GSC Investment Corp. Announces Second Quarter 2010 Financial Results

NEW YORK, Oct. 15  /PRNewswire-FirstCall/ -- GSC Investment Corp. (NYSE: GNV), a business development company, today announced financial results for the fiscal second quarter ended August 31, 2009.

Operating Results

For the quarter ended August 31, 2009, GSC Investment Corp. reported net investment income of $1.1 million, or $0.13 per share, and net loss on investments of $17.2 million, or $2.07 per share, resulting in a net decrease in net assets from operations of $16.2 million, or $1.94 per share. $16.1 million of the net loss was due to unrealized depreciation. Net asset value was $6.91 per share as of August 31, 2009 as compared to $8.85 per share as of May 31, 2009.

"The unrealized depreciation in our portfolio during the second quarter primarily reflects the combination of adverse credit events with several of our corporate debt investments and changes in our modeling assumptions regarding default, recovery and prepayment rates for our CLO investment," said Chief Executive Officer Seth M. Katzenstein. "While recent signs of stabilization in the credit markets are encouraging, corporate deficits accumulated during the recent recession continue to stress our investments.  As a result, we expect that adverse credit events in our portfolio will continue."

Portfolio and Investment Activity

As of August 31, 2009, the value of the Company's investment portfolio was $100.0 million, principally invested in 33 portfolio companies and one collateralized loan obligation fund ("CLO"). The overall portfolio composition consisted of 17.4% first lien term loans, 34.3% second lien term loans, 27.1% senior secured notes, 7.7% unsecured notes, 13.3% subordinated notes of GSCIC CLO and 0.2% equity/limited partnership interests.

During the second quarter, GSC Investment Corp. made no investments in new or existing portfolio companies.  For the quarter, the Company had $4.6 million in aggregate amount of exits and repayments, resulting in net repayments of $4.6 million.

As of August 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 7.4%, 9.5%, 11.6%, 12.3% and 0.1%, respectively, which resulted in an aggregate weighted average current yield of 8.2%.

As of August 31, 2009, 42.7%, or $37.0 million, of the Company's interest-bearing portfolio was fixed rate debt with a weighted average current coupon of 11.7% and 57.3%, or $49.7 million, of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 6.8%.

Liquidity and Capital Resources

At August 31, 2009, the Company had $49.6 million in borrowings under its credit facility and an asset coverage ratio of 216%.

On July 30, 2009, an ongoing borrowing base deficiency in the Company's credit facility became an event of default. Adverse credit conditions affecting the Company's portfolio investments have continued throughout the second quarter and have resulted in a $14.5 million deficiency in the Company's August 31, 2009 borrowing base, which exceeds the Company's unrestricted cash and cash equivalents of $6.6 million at August 31, 2009. During the continuance of an event of default, the lender has the ability to terminate the facility and sell the underlying collateral necessary to satisfy outstanding borrowings. The Company and its lender continue to discuss possible solutions to the event of default and the lender has elected not to accelerate the obligation to date, but has reserved the right to do so.

"The adverse economic environment that persists in the marketplace continues to have 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 leveraging the experience of our investment adviser GSC Group and the common ownership of other GSC Group-managed funds."

The Company continues to work with the investment banking firm of Stifel Nicolaus & Company as it actively evaluates strategic alternatives to maximize long-term shareholder value.

Dividend

The Company's Board of Directors has decided not to declare a dividend for the second quarter of fiscal year 2010.

  2010 Second Quarter Conference Call/Webcast Information

  When: Friday, October 16, 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 Friday, October 16, 2009 through 11:59 p.m. ET on Wednesday, October 28, 2009 by dialing [phone] (U.S. and Canada) or [phone] (outside U.S. and Canada), passcode for both replay numbers: 5269467.

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 Friday, October 16, 2009 through 11:59 p.m. ET, Wednesday, October 28, 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."

  Contact:    Carl J. Crosetto
              GSC Group
              973-437-1007




                          GSC Investment Corp.

                       Consolidated Balance Sheets

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

  Investments at fair value
    Non-control/non-affiliate
     investments (amortized
     cost of $132,206,257 and
     $137,020,449, respectively)       $86,689,407        $96,462,919
    Control investments (cost of
     $29,233,097 and $29,905,194,
     respectively)                      13,348,381         22,439,029
    Affiliate investments
     (cost of $0 and $0,
     respectively)                             318             10,527
                                   ---------------     -----------------
    Total investments at fair
     value (amortized cost of
     $161,439,354 and
     $166,925,643, respectively)       100,038,106        118,912,475
  Cash and cash equivalents              6,643,998          6,356,225
  Cash and cash equivalents,
   securitization accounts                 434,918          1,178,201
  Outstanding interest rate
   cap at fair value (cost
   of $131,000 and $131,000,
   respectively)                            89,347             39,513
  Interest receivable, net
   of reserve                            2,514,815          3,087,668
  Deferred credit facility
   financing costs, net                          -            529,767
  Management fee receivable                650,062            237,370
  Other assets                             596,870            321,260
                                   ---------------     -----------------

