WHITE PLAINS, N.Y., Nov. 25, 2013 (GLOBE NEWSWIRE) -- Fifth Street Senior Floating Rate Corp. (NASDAQ: FSFR ) ("FSFR" or "we") announces the financial results for its initial period from June 29, 2013 (the date of commencement of FSFR's operations) through September 30, 2013.
Initial Period Ended September 30, 2013 Financial Highlights
- On July 17, 2013, we completed an initial public offering of 6,666,668 shares of our common stock at the public offering price of $15.00 per share, raising $100.0 million of net proceeds. Fifth Street Management LLC, our investment adviser, paid the sales load and all other expenses incurred during this offering on behalf of us and our shareholders;
- Net investment income for the period ended September 30, 2013 was $0.8 million or $0.16 per share; and
- Net asset value per share increased to $15.13 as of September 30, 2013, as compared to $15.00 after our initial public offering.
Dividend Declarations
On October 8, 2013, our Board of Directors declared the following quarterly dividends:
- $0.01 per share for the quarter ended September 30, 2013, which was paid on October 31, 2013 to stockholders of record on October 21, 2013; and
- $0.20 per share for the quarter ended December 31, 2013, payable on January 31, 2014 to stockholders of record on December 16, 2013.
First Quarter 2014 Credit Facility and Investment Activity Update
- On November 1, 2013, we entered into a $100 million credit facility with Natixis, New York Branch. Pricing on the new facility is set at the applicable commercial paper rate plus 1.9% per annum. The facility has an 18-month reinvestment period and a final maturity date of November 1, 2021; and
- During our first fiscal quarter 2014 thus far, we have closed $46.8 million of new investments, $41.5 million of which were funded at close. To date, we have invested over 90% of our IPO proceeds in senior secured floating rate loans and we anticipate beginning to utilize the leverage from the Natixis facility prior to December 31, 2013.
Portfolio and Investment Activity
Our Board of Directors determined the fair value of our portfolio at September 30, 2013 to be $48.7 million. Total assets at September 30, 2013 were $101.5 million.
During the period ended September 30, 2013, we closed $58.6 million of investments in nine portfolio companies, $50.9 million of which were funded at close. We also received $4.0 million in connection with the exit of one debt investment at par.
At September 30, 2013, our portfolio consisted of investments in eight companies, all of which were completed in connection with investments by private equity sponsors. At fair value, 100.0% of our portfolio consisted of debt investments that bore interest at floating rates which are secured by first or second priority liens on the assets of the portfolio company. Our average portfolio company investment size at fair value was $6.1 million at September 30, 2013.
"We are pleased to report Fifth Street Senior Floating Rate Corp.'s initial period as a public company. We made progress deploying the proceeds raised in the IPO through period-end in a diversified portfolio of high quality senior floating rate loans sourced through our origination platform. Our pipeline continues to strengthen in the December quarter as we source attractive deals, which should enable us to fully deploy our equity and begin utilizing our recently announced credit facility," stated our Chief Investment Officer, Ivelin M. Dimitrov.
Our weighted average yield on debt investments at September 30, 2013 was 6.81%, and included a cash component of 6.77%.
Results of Operations
Total investment income for the period ended September 30, 2013 was $1.1 million, consisting of interest and fee income on our portfolio investments.
Expenses for the period ended September 30, 2013 were $0.3 million and primarily consisted of professional fees, the base management fee and general and administrative expenses. The base management fee was calculated at an annual rate of 1% of the average of our gross assets (excluding cash and cash equivalents) for the period.
Liquidity and Capital Resources
As of September 30, 2013, we had $52.3 million of cash and cash equivalents, portfolio investments (at fair value) of $48.7 million, $0.4 million of interest and fees receivable and unfunded commitments of $5.8 million.
Dividends
On October 8, 2013, our Board of Directors declared the following quarterly dividends:
- $0.01 per share for the quarter ended September 30, 2013, which was paid on October 31, 2013 to stockholders of record on October 21, 2013; and
- $0.20 per share for the quarter ended December 31, 2013, payable on January 31, 2014 to stockholders of record on December 16, 2013.
Dividends are paid primarily from distributable (taxable) income. Our Board of Directors determines dividends based on estimates of net investment income and distributable (taxable) income, which may differ from book income due to temporary and permanent differences in income and expense recognition and changes in unrealized appreciation and depreciation on investments.
Effective with our dividend payable in January 2014, our dividend reinvestment plan ("DRIP") provides for reinvestment of dividends, unless stockholders elect to receive cash. As a result, if our Board of Directors declares a cash dividend, our stockholders who have not "opted out" of our DRIP will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving cash dividends. We provide a 5% discount on newly-issued shares purchased through the DRIP (provided that shares are not issued at less than net asset value per share). If you are a stockholder and your shares of our common stock are held through a brokerage firm or other financial intermediary and you wish to participate in the DRIP, please contact your broker or other financial intermediary.
Portfolio Asset Quality
We utilize the following investment ranking system for our investment portfolio:
- Investment Ranking 1 is used for investments that are performing above expectations and/or capital gains are expected.
- Investment Ranking 2 is used for investments that are performing substantially within our expectations, and whose risks remain materially consistent with the potential risks at the time of the original or restructured investment. All new investments are initially ranked 2.
