UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 10, 2022 (August 9, 2022)
Portman Ridge Finance Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 814-00735 | 20-5951150 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 650 Madison Avenue, 23rd Floor New York, New York |
10022 | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code): (212) 891-2880
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class |
Trading |
Name of each exchange on which registered | ||
| Common Stock, par value $0.01 per share | PTMN | The NASDAQ Global Select Market |
| Item 2.02 | Results of Operations and Financial Condition. |
On August 9, 2022, Portman Ridge Finance Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended June 30, 2022. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Additionally, on August 10, 2022, the Company made available on its website, http://www.portmanridge.com/home, a supplemental investor presentation with respect to the second quarter 2022 earnings release. A copy of the investor presentation is being furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit |
Description | |
| 99.1 | Press Release, dated August 9, 2022 | |
| 99.2 | Investor Presentation, dated August 10, 2022 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PORTMAN RIDGE FINANCE CORPORATION | ||
| By: | /s/ Jason T. Roos | |
| Name: | Jason T. Roos | |
| Title: | Chief Financial Officer | |
Date: August 10, 2022
Exhibit 99.1
FOR IMMEDIATE RELEASE
Portman Ridge Finance Corporation
Announces Second Quarter 2022 Financial Results
Reports Strong Investment Activity and Lower Non-Accruals; Reduces Cost of Capital
Maintains its Quarterly Distribution of $0.63 per Share
NEW YORK, AUGUST 9, 2022 – Portman Ridge Finance Corporation (Nasdaq: PTMN) (the “Company” or “Portman Ridge”) announced today its financial results for the second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
| • | Net asset value (“NAV”) for the second quarter of 2022 was $261.7 million ($27.26 per share1) as compared to $278.3 million ($28.76 per share1) in the first quarter of 2022. |
| • | Total investment income for the second quarter of 2022 was $15.0 million, of which $11.9 million was attributable to interest income from the debt securities portfolio, inclusive of payment-in-kind income. |
| • | Excluding the impact of purchase price accounting, core investment income2 for the second quarter of 2022 was $13.7 million. |
| • | Net investment income (“NII”) for the second quarter of 2022 was $5.5 million ($0.57 per share). |
| • | Additionally, certain investments that closed either at quarter end or shortly thereafter would have generated an incremental $0.10 per share of NII if closed on April 1, 2022. |
| • | As of June 30, 2022, three of the Company’s debt investments were on non-accrual status compared to six as of March 31, 2022. |
| • | During the quarter, the Company repurchased 106,627 of shares under its Stock Repurchase program at an aggregate cost of approximately $2.5 million; since the beginning of the year, the Company has repurchased a total of 129,617 shares for an aggregate cost of approximately $3.0 million. |
| • | During the second quarter of 2022, the Company refinanced its Revolving Credit Facility with JPMorgan Chase Bank - the agreement placed three-month SOFR as the benchmark interest rate and reduced the applicable margin to 2.80% per annum from 2.85% per annum. Additionally, the Company extended the reinvestment period and scheduled termination date to April 29, 2025 and April 29, 2026, respectively. |
| 1 | NAV per share as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, was decreased 1 cent and 5 cents per share for the quarters ended June 30, 2022 and March 31, 2022, respectively, due to the impact of quarterly tax provisions. |
| 2 | Core investment income represents reported total investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers. Portman Ridge believes presenting core investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. |
| • | Total investments at fair value as of June 30, 2022 was $581.5 million; when excluding CLO Funds, Joint Ventures and short-term investments, these investments are spread across 32 different industries and 118 entities with an average par balance per entity of approximately $3.5 million. |
| • | As of June 30, 2022, par value of outstanding borrowings was $364.9 million with an asset coverage ratio of total assets to total borrowings of 170%. On a net basis, leverage as of June 30, 2022 was 1.2x. 3 |
Subsequent Events
| • | Declared a stockholder distribution of $0.63 per share for the third quarter of 2022, payable on September 2, 2022 to stockholders of record at the close of business on August 16, 2022. |
Management Commentary
Ted Goldthorpe, Chief Executive Officer of Portman Ridge, stated, “As seen by many in our industry, our operations have been affected by the challenging economic environment, rising interest rates and market volatility. Operating under these conditions, we continued our strategy of being prudent in our investment strategy and seeking out strong companies to add to our portfolio. As a result, even under these market conditions, we ended the quarter with a strong portfolio, reduced our non-accrual positions and maintained a dividend of $0.63 per share. Investment activity was strong, and although originations are still lower than the second half of 2021, during the second quarter, we deployed approximately $32.9 million of our available cash in new investments and an additional $20.6 million in the beginning of the third quarter, all but $7.2 million of which were investments we had in the pipeline since the end of the first quarter. On the other side of the balance sheet, we proactively restructured our agreement with JPMorgan Chase to lower the interest rate, shift from LIBOR to SOFR, and extend the maturity date by 2 1⁄2 years. This restructured agreement has lowered our cost of capital. Overall, we believe that we are well-positioned to improve our portfolio performance and investment income in the second half of 2022.”
