UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________________
FORM 8-K
Current
Report Pursuant to Section 13 or 15(d) of
the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 10, 2014
FULL CIRCLE CAPITAL CORPORATION
(Exact name of registrant as specified in
its charter)
| Maryland |
814-00809 |
27-2411476 |
| (State or other jurisdiction |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| of incorporation) |
|
|
102 Greenwich Avenue, 2nd
Floor
Greenwich, CT 06830
(Address of principal
executive offices and zip code)
Registrant’s
telephone number, including area code: (203) 900-2100
Check the appropriate box below if the Form 8-K is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| [ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
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| [ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| [ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On November 10, 2014, Full Circle Capital
Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended September
30, 2014. The text of the press release is included as an exhibit to this Form 8-K.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit No. |
Description |
| |
|
| 99.1 |
Press release dated November 10, 2014 |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: |
November 10, 2014 |
|
FULL CIRCLE CAPITAL CORPORATION |
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By: |
/s/ John E. Stuart |
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John E. Stuart |
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Co-Chief Executive Officer |
Exhibit
99.1
FULL CIRCLE CAPITAL CORPORATION ANNOUNCES
FIRST QUARTER FISCAL 2015 EARNINGS
Closed $37.9 Million in Direct and Managed
Investments in the First Quarter
Declared Monthly Distributions of $0.067
Per Share for a Total of $0.201 Per Share for
Third Quarter Fiscal 2015, Equal to Annualized
Distribution Rate of $0.80 Per Share
Greenwich, CT, November 10, 2014 –
Full Circle Capital Corporation (Nasdaq: FULL) (the “Company”) today announced its financial
results for the first quarter of fiscal 2015 ended September 30, 2014.
Financial Highlights for the First Quarter
of Fiscal 2015
| Ø | Originations to four new companies and
expansion of facilities to existing borrowers totaled $37.9 million, of which $27.9 million was funded directly by the Company
and $10.0 million was funded through FC Capital Investment Partners, LLC, a vehicle managed by the Company. Repayments or realizations
from portfolio companies and sales were $16.0 million from three portfolio companies. |
| Ø | Total investment income was $4.1 million,
an increase of 28.1% compared with $3.2 million for the three months ended September 30, 2013. |
| Ø | Net investment income (NII) increased
48.1% to $1.8 million compared with $1.2 million for the three months ended September 30, 2013. On a per share basis, NII was $0.16
for both three month periods. |
| Ø | Net realized and unrealized
losses were $1.6 million, or $0.14 per share. Unrealized losses
on investments were $2.0 million, or $0.17 per share. Realized gains on investments were $0.4 million, or $0.03 per share. |
| Ø | Net increase in net assets from operations
was $0.2 million, or $0.02 per share. |
| Ø | Net asset value was $6.24 per share at
September 30, 2014. |
| Ø | Per share amounts are based on approximately
11.9 million weighted average shares outstanding compared to 7.6 million weighted average shares outstanding for the first quarter
of fiscal 2014, reflecting the common equity offerings completed during calendar 2014. |
| Ø | Total portfolio investments at September
30, 2014 were $131.5 million compared to $125.2 million at June 30, 2014 and $94.6 million at September 30, 2013. |
| Ø | Weighted average portfolio interest rate
was 10.53% at September 30, 2014. |
| Ø | At September 30, 2014, 95% of portfolio
company investments were first lien senior secured loans. |
On November 3,
2014, the Board of Directors declared monthly distributions for the third quarter of fiscal 2015 as follows:
| Record Date |
Payment Date |
Per Share Amount |
| January 30, 2015 |
February 13, 2015 |
$0.067 |
| February 27, 2015 |
March 13, 2015 |
$0.067 |
| March 31, 2015 |
April 15, 2015 |
$0.067 |
These
distributions equate to a $0.804 annualized distribution rate, or a current annualized yield of 13.8%, based on the closing price
of the Company’s common stock of $5.84 per share on November
7, 2014.
Management Commentary
“In
the first quarter Full Circle Capital’s net investment income
increased 48.1%, reflecting the 39.0% growth in our investment portfolio, at fair value, over the last twelve months,”
said John Stuart, Chairman and Co-Chief Executive Officer of Full Circle Capital Corporation. “We
believe this growth was driven by strategic actions we have made over the past year that include a broadening of our investment
approach supported by an expanded investment team, as well as resolution of certain underperforming legacy positions. In particular,
we restructured the Blackstrap Broadcasting, LLC loan facility and the loan returned to performing status as of September 22, 2014.
