PURCHASE, N.Y., March 12, 2014 (GLOBE NEWSWIRE) -- MVC Capital, Inc.(NYSE: MVC ), a publicly traded business development company that makes private debt and equity investments, today announced its financial results for the first fiscal quarter ended January 31, 2014.
Fiscal First Quarter 2014 and Recent Financial Highlights
- Interest income was $3.5 million, compared to $2.7 million in Q1 2013
- NAV was $17.36, compared to $16.29 at Q1 2013 and $17.40 at Q4 2013
- Made three yielding investments totaling $14.3 million
- Paid quarterly dividend of $0.135 per share, totaling $3.1 million; 35 th consecutive quarterly dividend
"With our portfolio continuing to generate favorable results, we completed five follow-on investments during the quarter to further capitalize on the success of these companies," said Michael Tokarz, Chairman & Portfolio Manager of MVC Capital. "Deploying this capital accelerates our shift to yielding investments as well as better positioning us to deliver strong results in 2014 and beyond."
| Fiscal First Quarter 2014 Results | |||
| (Unaudited) ($ in thousands except for per share data) | Q1 2014 | Q1 2013 | Q4 2013 |
| Total operating income | 4,613 | 6,386 | 4,469 |
| Management fee | 2,304 | 2,080 | 2,221 |
| Portfolio fees - asset management | 106 | 106 | 106 |
| Management fee - asset management | 232 | 232 | 233 |
| Administrative | 908 | 890 | 1,023 |
| Interest, fees and other borrowing costs | 2,255 | 937 | 2,254 |
| Net Incentive compensation | 554 | 1,175 | 2,160 |
| Total waiver by adviser | (38) | (38) | (37) |
| Tax expense | 1 | 1 | 1 |
| Net operating income (loss) before net realized and unrealized gains | (1,709) | 1,003 | (3,492) |
| Net increase in net assets resulting from operations | 2,047 | 6,876 | 3,855 |
| Net increase per share in net assets resulting from operations | 0.10 | 0.29 | 0.18 |
| Net asset value per share | 17.36 | 16.29 | 17.40 |
In the first quarter of 2014, the Company earned $3.5 million in interest income, $106,513 in dividend income and $963,662 in fee and other income, compared to $2.7 million, $2.9 million and $790,359 for the first quarter of 2013, respectively. The decrease in operating income over the same period last year was primarily due to a reduction in dividend income from portfolio companies, specifically U.S. Gas & Electric ("USG&E"). The Company did not receive a quarterly dividend from USG&E as it had entered into an agreement to sell the portfolio company to US Holdings, which subsequently submitted a transaction termination notice. The decrease in operating income was partially offset by an increase in interest income from portfolio companies as the Company continued its focus on yielding investments.
The Company reported a net operating loss of $1.7 million for the first quarter, compared to net operating income of $1.0 million for the same quarter in 2013. Net operating income for the quarter was primarily impacted by an increase in borrowing costs and the reduction in dividend income as mentioned above.
Fiscal First Quarter 2014 Portfolio Adjustments
As of January 31, 2014, the Company's net assets were $392.5 million,or $17.36 per share, compared with net assets of $393.6 million, or $17.40 per share, at the beginning of the quarter and $389.7 million or $16.29 per share, at the end of the same period last year.
During the quarter, the Valuation Committee, which is comprised of three independent directors, changed the fair values of 15 portfolio companies, resulting in a net increase of $2.8 million or $0.13 per share 1 . In arriving at these determinations and consistent with the Company's valuation procedures and ASC 820, the Valuation Committee took into account many factors, including the performance of the portfolio companies, as well as the impact of changes in market multiples within certain sectors and fluctuations in currency valuations, particularly in the Euro.
| Write ups (downs) | |||
| Active Deals: | Q1 2014 | Q1 2013 | Q4 2013 |
| Biovations Holdings, Inc. | $59,846 | $ -- | $87,124 |
| Centile Holding B.V. | (29,000) | 90,000 | 568,000 |
| Custom Alloy Corporation | 4,000,000 | 840,000 | 4,160,000 |
| Foliofn, Inc. | (1,091,000) | -- | (3,808,000) |
| Freshii USA Inc | 14,600 | -- | (11,839) |
| Harmony Health & Beauty, Inc. | -- | (100,000) | -- |
| MVC Automotive Group B.V. | (1,924,409) | 2,180,000 | 778,910 |
| MVC Private Equity Fund, L.P. | 2,204,636 | 11,965 | 648,653 |
| NPWT Corporation | 35,000 | (84,091) | 19,000 |
| Octagon Credit Investors, LLC | (1,153,305) | 450,000 | -- |
| Ohio Medical Corporation | -- | (350,000) | (1,900,000) |
| Pre-Paid Legal Services, Inc. | -- | 118,520 | 144,081 |
| RuMe, Inc. | -- | 423,000 | (750,000) |
| Security Holdings, B.V. | (304,000) | 2,955,000 | 3,358,000 |
| SGDA Europe B.V. | (57,000) | (1,742,000) | 141,000 |
| SIA Tekers Invest | (12,000) | 234,000 | 214,000 |
| Turf Products, LLC | (92,000) | 180,000 | -- |
| Velocitius B.V. | (1,874,000) | (1,054,000) | 505,000 |
| Vestal Manufacturing Enterprises, Inc. | 3,000,000 | 1,650,000 | 2,675,000 |
| TOTAL | $2,777,368 | $5,802,394 | $6,828,869 |
Quarterly Investment Activity
During the quarter ended January 31, 2014, the Company made five follow-on investments in existing portfolio companies totaling approximately $19.4 million. The new investments were made in Security Holdings BV ($4.0 million), Centile ($100,000), MVC Automotive Group ($5.0 million), RuMe ($3.3 million) and Morey's Seafood ($7.0 million).