| 3 | 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. Portman Ridge believes presenting a net leverage ratio is useful and appropriate supplemental disclosure because it reflects the Company’s financial condition net of $44.0 million of cash and cash equivalents and restricted cash. However, the net leverage ratio is a non-U.S. GAAP measure and should not be considered as a replacement for the regulatory asset coverage ratio and other similar information presented in accordance with U.S. GAAP. Instead, the net leverage ratio should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial condition. |
Select Financial Highlights
| For the Three Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Total Investment Income |
$ | 15,044 | $ | 21,545 | ||||
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| Total Expenses |
9,522 | 9,835 | ||||||
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| Net Investment Income |
5,522 | 11,710 | ||||||
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| Net realized gain (loss) on investments |
(13,991 | ) | (2,356 | ) | ||||
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| Net unrealized gain (loss) on investments |
113 | 1,490 | ||||||
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| Tax (provision) benefit on realized and unrealized gains (losses) on investments |
(77 | ) | — | |||||
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| Net realized and unrealized appreciation (depreciation) on investments, net of taxes |
(13,955 | ) | (866 | ) | ||||
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| Realized gains (losses) on extinguishments of debt |
— | — | ||||||
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| Net Increase (Decrease) in Net Assets Resulting from Operations |
$ | (8,433 | ) | $ | 10,844 | |||
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| Net Increase (Decrease) In Stockholders’ Equity Resulting from Operations per Common Share (4): |
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| Basic and Diluted: |
$ | (0.88 | ) | $ | 1.40 | |||
| Net Investment Income Per Common Share (4): |
||||||||
| Basic and Diluted: |
$ | 0.57 | $ | 1.51 | ||||
| Weighted Average Shares of Common Stock Outstanding—Basic and Diluted (4) |
9,634,870 | 7,747,169 | ||||||
| 4 | The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021. As a result, the share and per share amounts have been adjusted retroactively to reflect the split for all periods prior to August 26, 2021. |
| ($ in thousands) | For the Three Months Ended June 30, 2022 |
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| Interest from investments in debt excluding accretion |
$ | 9,275 | ||
| Purchase discount accounting |
1,303 | |||
| PIK Investment Income |
1,292 | |||
| CLO Income |
928 | |||
| JV Income |
2,071 | |||
| Service Fees |
175 | |||
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| Total Investment Income |
15,044 | |||
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| Less: Purchase discount accounting |
(1,303 | ) | ||
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| Core Investment Income |
13,741 | |||
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Total investment income for the three months ended June 30, 2022 and June 30, 2021 was $15.0 million and $21.5 million, respectively. Total expenses for the three months ended June 30, 2022 and June 30, 2021 were $9.5 million and $9.8 million, respectively.
As of June 30, 2022, the weighted average contractual interest rate on our interest earning debt securities portfolio was approximately 8.7%. As of both March 31, 2022 and December 31, 2021, the weighted average contractual interest rate on our debt securities portfolio was approximately 8.1%.
Investment Portfolio Activity
The composition of our investment portfolio as of June 30, 2022 and December 31, 2021 at cost and fair value was as follows:
| ($ in thousands) | June 30, 2022 (Unaudited) |
December 31, 2021 | ||||||||||||||||||||||
| Security Type | Cost/Amortized Cost |
Fair Value | %(5) | Cost/Amortized Cost |
Fair Value | %(5) | ||||||||||||||||||
| Senior Secured Loan |
$ | 418,560 | $ | 414,920 | 72 | $ | 361,556 | $ | 364,701 | 66 | ||||||||||||||
| Junior Secured Loan |
62,272 | 59,147 | 10 | 82,996 | 70,549 | 13 | ||||||||||||||||||
| Senior Unsecured Bond |
416 | 43 | 0 | 416 | 43 | 0 | ||||||||||||||||||
| Equity Securities |
27,033 | 24,805 | 4 | 26,680 | 22,586 | 4 | ||||||||||||||||||
| CLO Fund Securities |
44,880 | 24,271 | 4 | 51,561 | 31,632 | 6 | ||||||||||||||||||
| Asset Manager Affiliates(6) |
17,791 | — | — | 17,791 | — | — | ||||||||||||||||||
| Joint Ventures |
66,065 | 58,273 | 10 | 64,365 | 60,474 | 11 | ||||||||||||||||||
| Derivatives |
31 | 22 | — | 31 | (2,412 | ) | — | |||||||||||||||||
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| Total |
$ | 637,048 | $ | 581,481 | 100 | % | $ | 605,396 | $ | 547,573 | 100 | % | ||||||||||||
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| 5 | Represents percentage of total portfolio at fair value. |
| 6 | Represents the equity investment in the Asset Manager Affiliates. |
As of June 30, 2022, three of the Company’s debt investments were on non-accrual status as compared to six at March 31, 2022 and seven at December 31, 2021. Investments on non-accrual status as of June 30, 2022 decreased to 0.0% and 0.3% of the Company’s investment portfolio at fair value and amortized cost, respectively. This compares to investments on non-accrual status as of March 31, 2022 of 0.2% and 1.9% of the Company’s investment portfolio at fair value and amortized cost, respectively, and 0.5% and 2.8% as of December 31, 2021, respectively.
Liquidity and Capital Resources
As of June 30, 2022, we had $364.9 million (par value) of borrowings outstanding with a weighted average interest rate of 4.3%, of which $108.0 million par value had a fixed rate and $256.9 million par value had a floating rate. Portman Ridge expects future portfolio investments to predominately be floating rate investments.
