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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Logan Ridge Finance Corporation | NASDAQ:LRFC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.05 | -0.22% | 22.29 | 8.96 | 22.50 | 22.29 | 22.25 | 22.26 | 828 | 21:05:30 |
Fourth Quarter 2022 Highlights
Full Year 2022 Milestones
Subsequent Events
Management CommentaryTed Goldthorpe, Chief Executive Officer and President of LRFC, said, “I am very proud of what we achieved during 2022, which was a transformative year for the Company and the first full fiscal year under Mount Logan Management’s stewardship. During the year, we took steps to reposition the Company’s investment portfolio, making substantial progress on our goal to rotate out of the non-income producing legacy equity exposure, reducing non-accruals, significantly increasing the portfolio’s diversification and growing the Company’s exposure to credits originated by the BC Partners Credit platform. Further, we have materially lowered the Company’s cost of debt capital, after successfully refinancing the entire legacy debt capital structure we inherited. More importantly, Management did all of this against the backdrop of particularly challenging and uncertain market conditions. As a result, the Company reported a second consecutive quarter of positive net investment income and the Company’s Board has restored Logan Ridge’s quarterly distribution, declaring a distribution of $0.18 per share for the first quarter of 2023. Going forward, we will continue to focus on maximizing the earnings power of the Company’s stronger balance sheet and more efficient capital structure to further increase shareholder total returns. After a pivotal 2022, we enter 2023 in a strong position to continue our work transitioning the Company to a more stable, higher earning and higher dividend paying BDC.”
Selected Financial Highlights
Results of OperationsOperating results for the years ended December 31, 2022 and 2021 were as follows (dollars in thousands):
For the Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
Total investment income | $ | 14,927 | $ | 16,754 | ||||
Total expenses, net of incentive fee waiver | 16,089 | 20,347 | ||||||
Net investment loss | (1,162 | ) | (3,593 | ) | ||||
Net realized gain (loss) on investments | 13,769 | (7,967 | ) | |||||
Net change in unrealized (depreciation) appreciation on investments | (24,631 | ) | 10,667 | |||||
Net realized loss on extinguishment of debt | — | (1,025 | ) | |||||
Net decrease in net assets resulting from operations | $ | (12,024 | ) | $ | (1,918 | ) |
Investment income
The composition of our investment income for the years ended December 31, 2022 and 2021 was as follows (dollars in thousands):
For the Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
Interest income | $ | 13,666 | $ | 14,825 | ||||
Payment-in-kind interest | 1,106 | 456 | ||||||
Dividend income | 14 | 906 | ||||||
Other income | 141 | 567 | ||||||
Total investment income | $ | 14,927 | $ | 16,754 |
Fair Value of Investments
The composition of our investments as of December 31, 2022 and December 31, 2021 at amortized cost and the fair value of investments was as follows (dollars in thousands):
As of December 31, 2022 | Investments atAmortized Cost | Amortized CostPercentage ofTotal Portfolio | Investments atFair Value | Fair ValuePercentage ofTotal Portfolio | ||||||||||||
First Lien Debt | $ | 143,047 | 64.9 | % | $ | 136,896 | 67.3 | % | ||||||||
Second Lien Debt | 8,283 | 3.8 | % | 6,464 | 3.2 | % | ||||||||||
Subordinated Debt | 26,571 | 12.0 | % | 25,851 | 12.7 | % | ||||||||||
Collateralized Loan Obligations | 6,185 | 2.8 | % | 4,972 | 2.4 | % | ||||||||||
Joint Venture | 414 | 0.2 | % | 403 | 0.2 | % | ||||||||||
Equity | 36,016 | 16.3 | % | 29,006 | 14.2 | % | ||||||||||
Total | $ | 220,516 | 100.0 | % | $ | 203,592 | 100.0 | % |
As of December 31, 2021 | Investments atAmortized Cost | Amortized CostPercentage ofTotal Portfolio | Investments atFair Value | Fair ValuePercentage ofTotal 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 December 31, 2022 consolidated statement of assets and liabilities, the following table shows the annual impact on net income (excluding the potential related incentive fee impact) of base rate changes in interest rates (considering interest rate floors for variable rate securities) assuming no changes in our investment and borrowing structure (dollars in thousands):
Basis Point Change | Increase(decrease) ininterestincome | (Increase)decrease ininterestexpense | Increase(decrease) innet income | ||||||||
Up 300 basis points | $ | 4,459 | $ | (1,701 | ) | $ | 2,758 | ||||
Up 200 basis points | 2,973 | (1,134 | ) | 1,839 | |||||||
Up 100 basis points | 1,486 | (567 | ) | 919 | |||||||
Down 100 basis points | (1,486 | ) | 567 | (919 | ) | ||||||
Down 200 basis points | (2,951 | ) | 1,134 | (1,817 | ) | ||||||
Down 300 basis points | $ | (4,348 | ) | $ | 1,701 | $ | (2,647 | ) |
Conference Call and Webcast
We will hold a conference call on Friday, March 10, 2023, at 10:00 a.m. Eastern Time to discuss fourth quarter and full year 2022 financial results. Stockholders, prospective stockholders, and analysts are welcome to listen to the call or attend the webcast.
