Portman Ridge Finance Corporation Reports Second Quarter 2021 Earnings Results; Declares Quarterly Distribution of $0.06 Per Share and Announces 1-for-10 Reverse Stock Split
Second Quarter 2021 Highlights
- Net investment income for the quarter was
$0.15per share, or $11.7 million.
- Net asset value (“NAV”) per share increased to
$2.93from $2.92quarter-to-quarter, reflecting continued favorable market conditions including ongoing tightening of credit spreads offset partially by approximately $0.02per share of one-time HCAP merger transaction costs.
- The fair value of the Company's investments excluding derivatives totaled
$520 million, of which the Company’s debt securities portfolio totaled $420 millionand was comprised of investments in 144 investee companies.
- During the second quarter, the Company acquired approximately
$62 millionpar value of investment portfolio assets. Also, during the quarter, the Company received approximately $70 millionin sale and repayment proceeds, which includes a $1.5 millionincrease relative to the carrying value of those assets sold.
- Net leverage(1) was 1.0x as of
June 30, 2021, down from 1.1x as of March 31, 2021, driven primarily by the HCAP merger transaction and timing of certain investments in the pipeline.
- The quarterly distribution for the second quarter was
$0.06per share and was paid on June 1, 2021.
- During the quarter, the Company issued
$108.0 millionin aggregate principal amount of unsecured 4.875% Notes due 2026 (the “4.875% Notes due 2026”) in two separate private placement offerings. On April 30, 2021, the Company issued $80.0 millionin the 4.875% Notes due 2026. Also, on April 30, 2021, the Company notified the trustee for the unsecured 6.125% Notes due 2022 of its election to redeem in full the aggregate amount outstanding of $76.7 million. This redemption was completed on May 30, 2021. On June 24, 2021, the Company issued an additional $28.0 millionin the 4.875% Notes due 2026, on identical terms to the 4.875% Notes due 2026 that were issued on April 30, 2021. Also, on June 24, 2021, the Company notified the trustee for HCAP’s 6.125% Notes due 2022 of its election to redeem in full the aggregate amount outstanding of $28.75 million. This redemption was completed, subsequent to quarter-end, on July 23, 2021.
- During the quarter, several affiliates of the Company’s Advisor and an affiliate of
LibreMax Intermediate Holdings, LPpurchased 1,381,305 shares of the Company’s common stock for total consideration of approximately $4.0 millionin a private placement. These purchases were made in accordance with the terms of the 2019 Externalization Agreement and represent the re-investment of incentive fees paid by the Company to its Advisor prior to the second anniversary of the Externalization. The shares were purchased at the net asset value per share of the Company’s common stock.
- As previously announced, following the lifting of the suspension of repurchases due to the
Harvest Capital Credit Corporation(“HCAP”) merger transaction, the Company has been actively repurchasing its shares under its existing share buyback program. Through the end of the second quarter, the Company repurchased approximately $380 thousandof its shares. Subsequent to quarter-end and to date, the Company has repurchased an additional approximately $1.2 millionof its shares.
Closing of Previously Announced Merger
June 9, 2021, the Company completed its previously announced HCAP merger transaction. Stockholders voted overwhelmingly in favor of the proposed transaction as over 96% of stockholders who voted at the meeting voted in favor of the merger.
- In connection with the HCAP merger transaction, the Company assumed
$28.75 millionof HCAP’s 6.125% Notes due 2022. As previously mentioned, these notes were redeemed in full on July 23, 2021.
1-for-10 Reverse Stock Split
The Company announced today that its Board of Directors has approved a 1-for-10 reverse stock split of the Company's then outstanding common stock. The Company expects to complete the reverse stock split in the third quarter of 2021 and will announce additional details prior to the effective date of the reverse stock split. The Company will reevaluate the quarterly distributions in conjunction with and commensurate with the reverse stock split.
The reverse stock split was approved by Portman Ridge's shareholders at its annual stockholders' meeting held on
In connection with the reverse stock split, the Company's certificate of incorporation will also be amended to reduce the authorized number of shares of the Company's common stock by one half of the reverse stock split ratio.
“Importantly, we are also pleased to announce the Board’s approval of a 1-for-10 reverse stock split to be completed in the third quarter. We are committed to making the ownership of our stock shareholder friendly, and we believe this reverse stock split will facilitate trading in our stock to the benefit of all shareholders,” continued Goldthorpe.
Selected Financial Highlights (unaudited)
|(in $ millions, except per share data)||
|Interest from investments in debt securities||$||18.0||$||15.2||$||5.2|
|Investment income on
|Investment income - Joint Ventures||2.5||2.0||1.0|
|Capital structuring service fees||0.2||0.4||0.2|
|Total investment income||21.5||18.3||7.3|
|Net Investment Income||$||11.7||$||8.2||$||2.6|
|Net realized and unrealized gains (losses)||(0.9||)||1.6||0.7|
|Realized losses on debt extinguishment||‒||(1.8||)||0.0|
|Net increase in net assets resulting from operations||$||10.8||$||8.0||$||3.3|
|Net increase in net assets resulting from operations per share (basic and diluted)||$||0.14||$||0.11||$||0.07|
|Net investment income per share (basic and diluted)||$||0.15||$||0.11||$||0.06|
|Weighted average shares outstanding (in millions)||77.5||75.2||44.8|
|Distribution per share||$||0.06||$||0.06||$||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 depreciation on investments for the three months ended
The fair value of our portfolio was
|Senior Secured Loan||333,708,309||351,699,217||68||304,539,184||328,845,612||68|
|Junior Secured Loan||76,595,157||67,905,491||13||87,977,057||75,807,477||16|
|Senior Unsecured Bond||416,170||42,845||0||416,170||207,766||0|
|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.
