Logan Ridge Finance Corporation Reports Third Quarter 2022 Financial Results
Reports Net Investment Income of
Continues to Exit Legacy Equity Portfolio Positions and Redeploy Proceeds into Interest-Earning Investments
Third Quarter 2022 Milestones
- Reported positive Net Investment Income (NII) of
$0.2 million or$0.07 per share, an increase of$1.1 million compared to the preceding 2022 quarter. - Investment income increased
$0.4 million due to net deployment as well as increase in base rate. - Interest expense decreased
$0.6 million due to the refinancing of the entire debt capital structure over the last year. - Gross and net leverage increased to 1.1x and 1.0x, respectively, compared to 1.0x and 0.8x, respectively, as of the preceding 2022 quarter.
- Made first capital commitment to the Great Lakes Joint Venture. Management plans to increase its commitment to this investment vehicle as it continues to successfully exit legacy equity portfolio positions.
- Subsequent to quarter end, LRFC successfully exited equity investment in
Burke America Parts Group, LLC for cash proceeds of$2.7 million , further reducing the Company’s non-yielding equity portfolio.
Management Commentary
Selected Third Quarter 2022 Financial Information
- Total investment income was
$3.8 million for the third quarter of 2022 as compared to$3.4 million for the third quarter of 2021. - NII was
$0.2 million for the third quarter of 2022. This compares to a net investment loss of$1.5 million reported in the third quarter of 2021. - Total operating expenses for the third quarter of 2022 declined to
$3.6 million as compared to$4.9 million in the third quarter of 2021. - The investment portfolio as of
September 30, 2022 consisted of investments in 54 portfolio companies with a fair value of approximately$193.1 million . This compares to 33 portfolio companies with a fair value of approximately$195.4 million as ofSeptember 30, 2021 . - Deployment remained strong. During the third quarter, the Company made approximately
$36.7 million of investments and had approximately$17.1 million in repayment and sales, resulting in net deployment of approximately$19.6 million for the period. - Net asset value as of
September 30, 2022 was$98.2 million , or$36.21 per share, as compared to$107.1 million , or$39.48 per share, as ofDecember 31, 2021 . - Cash and cash equivalents as of
September 30, 2022 were$11.3 million as compared to$39.1 million as ofDecember 31, 2021 . - Debt investment portfolio as of
September 30, 2022 , which represented 79.4% of our total portfolio at fair value, had a weighted average annualized yield of approximately 8.9% (excluding non-accruals and collateralized loan obligations). As ofDecember 31, 2021 , our debt investment portfolio, which represented 67.4% of the fair value of our total portfolio, had a weighted average annualized yield of approximately 8.1% (excluding non-accruals and collateralized loan obligations). As ofSeptember 30, 2022 andDecember 31, 2021 , 23.7% and 22.8% of the fair value of our debt investment portfolio was bearing a fixed rate of interest, respectively. - Non-yielding equity portfolio reduced. As of
September 30, 2022 , the non-yielding equity portfolio had declined to 17.6% and 17.0% of the Company’s total investments on a cost and fair value basis, respectively. - No new non-accruals as of
September 30, 2022 . The Company had debt investments in two portfolio companies on non-accrual status with an aggregate amortized cost of$12.1 million and an aggregate fair value of$8.9 million , which represented 6.0% and 4.6% of the investment portfolio, respectively as ofSeptember 30, 2022 . As ofDecember 31, 2021 , we had debt investments in two portfolio companies on non-accrual status with aggregate amortized cost of$12.7 million and an aggregate fair value of$7.6 million , which represented 6.7% and 3.8% of the investment portfolio, respectively.
