AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings

NEW YORK–(BUSINESS WIRE)–
AG Mortgage Investment Trust, Inc. (“MITT” or the “Company”) (NYSE: MITT – News) today reported net income for the quarter ended December 31, 2011 of $5.8 million and net book value of $20.52 per share.
FINANCIAL HIGHLIGHTS

• Net income of $5.8 million, or 0.58 per share for the fourth quarter
• Net income of $19.0 million, or $3.20 per share for the period from March 7, 2011 to December 31, 2011
• Core Earnings of $6.5 million or $0.65 per share for the quarter
• Core Earnings of $12.4 million, or $1.24 per share for the period from July 6, 2011 (the consummation of our initial public offering) to December 31, 2011
• Net realized gains of $2.9 million, or $0.29 per share, on Agency RMBS for the fourth quarter and $7.2 million, or $0.72 per share, for the period from July 6, 2011 to December 31, 2011
• Net realized losses of ($3.5) million, or ($0.35) per share, on credit investments for the fourth quarter and for the period from July 6, 2011 to December 31, 2011
• $0.70 per share dividend declared for the fourth quarter and $1.10 per share dividends declared for the period ended December 31, 2011
• Approximately $0.46 per share of undistributed taxable income as of December 31, 2011(1)
• $20.52 net book value per share as of December 31, 2011(1)

INVESTMENT HIGHLIGHTS

• $1.4 billion investment portfolio value as of December 31, 2011 (2) (4)
• 5.86x leverage as of December 31, 2011 (2) (3)
• 91.0% Agency RMBS investment portfolio (4)
• 9.0% credit investment portfolio, comprising Non-Agency RMBS, CMBS and ABS assets (4)
• 5.0% constant prepayment rate (“CPR”) for the fourth quarter on the Agency RMBS investment portfolio (5)
• 2.25% net interest margin as of December 31, 2011 (6)

FOURTH QUARTER 2011 AND PERIOD ENDED DECEMBER 31, 2011 RESULTS
AG Mortgage Investment Trust, Inc. is an actively managed REIT that opportunistically invests in a diversified risk-adjusted portfolio of Agency RMBS, Non-Agency RMBS, CMBS and ABS. For the fourth quarter, the Company had net income of $5.8 million, or $0.58 per diluted share, and Core Earnings of $6.5 million, or $0.65 per diluted share. For the period from March 7, 2011 to December 31, 2011, the Company had net income of $19.0 million, or $3.20 per diluted share (7), and for the period from July 6, 2011 to December 31, 2011 (“period ended December 31, 2011”), the Company had Core Earnings of $12.4 million, or $1.24 per diluted share. Core Earnings represents a non-GAAP financial measure and is defined as net income (loss) excluding (i) net realized gain (loss) on investments and terminations on derivative contracts and (ii) net unrealized appreciation (depreciation) on investments and derivative contacts. (See “Non-GAAP Financial Measure” below for further detail on Core Earnings)
David Roberts, Chief Executive Officer, commented “We are pleased to announce our fourth quarter earnings. During the quarter, Core Earnings increased to $0.65 per share and we announced our first full quarter dividend of $0.70 per share. In addition to meeting our financial goals, we continued to diversify funding relationships and in January we were able to successfully complete an equity raise which has improved our stock’s liquidity. We are proud of our accomplishments over the last two quarters and look forward to the opportunities ahead.”
“Amidst uncertainty in the global markets, European liquidity difficulties and year-end funding pressures, we continued to optimize our Agency portfolio, opportunistically rotate the credit portfolio and retain capital for potential market dislocations,” said Jonathan Lieberman, Chief Investment Officer. “While Agency RMBS yields have compressed, we believe the low interest rate environment and a carefully selected investment portfolio will continue to support attractive risk-adjusted returns. Over the course of the quarter, we rotated a significant portion of the Agency portfolio into securities with more favorable prepayment attributes to further mitigate prepayment risk. Allocations to credit securities were concentrated in less volatile short duration Non-Agency securities and CMBS tranches with superior intrinsic value. We believe MITT is well positioned to continue to produce sustainable returns and take advantage of the opportunities ahead in both the Agency RMBS and credit markets. With the success of the European Central Bank’s Long-Term Refinancing Operation, funding risks have materially declined and we anticipate deploying capital in a more aggressive style. New capital from our January equity transaction allows greater latitude to the investment team to selectively increase our capital allocation to credit opportunities.”

KEY STATISTICS (2)
		Weighted Average at						Weighted Average
		December 31, 2011						at September 30, 2011
Investment portfolio		$	1,388,006,801					$	1,332,205,377
Repurchase agreements		$	1,189,303,407					$	1,126,859,885
Stockholders’ equity		$	206,283,920					$	207,413,703
Leverage ratio		5.86x			(3	)		5.70x			(3	)
Swap ratio			66	%	(8	)			51	%	(8	)
Yield on investment portfolio			3.16	%	(9	)			3.26	%	(9	)
Cost of funds			0.91	%	(10	)			0.82	%	(10	)
Net interest margin			2.25	%	(6	)			2.44	%	(6	)
Management fees			1.49	%	(11	)			1.43	%	(11	)
Other operating expenses			1.57	%	(12	)			1.58	%	(12	)
Book value, per share		$	20.52		(1	)		$	20.64		(1	)
Dividend, per share		$	0.70					$	0.40

INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of December 31, 2011 (2):

														Weighted Average
		Current Face			Premium (Discount)				Amortized Cost		Fair Value			Coupon		Yield
Agency RMBS:
15-Year Fixed Rate		$	738,344,948		$	22,525,476			$	760,870,424	$	772,310,909		3.32	%	2.62	%
20-Year Fixed Rate			227,566,114			7,362,001				234,928,115		237,586,837		3.69	%	3.00	%
30-Year Fixed Rate			232,890,169			12,162,512				245,052,681		246,679,482		3.99	%	3.18	%
Interest Only			43,505,596			(34,046,500	)			9,459,096		6,636,871		5.50	%	3.45	%
Non-Agency RMBS			102,246,062			(8,980,754	)			93,265,308		90,368,316		5.90	%	6.31	%
CMBS			19,500,000			(5,411,965	)			14,088,035		13,537,851		5.88	%	13.44	%
ABS			21,046,150			(34,497	)			21,011,653		20,886,535		4.50	%	4.50	%
Total		$	1,385,099,039		$	(6,423,727	)		$	1,378,675,312	$	1,388,006,801		3.81	%	3.16	%

As of December 31, 2011, the weighted average yield on the Company’s investment portfolio was 3.16% and its weighted average cost of funds was 0.91%. This resulted in a net interest margin of 2.25% as of December 31, 2011. (6)
The CPR for the Agency RMBS portfolio was 5.0% for the fourth quarter and 5.0% for the month of December 2011. (5)
The weighted average cost basis of the Agency investment portfolio, excluding interest-only securities, was 103.5% as of December 31, 2011. The amortization of premiums (net of any accretion of discounts) on Agency securities for the fourth quarter was $1.9 million, or $(0.19) per share. The unamortized net Agency premium as of December 31, 2011 was $42.0 million.
Premiums and discounts associated with purchases of the Company’s securities are amortized or accreted into interest income over the estimated life of such securities, using the effective yield method. Since the cost basis of the Company’s Agency securities, excluding interest-only securities, exceeds the underlying principal balance by 3.5% as of December 31, 2011, slower actual and projected prepayments can have a meaningful positive impact, while faster actual or projected prepayments can have a meaningful negative impact on the Company’s asset yields.
We have also entered into “to-be-announced” (“TBA”) positions to facilitate the future purchase of Agency RMBS. Under the terms of these TBAs, the Company agrees to purchase, for future delivery, Agency RMBS with certain principal and interest specifications and certain types of underlying collateral, but the particular Agency RMBS to be delivered are not identified until shortly before (generally two days) the TBA settlement date. At December 31, 2011, we had $100 million net notional amount of TBA positions with a net weighted average purchase price of 103.8%. As of December 31, 2011, our TBA portfolio had a net weighted average yield at purchase of 3.01% and a net weighted average settlement date of February 5, 2012. We have recorded derivative assets of $1.4 million and derivative liabilities of $0.5 million, reflecting these TBA positions.
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of December 31, 2011 as summarized below:

		Agency RMBS						Non-Agency RMBS / CMBS / Other
Repurchase Agreements Maturing Within:		Balance			Weighted Average Rate			Balance			Weighted Average Rate
30 days or less		$	652,002,000		0.35	%		$	68,187,000		1.74	%
31-60 days			334,825,407		0.42	%			1,749,000		1.95	%
61-90 days			118,340,000		0.37	%			14,200,000		1.80	%
Greater than 90 days			-		-				-		-
Total / Weighted Average		$	1,105,167,407		0.37	%		$	84,136,000		1.75	%

As of December 31, 2011, the Company had entered into repurchase agreements with twenty-one counterparties. We continue to rebalance our exposures to counterparties and add new counterparties.
We have entered into interest rate swap agreements to hedge our portfolio. The Company’s swaps as of December 31, 2011 are summarized as follows:

Maturity		Notional Amount			Weighted Average Pay Rate			Weighted Average Receive Rate*			Weighted Average Years to Maturity
2012		$	100,000,000		0.354	%		0.285	%		0.14
2013			182,000,000		0.535	%		0.286	%		1.78
2014			204,500,000		1.000	%		0.395	%		2.54
2015			184,025,000		1.412	%		0.380	%		3.56
2016			87,500,000		1.625	%		0.328	%		4.63
2018			35,000,000		1.728	%		0.511	%		6.88
Total/Wtd Avg		$	793,025,000		1.008	%		0.350	%		2.72
* Approximately 50% of our interest rate swap notionals reset monthly based on one-month LIBOR and 50% of our interest rate swap notionals reset quarterly based on three-month LIBOR.

