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Investcorp Credit Management BDC, Inc. Reports Results for its Fiscal Third Quarter Ended March 31, 2020

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NEW YORK, May 11, 2020 /PRNewswire/ -- Investcorp Credit Management BDC, Inc. (NASDAQ:ICMB) ("ICMB" or the "Company") announced its financial results today for its fiscal third quarter ended March 31, 2020.

HIGHLIGHTS

  • ICMB made eight investments in six portfolio companies. The Company invested $36.9mm during the quarter. The weighted average yield of debt investments made in the quarter was 9.11%.
  • Investments in ACProducts, Inc., Montreign Operating Company, LLC., and TouchTunes Interactive Networks, Inc., were fully realized during the quarter.
  • The weighted average yield on debt investments, at cost, decreased 22 basis points to 10.19%, compared to 10.41% as of December 31, 2019. The change in LIBOR during the quarter accounted for a negative 64 basis point effect on the yield of the Company's debt portfolio.
  • Net asset value ("NAV") decreased $2.00 per share (or 19.70%) to $8.15, compared to $10.15 as of December 31, 2019.


Portfolio results, as of March 31, 2020:


Total assets

$313.7mm

Investment portfolio, at fair value

$274.9mm

Net assets

$113.1mm

Weighted average yield on debt investments, at cost

10.19%

Net asset value per share

$8.15

Portfolio activity in the current quarter:


Number of new investments

8

Total capital invested          

$36.9mm

Proceeds from repayments, sales, and amortization

$41.2mm

Number of portfolio companies, end of period

38

Net investment income (NII)

$3.4mm

Net investment income per share

$0.25

Net increase in net assets from operations

$(24.2)mm

Net increase in net assets from operations per share

($1.76)

Quarterly per share distribution paid on April 2, 2020

$0.25

Mr. Michael C. Mauer, the Company's Chief Executive Officer, said, "This year has presented us with an environment we could not have anticipated. That said, we had been positioning our portfolio for a cycle and disruption. With 90% of the portfolio in first lien, we have been positioned conservatively and defensively. Our portfolio companies continue to perform relatively well. Even with that, our portfolio has been exposed to the same economic effects of the global pandemic as everyone else.  We continue to be focused on stabilizing the portfolio and positioning for a rebound as we emerge from this. Our primary focus is the preservation of our shareholders' capital and the longer-term performance of the company."

Our dividend framework provides a quarterly base dividend and is supplemented (when applicable) by additional dividends determined by the level of overearnings on a net investment income basis relative to the base dividend level.

On May 7, 2020, the Company's Board of Directors (the "Board") declared a distribution for the quarter ending June 30, 2020 of $0.15 per share, payable on July 10, 2020, to stockholders of record as of June 19, 2020, in addition to a supplemental distribution of $0.03 per share, payable of July 10, 2020, to stockholders of record as of June 19, 2020. 

These distributions represent a 21.18% yield on the Company's $3.40 share price as of market close on May 8, 2020.  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 investments in six portfolio companies, of which four were new portfolio companies, and two were existing portfolio companies. The aggregate capital invested during the quarter totaled $36.9mm at cost, and investments were made at a weighted average yield of 9.11%.

The Company realized $41.2mm of repayments, sales, and amortization, including the repayments of ACProducts, Inc, CareerBuilder, LLC, Fusion Connect, Inc. – Superpriority Secured DIP, Montreign Operating Co LLC and Touchtunes Interactive Networks, Inc., as well as the sale of a portion of the Company's position in Specialty Building Products Holdings LLC.

The Company's realized and unrealized gains and losses accounted for a decrease in the Company's net investments of $27.7mm, or $2.01 per share.  The total net decrease in net assets resulting from operations for the quarter was $24.2.mm or $1.76 per share. 

As of March 31, 2020, the Company's investment portfolio consisted of investments in 38 portfolio companies, of which 84.3% were first lien investments, 11.3% were second lien investments, and 3.7% were unitranche loans. The Company's debt portfolio consisted of 98.1% floating rate investments and 1.9% fixed rate investments.

During the three months ended March 31, 2020, the Company's portfolio was negatively affected by the economic uncertainty caused by the novel coronavirus ("COVID-19") pandemic. The Company has closely monitored its portfolio companies throughout this period, including assessing portfolio companies' operational and liquidity exposure and outlook.

Capital Resources

As of March 31, 2020, the Company had $11.0mm in cash, $21.1mm in restricted cash and $18.3mm of capacity under its revolving credit facility with UBS AG, London Branch.

Subsequent Events

Subsequent to March 31, 2020 and through May 8, 2020, the Company invested $2.0mm in existing portfolio companies and received no repayments. As of May 8, 2020, the Company had 38 portfolio companies. 

On May 7, 2020, the Board declared a distribution for the quarter ended June 30, 2020 of $0.15 per share payable on July 10, 2020 to stockholders of record as of June 19, 2020. In addition, the Board declared a supplemental distribution for the quarter ending June 30, 2020 of $0.03 per share, payable on July 10, 2020, to stockholders of record as of June 19, 2020.

In March 2020, the World Health Organization declared COVID-19 as a pandemic.  Shortly thereafter, the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The COVID-19 outbreak has become increasingly widespread in the United States, including in the markets in which the Company operates. The Company has been and continues to assess the effects of COVID-19 on its portfolio companies and is taking steps to help mitigate the adverse consequences to each of its portfolio companies stemming from the COVID-19 pandemic.  Although the magnitude of the impact remains to be seen, the Company's portfolio companies and by extension its operating results will be adversely impacted by the COVID-19 pandemic. Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase the Company's costs, negatively impact its investment income and damage the Company's results of operations and its liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted.

