NEW YORK, Feb. 08, 2017 (GLOBE NEWSWIRE) -- CM Finance Inc (NASDAQ:CMFN) (“CMFN” or “the Company”) today announced its financial results for its fiscal second quarter ended December 31, 2016.
HIGHLIGHTS
- Net Asset Value (“NAV”) per share increased 2.3% to $12.13, from $11.86 in the prior quarter
- CMFN made four new investments during the quarter with a total cost of $24.5mm and a weighted average yield of 10.06%. This included investments in two new portfolio companies
- Four investments were fully realized during the quarter with an average IRR of 14.32%
- The weighted average yield on debt investments, at cost, declined to 9.79%, compared to 10.02% in the prior quarter
| Portfolio results, as of December 31, 2016: | ||||
| Total assets | $308.0mm | |||
| Investment portfolio, at fair value | $245.4mm | |||
| Net assets | $166.1mm | |||
| Weighted average yield on debt investments, at cost | 9.79% | |||
| Net asset value per share | $12.13 | |||
| Portfolio activity in the current quarter: | ||||
| Number of new investments | 4 | |||
| Total capital invested | $24.5mm | |||
| Proceeds from repayments, sales, and amortization | $47.9mm | |||
| Number of portfolio companies, end of period | 19 | |||
| Net investment income (NII) | $4.9mm | |||
| Net investment income per share | $0.36 | |||
| Net increase in net assets from operations | $8.6mm | |||
| Net increase in net assets from operations per share | $0.62 | |||
| Quarterly per share distribution paid on January 5, 2017 | $0.3516 |
Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said, “Unscheduled repayments late in the quarter boosted our net investment income. Our pipeline is robust, both for primary and secondary market opportunities. We are intensely focused on identifying investment opportunities to redeploy our capital into secured assets.”
On November 3, 2016, the Company’s Board of Directors declared a distribution for the quarter ended December 31, 2016 of $0.3516 per share, payable on January 5, 2017, to shareholders of record as of December 16, 2016. In addition, the Company’s Board of Directors also declared a distribution for the quarter ended March 31, 2017, of $0.25 per share, payable on April 6, 2017, to shareholders of record as of March 17, 2017. Mr. Mauer commented, “Our new dividend level of $.25 per share is consistent with our ability to generate NII without reducing the investment quality of our portfolio, by reaching for yield, or changing our focus from secured lending opportunities. We believe it is a sustainable and competitive level, representing a 10.4% yield on our February 7, 2017, closing share price of $9.65."
Portfolio and Investment Activities
During the quarter, we made investments in four companies, including two new portfolio companies. These four investments totaled $24.5mm, at cost, and were made at a weighted average yield of 10.06%. We also realized $47.9mm of repayments, sales and amortization. The resulting decline in the size of our investment portfolio was partially offset by realized and unrealized gains of approximately $3.7mm, or $.27 per share, for the quarter. The total net increase in net assets resulting from operations for the quarter was $8.6mm, or $0.62 per share. At December 31, 2016, our NAV per share was $12.13.
As of December 31, 2016, our investment portfolio of $245.4mm (at fair value) consisted of investments in 19 portfolio companies, of which 57.2% were first lien investments and 42.8% were second lien investments. Our debt portfolio consisted of 95.4% floating rate investments (of which 100% had a London Interbank Offered Rate, or LIBOR, floor) and 4.6% fixed rate investments. As of December 31, 2016, we had two loans on non-accrual status representing 5.1% of our portfolio at fair value.
Capital Resources
As of December 31, 2016, we had $26.6mm in cash, $27.8mm in restricted cash and $35.7mm of capacity under our revolving credit facility.
Subsequent Events
Subsequent to quarter end, our debt investment in U.S. Well Services, LLC was restructured. As a result of this, our $6.7 million loan is now a $3.8 million loan at L+9.00% with a 1% floor, or L+11.00% with a 1% floor if paid-in-kind, and an equity interest of approximately 2%. We also purchased an interest in the new first-out revolving credit facility of U.S. Well Services, LLC. We believe this creates real opportunity for upside to our current value over the near- and medium-term.
Subsequent to quarter end, the Company invested $21.3mm in new portfolio companies, $1.0mm in existing portfolio companies, and received no repayment or sales proceeds.
