Investment Income - Total investment income for the year ended December 31, 2025, was $61.2 million, a decrease from $62.4 million in 2024[14] - Net investment income ("NII") for the year ended December 31, 2025, was $25.1 million ($2.28 per share), compared to $24.0 million ($2.59 per share) in 2024[14] - Total investment income for 2025 was $61,152 million, a slight decrease of 2.0% compared to $62,432 million in 2024[38] - Net investment income rose to $25,132 million in 2025, up 4.5% from $24,044 million in 2024[38] - Core investment income decreased to $54,257,000 in 2025 from $62,197,000 in 2024, a decline of 12.8%[17] - An increase in interest rates by 1% is expected to result in a $2,117,000 increase in net investment income[24] Asset and Liability Management - Net asset value ("NAV") as of December 31, 2025, was $209.2 million ($16.68 per share), down from $231.3 million ($17.55 per share) as of September 30, 2025[6] - Total assets increased to $523,641 million in 2025 from $453,634 million in 2024, representing a growth of 15.4%[36] - Total liabilities increased to $314,485 million in 2025, up 14.3% from $275,141 million in 2024[36] - The net increase in net assets resulting from operations was $11,492,000 in 2025, compared to a loss of $5,935,000 in 2024[16] - Net increase in net assets resulting from operations was $11,492 million in 2025, a recovery from a decrease of $5,935 million in 2024[38] Shareholder Actions - Total shares repurchased in 2025 amounted to 698,548 at an aggregate cost of approximately $9.3 million, which was accretive to NAV by $0.24 per share[6] - The company announced a transition to monthly base distributions beginning in April 2026, with a base distribution of $0.09 per share[11] - Weighted average common stock outstanding increased to 11,001,571 shares in 2025 from 9,272,809 shares in 2024[38] Financial Performance - The company completed a merger with Logan Ridge Finance Corporation on July 15, 2025, enhancing scale and operational efficiency[2] - Total deployment for the year was approximately $52.3 million, with net repayments and sales of approximately $64.6 million[6] - The company issued $110 million in new notes in 2025, including $35 million of 7.50% notes due 2028 and $75 million of 7.75% notes due 2030[2] - Debt investments on non-accrual as of December 31, 2025, were 13, representing 4.0% of the investment portfolio at fair value[14] - The weighted average annualized yield was approximately 12.9% as of December 31, 2025[14] - Unrestricted cash decreased to $3.7 million in 2025 from $17.5 million in 2024, a decline of 78.9%[20] - Total expenses decreased to $36,208 million in 2025 from $38,388 million in 2024, a reduction of 5.7%[38] - Management fees for 2025 were $6,584 million, slightly up from $6,559 million in 2024[38] - Net realized losses on investments were $21,436 million in 2025, compared to losses of $31,183 million in 2024, indicating an improvement[38] Future Outlook - The company plans to hold a conference call on March 6, 2026, to discuss the fourth quarter and full year 2025 financial results[25]

Core Viewpoint - The company is undergoing significant changes in its capital structure and distribution policy, including a shift to monthly base distributions and a focus on enhancing financial flexibility through debt management and strategic mergers [4][7][20]. Distribution and Dividend Policy - The board approved a quarterly base distribution of $0.32 per share for the quarter ended March 31, 2026, transitioning to a monthly base distribution of $0.09 per share starting in April 2026 [1][7]. Debt Management and Financial Flexibility - The company issued $75 million of 7.75% notes due October 2030 and $35 million of 7.5% notes due October 2028, while redeeming its 4.875% notes due 2026, diversifying its funding base and enhancing financial flexibility [2][20]. - The company refinanced $108 million of unsecured notes maturing in April 2026, which is expected to reduce near-term refinancing risk [20]. Capital Management Actions - In December 2025, the company completed a tender offer, purchasing approximately 558,000 shares at a cost of about $7.6 million, which was accretive to NAV by $0.18 per share [3][7]. Corporate Activity and Strategy - 2025 was described as a "transformational year" for the company, marked by a merger with Logan Ridge and a rebranding to align with BC Partners [4][5]. - The company has a renewed stock purchase program of up to $10 million for approximately one year, approved on March 4, 2026 [8]. Financial Performance - For Q4 2025, net investment income (NII) was $7.4 million, down from $8.8 million in the prior quarter, while NAV fell 9.6% to $16.68 due to realized and unrealized losses [6][9][12]. - Total investment income for Q4 was $17.5 million, a decrease of $1.4 million sequentially, primarily due to lower distributions from a joint venture [10]. Portfolio Activity and Credit Trends - The company was cautious in new investment deployment during Q4, with originations totaling $9.6 million and repayments at $40.4 million, resulting in net repayments of about $30.8 million [14][15]. - Non-accruals increased to 13 investments, representing 4.0% of the portfolio at fair value, up from 10 investments in the previous quarter [17]. Balance Sheet and Leverage - As of December 31, 2025, the company had gross and net leverage ratios of 1.5x and 1.4x, respectively, with borrowings outstanding at $312.3 million [19]. - The weighted average contractual interest rate on borrowings was 6.9%, compared to 6.1% in the prior quarter [19]. Market and Competitive Landscape - The company noted a "notable risk off move" in public software valuations, driven by uncertainties around AI adoption, with software representing approximately 12.5% of the portfolio's fair market value [21][22]. - Management indicated that the M&A pipeline is larger than ever, with continued consolidation being a key part of the strategy [23].

Investment Strategy - The company primarily invests in illiquid securities, including loans and equity of private companies, with a valuation policy developed in accordance with ASC 820 and approved by the Board[101]. - The company utilizes independent valuation firms for third-party valuation consulting services to ensure fair value determinations[101]. - The company carries its investments at fair value, which may differ materially from market values due to the uncertainty in determining fair value for illiquid investments[457]. - An independent valuation firm is engaged to provide third-party valuation consulting services, reviewing material investments in illiquid securities at least once during a trailing 12-month period[458]. Regulatory Compliance - The company is subject to examination by the SEC for compliance with the 1940 Act, ensuring regulatory adherence[119]. - The company must maintain at least 70% of its total assets in "Qualifying Assets" as defined under the 1940 Act[107]. - The company is required to distribute at least 90% of its investment company taxable income to qualify for RIC tax treatment, avoiding corporate-level U.S. federal income taxes[122]. - The company must derive at least 90% of its gross income from qualified sources to maintain its status as a RIC[132]. - At the end of each quarter, at least 50% of the company's assets must consist of cash, U.S. government securities, and other specified securities to meet Diversification Tests[132]. - If the company fails to qualify as a RIC, it would be subject to corporate tax on all taxable income at regular rates, impacting distributions to stockholders[134]. - The company is subject to a 4% nondeductible U.S. federal excise tax on undistributed income unless it meets the Excise Tax Avoidance Requirement[124]. Financial Performance - The company had approximately $312.3 million in borrowings outstanding at a weighted average interest rate of 6.9%, with $162.0 million at a fixed rate and $150.3 million at a floating rate[451]. - A 1% increase in interest rates would increase net investment income by approximately $2.1 million annually, while a 2% increase would raise it by about $4.3 million, and a 3% increase by approximately $6.4 million[454]. - A 1% decrease in interest rates would lead to a decrease in net investment income of approximately $2.1 million, while a 2% and 3% decrease would result in decreases of approximately $3.9 million and $4.7 million, respectively[455]. Capital Structure - The asset coverage requirement for senior securities was changed from 200% to 150% effective March 29, 2019, allowing for more flexibility in capital structure[109]. Shareholder Relations - The company has adopted a dividend reinvestment plan allowing stockholders to reinvest distributions in additional shares of common stock[135]. - The plan administrator's fees under the dividend reinvestment plan are covered by the company, with no brokerage charges for participating stockholders[139]. - The company is committed to maintaining the privacy of stockholders and safeguarding their non-public personal information[113]. Competition - The company faces competition from various financial entities, including commercial investment banks and hedge funds, which may have lower costs of funds[102]. Corporate Governance - The company has no employees since externalization and does not expect to have any in the future[103]. - The company has adopted a code of ethics to govern personal investments and restrict certain transactions by personnel[112]. Tax Considerations - The company may need to recognize taxable income without receiving cash, which could affect its ability to meet the Annual Distribution Requirement[127].