TAXABLE INCOME
The primary differences between taxable income and GAAP net income include (i) unrealized gains and losses associated with investment and derivative portfolios are marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) temporary differences related to amortization of net premiums paid on investments (iii) the timing and amount of deductions related to stock-based compensation and (iv) excise taxes. As of December 31, 2011, the Company had undistributed taxable income of approximately $0.46 per share.
DIVIDEND
On December 14, 2011, the Company declared a dividend of $0.70 per share of common stock to stockholders of record as of December 30, 2011 and paid such dividend on January 27, 2012. The Company declared dividends of $1.10 per share for the period ended December 31, 2011.
SUBSEQUENT EVENT
On January 24, 2012, the Company completed a follow-on offering of 5,000,000 shares of its common stock and subsequently issued an additional 750,000 shares of common stock pursuant to the underwriters’ over-allotments at a price of $19.00 per share, for gross proceeds of approximately $109.3 million. Net proceeds to the Company from the offerings were approximately $104.1 million, net of issuance costs of approximately $5.2 million.
SHAREHOLDER CALL
The Company invites shareholders, prospective shareholders and analysts to attend MITT’s fourth quarter earnings conference call on March 1, 2012 at 11:00 am Eastern Time. The shareholder call can be accessed by dialing (888) 424-8151 (U.S. domestic) or (847) 585-4422 (international). Please enter code number 8732511#.
A presentation will accompany the conference call and will be available on the Company’s website at www.agmit.com. Select the Q4 2011 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An audio replay of the shareholder call combined with the presentation will be made available on our website after the call. The replay will be available until midnight on March 15, 2012. If you are interested in hearing the replay, please dial (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international). The conference ID number is 8732511#.
For further information or questions, please contact Allan Krinsman, the Company’s General Counsel, at (212) 883-4180 or akrinsman@angelogordon.com.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a real estate investment trust that invests in, acquires and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., an SEC-registered investment adviser that specializes in alternative investment activities.
Additional information can be found on the Company’s website at www.agmit.com.
ABOUT ANGELO, GORDON & CO.
Angelo, Gordon & Co. was founded in 1988 and has approximately $22 billion under management. Currently, the firm’s investment disciplines encompass five principal areas: (i) distressed debt and leveraged loans, (ii) real estate, (iii) mortgage-backed securities and other structured credit, (iv) private equity and special situations and (v) a number of hedge fund strategies. Angelo, Gordon & Co. employs over 250 employees, including more than 90 investment professionals, and is headquartered in New York, with associated offices in Amsterdam, Chicago, Los Angeles, London, Hong Kong Seoul, Shanghai, Sydney and Tokyo.
FORWARD LOOKING STATEMENTS
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in interest rates, changes in the yield curve, changes in prepayment rates, the availability and terms of financing, changes in the market value of our assets, general economic conditions, market conditions, conditions in the market for Agency securities, and legislative and regulatory changes that could adversely affect the business of the Company. Additional information concerning these and other risk factors are contained in the Company’s most recent filings with the Securities and Exchange Commission (“SEC”). Copies are available on the SEC’s website, http://www.sec.gov/. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

AG Mortgage Investment Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
			December 31, 2011			April 1, 2011
Assets			(Unaudited)
Real Estate securities, at fair value
Agency – $1,186,149,842 pledged as collateral			$	1,263,214,099		$	-
Non-Agency – $47,227,005 pledged as collateral				58,787,051			-
CMBS – $2,747,080 pledged as collateral				13,537,851			-
ABS – $4,526,620 pledged as collateral				4,526,620			-
Linked transactions, net, at fair value				8,787,180			-
Cash and cash equivalents				35,851,249			1,000
Restricted cash				3,037,055			-
Interest receivable				4,219,640			-
Derivative assets, at fair value				1,428,595			-
Prepaid expenses				317,950			-
Due from broker				341,491
Due from affiliates				104,994			-
Deferred costs				52,176			-
Total Assets			$	1,394,205,951		$	1,000
Liabilities
Repurchase agreements			$	1,150,149,407		$	-
Payable on unsettled trades				18,759,200			-
Interest payable				2,275,138			-
Derivative liabilities, at fair value				7,908,308			-
Dividend payable				7,011,171			-
Due to affiliates				770,341			-
Accrued expenses				668,552			-
Due to broker				379,914			-
Total Liabilities				1,187,922,031			-
Stockholders’ Equity (Deficit)
Common stock, par value $0.01 per share; 450,000,000 and 1,000 shares of common stock authorized and 10,009,958 and 100 shares issued and outstanding at December 31, 2011 and April 1, 2011, respectively				100,100			1
Additional paid-in capital				198,228,694			999
Retained earnings				7,955,126			-
				206,283,920			1,000
Total Liabilities & Equity			$	1,394,205,951		$	1,000

AG Mortgage Investment Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
							Period from
			Quarter Ended				March 7, 2011 to
			December 31, 2011				December 31, 2011
Net Interest Income
Interest income			$	10,022,275			$	18,748,669
Interest expense				1,106,097				1,696,344
				8,916,178				17,052,325
Other Income (Loss)
Net realized gain (loss)				(589,747	)			3,701,392
Gain (loss) on linked transactions, net				(1,013,291	)			(808,564	)
Realized loss on periodic interest settlements of interest rate swaps, net				(1,175,788	)			(2,162,290	)
Unrealized gain (loss) on derivative instruments, net				70,663				(6,491,430	)
Unrealized gain (loss) on real estate securities				1,346,237				11,040,692
				(1,361,926	)			5,279,800
Expenses
Management fee to affiliate				770,341				1,512,898
Other operating expenses				811,372				1,566,642
Equity based compensation to affiliate				97,343				176,165
Excise tax				105,724				105,724
				1,784,780				3,361,429
Net Income (Loss)			$	5,769,472			$	18,970,696
Earnings Per Share of Common Stock
Basic			$	0.58			$	3.20
Diluted			$	0.58			$	3.20
Weighted Average Number of Shares of Common Stock Outstanding
Basic				10,009,958				5,933,930
Diluted				10,010,799				5,933,930
Dividends Declared per Share of Common Stock			$	0.70			$	1.10

Non-GAAP Financial Measure
This press release contains Core Earnings, a non-GAAP financial measure. AG Mortgage Investment Trust’s management believes that this non-GAAP measure, when considered with GAAP, provides supplemental information useful in evaluating the results of the Company’s operations. This non-GAAP measure should not be considered a substitute, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations from these results should be carefully evaluated.
Core Earnings are defined by the Company as net income excluding both realized and unrealized gains (losses) on the sale or termination of securities, including underlying linked transactions and derivatives. As defined, Core Earnings include the net interest earned on these transactions, including credit derivatives, linked transactions, inverse Agency securities, interest rate derivatives or any other investment activity that may earn net interest. One of the objectives of the Company is to generate net income from net interest margin on the portfolio and management uses Core Earnings to measure this objective.
A reconciliation of GAAP net income to Core Earnings for the quarter and period ended December 31, 2011 is set forth below:

						Period from
		Quarter Ended				March 7, 2011 to
		December 31, 2011				December 31, 2011
Net income/loss		$	5,769,472			$	18,970,696
Add (Deduct):
Net realized gain			589,747				(3,701,392	)
Gain/loss on linked transactions, net			1,013,291				808,564
Net interest income on linked transactions			554,729				900,638
Unrealized gain/loss on derivative instruments, net			(70,663	)			6,491,430
Unrealized gain/loss on real estate securities			(1,346,237	)			(11,040,692	)
Core Earnings		$	6,510,339			$	12,429,244

