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NEW YORK, Nov. 07, 2017 -- CM Finance Inc (NASDAQ:CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal first quarter ended September 30, 2017.
HIGHLIGHTS
- The weighted average yield on debt investments, at cost, increased to 10.67% from 9.73% as of June 30, 2017
- CMFN made investments in three new portfolio companies during the quarter with a total cost of $46.9mm and a weighted average yield of 11.70%
- Three investments were fully realized during the quarter with a weighted average IRR of 10.52%
- Net asset value (“NAV”) per share declined by 0.2% to $12.39, compared to $12.41 as of June 30, 2017
| Portfolio results, as of September 30, 2017: | |||
| Total assets | $311.2mm | ||
| Investment portfolio, at fair value | $271.9mm | ||
| Net assets | $169.7mm | ||
| Weighted average yield on debt investments, at cost | 10.67% | ||
| Net asset value per share | $12.39 | ||
| Portfolio activity in the current quarter: | |||
| Number of new investments | 3 | ||
| Total capital invested | $46.9mm | ||
| Proceeds from repayments, sales, and amortization | $30.5mm | ||
| Number of portfolio companies, end of period | 23 | ||
| Net investment income (NII) | $3.0mm | ||
| Net investment income per share | $0.22 | ||
| Net increase in net assets from operations | $3.1mm | ||
| Net increase in net assets from operations per share | $0.23 | ||
| Quarterly per share distribution paid on October 5, 2017 | $0.25 | ||
Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said “We have had continued success by focusing on developing direct lending opportunities and club relationships which accounted for two of our three new investments during the quarter, as well as an additional club investment after quarter-end. Direct and club lending enables us to focus on appropriate structures to protect our capital as well as enabling us to invest capital at more attractive yields than are generally available in the syndicated markets.”
On November 7, 2017, the Company’s Board of Directors declared a distribution for the quarter ending December 31, 2017 of $0.25 per share, payable on January 4, 2018, to shareholders of record as of December 15, 2017. This represents a 11.63% yield on our $8.60 share price as of the close on November 6. 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, we made investments in three new portfolio companies. Two of three investments were 1st lien term loans and one was a 2nd lien term loan. These three investments totaled $46.9mm at cost and were made at a weighted average yield of 11.70%. We also realized $29.2mm of repayments, sales, and amortization, primarily related to the repayment of our 2nd lien loan to Transaction Network Services and our sales of Melissa & Doug and YRC Worldwide. Realized and unrealized gains accounted for an increase in our net investments of approximately $0.1mm, or $0.01 per share. The total net increase in net assets resulting from operations for the quarter was $3.1mm, or $.23 per share.
As of September 30, 2017, our investment portfolio consisted of investments in 23 portfolio companies, of which 51.0% were first lien investments, 44.6% were second lien investments and 4.4% were equity investments. Our debt portfolio consisted of 96.0% floating rate investments. As of September 30, 2017, we had one loan non-accrual status representing 2.8% of our portfolio at fair value.
Capital Resources
As of September 30, 2017, we had $14.5 mm in cash, $16.1mm in restricted cash and $22.7mm of capacity under our revolving credit facility with Citibank.
Subsequent Events
Subsequent to quarter end, the Company invested $8.0 mm in one new portfolio company and received $7.0 mm in repayments and sales proceeds.
