CM Finance Inc Reports Results for its Fiscal Second Quarter ended December 31, 2017
February 07 2018 - 4:15PM
CM Finance Inc (NASDAQ:CMFN) (“CMFN” or “the Company”) announced
its financial results for its fiscal second quarter ended December
31, 2017.
HIGHLIGHTS
- The weighted average yield on debt investments, at
cost, decreased to 10.25% from 10.67% as of September 30,
2017
- CMFN made investments in two new portfolio companies
and two existing portfolio companies during the quarter with a
total cost of $34.8mm. The weighted average yield of debt
investments made in the quarter was 8.9%
- Two investments were fully realized during the quarter
with a weighted average IRR of 14.16%
- Net asset value (“NAV”) per share increased by 0.9% to
$12.50, compared to $12.39 as of September 30, 2017
Portfolio results, as
of December 31, 2017: |
|
Total assets |
$299.1mm |
Investment portfolio,
at fair value |
$286.5mm |
Net assets |
$171.1mm |
Weighted average yield
on debt investments, at cost |
10.25% |
Net asset value per
share |
$12.50 |
|
|
Portfolio activity in
the current quarter: |
|
Number of new
investments |
4 |
Total capital
invested |
$34.8mm |
Proceeds from
repayments, sales, and amortization |
$23.9mm |
Number of portfolio
companies, end of period |
24 |
|
|
Net investment income
(NII) |
$3.7mm |
Net investment income
per share |
$0.27 |
Net increase in net
assets from operations |
$4.9mm |
Net increase in net
assets from operations per share |
$0.35 |
Quarterly per share
distribution paid on January 4, 2018 |
$0.25 |
Mr. Michael C. Mauer, the Company’s Chief
Executive Officer, said “We are beginning to see an increase in
attractive opportunities in our pipeline, and will continue to
focus on diversifying our portfolio. We successfully
redeployed capital received from unscheduled prepayments and are
currently evaluating a number of new directly sourced
investments. During the quarter, PR Wireless closed on its
joint venture with Sprint, significantly improving the risk profile
of our investment in the company through a full guarantee of the
debt by Sprint.”
On February 6, 2018, the Company’s Board of Directors declared a
distribution for the quarter ending March 31, 2018 of $0.25 per
share, payable on April 5, 2018, to shareholders of record as of
March 16, 2018. This represents a 12.74% yield on the Company’s
$7.85 share price as of the close on February 5, 2018.
Distributions may include net investment income, capital gains
and/or return of capital. The tax status of distributions will be
determined at the end of the taxable year.
Portfolio and Investment
ActivitiesDuring the quarter, the Company made investments
in two new portfolio companies and two existing portfolio
companies. These four investments totaled $34.8mm at cost and
were made at a weighted average yield of 8.9%. The Company
also realized $24.0mm of repayments, sales, and amortization,
primarily related to the repayments of Redbox Automated Retail, LLC
and PR Wireless, Inc (“PR Wireless”). Following the repayment of
the Company’s original PR Wireless investment, the Company made a
new investment in PR Wireless in connection with their previously
announced joint venture with Sprint. Realized and unrealized gains
accounted for an increase in the Company’s net investments of
approximately $1.2mm, or $0.09 per share. The total net
increase in net assets resulting from operations for the quarter
was $4.9mm, or $0.35 per share.
As of December 31, 2017, the Company’s
investment portfolio consisted of investments in 24 portfolio
companies, of which 50.1% were first lien investments, 44.9% were
second lien investments, 4.7% were equity investments, and 0.3%
were unsecured debt investments. The Company’s debt portfolio
consisted of 96.0% floating rate investments. As of December
31, 2017, the Company had no loans on non-accrual status.
Capital Resources
As of December 31, 2017, the Company had $5.4mm in cash, $1.7mm
in restricted cash and $32.2mm of capacity under its revolving
credit facility with UBS AG, London Branch.
