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SuRo Capital Corp. Reports Second Quarter 2020 Financial Results

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SAN FRANCISCO, Aug. 05, 2020 (GLOBE NEWSWIRE) -- SuRo Capital Corp. ("SuRo Capital" or the "Company") (NASDAQ:SSSS) today announced its financial results for the quarter ended June 30, 2020.  Net assets totaled approximately $192.7 million, or $11.84 per share, at June 30, 2020, compared to $10.22 per share at March 31, 2020 and $10.75 per share at June 30, 2019.

"This quarter, SuRo Capital reported the highest dividend-adjusted net asset value per share in five years.  On July 29, 2020, we were pleased to declare a $0.15 per share dividend.  The quarter was highlighted by several significant financings for existing portfolio companies and investments in new opportunities," said Mark Klein, President and Chief Executive Officer of SuRo Capital. "The companies in our portfolio demonstrated strong growth and resilience this quarter despite the ongoing impact of the COVID-19 outbreak.  We believe our portfolio is well-positioned given the current market conditions."

"We are also excited to announce the closing of two new investments during the second quarter: a $5.0 million equity investment in Rent the Runway, Inc. and a $6.9 million collateralized loan to Palantir Lending Trust.  SuRo Capital also made follow-on, pro rata investments in Lime during the second quarter and Coursera subsequent to quarter-end. We continue to see more opportunities to deploy capital in credit investments. We have also been exploring opportunities in pre-business combination private investments in public equity ("PIPEs") associated with the special-purpose acquisition company ("SPAC") asset class."

Investment Portfolio as of June 30, 2020

At June 30, 2020, SuRo Capital held positions in 24 portfolio companies with an aggregate fair value of approximately $199.0 million.  As a result of the Company's continued strategy to increase the size of its investments in individual portfolio companies, SuRo Capital has consolidated its investment portfolio around its top positions.  The Company's top five portfolio company investments accounted for approximately 68% of the total portfolio at fair value as of June 30, 2020.

Top Five Investments as of June 30, 2020

$ in millions   Cost Basis   Fair Value   % of Total Portfolio
Coursera, Inc.   $ 14.5   $ 49.9   25.1 %
Course Hero, Inc.     5.0     33.2   16.7  
Palantir Technologies, Inc.     16.2     30.5   15.3  
Ozy Media, Inc.     10.9     11.3   5.7  
Nextdoor.com, Inc.     10.0     10.5   5.3  
Total (rounded)   $ 56.6   $ 135.4   68.1 %
                   

Second Quarter 2020 Investment Portfolio Activity

During the three months ended June 30, 2020, SuRo Capital funded the following new and follow-on investments, excluding capitalized transaction costs:

Portfolio Company Investment Transaction Date Investment
Neutron Holdings, Inc. (d/b/a Lime) Junior Preferred Convertible Note 5/11/2020 $0.5 million
Rent the Runway, Inc. Preferred Stock 6/17/2020 $5.0 million
Palantir Lending Trust Collateralized Loan 6/19/2020 $6.9 million
       

Subsequent to quarter-end, through August 5, 2020, SuRo Capital funded the following follow-on investment:

Portfolio Company Investment Transaction Date Investment
Coursera, Inc. Preferred Shares, Series F 7/15/2020 $2.8 million
       

Second Quarter 2020 Financial Results

  Quarter Ended
June 30, 2020
Quarter Ended
June 30, 2019
     
  $ in millions per share(1) $ in millions per share(1)
         
Net investment loss (2) $ (4.7 ) $ (0.28 ) $ (2.8 ) $ (0.14 )
         
Net realized gain/(loss) on investments   (0.0 )   -     13.6     0.69  
         
Net change in unrealized appreciation/(depreciation) of investments, net of tax effects   26.5     1.62     (11.4 )   (0.58 )
         
Net increase/(decrease) in net assets resulting from operations – basic(3) $ 21.8   $ 1.34   $ (0.7 ) $ (0.03 )
         
