Portman Ridge Finance Corporation Announces Fourth Quarter and Full Year 2020 Financial Results
- As previously announced, the Company successfully closed on the merger of
Garrison Capital Inc.(“GARS” or “Garrison”) on October 28, 2020.
December 23, 2020, the Company entered into an Agreement and Plan of Merger (the “HCAP Merger Agreement”) with Harvest Capital Credit Corporation, a publicly traded business development company (“HCAP”).
February 12, 2021, the Board of Directors of the Company approved a cash distribution of $0.06per share of common stock to shareholders of record as of February 22, 2021. The distribution was paid on March 2, 2021.
February 22, 2021, the Company repaid $88.0 millionof 2018-2 Secured Notes due 2029.
March 8, 2021, the Company received a corporate investment grade rating of BBB- with a stable outlook from Egan-Jones.
March 11, 2021, the Board approved a $10 millionstock repurchase program with substantially the same terms as the prior program, which expired on March 5, 2021.
Fourth Quarter and Full Year 2020 Highlights
- Net investment income for the fourth quarter of 2020 was
$8.9 million, or $0.14per weighted average share. Excluding the impact of purchase accounting in connection with the Garrison merger, net investment income for the fourth quarter of 2020 was $5.2 million, or $0.08per share(1), compared to $2.7 million, or $0.06per share in the third quarter of 2020 and $2.1 million, or $0.06per share in the fourth quarter of 2019.
- Net investment income for the year ended
December 31, 2020was $17.0 million, or $0.34per share, compared with net investment income of $3.1 million, or $0.08per share in the year ended December 31, 2019. As noted above, excluding purchase accounting associated with the Garrison merger, net investment income for the full year was $13.3 million(1), or $0.27per share(1).
December 31, 2020, the fair value of the Company's investments totaled $487 million, of which the Company’s debt securities portfolio totaled $405 millionand was comprised of investments in 109 portfolio companies. At September 30, 2020, the fair value of the Company’s investments totaled $279 million, of which the Company’s debt securities portfolio totaled $205 millionand was comprised of investments in 65 portfolio companies.
- Net asset value per share at
December 31, 2020was $2.88, compared to net asset value per share of $2.85at September 30, 2020. Excluding approximately $1.6 millionin transaction expenses associated with the Garrison merger, this represents a 2.5% increase relative to the prior quarter.(2)
- Quarterly distribution paid during the fourth quarter was
$0.06per share, consistent with the first three quarters of the year. Accordingly, distributions for the full year 2020 totaled $0.24per share.
- As of
December 31, 2020, there were eight investments on non-accrual status. Investments on non-accrual status were 0.8% and 2.4% of the Company’s investment portfolio at fair value and amortized cost, respectively, compared to 1.3% and 3.2% as of September 30, 2020, and there was no change in the number of non-accrual debt securities during the quarter.
- During the fourth quarter (excluding the impacts of the Garrison merger), the Company acquired
$21.2 millionpar value of debt securities. Also, during the quarter, the Company received $135.1 millionin sale and repayment proceeds, which includes a $1.1 millionincrease relative to the carrying value of those assets sold. Of this activity, $92.4 millionwas the result of proactive sales of legacy Garrison assets (inclusive of a $0.6 millionincrease relative to carrying value).
Fourth Quarter 2020 – Selected Financial Highlights
|(in $ millions, except per share data)||
|Interest from investments in debt securities||$||16.4||$||4.9|
|Investment income on
|Investment income - Joint Ventures||2.2||2.2|
|Capital structuring service fees||0.6||-|
|Total investment income||19.9||7.8|
|Net Investment Income||$||8.9||$||2.7|
|Impact from GARS purchase accounting||3.7||-|
|Net investment income less GARS purchase accounting impact (1)||$||5.2||$||2.7|
|Net realized and unrealized gains||$||40.0||$||5.6|
|Net increase in net assets resulting from operations||$||49.0||$||8.3|
|Net increase in net assets resulting from operations per share (basic and diluted)||$||0.74||$||0.19|
|Net investment income per share (basic and diluted)||$||0.14||$||0.06|
|Impact from GARS purchase accounting||$||0.06||$||-|
|Net investment income less GARS purchase accounting impact (1)||$||0.08||$||0.06|
|Weighted average shares outstanding (in millions)||66.0||44.4|
|Distribution per share||$||0.06||$||0.06|
Total investment income for the three months ended
Total expenses for the three months ended
Net investment income for the three months ended
Net realized and unrealized appreciation on investments for the three months ended
Portfolio and Investment Activity
The fair value of our portfolio was
|Senior Secured Loan||304,539,184||328,845,612||68||91,245,574||88,788,639||32|
|Junior Secured Loan||87,977,057||75,807,477||16||100,655,341||95,188,373||34|
|Senior Unsecured Bond||416,170||207,766||0||620,145||403,615||—|
|Asset Manager Affiliates2||17,791,230||—||—||17,791,230||—||—|
¹ Represents percentage of total portfolio at fair value.
² Represents the equity investment in the Asset Manager Affiliates.
