Attached files
| file | filename |
|---|---|
| EX-31 - EX-31 - MVC CAPITAL, INC. | a14-14828_1ex31.htm |
| EX-32 - EX-32 - MVC CAPITAL, INC. | a14-14828_1ex32.htm |
| EX-10.A - EX-10.A - MVC CAPITAL, INC. | a14-14828_1ex10da.htm |
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2014 or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 814-00201
MVC CAPITAL, INC.
(Exact name of the registrant as specified in its charter)
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DELAWARE (State or other jurisdiction of |
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94-3346760 (I.R.S. Employer |
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287 Bowman Avenue 2nd Floor Purchase, New York (Address of principal |
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10577 (Zip Code)
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Registrant’s telephone number, including area code: (914) 701-0310
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o |
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Accelerated filer x |
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Non-accelerated filer o |
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
There were 22,860,653 shares of the registrant’s common stock, $.01 par value, outstanding as of June 6, 2014.
MVC Capital, Inc.
(A Delaware Corporation)
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk |
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Part I. Consolidated Financial Information
Item 1. Consolidated Financial Statements
CONSOLIDATED FINANCIAL STATEMENTS
MVC Capital, Inc.
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April 30, |
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October 31, |
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2014 |
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2013 |
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(Unaudited) |
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ASSETS |
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Assets |
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Cash and cash equivalents |
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$ |
23,124,065 |
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$ |
74,234,560 |
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Restricted cash and cash equivalents |
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6,933,500 |
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6,792,000 |
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Investments at fair value |
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Short-term investments (cost $0 and $49,937,320) |
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— |
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49,826,893 |
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Non-control/Non-affiliated investments (cost $119,215,249 and $92,139,375) |
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95,093,412 |
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74,433,413 |
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Affiliate investments (cost $139,232,093 and $136,499,386) |
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223,025,960 |
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219,694,633 |
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Control investments (cost $156,453,823 and $143,292,881) |
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145,006,347 |
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146,169,917 |
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Total investments at fair value (cost $414,901,165 and $421,868,962) |
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463,125,719 |
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490,124,856 |
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Receivable on sale of short-term investments |
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99,783,203 |
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— |
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Escrow receivables, net of reserves |
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5,936,928 |
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6,236,928 |
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Dividends and interest receivables, net of reserves |
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4,236,637 |
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3,528,899 |
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Deferred financing fees |
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3,051,835 |
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3,265,495 |
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Fee and other receivables |
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1,925,720 |
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2,109,538 |
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Prepaid expenses |
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508,708 |
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534,904 |
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Prepaid taxes |
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— |
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336 |
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Total assets |
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$ |
608,626,315 |
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$ |
586,827,516 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Liabilities |
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Senior notes |
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$ |
114,408,750 |
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$ |
114,408,750 |
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Revolving credit facility |
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100,000,000 |
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50,000,000 |
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Provision for incentive compensation (Note 11) |
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19,645,253 |
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23,959,109 |
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Management fee payable |
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2,305,971 |
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2,221,213 |
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Management fee payable - Asset Management |
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1,069,880 |
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606,766 |
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Professional fees payable |
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820,631 |
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742,859 |
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Accrued expenses and liabilities |
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650,067 |
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655,615 |
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Portfolio fees payable - Asset Management |
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375,802 |
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140,347 |
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Interest payable |
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374,387 |
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371,817 |
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Consulting fees payable |
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115,983 |
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167,968 |
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Taxes payable |
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541 |
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— |
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Total liabilities |
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239,767,265 |
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193,274,444 |
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Shareholders’ equity |
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Common stock, $0.01 par value; 150,000,000 shares authorized; 22,464,814 and 22,617,688 shares outstanding, respectively |
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283,044 |
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283,044 |
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Additional paid-in-capital |
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420,165,045 |
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420,165,045 |
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Accumulated earnings |
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69,078,307 |
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66,030,475 |
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Dividends paid to stockholders |
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(110,623,617 |
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(104,537,479 |
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Accumulated net realized loss |
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(1,716,744 |
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(2,201,455 |
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Net unrealized appreciation |
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48,224,554 |
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68,255,894 |
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Treasury stock, at cost, 5,839,634 and 5,686,760 shares held, respectively |
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(56,551,539 |
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(54,442,452 |
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Total shareholders’ equity |
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368,859,050 |
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393,553,072 |
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Total liabilities and shareholders’ equity |
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$ |
608,626,315 |
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$ |
586,827,516 |
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Net asset value per share |
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$ |
16.42 |
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$ |
17.40 |
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The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Statements of Operations
(Unaudited)
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For the Six Month Period |
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For the Six Month Period |
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November 1, 2013 to |
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November 1, 2012 to |
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April 30, 2014 |
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April 30, 2013 |
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Operating Income: |
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Dividend income |
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Non-control/Non-affiliated investments |
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$ |
69,580 |
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$ |
1,551 |
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Affiliate investments |
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71,590 |
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4,842,150 |
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Control investments |
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— |
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426,300 |
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Total dividend income |
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141,170 |
