Financial News

SuRo Capital Corp. Reports Third Quarter 2022 Financial Results

NEW YORK, Nov. 08, 2022 (GLOBE NEWSWIRE) -- SuRo Capital Corp. (“SuRo Capital”, the “Company”, “we”, “us”, and “our”) (Nasdaq: SSSS) today announced its financial results for the quarter ended September 30, 2022. Net assets totaled approximately $221.8 million, or $7.83 per share, at September 30, 2022 as compared to $9.24 per share at June 30, 2022 and $14.79 per share at September 30, 2021.

“As we previously mentioned, the first nine months of 2022 were the worst for equity markets in the past two decades. Simultaneously, there is a continued dramatic slowdown in the IPO market, with less than 40 IPOs in the US during the third quarter and more than 60% of IPOs being withdrawn, year to date. As macroeconomic challenges persist, we expect continued acceleration in the repricing of private securities. We are beginning to see bid-ask spreads start to narrow as increased discounts are reflected in the asking prices of private securities on the secondary markets. As a result, we believe continued pressure from declining macroeconomic conditions and the unfavorable IPO market will present compelling opportunities in the secondary market. Our considerable cash and US treasuries position of approximately $140.0 million allows us to be opportunistic in evaluating new, late stage, high-growth companies at increasingly compelling valuations,” said Mark Klein, Chairman and Chief Executive Officer of SuRo Capital.

“SuRo Capital continues its commitment to shareholder value-enhancing initiatives.   Given the discount our stock has traded at compared to net asset value per share, we believe our active Share Repurchase Program and recent Modified Dutch Auction Tender Offer to be efficient and accretive deployments of capital. During the third quarter we initiated and executed the Modified Dutch Auction Tender Offer, resulting in the purchase of 2.0 million shares of common stock for $6.60 per share. Year to date, in combination with the Board authorization of an additional $15.0 million to the Share Repurchase Program, SuRo Capital has repurchased over 3.0 million shares of common stock with approximately $16.4 million remaining in the Board-authorized Share Repurchase Program. Subsequent to quarter-end, the Board has extended the Share Repurchase Program through October 31, 2023,” Klein concluded.

Investment Portfolio as of September 30, 2022

At September 30, 2022, SuRo Capital held positions in 39 portfolio companies – 32 privately held and 7 publicly held, some of which may be subject to certain lock-up provisions – with an aggregate fair value of approximately $157.7 million, excluding US treasuries.   The Company’s top five portfolio company investments accounted for approximately 62% of the total portfolio at fair value as of September 30, 2022.

Top Five Investments as of September 30, 2022

Portfolio Company($ in millions)Cost BasisFair Value% of Total Portfolio
Course Hero, Inc.$15.0$56.735.9%
Blink Health, Inc. 15.0 10.86.8 
Orchard Technologies, Inc. 10.5 10.56.7 
Architect Capital PayJoy SPV, LLC 10.0 10.06.3 
StormWind, LLC 6.4 9.76.2 
Total$56.9$97.761.9%

Third Quarter 2022 Investment Portfolio Activity

During the three months ended September 30, 2022, SuRo Capital funded the following new and follow-on investments (excluding US treasuries):

Portfolio CompanyInvestmentTransaction DateAmount
Xgroup Holdings Limited (d/b/a Xpoint)(1)Convertible Note8/17/2022$1.0 million
Orchard Technologies, Inc.(2)Simple Agreement for Future Equity (SAFE)9/2/2022$0.5 million
Forge Global, Inc.(3)Common Shares9/30/2022$0.9 million

__________________

(1)  Investment made through SuRo Capital Sports, LLC.
(2)  Represents a follow-on investment.
(3)  On and effective August 5, 2022, SuRo Capital notified Forge Global, Inc. of its intent to net exercise via cashless settlement its 230,144 common warrants in Forge Global, Inc. into 53,283 shares of Forge Global, Inc.'s public common stock, pursuant to the net exercise formula in the warrant agreement. The exercise was effectuated on September 30, 2022.

