Financial Data and Key Metrics Changes - Net investment income for Q2 2019 was approximately $880,000 or $0.02 per basic share, compared to $2.5 million or $0.07 per share in Q2 2018 and a net investment loss of $2.2 million or negative $0.06 per basic share in Q1 2019 [6][8] - Net asset value (NAV) per share declined by $0.12 to $3.73 during Q2 2019, with approximately $0.08 of the decline attributable to a lease impairment and stockholder distribution exceeding net investment income [8][10] - Investment income from debt securities was approximately $3.8 million in Q2 2019, up from $2.9 million in Q1 2019 but down from $4.3 million in Q2 2018 [9] Business Line Data and Key Metrics Changes - Investment income from CLO fund securities was approximately $1.7 million in Q2 2019, compared to $1.8 million in Q1 2019 and $1.5 million in Q2 2018 [9] - Investment income from joint ventures increased to approximately $1.3 million in Q2 2019 from $1.1 million in Q1 2019 and $700,000 in Q2 2018 [9][12] - The company made investments into 12 borrowers during the quarter, totaling $46 million in face value, with 27% in first lien securities and 63% in second lien securities [12] Market Data and Key Metrics Changes - The market has seen increased competitiveness, leading the company to be selective in its investment approach, particularly in the unit tranche asset class [4][5] - The company is focusing on junior capital solutions only in attractive circumstances and companies with resilient business models [5] Company Strategy and Development Direction - The company is pursuing a merger with OHA Investment Corporation, expected to close in Q4 2019, which is anticipated to be accretive for both OHAI and Portman stockholders [2][16] - The strategy includes reducing CLO equity exposure and increasing investments in senior and unit tranche joint ventures to enhance risk-adjusted returns [5][18] - The company aims to stabilize NAV and improve earnings power by right-sizing the dividend to align with net investment income [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting a path towards earnings growth through portfolio repositioning and potential benefits from the OHAI merger [26][34] - The company is monitoring the impact of interest rate changes on earnings, noting that while rate cuts can be a headwind, the overall credit quality in the portfolio remains strong [38] Other Important Information - The company approved a cash distribution of $0.06 per share, payable on August 29, 2019, with a projected total distribution of $0.32 per share for the full year 2019 [10][11] - The company has committed to $21.7 million in face value loans post-quarter, all first lien securities, indicating a strong pipeline of opportunities [14] Q&A Session Summary Question: Higher G&A costs this quarter - Management indicated that higher G&A costs were primarily due to externalization-related expenses and not significantly related to the OHA merger [21][24] Question: Path for earnings to exceed dividends - Management sees a path for earnings growth through portfolio repositioning and the potential benefits from the OHAI transaction [26] Question: Target ROE for Portman Ridge - Management aims for a double-digit ROE over time, with current tracking in high single-digits [34] Question: Callable unsecured notes in September - Management is considering options for restructuring or calling the notes to gain flexibility [36] Question: Investment in cannabis companies - Management clarified that due to regulatory restrictions, the company will not pursue investments in the cannabis sector [42] Question: Impact of Blackstone's investment in BC Partners - Management expressed optimism that the investment would provide capital to expand the credit business, benefiting Portman Ridge shareholders [43]

Financial Data and Key Metrics Changes - Net investment income (NII) for Q1 2019 was a loss of $2.2 million or $0.06 per share, compared to income of $2.4 million or $0.07 per share in Q1 2018 and $0.06 per share in Q4 2018 [8] - The reduction in net asset value (NAV) was from $4.23 per share at the end of 2018 to $3.85 per share due to one-time expenses and fair value declines [11] - Interest income on debt securities was $2.9 million or $0.08 per share, down from $3.8 million or $0.10 per share in the same period of 2018 [12] Business Line Data and Key Metrics Changes - Investment income from CLO fund securities remained flat at $1.8 million or $0.05 per share [13] - Income from the joint venture with FC3 increased to $950,000 or $0.03 per share from $700,000 or $0.02 per share in Q1 2018 [13] - Approximately $28 million was invested in interest-bearing securities during the quarter, with $13.2 million in senior secured first lien loans at a weighted yield of 7.96% and $12.5 million in second lien loans at a weighted yield of 9.68% [15] Market Data and Key Metrics Changes - The asset coverage ratio at the end of the quarter was 216%, with the potential to increase leverage to a new statutory ratio of 150% [14] - The unit tranche market has become more competitive, leading to caution and selectivity in investments [21] Company Strategy and Development Direction - The company aims to transition to a more stable and predictable vehicle for net investment income and net asset value [6] - Plans to reduce CLO equity exposure and replace it with investments in senior and unit tranche joint ventures, which are expected to provide attractive risk-adjusted returns [24] - Commitment to align with shareholders by supporting net investment income for one year and taking incentive fees and equity at net asset value for two years [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in managing distressed credits and believes that the majority have been written down to minimal market values [19] - The company anticipates being fully invested and utilizing its revolving credit facility efficiently by the end of Q2 2019 [20] - Management noted that while CLO equity is a volatile asset class, it is still considered a good investment, but the intention is to gradually reduce exposure [40] Other Important Information - A special distribution of $0.67 per share was made to shareholders in connection with the externalization transaction [6] - The first quarter distribution of $0.10 per share was made on April 26, with future distributions aligned with the completion of financials [16][17] Q&A Session Summary Question: Are there covenants preventing leverage increase? - Yes, there are covenants that prevent increasing leverage above the one-to-one debt to equity ratio [28] Question: Is there a plan to renegotiate covenants? - There is no immediate need to renegotiate, but if leverage needs to be increased, action will be required regarding the outstanding public debt [29][30] Question: What is the trend in non-accruals? - All concerning credits have been written down, and the only significant market value remaining is from Roscoe Medical [33] Question: What EBITDA multiples are being invested in? - EBITDA multiples in the middle market have not increased significantly, but adjustments in calculations are becoming more common [35][36] Question: Is the intention to reduce CLO equity to zero? - While CLO equity is seen as a good asset class, it is too volatile for a BDC, and the reduction will be gradual [40][42] Question: How will capital markets fees be split? - All fees from commitments made by Portman Ridge will go to shareholders, lowering the overall cost of capital [56]