Third Quarter 2007 Highlights and Update
-- Net loss for the third quarter of 2007 was US$34.2 million, compared
to net income of US$21.8 million in the second quarter of 2007. Basic
loss per Class B share was US$0.74 in the third quarter, compared to
basic and diluted earnings per Class B share of US$0.73 in the second
quarter of 2007. Net loss for the nine months ended September 30, 2007
was US$0.8 million, or US$0.03 per Class B share.
-- Adjusted Net Income (net income excluding non-cash share-based
compensation expense) for the nine months ended September 30, 2007 was
approximately US$11 million.
-- As of the date of this announcement, the Company's US$22.2 billion
investment portfolio is comprised exclusively of AAA-rated floating
rate capped residential mortgage backed securities issued by Fannie
Mae and Freddie Mac, which are considered to have the implied
guarantee of the U.S. government and are expected to pay at par at
-- During the third quarter, The Carlyle Group committed to lend the
Company up to US$100 million in the form of a secured "bridge" loan in
order to provide the Group with immediate access to the net proceeds
from the Company's bank loan sales (as opposed to waiting until the
settlement of such trades). The Company ultimately did not have a need
for the bridge financing and it expired in October 2007.
-- On November 13, 2007, the Company repaid US$100 million borrowed from
The Carlyle Group pursuant to an unsecured and subordinated term loan.
On the same date, the Company entered into a revolving credit
Agreement with The Carlyle Group, permitting the Company to borrow,
re-pay and re-borrow up to US$100 million. The revolving credit
agreement expires on January 2, 2009, amounts outstanding accrue
interest at 10% per annum, and is subject to a commitment fee of
US$1 million payable in quarterly installments. As of the date of this
announcement, the Company had borrowed US$20 million under the
revolving credit agreement for cash management purposes.
-- As of the date of this announcement, two of the Company's repurchase
agreement counterparties had agreed to provide, or had increased their
commitment to provide, financing of up to US$3 billion for the
Company's investments in AAA-rated floating rate capped residential
mortgage backed securities issued by Fannie Mae and Freddie Mac. The
Company has begun using a portion of the US$3 billion of additional
financing to reduce its concentration of borrowings. The Company has
also obtained an additional US$2 billion of additional repurchase
agreement financing for its mortgage backed securities that it expects
to begin using later in November 2007. Finally, the Company has
entered negotiations for a US$2 billion 364 day "term" repurchase
-- As of September 30, 2007 the Company's "Liquidity Cushion" was
US$90.8 million and was comprised of cash and cash equivalents and
unencumbered AAA-rated mortgage backed securities. As of November 13,
2007, our "Liquidity Cushion" was approximately US$119.9 million
comprised of cash and cash equivalents and unencumbered AAA-rated
mortgage backed securities and available committed borrowings from The
-- The Board of Directors expects to approve a dividend payment based on
fourth quarter earnings, which would be paid in the first quarter of
next year. This reflects the Company's long-term focus of providing
shareholders with a stable rate of return. However, the Board of
Directors does not anticipate that any such dividend will meet the
Company's previously stated dividend targets. Unforeseen market
disruptions or other factors may affect the Board's decision to pay a
dividend, which will be made during the Board's year-end performance
review. Thereafter, subject to having sufficient liquidity, reasonably
stable market conditions and profits or reserves available, and with
approval of the Company's board of directors, the Company intends to
pay a quarterly cash dividend on each Class B share of approximately
90% of our Adjusted Net Income.
"During this quarter we were successful in our near-term focus of preserving the long term equity of our shareholders during a period of volatility," said John Stomber, President, Chief Executive Officer, and Chief Investment Officer. "Specifically, during the quarter we took actions to stabilize our investment portfolio, which is now composed exclusively of AAA-rated floating rate capped residential mortgage backed securities issued by Fannie Mae and Freddie Mac that pay at par at maturity. We are confident that these actions have preserved shareholder value."
Stomber continued, "Moving forward, we plan to operate with increased liquidity and to gradually reduce leverage and to diversify our investments. We remain confident in our strategy and believe it will enable us to move towards our stated targeted returns in 2008."
Carlyle Capital Corporation will host a conference call November 15, at 10:00 a.m. (ET) to discuss the Company's quarterly results. Investors can participate in the conference call by dialing +1-877-296-2302 (U.S. and Canada) or +1-706-634-9628 (International). The call will also be broadcast live via the Internet at the Company's web site, http://www.carlylecapitalcorp.com. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.
For your convenience, the conference call can be replayed in its entirety beginning at 11:00 a.m. Eastern Time on November 15, 2007 through November 22, 2007. If you wish to listen to the replay of this conference call, please dial +1-973-645-9291 and enter passcode "22707788".
About Carlyle Capital Corporation
Carlyle Capital Corporation Limited is a Guernsey limited company that was formed on August 29, 2006. The Company's long-term objective is to achieve attractive risk-adjusted returns for shareholders through current income and, to a lesser extent, capital appreciation. In the future, the Company will seek to achieve this objective by investing in a diversified portfolio of fixed income assets consisting of mortgage products and leveraged finance assets. The Company employs leverage to finance its investments and its income is generated primarily from the difference between the interest income earned on its assets and the costs of financing those assets as well as from capital gains generated when the Company disposes of assets.
Carlyle Investment Management L.L.C. ("CIM") manages the Company pursuant to a management agreement. CIM is a registered investment adviser under the U.S. Investment Advisers Act of 1940 and is an affiliate of The Carlyle Group.