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Portman Ridge Finance Corporation Announces First Quarter 2019 Financial Results

NEW YORK, May 10, 2019 (GLOBE NEWSWIRE) -- Portman Ridge Finance Corporation (PTMN) (the “Company”) announces its first quarter 2019 financial results.

Recent Developments

As previously announced, the Company entered into a stock purchase and transaction agreement (the “Externalization Agreement”) with BC Partners Advisors, LP, an affiliate of BC Partners LLP, pursuant to which the Company’s management function would be externalized (the “Externalization”). At a special meeting of the Company’s stockholders held on February 19, 2019, the Company’s stockholders approved the investment advisory agreement between the Company and Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors, LP, (the “Adviser”). The transactions contemplated by the Externalization Agreement closed on April 1, 2019, and the Company commenced operations as an externally managed BDC managed by the Adviser on that date.

Financial Highlights

  • Stockholders received a cash payment of $0.66972 per share upon closing of the Externalization on April 1, 2019.
     
  • Portman Ridge Finance Corporation declared a first quarter stockholder distribution of $0.10 per share.
     
  • Net investment loss for the first quarter ended March 31, 2019 was approximately $(2.2) million, or $(0.06) per basic share, compared with net investment income of approximately $2.5 million, or $0.07 per basic share in the quarter ended March 31, 2018.
     
  • Expenses associated with the Externalization totaled approximately $3.4 million or $0.09 per share during the first quarter of 2019.
     
  • At March 31, 2019, the fair value of the Company's investments totaled approximately $282 million.
     
  • Net asset value per share as of March 31, 2019 was $3.85.

Ted Goldthorpe, Chief Executive Officer of Portman Ridge Finance Corporation, noted, “We are pleased to have successfully closed the Externalization on April 1st, which provided stockholders with a cash payment of approximately $0.67 per share. We are actively repositioning the portfolio in the short-term and believe that the benefits associated with being externally managed and part of the broader BC Credit platform will enhance long-term value for stockholders.”

Operating Results

For the three months ended March 31, 2019, the Company reported total investment income of approximately $5.8 million as compared to approximately $6.8 million in the same period last year. Investment income from debt securities decreased 22% to approximately $2.9 million from approximately $3.8 million in the first quarter 2018. Changes in portfolio mix as well as an increase in non-accrual investments in the first quarter of 2019 were the primary contributors to this decline. Investment income on CLO fund securities in the first quarter of 2019 decreased slightly, to approximately $1.8 million from $1.9 million in the first quarter of 2018.

For the three months ended March 31, 2019, total expenses were approximately $8.0 million, including approximately $3.4 million in expenses associated with the Externalization. Interest expense and amortization on debt issuance costs for the period were approximately $1.8 million, compared with $1.9 million for the same period 2018.
                                                                                                           
Net investment loss for the first quarter of 2019 was approximately $(2.2) million, or $(0.06) per basic share, versus net investment income of approximately $2.5 million, or $0.07 per basic share, during the first quarter of 2018. Net realized and unrealized depreciation on investments for the three months ended March 31, 2019 was approximately $8.7 million, as compared to net realized and unrealized appreciation of approximately $318,000 for the same period in 2018.

Portfolio and Investment Activity

The fair value of our portfolio was approximately $282 million as of March 31, 2019. The composition of our investment portfolio at March 31, 2019 and December 31, 2018 at cost and fair value was as follows:

    March 31, 2019 (unaudited)     December 31, 2018  
Security Type   Cost/Amortized
Cost
  Fair Value     Cost/Amortized
Cost
  Fair Value  
Short-term investments²   $ 44,120,648   $ 44,120,648   16     $ 44,756,478   $ 44,756,478   17  
Senior Secured Loan     75,534,527     73,489,758   26       86,040,921     77,616,209   28  
Junior Secured Loan     88,707,755     78,249,650   28       76,223,561     70,245,535   26  
Senior Unsecured Bond     456,974     456,974   -                
CLO Fund Securities     54,299,958     45,605,015   16       55,480,626     44,325,000   16  
Equity Securities     29,326,114     16,835,340   6       21,944,430     14,504,687   5  
Asset Manager Affiliates³     17,791,230             17,791,230     3,470,000   1  
Joint Venture     24,914,858     23,707,969   8       24,914,858     18,390,440   7  
Total   $ 335,152,064   $ 282,465,354   100  %   $ 327,152,104   $ 273,308,349   100  %
                                     
     
¹  Represents percentage of total portfolio at fair value.    
²  Includes money market accounts and U.S. treasury bills.    
³  Represents the equity investment in the Asset Manager Affiliates.    
     