As of June 30, 2022, the Company had unrestricted cash of $22.0 million and restricted cash of $22.0 million. This compares to unrestricted cash of $28.9 million and restricted cash of $39.4 million as of December 31, 2021. As of June 30, 2022, we had $21.9 million of available borrowing capacity under the Senior Secured Revolving Credit Facility, and $25.0 million of borrowing capacity under the 2018-2 Revolving Credit Facility.
Total assets and shareholder’s equity as of June 30, 2022 were $652.8 million and $261.7 million, respectively, as compared to $648.3 million and $280.1 million, respectively, as of December 31, 2021.
As of June 30, 2022 and December 31, 2021, the fair value of investments and cash were as follows:
| ($ in thousands) Security Type |
June 30, 2022 | December 31, 2021 | ||||||
| Cash and cash equivalents |
$ | 22,039 | $ | 28,919 | ||||
| Restricted Cash |
21,991 | 39,421 | ||||||
| Senior Secured Loan |
414,920 | 364,701 | ||||||
| Junior Secured Loan |
59,147 | 70,549 | ||||||
| Senior Unsecured Bond |
43 | 43 | ||||||
| Equity Securities |
24,805 | 22,586 | ||||||
| CLO Fund Securities |
24,271 | 31,632 | ||||||
| Asset Manager Affiliates |
— | — | ||||||
| Joint Ventures |
58,273 | 60,474 | ||||||
| Derivatives |
22 | (2,412 | ) | |||||
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| Total |
$ | 625,512 | $ | 615,913 | ||||
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Interest Rate Volatility
The Company’s investment income is affected by fluctuations in various interest rates, including LIBOR and prime rates.
As of June 30, 2022, approximately 87.5% of our Debt Securities Portfolio were either floating rate with a spread to an interest rate index such as LIBOR or the prime rate. 78.4% of these floating rate loans contain LIBOR floors ranging between 0.10% and 2.25%. We generally expect that future portfolio investments will predominately be floating rate investments.
In periods of rising or lowering interest rates, the cost of the portion of debt associated with the 4.875% Notes Due 2026 would remain the same, given that this debt is at a fixed rate, while the interest rate on borrowings under the Revolving Credit Facility would fluctuate with changes in interest rates.
Generally, an increase in the base rate index for floating rate investment assets would increase gross investment income and a decrease in the base rate index for such assets would decrease gross investment income (in either case, such increase/decrease may be limited by interest rate floors/minimums for certain investment assets).
| Impact on net investment income from a change in interest rates at: |
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| ($ in thousands) | 1% | 2% | 3% | |||||||||
| Increase in interest rate |
$ | 2,478 | $ | 4,098 | $ | 5,717 | ||||||
| Decrease in interest rate |
$ | 1,085 | $ | 1,133 | $ | 1,030 | ||||||
Net investment income assuming a 1% increase in interest rates would increase by approximately $2.5 million on an annualized basis. If the increase in rates was more significant, such as 2% or 3%, the net effect on net investment income would be an increase of approximately $4.1 million and $5.7 million, respectively.
On an annualized basis, a decrease in interest rates of 1% would result in an increase in net investment income of approximately $1.1 million. A decrease in interest rates of 2% and 3% would result in an increase in net investment income of approximately $1.1 million and $1.0 million, respectively. The effect on net investment income from declines in interest rates impacted by interest rate floors on certain of our floating rate investments, as there is no floor on our floating rate debt facility and the 2018-2 Secured Notes.
Conference Call and Webcast
We will hold a conference call on Wednesday, August 10, 2022 at 9:00 am Eastern Time to discuss our second quarter 2022 financial results. To access the call, please dial (646) 307-1963 approximately 10 minutes prior to the start of the conference call and use the conference ID 7102603.
A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on the 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 2022 Conference Call. The online archive of the webcast will be available on the Company’s website shortly after the call.
About Portman Ridge Finance Corporation
Portman Ridge Finance Corporation (Nasdaq: PTMN) is a publicly traded, externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Portman Ridge’s middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies. Portman Ridge’s investment activities are managed by its investment adviser, Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors, LP.
Portman Ridge’s filings with the Securities and Exchange Commission (the “SEC”), earnings releases, press releases and other financial, operational and governance information are available on the Company’s website at www.portmanridge.com.
About BC Partners Advisors L.P. and BC Partners Credit
BC Partners is a leading international investment firm with over $40 billion of assets under management in private equity, private credit and real estate strategies. Established in 1986, BC Partners has played an active role in developing the European buyout market for three decades. Today, BC Partners executives operate across markets as an integrated team through the firm’s offices in North America and Europe. Since inception, BC Partners has completed 117 private equity investments in companies with a total enterprise value of €149 billion and is currently investing its eleventh private equity fund. For more information, please visit www.bcpartners.com.
BC Partners Credit was launched in February 2017 and has pursued a strategy focused on identifying attractive credit opportunities in any market environment and across sectors, leveraging the deal sourcing and infrastructure made available from BC Partners.
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 Portman Ridge Finance Corporation, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.
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 merger transactions effectuated by the Company; (3) the ability of the Company and/or its adviser to implement its business strategy; (4) evolving legal, regulatory and tax regimes; (5) changes in general economic and/or industry specific conditions; (6) the impact of increased competition; (7) business prospects and the prospects of the Company’s portfolio companies; (8) contractual arrangements with third parties; (9) any future financings by the Company; (10) the ability of Sierra Crest Investment Management LLC to attract and retain highly talented professionals; (11) the Company’s ability to fund any unfunded commitments; (12) any future distributions by the Company; (13) changes in regional or national economic conditions, including but not limited to the impact of the COVID-19 pandemic, and their impact on the industries in which we invest; and (14) other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the SEC. The forward-looking statements should be read in conjunction with the risks and uncertainties discussed in the Company’s filings with the SEC, including the Company’s most recent Form 10-K and other SEC filings. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the SEC.