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5,270,001 |
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Payment-in-kind dividend income |
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Affiliate investments |
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143,182 |
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132,278 |
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Total payment-in-kind dividend income |
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143,182 |
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132,278 |
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Interest income |
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Non-control/Non-affiliated investments |
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2,692,651 |
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1,079,798 |
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Affiliate investments |
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2,406,842 |
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1,940,922 |
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Control investments |
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191,798 |
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892,719 |
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Total interest income |
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5,291,291 |
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3,913,439 |
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Payment-in-kind interest income |
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Non-control/Non-affiliated investments |
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1,634,473 |
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285,698 |
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Affiliate investments |
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498,657 |
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481,435 |
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Control investments |
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77,264 |
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497,131 |
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Total payment-in-kind interest income |
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2,210,394 |
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1,264,264 |
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Fee income |
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Non-control/Non-affiliated investments |
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300,991 |
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400,591 |
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Affiliate investments |
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460,001 |
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473,129 |
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Control investments |
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161,499 |
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538,298 |
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Total fee income |
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922,491 |
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1,412,018 |
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Fee income - Asset Management(1) |
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Portfolio fees |
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595,827 |
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278,592 |
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Management Fees |
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617,485 |
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618,128 |
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Total fee income - Asset Management |
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1,213,312 |
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896,720 |
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Other income |
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553,769 |
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160,197 |
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Total operating income |
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10,475,609 |
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13,048,917 |
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Operating Expenses: |
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Interest and other borrowing costs |
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4,660,899 |
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2,354,861 |
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Management fee |
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4,609,912 |
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3,945,370 |
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Management fee - Asset Management(1) |
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463,114 |
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463,592 |
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Portfolio fees - Asset Management(1) |
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446,870 |
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208,944 |
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Audit fees |
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324,100 |
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316,400 |
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Legal fees |
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290,000 |
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276,000 |
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Consulting fees |
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259,402 |
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268,502 |
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Directors fees |
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206,250 |
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206,250 |
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Insurance |
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173,400 |
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165,540 |
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Administration |
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126,123 |
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126,187 |
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Other expenses |
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103,797 |
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274,291 |
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Public relations fees |
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102,000 |
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97,500 |
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Printing and postage |
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49,889 |
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61,118 |
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Net Incentive compensation (Note 11) |
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(4,313,856 |
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2,183,145 |
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Total operating expenses |
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7,501,900 |
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10,947,700 |
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Less: Voluntary Expense Waiver by Adviser(2) |
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(75,000 |
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(75,000 |
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Total waivers |
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(75,000 |
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(75,000 |
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Net operating income before taxes |
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3,048,709 |
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2,176,217 |
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Tax Expenses: |
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Current tax expense |
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877 |
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1,800 |
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Total tax expense |
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877 |
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1,800 |
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Net operating income |
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3,047,832 |
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2,174,417 |
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Net Realized and Unrealized Gain (Loss) on Investments: |
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Net realized (loss) gain on investments |
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Short-term investments |
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176,515 |
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— |
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Non-control/Non-affiliated investments |
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308,196 |
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(6,441,216 |
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Affiliate investments |
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— |
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— |
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Control investments |
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— |
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49,655,826 |
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Total net realized gain on investments |
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484,711 |
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43,214,610 |
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Net change in unrealized depreciation on investments |
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(20,031,340 |
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(30,621,385 |
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Net realized and unrealized (loss) gain on investments |
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(19,546,629 |
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12,593,225 |
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Net (decrease) increase in net assets resulting from operations |
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$ |
(16,498,797 |
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$ |
14,767,642 |
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Net (decrease) increase in net assets per share resulting from operations |
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$ |
(0.73 |
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$ |
0.62 |
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Dividends declared per share |
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$ |
0.27 |
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$ |
0.27 |
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Weighted average number of shares outstanding (3) |
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22,574,010 |
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23,844,840 |
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(1)These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”). Please see Note 10 “Management” for more information.
(2)Reflects the quarterly portion of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2014 and 2013 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). Please see Note 10 “Management” for more information.
(3)Please see Note 12 “Dividends and Distributions to Shareholders and Share Repurchase Program” for more information.