| CM Finance Inc and subsidiaries | |||||||||
| Consolidated Statements of Assets and Liabilities | |||||||||
| December 31, 2016 (Unaudited) | June 30, 2016 | ||||||||
| Assets | |||||||||
| Non-controlled, non-affiliated investments, at fair value (amortized cost of $268,644,626 and $307,364,949, respectively) | $ | 245,398,868 | $ | 272,114,164 | |||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 6,483,333 | 9,071,659 | |||||||
| Cash | 26,569,817 | 18,433,066 | |||||||
| Cash, restricted | 27,792,121 | 18,023,466 | |||||||
| Interest receivable | 1,530,437 | 1,897,710 | |||||||
| Deferred offering costs | 186,513 | 186,513 | |||||||
| Prepaid expenses and other assets | 1,125 | 234,837 | |||||||
| Total Assets | $ | 307,962,214 | $ | 319,961,415 | |||||
| Liabilities | |||||||||
| Notes Payable: | |||||||||
| Term loan | $ | 102,000,000 | $ | 102,000,000 | |||||
| Revolving credit facility | 14,332,649 | 30,478,329 | |||||||
| Deferred debt issuance costs | (782,100 | ) | (1,510,491 | ) | |||||
| Notes Payable, net | 115,550,549 | 130,967,838 | |||||||
| Base management fees payable | 2,395,481 | 1,257,768 | |||||||
| Income-based incentive fees payable | 1,167,813 | 275,540 | |||||||
| Payable for investments purchased | 9,965,000 | 8,828,750 | |||||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 6,483,333 | 9,071,659 | |||||||
| Dividend payable | 4,812,446 | 4,809,778 | |||||||
| Deferred financing costs payable | 620,500 | 879,042 | |||||||
| Interest payable | 262,216 | 175,792 | |||||||
| Accrued expenses and other liabilities | 650,825 | 945,365 | |||||||
| Total Liabilities | 141,908,163 | 157,211,532 | |||||||
| Commitments and Contingencies | |||||||||
| Net Assets | |||||||||
| Common Stock, par value $0.001 per share (100,000,000 shares authorized, 13,687,280 and 13,679,686 shares issued and outstanding, respectively) | 13,687 | 13,680 | |||||||
| Additional paid-in capital | 199,790,758 | 199,722,997 | |||||||
| Accumulated net realized loss | (7,988,787 | ) | — | ||||||
| Distributions in excess of net investment income | (2,515,849 | ) | (1,736,009 | ) | |||||
| Net unrealized depreciation on investments | (23,245,758 | ) | (35,250,785 | ) | |||||
| Total Net Assets | 166,054,051 | 162,749,883 | |||||||
| Total Liabilities and Net Assets | $ | 307,962,214 | $ | 319,961,415 | |||||
| Net Asset Value Per Share | $ | 12.13 | $ | 11.90 | |||||
| CM Finance Inc and subsidiaries | |||||||||||||||||||
| Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||
| For the three months ended December 31, | |||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||
| Investment Income: | |||||||||||||||||||
| Interest income | $ | 8,792,597 | $ | 8,707,519 | |||||||||||||||
| Payment in-kind interest income | — | 721,364 | |||||||||||||||||
| Other fee income | 359,494 | 529,819 | |||||||||||||||||
| Total investment income | 9,152,091 | 9,958,702 | |||||||||||||||||
| Expenses: | |||||||||||||||||||
| Base management fees | 1,183,946 | 1,444,998 | |||||||||||||||||
| Income-based incentive fees | 1,095,515 | — | |||||||||||||||||
| Interest expense | 1,037,818 | 1,007,104 | |||||||||||||||||
| Amortization of deferred debt issuance costs | 364,195 | 364,195 | |||||||||||||||||
| Professional fees | 229,804 | 172,434 | |||||||||||||||||
| Allocation of administrative costs from advisor | 148,710 | 161,180 | |||||||||||||||||
| Custodian and administrator fees | 107,473 | 136,038 | |||||||||||||||||
| Directors' fees | 99,999 | 96,750 | |||||||||||||||||
| Insurance expense | 92,651 | 102,443 | |||||||||||||||||
| Other expenses | 123,210 | 158,475 | |||||||||||||||||
| Total expenses | 4,483,321 | 3,643,617 | |||||||||||||||||
| Waiver of income-based incentive fees | (203,242 | ) | — | ||||||||||||||||
| Net expenses | 4,280,079 | 3,643,617 | |||||||||||||||||
| Net investment income | 4,872,012 | 6,315,085 | |||||||||||||||||
| Net realized and unrealized gains (losses) on investment transactions: | |||||||||||||||||||
| Net realized gains (losses) on investments | 39,502 | 106,604 | |||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments and unfunded commitments | 3,642,584 | (21,819,026 | ) | ||||||||||||||||
| Net realized and unrealized gains (losses) | 3,682,086 | (21,712,422 | ) | ||||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 8,554,098 | $ | (15,397,337 | ) | ||||||||||||||
| Basic and diluted: | |||||||||||||||||||
| Net investment income per share | $ | 0.36 | $ | 0.46 | |||||||||||||||
| Earnings (loss) per share | $ | 0.62 | $ | (1.13 | ) | ||||||||||||||
| Weighted Average Shares of Common Stock Outstanding | 13,686,865 | 13,671,273 | |||||||||||||||||
| Distributions paid per common share | $ | 0.3516 | $ | 0.3469 | |||||||||||||||
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.