NEW YORK, Sept. 06, 2017 (GLOBE NEWSWIRE) -- CM Finance Inc (NASDAQ:CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal fourth quarter ended June 30, 2017.
HIGHLIGHTS
- Net asset value (“NAV”) per share increased by 0.7% to $12.41, compared to $12.32 as of March 31, 2017
- CMFN made seven new investments, including investments in six new portfolio companies, during the quarter with a total cost of $53.2mm and a weighted average yield of 8.25%
- Six investments were fully realized during the quarter with an average IRR of 10.91%
- The weighted average yield on debt investments, at cost, increased to 9.73%, compared to 9.72% as of March 31, 2017
| Portfolio results, as of June 30, 2017: | ||||
| Total assets | $296.0mm | |||
| Investment portfolio, at fair value | $254.9mm | |||
| Net assets | $169.9mm | |||
| Weighted average yield on debt investments, at cost | 9.73% | |||
| Net asset value per share | $12.41 | |||
| Portfolio activity in the current quarter: | ||||
| Number of new investments | 7 | |||
| Total capital invested | $53.2mm | |||
| Proceeds from repayments, sales, and amortization | $67.4mm | |||
| Number of portfolio companies, end of period | 23 | |||
| Net investment income (NII) | $3.4mm | |||
| Net investment income per share | $0.25 | |||
| Net increase in net assets from operations | $4.7mm | |||
| Net increase in net assets from operations per share | $0.35 | |||
| Quarterly per share distribution paid on July 6, 2017 | $0.25 | |||
Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said, “During the current period of tightening spreads, declining new issue credit metrics, and increasing uncertainty, we have focused our origination efforts on lower-risk secured opportunities. We are also pleased to have lowered the risk profile in the portfolio by increasing diversification, reducing our average position size, and exiting one of our most highly levered investments.”
On August 24, 2017, the Company’s Board of Directors declared a distribution for the quarter ending September 30, 2017 of $0.25 per share, payable on October 5, 2017, to shareholders of record as of September 8, 2017. This represents a 10.05% yield on our $9.95 share price as of the close on September 5.
Portfolio and Investment Activities
During the quarter, we made investments in seven companies, including six new portfolio companies. Five of our seven investments were in 1st lien term loans. These seven investments totaled $53.2mm at cost, and were made at a weighted average yield of 8.25%. We also realized $67.4mm of repayments, sales, and amortization, primarily related to the repayment of our loans to School Specialty, Telecommunications Management, AP Gaming, and Land Holdings, and our sale of North American Lifting Holdings. Realized and unrealized gains accounted for an increase in our net investments of approximately $1.3mm, or $0.09 per share. The total net increase in net assets resulting from operations for the quarter was $4.7mm, or $0.35 per share.
As of June 30, 2017, our investment portfolio consisted of investments in 23 portfolio companies, of which 49.9% were first lien investments, 49.7% were second lien investments and 0.4% were in equity investments. Our debt portfolio consisted of 95.2% floating rate investments. As of June 30, 2017, we had one loan on non-accrual status representing 3.0% of our portfolio at fair value.
Capital Resources
As of June 30, 2017, we had $10.6mm in cash, $22.6mm in restricted cash and $50.0mm of capacity under our revolving credit facility with Citibank.
Subsequent Events
Subsequent to quarter end, the Company invested $17.5mm in one new portfolio company and received $14.8mm in repayments and sales proceeds.
The Company’s investment in Bird Electric Enterprises, LLC was restructured on September 1, 2017, resulting in the elimination of $15 million of principal and replaced with 10 Class C Units. The Class C Units are a non-voting class of preferred equity with a $10mm liquidation preference that accretes at a 10% rate until such time as certain EBITDA targets are met, after which the units are paid a 10% cash dividend.
| CM Finance Inc and subsidiaries | |||||||||||||
| Consolidated Statements of Assets and Liabilities | |||||||||||||
| June 30, 2017 | June 30, 2016 | ||||||||||||
| Assets | |||||||||||||
| Non-controlled, non-affiliated investments, at fair value (amortized cost of $270,467,740 and $307,364,949, respectively) | $ | 254,907,171 | $ | 272,114,164 | |||||||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 5,830,501 | 9,071,659 | |||||||||||
| Cash | 10,646,697 | 18,433,066 | |||||||||||
| Cash, restricted | 22,616,177 | 18,023,466 | |||||||||||
| Interest receivable | 1,627,774 | 1,897,710 | |||||||||||
| Deferred offering costs | 186,513 | 186,513 | |||||||||||
| Prepaid expenses and other assets | 219,045 | 234,837 | |||||||||||
| Total Assets | $ | 296,033,878 | $ | 319,961,415 | |||||||||
| Liabilities | |||||||||||||
| Notes Payable: | |||||||||||||
| Term loan | $ | 102,000,000 | $ | 102,000,000 | |||||||||
| Revolving credit facility | — | 30,478,329 | |||||||||||
| Deferred debt issuance costs | (578,074 | ) | (1,510,491 | ) | |||||||||
| Notes Payable, net | 101,421,926 | 130,967,838 | |||||||||||