Liquidity
As of January 31, 2014, the Company had investments in portfolio companies totaling $458.8 million and cash and cash equivalents of approximately $55.0 million, excluding restricted cash and cash equivalents of $6.7 million.
Dividends
The Board of Directors declared a dividend of $0.135 per share, or a total of $3.1 million distributed to shareholders during the first quarter. The dividend was paid on January 7, 2014 to shareholders of record on December 31, 2013. This distribution represented the thirty-fifth consecutive quarterly dividend paid by the Company since implementing a dividend policy in July of 2005. The dividends issued under current management have resulted in approximately $101 million in distributions to the Company's shareholders.
MVC-G
1 Based on shares outstanding as of January 31, 2014.
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 .
Safe Harbor Statement
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, including: MVC Capital's ability to execute its investment strategy; the performance of MVC Capital's investments; and changes in economic or financial market conditions and other factors that are enumerated in the Company's periodic filings with the Securities and Exchange Commission. MVC Capital disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release.
The press release contains unaudited financial results. For ease of review, we have excluded the word "approximately" when rounding the results.
There can be no assurance that future USG&E dividend payments to MVC or MVC dividend payments will match or exceed historic ones, or that they will be made at all . There can be no assurance that MVC will achieve its investment objective.
| MVC Capital, Inc. | ||
| Consolidated Balance Sheets | ||
| January 31, | October 31, | |
| 2014 | 2013 | |
| (Unaudited) | ||
| ASSETS | ||
| Assets | ||
| Cash and cash equivalents | $55,049,730 | $74,234,560 |
| Restricted cash and cash equivalents | 6,743,000 | 6,792,000 |
| Investments at fair value | ||
| Short-term investments (cost $99,703,383 and $49,937,320) | 99,777,105 | 49,826,893 |
| Non-control/Non-affiliated investments (cost $99,750,278 and $92,139,375) | 81,144,593 | 74,433,413 |
| Affiliate investments (cost $137,224,491 and $136,499,386) | 229,576,433 | 219,694,633 |
| Control investments (cost $149,650,046 and $143,292,881) | 148,078,601 | 146,169,917 |
| Total investments at fair value (cost $486,328,198 and $421,868,962) | 558,576,732 | 490,124,856 |
| Escrow receivables, net of reserves | 5,936,928 | 6,236,928 |
| Dividends and interest receivables, net of reserves | 3,909,563 | 3,528,899 |
| Deferred financing fees | 3,141,895 | 3,265,495 |
| Fee and other receivables | 2,607,037 | 2,109,538 |
| Prepaid expenses | 565,086 | 534,904 |
| Prepaid taxes | -- | 336 |
| Total assets | $636,529,971 | $586,827,516 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Liabilities | ||
| Senior notes | $114,408,750 | $114,408,750 |
| Revolving credit facility | 100,000,000 | 50,000,000 |
| Provision for incentive compensation (Note 11) | 24,513,050 | 23,959,109 |
| Management fee payable | 2,303,942 | 2,221,213 |
| Management fee payable - Asset Management | 838,347 | 606,766 |
| Accrued expenses and liabilities | 769,915 | 655,615 |
| Professional fees payable | 500,499 | 742,859 |
| Interest payable | 371,915 | 371,817 |
| Portfolio fees payable - Asset Management | 141,084 | 140,347 |
| Consulting fees payable | 135,511 | 167,968 |
| Taxes payable | 564 | -- |
| Total liabilities | 243,983,577 | 193,274,444 |
| Shareholders' equity | ||
| Common stock, $0.01 par value; 150,000,000 shares authorized; 22,617,688 and 22,617,688 shares outstanding, respectively | 283,044 | 283,044 |
| Additional paid-in-capital | 420,165,045 | 420,165,045 |
| Accumulated earnings | 64,321,684 | 66,030,475 |
| Dividends paid to stockholders | (107,590,867) | (104,537,479) |
| Accumulated net realized loss | (2,438,594) | (2,201,455) |
| Net unrealized appreciation | 72,248,534 | 68,255,894 |
| Treasury stock, at cost, 5,686,760 and 5,686,760 shares held, respectively | (54,442,452) | (54,442,452) |
| Total shareholders' equity | 392,546,394 | 393,553,072 |