Repurchase of common stock(4)   (3.6 )   0.16     (0.7 )   0.03  
         
Stock-based compensation(2)   2.0     0.12     -     -  
         
Increase/(decrease) in net asset value $ 20.2   $ 1.62   $ (1.4 ) $ 0.00  
                         

__________________

  1. Based on weighted-average number of shares outstanding for the relevant period
  2. For the quarter ended June 30, 2020, this balance includes $2.0 million of accelerated recognition of compensation cost related to the cancellation of all vested and unvested options on April 28, 2020.
  3. Total may not sum, due to rounding.
  4. During the quarters ended June 30, 2020 and 2019, the Company repurchased 594,637 and 115,801 shares of SuRo Capital common stock, for approximately $3.6 million and $0.7 million in cash, respectively, under its Share Repurchase Program. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulted in an increase in the net asset value per share.

Weighted-average common basic shares outstanding were approximately 16.4 million and 19.7 million for the quarters ended June 30, 2020 and 2019, respectively.

SuRo Capital's liquid assets were approximately $23.3 million as of June 30, 2020, consisting of cash and restricted cash.

Dividend Declaration for Second Quarter 2020

On July 29, 2020, SuRo Capital's Board of Directors declared a dividend of $0.15 per share payable on August 25, 2020 to the Company's common stockholders of record as of the close of business on August 11, 2020. The dividend will be paid in cash.

Share Repurchase Program

During the quarter ended June 30, 2020, SuRo Capital repurchased 594,637 shares under its Share Repurchase Program for an aggregate purchase price of $3.6 million.  The dollar value of shares that may yet be purchased by the Company under the Share Repurchase Program is approximately $2.7 million.

Under the publicly announced Share Repurchase Program and the Modified Dutch Auction Tender Offer, as of August 5, 2020, the Company has repurchased 5,901,324 shares of its common stock for approximately $37.3 million since the Share Repurchase Program was announced in August 2017.

Conference Call and Webcast

Management will hold a conference call and webcast for investors on August 5, 2020 at 2:00 p.m. PT (5:00 p.m. ET). The conference call access number for U.S. participants is 323-794-2093, and the conference call access number for participants outside the U.S. is 866-548-4713. The conference ID number for both access numbers is 3811592. Additionally, interested parties can listen to a live webcast of the call from the "Investor Relations" section of SuRo Capital's website at www.surocap.com. An archived replay of the webcast will also be available for 12 months following the live presentation.

A replay of the conference call may be accessed until 5:00 p.m. PT (8:00 p.m. ET) on August 12, 2020 by dialing 888-203-1112 (U.S.) or +1 719-457-0820 (International) and using conference ID number 3811592.

Certain Information Regarding the Dividend

The date of declaration and amount of the dividend are subject to the sole discretion of SuRo Capital's Board of Directors.  The aggregate amount of the dividend declared and paid by SuRo Capital will be fully taxable to stockholders.  The tax character of SuRo Capital's dividends cannot be finally determined until the close of SuRo Capital's taxable year (December 31).  SuRo Capital will report the actual tax characteristics of each year's dividends annually to stockholders and the IRS on Form 1099-DIV subsequent to year-end.

Registered stockholders with questions regarding declared dividends may call American Stock Transfer at 800-937-5449.

Forward-Looking Statements

Statements included herein, including statements regarding SuRo Capital's beliefs, expectations, intentions or strategies for the future, may constitute "forward-looking statements".  SuRo Capital cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.  All forward-looking statements involve a number of risks and uncertainties, including the impact of the COVID-19 pandemic and any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy, that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Risk factors, cautionary statements and other conditions which could cause SuRo Capital's actual results to differ from management's current expectations are contained in SuRo Capital's filings with the Securities and Exchange Commission. SuRo Capital undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.

About SuRo Capital Corp.