Liquidity and Capital Resources

At March 31, 2019, we had unrestricted cash and money market balances of approximately $47.4 million, total assets of approximately $293 million and stockholders' equity of approximately $144 million. Our net asset value per common share was $3.85. As of March 31, 2019, we had approximately $121.3 million (par value) of borrowings outstanding ($117.9 million net of capitalized costs) with a weighted average interest rate of approximately 6.0%. Our asset coverage ratio stood at 216% as of March 31, 2019.

Subject to prevailing market conditions, we intend to grow our portfolio of assets by raising additional capital, including through the prudent use of leverage available to us. As a result, we may seek to enter into new agreements with other lenders or into other financing arrangements as market conditions permit. Such financing arrangements may include a new secured and/or unsecured credit facility or the issuance of unsecured debt or preferred stock.

Conference Call and Webcast

We will hold a conference call on Friday, May 10, 2019 at 9:00 am Eastern Time to discuss our first quarter 2019 financial results. Stockholders, prospective stockholders and analysts are welcome to listen to the call or attend the webcast.

To access the call please dial (866) 757-5630 approximately 10 minutes prior to the start of the conference call. No password is required. A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on our Company's website www.portmanridge.com in the Investor Relations section under Events. The online archive of the webcast will be available after 7pm Eastern Time for approximately 90 days.

A replay of this conference call will be available from 12:00 p.m. on May 10, 2019 until 11:59 p.m. on May 18, 2019. The dial in number for the replay is (855) 859-2056 and the conference ID is 2309217.

About Portman Ridge Finance Corporation

Portman Ridge Finance Corporation (PTMN) is a publicly traded, externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Portman Ridge Finance Corporation’s middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies.  PTMN’s investment activities are managed by its investment adviser, Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors, LP.

Portman Ridge Finance Corporation's filings with the Securities and Exchange Commission, earnings releases, press releases and other financial, operational and governance information are available on the Company's website at www.portmanridge.com.

The Portman Ridge Finance Corporation logo is available at https://ml.globenewswire.com/Resource/Download/39c70ff2-a155-44fc-872b-f68105f0d5ad?size=0

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The matters discussed in this press release, as well as in future oral and written statements by management of Portman Ridge Finance Corporation, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.

Forward-looking statements relate to future events or our future financial performance and include, but are not limited to, projected financial performance, expected development of the business, plans and expectations about future investments and the future liquidity of the Company. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," “outlook”, "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.

Important assumptions include our ability to originate new investments, and achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation that such plans, estimates, expectations or objectives will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) uncertainty of the expected financial performance of the Company; (2) failure to realize the anticipated benefits of the Externalization; (3) the ability of the Company and/or BC Partners to implement its business strategy; (4) the risk that stockholder litigation in connection with the Externalization may result in significant costs of defense, indemnification and liability; (5) evolving legal, regulatory and tax regimes; (6) changes in general economic and/or industry specific conditions; (7) the impact of increased competition; (8) business prospects and the prospects of the Company’s portfolio companies; (9) contractual arrangements with third parties; (10) any future financings by the Company; (11) the ability of the Advisor to attract and retain highly talented professionals; and (12) the Company’s ability to fund any unfunded commitments. Further information about factors that could affect our financial and other results is included in our filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

Contact
Ted Gilpin

Ted.Gilpin@bcpartners.com

(212) 891-5007

Portman Ridge Finance Corporation
650 Madison Avenue, 23rd floor
New York, NY 10022
info@portmanridge.com

Source: Portman Ridge Finance Corporation. News Provided by Acquire Media


 
PORTMAN RIDGE FINANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
             
    As of
March 31, 2019
  As of
December 31, 2018
      (unaudited)      
ASSETS            
Investments at fair value:            
Short-term investments (cost: 2019 - $44,120,648; 2018 - $44,756,478)   $ 44,120,648     $ 44,756,478  
Debt securities (amortized cost: 2019 - $164,699,256; 2018 - $162,264,482)     152,196,382       147,861,744  
CLO Fund Securities managed by affiliates (amortized cost: 2019 - $4,416,048; 2018 - $4,407,106)     4,400,213       4,473,840  
CLO Fund Securities managed by non-affiliates (amortized cost: 2019 - $49,883,910; 2018 - $51,073,520)     41,204,802       39,851,160  
Equity securities (cost: 2019 - $29,326,114; 2018 - $21,944,430)     16,835,340       14,504,687  
Asset Manager Affiliates (cost: 2019 - $17,791,230; 2018 - $17,791,230)           3,470,000  
Joint Venture (cost: 2019 - $24,914,858; 2018 - $24,914,858)     23,707,969       18,390,440  
Total Investments at Fair Value (cost: 2019 - $335,152,064; 2018 - $327,152,104)     282,465,354       273,308,349  
Cash     3,288,010       5,417,125  
Restricted cash     1,466,002       3,907,341  
Interest receivable     877,156       1,342,970  
Due from affiliates     928,098       1,007,631  
Operating lease right-of-use asset     3,181,469        
Other assets     570,370       481,265  
Total Assets   $ 292,776,459     $ 285,464,681  
             
