Net Asset Value of $11.38 per Share as of December 31, 2019

 Board of Directors Approves Additional $5.0 Million for Share Repurchase Program; Bringing Share Repurchase Program and Tender Offer Total to $40.0 Million

SAN FRANCISCO, March 10, 2020 (GLOBE NEWSWIRE) -- Sutter Rock Capital Corp. (“Sutter Rock” or the “Company”) (Nasdaq:SSSS) today announced financial results for the quarter and fiscal year ended December 31, 2019.  Net assets totaled approximately $199.9 million, or $11.38 per share at December 31, 2019, inclusive of dividends totaling $0.32 per share declared during during the fourth quarter, as compared to $11.24 per share at September 30, 2019 and $9.89 per share at December 31, 2018.

“We are pleased to report a strong fourth quarter for Sutter Rock, which was driven by positive developments across our investment portfolio,” said Mark Klein, President and Chief Executive Officer of Sutter Rock.  “We believe that Parchment Inc.’s successful merger with Credentials Solutions is a strong positive signal for other top names in the Sutter Rock portfolio, and we are encouraged by the fundamentals of the portfolio.”

“Sutter Rock is committed to initiatives that enhance shareholder value and we believe the market is undervaluing our portfolio.  Accordingly, our Board of Directors has authorized an additional $5.0 million for share repurchases, bringing our Share Repurchase Program total to $30.0 million, not including the $10.0 million Tender Offer effectuated in the fourth quarter.  Given the significant discount at which our stock is trading compared to net asset value, we determined that this authorization is an efficient deployment of capital.”

“Looking forward, a key area of continued focus is selectively adding new investments to our portfolio to drive long-term value for shareholders.  The recent appointment of Keri Findley to Senior Managing Director and Senior Member of the Investment Committee will enhance this investment process by providing Sutter Rock with strategic guidance throughout our investment diligence and by introducing a credit-based investment strategy that will be complementary to our current equity approach.  We believe that Keri’s appointment, in combination with our healthy cash balance during ongoing dislocation in global equity markets, leaves us well positioned to opportunistically execute new investments at attractive pricing levels.”

Investment Portfolio as of December 31, 2019

At December 31, 2019, Sutter Rock held positions in 23 portfolio companies with an aggregate fair value of approximately $191.6 million.  As a result of the Company’s continued strategy to increase the size of its investments in individual portfolio companies, Sutter Rock has consolidated its investment portfolio around its top positions.  The Company’s top five portfolio company investments accounted for approximately 61% of the total portfolio at fair value as of December 31, 2019.

Top Five Investments as of December 31, 2019

 $ in millionsFair Value % of Total
Portfolio
 
 Coursera, Inc.$33.6 17.5% 
 Palantir Technologies, Inc. 31.6 16.5  
 Course Hero, Inc. 25.7 13.4  
 Ozy Media, Inc. 15.7 8.2  
 Nextdoor.com, Inc. (1) 10.9 5.7  
 Total (rounded)$117.4 61.3% 

____________________

  1. At December 31, 2019, Parchment, Inc. was a Top 5 position; however, due to the close of the Parchment, Inc. merger with Credential Solutions on January 31, 2020 and Sutter Rock’s full exit of its Parchment, Inc. position, it has been removed for illustrative purposes.

Fourth Quarter 2019 Investment Portfolio Activity

During the three months ended December 31, 2019, Sutter Rock exited its investments in the following portfolio companies:

Portfolio CompanyShares SoldAverage Net
Share Price (1)
Net ProceedsRealized Gain/(Loss)
Lyft, Inc.304,829$43.57$13.3 million$9.0 million
EdSurge Inc.873,153$-$-($1.0 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.

During the three months ended December 31, 2019, Sutter Rock funded the following follow-on investment:

Portfolio CompanyInvestmentTransaction DateAmount Invested
Stormwind, LLC.Preferred Shares, Series D11/26/2019$0.3 million

Subsequent to year-end, through March 9, 2020, Sutter Rock exited its position in Parchment, Inc.:

Portfolio CompanyShares SoldAverage Net
Share Price
Net Proceeds(1)Realized Gain/(Loss)
Parchment, Inc.3,200,512$3.37$10.8 million$6.8 million

____________________

  1. Net proceeds includes approximately $0.1 million in additional proceeds currently held in escrow.

Fourth Quarter 2019 Financial Results

 Quarter Ended
December 31, 2019
Quarter Ended
December 31, 2018
  
$ in millions

per share

$ in millions
 
per share
     
Net investment income/(loss)$(2.6)$(0.14)$1.7$0.08
     
Net realized gain on investments7.90.430.10.01
     
Net change in unrealized appreciation/(depreciation) of investments, net of tax effect(1)(3.1)(0.17)(17.0)(0.86)
     