Given the timing of this event at the very end of the quarter, there was no material benefit to the first quarter’s
earnings. We expect to realize the full impact beginning in the second quarter, which translates to approximately $1.2 million
of annual interest income. We have also lowered our cost of capital as we expanded our revolving credit facility and benefitted
from the expense reimbursement which was initiated this quarter. As previously announced, Full Circle Advisors has agreed to bear
any annual operating expenses of Full Circle Capital above 1.50% of Net Asset Value in fiscal 2015 and above 1.75% of Net Asset
Value in fiscal 2016 and beyond. We expect that these expense initiatives combined with our current level of investment will allow
Full Circle to cover the current stockholder distribution rate on a sustainable basis, an important goal of management and the
Board of Directors.”
Gregg
Felton, President and Co-Chief Executive Officer, commented, “We are pleased with the robust origination activity that continued
in the first quarter resulting in new investments of $37.9 million; $27.9 million of this amount was funded directly by Full Circle
Capital and the balance of $10.0 million was funded by FC Capital Investment Partners LLC, a vehicle managed by the Company. The
new investments included four new portfolio companies, and led to our highest ever portfolio asset level of $131.5 million at quarter
end. Our pipeline remains strong, with significant investment opportunities, including in our newer healthcare and real estate
strategies. At the end of the quarter, we proactively sold certain of our more liquid investment positions in favor of some higher
return opportunities in our pipeline. We will consider recycling other portfolio positions as we view a primary share issuance
as unattractive at current trading levels.”
First Quarter Fiscal 2015 Results
The Company’s net asset value at
September 30, 2014 was $6.24 per share. During the quarter, the Company generated $3.9 million of interest income compared to $3.0
million in the first quarter of fiscal 2014, an increase of 29.6%. Income from fees and other sources totaled $0.2 million. The
Company recorded net investment income of $1.8 million, or $0.16 per share. Net realized and unrealized losses were $1.6 million,
or $0.14 per share. Net unrealized depreciation of $2.0 million was comprised of $1.5 million of net unrealized depreciation on
equity investments and $0.5 million of net unrealized depreciation on debt investments. Realized gains on investments were $0.4
million, or $0.03 per share.
Net increase in net assets from operations
was $0.2 million, or $0.02 per share. Per share amounts for the quarter ended September 30, 2014 are based on approximately 11.9
million weighted average shares outstanding compared to 7.6 million weighted average shares outstanding for the quarter ended September
30, 2013. This increase reflects the common equity offerings that Full Circle Capital completed in calendar 2014.
During the quarter, new originations and
expansion of facilities to existing borrowers were $27.9 million, including four new loan facilities totaling $21.2 million. Repayments
from portfolio companies during the first quarter were $3.6 million from one portfolio company. Additionally, Full Circle Capital
sold two portfolio positions during the first quarter for total proceeds of $12.6 million.
At September 30, 2014, the Company’s
portfolio included debt investments in 27 companies. The average portfolio company debt investment at September 30, 2014 was $4.6
million. The weighted average interest rate on debt investments was 10.53%. At fair value, 95% of portfolio investments were first
lien loans, 0% were second lien loans and 5% were equity investments. Approximately 75% of the debt investment portfolio, at fair
value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 62% at September 30, 2014 compared
to 61% at September 30, 2013.
Subsequent Events
On October 9, 2014, the Company funded
a $2.75 million senior secured credit facility to Ads Direct Media, Inc., an internet advertising agency. The credit facility bears
interest at one month LIBOR plus 13.00% with a LIBOR floor of 0.50% and has a final maturity of October 6, 2017.
On October 10, 2014, the Company funded
$6.0 million of a $60 million second lien secured loan to Bioventus LLC, a specialty pharmaceutical company. The credit facility
bears interest at one month LIBOR plus 10.00% with a LIBOR floor at 1.00% and has a final maturity of April 10, 2020.
On October 15, 2014, the senior secured
credit facility with Esselte Holdings Inc., Esselte AB was paid off in full at par plus accrued interest for total proceeds of
$1,758,967.
On October 27, 2014, the senior secured
credit facility with PEAKS Trust 2009-1 was partially paid off at par plus accrued interest for total proceeds of $2,352,405.
Conference Call Details
Management will host a conference call
to discuss these results on Tuesday, November 11, 2014 at 10:00 a.m. EST. To participate in the conference call, please call 866-305-6438
(domestic call-in) or 706-679-7161 (international call-in) and reference code # 31577094.
