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CM Finance Inc Reports Results for its Fiscal Fourth Quarter ended June 30, 2018

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NEW YORK, Sept. 04, 2018 (GLOBE NEWSWIRE) -- CM Finance Inc (NASDAQ:CMFN) ("CMFN" or "the Company") announced its financial results for its fiscal fourth quarter ended June 30, 2018.

HIGHLIGHTS

  • The weighted average yield on debt investments, at cost, increased to 11.19%, an increase of 7 basis points compared to 11.12% as of March 31, 2018
  • CMFN made five new investments in four portfolio companies during the quarter with a total cost of $37.9mm.  The weighted average yield of debt investments made in the quarter was 9.65% 
  • Six investments were realized during the quarter, five fully realized and one partially realized, with a weighted average IRR of 19.95%
  • Net asset value ("NAV") per share increased by 0.2% to $12.57, compared to $12.55 as of March 31, 2018
Portfolio results, as of June 30, 2018:    
Total assets   $314.5mm
Investment portfolio, at fair value   $293.6mm
Net assets   $171.5mm
Weighted average yield on debt investments, at cost   11.19%
Net asset value per share   $12.57
Portfolio activity in the current quarter:    
Number of new investments   5
Total capital invested   $37.9mm
Proceeds from repayments, sales, and amortization   $46.9mm 
Number of portfolio companies, end of period   25
Net investment income (NII)   $8.5mm
Net investment income per share   $0.62
Net increase in net assets from operations   $3.5mm
Net increase in net assets from operations per share   $0.26
Quarterly per share distribution paid on October 5, 2018   $0.25

Mr. Michael C. Mauer, the Company's Chief Executive Officer, said, "The market continues to present good  opportunities, mostly on the first lien side in the current environment.  We saw some great realizations of previously stressed situations during the fourth quarter and were able to redeploy the proceeds into strong risk return investments during the first quarter."

On August 23, 2018, the Company's Board of Directors declared a distribution for the quarter ending September 30, 2018 of $0.25 per share, payable on October 5, 2018, to shareholders of record as of September 18, 2018. This represents a 10.93% yield on the Company's $9.15 share price as of the close on August 31, 2018.  Distributions may include net investment income, capital gains and/or return of capital; however, the Company does not expect the distribution to be comprised of a return of capital.The tax status of distributions will be determined at the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made five new investments in four portfolio companies.  These five investments totaled $37.9.mm at cost and were made at a weighted average yield of 9.65%.  The Company also realized $46.9mm of repayments, sales, and amortization, primarily related to the sales of PR Wireless, Inc., U.S. Well Services, LLC Classes A and B and Dayton Superior Corporation, and the repayments of Bird Electric Enterprises, LLC and CareerBuilder, LLC. Realized and unrealized gains accounted for a decrease in the Company's net investments of approximately $5.0mm, or $0.37 per share.  The total net increase in net assets resulting from operations for the quarter was $4.2mm, or $0.26 per share. 

As of June 30 2018, the Company's investment portfolio consisted of investments in 25 portfolio companies, of which 52.1% were first lien investments, 43.3% were second lien investments, 0.2% were in unsecured debt investments, 4.2% were unitranche loans, and 0.2% were in equities, warrants and other positions.  The Company's debt portfolio consisted of 95.8% floating rate investments and 4.2% fixed rate investments.  As of June 30, 2018, the Company had no investments on non-accrual status.

Capital Resources

As of June 30, 2018, the Company had $5.6mm in cash, $2.7mm in restricted cash and $32.2mm of capacity under its revolving credit facility with UBS AG, London Branch.

Share Repurchases

During the quarter, the Company repurchased 42,627 shares of common stock on the open market for $390,178 (including commissions).

Subsequent Events

On July 2, 2018, we closed the public offering of $30 million in aggregate principal amount of 6.125% notes due 2023 (the "Notes"). On July 12, 2018, the underwriters exercised their over-allotment option to purchase an additional $4.5 million in aggregate principal amount of the Notes. The total net proceeds to us from the Notes, including the exercise of the underwriters' over-allotment option, after deducting underwriting discounts and commissions of approximately $1.0 million and estimated offering expenses of approximately $230,000, were approximately $33.2 million. 

Subsequent to quarter end, the Company made investments in 5 new portfolio companyies with a total cost of $34.1mm, and received $13.3mm in repayments and sale proceeds.

           
           
CM Finance Inc and Subsidiaries          
Consolidated Statements of Assets and Liabilities          
           
               
        June 30, 2018     June 30, 2017
Assets            
Non-controlled, non-affiliated investments, at fair value (amortized cost of $   293,592,013     $   254,907,171  
  $302,647,282 and $ 270,467,740, respectively)          
Derivatives, at fair value (cost of $0 and $0, respectively)     229,918         5,830,501  
Cash         5,620,441         10,646,697  
Cash, restricted       2,706,273         22,616,177  
Receivable for investments sold     7,751,875         -   
Interest receivable       4,011,450         1,627,774  
Deferred offering costs       121,922         186,513  
Other receivables       245,550         -   
Prepaid expenses and other assets     255,139         219,045  
  Total Assets   $   314,534,581     $   296,033,878  
               