Financial Performance - Total investment income for Q3 2025 increased by 50.0% to $18.9 million, compared to $12.6 million in Q2 2025[4] - Net investment income for Q3 2025 rose by 94.2% to $8.8 million ($0.71 per share), up from $4.6 million ($0.50 per share) in Q2 2025[4] - For the three months ended September 30, 2025, the total investment income was $18,940,000, an increase from $15,177,000 in the same period of 2024, representing a growth of 18.3%[15] - Core investment income for the nine months ended September 30, 2025, was $43,688,000, down from $47,830,000 in 2024, reflecting a decrease of 8.9%[15] - Net investment income for the three months ended September 30, 2025, was $8,848,000, an increase from $5,802,000 in the same period of 2024, reflecting a growth of 52.4%[38] - Total investment income for the nine months ended September 30, 2025, was $43,688,000, down from $48,040,000 in 2024, indicating a decrease of 9.3%[38] Asset and Investment Portfolio - Net asset value (NAV) as of September 30, 2025, increased by 40.4% to $231.3 million ($17.55 per share) from $164.7 million ($17.89 per share) as of June 30, 2025[4] - The investment portfolio at fair value as of September 30, 2025, was $539.7 million, comprising 116 different portfolio companies[13] - As of September 30, 2025, the fair value of total investments was $557,147,000, compared to $444,974,000 as of December 31, 2024, indicating an increase of 25.1%[18] - Total investments at fair value rose to $539,701,000, compared to $405,021,000 in the previous period, marking a 33.2% increase[36] - The investment portfolio as of September 30, 2025, included 71.6% in first lien debt, maintaining the same percentage as of December 31, 2024[16] Debt and Liabilities - The company had approximately $324.6 million in outstanding borrowings with a weighted average interest rate of 6.1% as of September 30, 2025[17] - Total liabilities increased to $336,540,000 as of September 30, 2025, compared to $275,141,000 at December 31, 2024, reflecting a rise of 22.3%[36] - Debt investments on non-accrual as of September 30, 2025, were ten, representing 3.8% of the investment portfolio at fair value[13] - Approximately 85.2% of the debt securities portfolio at par value were floating rate, with 84.1% of these loans containing interest rate floors between 0.50% and 5.25%[19] - The company expects that a 1% increase in interest rates would result in a $2,161,000 increase in net investment income[22] Corporate Actions and Future Plans - The company completed a merger with Logan Ridge Finance Corporation on July 15, 2025, enhancing scale and portfolio diversification[3] - The company plans to initiate a modified Dutch Auction tender offer to repurchase up to $9.0 million of its common stock[9] - Between October 1, 2025, and November 4, 2025, the company repurchased 103,690 shares for approximately $1.2 million at an average price of $11.62 per share[8] - The company issued $75 million of 7.75% notes due October 2030 and $35 million of 7.50% notes due October 2028 to diversify funding and enhance financial flexibility[11] - The company expects total repurchases, including management and affiliates' ownership, to approximate 10% of outstanding common stock by year-end[5] Cash and Management - As of September 30, 2025, unrestricted cash was $2.8 million, down from $11.2 million as of June 30, 2025[18] - Management fees for the three months ended September 30, 2025, were $1,808,000, up from $1,611,000 in 2024, representing an increase of 12.2%[38] - The company plans to hold a conference call on November 7, 2025, to discuss third quarter 2025 financial results[23] Shareholder Information - The net asset value per common share decreased to $17.55 from $19.41, a decline of 9.6%[36] - The weighted average common stock outstanding for basic shares increased to 12,549,643 from 9,244,033 year-over-year[38] - The net increase in net assets resulting from operations for the three months ended September 30, 2025, was $23,630,000, compared to a loss of $1,509,000 in the same period of 2024[38] - The company reported net realized losses on investments of $2,678,000 for the three months ended September 30, 2025, compared to losses of $11,419,000 in the same period of 2024[38]

Investment Strategy and Portfolio - The company has a Debt Securities Portfolio focused on generating current income and capital appreciation from investments in senior secured term loans, mezzanine debt, and selected equity investments in middle-market companies with EBITDA between $10 million and $50 million[317]. - The company primarily invests in first and second lien term loans, which are expected to have lower default rates and higher recovery rates in case of defaults[317]. - The company’s investment strategy includes investing in CLO Fund Securities managed by other asset managers, diversifying its investment portfolio[318]. - The company evaluates strategic opportunities, including mergers and joint ventures, to enhance its investment capabilities and market position[321]. - The company has made strategic acquisitions, including OHA Investment Corporation and Garrison Capital Inc., enhancing its portfolio and market presence[324][325]. Financial Performance - As of September 30, 2025, the total fair value of the investment portfolio was $539.70 million, compared to $405.02 million on December 31, 2024, representing a 33.2% increase[332]. - The weighted average annualized yield of the Debt Securities Portfolio increased to approximately 13.8% as of September 30, 2025, up from 11.3% as of December 31, 2024[336]. - Total investment income for the three months ended September 30, 2025, was approximately $18.9 million, compared to $15.2 million for the same period in 2024[354]. - For the nine months ended September 30, 2025, total investment income was approximately $43.7 million, down from $48.0 million for the same period in 2024[354]. - The company reported a net change in unrealized appreciation of $18.25 million for the nine months ended September 30, 2025[332]. Acquisitions and Investments - The company completed the acquisition of Logan Ridge Finance Corporation on July 15, 2025, with each share of LRFC common stock converted into 1.500 newly-issued shares of the company's common stock, plus a cash payment of $0.47 per share[329][330]. - The total cost of the LRFC Acquisition was approximately $52.8 million, resulting in a purchase discount of $20.9 million allocated to investment assets[330]. - The company made purchases/originations totaling $86.61 million during the nine months ended September 30, 2025[332]. - The company’s investment in subordinated debt increased from $1.74 million on December 31, 2024, to $24.83 million on September 30, 2025, marking a significant increase in this category[334]. Debt and Financing - The company had approximately $324.6 million of outstanding borrowings as of September 30, 2025, with an asset coverage ratio of 171%, exceeding the minimum requirement of 150%[384]. - The company issued $108.0 million of 4.875% Notes due 2026, with interest paid semi-annually, and was in compliance with all debt covenants as of September 30, 2025[386]. - The company assumed $50.0 million in 2026 Notes with a step-up interest rate to 6.00% due to a downgrade below Investment Grade[387]. - The Revolving Credit Facility has an initial principal amount of $115 million, with the potential to increase to $215 million, and was amended to reduce the applicable margin to 2.80% per annum[392]. - As of September 30, 2025, GLPRF LLC had approximately $130.8 million in borrowings outstanding under the Revolving Credit Facility, in compliance