Logan Ridge Finance Corp. false 0001571329 0001571329 2024-05-08 2024-05-08

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 8, 2024

 

 

Logan Ridge Finance Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

Maryland   814-01022   90-0945675

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

650 Madison Avenue, 23rd Floor

New York, New York

  10022
(Address of Principal Executive Officers)   (Zip Code)

(212) 891-2880

(Registrant’s Telephone Number, Including Area Code)

NOT APPLICABLE

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading
symbol(s)

 

Name of Each Exchange
on Which Registered

Common Stock, par value $0.01 per share   LRFC   NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On May 8, 2024, Logan Ridge Finance Corporation issued a press release announcing its financial results for the fiscal quarter ended March 31, 2024. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit Number   

Description

99.1    Press Release, dated May 8, 2024
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: May 8, 2024   By:  

/s/ Brandon Satoren

    Name:   Brandon Satoren
    Title:   Chief Financial Officer

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Logan Ridge Finance Corporation Announces

First Quarter 2024 Financial Results

Reports Strong Results with Net Investment Income of $0.35 Per Share, Compared to $0.22 Per Share in the Previous Quarter; Net Asset Value Increased to $33.71 Per Share from $33.34 Per Share in the Previous Quarter

Declared a Distribution of $0.33 Per Share for the Second Quarter of 2024, an Increase of 3% Compared to the First Quarter of 2024; Fifth Consecutive Quarterly Distribution Increase

Continued Repurchasing Shares Under its Share Repurchase Program

NEW YORK, May 8, 2024 – Logan Ridge Finance Corporation (“Logan Ridge”, “Logan”, “LRFC”, “Company”, “we”, “us” or “our”) (Nasdaq: LRFC) announced today its financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights

 

 

Net Investment Income (“NII”) increased to $0.9 million or $0.35 per share, as of March 31, 2024, from $0.6 million or $0.22 per share as of December 31, 2023.

 

 

Net asset value increased to $33.71 per share as of March 31, 2024, from $33.34 per share as of December 31, 2023.

 

 

Made approximately $9.8 million of investments and had approximately $0.9 million in repayments and sales of investments, resulting in net deployment of approximately $8.9 million during the quarter ended March 31, 2024.

 

 

Repurchased 20,867 of its outstanding shares of common stock during the quarter ended March 31, 2024, for an aggregate cost of approximately $0.5 million under the share repurchase program which resulted in $0.08 per share of NAV accretion.

Subsequent Events

 

 

On May 7, 2024, the Company’s Board of Directors approved a second quarter distribution of $0.33 per share payable on May 31, 2024, to stockholders of record as of May 21, 2024. This represents an increase of 3% as compared to $0.32 per share distributed for the first quarter of 2024.

Management Commentary

Ted Goldthorpe, Chief Executive Officer and President of LRFC, said, “During the first quarter of 2024, we continued to build upon the record financial results we generated in 2023. The first quarter results are highlighted by quarter-over-quarter increases in net investment income and net asset value of 63% and 1%, respectively. Following the strong earnings we saw in 2023, Logan Ridge is off to solid start in 2024 ending the first quarter with net deployment of $8.9 million and a robust pipeline.

Further, the strength of the Company’s financial position has allowed the Board of Directors to approve a dividend of $0.33 per share for the second quarter of 2024, which represents a 3% increase compared to the $0.32 per share distribution declared for the first quarter of 2024.

Looking forward to the rest of 2024, we remain focused on increasing shareholder returns by leveraging the Company’s strong balance sheet, and the continued diligent deployment of capital by taking advantage of new attractive investment opportunities that we see throughout the market.”

 

1


Selected Financial Information

 

 

Total investment income for the quarter ended March 31, 2024, decreased by $0.3 million, to $5.0 million, compared to $5.3 million for the first quarter of 2023.

 

 

Total operating expenses for the quarter ended March 31, 2024, decreased by $0.1 million, to $4.1 million, compared to $4.2 million for the first quarter of 2023.

 

 

Net investment income for the quarter ended March 31, 2024, was $0.9 million, or $0.35 per share, compared to $1.1 million, or $0.40 per share, for the first quarter of 2023.

 

 

Net asset value as of March 31, 2024, was $90.2 million, or $33.71 per share, compared to $89.2 million, or $33.34 per share, as of December 31, 2023.

 

 

Cash and cash equivalents as of March 31, 2024, were $8.3 million compared to $3.9 million as of December 31, 2023.

