- Strategic Alternatives Review Proceeding -
- Receives $29.3 Million in Repayments -
- Net Investment Income of $1.7 Million or $0.08 per Share -
GREENWICH, Conn., May 13, 2016 (GLOBE NEWSWIRE) -- Full Circle Capital Corporation (Nasdaq:FULL) (the “Company”) today announced its financial results for the fiscal third quarter ended March 31, 2016.
Financial Highlights for the Fiscal Third Quarter Ended March 31, 2016:
- Received $29.3 million in repayments.
- Total investment income of $3.7 million, compared with $4.3 million for the prior-year quarter.
- Net investment income (“NII”) was $1.7 million, or $0.08 per share, compared with $2.0 million, or $0.17 per share, in the prior-year quarter.
- Net unrealized losses were $2.8 million, consisting of net unrealized losses on investments of $4.5 million, partially offset by net unrealized gains on an open swap contract of $1.7 million. Net realized gains were $0.1 million.
- Net decrease in net assets from operations was $1.0 million, or $0.04 per share.
- Per share amounts are based on approximately 22.5 million weighted average shares outstanding for the third quarter of fiscal 2016, compared to approximately 12.0 million weighted average shares outstanding for the third quarter of fiscal 2015. The increase in weighted average shares outstanding reflects share issuances completed during calendar 2015 offset by share repurchases during the first and second quarters of fiscal 2016.
As of March 31, 2016:
- Net asset value was $3.61 per share and aggregate investment portfolio fair value was $91.3 million
- Weighted average portfolio interest rate was 10.27%.
- 89% of portfolio company investments were first lien senior secured loans.
Update on Strategic Alternatives
As noted previously, in November 2015, the Company’s Board of Directors formed a Special Committee, composed solely of independent directors Mark C. Biderman, Edward H. Cohen and Thomas A. Ortwein, Jr., to consider various strategic alternatives potentially available to the Company. The process being conducted by the Special Committee is ongoing.
In order to maximize the types of potential strategic alternatives available to the Company, the Company has opted not to reinvest any cash proceeds received by the Company in connection with loan repayments and sales and has limited its origination activities. As a result of this change in investment strategy, the Company’s loan assets and related investment income have declined. Accordingly, the Board of Directors suspended the declaration of any future distributions to stockholders.
Third Quarter Fiscal 2016 Results
The Company’s net asset value at March 31, 2016 was $3.61 per share. During the quarter, the Company generated $3.4 million of interest income compared to $4.3 million in the third quarter of fiscal 2015, a decrease of 19.1%. Income from fees and other sources in the quarter totaled $0.2 million, compared to $0.1 million in the prior-year quarter.
The Company produced NII of $1.7 million, or $0.08 per share, in the quarter ended March 31, 2016 compared to $2.0 million, or $0.17 per share, in the quarter ended March 31, 2015.
Net unrealized losses of $2.8 million were comprised of $6.3 million of net unrealized depreciation on equity investments, $1.8 million of net unrealized appreciation on debt investments and $1.7 million of net unrealized appreciation on an open swap contract. Realized gains on investments were $0.1 million. Net decrease in net assets resulting from operations was $1.0 million, or $0.04 per share.
Since the beginning of calendar 2016, the Company has restructured terms with respect to two of its portfolio companies and received approximately $37 million in repayments.
At March 31, 2016, the Company’s portfolio included debt investments in 25 companies at an average of $3.6 million per investment. The weighted average interest rate on all outstanding debt investments was 10.27% at March 31, 2016, while the weighted average interest rate of the Company’s performing debt investments was 11.93%. At fair value, 88.5% of portfolio investments were first lien loans, 11.2% were second lien loans and 0.3% were equity investments. Approximately 76% of the debt investment portfolio, at fair value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 63% at March 31, 2016, compared to 66% at March 31, 2015.
Subsequent Events
On April 6, 2016, the senior secured note to Fuse, LLC was sold for total proceeds of approximately $5.5 million. At March 31, 2016 the Company had unrealized losses of approximately $1.7 million which were realized on April 6, 2016.
