PURCHASE, N.Y., Dec. 27, 2012 (GLOBE NEWSWIRE) -- MVC Capital, Inc. (NYSE:MVC), a publicly traded business development company that makes private equity and debt investments, today announced its financial results for the fourth quarter and year ended October 31, 2012.
Fourth Fiscal Quarter 2012 Financial Highlights
- Interest and dividend income of $5.1 million, compared with $2.9 million in Q4 FY 2011
- Fee and other income of $1.0 million, compared with $566,000 in Q4 FY 2011
- Net operating income of $3.6 million, compared to a loss of $4.1 million in Q4 FY 2011
- Increased quarterly dividend by 12.5% in the fourth quarter to $0.135 per share; paid 30th consecutive quarterly dividend
- Completed sale of SHL Group Ltd. in August for gross proceeds of $15.3 million
"During the fourth quarter, MVC successfully took advantage of opportunities to harvest returns from our investment portfolio," noted Michael Tokarz, Chairman and Portfolio Manager. "In the case of SHL Group, we monetized our investment for a realized gain of approximately $9.2 million or a 2.5X return on invested cash. As it pertains to USG&E, we received a significant dividend that was supported by the Company's strong cash flows. Combined, these transactions highlight the strength of our diversified investment portfolio and our ability to generate favorable returns for shareholders."
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Operating Results |
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| Unaudited, except for FY results (in thousands, except per share data) | Qtr 4 2012 | Qtr 4 2011 | FY 2012 | FY 2011 |
| Total operating income | $6,148 | $3,421 | $29,887 | $15,971 |
| Management fee | 2,027 | 2,155 | 8,588 | 8,845 |
| Portfolio fees - asset management | 106 | -- | 968 | -- |
| Management fee - asset management | 140 | -- | 757 | 297 |
| Administrative | 862 | 1,105 | 3,573 | 4,320 |
| Interest and other borrowing costs | 886 | 783 | 3,367 | 3,082 |
| Net incentive compensation | (1,410) | 3,483 | (5,937) | 1,948 |
| Total waiver by adviser | (38) | (38) | (2,554) | (251) |
| Tax expense | 3 | 2 | 4 | 14 |
| Net operating income (loss) | 3,572 | (4,069) | 21,121 | (2,284) |
| Net (decrease) increase in net assets resulting from operations | ($3,557) | $13,282 | ($21,655) | $6,971 |
| Net (decrease) increase in net assets resulting from operations per share | ($0.14) | $0.56 | ($0.90) | $0.30 |
| Net Asset value per share | $16.14 | $17.54 | $16.14 | $17.54 |
In the fourth quarter of 2012, the Company earned approximately $5.1 million in interest and dividend income, and approximately $1.0 million in fee and other income. Combined, this resulted in an increase in total operating income of approximately $2.7 million to $6.1 million, as compared to the same quarter in 2011.
The Company reported net operating income of approximately $3.6 million for the fourth quarter, as compared to a net operating loss of approximately ($4.1) million for the same quarter in 2011.
In fiscal 2012, the Company earned approximately $25.2 million in interest and dividend income, and approximately $4.7 million in fee and other income. Combined, this resulted in an increase in total operating income of approximately $13.9 million to $29.9 million, as compared to fiscal 2011.
The Company reported net operating income of approximately $21.1 million for fiscal 2012, as compared to a net operating loss of approximately ($2.3) million for fiscal 2011.
Fourth Quarter 2012 Portfolio Adjustments
| Active Deals | Status | Write up (Write down) |
| Velocitius B.V. | Write-up | $2,452,000 |
| Vestal Manufacturing Enterprises, Inc. | Write-up | $1,750,000 |
| Octagon Credit Investors, LLC | Write-up | $700,000 |
| Turf Products Corporation | Write-up | $271,000 |
| SGDA Europe B.V. | Write-up | $239,000 |
| SIA Tekers Invest | Write-up | $139,000 |
| MVC Private Equity Fund L.P. | Write-up | $12,640 |
| Ohio Medical Corp. & Guarantee | Write-down | ($8,525,000) |
| Security Holdings B.V. | Write-down | ($2,959,000) |
| NPWT Corporation | Write-down | ($465,000) |
| MVC Automotive Group B.V. | Write-down | ($362,000) |
| Harmony Health & Beauty, Inc. | Write-down | ($150,000) |
| MVC Partners LLC | Write-down | ($71,360) |
| Centile Holdings B.V. | Write-down | ($34,376) |
| Total | ($7,003,096) |
As of October 31, 2012, the Company's net assets were approximately $386.0 million or $16.14 per share, compared with net assets of approximately $392.8 million, or $16.42 per share, at the beginning of the quarter and $419.5 million, or $17.54 per share, at the end of the same period last year. During the quarter, the Company received gross proceeds of approximately $15.3 million from the sale of SHL Group Limited ("SHL") to the Corporate Executive Board. In addition the Company also received a dividend of $2.4 million from U.S. Gas & Electric ("USG&E").