The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Statements of Operations
(Unaudited)
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For the Quarter |
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For the Quarter |
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February 1, 2014 to |
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February 1, 2013 to |
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April 30, 2014 |
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April 30, 2013 |
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Operating Income: |
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Dividend income |
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Non-control/Non-affiliated investments |
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$ |
69,390 |
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$ |
577 |
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Affiliate investments |
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36,149 |
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2,456,402 |
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Control investments |
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— |
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— |
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Total dividend income |
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105,539 |
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2,456,979 |
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Payment-in-kind dividend income |
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Affiliate investments |
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72,300 |
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66,794 |
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Total payment-in-kind dividend income |
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72,300 |
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66,794 |
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Interest income |
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Non-control/Non-affiliated investments |
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1,389,257 |
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563,080 |
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Affiliate investments |
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1,330,673 |
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823,884 |
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Control investments |
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96,493 |
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391,672 |
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Total interest income |
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2,816,423 |
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1,778,636 |
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Payment-in-kind interest income |
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Non-control/Non-affiliated investments |
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852,407 |
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242,520 |
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Affiliate investments |
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251,784 |
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236,846 |
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Control investments |
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37,992 |
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202,830 |
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Total payment-in-kind interest income |
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1,142,183 |
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682,196 |
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Fee income |
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|
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Non-control/Non-affiliated investments |
|
300,487 |
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400,487 |
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Affiliate investments |
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230,001 |
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236,283 |
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Control investments |
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80,749 |
|
404,498 |
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Total fee income |
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611,237 |
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1,041,268 |
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Fee income - Asset Management(1) |
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|
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Management fees |
|
454,392 |
|
309,287 |
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Portfolio fees |
|
308,710 |
|
137,979 |
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|
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Total fee income - Asset Management |
|
763,102 |
|
447,266 |
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Other income |
|
351,571 |
|
190,042 |
| ||
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|
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Total operating income |
|
5,862,355 |
|
6,663,181 |
| ||
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|
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Operating Expenses: |
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|
|
|
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Interest and other borrowing costs |
|
2,405,389 |
|
1,417,818 |
| ||
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Management fee |
|
2,305,970 |
|
1,865,133 |
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Portfolio fees - Asset Management(1) |
|
340,794 |
|
103,484 |
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Management fee - Asset Management(1) |
|
231,533 |
|
231,961 |
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Audit fees |
|
161,700 |
|
158,100 |
| ||
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Legal fees |
|
152,000 |
|
140,000 |
| ||
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Consulting fees |
|
124,251 |
|
136,251 |
| ||
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Directors’ fees |
|
103,125 |
|
103,125 |
| ||
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Insurance |
|
86,700 |
|
82,770 |
| ||
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Administration |
|
61,448 |
|
62,315 |
| ||
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Public relations fees |
|
51,000 |
|
48,000 |
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Printing and postage |
|
24,083 |
|
30,118 |
| ||
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Other expenses |
|
(36,941 |
) |
140,738 |
| ||
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Net Incentive compensation (Note 11) |
|
(4,867,797 |
) |
1,008,484 |
| ||
|
|
|
|
|
|
| ||
|
Total operating expenses |
|
1,143,255 |
|
5,528,297 |
| ||
|
|
|
|
|
|
| ||
|
Less: Voluntary Expense Waiver by Adviser (2) |
|
(37,500 |
) |
(37,500 |
) | ||
|
|
|
|
|
|
| ||
|
Total waivers |
|
(37,500 |
) |
(37,500 |
) | ||
|
|
|
|
|
|
| ||
|
Net operating income before taxes |
|
4,756,600 |
|
1,172,384 |
| ||
|
|
|
|
|
|
| ||
|
Tax (Benefit) Expenses: |
|
|
|
|
| ||
|
Current tax (benefit) expense |
|
(23 |
) |
1,067 |
| ||
|
|
|
|
|
|
| ||
|
Total tax (benefit) expense |
|
(23 |
) |
1,067 |
| ||
|
|
|
|
|
|
| ||
|
Net operating income |
|
4,756,623 |
|
1,171,317 |
| ||
|
|
|
|
|
|
| ||
|
Net Realized and Unrealized (Loss) Gain on Investments: |
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Net realized gain (loss) on investments |
|
|
|
|
| ||
|
Short-term investments |
|
338,448 |
|
— |
| ||
|
Non-control/Non-affiliated investments |
|
383,402 |
|
(4,518,677 |
) | ||
|
Control investments |
|
— |
|
49,655,826 |
| ||
|
|
|
|
|
|
| ||
|
Total net realized gain on investments |
|
721,850 |
|
45,137,149 |
| ||
|
|
|
|
|
|
| ||
|
Net unrealized depreciation on investments |
|
(24,023,980 |
) |
(38,417,062 |
) | ||
|
|
|
|
|
|
| ||
|
Net realized gain and net change in unrealized (depreciation) appreciation on investments |
|
(23,302,130 |
) |
6,720,087 |
| ||
|
|
|
|
|
|
| ||
|
Net (decrease) increase in net assets resulting from operations |
|
$ |
(18,545,507 |
) |
$ |
7,891,404 |
|
|
|
|
|
|
|
| ||
|
Net (decrease) increase in net assets per share resulting from operations |
|
$ |
(0.83 |
) |
$ |
0.33 |
|
|
|
|
|
|
|
| ||
|
Dividends declared per share |
|
$ |
0.135 |
|
$ |
0.135 |
|
|
|
|
|
|
|
| ||
|
Weighted average number of shares outstanding (3) |
|
22,541,251 |
|
23,790,734 |
| ||
(1)These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”). Please see Note 10 “Management” for more information.
(2)Reflects the quarterly portion of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2014 and 2013 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). Please see Note 10 “Management” for more information.
(3) Please see Note 12 “Dividends and Distributions to Shareholders and Share Repurchase Program” for more information.
