth Fiscal Quarter
2014, Equal to Annualized Distribution Rate of $0.80 Per
Share
Full Circle Capital Corporation (Nasdaq:FULL) (the “Company”)
today announced its financial results for the second quarter of
fiscal 2014 ended December 31, 2013.
Financial Highlights for the Second
Quarter of Fiscal 2014
- Total investment income was $4.0
million, an increase of 29.0% compared to $3.1 million for the
three months ended December 31, 2012 and a 24.3% increase compared
to $3.2 million for the three months ended September 30, 2013.
- Net investment income was $1.9 million,
or $0.25 per share, compared to $1.5 million, or $0.22 per share,
for the three months ended December 31, 2012 and compared to $1.2
million, or $0.16 per share, for the three months ended September
30, 2013.
- Net realized and unrealized losses were
$3.1 million, or $0.41 per share. The change in unrealized loss on
investments was $2.6 million, or $0.34 per share. Of the change in
unrealized loss, $0.4 million was related to the reversal of
previously unrealized gains related to iMedx Inc., CSL Operating
LLC, Coast Plating, Inc., and Employment Plus, Inc. This $0.4
million was recognized as fee income during the three months ended
December 31, 2013.
- Realized losses were $0.5 million, or
$0.07 per share. Combined with net investment income, this resulted
in a net decrease in net assets from operations of $1.2 million, or
$0.16 per share.
- Net asset value of $7.09 per share at
December 31, 2013.
- Total portfolio investments at December
31, 2013 were $75.9 million compared to $77.6 million at December
31, 2012 and $94.6 million at September 30, 2013.
- Weighted average portfolio interest
rate was 12.48% at December 31, 2013.
- New originations and expansion of
facilities to existing borrowers were $5.0 million, including one
new portfolio company. Repayments and realizations totaled $19.7
million during the three month period.
- At December 31, 2013, 90% of portfolio
company investments were first lien senior secured loans.
On February 5, 2014, the Board of Directors declared monthly
distributions for the fourth quarter of fiscal 2014 as follows:
Record Date Payment Date
Per Share Amount April 30, 2014 May 15, 2014
$0.067 May 30, 2014 June 13, 2014 $0.067 June
30, 2014 July 15, 2014
$0.067
These distributions equate to a $0.804 annualized distribution
rate, or a current annualized yield of 10.88%, based on the closing
price of the Company’s common stock of $7.39 per share on February
7, 2014.
Management Commentary
“For the second quarter, net investment income exceeded
distributions on a 53% increase in net investment income over the
prior sequential quarter,” said John Stuart, Chairman and Co-Chief
Executive Officer of Full Circle Capital Corporation. “We received
$19.7 million in repayments and realizations from five portfolio
companies during the three month period which drove fee income to
$1.2 million and total net investment income to $1.9 million.
Including our recent portfolio realizations, we ended the quarter
with debt investments in 18 portfolio companies, which represented
a 12.48% weighted average interest rate at the end of the second
quarter. While our results were negatively impacted by portfolio
valuations, the portfolio remains highly collateralized with 90%
invested in first lien senior secured debt and 78% of our loans
currently bear floating rates. We believe that recent realizations
as well as the liquidity from both our expanded line of credit and
the January 2014 raise of $13.5 million in new equity capital,
provides us with ample resources to execute on the increased
opportunity set resulting from the recent appointment of Gregg
Felton as Co-CEO and President.”
Mr. Felton commented, "We have broadened our origination
strategy to include transactions structured as convertible debt as
well as secondary purchases at a discount to par value. The three
investments made during and subsequent to quarter end are examples
of this broader approach. We believe these investments offer
the opportunity for both current income and capital appreciation.
We are actively growing an attractive pipeline of transactions and
are well positioned to execute given our current liquidity.”
Second Quarter Fiscal 2014
Results
The Company’s net asset value at December 31, 2013 was $7.09 per
share. During the quarter, the Company generated $2.8 million of
interest income, of which 100% was paid in cash. Income from fees,
dividends and other sources totaled $1.2 million. The Company
recorded net investment income of $1.9 million, or $0.25 per share.
Net realized and unrealized losses were $3.1 million, or $0.41 per
share; the majority of these losses were unrealized and related to
fair value adjustments at quarter end. Net decrease in net assets
from operations was $1.2 million, or $0.16 per share. Per share
amounts for the quarter ended December 31, 2013 are based on
approximately 7.6 million weighted average shares outstanding.
The change in unrealized loss on investments was $2.6 million,
or $0.34 per share, for the three months ended December 31, 2013.
The change in unrealized depreciation is primarily due to the
depreciation of the senior secured term loans to ProGrade Ammo
Group, LLC and Modular Process Control, LLC of $1.3 million and
$0.5 million, respectively. Of the change in unrealized loss, $0.4
million was related to the reversal of previously unrealized gains
related to iMedx Inc., CSL Operating LLC, Coast Plating, Inc., and
Employment Plus, Inc. This $0.4 million was recognized as fee
income during the three months ended December 31, 2013 and is
reflected as Other Income in the Statement of Operations. This was
partially offset by the $0.3 million appreciation of the senior
secured loans to Global Energy Efficiency Holdings, Inc. The
overall change in unrealized loss consisted of $2.3 million of net
unrealized depreciation on debt investments and $309,602 of net
unrealized depreciation on equity investments.
