MVC Capital, Inc. (NYSE: MVC), a publicly traded business development company that makes private equity and debt investments, today announced its financial results for the first quarter ended January 31, 2011. As of January 31, 2011, the Company's net assets were approximately $415.9 million or $17.33 per share. This compares with net assets of approximately $425.0 million, or $17.71 per share, at the beginning of the quarter and $428.7 million, or $17.64 per share, at the end of the same period last year. During the quarter, the Valuation Committee, which is comprised of three independent directors, adjusted the fair values of seven portfolio companies, resulting in a net decrease of approximately $9.9 million or $0.41 per share. In arriving at these determinations and consistent with the Company's valuation procedures and ASC 820, the Valuation Committee took into account a variety of factors, including the performance of the portfolio companies, the impact of changes in market multiples within certain sectors and fluctuations in currency valuations. In the first quarter of 2011, the Company earned approximately $3.4 million in interest and dividend income and approximately $1.1 million in fee and other income, representing a decrease in total operating income of approximately $3.3 million as compared to the same quarter in 2010. The primary reasons for the decline in total operating income were due to the prepayment of investments that provide current income, reserves against non-performing loans as well as the reduction in dividend income received from exited portfolio companies. The Company also reported net operating income of approximately $1.8 million for the first quarter, as compared to net operating income of $2.9 million for the same quarter in 2010. The Company decreased the provision for incentive compensation by approximately $1.6 million during the quarter, as compared to an increase of approximately $1.0 million during the same quarter in 2010, as a result of unrealized depreciation within the portfolio. The Company continued cost containment measures, which enabled reductions across certain operating expense items. In addition to an existing voluntary expense waiver, the Company’s investment adviser has also voluntarily agreed that any assets of the Company that are invested in exchange traded funds would not be subject to the base management fee.
During the quarter, the Company made two follow-on investments totaling $8.3 million. These follow-on investments included a $3.3 million equity investment and a $5.0 million six-month bridge loan to Security Holdings B.V. Also during the quarter, the Company invested $20.0 million into two separate exchange traded funds in an effort to provide the Company with short-term, higher yielding and liquid investments while identifying and closing new investments. During the quarter, PreVisor, Inc., a portfolio holding of the Company, was acquired for stock, by privately-held SHL Group Limited resulting in no change to the cost of $6.0 million or fair value of the investment of $10.4 million. Additionally, the Company sold its common stock of LHD Europe Holding, Inc. (the remaining European operations of Vitality Foodservice, Inc. that was not sold to Nestle in December 2009), receiving proceeds of approximately $542,000 resulting in a realized gain of approximately $317,000.“Our focus continues to be on uncovering ways to grow the value of our existing portfolio while simultaneously generating strong investment opportunities for our shareholders,” said Michael Tokarz, Chairman and Portfolio Manager. “Although certain of our investments depreciated in value this quarter, we remain optimistic about our aggregate portfolio, expanding our deal pipeline and our emphasis on yielding investments.” As of January 31, 2011, the Company had 33 investments across 24 industries with approximately 77% of the fair values of those investments held domestically and approximately 23% held internationally. The portfolio breakdown between equity and yielding investments as of January 31, 2011, was 71.8% and 28.2%, respectively. 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. For MVC's investor relations, please call 914-510-9400. All media inquiries should be directed to Nathaniel Garnick at 212-687-8080. Forward-Looking Statements 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, and these factors are enumerated in the company's periodic filings with the Securities and Exchange Commission.