Contacts:
Portman Ridge Finance Corporation
650 Madison Avenue, 23rd floor
New York, NY 10022
info@portmanridge.com
Jason Roos
Chief Financial Officer
Jason.Roos@bcpartners.com
(212) 891-2880
Lena Cati
The Equity Group Inc.
lcati@equityny.com
(212) 836-9611
PORTMAN RIDGE FINANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| June 30, 2022 | December 31, 2021 |
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| (Unaudited) | ||||||||
| ASSETS |
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| Investments at fair value: |
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Non-controlled/non-affiliated investments (amortized cost: 2022 - $506,773; 2021 - $479,153) |
$ | 485,800 | $ | 452,482 | ||||
| Non-controlled affiliated investments (amortized cost: 2022 - $72,114; 2021 - $74,082) |
70,962 | 74,142 | ||||||
| Controlled affiliated investments (cost: 2022 - $58,161; 2021 - $52,130) |
24,719 | 23,361 | ||||||
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| Total Investments at Fair Value (cost: 2022 - $637,048; 2021 - $605,365) |
581,481 | 549,985 | ||||||
| Cash and cash equivalents |
22,039 | 28,919 | ||||||
| Restricted cash |
21,991 | 39,421 | ||||||
| Interest receivable |
2,829 | 5,514 | ||||||
| Receivable for unsettled trades |
4,779 | 20,193 | ||||||
| Due from affiliates |
693 | 507 | ||||||
| Other assets |
18,997 | 3,762 | ||||||
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| Total Assets |
$ | 652,809 | $ | 648,301 | ||||
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| LIABILITIES |
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| 2018-2 Secured Notes (net of discount of: 2022 - $1,314; 2021 - $1,403) |
162,549 | 162,460 | ||||||
| 4.875% Notes Due 2026 (net of discount of: 2022 - $1,933; 2021 - $2,157; net of deferred financing costs of: 2022 - $918; 2021 - $951) |
105,149 | 104,892 | ||||||
| Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of deferred financing costs of: 2022 - $1,244; 2021 - $732) |
91,827 | 79,839 | ||||||
| Derivative liabilities (cost: 2021 - $31) |
— | 2,412 | ||||||
| Payable for unsettled trades |
20,293 | 5,397 | ||||||
| Accounts payable, accrued expenses and other liabilities |
4,723 | 4,819 | ||||||
| Accrued interest payable |
2,452 | 2,020 | ||||||
| Due to affiliates |
891 | 1,799 | ||||||
| Management and incentive fees payable |
3,259 | 4,541 | ||||||
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| Total Liabilities |
391,143 | 368,179 | ||||||
| COMMITMENTS AND CONTINGENCIES |
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| NET ASSETS |
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| Common stock, par value $0.01 per share, 20,000,000 common shares authorized; 9,897,776 issued, and 9,599,856 outstanding at June 30, 2022, and 9,867,998 issued, and 9,699,695 outstanding at December 31, 2021 |
97 | 97 | ||||||
| Capital in excess of par value |
731,189 | 733,095 | ||||||
| Total distributable (loss) earnings |
(469,620 | ) | (453,070 | ) | ||||
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| Total Net Assets |
261,666 | 280,122 | ||||||
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| Total Liabilities and Net Assets |
$ | 652,809 | $ | 648,301 | ||||
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| NET ASSET VALUE PER COMMON SHARE (4) |
$ | 27.26 | $ | 28.88 | ||||
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| (4) | The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented. |
PORTMAN RIDGE FINANCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended June 30, |
For the Six Months Ended June 30, |
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| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| INVESTMENT INCOME |
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| Interest income: |
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|
Non-controlled/non-affiliated investments |
$ | 10,649 | $ | 17,443 | $ | 23,316 | $ | 31,913 | ||||||||
| Non-controlled affiliated investments |
857 | 662 | 1,448 | 895 | ||||||||||||
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| Total interest income |
11,506 | 18,105 | 24,764 | 32,808 | ||||||||||||
| Payment-in-kind income: |
||||||||||||||||
|
Non-controlled/non-affiliated investments |
1,199 | 720 | 2,325 | 1,852 | ||||||||||||
| Non-controlled affiliated investments |
73 | 24 | 329 | 24 | ||||||||||||
| Controlled affiliated investments |
20 | — | 20 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total payment-in-kind income |
1,292 | 744 | 2,674 | 1,876 | ||||||||||||
| Dividend income: |
||||||||||||||||
| Non-controlled affiliated investments |
1,005 | 1,114 | 1,950 | 1,927 | ||||||||||||
| Controlled affiliated investments |
1,066 | 1,416 | 2,229 | 2,642 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total dividend income |
2,071 | 2,530 | 4,179 | 4,569 | ||||||||||||
| Fees and other income |
175 | 166 | 371 | 596 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total investment income |
15,044 | 21,545 | 31,988 | 39,849 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EXPENSES |
||||||||||||||||
| Management fees |
2,088 | 1,914 | 4,223 | 3,707 | ||||||||||||
| Performance-based incentive fees |
1,169 | 2,300 | 2,847 | 4,393 | ||||||||||||
| Interest and amortization of debt issuance costs |
3,889 | 3,527 | 7,233 | 6,907 | ||||||||||||
| Professional fees |
879 | 696 | 1,724 | 2,190 | ||||||||||||
| Administrative services expense |
822 | 718 | 1,669 | 1,332 | ||||||||||||
| Other general and administrative expenses |
675 | 680 | 862 | 1,397 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
