GSC Investment Corp. Announces First Quarter 2010 Financial Results

NEW YORK, July 13  /PRNewswire-FirstCall/ -- GSC Investment Corp. (NYSE: GNV), a business development company, today announced financial results for the fiscal first quarter ended May 31, 2009.

Operating Results

For the quarter ended May 31, 2009, GSC Investment Corp. reported net investment income of $2.6 million, or $0.31 per share, and net unrealized appreciation on its investment portfolio of $2.8 million, or $0.34 per share, resulting in a net increase in net assets from operations of $5.4 million, or $0.65 per share. There were no material realized gains or losses on investments during the quarter. Net asset value was $8.85 per share as of May 31, 2009 as compared to $8.20 per share as of February 28, 2009.

"The unrealized appreciation in our portfolio during the first quarter is a welcome occurrence and reflects some stabilization in the credit markets after a period of unprecedented volatility," said Chief Executive Officer Seth M. Katzenstein.  "While we are encouraged by the rebound in the credit markets, the effects of the recession are still working their way through our portfolio companies, and we expect that adverse credit events in our portfolio companies will continue to occur. Accordingly, we continue to stand by our conservative strategy of investing at high-attachment points in the capital structure and will continue to preserve capital and reduce debt in order to maximize long-term shareholder value."

Portfolio and Investment Activity

As of May 31, 2009, the value of the Company's investment portfolio was $121.2 million, principally invested in 35 portfolio companies and one collateralized loan obligation fund ("CLO"). The overall portfolio composition consisted of 16.3% first lien term loans, 33.7% second lien term loans, 23.6% senior secured notes, 10.5% unsecured notes, 15.8% subordinated notes of GSCIC CLO and 0.1% equity/limited partnership interests.

During the first quarter, GSC Investment Corp. made no investments in new or existing portfolio companies.  For the quarter, the Company had $0.3 million in aggregate amount of exits and repayments, resulting in net repayments of $0.3 million.

As of May 31, 2009, the weighted average current yield on the Company's first lien term loans, second lien term loans, senior secured notes, unsecured notes and the GSCIC CLO subordinated notes were 7.7%, 9.3%, 11.6%, 12.3% and 11.2%, respectively, which resulted in an aggregate weighted average current yield of 10.3%.

As of May 31, 2009, 42.6%, or $43.4 million, of the Company's interest-bearing portfolio was fixed rate debt with a weighted average current coupon of 11.7% and 57.4%, or $58.6 million, of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 6.4%.

Liquidity and Capital Resources

In January 2009, the Company's revolving credit facility began a two-year amortization period during which all payments of principal on, and sale proceeds from, the collateral (substantially all of the Company's portfolio, excluding its CLO investment) are used to repay outstanding borrowings. At May 31, 2009, the Company had $57.8 million in borrowings under the facility and an asset coverage ratio of 227%.

Following the end of the first quarter, several portfolio investments were either downgraded or experienced adverse events that resulted in a $17.4 million deficiency in the Company's June 30, 2009 borrowing base, which exceeds the Company's unrestricted cash and cash equivalents of $10.3 million at May 31, 2009. If the Company is unsuccessful in obtaining a waiver and the borrowing base deficiency continues for 30 days, an event of default will occur and the lender will have the option to terminate the facility and sell the underlying collateral. "We are currently engaged in constructive discussions with our lender regarding a waiver of the borrowing base deficiency," said Mr. Katzenstein. "We have historically been able to work constructively with our lender, but these discussions are ongoing."

"The adverse economic environment and tight credit market have had a negative effect on several of our portfolio companies. Some portfolio companies have experienced worse than expected declines in operating performance, while others have been unable to refinance maturing debt," said Mr. Katzenstein. "We believe that the best way to maximize the value of underperforming and stressed investments is to actively manage them through the workout process. Our investment adviser, GSC Group, has significant experience in workouts of middle market companies. In many cases, other GSC Group-managed funds also own these investments, and we believe that GSC Group will be able to leverage both its expertise and these combined ownership positions to positively influence the workout process."

As the Company announced in connection with its fiscal year 2009 earnings, it has retained the investment banking firm of Stifel, Nicolaus & Company to help identify and evaluate strategic and financing opportunities. This Company is actively considering and evaluating opportunities to maximize long-term shareholder value.

Dividend

Consistent with the Company's strategy of preserving capital and reducing debt, the Company's Board of Directors has decided not to declare a dividend for the first quarter of fiscal year 2010.  The Board will consider declaring a dividend at its next regularly scheduled meeting in October, 2009.

  2010 First Quarter Conference Call/Webcast Information

  When: Tuesday, July 14, 2009, 10:00 a.m. Eastern Time (ET)



Call: Interested parties may participate by dialing [phone] (U.S. and Canada) or [phone] (outside U.S. and Canada).

A replay of the call will be available from 1:00 p.m. ET on Tuesday, July 14, 2009 through 11:59 p.m. ET on Monday, July 27, 2009 by dialing [phone] (U.S. and Canada) or [phone] (outside U.S. and Canada), passcode for both replay numbers: 3510417.

Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.gscinvestmentcorp.com/events.cfm. A replay of the webcast will be available from 1:00 p.m. ET on Tuesday, July 14, 2009 through 11:59 p.m. ET, Monday, July 27, 2009.

About GSC Investment Corp.

GSC Investment Corp. is a specialty finance company that invests primarily in leveraged loans and mezzanine debt issued by U.S. middle-market companies, high yield bonds and collateralized loan obligations. It has elected to be treated as a business development company under the Investment Company Act of 1940. The Company may also opportunistically invest in distressed debt, debt issued by non-middle market companies, and equity securities issued by middle and non-middle market companies. The Company draws upon the support and investment advice of its external manager, GSC Group, an alternative asset investment manager that focuses on complex, credit-driven strategies. GSC Investment Corp. is traded on the New York Stock Exchange under the symbol "GNV."