To access the conference call, please dial (800) 715-9871 approximately 10 minutes prior to the start of the call. A replay of the conference call will be available from approximately 12:00 p.m. Eastern Time on March 10 through March 23. The conference ID is 8500679.
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.loganridgefinance.com in the Investor Resources section under Events and Presentations. The webcast can also be accessed by clicking the following link: https://edge.media-server.com/mmc/p/wxmhir6f. The online archive of the webcast will be available on the Company’s website shortly after the call.
About Logan Ridge Finance CorporationLogan Ridge Finance Corporation (Nasdaq: LRFC) is a business development company that invests primarily in first lien loans and, to a lesser extent, second lien loans and equity securities issued by lower middle-market companies. The Company invests in performing, well-established middle-market businesses that operate across a wide range of industries. It employs fundamental credit analysis, targeting investments in businesses with relatively low levels of cyclicality and operating risk. For more information, visit www.loganridgefinance.com.
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 Advisors L.P. and BC Partners CreditBC Partners is a leading international investment firm with over $40 billion of assets under management in private equity, private credit and real estate strategies. Established in 1986, BC Partners has played an active role in developing the European buyout market for three decades. Today, BC Partners executives operate across markets as an integrated team through the firm's offices in North America and Europe. Since inception, BC Partners has completed 117 private equity investments in companies with a total enterprise value of €149 billion and is currently investing its eleventh private equity fund. For more information, please visit www.bcpartners.com.
BC Partners Credit was launched in February 2017 and has pursued a strategy focused on identifying attractive credit opportunities in any market environment and across sectors, leveraging the deal sourcing and infrastructure made available from BC Partners.
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 Securities and Exchange Commission (“SEC”), including the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC.
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:
Logan Ridge Finance Corporation650 Madison Avenue, 23rd FloorNew York, NY 10022
Jason Roos Chief Financial Officer Jason.Roos@bcpartners.com (212) 891-5046
Lena Cati The Equity Group Inc.lcati@equityny.com (212) 836-9611
Val FerraroThe Equity Group Inc.vferraro@equityny.com (212) 836-9633
Logan Ridge Finance CorporationConsolidated Statements of Assets and Liabilities(in thousands, except share and per share data) | ||||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Investments at fair value: | ||||||||
Non-control/non-affiliate investments (amortized cost of $191,435 and $131,829, respectively) | $ | 177,268 | $ | 129,991 | ||||
Affiliate investments (amortized cost of $29,081 and $49,803, respectively) | 26,324 | 61,359 | ||||||
Control investments (amortized cost of zero and $8,850, respectively) | — | 6,839 | ||||||
Total investments at fair value (amortized cost of $220,516 and $190,482, respectively) | 203,592 | 198,189 | ||||||
Cash and cash equivalents | 6,793 | 39,056 | ||||||
Interest and dividend receivable | 1,578 | 929 | ||||||
Prepaid expenses | 2,682 | 3,358 | ||||||
Receivable for unsettled trades | — | 685 | ||||||
Other assets | 65 | — | ||||||
Total assets | $ | 214,710 | $ | 242,217 | ||||
LIABILITIES | ||||||||
2022 Notes (net of deferred financing costs of zero and $46, respectively) | $ | — | $ | 22,787 | ||||
2022 Convertible Notes (net of deferred financing costs of zero and $167, respectively) | — | 51,921 | ||||||
2026 Notes (net of deferred financing costs and original issue discount of $1,421 and $1,552, respectively) | 48,579 | 48,448 | ||||||
2032 Convertible Notes (net of deferred financing costs and original issue discount of $1,117 and zero, respectively) | 13,883 | — | ||||||
