Full Circle Capital Corporation Announces Fourth Quarter & Full Year Fiscal 2013 Earnings

Completed Strategic Debt Initiatives with New Revolving Line of Credit and Note Offering

Announced Monthly Distributions of $0.077 Per Share for a Total of $0.231 Per Share for Second Fiscal Quarter 2014, Equal to Annualized Distribution Rate of $0.924 Per Share

Michael J. Sell Appointed Chief Financial Officer

Business Wire

RYE BROOK, N.Y.--(BUSINESS WIRE)--

Full Circle Capital Corporation (FULL) (the “Company”) today announced its financial results for the fourth quarter and full year of fiscal 2013 ended June 30, 2013.

Financial Highlights for the Fourth Quarter of Fiscal 2013

  • Net asset value of $8.01 per share at June 30, 2013.
  • Total investment income was $3.3 million, an increase of 17.1% compared to $2.8 million for the three months ended March 31, 2013.
  • Net investment income was $1.4 million, or $0.180 per share, compared to $1.3 million, or $0.173 per share, for the three months ended March 31, 2013.
  • Net realized and unrealized gains were $0.5 million, or $0.06 per share. Combined with net investment income, this resulted in a net increase in net assets from operations of $1.9 million, or $0.24 per share. This is an increase of 25.2% compared to a net increase in net assets from operations of $1.5 million, or $0.20 per share, for the three months ended March 31, 2013.
  • Monthly distributions of $0.077 per share were paid on May 15, 2013, June 14, 2013 and July 15, 2013, totaling $0.231 per share for the quarter.
  • Total portfolio investments at June 30, 2013 were $88.2 million, a 22.0% increase compared to portfolio investments of $72.3 million at June 30, 2012 and nearly even with portfolio investments of $88.1 million at March 31, 2013.
  • Weighted average portfolio interest rate was 12.90% at June 30, 2013 compared to 12.69% at March 31, 2013.
  • New originations and expansion of facilities to existing borrowers totaled $3.5 million. Realizations were $3.1 million reflecting the full payoff of one existing loan facility to Matt Martin Real Estate Management, LLC at par plus accrued interest and fees.
  • At June 30, 2013, 89% of portfolio company investments, based on fair value, were first lien senior secured loans.

Strategic Highlights for the Fourth Quarter of Fiscal 2013

  • On June 3, 2013 Full Circle Capital closed a new three-year, $32.5 million revolving credit facility with Sovereign Bank, N.A. Borrowings under the facility bear interest based on a tiered rate structure, depending upon utilization, ranging from LIBOR plus 3.25% to 4.00% per annum, or from Sovereign’s prime rate plus 1.25% to 2.00% per annum, based on Full Circle’s election at the time of borrowing. This represents a significant improvement in the cost of debt capital from Full Circle’s prior revolving credit facility, which bore interest at LIBOR plus 5.50% per annum.
  • On June 28, 2013 Full Circle Capital issued $18.75 million ($21.1 million including the subsequent exercise of the overallotment option) of seven-year, 8.25% Notes that will mature on June 30, 2020. The Notes can be called any time after June 30, 2016 and pay interest quarterly beginning September 30, 2013.

Distributions

On September 9, 2013, the Board of Directors declared monthly distributions for the second quarter of fiscal 2014 as follows:

                     
Record Date         Payment Date         Per Share Amount
October 31, 2013 November 15, 2013 $0.077
November 29, 2013 December 13, 2013 $0.077
December 31, 2013         January 15, 2014         $0.077
 

These distributions equate to a $0.924 annualized distribution rate, or a current annualized yield of 11.4%, based on the closing price of the Company’s common stock of $8.07 per share on September 11, 2013.

