SuRo Capital Corp. (“SuRo Capital”, the
“Company”, “we”, “us”, and “our”) (Nasdaq:
SSSS) today announced its financial results for
the quarter ended September 30, 2023. Net assets totaled
approximately $212.0 million, or $8.41 per share, at September 30,
2023, as compared to $7.35 per share at June 30, 2023 and $7.83 per
share at September 30, 2022.
“Rising interest rates throughout the third
quarter continued to drive volatility in the public markets. While
private market valuations were continuing to converge with their
public comparables, the diminished volume, coupled with increased
volatility and the general opacity inherent in the secondary
markets, has led to greater variability in trading prices. There
are indications the Federal Reserve Bank has completed raising
interest rates; however, the war in Israel, coupled with a pullback
in consumer spending, continue to drive volatility in the equity
markets,” said Mark Klein, Chairman, and Chief Executive Officer of
SuRo Capital.
Mr. Klein continued, “Despite these cross
currents, we remain steadfast in our belief there are high-quality
opportunities available at attractive prices that allow us to be
both opportunistic and judicious with the deployment of capital. We
made four investments during the third quarter: two in new
portfolio companies and two in follow-on investments. Additionally,
one of our SPAC sponsor investments closed its previously announced
transaction and two other SPAC sponsor investments announced
definitive agreements."
“We continue to believe the market is
undervaluing our portfolio. As such, subject to regulatory trading
restrictions, we remain active in repurchasing shares pursuant to
the Share Repurchase Program approved by our Board of Directors.
Year-to-date, under both the Share Repurchase Program and our
Modified Dutch Auction Tender Offer, we have repurchased 3.2
million shares for approximately $14.2 million and have a remaining
$20.7 million approved to deploy via the Share Repurchase Program.
As we have demonstrated throughout the preceding quarters and
years, we are highly focused on balancing deploying capital between
new investment opportunities and share repurchases to maximize
shareholder value,” Mr. Klein concluded.
Investment Portfolio as of September 30,
2023
At September 30, 2023, SuRo Capital held
positions in 39 portfolio companies – 34 privately held and 5
publicly held – with an aggregate fair value of approximately
$193.5 million, excluding short-term US treasuries. The Company’s
top five portfolio company investments accounted for approximately
61% of the total portfolio at fair value as of September 30,
2023.
Top Five Investments as of September 30,
2023
Portfolio Company($ in millions) |
Cost Basis |
Fair Value |
% of Total Portfolio |
Learneo, Inc. (f/k/a Course Hero, Inc.) |
$ |
15.0 |
$ |
65.4 |
33.8 |
% |
PSQ Holdings, Inc. (d/b/a
PublicSq.) |
|
2.7 |
|
18.1 |
9.4 |
|
ServiceTitan, Inc. |
|
10.0 |
|
11.9 |
6.2 |
|
Blink Health, Inc. |
|
15.0 |
|
11.6 |
6.0 |
|
StormWind, LLC |
|
6.4 |
|
10.3 |
5.3 |
|
Total |
$ |
49.1 |
$ |
117.4 |
60.7 |
% |
__________________
Note: Total may not sum due to rounding.
Third Quarter 2023 Investment Portfolio
Activity
During the three months ended September 30,
2023, SuRo Capital made the following new and follow-on
investments, excluding short-term US treasuries:
Portfolio Company |
Investment |
Transaction Date |
Amount |
FourKites, Inc. |
Common Shares |
Various |
$5.8 million |
Shogun Enterprises, Inc.
(d/b/a Hearth) |
Series B-4 Preferred & Warrants |
7/12/2023 |
$0.5 million |
Stake Trade, Inc. (d/b/a
Prophet Exchange)(1) |
Simple Agreement for Future Equity (SAFE) |
7/26/2023 |
$1.0 million |
__________________(1) Investment made through
SuRo Capital Sports, LLC.
