OFS Capital Corporation Announces First Quarter 2013 Financial Results

OFS Capital Corporation Announces First Quarter 2013 Financial Results

ROLLING MEADOWS, Ill.--(BUSINESS WIRE)-- OFS Capital Corporation (NAS: OFS) ("OFS Capital" or the "Company") today announced its financial results for the fiscal quarter ended March 31, 2013, OFS Capital's first full quarter of operations following its initial public offering in November 2012.

(1)The Company consolidated the balance sheet of OFS Capital WM, LLC ("OFS Capital WM") into its own effective March 31, 2012, and it consolidated the statement of operations of OFS Capital WM effective April 1, 2012.
(2)The pro forma consolidated statement of operations for the three months ended March 31, 2012 assumed the Company consolidated the statement of operations of OFS Capital WM effective January 1, 2012.

Other Key Data Points

• The aggregate fair value of OFS Capital's investment assets was 98.6% of cost at March 31, 2013.

• On April 30, 2013, OFS Capital paid first quarter 2013 dividend of $0.34 per share to shareholders of record as of April 17, 2013.

"We remain focused on keeping our OFS Capital WM senior loan subsidiary fully invested in senior secured floating rate assets, which have enhanced the earnings of OFS Capital" said Glenn Pittson, Chairman and Chief Executive Officer of OFS Capital Corporation. "Simultaneously, we continue to work towards converting our Tamarix Capital Partners L.P. ("Tamarix LP") investment into a drop-down small business investment company fund ("SBIC") within OFS Capital. We are working to obtain the necessary investor and regulatory approvals."

PORTFOLIO AND INVESTMENT ACTIVITY

During the first quarter of 2013, OFS Capital closed senior secured debt investments of $7.7 million at par in two new portfolio companies, and it funded a capital call of approximately $2.6 million into the Tamarix Capital SBIC fund. The SBIC fund closed two investments in one new portfolio company, consisting of a second lien debt investment with a face amount of $3.6 million and a $0.4 million equity investment.

The total fair value of OFS Capital's investment portfolio was $228.8 million as of March 31, 2013, including a total of $221.2 million in senior secured debt investments in 57 portfolio companies held in the OFS Capital WM senior loan vehicle (with a 7.43% weighted average yield to fair value), as well as a $7.5 million fair value for the Company's 67.5% limited partnership interest in the SBIC.

As of March 31, 2013, the investment portfolio held by the SBIC consisted of outstanding loans of $21.9 million in aggregate principal amount, and equity investments of $3.5 million at fair value.

RESULTS OF OPERATIONS

Investment income

Total investment income was $4.4 million for the three months ended March 31, 2013, compared with $0.6 million for the same period in the prior year. The increase in total investment income was attributable primarily to the Company's consolidation of the statement of operations of OFS Capital WM, which became effective April 1, 2012.

Total expenses

Total expenses were $2.9 million for the three months ended March 31, 2013, compared with $0.4 million for the same period in the prior year. The increase was attributable primarily to the Company's consolidation of the statement of operations of OFS Capital WM, which became effective April 1, 2012.

Net Investment Income

Net investment income was $1.4 million and $0.2 million, for the three months ended March 31, 2013 and March 31, 2012, respectively, with the $1.2 million increase attributable primarily to the Company's consolidation of the statement of operations of OFS Capital WM beginning April 1, 2012.

Net realized and unrealized gain on investments

Net realized and unrealized gain on investments totaled $1.4 million for the three months ended March 31, 2013, comprised primarily of $1.2 million in net change in unrealized depreciation on non-affiliate investments (i.e., investment assets in the OFS Capital WM senior loan vehicle) and $0.2 million in net change in unrealized depreciation on affiliate investments (the Company's limited partnership interest in the SBIC fund). Because the Company did not consolidate the statement of operations of OFS Capital WM prior to April 1, 2012 and the Company's other debt and equity investments as of March 31, 2012 were carried on a cost basis (rather than fair value basis), the Company did not reflect any realized or unrealized gain (or loss) for the three months ended March 31, 2012.

Other income prior to becoming a business development company

For the three months ended March 31, 2012, OFS Capital had $2.6 million in other income prior to becoming a BDC, comprised of $2.6 million in income from equity interest in OFS Capital WM prior to the consolidation of that entity's operations into the Company's consolidated statements of operation effective April 1, 2012.

Net increase in net assets resulting from operations

Net increase in net assets resulting from operations was approximately $2.9 million for the three months ended March 31, 2013, as well as for the three months ended March 31, 2012, and OFS Capital's NAV was $14.76 per share at March 31, 2013.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2013, OFS Capital had $12.2 million in cash and cash equivalents, $97.2 million in debt outstanding, and $34.9 million in borrowing availability on its revolving credit facility.

The Company intends to continue to use its liquidity to finance its investment objectives.

CONFERENCE CALL

The Company will host a conference call to discuss these results on Wednesday, May 8, 2013 at 11:00 AM Eastern Daylight Time. To participate in the call, please dial (888) 317-6016 (domestic dial-in) or (412) 317-6016 (international dial-in) approximately 15 minutes prior to the call.

A telephone replay of the conference call will be available from 2:00 PM Eastern Daylight Time on May 8, 2013 until 9:00 AM on May 22, 2013 and may be accessed by calling (877) 344-7529 (domestic dial-in) or (412) 317-0088 (international dial-in) and utilizing passcode 10028260.

For more detailed discussion of the financial and other information included in this press release, please refer to the Company's Form 10-Q for the quarter ended March 31, 2013, which is to be filed with the Securities and Exchange Commission.