NEW YORK, Nov. 7, 2013 (GLOBE NEWSWIRE) -- KCAP Financial, Inc. (Nasdaq:KCAP) announces its third quarter 2013 financial results.
- Net investment income for the three months ended September 30, 2013 was approximately $7.6 million, or $0.23 per share.
- KCAP Financial, Inc. declared a third quarter dividend of $0.25 per share.
- At September 30, 2013, the fair value of KCAP's investments totaled approximately $440.5 million.
- Net asset value per share of $7.96 as of September 30, 2013.
Dayl Pearson, President and Chief Executive Officer of KCAP Financial Inc., noted, "While the credit markets continue to be relatively aggressive, we are nonetheless pleased with our results, especially the upward trajectory of net investment income, resulting in part from investing the excess cash we had on hand last quarter."
For the three months ended September 30, 2013, we reported total investment income of approximately $12.6 million, as compared to approximately $10.4 million, in the prior year period, an increase of 22%. Investment income from debt securities increased 4% to approximately $3.7 million from approximately $3.6 million. Dividends from investments in CLO fund securities decreased 7% from $5.8 million to $5.4 million, and dividends from our Asset Manager Affiliates increased 259% from $925,000 to $3.3 million. The decrease in CLO dividends is attributable to the acceleration of pre-payments in existing CLO funds that are past their reinvestment period, while the increase in dividends from the Asset Manager Affiliates is attributable to greater assets under management and incentive fees.
For the three months ended September 30, 2013, total expenses were higher by approximately $1.9 million as compared to the same period in 2012. This is primarily attributed to the increase in interest expense related to the average outstanding principal balance on our borrowings, and an increase in compensation and administrative fees.
Net investment income for the third quarter of 2013 and 2012 was approximately $7.6 million and $7.1 million, or $0.23 and $0.27 per share, respectively. Net realized and unrealized depreciation on investments for the third quarter of 2013 was approximately $7.3 million, as compared to net realized and unrealized appreciation on investments of $2.2 million for the same period in 2012.
Portfolio and Investment Activity
The fair value of our portfolio was approximately $440.5 million as of September 30, 2013.
The composition of our investment portfolio at September 30, 2013 and December 31, 2012 at cost and fair value was as follows:
|September 30, 2013 (unaudited)||December 31, 2012|
|Security Type||Cost||Fair Value||%1||Cost||Fair Value||%1|
|Time Deposits||$ -||$ -||- %||$ 1,942,834||$ 1,942,834||1%|
|Money Market Account||9,055,634||9,055,634||3||30,543,824||30,543,824||15|
|Senior Secured Loan||186,686,207||179,395,497||68||67,874,565||60,258,885||29|
|Junior Secured Loan||44,327,364||41,309,810||16||49,646,273||33,486,956||17|
|Senior Unsecured Loan||20,000,000||20,000,000||8||-||-||-|
|First Lien Bond||2,939,165||2,556,300||1||2,928,762||3,000,000||1|
|Senior Subordinated Bond||1,037,667||1,061,901||-||2,729,088||2,735,881||1|
|Senior Secured Bond||1,519,751||1,537,500||1||-||-||-|
|Senior Unsecured Bond||10,830,904||11,338,900||4||10,798,463||11,185,000||5|
|CLO Fund Securities||101,346,359||82,152,488||31||90,146,410||83,257,507||40|
|Asset Manager Affiliates||83,273,236||82,533,000||30||83,161,529||77,242,000||37|
|Total||$ 480,071,496||$ 440,486,083||166%||$ 358,547,336||$ 312,044,763||150%|
|1 Calculated as a percentage of net asset value.|
Liquidity and Capital Resources
As of September 30, 2013, we had unrestricted cash and money market balances of approximately $18.8 million, total assets of approximately $468.0 million and stockholders' equity of approximately $265.1 million. Our net asset value per common share was $7.96. As of September 30, 2013, we had $195.7 million of borrowings outstanding ($192.5 million net of discount) with a weighted average interest rate of approximately 5.1%.
