Portman Ridge Finance Corp. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Portman Ridge Finance Corp. has filed its 2023 10-K, detailing its investment portfolio and financial performance.</b>

AI Summary

Portman Ridge Finance Corp (BCIC) filed a Annual Report (10-K) with the SEC on March 13, 2024. Portman Ridge Finance Corp. (formerly KCAP Financial, Inc.) filed its 2023 10-K report on March 13, 2024. The company's portfolio includes various debt securities and non-controlled affiliates, with specific investments detailed. Notable debt investments include Senior Secured Loans to Colonnade Intermediate, LLC (12.5% interest) and Money Transfer Acquisition, Inc. (13.7% interest). Junior Secured Loans include Idera, Inc. (12.3% interest) and Project Leopard Holdings, Inc. (12.2% interest). The filing references specific valuation techniques such as Discounted Cash Flow and Fair Value Inputs Level 3 for certain securities.

Why It Matters

For investors and stakeholders tracking Portman Ridge Finance Corp, this filing contains several important signals. The 10-K filing provides a comprehensive overview of Portman Ridge's investment strategy, asset allocation, and risk exposures for the fiscal year ended December 31, 2023. Investors can gain insights into the specific terms, interest rates, and maturity dates of the company's debt and equity investments, aiding in valuation and risk assessment.

Risk Assessment

Risk Level: medium — Portman Ridge Finance Corp shows moderate risk based on this filing. The company's financial performance is tied to the performance of its debt and equity investments, which are subject to market and credit risks, as indicated by the various interest rates and loan types detailed in the filing.

Analyst Insight

Review the detailed breakdown of debt and equity investments in the 10-K to assess the company's risk exposure and potential for future income generation.

Key Numbers

• 12.5% — Interest Rate (Colonnade Intermediate, LLC Senior Secured Loan.)
• 13.7% — Interest Rate (Money Transfer Acquisition, Inc. Senior Secured Loan.)
• 12.3% — Interest Rate (Idera, Inc. Junior Secured Loan.)
• 11.1% — Interest Rate (BetaNXT, Inc. Senior Secured Loan.)
• 11.5% — Interest Rate (Intermedia Holdings, Inc. Senior Secured Loan.)
• 2023-12-31 — Fiscal Year End (Date of the 10-K filing.)
• 2024-03-13 — Filing Date (Date the 10-K was filed with the SEC.)
• 24.9% — Percentage Ownership (Catamaran CLO 2014-2 Ltd. Subordinated Securities.)

Key Players & Entities

• Portman Ridge Finance Corp. (company) — Filer of the 10-K report.
• KCAP Financial, Inc. (company) — Former name of Portman Ridge Finance Corp.
• Colonnade Intermediate, LLC (company) — Borrower of a Senior Secured Loan with a 12.5% interest rate.
• Money Transfer Acquisition, Inc. (company) — Borrower of a Senior Secured Loan with a 13.7% interest rate.
• Idera, Inc. (company) — Borrower of a Junior Secured Loan with a 12.3% interest rate.
• Project Leopard Holdings, Inc. (company) — Borrower of a Junior Secured Loan with a 12.2% interest rate.
• BetaNXT, Inc. (company) — Borrower of a Senior Secured Loan with an 11.1% interest rate.
• Intermedia Holdings, Inc. (company) — Borrower of a Senior Secured Loan with an 11.5% interest rate.

FAQ

Risk Factors

• Distributions Payment Risks [medium — financial]: Risks associated with the payment of distributions are detailed, indicating potential volatility in income payouts.
• Valuation of Securities [medium — market]: The company utilizes various valuation techniques, including discounted cash flow and Level 3 inputs, highlighting the subjective nature of valuing certain assets.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share PTMN The NASDAQ Global Se
• $19.99 — 7,678,883 based upon a closing price of $19.99 reported for such date by The NASDAQ Gl
• $10 million — eciation and amortization ("EBITDA") of $10 million to $50 million and/or total debt of $25
• $50 million — ortization ("EBITDA") of $10 million to $50 million and/or total debt of $25 million to $15
• $25 million — ion to $50 million and/or total debt of $25 million to $150 million. We primarily invest in
• $150 million — ion and/or total debt of $25 million to $150 million. We primarily invest in first and secon
• $3.1 million — par balance per entity of approximately $3.1 million. Our investment portfolio totaled $467.
• $467.9 million — llion. Our investment portfolio totaled $467.9 million at fair value as of December 31, 2023.
• $25 m — payment from BCP, or its affiliate, of $25 million, or $0.669672 per share of our co
• $0.669672 — P, or its affiliate, of $25 million, or $0.669672 per share of our common stock, directly
• $4.6 million — the Adviser has purchased approximately $4.6 million newly issued shares of our common stock
• $0.40 — one-year period to be at least equal to $0.40 per share, subject to certain adjustmen
• $35.0 million — ed by the Externalization Agreement was $35.0 million. On the date of the Closing, we chang
• $0.001 — , each share of common stock, par value $0.001 per share, of OHAI (the "OHAI Common St
• $0 — ithout interest, equal to approximately $0.42, and (ii) 0.3688 shares of common st