with all debt covenants[398]. Distributions and Share Repurchase - The company declared total distributions of $1.41 per share for 2025, with quarterly distributions of $0.47 per share in Q1, Q2, and Q3[407]. - The company repurchased 20,573 shares under the 2025 Stock Repurchase Program during the three months ended September 30, 2025[409]. - The company intends to continue making quarterly distributions to stockholders, aiming to distribute at least 98% of ordinary net taxable income and capital gains[401]. - The 2025 Stock Repurchase Program, approved on March 12, 2025, allows for up to $10 million in share repurchases, similar to previous programs[408]. Valuation and Risk Management - Fair value determinations for investments are primarily classified as Level III, indicating significant management judgment is involved due to the lack of observable market prices[419]. - The company recognizes unrealized appreciation or depreciation on investments as market conditions change, impacting the overall valuation of the portfolio[421]. - The company has engaged an independent valuation firm to provide third-party valuation consulting services for its material investments in illiquid securities[449]. - The level of excess spread from CLO Fund Securities can vary significantly due to fluctuations in benchmark interest rates and compliance with financial covenants[430]. Expenses and Income - Total expenses for the three months ended September 30, 2025, were approximately $10.28 million, up from $9.38 million in 2024, an increase of 9.5%[366]. - Management fees for the three months ended September 30, 2025, were approximately $1.81 million, compared to $1.61 million in 2024, an increase of 12.4%[370]. - Investment income attributable to CLO Fund Securities for the nine months ended September 30, 2025, was approximately $0.4 million, down from $1.3 million in 2024, a decrease of 69.2%[361]. - The net change in unrealized appreciation on investments for the three months ended September 30, 2025, was approximately $15.5 million, significantly higher than $4.5 million in 2024[379]. Market Conditions and Interest Rates - A 1% increase in interest rates would increase net investment income by approximately $2.2 million on an annualized basis, while a 1% decrease would decrease it by approximately $2.1 million[445][446]. - As of September 30, 2025, approximately 85.2% of the company's Debt Securities Portfolio were floating rate with a spread to an interest rate index such as SOFR or the prime rate[442]. - The company had $324.6 million in borrowings outstanding at a current weighted average interest rate of 6.1%, with $160.5 million at a fixed rate and $164.1 million at a floating rate[442].

[Executive Summary & Recent Developments](index=1&type=section&id=Executive%20Summary%20%26%20Recent%20Developments) This section summarizes Portman Ridge Finance Corporation's Q2 2025 performance, strategic merger, and rebranding initiatives [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Portman Ridge Finance Corporation announced its Q2 2025 financial results, highlighted by the completion of the Logan Ridge merger, which is expected to enhance scale, diversification, and liquidity. The company also plans to rebrand as BCP Investment Corporation. Key financial metrics for the quarter showed an increase in total investment income and net investment income compared to the prior quarter - On July 15, 2025, Portman Ridge completed the merger with Logan Ridge Finance Corporation, with Portman Ridge as the surviving company[5](index=5&type=chunk) - The combined company's total assets are expected to exceed **$600 million** (as of July 11, 2025), aiming for enhanced scale, diversified portfolio, cost savings, and improved stock trading liquidity[5](index=5&type=chunk) - Portman Ridge will rebrand and operate under the name BCP Investment Corporation, trading on Nasdaq under the new ticker symbol '**BCIC**'[5](index=5&type=chunk) Q2 2025 Financial Highlights (vs. Q1 2025) | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (Millions) | Change (%) | | :---------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Investment Income | $12.6 | $12.1 | $0.5 | 4.1% | | Core Investment Income | $12.6 | $12.1 | $0.5 | 4.1% | | Net Investment Income | $4.6 | $4.3 | $0.3 | 7.0% | | NII Per Share | $0.50 | $0.47 | $0.03 | 6.4% | [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO Ted Goldthorpe emphasized the company's strategic progress in Q2, including strong net investment income and the successful Logan Ridge merger. He highlighted the merger's potential for increased scale, diversification, and financial flexibility, and announced the upcoming rebranding to BCP Investment Corporation to align with BC Partners - CEO Ted Goldthorpe noted the generation of net investment income of **$4.6 million** (**$0.50 per share**) in Q2, up from **$4.3 million** (**$0.47 per share**) in the prior quarter, maintaining focus on a high-quality portfolio and long-term shareholder value[7](index=7&type=chunk) - The Logan Ridge merger is a 'transformational milestone' expected to provide increased scale, broader portfolio diversification, enhanced financial flexibility, and earnings accretion through cost synergies[8](index=8&type=chunk) - The company will change its corporate name to BCP Investment Corporation (Nasdaq: **BCIC**) to reflect alignment with BC Partners, a global alternative investment platform[9](index=9&type=chunk) [Subsequent Events & Merger Details](index=2&type=section&id=Subsequent%20Events) Subsequent events include the declaration of Q3 2025 quarterly base and supplemental distributions. Detailed terms of the Logan Ridge acquisition were provided, outlining the share conversion ratio and additional cash payments to former Logan Ridge shareholders Net Asset Value (NAV) Comparison | Metric | June 30, 2025 | March 31, 2025 | | :----- | :------------ | :------------- | | NAV | $164.7 million| $173.5 million | | NAV/Share | $17.89 | $18.85 | - On August 7, 2025, the Company declared a regular quarterly base distribution of **$0.47 per share** and a supplemental cash distribution of **$0.02 per share**, payable on August 29, 2025[10](index=10&type=chunk) - In the Logan Ridge acquisition, each share of LRFC common stock was converted into **1.500 newly-issued shares** of Portman Ridge common stock, with additional cash payments to LRFC shareholders[10](index=10&type=chunk) [Financial Performance Overview](index=3&type=section&id=Financial%20Performance%20Overview) This section details Portman Ridge Finance Corporation's financial results for Q2 2025, including investment income, expenses, and net asset changes [Selected Financial Highlights](index=3&type=section&id=Selected%20Financial%20Highlights) The company reported a decrease in total investment income and net investment income for Q2 2025 compared to Q2 2024. Net asset value also declined from the previous quarter. The investment portfolio fair value decreased, though debt investments on non-accrual remained stable, and the weighted average annualized yield was 10.7% Key Financial Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Change (%) | | :---------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Investment Income | $12.6 | $16.3 | $(3.7) | -22.7% | | Core Investment Income | $12.6 | $16.2 | $(3.6) | -22.2% | | Net Investment Income | $4.6 | $6.5 | $(1.9) | -29.2% | | NII Per Share | $0.50 | $0.70 | $(0.20) | -28.6% | Investment Portfolio & Debt Metrics (June 30, 2025) | Metric | Value (June 30, 2025) | Value (March 31, 2025) | | :----------------------------------- | :-------------------- | :--------------------- | | Investment