SuRo Capital Corp. (NASDAQ:SSSS) is a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock. SuRo Capital is headquartered in San Francisco, CA. Connect with the company on Twitter, LinkedIn, and at www.surocap.com

Contact
SuRo Capital Corp.
(650) 235-4769
IR@surocap.com

Media Contact
Bill Douglass
Gotham Communications, LLC
Communications@surocap.com

SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

  June 30, 2020   December 31, 2019
ASSETS      
Investments at fair value:      
Non-controlled/non-affiliate investments (cost of $99,121,577 and $90,567,041, respectively) $ 168,700,422     $ 152,866,112  
Non-controlled/affiliate investments (cost of $52,857,243 and $52,857,243, respectively) 29,438,698     37,944,268  
Controlled investments (cost of $7,161,412 and $7,161,412, respectively) 860,198     775,198  
Total Portfolio Investments 198,999,318     191,585,578  
Investments in U.S. Treasury bills (cost of $99,999,611 and $49,996,667, respectively) 100,000,000     50,000,000  
Total Investments (cost of $259,139,843 and $200,582,363, respectively) 298,999,318     241,585,578  
Cash 22,385,073     44,861,263  
Restricted cash 900,000      
Escrow proceeds receivable 67,135     265,303  
Interest and dividends receivable 70,274     84,630  
Deferred financing costs 11,382     11,382  
Prepaid expenses and other assets(1) 1,197,711     1,755,933  
Total Assets 323,630,893     288,564,089  
LIABILITIES      
Accounts payable and accrued expenses(1) 1,933,219     1,143,923  
Payable to executive officers     1,369,873  
Accrued interest payable 475,000     475,000  
Dividends payable     2,107,709  
Payable for securities purchased 89,499,611     44,746,660  
Income tax payable 38,965      
4.75% Convertible Senior Notes due March 28, 2023(2) 38,991,657     38,803,635  
Total Liabilities 130,938,452     88,646,800  
       
Net Assets $ 192,692,441     $ 199,917,289  
NET ASSETS      
Common stock, par value $0.01 per share (100,000,000 authorized; 16,279,679 and 17,564,244 issued and outstanding, respectively) $ 162,797     $ 175,642  
Paid-in capital in excess of par 173,199,798     178,550,374  
Accumulated net investment loss (33,351,303 )   (25,679,362 )
Accumulated net realized gain on investments 12,821,670     5,867,417  
Accumulated net unrealized appreciation/(depreciation) of investments 39,859,479     41,003,218  
Net Assets $ 192,692,441     $ 199,917,289  
Net Asset Value Per Share $ 11.84     $ 11.38  
               

__________________________________________________

  1. This balance includes a right of use asset and corresponding operating lease liability, respectively.
  2. As of June 30, 2020 and December 31, 2019, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000.

SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
INVESTMENT INCOME              
Non-controlled/non-affiliate investments:              
Interest income $ 61,126     $ 198,175     $ 216,211     $ 336,672  
Dividend income         50,000      
Non-controlled/affiliate investments:            
Interest income/(reversal of interest income accrual) (49,612 )   60,127     (29,184 )   119,593  
Dividend income 30,000         56,250      
Controlled investments:            
Interest income     29,650         58,937  
Dividend income 200,000     200,000     200,000     200,000  
Total Investment Income 241,514     487,952     493,277     715,202  
OPERATING EXPENSES            
Management fees(1)             848,723  
Reversal of incentive fee accrual(1)             (4,660,472 )
Costs incurred under Administration Agreement(1)             306,084  
Compensation expense(2) 3,005,524     469,944     3,930,440     632,108  
Directors' fees 111,250     86,250     222,500     172,500  
Professional fees 678,472     1,310,028     1,817,838     3,371,950  
Interest expense 568,627     600,205     1,142,027     1,204,373  
Income tax expense 39,590     29,949     48,255     33,712  
Other expenses 505,439     796,807     1,004,158     991,753  
Total Operating Expenses 4,908,902     3,293,183     8,165,218     2,900,731  
Net Investment Loss (4,667,388 )   (2,805,231 )   (7,671,941 )   (2,185,529 )
Realized Gains/(Losses) on Investments:          
Non-controlled/non-affiliated investments (23,987 )   13,590,233     6,954,253     21,859,371  
Non-controlled/affiliate investments             (12,334,831 )
Net Realized Gain/(Loss) on Investments (23,987 )   13,590,233     6,954,253     9,524,540  
Change in Unrealized Appreciation/(Depreciation) of Investments:            
Non-controlled/non-affiliated investments 24,821,654     (6,751,196 )   7,276,832     10,277,147  
Non-controlled/affiliate investments 1,569,843     (1,220,012 )   (8,505,571 )   7,802,636  
Controlled investments 130,698     (4,469,112 )   85,000     (9,820,352 )
Net Change in Unrealized Appreciation/(Depreciation) of Investments 26,522,195     (12,440,320 )   (1,143,739 )   8,259,431  
Provision for taxes on unrealized appreciation of investments     979,713         885,566  
Net Change in Net Assets Resulting from Operations $ 21,830,820     $ (675,605 )   $ (1,861,427 )   $ 16,484,008  
Net Change in Net Assets Resulting from Operations per Common Share:            
Basic $ 1.33     $ (0.03 )   $ (0.11 )   $ 0.84  
Diluted(3) $ 1.10     $ (0.03 )   $ (0.11 )   $ 0.70  
Weighted-Average Common Shares Outstanding      
Basic 16,383,188     19,719,706     16,912,091     19,741,058  
Diluted(3) 20,300,980     19,719,706     16,912,091     23,472,402  
                       

