CORRECTING and REPLACING – CM Finance Inc Reports Results for its Fiscal First Quarter Ended September 30, 2018
08 Novembre 2018 - 3:07PM
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.
HIGHLIGHTS
- 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
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Portfolio results, as of September 30, 2018: |
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Total
assets |
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$341.4mm |
Investment portfolio, at fair value |
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$330.7mm |
Net
assets |
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$169.4mm |
Weighted
average yield on debt investments, at cost |
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10.90% |
Net
asset value per share |
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$12.41 |
Portfolio activity in the current quarter: |
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Number
of new investments |
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13 |
Total
capital invested |
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$53.7mm |
Proceeds
from repayments, sales, and amortization |
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$14.4mm |
Number
of portfolio companies, end of period |
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30 |
Net
investment income (NII) |
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$3.4mm |
Net
investment income per share |
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$0.25 |
Net
increase in net assets from operations |
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$1.4mm |
Net
increase in net assets from operations per share |
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$0.10 |
Quarterly per share distribution paid on October 5, 2018 |
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$0.25 |
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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
$53.7.mm 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 andexisting
portfolio companies and received repayment or sales proceeds of
$46.4 million
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CM Finance Inc and
Subsidiaries |
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Consolidated Statements of Assets and
Liabilities |
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September 30, 2018 |
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(Unaudited) |
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June 30, 2018 |
Assets |
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Non-controlled, non-affiliated investments, at fair value
(amortized cost of |
$ |
330,694,472 |
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$ |
293,592,013 |
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$341,475,968 and $ 302,647,282, respectively) |
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Derivatives, at fair value (cost of $0 and $0, respectively) |
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878,000 |
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229,918 |
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Cash |
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2,674,298 |
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5,620,441 |
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Cash,
restricted |
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1,448,718 |
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2,706,273 |
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Receivable
for investments sold |
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1,904,507 |
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7,751,875 |
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Interest
receivable |
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3,562,036 |
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4,011,450 |
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Deferred
offering costs |
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121,922 |
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121,922 |
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Other
receivables |
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- |
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245,550 |
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Prepaid
expenses and other assets |
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160,451 |
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255,139 |
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Total
Assets |
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$ |
341,444,404 |
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$ |
314,534,581 |
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Liabilities |
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Notes
payable: |
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Term loan |
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$ |
102,000,000 |
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$ |
102,000,000 |
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Revolving
credit facility |
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11,843,470 |
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17,823,000 |
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Baby bonds
payable: |
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34,500,000 |
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- |
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Deferred
debt issuance costs |
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(2,741,644 |
) |
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(1,953,771 |
) |
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Notes payable, net |
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145,601,826 |
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117,869,229 |
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Payable for
investments purchased |
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15,159,326 |
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12,569,450 |
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Dividend
payable |
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3,412,531 |
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3,417,848 |
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Deferred
financing costs payable |
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2,071,167 |
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2,071,167 |
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Income-based incentive fees payable |
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2,392,999 |
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2,294,678 |
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Base
management fees payable |
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1,351,855 |
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1,319,853 |
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Accrued
provision for taxes |
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- |
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2,579,337 |
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Derivatives, at fair value (cost $0 and $0, respectively) |
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878,000 |
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229,918 |
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Interest
payable |
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932,289 |
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303,153 |
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Directors'
fees payable |
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97,673 |
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99,296 |
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Accrued
expenses and other liabilities |
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104,339 |
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257,986 |
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Total
Liabilities |
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172,002,005 |
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143,011,915 |
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Commitments and Contingencies (Note 6) |
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Net
Assets |
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Common
stock, par value $0.001 per share (100,000,000 shares
authorized, |
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13,650,124
and 13,649,504 shares issued and outstanding, respectively) |
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13,650 |
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13,649 |
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Additional
paid-in capital |
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198,706,416 |
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198,700,999 |
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Accumulated
net realized loss |
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(21,345,472 |
) |
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(21,087,280 |
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Undistributed (distributions in excess of) net investment
income |
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2,947,532 |
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2,950,567 |
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Net
unrealized depreciation on investments |
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(10,778,532 |
) |
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(9,055,269 |
