Logan Ridge Finance Corporation Announces Fourth Quarter and Full Year 2021 Financial Results
Fourth Quarter and Full Year 2021 Highlights
- During the year ended
December 31, 2021, we have successfully de-levered the Company from 1.98x as of December 31, 2020to 1.17x as of December 31, 2021. As of September 30, 2021our debt-to-equity ratio was 1.13x.
- As of
December 31, 2021, 34% of the Company’s investment portfolio at fair value was invested in assets originated by Mount Logan Management, part of the BC Partners Credit Platform, with an additional $39.1 millionof cash available for deployment in investments originated by the BC Partners Credit Platform.
- During the fourth quarter, we successfully monetized a further
$36.3 millionof the legacy portfolio we inherited from the former investment advisor on July 1, 2021, which represents approximately 16% of the portfolio at fair value as of July 1, 2021. Since Mount Logan Management became the Company’s investment advisor, we have successfully monetized $99.5 millionof the legacy portfolio we inherited from former investment advisor through December 31, 2021, which represents approximately 44% of the portfolio at fair value as of July 1, 2021.
- During the fourth quarter, we successfully exited a non-accrual investment for proceeds of
$0.6 million. This position was valued at zero as of September 30, 2021.
- As of
December 31, 2021, the Company’s investment portfolio consisted of investments in 40 portfolio companies with an aggregate fair value of approximately $198.2 million. The debt investment portfolio, which represented 67.4% of the fair value of the total portfolio as of December 31, 2021, had a weighted average annualized yield of approximately 9.3%.
- During the fourth quarter, the Company made approximately
$46.2 millionof investments and had approximately $42.1 millionin repayments and sales of investments, resulting in net deployment of approximately $4.1 million. Since Mount Logan Management assumed the role as the Company’s investment advisor on July 1, 2021, we have deployed $79.5 millionin interest earning investments December 31, 2021, and had sales and repayments of $106.2 million.
- During the fourth quarter, the Company exited equity investments in three portfolio companies generating
$2.0 millionin proceeds that can be redeployed into interest earning investments. Since Mount Logan Management assumed the role of the Company’s investment advisor on July 1, 2021, we have successfully exited equity investments in six portfolio companies, generating $13.4 millionof proceeds through December 31, 2021, which can be redeployed into interest earning investments.
- As previously announced, following the receipt of an investment grade credit rating of “BBB-’’, Logan Ridge completed:
- the issuance of
$50 millionin aggregate principal amount of 5.25% Senior Unsecured Notes due 2026 in a private placement transaction on October 29, 2021.
- the redemption of
$50 million6.0% fixed-rate notes due 2022 on December 6, 2021. Following this redemption, $22.8 millionaggregate principal amount of the 6.0% fixed-rate notes due 2022 remains outstanding.
- the issuance of
Selected Financial Highlights
- Total investment income for the quarter ended
December 31, 2021was $3.4 million, which represents an increase of less than $0.1 million, or approximately 1.2%, compared to total investment income for the prior quarter ended September 30, 2021of $3.4 million.
- Total investment income for the year ended
December 31, 2021decreased by $9.7 million, or 36.6%, compared to the prior year, mainly due to lower average outstanding debt investments resulting in a decrease in interest income to $14.8 millionduring the year ended December 31, 2021, from $23.7 millionduring the prior year.
- Total operating expenses for the quarter ended
December 31, 2021decreased to $4.7 million, compared to $4.9 millionfor the prior quarter ended September 30, 2021. Interest and financing expenses increased by $0.2 millionto $2.5 millionfor the quarter ended December 31, 2021primarily due to a $0.3 millionone-time expense associated with refinancing the 6.00% fixed rate notes. The increase in interest and financing expenses was offset by declines in administrative service fees and general and administrative expenses.
- Total operating expenses for the year ended
December 31, 2021decreased to $20.3 million, compared to $26.4 milliona year ago. Interest and financing expenses declined by $4.6 millionto $10.6 millionfor the year ended December 31, 2021primarily due to lower average debt outstanding. Base management fee declined 25% to $4.8 millionfor the year ended December 31, 2021due to lower average assets under management.
- During the quarter ended
December 31, 2021, the Company recognized $8.3 millionof net realized losses on its portfolio investments, as compared to net realized gains of $7.4 millionduring the quarter ended September 30, 2021, primarily driven by the exit of a non-accrual investment during the fourth quarter of 2021 that was previously valued at zero as of September 30, 2021. Additionally, during the quarter ended December 31, 2021, the Company recognized $0.2 millionof extinguishment losses on the retirement of the 6.00% fixed rate notes.
- During the years ended
December 31, 2021and 2020, the Company recognized $8.0 millionand $24.0 millionof net realized losses on its portfolio investments, respectively. The change in realized losses was primarily due to changes in the market conditions of our investments and the values at which they were realized, caused by fluctuations in the market and in the economy.
- Total borrowings outstanding as of
December 31, 2021were $124.9 million. This balance was comprised of $50.0 millionof 5.25% fixed-rate notes due 2026, $22.8 millionof 6.0% fixed-rate notes due 2022 and $52.1 millionof 5.75% fixed-rate convertible notes due 2022. In addition, as of December 31, 2021, we did not have any outstanding borrowings under the KeyBank Credit Facility. The KeyBank Credit Facility provides for borrowings of up to $25.0 millionon a revolving basis and may be increased up to $100.0 million.