Subsequent EventsSubsequent to quarter end, the
Company did not make any investments and received $3.6 mm in
repayments proceeds.
CM Finance Inc
and subsidiaries |
|
|
|
Consolidated Statements of Assets and
Liabilities |
|
|
|
|
|
|
|
|
December 31, 2017 |
|
|
Assets |
(Unaudited) |
|
June 30, 2017 |
Non-controlled,
non-affiliated investments, at fair value (amortized cost of
$293,670,448 and $270,467,740, respectively) |
$ |
286,531,168 |
|
|
$ |
254,907,171 |
|
Derivatives, at fair
value (cost $0 and $0, respectively) |
|
615,887 |
|
|
|
5,830,501 |
|
Cash |
|
5,396,195 |
|
|
|
10,646,697 |
|
Cash, restricted |
|
1,724,789 |
|
|
|
22,616,177 |
|
Interest
receivable |
|
4,340,841 |
|
|
|
1,627,774 |
|
Dividend
receivable |
|
189,583 |
|
|
|
— |
|
Other receivables |
|
179,819 |
|
|
|
— |
|
Deferred offering
costs |
|
58,344 |
|
|
|
186,513 |
|
Prepaid expenses and
other assets |
|
48,594 |
|
|
|
219,045 |
|
Total Assets |
$ |
299,085,220 |
|
|
$ |
296,033,878 |
|
|
|
|
|
Liabilities |
|
|
|
Notes payable: |
|
|
|
Term
loan |
$ |
102,000,000 |
|
|
$ |
102,000,000 |
|
Revolving
credit facility |
|
17,830,000 |
|
|
|
— |
|
Deferred
debt issuance costs |
|
(2,344,525) |
|
|
|
(578,074) |
|
Notes payable, net |
|
117,485,475 |
|
|
|
101,421,926 |
|
Base management fees
payable |
|
2,315,233 |
|
|
|
1,132,391 |
|
Income-based incentive
fees payable |
|
1,162,320 |
|
|
|
274,073 |
|
Derivatives, at fair
value (cost $0 and $0, respectively) |
|
615,887 |
|
|
|
5,830,501 |
|
Dividend payable |
|
3,422,622 |
|
|
|
3,422,307 |
|
Payable for investments
purchased |
|
— |
|
|
|
12,490,000 |
|
Deferred financing
costs payable |
|
2,071,167 |
|
|
|
620,500 |
|
Interest payable |
|
283,367 |
|
|
|
205,027 |
|
Directors' fees
payable |
|
96,746 |
|
|
|
100,000 |
|
Accrued expenses and
other liabilities |
|
522,666 |
|
|
|
589,041 |
|
Total Liabilities |
|
127,975,483 |
|
|
|
126,085,766 |
|
|
|
|
|
Commitments and
Contingencies (Note 6) |
|
|
|
|
|
|
|
Net
Assets |
|
|
|
Common stock, par value
$0.001 per share (100,000,000 shares authorized, 13,690,480 and
13,689,221 shares issued and outstanding, respectively) |
|
13,690 |
|
|
|
13,689 |
|
Additional paid-in
capital |
|
199,077,935 |
|
|
|
199,066,123 |
|
Accumulated net
realized loss |
|
(18,612,517) |
|
|
|
(11,231,827) |
|
Distributions in excess
of net investment income |
|
(2,481,050) |
|
|
|
(2,339,304) |
|
Net unrealized
depreciation on investments |
|
(6,888,321) |
|
|
|
(15,560,569) |
|
Total Net Assets |
|
171,109,737 |
|
|
|
169,948,112 |
|
Total Liabilities and Net Assets |
$ |
299,085,220 |
|
|
$ |
296,033,878 |
|
Net Asset Value Per
Share |
$ |
12.50 |
|
|
$ |
12.41 |
|
CM Finance Inc
and subsidiaries |
|
|
|
Consolidated Statements of Operations
(Unaudited) |
|
|
|
|
|
|
|
|
For the three months ended December
31, |
Investment
Income: |
|
2017 |
|
|
2016 |
|
Interest income |
$ |
7,538,152 |
|
$ |
8,792,597 |
|
Payment in-kind
interest income |
|
722,039 |
|
|
— |
|
Payment in-kind
dividend income |
|
189,583 |
|
|
— |
|
Other fee Income |
|
— |
|
|
359,494 |
|
Total investment income |
|
8,449,774 |
|
|
9,152,091 |
|
|
|
|
|
Expenses: |
|
|
|
Base management
fees |
|
1,161,353 |
|
|
1,183,946 |
|
Interest expense |
|
1,601,261 |
|
|