Net increase/(decrease) in net assets resulting from operations - basic(2)$2.2$0.12$(15.2)$(0.77)
     
Dividends declared(5.6)(0.32)--
     
Repurchase of common stock(3)(10.2)0.36(2.8)0.08
     
Stock-based compensation(0.5)(0.02)--
     
Increase/(decrease) in net asset value(2)$(14.0)$0.14$(18.0)$(0.69)

__________________

  1. Includes related net tax benefit of $5.5 million for the quarter ended December 31, 2018.
  2. Total may not sum, due to rounding.
  3. During the quarters ended December 31, 2019 and 2018, the Company repurchased 28,000 and 412,308 shares of Sutter Rock common stock, respectively, for approximately $0.2 million and $2.8 million, respectively, in cash under its Share Repurchase Program. Additionally, during the quarter ended December 31, 2019, under its modified Dutch Auction tender offer, Sutter Rock repurchased 1,449,275 shares for $10.0 million. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulted in an increase in the net asset value per share.

Weighted-average common basic shares outstanding were approximately 18.4 million and 19.9 million for the quarters ended December 31, 2019 and 2018, respectively.

Fiscal Year 2019 Financial Results

 Fiscal Year Ended
December 31, 2019
Fiscal Year Ended
December 31, 2018
  
$ in millions
 
per share

$ in millions
 
per share
     
Net investment loss$(9.5)$(0.49)$(7.6)$(0.37)
     
Net realized gain/(loss)19.2 0.99(7.8)(0.38)
     
Net change in unrealized appreciation/(depreciation) of investments13.4 0.699.60.47
     
Adjustment to provision for taxes on net unrealized appreciation/depreciation of investments0.9 0.056.70.33
     
Net increase in net assets resulting from operations - basic$24.0$1.24$0.9$0.05
     
Dividends declared (5.6)(0.32)--
     
Repurchase of common stock(1)(14.8)0.52(10.3)0.20
     
Stock based compensation 1.00.05--
     
Increase/(decrease) in net asset value(2)$4.5$1.49$(9.4)$0.25

__________________

  1. During the years ended December 31, 2019 and 2018, the Company repurchased 749,128 and 1,483,698 shares of Sutter Rock common stock, respectively, for approximately $4.8 million and $10.3 million, respectively, in cash under its Share Repurchase Program. Additionally, during the year ended December 31, 2019, under its modified Dutch Auction tender offer, Sutter Rock repurchased 1,449,275 shares for $10.0 million. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulted in an increase in the net asset value per share.
  2. Total may not sum, due to rounding.

Weighted-average common basic shares outstanding were approximately 19.3 million and 20.6 million for the fiscal years ended December 31, 2019 and 2018, respectively.

Sutter Rock’s liquid assets were approximately $50.1 million as of December 31, 2019, consisting of cash and cash equivalents.

Dividends Declared

On November 5, 2019, Sutter Rock’s Board of Directors declared a $0.20 per share cash dividend, paid on December 12, 2019 to the Company’s common stockholders of record as of the close of business on December 2, 2019.

On December 20, 2019, Sutter Rock’s Board of Directors declared a $0.12 per share cash dividend, paid on January 15, 2020 to the Company’s stockholders of record as of the close of business on December 31, 2019.

Share Repurchase Program & Modified Dutch Auction Tender Offer

During the quarter ended December 31, 2019, Sutter Rock repurchased 28,000 shares under the Share Repurchase Program for an aggregate purchase price of $0.2 million. From January 1, 2020 through March 9, 2020, the Company repurchased an additional 237,612 shares of its common stock for an aggregate purchase price of $1.5 million.

On March 9, 2020, the Board of Directors authorized a $5.0 million expansion of the Share Repurchase Program to $30.0 million. The dollar value of shares that may yet be purchased by the Company under the Share Repurchase Program is approximately $8.5 million.

During the quarter ended December 31, 2019, Sutter Rock commenced a modified Dutch Auction Tender Offer for $10.0 million of its outstanding common stock.  Sutter Rock repurchased 1,449,275 shares, representing 7.6% of its outstanding shares, for payment in late November 2019, at a price of $6.90 per share on a pro rata basis, excluding fees and expenses relating to the self-tender offer.

Under the publicly announced Share Repurchase Program and the modified Dutch Auction Tender Offer, as of March 9, 2020, the Company has repurchased 4,854,371 shares of its common stock for approximately $31.5 million since the Share Repurchase Program was announced in August 2017.