9,522 | 9,835 | 18,558 | 19,926 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NET INVESTMENT INCOME |
5,522 | 11,710 | 13,430 | 19,923 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS |
||||||||||||||||
| Net realized gains (losses) from investment transactions: |
||||||||||||||||
|
Non-controlled/non-affiliated investments |
(14,109 | ) | (2,028 | ) | (17,779 | ) | (7,223 | ) | ||||||||
| Non-controlled affiliated investments |
118 | (328 | ) | 330 | (219 | ) | ||||||||||
| Derivatives |
— | — | (2,095 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net realized gain (loss) on investments |
(13,991 | ) | (2,356 | ) | (19,544 | ) | (7,442 | ) | ||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||
|
Non-controlled/non-affiliated investments |
4,870 | (1,430 | ) | 5,699 | 4,833 | |||||||||||
| Non-controlled affiliated investments |
(1,329 | ) | 1,257 | (1,212 | ) | 1,588 | ||||||||||
| Controlled affiliated investments |
(3,428 | ) | 1,883 | (4,673 | ) | 2,508 | ||||||||||
| Derivatives |
— | (220 | ) | 2,442 | (694 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net unrealized gain (loss) on investments |
113 | 1,490 | 2,256 | 8,235 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Tax (provision) benefit on realized and unrealized gains (losses) on investments |
(77 | ) | — | (517 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net realized and unrealized appreciation (depreciation) on investments, net of taxes |
(13,955 | ) | (866 | ) | (17,805 | ) | 793 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Realized gains (losses) on extinguishments of debt |
— | — | — | (1,835 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (8,433 | ) | $ | 10,844 | $ | (4,375 | ) | $ | 18,881 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share (4): |
||||||||||||||||
| Basic and Diluted: |
$ | (0.88 | ) | $ | 1.40 | $ | (0.45 | ) | $ | 2.37 | ||||||
| Net Investment Income Per Common Share (4): |
||||||||||||||||
| Basic and Diluted: |
$ | 0.57 | $ | 1.51 | $ | 1.39 | $ | 2.50 | ||||||||
| Weighted Average Shares of Common Stock Outstanding—Basic and |
9,634,870 | 7,747,169 | 9,666,298 | 7,974,361 | ||||||||||||
| (4) | The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented. |
2022 Q2 Earnings Presentation August 10, 2022 Exhibit 99.2
Important Information Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements. The matters discussed in this presentation, as well as in future oral and written statements by management of Portman Ridge Finance Corporation (“PTMN”, “Portman Ridge” or the “Company”), that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. 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, our contractual arrangements and relationships with third parties, the ability of our portfolio companies to achieve their objectives, the ability of the Company’s investment adviser to attract and retain highly talented professionals, our ability to maintain our qualification as a regulated investment company and as a business development company, our compliance with covenants under our borrowing arrangements, 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. Forward-looking statements are subject to change at any time based upon economic, market or other conditions, including with respect to the impact of the COVID-19 pandemic and its effects on the Company and its portfolio companies’ results of operations and financial condition. More information on these risks and other potential factors that could affect the Company’s financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein, is included in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed quarterly report on Form 10-Q and annual report on Form 10-K, as well as in subsequent filings. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this presentation should not be regarded as a representation by us that our plans and objectives will be achieved. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the SEC.
NAV per share as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, was decreased 1 cent and 5 cents per share for the quarters ended June 30, 2022 and March 31, 2022, respectively, due to the impact of quarterly tax provisions. Core investment income represents reported total investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers. Portman Ridge believes presenting core investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. 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. Portman Ridge believes presenting a net leverage ratio is useful and appropriate supplemental disclosure because it reflects the Company’s financial condition net of $44.0 million of cash and cash equivalents and restricted cash. However, the net leverage ratio is a non-U.S. GAAP measure and should not be considered as a replacement for the regulatory asset coverage ratio and other similar information presented in accordance with U.S. GAAP. Instead, the net leverage ratio should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial condition. Quarterly Highlights Q2 2022 Highlights Net asset value (“NAV”) for the second quarter was $261.7 million ($27.26 per share(1)) as compared to $278.3 million ($28.76 per share(1)) in the first quarter of 2022. Total investment income for the second quarter of 2022 was $15.0 million, of which $11.9 million was attributable to interest income from the debt securities portfolio, inclusive of payment-in-kind income. Core investment income(2) for the second quarter of 2022, excluding the impact of purchase price accounting, was $13.7 