Management Commentary

“In the fourth quarter of fiscal 2013, we made substantial progress by completing two strategic initiatives that will provide balance sheet stability and that are expected to be important drivers of increasing returns to our stockholders. We expanded and diversified our debt capital resources by refinancing our senior revolving line of credit at significantly lower borrowing costs, and we issued $21 million of seven year notes, which provide us with fixed rate borrowings over a relatively longer term,” said John Stuart, Chairman and Chief Executive Officer of Full Circle Capital Corporation. “As we invest the funds from our senior leverage line, the overall benefits of this strategy -- the significantly lower marginal cost of debt capital and greater interest margin -- should become more evident in our financial results. With a fixed interest rate on a portion of our debt capital, and floating rate debt investments comprising 84% of our portfolio, we believe that Full Circle Capital is well situated for a rising rate environment. In summary, these strategic actions place us in a strong position for continued growth of our investment portfolio and net investment income.”

“During fiscal 2013 we were successful in deploying our available capital and increased our investment portfolio by 22% to $88.2 million. We added five new portfolio companies that fit well within our investment strategy to invest in senior secured loans to smaller and lower middle-market companies with a significant level of risk protection and a desirable yield. Combined with the full repayments we received from two existing borrowers, we now have debt investments in 19 companies that collectively yield 12.90%, on a weighted average basis,” concluded Mr. Stuart.

Michael J. Sell Appointed Chief Financial Officer

Michael J. Sell has been appointed Chief Financial Officer of Full Circle Capital Corporation, effective September 30, 2013. Mr. Sell replaces William E. Vastardis, who has resigned his position as CFO to focus on his position as President of Vastardis Fund Services LLC. Vastardis Fund Services will continue to act as Full Circle Capital Corporation’s Sub-Administrator and Mr. Vastardis will also continue to serve Full Circle Capital Corporation as Assistant Secretary and Assistant Treasurer.

“Mike Sell has worked closely with Bill Vastardis and me for several years in various finance and accounting roles at both Full Circle Capital and at Vastardis Fund Services. We believe Mike’s background, experience and deep knowledge of our business have prepared him well for this expanded role and we look forward to his continued contribution to our growth,” commented Mr. Stuart. “We thank Bill for his important contribution to our progress to date and look forward to his continued involvement with Full Circle Capital.”

Mr. Vastardis commented, “I have been happy to serve as CFO of Full Circle Capital over the past three years from the time of its formation and IPO. I am confident that Mike Sell is well prepared to take the reins as CFO and I look forward to continuing to work with the Full Circle Capital team.”

Mr. Sell, 35, initially joined Full Circle Funding, LP as a Vice President in June 2008. From August 2010 through September 2012, Mr. Sell was employed by Vastardis Fund Services, where he focused on business development company accounting and financial reporting. In September 2012, Mr. Sell rejoined Full Circle Service Company and was appointed as Full Circle Capital’s Assistant Secretary in December 2012. Prior to joining Full Circle Funding, LP, from 2004 to 2008, Mr. Sell was actively involved in operational and portfolio analysis for two hedge fund of funds. Mr. Sell began his career at PricewaterhouseCoopers, LLP as a senior assurance associate focused on the financial services industry. Mr. Sell earned a Bachelor of Science degree in Accountancy and Finance from Miami University in 2000 and a Master of Accountancy from Miami University in 2001.

Fourth Quarter Fiscal 2013 Results

The Company’s net asset value at June 30, 2013 was $8.01 per share. During the quarter, the Company generated $2.9 million of interest income, of which 100% was paid in cash. Income from fees, dividends and other sources totaled $0.4 million, resulting in $3.3 million of total investment income. The Company recorded net investment income of $1.4 million, or $0.18 per share. Net unrealized and realized gains were $0.5 million, or $0.06 per share. Net increase in net assets from operations was $1.9 million, or $0.24 per share. Per share amounts for the quarter ended June 30, 2013 are based on approximately 7.6 million weighted average shares outstanding compared to 6.2 million at June 30, 2012 and 7.6 million at March 31, 2013, reflecting the 1.35 million share equity offering that the Company completed in November 2012.

During the quarter, the Company originated $1.7 million in one new loan facility. Additional funding to existing borrowers, excluding regular borrowing under revolvers, was $1.75 million during the quarter. Realizations during the fourth quarter were $3.1 million reflecting the full payoff of one loan at par plus interest and fees.