- As of
December 31, 2021, we had debt investments in two portfolio companies that remain on non-accrual status with an aggregate amortized cost of $12.7 millionand an aggregate fair value of $7.6 million, which represented 6.7% and 3.8% of the investment portfolio, respectively. As of September 30, 2021, the Company had debt investments in three portfolio companies on non-accrual status with an aggregate amortized cost of $21.3 millionand an aggregate fair value of $9.2 million, which represented 11.0% and 4.7% of the Company’s investment portfolio, respectively.
The composition of our investments as of
|First Lien Debt||$||103,667||54.4||%||$||98,251||49.6||%|
|Second Lien Debt||30,048||15.8||%||30,190||15.2||%|
|Equity and Warrants||51,717||27.2||%||64,698||32.6||%|
|First Lien Debt||$||185,107||66.7||%||$||167,418||60.9||%|
|Second Lien Debt||39,026||14.1||%||39,209||14.3||%|
|Equity and Warrants||53,519||19.3||%||68,065||24.8||%|
Interest Rate Risk
Based on our
|Basis Point Change||Increase
|Up 300 basis points||$||1,755||$||—||$||1,755|
|Up 200 basis points||909||—||909|
|Up 100 basis points||269||—||269|
|Down 100 basis points||—||—||—|
|Down 200 basis points||—||—||—|
|Down 300 basis points||$||—||$||—||$||—|
Conference Call and Webcast
We will hold a conference call on
To access the conference call, please dial (844) 616-4517 approximately 10 minutes prior to the start of the call. A replay of the conference call will be available from
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.loganridge.com in the Investor Resources section under Events and Presentations. The webcast can also be accessed by clicking the following link: Logan Ridge Fourth Quarter and Full Year 2021 Conference Call. The online archive of the webcast will be available on the Company’s website shortly after the call.
About Mount Logan Capital Inc.
Mount Logan Capital Inc. is an alternative asset management company that is focused on public and private debt securities in the North American market. The Company seeks to source and actively manage loans and other debt-like securities with credit-oriented characteristics. The Company actively sources, evaluates, underwrites, manages, monitors, and primarily invests in loans, debt securities, and other credit-oriented instruments that present attractive risk-adjusted returns and present low risk of principal impairment through the credit cycle.
BC Partners Credit was launched in
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking” statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. 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. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include those risk factors detailed in the Company’s reports filed with the
For additional information, contact:
Chief Financial Officer
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
|Investments at fair value:|
|Non-control/non-affiliate investments (amortized cost of
|Affiliate investments (amortized cost of
|Control investments (amortized cost of
|Total investments at fair value (amortized cost of
|Cash and cash equivalents||39,056||49,942|
|Interest and dividend receivable||929||2,286|
|Receivable for unsettled trades||685||—|
|SBA-guaranteed debentures (net of deferred financing costs of zero and
|2022 Notes (net of deferred financing costs of
|2022 Convertible Notes (net of deferred financing costs of
|2026 Notes (net of deferred financing costs and original issue discount of
|KeyBank Credit Facility (net of deferred financing costs of
|Management and incentive fees payable||1,065||3,842|
|Interest and financing fees payable||911||1,688|
|Trade settlement payable||9,265||—|
|Accounts payable and accrued expenses||1,144||28|
|Commitments and contingencies|
|Common stock, par value
|Additional paid in capital||188,846||229,481|
|Total distributable loss||(81,844||)||(120,561||)|
|Total net assets||$||107,029||$||108,947|
|Total liabilities and net assets||$||242,217||$||327,997|
|Net asset value per share||$||39.48||$||40.19|
Consolidated Statements of Operations
(in thousands, except share and per share data)
|For the Years Ended
|Total interest and fee income||14,821||23,668||36,106|
|Payment-in-kind interest and dividend income:|
|Total payment-in-kind interest and dividend income||456||1,923||2,962|
|Total dividend income||906||25||3,299|
|Total other income||567||779||1,470|
|Interest income from cash and cash equivalents||4||51||198|
|Total investment income||16,754||26,446||44,035|
|Interest and financing expenses||10,569||15,144||17,121|
|Base management fee||4,846||6,428||7,967|
|Administrative service fees||1,039||1,400||1,400|
|General and administrative expenses||3,483||3,091||2,915|
|Expenses before incentive fee waiver||20,347||26,388||31,280|
|Incentive fee waiver||—||—||(288||)|
|NET INVESTMENT (LOSS) INCOME||(3,593||)||58||13,043|
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS|
|Net realized loss on investments:|
|Net realized loss on investments||(7,967||)||(24,049||)||(19,756||)|
|Net change in unrealized appreciation (depreciation) on investments:|
|Net change in unrealized appreciation (depreciation) on investments||10,667||(11,611||)||(20,306||)|
|Total net realized and unrealized gain (loss) on investments||2,700||(35,660||)||(40,062||)|
|Total net realized and unrealized gain (loss) on investments, net of taxes||2,700||(35,660||)||(40,690||)|
|Net realized (loss) gain on extinguishment of debt||(1,025||)||155||—|
|OPERATIONS – BASIC AND DILUTED|
|WEIGHTED AVERAGE COMMON STOCK OUTSTANDING –||2,711,068||2,709,169||2,686,287|
|BASIC AND DILUTED|
|DISTRIBUTIONS PAID PER SHARE||$||—||$||1.50||$||6.00|
Source: Logan Ridge Finance Corporation