Results of Operations
Operating results for the three and nine months ended
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
$ in thousands | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Total investment income | $ | 3,748 | $ | 3,372 | $ | 10,389 | $ | 13,342 | ||||||||
Total expenses, net of incentive fee waiver | 3,566 | 4,882 | 12,186 | 15,601 | ||||||||||||
Net investment income (loss) | 182 | (1,510 | ) | (1,797 | ) | (2,259 | ) | |||||||||
Net realized (loss) gain on investments | (5,192 | ) | 7,425 | 10,274 | 349 | |||||||||||
Net change in unrealized appreciation (depreciation) on investments | 2,049 | (9,401 | ) | (17,330 | ) | 4,039 | ||||||||||
Net realized loss on extinguishment of debt | — | — | — | (815 | ) | |||||||||||
Net (decrease) increase in net assets resulting from operations | $ | (2,961 | ) | $ | (3,486 | ) | $ | (8,853 | ) | $ | 1,314 |
Investment Income
The composition of investment income for the three and nine months ended
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
$ in thousands | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Interest income | $ | 3,373 | $ | 3,248 | $ | 9,566 | $ | 11,969 | ||||||||
Payment-in-kind interest | 297 | 100 | 737 | 393 | ||||||||||||
Dividend income | — | 24 | — | 739 | ||||||||||||
Other income | 78 | — | 86 | 241 | ||||||||||||
Total investment income | $ | 3,748 | $ | 3,372 | $ | 10,389 | $ | 13,342 |
Fair Value of Investments
The following table summarizes the amortized cost and the fair value of investments as of
($ in thousands) | Investments at Amortized Cost |
Amortized Cost Percentage of Total Portfolio |
Investments at Fair Value |
Fair Value Percentage of Total Portfolio |
||||||||||||
First Lien Debt | $ | 124,030 | 61.2 | % | $ | 119,426 | 61.9 | % | ||||||||
Second Lien Debt | 9,020 | 4.4 | % | 7,773 | 4.0 | % | ||||||||||
Subordinated Debt | 26,501 | 13.1 | % | 26,096 | 13.5 | % | ||||||||||
Collateralized Loan Obligations | 7,267 | 3.6 | % | 6,664 | 3.5 | % | ||||||||||
Joint Venture | 277 | 0.1 | % | 270 | 0.1 | % | ||||||||||
Equity and Warrants | 35,648 | 17.6 | % | 32,891 | 17.0 | % | ||||||||||
Total | $ | 202,743 | 100.0 | % | $ | 193,120 | 100.0 | % |
The following table summarizes the amortized cost and the fair value of investments as of
($ in thousands) | Investments at Amortized Cost |
Amortized Cost Percentage of Total Portfolio |
Investments at Fair Value |
Fair Value Percentage of Total Portfolio |
||||||||||||
First Lien Debt | $ | 103,667 | 54.4 | % | $ | 98,251 | 49.6 | % | ||||||||
Second Lien Debt | 30,048 | 15.8 | % | 30,190 | 15.2 | % | ||||||||||
Subordinated Debt | 5,050 | 2.6 | % | 5,050 | 2.6 | % | ||||||||||
Equity and Warrants | 51,717 | 27.2 | % | 64,698 | 32.6 | % | ||||||||||
Total | $ | 190,482 | 100.0 | % | $ | 198,189 | 100.0 | % |
Interest Rate Risk
Based on our
Basis Point Change | Increase (decrease) in interest income |
(Increase) decrease in interest expense |
Increase (decrease) in net income |
|||||||||||||
Up 300 basis points | $ | 3,952 | $ | (1,392 | ) | $ | 2,560 | |||||||||
Up 200 basis points | 2,635 | (928 | ) | 1,707 | ||||||||||||
Up 100 basis points | 1,317 | (464 | ) | 853 | ||||||||||||
Down 100 basis points | (1,317 | ) | 464 | (853 | ) | |||||||||||
Down 200 basis points | (2,520 | ) | 928 | (1,592 | ) | |||||||||||
Down 300 basis points | (3,174 | ) | 1,226 | (1,948 | ) |
Conference Call and Webcast
LRFC will discuss these results in a conference call on
To access the call, please dial (646) 307-1963 approximately 10 minutes prior to the start of the conference call and use the conference ID 2780266.
A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on the Company’s website, loganridgefinance.com, in the Investor Relations section, under Events and Presentations. The webcast can also be accessed by clicking the following link:
About
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.
About
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
Any forward-looking statements speak only as of the date of this communication. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
For additional information, contact:
Chief Financial Officer
Jason.Roos@bcpartners.com
(212) 891-5046
lcati@equityny.com
(212) 836-9611
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
As of |
As of |
|||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Investments at fair value: | ||||||||
Non-control/non-affiliate investments (amortized cost of |
$ | 166,404 | $ | 129,991 | ||||
Affiliate investments (amortized cost of |
26,716 | 61,359 | ||||||
Control investments (amortized cost of |
— | 6,839 | ||||||
Total investments at fair value (amortized cost of |
193,120 | 198,189 | ||||||
Cash and cash equivalents | 11,263 | 39,056 | ||||||