KeyBank Credit Facility (net of deferred financing costs of $1,322 and $353, respectively) | 54,615 | (353 | ) | |||||
Management and incentive fees payable | 933 | 1,065 | ||||||
Interest and financing fees payable | 973 | 911 | ||||||
Payable for unsettled trades | — | 9,265 | ||||||
Accounts payable and accrued expenses | 722 | 1,144 | ||||||
Total liabilities | $ | 119,705 | $ | 135,188 | ||||
Commitments and contingencies | ||||||||
NET ASSETS | ||||||||
Common stock, par value $0.01, 100,000,000 common shares authorized, 2,711,068 and 2,711,068 common shares issued and outstanding, respectively | $ | 27 | $ | 27 | ||||
Additional paid in capital | 191,038 | 188,846 | ||||||
Total distributable loss | (96,060 | ) | (81,844 | ) | ||||
Total net assets | $ | 95,005 | $ | 107,029 | ||||
Total liabilities and net assets | $ | 214,710 | $ | 242,217 | ||||
Net asset value per share | $ | 35.04 | $ | 39.48 | ||||
Logan Ridge Finance CorporationConsolidated Statements of Operations(in thousands, except share and per share data) | ||||||||||||
For the Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
INVESTMENT INCOME | ||||||||||||
Interest income: | ||||||||||||
Non-control/non-affiliate investments | $ | 12,732 | $ | 10,068 | $ | 16,729 | ||||||
Affiliate investments | 706 | 4,368 | 6,580 | |||||||||
Control investments | 228 | 389 | 410 | |||||||||
Total interest and fee income | 13,666 | 14,825 | 23,719 | |||||||||
Payment-in-kind interest and dividend income: | ||||||||||||
Non-control/non-affiliate investments | 919 | 95 | 1,105 | |||||||||
Affiliate investments | 187 | 361 | 818 | |||||||||
Total payment-in-kind interest and dividend income | 1,106 | 456 | 1,923 | |||||||||
Dividend income: | ||||||||||||
Non-control/non-affiliate investments | — | 727 | — | |||||||||
Affiliate investments | 14 | 179 | 25 | |||||||||
Total dividend income | 14 | 906 | 25 | |||||||||
Other income: | ||||||||||||
Non-control/non-affiliate investments | 141 | 479 | 709 | |||||||||
Affiliate investments | — | 88 | 70 | |||||||||
Total other income | 141 | 567 | 779 | |||||||||
Total investment income | 14,927 | 16,754 | 26,446 | |||||||||
EXPENSES | ||||||||||||
Interest and financing expenses | 7,815 | 10,569 | 15,144 | |||||||||
Base management fee | 3,861 | 4,846 | 6,428 | |||||||||
Directors expense | 493 | 410 | 325 | |||||||||
Administrative service fees | 620 | 1,039 | 1,400 | |||||||||
General and administrative expenses | 3,300 | 3,483 | 3,091 | |||||||||
Total expenses | 16,089 | 20,347 | 26,388 | |||||||||
NET INVESTMENT (LOSS) INCOME | (1,162 | ) | (3,593 | ) | 58 | |||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||
Net realized gain (loss) on investments: | ||||||||||||
Non-control/non-affiliate investments | 17,312 | (10,442 | ) | (25,016 | ) | |||||||
Affiliate investments | 1,672 | 2,475 | 1,451 | |||||||||
Control investments | (5,215 | ) | — | (484 | ) | |||||||
Net realized gain (loss) on investments | 13,769 | (7,967 | ) | (24,049 | ) | |||||||
Net change in unrealized (depreciation) appreciation on investments: | ||||||||||||
Non-control/non-affiliate investments | (25,434 | ) | 13,058 | (5,509 | ) | |||||||
Affiliate investments | (1,208 | ) | (908 | ) | (5,543 | ) | ||||||
Control investments | 2,011 | (1,483 | ) | (559 | ) | |||||||
Net change in unrealized (depreciation) appreciation on investments | (24,631 | ) | 10,667 | (11,611 | ) | |||||||
Total net realized and change in unrealized (loss) gain on investments | (10,862 | ) | 2,700 | (35,660 | ) | |||||||
Net realized (loss) gain on extinguishment of debt | — | (1,025 | ) | 155 | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (12,024 | ) | $ | (1,918 | ) | $ | (35,447 | ) | |||
NET DECREASE IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC & DILUTED | $ | (4.44 | ) | $ | (0.71 | ) | $ | (13.08 | ) | |||
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC & DILUTED | 2,711,068 | 2,711,068 | 2,709,169 | |||||||||
DISTRIBUTIONS PAID PER SHARE | $ | — | $ | — | $ | 1.50 | ||||||
1 Year Logan Ridge Finance Chart |
1 Month Logan Ridge Finance Chart |
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