 

 

The investment portfolio as of March 31, 2024, consisted of investments in 62 portfolio companies with a fair value of approximately $200.1 million. This compares to 60 portfolio companies with a fair value of approximately $189.7 million as of December 31, 2023.

 

 

Deployment remained strong. During the first quarter, the Company made approximately $9.8 million in investments and $0.9 million in repayments and sales of investments, resulting in net deployment of approximately $8.9 million for the quarter.

 

 

The debt investment portfolio as of March 31, 2024, represented 80.8% of the fair value of the total portfolio, with a weighted average annualized yield of approximately 11.4% (excluding income from non-accruals and collateralized loan obligations), compared to a debt investment portfolio of approximately 82.0% with a weighted average annualized yield of approximately 11.1% (excluding income from non-accruals and collateralized loan obligations) as of December 31, 2023. As of March 31, 2024, 11.5% of the fair value of the debt investment portfolio was bearing a fixed rate of interest, compared to 13.6% of the fair value of the debt investment portfolio as of December 31, 2023.

 

 

Non-Accruals: As of March 31, 2024, the Company had debt investments in three portfolio companies on non-accrual status with an amortized cost and fair value of $17.2 million and $10.6 million, respectively, representing 8.3% and 5.3% of the investment portfolio’s amortized cost and fair value, respectively. This compares to debt investments in three portfolio companies on non-accrual status with an aggregate amortized cost and fair value of $17.2 million and $12.8 million, respectively, representing 8.7% and 6.9% of the investment portfolio’s amortized cost and fair value, respectively, at December 31, 2023.

 

 

Asset coverage ratio as of December 31, 2023 was 176%.

Results of Operations

Our operating results for the quarters ended March 31, 2024 and March 31, 2023 were as follows (dollars in thousands):

 

     For the Three Months Ended March 31,  
     2024      2023  

Total investment income

   $ 5,003      $    5,256  

Total expenses

     4,056        4,183  
  

 

 

    

 

 

 

Net investment income

     947        1,073  

Net realized gain (loss) on investments

     287        (1,506

Net change in unrealized appreciation (depreciation) on investments

     675        (217

Net realized loss on extinguishment of debt

     (58      —   
  

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $    1,851      $ (650
  

 

 

    

 

 

 

Investment income

The composition of our investment income for the quarters ended March 31, 2024 and March 31, 2023 was as follows (dollars in thousands):

 

     For the Three Months Ended March 31,  
     2024      2023  

Interest income

   $ 4,633      $ 4,768  

Payment-in-kind interest

     353        464  

Dividend income

     17        14  

Other income

     —         10  
  

 

 

    

 

 

 

Total investment income

   $    5,003      $    5,256  
  

 

 

    

 

 

 

 

2


Fair Value of Investments

The composition of our investments as of March 31, 2024, and December 31, 2023 at amortized cost and the fair value of investments was as follows (dollars in thousands):

 

March 31, 2024    Investments at
Amortized Cost
     Amortized Cost
Percentage of
Total Portfolio
    Investments at
Fair Value
     Fair Value
Percentage of
Total Portfolio
 

First Lien Debt

   $ 137,088        66.5   $ 130,377        65.2

Second Lien Debt

     9,155        4.4     8,308        4.2

Subordinated Debt

     26,573        12.9     22,910        11.4

Collateralized Loan Obligations

     1,701        0.8     1,648        0.8

Joint Venture

     386        0.2     396        0.2

Equity

     31,404        15.2     36,483        18.2
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 206,307        100.0   $ 200,122        100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

 

December 31, 2023    Investments at
Amortized Cost
     Amortized Cost
Percentage of
Total Portfolio
    Investments at
Fair Value
     Fair Value
Percentage of
Total Portfolio
 

First Lien Debt

   $ 128,537        65.4   $ 124,007        65.4

Second Lien Debt

     8,968        4.6     7,918        4.2

Subordinated Debt

     26,573        13.5     23,548        12.4

Collateralized Loan Obligations

     1,600        0.8     1,600        0.8

Joint Venture

     440        0.2     450        0.2

Equity

     30,400        15.5     32,135        17.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 196,518        100.0   $ 189,658        100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Interest Rate Risk

Based on our March 31, 2024 consolidated statements of assets and liabilities, the following table shows the annual impact on net income (excluding the potential related incentive fee impact) of base rate changes in interest rates (considering interest rate floors for variable rate securities) assuming no changes in our investment and borrowing structure (dollars in thousands):