Footnotes
(1) Per share figures are calculated using outstanding shares including all shares granted to our Manager and our independent directors under our equity incentive plans as of quarter end.
(2) Generally when we purchase a security and finance it with a repurchase agreement, the security is included in our assets and the repurchase agreement is separately reflected in our liabilities on our balance sheet. For securities with certain characteristics (including those which are not readily obtainable in the market place) that are purchased and then simultaneously sold back to the seller under a repurchase agreement, US GAAP requires these transactions be netted together and recorded as a forward purchase commitment. Throughout this press release where we disclose our investment portfolio and the repurchase agreements that finance it, including our leverage metrics, we have un-linked the transaction and used the gross presentation as used for all other securities. This presentation is consistent with how the Company’s management evaluates the business, and believes provides the most accurate depiction of the Company’s investment portfolio and financial condition.
(3) Calculated by dividing total repurchase agreements, including $39.2 million included in linked transactions, plus payable on unsettled trades on our GAAP balance sheet by our GAAP stockholders’ equity.
(4) The total investment portfolio is calculated by summing the fair market value of our Agency RMBS, Non-Agency RMBS, CMBS and ABS assets, including linked transactions. The percentage of Agency RMBS and credit investments are calculated by dividing the respective fair market value of each, including linked transactions, by the total investment portfolio.
(5) This represents the weighted average monthly CPRs published during the period for our in-place portfolio during the same period.
(6) Net interest margin is calculated by subtracting the weighted average cost of funds from the weighted average yield for the Company’s investment portfolio, which excludes cash held by the Company. See footnotes (9) and (10) for further detail.
(7) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP. For the period from March 7, 2011 to December 31, 2011, the calculation reflected the impact of 100 shares outstanding from July 1, 2011 through the settlement date of our IPO.
(8) The swap ratio was calculated by dividing the notional value of our interest rate swaps by total repurchase agreements, including those included in linked transactions, plus payable on unsettled trades.
(9) The yield on our investment portfolio during the period represents an effective interest rate, which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of quarter end. This calculation excludes cash held by the Company.
(10) The cost of funds was calculated as the sum of the weighted average rate on the repurchase agreements outstanding at quarter end and the weighted average net pay rate on our interest rate swaps. Both elements of the cost of funds were weighted by the repurchase agreements outstanding at quarter end.
(11) The management fee percentage at quarter end was calculated by annualizing management fees incurred during the quarter and dividing by quarter-ended stockholders’ equity.
(12) The other operating expenses percentage at quarter end was calculated by annualizing other operating expenses recorded during the quarter and dividing by quarter-ended stockholders’ equity.
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15. Investing in the right causes

Tandem Fund assists social enterprises in getting financing
TANDEM Fund calls itself a “patient investor” to social enterprises.
“For all their benefits, social enterprises find it difficult to obtain financing,” its website reads.
“On one hand, they generate returns that are too low for banks of traditional investors. On the other, they are often ineligible for foundation money as for-profit enterprises.
“Our role is to fill that gap. We act as a patient investor, providing capital to social enterprises that wouldn’t otherwise be able to gain investment.”
The venture fund, says its chief operating officer Kal Joffres, is the only one in Malaysia that invests exclusively in social enterprises.
As a not-for-profit fund, it differs from a conventional investment firm in that the returns from its investees are recycled into other social enterprises, rather than paid back as a dividend to shareholders.
A native Canadian, Joffres was a strategy consultant to non-profits and United Nations agencies prior to joining Tandem Fund.
The business and philosophy graduate from McGill University moved to Malaysia after helping a client here to start a social venture fund, which became Tandem Fund.
The fund has two sources of capital: the income from its subsidiary Tandemic, a social media consultancy, and a major banking group in Malaysia, who was the client that hired Joffres.
Tandemic – which has worked with consumer brands and government agencies – helps build social movements by organising communities around causes using social media and on-ground events.
“We started Tandemic because we thought some of our skills would be useful for companies and brands. The way we see it is a lot of organisations that are interested in social media aren’t doing it very well.
“They tell people, Here’s our latest deal, follow us on Twitter’, which is not effective. We try to engage people around causes they care about, we build communities around causes,” Joffres quips.
A portion of the Tandemic’s profit is used to finance Tandem Fund’s more experimental social enterprises.
On the second source, Joffres points out that the fund does not receive any cash for investment but rather acts as a conduit to identify social enterprises that meet several criteria, including financial sustainability and social impact. It is the bank that invests directly in the social enterprises, he says.
The social enterprises that are at a mature stage and can turn in a profit are put under Tandem Fund’s management, while the ones that more closely resemble a non-profit are directed to the bank’s philanthropic arm.
Tandem Fund has four projects under its belt: Design Change, Do Something Good, Sols24/7, and a yet unnamed mobile healthcare unit that aims to deliver medical care via waterways, especially in Sarawak.
Besides funding social enterprises, it helps streamline their operations, for example by customising a set of performance measures for each company.
On the challenges faced by fledgeling social enterprises, Joffres says this includes profitability, management skills, market access, and talent.
“A lot of social enterprises in Malaysia haven’t figured out how to make money yet. There’s still work to be done on the business model.
“They also tend to have very thin middle management. There are very passionate people running them, but it’s also important to have operational people in place to make sure things run smoothly,” he elaborates.
The country’s geography, he adds, can also be a hindrance as the people who need assistance are often deep in remote areas.
Disorganisation is another thing. “It’s easier to work with communities that are internally organised, but these are limited,” Joffres says.
“When you have one player that tries to do too many things along the value chain, instead of having a few to help you along the line, your risk increases. This is especially so if you are a start-up.”
In addition, he notes that there are talent acquisition issues in the sector, but insists that “just because you work for a social enterprise doesn’t mean you don’t get paid as well (as other companies)”. Some social enterprises do pay competitively, he says.
Nonetheless, he adds that “people love the fact they are working for social missions” in social enterprises.
“For the most part, it isn’t easy to get talent in any sector. We have a really passionate team and they get to pursue causes they’re interested in,” he says.
Joffres thinks that interest in the sector is growing among the youth and urbanites.
“If you have a strong social dimension you have an edge over companies that don’t,” he says.
“For instance, people don’t buy Body Shop products only because they’re good products, but also because of the social impact (they have). People who have spending power care about this stuff.”
Related Stories:
The rise of social enterprises
Creating an impact
SEA says some local enterprises are ready for investors

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First Financial Announces the Conversion of First Federal Savings and Loan to a State-Chartered Commercial Bank and …

CHARLESTON, S.C., Feb. 22, 2012 (GLOBE NEWSWIRE) — First Financial Holdings, Inc. (“First Financial”) (Nasdaq:FFCH – News), the holding company for First Federal Savings and Loan Association of Charleston (“First Federal”), announced today that First Federal has converted from a federal savings and loan association to a South Carolina-chartered commercial bank and a member of the Federal Reserve System. In connection with First Federal’s conversion, First Financial also announced that it has registered with the Federal Reserve as a bank holding company.
R. Wayne Hall, President and Chief Executive Officer stated, “As an important part of our strategic re-positioning, we are delighted to complete our conversion to a state-chartered commercial bank, to be a member of the Federal Reserve System and to have become a bank holding company. Converting to a commercial bank charter reinforces our focus on commercial banking as we execute our business strategy. From our customers’ perspective, the charter conversion will be seamless; we will continue to operate through our current network of branch offices and the terms and conditions of our customers’ loans and deposit accounts will not be affected in any manner.”
As a result of the charter conversion and membership in the Federal Reserve System, the South Carolina State Board of Financial Institutions and the Federal Reserve will serve as First Federal’s primary regulators. The Federal Reserve will also serve as First Financial’s primary regulator.
About First Financial
First Financial Holdings, Inc. (“First Financial”) (Nasdaq:FFCH – News) is a Charleston, South Carolina bank holding company with $3.1 billion in total assets as of December 31, 2011. First Financial offers integrated financial solutions, including personal, business and wealth management services. First Federal Savings and Loan Association of Charleston (“First Federal”), which was founded in 1934 and is the primary subsidiary, serves individuals and businesses throughout coastal South Carolina, Florence, South Carolina and Wilmington, North Carolina. First Financial subsidiaries include: First Federal; First Southeast Investor Services, Inc., a registered broker-dealer, and First Southeast 401(k) Fiduciaries, Inc., a registered investment advisor. First Federal is the largest commercial bank headquartered in the Charleston, South Carolina metropolitan area and the third largest commercial bank headquartered in South Carolina, based on asset size. Additional information about First Financial is available at http://www.firstfinancialholdings.com/.
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nScaled Announces Series A Investment by Almaz Capital and Doughty Hanson Technology Ventures

