CM Finance Inc Reports Results for its Fiscal First Quarter ended September 30, 2017


NEW YORK, Nov. 07, 2017 (GLOBE NEWSWIRE) -- 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 cost10.67% 
Net asset value per share$12.39 
   
Portfolio activity in the current quarter:
Number of new investments3 
Total capital invested$46.9mm 
Proceeds from repayments, sales, and amortization$30.5mm  
Number of portfolio companies, end of period23 
   
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: investorrelations@cmipllc.com
Phone: 212-257-5199