Liabilities            
Notes payable:            
  Term loan   $   102,000,000     $   102,000,000  
  Revolving credit facility     17,823,000         -   
  Deferred debt issuance costs     (1,953,771 )       (578,074 )
  Notes payable, net       117,869,229         101,421,926  
Payable for investments purchased     12,569,450         12,490,000  
Dividend payable       3,417,848         3,422,307  
Deferred financing costs payable     2,071,167         620,500  
Income-based incentive fees payable     2,294,678         274,073  
Base management fees payable     1,319,853         1,132,391  
Accrued provision for taxes       2,579,337         -   
Derivatives, at fair value (cost $0 and $0, respectively)     229,918         5,830,501  
Interest payable       303,153         205,027  
Directors' fees payable       99,296         100,000  
Allocation of administrative cost from advisor payable     -          85,000  
Accrued expenses and other liabilities     257,986         504,041  
  Total Liabilities       143,011,915         126,085,766  
               
Commitments and Contingencies (Note 6)          
               
Net Assets            
Common stock, par value $0.001 per share (100,000,000 shares authorized,          
  13,649,504 and 13,689,221 shares issued and outstanding, respectively)     13,649         13,689  
Additional paid-in capital       198,700,999         199,066,123  
Accumulated net realized loss     (21,087,280 )       (11,231,827 )
Undistributed (distributions in excess of) net investment income     2,950,567         (2,339,304 )
Net unrealized depreciation on investments     (9,055,269 )       (15,560,569 )
  Total Net Assets       171,522,666         169,948,112  
  Total Liabilities and Net Assets $   314,534,581     $   296,033,878  
Net Asset Value Per Share   $   12.57     $   12.41  

 

                                   
                                   
                                   
CM Finance Inc and Subsidiaries                                  
Consolidated Statements of Operations                                  
                                   
                                     
    For the three months ended June 30,   For the twelve months ended June 30,
    2018     2017     2016     2018     2017     2016  
Investment Income:                                  
Interest income $   7,829,506     $   6,920,498     $   7,493,388     $   28,691,187     $   29,476,315     $   33,683,108  
Payment in-kind interest income     272,386         237,065         -          2,609,037         423,632         960,603  
Dividend income     8,750,239         -          -          9,005,887         -          -   
Payment in-kind dividend income     -          -          -          333,333         -          -   
Other fee income     90,060         36,476         321,395         152,308         1,112,250         936,211  
  Total investment income     16,942,191         7,194,039         7,814,783         40,791,752         31,012,197         35,579,922  
                                     
Expenses:                                  
Interest expense     1,703,395         1,321,181         1,012,620         6,310,842         4,748,449         4,048,527  
Base management fees      1,319,853         1,132,392         1,257,768         4,871,706         4,652,064         5,511,532  
Income-based incentive fees     2,092,596         18,511         -          3,932,710         1,289,927         1,229,031  
Provision for tax expense     2,579,337         -          -          2,579,337         -          -   
Professional fees     315,091         114,462         356,769         1,063,528         806,810         1,039,802  
Allocation of administrative costs from advisor     594,045         433,959         60,000         1,198,397         987,286         785,846  
Amortization of deferred debt issuance costs     195,377         102,013         364,195         695,470         932,417         1,441,044  
Insurance expense     80,643         90,923         91,916         351,923         345,697         367,327  
Directors' fees     104,573         201,235         97,672         402,240         501,233         425,922  
Custodian and administrator fees     46,844         130,578         111,858         295,032         480,269         442,598  
Offering expense     -          -          -          186,513         -          -   
Other expenses     (101,244 )       215,127         61,067         455,645         818,532         434,337  
  Total expenses     8,930,510         3,760,381         3,413,865         22,343,343         15,562,684         15,725,966  
Waiver of income-based incentive fees     (527,224 )       -          -          (527,224 )       (249,071 )       -   
  Net expenses     8,403,286         3,760,381         3,413,865         21,816,119         15,313,613         15,725,966  
  Net investment income     8,538,905         3,433,658         4,400,918         18,975,633         15,698,584         19,853,956  
                                     
Net realized and unrealized gain/(loss) on investments:                                  
Net realized gain (loss) from investments     (2,236,687 )       (2,708,549 )       1         (9,855,453 )       (11,809,335 )       283,276  
Net change in unrealized appreciation (depreciatio) in value of investments     (2,762,636 )       4,007,279         (411,534 )       6,505,300         19,690,216         (29,482,002 )
  Total realized and unrealized gain (loss) on investments     (4,999,323 )       1,298,730         (411,533 )       (3,350,153 )       7,880,881         (29,198,726 )
                                     
Net increase (decrease) in net assets resulting from operations                                  
$   3,539,582     $   4,732,388     $   3,989,385     $   15,625,480     $   23,579,465     $   (9,344,770 )
                                     
Basic and diluted:                                  
  Net investment income per share $   0.62     $   0.25     $   0.32     $   1.39     $   1.15     $   1.45  
  Earnings (loss) per share $   0.26     $   0.35     $   0.29     $   1.14     $   1.72     $   (0.68 )
  Weighted average shares of common stock outstanding     13,687,517         13,689,170         13,679,532         13,689,823         13,686,288         13,674,197  
                                     

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

Contacts
CM Finance Inc
Investor Relations
Email: investorrelations@cmipllc.com
Phone: 212-257-5199

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