Filed pursuant to rule 497
File No. 333-149374
FS INVESTMENT CORPORATION
Supplement dated July 14, 2009
to
Prospectus dated September 18, 2008
This supplement contains information which amends, supplements or modifies certain information contained in the Prospectus of FS Investment Corporation dated September 18, 2008, as supplemented by Supplement No. 1 dated October 15, 2008, Supplement No. 2 dated January 14, 2009, Supplement No. 3 dated February 13, 2009, Supplement No. 4 dated March 14, 2009, Supplement No. 5 dated April 2, 2009, Supplement No. 6 dated April 23, 2009, and Supplement No. 7 dated May 21, 2009.
You should carefully consider the “Risk Factors” beginning on page 24 of the Prospectus before you decide to invest.
Status of Our Initial Public Offering
In our monthly closing on June 1, 2009, we accepted subscriptions for 553,113 shares of our common stock at an average price per share of $9.94 for corresponding gross proceeds of $5,499,813. In our monthly closing on July 1, 2009, we accepted subscriptions for 900,435 shares of our common stock at an average price per share of $9.88 for corresponding gross proceeds of $8,892,065. We also issued 13,030 shares through our distribution reinvestment plan at an average price per share of $9.50 for corresponding gross proceeds of $123,789. Since commencing our public offering on December 15, 2008, we have received and accepted subscriptions totaling $33,616,961. Including $1,000,008 contributed by principals of our investment adviser in February 2008, we have accepted subscriptions for gross proceeds of $34,616,969 to date.
Portfolio Update
From May 19, 2009 to June 30, 2009, we invested in seven new portfolio companies and increased our positions in four others through secondary market transactions. During this period, we also sold interests in two positions, with both sale transactions having resulted in realized gains.
Presently, our investment portfolio consists of 30 positions in senior secured loans, second lien secured loans and senior unsecured bonds of U.S. companies with an average annual EBITDA of $364.0 million. The investments in our portfolio were purchased at an average price of 72.5% of par value. Presently the weighted average credit rating of our portfolio is B3 based upon the Moody’s scale and our estimated gross annual portfolio yield is 14.9%(1) . We intend to continue to add securities to our portfolio as our offering progresses. The following is our investment portfolio as of June 30, 2009.
| (1) | Based upon the purchase price of our investments. |
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| Security |
Industry |
Date of Most Recent Purchase |
Original Cost |
Par Value | ||||||
| Senior Secured Loans – First Lien |
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| Texas Competitive Electric Holdings (TXU Corp.), L+350, 10/10/14 |
Utility | Jun-09 | $ | 1,797,303 | $ | 2,491,130 | ||||
| First Data Corporation, L+275, 9/24/14 |
Merchant Processing | Mar-09 | $ | 690,237 | $ | 994,937 | ||||
| Vertellus Specialties, Inc., L+425, 12/10/12 |
Specialty Chemicals | Feb-09 | $ | 397,727 | $ | 489,510 | ||||
| Global Tel Link, L+600, 2/14/13 |
Telecommunications | Feb-09 | $ | 366,235 | $ | 417,362 | ||||
| DTN, Inc., L+500, 3/10/13 |
Business Information Services | Feb-09 | $ | 496,658 | $ | 570,871 | ||||
| King Pharmaceuticals, Inc., L+500, 4/19/12 |
Specialty Pharmaceuticals | Feb-09 | $ | 405,383 | $ | 449,801 | ||||
| Corel Corporation, L+400, 5/2/12 |
Software | Apr-09 | $ | 703,680 | $ | 940,423 | ||||
| 1-800 Contacts, L+395, 3/4/15 |
Healthcare | Jun-09 | $ | 1,789,878 | $ | 2,094,737 | ||||
| Clarke American, L+250, 6/30/14 |
Business Information Services | Apr-09 | $ | 928,621 | $ | 1,493,652 | ||||
| Kenan Advantage Group, Inc., L+300, 12/16/11 |
Transportation and Logistics | Mar-09 | $ | 746,161 | $ | 994,881 | ||||