The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
For the Six Month Period |
|
For the Six Month Period |
| ||
|
|
|
November 1, 2013 |
|
November 1, 2012 |
| ||
|
|
|
April 30, 2014 |
|
April 30, 2013 |
| ||
|
Cash flows from Operating Activities: |
|
|
|
|
| ||
|
Net (decrease) increase in net assets resulting from operations |
|
$ |
(16,498,797 |
) |
$ |
14,767,642 |
|
|
Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash (used in) provided by operating activities: |
|
|
|
|
| ||
|
Net realized gain |
|
(484,711 |
) |
(43,214,610 |
) | ||
|
Net change in unrealized depreciation |
|
20,031,340 |
|
30,621,385 |
| ||
|
Amortization of discounts and fees |
|
(861,285 |
) |
(100,982 |
) | ||
|
Increase in accrued payment-in-kind dividends and interest |
|
(2,127,458 |
) |
(1,102,967 |
) | ||
|
Amortization of deferred financing fees |
|
213,660 |
|
56,287 |
| ||
|
Allocation of flow through (income) loss |
|
(281,831 |
) |
(80,370 |
) | ||
|
Changes in assets and liabilities: |
|
|
|
|
| ||
|
Dividends, interest and fees receivable |
|
(707,738 |
) |
1,460,383 |
| ||
|
Fee and other receivables |
|
183,818 |
|
1,068,134 |
| ||
|
Proceeds from short term receivables |
|
(99,783,203 |
) |
— |
| ||
|
Escrow receivables, net of reserves |
|
300,000 |
|
(4,970,868 |
) | ||
|
Prepaid expenses |
|
26,196 |
|
212,029 |
| ||
|
Prepaid taxes |
|
336 |
|
343 |
| ||
|
Incentive compensation (Note 11) |
|
(4,313,856 |
) |
2,183,145 |
| ||
|
Other liabilities |
|
581,677 |
|
212,282 |
| ||
|
Purchases of equity investments |
|
(12,818,418 |
) |
(5,894,411 |
) | ||
|
Purchases of debt instruments |
|
(34,037,000 |
) |
(30,571,661 |
) | ||
|
Purchases of short term investments |
|
(199,323,373 |
) |
— |
| ||
|
Proceeds from equity investments (1) |
|
491,075 |
|
65,744,643 |
| ||
|
Proceeds from debt instruments |
|
7,200,000 |
|
20,229,280 |
| ||
|
Sales/maturities of short term investments |
|
249,435,798 |
|
— |
| ||
|
|
|
|
|
|
| ||
|
Net cash (used in) provided by operating activities |
|
(92,773,770 |
) |
50,619,684 |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from Financing Activities: |
|
|
|
|
| ||
|
Proceeds from senior notes |
|
— |
|
80,500,000 |
| ||
|
Net proceeds from revolving credit facility |
|
50,000,000 |
|
— |
| ||
|
Repayments of revolving credit facility |
|
— |
|
(50,000,000 |
) | ||
|
Repurchase of common stock |
|
(2,109,087 |
) |
(5,729,895 |
) | ||
|
Financing fees paid |
|
— |
|
(3,096,620 |
) | ||
|
Distributions paid to shareholders |
|
(6,086,138 |
) |
(6,419,929 |
) | ||
|
|
|
|
|
|
| ||
|
Net cash provided by financing activities |
|
41,804,775 |
|
15,253,556 |
| ||
|
|
|
|
|
|
| ||
|
Net change in cash and cash equivalents for the period |
|
(50,968,995 |
) |
65,873,240 |
| ||
|
|
|
|
|
|
| ||
|
Unrestricted and restricted cash and cash equivalents, beginning of period |
|
$ |
81,026,560 |
|
$ |
42,640,558 |
|
|
|
|
|
|
|
| ||
|
Unrestricted and restricted cash and cash equivalents, end of period |
|
$ |
30,057,565 |
|
$ |
108,513,798 |
|
(1) For the six month period ended April 30, 2014, proceeds from equity investments includes $491,075 in escrow receivables, net of reserves.
During the six month period ended April 30, 2014 and 2013 MVC Capital, Inc. paid $4,348,623 and $2,360,378 in interest expense, respectively.
During the six month period ended April 30, 2014 and 2013 MVC Capital, Inc. paid $300 and $1,757 in income taxes, respectively.
Non-cash activity:
During the six month period ended April 30, 2014 and 2013, MVC Capital, Inc. recorded payment in-kind dividend and interest of $2,127,458 and $1,102,967, respectively. This amount was added to the principal balance of the investments and recorded as dividend/interest income.
During the six month period ended April 30, 2014 and 2013, MVC Capital, Inc. was allocated $553,769 and $160,197, respectively, in flow-through income from its equity investment in Octagon Credit Investors, LLC. Of these amounts, $271,938 and $80,370, respectively, was received in cash and $281,831 and $80,370, respectively, was undistributed and therefore increased the cost of the investment. The fair value then increased by $101,099 and $80,370, respectively, by the Company’s Valuation Committee.
On November 19, 2013, MVC Capital, Inc. converted the MVC Automotive Group B.V. bridge loan of approximately $1.6 million to addional common equity interest.