During the three months ended September 30,
2023, SuRo Capital exited or received proceeds from the following
investments, excluding short-term US treasuries:
Portfolio Company |
Transaction Date |
Quantity |
Average Net Share
Price(1) |
Net Proceeds |
Realized Loss |
Nextdoor Holdings,
Inc.(2) |
Various |
589,996 |
$3.09 |
$1.8 million |
$(1.4 million) |
Residential Homes For Rent,
LLC (d/b/a Second Avenue)(3) |
Various |
N/A |
N/A |
$0.3 million |
$- |
__________________(1) The average net share
price is the net share price realized after deducting all
commissions and fees on the sale(s), if applicable.
(2) As of September 30, 2023, SuRo Capital held
262,420 remaining Nextdoor Holdings, Inc. public common shares.
(3) During the three months ended September 30,
2023, approximately $0.3 million was received from Residential
Homes For Rent, LLC (d/b/a Second Avenue) related to the 15% term
loan due December 23, 2023. Of the proceeds received, approximately
$0.3 million repaid a portion of the outstanding principal and the
remaining was attributed to interest.
Subsequent to quarter-end through November 8,
2023, SuRo Capital made the following follow-on investments,
excluding short-term US treasuries:
Portfolio Company |
Investment |
Transaction Date |
Amount |
Xgroup Holdings Limited (d/b/a
Xpoint)(1) |
Convertible Note |
10/26/2023 |
$0.3 million |
__________________
(1) Investment made through
SuRo Capital Sports, LLC.Subsequent to quarter-end through November
8, 2023, SuRo Capital exited or received proceeds from the
following investments, excluding short-term US treasuries:
Portfolio Company |
Transaction Date |
Quantity |
Average Net Share
Price(1) |
Net Proceeds |
Realized Gain |
PSQ Holdings, Inc. (d/b/a
PublicSq.) – Public Warrants (2) |
Various |
67,931 |
$1.01 |
<$0.1 million |
<$0.1 million |
Residential Homes For Rent,
LLC (d/b/a Second Avenue)(3) |
10/23/2023 |
N/A |
N/A |
$0.1 million |
$- |
__________________(1) The average net share price is the net
share price realized after deducting all commissions and fees on
the sale(s), if applicable. (2) As of November 8, 2023, SuRo
Capital held 2,632,069 remaining PSQ Holdings, Inc. (d/b/a
PublicSq.) public warrants. (3) Subsequent to September 30, 2023,
$0.1 million was received from Residential Homes for Rent, LLC
(d/b/a Second Avenue) related to the 15% term loan due December 23,
2023. Of the proceeds received, $0.1 million repaid a portion of
the outstanding principal and the remaining proceeds were
attributed to interest.
Third Quarter 2023 Financial
Results
|
Quarter EndedSeptember 30,
2023 |
Quarter EndedSeptember 30,
2022 |
|
$ in millions |
per share(1) |
$ in millions |
per share(1) |
|
|
|
|
|
Net investment loss |
$(2.7) |
$(0.11) |
$(3.8) |
$(0.13) |
|
|
|
|
|
Net realized loss on
investments |
(1.5) |
(0.06) |
(5.1) |
(0.17) |
|
|
|
|
|
Net change in unrealized
appreciation/(depreciation) of investments |
29.3 |
1.16 |
(37.0) |
(1.24) |
|
|
|
|
|
Net change in net assets
resulting from operations – basic(2) |
$25.2 |
$0.99 |
$(45.9) |
$(1.54) |
|
|
|
|
|
Repurchase of common
stock(3) |
(0.7) |
0.04 |
(13.2) |
0.11 |
|
|
|
|
|
Stock-based compensation |
0.8 |
0.03 |
0.7 |
0.02 |
|
|
|
|
|
Increase/(decrease) in net asset value(2) |
$25.3 |
$1.06 |
$(58.4) |
$(1.41) |
__________________(1) Based on weighted-average number of shares
outstanding for the relevant period. (2) Totals may not sum due to
rounding. (3) During the quarter ended September 30, 2023 the
Company repurchased 186,493 shares of SuRo Capital common stock for
approximately $0.7 million in cash under the Share Repurchase
Program. During the quarter ended September 30, 2022
the Company repurchased 2,000,000 shares of SuRo Capital common
stock for approximately $13.2 million in cash under the Modified
Dutch Auction Tender Offer. The use of cash in connection with the
repurchases decreased net asset value as of quarters-end; however,
the reduction in shares outstanding as of quarters-end resulted in
an increase in the net asset value per share.
