Logan Ridge Finance Corporation Announces the Successful Exit of its Largest Equity Investment, Nth Degree Investment Group, LLC

Rhea-AI Summary

Logan Ridge Finance (Nasdaq: LRFC) has successfully exited its largest equity investment, Nth Degree Investment Group, , as of September 10, 2024. The sale was completed at or above the previously reported fair value as of June 30, 2024. CEO Ted Goldthorpe described this as a transformative event and an important milestone for the company.

The exit aligns with Logan Ridge's turnaround strategy implemented since Mount Logan Management became the company's investment advisor in July 2021. The strategy focuses on rotating out of the legacy equity portfolio. The cash proceeds from this transaction will be reinvested into interest-earning assets originated by the BC Partners Credit Platform, which is expected to significantly improve the long-term earning power of Logan Ridge's portfolio.

Positive

• Successful exit of largest equity investment at or above fair value
• Cash proceeds to be reinvested in interest-earning assets
• Expected improvement in long-term earning power of the portfolio
• Alignment with company's turnaround strategy

Negative

• None.

Insights

Financial Analyst

The successful exit of Logan Ridge Finance 's largest equity investment, Nth Degree Investment Group, , marks a significant milestone in the company's turnaround strategy. This move aligns with their goal of rotating out of the legacy equity portfolio, which has been a key focus since Mount Logan Management took over in July 2021.

The transaction's impact is twofold:

• It provides substantial cash proceeds, enhancing LRFC's liquidity position.
• It allows for redeployment of capital into interest-earning assets, potentially boosting the company's income generation.

This strategic shift from equity to debt investments could lead to more stable and predictable revenue streams, which is typically favored by BDC investors. However, the actual financial impact will depend on the yield of the new investments compared to the returns generated by Nth Degree previously.

Investment Strategist

This exit represents a pivotal moment in Logan Ridge's portfolio transformation. By divesting its largest equity position at or above fair value, the company demonstrates effective execution of its strategy and potentially unlocks significant value for shareholders. The move to redeploy proceeds into interest-earning assets originated by the BC Partners Credit Platform suggests a shift towards a more income-focused approach.

This transition could lead to:

• Improved earnings stability and visibility
• Enhanced dividend-paying capacity
• Potentially lower overall portfolio risk

Investors should monitor the pace and efficiency of capital redeployment, as well as the yield on new investments, to gauge the success of this strategic shift in the coming quarters.

NEW YORK, Sept. 12, 2024 (GLOBE NEWSWIRE) --  Logan Ridge Finance Corporation (Nasdaq: LRFC) (the “Company”) today announced that as of September 10, 2024, it has exited its largest equity investment, Nth Degree Investment Group, LLC (“Nth Degree”), at or above its previously reported fair value as of June 30, 2024.

Ted Goldthorpe, Chief Executive Officer and President of Logan Ridge, said, “The rotation out of the legacy equity portfolio has been a key component of the turnaround strategy for Logan Ridge since Mount Logan Management took over as the Company’s investment advisor in July of 2021.

We see the sale of Nth Degree, our largest equity position, as a transformative event and an important milestone for the Company. The cash proceeds from this transaction will be redeployed into interest earning assets originated by the BC Partners Credit Platform, which will significantly improve the long-term earning power of our portfolio.”

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.

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, 3rd 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

FAQ

What major investment did Logan Ridge Finance (LRFC) exit in September 2024?

Logan Ridge Finance (LRFC) exited its largest equity investment, Nth Degree Investment Group, , on September 10, 2024.

How does the exit of Nth Degree align with LRFC's strategy?

The exit aligns with LRFC's turnaround strategy, implemented since July 2021, which focuses on rotating out of the legacy equity portfolio.

What will LRFC do with the proceeds from the Nth Degree sale?

LRFC plans to redeploy the cash proceeds into interest-earning assets originated by the BC Partners Credit Platform.

How is the Nth Degree exit expected to impact LRFC's portfolio?

The reinvestment of proceeds is expected to significantly improve the long-term earning power of LRFC's portfolio.