Portfolio (Fair Value) | $395.1 million | $406.4 million | | Number of Portfolio Companies | 96 | 93 | | Debt Investments on Non-Accrual (Fair Value) | 2.1% | 2.6% | | Weighted Average Annualized Yield | 10.7% | N/A | | Asset Coverage Ratio | 165% | 168% | | Net Leverage | 1.4x | 1.3x | [Results of Operations](index=4&type=section&id=Results%20of%20Operations) The consolidated statements of operations show a decline in total investment income and net investment income for both the three and six months ended June 30, 2025, compared to the same periods in 2024. Net realized losses on investments increased significantly, contributing to a net decrease in net assets from operations Consolidated Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $12,630 | $16,337 | $24,748 | $32,863 | | Total expenses | $8,073 | $9,860 | $15,851 | $20,161 | | Net Investment Income | $4,557 | $6,477 | $8,897 | $12,702 | | Net realized gain (loss) on investments | $(15,840) | $(6,922) | $(16,013) | $(8,979) | | Net change in unrealized gain (loss) on investments | $6,628 | $(5,966) | $2,725 | $(5,895) | | Net Increase (Decrease) in Net Assets Resulting from Operations | $(4,518) | $(6,372) | $(4,600) | $(1,887) | | Net Investment Income Per Common Share | $0.50 | $0.70 | $0.97 | $1.36 | [Investment Income Composition](index=4&type=section&id=Investment%20Income) Investment income for Q2 2025 was primarily driven by interest income, which saw a decrease compared to Q2 2024. Payment-in-kind (PIK) income increased, while CLO and JV income decreased year-over-year Investment Income Composition (in thousands) | Income Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income (excl. CLO & purchase discount) | $8,573 | $11,589 | $16,095 | $23,675 | | Purchase discount accretion | $0 | $112 | $16 | $185 | | PIK income | $2,449 | $2,201 | $5,510 | $4,207 | | CLO income | $214 | $524 | $292 | $1,081 | | JV income | $1,213 | $1,800 | $2,630 | $3,453 | | Fees and other income | $181 | $111 | $205 | $262 | | **Total Investment Income** | **$12,630** | **$16,337** | **$24,748** | **$32,863** | | **Core Investment Income** | **$12,630** | **$16,225** | **$24,732** | **$32,678** | [Investment Portfolio and Capital Structure](index=5&type=section&id=Investment%20Portfolio%20and%20Capital%20Structure) This section outlines the composition and fair value of the investment portfolio, along with the company's liquidity, capital resources, and interest rate risk exposure [Fair Value of Investments](index=5&type=section&id=Fair%20Value%20of%20Investments) As of June 30, 2025, the investment portfolio at fair value was $395.1 million, primarily composed of First Lien Debt (73.7%). The total portfolio decreased slightly from December 31, 2024, with minor shifts in the percentage allocation across security types Investment Portfolio Composition by Security Type (Fair Value, in thousands) | Security Type | June 30, 2025 Fair Value | Percentage of Total Portfolio | December 31, 2024 Fair Value | Percentage of Total Portfolio | | :------------------------ | :----------------------- | :---------------------------- | :--------------------------- | :---------------------------- | | First Lien Debt | $291,071 | 73.7% | $289,957 | 71.6% | | Second Lien Debt | $30,276 | 7.7% | $28,996 | 7.2% | | Subordinated Debt | $1,750 | 0.4% | $1,740 | 0.4% | | Collateralized Loan Obligations | $3,263 | 0.8% | $5,193 | 1.3% | | Joint Ventures | $44,634 | 11.3% | $54,153 | 13.4% | | Equity | $23,919 | 6.1% | $24,762 | 6.1% | | Derivatives | $196 | 0.0% | $220 | 0.0% | | **Total** | **$395,109** | **100.0%** | **$405,021** | **100.0%** | [Liquidity and Capital Resources](index=5&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $255.4 million in outstanding borrowings with a weighted average interest rate of 6.0%. Cash and cash equivalents totaled $11.2 million (unrestricted) and $13.4 million (restricted), with $52.6 million available under the JPM Credit Facility - Outstanding borrowings as of June 30, 2025, were **$255.4 million** (par value) at a weighted average interest rate of **6.0%**[15](index=15&type=chunk) Cash and Cash Equivalents (in thousands) | Cash Type | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Cash and Cash Equivalents | $11,222 | $17,532 | | Restricted Cash | $13,357 | $22,421 | - The Company had **$52.6 million** of available borrowing capacity under the JPM Credit Facility as of June 30, 2025[16](index=16&type=chunk) [Interest Rate Risk](index=6&type=section&id=Interest%20Rate%20Risk) The company's investment income is significantly influenced by interest rate fluctuations, with approximately 86.9% of its Debt Securities Portfolio being floating rate. A sensitivity analysis indicates that a 1% increase in interest rates would increase net investment income by $1.477 million, while a 1% decrease would reduce it by the same amount - Approximately **86.9%** of the Debt Securities Portfolio (at par value) were floating rate as of June 30, 2025, with **86.5%** of these loans containing interest rate floors[17](index=17&type=chunk) Impact on Net Investment Income from Interest Rate Changes (in thousands) | Change in Interest Rate | Impact on Net Investment Income | | :---------------------- | :------------------------------ | | +1% | $1,477 | | +2% | $2,955 | | +3% | $4,432 | | -1% | $(1,477) | | -2% | $(2,912) | | -3% | $(4,105) | [Corporate Information](index=6&type=section&id=Corporate%20Information) This section provides details on the company's corporate structure, investor relations, and important legal disclaimers regarding forward-looking statements [Conference Call and Webcast](index=6&type=section&id=Conference%20Call%20and%20Webcast) Portman Ridge Finance Corporation will host a conference call and webcast on August 8, 2025, to discuss its second quarter 2025 financial results, with replay and online archive available - A conference call to discuss Q2 2025 financial results will be held on Friday, August 8, 2025, at **10:00 am Eastern Time**[21](index=21&type=chunk) - A live audio webcast and replay will be available on the Company's website www.portmanridge.com in the Investor Relations section[23](index=23&type=chunk) [About Portman Ridge Finance Corporation](index=6&type=section&id=About%20Portman%20Ridge%20Finance%20Corporation) Portman Ridge Finance Corporation is a publicly traded Business Development Company (BDC) that originates, structures, finances, and manages a portfolio of middle-market investments. Its investment activities are managed by Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors L.P - Portman Ridge Finance Corporation is a publicly traded, externally managed investment company regulated as a **Business Development Company (BDC)**[24](index=24&type=chunk) - The company's business focuses on originating, structuring, financing, and managing a portfolio of term loans, mezzanine investments, and selected equity securities in middle-market companies[24](index=24&type=chunk) - Investment activities are managed by Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors L.P[24](index=24&type=chunk) [About BC Partners Advisors L.P. and BC Partners Credit](index=7&type=section&id=About%20BC%20Partners%20Advisors%20L.P.