SuRo Capital Corp. Reports Second Quarter 2024 Financial Results

Source: GlobeNewswire
SuRo Capital Corp. Reports Second Quarter 2024 Financial Results

Net Asset Value of $6.94 Per Share as of June 30, 2024

Executed Purchase Agreement for 6.50% Convertible Notes Due 2029

Board Approved Note Repurchase Program Up To $35.0 Million

NEW YORK, Aug. 07, 2024 (GLOBE NEWSWIRE) -- SuRo Capital Corp. (“SuRo Capital”, the “Company”, “we”, “us”, and “our”) (Nasdaq: SSSS) today announced its financial results for the quarter ended June 30, 2024. Net assets totaled approximately $162.3 million, or $6.94 per share, at June 30, 2024, as compared to $7.17 per share at March 31, 2024 and $7.35 per share at June 30, 2023.

“The second quarter was broadly positive for the U.S. economy and equity markets as investors became increasingly confident in the prospect of rate cuts later in the year. However, as of late last week, the market has become volatile due to a confluence of domestic and global factors leading to a sharp change in investor sentiment. Despite these fluctuations in the broader public markets, in the second quarter, private technology companies continued to see increasing interest from investors,” said Mark Klein, Chairman and Chief Executive Officer of SuRo Capital.

Mr. Klein continued, “As we have previously mentioned, with nearly $55.0 million in investable capital, we remain incredibly enthusiastic about our investment pipeline. During the second quarter, we completed a $10.0 million investment in Canva, Inc., a leading design software and collaboration platform with over 170 million monthly users, and a $15.0 million investment in CW Opportunity 2 LP, an SPV invested in CoreWeave, Inc., an AI cloud computing provider offering a suite of NVIDIA GPUs on top of its fast and flexible infrastructure.   We believe that these investments strengthen our already well-positioned existing portfolio for the re-opening of the IPO window.”

“We are pleased to announce our Board of Directors has approved a repurchase program of up to $35.0 million for our 6.00% Notes due 2026. Additionally, the Board approved up to $75.0 million of private 6.50% Convertible Notes due 2029, with an initial issuance of up to $25.0 million. We believe the refinancing of a portion of our current debt to a longer-dated convertible instrument with favorable terms strengthens our balance sheet,” Mr. Klein continued.

“As we have consistently demonstrated, SuRo Capital is committed to initiatives that enhance shareholder value, and we believe the market is currently undervaluing our portfolio. Given the discount our stock has traded at compared to net asset value per share, we believe our recently completed Modified Dutch Auction Tender Offer was an efficient and accretive deployment of capital,” concluded Mr. Klein.

Investment Portfolio as of June 30, 2024

At June 30, 2024, SuRo Capital held positions in 39 portfolio companies – 35 privately held and 4 publicly held, some of which may be subject to certain lock-up provisions – with an aggregate fair value of approximately $182.9 million. The Company’s top five portfolio company investments accounted for approximately 49% of the total portfolio at fair value as of June 30, 2024.

Top Five Investments as of June 30, 2024

Portfolio Company ($ in millions)Cost BasisFair Value% of Total Portfolio
Learneo, Inc.$15.0$29.015.9%
Blink Health, Inc. 15.0 19.910.9 
CW Opportunity 2 LP   15.0 15.08.2 
ServiceTitan, Inc. 10.0 14.47.9 
Locus Robotics Corp. 10.0 11.06.0 
Total$65.0$89.348.8%
       

__________________

Note: Total may not sum due to rounding.

Second Quarter 2024 Investment Portfolio Activity

During the three months ended June 30, 2024, SuRo Capital made the following investments:

Portfolio CompanyInvestmentTransaction DateAmount
Canva, Inc.Common Shares4/17/2024$10.0 million
CW Opportunity 2 LP(1)Class A Interest5/7/2024$15.0 million
    

__________________

(1) CW Opportunity 2 LP is a special purpose vehicle that is invested in the Series C Preferred Shares of CoreWeave, Inc.