During the quarter, the Company originated $5.0 million in one
new loan facility. Repayments and realizations from five portfolio
companies totaled $19.7 million during the three month period.
At December 31, 2013, the Company’s portfolio included debt
investments in 18 companies. The average portfolio company debt
investment at December 31, 2013 was $3.9 million. The weighted
average interest rate on debt investments was 12.48%. At fair
value, 90% of portfolio investments were first lien loans, 2% were
second lien loans and 8% were equity investments. Approximately 78%
of the debt investment portfolio, at fair value, bore interest at
floating rates. The loan-to-value ratio on the Company’s loans was
71% at December 31, 2013, compared to 59% at December 31, 2012 and
61% at September 30, 2013.
Subsequent Events
On January 14, 2014, the Company completed a follow-on public
offering of 1,650,000 shares of the Company’s common stock for
gross proceeds of approximately $11.8 million. On January 27, 2014,
the underwriters exercised in full their option to purchase 242,300
additional shares. The exercise of the over-allotment resulted in
the Company receiving an additional $1.7 million in gross
proceeds.
On January 15, 2014, the Company received gross proceeds of
$7,664,074 relating to the full repayment of its senior secured
credit facility and the senior secured revolving loan with Global
Energy Efficiency Holdings, Inc. Of the $7,664,074 million in gross
proceeds, $7,226,737 represented repayment of expenses, interest,
and principal, at par, and $437,337 represented prepayment fees and
success fees.
On January 21, 2014, the Company invested $500,000 in warrants
as part of a $30 million dollar senior secured convertible note
purchase agreement with Advanced Cannabis Solutions, Inc. (ACS), a
non-residential property owner and provider of consulting services.
The agreement to purchase convertible notes is contingent upon ACS’
satisfaction of certain requirements. The convertible notes, when
funded, will bear interest at a fixed rate of 12.00% per annum and
have a final maturity of January 21, 2020. As of February 7, 2014,
ACS’ common stock’s last sale on the OTC bulletin board was $12.32
per share.
On January 31, 2014, the Company purchased approximately $7.5
million par amount of a $256.3 million senior secured credit
facility to PEAKS Trust 2009-1, a special purpose entity holding
student loans, for approximately $6.0 million. The senior secured
credit facility is guaranteed by ITT Educational Services, Inc.,
and bears interest at LIBOR plus 5.50%, with a minimum LIBOR of
2.00% per annum and has a final maturity of January 27, 2020.
Conference Call Details
Management will host a conference call to discuss these results
on Tuesday, February 11, 2014 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 #
67682701.
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 11, 2014 until 11:59 p.m. ET on February
14, 2014 by calling 855-859-2056 (domestic) or 404-537-3406
(international) and entering confirmation # 67682701. 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
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,” “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.
FULL CIRCLE CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES
December 31,
June 30,
2013
2013
Unaudited Audited
Assets Control Investments at Fair
Value (Cost of $19,682,970 and $18,139,543, respectively) (NOTE 2,
9) $ 20,913,955 $ 19,115,440 Affiliate Investments at Fair Value
(Cost of $18,178,195 and $17,954,622, respectively) (NOTE 2, 9)
13,355,664 16,547,903 Non-Control/Non-Affiliate Investments at Fair
Value (Cost of $65,612,198 and $53,220,538, respectively) (NOTE 2,
9) 62,613,339 52,511,158 Total
Investments at Fair Value (Cost of $103,473,363 and $89,314,703,
respectively) 96,882,958 88,174,501 Cash 907,361 18,029,115
Deposit with Broker 2,150,000 - Interest Receivable (NOTE 2)
905,939 1,097,970 Principal Receivable 487,641 104,768 Dividends
Receivable - 36,705 Due from Portfolio Investment 160,158 105,030
Receivable from Notes Offering - 2,299,704 Prepaid Expenses 127,564
61,198 Other Assets 752,487 1,437,273 Deferred Offering Expenses
171,299 86,834 Deferred Debt Issuance Costs (NOTE 8) 1,026,318
1,086,895 Deferred Credit Facility Fees (NOTE 8) 597,048
543,846
Total Assets
104,168,773 113,063,839