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Less
Treasury Stock |
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(101,195 |
) |
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- |
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Total Net
Assets |
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169,442,399 |
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171,522,666 |
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Total Liabilities and Net Assets |
$ |
341,444,404 |
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$ |
314,534,581 |
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Net Asset
Value Per Share |
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$ |
12.41 |
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$ |
12.57 |
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See notes to unaudited consolidated financial
statements. |
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CM Finance Inc and
Subsidiaries |
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Consolidated Statements of Operations
(Unaudited) |
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For the three months ended
September 30, |
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2018 |
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2017 |
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Investment Income: |
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Interest
income |
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$ |
7,654,840 |
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$ |
6,426,053 |
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Payment
in-kind interest income |
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413,620 |
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292,478 |
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Dividend
income |
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31,275 |
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- |
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Payment
in-kind dividend income |
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- |
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- |
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Other fee
income |
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155,155 |
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9,879 |
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Total investment income |
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8,254,890 |
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6,728,410 |
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Expenses: |
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Interest
expense |
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2,264,857 |
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1,437,829 |
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Base
management fees |
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1,351,855 |
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1,153,880 |
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Income-based incentive fees |
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120,321 |
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- |
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Provision
for tax expense |
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- |
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- |
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Professional fees |
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232,800 |
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209,041 |
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Allocation
of administrative costs from advisor |
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338,063 |
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127,229 |
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Amortization of deferred debt issuance costs |
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195,377 |
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125,202 |
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Insurance
expense |
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84,440 |
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85,225 |
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Directors'
fees |
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101,250 |
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99,667 |
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Custodian
and administrator fees |
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7,500 |
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91,996 |
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Offering
expense |
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51,750 |
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186,513 |
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Other
expenses |
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119,181 |
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195,652 |
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Total
expenses |
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4,867,394 |
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3,712,234 |
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Waiver of
income-based incentive fees |
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(22,000 |
) |
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- |
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Net
expenses |
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4,845,394 |
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3,712,234 |
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Net
investment income |
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3,409,496 |
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3,016,176 |
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Net
realized and unrealized gain/(loss) on investments: |
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Net
realized loss from investments |
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(258,192 |
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(7,380,690 |
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Net change in unrealized appreciation (depreciation)
in value of investments |
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(1,723,263 |
) |
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7,500,231 |
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Total realized and unrealized gain on
investments |
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(1,981,455 |
) |
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119,541 |
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Net increase (decrease) in net assets
resulting from operations |
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$ |
1,428,041 |
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$ |
3,135,717 |
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Basic and
diluted: |
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Net
investment income per share |
$ |
0.25 |
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$ |
0.22 |
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Earnings
(loss) per share |
$ |
0.10 |
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$ |
0.23 |
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Weighted
average shares of common stock outstanding |
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13,650,097 |
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13,689,885 |
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Distributions paid per common share |
$ |
0.25 |
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$ |
0.25 |
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See notes to unaudited consolidated financial
statements. |
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About CM Finance Inc
The Company is an externally-managed,
closed-end, non-diversified management investment company that has
elected to be regulated as a business development company under the
Investment Company Act of 1940. The Company’s investment
objective is to maximize the total return to its stockholders in
the form of current income and capital appreciation through debt
and related equity investments by targeting investment
opportunities with favorable risk-adjusted returns. The Company
seeks to invest primarily in middle-market companies that have
annual revenues of at least $50mm and earnings before interest,
taxes, depreciation and amortization of at least $15mm. The
Company’s investment activities are managed by its investment
adviser, CM Investment Partners LLC. To learn more about CM Finance
Inc, please visit www.cmfn-inc.com.
Forward-Looking Statements
Statements included herein may contain
“forward-looking statements,” which relate to future performance or
financial condition. Statements other than statements of historical
facts included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of assumptions, risks and uncertainties, which
change over time. Actual results may differ materially from those
anticipated in any forward-looking statements as a result of a
number of factors, including those described from time to time in
filings by the Company with the Securities and Exchange Commission.
The Company undertakes no duty to update any forward-looking
statement made herein except as required by law. All
forward-looking statements speak only as of the date of this press
release.
ContactsCM Finance IncInvestor Relations Email:
investorrelations@cmipllc.comPhone: 212-257-5199
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