Portman Ridge Finance Corporation (NASDAQ:PTMN) Q4 2022 Results Conference Call March 10, 2023 9:00 AM ET Company Participants Ted Goldthorpe - CEO, President & Director Jason Roos - CFO Patrick Schafer - CIO Conference Call Participants Ryan Lynch - KBW Christopher Nolan - Ladenburg Thalmann Operator Welcome to Portman Ridge Finance Corporation's Fourth Quarter and Full Year 2022 Earnings Conference Call. An earnings press release was distributed yesterday, March 9, after market close. A copy of the releas ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Portman Ridge Finance Corporation is an externally managed BDC focused on generating income and capital appreciation by investing in secured debt of U.S. middle-market companies - **Portman Ridge is an externally managed BDC focusing on secured debt in U.S. middle-market companies**, defined as those with EBITDA of $10 million to $50 million[18](index=18&type=chunk)[21](index=21&type=chunk) Portfolio Overview as of December 31, 2022 | Metric | Value | | :--- | :--- | | Total Portfolio Fair Value | $576.5 million | | Number of Industries | 31 | | Number of Entities | 119 | | Average Par Balance per Entity | ~$3.3 million | - The company has completed several strategic transactions, including becoming externally managed in 2019, acquiring GARS in 2020, acquiring HCAP in 2021, and executing a **1-for-10 reverse stock split** in 2021[27](index=27&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - The company has elected to be treated as a **Regulated Investment Company (RIC)** for U.S. federal income tax purposes, which generally allows it to avoid corporate-level income taxes by distributing its income to stockholders[25](index=25&type=chunk)[115](index=115&type=chunk) [Investment Portfolio](index=6&type=section&id=Item%201.%20Business%20-%20Investment%20Portfolio) The company's investment portfolio primarily comprises debt securities, joint ventures, and CLO fund securities, with debt securities constituting 82% of the total fair value Portfolio Composition by Fair Value (December 31, 2022) | Portfolio Segment | % of Total Portfolio (Fair Value) | | :--- | :--- | | Debt Securities Portfolio | ~82% | | CLO Fund Securities | ~3% | | Joint Ventures & Other | ~15% | - The Debt Securities Portfolio is diversified across 31 industries and 119 entities, with an average par balance of approximately $3.3 million per investment. **88%** of this portfolio consists of senior secured loans[50](index=50&type=chunk) - The company holds investments in two key joint ventures: KCAP Freedom 3 LLC (F3C Joint Venture) and Series A – Great Lakes Funding II LLC (Great Lakes II Joint Venture), with fair values of **$18.7 million** and **$40.3 million**, respectively, as of December 31, 2022[47](index=47&type=chunk)[50](index=50&type=chunk) [Advisory and Administration Agreements](index=9&type=section&id=Item%201.%20Business%20-%20Advisory%20and%20Administration%20Agreements) The company is managed by Sierra Crest Investment Management LLC, which receives a base management fee and a two-part incentive fee, while administrative services are provided by BC Partners Management LLC Adviser Compensation Structure | Fee Type | Rate/Structure | | :--- | :--- | | **Base Management Fee** | 1.50% on average gross assets (excluding cash). | | | 1.00% on average gross assets exceeding 200% of NAV. | | **Incentive Fee (Income-Based)** | 17.50% of pre-incentive fee net investment income, subject to a 7.00% hurdle rate. | | **Incentive Fee (Capital Gains)** | 17.50% of cumulative realized capital gains net of losses and unrealized depreciation. | - The Advisory Agreement is subject to annual re-approval by the Board of Directors. It was most recently re-approved on **March 6, 2023**[83](index=83&type=chunk) - The company reimburses the Administrator for costs and expenses related to administrative services, including office space, equipment, and allocable compensation for the CFO and CCO[86](index=86&type=chunk)[87](index=87&type=chunk) [Regulation and Taxation](index=13&type=section&id=Item%201.