PURCHASE, N.Y., Dec. 01, 2015 (GLOBE NEWSWIRE) -- MVC Capital, Inc. MVC, a publicly traded business development company that makes private debt and equity investments, today announced its financial results for the fiscal first quarter ended January 31, 2015 and fiscal second quarter ended April 30, 2015.
Financial & Operational Highlights During Fiscal First and Second Quarters
- Earned interest income of $4.3 million and $4.8 million in the first and second fiscal quarters of 2015, respectively, compared to $3.5 million and $4.0 million in Q1 2014 and Q2 2014
- Invested approximately $40 million in four loans with a weighted average interest rate of 15.1%
- Paid quarterly dividends in each of the first and second fiscal quarters of $0.135 per share, or approximately $3.1 million; marking the Company's 39th and 40th consecutive quarterly dividends
"In the first half of fiscal year 2015, we utilized the expertise of our lending team to deploy capital into yielding investments that, in our view, provide solid risk adjusted returns," said Michael Tokarz, Chairman & Portfolio Manager of MVC Capital. "As we look ahead, we are committed to our shift to yield and will continue to look to monetize non-yielding assets."
Fiscal First and Second Quarter 2015 Results
| Six Months Ended | |||||||||||||||||||
| (Unaudited) | Q2 2015 | Q1 2015 | Q2 2014 | Q1 2014 | Apr. 2015 | Apr. 2014 | |||||||||||||
| ($ in thousands except for per share data) | |||||||||||||||||||
| Total operating income | 5,273 | 4,856 | 5,862 | 4,613 | 10,129 | 10,475 | |||||||||||||
| Management fee | 2,066 | 1,980 | 2,227 | 2,189 | 4,046 | 4,417 | |||||||||||||
| Portfolio fees - asset management | 187 | 204 | 341 | 106 | 391 | 447 | |||||||||||||
| Management fee - asset management | (18 | ) | 16 | 231 | 232 | (2 | ) | 463 | |||||||||||
| Administrative | 1,325 | 1,159 | 727 | 908 | 2,484 | 1,634 | |||||||||||||
| Interest, fees and other borrowing costs | 2,616 | 2,455 | 2,406 | 2,255 | 5,071 | 4,661 | |||||||||||||
| Net Incentive compensation | (3,462 | ) | (2,120 | ) | (3,414 | ) | 435 | (5,582 | ) | (2,979 | ) | ||||||||
| Total waiver by adviser | (37 | ) | (38 | ) | (37 | ) | (38 | ) | (75 | ) | (75 | ) | |||||||
| Tax expense | 1 | 0 | 0 | 1 | 1 | 1 | |||||||||||||
| Net operating income (loss) before net realized and unrealized gains | 2,595 | 1,200 | 3,381 | (1,475 | ) | 3,795 | 1,906 | ||||||||||||
| Net increase (decrease) in net assets resulting from operations | (11,813 | ) | (9,743 | ) | (12,651 | ) | 1,685 | (21,556 | ) | (10,966 | ) | ||||||||
| Net increase (decrease) per share in net assets resulting from operations | (0.52 | ) | (0.43 | ) | (0.57 | ) | 0.08 | (0.95 | ) | (0.49 | ) | ||||||||
| Net asset value per share | 13.93 | 14.58 | 15.89 | 16.57 | 13.93 | 15.89 | |||||||||||||
In the first fiscal quarter of 2015, the Company earned total operating income of $4.9 million, comprised of $4.3 million in interest and dividend income and $568,854 in fee and other income, compared to total operating income of $4.6 million, comprised of $3.6 million and $1.0 million respectively for the first fiscal quarter of 2014. The increase in interest income was primarily due to the Company's continued focus on adding yielding investments.
The Company reported net operating income of $1.2 million for the first fiscal quarter, compared to a net operating loss of $1.5 million for the same quarter in 2014. Net operating income for the quarter was primarily impacted by a reduction in net incentive compensation.
For the second fiscal quarter of 2015, the Company earned total operating income of $5.3 million, comprised of $4.8 million in interest and dividend income and $485,097 in fee and other income, compared to total operating income of $5.9 million, comprised of $4.1 million and $1.8 million respectively for the second quarter of 2014. The decrease in total operating income was primarily due to a decrease in fee income from asset management of the PE Fund, its portfolio companies and the Company's portfolio investments, which was partially offset by an increase in interest and dividend income.
The Company reported net operating income of $2.6 million for the second fiscal quarter of 2015, compared to net operating income of $3.4 million for the second fiscal quarter of 2014. This decrease in net operating income was driven by a decrease in total income as well as increases in interest and borrowing costs, legal fees and other expenses.
Fiscal First and Second Quarter 2015 Portfolio Adjustments
As of January 31, 2015, the Company's net assets were $331.1 million or $14.58 per share, compared with net assets of $343.9 million, or $15.15 per share, at the beginning of the quarter and $374.7 million, or $16.57 per share as of January 31, 2014.
As of April 30, 2015, the Company's net assets were $316.2 million or $13.93 per share, compared with net assets of $356.9 million, or $15.89 per share, as of April 30, 2014.
During the first two fiscal quarters of 2015, changes in the fair values of the Company's portfolio companies resulted in a net decrease of $12.1 million or $0.53 per share and a net decrease of $15.9 million or $0.70 per share respectively.