During the three months ended September 30, 2022, SuRo Capital exited or received proceeds from the following investments:

Portfolio CompanyTransaction
Date
Shares
Sold
Average Net
Share Price
(1)
Net 
Proceeds
Realized
Gain/(Loss)
Enjoy Technology, Inc.(2)Various947,297$0.26$0.2 million($5.3 million)
NewLake Capital Partners, Inc.(3)Various15,310$17.37$0.3 million<($0.1 million)
Palantir Lending Trust SPV I(4)7/14/2022N/AN/A$0.6 million$0.6 million
Rent The Runway, Inc.(5)Various60,000$5.00$0.3 million($0.6 million)
Residential Homes For Rent, LLC (d/b/a Second Avenue)(6)VariousN/AN/A$0.3 million$-
Rover Group, Inc.(7)Various257,192$4.09$1.1 million$0.3 million

__________________
(1)  The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.
(2)  As of August 12, 2022, SuRo Capital had sold all its public common shares of Enjoy Technology, Inc.
(3)  As of September 30, 2022, SuRo Capital held 232,133 remaining NewLake Capital Partners, Inc. public common shares.
(4)  On July 14, 2022, a final payment was received for the remaining 512,290 Class A common shares of Palantir Technologies, Inc. that comprised the beneficial equity interest in underlying shares. The realized gain from SuRo Capital's investment in Palantir Lending Trust SPV I is generated by the proceeds from the sale of shares collateralizing the repaid promissory note to Palantir Lending Trust SPV I and attributable to the Equity Participation in Underlying Collateral.
(5)  As of September 30, 2022, SuRo Capital held 229,191 remaining Rent the Runway, Inc. public common shares.
(6)  During the three months ended September 30, 2022, approximately $0.3 million was received from Residential Homes For Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, approximately $0.3 million repaid a portion of the outstanding principal and the remaining was attributed to interest.
(7)  As of September 30, 2022, SuRo Capital held 106,854 remaining Rover Group, Inc. public common shares.

Subsequent to quarter-end through November 8, 2022, SuRo Capital exited or received proceeds from the following investments (excluding US treasuries):

Portfolio CompanyTransaction
Date
Shares
Sold
Average Net
Share Price
(1)
Net 
Proceeds
Realized
Gain/(Loss)
Rover Group, Inc.(2)Various106,854$3.93$0.4 million$0.1 million
Kahoot! ASA(3)10/19/202261,367$2.12$0.1 million($0.2 million)
Residential Homes For Rent, LLC (d/b/a Second Avenue)(4)10/31/2022N/AN/A$0.1 million$-

__________________
(1)  The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.
(2)  As of October 11, 2022, SuRo Capital had sold all its public common shares of Rover Group, Inc.
(3)  As of November 8, 2022, SuRo Capital held 38,305 public common shares of Kahoot! ASA, all of which are subject to lock-up restrictions.
(4)  On October 31, 2022, approximately $0.1 million was received from Residential Homes For Rent, LLC (d/b/a Second Avenue) related to the 15% term loan due December 23, 2023. Of the proceeds received, approximately $0.1 million repaid a portion of the outstanding principal and the remaining was attributed to interest.

Third Quarter 2022 Financial Results

 Quarter Ended 
September 30, 2022
Quarter Ended 
September 30, 2021
$ in millionsper share(1)$ in millionsper share(1)
     
Net investment loss$(3.8)$(0.13)$(2.2)$(0.08)
     
Net realized gain/(loss) on investments(5.1)(0.17)32.50.93
     
Net change in unrealized appreciation/(depreciation) of investments(37.0)(1.24)(15.0)(0.61)
     
Net increase/(decrease) in net assets resulting from operations – basic(2)$(45.9)$(1.54)$15.2$0.24
     
Dividends declared--(59.8)(2.25)
     
Issuance of common stock from stock dividend--30.20.22
     
Repurchase of common stock(3)(13.2)0.11--
     
Stock-based compensation0.70.020.50.02
     
Increase/(decrease) in net asset value(2)$(58.4)$(1.41)$(13.8)$(1.77)

__________________

(1)  Based on basic weighted-average number of shares outstanding for the relevant period.
(2)  Total may not sum due to rounding.
(3)  Includes 2,000,000 shares repurchased via the Modified Dutch Auction Tender Offer at a price of $6.60 per share.

Weighted-average common basic shares outstanding were approximately 29.8 million and 27.6 million for the quarters ended September 30, 2022, and 2021, respectively. As of September 30, 2022, there were 28,333,661 shares of the Company’s common stock outstanding.

SuRo Capital’s liquid assets were approximately $154.3 million as of September 30, 2022, consisting of cash, US Treasuries, and securities of publicly traded portfolio companies not subject to lock-up restrictions at quarter-end.

Modified Dutch Auction Tender Offer

On August 1, 2022, our Board of Directors authorized a Modified Dutch Auction Tender Offer (“Tender Offer”) to purchase up to 2.0 million shares of our common stock at a price per share between $6.00 and $7.00, using available cash. In accordance with the Tender Offer, on September 12, 2022, the Company repurchased 2,000,000 shares, at a price of $6.60 per share representing 6.6% of its outstanding shares. The per share purchase price of properly tendered shares represents 71.4% of net asset value per share as of June 30, 2022.