SAN FRANCISCO, CA–(Marketwire -02/22/12)- nScaled, a pioneering provider of cloud-based Recovery-as-a-Service (RaaS) solutions, today announced that it has completed a Series A round of financing, securing $7 million in investments from Almaz Capital and Doughty Hanson Technology Ventures, as well as leading Silicon Valley angel investors. The investment will be used to fund nScaled’s growth, including expansion of its global network of data centers and new software development, as well as sales and marketing efforts.
Peter Loukianoff, co-founder and managing partner of Almaz Capital, said, “In nScaled, we found a company that is in prime position to command a dominant role in the emerging market of cloud-based disaster recovery. nScaled’s technology platform will enable the company to broaden its service offerings in the future and allow customers to take full advantage of the cloud and its enormous economic and operational benefits. Cloud-computing is forcing dramatic structural changes in the way software applications are consumed by companies of all sizes and nScaled is well-positioned to capitalize on this tectonic market shift.”
“We invested in nScaled because we believe there is a gap in the market for technology that simplifies and reduces the cost of providing disaster recovery,” added George Powlick, managing director at Doughty Hanson Technology Ventures. “nScaled’s early success and the market’s acceptance of Cloud-based recovery services make us confident that nScaled will become a leader in the market.”
“2011 was a stellar year for nScaled. We tripled the size of our business by virtually all measures and we have similarly aggressive growth plans for 2012,” said Mark Hadfield, CEO of nScaled. “This funding will help us achieve that growth and position us as one of the dominant players in Recovery-as-a-Service.”
As part of its growth strategy, nScaled recently announced the availability of free accounts designed to provide prospective customers with a fast and easy way to discover Cloud-based disaster recovery, backup and archiving capabilities for their VMware data centers.
About Almaz CapitalAlmaz Capital is one of the leading venture capital firms serving entrepreneurs and companies with ties to Russia and the Commonwealth of Independent States (CIS). Investors and strategic partners of the firm include industry leaders, such as Cisco, the European Bank for Reconstruction and Development (the “EBRD”), and UFG Asset Management. Almaz Capital primarily targets early and expansion stage investments in high growth sectors, including Technology, Digital Media, and Communications. In addition to extensive experience in Russia and the CIS, the firm’s network in Silicon Valley offers portfolio companies an effective local investment partner with global reach. For more information please go to http://www.almazcapital.com/
About Doughty Hanson Technology VenturesDoughty Hanson Technology Ventures invests in exceptional entrepreneurs and management teams that have the passion, commitment and vision to conceive great ideas and build global businesses. Their investment strategy targets companies that develop sophisticated and proprietary technologies and focuses on three industry sectors: internet software, mobile communications and clean energy technology. For more information please go to http://www.doughtyhanson.com/
About nScaled Inc.nScaled provides Recovery-as-a-Service (RaaS) to mid-size companies worldwide. They provide an all-in-one solution for disaster recovery, business continuity, backup and archiving to customers with zero tolerance for data loss or downtime. nScaled’s customers are banks, law firms, hospitals, manufacturers, retailers, universities — any organization that needs to be ready for the inevitable problems that lead to data or server loss. All services are based on a global network of remote cloud data centers plus on-premises local cloud appliance, all managed as one secure, seamless infrastructure. The company is headquartered in San Francisco, with offices in London. For more information, please visit http://www.nscaled.com or write to info@nscaled.com.
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Flooded businesses eligible for low-interest loans

Low-interest loans of up to $2 million are now available to small businesses, farms and nonprofits in Brevard and five other counties hit by heavy rains in early October, the U.S. Small Business Administration has announced.
The federal economic injury disaster loans will be provided to small businesses, agricultural cooperatives, aquaculture operations, and most private non-profit groups in Florida harmed by excessive rain, flooding and high winds that hit the region Oct. 7-9, 2011.
The five other eligible counties are Indian River, Martin, Okeechobee, Osceola and Saint Lucie.
“When the Secretary of Agriculture issues a disaster declaration to help farmers recover from damages and losses to crops, the Small Business Administration issues a declaration to eligible entities affected by the same disaster,” Frank Skaggs, director of SBA’s Field Operations Center East in Atlanta, said in a release.
Under the declaration, the SBA’s Economic Injury Disaster Loan program is available to eligible farm-related and nonfarm-related operations that suffered financial losses as a direct result of the disaster. With the exception of aquaculture, SBA can’t provide disaster loans to agricultural producers, farmers or ranchers, SBA said in the release.
The loans can be up to $2 million with interest rates of 3 percent for private non-profit groups and 4 percent for small businesses, with terms up to 30 years. The SBA determines eligibility based on the size of the applicant, type of activity and its financial resources.
The SBA determines the loan amounts and terms and are based on each applicant’s financial condition. The working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not happened. But they aren’t intended to replace lost sales or profits.
Completed loan applications must be returned to SBA no later than October 9, 2012.
Contact Waymer at 321-242-3663 or jwaymer@floridatoday.com

How to apply

U.S. Small Business Administration loans available for those affected by Oct. 7-9 heavy weather:
For information, call 1-800-659-2955 (800-877-8339 for the deaf and hard-of-hearing) or e-mail to disastercustomerservice@sba.gov.
Loan applications can be downloaded from www.sba.gov.
Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
You can also apply for disaster loans electronically from SBA’s website at https://disasterloan.sba.gov/ela/.
Completed loan applications must be returned to SBA no later than Oct. 9, 2012.
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Microfinance Operations Office; Associate Operations Officer/Operations Officer