Weighted-average common basic shares outstanding
were approximately 25.4 million and 29.8 million for the quarters
ended September 30, 2023, and 2022, respectively. As of September
30, 2023, there were 25,209,108 shares of the Company’s common
stock outstanding.
SuRo Capital’s liquid assets were approximately
$105.4 million as of September 30, 2023, consisting of cash,
short-term US treasuries, and securities of publicly traded
portfolio companies not subject to lock-up restrictions at
quarter-end.
Share Repurchase Program
On August 7, 2023, the Company’s Board of
Directors authorized an extension, and a $5.0 million expansion, of
the Share Repurchase Program to $60.0 million.
Since inception of the Share Repurchase Program
in August 2017, SuRo Capital has repurchased over 6.0 million
shares of its common stock for an aggregate purchase price of
approximately $39.3 million. This does not include repurchases
under various tender offers during this time period. During the
quarter ended September 30, 2023, under the Share Repurchase
Program, the Company repurchased 186,493 shares of its common stock
for approximately $0.7 million. The dollar value of shares that may
yet be purchased by the Company under the Share Repurchase Program
is approximately $20.7 million. The Share Repurchase Program is
authorized through October 31, 2024.
Under the Share Repurchase Program, the Company
may repurchase its outstanding common stock in the open market,
provided it complies with the prohibitions under its insider
trading policies and procedures and the applicable provisions of
the Investment Company Act of 1940, as amended, and the Securities
Exchange Act of 1934, as amended.
Conference Call and Webcast
Management will hold a conference call and
webcast for investors at 2:00 p.m. PT (5:00 p.m. ET). The
conference call access number for U.S. participants is
866-580-3963, and the conference call access number for
participants outside the U.S. is +1 786-697-3501. The conference ID
number for both access numbers is 4506259. Additionally, interested
parties can listen to a live webcast of the call from the "Investor
Relations" section of SuRo Capital’s website at www.surocap.com. An
archived replay of the webcast will also be available for 12 months
following the live presentation.
A replay of the conference call may be accessed
until 5:00 p.m. PT (8:00 p.m. ET) on November 15, 2023 by dialing
866-583-1035 (U.S.) or +44 (0) 20 3451 9993 (International) and
using conference ID number 4506259.
Forward-Looking Statements
Statements included herein, including statements
regarding SuRo Capital's beliefs, expectations, intentions, or
strategies for the future, may constitute "forward-looking
statements". SuRo Capital cautions you that forward-looking
statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected
or implied in these statements. All forward-looking statements
involve a number of risks and uncertainties, including the impact
of any market volatility that may be detrimental to our business,
our portfolio companies, our industry, and the global economy, that
could cause actual results to differ materially from the plans,
intentions, and expectations reflected in or suggested by the
forward-looking statements. Risk factors, cautionary statements,
and other conditions which could cause SuRo Capital's actual
results to differ from management's current expectations are
contained in SuRo Capital's filings with the Securities and
Exchange Commission. SuRo Capital undertakes no obligation to
update any forward-looking statement to reflect events or
circumstances that may arise after the date of this press
release.
About SuRo Capital Corp.
SuRo Capital Corp. (Nasdaq: SSSS) is a publicly
traded investment fund that seeks to invest in high-growth,
venture-backed private companies. The fund seeks to create a
portfolio of high-growth emerging private companies via a
repeatable and disciplined investment approach, as well as to
provide investors with access to such companies through its
publicly traded common stock. SuRo Capital is headquartered in New
York, NY and has offices in San Francisco, CA. Connect with the
company on Twitter, LinkedIn, and at www.surocap.com.