At June 30, 2013, the Company’s portfolio included investments in 22 companies, of which 19 were debt investments. The average portfolio company debt investment at June 30, 2013 was $4.3 million. The weighted average interest rate on investments was 12.90%. At fair value, 89% of portfolio investments were first lien loans, 3% 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 60% at June 30, 2013 compared to 62% at June 30, 2012 and 54% at March 31, 2013.

Subsequent Portfolio Activity

On August 1, 2013, the Company funded $4.5 million of a $9.0 million senior secured credit facility to Infinite Aegis Group, LLC, a provider of both revenue cycle management services to healthcare service providers including large hospital systems and doctor-owned clinics, and owns and operates urgent care and occupational care centers in Colorado. The senior secured credit facility bears interest at one-month LIBOR plus 12% and has a final maturity of July 31, 2017. Of the $9.0 million facility, $4.0 million was funded by another lender.

On September 4, 2013, the Company funded $1.5 million of a $5.0 million senior secured credit facility to Franklin Place Shops — Red, LLC. Franklin Place Shops — Red, LLC is a manager and owner of commercial real estate assets in northwest Ohio. The senior secured credit facility bears interest at 12% and has a final maturity of March 3, 2014. Of the $5.0 million facility, $3.5 million was funded by other lenders.

Conference Call Details

Management will host a conference call to discuss these results on Friday, September 13, 2013 at 10:00 a.m. EDT. To participate in the conference call, please call 866-305-6438 (domestic call-in) or 706-679-7161 (international call-in) and reference code # 47058024.

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. EDT on September 13, 2013 until 11:59 p.m. EDT on September 16, 2013 by calling 855-859-2056 (domestic) or 404-537-3406 (international) and entering confirmation # 47058024. 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
 

 

June 30, 2013 June 30, 2012
(Audited) (Audited)
Assets

Control Investments at Fair Value (Cost of $18,139,543 and $6,639,648,

respectively) $ 19,115,440 $ 6,777,511

Affiliate Investments at Fair Value (Cost of $17,954,622 and $6,802,017,

respectively) 16,547,903 5,112,142

Non-Control/Non-Affiliate Investments at Fair Value (Cost of $53,220,538 and

$85,181,617, respectively)

  52,511,158   82,957,117

Total Investments at Fair Value (Cost of $89,314,703 and $98,623,282,

respectively) 88,174,501 94,846,770
 
Cash 18,029,115 639,149
Deposit with Broker - 2,350,000
Interest Receivable 1,097,970 902,711
Principal Receivable 104,768 513,372
Dividends Receivable 36,705 -
Due from Portfolio Investment 105,030 11,140
Receivable from Notes Offering 2,299,704 -
Prepaid Expenses 61,198 43,053

Other Assets

1,437,273 25,499
Deferred Offering Expenses 86,834 67,685
Deferred Debt Issuance Costs 1,086,895 -
Deferred Credit Facility Fees   543,846   50,000
 
Total Assets   113,063,839   99,449,379
 
Liabilities
Due to Affiliate 728,371 580,353
Accounts Payable 471,297 115,741
Accrued Liabilities 10,172 79,651
Due to Broker - 22,500,041
Dividends Payable 582,842 478,892
Interest Payable 134,167 142,518
Other Liabilities 358,696 140,458
Accrued Offering Expenses - 19,697
Line of Credit 25,584,147 18,544,660
Notes Payable 8.25% due June 30, 2020 21,145,525 -
Distribution Notes   3,404,583   3,404,583
 
Total Liabilities   52,419,800   46,006,594
 
Net Assets $ 60,644,039 $ 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 66,319,579 57,455,232
Distributions in Excess of Net Investment Income (200,200) (122,763)
Accumulated Net Realized Losses (4,410,832) (175,366)
Accumulated Net Unrealized Losses   (1,140,202)   (3,776,512)
Net Assets $ 60,644,039 $ 53,442,785
 
Net Asset Value Per Share $ 8.01 $ 8.59
 
                 
FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended
June 30,
Year Ended
June 30,
2013         2012 2013         2012
Investment Income