- Investment Ranking 3 is used for investments that are performing below our expectations and for which risk has materially increased since the original or restructured investment. The portfolio company may be out of compliance with debt covenants and may require closer monitoring. To the extent that the underlying agreement has a PIK interest provision, investments with a ranking of 3 are generally those on which we are not accruing PIK interest.
- Investment Ranking 4 is used for investments that are performing substantially below our expectations and for which risk has increased substantially since the original or restructured investment. Investments with a ranking of 4 are those for which some loss of principal is expected and are generally those on which we are not accruing cash interest.
At September 30, 2013, the distribution of our investments on the 1 to 4 investment ranking scale at fair value was as follows:
| September 30, 2013 | |||
| Investment Ranking | Fair Value | % of Portfolio | Leverage Ratio |
| 1 | — | 0.00% | — |
| 2 | $ 48,653,617 | 100.00% | 4.32 |
| 3 | — | 0.00% | — |
| 4 | — | 0.00% | — |
| Total | $ 48,653,617 | 100.00% | 4.32 |
Recent Developments
On November 1, 2013, we entered into a $100 million credit facility with Natixis, New York Branch. Pricing on the new facility is set at the applicable commercial paper rate plus 1.9% per annum. The interest rate would remain the same for any additional future commitments from Natixis that are funded through its commercial paper conduit. To the extent new lenders participate in the facility or Natixis funds incremental commitments outside of its commercial paper conduit, pricing on those commitments would be three-month LIBOR plus 2.0% per annum. The facility has an 18-month reinvestment period and a final maturity date of November 1, 2021. DBRS, Inc. currently rates the facility AA.
| Fifth Street Senior Floating Rate Corp. Statement of Assets and Liabilities | |
| September 30, | |
| 2013 | |
| ASSETS | |
| Investments at fair value: | |
| Non-control/Non-affiliate investments (cost September 30, 2013: $48,653,617) | $ 48,653,617 |
| Total investments at fair value (cost September 30, 2013: $48,653,617) | 48,653,617 |
| Cash and cash equivalents | 52,346,831 |
| Interest and fees receivable | 394,023 |
| Due from portfolio company | 8,333 |
| Other assets | 47,240 |
| Total assets | $ 101,450,044 |
| LIABILITIES AND NET ASSETS | |
| Liabilities: | |
| Accounts payable, accrued expenses and other liabilities | $ 484,066 |
| Base management fee payable | 61,379 |
| Due to FSC, Inc. | 61,721 |
| Total liabilities | 607,166 |
| Net assets: | |
| Common stock, $0.01 par value, 150,000,000 shares authorized, 6,666,768 shares issued and outstanding at September 30, 2013 | 66,668 |
| Additional paid-in-capital | 99,934,852 |
| Accumulated undistributed net investment income | 841,358 |
| Total net assets (equivalent to $15.13 per common share at September 30, 2013) | 100,842,878 |
| Total liabilities and net assets | $ 101,450,044 |
| Fifth Street Senior Floating Rate Corp. Statement of Operations | |
| Period from June 29 through September 30, 2013 | |
| Interest income: | |
| Non-control/Non-affiliate investments | $ 434,338 |
| Interest on cash and cash equivalents | 1,674 |
| Total interest income | 436,012 |
| Fee income: | |
| Non-control/Non-affiliate investments | 708,448 |
| Total fee income | 708,448 |
| Total investment income | 1,144,460 |
| Expenses: | |
| Base management fee | 61,379 |
| Professional fees | 102,811 |
| Board of Directors fees | 33,521 |
| Administrator expense | 61,721 |
| General and administrative expenses | 43,670 |
| Total expenses | 303,102 |
| Net investment income | 841,358 |
| Net increase in net assets resulting from operations | $ 841,358 |
| Net investment income per common share – basic and diluted | $ 0.16 |
| Earnings per common share – basic and diluted | $ 0.16 |
| Weighted average common shares outstanding – basic and diluted | 5,319,250 |
About Fifth Street Senior Floating Rate Corp.
Fifth Street Senior Floating Rate Corp. is a specialty finance company that provides financing solutions in the form of floating rate senior secured loans to small and mid-sized companies, primarily in connection with investments by private equity sponsors. The company's investment objective is to maximize its portfolio's total return by generating current income from its debt investments while seeking to preserve its capital. FSFR has elected to be regulated as a business development company and is externally managed by Fifth Street Management LLC, an SEC-registered investment adviser and leading alternative asset manager with over $3 billion in assets under management. With a track record of more than 15 years and offices across the country, Fifth Street Management's nationally recognized platform has the ability to hold loans up to $150 million, commit up to $250 million and structure and syndicate transactions up to $500 million. FSFR's website can be found at fifthstreetsenior.com.
Forward-Looking Statements
This press release may contain certain forward-looking statements, including statements with regard to the future performance of the company. Words such as "believes," "estimates," "expects," "projects," "anticipates," and "future" or similar expressions are intended to identify 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 to differ materially from those projected in these forward-looking statements, and these factors are identified from time to time in the company's filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact: Dean Choksi, Senior Vice President of Finance & Head of Investor Relations (914) 286-6855 Media Contact: Nick Rust Prosek Partners (212) 279-3115 ext. 252