| West Corp, L+500, 10/24/13 |
Telecommunications Services | Mar-09 | $ | 434,052 | $ | 497,481 | ||||
| Contec LLC, L+475, 7/28/14 |
Telecommunications | May-09 | $ | 1,580,068 | $ | 1,993,725 | ||||
| Apptis Inc, L+325, 12/20/12 |
Defense & Aerospace | Apr-09 | $ | 647,384 | $ | 883,713 | ||||
| Safenet, L+250, 4/12/14 |
Networking and Security Equipment | Mar-09 | $ | 340,761 | $ | 497,462 | ||||
| Intralinks, L+275, 6/15/14 |
Business Information Services | May-09 | $ | 1,081,418 | $ | 1,487,887 | ||||
| NCO Group, L+500, 5/15/13 |
Business Process Outsourcing | Apr-09 | $ | 668,227 | $ | 997,354 | ||||
| Columbian Chemicals, L+600, 3/16/13 |
Commodity Chemicals | Apr-09 | $ | 752,548 | $ | 1,213,787 | ||||
| Quantum Corp, L+350, 7/14/14 |
Storage Software and Hardware | Apr-09 | $ | 827,920 | $ | 997,494 | ||||
| Clientlogic Corporation (Sitel), L+550, 1/30/14 |
Professional and Business Services | Jun-09 | $ | 1,440,000 | $ | 2,000,000 | ||||
| Caritor, Inc. (Keane), L+225, 6/4/13 |
IT Outsourcing | Jun-09 | $ | 720,792 | $ | 997,636 | ||||
| WCP Exposition Services, L+450, 4/29/11 (3) |
Tradeshow Equipment and Services | Jun-09 | $ | 254,727 | $ | 562,933 | ||||
| Senior Secured Loans – Second Lien |
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| Asurion Corp, L+650, 7/3/15 |
Insurance | Jan-09 | $ | 605,000 | $ | 1,000,000 | ||||
| Bresnan Communications LLC, L+450, 3/29/14 |
Broadcast and Entertainment | Jan-09 | $ | 720,000 | $ | 1,000,000 | ||||
| Harrington Holdings, L+600, 7/11/14 |
Healthcare | Apr-09 | $ | 640,000 | $ | 1,000,000 | ||||
| Intergraph, L+600, 11/28/14 |
Software | Apr-09 | $ | 850,000 | $ | 1,000,000 | ||||
| Awesome Acquisition Company (CiCi), L+500, 6/4/14 |
Restaurants | Jun-09 | $ | 1,360,000 | $ | 2,000,000 | ||||
| American Safety Razor, L+625, 1/30/14 |
Personal Care | Jun-09 | $ | 1,800,000 | $ | 2,500,000 | ||||
| Dresser Inc, L+575, 4/20/15 |
Computers and Electronics | Jun-09 | $ | 1,380,000 | $ | 2,000,000 | ||||
| Sorenson Communications Inc, L+700, 2/16/14 |
Telecommunications | Mar-09 | $ | 1,121,480 | $ | 1,508,443 | ||||
| Senior Unsecured Bonds |
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| Outback Steakhouse Inc, 10%, 6/15/15 |
Restaurants | Jun-09 | $ | 1,350,000 | $ | 2,000,000 | ||||
| $ | 26,896,260 | $ | 37,075,219 | |||||||
The table below shows portfolio investments that were sold or experienced a material repayment since May 19, 2009. We consider repayments in excess of 1% of a position’s value to be material.
| Security |
Original Cost | Disposition Price | Transaction Type | |||||
| N.E.W Customer Service, L+250, 5/22/14 |
$ | 705,000 | $ | 845,000 | Sale | |||
| Ashland Inc, L+440, 5/13/14 |
$ | 492,500 | $ | 500,000 | Sale | |||
| Global Tel Link, L+600, 2/14/13 |
$ | 10,429 | $ | 11,885 | Paydown | |||
| King Pharmaceuticals, Inc., L+500, 4/19/12 |
$ | 115,983 | $ | 128,691 | Paydown | |||
Distributions
On May 28, 2009, our Board of Directors declared a special stock distribution of 3.7 shares per 100 shares outstanding, payable on May 30, 2009 to shareholders of record as of May 30, 2009. On June 25, 2009, our Board of Directors declared a special stock distribution of 3.5 shares per 100 shares outstanding, payable on June 30, 2009 to shareholders of record as of June 30, 2009. The purpose of these special stock distributions was to maintain a net asset value (“NAV”) per share below the then-prevailing net offering price, as required by the Investment Company Act of 1940 subject to certain limited exceptions. Our Board of Directors determined that our portfolio performance sufficiently warranted taking these actions. As the stock distributions did not change any shareholder’s proportionate interest in us, they are not expected to represent taxable distributions.
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