Filing Documents

• ptmn-20231231.htm (10-K) — 9576KB
• ptmn-ex4_7.htm (EX-4.7) — 25KB
• ptmn-ex21_1.htm (EX-21.1) — 25KB
• ptmn-ex23_1.htm (EX-23.1) — 4KB
• ptmn-ex31_1.htm (EX-31.1) — 13KB
• ptmn-ex31_2.htm (EX-31.2) — 14KB
• ptmn-ex32_1.htm (EX-32.1) — 8KB
• ptmn-ex32_2.htm (EX-32.2) — 8KB
• ptmn-ex97_1.htm (EX-97.1) — 45KB
• img2484198_0.jpg (GRAPHIC) — 195KB
• 0000950170-24-030788.txt (&nbsp;) — 38233KB
• ptmn-20231231.xsd (EX-101.SCH) — 2071KB
• ptmn-20231231_htm.xml (XML) — 10465KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 13 Item 1B. Unresolved Staff Comments 28 Item 1C. Cybersecurity 28 Item 2.

Properties

Properties 29 Item 3.

Legal Proceedings

Legal Proceedings 29 Item 4. Mine Safety Disclosures 29 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. [Reserved] 32 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 47 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 47 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 48 Item 9A.

Controls and Procedures

Controls and Procedures 48 Item 9B. Other Information 48 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 51 Part III Item 10. Directors, Executive Officers and Corporate Governance 52 Item 11.

Executive Compensation

Executive Compensation 52 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52 Item 13. Certain Relationships and Related Transactions, and Director Independence 52 Item 14. Principal Accountant Fees and Services 52 Part IV Item 15. Exhibits and Financial Statement Schedules 53 Item 16. Form 10-K Summary 53

Financial Statements

Financial Statements F- 1

Signatures

Signatures i CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements. The matters discussed in this Annual Report, as well as in future oral and written statements by the Company, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other similar words, although not all forward-looking statements include these words. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, our ability to successfully and profitably integrate acquired assets and companies, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Annual Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this Annual Report on Form 10-K include statements as to: our future operating results; our business prospects and the prospects of our existing and prospective portfolio companies; the return or impact of current and future investments; our contractual arrangements and other relationships with third parties; the dependence of our future success on the general economy and its impact on the industries in which we invest; the financial con

Business

Item 1. Business In this Annual Report on Form 10-K, the "Company", "Portman Ridge", "we", "us" and "our" refer to Portman Ridge Finance Corporation and its wholly-owned subsidiaries, unless the context otherwise requires. GENERAL Our Company We are an externally managed, non-diversified closed-end investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940 (the "1940 Act"). Sierra Crest Investment Management LLC (the "Adviser") is an affiliate of BC Partners LLP ("BC Partners"). Subject to the overall supervision of the Board, the Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals. The Adviser seeks to invest on our behalf in performing, well-established middle market businesses that operate across a wide range of industries (i.e., no concentration in any one industry). The Adviser employs fundamental credit analysis, targeting investments in businesses with relatively low levels of cyclicality and operating risk. The holding size of each position will generally be dependent upon a number of factors including total facility size, pricing and structure, and the number of other lenders in the facility. The Adviser has experience managing levered vehicles, both public and private, and seeks to enhance our returns through the use of leverage with a prudent approach that prioritizes capital preservation. The Adviser believes this strategy and approach offers attractive risk/return with lower volatility given the potential for fewer defaults and greater resilience through market cycles. We originate, structure, and invest in secured term loans, bonds or notes and mezzanine debt primarily in privately-held middle market companies but

View Full Filing

View this 10-K filing on SEC EDGAR