Subject to prevailing market conditions, we intend to grow our portfolio of assets by raising additional capital, including through the prudent use of leverage available to us. As a result, we may seek to enter into new agreements with other lenders or into other financing arrangements as market conditions permit. Such financing arrangements may include a new secured and/or unsecured credit facility or the issuance of unsecured debt or preferred stock.
Generally, we seek to fund dividends to shareholders from current distributable earnings, primarily from net interest and dividend income generated by our investment portfolio and any distributions from our Asset Manager Affiliates (Trimaran Advisors and Katonah Debt Advisors). We announced a regular quarterly dividend of $0.25 per share for the quarter ended September 30, 2013. The record date for this dividend was October 8, 2013 and the dividend was paid on October 29, 2013. Tax characteristics of all dividends will be reported to stockholders on Form 1099-DIV after the end of the calendar year.
We have adopted a dividend reinvestment plan that provides for reinvestment of dividends in shares of our common stock, unless a stockholder elects to receive cash. As a result, if we declare a cash dividend, shareholders who have not "opted out" of our dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving the cash dividends. Please contact your broker or other financial intermediary for more information regarding the dividend reinvestment plan.
Conference Call and Webcast
We will hold a conference call on Friday, November 8, 2013 at 9:00 a.m. Eastern Standard Time to discuss our third quarter 2013 financial results. Shareholders, prospective shareholders and analysts are welcome to listen to the call or attend the webcast.
The conference call dial-in number is (866) 757-5630. No password is required. A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on our Company's website www.kcapfinancial.com in the Investor Relations section under Events. The online archive of the webcast will be available after 7:00 p.m. Eastern Standard Time for approximately 90 days.
A replay of this conference call will be available from 12:00 p.m. on November 8, 2013 until 11:59 p.m. on November 15, 2013. The dial in number for the replay is (800) 585-8367 and the conference ID is 96644788.
About KCAP Financial, Inc.
KCAP Financial, Inc. is a publicly traded, internally managed business development company. The Company's middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies. The Company's wholly owned portfolio companies, Katonah Debt Advisors, L.L.C. and Trimaran Advisors, L.L.C., manage collateralized debt obligation funds that invest in broadly syndicated corporate term loans, high-yield bonds and other credit instruments.
The KCAP Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3121
Forward Looking Statements
This press release contains forward-looking statements. The matters discussed in this press release that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may,'' "will,'' "should,'' "expects,'' "plans,'' "anticipates,'' "could,'' "intends,'' "target,'' "projects,'' "contemplates,'' "believes,'' "estimates,'' "predicts,'' "potential'' or "continue'' or the negative of these terms or other similar words. Further information about factors that could affect our financial and other results is included in our filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.
|KCAP FINANCIAL, INC.|
| As of |
September 30, 2013
| As of |
December 31, 2012
|Investments at fair value:|
|Time deposits (cost: 2013 - $0; 2012 - $1,942,834)||$ —||$ 1,942,834|
|Money market account (cost: 2013 - $9,055,634; 2012 - $30,543,824)||9,055,634||30,543,824|
|Debt securities (cost: 2013 - $267,741,058; 2012 - $134,377,151)||257,359,908||111,037,882|
|CLO Fund securities managed by non-affiliates (cost: 2013 - $12,634,461; 2012 - $10,487,023)||4,445,290||3,725,924|