%20Business%20-%20Regulation%20and%20Taxation) As a BDC, the company must invest primarily in qualifying assets, maintain a 150% asset coverage ratio, and distribute at least 90% of taxable income to maintain RIC tax status - The company must maintain an asset coverage ratio of at least **150%**, a requirement that became effective March 29, 2019, allowing for increased leverage compared to the previous 200% requirement[104](index=104&type=chunk) - To qualify as a RIC, the company must meet a **90%** Income Test (deriving at least 90% of gross income from specific investment sources) and Diversification Tests at the end of each quarter[119](index=119&type=chunk) - The company is also subject to a **4%** nondeductible U.S. federal excise tax unless it distributes at least **98%** of its net ordinary income for the calendar year and **98.2%** of its capital gain net income for the one-year period ending October 31[117](index=117&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, structural, leverage, investment, and market risks, including conflicts of interest, illiquid portfolio valuations, and interest rate fluctuations - **Business & Structural Risks:** **Conflicts of interest may arise from the Adviser's compensation structure**. The company operates in a highly competitive market and relies on key personnel from the Adviser[141](index=141&type=chunk)[152](index=152&type=chunk)[157](index=157&type=chunk) - **Leverage Risks:** Borrowing money **magnifies gains and losses**. The company may default on its credit facilities or notes, which contain restrictive covenants that could hinder operations and distributions[188](index=188&type=chunk)[193](index=193&type=chunk) - **Investment Risks:** The portfolio consists of **illiquid, speculative, and below-investment-grade securities**. Valuations are determined in good faith and are **subject to uncertainty**. The company is **non-diversified**, increasing risk from individual issuer defaults[214](index=214&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk) - **Market & Economic Risks:** **Economic recessions, capital market disruptions, inflation, and interest rate changes** could adversely affect portfolio companies and the company's financial results. The discontinuation of LIBOR presents transition risks[166](index=166&type=chunk)[213](index=213&type=chunk)[266](index=266&type=chunk) - **Common Stock Risks:** Shares of BDCs frequently **trade at a discount to their net asset value**. The company may not be able to pay distributions, and a portion of distributions may be a return of capital[240](index=240&type=chunk)[244](index=244&type=chunk) [Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - **None**[279](index=279&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties) The company does not own any real estate or other real property - The company does not own any real estate[280](index=280&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in two stockholder class action lawsuits alleging breaches of fiduciary duties related to the HCAP acquisition, with an indeterminable outcome - The company is a defendant in **two stockholder class action lawsuits** related to the HCAP merger, alleging breaches of fiduciary duties by former HCAP officers and directors[282](index=282&type=chunk) - As the surviving corporation of the HCAP merger, Portman Ridge is responsible for any claims against HCAP and indemnification for its former officers and directors[283](index=283&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[285](index=285&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Portman Ridge's common stock trades on NASDAQ, consistently traded at a discount to NAV, and the company maintains a quarterly distribution policy and a stock repurchase program Stock Price vs. NAV per Share (2022) | Period | NAV per Share | High Closing Price | Low Closing Price | High as % of NAV | Low as % of NAV | | :--- | :--- | :--- | :--- | :--- | :--- | | Q4 2022 | $24.23 | $23.00 | $19.61 | (5.08)% | (19.07)% | | Q3 2022 | $26.18 | $24.38 | $20.00 | (6.88)% | (23.61)% | | Q2 2022 | $27.26 | $24.08 | $21.86 | (11.66)% | (19.80)% | | Q1 2022 | $28.76 | $25.15 | $23.29 | (12.55)% | (19.02)% | - The company intends to continue making **quarterly distributions**, determined by the Board, to maintain its RIC status[291](index=291&type=chunk) Stock Repurchase Program Activity | Period | Shares Purchased | Average Price Paid | Dollar Value Remaining | | :--- | :--- | :--- | :--- | | **2022 Total** | **167,017** | **~$22.90** | **$6,169 thousand** | | **2021 Total** | **75,377** | **~$24.23** | **$8,174 thousand** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, the company experienced decreased investment income and increased expenses, resulting in a net decrease in net assets from operations, while maintaining a compliant asset coverage ratio Key Operational Results (Years Ended Dec 31) | ($ in thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Investment Income | $69,614 | $80,086 | $42,764 | | Total Expenses | $40,724 | $38,082 | $26,321 | | Net Investment Income | $28,890 | $42,004 | $17,000 | | Net Realized (Loss)/Gain | ($31,185) | ($4,258) | $7,605 | | Net Unrealized (Depreciation)/Appreciation | ($17,915) | ($8,443) | $6,813 | | **Net (Decrease)/Increase in Net Assets** | **($20,996)** | **$26,026** | **$31,573** | Financial Condition (As of Dec 31) | ($ in thousands, except per share) | 2022 | 2021 | | :--- | :--- | :--- | | Total Investments (Fair Value) | $576,478 | $549,985 | | Total Assets | $619,486 | $648,301 | | Total Liabilities | $387,363 | $368,179 | | **Net Assets** | **$232,123** | **$280,122** | | **NAV per Share** | **$24.23** | **$28.88** | - The company's asset coverage ratio was **160%** as of December 31, 2022, exceeding the **150%** minimum required by the 1940 Act[386](index=386&type=chunk) - The company's critical accounting policy is the **valuation of its portfolio investments**, which are primarily **illiquid Level III assets**. The Adviser is designated as the valuation designee, using methodologies like discounted cash flow and enterprise value, with oversight from the Board and input from independent valuation firms[407](index=407&type=chunk)[409](index=409&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations, with 90% of the debt portfolio being floating rate, and portfolio valuation risk due to illiquid investments - As of December 31, 2022, **90.0%** of the company's Debt Securities Portfolio (at par) was **floating rate**, making investment income sensitive to interest rate changes[440](index=440&type=chunk) Annualized Impact of Interest Rate Changes on Net Investment Income | ($ in thousands) | +1% Change | +2% Change | +3% Change | | :--- | :--- | :--- | :--- | | **Increase in Interest Rate** | $1,963 | $3,927 | $5,890 | | **Decrease in Interest Rate** | ($1,963) | ($3,927) | ($5,625) | - Portfolio valuation risk is significant due to the **illiquid nature** of the company's investments. Fair value is determined in good faith by the Adviser, as the designated valuation designee, with Board oversight and the use of third-party valuation firms[447](index=447&type=chunk)[448](index=448&type=chunk) [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the company's audited consolidated financial statements and supplementary data, which begin on page F-1 - The company's financial statements are annexed to the Annual Report beginning on page F-1[449](index=449&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2022 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[450](index=450&type=chunk) - Management concluded that the company maintained **effective** internal control over financial reporting as of December 31, 2022, based on the COSO framework[454](index=454&type=chunk) [Other Information](index=52&type=section&id=Item%209B.%20Other%20Information) This section details estimated annual expenses as a percentage of net assets, totaling 18.03% for 2022, and provides a hypothetical expense illustration Annual Expenses (as a percentage of net assets) | Expense Category | Percentage | | :--- | :--- | | Base management fee | 3.60% | | Incentive fee | 2.64% | | Interest payments on borrowed funds | 7.63% | | Other expenses | 3.68% | | Acquired fund fees and expenses | 0.48% | | **Total annual expenses** | **18.03%** | - A hypothetical **$1,000** investment with a 5% annual return would incur approximately **$149** in expenses in the first year and **$612** over five years[461](index=461&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=54&type=section&id=Items%2010-14) Information for