million. Net investment income (“NII”) for the second quarter of 2022 was $5.5 million ($0.57 per share). Additionally, certain investments that closed either at quarter end or shortly thereafter would have generated an incremental $0.10 per share of NII if closed on April 1, 2022. Non-accruals on debt investments, as of June 30, 2022, were reduced to three from six investments as of March 31, 2022. As of June 30, 2022, debt investments on non-accrual status represented 0.0% and 0.3% of the Company’s investment portfolio at fair value and amortized cost, respectively, which compares to 0.2% and 1.9% of the Company’s investment portfolio at fair value and amortized cost, respectively, as of March 31, 2022. Shares repurchased under the Company’s Renewed Stock Repurchase program were at an aggregate cost of approximately $2.5 million; since the beginning of the year, the Company has repurchased shares at an aggregate cost of approximately $3.0 million. Revolving Credit Facility with JPMorgan Chase Bank was refinanced during the second quarter - the agreement placed three-month SOFR as the benchmark interest rate and reduced the applicable margin to 2.80% per annum from 2.85% per annum. Additionally, the Company extended the reinvestment period and scheduled termination date to April 29, 2025 and April 29, 2026, respectively. Fair value of investments totaled $581.5 million as of June 30, 2022; when excluding CLO Funds, Joint Ventures and short-term investments, these investments are spread across 32 different industries and 118 entities with an average par balance per entity of approximately $3.5 million. Par value of outstanding borrowings as of June 30, 2022 was $364.9 million with an asset coverage ratio of total assets to total borrowings of 170%. On a net basis, leverage as of June 30, 2022 was 1.2x. (3)
Financial Highlights Core net investment income represents reported total net investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers, while also considering the impact of accretion from these mergers on expenses. Portman Ridge believes presenting core net investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. ($ in thousands) Q1 2022 Q2 2022 Core investment income $15,132 $13,741 Expenses: Management fees 2,135 2,088 Performance-based incentive fees 1,678 1,169 Interest and amortization of debt issuance costs 3,344 3,889 Professional fees 845 879 Administrative services expense 847 822 Other general and administrative expenses 187 675 Total expenses $9,036 $9,522 Core net investment income (1) $6,413 $4,874 Net realized gain (loss) on investments (5,553) (13,991) Net unrealized gain (loss) on investments 2,143 113 Tax (provision) benefit on realized and unrealized gains (losses) on investments (440) (77) Net increase/(decrease) in Core net assets resulting from operations $2,563 ($9,081) Per Share Q1 2022 Q2 2022 Core Net Investment Income $0.66 $0.51 Net Realized and Unrealized Gain / (Loss) ($0.35) ($1.44) Net Core Earnings $0.26 ($0.94) Distributions declared $0.63 $0.63 Net Asset Value $28.76 $27.26
Core Earning Analysis Core net investment income represents reported total net investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers, while also considering the impact of accretion from these mergers on expenses. Portman Ridge believes presenting core net investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. ($ in ‘000s except per share) Q1 2022 Q2 2022 Interest Income: Non-controlled/non-affiliated investments 12,667 10,649 Non-controlled affiliated investments 591 857 Total interest income 13,258 11,506 Payment-in-kind income: Non-controlled/non-affiliated investments 1,126 1,199 Non-controlled affiliated investments 256 73 Non-controlled affiliated investments - 20 Total payment-in-kind income 1,382 1,292 Dividend income: Non-controlled affiliated investments 945 1,005 Controlled affiliated investments 1,163 1,066 Total dividend income 2,108 2,071 Fees and other income 196 175 Reported Investment Income $16,944 $15,044 Less: Purchase discount accouting (1,812) (1,303) Core Investment Income $15,132 $13,741 Reported Net Investment Income $7,908 $5,522 NII Per Share $0.82 $0.57 Core Net Investment Income (1) $6,413 $4,874 NII Per Share $0.63 $0.51
As discussed on the prior earnings call, Portman Ridge had a healthy and active pipeline to invest cash on the balance sheet as of March 31, 2022. However, given the volatility in the markets, a number of transactions took significantly longer to close than usual. Delayed Closings
July 19, 2022 was the most recent practical date used to complete the information presented in this table. 3 month LIBOR per Bloomberg as of August 1, 2022. As of June 30, 2022, approximately 93% of our floating rate assets were on LIBOR contract. Shown below, those contracts have taken a significant amount of time to reset and still remain significantly below the prevailing 3 month LIBOR rate. Rising Rates 1 2
Over the last two years, Portman has experienced an average of $1.8mm in income related to repayment / prepayment activity as compared to the current quarter of $0.4mm. Limited Repayment Activity
All per share information assumes the ending 6/30/2022 share count, including Q2 2022. The below analysis begins with Q2 2022 net investment income and assumes no other changes to the portfolio (including accrual status of each portfolio company), investment income, professional expenses or administrative expenses other than the following: Delayed Settlements assumes all deals referred to on Slide 6 closed on July 1, 2022 and earn income at their initial benchmark rate plus spread plus amortized OID. Current benchmarks assumes that all assets and liabilities that have LIBOR based contracts are reset at 2.78% plus applicable spreads and all assets and liabilities that have SOFR based contracts are reset at 2.56% plus applicable spreads beginning on July 1, 2022. NII Per Share Bridge