Liabilities Due to Affiliate (NOTE 5) 882,235 728,371
Accounts Payable 50,964 471,297 Accrued Liabilities 9,000 10,172
Due to Broker 21,000,256 - Dividends Payable 582,842 582,842
Interest Payable 52,150 134,167 Other Liabilities 334,961 358,696
Line of Credit (NOTE 8) 6,440,944 25,584,147 Notes Payable 8.25%
due June 30, 2020 (NOTE 8) 21,145,525 21,145,525 Distribution Notes
(NOTE 8) - 3,404,583
Total
Liabilities 50,498,877 52,419,800
Net Assets $ 53,669,896 $ 60,644,039
Components of Net Assets Common Stock, par value
$0.01 per share (100,000,000 authorized; 7,569,382 issued and
outstanding) $ 75,694 $ 75,694 Paid-in Capital in Excess of Par
66,319,579 66,319,579 Distributions in Excess of Net Investment
Income (553,439 ) (200,200 ) Accumulated Net Realized Losses
(5,581,533 ) (4,410,832 ) Accumulated Net Unrealized Losses
(6,590,405 ) (1,140,202 )
Net Assets $ 53,669,896
$ 60,644,039
Net Asset Value Per Share
$ 7.09 $ 8.01
FULL CIRCLE CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months EndedDecember 31, Six Months
EndedDecember 31, 2013 2012
2013 2012 Investment Income
Interest Income from Non-Control/Non-Affiliate Investments $
1,649,533 $ 1,974,071 $ 3,530,671 $ 3,994,055 Interest Income from
Affiliate Investments 656,935 280,567 1,310,653 560,508 Interest
Income from Control Investments 484,207 319,411 942,111 598,584
Dividend Income from Control Investments - 72,493 34,411 106,590
Other Income from Non-Control/Non-Affiliate Investments (NOTE 2)
1,189,891 384,553 1,363,362 528,580 Other Income from Affiliate
Investments (NOTE 2) 3,837 56,004 8,881 59,585 Other Income from
Control Investments (NOTE 2) 12,500 12,500
25,000 25,000 Total Investment
Income 3,996,903 3,099,599
7,215,089 5,872,902
Operating
Expenses Management Fee (NOTE 5) 382,489 345,126 791,747
679,162 Incentive Fee (NOTE 5) 474,897 365,430
789,636 673,362 Total Advisory
Fees 857,386 710,556 1,581,383
1,352,524 Allocation of Overhead
Expenses (NOTE 5) 34,881 84,552 98,711 141,308 Sub-Administration
Fees (NOTE 5) 50,000 50,000 100,000 123,429 Officers’ Compensation
(NOTE 5) 75,529 75,160 150,867
150,354 Total Costs Incurred Under
Administration Agreement 160,410 209,712
349,578 415,091
Directors’ Fees 31,625 33,125 60,250 61,750 Interest Expense (NOTE
8) 718,502 438,587 1,439,479 835,082 Professional Services Expense
158,620 109,902 354,481 275,063 Bank Fees 21,622 5,230 35,468 8,320
Other 149,150 126,837 250,635
221,177
Total Operating Expenses
2,097,315 1,633,949 4,071,274 3,169,007 Net Investment
Income 1,899,588 1,465,650 3,143,815 2,703,895 Net Change in
Unrealized Gain (Loss) on Investments (2,627,312 ) 1,292,589
(5,450,203 ) 1,809,902 Net Realized Gain (Loss) on: Investments
(492,216 ) (3,186,441 ) (1,170,769 ) (4,047,108 ) Foreign Currency
Transactions - - 68
- Net Realized Gain (Loss) (492,216 )
(3,186,441 ) (1,170,701 ) (4,047,108 )
Net
Increase (Decrease) in Net Assets Resulting from Operations $
(1,219,940 ) $ (428,202 ) $ (3,477,089 ) $ 466,689
Earnings per Common Share Basic and Diluted (NOTE 4) $ (0.16 ) $
(0.06 ) $ (0.46 ) $ 0.07 Net Investment Income per Common Share
Basic and Diluted $ 0.25 $ 0.22 $ 0.42 $ 0.42 Weighted Average
Shares of Common Share Outstanding Basic and Diluted 7,569,382
6,732,969 7,569,382 6,476,175
FULL CIRCLE CAPITAL CORPORATION AND
SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(unaudited)
Three months Three months Six months
Six months ended December ended December
ended December ended December 31, 2013 31,
2012 31, 2013 31, 2012 Per Share
Data (1) : Net asset value at beginning of period
$ 7.48 $ 8.51 $ 8.01 $ 8.59 Dilution from offering
(2) -
(0.17 ) - (0.17 ) Offering costs - (0.01 ) - (0.01 ) Net investment
income (loss) 0.25 0.22 0.42 0.42 Change in unrealized gain (loss)
(0.34 ) 0.20 (0.73 ) 0.28 Realized gain (loss) (0.07 ) (0.49 )
(0.15 ) (0.62 ) Dividends declared (0.23 ) (0.23 )
(0.46 ) (0.46 ) Net asset value at end of period $
7.09 $ 8.03 $ 7.09 $ 8.03
(1)
Financial highlights are based on weighted
average shares outstanding.
(2)
Dilution from offering is based on the
change in net asset value from a follow on offering on November 27,
2012.
Full Circle Capital CorporationJohn E. Stuart,
914-220-6300Co-CEOjstuart@fccapital.comorInvestor
Relations:LHAStephanie Prince/Jody Burfening,
212-838-3777sprince@lhai.com
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