Investments on non-accrual status were 1.5% and 3.3% of the Company’s investment portfolio at fair value and amortized cost, respectively, compared to 0.7% and 2.3% as of
Liquidity and Capital Resources
During the quarter, the Company issued
The proceeds from the issuances of the 4.875% Notes due 2026 were generally used to redeem existing notes of the Company. On
The Company’s asset coverage ratio stood at 171% as of
Stock Repurchase Program
During the three months ended
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 Second Quarter 2021 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 leverage is calculated as the ratio between (A) debt, excluding unamortized debt issuance costs, less available cash and cash equivalents, and restricted cash and (B) NAV.
CONSOLIDATED BALANCE SHEETS
|Investments at fair value:|
|Debt securities (amortized cost: 2021 -
|Equity securities (cost: 2021 -
|Asset Manager Affiliates (cost: 2021 -
|Joint Ventures (cost: 2021 -
|Total Investments at Fair Value, excluding derivatives (cost: 2021 -
|Cash and cash equivalents||65,655,197||6,990,008|
|Receivable for unsettled trades||7,863,142||25,107,598|
|Due from affiliates||483,220||357,168|
|6.125% Notes Due 2022 (net of offering costs of: 2020 -
|2018-2 Secured Notes (net of discount of: 2021-$1,491,277; 2020 -
|4.875% Notes Due 2026 (net of discount of: 2021-$2,374,942; 2020 -
|Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of offering costs of: 2021-$914,855; 2020 -
|6.125% Notes Due 2022||28,750,000||—|
|Derivative liabilities, net (cost: 2021 -
|Payable for unsettled trades||1,369,754||—|
|Accounts payable, accrued expenses and other liabilities||3,689,638||1,788,908|
|Accrued interest payable||2,146,231||1,089,531|
|Due to affiliates||1,926,429||1,374,739|
|Management and incentive fees payable||6,016,720||5,243,869|
|COMMITMENTS AND CONTINGENCIES (NOTE 8)|
|Common stock, par value
|Capital in excess of par value||680,857,172||638,459,548|
|Total distributable (loss) earnings||(413,170,269||)||(422,947,327||)|
|Total Stockholders' Equity||268,604,311||216,263,863|
|Total Liabilities and Stockholders' Equity||$||649,513,030||$||600,178,421|
|NET ASSET VALUE PER COMMON SHARE||$||2.93||$||2.88|
CONSOLIDATED STATEMENTS OF OPERATIONS
|For the Three Months
|For the Six Months
|Interest from investments in debt securities||$||17,258,911||$||4,813,517||$||31,345,386||$||9,393,299|
|Payment-in-kind investment income||744,815||381,528||1,876,413||690,897|
|Interest from short-term investments||—||-||-||15,279|
|Investment income on
|Investment income on
|Investment income - Joint Ventures||2,530,198||1,000,883||4,569,464||2,578,019|
|Capital structuring service fees||165,841||197,381||595,808||279,285|
|Total investment income||21,545,152||7,313,894||39,849,714||15,068,101|
|Performance-based incentive fees||2,299,858||454,874||4,393,477||556,880|
|Interest and amortization of debt issuance costs||3,526,586||2,394,870||6,907,083||4,744,941|
|Administrative services expense||718,285||430,265||1,331,657||891,265|
|Other general and administrative expenses||479,790||175,998||1,020,203||374,273|
|Management and performance-based incentive fees waived||—||(454,874||)||—||(556,880||)|
|Net Investment Income||11,710,742||2,599,906||19,923,257||5,365,698|
|Realized And Unrealized Gains (Losses) On Investments:|
|Net realized (losses) gains from investment transactions||(2,355,735||)||(881,615||)||(7,441,523||)||(1,929,762||)|
|Net change in unrealized appreciation (depreciation) on:|
|Joint Venture Investments||(617,515||)||2,308,479||590,770||(5,800,718||)|
|Total net change in unrealized appreciation (depreciation)||1,489,378||1,564,939||8,234,727||(29,359,742||)|
|Net realized and unrealized appreciation (depreciation) on investments||(866,357||)||683,324||793,204||(31,289,504||)|
|Realized (losses) gains on extinguishments of Debt||—||464||(1,834,963||)||154,571|
|Net Increase (Decrease) In Stockholders’ Equity Resulting From Operations||$||10,844,385||$||3,283,694||$||18,881,498||$||(25,769,235||)|
|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||77,471,692||44,610,714||79,743,607||44,716,953|
|Weighted Average Shares of Common Stock Outstanding—Diluted||77,471,692||44,610,714||79,743,607||44,716,953|
Source: Portman Ridge Finance Corporation