NEW YORK, May 10, 2017 (GLOBE NEWSWIRE) -- CM Finance Inc (NASDAQ:CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal third quarter ended March 31, 2017.
HIGHLIGHTS
- Net asset value (“NAV”) per share increased by 1.6% to $12.32, compared to $12.13 as of December 31, 2016
- CMFN made seven new investments, including investments in three new portfolio companies, during the quarter with a total cost of $32.2mm and a weighted average yield of 10.54%
- One investment was fully realized during the quarter, with an IRR of 14.39%
- The weighted average yield on debt investments, at cost, declined to 9.72%, compared to 9.79% as of December 31, 2016
| Portfolio results, as of March 31, 2017: | ||
| Total assets | $298.8mm | |
| Investment portfolio, at fair value | $268.7mm | |
| Net assets | $168.6mm | |
| Weighted average yield on debt investments, at cost | 9.72% | |
| Net asset value per share | $12.32 | |
| Portfolio activity in the current quarter: | ||
| Number of new investments | 7 | |
| Total capital invested | $32.2mm | |
| Proceeds from repayments, sales, and amortization | $11.2mm | |
| Number of portfolio companies, end of period | 21 | |
| Net investment income (NII) | $3.4mm | |
| Net investment income per share | $0.25 | |
| Net increase in net assets from operations | $6.0mm | |
| Net increase in net assets from operations per share | $0.44 | |
| Quarterly per share distribution paid on April 6, 2017 | $0.25 | |
Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said “We are pleased with our ability to invest money during the quarter, with net investments of $21 million. We also had a favorable realization of our investment in Land Holdings, which repaid our loan at a premium. We anticipate that unscheduled repayments will continue in our portfolio, as they have for many of our BDC peers. Our pipeline of primary and secondary market opportunities is strong and we expect to continue to deploy our capital into a variety of senior secured opportunities.”
On May 2, 2017, the Company’s Board of Directors declared a distribution for the quarter ending June 30, 2017 of $0.25 per share, payable on July 6, 2017, to shareholders of record as of June 16, 2017. This represents a 9.7% yield on our $10.30 share price as of the close on May 9.
Portfolio and Investment Activities
During the quarter, we made investments in seven companies, including three new portfolio companies. These seven investments totaled $32.2mm, at cost, and were made at a weighted average yield of 10.54%. We also realized $11.2mm of repayments, sales and amortization, primarily the repayment of our loan to Land Holdings. Realized and unrealized gains accounted for an increase in our net investments of approximately $2.6mm, or $0.19 per share. The total net increase in net assets resulting from operations for the quarter was $6.0mm, or $0.44 per share.
As of March 31, 2017, our investment portfolio consisted of investments in 21 portfolio companies, of which 50.4% were first lien investments and 49.2% were second lien investments. Our debt portfolio consisted of 100.0% floating rate investments. As of March 31, 2017, we had one loan on non-accrual status representing 2.8% of our portfolio at fair value.
Capital Resources
As of March 31, 2017, we had $5.5mm in cash, $16.7mm in restricted cash and $35.7mm of capacity under our revolving credit facility with Citibank.
Subsequent Events
Subsequent to quarter end, the Company invested $15.8mm in two new portfolio companies and received $25.4mm in repayments and sales proceeds.
| CM Finance Inc and subsidiaries | |||||||||
| Consolidated Statements of Assets and Liabilities | |||||||||
| March 31, 2017 (Unaudited) | June 30, 2016 | ||||||||
| Assets | |||||||||
| Non-controlled, non-affiliated investments, at fair value (amortized cost of $288,260,647 and $307,364,949, respectively) | $ | 268,692,799 | $ | 272,114,164 | |||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 6,077,265 | 9,071,659 | |||||||
| Cash | 5,547,147 | 18,433,066 | |||||||
| Cash, restricted | 16,660,192 | 18,023,466 | |||||||
| Interest receivable | 1,358,391 | 1,897,710 | |||||||
| Deferred offering costs | 186,513 | 186,513 | |||||||
| Prepaid expenses and other assets | 309,968 | 234,837 | |||||||
| Total Assets | $ | 298,832,275 | $ | 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 | (680,087 | ) | (1,510,491 | ) | |||||
| Notes Payable, net | 115,652,562 | 130,967,838 | |||||||