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. EST on November 11, 2014 until 11:59 p.m. EST on November 14, 2014 by calling 855-859-2056 (domestic)
or 404-537-3406 (international) and entering confirmation # 31577094. 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.
| Company Contact: |
Investor Relations Contacts: |
| John Stuart, Co-Chief Executive Officer |
Stephanie Prince |
| Gregg J. Felton, Co-Chief Executive Officer |
Jody Burfening |
| Full Circle Capital Corporation |
LHA |
| (203) 900 – 2100 |
212-838-3777 |
| info@fccapital.com |
sprince@lhai.com |
FULL CIRCLE CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES
| | |
September 30 , 2014 | |
June 30, 2014 |
| | |
Unaudited | |
|
| Assets | |
| | | |
| | |
| Control Investments at Fair Value (Cost of $20,616,819 and $20,253,149, respectively) | |
$ | 14,898,733 | | |
$ | 17,539,057 | |
| Affiliate Investments at Fair Value (Cost of $26,165,283 and $20,177,115, respectively) | |
| 21,427,795 | | |
| 14,588,417 | |
| Non-Control/Non-Affiliate Investments at Fair Value (Cost of $100,607,151 and $123,605,311, respectively) | |
| 95,202,874 | | |
| 118,063,285 | |
| Total Investments at Fair Value (Cost of $147,389,253 and $164,035,575, respectively) | |
| 131,529,402 | | |
| 150,190,759 | |
| | |
| | | |
| | |
| Cash | |
| 73,644 | | |
| — | |
| Deposit with Broker | |
| — | | |
| 2,525,000 | |
| Interest Receivable | |
| 1,393,242 | | |
| 1,016,726 | |
| Principal Receivable | |
| 269,980 | | |
| 207,233 | |
| Due from Affiliate | |
| 336,685 | | |
| 4,273 | |
| Due from Portfolio Investment | |
| 136,041 | | |
| 135,288 | |
| Receivable for Investments Sold | |
| 12,399,828 | | |
| — | |
| Prepaid Expenses | |
| 182,654 | | |
| 57,470 | |
| Other Assets | |
| 738,451 | | |
| 750,326 | |
| Deferred Offering Expenses | |
| 47,581 | | |
| — | |
| Deferred Debt Issuance Costs | |
| 908,096 | | |
| 947,937 | |
| Deferred Credit Facility Fees | |
| 477,539 | | |
| 449,350 | |
| | |
| | | |
| | |
| Total Assets | |
| 148,493,143 | | |
| 156,284,362 | |
| | |
| | | |
| | |
| Liabilities | |
| | | |
| | |
| Due to Affiliates | |
| 970,167 | | |
| 891,966 | |
| Bank Overdraft | |
| — | | |
| 821,316 | |
| Accrued Liabilities | |
| 91,925 | | |
| 184,857 | |
| Due to Broker | |
| — | | |
| 25,000,221 | |
| Payable for Investments Acquired | |
| — | | |
| 24,900,172 | |
| Distributions Payable | |
| 800,585 | | |
| 766,683 | |
| Interest Payable | |
| 93,785 | | |
| 45,254 | |
| Other Liabilities | |
| 1,074,730 | | |
| 1,076,800 | |
| Accrued Offering Expenses | |
| 33,328 | | |
| 35,828 | |
| Line of Credit | |
| 37,065,023 | | |
| 8,435,463 | |
| Notes Payable 8.25% due June 30, 2020 | |
| 33,826,227 | | |
| 21,145,525 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 73,955,770 | | |
| 83,304,085 | |
| Commitments and contingencies | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net Assets | |
$ | 74,537,373 | | |
$ | 72,980,277 | |
| | |
| | | |
| | |
| Components of Net Assets | |
| | | |
| | |
| Common Stock, par value $0.01 per share (100,000,000 authorized; 11,949,034 and 11,443,034 issued and outstanding, respectively) | |
$ | 119,490 | | |
$ | 114,430 | |
| Paid-in Capital in Excess of Par | |
| 95,828,760 | | |
| 92,103,666 | |
| Distributions in Excess of Net Investment Income | |
| (690,933 | ) | |
| (131,251 | ) |
| Accumulated Net Realized Losses | |
| (4,860,093 | ) | |
| (5,261,752 | ) |
| Accumulated Net Unrealized Losses | |
| (15,859,851 | ) | |
| (13,844,816 | ) |
| Net Assets | |
$ | 74,537,373 | | |
$ | 72,980,277 | |
| | |
| | | |
| | |
| Net Asset Value Per Share | |