Items 10 through 14, covering governance, compensation, and ownership, is incorporated by reference from the 2023 proxy statement - Information for Part III (Items 10, 11, 12, 13, and 14) is **incorporated by reference** from the company's definitive proxy statement for the 2023 annual meeting of stockholders[468](index=468&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=55&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of the financial statements and other required exhibits filed with the report - This section provides an index of the financial statements and exhibits filed with the report[474](index=474&type=chunk)[475](index=475&type=chunk) Financial Statements [Consolidated Balance Sheets](index=59&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2022, the company reported total assets of $619.5 million, total liabilities of $387.4 million, and net assets of $232.1 million, with a decrease in NAV per share from 2021 Consolidated Balance Sheet Summary | ($ in thousands) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Investments at Fair Value | $576,478 | $549,985 | | Total Assets | $619,486 | $648,301 | | Total Liabilities | $387,363 | $368,179 | | **Total Net Assets** | **$232,123** | **$280,122** | | **Net Asset Value Per Share** | **$24.23** | **$28.88** | [Consolidated Statements of Operations](index=60&type=section&id=Consolidated%20Statements%20of%20Operations) For 2022, the company reported $69.6 million in total investment income, resulting in a net investment income of $28.9 million and a net decrease in net assets from operations of $21.0 million Statement of Operations Summary (Year Ended Dec 31, 2022) | ($ in thousands) | Amount | | :--- | :--- | | Total investment income | $69,614 | | Net expenses | $40,724 | | **Net investment income** | **$28,890** | | Net realized loss on investments | ($31,185) | | Net unrealized depreciation on investments | ($17,915) | | **Net decrease in net assets from operations** | **($20,996)** | [Consolidated Schedules of Investments](index=63&type=section&id=Consolidated%20Schedules%20of%20Investments) As of December 31, 2022, the company's $576.5 million investment portfolio was primarily composed of senior and junior secured loans, diversified across 31 industries Portfolio Composition by Fair Value (Dec 31, 2022) | Security Type | Fair Value ($ in thousands) | % of Portfolio | | :--- | :--- | :--- | | Senior Secured Loan | $418,722 | 73% | | Junior Secured Loan | $56,400 | 10% | | Joint Ventures | $58,955 | 10% | | Equity Securities | $21,905 | 4% | | CLO Fund Securities | $20,453 | 3% | | **Total** | **$576,478** | **100%** | Top Industry Concentrations by Fair Value (Dec 31, 2022) | Industry | Fair Value ($ in thousands) | % of Portfolio | | :--- | :--- | :--- | | Banking, Finance, Insurance & Real Estate | $78,264 | 14% | | High Tech Industries | $73,994 | 13% | | Services: Business | $66,207 | 11% | | Joint Ventures | $58,955 | 10% | | Healthcare & Pharmaceuticals | $50,566 | 9% | [Notes to Consolidated Financial Statements](index=79&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, investment valuation, debt structure, and the accounting treatment of the GARS and HCAP acquisitions - The company's valuation policy designates the Adviser as the "**valuation designee**" under SEC **Rule 2a-5**, responsible for fair value determinations of the portfolio, with Board oversight[580](index=580&type=chunk) Borrowings as of December 31, 2022 | Debt Instrument | Carrying Value ($ in thousands) | | :--- | :--- | | 2018-2 Secured Notes | $176,937 | | 4.875% Notes Due 2026 | $105,478 | | Revolving Credit Facility | $90,893 | | **Total** | **$373,308** | - The acquisitions of GARS (2020) and HCAP (2021) were accounted for as **asset acquisitions**, resulting in purchase discounts of **$40.4 million** and **$3.8 million**, respectively, which are amortized into interest income over the life of the acquired investments[757](index=757&type=chunk)[762](index=762&type=chunk)