____________________________________________________________________________________________________________________________

  1. This balance references a related-party transaction.
  2. For the three and six months ended June 30, 2020, this balance includes $1,962,431 of accelerated recognition of compensation cost related to the cancellation of unvested options on April 28, 2020.
  3. For the six months ended June 30, 2020 and the three months ended June 30, 2019, 3,917,792 and 3,731,344 potentially dilutive common shares, respectively, were excluded from the weighted-average common shares outstanding for diluted net increase in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive.

SURO CAPITAL CORP. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)

  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Per Basic Share Data              
Net asset value at beginning of the period $ 10.22     $ 10.75     $ 11.38     $ 9.89  
Net investment income/(loss)(1) (0.28 )   (0.14 )   (0.45 )   (0.11 )
Net realized gain/(loss) on investments(1)     0.69     0.41     0.48  
Net change in unrealized appreciation/(depreciation) of investments(1) 1.62     (0.63 )   (0.07 )   0.42  
Provision for taxes on unrealized appreciation of investments(1)     0.05         0.05  
Repurchases of common stock(1) 0.16     0.03     0.45     0.02  
Stock-based compensation(1) 0.12         0.12      
Net asset value at end of period $ 11.84     $ 10.75     $ 11.84     $ 10.75  
Per share market value at end of period $ 8.47     $ 6.40     $ 8.47     $ 6.40  
Total return based on market value(2) 44.54 %   (15.57 )%   29.31 %   22.61 %
Total return based on net asset value(2) 15.85 %   %   4.04 %   8.70 %
Shares outstanding at end of period 16,279,679     19,646,846     16,279,679     19,646,846  
Ratios/Supplemental Data:              
Net assets at end of period $ 192,692,441     $ 211,125,048     $ 192,692,441     $ 211,125,048  
Average net assets $ 169,877,812     $ 211,244,233     $ 184,435,968     $ 203,070,126  
Ratio of gross operating expenses to average net assets(3) 8.19 %   5.14 %   7.83 %   4.66 %
Ratio of income tax provision to average net assets %   (0.46 )%   %   (0.44 )%
Ratio of net operating expenses to average net assets(3) 8.19 %   4.68 %   7.83 %   4.22 %
Ratio of net investment income/(loss) to average net assets(3) (7.61 )%   (5.39 )%   (7.29 )%   (2.18 )%
Portfolio Turnover Ratio %   %   5.88 %   5.04 %
                       

___________________________________________________

  1. Based on weighted-average number of shares outstanding for the relevant period.
  2. Total return based on market value is based on the change in market price per share between the opening and ending market values per share in the year.  Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share.
  3. Financial Highlights for periods of less than one year are annualized and the ratios of operating expenses to average net assets and net investment loss to average net assets are adjusted accordingly. Significant and material non-recurring expenses are not annualized. For the three and six months ended June 30, 2020, the Company excluded $1,962,431 and $1,962,431, respectively of non-recurring expenses. For the three and six months ended June 30, 2019, the Company excluded $617,536 and $(1,769,820), respectively, of non-recurring expenses and did not annualize the income tax provision. Because the ratios are calculated for the Company's common stock taken as a whole, an individual investor's ratios may vary from these ratios.

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