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Fifth Street Finance Corp. Announces Quarter Ended June 30, 2012 Financial Results

As of June 30, 2012, we had stopped accruing cash and/or PIK interest and OID on four investments, three of which had not paid all of their scheduled cash interest payments for the period ended June 30, 2012. As of June 30, 2011, we had stopped accruing cash interest, PIK interest and OID on two investments that had not paid all of their scheduled cash interest payments for the period ended June 30, 2011.

Recent Developments

On August 6, 2012, our Board of Directors declared the following dividends:

  • $0.0958 per share, payable on October 31, 2012 to stockholders of record on October 15, 2012;
  • $0.0958 per share, payable on November 30, 2012 to stockholders of record on November 15, 2012;
  • $0.0958 per share, payable on December 28, 2012 to stockholders of record on December 14, 2012;
  • $0.0958 per share, payable on January 31, 2013 to stockholders of record on January 15, 2013; and
  • $0.0958 per share, payable on February 28, 2013 to stockholders of record on February 15, 2013.
Fifth Street Finance Corp.
 
Consolidated Statements of Assets and Liabilities
(in thousands, except per share data)
(unaudited)
     
  June 30, September 30,
  2012 2011
ASSETS    
Investments at fair value:    
Control investments (cost June 30, 2012: $15,542; cost September 30, 2011: $13,726) $14,916 $14,500
Affiliate investments (cost June 30, 2012: $1,080; cost September 30, 2011: $34,182) 2,444 25,897
Non-control/Non-affiliate investments (cost June 30, 2012: $1,203,770; cost September 30, 2011: $1,108,174) 1,180,737 1,079,440
Total investments at fair value (cost June 30, 2012: $1,220,392; cost September 30, 2011: $1,156,082) 1,198,097 1,119,837
Cash and cash equivalents 105,694 67,644
Interest and fees receivable 5,922 6,752
Due from portfolio company 449 552
Deferred financing costs 14,216 14,668
Collateral posted to bank and other assets 113 264
Total assets $1,324,491 $1,209,717
     
LIABILITIES AND NET ASSETS    
Liabilities:    
Accounts payable, accrued expenses and other liabilities $1,146 $1,175
Base management fee payable 6,094 5,710
Incentive fee payable 5,477 4,997
Due to FSC, Inc. 2,152 1,480
Interest payable 3,965 4,669
Payments received in advance from portfolio companies 36 35
Offering costs payable 9
Credit facilities payable 228,541 178,024
SBA debentures payable 150,000 150,000
Convertible senior notes payable 115,000 135,000
Total liabilities 512,420 481,090
Net assets:    
Common stock, $0.01 par value, 150,000 shares authorized, 82,462 and 72,376 shares issued and outstanding at June 30, 2012 and September 30, 2011 825 724
Additional paid-in-capital 930,188 829,620
Net unrealized depreciation on investments and interest rate swap (21,916) (35,976)
Net realized loss on investments and interest rate swap (90,904) (63,485)
Accumulated overdistributed net investment income (6,122) (2,256)
Total net assets (equivalent to $9.85 and $10.07 per common share at June 30, 2012 and September 30, 2011) 812,071 728,627
Total liabilities and net assets $1,324,491 $1,209,717
     
Fifth Street Finance Corp.
         
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
         
  Three  months Three  months Nine months Nine months
  ended ended ended ended
  June 30, June 30, June 30, June 30,
  2012 2011 2012 2011
Interest income:        
Control investments $2 $40 $434 $54
Affiliate investments 835 1,126 2,229 3,416
Non-control/Non-affiliate investments 27,822 24,271 85,131 61,963
Interest on cash and cash equivalents 11 4 29 17
         
Total interest income 28,670 25,441 87,823 65,450
         
PIK interest income:        
Control investments 211 105 249 239
Affiliate investments 158 278 467 835
Non-control/Non-affiliate investments 3,557 3,179 9,516 9,103
         
Total PIK interest income 3,926 3,562 10,232 10,177
         
Fee income:        
Control investments 127
Affiliate investments 377 283 630 550
Non-control/Non-affiliate investments 7,954 2,992 23,744 11,000
         
Total fee income 8,331 3,275 24,374 11,677
         
Dividend and other income:        
Non-control/Non-affiliate investments 81 164 154 174
         
Total dividend and other income 81 164 154 174
         
Total investment income 41,008 32,442 122,583 87,478
         
Expenses:        
Base management fee 6,094 5,381 17,226 13,946
Incentive fee 5,477 4,132 16,422 11,785
Professional fees 619 456 2,310 1,654
Board of Directors fees 30 46 156 132
Interest expense 5,611 4,977 16,936 9,640
Administrator expense 690 395 2,214 1,140
General and administrative expenses 807 529 3,201 2,043
         
Total expenses 19,328 15,916 58,465 40,340
         
Gain on extinguishment of convertible senior notes 230 1,571
         
Net investment income 21,910 16,526 65,689 47,138
         
Unrealized appreciation (depreciation) on interest rate swap (919)  51
Unrealized appreciation (depreciation) on investments:        
Control investments (2,493)  5,225 (1,404)  12,538
Affiliate investments 322 13,931 9,649 3,760
Non-control/Non-affiliate investments 2,350 215 5,815 18,573
         
Net unrealized appreciation on investments 179 19,371 14,060 34,871
         
Realized loss on investments:        
Control investments (7,806) 
Affiliate investments (14,146)  (10,620)  (14,146) 
Non-control/Non-affiliate investments (16,800)  (6,157) 
         
Net realized loss on investments (14,146) (27,420)  (28,109)
         
Net increase in net assets resulting from operations $22,089 $20,832 $52,329 $53,951
         
Net investment income per common share — basic $0.27 $0.25 $0.84 $0.77
Earnings per common share — basic $0.27 $0.31 $0.67 $0.88
Weighted average common shares outstanding — basic 82,421 67,081 78,089 61,254
Net investment income per common share — diluted $0.26 $0.24 $0.80 $0.76
Earnings per common share — diluted $0.26 $0.30 $0.64 $0.87
Weighted average common shares outstanding — diluted 90,279 76,020 86,325 64,233

About Fifth Street Finance Corp.

Fifth Street Finance Corp. is a specialty finance company that lends to and invests in small and mid-sized companies, primarily in connection with investments by private equity sponsors. Fifth Street Finance Corp.'s investment objective is to maximize its portfolio's total return by generating current income from its debt investments and capital appreciation from its equity investments.

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