Financial Data and Key Metrics Changes - Total investment income for Q3 2022 was $19 million, an increase of $3.6 million from $15 million in Q2 2022, driven by rising rates [19][4] - Net investment income for Q3 2022 was $8.4 million or $0.87 per share, compared to $5.5 million or $0.57 per share in Q2 2022 [21] - Total expenses for Q3 2022 were $10.6 million, up from $9.1 million in Q2 2022, primarily due to increased interest expenses [22] - Net asset value at the end of Q3 2022 was $251.6 million or $26.18 per share, down from $261.7 million or $27.26 per share in Q2 2022 [22] Business Line Data and Key Metrics Changes - Net deployments for the quarter were approximately $2.4 million, with new fundings of $44.3 million offset by $41.9 million in repayments [15][10] - The average interest coverage in the portfolio was 3.5x, with LTM revenues growing by 4.5% [10] Market Data and Key Metrics Changes - Leveraged loan new issue volume declined over 80% year-over-year, and loan prices fell from 95% of par in August to 92% by the end of September [6][7] - Approximately 89.3% of the debt securities portfolio were floating rate, with 71% linked to LIBOR [12] Company Strategy and Development Direction - The company is focused on being selective and resourceful in investment decisions, taking advantage of opportunities arising from the current market environment [11] - The management emphasized a cautious investment strategy due to economic uncertainty, while also indicating a strong position for future growth [11][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is challenging, but they expect strong financial performance to continue in future quarters [4][28] - There is a positive outlook on interest income as rates continue to rise, with expectations for incremental income generation [34][35] Other Important Information - The company announced a quarterly dividend increase of 6% to $0.67 per share, reflecting strong financial performance [5][26] - The debt-to-equity ratio was 1.5x on a gross basis and 1.3x on a net basis, with an asset coverage ratio of 167% [25] Q&A Session Summary Question: Were there any non-recurring items in earnings? - Management indicated that there were no significant non-recurring items, and the quarter reflected a normal run rate [31][32] Question: Is the new dividend of $0.67 potentially low? - Management acknowledged the uncertainty in the environment but noted that there are no current credit quality issues, suggesting a potential for future dividend increases [35][36] Question: Can you explain the significant jump in projected earnings? - Management clarified that the projection included purchase accounting accretion and was based on changing benchmark rates without additional assumptions [42][44] Question: What is the expectation for future dividend increases? - Management expressed a desire to be conservative while also indicating a positive momentum for future dividend increases [49][50] Question: How is the deal flow and quality of deals changing? - Management noted that the market has improved, with wider spreads and better quality deals available compared to six months ago [58][59] Question: What is the status of the joint ventures? - Management explained that there was a temporary return of capital due to the expiration of the investment period in a joint venture, but they expect to return to previous levels soon [54][56]

Portman Ridge Finance Corporation (NASDAQ:PTMN) Q2 2022 Earnings Conference Call August 10, 2022 9:00 AM ET Company Participants Ted Goldthorpe - Chief Executive Officer Patrick Schafer - Chief Investment Officer Jason Roos - Chief Financial Officer Conference Call Participants Christopher Nolan - Ladenburg Thalmann & Co. Inc. Ryan Lynch - Keefe, Bruyette, & Woods, Inc. Steven Martin - Slater Capital Management, LLC Operator Welcome to the Portman Ridge Finance Corporation Second Quarter 2022 Earnings Confe ...

PORTMAN 2022 Q2 Earnings Presentation August 10, 2022 Important Information Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements. The matters discussed in this presentation, as well as in future oral and written statements by management of Portman Ridge Finance Corporation ("PTMN", "Portman Ridge" or the "Company"), that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 814-00735 Portman Ridge Finance Corporation (Exact name of Registrant as specified in its charter) Delaware 20-5951150 (State or other jurisdiction of Inc ...

