OREANDA-NEWS. August 31, 2016. CM Finance Inc (NASDAQ:CMFN) (“CMFN” or “the Company”) today announced financial results for its fiscal fourth quarter ended June 30, 2016.

HIGHLIGHTS

  • Decline in NAV per share to \\$11.90 per share from \\$11.96 per share as of March 31, 2016
  • Investment portfolio declined by \\$4.2 mm, or 1.6%, from last quarter, to \\$272.1 mm at fair value
  • Three new investments with a cost of \\$15.3 mm and an average yield of 10.60% were made during the quarter
  • Two investments were fully realized during the quarter
  • Weighted average yield of debt portfolio, at cost (without amortization), of 9.57% compared to 9.71% at March 31, 2016
  • Weighted average yield of debt portfolio, at cost (with amortization), of 9.80%(1) compared to 9.90% at March 31, 2016
  • Declared a regular quarterly distribution of \\$0.3516 per share for the quarter ending September 30, 2016, payable on October 6, 2016, to shareholders of record as of September 16, 2016
           
Portfolio results, as of June 30, 2016:          
Total Assets         \\$320.0 mm
Investment portfolio, at fair value         \\$272.1 mm
Net Assets         \\$162.7 mm
Weighted Average yield on debt investments, at cost         9.80% (1)
Net Asset Value per share         \\$11.90 
           
Portfolio activity in the current quarter:          
Number of new investments         3 
Total capital invested         \\$15.3 mm
Proceeds from repayments, sales, and amortization         \\$20.0 mm
Number of portfolio companies, end of period         22 
           
Net investment income         \\$4.4 mm
Net investment income per share         \\$0.32 
Net increase in net assets from operations         \\$4.0 mm
Net increase in net assets from operations per share         \\$0.29 
Distribution declared per share (paid July 7, 2016)         \\$0.3516 
           

Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said “We see opportunities in both the primary and secondary markets, especially in first and second lien debt.  As patient investors with a long-term focus, we will continue to be patient in deploying our capital.”

On August 25, 2016, the Company’s Board of Directors declared a distribution for the quarter ended September 30, 2016 of \\$0.3516 per share payable on October 6, 2016 to shareholders of record as of September 16, 2016.

The Company reported net investment income of \\$4.4 mm, or \\$0.32 per share, and net realized and unrealized losses of \\$0.4 mm or \\$0.03 per share, for the quarter. The total net increase in net assets resulting from operations for the quarter was \\$4.0 mm, or \\$0.29 per share. At June 30, 2016, the Company’s net asset value (NAV) per share was \\$11.90.

Portfolio and Investment Activities

During the quarter, we realized \\$20.0 mm of repayments, sales proceeds and amortization. The decrease in our net investments after taking into account realized and unrealized gains was approximately \\$0.4 mm (at fair value). 

At June 30, 2016, our investment portfolio of \\$272.1 mm (at fair value) consisted of investments in 22 portfolio companies, of which 57.7% were first lien investments and 42.2% were second lien investments. At June 30, 2016, our average portfolio company investment at fair value was \\$12.4 mm. At June 30, 2016, we had two loans on non-accrual status representing 6.2% of our portfolio at fair value.

As of June 30, 2016 and June 30, 2015, 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 9.80% and 10.91%, respectively.

Capital Resources

As of June 30, 2016, we had \\$18.4 mm in cash, \\$18.0 mm in restricted cash and \\$19.5 mm of capacity under our revolving credit facility. Our net assets totaled \\$162.7 mm.

Subsequent Events

Subsequent to quarter end, the Company invested \\$13.2 mm in new and existing portfolio companies and received repayment or sales proceeds of \\$24.7 mm.

On August 25, 2016, the Company’s Board of Directors declared a regular distribution for the quarter ended September 30, 2016 of \\$0.3516 per share payable on October 6, 2016 to shareholders of record as of September 16, 2016.