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 underperformance of certain 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 2015 | Q2 2015 | YTD 2015 | YTD 2014 | ||||||||
| Advantage Insurance Ltd. | $ | 20,000 | ($ | 27,636 | ) | ($ | 7,636 | ) | $ | - | ||
| BiogenicsReagents | $ | 27,987 | $ | 852,426 | $ | 880,413 | - | |||||
| Biovations Holdings, Inc. | ($ | 716,230 | ) | ($ | 2,675,434 | ) | ($ | 3,391,664 | ) | $ | 39,986 | |
| Centile Holding B.V. | ($ | 538,000 | ) | ($ | 98,000 | ) | ($ | 636,000 | ) | $ | 28,000 | |
| Custom Alloy Corporation | ($ | 84,187 | ) | ($ | 10,688 | ) | ($ | 94,875 | ) | $ | 2,660,000 | |
| Equus Total Return | ($ | 1,022,268 | ) | ($ | 133,339 | ) | ($ | 1,155,607 | ) | - | ||
| Foliofn, Inc. | $ | 109,000 | ($ | 82,000 | ) | $ | 27,000 | ($ | 964,000 | ) | ||
| Freshii USA Inc. | - | - | - | $ | 23,131 | |||||||
| Inland Environmental & Remediation, Inc. | ($ | 713,000 | ) | ($ | 1,434,989 | ) | ($ | 2,147,989 | ) | - | ||
| G3K Displays, Inc. | - | - | - | ($ | 5,625,000 | ) | ||||||
| JSC Tekers Holdings | ($ | 599,106 | ) | $ | 5,000 | ($ | 594,106 | ) | - | |||
| Morey's Seafood International LLC | - | ($ | 252,867 | ) | ($ | 252,867 | ) | - | ||||
| MVC Automotive Group B.V. | ($ | 5,894,000 | ) | $ | 246,000 | ($ | 5,648,000 | ) | ($ | 6,670,165 | ) | |
| MVC Private Equity Fund, L.P. | ($ | 758,656 | ) | $ | 609,647 | ($ | 149,009 | ) | $ | 3,115,340 | ||
| NPWT Corporation | ($ | 38,000 | ) | ($ | 13,000 | ) | ($ | 51,000 | ) | ($ | 39,000 | ) |
| Octagon Credit Investors, LLC | - | - | - | ($ | 19,648 | ) | ||||||
| Ohio Medical Corporation | - | ($ | 10,500,000 | ) | ($ | 10,500,000 | ) | - | ||||
| Pre-Paid Legal Services, Inc. | ($ | 100,000 | ) | - | ($ | 100,000 | ) | $ | 100,000 | |||
| RuMe, Inc. | $ | 1,000,000 | $ | 700,000 | $ | 1,700,000 | - | |||||
| Security Holdings, B.V. | ($ | 1,100,000 | ) | ($ | 850,000 | ) | ($ | 1,950,000 | ) | $ | 118,000 | |
| SGDA Europe B.V. | ($ | 748,664 | ) | ($ | 1,348,000 | ) | ($ | 2,096,664 | ) | $ | 538,260 | |
| SIA Tekers Invest | ($ | 170,000 | ) | ($ | 21,000 | ) | ($ | 191,000 | ) | ($ | 5,000 | ) |
| Turf Products, LLC | $ | 1,563 | $ | 1,503 | $ | 3,066 | ($ | 92,000 | ) | |||
| U.S. Gas & Electric, Inc. | - | - | - | ($ | 9,000,000 | ) | ||||||
| U.S. Spray Drying Holding Company | $ | 387,000 | - | $ | 387,000 | - | ||||||
| Velocitius B.V. | ($ | 1,129,000 | ) | ($ | 899,000 | ) | ($ | 2,028,000 | ) | ($ | 2,480,000 | ) |
| Vestal Manufacturing Enterprises, Inc. | - | - | - | $ | 3,000,000 | |||||||
| TOTAL | ($ | 12,065,561 | ) | ($ | 15,931,377 | ) | ($ | 27,996,938 | ) | ($ | 15,272,096 | ) |
Quarterly and Annual Investment Activity
During the first six months of fiscal year 2015, MVC announced that it made four new yielding investments totaling approximately $40 million in Agri-Carriers Group Inc., Legal Solutions Holdings, Inc., The Results Companies, LLC, and RXInnovation, Inc.
During the first and second fiscal quarters of 2015, MVC did not purchase any of its shares under the repurchase program authorized by the Board of Directors in April 2013 as it had not yet filed its fiscal 2015 quarterly financials.
Liquidity
As of January 31, 2015, the Company had investments in portfolio companies totaling $449.0 million and cash and cash equivalents of approximately $16.2 million, excluding restricted cash and cash equivalents of $5.6 million.
As of April 30, 2015, the Company had investments in portfolio companies totaling $434.3 million and cash and cash equivalents of approximately $9.1 million, excluding restricted cash and cash equivalents of $6.1 million.
Dividends
The board of directors declared dividends of $0.135 per share, or a total of $3.1 million, distributed to shareholders in each of the first and second fiscal quarters of 2015.
Under current management the dividends issued to the Company's shareholders have totaled approximately $117 million through April 30, 2015 and approximately $123 million through October 31, 2015.
Subsequent Events
On October 30, 2015, the Company renewed its $30 million credit facility with Firstrust Bank through December 31, 2015.
On November 20, 2015, Grant Thornton, LLP was engaged as the independent registered public accounting firm for fiscal 2015, effective following the Company's filing of its Quarterly Report on Form 10-Q for the quarter ended April 30, 2015.
For additional subsequent event details, please reference the Subsequent Event section of the Form 10-Q for the fiscal quarters ended January 31, 2015 and April 30, 2015.
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.
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 yield 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 MVC will achieve its investment objective.
The accompanying notes are an integral part of these consolidated financial statements.
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