GSC
Special Meeting of Stockholders
Your
Vote is Important. Please Vote FOR All Proposals Today!
July 8,
2010
Dear GSC Investment
Corp. Stockholder:
We
recently mailed to you a proxy statement for the special meeting of stockholders
detailing the $55 million recapitalization plan of GSC Investment Corp. (“GSC”),
which includes an equity investment by Saratoga Investment Advisors, LLC
(“Saratoga”) and CLO Partners LLC and a new credit facility to replace the
Company’s existing credit facility. Your Board of Directors
unanimously recommends that GSC stockholders approve all proposals at the
special meeting to be held on July 30, 2010.
The
proposals in the special meeting proxy statement differ from the proposals in
the annual meeting proxy statement, which you will have already received under
separate cover.
Your
vote at the special meeting is extremely important because it affects the future
of your company and your investment
.
We
urge you to read the special meeting proxy statement carefully and vote
FOR
all proposals by either telephone or Internet or by signing, dating, and
returning the enclosed proxy form today. If you have already voted
your shares for the special meeting, please accept our thanks.
The
Company’s Board of Directors Believes that the Saratoga Transaction
is
in the Best Interests of the Company and its Stockholders and
Will
Allow GSC Stockholders to Participate in the Company’s Future
Growth
As
noted in the special meeting proxy statement, the unprecedented economic
conditions that have impacted companies in the financial services industry,
coupled with the event of default under the Company’s existing credit facility
with Deutsche Bank (the “DB Facility”), has made it impossible for GSC to
continue to operate its business consistent with past practice. The
proposed strategic transaction with Saratoga will provide us with an equity
investment of approximately $15 million and allow us to enter into a new credit
facility with Madison Capital Funding LLC, the combination of which will allow
us to repay in full the amounts outstanding under the DB Credit Facility and
eliminate the uncertainty created by the event of default
thereunder.
Because current GSC
stockholders will continue as our stockholders following the transaction, GSC
stockholders can participate in the future growth and prospects of the
post-transaction company, without the limitations currently restricting the
operations of GSC.
The Saratoga
Transaction is the result of a comprehensive process that commenced in 2008 to
explore financial and strategic alternatives that would maximize value for its
stockholders. After a review of various possible alternatives, an
extensive search for potential bidders and extensive discussions and
negotiations, GSC and its Board of Directors believes that the Saratoga
Transaction represents the best alternative available to, and is in the best
interests of, the Company and our stockholders. Stockholders are
encouraged to read the description of this process contained in the proxy
statement under the caption “Background of the Transaction.”
Saratoga Investment
Advisors, LLC is a New York-based investment firm formed to focus on
credit-driven strategies. It is affiliated with Saratoga Partners, a
leading middle-market private equity investment firm with $750 million of
committed and invested institutional equity capital. Saratoga
Partners primarily invests in businesses with strong management teams and
valuations of between $50 million and $500 million, specializing in companies in
manufacturing and business services, and has a 25-year history of private
investments in middle market companies and focuses on public and private equity,
preferred stock, mezzanine investments, and senior and subordinated
debt. It also has a successful record in special situations and
distressed investing. Since Saratoga Partners was founded in 1984 as
a division of the New York investment firm Dillon, Read & Co., Inc., it has
invested in 35 companies with an aggregate value of more than $3.7 billion. It
has been an independent firm since its spinoff in 1998 after Dillon Read was
acquired by Swiss Bank Corporation (a predecessor to UBS AG).
GSC
Board of Directors Unanimously Recommend that Stockholders Vote FOR
All
Proposals at the Special Meeting to be Held on July 30, 2010
The
Saratoga Transaction is conditioned on the approval of Proposals 1 and 2
contained in the special meeting proxy statement. The Saratoga
Transaction will not be completed, even if all of the other conditions in the
Stock Purchase Agreement are satisfied or waived, if the requisite stockholder
approval of both Proposals 1 and 2 is not received.
Your Board
unanimously urges you to vote
FOR
each of the following proposals at the special meeting:
-
Proposal
1
: approve the issuance of 9,868,422 shares of our common stock to
Saratoga Investment Advisors, LLC and CLO Partners LLC for an aggregate purchase
price of approximately $15,000,000 at a price per share below the current net
asset value per share, and
-
Proposal
2
: approve the Investment Advisory and Management Agreement, pursuant to
which Saratoga Investment Advisors, LLC would be appointed as the new investment
adviser of GSC Investment Corp.
Remember
: Not
voting at all, or voting “Abstain”, will have the same effect as a vote against
the Saratoga Transaction. Please vote
FOR
the proposals today.
Thank you for your
consideration and support.
On behalf of the
Board of Directors,
Seth
M. Katzenstein
, Chief Executive Officer
If
you have questions or need assistance voting your shares, you should
contact:
Brokers call
collect: (203) 658-9400
Stockholders call
toll free: (800) 607-0088
E-mail:
GSC@morrowco.com