 

Investcorp Credit Management BDC, Inc. and Subsidiaries






Consolidated Statements of Assets and Liabilities
















March 31, 2020










(Unaudited)



June 30, 2019

Assets







Non-controlled, non-affiliated investments, at fair value (amortized cost of

$

274,912,817


$

306,390,993

          $315,310,601 and $ 321,504,359, respectively)






Cash




11,017,825



19,706,281

Cash, restricted


21,092,466



6,589,901

Receivable for investments sold


1,422,112



820,332

Interest receivable


2,737,421



3,090,639

Payment-in-kind interest receivable


379,527



-

Deferred offering costs


121,922



121,922

Other receivables


1,567,321



-

Prepaid expenses and other assets


424,999



227,924

          Total Assets

$

313,676,410


$

336,947,992









Liabilities







Notes payable:






          Term loan

$

122,000,000


$

122,000,000

          Revolving credit facility


11,671,088



11,026,670

          2023 Notes payable


51,375,000



34,500,000

          Deferred debt issuance costs


(1,715,535)



(2,000,262)

                    Notes payable, net


183,330,553



165,526,408

Payable for investments purchased


8,858,179



22,276,343

Dividend payable


3,415,034



3,404,923

Deferred financing costs payable


1,037,000



1,037,000

Income-based incentive fees payable


737,659



545,991

Base management fees payable


1,296,037



-

Accrued provision for taxes


-



13,778

Interest payable


1,069,895



724,222

Directors' fees payable


21,559



95,240

Accrued expenses and other liabilities


856,136



240,197

          Total Liabilities


200,622,052



193,864,102









Commitments and Contingencies (Note 6)














Net Assets







Common stock, par value $0.001 per share (100,000,000 shares authorized,






          13,870,248 and 13,619,690 shares issued and outstanding, respectively)


13,870



13,620

Additional paid-in capital


200,863,603



198,398,831

Distributable earnings (loss)


(87,823,115)



(55,328,561)

          Total Net Assets


113,054,358



143,083,890

          Total Liabilities and Net Assets

$

313,676,410


$

336,947,992

Net Asset Value Per Share

$

8.15


$

10.51

















See notes to unaudited consolidated financial statements.

 

Investcorp Credit Management BDC, Inc. and Subsidiaries












Consolidated Statements of Operations (Unaudited)




























For the three months ended
March 31,













For the nine months ended March 31,





2020


2019


2020


2019


Investment Income:













Interest income


7,599,834


$

8,564,501


$

22,912,000


$

24,700,592


Payment in-kind interest income

916,303



-



3,278,294



953,928


Dividend income


-



15,607



-



46,882


Other fee income


313,543



142,483



629,269



575,003


          Total investment income

8,829,680



8,722,591



26,819,563



26,276,405















Expenses:













Interest expense


2,532,121



2,164,625



7,417,144



6,586,019


Base management fees 


1,359,833



1,369,713



4,084,894



4,126,865


Income-based incentive fees


(19,370)



723,484



832,472



1,597,526


Provision for tax expense


135,024



131,304



145,042



144,250


Professional fees


394,868



251,158



1,094,828



717,486


Allocation of administrative costs from advisor

352,000



346,777



1,034,000



1,026,473


Amortization of deferred debt issuance costs

195,377



195,377



586,131



586,131


Insurance expense


100,044



83,987



267,567



252,867


Directors' fees


82,500



101,250



187,500



303,750


Custodian and administrator fees

74,637



243,823



282,106



258,823


Offering expense


86,906



51,750



224,260



155,250


Other expenses


156,428



18,399



433,288



373,613


          Total expenses


5,450,368



5,681,647



16,589,232



16,129,053


Waiver of base management fees

(63,797)






(165,832)



-


Waiver of income-based incentive fees

(352)



(362,478)



(336,971)



(384,478)


          Net expenses


5,386,219



5,319,169



16,086,429



15,744,575


          Net investment income

3,443,461



3,403,422



10,733,134



10,531,830


Net realized and unrealized gain/(loss) on investments:























Net realized gain (loss) from investments

(7,688,552)



(22,553,307)



(7,632,194)



(22,736,499)


Net change in unrealized appreciation (depreciation) in value












     of investments

(19,999,276)



17,792,347



(25,284,416)



2,892,876


          Total realized and unrealized gain (loss) on investments

(27,687,828)



(4,760,960)



(32,916,610)



(19,843,623)


Net increase (decrease) in net assets resulting from operations












(24,244,367)


$

(1,357,538)


$

(22,183,476)


$

(9,311,793)

















Basic and diluted:













          Net investment income per share

0.25


$

0.25


$

0.78


$

0.77


          Earnings per share

(1.76)


$

(0.10)


$

(1.62)


$

(0.68)














          Weighted average shares of common stock outstanding

13,791,581



13,613,694



13,694,611



13,634,370

















Distributions paid per common share

0.25


$

0.25


$

0.75


$

0.75
































See notes to unaudited consolidated financial statements.


 

About Investcorp Credit Management BDC, 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 Investcorp Credit Management BDC, Inc., please visit www.icmbdc.com.

Forward-Looking Statements

Statements included herein in this press release may contain "forward-looking statements," which relate to future performance or financial condition, are based upon current expectations and are inherently uncertain. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control and including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. 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. All forward-looking statements speak only as of the date of this press release. The Company undertakes no duty to update any forward-looking statement made herein except as required by law.

Contacts
Investcorp Credit Management BDC, Inc.
Investor Relations
Email: icmbinvestorrelations@investcorp.com
Phone: 212-257-5199

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SOURCE Investcorp Credit Management BDC, Inc.

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