    Total assets                      $110,968,116       $130,662,479
                                   ================    =================

  LIABILITIES
  Revolving credit facility            $49,580,451        $58,994,673
  Management and incentive
   fees payable                          3,135,958          2,880,667
  Accounts payable and
   accrued expenses                        547,739            700,537
  Interest and credit facility
   fees payable                            408,695             72,825
  Due to manager                             5,942                  -
                                   ---------------     -----------------
    Total liabilities                  $53,678,785        $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                     9,766,239          6,122,492
  Accumulated
   undistributed net
   realized loss from
   investments and
   derivatives                          (7,978,576)        (6,948,628)
  Net unrealized
   depreciation on
   investments and
   derivatives                         (61,442,899)       (48,104,654)
                                   ---------------     -----------------
    Total stockholders' equity          57,289,331         68,013,777
                                   ---------------     -----------------

  Total liabilities and
   stockholders' equity               $110,968,116       $130,662,479
                                   ================    =================

  NET ASSET VALUE PER SHARE                  $6.91              $8.20
                                   ---------------     -----------------




                              GSC Investment Corp.

                      Consolidated Statement of Operations

                                  For the three            For the six
                                  months ended             months ended
                                   August 31                August 31
                                  -------------           -------------
                              2009         2008        2009          2008
                              ----         ----        ----          ----
                          (unaudited)  (unaudited)  (unaudited)  (unaudited)
  INVESTMENT INCOME
  Interest from investments
    Non-Control/Non-
     Affiliate
      investments         $2,654,665   $4,144,437   $5,973,505   $8,603,561
    Control investments      449,485    1,111,003    1,317,714    1,746,389
                         -----------    ---------   ----------    ---------
       Total interest
        income             3,104,150    5,255,440    7,291,219   10,349,950
  Interest from cash and
   cash equivalents            6,991       36,008       20,182      102,697
  Management fee income      516,939      489,148    1,037,931    1,011,887
  Other income                57,278       54,279      100,412       82,494
                         -----------    ---------   ----------    ---------
    Total investment
     income                3,685,358    5,834,875    8,449,744   11,547,028
                         -----------    ---------   ----------    ---------
  EXPENSES
  Interest and credit
   facility financing
   expenses                1,405,548      623,611    2,048,441    1,456,809
  Base management fees       505,314      705,532    1,053,058    1,454,031
  Professional fees          341,998      315,130      681,778      660,589
  Administrator
   expenses                  171,861      260,946      343,722      509,344
  Incentive management
   fees                            -      407,027      322,183      747,134
  Insurance                  223,459      177,162      429,476      344,648
  Directors fees and
   expenses                   63,136       73,276      145,136      139,885
  General & administrative    66,145       77,904      125,925      142,941
                            --------    ---------   ----------    ---------
    Expenses before
     manager expense
     waiver and
     reimbursement         2,777,461    2,640,588    5,149,719    5,455,381
                         -----------    ---------   ----------    ---------
  Expense reimbursement     (171,861)    (260,946)    (343,722)    (559,059)
                         -----------    ---------   ----------    ---------
    Total expenses
     net of expense
     waiver and
     reimbursement         2,605,600    2,379,642    4,805,997    4,896,322
                         -----------    ---------   ----------    ---------

    NET INVESTMENT
     INCOME                1,079,758    3,455,233    3,643,747    6,650,706
                         -----------    ---------   ----------    ---------

  REALIZED AND UNREALIZED
   GAIN (LOSS) ON
   INVESTMENTS:
  Net realized gain/(loss)
   from investments       (1,024,796)     173,681   (1,029,948)    (129,819)
  Net realized gain from
   derivatives                     -       14,364            -       30,454
  Net unrealized
   depreciation on
   investments           (16,157,371)  (6,194,371) (13,388,079)  (6,279,188)
  Net unrealized
   appreciation/
   (depreciation) on
   derivatives                14,147      (16,328)      49,834      (28,326)
                         -----------    ---------   ----------    ---------
    Net loss on
     investments         (17,168,020)  (6,022,654) (14,368,193)  (6,406,879)
                         -----------    ---------   ----------    ---------

  NET INCREASE (DECREASE)
   IN NET ASSETS RESULTING
   FROM OPERATIONS      $(16,088,262) $(2,567,421)$(10,724,446)    $243,827
                        ============  ===========  ============    ========

  WEIGHTED AVERAGE - BASIC
   AND DILUTED EARNINGS
   (LOSS) PER COMMON SHARE    $(1.94)      $(0.31)      $(1.29)       $0.03

  WEIGHTED AVERAGE COMMON
   STOCK OUTSTANDING -
   BASIC AND DILUTED       8,291,384    8,291,384    8,291,384    8,291,384


DATASOURCE: GSC Investment Corp.



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

Tomforde of Broadgate Consultants, LLC, [phone]



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

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