Quarterly Investment Activity
During the quarter, the Company made two follow-on investments and no new investments. The follow-on investments were made in SGDA Sanierungsgesellschaft fur Deponien und Altasten GmbH ("SGDA") for approximately $360,000 and Centile Holdings, B.V. ("Centile") for approximately $173,000.
During the quarter, the Company sold its common shares of SHL to the Corporate Executive Board and received gross proceeds of approximately $15.3 million, resulting in a 2.5X return on invested cash.
Annual Investment Activity
During the fiscal year, the Company continued to increase liquidity while making two new investments in Freshii USA, Inc. and Biovation Holdings, Inc. ("Biovations") totaling $2.5 million. In addition, the Company made nine follow on investments in five existing portfolio companies totaling $8.8 million.
The Company, through MVC Partners Limited Partnership interest and MVCFS' General Partnership interest, contributed approximately $8.2 million of its $20.1 million capital commitment to the MVC Private Equity Fund L.P., which as of October 31, 2012, has invested in Plymouth Rock Energy, LLC, Gibdock Limited and Focus Pointe Holdings, Inc. Additionally, the Company invested $48,000 for an additional 9,568 shares of SHL's common stock. MVC loaned SGDA an additional $360,000 and extended the maturity date of its debt to August 31, 2014. Lastly, the Company made a follow-on investment of $173,000 in Centile.
Dividends
The board of directors increased the fourth quarter dividend to $0.135 per share, or a total of approximately $3.2 million, to be distributed to shareholders. This represents an increase of 12.5% over the prior dividend. The dividend was paid on October 31, 2012 to shareholders of record on October 25, 2012.
For fiscal 2012, the Company paid dividends totaling $0.495 per share, or a total of approximately $11.8 million. The dividends issued under current management have resulted in approximately $85.6 million in distributions to the Fund's shareholders through October 31, 2012.
Liquidity
As of October 31, 2012, the Company had investments in portfolio companies with a fair value of approximately $404.2 million with a cost basis of $332.4 million, and cash and cash equivalents of approximately $42.6 million. Of the $42.6 million of cash on the balance sheet, $6.5 million is restricted cash.
In the fourth quarter, the Company received a dividend from USG&E of approximately $2.4 million. USG&E's board approved an initial dividend to its shareholders, with future distributions projected to be paid quarterly, as long as cash flows support the dividend. Each quarterly dividend must be approved by USG&E's board of directors and be permissible under its gas and electric supply credit documentation.
Subsequent Events
On November 26, 2012, the Company loaned an additional $8.0 million to JSC Tekers, increasing the loan amount to $12.0 million. The interest rate remains at 8% per annum and the maturity date was extended to December 31, 2014.
On December 14, 2012, the Company loaned an additional $500,000 to Biovations, increasing the loan amount to $2.0 million. Both the interest rate and the maturity date on the loan will remain the same.
On December 17, 2012, the Company declared its first quarter of 2013 dividend in the amount of $0.135 per share, or a total of approximately $3.2 million. The dividend is payable on January 7, 2013 to shareholders of record on December 31, 2012 and will therefore be taxed at 2012 rates.
Also on December 17, 2012, the Company received an approximate $426,000 dividend from Vestal Manufacturing Enterprises, Inc.
MVC-G
About MVC Capital, Inc.
MVC is a business development company traded on the New York Stock Exchange that provides long-term debt and equity investment capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries. For additional information about MVC, please visit the MVC's website at www.mvccapital.com.
About Our Distributions
The amount and specific timing of any future dividends paid pursuant to the Fund's dividend policy will be determined by its board of directors. At this time, the Fund is unable to make a conclusive determination as to the characteristics of the distributions announced herein. In January, a Form 1099 DIV will be sent to shareholders that will state the aggregate amount and actual tax characterization of distributions for the preceding year.