Financial Data and Key Metrics Changes - The net asset value (NAV) for Q1 2022 remained relatively flat at $278 million or $28.76 per share, compared to $280 million or $28.88 per share in Q4 2021, with a decline of less than 0.3% when excluding a one-time tax impact [5][13] - Net investment income for Q1 2022 was reported at $7.9 million or $0.82 per share, while core net investment income was $6.1 million or $0.63 per share [5][13] - Total investment income for Q1 was $16.9 million, with $13 million attributed to interest income from the debt securities portfolio [13] Business Line Data and Key Metrics Changes - Approximately $43 million of investments were made during the quarter, with 50% occurring in the last two weeks of March, resulting in minimal impact on the income statement [9] - The weighted average spread on new investments was 811 basis points, with 67% of new investments being first lien securities and 26% being second lien or unsecured securities [9][10] - The debt securities portfolio was marked at 94.4% of par, yielding a stated spread to LIBOR of 727 basis points on accruing debt securities [10] Market Data and Key Metrics Changes - The first quarter of 2022 experienced low activity in originations and investments due to geopolitical disruptions and market volatility [9] - Investments on non-accrual status decreased to 0.21% and 1.9% of the company's investment portfolio at fair value and amortized costs, respectively, compared to 0.52% and 2.8% as of December 31, 2021 [11] Company Strategy and Development Direction - The company has shifted its revolving credit facility agreement from LIBOR to a three-month SOFR benchmark, reducing the applicable margin and extending the reinvestment period [8] - The company aims to maintain a leverage ratio between 1.25 to 1.4 times, with a current debt-to-equity ratio of 1.27 times on a gross basis and 0.97 times on a net basis [17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future investment income due to rising interest rates, indicating that a 1% increase in interest rates could lead to an annualized increase of approximately $1.5 million in net investment income [19] - The management noted that while trailing earnings are strong, they are preparing for potential economic slowdowns, particularly in consumer discretionary sectors [33][34] Other Important Information - The company repurchased 22,990 shares under its stock repurchase program at an aggregate cost of approximately $545,000 [6] - The company has a pipeline of an additional $20 to $30 million ready for deployment before the end of the second quarter [12] Q&A Session Summary Question: Interest rate sensitivity change - Management confirmed that the company has shifted from being liability sensitive to asset sensitive due to changes in LIBOR rates [21][23] Question: Dividend policy considerations - Management indicated that while they are over-earning their dividend, they are cautious about increasing it further due to market volatility [25][26] Question: Underwriting strategy in changing economic environment - Management stated they are being conservative in underwriting, particularly in sectors showing weakness, and are not expecting to reach the high end of their leverage range soon [34] Question: Spread compression and deal volume - Management noted that they have not seen spread compression in their area, despite a decrease in deal flow during the first quarter [36][39] Question: Co-investments across the broader BC Partners platform - Management confirmed that over 95% of new deals are co-investments across their various funds, targeting a position size of $10 to $15 million [45][49] Question: Legacy exposure to higher rates - Management expressed confidence that rising rates would not materially impact credit quality, as interest coverage is at all-time highs [55][56]

Debt Securities and Investment 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 privately-held middle market companies [282]. - The middle market is defined as companies with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million [282]. - The company's investments may include "covenant-lite" loans, which carry a higher risk of loss compared to loans with financial maintenance covenants [284]. - Total portfolio fair value as of March 31, 2022, was $568,011,000, an increase from $547,573,000 as of December 31, 2021 [302]. - The investment portfolio was diversified across 30 different industries and 116 different entities, with an average par balance per entity of approximately $3.3 million [309]. - The fair value of Senior Secured Loans increased to $395,062,000 as of March 31, 2022, from $364,701,000 as of December 31, 2021 [303]. - The company’s investment in Joint Ventures was valued at $60,217,000 as of March 31, 2022, consistent with the previous period [303]. - The healthcare and pharmaceuticals sector accounted for 8% of the total portfolio fair value as of March 31, 2022, down from 11% as of December 31, 2021 [306]. - As of March 31, 2022, six investments were on non-accrual status, a decrease from seven as of December 31, 2021 [309]. - The company had approximately $29.1 million invested in