Liquidity and Capital Resources
The Company’s asset coverage ratio stood 156% as of
Stock Repurchase Program
Conference Call and Webcast
We will hold a conference call on
To access the call please dial (866) 757-5630 approximately 10 minutes prior to the start of the conference call. A replay of the conference call will be available from
A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on our Company’s website www.portmanridge.com in the Investor Relations section under Events and Presentations. The webcast can also be accessed by clicking the following link: Portman Ridge Fourth Quarter and Full Year 2020 Conference Call. The online archive of the webcast will be available on the Company’s website shortly after the call.
Portman Ridge’s filings with the
BC Partners Credit was launched in
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements. The matters discussed in this press release, as well as in future oral and written statements by management of
Forward-looking statements relate to future events or our future financial performance and include, but are not limited to, projected financial performance, expected development of the business, plans and expectations about future investments and the future liquidity of the Company. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “outlook”, “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.
Important assumptions include our ability to originate new investments, and achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation that such plans, estimates, expectations or objectives will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) uncertainty of the expected financial performance of the Company; (2) expected synergies and savings associated with the transaction in which
(1) Net investment income excluding the impact of purchase accounting in connection with the GARS merger is net investment income as determined in accordance with
(2) Net asset value excluding the transaction expense associated with the Garrison merger is net asset as determined in accordance with
CONSOLIDATED BALANCE SHEETS
|Investments at fair value:|
|Debt securities (amortized cost: 2020 -
|Equity securities (cost: 2020 -
|Asset Manager Affiliates (cost: 2020 -
|Joint Ventures (cost: 2020 -
|Short-term investments (cost: 2020 -
|Total Investments at Fair Value, excluding derivatives (cost: 2020 -
|Cash and cash equivalents||6,990,008||136,864|
|Receivable for unsettled trades||25,107,598||24,420,045|
|Due from affiliates||357,168||473,100|
|6.125% Notes Due 2022 (net of offering costs of: 2020-$1,058,351; 2019 -
|2018-2 Secured Notes (net of discount of: 2020-$2,444,512; 2019 -
|Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of offering costs of: 2020-$1,097,815; 2019 -
|Derivative liabilities, net (cost: 2020 -
|Accounts payable and accrued expenses||1,788,908||1,386,981|
|Accrued interest payable||1,089,531||136,486|
|Due to affiliates||1,374,739||1,711,793|
|Management and incentive fees payable||5,243,869||1,076,645|
|COMMITMENTS AND CONTINGENCIES (NOTE 9)|
|Common stock, par value
|Capital in excess of par value||638,459,548||451,353,379|
|Total distributable (loss) earnings||(422,947,327||)||(299,603,106||)|
|Total Stockholders' Equity||216,263,863||152,198,570|
|Total Liabilities and Stockholders' Equity||$||600,178,421||$||310,407,700|
|NET ASSET VALUE PER COMMON SHARE||$||2.88||$||3.40|
CONSOLIDATED STATEMENTS OF OPERATIONS
|For the Year
|Interest from investments in debt securities||$||28,210,725||$||14,377,460||$||14,939,309|
|Payment-in-kind investment income||3,217,614||606,234||1,066,354|
|Interest from short-term investments||15,279||79,065||76,055|
|Investment income on
|Investment income on
|Dividends from Asset Manager Affiliates||—||—||1,246,510|
|Investment income - Joint Ventures||6,911,418||4,859,780||3,100,000|
|Capital structuring service fees||867,853||137,061||245,393|
|Total investment income||42,764,185||26,495,135||27,086,793|
|Performance-based incentive fees||4,857,563||—||—|
|Interest and amortization of debt issuance costs||10,283,996||8,261,445||7,403,436|
|Administrative services expense||1,941,398||1,243,587||—|
|Other general and administrative expenses||1,152,045||1,496,258||1,874,600|
|Lease termination costs||—||1,431,030||—|
|Management and performance-based incentive fees waived||(556,880||)||—||—|
|Net Investment Income||17,000,346||3,073,689||10,004,477|
|Realized And Unrealized Gains (Losses) On Investments:|
|Net realized gains (losses) from investment transactions||7,604,698||(15,619,046||)||(16,474,939||)|
|Net change in unrealized appreciation (depreciation) on:|
|Asset Manager Affiliates investments||—||—||(579,000||)|
|Joint Venture Investments||(2,076,723||)||3,017,847||(3,125,560||)|
|Total net change in unrealized appreciation (depreciation)||6,813,063||1,121,364||(2,903,994||)|
|Net realized and unrealized appreciation (depreciation) on investments||14,417,761||(14,497,682||)||(19,378,933||)|
|Realized gains on extinguishments of Debt||154,571||(1,075,968||)||(197,090||)|
|Net Increase (Decrease) In Stockholders’ Equity Resulting From Operations||$||31,572,678||$||(12,499,961||)||$||(9,571,546||)|
|Net Increase (Decrease) In Stockholders' Equity Resulting from Operations per Common Share:|
|Net Investment Income Per Common Share:|
|Weighted Average Shares of Common Stock Outstanding—Basic||49,987,586||37,641,650||37,356,241|
|Weighted Average Shares of Common Stock Outstanding—Diluted||49,987,586||37,641,650||37,356,241|
Source: Portman Ridge Finance Corporation