ContactSuRo Capital Corp.(212)
931-6331IR@surocap.com
SURO CAPITAL
CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF ASSETS
AND LIABILITIES (UNAUDITED) |
|
|
September 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Investments at fair
value: |
|
|
|
Non-controlled/non-affiliate investments (cost of $162,899,416 and
$155,103,810, respectively) |
$ |
152,267,563 |
|
|
$ |
130,901,546 |
|
Non-controlled/affiliate
investments (cost of $32,911,517 and $41,140,804,
respectively) |
|
30,297,127 |
|
|
|
12,591,162 |
|
Controlled investments (cost
of $17,168,157 and $19,883,894, respectively) |
|
10,928,028 |
|
|
|
13,695,870 |
|
Total Portfolio Investments |
|
193,492,718 |
|
|
|
157,188,578 |
|
Investments in U.S. Treasury
bills (cost of $19,990,216 and $84,999,598, respectively) |
|
20,265,064 |
|
|
|
85,056,817 |
|
Total Investments (cost of
$232,969,306 and $301,128,106, respectively) |
|
213,757,782 |
|
|
|
242,245,395 |
|
Cash |
|
73,503,279 |
|
|
|
40,117,598 |
|
Escrow proceeds
receivable |
|
309,484 |
|
|
|
628,332 |
|
Interest and dividends
receivable |
|
100,860 |
|
|
|
138,766 |
|
Deferred financing costs |
|
611,736 |
|
|
|
555,761 |
|
Prepaid expenses and other
assets(1) |
|
693,687 |
|
|
|
727,006 |
|
Total Assets |
|
288,976,828 |
|
|
|
284,412,858 |
|
LIABILITIES |
|
|
|
Accounts payable and accrued
expenses(1) |
|
3,162,468 |
|
|
|
708,827 |
|
Dividends payable |
|
188,357 |
|
|
|
296,170 |
|
6.00% Notes due December 30,
2026(2) |
|
73,654,960 |
|
|
|
73,387,159 |
|
Total Liabilities |
|
77,005,785 |
|
|
|
74,392,156 |
|
|
|
|
|
Net
Assets |
$ |
211,971,043 |
|
|
$ |
210,020,702 |
|
NET
ASSETS |
|
|
|
Common stock, par value $0.01
per share (100,000,000 authorized; 25,209,108 and 28,429,499 issued
and outstanding, respectively) |
$ |
252,091 |
|
|
$ |
284,295 |
|
Paid-in capital in excess of
par |
|
318,691,954 |
|
|
|
330,899,254 |
|
Accumulated net investment
loss |
|
(75,528,136 |
) |
|
|
(64,832,605 |
) |
Accumulated net realized
gain/(loss) on investments, net of distributions |
|
(11,989,672 |
) |
|
|
2,552,465 |
|
Accumulated net unrealized
appreciation/(depreciation) of investments |
|
(19,455,194 |
) |
|
|
(58,882,707 |
) |
Net Assets |
$ |
211,971,043 |
|
|
$ |
210,020,702 |
|
Net Asset Value Per Share |
$ |
8.41 |
|
|
$ |
7.39 |
|
__________________________________________________
(1) This balance includes a right of use asset
and corresponding operating lease liability, respectively. (2) As
of September 30, 2023, the 6.00% Notes due December 30, 2026
(effective interest rate of 6.53%) had a face value $75,000,000. As
of December 31, 2022, the 6.00% Notes due December 30, 2026
(effective interest rate of 6.53%) had a face value
$75,000,000.
SURO CAPITAL CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (UNAUDITED) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
2023 |
|
|
|
2022 |
|
INVESTMENT
INCOME |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliate
investments: |
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
28,070 |
|
|
$ |
26,747 |
|
|
|
$ |
117,939 |
|
|
$ |
338,484 |
|
Dividend income |
|
|
63,145 |
|
|
|
107,764 |
|
|
|
|
189,435 |
|
|
|
429,758 |
|
Controlled investments: |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
400,000 |
|
|
|
385,000 |
|
|
|
|
954,425 |
|
|
|
1,225,000 |
|
Interest income from U.S.
