Portman Ridge(US:PTMN)2025-05-08 20:06Portfolio Valuation - The fair value of the total portfolio at December 31, 2024, was $405.021 million, down from $467.865 million at December 31, 2023, reflecting a decrease of approximately 13.4%[279] - The fair value of the portfolio at March 31, 2025, was $406.423 million, showing a slight increase from $405.021 million at December 31, 2024[279] - As of March 31, 2025, the fair value of total investments and cash was approximately $429.9 million, down from $444.9 million as of December 31, 2024[323] - The fair value of investments in Joint Ventures as of March 31, 2025, was approximately $50.5 million, compared to $54.2 million as of December 31, 2024[307] - The fair value of the Company's investment in the F3C Joint Venture was $11.4 million as of March 31, 2025, down from $13.0 million as of December 31, 2024[292] - The fair value of CLO Fund Securities decreased from $5.2 million as of December 31, 2024, to $4.6 million as of March 31, 2025[285] - The majority of the company's investments are classified as Level III in the fair value hierarchy, indicating significant management judgment in valuation[354] - Fair value for investments is determined using various methods, including discounted cash flow and comparable company analysis, with significant judgment involved[362] Investment Activity - Total portfolio investment activity for the three months ended March 31, 2025, included purchases/originations of $20.361 million and pay-downs/sales of $15.660 million[279] - The company has made strategic acquisitions, including OHA Investment Corporation for approximately $0.42 per share and Garrison Capital Inc. for approximately $1.19 per share[273][275] - The company evaluates strategic opportunities, including potential mergers with affiliated funds, to enhance its investment capabilities[270] - The company entered into a Merger Agreement with Logan Ridge Finance Corporation, with the anticipated completion in the second quarter of 2025, subject to stockholder approvals[371] Income and Expenses - For the three months ended March 31, 2025, total investment income was approximately $12.1 million, a decrease of 26.5% from $16.5 million in the same period of 2024[299] - Interest income from the Debt Securities Portfolio for the three months ended March 31, 2025, was approximately $10.3 million, down from $14.2 million in 2024, reflecting a significant decline[301] - Total expenses for the three months ended March 31, 2025, were approximately $7.8 million, a decrease of 24.5% from $10.3 million in 2024, primarily due to lower management and incentive fees[311] - Management fees for the three months ended March 31, 2025, were approximately $1.5 million, down from $1.7 million in 2024[312] - Interest expense and amortization of debt issuance costs for the three months ended March 31, 2025, were approximately $4.3 million, compared to $5.7 million in 2024, reflecting a reduction in average debt outstanding[313] - Core investment income for the three months ended March 31, 2025, was approximately $12.1 million, compared to $16.5 million in 2024, excluding the impact of purchase discount accretion[304] - For the three months ended March 31, 2025, net investment income was approximately $4.3 million, a decrease of 30.6% from $6.2 million in the same period of 2024[318] - The company recognized $0.2 million of net realized losses on investments for the three months ended March 31, 2025, compared to $2.1 million in losses for the same period in 2024[319] - The total net change in unrealized appreciation (depreciation) on investments for the three months ended March 31, 2025, was approximately $(3.9) million, compared to a gain of $0.1 million in 2024[320] - The net increase (decrease) in net assets resulting from operations for the three months ended March 31, 2025, was $(0.1) million, compared to an increase of $4.5 million in 2024[321] Debt and Financing - The company had approximately $255.4 million of outstanding borrowings as of March 31, 2025, with an asset coverage ratio of 168%, exceeding the minimum requirement of 150%[325] - Long-term debt obligations total $255.379 million, with $108 million due in less than two years and $147.379 million due in 2-3 years[346] - The company had $255.4 million in borrowings outstanding at a weighted average interest rate of 5.9%, with $108.0 million at a fixed rate and $147.4 million at a floating rate[375] - A 1% increase in interest rates would increase net investment income by approximately $1.6 million annually, while a 2% and 3% increase would raise it by about $3.3 million and $5.0 million, respectively[378] - Conversely, a 1% decrease in interest rates would decrease net investment income by approximately $1.6 million, with decreases of 2% and 3% resulting in reductions of about $3.2 million and $4.7 million, respectively[379] Distributions - The company intends to maintain its RIC status by distributing substantially all of its net ordinary taxable income to stockholders[269] - The company intends to continue making quarterly distributions to stockholders, aiming to distribute at least 98% of ordinary net taxable income for the calendar year[337] - The company declared a total distribution of $0.54 per share for the first quarter of 2025, including a regular quarterly base distribution of $0.47 and a supplemental cash distribution of $0.07[342] - Total distributions declared in 2024 amounted to $2.76 per share, with each quarter contributing $0.69[342] - In 2023, the company declared total distributions of $2.75 per share, with the first quarter at $0.68 and subsequent quarters at $0.69 each[342] Commitments and Future Plans - The company has a total financial commitment of $35.0 million related to the Externalization Agreement with BC Partners[272] - The company has commitments to fund investments of approximately $26.5 million as of March 31, 2025, down from $27.2 million at the end of 2024[345] - The company plans to grow its portfolio of assets by raising additional capital, including through the prudent use of leverage[322] - The company approved a $10 million stock repurchase program effective March 6, 2023, which may be renewed annually[343] - No shares were repurchased under the Renewed Stock Repurchase Program or the 2025 Stock Repurchase Program during the three months ended March 31, 2025[344] Valuation Methods - The company follows ASC 820 for fair value measurements, which prioritizes market-based inputs over entity-specific inputs[352] - The company values its investments in CLO Fund Securities based on expected cash inflows and outflows, utilizing discounted cash flow models and market comparisons[356] - The company may consider other valuation methods as appropriate under U.S. GAAP to determine fair value of investments[363] - The Adviser has engaged an independent valuation firm for third-party valuation consulting services[382] - Third-party valuations will be performed quarterly on the Company's material investments in illiquid securities[382] - Each material investment will be reviewed at least once during a trailing 12-month period[382] - The independent valuation estimates are considered relevant data inputs for determining fair value[382] - The Adviser plans to continue engaging the independent valuation firm for future valuation services[382] - Valuation services will include the review of certain portfolio assets[382] - The review process will be part of the quarterly and annual year-end valuation process[382] Investment Portfolio Composition - The investment portfolio primarily consists of senior secured loans, junior secured loans, and subordinated/mezzanine debt investments targeting middle-market companies with EBITDA of $10 million to $50 million[266] - The debt investment portfolio was diversified across 24 different industries and 72 different portfolio companies, with a fair value of approximately $324.8 million and an average par balance per entity of approximately $2.6 million[283] - The Company’s portfolio includes 72 different portfolio companies, with six investments on non-accrual status as of March 31, 2025, consistent with the status as of December 31, 2024[283] - The largest industry concentration in the investment portfolio as of March 31, 2025, was in Services: Business, accounting for 13.4% of the total portfolio[281] - The Company has a 62.8% economic interest in the F3C Joint Venture, which primarily invests in middle-market loans[290] - The Company’s investment in the Great Lakes II Joint Venture focuses on underwriting and holding senior, secured unitranche loans made to middle-market companies[293] - The company has invested in "covenant-lite" loans, which may pose a greater risk of loss compared to loans with financial maintenance covenants[268]