 

Basis Point Change

  

Increase
(decrease) in
interest income

    

(Increase)
decrease in
interest expense

    

Increase
(decrease) in
net income

 

Up 300 basis points

   $ 4,495      $ (1,610    $ 2,885  

Up 200 basis points

     2,997        (1,073      1,924  

Up 100 basis points

     1,498        (537      961  

Down 100 basis points

     (1,498      537        (961

Down 200 basis points

     (2,997      1,073        (1,924

Down 300 basis points

   $ (4,434    $ 1,610      $ (2,824

Conference Call and Webcast

We will hold a conference call on Thursday, May 9, 2024, at 10:00 a.m. Eastern Time to discuss the first quarter 2024 financial results. Stockholders, prospective stockholders, and analysts are welcome to listen to the call or attend the webcast.

To access the conference call, please dial (646) 307-1963 approximately 10 minutes prior to the start of the call and use the conference ID 2512637.

A replay of this conference call will be available shortly after the live call through May 16, 2024.

A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on our Company’s website www.loganridgefinance.com in the Investor Resources section under Events and Presentations. The webcast can also be accessed by clicking the following link: https://edge.media-server.com/mmc/p/jhfbv6fa. The online archive of the webcast will be available on the Company’s website shortly after the call.

About Logan Ridge Finance Corporation

Logan Ridge Finance Corporation (Nasdaq: LRFC) is a business development company that invests primarily in first lien loans and, to a lesser extent, second lien loans and equity securities issued by lower middle-market companies. The Company invests in performing, well-established middle-market businesses that operate across a wide range of industries. It employs fundamental credit analysis, targeting investments in businesses with relatively low levels of cyclicality and operating risk. For more information, visit www.loganridgefinance.com.

 

3


About Mount Logan Capital Inc.

Mount Logan Capital Inc. (“MLC”) is an alternative asset management company that is focused on public and private debt securities in the North American market. MLC seeks to source and actively manage loans and other debt-like securities with credit-oriented characteristics. MLC actively sources, evaluates, underwrites, manages, monitors, and primarily invests in loans, debt securities, and other credit-oriented instruments that present attractive risk-adjusted returns and present low risk of principal impairment through the credit cycle.

About BC Partners Advisors L.P. and BC Partners Credit

BC Partners is a leading international investment firm in private equity, private credit and real estate strategies. Established in 1986, BC Partners has played an active role in developing the European buyout market for three decades. Today, BC Partners executives operate across markets as an integrated team through the firm’s offices in North America and Europe. For more information, please visit www.bcpartners.com.

BC Partners Credit was launched in February 2017 and has pursued a strategy focused on identifying attractive credit opportunities in any market environment and across sectors, leveraging the deal sourcing and infrastructure made available from BC Partners.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains “forward-looking” statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include those risk factors detailed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC.

Any forward-looking statements speak only as of the date of this communication. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

For additional information, contact:

Logan Ridge Finance Corporation

650 Madison Avenue, 23rd Floor

New York, NY 10022

Brandon Satoren

Chief Financial Officer

Brandon.Satoren@bcpartners.com 

(212) 891-2880

Lena Cati

The Equity Group Inc.

lcati@equityny.com

(212) 836-9611

Val Ferraro

The Equity Group Inc.

vferraro@equityny.com

(212) 836-9633

 

4


Logan Ridge Finance Corporation

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

 

     As of March 31,
2024
    As of December 31,
2023
 
     (unaudited)        

ASSETS

    

Investments at fair value:

    

Non-control/non-affiliate investments (amortized cost of $180,798 and $170,972, respectively)

   $ 167,802     $ 161,880  

Affiliate investments (amortized cost of $25,509 and $25,546, respectively)

     32,320       27,778  
  

 

 

   

 

 

 

Total investments at fair value (amortized cost of $206,307 and $196,518, respectively)

     200,122       189,658  

Cash and cash equivalents

     8,335       3,893  

Interest and dividend receivable

     1,865       1,374  

Prepaid expenses

     2,013       2,163  

Receivable for unsettled trades

     167       —   

Distribution paid in advance to transfer agent

     855       —   

Other assets

     17       —   
  

 

 

   

 

 

 

Total assets

   $ 213,374     $ 197,088  
  

 

 

   

 

 

 

LIABILITIES

    

