MVC Capital Announces Its 2011 Fiscal Year Results
PURCHASE, N.Y.--(BUSINESS WIRE)-- MVC Capital, Inc. (MVC), a publicly traded business development company that makes private debt and equity investments, today announced financial results for its fiscal year ended October 31, 2011. The highlights of the fiscal 2011 performance include: over $43 million in new and follow-on investment activity; an increase in the Company's net assets resulting from operations; significant progress with MVC Partners, LLC, including another fundraising close for the MVC Private Equity Fund L.P (MVCPE); and a consistent level of distributions paid to shareholders.
A core focus for the Company during fiscal 2011 continued to be its existing portfolio, as well as the prudent deployment of capital into both new and existing portfolio companies. Throughout fiscal 2011, the Company made six new investments totaling $26.1 million and seven follow-on investments aggregating $17.1 million into four existing portfolio companies. The Companys new fiscal 2011 investments were made into: Octagon High Income Cayman Fund Ltd. (Octagon Fund), JSC Tekers Holdings (JSC Tekers), Teleguam Holdings, LLC (Teleguam), Pre-Paid Legal Services, Inc. (Pre-Paid Legal), RuMe, Inc. (RuMe) and Centile Holdings B.V. (Centile).
Under the Company's management team, net assets have grown each year, and fiscal 2011 marked another year of growth with a net increase in net assets resulting from operations of approximately $7.0 million. As of October 31, 2011, the Company's net asset value was approximately $420 million or $17.54 per share. During the year, the Companys Valuation Committee made determinations regarding the fair values of the portfolio investments that resulted in net write-ups as of the fiscal year end in the following portfolio companies: Summit Research Labs, Inc ($14.5M), SHL Group Limited ($4.9M), Security Holdings B.V. ($17.6M), Total Safety ($74K), U.S. Gas & Electric, Inc. ($2.5M) and Velocitius B.V. ($200K). The Valuation Committee also increased the fair value of Ohio Medical Corporations preferred stock by approximately $1.9 million due to PIK distributions, which were treated as a return of capital. The Companys Valuation Committee also made determinations regarding the fair values of investments that resulted in net write-downs in the following portfolio companies: MVC Automotive Group B.V. ($1.7M), SIA Tekers Invest ($2.3M), Octagon Fund ($209K), BP Clothing, LLC ($7.1), Ohio Medical Corporation ($8.5M), NPWT Corporation ($200K), HuaMei Capital Company ($1.5M), SGDA Europe B.V. ($4.3M), Vestal Manufacturing Enterprises, Inc. ($745K) and Harmony Health and Beauty, Inc. ($5.7M).
A continued focus of the Company this year was on MVCPE through the Companys investment in MVC Partners, LLC. As previously disclosed, the Board of Directors authorized the establishment of MVCPE, for which an indirect wholly-owned subsidiary of the Company serves as the general partner and another subsidiary serves as a limited partner. As of the end of fiscal 2011, MVCPE had closed on approximately $104 million of capital commitments. Subsequent to the 2011 fiscal year end, the Company, through its subsidiaries, funded $6.3 million of its $20.1 million capital commitment to MVCPE, which to date has invested in Plymouth Rock Energy, LLC and Gibdock Limited.
The Company's aggregate net realized and unrealized gains for the year ended October 31, 2011 were $9.3 million. The Companys net realized losses for the fiscal year ended October 31, 2011 were $26.4 million. These losses were primarily related to the loss on the sale of Harmony Pharmacy & Health Centers, Inc., the dissolution of Amersham Corporation, the dissolution of Sonexis, Inc., a legacy portfolio company, and the sale of HuaMei Capital Company, Inc. A portion of the losses were offset by the gains on the sales of LHD Europe, SPDR Barclays Capital High Yield Bond Fund, iShares S&P U.S. Preferred Stock Index Fund, and the distributions from Octagon High Income Cayman Fund Ltd.
For fiscal 2011, the Company earned approximately $11.4 million in interest and dividend income and approximately $4.5 million in fee and other income, representing a decrease of approximately $7.6 million or 32% in total income as compared to fiscal 2010. Due to the reduction in total income as a result of repayments of certain investments, a decrease in dividend income from the sale of portfolio companies and reserves against non-performing loans, the Company's net operating loss for 2011 was $2.3 million. The Company's net operating loss takes into account, among other items, the expense of approximately $9.1 million in management fees, $3.1 million in interest and other borrowing costs incurred under the Company's credit facilities and $1.9 million in the provision for incentive compensation (which is only payable upon the occurrence of a realization event). Despite the reduced operating income, the Company paid shareholders distributions of $0.48 per share (or $11.5 million).
"Fiscal 2011 represented a year of renewed investment activity into new and existing portfolio companies while simultaneously uncovering additional ways to create value over the long-term, said Michael Tokarz, Chairman and Portfolio Manager of the Company. "As we look ahead, we are fortunate to have designed a platform in MVC Partners, LLC that allows our shareholders to continue to participate in proprietary investments made by our team, which complement the current increasing focus on yielding investments of MVC Capital. With a pipeline of approximately $250 million of potential investment opportunities across both MVC and MVCPE, we are looking forward to executing our investment strategy in 2012 and beyond.
As of October 31, 2011, the Company had 33 investments across 26 industries, with 79.8% of our portfolio comprised of equity investments and 20.2% comprised of debt and yielding investments.
About MVC Capital, Inc.
MVC Capital is a Business Development Company traded on the New York Stock Exchange that provides long-term debt and equity capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries. For additional information about MVC Capital, please visit 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.
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. Furthermore, past performance is no guarantee of future results. 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.
MVC Capital, Inc.
Investor Relations, 914-510-9400
Nathaniel Garnick, 212-687-8080
Source: MVC Capital, Inc.Copyright Business Wire 2012