Business & Finance
Business and Finance
Business and Finance
Wed, December 22, 2010
Tue, December 21, 2010 
PURCHASE, N.Y.--([ BUSINESS WIRE ])--MVC Capital, Inc. (NYSE: 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, 2010. The highlights of the fiscal 2010 performance include: positive liquidity events; an increase in the Companya™s net assets resulting from operations; further improved net operating income; a consistent level of distributions paid to shareholders; significant progress with MVC Partners, LLC, including completion of a first close for a new private equity fund; near completion of the Companya™s share repurchase program; a renewed credit facility; and a strong cash balance available to take advantage of investment opportunities.
"Fiscal 2010 represented a year where our portfolio continued to perform and we were able to recognize value for our shareholders by taking advantage of certain exit opportunities"
A core focus for the Company during fiscal 2010 was its existing portfolio. Throughout fiscal 2010, the Company exited seven investments receiving cash and other consideration of approximately $87.7 million. The Companya™s aggregate net realized and unrealized gains for the year ended October 31, 2010 were $10.5 million. These net realized and unrealized gains were primarily related to the sales of Vitality Foodservice, Inc. and Dakota Growers Pasta Company and the increased fair values of certain portfolio companies, including, Octagon Credit Investors, LLC, Summit Research Labs, Inc., Velocitius B.V., PreVisor, Inc., U.S. Gas & Electric, Inc., Vestal Manufacturing Enterprises, Inc., and LHD Europe, whose increase in fair value was able to offset the fair value declines of other portfolio companies. For fiscal year ended October 31, 2010, the Company utilized prior year capital loss carry forwards in the amount of $30.0 million.
The Company also worked diligently to uncover additional opportunities within its portfolio and allocated capital to certain portfolio companies in addition to the one new investment made into Integrated Packaging Corporation. The follow-on investments made in fiscal 2010 aggregated $7.7 million and included: Harmony Pharmacy & Health Center, Inc., SGDA Europe B.V. and Security Holdings B.V.
Under the Companya™s current management team, net assets have grown each year, and fiscal 2010 marked another year of growth with a net increase in net assets resulting from operations of approximately $16.1 million. As of October 31, 2010, the Companya™s net asset value was approximately $425 million or $17.71 per share.
During the year, the Company reported net operating income of $5.6 million, which exceeded the levels of the last three fiscal years. For fiscal 2010, the Company earned approximately $19.3 million in interest and dividend income and approximately $4.2 million in fee and other income, representing a decrease of approximately $2.6 million or 9.9% in total income as compared to fiscal 2009. Although there was a reduction in total income as a result of repayments of certain investments, historically low lending rates, and reserves against non-performing loans, the Companya™s net operating income for 2010 of $5.6 million surpassed fiscal 2009 by approximately $1.1 million or 24.5%. The Companya™s net operating income takes into account, among other items, the accrual of approximately $9.3 million in management fees, $2.5 million in the provision for incentive compensation (which is only payable upon the occurrence of a realization event) and $2.8 million in interest and other borrowing costs incurred under the Companya™s credit facilities.Also during this fiscal year, the Company paid $0.48 per share (or $11.6 million) in distributions to shareholders. The Company has continued to pay its dividend even through challenging economic times without any reductions or suspensions.
Another significant focus of the Company this year was on MVC Partners, LLC. As previously disclosed, the Board of Directors authorized the establishment of a private equity fund, for which an indirect wholly-owned subsidiary of the Company serves as the general partner and which may raise up to $250 million. On October 29, 2010, through MVC Partners, the Company committed to invest $20 million in the PE Fund. The PE Fund recently completed a first closing of approximately $80 million of capital commitments.
Subsequent to the renewal of the Companya™s credit facility in April 2010 and as a result of the Companya™s solid performance and liquidity position, the Board of Directors was able to authorize a $5 million share repurchase program, under which shares were acquired during the third and fourth quarters. As of October 31, 2010, the Company repurchased approximately $4 million worth of stock at an average price of $13.06 per share.
aFiscal 2010 represented a year where our portfolio continued to perform and we were able to recognize value for our shareholders by taking advantage of certain exit opportunities,a said Michael Tokarz, Chairman and Portfolio Manager of the Company. aIf the Company would have distributed all of its gains from fiscal 2010 instead of sheltering the gains with capital loss carry forwards, distributions to shareholders would have increased by $30.0 million or $1.25 per share. Given the available cash on the balance sheet, the current portfolio activity and the expanding pipeline of investment opportunities, we are looking forward to fiscal 2011 and beyond.a
As of October 31, 2010, the Company had 33 investments across 25 industries with approximately 76% of the fair values of those investments held domestically and approximately 24% held internationally. The portfolio breakdown between equity and yielding investments as of October 31, 2010 was 74% and 26%, respectively.
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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 MVCa™s website at [ www.mvccapital.com ]. For MVCa™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. 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 companya™s periodic filings with the Securities and Exchange Commission.