Conference Call and Webcast

Management will hold a conference call and webcast for investors on March 11, 2020 at 2:00 p.m. PT (5:00 p.m. ET).  The conference call access number for U.S. participants is 334-777-6978, and the conference call access number for participants outside the U.S. is +1 800-367-2403.  The conference ID number for both access numbers is 7996418.  Additionally, interested parties can listen to a live webcast of the call from the "Investor Relations" section of Sutter Rock’s website at www.sutterrock.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 March 18, 2020 by dialing 888-203-1112 (U.S.) or +1 719-457-0820 (International) and using conference ID number 7996418.

About Sutter Rock Capital Corp.   

Sutter Rock 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. Sutter Rock is headquartered in San Francisco, CA. Connect with the company on Twitter, LinkedIn, and at www.sutterrock.com.

Forward-Looking Statements

Statements included herein, including statements regarding Sutter Rock's beliefs, expectations, intentions or strategies for the future, may constitute "forward-looking statements". Sutter Rock 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 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 Sutter Rock's actual results to differ from management's current expectations are contained in Sutter Rock's filings with the Securities and Exchange Commission. Sutter Rock undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.

Contact
Sutter Rock Capital Corp.
(650) 235-4769
IR@sutterrock.com

Media Contact
Bill Douglass
Gotham Communications, LLC
Communications@sutterrock.com

 
 
SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 
December 31,
 2019
 December 31,
 2018
ASSETS 
Investments at fair value: 
Non-controlled/non-affiliate investments (cost of $90,567,041 and $105,869,607, respectively)$152,866,112  $170,067,233 
Non-controlled/affiliate investments (cost of $52,857,243 and $42,333,854, respectively)37,944,268  5,931,863 
Controlled investments (cost of $7,161,412 and $22,960,942, respectively)775,198  22,816,733 
Total Portfolio Investments191,585,578  198,815,829 
Investments in U.S. Treasury bills (cost of $49,996,667 and $99,982,067, respectively)50,000,000  99,994,000 
Total Investments (cost of $200,582,363 and $271,146,470, respectively)241,585,578  298,809,829 
Cash44,861,263  28,184,163 
Escrow proceeds receivable265,303  2,494,582 
Interest and dividends receivable84,630  255,670 
Deferred financing costs11,382  267,541 
Prepaid expenses and other assets(3)1,755,933  207,769 
Total Assets288,564,089  330,219,554 
LIABILITIES 
Accounts payable and accrued expenses(3)1,143,923  490,687 
Accrued incentive fees, net of waiver of incentive fees(1)  4,660,472 
Accrued management fees, net of waiver of management fees(1)  415,056 
Payable to executive officers1,369,873   
Accrued interest payable475,000  475,000 
Dividends payable2,107,709   
Payable for securities purchased44,746,660  89,480,103 
Deferred tax liability  885,566 
4.75% Convertible Senior Notes due March 28, 2023(2)38,803,635  38,434,511 
Total Liabilities88,646,800  134,841,395 
  
Net Assets$199,917,289  $195,378,159 
NET ASSETS 
Common stock, par value $0.01 per share (100,000,000 authorized; 17,564,244 and 19,762,647 issued and outstanding, respectively)$175,642  $197,626 
Paid-in capital in excess of par178,550,374  192,322,399 
Accumulated net investment loss(25,679,362) (16,228,294)
Accumulated net realized gain/(loss) on investments5,867,417  (7,691,365)
Accumulated net unrealized appreciation/(depreciation) of investments41,003,218  26,777,793 
Net Assets$199,917,289  $195,378,159 
Net Asset Value Per Share$11.38  $9.89 

__________________

  1. This balance references a related-party transaction.
  2. As of December 31, 2019 and December 31, 2018, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000.
  3. This balance includes a right of use asset and corresponding operating lease liability, respectively.
  
