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Fifth Street Finance Corp. Announces Quarter Ended December 31, 2012 Financial Results

Stocks in this article: FSC

As of December 31, 2012, we had stopped accruing PIK interest on two investments. As of December 31, 2011, we had stopped accruing cash and/or PIK interest and OID on four investments, including three that had not paid all of their scheduled cash interest payments for the period ended December 31, 2011.

Recent Developments

On January 14, 2013, our Board of Directors declared the following dividends:

  • $0.0958 per share, payable on March 29, 2013 to stockholders of record on March 15, 2013;
  • $0.0958 per share, payable on April 30, 2013 to stockholders of record on April 15, 2013; and
  • $0.0958 per share, payable on May 31, 2013 to stockholders of record on May 15, 2013.

Effective January 15, 2013, our Board of Directors increased its size to eight members and appointed Ivelin M. Dimitrov, our Chief Investment Officer, to the Board for a one-year term to serve until our 2014 Annual Meeting of Stockholders.

At our Annual Meeting of Stockholders scheduled to be held on March 14, 2013, we intend to seek the approval of our stockholders to increase the number of authorized shares of our common stock from 150,000,000 to 250,000,000.

 
 
Fifth Street Finance Corp.
 
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
(unaudited)
     
  December 31, 2012 September 30,  2012
ASSETS    
Investments at fair value:    
Control investments (cost December 31, 2012: $58,238; cost September 30, 2012: $58,557) $ 51,698 $ 53,240
Affiliate investments (cost December 31, 2012: $29,964; cost September 30, 2012: $29,496) 31,499 31,187
Non-control/Non-affiliate investments (cost December 31, 2012: $1,481,966; cost September 30, 2012: $1,180,436) 1,497,251 1,203,681
     
Total investments at fair value (cost December 31, 2012: $1,570,168; cost September 30, 2012: $1,268,489) 1,580,448 1,288,108
Cash and cash equivalents 37,438 74,393
Interest and fees receivable 8,583 7,652
Due from portfolio company 1,684 3,292
Receivables from unsettled transactions 250 1,750
Deferred financing costs 18,136 13,751
Other assets 145 56
     
Total assets $ 1,646,684 $ 1,389,002
     
     
LIABILITIES AND NET ASSETS    
     
Liabilities:    
Accounts payable, accrued expenses and other liabilities $ 1,377 $ 978
Base management fee payable 1,548 6,573
Incentive fee payable 1,230 5,579
Due to FSC, Inc. 763 1,630
Interest payable 5,096 4,219
Payments received in advance from portfolio companies 41 40
Offering costs payable 162
Credit facilities payable 218,000 201,251
SBA debentures payable 181,750 150,000
Convertible senior notes payable 115,000 115,000
Senior unsecured notes payable 75,000
     
Total liabilities 599,805 485,432
     
Net assets:    
Common stock, $0.01 par value, 150,000 shares authorized, 105,943 and 91,048 shares issued and outstanding at December 31, 2012 and September 30, 2012 1,059 910
Additional paid-in-capital 1,171,963 1,019,053
Net unrealized appreciation on investments 10,658 19,998
Net realized loss on investments and interest rate swap (127,436) (128,062)
Accumulated overdistributed net investment income (9,365) (8,329)
     
Total net assets (equivalent to $9.88 and $9.92 per common share at December 31, 2012 and September 30, 2012) 1,046,879 903,570
     
Total liabilities and net assets $ 1,646,684 $ 1,389,002
     
 
 
Fifth Street Finance Corp.
 
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
  Three months ended December 31, 2012 Three months ended December 31, 2011
Interest income:    
Control investments $ 882 $ 221
Affiliate investments 584 704
Non-control/Non-affiliate investments 33,454 29,126
Interest on cash and cash equivalents 3 4
Total interest income 34,923 30,055
PIK interest income:    
Control investments 108 38
Affiliate investments 456 155
Non-control/Non-affiliate investments 3,156 3,222
Total PIK interest income 3,720 3,415
Fee income:    
Control investments 99
Affiliate investments 12 108
Non-control/Non-affiliate investments 12,683 5,885
Total fee income 12,794 5,993
Dividend and other income:    
Non-control/Non-affiliate investments 346 34
Total dividend and other income 346 34
Total investment income 51,783 39,497
     
Expenses:    
Base management fee 8,046 5,741
Incentive fee 6,639 5,247
Professional fees 1,188 1,091
Board of Directors fees 129 56
Interest expense 7,156 5,724
Administrator expense 930 816
General and administrative expenses 1,139 1,138
Total expenses 25,227 19,813
Gain on extinguishment of convertible senior notes 1,305
Net investment income 26,556 20,989
Unrealized appreciation (depreciation) on investments:    
Control investments (1,222) 1,114
Affiliate investments (156) (1,283)
Non-control/Non-affiliate investments (7,961) 6,002
Net unrealized appreciation (depreciation) on investments (9,339) 5,833
Realized gain (loss) on investments:    
Control investments
Affiliate investments 76
Non-control/Non-affiliate investments 626 (16,714)
Net realized gain (loss) on investments 626 (16,638)
Net increase in net assets resulting from operations $ 17,843 $ 10,184
Net investment income per common share — basic $ 0.28 $ 0.29
Earnings per common share — basic $ 0.19 $ 0.14
Weighted average common shares outstanding — basic 94,889 72,376
Net investment income per common share — diluted $ 0.27 $ 0.27
Earnings per common share — diluted $ 0.19 $ 0.13
Weighted average common shares outstanding — diluted 102,679 80,913

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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