%20and%20BC%20Partners%20Credit) BC Partners is a prominent international investment firm specializing in private equity, private credit, and real estate. BC Partners Credit, launched in 2017, leverages the firm's extensive expertise to identify attractive credit opportunities across various market environments and sectors - BC Partners is a leading international investment firm with strategies in private equity, private credit, and real estate[26](index=26&type=chunk) - BC Partners Credit, launched in **February 2017**, focuses on identifying attractive credit opportunities by leveraging BC Partners' deal sourcing and infrastructure[27](index=27&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section serves as a standard legal disclaimer, advising that forward-looking statements are based on current expectations and involve substantial risks and uncertainties. It lists various factors that could cause actual results to differ materially from projections, including economic conditions, competition, and regulatory changes - The press release contains forward-looking statements based on current management expectations, subject to substantial risks and uncertainties[28](index=28&type=chunk) - Important factors that could cause actual results to differ include uncertainty of financial performance, expected synergies from mergers, business strategy implementation, evolving legal/regulatory/tax regimes, and changes in economic conditions[29](index=29&type=chunk)[30](index=30&type=chunk) - Readers are advised to consult the Company's SEC filings, including Form 10-K, 10-Q, and 8-K, for more information on risks and uncertainties[30](index=30&type=chunk) [Contacts](index=8&type=section&id=Contacts) Contact information is provided for Portman Ridge Finance Corporation, including its Chief Financial Officer, and for investor relations through The Equity Group Inc - Contact for Portman Ridge Finance Corporation: Brandon Satoren, Chief Financial Officer (Brandon.Satoren@bcpartners.com, **(212) 891-2880**)[31](index=31&type=chunk) - Investor Relations contacts: Lena Cati (lcati@equityny.com, **(212) 836-9611**) and Val Ferraro (vferraro@equityny.com, **(212) 836-9633**) at The Equity Group Inc[31](index=31&type=chunk) [Consolidated Financial Statements](index=9&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated balance sheets and statements of operations, providing a detailed view of its financial position and performance [Consolidated Statements of Assets and Liabilities](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20ASSETS%20AND%20LIABILITIES) The consolidated balance sheet as of June 30, 2025, shows total assets of $427.995 million, a decrease from $453.634 million at December 31, 2024. Total investments at fair value also decreased, while total liabilities and net assets saw corresponding changes Consolidated Statements of Assets and Liabilities (in thousands) | ASSETS | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total Investments at fair value | $395,109 | $405,021 | | Cash and cash equivalents | $11,222 | $17,532 | | Restricted cash | $13,357 | $22,421 | | Total Assets | $427,995 | $453,634 | | LIABILITIES | | | | 4.875% Notes Due 2026 | $107,356 | $106,983 | | Great Lakes Portman Ridge Funding LLC Revolving Credit Facility | $146,306 | $158,157 | | Total Liabilities | $263,266 | $275,141 | | NET ASSETS | | | | Total Net Assets | $164,729 | $178,493 | | Net Asset Value Per Common Share | $17.89 | $19.41 | [Consolidated Statements of Operations](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The consolidated income statement for the three and six months ended June 30, 2025, shows a decrease in total investment income and net investment income compared to the prior year. Net realized losses on investments significantly impacted the net increase (decrease) in net assets resulting from operations Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $12,630 | $16,337 | $24,748 | $32,863 | | Total expenses | $8,073 | $9,860 | $15,851 | $20,161 | | Net Investment Income | $4,557 | $6,477 | $8,897 | $12,702 | | Net realized gain (loss) on investments | $(15,840) | $(6,922) | $(16,013) | $(8,979) | | Net change in unrealized appreciation (depreciation) on investments | $6,628 | $(5,966) | $2,725 | $(5,895) | | Net Increase (Decrease) in Net Assets Resulting from Operations | $(4,518) | $(6,372) | $(4,600) | $(1,887) | | Net Investment Income Per Common Share | $0.50 | $0.70 | $0.97 | $1.36 |

Financial Data and Key Metrics Changes - The company generated net investment income of $4.6 million or $0.50 per share, an increase from $4.3 million or $0.47 per share in the prior quarter [3][13] - Total investment income for the quarter was $12.6 million, up from $12.1 million in the previous quarter [12] - Net asset value (NAV) decreased to $164.7 million from $173.5 million in the prior quarter, with NAV per share dropping to $17.89 from $18.85 [13][15] Business Line Data and Key Metrics Changes - The merger with Logan Ridge Finance Corporation was highlighted as a transformational milestone, with Logan Ridge generating net investment income of $1.2 million or $0.47 per share, up from $0.9 million or $0.35 per share in the previous year [4] - The company ended the quarter with a diversified debt investment portfolio across 69 different companies and 25 industries, with an average par balance of $2.6 million [9] Market Data and Key Metrics Changes - Activity in core markets was constrained initially due to tariff announcements, but deal volume picked up towards the end of the quarter [7] - Approximately 86.9% of the debt securities portfolio was based on floating rates, primarily linked to SOFR, which slightly declined over the last two quarters [9] Company Strategy and Development Direction - The company plans to leverage enhanced scale and diversified portfolio to deliver compelling risk-adjusted returns and drive long-term value for shareholders [6] - A new corporate name, BCP Investment Corporation, will be adopted to reflect the affiliation with BC Partners and the commitment to building an industry-leading business development company [5] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the opportunities in the second half of the year, particularly with increased refinancing activity and a healthy mix of new LBO processes [8][36] - The management team remains confident in their strategy and experienced leadership as they navigate the current market environment [6] Other Important Information - The company modified its dividend policy to introduce a stable base distribution of $0.47 per share, expected to be sustainable across market cycles [5] - The company has six investments on non-accrual status, representing 2.14% and 2.64% of the investment portfolio at fair value and cost, respectively [10] Q&A Session Summary Question: Were there any non-recurring items in the quarter? - Management confirmed there were no material non-recurring items outside of the other income reported [18] Question: Why was interest income higher quarter over quarter despite a smaller portfolio and a slight dip in yield? - The increase was largely driven by net deployment activity from the prior quarter [19][20] Question: What was the reason for the realized loss of $15 million? - The loss was primarily attributed to ProAir and Anthem, with Anthem undergoing restructuring [24] Question: When will the trading symbol and name change take effect? - The change is expected to occur within the next couple of weeks, pending the completion of the new website [25] Question: Has deal activity picked up for merging with other BDCs? - Management noted that deal activity has increased significantly, with a robust M&A pipeline [26] Question: How does the pipeline break down in terms of new and add-on opportunities? - The focus is on refinancing activity, with a healthy mix of new sales and refinancing opportunities [35] Question: What is the potential NAV benefit from positions currently held at a discount to par? - The average remaining maturity for these positions is about two and a half to three years, with potential NAV benefits expected over that timeframe [46] Question: What changes will occur in the combined portfolio post-merger? - The portfolios are similar, with a slight increase in diversification expected, but no dramatic changes anticipated [56][60]