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit www.ifc.org.
IFC Advisory Services in Vietnam helps Vietnamese firms make their operations more efficient and client-friendly, and raise their international competitiveness by improving social, environmental, and corporate governance practices. We support Vietnam’s sustainable development by helping to attract international investment to vital sectors such as infrastructure, renewable energy, and microfinance. Our Advisory Services are structured into four business lines: Access to Finance, Investment Climate, Sustainable Business Advisory, and Public-Private Partnerships. In the Mekong region covering Cambodia, Lao PDR, and Vietnam, our advisory services are delivered in partnership with the European Union, Finland, Ireland, the Netherlands, New Zealand, and Switzerland.
Their operations in Vietnam will be expanding in 2012, and we are looking for qualified applicants for the following three positions. All positions will be expected to lead existing and potential assistance projects in their Business Line and the IFC portfolio, including developing excellent client relations, designing and implementing projects for meaningful development impact, and ensuring IFC procedures are respected. In addition, all positions are expected to contribute to the development of IFC’s Vietnam Program by actively identifying new opportunities for IFC, providing input to IFC’s strategy for their Business Lines and building relationships with industry stakeholders.
1. Microfinance Operations Officer, Access to Finance – A2F (position no.120038)
IFC intends to support the development of Vietnam’s nascent commercial microfinance sector and increase access to microfinance services to urban and rural poor by creating an enabling environment and a financial sector that can create and manage sustainable private sector institutions to serve a large number of low-income households.
The Microfinance Operations Officer is a local 2 year term appointment based in Hanoi or Ho Chi Minh City. S/he will work closely with and under the supervision of the A2F Vietnam Program Manager. S/he will be primarily responsible for the implementation of A2F Microfinance (MF) projects in Vietnam. S/he must be an experienced professional whose knowledge and skills enable him/her to undertake project design, project implementation, and knowledge management initiatives with limited direct supervision.
Specific duties and accountabilities:
- Lead the MF project development by addressing all key aspects (scope of work, terms, deliverables, etc.), monitoring results, benchmarking against best practice, and consulting with the relevant stakeholders.
- Prepare project work plans, budgets and project operational documents, consistent with overall IFC objectives, plans and budgets. Ensure project(s) compliance with IFC’s overall financial market strategy and IFC procedures.
- Prepare terms-of-reference and help identify, select, and schedule consultant assignments; guide consultants in the effective delivery of their services, including monitoring their work to ensure that agreed deliverables are met and that they are captured in appropriate reports.
- Analyze developmental impact of the project(s). Document progress, resolve issues, and initiate improvements when needed.
- Pro-actively and effectively develop and nurture working relationship with government partners and private sector partners including, but not limited to, banks and MFIs.
- Communicate the progress of the project(s) and overall program to IFC and related partners, and proactively engage with IFC communications to ensure external and internal communications issues are well addressed.
- Liaise and work closely with the IFC investment in joint appraisal teams working on existing or new advisory and investment projects.
- Identify key lessons learned to be shared with the wider IFC A2F team, and develop IFC Smart Lessons and other internal knowledge management documents in Microfinance.
- Contribute to raising external funding and donor relations.
- Contribute to A2F strategy for Vietnam to maximize IFC’s financial and social returns in both investment and advisory services.
- Travel as necessary to support project design and development, and implementation.
Selection criteria:
- Master’s degree in Finance/Economics/Business Administration/Law or equivalent degree from a recognized institution.
- At least 5 years of relevant working experience in financial sector, preferably with hands on experience in Microfinance.
- Proven experience in managing a project, preferably donor-funded, including project design, implementation and completion.
- Ability to work independently, multi-task, deal with conflicting priorities and deliver high quality work on schedule.
- Excellent analytical skills, including ability to evaluate projects and business operations on technical, commercial, managerial, and financial grounds.
- Proven Relationship Management experience: ability to establish strong credibility among senior clients including government and private sector clients.
- Strong interpersonal skills and proven ability to build cooperative networks.
·- Ability to communicate ideas clearly and confidently, articulate issues and recommend practical solutions.
- Strong oral and written English skills, including ability to write and edit project/program documents.
- Ability and willingness to travel in Vietnam.
2. Associate Operations Officer/Operations Officer, Investment Climate (position no.120040)
IFC’s Investment Climate (IC) work focuses on improving the policies, laws, and regulations that affect domestic and foreign investors and influence their decisions to invest. Our East Asia and the Pacific portfolio consists of more than 20 projects with a total volume of more than $20 million, and more than 30 staff working in 9 offices throughout the region.
The Associate Operations Officer/Operations Officer position is a local 2 year term appointment based in Hanoi, with possible renewable extension subject to business need and satisfactory performance. S/he will support the Regional Business Line Leader in building and managing IFC’s regional portfolio of the business line’s respective advisory initiatives in the East Asia and Pacific (EAP) Region and the program in Vietnam. S/he will work in close collaboration with regional colleagues and global experts, and regional departments. S/he is expected to participate in and contribute to IFC strategy discussions, new project development, and donor relations.
Specific duties and accountabilities:
- Maintain IC pipeline activities in line with regional and business line strategies
- Prepare portfolio or topical reviews or analyses and financial projections and present results.
- Manage project reporting cycles, ensuring high quality and on-time (i) Project Supervision Reports (PSRs), (ii) Donor Reports and Presentations, and (iii) Project Completion Reports (PCRs).
- Maintain deadlines for submission and completion of initial review of all reports and ensure project compliance with all IFC and donor requirements.
- Oversee updates to project/pipeline activities in line with management/business line network/portfolio review discussions.
- Serve as proxy to the Regional Business Line Leader in project processing activities.
- Support PMs as necessary with program and administrative needs.
- Prepare documents such as donor/partner concept papers and proposals; monitor program/project funding gaps/needs.
- Coordinate recruitment of business line staff; assist and coordinate selection and monitoring of consultants including the preparation of Terms of Reference, negotiation of fees, processing of contracts; work alongside consultants in technical assistance assignments.
- Coordinate and deliver on (ad-hoc) IFC regional management or head office requests for data or information on IC projects in the region.     
- Lead coordination and preparation of business line specific meetings, conferences, study tours and other events.
- Proactively seek out international best practice, national/corporate compliance requirements and internal advice, share information, and work in teams with other colleagues.
- Travel as necessary in the region.
Selection criteria:
- Masters in Business Administration, Law, Economics, Finance or Development or equivalent professional qualification.
- Minimum 5 years of relevant experience, preferably including overseas study/work.
- Experience with international and/or bilateral/multilateral development institutions, as well as prior work in advisory/consulting in private sector development.
- Knowledge of the institutional, legal, regulatory framework and business practices in Vietnam.
- Strong administrative and organizational skills.
- Strong working knowledge of Microsoft Office software, particularly Excel and PowerPoint.
Interested candidates please review the complete job description and apply on-line at http://www.ifc.org/careers and choose the relevant vacancy number. Please note that you need to register before submitting your application. The closing date is 20th February 2012. Only applicants selected for interview will be contacted.
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SEC Said to Look at Smaller Firms in Review of Private Equity Valuations

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UpTech Announces Judges for Start-Ups in Business Accelerator Contest

HIGHLAND HEIGHTS, Ky.–(BUSINESS WIRE)–
UpTech, a super business accelerator committed to funding 50 of the best and brightest early-stage informatics companies from the United States and abroad, announced today that it has selected the Judges who will decide which companies will be accepted into the program.
UpTech will invest up to $100,000 into each winning startup company and provide six months of business development and applied intellectual property (IP) research support, free premium office space, and professional mentoring.
The judges who will review the applications from the start-up companies are informatics, technology, business, and investment experts from CBS, Cisco, Dell, Procter & Gamble, Queen City Angels, Scripps, SUMMUS, and the North Carolina Biotechnology Center. The judges are:
• Frank Muehlman, Vice President and General Manager of the Public Business Group of Dell, Inc., for the North American region. He is responsible for all sales, marketing, and customer service in this region.
• Jim Fortner, Vice President of Information Technology Architecture, Development, and Operations for the Global Business Services division of Procter & Gamble. He manages key relationships with IT vendors at P&G.
• Marc LeShay, Vice President of Enterprise Architecture for the CBS Corporation. He has lectured around the world on topics ranging from penetrating the U.S. market, early-stage financing, IT strategy, and building strategic organizations.
• Robin Davis, Vice President for Strategic Planning and Development for The E.W. Scripps Company. She previously served as Vice President of Finance and Administration for the newspaper division of the company.
• Russ Smoak, Director and General Manager of Security Research and Operations at Cisco Systems. He is responsible for multiple security programs focused on product vulnerability disclosure, intrusion prevention, and security vulnerability.
• Wai Wong, President and Chief Executive Officer of SUMMUS Software, a global provider of IT solutions. Before founding SUMMUS, Wong served in management positions at Amdocs, BEA Systems, and Computer Associates (CA Technologies).
• Dr. Leslie Alexandre, a healthcare and biosciences consultant and former president and CEO of the North Carolina Biotechnology Center. She is an internationally respected leader in biotechnology economic development.
• Tony Shipley, is Chairman of Queen City Angels, a Cincinnati based group of angel investors, and Chairman of Transactiv, an Internet company supported by Queen City Angels.
“The quality of the judging panel clearly indicates the level of excitement that is being generated by UpTech,” said Adam Caswell, an UpTech co-founder. “These judges – like many others interested in this business accelerator — are drawn to the big idea of linking equity investment to new information-driven businesses, which are supported by the applied research capabilities of NKU’s College of Informatics and the local business community.”
The judges will examine seed-level ideas that support five sectors of informatics: health information technology, cloud computing virtualization, business analytics, digital media, and cyber security. UpTech has been accepting applications for participation in the program since Feb. 2 and it will close this first round of applications on March 9, 2012. The screening and judging process will be completed during the month of March and the winners will be announced on March 30, 2012.
UpTech is one of the most robust business accelerators in the world. In addition to an equity investment of up to $100,000, each winning business will also receive six months of free, premium riverfront office on the Ohio River with a view of downtown Cincinnati skyline and support from financial, law, accounting, and marketing/public relations firms. The winners also will receive applied IP research support from faculty, staff and graduate assistants and two student interns from Northern Kentucky University’s College of Informatics for each company along with on-campus informatics labs and facilities for collaboration, events, and seminars.
More information about UpTech can be found at http://www.uptechideas.org.
About UpTech
A partnership of Vision 2015, Campbell County Economic Progress Authority (CCEPA), Tri-County Economic Development Corporation (Tri-ED), and Northern Kentucky University, UpTech, LLC, is a super business accelerator program designed to attract startup companies to the area to support regional growth. The goal of the program is to attract and support 50 national and international early-stage informatics companies and provide them with financial and developmental assistance. UpTech, LLC is funded by independent investors. For more information, please visit http://www.uptechideas.org.
Follow UpTech on social media at:
Facebook at UpTech – Accelerate Big Ideas
Twitter at @UpTechIdeas

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Pension Funds Get Queasy over Private Equity