On April 11, 2016, Modular Process Control, LLC completed a restructuring whereby the loans and warrant were extinguished for consideration including $0.8 million in cash and $0.8 million of an unsecured promissory note. At March 31, 2016, the Company had unrealized losses of approximately $6.4 million, of which approximately $5.5 million were realized as part of the restructuring on April 11, 2016.
On April 19, 2016, the senior secured revolving term loan to ProGrade Ammo Group, LLC was repaid for net proceeds of approximately $1.6 million. At March 31, 2016, the Company had unrealized losses of approximately $5.4 million which were realized on April 19, 2016.
Conference Call Details
The Company will not be holding an earnings call for this quarter.
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 website 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 | ||||||||||||||
| March 31, 2016 | June 30, 2015 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Assets | ||||||||||||||
| Control Investments at Fair Value (Cost of $408,606 and $11,409,596, respectively) | $ | 130,000 | $ | 5,812,064 | ||||||||||
| Affiliate Investments at Fair Value (Cost of $20,003,978 and $24,434,726, respectively) | 3,787,728 | 16,019,272 | ||||||||||||
| Non-Control/Non-Affiliate Investments at Fair Value (Cost of $98,216,482 and $136,351,581, respectively) | 87,357,234 | 130,282,423 | ||||||||||||
| Total Investments at Fair Value (Cost of $118,629,066 and $172,195,903, respectively) | 91,274,962 | 152,113,759 | ||||||||||||
| Cash | 19,778,639 | 3,736,563 | ||||||||||||
| Interest Receivable | 1,098,038 | 1,903,606 | ||||||||||||
| Principal Receivable | 27,578 | 23,287 | ||||||||||||
| Distributions Receivable | - | 15,141 | ||||||||||||
| Due from Affiliates | 246,929 | 605,749 | ||||||||||||
| Due from Portfolio Investments | 256,340 | 180,300 | ||||||||||||
| Receivable on Open Swap Contract | - | 1,081 | ||||||||||||
| Receivable for Investments Sold | 2,849,194 | - | ||||||||||||
| Prepaid Expenses | 148,547 | 66,105 | ||||||||||||
| Other Assets | 28,483 | 1,483,578 | ||||||||||||
| Deferred Offering Expenses | 367,807 | 328,168 | ||||||||||||
| Deferred Credit Facility Fees | 50,624 | 267,645 | ||||||||||||
| Total Assets | 116,127,141 | 160,724,982 | ||||||||||||
| Liabilities | ||||||||||||||
| Due to Affiliates | 716,479 | 1,052,489 | ||||||||||||
| Accrued Liabilities | 289,282 | 179,378 | ||||||||||||
| Deposit from Swap Counterparty | - | 10,380,000 | ||||||||||||
| Payable for Investments Acquired | - | 15,020,000 | ||||||||||||
| Distributions Payable | 786,529 | 813,240 | ||||||||||||
| Interest Payable | 45,062 | 57,605 | ||||||||||||
| Other Liabilities | 187,826 | 305,957 | ||||||||||||
| Accrued Offering Expenses | - | 7,258 | ||||||||||||
| Notes Payable 8.25% due June 30, 2020 (plus unamortized premium of $141,218 and $158,504 and less deferred debt issuance costs of $714,453 and $833,541, respectively) | 33,072,290 | 32,970,488 | ||||||||||||
| Total Liabilities | 35,097,468 | 60,786,415 | ||||||||||||
| Commitments and contingencies | - | - | ||||||||||||
| Net Assets | $ | 81,029,673 | $ | 99,938,567 | ||||||||||
| Components of Net Assets | ||||||||||||||