  
SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
  
Year Ended December 31,
 2019 2018 2017
INVESTMENT INCOME     
Non-controlled/non-affiliate investments:     
Interest income$828,392  $351,188  $(4,627)
Dividend income100,000    73,096 
Non-controlled/affiliate investments:   
Interest income108,395  581,813  59,460 
Controlled investments:   
Interest income58,937  59,835  249,839 
Dividend income400,000  625,000  475,000 
Total Investment Income1,495,724  1,617,836  852,768 
OPERATING EXPENSES   
Management fees(1)848,723  5,199,900  5,666,176 
Incentive fees/(Reversal of incentive fee accrual)(1)(4,660,472) 382,387  7,151,641 
Costs incurred under Administration Agreement(1)306,084  1,702,047  1,874,839 
Compensation expense4,286,972     
Directors’ fees383,370  345,000  328,480 
Professional fees5,290,329  1,587,578  2,068,668 
Interest expense2,372,570  4,545,471  4,696,819 
Income tax expense33,825  482,994  52,901 
Other expenses2,085,391  899,457  600,331 
Total Operating Expenses10,946,792  15,144,834  22,439,855 
Management fee waiver(1)  (892,421) (708,272)
Incentive fee waiver(1)    (5,000,000)   
Total operating expenses, net of waiver of management and incentive fees 10,946,792   9,252,413   21,731,583 
Net Investment Loss(9,451,068) (7,634,577) (20,878,815)
Realized Gains/(Losses) on Investments:  
Non-controlled/non-affiliated investments32,625,663  (7,432,939) 3,989,476 
Non-controlled/affiliate investments(13,446,323)    
Controlled investments  (680) (3,075,494)
Net Realized Gain/(Loss) on Investments19,179,340  (7,433,619) 913,982 
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018  (397,846)  
Change in Unrealized Appreciation/(Depreciation) of Investments:    
Non-controlled/non-affiliated investments(1,907,148) 21,819,883  45,958,490 
Non-controlled/affiliate investments21,489,014  (10,988,777) (16,084,516)
Controlled investments(6,242,007) (1,190,056) 4,901,722 
Net Change in Unrealized Appreciation/(Depreciation) of Investments13,339,859  9,641,050  34,775,696 
Benefit from taxes on unrealized depreciation of investments885,566  6,716,735  2,757,070 
Net Change in Net Assets Resulting from Operations$23,953,697  $891,743  $17,567,933 
Net Change in Net Assets Resulting from Operations per Common Share:    
Basic$1.24  $0.04  $0.80 
Diluted(2)$1.14  $0.04  $0.80 
Weighted-Average Common Shares Outstanding  
Basic19,328,414  20,617,890  21,924,490 
Diluted(2)23,069,622  20,617,890  21,924,490 

__________________

  1. This balance references a related-party transaction.
  2. For the years ended December 31, 2019, 2018, and 2017, 0, 6,079,068, and 5,751,815 potentially dilutive common shares, respectively, were excluded from the weighted-average common shares outstanding for diluted net increase in net assets resulting from operations per common share because the effect of these shares would have been anti-dilutive.​
 
 
SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
                    
Year Ended December 31,
  2019  2018  2017  2016   2015 
Per Basic Share Data         
Net asset value at beginning of the year$9.89  $9.64  $8.66  $12.08  $14.80 
Net investment loss(1) (0.49)  (0.37)  (0.95)  (0.06)  (2.52)
Net realized gain/(loss) on investments(1) 0.99   (0.36)  0.04   (0.12)  2.80 
Benefit from taxes on net realized loss of investments(1)             0.02 
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018(1)    (0.02)         
Net change in unrealized appreciation/(depreciation) of investments(1) 0.69   0.47   1.59   (3.30)  (0.69)
Benefit from taxes on unrealized depreciation of investments(1) 0.05   0.33   0.13   0.10   0.83 
Dividends declared (0.32)        (0.04)  (2.76)
Repurchase of common stock 0.52   0.20   0.18       
Stock-based compensation(1) 0.05             
Net asset value at end of year$11.38  $9.89  $9.64  $8.66  $12.08 
Per share market value at end of year$6.55  $5.22  $5.45  $5.03  $9.37 
Total return based on market value(2) 31.53%  (4.22)%  8.35%  (23.29)%  8.57%
Total return based on net asset value(2) 15.08%  2.59%  11.32%  (27.74)%  (0.27)%
Shares outstanding at end of year 17,564,244   19,762,647   21,246,345   22,181,003   22,181,003 
Ratios/Supplemental Data:                  
Net assets at end of year$199,917,289  $195,378,159  $204,762,866  $192,128,810  $268,010,945 
Average net assets$209,261,190  $208,678,731  $199,457,678  $243,577,514  $296,560,393 
Ratio of gross operating expenses to average net assets(3) 6.08%  7.09%  11.25%  0.82%  9.10%
Ratio of incentive fee waiver to average net assets %  (2.40)%  %  %  %
Ratio of management fee waiver to average net assets %  (0.43)%  (0.36)%  %  %
Ratio of income tax provision to average net assets (0.42)%  (3.22)%  (1.38)%  (0.87)%  (1.88)%
Ratio of net operating expenses to average net assets(3) 5.66%  1.04%  9.51%  (0.05)%  7.22%
Ratio of net investment loss to average net assets(3) (4.52)%  (3.66)%  (10.47)%  (0.52)%  (16.41)%
Portfolio Turnover Ratio 12.95%  5.01%  0.07%  4.46%  8.30%

__________________

  1. Based on weighted-average number of shares outstanding for the relevant period.
  2. Total return based on market value is based on the change in market price per share between the opening and ending market values per share in the year.  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.
  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.  Non-recurring expenses, including the $5.0 million accrued incentive fee forfeiture pursuant to the Waiver Agreement, are not annualized.  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.