The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Statements of Changes in Net Assets
|
|
|
For the Six Month Period |
|
For the Six Month Period |
|
|
| |||
|
|
|
November 1, 2013 to |
|
November 1, 2012 to |
|
For the Year Ended |
| |||
|
|
|
April 30, 2014 |
|
April 30, 2013 |
|
October 31, 2013 |
| |||
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
| |||
|
Operations: |
|
|
|
|
|
|
| |||
|
Net operating income (loss) |
|
$ |
3,047,832 |
|
$ |
2,174,417 |
|
$ |
(3,445,195 |
) |
|
Net realized gain on investments |
|
484,711 |
|
43,214,610 |
|
43,664,918 |
| |||
|
Net change in unrealized depreciation on investments |
|
(20,031,340 |
) |
(30,621,385 |
) |
(3,482,873 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Net (decrease) increase in net assets from operations |
|
(16,498,797 |
) |
14,767,642 |
|
36,736,850 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Shareholder Distributions: |
|
|
|
|
|
|
| |||
|
Distributions to shareholders from income |
|
— |
|
(6,419,929 |
) |
(5,837,868 |
) | |||
|
Distributions to shareholders from return of capital |
|
(6,086,138 |
) |
— |
|
(6,688,836 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Net decrease in net assets from shareholder distributions |
|
(6,086,138 |
) |
(6,419,929 |
) |
(12,526,704 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Capital Share Transactions: |
|
|
|
|
|
|
| |||
|
Repurchase of common stock |
|
(2,109,087 |
) |
(5,729,895 |
) |
(16,673,207 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Net decrease in net assets from capital share transactions |
|
(2,109,087 |
) |
(5,729,895 |
) |
(16,673,207 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Total (decrease) increase in net assets |
|
(24,694,022 |
) |
2,617,818 |
|
7,536,939 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net assets, beginning of period/year |
|
393,553,072 |
|
386,016,133 |
|
386,016,133 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net assets, end of period/year |
|
$ |
368,859,050 |
|
$ |
388,633,951 |
|
$ |
393,553,072 |
|
|
|
|
|
|
|
|
|
| |||
|
Common shares outstanding, end of period/year |
|
22,464,814 |
|
23,469,342 |
|
22,617,688 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Undistributed net operating income |
|
$ |
— |
|
$ |
5,036,651 |
|
$ |
— |
|
The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Selected Per Share Data and Ratios
|
|
|
For the Six Month Period |
|
For the Six Month Period |
|
For the |
| |||
|
|
|
November 1, 2013 to |
|
November 1, 2012 to |
|
Year Ended |
| |||
|
|
|
April 30, 2014 |
|
April 30, 2013 |
|
October 31, 2013 |
| |||
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Net asset value, beginning of period/year |
|
$ |
17.40 |
|
$ |
16.14 |
|
$ |
16.14 |
|
|
|
|
|
|
|
|
|
| |||
|
Gain from operations: |
|
|
|
|
|
|
| |||
|
Net operating income (loss) |
|
0.14 |
|
0.07 |
|
(0.15 |
) | |||
|
Net realized and unrealized (loss) gain on investments |
|
(0.87 |
) |
0.55 |
|
1.74 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total gain from investment operations |
|
(0.73 |
) |
0.62 |
|
1.59 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Less distributions from: |
|
|
|
|
|
|
| |||
|
Income |
|
— |
|
(0.27 |
) |
(0.25 |
) | |||
|
Return of capital |
|
(0.27 |
) |
— |
|
(0.29 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Total distributions |
|
(0.27 |
) |
(0.27 |
) |
(0.54 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Capital share transactions |
|
|
|
|
|
|
| |||
|
Anti-dilutive effect of share repurchase program |
|
0.02 |
|
0.07 |
|
0.21 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total capital share transactions |
|
0.02 |
|
0.07 |
|
0.21 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net asset value, end of period/year |
|
$ |
16.42 |
|
$ |
16.56 |
|
$ |
17.40 |
|
|
|
|
|
|
|
|
|
| |||
|
Market value, end of period/year |
|
$ |
13.04 |
|
$ |
12.99 |
|
$ |
13.83 |
|
|
|
|
|
|
|
|
|
| |||
|
Market discount |
|
(20.58 |
)% |
(21.56 |
)% |
(20.52 |
)% | |||
|
|
|
|
|
|
|
|
| |||
|
Total Return - At NAV (a) |
|
(4.12 |
)%(d) |
4.30 |
%(d) |
11.30 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Total Return - At Market (a) |
|
(3.83 |
)%(d) |
7.37 |
%(d) |
16.65 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Ratios and Supplemental Data: |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Portfolio turnover ratio |
|
1.64 |
% |
9.44 |
% |
24.40 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Net assets, end of period/year (in thousands) |
|
$ |
368,859 |
|
$ |
388,634 |
|
$ |
393,553 |
|
|
|
|
|
|
|
|
|
| |||
|
Ratios to average net assets: |
|
|
|
|
|
|
| |||
|
Expenses excluding tax expense |
|
3.85 |
%(c) |
5.65 |
%(c) |
7.26 |
% | |||
|
Expenses including tax expense |
|
3.85 |
%(c) |
5.65 |
%(c) |
7.26 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Net operating income (loss) before tax expense |
|
1.58 |
%(c) |
1.13 |
%(c) |
(0.89 |
)% | |||
|
Net operating income (loss) after tax expense |
|
1.58 |
%(c) |
1.13 |
%(c) |
(0.89 |
)% | |||
|
|
|
|
|
|
|
|
| |||
|
Ratios to average net assets excluding waivers: |
|
|
|
|
|
|
| |||
|
Expenses excluding tax expense |
|
3.89 |
%(c) |
5.69 |
%(c) |
7.30 |
% | |||
|
Expenses including tax expense |
|
3.89 |
%(c) |
5.69 |
%(c) |
7.30 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Net operating income (loss) before tax expense |
|
1.54 |
%(c) |
1.09 |
%(c) |
(0.93 |
)% | |||
|
Net operating income (loss) after tax expense |
|
1.54 |
%(c) |
1.09 |
%(c) |
(0.93 |
)% | |||
(a) Total annual return is historical and assumes changes in share price, reinvestments of all dividends and distributions, and no sales charge for the period/year.