| Base management fees payable | 1,132,391 | 1,257,768 | |||||||||||
| Income-based incentive fees payable | 274,073 | 275,540 | |||||||||||
| Payable for investments purchased | 12,490,000 | 8,828,750 | |||||||||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 5,830,501 | 9,071,659 | |||||||||||
| Dividend payable | 3,422,307 | 4,809,778 | |||||||||||
| Deferred financing costs payable | 620,500 | 879,042 | |||||||||||
| Interest payable | 205,027 | 175,792 | |||||||||||
| Directors' fees payable | 100,000 | — | |||||||||||
| Accrued expenses and other liabilities | 589,041 | 945,365 | |||||||||||
| Total Liabilities | 126,085,766 | 157,211,532 | |||||||||||
| Commitments and Contingencies (Note 6) | |||||||||||||
| Net Assets | |||||||||||||
| Common Stock, par value $0.001 per share (100,000,000 shares authorized, 13,689,221 and 13,679,686 shares issued and outstanding, respectively) | 13,689 | 13,680 | |||||||||||
| Additional paid-in capital | 199,066,123 | 199,722,997 | |||||||||||
| Accumulated net realized loss | (11,231,827 | ) | — | ||||||||||
| Distributions in excess of net investment income | (2,339,304 | ) | (1,736,009 | ) | |||||||||
| Net unrealized depreciation on investments | (15,560,569 | ) | (35,250,785 | ) | |||||||||
| Total Net Assets | 169,948,112 | 162,749,883 | |||||||||||
| Total Liabilities and Net Assets | $ | 296,033,878 | $ | 319,961,415 | |||||||||
| Net Asset Value Per Share | $ | 12.41 | $ | 11.90 | |||||||||
| CM Finance Inc and subsidiaries | |||||||||||||||||||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||||||||||||||||||
| Three months ended June 30, | Twelve months ended June 30, | ||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||
| Investment Income: | |||||||||||||||||||||||||||||||||
| Interest income | $ | 6,920,498 | $ | 7,493,388 | $ | 11,259,339 | $ | 29,476,315 | $ | 33,683,108 | $ | 35,165,863 | |||||||||||||||||||||
| Payment in-kind interest income | 237,065 | — | 218,174 | 423,632 | 960,603 | 1,121,036 | |||||||||||||||||||||||||||
| Other fee income | 36,476 | 321,395 | 42,332 | 1,112,250 | 936,211 | 630,206 | |||||||||||||||||||||||||||
| Total investment income | 7,194,039 | 7,814,783 | 11,519,845 | 31,012,197 | 35,579,922 | 36,917,105 | |||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||
| Base management fees | 1,132,392 | 1,257,768 | 1,420,978 | 4,652,064 | 5,511,532 | 5,169,039 | |||||||||||||||||||||||||||
| Income-based incentive fees | 18,511 | — | 1,563,388 | 1,289,927 | 1,229,031 | 4,711,675 | |||||||||||||||||||||||||||
| Interest expense | 1,321,181 | 1,012,620 | 988,886 | 4,748,449 | 4,048,527 | 3,527,014 | |||||||||||||||||||||||||||
| Allocation of administrative costs from advisor | 433,959 | 60,000 | 209,241 | 987,286 | 785,846 | 591,233 | |||||||||||||||||||||||||||
| Amortization of deferred debt issuance costs | 102,013 | 364,195 | 340,590 | 932,417 | 1,441,044 | 1,194,662 | |||||||||||||||||||||||||||
| Professional fees | 114,462 | 356,769 | 380,330 | 806,810 | 1,039,802 | 1,214,546 | |||||||||||||||||||||||||||
| Directors' fees | 201,235 | 97,672 | 108,005 | 501,233 | 425,922 | 426,255 | |||||||||||||||||||||||||||
| Custodian and administrator fees | 130,578 | 111,858 | 87,344 | 480,269 | 442,598 | 303,913 | |||||||||||||||||||||||||||
| Insurance expense | 90,923 | 91,916 | 85,266 | 345,697 | 367,327 | 396,885 | |||||||||||||||||||||||||||
| Other expenses | 215,127 | 61,067 | 84,110 | 818,532 | 434,337 | 338,835 | |||||||||||||||||||||||||||
| Total expenses | 3,760,381 | 3,413,865 | 5,268,138 | 15,562,684 | 15,725,966 | 17,874,057 | |||||||||||||||||||||||||||
| Waiver of income-based incentive fees | — | — | — | (249,071 | ) | — | (1,174,655 | ) | |||||||||||||||||||||||||
| Net expenses | 3,760,381 | 3,413,865 | 5,268,138 | 15,313,613 | 15,725,966 | 16,699,402 | |||||||||||||||||||||||||||
| Net investment income | 3,433,658 | 4,400,918 | 6,251,707 | 15,698,584 | 19,853,956 | 20,217,703 | |||||||||||||||||||||||||||
| Net realized and unrealized gains (losses) on investment transactions: | |||||||||||||||||||||||||||||||||
| Net realized gains (losses) on investments | (2,708,549 | ) | 1 | 4,326,004 | (11,809,335 | ) | 283,276 | 3,012,575 | |||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | 4,007,279 | (411,534 | ) | (5,911,675 | ) | 19,690,216 | (29,482,002 | ) | (7,796,990 | ) | |||||||||||||||||||||||
| Net realized and unrealized gains (losses) | 1,298,730 | (411,533 | ) | (1,585,671 | ) | 7,880,881 | (29,198,726 | ) | (4,784,415 | ) | |||||||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 4,732,388 | $ | 3,989,385 | $ | 4,666,036 | $ | 23,579,465 | $ | (9,344,770 | ) | $ | 15,433,288 | ||||||||||||||||||||
| Basic and diluted: | |||||||||||||||||||||||||||||||||
| Net investment income per share | $ | 0.25 | $ | 0.32 | $ | 0.46 | $ | 1.15 | $ | 1.45 | $ | 1.48 | |||||||||||||||||||||
| Earnings (loss) per share | $ | 0.35 | $ | 0.29 | $ | 0.34 | $ | 1.72 | $ | (0.68 | ) | $ | 1.13 | ||||||||||||||||||||
| Weighted Average Shares of Common Stock Outstanding | 13,689,170 | 13,679,532 | 13,667,254 | 13,686,288 | 13,674,197 | 13,666,812 | |||||||||||||||||||||||||||
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.