During the three months ended June 30, 2024, SuRo Capital exited or received proceeds from the following investments, excluding short-term US treasuries:

Portfolio CompanyTransaction DateNet Proceeds Realized Gain
Architect Capital PayJoy SPV, LLC(1)6/28/2024$10.0 million$-
True Global Ventures 4 Plus Pte Ltd6/28/2024$0.2 million$-
    

__________________

(1) On June 28, 2024, SuRo Capital redeemed its Membership Interest in Architect Capital PayJoy SPV, LLC.

Subsequent to quarter-end through August 7, 2024, SuRo Capital exited or received proceeds from the following investments:

Portfolio CompanyTransaction DateQuantityAverage Net
Share Price
(1)
Net
Proceeds
Realized Gain
PSQ Holdings, Inc. (d/b/a PublicSquare) – Public Common Shares(2)Various220,000$2.87$0.6 million$0.5 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 August 7, 2024, SuRo Capital held 1,756,032 remaining PSQ Holdings, Inc. (d/b/a PublicSquare) public common shares.

Second Quarter 2024 Financial Results

 Quarter Ended
June 30, 2024
Quarter Ended
June 30, 2023
$ in millions
 per share(1)
 $ in millions
 per share(1)
     
Net investment loss$(3.7) $(0.16) $(3.8) $(0.15)
     
Net realized loss on investments (0.0)  (0.00)  (13.3)  (0.51)
     
Net change in unrealized appreciation/(depreciation) of investments (7.0)  (0.30)  1.5   0.06 
     
Net decrease in net assets resulting from operations – basic (2)$(10.7) $(0.45) $(15.6) $(0.60)
     
Repurchase of common stock (9.4)  0.20   (13.5)  0.33 
     
Stock-based compensation 0.6   0.03   0.8   0.03 
     
Decrease in net asset value(2)$(19.4) $(0.23) $(28.4) $(0.24)
                

__________________    

(1) Based on basic weighted-average number of shares outstanding for the relevant period.
(2) Total may not sum due to rounding.

Weighted-average common basic shares outstanding were approximately 23.4 million and 26.0 million for the quarters ended June 30, 2024 and 2023, respectively. As of June 30, there were 23,378,002 shares of the Company’s common stock outstanding.

SuRo Capital’s liquid assets were approximately $57.6 million as of June 30, 2024, consisting of cash and securities of publicly traded portfolio companies not subject to lock-up restrictions at quarter-end.

Convertible Note Purchase Agreement

On August 6, 2024, SuRo Capital entered into a Note Purchase Agreement (the “Note Purchase Agreement”), by and between the Company and the purchaser identified therein (the “Purchaser”), pursuant to which we may issue up to a maximum of $75.0 million in aggregate principal amount of 6.50% Convertible Notes due 2029 (the “Convertible Notes”). Pursuant to the Note Purchase Agreement, we agreed to issue and sell, and the Purchaser agreed to purchase, up to $25.0 million in aggregate principal amount of the Convertible Notes (the “Initial Notes”). Thereafter, upon mutual agreement between the Company and the Purchaser, we may issue additional Convertible Notes for sale in subsequent offerings (the “Additional Notes”), or issue additional notes with modified pricing terms (the “New Notes”), in the aggregate for both the Additional Notes and the New Notes, up to a maximum of $50.0 million in one or more private offerings. The Purchaser will acquire, and we will issue, up to $25.0 million of the Initial Notes on or about August 14, 2024 (the “Initial Closing Date”), and thereafter at such time and date as the Purchaser and we mutually agree to purchase and sell any Additional Notes.  

Interest on the Convertible Notes will be paid quarterly in arrears on March 30, June 30, September 30, and December 30, at a rate of 6.50% per year, beginning September 30, 2024. The Convertible Notes will mature on August 14, 2029 and may be redeemed in whole or in part at any time or from time to time at our option on or after August 6, 2027 upon the fulfillment of certain conditions. The Convertible Notes will be convertible into shares of our common stock at the Purchaser's sole discretion at an initial conversion rate of 129.0323 shares of our common stock per $1,000 principal amount of the Convertible Notes, subject to adjustment as provided in the Note Purchase Agreement.   The net proceeds from the offering will be used to repay outstanding indebtedness, make investments in accordance with our investment objective and investment strategy, and for other general corporate purposes. The Note Purchase Agreement includes customary representations, warranties, and covenants by the Company.