(b) Supplemental Ratio information
|
Ratios to average net assets: (b) |
|
|
|
|
|
|
|
|
Expenses excluding incentive compensation |
|
6.09 |
%(c) |
4.52 |
%(c) |
5.12 |
% |
|
Expenses excluding incentive compensation, interest and other borrowing costs |
|
3.67 |
%(c) |
3.29 |
%(c) |
3.39 |
% |
|
|
|
|
|
|
|
|
|
|
Net operating (loss) income before incentive compensation |
|
(0.66 |
)%(c) |
2.26 |
%(c) |
1.25 |
% |
|
Net operating income before incentive compensation, interest and other borrowing costs |
|
1.76 |
%(c) |
3.49 |
%(c) |
2.98 |
% |
|
|
|
|
|
|
|
|
|
|
Ratios to average net assets excluding waivers: (b) |
|
|
|
|
|
|
|
|
Expenses excluding incentive compensation |
|
6.13 |
%(c) |
4.56 |
%(c) |
5.16 |
% |
|
Expenses excluding incentive compensation, interest and other borrowing costs |
|
3.71 |
%(c) |
3.33 |
%(c) |
3.43 |
% |
|
|
|
|
|
|
|
|
|
|
Net operating (loss) income before incentive compensation |
|
(0.70 |
)%(c) |
2.22 |
%(c) |
1.21 |
% |
|
Net operating income before incentive compensation, interest and other borrowing costs |
|
1.72 |
%(c) |
3.45 |
%(c) |
2.94 |
% |
(c) Annualized.
(d) Non- Annualized.
The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Schedule of Investments
April 30, 2014 (Unaudited)
|
Company |
|
Industry |
|
Investment |
|
Principal |
|
Cost |
|
Fair Value |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-control/Non-affiliated investments- 25.78% (a), (c), (f), (g) |
|
|
|
|
|
|
|
|
|
|
| |||
|
Actelis Networks, Inc. |
|
Technology Investment |
|
Preferred Stock (150,602 shares) (d), (i) |
|
|
|
$ |
5,000,003 |
|
— |
| ||
|
Biogenic Reagents |
|
Renewable energy |
|
Senior Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b) |
|
$ |
5,141,868 |
|
5,141,868 |
|
$ |
5,141,868 |
| |
|
|
|
|
|
Senior Convertible Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b) |
|
4,627,682 |
|
4,627,682 |
|
4,627,682 |
| |||
|
|
|
|
|
|
|
|
|
9,769,550 |
|
9,769,550 |
| |||
|
Biovation Holdings, Inc. |
|
Manufacturer of Laminate Material and Composites |
|
Bridge Loan 6.0000% Cash, 6.0000% PIK, 08/31/2014 (b) |
|
3,105,032 |
|
3,105,032 |
|
3,034,155 |
| |||
|
|
|
|
|
Warrants (d) |
|
|
|
288,000 |
|
363,000 |
| |||
|
|
|
|
|
|
|
|
|
3,393,032 |
|
3,397,155 |
| |||
|
FOLIOfn, Inc. |
|
Technology Investment |
|
Preferred Stock (5,802,259 shares) (d), (i) |
|
|
|
15,000,000 |
|
6,018,000 |
| |||
|
Freshii USA, Inc. |
|
Food Services |
|
Senior Secured Loan 6.0000% Cash, 6.0000% PIK, 01/11/2017 (b) |
|
1,143,200 |
|
1,119,497 |
|
1,124,900 |
| |||
|
|
|
|
|
Warrants (d), (l) |
|
|
|
33,873 |
|
41,785 |
| |||
|
|
|
|
|
|
|
|
|
1,153,370 |
|
1,166,685 |
| |||
|
G3K Display, Inc. |
|
Retail Store Fixtures |
|
Senior Lien Loan 13.0000% Cash, 4/11/2019 (h) |
|
5,625,000 |
|
5,625,000 |
|
— |
| |||
|
|
|
|
|
Warrants (d) |
|
|
|
— |
|
— |
| |||
|
|
|
|
|
|
|
|
|
5,625,000 |
|
— |
| |||
|
Inland Environmental & Remediation LP |
|
Environmental Services |
|
Senior Secured Loan 12.0000% Cash, 4/17/2019 |
|
13,000,000 |
|
12,292,467 |
|
12,292,467 |
| |||
|
|
|
|
|
Warrants (d) |
|
|
|
713,000 |
|
713,000 |
| |||
|
|
|
|
|
|
|
|
|
13,005,467 |
|
13,005,467 |
| |||
|
MainStream Data, Inc. |
|
Technology Investment |
|
Common Stock (5,786 shares) (d), (i) |
|
|
|
3,750,000 |
|
— |
| |||
|
Morey’s Seafood International, LLC |
|
Food Services |
|
Second Lien Loan 10.0000% Cash, 3.0000% PIK, 08/12/2018 |
|
15,108,750 |
|
15,108,750 |
|
15,108,750 |
| |||
|
NPWT Corporation |
|
Medical Device Manufacturer |
|
Series B Common Stock (281 shares) (d) |
|
|
|
1,231,638 |
|
11,000 |
| |||
|
|
|
|
|
Series A Convertible Preferred Stock (5,000 shares) (d) |
|
|
|
— |
|
205,000 |
| |||
|
|
|
|
|
|
|
|
|
1,231,638 |
|
216,000 |
| |||
|
Prepaid Legal Services, Inc. |
|
Consumer Services |