|CLO Fund securities managed by affiliates (cost: 2013 - $88,711,898; 2012 - $79,659,387)||77,707,198||79,531,583|
|Equity securities (cost: 2013 - $18,655,209; 2012 - $18,375,587)||9,385,053||8,020,716|
|Asset manager affiliates (cost: 2013 - $83,273,236; 2012 - $83,161,529)||82,533,000||77,242,000|
|Total investments at fair value (cost: 2013 - $480,071,496; 2012 - $358,547,336)||440,486,083||312,044,763|
|Total assets||$ 468,012,922||$ 319,260,473|
|Convertible Notes||$ 49,008,000||$ 60,000,000|
|Notes issued by KCAP Senior Funding I, LLC (net of discount: $3,139,780)||102,110,220||—|
|Payable for open trades||7,974,944||—|
|Accounts payable and accrued expenses||2,437,029||2,581,432|
|Total liabilities||$ 202,930,193||$ 111,384,814|
|Common stock, par value $0.01 per share, 100,000,000 common shares authorized; 33,314,779 and 26,470,408 common shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively||$ 331,955||$ 264,382|
|Capital in excess of par value||370,591,623||310,566,503|
|Accumulated undistributed net investment income||2,667,111||103,484|
|Accumulated net realized losses||(68,401,784)||(56,035,375)|
|Net unrealized depreciation on investments||(40,106,176)||(47,023,335)|
|Total stockholders' equity||$ 265,082,729||$ 207,875,659|
|Total liabilities and stockholders' equity||$ 468,012,922||$ 319,260,473|
|NET ASSET VALUE PER COMMON SHARE||$ 7.96||$ 7.85|
|See accompanying notes to financial statements.|
|KCAP FINANCIAL, INC.|
|STATEMENTS OF OPERATIONS|
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|Interest from investments in debt securities||$ 3,716,675||$ 3,570,141||$ 9,191,940||$ 8,743,045|
|Interest from cash and time deposits||12,183||511||19,920||3,919|
|Dividends from investments in CLO Fund securities managed by non-affiliates||281,571||530,420||1,029,236||1,408,124|
|Dividends from investments in CLO Fund securities managed by affiliates||5,109,417||5,258,554||15,147,600||13,901,079|
|Dividends from Asset Manager Affiliates||3,325,000||925,000||9,625,000||2,950,000|
|Capital structuring service fees||200,185||69,305||259,512||230,910|
|Total investment income||12,645,031||10,353,931||35,273,208||27,237,077|
|Interest and amortization of debt issuance costs||2,902,486||1,689,908||7,412,795||4,778,546|
|Administrative and other||433,594||305,060||1,453,150||1,000,145|
|Net Investment Income||7,570,705||7,133,095||21,098,575||16,776,197|
|Realized And Unrealized Gains (Losses) On Investments:|
|Net realized losses from investment transactions||(10,387,242)||(3,767,256)||(12,032,708)||(3,462,835)|
|Net change in unrealized appreciation (depreciation) on:|
|CLO Fund securities managed by non-affiliates||(239,837)||1,520,468||(1,428,072)||1,454,857|
|CLO Fund securities managed by affiliates||(2,529,499)||2,281,860||(10,876,896)||4,913,588|
|Asset Manager Affiliates investments||(4,806,105)||1,309,027||5,179,293||(5,690,582)|
|Total net change in unrealized appreciation (depreciation)||3,057,459||6,002,555||6,917,159||(1,750,857)|
|Realized and unrealized appreciation (depreciation) on investments||(7,329,783)||2,235,299||(5,115,549)||(5,213,692)|
|Realized losses on extinguishments of Convertible Notes||(333,701)||—||(333,701)||—|
|Net Increase (Decrease) In Net Assets Resulting From Operations||$ (92,779)||$ 9,368,394||$ 15,649,325||$ 11,562,505|
|Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share:|
|Basic:||$ —||$ 0.35||$ 0.49||$ 0.45|
|Diluted:||$ —||$ 0.32||$ 0.49||$ 0.44|
|Net Investment Income Per Common Share:|
|Basic:||$ 0.23||$ 0.27||$ 0.66||$ 0.65|
|Diluted:||$ 0.22||$ 0.25||$ 0.65||$ 0.64|
|Weighted Average Shares of Common Stock Outstanding—Basic||33,312,328||26,668,701||31,887,711||25,860,510|
|Weighted Average Shares of Common Stock Outstanding—Diluted||33,326,934||33,881,913||31,903,230||25,873,247|
|See accompanying notes to financial statements.|
CONTACT: KCAP Financial, Inc. Investor Relations Denise Rodriguez (212) 455-8300 firstname.lastname@example.org
Source:KCAP Financial, Inc.