Keating Capital Reports Q2 2013 Results
Pre-IPO Investor Provides Financial Update
"Although we did not make any new investments during the second quarter,
we were quite active on the disposition front. During the second quarter
of 2013, we sold our entire positions in Solazyme, LifeLock and Corsair
Components. We generated aggregate net realized gains of approximately
Highlights for the Quarter Ended
Net realized gains of
$4.4 millionfrom disposition of three portfolio companies
$0.48per share special dividend declared; $0.24per share paid in Q2 and $0.24per share to be paid in Q3
159,996 shares of common stock repurchased for
$1.0 million, an average price of $6.43per share, or a 20% weighted-average discount to NAV
$7.79per share as of June 30, 2013
Portfolio company, Tremor Video, completes a
- Weighted-average portfolio company holding period of 1.6 years
Net Realized Gains of
During the second quarter of 2013, in addition to the disposition of its
remaining Solazyme, Inc. position, the Company sold its entire positions
in LifeLock, Inc. and
The following table summarizes the realized gains and losses from the
Company's sale of portfolio company investments from inception through
|Portfolio||Disposition of||Holding Period||Investment||Realized||Return||Rate of||Rate of|
|Company||Interest||(Years)||Amount||Gain (Loss)||Multiple1||Return2||Return (IRR)3|
|LifeLock, Inc.||Q2 2013||1.1||$||5,000,000||$||3,675,041||1.74x||74%||66%|
|Solazyme, Inc.||Q2 2013||1.8||$||2,080,750||$||453,452||1.22x||22%||12%|
|NeoPhotonics Corp.||Q3 2012||2.6||$||1,000,000||$||(121,428||)||0.88x||-12%||-5%|
Weighted-Average Return Multiple and Rates
|1Total return multiple on a portfolio company investment is determined by dividing the net proceeds realized from the sale of such investment by the aggregate cost of such investment. The weighted-average total return multiple is determined by dividing the aggregate net proceeds from the sale of all disposed portfolio companies by the aggregate investment cost of all disposed portfolio companies.|
|2Total rate of return on a portfolio company investment is determined by dividing the net gain or loss realized from the sale of such investment by the aggregate cost of such investment. The total rate of return is not annualized. The weighted-average total rate of return is determined by dividing the aggregate net gains and losses realized from the sale of all disposed portfolio company investments by the aggregate cost of all disposed portfolio company investments. The weighted-average total rate of return is not annualized.|
|3Internal rate of return is the annualized rate of return on a portfolio company investment taking into account the amount and timing of all cash flows related to such portfolio company investment including the initial investment, any follow-on investment and the net proceeds from the sale of such investment. The weighted-average internal rate of return is the annualized rate of return on all disposed portfolio company investments taking into account the amount and timing of the cash flows related to all disposed portfolio company investments (as a group).|
Tremor Video IPO
Tremor Video was founded in 2005 and is headquartered in
Tremor Video is the fourth portfolio company (out of a total of 20
portfolio company investments) that has successfully completed an IPO
since Keating Capital's first portfolio company investment in
Weighted-Average Holding Period of 1.6 Years
Based on information received from portfolio companies, the Company believes that more than half of its 15 private portfolio companies could complete an IPO or sale transaction during 2014, although a majority of these are expected to occur in the second half of 2014. However, there can be no assurance that any of these private portfolio companies will complete an IPO or sale transaction in 2014, or at all.
Stock Repurchase Program
During the second quarter, the Company repurchased 159,996 shares of its
common stock for approximately
Since the inception of the stock repurchase program in
The Company believes the stock repurchase program continues to be an important part of its strategy to reduce the current NAV discount, even though these repurchases decrease the capital available for investment and increase the Company's operating expense ratio.