LIABILITIES            
6.125% Notes Due 2022 (net of offering costs of: 2019-$2,071,220; 2018 - $2,207,342)   $ 75,335,980     $ 75,199,858  
Great Lakes KCAP Funding I, LLC Revolving Credit Facility (net of offering costs of: 2019-$1,327,960; 2018 - $1,155,754)     42,543,122       25,200,331  
Operating lease liability     3,553,359        
Payable for open trades     23,624,746       23,204,564  
Accounts payable and accrued expenses     3,898,900       3,591,910  
Accrued interest payable     134,324       131,182  
Due to affiliates           115,825  
             
Total Liabilities     149,090,431       127,443,670  
             
             
STOCKHOLDERS' EQUITY            
Common stock, par value $0.01 per share, 100,000,000 common shares authorized; 37,526,568 issued, and 37,331,709 outstanding at March 31, 2019, and 37,521,705 issued, and 37,326,846 outstanding at December 31, 2018     373,317       373,268  
Capital in excess of par value     307,099,763       306,784,387  
Total distributable (loss) earnings     (163,787,052 )     (149,136,644 )
             
Total Stockholders' Equity     143,686,028       158,021,011  
             
Total Liabilities and Stockholders' Equity   $ 292,776,459     $ 285,464,681  
             
NET ASSET VALUE PER COMMON SHARE   $ 3.85     $ 4.23  
             
 


 
PORTMAN RIDGE FINANCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
    Three Months Ended
  March 31,
    2019   2018
           
Investment Income:          
  Interest from investments in debt securities $ 2,936,796     $ 3,398,197  
  Payment-in-kind investment income   2,022       362,937  
  Interest from cash and time deposits   35,669       49,205  
  Investment income on CLO Fund Securities managed by affiliates   132,446       1,833,667  
  Investment income on CLO Fund Securities managed by non-affiliates   1,681,274       99,361  
  Dividends from Asset Manager Affiliates         320,000  
  Investment income - Joint Venture   950,000       700,000  
  Capital structuring service fees   61,203       63,110  
  Total investment income   5,799,410       6,826,477  
             
Expenses:          
  Interest and amortization of debt issuance costs   1,800,926       1,863,848  
  Compensation   3,688,578       1,207,337  
  Professional fees   1,668,122       714,410  
  Insurance   88,651       78,022  
  Administrative and other   748,320       502,118  
  Total expenses   7,994,597       4,365,735  
             
Net Investment (Loss) Income   (2,195,187 )     2,460,742  
Realized And Unrealized (Losses) Gains On Investments:          
  Net realized (losses) gains from investment transactions   (13,349,430 )     3,101  
  Net change in unrealized (depreciation) appreciation on:          
  Debt securities   1,899,864       (442,884 )
  Equity securities   (5,051,031 )     63,596  
  CLO Fund Securities managed by affiliates   (82,569 )     (220,819 )
  CLO Fund Securities managed by non-affiliates   2,543,252       349,355  
  Asset Manager Affiliates investments         314,000  
  Joint Venture Investment   5,317,529       251,376  
  Total net change in unrealized appreciation   4,627,045       314,624  
  Net realized and unrealized (depreciation) appreciation on investments   (8,722,385 )     317,725  
Realized losses on extinguishments of Debt         (169,074 )
Net (Decrease) Increase In Stockholders’ Equity Resulting From Operations $ (10,917,572 )   $ 2,609,393  
             
  Net (Decrease) Increase In Stockholders' Equity Resulting from Operations per Common Share:          
  Basic: $ (0.29 )   $ 0.07  
  Diluted: $ (0.29 )   $ 0.07  
  Net Investment (Loss) Income Per Common Share:          
  Basic: $ (0.06 )   $ 0.07  
  Diluted: $ (0.06 )   $ 0.07  
             
  Weighted Average Shares of Common Stock Outstanding—Basic   37,335,094       37,350,411  
  Weighted Average Shares of Common Stock Outstanding—Diluted   37,335,094       37,350,411