Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter Ended December 31, 2020 and Quarterly and Supplemental Distributions

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Investcorp Credit Management BDC (NASDAQ: ICMB) reported its fiscal Q2 2021 results, highlighting a net investment income of $3.0 million, or $0.22 per share. The net asset value per share increased to $7.84. Distributions for the quarter ending March 31, 2021, were declared at $0.15 per share, with an additional $0.03 supplemental distribution. The company made investments totaling $17.6 million at a weighted average yield of 11.75%, while receiving $23 million in repayments. However, net investment income was lower compared to previous periods due to COVID-19 impacts.

Positive

• Net investment income increased to $3.0 million or $0.22 per share.
• Net asset value per share rose to $7.84.
• Declared a distribution of $0.15 per share and a supplemental $0.03 per share.
• Made four investments totaling $17.6 million at an 11.75% yield.
• Received repayments totaling $23.0 million during the quarter.

Negative

• Net investment income decreased compared to previous quarters.
• Total investment income declined to $7.1 million from $9.4 million year-over-year due to COVID-19 effects.

NEW YORK, Feb. 9, 2021 /PRNewswire/ -- Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) ("ICMB" or the "Company") announced its financial results today for its fiscal second quarter ended December 31, 2020.  

HIGHLIGHTS

• On February 3, 2021, the Company's Board declared a distribution for the quarter ending March 31, 2021 of $0.15 per share, payable on April 1, 2021, to stockholders of record as of March 12, 2021, and a supplemental distribution of $0.03 per share, payable on April 1, 2021, to stockholders of record as of March 12, 2021.
• ICMB made four investments, across one existing portfolio company and three new portfolio companies. These investments totaled $17.6mm. The weighted average yield of debt investments made in the quarter was 11.75%.
• ICMB fully realized four investments during the quarter, totaling $15.8 million, and received additional partial repayments totaling $7.2 million.
• The weighted average yield on debt investments, at cost, increased 51 basis points to 9.76%, compared to 9.25% as of September 30, 2020.
• Net asset value ("NAV") increased $0.03 per share to $7.84, compared to $7.81 as of September 30, 2020. The Net Assets increased by $0.612mil or 0.56% for the quarter ended December 31, 2020.

Portfolio results, as of December 31, 2020:
Total assets	$271.5mm
Investment portfolio, at fair value	$257.7mm
Net assets	$109.1mm
Weighted average yield on debt investments, at cost	9.76%
Net asset value per share	$7.84
Portfolio activity in the current quarter:
Number of new investments	3
Total capital invested	$17.6mm
Proceeds from repayments, sales, and amortization	$23.0mm
Number of portfolio companies, end of period	37
Net investment income (NII)	$3.0mm
Net investment income per share	$0.22
Net increase in net assets from operations	$3.1mm
Net decrease in net assets from operations per share	$0.22
Quarterly per share distribution paid on January 4, 2021	$0.18

Mr. Michael C. Mauer, the Company's Chief Executive Officer, said, "The current market has highlighted companies with resilient business models and strong capital structures.  In this environment we continue to see good investment opportunities at attractive yields."

The Company's dividend framework provides a quarterly base dividend and is supplemented (when available) by additional dividends determined by the net investment income during the quarter.

On November 3, 2020, the Company's Board of Directors (the "Board") declared a distribution for the quarter ending December 31, 2020 of $0.15 per share, payable on January 4, 2021, to stockholders of record as of December 10, 2020, and a supplemental distribution of $0.03 per share, payable on January 4, 2021, to stockholders of record as of December 10, 2020.

These distributions represent a 14.26% yield on the Company's $5.05 share price as of market close on February 8, 2021.  Distributions may include net investment income, capital gains and/or return of capital, however, the Company does not expect these distributions 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 four investments, across one existing portfolio company and three new portfolio companies.  The aggregate capital invested during the quarter totaled $17.6mm, at cost, and the new debt investments were made at a weighted average yield of 11.75%.

The Company received proceeds of $23.1mm from repayments, sales and amortization during the quarter, primarily related to the realizations of KIK Custom Products, RPX, Northstar Group, and Deluxe.

The Company's realized and unrealized gains and losses accounted for an increase in the Company's net investments of $0.1mm, or $0.00 per share.  The total net increase in net assets resulting from operations for the quarter was $3.1mm, or $0.22 per share. 

As of December 31, 2020, the Company's investment portfolio consisted of investments in 37 portfolio companies, of which 87.2% were first lien investments, 4.9% were second lien investments, 4.4% were unitranche loans, and 3.5% were equity, warrants, and other investments. The Company's debt portfolio consisted of 99.4% floating rate investments and 0.6% fixed rate investments.

COVID-19 Developments
During the six months ended December 31, 2020, the Company's portfolio was negatively affected by the economic uncertainty caused by the novel coronavirus ("COVID-19") pandemic. The Company has closely monitored its portfolio companies throughout this period, including assessing portfolio companies' operational and liquidity exposure and outlook. Though the magnitude of the impact remains to be seen, certain of the Company's portfolio companies and, by extension, select operating results have been, and may continue to be, adversely impacted by the COVID-19 pandemic. For additional information about the COVID-19 pandemic and its potential impact on the Company's results of operations and financial condition, please refer to the disclosure in the Company's Form 10-Q for the quarter ended December 31, 2020.

