CM Finance Inc Reports Results for Its Fiscal First Quarter Ended September 30, 2014

NEW YORK--()--CM Finance Inc (Nasdaq:CMFN) (“CMFN” or “the Company”) today announced financial results for its fiscal first quarter ended September 30, 2014.

HIGHLIGHTS

  • Investment portfolio increased by $25.0 million, or 9%, from last quarter, to $298.7 million
  • Yield, at cost, on debt portfolio increased to 11.72% from 10.82% last quarter
  • Four debt investments made during the quarter with a weighted average yield of 14.1%
  • UBS financing facility: upsized by $24.5 million, extended term and added flexibility
  • Declared dividend of $.3375 per share for quarter ended December 31, 2014
Portfolio results, as of September 30, 2014:  
Total Assets $ 335.6mm
Investment portfolio, at fair value $ 298.7mm
Net Assets $ 200.2mm
Weighted Average yield on debt investments, at cost 11.72%
Weighted Average yield on debt investments, at fair value 11.15%
Net Asset Value per share $ 14.65
 
Portfolio activity in the current quarter:
Number of new investments 4
Total capital invested $ 54.6mm
Proceeds from repayments, sales, and amortization $ 30.0mm
Number of portfolio companies, end of period 25
 
Net investment income $ 4.6mm
Net investment income per share $ 0.34
Net increase in net assets from operations $ 4.6mm
Net increase in net assets from operations per share $ 0.34

Dividend declared per share (paid October 1, 2014)

$

0.3375

Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said, “We enter our new fiscal year optimistic about the portfolio. We continue to see significant deal flow, and an increasingly favorable environment to structure investments with attractive structural and economic terms. We have opportunistically begun to exit lower-yielding, liquid investments as we have had the ability to originate loans with better risk/reward characteristics.”

On November 6, 2014, the Company’s Board of Directors declared a fourth calendar quarter dividend of $.3375 per share payable on January 5, 2015 to shareholders of record as of December 18, 2014.

The Company reported net investment income of $4.6 million, or $0.34 per share, and an immaterial amount of net realized and unrealized losses. The total net increase in net assets for the quarter was $4.6 million, or $0.34 per share. At September 30, 2014, net asset value (NAV) per share was $14.65.

Portfolio and Investment Activities

During the quarter, we continued to grow and diversify our investment portfolio. We added four new investments and funded one pre-existing commitment in the fiscal first quarter, which totaled $54.6 million, and realized $30.0 million of repayments, sales proceeds, and amortization. Growth in net investments was approximately $25.0 million (at fair value). Three of our four investments in the fiscal first quarter were to new portfolio companies. Our investments in new portfolio companies during the quarter averaged $17.4 million, and had a weighted average yield of 14.1%.

At September 30, 2014, our investment portfolio of $298.7 million (at fair value) consisted of investments in 25 portfolio companies, of which 48.0% were first lien investments, 50.7% were second lien investments, and 1.3% were warrant positions. At September 30, 2014, our average portfolio company investment at fair value was $11.9 million. We had no nonperforming loans in the portfolio.

As of September 30, 2014 and June 30, 2014, respectively, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 11.72% and 10.82%, respectively, and our weighted average total yield of debt and income producing securities at fair value (which includes interest income and amortization of fees and discounts) was 11.15% and 10.44%, respectively.

Capital Resources

As of September 30, 2014, we had $18.0 million in cash, $12.0 million in restricted cash, and $28.5 million of capacity under our revolving credit facility. Our net assets totaled $200.2 million.

Subsequent Events

Subsequent to quarter end, the Company invested $27.8 million in new and existing portfolio companies and received repayment or sales proceeds of $19.7 million.

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 $50 million and earnings before interest, taxes, depreciation and amortization of at least $15 million. 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.

     
CM Finance Inc and subsidiaries
Consolidated Statement of Assets and Liabilities          
 
 

September 30, 2014

June 30, 2014

Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of $296,539,888 and $271,682,258, respectively) $ 298,672,633 $ 273,710,465
Derivatives, at fair value (cost $0 and $0, respectively) 987,590 563,866
Cash 18,049,346 24,698,073
Cash, restricted 12,002,839 7,139,313
Interest receivable 1,986,834 1,458,043
Deferred debt issuance costs 3,330,671 459,676
Prepaid expenses and other assets   537,280     730,562  
Total Assets $ 335,567,193   $ 308,759,998  
 
Liabilities
Notes Payable:
Term loan $ 102,000,000 $ 76,500,000
Revolving credit facility 21,487,523 9,091,314
Payable for investments purchased 1,194,000 16,660,000
Distributions payable 4,612,500 4,612,500
Derivatives, at fair value (cost $0 and $0, respectively) 987,590 563,866
Base management fees payable 1,107,453 313,237
Income-based incentive fees payable 386,629 -
Accrued deferred financing costs 2,787,292 -
Interest payable 130,583 108,117
Accrued expenses and other liabilities   675,862     694,143  
Total Liabilities 135,369,432 108,543,177
 
Net Assets
Common Stock, par value $0.001 per share (100,000,000 shares authorized, 13,666,666 and 13,666,666 shares issued and outstanding, respectively) 13,667 13,667
Additional paid-in capital 198,810,786 198,810,786
Accumulated net realized loss (123,598 ) -
Distributions in excess of net investment income (635,839 ) (635,839 )
Net unrealized appreciation on investments   2,132,745     2,028,207  
Total Net Assets   200,197,761     200,216,821  
   
Total Liabilities and Net Assets $ 335,567,193   $ 308,759,998  
 
 
Net Asset Value Per Share $ 14.65 $ 14.65
   

For the three
months ended
September 30, 2014

 
Investment Income:
Interest income $ 6,932,006
Payment in-kind interest income 561,020
Other fee income 336,568
Royalty income   31,275  
Total investment income 7,860,869
 
Expenses:
Interest expense 718,876
Amortization of deferred debt issuance costs 172,892
Base management fees 1,107,453
Income-based incentive fees 969,458
Capital gains incentive fees 138,049
Custodian and administrator fees 88,690
Directors' fees 114,750
Professional fees 210,223
Allocation of administrative costs from advisor 191,420
Insurance expense 110,746
Other expenses   146,690  
Total expenses 3,969,247
Waiver of income-based incentive fees (582,829 )
Waiver of capital gains incentive fees   (138,049 )
Net expenses   3,248,369  
 
Net investment income $ 4,612,500  
 
Net realized and unrealized losses on investment transactions:
Net realized losses on investments (123,598 )
Net change in unrealized appreciation on investments   104,538  
Net realized and unrealized losses   (19,060 )
 
Net increase in net assets resulting from operations $ 4,593,440  
 
Basic and diluted:
Net investment income per share 0.34
Earnings per share 0.34
Weighted Average Shares of Common Stock Outstanding 13,666,666
 
Dividends declared per common share 0.3375

Contacts

CM Finance Inc
Investor Relations
Michael C. Mauer, 212-257-5199
investorrelations@cmfn-inc.com

Contacts

CM Finance Inc
Investor Relations
Michael C. Mauer, 212-257-5199
investorrelations@cmfn-inc.com