NEW YORK, Feb. 07, 2018 (GLOBE NEWSWIRE) -- 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 Activities
During 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 Events
Subsequent 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.
Contacts
CM Finance Inc
Investor Relations
Email: investorrelations@cmipllc.com
Phone: 212-257-5199