MCG Capital choosing not to play amid bubbly conditions

|About: MCG Capital (MCGC)|By:, SA News Editor

Net operating income of $6.3M or $0.09 per share compares to $0.125 dividend. $37.1M of originations and advances during quarter, including $33M to two new portfolio companies. $39.6M of portfolio monetized. 512K shares repurchased at average price of $4.73 each. For full year, about 1M shares repurchased at average price of $4.62 each. Operating efficiency: Costs (excl. interest expense) as a percentage of total assets falls to 2.2% from 3.6% two years ago.

Outlook: "We believe that current market conditions in our primary lending markets are consistent with the peak of a credit cycle. The current supply of debt capital exceeds the demand by issuers in our markets, resulting in lower pricing and weaker contractual protections ... We intend to redeploy our excess liquidity in a cautious and deliberate manner." Money will instead go to buybacks as share repurchase program is boosted to $35M from $25M.

NOI for FY2014 is guided for $0.25-$0.30 per share vs. $0.42 for 2013. Management expects distribution to be cut to something in the area of $0.07 per share for the rest of 2014.

MCGC -0.5% premarket

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