Note Repurchase Program

On August 6, 2024, SuRo Capital’s Board of Directors approved a discretionary note repurchase program (the “Note Repurchase Program”) which allows the Company to repurchase up to 46.67%, or $35.0 million in aggregate principal amount, of our 6.00% Notes due 2026 through open market purchases, including block purchases, in such manner as will comply with the provisions of the Investment Company Act of 1940, as amended (the "1940 Act") and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As of August 7, 2024, we had not repurchased any of the 6.00% Notes due 2026 under the Note Repurchase Program.

Modified Dutch Auction Tender Offer

On February 14, 2024, our Board of Directors authorized a modified Dutch Auction tender offer (the “Tender Offer”) to purchase up to 2.0 million shares of our common stock at a price per share not less than $4.00 and not greater than $5.00 in $0.10 increments, using available cash. In accordance with the Tender Offer, following the expiration of the Tender Offer at 5:00 P.M. Eastern Time on April 1, 2024, the Company repurchased 2,000,000 shares at a price of $4.70 per share, representing 7.9% of its outstanding shares. The per share purchase price of properly tendered shares represents 65.6% of net asset value per share as of March 31, 2024.

Share Repurchase Program

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 1940 Act and the Exchange Act.

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. The dollar value of shares that may yet be purchased by SuRo Capital under the Share Repurchase Program is approximately $20.7 million. The Share Repurchase Program is authorized through October 31, 2024.

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) on August 7, 2024. 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 6397974. 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 August 14, 2024 by dialing 866-583-1035 (U.S.) or +44 (0) 20 3451 9993 (International) and using conference ID number 6397974.

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 X, LinkedIn, and at www.surocap.com.

Contact
SuRo Capital Corp.
(212) 931-6331
IR@surocap.com


SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

 June 30, 2024 December 31, 2023
ASSETS   
Investments at fair value:   
Non-controlled/non-affiliate investments (cost of $195,251,769 and $160,994,161, respectively)$161,548,344  $147,167,535 
Non-controlled/affiliate investments (cost of $32,733,009 and $32,775,940, respectively) 19,386,536   24,931,333 
Controlled investments (cost of $8,764,352 and $18,771,097, respectively) 1,970,000   11,982,381 
Total Portfolio Investments 182,904,880   184,081,249 
Investments in U.S. Treasury bills (cost of $0 and $63,792,704, respectively)    63,810,855 
Total Investments (cost of $236,749,130 and $276,333,902, respectively) 182,904,880   247,892,104 
Cash 54,379,773   28,178,352 
Escrow proceeds receivable 71,044   309,293 
Interest and dividends receivable 83,844   132,607 
Deferred financing costs 561,075   594,726 
Prepaid expenses and other assets(1) 282,555   494,602 
Total Assets 238,283,171   277,601,684 
LIABILITIES   
Accounts payable and accrued expenses(1) 2,002,539   346,308 
Dividends payable 44,700   152,523 
6.00% Notes due December 30, 2026(2) 73,923,741   73,745,207 
Total Liabilities 75,970,980   74,244,038 
    
Net Assets$162,312,191  $203,357,646 
NET ASSETS   
Common stock, par value $0.01 per share (100,000,000 authorized; 23,378,002 and 25,445,805 issued and outstanding, respectively)$233,780  $254,458 
Paid-in capital in excess of par 240,145,859   248,454,107 
Accumulated net investment loss (11,182,638)  (4,304,111)
Accumulated net realized loss on investments, net of distributions (12,802,458)  (12,348,772)
Accumulated net unrealized appreciation/(depreciation) of investments (54,082,352)  (28,698,036)
Net Assets$162,312,191  $203,357,646 
Net Asset Value Per Share$6.94  $7.99 

__________________

(1)This balance includes a right of use asset and corresponding operating lease liability, respectively.
(2)As of June 30, 2024, the 6.00% Notes due December 30, 2026 (the "6.00% Notes due 2026") (effective interest rate of 6.53%) had a face value $75,000,000. As of December 31, 2023, the 6.00% Notes due 2026 (effective interest rate of 6.53%) had a face value $75,000,000.
  