Interest and dividend receivable | 1,162 | 929 | ||||||
Prepaid expenses | 2,908 | 3,358 | ||||||
Receivable for unsettled trades | — | 685 | ||||||
Other assets | 30 | — | ||||||
Total assets | $ | 208,483 | $ | 242,217 | ||||
LIABILITIES | ||||||||
2022 Notes (net of deferred financing costs of zero and |
$ | — | $ | 22,787 | ||||
2022 Convertible Notes (net of deferred financing costs of zero and |
— | 51,921 | ||||||
2026 Notes (net of deferred financing costs and original issue discount of |
48,491 | 48,448 | ||||||
2032 Convertible Notes (net of deferred financing costs and original issue discount of |
13,854 | — | ||||||
KeyBank Credit Facility (net of deferred financing costs of |
44,385 | (353 | ) | |||||
Management and incentive fees payable | 927 | 1,065 | ||||||
Interest and financing fees payable | 1,289 | 911 | ||||||
Payable for unsettled trades | 381 | 9,265 | ||||||
Accounts payable and accrued expenses | 980 | 1,144 | ||||||
Total liabilities | $ | 110,307 | $ | 135,188 | ||||
Commitments and contingencies | ||||||||
NET ASSETS | ||||||||
Common stock, par value |
$ | 27 | $ | 27 | ||||
Additional paid in capital | 188,846 | 188,846 | ||||||
Total distributable loss | (90,697 | ) | (81,844 | ) | ||||
Total net assets | $ | 98,176 | $ | 107,029 | ||||
Total liabilities and net assets | $ | 208,483 | $ | 242,217 | ||||
Net asset value per share | $ | 36.21 | $ | 39.48 |
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
INVESTMENT INCOME | ||||||||||||||||
Interest income: | ||||||||||||||||
Non-control/non-affiliate investments | $ | 3,162 | $ | 2,079 | $ | 8,817 | $ | 8,177 | ||||||||
Affiliate investments | 176 | 1,072 | 521 | 3,499 | ||||||||||||
Control investments | 35 | 97 | 228 | 293 | ||||||||||||
Total interest and fee income | 3,373 | 3,248 | 9,566 | 11,969 | ||||||||||||
Payment-in-kind interest and dividend income: | ||||||||||||||||
Non-control/non-affiliate investments | 250 | — | 597 | 95 | ||||||||||||
Affiliate investments | 47 | 100 | 140 | 298 | ||||||||||||
Total payment-in-kind interest and dividend income | 297 | 100 | 737 | 393 | ||||||||||||
Dividend income: | ||||||||||||||||
Non-control/non-affiliate investments | — | — | — | 560 | ||||||||||||
Affiliate investments | — | 24 | — | 179 | ||||||||||||
Total dividend income | — | 24 | — | 739 | ||||||||||||
Other income: | ||||||||||||||||
Non-control/non-affiliate investments | 78 | — | 86 | 174 | ||||||||||||
Affiliate investments | — | — | — | 67 | ||||||||||||
Total other income | 78 | — | 86 | 241 | ||||||||||||
Total investment income | 3,748 | 3,372 | 10,389 | 13,342 | ||||||||||||
EXPENSES | ||||||||||||||||
Interest and financing expenses | 1,558 | 2,296 | 5,877 | 8,061 | ||||||||||||
Base management fee | 927 | 1,111 | 2,928 | 3,781 | ||||||||||||
Directors expense | 135 | 103 | 358 | 309 | ||||||||||||
Administrative service fees | 175 | 200 | 426 | 900 | ||||||||||||
General and administrative expenses | 771 | 1,172 | 2,597 | 2,550 | ||||||||||||
Total expenses | 3,566 | 4,882 | 12,186 | 15,601 | ||||||||||||
NET INVESTMENT INCOME (LOSS) | 182 | (1,510 | ) | (1,797 | ) | (2,259 | ) | |||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||||||
Net realized (loss) gain on investments: | ||||||||||||||||
Non-control/non-affiliate investments | 23 | 7,425 | 15,489 | (1,866 | ) | |||||||||||
Affiliate investments | — | — | — | 2,215 | ||||||||||||
Control investments | (5,215 | ) | — | (5,215 | ) | — | ||||||||||
Net realized (loss) gain on investments | (5,192 | ) | 7,425 | 10,274 | 349 | |||||||||||
Net change in unrealized appreciation (depreciation) on investments: | ||||||||||||||||
Non-control/non-affiliate investments | 652 | (6,169 | ) | (16,993 | ) | 4,269 | ||||||||||
Affiliate investments | (3,825 | ) | (2,842 | ) | (2,348 | ) | 1,190 | |||||||||
Control investments | 5,222 | (390 | ) | 2,011 | (1,420 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on investments | 2,049 | (9,401 | ) | (17,330 | ) | 4,039 | ||||||||||
Total net realized and change in unrealized (loss) gain on investments | (3,143 | ) | (1,976 | ) | (7,056 | ) | 4,388 | |||||||||
Net realized loss on extinguishment of debt | — | — | — | (815 | ) | |||||||||||
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (2,961 | ) | $ | (3,486 | ) | $ | (8,853 | ) | $ | 1,314 | |||||
NET (DECREASE) INCREASE IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC & DILUTED | $ | (1.09 | ) | $ | (1.29 | ) | $ | (3.27 | ) | $ | 0.48 | |||||
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC & DILUTED | 2,711,068 | 2,711,068 | 2,711,068 | 2,711,068 | ||||||||||||
DISTRIBUTIONS PAID PER SHARE | $ | — | $ | — | $ | — | $ | — |

Source: Logan Ridge Finance Corporation