$ | 6.24 | | |
$ | 6.38 | |
FULL CIRCLE CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | |
Three Months Ended
September 30, 2014 | |
Three Months Ended
September 30, 2013 |
| Investment Income | |
| | | |
| | |
| Interest Income from Non-Control/Non-Affiliate Investments | |
$ | 2,807,931 | | |
$ | 1,881,138 | |
| Interest Income from Affiliate Investments | |
| 540,560 | | |
| 653,718 | |
| Interest Income from Control Investments | |
| 529,108 | | |
| 457,904 | |
| Dividend Income from Control Investments | |
| — | | |
| 34,411 | |
| Other Income from Non-Control/Non-Affiliate Investments | |
| 187,055 | | |
| 173,471 | |
| Other Income from Affiliate Investments | |
| 9,470 | | |
| 5,044 | |
| Other Income from Control Investments | |
| 12,500 | | |
| 12,500 | |
| | |
| | | |
| | |
| Total Investment Income | |
| 4,086,624 | | |
| 3,218,186 | |
| | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | |
| Management Fee | |
| 572,558 | | |
| 409,258 | |
| Incentive Fee | |
| 389,850 | | |
| 314,739 | |
| Total Advisory Fees | |
| 962,408 | | |
| 723,997 | |
| | |
| | | |
| | |
| Allocation of Overhead Expenses | |
| 36,555 | | |
| 63,830 | |
| Sub-Administration Fees | |
| 63,209 | | |
| 50,000 | |
| Officers’ Compensation | |
| 75,913 | | |
| 75,338 | |
| Total Costs Incurred Under Administration Agreement | |
| 175,677 | | |
| 189,168 | |
| | |
| | | |
| | |
| Directors’ Fees | |
| 47,946 | | |
| 28,625 | |
| Interest Expenses | |
| 1,002,383 | | |
| 720,977 | |
| Professional Services Expense | |
| 219,668 | | |
| 195,861 | |
| Bank Fees | |
| 10,271 | | |
| 13,846 | |
| Other | |
| 108,871 | | |
| 101,485 | |
| | |
| | | |
| | |
| Total Gross Operating Expenses | |
| 2,527,224 | | |
| 1,973,959 | |
| | |
| | | |
| | |
| Expense Reimbursement | |
| (282,674 | ) | |
| — | |
| | |
| | | |
| | |
| Total Net Operating Expenses | |
| 2,244,550 | | |
| 1,973,959 | |
| | |
| | | |
| | |
| Net Investment Income | |
| 1,842,074 | | |
| 1,244,227 | |
| Net Change in Unrealized Loss on Investments | |
| (2,015,035 | ) | |
| (2,822,891 | ) |
| Net Realized Gain (Loss) on: | |
| | | |
| | |
| Investments | |
| 402,907 | | |
| (678,553 | ) |
| Foreign Currency Transactions | |
| (1,248 | ) | |
| 68 | |
| Net Realized Gain (Loss) | |
| 401,659 | | |
| (678,485 | ) |
| | |
| | | |
| | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | |
$ | 228,698 | | |
$ | (2,257,149 | ) |
| | |
| | | |
| | |
| Earnings (Loss) per Common Share Basic and Diluted | |
$ | 0.02 | | |
$ | (0.30 | ) |
| Net Investment Income per Common Share Basic and Diluted | |
$ | 0.16 | | |
$ | 0.16 | |
| Weighted Average Shares of Common Stock Outstanding Basic and Diluted | |
| 11,877,534 | | |
| 7,569,382 | |
FULL CIRCLE CAPITAL CORPORATION AND
SUBSIDIARIES
FINANCIAL HIGHLIGHTS
| | |
Three months ended
September 30, 2014 | |
Three months ended
September 30, 2013 |
| | |
| | | |
| | |
| Per Share Data (1) : | |
| | | |
| | |
| Net asset value at beginning of period | |
$ | 6.38 | | |
$ | 8.01 | |
| Accretion (dilution) from offering | |
| 0.04 | | |
| — | |
| Offering costs | |
| (0.00 | ) | |
| — | |
| Net investment income | |
| 0.16 | | |
| 0.16 | |
| Change in unrealized loss | |
| (0.17 | ) | |
| (0.37 | ) |
| Realized gain (loss) | |
| 0.03 | | |
| (0.09 | ) |
| Dividends from Net investment income | |
| (0.16 | ) | |
| (0.16 | ) |
| Return of capital | |
| (0.04 | ) | |
| (0.07 | ) |
| Net asset value at end of period | |
$ | 6.24 | | |
$ | 7.48 | |
| | |
| | | |
| | |
| (1) |
Financial highlights are based on weighted average shares outstanding. |
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