| Common Stock, par value $0.01 per share (100,000,000 authorized; 22,472,243 and 23,235,430 issued and outstanding, respectively) | $ | 224,722 | $ | 232,354 | ||||||||||
| Paid-in Capital in Excess of Par | 130,072,314 | 132,487,067 | ||||||||||||
| Distributions in Excess of Net Investment Income | (763,276 | ) | (119,318 | ) | ||||||||||
| Accumulated Net Realized Losses | (21,149,983 | ) | (12,579,392 | ) | ||||||||||
| Accumulated Net Unrealized Losses | (27,354,104 | ) | (20,082,144 | ) | ||||||||||
| Net Assets | $ | 81,029,673 | $ | 99,938,567 | ||||||||||
| Net Asset Value Per Share | $ | 3.61 | $ | 4.30 | ||||||||||
| FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||||
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
| Investment Income | |||||||||||||||||||||
| Interest Income from Non-Control/Non-Affiliate Investments | $ | 3,164,723 | $ | 3,310,605 | $ | 9,804,079 | $ | 9,486,149 | |||||||||||||
| Interest Income from Affiliate Investments | 143,205 | 629,108 | 1,093,647 | 1,835,289 | |||||||||||||||||
| Interest Income from Control Investments | 134,619 | 317,431 | 464,244 | 1,280,177 | |||||||||||||||||
| Dividend Income from Control Investments | 13,351 | - | 33,998 | - | |||||||||||||||||
| Other Income from Non-Control/Non-Affiliate Investments | 119,661 | 19,148 | 1,696,484 | 524,990 | |||||||||||||||||
| Other Income from Affiliate Investments | 933 | 625 | 4,314 | 94,667 | |||||||||||||||||
| Other Income from Control Investments | 94,385 | 12,500 | 119,385 | 37,500 | |||||||||||||||||
| Other Income from Non-Investment Sources | (880 | ) | 19,108 | 23,801 | 48,597 | ||||||||||||||||
| Total Investment Income | 3,669,997 | 4,308,525 | 13,239,952 | 13,307,369 | |||||||||||||||||
| Operating Expenses | |||||||||||||||||||||
| Management Fee | 451,381 | 545,564 | 1,612,167 | 1,699,451 | |||||||||||||||||
| Incentive Fee | 246,879 | 419,559 | 1,263,241 | 1,335,651 | |||||||||||||||||
| Total Advisory Fees | 698,260 | 965,123 | 2,875,408 | 3,035,102 | |||||||||||||||||
| Allocation of Overhead Expenses | 58,161 | 53,511 | 166,183 | 127,028 | |||||||||||||||||
| Sub-Administration Fees | 57,539 | 65,195 | 196,268 | 194,999 | |||||||||||||||||
| Officers’ Compensation | 76,306 | 75,913 | 228,919 | 227,739 | |||||||||||||||||
| Total Costs Incurred Under Administration Agreement | 192,006 | 194,619 | 591,370 | 549,766 | |||||||||||||||||
| Directors’ Fees | 34,750 | 49,750 | 119,250 | 138,446 | |||||||||||||||||
| Interest Expenses | 931,933 | 1,119,639 | 2,910,262 | 3,299,116 | |||||||||||||||||
| Professional Services Expense | 218,058 | 149,698 | 771,583 | 509,292 | |||||||||||||||||
| Bank Fees | 7,396 | 8,910 | 23,197 | 30,099 | |||||||||||||||||
| Other | 118,845 | 142,326 | 414,686 | 402,720 | |||||||||||||||||
| Total Gross Operating Expenses | 2,201,248 | 2,630,065 | 7,705,756 | 7,964,541 | |||||||||||||||||
| Fee Waivers and Expense Reimbursement | (246,879 | ) | (299,476 | ) | (967,372 | ) | (830,523 | ) | |||||||||||||
| Total Net Operating Expenses | 1,954,369 | 2,330,589 | 6,738,384 | 7,134,018 | |||||||||||||||||
| Net Investment Income | 1,715,628 | 1,977,936 | 6,501,568 | 6,173,351 | |||||||||||||||||
| Net Change in Unrealized Gain (Loss) on: | |||||||||||||||||||||