SURO CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

  Three Months Ended June 30, Six Months Ended June 30,
   2024   2023   2024   2023 
INVESTMENT INCOME        
Non-controlled/non-affiliate investments:        
Interest income(1) $290,750  $40,394  $532,757  $89,869 
Dividend income     63,145   21,875   126,290 
Controlled investments:        
Interest income  376,667   318,425   811,667   554,425 
Interest income from U.S. Treasury bills  359,936   950,254   1,189,145   1,900,716 
Total Investment Income  1,027,353   1,372,218   2,555,444   2,671,300 
OPERATING EXPENSES        
Compensation expense  2,198,509   2,117,872   4,383,827   4,254,626 
Directors’ fees  167,825   161,661   338,938   322,226 
Professional fees  586,825   916,579   1,315,384   1,907,413 
Interest expense  1,214,267   1,214,267   2,428,534   2,427,553 
Income tax expense  52,794   90,826   54,894   620,606 
Other expenses  462,758   676,353   912,394   1,165,981 
Total Operating Expenses  4,682,978   5,177,558   9,433,971   10,698,405 
Net Investment Loss  (3,655,625)  (3,805,340)  (6,878,527)  (8,027,105)
Realized Gain/(Loss) on Investments:        
Non-controlled/non-affiliated investments  (22,867)  (2,325,175)  (507,008)  (2,135,832)
Non-controlled/affiliate investments     (10,945,024)  60,067   (10,945,024)
Controlled investments  (6,745)     (6,745)   
Net Realized Loss on Investments  (29,612)  (13,270,199)  (453,686)  (13,080,856)
Change in Unrealized Appreciation/(Depreciation) of Investments:        
Non-controlled/non-affiliated investments  (3,481,638)  (12,152,800)  (19,876,809)  (14,216,377)
Non-controlled/affiliate investments  (3,485,172)  11,220,424   (5,501,871)  9,900,060 
Controlled investments  864   2,387,891   (5,636)  14,420,763 
Net Change in Unrealized Appreciation/(Depreciation) of Investments  (6,965,946)  1,455,515   (25,384,316)  10,104,446 
Net Change in Net Assets Resulting from Operations $(10,651,183) $(15,620,024) $(32,716,529) $(11,003,515)
Net Change in Net Assets Resulting from Operations per Common Share:        
Basic $(0.45) $(0.60) $(1.34) $(0.41)
Diluted(2) $(0.45) $(0.60) $(1.34) $(0.41)
Weighted-Average Common Shares Outstanding       
Basic  23,410,235   25,952,447   24,401,863   27,158,786 
Diluted(2)  23,410,235   25,952,447   24,401,863   27,158,786 
                 

__________________

(1)Includes interest income earned on cash.
(2)For the three and six months ended June 30, 2024 and June 30, 2023, there were no potentially dilutive securities outstanding.
  


 Three Months Ended June 30, Six Months Ended June 30,
   2024   2023   2024   2023 
Per Basic Share Data        
Net asset value at beginning of the year $7.17  $7.59  $7.99  $7.39 
Net investment loss(1)  (0.16)  (0.15)  (0.28)  (0.30)
Net realized loss on investments(1)     (0.51)  (0.02)  (0.48)
Net change in unrealized appreciation/(depreciation) of investments(1)  (0.30)  0.06   (1.04)  0.37 
Repurchase of common stock(1)  0.20   0.33   0.23   0.33 
Stock-based compensation(1)  0.03   0.03   0.06   0.04 
Net asset value at end of period $6.94  $7.35  $6.94  $7.35 
Per share market value at end of period $4.01  $3.20  $4.01  $3.20 
Total return based on market value(2) (11.87)% (11.60)%  1.78% (15.79)%
Total return based on net asset value(2) (3.21)% (3.16)% (13.14)% (0.54)%
Shares outstanding at end of period  23,378,002   25,398,640   23,378,002   25,398,640 
Ratios/Supplemental Data:    
Net assets at end of period $162,312,191  $186,692,724  $162,312,191  $186,692,724 
Average net assets $175,240,305  $205,097,855  $188,879,950  $207,210,870 
Ratio of net operating expenses to average net assets(3)  10.75%  10.13%  10.04%  10.41%
Ratio of net investment loss to average net assets(3) (8.39)% (7.44)% (7.32)% (7.81)%
Portfolio Turnover Ratio  5.72%  2.09%  5.84%  3.89%
                 

__________________

(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.