Treasury bills |
|
|
974,531 |
|
|
|
— |
|
|
|
|
2,875,247 |
|
|
|
— |
|
Total Investment Income |
|
|
1,465,746 |
|
|
|
519,511 |
|
|
|
|
4,137,046 |
|
|
|
1,993,242 |
|
OPERATING
EXPENSES |
|
|
|
|
|
|
|
|
|
Compensation expense |
|
|
2,123,704 |
|
|
|
1,836,808 |
|
|
|
|
6,378,330 |
|
|
|
5,456,771 |
|
Directors’ fees |
|
|
161,661 |
|
|
|
161,661 |
|
|
|
|
483,887 |
|
|
|
514,055 |
|
Professional fees |
|
|
277,075 |
|
|
|
565,411 |
|
|
|
|
2,184,488 |
|
|
|
2,916,583 |
|
Interest expense |
|
|
1,215,248 |
|
|
|
1,202,748 |
|
|
|
|
3,642,801 |
|
|
|
3,630,301 |
|
Income tax expense |
|
|
— |
|
|
|
74,497 |
|
|
|
|
620,606 |
|
|
|
82,238 |
|
Other expenses |
|
|
356,484 |
|
|
|
487,619 |
|
|
|
|
1,522,465 |
|
|
|
1,238,120 |
|
Total Operating Expenses |
|
|
4,134,172 |
|
|
|
4,328,744 |
|
|
|
|
14,832,577 |
|
|
|
13,838,068 |
|
Net Investment Loss |
|
|
(2,668,426 |
) |
|
|
(3,809,233 |
) |
|
|
|
(10,695,531 |
) |
|
|
(11,844,826 |
) |
Realized Loss on
Investments: |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated
investments |
|
|
(1,461,281 |
) |
|
|
(5,141,097 |
) |
|
|
|
(3,597,113 |
) |
|
|
(3,940,668 |
) |
Non-controlled/affiliate
investments |
|
|
— |
|
|
|
— |
|
|
|
|
(10,945,024 |
) |
|
|
(70,379 |
) |
Net Realized Loss on Investments |
|
|
(1,461,281 |
) |
|
|
(5,141,097 |
) |
|
|
|
(14,542,137 |
) |
|
|
(4,011,047 |
) |
Change in Unrealized
Appreciation/(Depreciation) of Investments: |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated
investments |
|
|
27,760,743 |
|
|
|
(34,763,904 |
) |
|
|
|
13,544,366 |
|
|
|
(101,639,973 |
) |
Non-controlled/affiliate
investments |
|
|
1,568,324 |
|
|
|
(1,866,488 |
) |
|
|
|
25,939,147 |
|
|
|
(2,228,109 |
) |
Controlled investments |
|
|
(6,000 |
) |
|
|
(321,528 |
) |
|
|
|
(56,000 |
) |
|
|
(61,528 |
) |
Net Change in Unrealized Appreciation/(Depreciation) of
Investments |
|
|
29,323,067 |
|
|
|
(36,951,920 |
) |
|
|
|
39,427,513 |
|
|
|
(103,929,610 |
) |
Net Change in Net Assets Resulting from
Operations |
|
$ |
25,193,360 |
|
|
$ |
(45,902,250 |
) |
|
|
$ |
14,189,845 |
|
|
$ |
(119,785,483 |
) |
Net Change in Net Assets Resulting from Operations per
Common Share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.99 |
|
|
$ |
(1.54 |
) |
|
|
$ |
0.53 |
|
|
$ |
(3.92 |
) |
Diluted(1) |
|
$ |
0.99 |
|
|
$ |
(1.54 |
) |
|
|
$ |
0.53 |
|
|
$ |
(3.92 |
) |
Weighted-Average
Common Shares Outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
25,351,306 |
|
|
|
29,781,801 |
|
|
|
|
26,549,672 |
|
|
|
30,542,611 |
|
Diluted(1) |
|
|
25,351,306 |
|
|
|
29,781,801 |
|
|
|
|
26,549,672 |
|
|
|
30,542,611 |
|
____________________________________________________________________________________________________________________________
(1) For the three and nine
months ended September 30, 2023 and September 30, 2022, there were
no potentially dilutive securities outstanding.