1,037,818 |
|
Professional fees |
|
236,024 |
|
|
229,804 |
|
Offering expense |
|
— |
|
|
— |
|
Allocation of
administrative costs from advisor |
|
184,561 |
|
|
148,710 |
|
Amortization of
deferred debt issuance costs |
|
179,514 |
|
|
364,195 |
|
Directors’ fees |
|
99,000 |
|
|
99,999 |
|
Custodian and
administrator fees |
|
113,443 |
|
|
107,473 |
|
Insurance expense |
|
85,225 |
|
|
92,651 |
|
Income-based incentive
fees |
|
921,782 |
|
|
1,095,515 |
|
Other expenses |
|
180,482 |
|
|
123,210 |
|
Total expenses |
|
4,762,645 |
|
|
4,483,321 |
|
Waiver of income-based
incentive fees |
|
— |
|
|
(203,242) |
|
Net expenses |
|
4,762,645 |
|
|
4,280,079 |
|
Net Investment Income |
|
3,687,129 |
|
|
4,872,012 |
|
|
|
|
|
Net realized and
unrealized gain/(loss) on investments: |
|
|
|
Net realized loss from
investments |
|
— |
|
|
39,502 |
|
Net change in
unrealized appreciation in value of investments |
|
1,172,018 |
|
|
3,642,584 |
|
Net realized and
unrealized gain on investments |
|
1,172,018 |
|
|
3,682,086 |
|
|
|
|
|
Net increase in
net assets resulting from operations |
$ |
4,859,147 |
|
$ |
8,554,098 |
|
|
|
|
|
Basic and diluted: |
|
|
|
Net
investment income per share |
$ |
0.27 |
|
$ |
0.36 |
|
Net
increase in net assets resulting from operations per share |
$ |
0.35 |
|
$ |
0.62 |
|
Weighted
average shares of common stock outstanding |
|
13,690,480 |
|
|
13,686,865 |
|
|
|
|
|
Distributions
paid per common share |
$ |
0.2500 |
|
$ |
0.3516 |
|
About CM Finance Inc
The Company is an externally-managed,
closed-end, non-diversified management investment company that has
elected to be regulated as a business development company under the
Investment Company Act of 1940. The Company’s investment
objective is to maximize the total return to its stockholders in
the form of current income and capital appreciation through debt
and related equity investments by targeting investment
opportunities with favorable risk-adjusted returns. The Company
seeks to invest primarily in middle-market companies that have
annual revenues of at least $50mm and earnings before interest,
taxes, depreciation and amortization of at least $15mm. The
Company’s investment activities are managed by its investment
adviser, CM Investment Partners LLC. To learn more about CM Finance
Inc, please visit www.cmfn-inc.com.
Forward-Looking Statements
Statements included herein may contain
“forward-looking statements,” which relate to future performance or
financial condition. Statements other than statements of historical
facts included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of assumptions, risks and uncertainties, which
change over time. Actual results may differ materially from those
anticipated in any forward-looking statements as a result of a
number of factors, including those described from time to time in
filings by the Company with the Securities and Exchange Commission.
The Company undertakes no duty to update any forward-looking
statement made herein except as required by law. All
forward-looking statements speak only as of the date of this press
release.
ContactsCM Finance IncInvestor Relations Email:
investorrelations@cmipllc.com Phone: 212-257-5199
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