Hercules Technology Growth Capital, Inc. - 8-K Summary
Business Context and Reporting Period
This Form 8-K was filed on October 18, 2006, by Hercules Technology Growth Capital, Inc. The report details investment activities and portfolio events occurring between July 1, 2006, and September 29, 2006.
Key Financial Metrics and Investment Activity
Investment Commitments: The company entered into binding agreements to invest approximately $81.5 million in structured mezzanine debt across ten companies (nine new, one existing) and made a $250,000 equity investment in one existing portfolio company.
Funded Investments: During the same period, the company funded debt investments totaling $67.2 million in fourteen companies (nine new, five existing) and made two equity investments.
| Company | Investment Type | Principal Business | Amount Funded |
|---|---|---|---|
| Affinity Express, Inc. | Senior Debt | Consumer and Business Services | $296,298 |
| Agami Systems, Inc. | Senior Debt | Electronics and Computer Hardware | $7,000,000 |
| Atrenta, Inc. | Equity | Software | $250,000 |
| Aveo Pharmaceuticals | Senior Debt | Biopharmaceuticals | $7,500,000 |
| BabyUniverse, Inc. | Senior Debt | Consumer and Business Products | $5,000,000 |
| BARRX Medical, Inc. | Equity | Medical Devices and Equipment | $1,500,000 |
| EpiCept Corporation | Senior Debt | Biopharmaceuticals | $10,000,000 |
| ForeScout Technologies, Inc. | Senior Debt | Software | $1,000,000 |
| Gynesonics, Inc. | Senior Debt | Medical Devices and Equipment | $2,000,000 |
| Hedgestreet, Inc. | Senior Debt | Consumer and Business Services | $3,000,000 |
| Intelliden, Inc. | Senior Debt | Software | $3,000,000 |
| iWatt, Inc. | Senior Debt | Semiconductors | $2,000,000 |
| Luminuous Devices, Inc. | Senior Debt | Electronics and Computer Hardware | $10,000,000 |
| Novasys Medical, Inc. | Senior Debt | Medical Devices and Equipment | $6,000,000 |
| Oatsystems, Inc. | Senior Debt | Software | $3,000,000 |
| Portola Pharmaceuticals, Inc. | Senior Debt | Biopharmaceuticals | $5,625,000 |
| Total Funded | $67,171,298 |
Liquidity and Debt: As of September 29, 2006, the company had $91.0 million outstanding under its securitization credit facility.
Material Changes and Unusual Items
Portfolio Exit and Loss: In September 2006, the company sold the assets of Optovia Corporation for approximately $2.6 million. This transaction resulted in an estimated realized loss of $2.7 million for the third quarter. The loss includes approximately $380,000 in legal expenses and incentive fees paid to third parties and Optovia management.
Outlook, Commitments, and Risks
Unfunded Commitments: As of September 29, 2006, the company held unfunded commitments totaling approximately $95.7 million. These are subject to underwriting and portfolio maintenance standards and may expire without being drawn upon.
Pipeline: The company extended non-binding term sheets to six prospective new portfolio companies representing approximately $58.5 million in structured mezzanine debt. These investments are contingent on due diligence, approval, and definitive agreement negotiation.
Key Facts for Investor Verification
- Verify the impact of the $2.7 million realized loss on Optovia Corporation on third-quarter earnings.
- Confirm the drawdown schedule and terms of the $95.7 million in unfunded commitments.
- Monitor the status of the $58.5 million in non-binding term sheets to assess future capital deployment.
- Review the utilization of the $91.0 million securitization credit facility for liquidity management.