SURO CAPITAL CORP. AND SUBSIDIARIESFINANCIAL HIGHLIGHTS
(UNAUDITED) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Per Basic Share
Data |
|
|
|
|
|
|
|
|
Net asset value at beginning
of period |
|
$ |
7.35 |
|
|
$ |
9.24 |
|
|
$ |
7.39 |
|
|
$ |
11.72 |
|
Net investment loss(1) |
|
|
(0.11 |
) |
|
|
(0.13 |
) |
|
|
(0.40 |
) |
|
|
(0.39 |
) |
Net realized loss on investments(1) |
|
|
(0.06 |
) |
|
|
(0.17 |
) |
|
|
(0.55 |
) |
|
|
(0.13 |
) |
Net change in unrealized appreciation/(depreciation) of
investments(1) |
|
|
1.16 |
|
|
|
(1.24 |
) |
|
|
1.49 |
|
|
|
(3.40 |
) |
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.11 |
) |
Issuance of common stock from public offering(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Repurchase of common stock(1) |
|
|
0.04 |
|
|
|
0.11 |
|
|
|
0.41 |
|
|
|
0.08 |
|
Stock-based compensation(1) |
|
|
0.03 |
|
|
|
0.02 |
|
|
|
0.07 |
|
|
|
0.05 |
|
Net asset value at end of
period |
|
$ |
8.41 |
|
|
$ |
7.83 |
|
|
$ |
8.41 |
|
|
$ |
7.83 |
|
Per share market value at end
of period |
|
$ |
3.62 |
|
|
$ |
3.87 |
|
|
$ |
3.62 |
|
|
$ |
3.87 |
|
Total return based on market
value(2) |
|
|
13.13 |
% |
|
(39.53)% |
|
(4.74)% |
|
(68.91)% |
Total return based on net
asset value(2) |
|
|
14.42 |
% |
|
(15.26) % |
|
|
13.80 |
% |
|
(32.25)% |
Shares outstanding at end of
period |
|
|
25,209,108 |
|
|
|
28,333,661 |
|
|
|
25,209,108 |
|
|
|
28,333,661 |
|
Ratios/Supplemental
Data: |
|
|
|
|
|
|
|
|
Net assets at end of
period |
|
$ |
211,971,043 |
|
|
$ |
221,783,611 |
|
|
$ |
211,971,043 |
|
|
$ |
221,783,611 |
|
Average net assets |
|
$ |
204,284,971 |
|
|
$ |
278,994,914 |
|
|
$ |
206,224,853 |
|
|
$ |
340,160,110 |
|
Ratio of net operating
expenses to average net assets(3) |
|
|
8.03 |
% |
|
|
5.14 |
% |
|
|
9.62 |
% |
|
|
4.89 |
% |
Ratio of net investment loss
to average net assets(3) |
|
(5.18)% |
|
(4.66)% |
|
(6.93)% |
|
(4.52)% |
Portfolio Turnover Ratio |
|
|
1.17 |
% |
|
|
0.85 |
% |
|
|
4.93 |
% |
|
|
3.47 |
% |
__________________
(1) Based on weighted-average number of shares
outstanding for the relevant period.(2) Total return based on
market value is based upon the change in market price per share
between the opening and ending market values per share in the
period, adjusted for dividends and equity issuances. Total return
based on net asset value is based upon the change in net asset
value per share between the opening and ending net asset values per
share in the period, adjusted for dividends and equity issuances.
(3) Financial highlights for periods of less than one year are
annualized and the ratios of operating expenses to average net
assets and net investment loss to average net assets are adjusted
accordingly. Because the ratios are calculated for the Company’s
common stock taken as a whole, an individual investor’s ratios may
vary from these ratios.
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