|
2nd Lien Term Loan , 9.7500% Cash, 07/01/2020 |
|
10,000,000 |
|
9,866,634 |
|
10,100,000 |
| |||
|
SGDA Sanierungsgesellschaft fur Deponien und Altlasten GmbH |
|
Environmental Services |
|
Term Loan 7.0000% Cash, 08/31/2014 (e) |
|
6,547,350 |
|
6,547,350 |
|
6,547,350 |
| |||
|
Summit Research Labs, Inc. |
|
Specialty Chemicals |
|
Second Lien Loan 7.0000% Cash, 7.0000% PIK , 10/01/2018 (b) |
|
24,276,455 |
|
24,276,455 |
|
24,276,455 |
| |||
|
U.S. Spray Drying Holding Company |
|
Specialty Chemicals |
|
Class B Common Stock (784 shares) |
|
|
|
5,488,000 |
|
5,488,000 |
| |||
|
Sub Total Non-control/Non-affiliated investments |
|
|
|
|
|
|
|
119,215,249 |
|
95,093,412 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Affiliate investments - 60.46% (a), (c), (f), (g) |
|
|
|
|
|
|
|
|
|
|
| |||
|
Advantage Insurance Holdings LTD |
|
Insurance |
|
Preferred Stock (750,000 shares) (d), (e) |
|
|
|
7,500,000 |
|
7,500,000 |
| |||
|
Centile Holdings B.V. |
|
Software |
|
Common Equity Interest (d), (e) |
|
|
|
3,274,376 |
|
4,905,000 |
| |||
|
Custom Alloy Corporation |
|
Manufacturer of Pipe Fittings |
|
Unsecured Subordinated Loan 12.0000% Cash, 09/04/2016 |
|
6,500,000 |
|
6,500,000 |
|
6,500,000 |
| |||
|
|
|
|
|
Convertible Series A Preferred Stock (9 shares) (d) |
|
|
|
44,000 |
|
99,704 |
| |||
|
|
|
|
|
Convertible Series B Preferred Stock (1,991 shares) (d) |
|
|
|
9,956,000 |
|
22,560,296 |
| |||
|
|
|
|
|
|
|
|
|
16,500,000 |
|
29,160,000 |
| |||
|
JSC Tekers Holdings |
|
Real Estate Management |
|
Common Stock (2,250 shares) (d), (e) |
|
|
|
4,500 |
|
4,500 |
| |||
|
|
|
|
|
Secured Loan 8.0000% Cash, 12/31/2014 (e), (h) |
|
12,000,000 |
|
12,000,000 |
|
11,000,000 |
| |||
|
|
|
|
|
|
|
|
|
12,004,500 |
|
11,004,500 |
| |||
|
Marine Exhibition Corporation |
|
Theme Park |
|
Senior Subordinated Debt 7.0000% Cash, 4.0000% PIK, 06/30/2017 (b) |
|
11,546,289 |
|
11,546,289 |
|
11,546,289 |
| |||
|
|
|
|
|
Second Lien Loan 7.0000% Cash, 4.0000% PIK, 06/30/2014 (b) |
|
1,503,500 |
|
1,503,500 |
|
1,503,500 |
| |||
|
|
|
|
|
Convertible Preferred Stock (20,000 shares) (b) |
|
|
|
3,687,302 |
|
3,687,302 |
| |||
|
|
|
|
|
|
|
|
|
16,737,091 |
|
16,737,091 |
| |||
|
Octagon Credit Investors, LLC |
|
Financial Services |
|
Limited Liability Company Interest |
|
|
|
2,893,330 |
|
7,000,000 |
| |||
|
RuMe Inc. |
|
Consumer Products |
|
Common Stock (5,297,548 shares) (d) |
|
|
|
924,475 |
|
924,475 |
| |||
|
|
|
|
|
Senior Secured Loan 12.0000% Cash, 04/04/2014 |
|
3,250,000 |
|
3,250,000 |
|
3,250,000 |
| |||
|
|
|
|
|
Series B-1 Preferred Stock (4,999,076 shares) (d) |
|
|
|
999,815 |
|
1,090,000 |
| |||
|
|
|
|
|
|
|
|
|
5,174,290 |
|
5,264,475 |
| |||
|
Security Holdings B.V. |
|
Electrical Engineering |
|
Common Equity Interest (d), (e) |
|
|
|
40,186,620 |
|
36,376,000 |
| |||
|
|
|
|
|
Bridge Loan 5.0000% Cash, 2/15/2014 (e) |
|
4,000,000 |
|
4,000,000 |
|
4,000,000 |
| |||
|
|
|
|
|
|
|
|
|
44,186,620 |
|
40,376,000 |
| |||
|
SGDA Europe B.V. |
|
Environmental Services |
|
Common Equity Interest (d), (e) |
|
|
|
20,084,599 |
|
7,034,000 |
| |||
|
U.S. Gas & Electric, Inc. |
|
Energy Services |
|
Second Lien Loan 9.0000% Cash, 5.0000% PIK , 07/25/2015 (b) |
|
10,377,287 |
|
10,377,287 |
|
10,377,287 |
| |||
|
|
|
|
|
Convertible Series I Preferred Stock (32,200 shares) (d), (k) |
|
|
|
500,000 |
|
83,667,607 |
| |||
|
|
|
|
|
Convertible Series J Preferred Stock (8,216 shares) (d) |
|
|
|
— |
|
— |
| |||
|
|
|
|
|
|
|
|
|
10,877,287 |
|
94,044,894 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Sub Total Affiliate investments |
|
|
|
|
|
|
|
139,232,093 |
|
223,025,960 |
| |||
The accompanying notes are an integral part of these consolidated financial statements.
MVC Capital, Inc.