| Base management fees payable | 1,124,191 | 1,257,768 | |||||||
| Income-based incentive fees payable | 428,606 | 275,540 | |||||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 6,077,265 | 9,071,659 | |||||||
| Dividend payable | 3,422,106 | 4,809,778 | |||||||
| Payable for investments purchased | 1,980,000 | 8,828,750 | |||||||
| Deferred financing costs payable | 620,500 | 879,042 | |||||||
| Interest payable | 223,355 | 175,792 | |||||||
| Accrued expenses and other liabilities | 673,250 | 945,365 | |||||||
| Total Liabilities | 130,201,835 | 157,211,532 | |||||||
| Commitments and Contingencies (Note 6) | |||||||||
| Net Assets | |||||||||
| Common Stock, par value $0.001 per share (100,000,000 shares authorized, 13,688,441 and 13,679,686 shares issued and outstanding, respectively) | 13,688 | 13,680 | |||||||
| Additional paid-in capital | 199,801,235 | 199,722,997 | |||||||
| Accumulated net realized loss | (9,100,786 | ) | — | ||||||
| Distributions in excess of net investment income | (2,515,849 | ) | (1,736,009 | ) | |||||
| Net unrealized depreciation on investments | (19,567,848 | ) | (35,250,785 | ) | |||||
| Total Net Assets | 168,630,440 | 162,749,883 | |||||||
| Total Liabilities and Net Assets | $ | 298,832,275 | $ | 319,961,415 | |||||
| Net Asset Value Per Share | $ | 12.32 | $ | 11.90 | |||||
| CM Finance Inc and subsidiaries | ||||||||||||||||||||||
| Consolidated Statements of Operations (Unaudited) | ||||||||||||||||||||||
| For the three months ended March 31, | For the nine months ended March 31, | |||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
| Investment Income: | ||||||||||||||||||||||
| Interest income | $ | 6,394,838 | $ | 7,886,588 | $ | 22,555,817 | $ | 26,189,720 | ||||||||||||||
| Payment in-kind interest income | 186,567 | — | 186,567 | 960,603 | ||||||||||||||||||
| Other fee income | 499,813 | 51,255 | 1,075,774 | 614,816 | ||||||||||||||||||
| Total investment income | 7,081,218 | 7,937,843 | 23,818,158 | 27,765,139 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||
| Base management fees | 1,124,191 | 1,356,609 | 3,519,672 | 4,253,764 | ||||||||||||||||||
| Income-based incentive fees | 211,572 | — | 1,307,087 | 1,229,032 | ||||||||||||||||||
| Interest expense | 1,398,060 | 1,043,815 | 3,427,268 | 3,035,907 | ||||||||||||||||||
| Amortization of deferred debt issuance costs | 102,013 | 364,195 | 830,404 | 1,076,849 | ||||||||||||||||||
| Professional fees | 267,955 | 218,265 | 692,348 | 683,033 | ||||||||||||||||||
| Allocation of administrative costs from advisor | 136,375 | 287,715 | 553,327 | 725,846 | ||||||||||||||||||
| Custodian and administrator fees | 133,529 | 108,058 | 349,691 | 330,740 | ||||||||||||||||||
| Directors' fees | 99,999 | 116,750 | 299,998 | 328,250 | ||||||||||||||||||
| Insurance expense | 69,563 | 86,765 | 254,774 | 275,411 | ||||||||||||||||||
| Other expenses | 161,679 | 86,238 | 567,734 | 373,269 | ||||||||||||||||||
| Total expenses | 3,704,936 | 3,668,410 | 11,802,303 | 12,312,101 | ||||||||||||||||||
| Waiver of income-based incentive fees | (45,829 | ) | — | (249,071 | ) | — | ||||||||||||||||
| Net expenses | 3,659,107 | 3,668,410 | 11,553,232 | 12,312,101 | ||||||||||||||||||
| Net investment income | 3,422,111 | 4,269,433 | 12,264,926 | 15,453,038 | ||||||||||||||||||
| Net realized and unrealized gains (losses) on investment transactions: | ||||||||||||||||||||||
| Net realized gains (losses) on investments | (1,111,999 | ) | (18,649 | ) | (9,100,786 | ) | 283,275 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | 3,677,910 | (2,355,765 | ) | 15,682,937 | (29,070,468 | ) | ||||||||||||||||
| Net realized and unrealized gains (losses) | 2,565,911 | (2,374,414 | ) | 6,582,151 | (28,787,193 | ) | ||||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 5,988,022 | $ | 1,895,019 | $ | 18,847,077 | $ | (13,334,155 | ) | |||||||||||||
| Basic and diluted: | ||||||||||||||||||||||
| Net investment income per share | $ | 0.25 | $ | 0.31 | $ | 0.90 | $ | 1.13 | ||||||||||||||
| Earnings (loss) per share | $ | 0.44 | $ | 0.14 | $ | 1.38 | $ | (0.98 | ) | |||||||||||||
| Weighted Average Shares of Common Stock Outstanding | 13,688,377 | 13,677,532 | 13,685,331 | 13,672,431 | ||||||||||||||||||
| Distributions paid per common share | $ | 0.2500 | $ | 0.3516 | $ | 0.9532 | $ | 1.4754 | ||||||||||||||
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.