Financial Performance - Total investment income for Q2 2025 was $12.63 million, compared to $12.1 million in Q1 2025 and $16.337 million in Q2 2024[11] - Core investment income for Q2 2025 was $12.63 million, compared to $12.102 million in Q1 2025 and $16.225 million in Q2 2024[11] - Net investment income (NII) for Q2 2025 was $4.6 million ($0.50 per share), compared to $4.34 million ($0.47 per share) for Q1 2025 and $6.477 million ($0.70 per share) for Q2 2024[11] - Net asset value (NAV) as of June 30, 2025, was $164.7 million ($17.89 per share), compared to $173.5 million ($18.85 per share) for Q1 2025[11] Portfolio Composition and Activity - Investment portfolio at fair value as of June 30, 2025, was $395.109 million, comprised of 96 different portfolio companies[11] - Deployments of approximately $10.9 million and repayments and sales of approximately $17.0 million, resulting in net repayments and sales of approximately $6.1 million[11] - Debt investments on non-accrual, as of June 30, 2025, were six, representing 2.1% of the Company's investment portfolio at fair value and 4.8% at amortized cost[11] - Weighted average annualized yield, excluding income from non-accruals and collateralized loan obligations, was approximately 10.7% as of June 30, 2025[11] Capital Structure and Distributions - Par value of outstanding borrowings, as of June 30, 2025, was $255.4 million, with an asset coverage ratio of total assets to total borrowings of 165%[11] - Declared a regular quarterly base distribution of $0.47 per share of common stock, and a supplemental cash distribution of $0.02 per share of common stock[11] Recent Developments - The company announced the closing of the merger with Logan Ridge Finance Corporation on July 15, 2025, with the combined company having total assets in excess of $600 million based on July 11, 2025, financial data[9]

Core Viewpoint - Portman Ridge (PTMN) reported quarterly earnings of $0.5 per share, exceeding the Zacks Consensus Estimate of $0.47 per share, but down from $0.7 per share a year ago, indicating a mixed performance trend [1][2] Financial Performance - The company posted revenues of $12.63 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.77%, but down from $16.34 million year-over-year [2] - Over the last four quarters, Portman Ridge has only surpassed consensus EPS estimates once and has topped consensus revenue estimates just once [2] Stock Performance - Portman Ridge shares have declined approximately 24.1% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.46 on revenues of $12.17 million, and for the current fiscal year, it is $1.99 on revenues of $48.62 million [7] - The trend of earnings estimate revisions is mixed ahead of the earnings release, which may influence future stock movements [6] Industry Context - The Financial - Investment Management industry, to which Portman Ridge belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

[Filing Information](index=1&type=section&id=Filing%20Information) This section details the registrant's quarterly report filing, stock information, and exchange listing - Portman Ridge Finance Corporation filed a Quarterly Report on Form 10-Q for the period ended June 30, 2025[1](index=1&type=chunk)[2](index=2&type=chunk) - The registrant is a **Non-accelerated filer** with **13,191,929 shares** of common stock outstanding as of August 1, 2025[4](index=4&type=chunk)[5](index=5&type=chunk) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, par value $0.01 per share | PTMN | The NASDAQ Global Select Market | [Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This part presents the company's unaudited consolidated financial statements, management's analysis, and market risk [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including assets, operations, cash flows, and investment notes [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) This statement details the company's financial position, including assets, liabilities, and net assets | ASSETS (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------- | :------------------------ | :---------------- | | Investments at fair value | $395,109 | $405,021 | | Cash and cash equivalents | $11,222 | $17,532 | | Restricted cash | $13,357 | $22,421 | | Total Assets | $427,995 | $453,634 | | LIABILITIES (in thousands) | | | | 4.875% Notes Due 2026 | $107,356 | $106,983 | | Revolving Credit Facility | $146,306 | $158,157 | | Total Liabilities | $263,266 | $275,141 | | NET ASSETS (in thousands) | | | | Total Net Assets | $164,729 | $178,493 | | Net Asset Value Per Common Share | $17.89 | $19.41 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This statement outlines the company's financial performance, detailing income, expenses, and net changes in assets | (in thousands, except per share) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Total investment income | $12,630 | $16,337 | $24,748 | $32,863 | | Total expenses | $8,073 | $9,860 | $15,851 | $20,161 | | NET INVESTMENT INCOME | $4,557 | $6,477 | $8,897 | $12,702 | | Net realized gain (loss) on investments | $(15,840) | $(6,922) | $(16,013) | $(8,979) | | Net change in unrealized appreciation (depreciation) on investments | $6,628 | $(5,966) | $2,725 | $(5,895) | | NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $(4,518) | $(6,372) | $(4,600) | $(1,887) | | Net Investment Income Per Common Share (Basic and Diluted) | $0.50 | $0.70 | $0.97 | $1.36 | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) This statement tracks changes in net assets, reflecting operations, distributions, and capital transactions | (in thousands, except per share) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net increase (decrease) in net assets resulting from operations | $(4,518) | $(6,372) | $(4,600) | $(1,887) | | Distributions declared | $(4,325) | $(6,411) | $(9,292) | $(12,854) | | Net increase (decrease) in net assets resulting from capital share transactions | $61 | $(1,395) | $128 | $(2,348) | | Net assets at beginning of period | $173,511 | $210,607 | $178,493 | $213,518 | | Net assets at end of period | $164,729 | $196,429 | $164,729 | $196,429 | | Net asset value per common share | $17.89 | $21.21 | $17.89 | $21.21 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities over specific periods | (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by (used in) operating activities | $5,890 | $20,889 | | Net cash provided by (used in) financing activities | $(21,264) | $(55,814) | | CHANGE IN CASH AND RESTRICTED CASH | $(15,374) | $(34,925) | | CASH AND RESTRICTED CASH, BEGINNING OF PERIOD | $39,953 | $71,564 | | CASH AND RESTRICTED CASH, END OF PERIOD | $24,579 | $36,639 | [Consolidated Schedules of Investments](index=8&type=section&id=Consolidated%20Schedules%20of%20Investments) This section details the company's investment portfolio by type, fair value, and portfolio companies - As of June 30, 2025, the investment portfolio comprised **96 portfolio companies** with a fair value of approximately **$395.1 million**, a decrease from **93 companies** and **$405.0 million** at December 31, 2024[83](index=83&type=chunk) - The debt investment portfolio (excluding CLO Funds, equities, and Joint Ventures) was diversified across **25 industries** and **69 companies** with a fair value of approximately **$323.1 million** as of June 30, 2025[84](index=84&type=chunk) | Investment Type | Fair Value (June 30, 2025) | Fair Value (December 31, 2024) | | :--------------------------------------- | :--------------------------- | :----------------------------- | | Non-controlled/non-affiliated investments | $329,911 | $327,622 | | Non-controlled affiliated investments | $53,916 | $64,384 | | Controlled affiliated investments | $11,282 | $13,015 | | Total Investments at fair value | $395,109 | $405,021 | [Consolidated Financial Highlights](index=18&type=section&id=Consolidated%20Financial%20Highlights) This section summarizes key financial metrics and ratios, providing an overview of performance and financial health | Per Share Data | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--------------- | :------------------------------------- | :------------------------------------- | | Net asset value, at beginning of period | $19.41 | $22.76 | | Net investment income | $0.97 | $1.36 | | Net realized gain (loss) from investments | $(1.75) | $(0.96) | | Net change in unrealized appreciation (depreciation) on investments | $0.30 | $(0.63) | | Net increase (decrease) in net assets resulting from operations | $(0.50) | $(0.20) | | Net asset value, end of period | $17.89 | $21.21 | | Total net asset value return | (0.64)% | (0.11)% | | Total market return | (17.40)% | 15.61% | | Portfolio turnover rate | 7.09% | 11.08% | | Asset coverage ratio | 164.50% | 168.91% | | Ratio of net investment income to average net assets (annualized) | 10.42% | 12.35% | | Ratio of total expenses to average net assets (annualized) | 18.56% | 19.60% | [Notes to Consolidated Financial Statements](index=19&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section explains accounting policies, investment valuations, related party transactions, and borrowings - Portman Ridge Finance Corporation operates as an externally managed **BDC** and **RIC**, focusing on secured term loans, bonds, and mezzanine debt in middle market companies, with a **150% asset coverage requirement**[58](index=58&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - The company completed several acquisitions, including **OHAI (December 2019)**, **GARS (October 2020)**, and **HCAP (June 2021)**, significantly impacting its portfolio and operations[68](index=68&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) - As of June 30, 2025, **six debt investments** were on non-accrual status, representing **4.8%** of the investment portfolio by amortized cost and **2.1%** by fair value[112](index=112&type=chunk) - The company's **Level III investments**, a significant portfolio portion, are valued using unobservable inputs like required rate of return, EBITDA multiples, and discount rates, reflecting illiquid middle-market holdings[155](index=155&type=chunk)[156](index=156&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - Management fees for the six months ended June 30, 2025, were approximately **$2.9 million**, and incentive fees were approximately **$1.9 million**, both decreasing year-over-year[190](index=190&type=chunk) - The company had **$108.0 million** in **4.875% Notes Due 2026** and **$147.4 million** outstanding under its Revolving Credit Facility as of June 30, 2025, with a **6.0% weighted average interest rate** and **1.6 years weighted average maturity**[202](index=202&type=chunk)[207](index=207&type=chunk)[225](index=225&type=chunk) - The Board authorized a **$10 million stock repurchase program** effective March 12, 2025, with no shares repurchased during the three and six months ended June 30, 2025[251](index=251&type=chunk)[253](index=253&type=chunk) - Subsequent to the period, the company acquired **Logan Ridge Finance Corporation (LRFC)** on July 15, 2025, and declared a regular quarterly base distribution of **$0.47 per share** and a supplemental cash distribution of **$0.02 per share** on August 7, 2025[255](index=255&type=chunk)[257](index=257&type=chunk) Investment Portfolio by Security Type (Fair Value) | Security Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | First Lien Debt | 73.7% | 71.6% | | Second Lien Debt | 7.7% | 7.2% | | Subordinated Debt | 0.4% | 0.4% | | Collateralized Loan Obligations | 0.8% | 1.3% | | Joint Ventures | 11.3% | 13.4% | | Equity | 6.1% | 6.1% | | Derivatives | 0.0% | 0.0% | | Total | 100.0% | 100.0% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, liquidity, capital resources, and investment strategy [General](index=41&type=section&id=General) This section provides an overview of the company's business model, investment objectives, and historical transactions - Portman Ridge Finance Corporation is an externally managed **BDC**, advised by Sierra Crest Investment Management LLC, aiming to generate current income and capital appreciation through secured term loans, bonds, and mezzanine debt in middle market companies[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - The company maintains **RIC status** for U.S. federal income tax purposes, aiming to distribute substantially all net ordinary taxable income and capital gains to stockholders[265](index=265&type=chunk) - Significant past transactions include externalization to **BC Partners (April 2019)** and acquisitions of **OHAI (December 2019)**, **GARS (October 2020)**, and **HCAP (June 2021)**[267](index=267&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[272](index=272&type=chunk) [Portfolio and Investment Activity](index=46&type=section&id=Portfolio%20and%20Investment%20Activity) This section details the company's investment portfolio composition, activity, and changes in fair value - As of June 30, 2025, the Debt Securities Portfolio had a weighted average annualized yield of approximately **10.7%**, down from **11.3%** at December 31, 2024, with **six debt investments** on non-accrual status[280](index=280&type=chunk)[281](index=281&type=chunk) - The fair value of CLO Fund Securities decreased from **$5.2 million** at December 31, 2024, to **$3.3 million** at June 30, 2025, with Joint Ventures valued at **$11.3 million** and **$33.4 million** respectively[283](index=283&type=chunk)[290](index=290&type=chunk)[294](index=294&type=chunk) Total Portfolio Investment Activity (Six Months Ended June 30, 2025) | (in thousands) | Fair Value at Dec 31, 2024 | Purchases / Originations / Draws | Pay-downs / Pay-offs / Sales | Net Accretion of Interest | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at June 30, 2025 | | :--------------- | :------------------------- | :----------------------------- | :-------------------------- | :------------------------ | :----------------------- | :------------------------------------------------- | :-------------------------- | | First Lien Debt | $289,957 | $32,679 | $(24,990) | $1,281 | $(8,530) | $674 | $291,071 | | Second Lien Debt | $28,996 | $703 | $0 | $(46) | $26 | $597 | $30,276 | | Subordinated Debt | $1,740 | $0 | $(26) | $1 | $(1,931) | $1,966 | $1,750 | | Equity | $24,762 | $1,170 | $(108) | $0 | $(4,037) | $2,132 | $23,919 | | Collateralized Loan Obligations | $5,193 | $0 | $(1,545) | $292 | $(1,536) | $859 | $3,263 | | Joint Ventures | $54,153 | $0 | $(6,040) | $0 | $0 | $(3,479) | $44,634 | | Derivatives | $220 | $0 | $0 | $0 | $0 | $(24) | $196 | | Total Portfolio | $405,021 | $34,552 | $(32,709) | $1,600 | $(16,080) | $2,725 | $395,109 | [Results of Operations](index=49&type=section&id=Results%20of%20Operations) This section analyzes financial results, including investment income, expenses, and net gains/losses - Net investment income for Q2 2025 was approximately **$4.6 million ($0.50 per share)**, down from **$6.5 million ($0.70 per share)** in Q2 2024[319](index=319&type=chunk) - The company recognized net realized losses of **$15.8 million** in Q2 2025 and **$16.0 million** YTD 2025, with net unrealized appreciation of **$6.6 million** in Q2 2025 and **$2.7 million** YTD 2025[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) Investment Income Breakdown (in thousands) | Income Type | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Interest income (Non-controlled/non-affiliated) | $8,463 | $11,913 | $15,763 | $24,534 | | Interest income (Non-controlled affiliated) | $324 | $312 | $640 | $407 | | Payment-in-kind income | $2,449 | $2,201 | $5,510 | $4,207 | | Dividend income | $1,213 | $1,800 | $2,630 | $3,453 | | Fees and other income | $181 | $111 | $205 | $262 | | Total investment income | $12,630 | $16,337 | $24,748 | $32,863 | Total Expenses Breakdown (in thousands) | Expense Type | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Management fees | $1,445 | $1,680 | $2,911 | $3,409 | | Performance-based incentive fees | $967 | $1,374 | $1,887 | $2,608 | | Interest and amortization of debt issuance costs | $4,230 | $5,365 | $8,528 | $11,091 | | Professional fees | $403 | $469 | $855 | $1,074 | | Administrative services expense | $450 | $361 | $861 | $717 | | Directors' fees | $142 | $162 | $286 | $323 | | Other general and administrative expenses | $436 | $449 | $523 | $939 | | Total expenses | $8,073 | $9,860 | $15,851 | $20,161 | [Financial Condition, Liquidity, and Capital Resources](index=52&type=section&id=Financial%20Condition,%20Liquidity,%20and%20Capital%20Resources) This section discusses the company's financial position, including assets, liabilities, borrowings, and distribution policy - As of June 30, 2025, outstanding borrowings totaled **$255.4 million**, with an **asset coverage ratio of 165%**, including **$108.0 million** in 4.875% Notes Due 2026 and **$147.4 million** under the Revolving Credit Facility[326](index=326&type=chunk)[328](index=328&type=chunk)[337](index=337&type=chunk) - The Revolving Credit Facility was amended on July 23, 2024, increasing commitments to **$200.0 million**, reducing the applicable margin to **2.50%**, and extending maturity to **August 29, 2027**[333](index=333&type=chunk) - The company intends to make quarterly distributions, aiming to distribute at least **98%** of ordinary net taxable income and **98.2%** of capital gains to maintain RIC status[338](index=338&type=chunk)[344](index=344&type=chunk) - As of June 30, 2025, unfunded commitments were approximately **$32.7 million**, an increase from **$27.2 million** at December 31, 2024[348](index=348&type=chunk) Investments and Cash (in thousands) | Security Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and Cash Equivalents | $11,222 | $17,532 | | Restricted Cash | $13,357 | $22,421 | | First Lien Debt | $291,071 | $289,957 | | Second Lien Debt | $30,276 | $28,996 | | Subordinated Debt | $1,750 | $1,740 | | Equity | $23,919 | $24,762 | | Collateralized Loan Obligations | $3,263 | $5,193 | | Joint Ventures | $44,634 | $54,153 | | Derivatives | $196 | $220 | | Total | $419,688 | $444,974 | [Critical Accounting Policies and Estimates](index=56&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section details critical accounting policies, particularly investment valuation, fair value hierarchy, and income recognition - The most significant estimate is the valuation of investments without readily available market prices, determined at fair value by the Adviser using discounted cash flow, market multiples, and third-party valuations[352](index=352&type=chunk)[353](index=353&type=chunk)[358](index=358&type=chunk) - Investments are categorized into a **three-level fair value hierarchy**, with a majority classified as **Level III** due to reliance on unobservable inputs for private companies[357](index=357&type=chunk)[360](index=360&type=chunk) - Interest income, including PIK interest, is recorded on an accrual basis, while CLO Fund Securities income is recognized using the effective interest method based on anticipated yields[369](index=369&type=chunk)[371](index=371&type=chunk)[373](index=373&type=chunk) - The company completed the acquisition of **Logan Ridge Finance Corporation** on July 15, 2025, and declared a regular quarterly base distribution of **$0.47 per share** and a supplemental cash distribution of **$0.02 per share** on August 7, 2025[377](index=377&type=chunk)[378](index=378&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, focusing on interest rate fluctuations and investment valuation - The company's principal market risks are interest rate fluctuations and investment portfolio valuations, with approximately **86.9%** of the Debt Securities Portfolio in floating rate investments[379](index=379&type=chunk)[381](index=381&type=chunk) - Portfolio investments are carried at fair value, determined by the Adviser under Board-approved procedures, with illiquid investments relying on management judgment[387](index=387&type=chunk) Impact on Net Investment Income from Interest Rate Changes (Annualized, in thousands) | Change in Interest Rate | Impact on Net Investment Income | | :---------------------- | :------------------------------ | | +1% | $1,477 | | +2% | $2,955 | | +3% | $4,432 | | -1% | $(1,477) | | -2% | $(2,912) | | -3% | $(4,105) | [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[389](index=389&type=chunk) - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2025[390](index=390&type=chunk) [Part II. Other Information](index=61&type=section&id=Part%20II.%20Other%20Information) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not currently involved in any material legal proceedings - The Company is not currently a party to any material legal proceedings[393](index=393&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in the company's annual report - There have been no material changes to the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2024[394](index=394&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details unregistered equity sales, primarily through the dividend reinvestment plan, and common stock repurchases - The company issued **4,981 shares** (Q2 2025) and **9,676 shares** (YTD 2025) of common stock under its dividend reinvestment plan, with an aggregate value of approximately **$0.1 million** for both periods[395](index=395&type=chunk) - No shares were repurchased under the stock repurchase program during Q2 and YTD 2025, contrasting with **79,772 shares** for **$1.6 million** in Q2 2024[397](index=397&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[398](index=398&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are not applicable to the company[399](index=399&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This section provides other relevant information, noting no directors or officers adopted or terminated Rule 10b5-1 trading arrangements - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[400](index=400&type=chunk) [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q report, including corporate governance documents and certifications - The exhibit list includes the Certificate of Incorporation, Bylaws, CEO and CFO certifications, Financial Statements of Logan Ridge Finance Corporation, and Inline XBRL documents[401](index=401&type=chunk)[404](index=404&type=chunk) [Signatures](index=63&type=section&id=Signatures) This section contains the official signatures of the company's principal executive and financial officers, certifying the report's submission - The report was signed by Edward Goldthorpe, President and Chief Executive Officer, and Brandon Satoren, Chief Financial Officer, on August 7, 2025[406](index=406&type=chunk)[407](index=407&type=chunk)[408](index=408&type=chunk)