FSIC: Delay in deals will make up for dividend shortfall

The Pennsylvania-based company has reported a drop in net investment income per share.

FS Investment Corporation reported a year-on-year drop in originations for the third quarter, but officials of the business development company noted that several of the deals scheduled for the third quarter were pushed back.

The Philadelphia-based company, sub-advised by GSO Capital, reported $144.23 million in originations for the three months ending 30 September, compared with $194.64 million at the same time last year. It reported a decrease in net investment income (NII) to $49 million from $63.77 million, a decrease to 20 cents per share from 26 cents per share.

The company declared a dividend of 22 cents a share, slightly less than NII per share, though the delay in some deals will make up for that shortfall, Brad Marshall, a senior FSIC portfolio manager, said on the call.

“As it relates to the dividend, we will fully cover [it] in the fourth quarter,” Marshal said, according to a transcript of the call. “I think we have some deals that got pushed into the fourth quarter from the third quarter. We are pretty busy selling assets into a fairly strong market.”

The company’s energy portfolio, which, at 12 percent, is the second-largest sector in FSIC’s portfolio, appeared to improve its outlook in the quarter after two companies, Warren Resources and SandRidge Energy, exited Chapter 11. The company received common equity in both companies in addition to first lien paper in Warren Resources and convertible debt in SandRidge. Pre-bankruptcy, FSIC held a first lien loan in the former and senior secured bonds in the latter.

Year to date, Marshall said, unrealised energy investment appreciation stood at $72.2 million, offset by $1.8 million in realised losses, adding 29 cents to net asset value per share. FSIC’s NAV per share stood at $9.42 for the third quarter, which was a year-on-year decrease from $9.64. While a decrease from the same time last year, FSIC posted a rise in its NAV per share, $9.18, from the second quarter. For the three months ending 30 June, the company also reported a gain in the first quarter, to $8.82.