CM Finance Inc and subsidiaries
Consolidated Statements of Assets and Liabilities
| Assets | September 30, 2017 (Unaudited) | June 30, 2017 | ||||||
| Non-controlled, non-affiliated investments, at fair value (amortized cost of $280,174,244 and $270,467,740, respectively) | $ | 271,862,946 | $ | 254,907,171 | ||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 6,550,448 | 5,830,501 | ||||||
| Cash | 14,537,986 | 10,646,697 | ||||||
| Cash, restricted | 16,143,582 | 22,616,177 | ||||||
| Interest receivable | 1,702,662 | 1,627,774 | ||||||
| Other receivable | 219,914 | - | ||||||
| Deferred offering costs | 37,395 | 186,513 | ||||||
| Prepaid expenses and other assets | 140,751 | 219,045 | ||||||
| Total Assets | 311,195,684 | 296,033,878 | ||||||
| Liabilities | ||||||||
| Notes Payable: | ||||||||
| Term loan | 102,000,000 | 102,000,000 | ||||||
| Revolving credit facility | 27,260,000 | - | ||||||
| Deferred debt issuance costs | (1,487,038 | ) | (578,074 | ) | ||||
| Notes Payable, net | 127,772,962 | 101,421,926 | ||||||
| Base management fees payable | 1,153,880 | 1,132,391 | ||||||
| Income-based incentive fees payable | 240,538 | 274,073 | ||||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 6,550,448 | 5,830,501 | ||||||
| Distribution payable | 3,422,432 | 3,422,307 | ||||||
| Payable for investments purchased | - | 12,490,000 | ||||||
| Deferred financing costs payable | 1,654,667 | 620,500 | ||||||
| Interest payable | 232,555 | 205,027 | ||||||
| Directors’ fees payable | 97,043 | 100,000 | ||||||
| Accrued expenses and other liabilities | 397,948 | 589,041 | ||||||
| Total Liabilities | 141,522,473 | 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) | 13,689 | 13,689 | ||||||
| Additional paid-in capital | 199,077,936 | 199,066,123 | ||||||
| Accumulated net realized loss | (18,612,517 | ) | (11,231,827 | ) | ||||
| Distributions in excess of net investment income | (2,745,559 | ) | (2,339,304 | ) | ||||
| Net unrealized depreciation on investments | (8,060,338 | ) | (15,560,569 | ) | ||||
| Total Net Assets | 169,673,211 | 169,948,112 | ||||||
| Total Liabilities and Net Assets | 311,195,684 | 296,033,878 | ||||||
| Net Asset Value Per Share | $ | 12.39 | $ | 12.41 | ||||
CM Finance Inc and subsidiaries
Consolidated Statements of Operations (Unaudited)
| For the three months ended September 30, | ||||||||
| Investment Income: | 2017 | 2016 | ||||||
| Interest income | $ | 6,426,053 | $ | 7,368,382 | ||||
| Payment in-kind interest income | 292,478 | — | ||||||
| Other fee Income | 9,879 | 216,467 | ||||||
| Total investment income | 6,728,410 | 7,584,849 | ||||||
| Expenses: | ||||||||
| Base management fees | 1,153,880 | 1,211,535 | ||||||
| Interest expense | 1,437,829 | 991,390 | ||||||
| Professional fees | 209,041 | 194,589 | ||||||
| Offering expense | 186,513 | — | ||||||
| Allocation of administrative costs from advisor | 127,229 | 268,242 | ||||||
| Amortization of deferred debt issuance costs | 125,202 | 364,196 | ||||||
| Directors’ fees | 99,667 | 100,000 | ||||||
| Custodian and administrator fees | 91,996 | 108,689 | ||||||
| Insurance expense | 85,225 | 92,560 | ||||||
| Other expenses | 195,652 | 282,845 | ||||||
| Total expenses | 3,712,234 | 3,614,046 | ||||||
| Waiver of income-based incentive fees | — | — | ||||||
| Net expenses | 3,712,234 | 3,614,046 | ||||||
| Net Investment Income | 3,016,176 | 3,970,803 | ||||||
| Net Realized and Unrealized Gain/(Loss) on Investments | ||||||||
| Net realized loss from investments | (7,380,690 | ) | (8,028,289 | ) | ||||
| Net change in unrealized appreciation in value of investments | 7,500,231 | 8,362,443 | ||||||
| Net realized and unrealized gain on investments | 119,541 | 334,154 | ||||||
| Net Increase in Net Assets Resulting from Operations | $ | 3,135,717 | $ | 4,304,957 | ||||
| Basic and diluted | ||||||||
| Net investment income per share | $ | 0.22 | $ | 0.29 | ||||
| Net increase in net assets resulting from operations per share | $ | 0.23 | $ | 0.31 | ||||
| Weighted Average Shares of Common Stock Outstanding | 13,689,885 | 13,680,817 | ||||||
| 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: [email protected]
Phone: 212-257-5199