  
CM Finance Inc and subsidiaries 
Consolidated Statements of Assets and Liabilities  
  
 June 30, 2016 June 30, 2015 
Assets 
Non-controlled, non-affiliated investments, at fair value (amortized cost of \\$307,364,949 and \\$336,092,639, respectively)\\$ 272,114,164 \\$ 330,323,856  
Derivatives, at fair value (cost \\$0 and \\$0, respectively) 9,071,659   1,845,768  
Cash 18,433,066   21,535,492  
Cash, restricted 18,023,466   3,433,704  
Interest receivable 1,897,710   2,900,804  
Deferred offering costs 186,513   186,513  
Prepaid expenses and other assets 234,837   232,704  
Total Assets\\$ 319,961,415 \\$ 360,458,841  
Liabilities 
Notes Payable:    
Term loan\\$ 102,000,000 \\$ 102,000,000  
Revolving credit facility 30,478,329   48,847,459  
Deferred debt issuance costs (1,510,491)  (2,331,035) 
Notes Payable, net 130,967,838   148,516,424  
Payable for investments purchased 8,828,750   2,988,655  
Distributions payable 4,809,778   4,741,174  
Derivatives, at fair value (cost \\$0 and \\$0, respectively) 9,071,659   1,845,768  
Base management fees payable 1,257,768   1,420,978  
Income-based incentive fees payable 275,540   1,723,260  
Deferred financing costs payable 879,042   1,525,000  
Interest payable 175,792   168,658  
Accrued expenses and other liabilities 945,365   578,075  
Total Liabilities  157,211,532   163,507,992  
  
Commitments and Contingencies 
  
Net Assets 
Common Stock, par value \\$0.001 per share (100,000,000 shares authorized, 13,679,686 and 13,667,267 shares issued and outstanding, respectively) 13,680   13,667  
Additional paid-in capital 199,722,997   199,418,478  
Accumulated net realized (loss) gain —   3,700,400  
Distributions in excess of net investment income (1,736,009)  (412,913) 
Net unrealized depreciation on investments (35,250,785)  (5,768,783) 
Total Net Assets  162,749,883   196,950,849  
Total Liabilities and Net Assets\\$ 319,961,415 \\$ 360,458,841  
  
Net Asset Value Per Share\\$ 11.90 \\$ 14.41  
  

   

CM Finance Inc and subsidiaries 
Consolidated Statements of Operations 
  
 For the three months ended June 30, For the twelve months ended  June 30, 
 2016 2015 2016 2015  
Investment Income: 
Interest income\\$ 7,493,388  \\$ 11,259,339   \\$ 33,683,108  \\$ 35,165,863   
Payment in-kind interest income  —    218,174     960,603    1,121,036   
Other fee income  321,395    42,332     936,211    630,206   
Total investment income  7,814,783    11,519,845     35,579,922    36,917,105   
  
Expenses: 
Interest expense  1,012,620    988,886     4,048,527    3,527,014   
Amortization of deferred debt issuance costs  364,195    340,590     1,441,044    1,194,662   
Base management fees  1,257,768    1,420,978     5,511,532    5,169,039   
Income-based incentive fees  (1)   1,563,388     1,229,031    4,711,675   
Custodian and administrator fees  111,858    87,344     442,598    303,913   
Directors' fees  97,672    108,005     425,922    426,255   
Professional fees  356,769    380,330     1,039,802    1,214,546   
Allocation of administrative costs from advisor  60,000    209,241     785,846    591,233   
Insurance expense  91,916    85,266     367,327    396,885   
Other expenses  61,068    84,110     434,337    338,835   
Total expenses  3,413,865    5,268,138     15,725,966    17,874,057   
Waiver of income-based incentive fees  —    —     —    (1,174,655)  
Net expenses  3,413,865    5,268,138     15,725,966    16,699,402   
Net investment income  4,400,918    6,251,707     19,853,956    20,217,703   
  
Net realized and unrealized gains (losses) on investment transactions: 
Net realized gains (losses) on investments  1    4,326,004     283,276    3,012,575   
Net change in unrealized appreciation (depreciation) on investments      (411,534)   (5,911,675)    (29,482,002)   (7,796,990)  
Net realized and unrealized losses  (411,533)   (1,585,671)    (29,198,726)   (4,784,415)  
Net increase (decrease) in net assets resulting from operations\\$ 3,989,385  \\$ 4,666,036   \\$ (9,344,770) \\$ 15,433,288   
Basic and diluted:    
Net investment income per share\\$ 0.32  \\$ 0.46   \\$ 1.45  \\$ 1.48   
Earnings (loss) per share\\$ 0.29  \\$ 0.34   \\$ (0.68) \\$ 1.13   
Weighted Average Shares of Common Stock Outstanding  13,679,532    13,667,254     13,674,197    13,666,812   
  

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 mm and earnings before interest, taxes, depreciation and amortization of at least \\$15 mm. 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.