                        GSC Investment Corp.

                    Consolidated Balance Sheets

                                                       As of
                                             ---------------------------
                                             May 31,        February 28,
                                              2009              2009
                                             -------        ------------
                                           (unaudited)
  ASSETS

  Investments at fair value
    Non-control/non-affiliate
     investments (amortized cost of
     $137,234,017 and $137,020,449,
     respectively)                        $101,983,348       $96,462,919
    Control investments (cost of
     $29,233,097 and $29,905,194,
     respectively)                          19,235,848        22,439,029
    Affiliate investments (cost
     of $0 and $0, respectively)                 4,043            10,527
                                                 -----            ------
    Total investments at fair value
     (amortized cost of $166,467,114
     and $166,925,643, respectively)       121,223,239       118,912,475
  Cash and cash equivalents                  8,544,000         6,356,225
  Cash and cash equivalents,
   securitization accounts                   2,028,951         1,178,201
  Outstanding interest rate cap at
   fair value (cost of $131,000 and
   $131,000, respectively)                      75,200            39,513
  Interest receivable, net of reserve        3,067,955         3,087,668
  Deferred credit facility financing
   costs, net                                  483,447           529,767
  Management fee receivable                    237,306           237,370
  Other assets                                 140,992           321,260
                                               -------           -------

    Total assets                          $135,801,090      $130,662,479
                                          ============      ============

  LIABILITIES
  Revolving credit facility                $57,755,257       $58,994,673
  Management and incentive fees
   payable                                   3,750,594         2,880,667
  Accounts payable and accrued
   expenses                                    690,646           700,537
  Interest and credit facility fees
   payable                                     227,000            72,825
    Total liabilities                      $62,423,497       $62,648,702
                                           ===========       ===========

  STOCKHOLDERS' EQUITY
  Common stock, par value $.0001 per
   share, 100,000,000 common shares
   authorized, 8,291,384 and 8,291,384
   common shares issued and
   outstanding, respectively                       829               829
  Capital in excess of par value           116,943,738       116,943,738
  Accumulated undistributed net
   investment income                         8,686,481         6,122,492
  Accumulated undistributed net
   realized loss from investments
   and derivatives                          (6,953,780)       (6,948,628)
  Net unrealized depreciation
   on investments and derivatives          (45,299,675)      (48,104,654)
                                           -----------       -----------
    Total stockholders' equity              73,377,593        68,013,777
                                            ----------        ----------

  Total liabilities and
   stockholders' equity                   $135,801,090      $130,662,479
                                          ============      ============

  NET ASSET VALUE PER SHARE                      $8.85             $8.20
                                                 -----             -----



                           GSC Investment Corp.

                   Consolidated Statement of Operations

                                               For the        For the
                                            three months   three months
                                                ended          ended
                                               May 31,        May 31,
                                                 2009           2008
                                            -------------  -------------
                                             (unaudited)    (unaudited)
  INVESTMENT INCOME
  Interest from investments
    Non-Control/Non-Affiliate investments     $3,318,840     $4,459,124
    Control investments                          868,229        635,386
                                                 -------        -------
         Total interest income                 4,187,069      5,094,510
  Interest from cash and cash equivalents         13,191         66,689
  Management fee income                          520,992        522,739
  Other income                                    43,134         31,423
                                                  ------         ------
    Total investment income                    4,764,386      5,715,361
                                               ---------      ---------

  EXPENSES
  Interest and credit facility financing
   expenses                                      642,893        833,198
  Base management fees                           547,744        748,499
  Professional fees                              339,780        345,459
  Administrator expenses                         171,861        248,398
  Incentive management fees                      322,183        340,107
  Insurance                                      206,017        167,486
  Directors fees and expenses                     82,000         66,609
  General & administrative                        59,780         65,037
  Other expense                                        -          3,208
    Expenses before expense waiver and
     reimbursement                             2,372,258      2,818,001
                                               ---------      ---------
  Expense reimbursement                         (171,861)      (298,113)
                                                --------       --------
    Total expenses net of expense waiver
     and reimbursement                         2,200,397      2,519,888
                                               ---------      ---------

    NET INVESTMENT INCOME                      2,563,989      3,195,473
                                               ---------      ---------

  REALIZED AND UNREALIZED GAIN (LOSS)
   ON INVESTMENTS:
  Net realized loss from investments              (5,152)      (287,410)
  Net unrealized appreciation/
   (depreciation) on investments               2,769,292        (84,817)
  Net unrealized appreciation/
   (depreciation) on derivatives                  35,687        (11,998)
                                                  ------        -------
    Net gain/(loss) on investments             2,799,827       (384,225)
                                               ---------       --------

  NET INCREASE IN NET ASSETS RESULTING
   FROM OPERATIONS                            $5,363,816     $2,811,248
                                              ==========     ==========

  WEIGHTED AVERAGE - BASIC AND DILUTED
   EARNINGS PER COMMON SHARE                       $0.65          $0.34

  WEIGHTED AVERAGE COMMON STOCK
   OUTSTANDING - BASIC AND DILUTED             8,291,384      8,291,384
  Contact:    Carl J. Crosetto
              GSC Group
              973-437-1007


DATASOURCE: GSC Investment Corp.



CONTACT:  Carl J. Crosetto, GSC Group, [phone]; or Roland

Tomforde, Broadgate Consultants, LLC, [phone]



Web Site:  http://ir.gscinvestmentcorp.com/ 

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