Gilford Securities Reiterates Buy Rating On FSC
March 25, 2011 12:49 PM
Gilford Securities is reiterating its Buy rating on shares of Fifth Street Finance Corp. (NYSE: FSC).
“Last month FSC raised capital in a secondary offering of 11.5 million shares at $12.65 per share, generating net proceeds of approximately $138 million,” Gilford Securities writes. “The offering was accretive and we estimate that it raised NAV to approximately $10.75 per share. The proceeds allowed Fifth Street to pay down their credit lines and refill their origination capacity. We do not know at this time what level of repayment activity there has been during the quarter.
“The new shares from the recent secondary mean a greater challenge to covering the dividend through Net Investment Income. The large unfunded balances1 of over $100 million that require FSC to hold cash in the event that they need to be funded quickly meant that FSC was becoming capacity constrained. That in turn could have affected their ability to close deals on a timely basis.”
Fifth Street Finance currently trades at $13.52.