Share Repurchase Program

Since inception of the Share Repurchase Program in August 2017, SuRo Capital has repurchased over 5.8 million shares of its common stock for an aggregate purchase price of approximately $38.6 million.

On March 13, 2022, the Company’s Board of Directors authorized a $15.0 million expansion of the Share Repurchase Program to $55.0 million. Year to date, under the Share Repurchase Program, the Company repurchased 1,008,676 shares of its common stock for approximately $8.3 million. The dollar value of shares that may yet be purchased by the Company under the Share Repurchase Program is approximately $16.4 million. The Share Repurchase Program is authorized through October 31, 2023.

Under the Share Repurchase Program, the Company may repurchase its outstanding common stock in the open market provided it complies with the prohibitions under its insider trading policies and procedures and the applicable provisions of the Investment Company Act of 1940, as amended, and the Securities Exchange Act of 1934, as amended.

Conference Call and Webcast

Management will hold a conference call and webcast for investors at 2:00 p.m. PT (5:00 p.m. ET) on November 8, 2022. 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 7689121. Additionally, interested parties can listen to a live webcast of the call from the "Investor Relations" section of SuRo Capital’s website at www.surocap.com. An archived replay of the webcast will also be available for 12 months following the live presentation.

A replay of the conference call may be accessed until 5:00 p.m. PT (8:00 p.m. ET) on November 15, 2022 by dialing 866-583-1035 (U.S.) or +44 (0) 20 8196 1480 (International) and using conference ID number 7689121.

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 the COVID-19 pandemic and any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy, that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Risk factors, cautionary statements, and other conditions which could cause SuRo Capital's actual results to differ from management's current expectations are contained in SuRo Capital's filings with the Securities and Exchange Commission. SuRo Capital undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.

About SuRo Capital Corp.

SuRo Capital Corp. (Nasdaq: SSSS) is a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock. SuRo Capital is headquartered in New York, NY and has offices in San Francisco, CA. Connect with the company on Twitter, LinkedIn, and at www.surocap.com.

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

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

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

 September 30, 2022 December 31, 2021
ASSETS   
Investments at fair value:   
Non-controlled/non-affiliate investments (cost of $148,024,855 and $146,360,300, respectively)$131,739,945  $231,768,290 
Non-controlled/affiliate investments (cost of $41,140,804 and $41,211,183, respectively) 12,310,601   14,609,089 
Controlled investments (cost of $19,883,894 and $19,883,894, respectively) 13,697,346   13,758,874 
Total Portfolio Investments 157,747,892   260,136,253 
Investments in U.S. Treasury bills (cost of $99,173,075 and $0, respectively) 99,226,000    
Total Investments (cost of $308,222,628 and $207,455,377, respectively) 256,973,892   260,136,253 
Cash 39,652,608   198,437,078 
Proceeds receivable    52,493 
Escrow proceeds receivable 653,791   2,046,645 
Interest and dividends receivable 119,608   83,655 
Deferred financing costs 572,771   621,719 
Prepaid expenses and other assets(1) 889,174   937,984 
Total Assets 298,861,844   462,315,827 
LIABILITIES   
Accounts payable and accrued expenses(1) 3,431,394   875,047 
Accrued interest payable    175,000 
Dividends payable 349,929   23,390,048 
6.00% Notes due December 30, 2026(2) 73,296,910   73,029,108 
Total Liabilities 77,078,233   97,469,203 
    
Net Assets$221,783,611  $364,846,624 
NET ASSETS   
Common stock, par value $0.01 per share (100,000,000 authorized; 28,333,661 and 31,118,556 issued and outstanding, respectively)$283,337  $311,185 
Paid-in capital in excess of par 330,271,551   350,079,409 
Accumulated net investment loss (61,969,423)  (50,124,597)
Accumulated net realized gain on investments, net of distributions 4,446,871   11,899,742 
Accumulated net unrealized appreciation/(depreciation) of investments (51,248,725)  52,680,885 
Net Assets$221,783,611  $364,846,624 
Net Asset Value Per Share$7.83  $11.72 

__________________________________________________

(1)  This balance includes a right of use asset and corresponding operating lease liability, respectively.
(2)  As of September 30, 2022, the 6.00% Notes due December 30, 2026 (effective interest rate of 6.53%) had a face value $75,000,000. As of December 31, 2021, the 6.00% Notes due December 30, 2026 (effective interest rate of 6.13%) had a face value $75,000,000.