By Cristina Alesci and Devin Banerjee
Mitt Romney’s campaign for the Republican Presidential nomination may be creating funding headaches for his former colleagues in the private equity industry. Romney’s opponents have characterized Bain Capital—the firm he helped found in 1984 and left in 1999—and other buyout managers as corporate looters who enrich themselves at the expense of ordinary workers. The issue is likely to remain in the news should Romney win his party’s nomination and face President Obama in the general election.
With public scrutiny focused on private equity funds, pension funds are more reluctant to invest and may ask for more details on job creation and push for lower fees, according to officials and trustees at public pensions. “Pension funds have boards. They don’t want to be giving money to an industry that has a taint,” says Tony James, president of Blackstone Group, the world’s largest private equity firm. “Similarly, boards of directors don’t want to sell their company to organizations they don’t view as respectable. So it could be very damaging for the industry.”
The debate comes as the industry is competing for a shrinking pool of investor dollars. Fundraising has fallen off sharply since the onset of the global financial crisis, staying below $100 million each quarter, according to London-based researcher Preqin. In the second quarter of 2007, at the peak of the leveraged buyout boom, private equity firms raised almost $214 billion. In the fourth quarter of 2011, they raised $52.4 billion.
Public and private pension funds in the U.S. provide 42 percent of the capital for all private equity investments, according to the Private Equity Growth Capital Council in Washington. Public employee pension funds, which must answer to ordinary workers, are sensitive to protracted debates about managers’ compensation and whether buyouts create value and jobs, says one official who asked not to be named because he wasn’t authorized to speak on the topic. “The political attacks against Romney and Bain will definitely come up when firms pitch us their new funds,” says William R. Atwood, executive director of the Illinois State Board of Investment, which oversees $10.4 billion in pension funds. “You’d be crazy not to bring it up.” The Illinois pension board had $621.3 million, or 6 percent of its assets, in private equity as of Dec. 31, according to its website.
Bad publicity has hurt private equity firms in the past. Last year, Blackstone lost out on a deal to manage hedge fund investments for New York City’s public pension funds after the company’s chief strategist suggested retiree benefits were too generous.
Bain tends to be less reliant on pension funds than its rivals. When Romney set out to raise Bain’s first fund in 1984, he steered clear of pension funds, pursuing high-net-worth individuals who contributed about $37 million, according to a person who worked with Romney at the time. Kohlberg Kravis Roberts’s co-founders, by contrast, received early capital from Oregon’s and Washington’s pensions, with the latter contributing $12 million to KKR’s first fund in 1982.
The success of Bain’s first fund, which generated a 61 percent average annual return, according to marketing documents from 2004 obtained by Bloomberg, allowed Bain to charge a premium for its investment services. Bain collects 30 percent of the profit on its investments, the highest in the industry. Pensions historically have been less willing to pay the higher performance fees. In a recent fund, Bain relied on pensions for about 9 percent of client assets. Alex Stanton, a spokesman for Bain, declined to comment.
One Bain executive expects the storm to blow over. “Our limited partners have been with us for 28 years, many of them,” Bain Managing Director Stephen Pagliuca said in an interview at the World Economic Forum in Davos on Jan. 27. “We just keep our heads down and try to build value.” Pagliuca also said that pensions will come to rely more on private equity to meet their growing obligations to workers because traditional assets like stocks and bonds won’t return enough. Still, with Romney’s candidacy keeping the spotlight on the industry, Atwood of the Illinois State Board of Investment says there’s bound to be an impact. “We all know that private equity managers make a lot of money, and we know how they do their business,” he says. “But when it’s on the front page, it causes us to think twice when making investment decisions. Private equity is more lucrative when it’s kept quiet.”
The bottom line: Pension funds, which provide 42 percent of the private equity industry’s capital, may pull back amid criticism of Romney and Bain.
Alesci is a reporter for Bloomberg News in New York. Banerjee is a reporter for Bloomberg News in New York.http://tourism9.com/    http://vkins.com/

Apollo Investment Corporation Announces Quarterly Financial Results, Senior Management Changes, Quarterly Dividend …

NEW YORK, NY–(Marketwire -02/08/12)- Apollo Investment Corporation (NASDAQ: AINV – News)

• Reports Net Assets of $1.6 billion and Net Asset Value per share of $8.16 as of December 31, 2011 and Net Investment Income of $0.20 per share for the quarter ended December 31, 2011
• Names Respected Industry Veteran Edward Goldthorpe as President
• Seeks to Capitalize on Current Market Opportunities by Providing Diverse Array of Private Debt Market Investment Solutions
• Declares a Dividend of $0.20 per share for the Fiscal Fourth Quarter of 2012
• Considers an Equity Capital Raise with Support from Apollo Global Management and Related Fee Waiver from Apollo Investment Management