Forward-Looking Statements
The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated in the company's periodic filings with the Securities and Exchange Commission.
| MVC Capital, Inc. | ||
| Consolidated Balance Sheets | ||
| October 31, | October 31, | |
| 2012 | 2011 | |
| ASSETS | ||
| Assets | ||
| Cash and cash equivalents | $ 36,160,558 | $ 28,317,460 |
| Restricted cash and cash equivalents | 6,480,000 | 6,925,000 |
| Investments at fair value | ||
| Non-control/Non-affiliated investments (cost $54,629,419 and $90,292,464) | 34,197,990 | 51,182,558 |
| Affiliate investments (cost $128,521,214 and $126,356,770) | 178,396,856 | 187,953,099 |
| Control investments (cost $149,281,248 and $141,569,773) | 191,575,802 | 213,079,430 |
| Total investments at fair value (cost $332,431,881 and $358,219,007) | 404,170,648 | 452,215,087 |
| Dividends and interest receivables, net of reserves | 4,559,703 | 3,277,126 |
| Fee and other receivables | 3,314,116 | 4,595,741 |
| Escrow receivables | 991,563 | 1,146,899 |
| Prepaid expenses | 753,501 | 629,868 |
| Prepaid taxes | 591 | -- |
| Total assets | $ 456,430,680 | $ 497,107,181 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Liabilities | ||
| Term loan | $ 50,000,000 | $ 50,000,000 |
| Provision for incentive compensation (Note 5) | 15,655,438 | 23,938,058 |
| Management fee payable | 2,027,571 | 2,303,655 |
| Management fee payable - Asset Management | 1,054,433 | 297,250 |
| Professional fees payable | 767,835 | 703,293 |
| Other accrued expenses and liabilities | 734,501 | 288,111 |
| Portfolio fees payable - Asset Management | 140,293 | -- |
| Consulting fees payable | 34,476 | 64,999 |
| Taxes payable | -- | 2,099 |
| Total liabilities | 70,414,547 | 77,597,465 |
| Shareholders' equity | ||
| Common stock, $0.01 par value; 150,000,000 shares authorized; 23,916,982 and 23,916,982 shares outstanding, respectively | 283,044 | 283,044 |
| Additional paid-in-capital | 425,651,660 | 428,428,139 |
| Accumulated earnings | 64,524,665 | 40,499,006 |
| Dividends paid to stockholders | (92,010,775) | (80,171,868) |
| Accumulated net realized loss | (46,401,983) | (25,755,440) |
| Net unrealized appreciation | 71,738,767 | 93,996,080 |
| Treasury stock, at cost, 4,387,466 and 4,387,466 shares held, respectively | (37,769,245) | (37,769,245) |
| Total shareholders' equity | 386,016,133 | 419,509,716 |
| Total liabilities and shareholders' equity | $ 456,430,680 | $ 497,107,181 |
| Net asset value per share | $ 16.14 | $ 17.54 |
| The accompanying notes are an integral part of these consolidated financial statements. | ||
| MVC Capital, Inc. | |||
| Consolidated Statements of Operations | |||
| For the Year Ended | For the Year Ended | For the Year Ended | |
| October 31, 2012 | October 31, 2011 | October 31, 2010 | |
| Operating Income: | |||
| Dividend income | |||
| Non-control/Non-affiliated investments | $ 7,755 | $ 246,234 | $ -- |
| Affiliate investments | 2,481,234 | 341,043 | 1,893,133 |
| Control investments | 12,000,000 | -- | -- |
| Total dividend income | 14,488,989 | 587,277 | 1,893,133 |
| Payment-in-kind dividend income | |||
| Affiliate investments | 249,347 | 230,358 | 382,398 |
| Total payment-in-kind dividend income | 249,347 | 230,358 | 382,398 |
| Interest income | |||
| Non-control/Non-affiliated investments | 2,050,801 | 2,356,210 | 6,720,255 |
| Affiliate investments | 3,111,318 | 2,978,289 | 2,751,668 |
| Control investments | 2,423,174 | 2,353,376 | 2,388,872 |
| Total interest income | 7,585,293 | 7,687,875 | 11,860,795 |
| Payment-in-kind interest income | |||
| Non-control/Non-affiliated investments | 44,304 | 268,423 | 1,972,985 |
| Affiliate investments | 2,024,462 | 1,920,686 | 2,256,028 |
| Control investments | 812,929 | 755,254 | 949,897 |
| Total payment-in-kind interest income | 2,881,695 | 2,944,363 | 5,178,910 |
| Fee income | |||
| Non-control/Non-affiliated investments | 68,056 | 1,086,961 | 352,679 |
| Affiliate investments | 1,105,226 | 1,130,131 | 2,717,090 |
