CORRECTING and REPLACING CM Finance Inc Reports Results for its Fiscal First Quarter Ended September 30, 2018

NEW YORK, Nov. 08, 2018 (GLOBE NEWSWIRE) — In a release issued under the same headline yesterday by CM Finance Inc (NASDAQ: CMFN) please note that in the table titled CM Finance Inc and Subsidiaries, Consolidated Statements of Assets and Liabilities, data has been updated. The corrected release follows:

CM Finance Inc (NASDAQ: CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal first quarter ended September 30, 2018.


  • CMFN made thirteen new investments in seven portfolio companies during the quarter with a total cost of $53.7mm.  The weighted average yield of debt investments made in the quarter was 9.24% 
  • Four investments were realized during the quarter, two fully realized and two partially realized, with a weighted average internal rate of return (“IRR”) of 11.76%
  • The weighted average yield on debt investments, at cost, decreased to 10.90%, a decrease of 29 basis points compared to 11.19% as of June 30, 2018
  • Net asset value (“NAV”) per share decreased by 1.27% to $12.41, compared to $12.57 as of June 30, 2018
Portfolio results, as of September 30, 2018:                  
Total assets                  $341.4mm
Investment portfolio, at fair value                 $330.7mm
Net assets                  $169.4mm
Weighted average yield on debt investments, at cost                 10.90%
Net asset value per share                 $12.41
Portfolio activity in the current quarter:                  
Number of new investments                  13
Total capital invested                  $53.7mm
Proceeds from repayments, sales, and amortization                 $14.4mm
Number of portfolio companies, end of period                 30
Net investment income (NII)                  $3.4mm
Net investment income per share                 $0.25
Net increase in net assets from operations                 $1.4mm
Net increase in net assets from operations per share                 $0.10
Quarterly per share distribution paid on October 5, 2018                 $0.25

Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said “We made significant progress in diversifying our portfolio this quarter, increasing our portfolio company count to 30 while decreasing our average position size.  We also made an active decision to invest in first lien loans, increase the percentage of our portfolio invested in first lien from 52.1% to 61.5%.  In a challenging technical environment, we believe taking a conservative approach to risk is prudent.”

On November 6, 2018, the Company’s Board of Directors declared a distribution for the quarter ending December 31, 2018 of $0.25 per share, payable on January 3, 2019, to shareholders of record as of December 14, 2018. This represents a 12.42% yield on the Company’s $8.05 share price as of the close on November 5, 2018.  Distributions may include net investment income, capital gains and/or return of capital; however, the Company does not expect the distribution to be comprised of a return of capital.The tax status of distributions will be determined at the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made investments in seven portfolio companies.  These investments totaled $ at cost and were made at a weighted average yield of 9.24%.  The Company also realized $14.4mm of repayments, sales, and amortization, primarily related to the sales of International Wire Group, Inc. and U.S. Lumber and the repayments of Intermedia Holdings, Inc and Zinc Acquisition Holdings, LP. Realized and unrealized gains accounted for a decrease in the Company’s net investments of approximately $2.0mm, or $0.15 per share.  The total net increase in net assets resulting from operations for the quarter was $1.4mm, or $0.10 per share. 

As of September 30 2018, the Company’s investment portfolio consisted of investments in 30 portfolio companies, of which 61.5% were first lien investments, 34.7% were second lien investments, less than 0.01% were in unsecured debt investments, 3.6% were unitranche loans, and 0.2% were in equities, warrants and other positions.  The Company’s debt portfolio consisted of 98.2% floating rate investments and 1.8% fixed rate investments.  As of September 30, 2018, the Company had no investments on non-accrual status.

Capital Resources

As of Septmeber 30, 2018, the Company had $2.7mm in cash, $1.4mm in restricted cash and $38.1mm of capacity under its revolving credit facility with UBS AG, London Branch.

Share Repurchases

During the quarter, the Company repurchased 11,215 shares of common stock on the open market for $101,195 (including commissions).

Subsequent Events

Subsequent to the three months ended September 30, 2018 through November 5, 2018, we invested $18.2 million in new and
existing portfolio companies and received repayment or sales proceeds of $46.4 million

CM Finance Inc and Subsidiaries          
Consolidated Statements of Assets and Liabilities          
        September 30, 2018      
        (Unaudited)     June 30, 2018
Non-controlled, non-affiliated investments, at fair value (amortized cost of $   330,694,472     $   293,592,013  
  $341,475,968 and $ 302,647,282, respectively)          
Derivatives, at fair value (cost of $0 and $0, respectively)     878,000         229,918  
Cash         2,674,298         5,620,441  
Cash, restricted       1,448,718         2,706,273  
Receivable for investments sold     1,904,507         7,751,875  
Interest receivable       3,562,036         4,011,450  
Deferred offering costs       121,922         121,922  
Other receivables       –          245,550  
Prepaid expenses and other assets     160,451         255,139  
  Total Assets   $   341,444,404     $   314,534,581  
Notes payable:            
  Term loan   $   102,000,000     $   102,000,000  
  Revolving credit facility     11,843,470         17,823,000  
  Baby bonds payable:       34,500,000         –   
  Deferred debt issuance costs     (2,741,644 )       (1,953,771 )
  Notes payable, net       145,601,826         117,869,229  
Payable for investments purchased     15,159,326         12,569,450  
Dividend payable       3,412,531         3,417,848  
Deferred financing costs payable     2,071,167         2,071,167  
Income-based incentive fees payable     2,392,999         2,294,678  
Base management fees payable     1,351,855         1,319,853  
Accrued provision for taxes       –          2,579,337  
Derivatives, at fair value (cost $0 and $0, respectively)     878,000         229,918  
Interest payable       932,289         303,153  
Directors’ fees payable       97,673         99,296  
Accrued expenses and other liabilities     104,339         257,986  
  Total Liabilities       172,002,005         143,011,915  
Commitments and Contingencies (Note 6)          
Net Assets            
Common stock, par value $0.001 per share (100,000,000 shares authorized,          
  13,650,124 and 13,649,504 shares issued and outstanding, respectively)     13,650         13,649  
Additional paid-in capital       198,706,416         198,700,999  
Accumulated net realized loss     (21,345,472 )       (21,087,280 )
Undistributed (distributions in excess of) net investment income     2,947,532         2,950,567  
Net unrealized depreciation on investments     (10,778,532 )       (9,055,269 )
Less Treasury Stock       (101,195 )       –   
  Total Net Assets       169,442,399         171,522,666  
  Total Liabilities and Net Assets $   341,444,404     $   314,534,581  
Net Asset Value Per Share   $   12.41     $   12.57  
See notes to unaudited consolidated financial statements.

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CM Finance Inc and Subsidiaries          
Consolidated Statements of Operations (Unaudited)          
      For the three months ended September 30,
      2018     2017  
Investment Income:            
Interest income   $ 7,654,840     $ 6,426,053  
Payment in-kind interest income   413,620       292,478  
Dividend income     31,275        
Payment in-kind dividend income          
Other fee income     155,155       9,879  
  Total investment income   8,254,890       6,728,410  
Interest expense     2,264,857       1,437,829  
Base management fees     1,351,855       1,153,880  
Income-based incentive fees   120,321        
Provision for tax expense            
Professional fees     232,800       209,041  
Allocation of administrative costs from advisor   338,063       127,229  
Amortization of deferred debt issuance costs   195,377       125,202  
Insurance expense     84,440       85,225  
Directors’ fees     101,250