Net Asset Value Rollforward Please update chart to remove Q1'21 / add Q2'22; only updated Q2'22, unless otherwise noted Leverage and Asset Coverage Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Debt / Equity 1.4x 1.3x 1.3x 1.3x 1.4x leverage calc: total outstnading borrowings / Net asset value ($352.4M/$278.3M for PQ) Asset Coverage 1.71 1.78 1.78 1.8 1.7 Updated Q1'22 to corrected 178%; please update asset coverage ratio from equivalent of p.55 of last quarter's 10-Q. It can also be found on the Consolidated Financial Highlights (p. 20 of last quarter's 10Q equivalent; should have been 178% as noted here, so please make sure these agree on both spots of the 10Q) Roll forward for Q2, this should be an abridged version of the Consolidated Statements of Change in Net Assets (p. 6 of last qtr 10Q) ($ in ‘000s) Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 NAV, Beginning of Period $,216,264 $,219,855 $,268,604 $,271,048 $,280,122 $,278,301 should be Prior quarter Net Asset Value from 10-Q Consolidated Balance Sheet Realized Gains (Losses) from Investments (5,086) (2,356) (3,931) 0 -5,553 ,-13,991 Should be 2Q Subtotal of Realized Gains as listed on Statement of Operations Unrealized Gains (Losses) 6745 1489 (642) (16,034) 2,143 113 Should be 2Q Subtotal of Unrealized Gains as listed on Statement of Operations Net Investment Income 8213 11711 13718 8362 7908 5522 Should be 2Q NII as listed on Statement of Operations Net Decrease in Assets Resulting from Distributions (4,446) (4,430) (5,254) (5,517) -6,110.808 -6,064.6143600000005 YTD Pull directly from Distributions of ordinary income in Consolidated Statements of Change in Net Assets Tax (provision) benefit on realized and unrealized (gains) losses on investments -- -- -- (1,442) -,440 -77 Should be 2Q Tax Benefit as listed on Statement of Operations Private Placement and other -- -- -- 16592 439 -25.23114 YTD Pull directly from Private placement and other in Consolidated Statements of Change in Net Assets Stock Repurchases -- (380) (1,447) -- -,545 -2,458.5445 YTD Pull directly from Stock repurchases in Consolidated Statements of Change in Net Assets Distribution Reinvestment Plan -- 4020 -- -- 338 346.18453000000005 YTD Pull directly from Distribution Reinvestment Plan in Consolidated Statements of Change in Net Assets NAV, End of Period $,219,855 $,268,604 $,271,048 $,280,122 $,278,301 $,261,666 38695
As of June 30, 2022. Figures shown do not include short term investments, CLO holdings, F3C JV or Great Lakes JV portfolio companies, and derivatives. Shown as % of debt and equity investments at fair market value. Current Portfolio Profile(1) Diversified Portfolio of Assets Diversification by Borrower(2) Asset Mix(2) Industry Diversification(2) 118 Debt + Equity Portfolio Investee Companies $3.3mm / 1% Average Debt Position Size U.S Centric Investments: Nearly 100% US-Based Companies Focus on Non-Cyclical Industries with High FCF Generation Credit quality has been stable to improving during the rotation period Top 5 Borrowers, 14.6%
For comparability purposes, portfolio trends metrics exclude short-term investments and derivatives. Excludes select investments where the metric is not applicable, appropriate, data is unavailable for the underlying statistic analyzed Includes assets purchased from affiliate of HCAP’s former manager in a separate transaction. CLO holdings and Joint Ventures are excluded from investment count. Excluding non-accrual and partial non-accrual investments and excluding CLO holdings and Joint Ventures. Portfolio Trends(1)(2)
Based on FMV. As of June 30, 2022, three of the Company’s debt investments were on non-accrual status and represented 0.0% and 0.3% of the Company’s investment portfolio at fair value and amortized cost, respectively Credit Quality ($ in ‘000s) Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Investments Credit Quality – Internal Rating (1) Performing 95.0% 94.2% 93.6% 94.5% 95.3% Underperforming 5.0% 5.8% 6.4% 5.5% 4.7% Investments on Non-Accrual Status Number of Non-Accrual Investments 8 6 7 6 3 Non-Accrual Investments at Cost $17,015 $15,284 $16,730 $11,730 $1,693 Non-Accrual Investments as a % of Total Cost 3.3% 2.5% 2.8% 1.9% 0.3% Non-Accrual Investments at Fair Value $7,601 $4,980 $2,900 $1,039 $244 Non-Accrual Investments as a % of Total Fair Value 1.5% 0.9% 0.5% 0.2% 0.0%
At Fair Value. Does not include activity in short-term investments and derivatives. Portfolio Composition (1)
M&A Value Realization Our track record demonstrates BC Partners’ ability to efficiently realize the value of legacy portfolios acquired while rotating into BC Partners’ sourced assets We are in the early stages of implementing the same strategy with the acquired and fully redeemed HCAP assets but were successful in several monetizations during the quarter OHAI GARS HCAP
Appendix