2026 Notes (net of deferred financing costs and original issue discount of $967 and $1,057, respectively)

   $ 49,033     $ 48,943  

2032 Convertible Notes (net of deferred financing costs and original issue discount of $910 and $999, respectively)

     13,090       14,001  

KeyBank Credit Facility (net of deferred financing costs of $897 and $982, respectively)

     52,018       38,571  

Management and incentive fees payable

     893       869  

Distribution payable

     856       —   

Interest and financing fees payable

     1,441       949  

Accounts payable and accrued expenses

     1,289       833  

Payable for unsettled trades

     4,559       3,747  
  

 

 

   

 

 

 

Total liabilities

   $ 123,179     $ 107,913  
  

 

 

   

 

 

 

Commitments and contingencies

    

NET ASSETS

    

Common stock, par value $0.01, 100,000,000 shares of common stock authorized, 2,675,936 and 2,674,698 shares of common stock issued and outstanding, respectively

   $ 27     $ 27  

Capital in excess of par value

     188,430       188,405  

Total distributable earnings (loss)

     (98,262     (99,257
  

 

 

   

 

 

 

Total net assets

   $ 90,195     $ 89,175  
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 213,374     $ 197,088  
  

 

 

   

 

 

 

Net asset value per share

   $ 33.71     $ 33.34  

 

5


Logan Ridge Finance Corporation

Consolidated Statements of Operations

(in thousands, except share and per share data)

 

     For the Three Months Ended
March 31,
 
     2024     2023  

INVESTMENT INCOME

    

Interest income:

    

Non-control/non-affiliate investments

   $ 4,633     $ 4,604  

Affiliate investments

     —        164  
  

 

 

   

 

 

 

Total interest income

     4,633       4,768  
  

 

 

   

 

 

 

Payment-in-kind interest and dividend income:

    

Non-control/non-affiliate investments

     336       416  (1) 

Affiliate investments

     17       48  
  

 

 

   

 

 

 

Total payment-in-kind interest and dividend income

     353       464  
  

 

 

   

 

 

 

Dividend income:

    

Affiliate investments

     17       14  
  

 

 

   

 

 

 

Total dividend income

     17       14  
  

 

 

   

 

 

 

Other income:

    

Non-control/non-affiliate investments

     —        10  
  

 

 

   

 

 

 

Total other income

     —        10  
  

 

 

   

 

 

 

Total investment income

     5,003       5,256  
  

 

 

   

 

 

 

EXPENSES

    

Interest and financing expenses

     2,007       2,069  

Base management fee

     893       930  

Directors’ expense

     150       135  

Administrative service fees

     201       257  

General and administrative expenses

     805       792  
  

 

 

   

 

 

 

Total expenses

     4,056       4,183  
  

 

 

   

 

 

 

NET INVESTMENT INCOME

     947       1,073  
  

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

    

Net realized gain (loss) on investments:

    

Non-control/non-affiliate investments

     287       (1,506
  

 

 

   

 

 

 

Net realized gain (loss) on investments

     287       (1,506
  

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on investments:

    

Non-control/non-affiliate investments

     (3,904     (1,250

Affiliate investments

     4,579       1,033  
  

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on investments

     675       (217
  

 

 

   

 

 

 

Total net realized and change in unrealized gain (loss) on investments

     962       (1,723
  

 

 

   

 

 

 

Net realized loss on extinguishment of debt

     (58     —   
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $ 1,851     $ (650
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC

   $ 0.69     $ (0.24

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC

     2,678,342       2,710,990  

NET INCREASE (DECREASE) IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – DILUTED

   $ 0.65     $ (0.24

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – DILUTED

     3,195,740       2,710,990  

DISTRIBUTIONS PAID PER SHARE

   $ 0.32     $ 0.18  

 

(1)

During the three months ended March 31, 2023, the Company received $0.2 million of non-recurring income that was paid-in-kind and included in this financial statement line item.

 

6

v3.24.1.u1
Document and Entity Information
May 08, 2024
Cover [Abstract]  
Entity Registrant Name Logan Ridge Finance Corp.
Amendment Flag false
Entity Central Index Key 0001571329
Document Type 8-K
Document Period End Date May 08, 2024
Entity Incorporation State Country Code MD
Entity File Number 814-01022
Entity Tax Identification Number 90-0945675
Entity Address, Address Line One 650 Madison Avenue
Entity Address, Address Line Two 23rd Floor
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10022
City Area Code (212)
Local Phone Number 891-2880
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $0.01 per share
Trading Symbol LRFC
Security Exchange Name NASDAQ
Entity Emerging Growth Company false

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