| Control investments | 766,631 | 566,426 | 626,780 |
| Total fee income | 1,939,913 | 2,783,518 | 3,696,549 |
| Fee income - Asset Management 1 | |||
| Portfolio fees | 1,290,160 | -- | -- |
| Management fees | 1,009,577 | 396,333 | -- |
| Total fee income - Asset Management | 2,299,737 | 396,333 | -- |
| Other income | 442,138 | 1,341,241 | 509,712 |
| Total operating income | 29,887,112 | 15,970,965 | 23,521,497 |
| Operating Expenses: | |||
| Management fee | 8,587,992 | 8,844,572 | 9,329,809 |
| Interest and other borrowing costs | 3,366,756 | 3,082,125 | 2,824,788 |
| Portfolio fees - Asset Management 1 | 967,620 | -- | -- |
| Management fee - Asset Management 1 | 757,183 | 297,250 | -- |
| Audit & tax preparation fees | 769,500 | 560,800 | 548,500 |
| Legal fees | 635,238 | 884,472 | 487,000 |
| Other expenses | 590,859 | 1,209,693 | 832,391 |
| Consulting fees | 384,104 | 550,271 | 366,200 |
| Directors' fees | 348,833 | 329,000 | 346,800 |
| Insurance | 333,752 | 348,027 | 353,135 |
| Administration | 261,914 | 268,146 | 273,986 |
| Printing and postage | 129,942 | 80,280 | 103,396 |
| Public relations fees | 119,700 | 89,800 | 84,000 |
| Net Incentive compensation (Note 5) | (5,937,431) | 1,947,744 | 2,479,167 |
| Total operating expenses | 11,315,962 | 18,492,180 | 18,029,172 |
| Less: Voluntary Expense Waiver by Adviser 2 | (150,000) | (150,000) | (150,000) |
| Less: Voluntary Management Fee Waiver by Adviser 3 | (58,728) | (100,635) | -- |
| Less: Voluntary Incentive Fee Waiver by Adviser 4 | (2,345,189) | -- | -- |
| Total waivers | (2,553,917) | (250,635) | (150,000) |
| Net operating income (loss) before taxes | 21,125,067 | (2,270,580) | 5,642,325 |
| Tax Expenses: | |||
| Current tax expense | 3,997 | 13,557 | 8,476 |
| Total tax expense | 3,997 | 13,557 | 8,476 |
| Net operating income (loss) | 21,121,070 | (2,284,137) | 5,633,849 |
| Net Realized and Unrealized Gain (Loss) on Investments and foreign currency: | |||
| Net realized (loss) gain on investments and foreign currency | |||
| Non-control/Non-affiliated investments | (19,209,277) | (16,339,803) | (205,245) |
| Affiliate investments | -- | (10,081,806) | 36,111,253 |
| Control investments | (1,309,156) | -- | (3,717,209) |
| Foreign currency | -- | -- | (389) |
| Total net realized (loss) gain on investments and foreign currency | (20,518,433) | (26,421,609) | 32,188,410 |
| Net change in unrealized (depreciation) appreciation on investments | (22,257,313) | 35,676,725 | (21,689,497) |
| Net realized (loss) gain and net change in unrealized (depreciation) appreciation on investments and foreign currency | (42,775,746) | 9,255,116 | 10,498,913 |
| Net (decrease) increase in net assets resulting from operations | $ (21,654,676) | $ 6,970,979 | $ 16,132,762 |
| Net (decrease) increase in net assets per share resulting from operations | $ (0.90) | $ 0.30 | $ 0.66 |
| Dividends declared per share | $ 0.495 | $ 0.480 | $ 0.480 |
| The accompanying notes are an integral part of these consolidated financial statements. | |||
| 1 These items are related to the management of the MVC Private Equity Fund, L.P. ("PE Fund"). Please see Note 4 "Management" for more information. | |||
| 2 Reflects TTG Advisers' voluntary waiver of $150,000 of expenses for the 2012, 2011 and 2010 fiscal years that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement. Please see Note 4 "Management" for more information. | |||
| 3 Reflects TTG Advisers' voluntary agreement that any assets of the Company invested in exchange-traded funds or the Octagon High Income Cayman Fund Ltd. would not be taken into the calculation of the base management fee due to TTG Advisers under the Advisory Agreement. Please see Note 4 "Management" for more information. | |||
| 4 Reflects TTG Advisers' voluntary waiver of the Incentive Fee associated with pre-incentive fee net operating income for the fiscal year ended October 31, 2012. Please see Note 4 "Management" for more information. | |||