CLO Fund Securities as of March 31, 2022, down from $31.6 million as of December 31, 2021 [312]. Acquisitions and Corporate Actions - The company completed the acquisition of Garrison Capital Inc. (GARS) on October 28, 2020, with GARS stockholders receiving approximately $1.19 in cash and 1.917 shares of the company's common stock for each share of GARS [290]. - The company acquired Harvest Capital Credit Corporation (HCAP) on June 9, 2021, with HCAP stockholders receiving $18.54 million in cash and 15,252,453 shares of the company's common stock [292]. - The company assumed $28.75 million in aggregate principal amount of HCAP's 6.125% Notes due September 15, 2022, as part of the HCAP acquisition [294]. - A reverse stock split of 1-for-10 was executed on August 26, 2021, reducing the number of authorized shares from 100 million to 20 million [299]. Financial Performance and Income - The investment income for the three months ended March 31, 2022, was approximately $16.944 million, a decrease from $18.305 million in the same period of 2021 [335]. - The net investment income for KCAP Freedom 3 LLC for the three months ended March 31, 2022, was $1.740 million, compared to $1.519 million in 2021 [323]. - The total equity of KCAP Freedom 3 LLC decreased to $34.177 million as of March 31, 2022, from $35.677 million as of December 31, 2021 [321]. - The net income for KCAP Freedom 3 LLC for the three months ended March 31, 2022, was $217,000, a significant decrease from $3.285 million in the same period of 2021 [323]. - The investment income attributable to interest income on the Debt Securities Portfolio was approximately $13.0 million for the three months ended March 31, 2022, down from $15.2 million in 2021 [337]. - For the three months ended March 31, 2022, core investment income was approximately $15.1 million, an increase of 12.5% from $13.5 million in the same period of 2021 [340]. - Investment income from CLO Fund Securities was approximately $1.6 million for Q1 2022, compared to $617 thousand in Q1 2021, reflecting a significant increase of 158% [341]. Expenses and Liabilities - Total expenses for the three months ended March 31, 2022, were approximately $9.0 million, a decrease of 10.5% from $10.1 million in the same period of 2021 [349]. - Net investment income for Q1 2022 was approximately $2.4 million, or $0.24 per share, down from $3.1 million, or $0.41 per share in Q1 2021 [352]. - The company had approximately $352.4 million of outstanding borrowings with an asset coverage ratio of 180%, exceeding the minimum requirement of 150% under the 1940 Act [358]. - The company declared a total dividend of $0.63 in 2022, compared to $2.42 in 2021 [1]. - The company’s long-term debt obligations total $352.4 million, with $80.6 million due within one year [382]. Valuation and Investment Methodologies - The company's investments are primarily classified as Level III, indicating significant management judgment in valuation [389]. - Fair value of investments is determined based on market conditions, financial performance, and comparable transactions [394]. - The company utilizes a discounted cash flow model for valuing its wholly-owned Asset Manager Affiliates [392]. - The company’s valuation methodologies may involve significant management judgment and assumptions about market conditions [397]. - An independent valuation firm is engaged to provide third-party valuation consulting services, reviewing material investments in illiquid securities at least once every 12 months [416]. Strategic Intent and Future Outlook - The company intends to distribute substantially all of its net ordinary taxable income to stockholders to maintain its status as a regulated investment company (RIC) [285]. - The company may evaluate strategic opportunities including mergers, divestitures, and joint ventures depending on market conditions [286]. - The company intends to continue making quarterly distributions to stockholders, aiming to distribute at least 98% of ordinary net taxable income to avoid excise taxes [371][375]. - The company is required to maintain adequate liquidity to cover normal cyclical swings in funding availability and unexpected funding requirements [357]. - The company may borrow amounts up to 5% of total assets for temporary purposes, in addition to the leverage limits set by the 1940 Act [358]. - The company is prohibited from declaring dividends if its asset coverage is below the required threshold, ensuring compliance with the 1940 Act [374].

Portman Ridge Finance Corporation (NASDAQ:PTMN) Q4 2021 Results Conference Call March 11, 2022 9:00 AM ET Company Participants Serena Liegey - The Equity Group Inc. Ted Goldthorpe - Chief Executive Officer Jason Roos - Chief Financial Officer Patrick Schafer - Chief Investment Officer Conference Call Participants Christopher Nolan - Ladenburg Thalmann Ryan Lynch - KBW Steven Martin - Slater Operator Good day, and thank you for standing by. Welcome to the Portman Ridge Fourth Quarter 2021 Financial Results C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 814-00735 Portman Ridge Finance Corporation (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organi ...