Apollo Investment Corporation (NASDAQ: AINV – News) or the “Company”, “Apollo Investment“, “we” or “our” today announces financial results for its fiscal quarter ended December 30, 2011. Our net investment income was $0.20 per share for the quarter ended December 31, 2011 and net asset value (“NAV”) was $8.16 per share as of December 31, 2011.
The Board announced today that Mr. Edward Goldthorpe will be joining Apollo Investment Corporation as its President, succeeding Mr. Patrick Dalton, who formerly held positions as President and Chief Operating Officer. Mr. Edward Goldthorpe will also replace Mr. Dalton as Chief Investment Officer of our investment adviser. The Company announced that its Board of Directors has appointed Mr. James Zelter as the Company‘s interim President, effective immediately. He will also serve as interim CIO of Apollo Investment Management until Mr. Goldthorpe joins, which is expected to occur in the next 90 days. Mr. Zelter will retain his position as Chief Executive Officer of the Company. Apollo Investment also announced that its Board of Directors has appointed Mr. Gene Donnelly, Apollo Global Management, LLC’s CFO, as interim CFO and Treasurer for the Company. Mr. Donnelly succeeds Mr. Richard Peteka who formerly served as the Company’s CFO and Treasurer. Mr. Donnelly will serve as interim CFO and Treasurer until a permanent replacement has been appointed by the Board. The Board also named Ms. Eileen Patrick as the Executive Vice President of Corporate Strategy for the Company. In this newly created role, Ms. Patrick will assist in the execution of Apollo Investment Corporation’s strategic expansion during this period of transition.
In order to capitalize on various proprietary market opportunities and to maintain an appropriate capital structure, the Board has authorized management to explore whether the Company should raise up to $200 million of additional equity capital, which may be conducted, among other means, through either a marketed deal or a rights offering. Apollo Global Management has informed the Company that it intends to support AINV’s equity capital raise, which in the case of a rights offering could include the exercise of oversubscription rights as a backstop for up to $50 million. In further support of an equity offering, Apollo Investment Management has informed the Company that it intends to waive its management and incentive fees associated with any shares issued through this offering. Additionally, Apollo Global Management may also purchase shares of AINV in the open market.
The Company also announced that its Board of Directors has declared for the fourth fiscal quarter of 2012 a dividend of $0.20 per share, payable on April 3, 2012 to stockholders of record as of February 18, 2012. We believe having a dividend that is more closely aligned with net investment income per share is prudent and appropriate. The specific tax characteristics of this dividend will be reported to stockholders on Form 1099 after the end of the calendar year.
Mr. Zelter, Apollo Investment Corporation’s Chief Executive Officer, said, “Since the onset of the global credit crisis, we believe the role of business development companies such as Apollo Investment Corporation has become increasingly important, filling the gap left by banks and traditional financial services companies. Prior to the credit crisis, AINV focused primarily on providing acquisition financing to middle market private equity sponsors. Today, we believe the growing void in the capital markets creates attractive opportunities for our business. Consequently, we intend to expand our footprint to provide a wider array of proprietary private financing solutions for companies across a broad spectrum of industries and situations. The changes we have announced today, including more closely aligning our dividend with our net investment income and our decision to explore the raising of additional equity capital, are designed to reposition us to grow our business in the current environment.”
Mr. Zelter continued, “We are very pleased that industry veteran Edward Goldthorpe has agreed to join the senior management team at AINV, and we are confident he will play a major role in driving growth and value creation for the Company. Broadly speaking, we believe the changes we have made will enable us to capitalize on the meaningful opportunities we see in the current market and generate attractive risk-adjusted returns for our shareholders.”
ABOUT EDWARD J. GOLDTHORPE:Mr. Goldthorpe was most recently with Goldman Sachs for the past 13 years, where he served as a Managing Director with the Bank Loan Distressed Investing Desk (2009-2012), and prior to that Mr. Goldthorpe was a Managing Director with the Special Situations Group within the firm’s Securities Division (2005-2009). Previously, Mr. Goldthorpe was a Vice President in the High Yield Distressed Group (2001-2005), an analyst in the Merchant Banking Division (2000-2001), and an analyst in the Investment Banking Division (1999-2000).
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED DECEMBER 31, 2011:
At December 31, 2011:
Total Assets: $2.9 billion
Investment Portfolio: $2.8 billion
Net Assets: $1.6 billion
Net Asset Value per share: $8.16
Portfolio Activity for the Quarter Ended December 31, 2011:
Investments made during the quarter: $95 million
Number of new portfolio companies invested: 3
Investments sold or prepaid during the quarter: $175 million
Number of portfolio company exits: 5
Operating Results for the Quarter Ended December 31, 2011 (in thousands, except per share amounts):
Net investment income: $38,538
Net realized and unrealized gain: $25,159
Net increase in net assets from operations: $63,697
Net investment income per share: $0.20
Net realized and unrealized gain per share: $0.12
Earnings per share — basic: $0.32
Earnings per share — diluted: $0.31
CONFERENCE CALL / WEBCAST AT 11:00 AM EST ON FEBRUARY 8, 2012
The Company will host a conference call at 11:00 a.m. (Eastern Standard Time) on Wednesday, February 8, 2012 to present third fiscal quarter results. All interested parties are welcome to participate in the conference call by dialing (888) 802-8579 approximately 5-10 minutes prior to the call, international callers should dial (973) 633-6740. Participants should reference Apollo Investment Corporation or Conference ID: 40610975 when prompted. Following the call you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available through February 22, 2012 by calling (800) 585-8367; international callers please dial (404) 537-3406, reference pin #40610975. The audio webcast will be available later that same day. To access the audio webcast please visit the Event Calendar in the Investor Relations section of our website at www.apolloic.com.
PORTFOLIO AND INVESTMENT ACTIVITYDuring the three months ended December 31, 2011, we invested $95 million across 3 new and 6 existing portfolio companies, through a combination of primary and secondary market purchases. This compares to investing $382 million in 8 new and 3 existing portfolio companies for the three months ended December 31, 2010. Investments sold or prepaid during the three months ended December 31, 2011 totaled $175 million versus $481 million for the three months ended December 31, 2010.
At December 31, 2011, our portfolio consisted of 67 portfolio companies and was invested 29% in senior secured loans, 60% in subordinated debt, 1% in preferred equity and 10% in common equity and warrants measured at fair value versus 69 portfolio companies invested 29% in senior secured loans, 62% in subordinated debt, 1% in preferred equity and 8% in common equity and warrants at December 31, 2010.
The weighted average yields on our senior secured loan portfolio, subordinated debt portfolio and total debt portfolio as of December 31, 2011 at our current cost basis were 9.7%, 12.6% and 11.7%, respectively. At December 31, 2010, the yields were 8.7%, 12.9% and 11.5%, respectively.
Since the initial public offering of Apollo Investment in April 2004 and through December 31, 2011, invested capital totaled over $8.6 billion in 164 portfolio companies. Over the same period, Apollo Investment completed transactions with more than 100 different financial sponsors.
At December 31, 2011, 66% or $1.7 billion of our income-bearing investment portfolio is fixed rate and 34% or $0.8 billion is floating rate, measured at fair value. On a cost basis, 65% or $1.8 billion of our income-bearing investment portfolio is fixed rate and 35% or $1.0 billion is floating rate. At December 31, 2010, 63% or $1.7 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate. On a cost basis, 63% or $1.8 billion of our income-bearing investment portfolio was fixed rate and 37% or $1.0 billion was floating rate.
RESULTS OF OPERATIONS
Results comparisons below are for the three and nine months ended December 31, 2011 and December 31, 2010.
Investment Income
For the three and nine months ended December 31, 2011, gross investment income totaled $83.8 million and $272.4 million, respectively. For the three and nine months ended December 31, 2010, gross investment income totaled $94.3 million and $264.1 million, respectively. The decrease in gross investment income for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to a decrease in the receipt of prepayment premiums and other deal related income. The increase in gross investment income for the nine months ended December 31, 2011 as compared to the nine months ended December 31, 2010 was primarily due to an increase in the receipt of prepayment premiums and other deal related income.
Expenses
Expenses totaled $45.3 million and $140.7 million, respectively, for the three and nine months ended December 31, 2011, of which $24.3 million and $75.6 million, respectively, were base management fees and performance-based incentive fees and $16.9 million and $50.2 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $4.0 million and $14.9 million, respectively, for the three and nine months ended December 31, 2011. Expenses totaled $44.2 million and $122.9 million, respectively, for the three and nine months ended December 31, 2010, of which $27.7 million and $80.1 million, respectively, were base management fees and performance-based incentive fees and $13.4 million and $34.1 million, respectively, were interest and other debt expenses. Administrative services and other general and administrative expenses totaled $3.0 million and $8.8 million, respectively, for the three and nine months ended December 31, 2010. Expenses consist of base investment advisory and management fees, insurance expenses, administrative services fees, legal fees, directors’ fees, audit and tax services expenses, and other general and administrative expenses. The increase in expenses from the December 2010 periods to the December 2011 periods was primarily due to an increase in interest expense as our average interest cost in the current periods is over 100 basis points higher than in the year ago periods and the average debt outstanding is roughly $150 million higher on a year over year basis. The increase in average interest cost resulted from the issuance of new tranches of long-term fixed rate debt in periods during and subsequent to the three and nine month periods ended December 31, 2010. In addition, in the nine month period ended December 31, 2011, the Company recognized approximately $4.0 million in net non-recurring expenses, including legal and other professional expenses of $4.7 million net of a non-recurring reduction of administrative expenses.
Net Investment Income
The Company’s net investment income totaled $38.5 million and $131.7 million, or $0.20 and $0.67, per average basic share, respectively, for the three and nine months ended December 31, 2011. The Company’s net investment income totaled $50.1 million and $141.1 million, or $0.26 and $0.73, per average basic share, respectively, for the three and nine months ended December 31, 2010.
Net Realized Losses
The Company had investment sales and prepayments totaling $175 million and $1.3 billion, respectively, for the three and nine months ended December 31, 2011. The Company had investment sales and prepayments totaling $481 million and $722 million, respectively, for the three and nine months ended December 31, 2010. Net realized losses for the three and nine months ended December 31, 2011 were $275.0 million and $341.1 million, respectively. For the three and nine months ended December 31, 2010, net realized losses totaled $64.9 million and $150.5 million, respectively. Net realized losses for the three and nine month periods ended December 31, 2011 were primarily derived from the exits of select investments, specifically Grand Prix Holdings, which accounted for $274 million of the realized loss totals, but also included Playpower Holdings, TL Acquisitions and FSC Holdings. The realized losses incurred upon the exit of these investments reversed out previously reported unrealized losses. Net realized losses for the three and nine months ended December 31, 2010 were primarily derived from selective exits and restructurings of underperforming investments.
Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents and Foreign Currencies
For the three and nine months ended December 31, 2011, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $300.2 million and $5.9 million, respectively. For the three and nine months ended December 31, 2010, net change in unrealized appreciation on the Company’s investments, cash equivalents, foreign currencies and other assets and liabilities totaled $99.3 million and $77.7 million, respectively. For the three months ended December 31, 2011, the increase in unrealized appreciation was mainly derived from the reclassification of $274 million of previously recognized unrealized depreciation on our investment in Grand Prix Holdings to a realized loss. For the nine months ended December 31, 2011, the change in unrealized depreciation was comprised of the impact from Grand Prix Holdings together with the general decline in capital market conditions during the period. For the three and nine months ended December 31, 2010, net unrealized appreciation was impacted by net changes in specific portfolio company fundamentals and stronger capital market conditions.
Net Increase (Decrease) in Net Assets From Operations
For the three months ended December 31, 2011, the Company had a net increase in net assets resulting from operations of $63.7 million. For the nine months ended December 31, 2011, the Company had a net decrease in net assets resulting from operations of $203.5 million. For the three and nine months ended December 31, 2010, the Company had a net increase in net assets resulting from operations of $84.5 million and $68.4 million, respectively. For the three months ended December 31, 2011 basic and diluted earnings per average share were $0.32 and $0.31, respectively. For the nine months ended December 31, 2011, basic and diluted losses per average share were $1.04 and $1.04, respectively. The basic and diluted earnings per average share were $0.43 and $0.36 for the three and nine months ended December 31, 2010.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our senior secured, multi-currency $1.254 billion revolving credit facility maturing on April 12, 2013 (see note 10 within the Notes to Financial Statements) (the “Facility”), our senior secured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and prepayments of senior and subordinated loans and income earned from investments. The Company also has investments in its portfolio that contain PIK provisions. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of dividends, even though the Company has not yet collected the cash. For the nine months ended December 31, 2011, accrued PIK totaled $13.1 million, on total investment income of $272.4 million. On April 13, 2011, $380 million of commitments on the Facility matured. At December 31, 2011, the Company had $743 million in borrowings outstanding on its Facility and $511 million of unused capacity. As of December 31, 2011, aggregate lender commitments under the Facility total $1.254 billion.
On May 3, 2010, the Company closed on its most recent follow-on public equity offering of 17.25 million shares of common stock at $12.40 per share raising approximately $204 million in net proceeds. In the future, the Company may raise additional equity or debt capital, among other considerations. The primary use of funds will be investments in portfolio companies, reductions in debt outstanding and other general corporate purposes, including the payment of interest, fees or distributions to shareholders.
On September 30, 2010, the Company entered into a note purchase agreement, providing for a private placement issuance of $225 million in aggregate principal amount of five-year, senior secured notes with a fixed interest rate of 6.25% and a maturity date of October 4, 2015 (the “Senior Secured Notes”). On October 4, 2010, the Senior Secured Notes were sold to certain institutional accredited investors pursuant to an exemption from registration under the Securities Act of 1933, as amended. Interest on the Senior Secured Notes will be due semi-annually on April 4 and October 4, commencing on April 4, 2011. The proceeds from the issuance of the Senior Secured Notes were primarily used to reduce other outstanding borrowings and/or commitments on the Company’s Facility.
On January 25, 2011, the Company closed a private offering of $200 million aggregate principal amount of senior unsecured convertible notes (the “Convertible Notes”). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2011. The Convertible Notes will mature on January 15, 2016 unless earlier converted or repurchased at the holder’s option. Prior to December 15, 2015, the Convertible Notes will be convertible only upon certain corporate reorganizations, dilutive recapitalizations or dividends, or if, during specified periods our shares trade at more than 130% of the then applicable conversion price or the Convertible Notes trade at less than 97% of their conversion value and, thereafter, at any time. The Convertible Notes will be convertible by the holders into shares of common stock, initially at a conversion rate of 72.7405 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (14,548,100 common shares) corresponding to an initial conversion price per share of approximately $13.75, which represents a premium of 17.5% to the $11.70 per share closing price of the Company’s common stock on The NASDAQ Global Select Market on January 19, 2011. The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.28 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $11.70 per share. The Convertible Notes are senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
On August 11, 2011, the Company adopted a plan for the purpose of repurchasing up to $200 million of its common stock in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company’s plan was designed to allow it to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in the plan to repurchase shares on the Company’s behalf in accordance with the terms of the plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. While the portion of the plan reliant on Rule 10b-18 remains in effect, the portion reliant on Rule 10b5-1 is subject to periodic renewal and is not currently in effect. As of December 31, 2011, no shares have been repurchased.
On September 29, 2011, the Company closed a private offering of $45 million aggregate principal amount of senior secured notes (the “Notes”) consisting of two series: (1) 5.875% Senior Secured Notes, Series A, of the Company due September 29, 2016 in the aggregate principal amount of $29 million; and (2) 6.250% Senior Secured Notes, Series B, of the Company due September 29, 2018, in the aggregate principal amount of $16 million. The Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the offering of Notes are intended to be used to fund new portfolio investments, reduce outstanding borrowings on the Company’s Facility and for general corporate purposes, including the payment of interest, fees or distributions to shareholders.

APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts)

December 31, 2011
(unaudited)      March 31, 2011
-----------------  ---------------
Assets
Non-controlled/non-affiliated
investments, at value (cost--$2,813,436
and $2,900,378, respectively)           $       2,577,312  $     2,901,295
Non-controlled/affiliated investments,
at value (cost--$0 and $22,407,
respectively)                                          --           37,295
Controlled investments, at value (cost--
$221,639 and $376,051, respectively)              201,543          111,568
Cash                                                    --            5,471
Foreign currency (cost--$632 and $881,
respectively)                                         635              883
Receivable for investments sold                     81,810           13,461
Interest receivable                                 60,505           45,686
Dividends receivable                                    13            5,131
Miscellaneous income receivable                      1,216               --
Receivable from investment adviser                      --              576
Prepaid expenses and other assets                   19,902           27,447
-----------------  ---------------

Total assets                           $       2,942,936  $     3,148,813
-----------------  ---------------

Liabilities
Debt                                     $       1,213,185  $     1,053,443
Payable for investments purchased                   25,000           37,382
Dividends payable                                   55,172           54,740
Management and performance-based
incentive fees payable)                            24,327           27,553
Interest payable                                    10,614            9,703
Accrued administrative expenses                      2,502            1,738
Other liabilities and accrued expenses               2,665            3,223
Due to custodian                                     2,064               --
-----------------  ---------------

Total liabilities                      $       1,335,529  $     1,187,782
-----------------  ---------------

Net Assets
Common stock, par value $.001 per share,
400,000 and 400,000 common shares
authorized, respectively, and 197,043
and 195,502 issued and outstanding,
respectively                            $             197  $           196
Paid-in capital in excess of par                 2,886,449        2,871,559
Undistributed net investment income                 23,271           56,557
Accumulated net realized loss                   (1,055,001)        (713,873)
Net unrealized depreciation                       (247,509)        (253,408)
-----------------  ---------------

Total net assets                       $       1,607,407  $     1,961,031
-----------------  ---------------

Total liabilities and net assets       $       2,942,936  $     3,148,813
-----------------  ---------------

Net Asset Value Per Share                $            8.16  $         10.03
-----------------  ---------------

APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)

Three months ended           Nine months ended
--------------------------  --------------------------
December 31,  December 31,  December 31,  December 31,
2011          2010          2011          2010
------------  ------------  ------------  ------------
INVESTMENT INCOME:
From non-
controlled/non-
affiliated
investments:
Interest            $     77,220  $     83,820  $    238,264  $    233,166
Dividends                  1,125           992         5,410         3,712
Other income               3,521         6,650        16,761        11,958
From non-
controlled/
affiliated
investments:
Interest                      --         2,746           899         9,088
From controlled
investments:
Interest                   1,297            --         2,565            --
Dividends                    652            --         8,489         6,031
Other income                  --           110            --           110
------------  ------------  ------------  ------------

Total Investment
Income            $     83,815  $     94,318  $    272,388  $    264,065
------------  ------------  ------------  ------------

EXPENSES:
Management fees     $     14,693  $     15,203  $     46,171  $     44,787
Performance-based
incentive fees            9,634        12,532        29,398        35,284
Interest and other
debt expenses            16,926        13,433        50,222        34,079
Administrative
services expense          1,500         1,540         3,887         4,348
Other general and
administrative
expenses                  2,524         1,484        10,978         4,432
------------  ------------  ------------  ------------

Total expenses           45,277        44,192       140,656       122,930
------------  ------------  ------------  ------------

Net investment
income           $     38,538  $     50,126  $    131,732  $    141,135
------------  ------------  ------------  ------------

REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS, CASH
EQUIVALENTS AND
FOREIGN CURRENCIES:
Net realized gain
(loss):
Non-controlled/
non-affiliated
investments and
cash equivalents  $     (1,746) $    (55,650) $    (85,208) $   (142,777)
Non-controlled/
affiliated
investments                167            --        19,039            --
Controlled
investments           (274,452)           --      (274,452)           --
Foreign currencies        1,036        (9,289)         (507)       (7,673)
------------  ------------  ------------  ------------

Net realized loss     (274,995)      (64,939)     (341,128)     (150,450)
------------  ------------  ------------  ------------

Net change in
unrealized gain
(loss):
Investments and
cash equivalents       298,005        89,088        (7,464)       71,140
Foreign currencies        2,149        10,229        13,363         6,535
------------  ------------  ------------  ------------

Net change in
unrealized gain
(loss)                300,154        99,317         5,899        77,675
------------  ------------  ------------  ------------

Net realized and
unrealized gain
(loss) from
investments, cash
equivalents and
foreign currencies       25,159        34,378      (335,229)      (72,775)
------------  ------------  ------------  ------------

NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS     $     63,697  $     84,504  $   (203,497) $     68,360
------------  ------------  ------------  ------------

EARNINGS (LOSS) PER
SHARE BASIC         $       0.32  $       0.43  $      (1.04) $       0.36
DILUTED              $       0.31  $       0.43  $      (1.04) $       0.36
------------  ------------  ------------  ------------

About Apollo Investment Corporation
Apollo Investment Corporation is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company’s investment portfolio is principally in middle-market private companies. From time to time, the Company may also invest in public companies. The Company invests primarily in senior secured loans and mezzanine loans and equity in furtherance of its business plan. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Management, L.P., a leading private equity investor.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.
We may use words such as “anticipates,” “believes,” “expects,” “intends”, “will”, “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.
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