Consolidated Schedule of Investments - (Continued)
April 30, 2014 (Unaudited)
|
Company |
|
Industry |
|
Investment |
|
Principal |
|
Cost |
|
Fair Value |
| |||
|
Control Investments - 39.31% (a), (c), (f), (g) |
|
|
|
|
|
|
|
|
|
|
| |||
|
Harmony Health & Beauty, Inc. |
|
Health & Beauty - Distributor |
|
Common Stock (147,621 shares) (d) |
|
|
|
$ |
6,700,000 |
|
— |
| ||
|
MVC Automotive Group B.V. |
|
Automotive Dealerships |
|
Common Equity Interest (d), (e) |
|
|
|
45,662,438 |
|
$ |
34,969,000 |
| ||
|
MVC Private Equity Fund LP |
|
Private Equity |
|
Limited Partnership Interest (d), (j) |
|
|
|
11,831,196 |
|
17,158,826 |
| |||
|
|
|
|
|
General Partnership Interest (d), (j) |
|
|
|
301,816 |
|
432,610 |
| |||
|
|
|
|
|
|
|
|
|
12,133,012 |
|
17,591,436 |
| |||
|
Ohio Medical Corporation |
|
Medical Device Manufacturer |
|
Common Stock (5,620 shares) (d) |
|
|
|
15,763,636 |
|
— |
| |||
|
|
|
|
|
Series A Convertible Preferred Stock (26,795 shares) (b) |
|
|
|
30,000,000 |
|
24,600,000 |
| |||
|
|
|
|
|
Series C Convertible Preferred Stock (8,486 shares) (b) |
|
|
|
22,618,466 |
|
25,668,855 |
| |||
|
|
|
|
|
|
|
|
|
68,382,102 |
|
50,268,855 |
| |||
|
SIA Tekers Invest |
|
Port Facilities |
|
Common Stock (68,800 shares) (d), (e) |
|
|
|
2,300,000 |
|
1,472,000 |
| |||
|
Turf Products, LLC |
|
Distributor - Landscaping and |
|
Senior Subordinated Debt 7.0000% Cash, 4.0000% PIK, 11/1/2018 (b) |
|
$ |
3,895,262 |
|
3,895,262 |
|
3,895,262 |
| ||
|
|
|
Irrigation Equipment |
|
Limited Liability Company Interest (d) |
|
|
|
3,535,694 |
|
3,466,794 |
| |||
|
|
|
|
|
Guarantee |
|
|
|
— |
|
(92,000 |
) | |||
|
|
|
|
|
Warrants (d) |
|
|
|
— |
|
— |
| |||
|
|
|
|
|
|
|
|
|
7,430,956 |
|
7,270,056 |
| |||
|
Velocitius B.V. |
|
Renewable Energy |
|
Common Equity Interest (d), (e) |
|
|
|
11,395,315 |
|
17,385,000 |
| |||
|
Vestal Manufacturing Enterprises, Inc. |
|
Iron Foundries |
|
Senior Subordinated Debt 12.0000% Cash, 04/29/2015 |
|
600,000 |
|
600,000 |
|
600,000 |
| |||
|
|
|
|
|
Common Stock (81,000 shares) (d) |
|
|
|
1,850,000 |
|
15,450,000 |
| |||
|
|
|
|
|
|
|
|
|
2,450,000 |
|
16,050,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Sub Total Control Investments |
|
|
|
|
|
|
|
156,453,823 |
|
145,006,347 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
TOTAL INVESTMENT ASSETS - 125.55% (f) |
|
|
|
|
|
|
|
$ |
414,901,165 |
|
$ |
463,125,719 |
| |
(a) These securities are restricted from public sale without prior registration under the Securities Act of 1933. The Company negotiates certain aspects of the method and timing of the disposition of these investments, including registration rights and related costs.
(b) These securities accrue a portion of their interest/dividends in “payment in kind” interest/dividends which is capitalized to the investment.
(c) All of the Company’s equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except MVC Automotive Group B.V., Security Holdings B.V., SGDA Europe B.V., SGDA Sanierungsgesellschaft fur Deponien und Altlasten mbH, SIA Tekers Invest, JSC Tekers Holdings, Centile Holdings B.V., Velocitius B.V., MVC Private Equity Fund L.P., Advantage Insurance and Freshii USA, Inc. The Company makes available significant managerial assistance to all of the portfolio companies in which it has invested.
(d) Non-income producing assets.
(e) The principal operations of these portfolio companies are located in Europe which represents approximately 21% of the total assets. The remaining portfolio companies are located in North America which represents approximately 55% of the total assets.
(f) Percentages are based on net assets of $368,859,050 as of April 30, 2014.
(g) See Note 3 for further information regarding “Investment Classification.”
(h) All or a portion of the accrued interest on these securities have been reserved for.
(i) Legacy Investments.
(j) MVC Private Equity Fund, LP is a private equity fund focused on control equity investments in the lower middle market. The fund currently holds four investments, three located in the United States and one in Gibraltar, the investments are in the energy, services, and industrial sectors.
(k) Upon a liquidity event, the Company may receive additional ownership in U.S. Gas & Electric, Inc.
(l) Includes a warrant in Freshii One LLC, an affiliate of Freshii USA, Inc.
(m) All or a portion of these securities may serve as collateral for the BB&T Credit Facility.
PIK - Payment-in-kind
- Denotes zero cost or fair value.
The accompanying notes are an integral part of these consolidated financial statements.