| Total liabilities and shareholders' equity | $636,529,971 | $586,827,516 |
| Net asset value per share | $17.36 | $17.40 |
| The accompanying notes are an integral part of these consolidated financial statements. | ||
| MVC Capital, Inc. | ||
| Consolidated Statements of Operations | ||
| (Unaudited) | ||
| For the Quarter | For the Quarter | |
| Ended | Ended | |
| January 31, 2014 | January 31, 2013 | |
| Operating Income: | ||
| Dividend income | ||
| Non-control/Non-affiliated investments | $190 | $974 |
| Affiliate investments | 106,323 | 2,385,748 |
| Control investments | -- | 426,300 |
| Total dividend income | 106,513 | 2,813,022 |
| Payment-in-kind dividend income | ||
| Affiliate investments | -- | 65,484 |
| Total payment-in-kind dividend income | -- | 65,484 |
| Interest income | ||
| Non-control/Non-affiliated investments | 1,303,394 | 543,884 |
| Affiliate investments | 1,076,169 | 1,022,952 |
| Control investments | 95,305 | 581,774 |
| Total interest income | 2,474,868 | 2,148,610 |
| Payment-in-kind interest income | ||
| Non-control/Non-affiliated investments | 782,066 | 16,012 |
| Affiliate investments | 246,873 | 338,675 |
| Control investments | 39,272 | 213,574 |
| Total payment-in-kind interest income | 1,068,211 | 568,261 |
| Fee income | ||
| Non-control/Non-affiliated investments | 504 | 104 |
| Affiliate investments | 230,000 | 236,846 |
| Control investments | 80,750 | 133,800 |
| Total fee income | 311,254 | 370,750 |
| Fee income - Asset Management 1 | ||
| Portfolio fees | 141,435 | 140,613 |
| Management Fees | 308,775 | 308,841 |
| Total fee income - Asset Management | 450,210 | 449,454 |
| Other income (loss) | 202,198 | (29,845) |
| Total operating income | 4,613,254 | 6,385,736 |
| Operating Expenses: | ||
| Management fee | 2,303,942 | 2,080,237 |
| Interest and other borrowing costs | 2,255,510 | 937,043 |
| Incentive compensation (Note 11) | 553,941 | 1,174,661 |
| Management fee - Asset Management 1 | 231,581 | 231,631 |
| Audit fees | 162,400 | 158,300 |
| Other expenses | 140,738 | 133,553 |
| Legal fees | 138,000 | 136,000 |
| Consulting fees | 135,151 | 132,251 |
| Portfolio fees - Asset Management 1 | 106,076 | 105,460 |
| Directors fees | 103,125 | 103,125 |
| Insurance | 86,700 | 82,770 |
| Administration | 64,675 | 63,872 |
| Public relations fees | 51,000 | 49,500 |
| Printing and postage | 25,806 | 31,000 |
| Total operating expenses | 6,358,645 | 5,419,403 |
| Less: Voluntary Expense Waiver by Adviser 2 | (37,500) | (37,500) |
| Total waivers | (37,500) | (37,500) |
| Net operating (loss) income before taxes | (1,707,891) | 1,003,833 |
| Tax Expenses: | ||
| Current tax expense | 900 | 733 |
| Total tax expense | 900 | 733 |
| Net operating (loss) income | (1,708,791) | 1,003,100 |
| Net Realized and Unrealized (Loss) Gain on Investments: | ||
| Net realized loss on investments | ||
| Non-control/Non-affiliated investments | (237,139) | (1,922,539) |
| Total net realized loss on investments | (237,139) | (1,922,539) |
| Net change in unrealized appreciation on investments | 3,992,640 | 7,795,677 |
| Net realized and unrealized gain on investments | 3,755,501 | 5,873,138 |
| Net increase in net assets resulting from operations | $2,046,710 | $6,876,238 |
| Net increase in net assets per share resulting from operations | $0.10 | $0.29 |
| Dividends declared per share | $0.135 | $0.135 |
| 1 These items are related to the management of the MVC Private Equity Fund, L.P. ("PE Fund"). Please see Note 10 "Management" for more information. |
| 2 Reflects the quarterly portion of the TTG Advisers' voluntary waiver of $150,000 of expenses for the 2014 and 2013 fiscal years, that the Company |
| would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the "Voluntary Waiver"). Please see Note 10 |
| "Management" for more information. |
| The accompanying notes are an integral part of these consolidated financial statements. |
Investor Relations Jackie Rothchild MVC Capital, Inc. 914-510-9400 Or Jeffrey Goldberger / Garth Russell KCSA Strategic Communications 212-896-1249 / 212-896-1250 Media Inquiries Nathaniel Garnick / Patrick Scanlan Sard Verbinnen & Co. 212-687-8080