Interest Income from Non-Control/Non-Affiliate

Investments $ 1,790,960 $ 1,197,972 $ 7,400,633 $ 7,068,048
Interest Income from Affiliate Investments 637,255 969,071 1,587,281 1,203,935

Interest Income from Control Investments

470,459 225,754 1,504,343 708,854
Dividend Income from Control Investments 36,706 - 223,474 57,216

Other Income from Non-Control/Non-Affiliate

Investments

302,146 (25,255) 1,136,661 489,882
Other Income from Affiliate Investments 80,054 101,101 143,631 155,187
Other Income from Control Investments   12,500   12,500   50,000   143,889
Total Investment Income   3,330,080   2,481,143   12,046,023   9,827,011
 
Operating Expenses
Management Fee 389,946 308,272 1,431,851 1,186,841
Incentive Fee   338,427   273,726   1,339,833   1,197,590
Total Advisory Fees   728,373   581,998   2,771,684   2,384,431
 
Allocation of Overhead Expenses 84,552 52,070 310,412 316,173
Sub-Administration Fees 50,000 78,114 223,429 312,457
Officers’ Compensation   75,222   74,800   300,736   267,153
Total Administration Fees   209,774   204,984   834,577   895,783
 
Directors’ Fees 38,125 33,125 124,500 119,500
Interest Expenses 640,103 310,599 1,854,495 889,055
Professional Services Expense 183,065 189,121 567,126 625,101
Bank Fees 4,134 2,488 16,429 12,228
Tax Expenses 109 - 4,369 -
Other 161,875 86,881 492,262 381,202
-
Total Gross Operating Expenses 1,965,558 1,409,196 6,665,442 5,307,300
 
Management Fee Waiver and Expense Reimbursement   -   -   -   (313,792)
Total Net Operating Expenses   1,965,558   1,409,196   6,665,442   4,993,508
 
Net Investment Income 1,364,522 1,071,947 5,380,581 4,833,503

Net Change in Unrealized Gain (Loss) on

Investments 657,754 (1,467,058) 2,636,310 (1,979,965)
Net Realized Gain (Loss) on Investments   (168,640)   (302,405)   (4,215,748)   (175,366)

Net Increase in Net Assets Resulting from

Operations $ 1,853,636 $ (697,516) $ 3,801,143 $ 2,678,172
 

Earnings per Common Share Basic and Diluted

$ 0.24 $ (0.11) $ 0.54 $ 0.43

Net Investment Income per Common Share Basic

 

and Diluted $ 0.18 $ 0.17 $ 0.77 $ 0.78

Weighted Average Shares of Common Share

 

Outstanding Basic and Diluted 7,569,382 6,219,382 7,018,286 6,219,382
 
                               
FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
 
Year ended
June 30, 2013
Year ended
June 30, 2012

For the period from

August 31, 2010

(commencement of

operations) to

June 30, 2011

For the period

from April 16, 2010

(date of inception)

to

June 30, 2010

Per Share Data (1)        
Net asset value at beginning of period $ 8.59 $ 9.08 $ 9.40 $ 15.00

(3)

 

Dilution from offering (0.18) (2)
Offering costs (0.02) - (0.04)
Net investment income (loss) 0.77 0.78 0.70 (125.45)
Change in unrealized gain (loss) 0.37 (0.32) (0.29)
Realized gain (loss) (0.60) (0.03) 0.06
Dividends declared     (0.92)     (0.92)     (0.75)      
Net asset value at end of period $   8.01 $   8.59 $   9.08 $   (110.45)
 
(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 follow on offering on November 27, 2012.
(3) For the period from April 16, 2010 (date of inception) to June 30, 2010, the net asset value at issuance was $15.00.
 

Contact:
Full Circle Capital Corporation
John E. Stuart, 914-220-6300
CEO
jstuart@fccapital.com
or
Investor Relations:
LHA
Stephanie Prince/Jody Burfening
212-838-3777
sprince@lhai.com

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