Results of Operations and Balance Sheet
Decrease in Net Asset Value for the Second Quarter
The Company had net investment loss—effectively the Company's
operating expenses (including base management fees and accrued
incentive fees)—of approximately
$1.3 million, or a loss of $0.15per share. The Company's operating expenses, excluding base management fees, accrued incentive fees and costs related to its withdrawn registration statement, were approximately $403,000in the second quarter. On May 20, 2013, the Company withdrew its registration statement for an underwritten follow-on offering because it was determined an underwritten offering was not feasible at the time. As a result, the Company charged-off approximately $290,000of the deferred offering costs related to legal, audit and printing costs, which are included in the second quarter operating expenses.
The Company had net realized gains of approximately
$4.4 millionduring the quarter, or an increase of $0.48per share.
The Company had a net decrease in unrealized appreciation on its
portfolio company investments of approximately
$3.1 million, or a decrease of $0.34per share, as a result of the following:
A reversal of the
March 31, 2013net unrealized appreciation of approximately $4.7 millionon the three portfolio companies that were sold in the second quarter: Corsair, Solazyme and LifeLock.
Write-downs during the quarter of approximately
$2.4 millionin four portfolio companies.
Write-ups during the quarter of approximately
$4.0 millionin 11 portfolio companies.
$4.7 millionin reversals of net unrealized appreciation on the Company's second quarter dispositions, the Company had a net increase in unrealized appreciation of approximately $1.7 millionduring the second quarter on its portfolio company positions held at June 30, 2013.
- A reversal of the
The Company's NAV increased by
$0.03per share as a result of its share repurchases. This increase was offset by the dividend of $0.24per share paid in June.
The following table details the change in net asset value for the
|Change in Net Asset Value|
|Three Months Ended|
|Net Asset Value, Beginning of Period2||$||73,092,420||$||8.00|
|Net Investment Loss||(1,325,466||)||(0.15||)|
|Net Realized Gain on Investments:|
|Net Realized Gain on Investments:||4,400,178||0.48|
|Net Change in Unrealized Appreciation (Depreciation) on Investments:|
|Tremor Video, Inc.||999,984||0.11|
|Net Change in Unrealized Appreciation (Depreciation) on Investments:||(3,065,557||)||(0.34||)|
|Net Increase in Net Assets Resulting from Operations||9,155||*|
|Stockholder distributions paid from net realized gains||(2,164,145||)||(0.24||)|
|Capital Stock Transactions:|
|Repurchases of Common Stock||(1,028,629||)||0.03|
|Net Asset Value, End of Period2||$||69,908,801||$||7.79|
|Weighted Average Common Shares Outstanding During Period||9,086,011|
|Common Shares Outstanding At End of Period||8,972,226|
* Per share amounts less than
|1Unless otherwise indicated, per share data based on weighted average common shares outstanding during the period.|
|2Per share data based on total common shares outstanding at the beginning and end of the corresponding period.|
Since 2011, the Company has made three distributions to stockholders
May 2011, the Company paid $0.13per share as a return of capital.
December 2012, the Company paid a dividend of $0.03per share representing 100% of net realized capital gains for 2012.
June 2013, the Company paid a dividend of $0.24per share representing half of the $0.48per share in net gains realized in the first half of 2013.
|Tremor Video, Inc.||4,000,001||4,859,984||859,983|
A slide presentation will accompany the earnings call and will be available prior to the earnings call at http://ir.keatingcapital.com/events.cfm. Select the Q2 2013 Earnings Call Slides link to download and print the presentation.
An archived audio replay of the earnings call together with the slide
presentation will be available within approximately three hours after
completion of the call at http://ir.keatingcapital.com/events.cfm.
This archived recording will be available until the Company's next
quarterly conference call which has been tentatively scheduled for
This press release may contain statements of a forward-looking nature
relating to future events. These forward-looking statements are subject
to the inherent uncertainties in predicting future results and
conditions. These statements reflect Keating Capital's current beliefs,
and a number of important factors could cause actual results to differ
materially from those expressed in this press release, including the
factors set forth in "Risk Factors" set forth in Keating Capital's Form
10-K and Form 10-Q filed with the
Investor Relations Contact:
Investor Relations Director
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