The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented. Balance Sheet June 30, 2022 December 31, 2021 (in thousands, except share and per share amounts) (Unaudited) ASSETS Investments at fair value: Non-controlled/non-affiliated investments (amortized cost: 2022 - $506,773; 2021 - $479,153) 485,800 $ 452,482 $ Non-controlled affiliated investments (amortized cost: 2022 - $72,114; 2021 - $74,082) 70,962 74,142 Controlled affiliated investments (cost: 2022 - $58,161; 2021 - $52,130) 24,719 23,361 Total Investments at Fair Value (cost: 2022 - $637,048; 2021 - $605,365) 581,481 549,985 Cash and cash equivalents 22,039 28,919 Restricted cash 21,991 39,421 Interest receivable 2,829 5,514 Receivable for unsettled trades 4,779 20,193 Due from affiliates 693 507 Other assets 18,997 3,762 Total Assets 652,809 $ 648,301 $ LIABILITIES 2018-2 Secured Notes (net of discount of: 2022 - $1,314; 2021 - $1,403) 162,549 162,460 4.875% Notes Due 2026 (net of discount of: 2022 - $1,933; 2021 - $2,157; net of deferred financing costs of: 2022 - $918; 2021 - $951) 105,149 104,892 Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of deferred financing costs of: 2022 - $1,244; 2021 - $732) 91,827 79,839 Derivative liabilities (cost: 2021 - $31) - 2,412 Payable for unsettled trades 20,293 5,397 Accounts payable, accrued expenses and other liabilities 4,723 4,819 Accrued interest payable 2,452 2,020 Due to affiliates 891 1,799 Management and incentive fees payable 3,259 4,541 Total Liabilities 391,143 368,179 COMMITMENTS AND CONTINGENCIES NET ASSETS Common stock, par value $0.01 per share, 20,000,000 common shares authorized; 9,897,776 issued, and 9,599,856 outstanding at June 30, 2022, and 9,867,998 issued, and 9,699,695 outstanding at December 31, 2021 97 97 Capital in excess of par value 731,189 733,095 Total distributable (loss) earnings (469,620) (453,070) Total Net Assets 261,666 280,122 Total Liabilities and Stockholders' Equity 652,809 $ 648,301 $ NET ASSET VALUE PER COMMON SHARE (1) 27.26 $ 28.88 $
The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the weighted average shares outstanding and per share values have been adjusted retroactively to reflect the split for all periods presented. Income Statement (Unaudited) (in thousands, except share and per share amounts) 2022 2021 2022 2021 INVESTMENT INCOME Interest income: Non-controlled/non-affiliated investments 10,649 $ 17,443 $ 23,316 $ 31,913 $ Non-controlled affiliated investments 857 662 1,448 895 Total interest income 11,506 18,105 24,764 32,808 Payment-in-kind income: Non-controlled/non-affiliated investments 1,199 720 2,325 1,852 Non-controlled affiliated investments 73 24 329 24 Controlled affiliated investments 20 - 20 - Total payment-in-kind income 1,292 744 2,674 1,876 Dividend income: Non-controlled affiliated investments 1,005 1,114 1,950 1,927 Controlled affiliated investments 1,066 1,416 2,229 2,642 Total dividend income 2,071 2,530 4,179 4,569 Fees and other income 175 166 371 596 Total investment income 15,044 21,545 31,988 39,849 EXPENSES Management fees 2,088 1,914 4,223 3,707 Performance-based incentive fees 1,169 2,300 2,847 4,393 Interest and amortization of debt issuance costs 3,889 3,527 7,233 6,907 Professional fees 879 696 1,724 2,190 Administrative services expense 822 718 1,669 1,332 Other general and administrative expenses 675 680 862 1,397 Total expenses 9,522 9,835 18,558 19,926 NET INVESTMENT INCOME 5,522 11,710 13,430 19,923 REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Net realized gains (losses) from investment transactions: Non-controlled/non-affiliated investments (14,109) (2,028) (17,779) (7,223) Non-controlled affiliated investments 118 (328) 330 (219) Derivatives - - (2,095) - Net realized gain (loss) on investments (13,991) (2,356) (19,544) (7,442) Net change in unrealized appreciation (depreciation) on: Non-controlled/non-affiliated investments 4,870 (1,430) 5,699 4,833 Non-controlled affiliated investments (1,329) 1,257 (1,212) 1,588 Controlled affiliated investments (3,428) 1,883 (4,673) 2,508 Derivatives - (220) 2,442 (694) Net unrealized gain (loss) on investments 113 1,490 2,256 8,235 Tax (provision) benefit on realized and unrealized gains (losses) on investments (77) - (517) - Net realized and unrealized appreciation (depreciation) on investments, net of taxes (13,955) (866) (17,805) 793 Realized gains (losses) on extinguishments of debt - - - (1,835) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (8,433) $ 10,844 $ (4,375) $ 18,881 $ Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share : : Basic and Diluted: (0.88) $ 1.40 $ (0.45) $ 2.37 $ Net Investment Income Per Common Share : (1) : Basic and Diluted: 0.57 $ 1.51 $ 1.39 $ 2.50 $ Weighted Average Shares of Common Stock Outstanding—Basic and Diluted (1) 9,634,870 7,747,169 9,666,298 7,974,361 For the Three Months Ended June 30, For the Six Months Ended June 30, (1)
Cash and Cash Equivalents Unrestricted cash and cash equivalents totaled $22.0 million as of June 30, 2022 Restricted cash of $22.0 million as of June 30, 2022 Debt Summary As of June 30, 2022, par value of outstanding borrowings was $364.9 million; there was $21.9 million of available borrowing capacity under the Senior Secured Revolving Credit Facility and $25.0 million of borrowing capacity under the 2018-2 Revolving Credit Facility. On April 29, 2022, the Company refinanced its Revolving Credit Facility with JP Morgan Chase as administrative agent. The amended agreement places three-month SOFR as the benchmark interest rate and reduces the applicable margin to 2.80% per annum from 2.85% per annum. Other amendments include the extension of the reinvestment period and scheduled termination date to April 29, 2025 and April 29, 2026, respectively. Corporate Leverage & Liquidity
The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the distribution per share amounts have been adjusted retroactively to reflect the split for all periods presented. Regular Distribution Information (1)