Capital Resources
As of December 31, 2020, the Company had $3.8mm in cash, $4.7mm in restricted cash and $16mm of capacity under its revolving credit facility with UBS AG, London Branch.

Subsequent Events
Subsequent to December 31, 2020 and through February 8, 2021, the Company made no new investments and received $2.9mm in repayments. As of February 8, 2021, the Company had 37 portfolio companies. 

 

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Assets and Liabilities
				December 31, 2020
				(Unaudited)			June 30, 2020
Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of			$	257,731,578		$	270,621,709
	$303,922,586 and $ 316,924,638, respectively)
Cash				3,771,963			14,876,444
Cash, restricted				4,707,001			5,417,118
Receivable for investments sold				2,033,722			1,576,730
Interest receivable				2,219,364			2,301,641
Payment-in-kind interest receivable				532,680			514,643
Other receivables				427,208			1,135,563
Prepaid expenses and other assets				119,263			350,661
	Total Assets		$	271,542,779		$	296,794,509
Liabilities
Notes payable:
	Term loan		$	102,000,000		$	102,000,000
	Revolving credit facility			4,000,000			30,000,000
	2023 Notes payable			51,375,000			51,375,000
	Deferred debt issuance costs			(870,365)			(1,042,497)
		Notes payable, net		156,504,635			182,332,503
Dividend payable				2,503,272			2,499,360
Income-based incentive fees payable				649,122			707,796
Base management fees payable				1,095,082			1,196,937
Interest payable				977,229			1,000,452
Directors' fees payable				23,809			24,559
Accrued expenses and other liabilities				718,316			907,907
	Total Liabilities			162,471,465			188,669,514
Commitments and Contingencies (Note 6)
Net Assets
Common stock, par value $0.001 per share (100,000,000 shares authorized,
	13,907,064 and 13,885,335 shares issued and outstanding, respectively)			13,907			13,885
Additional paid-in capital				200,850,429			200,779,949
Distributable earnings (loss)				(91,793,022)			(92,668,839)
	Total Net Assets			109,071,314			108,124,995
	Total Liabilities and Net Assets		$	271,542,779		$	296,794,509
Net Asset Value Per Share			$	7.84		$	7.79
See notes to unaudited consolidated financial statements.

 

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
					For the three months ended December 31,					For the six months ended December 31,
				2020			2019			2020			2019
Investment Income:
Interest income				$	5,823,345		$	7,741,904		$	11,910,939		$	15,312,166
Payment in-kind interest income					891,417			1,454,214			1,731,744			2,361,991
Other fee income					373,004			235,331			416,064			315,726
		Total investment income			7,087,766			9,431,449			14,058,747			17,989,883
Expenses:
Interest expense					1,837,775			2,533,278			3,819,500			4,885,023
Base management fees					1,189,440			1,369,983			2,410,212			2,725,061
Income-based incentive fees					-			851,842			-			851,842
Provision for tax expense					5,780			10,018			5,780			10,018
Professional fees					319,725			390,107			639,450			699,960
Allocation of administrative costs from advisor					354,000			330,000			708,000			682,000
Amortization of deferred debt issuance costs					-			195,377			-			390,754
Insurance expense					108,186			83,761			216,372			167,523
Directors' fees					78,625			22,500			155,250			105,000
Custodian and administrator fees					63,822			77,597			129,749			207,469
Offering expense					86,906			85,604			172,133			137,354
Other expenses					119,828			120,590			245,100			276,860
		Total expenses			4,164,087			6,070,657			8,501,546			11,138,864
Waiver of base management fees					(94,359)			(57,852)			(207,330)			(102,035)
Waiver of income-based incentive fees					-			(336,619)			-			(336,619)
		Net expenses			4,069,728			5,676,186			8,294,216			10,700,210
		Net investment income			3,018,038			3,755,263			5,764,531			7,289,673
Net realized and unrealized gain/(loss) on investments:
Net realized gain (loss) from investments					-			25,285			3,693			56,358
Net change in unrealized appreciation (depreciation) in value					-
	of investments				59,768			(813,105)			111,899			(5,285,140)
		Total realized and unrealized gain (loss) on investments			59,768			(787,820)			115,592			(5,228,782)
Net increase (decrease) in net assets resulting from operations
				$	3,077,806		$	2,967,443		$	5,880,123		$	2,060,891
Basic and diluted:
		Net investment income per share		$	0.22		$	0.27		$	0.41		$	0.53
		Earnings per share		$	0.22		$	0.22		$	0.42		$	0.15
		Weighted average shares of common stock outstanding			13,905,173			13,668,027			13,899,449			13,646,653
Distributions paid per common share				$	0.18		$	0.25		$	0.36		$	0.50
See notes to unaudited consolidated financial statements.

 

About Investcorp Credit Management BDC, 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 Investcorp Credit Management BDC, Inc., please visit www.icmbdc.com.

Forward-Looking Statements
Statements included herein in this press release may contain "forward-looking statements," which relate to future performance or financial condition, are based upon current expectations and are inherently uncertain. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control and including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. 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. All forward-looking statements speak only as of the date of this press release. The Company undertakes no duty to update any forward-looking statement made herein except as required by law.

Contacts
Investcorp Credit Management BDC, Inc.
Investor Relations
Email: icmbinvestorrelations@investcorp.com
Phone: 212-257-5199

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