| Investments | (4,446,098 | ) | 3,165,547 | (7,271,960 | ) | (6,474,247 | ) | ||||||||||||||
| Open Swap Contract | 1,650,000 | - | - | - | |||||||||||||||||
| Net Change in Unrealized Gain (Loss) | (2,796,098 | ) | 3,165,547 | (7,271,960 | ) | (6,474,247 | ) | ||||||||||||||
| Net Realized Gain (Loss) on: | |||||||||||||||||||||
| Non-Control/Non-Affiliate Investments | 1,851,853 | (3,458,023 | ) | (2,607,787 | ) | (4,186,132 | ) | ||||||||||||||
| Affiliate Investments | (348,339 | ) | 44,461 | 1,363,984 | 44,461 | ||||||||||||||||
| Control Investments | 661,613 | (71,953 | ) | (5,444,394 | ) | (242,389 | ) | ||||||||||||||
| Open Swap Contract | (2,085,281 | ) | - | (1,882,293 | ) | - | |||||||||||||||
| Foreign Currency Transactions | - | - | (101 | ) | (1,248 | ) | |||||||||||||||
| Net Realized Gain (Loss) | 79,846 | (3,485,515 | ) | (8,570,591 | ) | (4,385,308 | ) | ||||||||||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (1,000,624 | ) | $ | 1,657,968 | $ | (9,340,983 | ) | $ | (4,686,204 | ) | ||||||||||
| Earnings (Loss) per Common Share Basic and Diluted | $ | (0.04 | ) | $ | 0.14 | $ | (0.41 | ) | $ | (0.39 | ) | ||||||||||
| Net Investment Income per Common Share Basic and Diluted | $ | 0.08 | $ | 0.17 | $ | 0.29 | $ | 0.52 | |||||||||||||
| Weighted Average Shares of Common Stock Outstanding Basic | 22,472,243 | 11,949,034 | 22,726,053 | 11,925,027 | |||||||||||||||||
| Weighted Average Shares of Common Stock Outstanding Diluted | 22,472,243 | 11,990,011 | 22,726,053 | 11,925,027 | |||||||||||||||||
| FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||
| Three months ended March 31, 2016 | Three months ended March 31, 2015 | Nine months ended March 31, 2016 | Nine months ended March 31, 2015 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
| Per Share Data (1) : | ||||||||||||||||||||||
| Net asset value at beginning of period | $ | 3.76 | $ | 5.48 | $ | 4.30 | $ | 6.38 | ||||||||||||||
| Accretion (dilution) from offerings (2) | - | (0.96 | ) | - | (0.92 | ) | ||||||||||||||||
| Accretion from share repurchases(3) | - | - | 0.03 | - | ||||||||||||||||||
| Offering costs | - | (0.06 | ) | - | (0.06 | ) | ||||||||||||||||
| Net investment income (loss)(4) | 0.08 | 0.17 | 0.29 | 0.52 | ||||||||||||||||||
| Net change in unrealized gain (loss) | (0.12 | ) | 0.29 | (0.31 | ) | (0.52 | ) | |||||||||||||||
| Net realized gain (loss) | 0.00 | (0.29 | ) | (0.38 | ) | (0.37 | ) | |||||||||||||||
| Dividends from net investment income | (0.08 | ) | (0.17 | ) | (0.29 | ) | (0.52 | ) | ||||||||||||||
| Return of capital | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.08 | ) | ||||||||||||||
| Net asset value at end of period | $ | 3.61 | $ | 4.43 | $ | 3.61 | $ | 4.43 | ||||||||||||||
| (1 | ) | Financial highlights are based on weighted average shares outstanding. | |
| (2 | ) | Accretion and dilution from offering(s) is based on the net change in net asset value from each follow-on offering. | |
| (3 | ) | Accretion from share repurchases during the period is based on the net change in net asset value from the share repurchases. | |
| (4 | ) | Net investment income (loss) per share is calculated based on the beginning of year and end of year shares outstanding. |