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

 Three Months Ended September 30, Nine Months Ended September 30,
 2022
 2021
  2022
 2021
INVESTMENT INCOME        
Non-controlled/non-affiliate investments:        
Interest income$26,747  $138,072   $338,484  $450,768 
Dividend income 107,764   275,844    429,758   426,688 
Non-controlled/affiliate investments:        
Dividend income           102,632 
Controlled investments:        
Interest income 385,000   110,000    1,225,000   110,000 
Total Investment Income 519,511   523,916    1,993,242   1,090,088 
OPERATING EXPENSES        
Compensation expense 1,836,808   1,500,061    5,456,771   4,139,263 
Directors’ fees(1) 161,661   368,281    514,055   590,781 
Professional fees 565,411   604,475    2,916,583   2,107,158 
Interest expense 1,202,748       3,630,301   504,793 
Income tax expense 74,497   (1,975)   82,238   7,648 
Other expenses 487,619   276,552    1,238,120   841,241 
Total Operating Expenses 4,328,744   2,747,394    13,838,068   8,190,884 
Net Investment Loss (3,809,233)  (2,223,478)   (11,844,826)  (7,100,796)
Realized Gain/(Loss) on Investments:       
Non-controlled/non-affiliated investments (5,141,097)  30,601,821    (3,940,668)  170,413,151 
Non-controlled/affiliate investments    1,893,839    (70,379)  1,893,839 
Net Realized Gain/(Loss) on Investments (5,141,097)  32,495,660    (4,011,047)  172,306,990 
Change in Unrealized Appreciation/(Depreciation) of Investments:        
Non-controlled/non-affiliated investments (34,763,904)  9,252,577    (101,639,973)  (6,078,092)
Non-controlled/affiliate investments (1,866,488)  (24,389,188)   (2,228,109)  (2,727,465)
Controlled investments (321,528)  112,833    (61,528)  207,194 
Net Change in Unrealized Appreciation/(Depreciation) of Investments (36,951,920)  (15,023,778)   (103,929,610)  (8,598,363)
Net Change in Net Assets Resulting from Operations$(45,902,250) $15,248,404   $(119,785,483) $156,607,831 
Net Change in Net Assets Resulting from Operations per Common Share:        
Basic$(1.54) $0.55   $(3.92) $6.39 
Diluted(2)$(1.54) $0.55   $(3.92) $6.11 
Weighted-Average Common Shares Outstanding       
Basic 29,781,801   27,619,062    30,542,611   24,506,181 
Diluted(2) 29,781,801   27,619,062    30,542,611   25,705,099 

______________________________

(1)  For the three and nine months ended September 30, 2022 and the three months ended September 30, 2021, there were no potentially dilutive securities outstanding. For the nine months ended September 30, 2021, 0 potentially dilutive common shares were excluded from the weighted-average common shares outstanding for diluted net increase in net assets resulting from operations per common share.

SURO CAPITAL CORP. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
 2022 2021 2022 2021
Per Basic Share Data       
Net asset value at beginning of the year$9.24  $16.56  $11.72  $15.14 
Net investment loss(1) (0.13)  (0.08)  (0.39)  (0.29)
Net realized gain/(loss) on investments(1) (0.17)  0.93   (0.13)  7.03 
Net change in unrealized appreciation/(depreciation) of investments(1) (1.24)  (0.61)  (3.40)  (0.35)
Dividends declared    (2.25)  (0.11)  (5.25)
Issuance of common stock from stock dividend    0.22      0.38 
Issuance of common stock from public offering(1)       0.01    
Issuance of common stock from conversion of 4.75% Convertible Notes due 2023(1)          (1.91)
Repurchase of common stock(1) 0.11     0.08    
Stock-based compensation(1) 0.02   0.02   0.05   0.04 
Net asset value at end of period$7.83  $14.79  $7.83  $14.79 
Per share market value at end of period$3.87  $12.91  $3.87  $12.91 
Total return based on market value(2) (39.53)%  30.46%  (68.91)%  71.32%
Total return based on net asset value(2) (15.26)%  2.90%  (32.25)%  32.36%
Shares outstanding at end of period 28,333,661   28,781,016   28,333,661   28,781,016 
Ratios/Supplemental Data:   
Net assets at end of period$221,783,611  $425,766,489  $221,783,611  $425,766,489 
Average net assets$278,994,914  $427,927,307  $340,160,110  $389,106,239 
Ratio of net operating expenses to average net assets(3) 5.14%  2.41%  4.89%  2.81%
Ratio of net investment loss to average net assets(3) (4.66)%  (1.92)%  (4.52)%  (2.43)%
Portfolio Turnover Ratio 0.85%  10.03%  3.47%  23.93%

________________
(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)  Because the ratios are calculated for the Company’s common stock taken as a whole, an individual investor’s ratios may vary from these ratios.


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