PhenixFIN Corporation Announces First Quarter 2021 Financial Results

Rhea-AI Summary

PhenixFIN Corporation (NASDAQ: PFX) reported its fiscal first quarter 2021 results, highlighting total investment income of $12.8 million and net investment income of $8.3 million, equivalent to $3.06 per share. The company had $62.4 million in cash and net asset value of $144.2 million as of December 31, 2020. A key development included the sale of the MCC Senior Loan Strategy JV I LLC, yielding net proceeds of $41 million, leading to a full redemption of $74 million in notes. PhenixFIN also adopted an internalized management structure effective January 1, 2021, and announced a $15 million share repurchase program.

Positive

• Total investment income of $12.8 million.
• Net investment income of $8.3 million ($3.06 per share).
• Successful sale of MCC JV yielding $41 million.
• Full redemption of $74 million in 6.5% Notes.
• Net asset value of $144.2 million ($52.94 per share).
• Adoption of internalized management structure.
• Authorization of $15 million share repurchase program.

Negative

• Net realized loss of $14.8 million.
• 9 portfolio company investments on non-accrual status.

NEW YORK, Feb. 16, 2021 (GLOBE NEWSWIRE) -- PhenixFIN Corporation (NASDAQ: PFX) (the "Company"), a publicly traded business development company, today announced its financial results for the fiscal first quarter of 2021.

First Quarter 2021 Highlights

• Total investment income of $12.8 million; net investment income of $8.3 million
• $62.4 million in cash on December 31, 2020
• Sale of MCC Senior Loan Strategy JV I LLC (“MCC JV”), resulting in net proceeds of $41 million
• Full redemption of $74.0 million of the 6.5% Notes due 2021
• Net asset value of $144.2 million, or $52.94 per share vs. $55.30 per share as of September 30, 2020

David Lorber, Chief Executive Officer of the Company, stated: “The quarter brought significant change for the organization with the announced sale of the MCC JV facility, meaningful debt paydown, and the announced transition to the internalized management structure.  I am pleased with the market’s favorable reaction to this change and with the cohesive transition to the internalized management structure for all aspects of the business.  The new team is excited for the prospects of PhenixFIN Corporation and we look forward to driving value for shareholders.”

As previously announced on October 9, 2020, the Board of Directors of the Company (the “Board”) approved the sale of the MCC JV facility, leading to the October 21, 2020 redemption of the $74 million 6.5% Notes due January 2021.  In addition, on November 18, 2020, the Board approved the adoption of an internalized management structure, effective January 1, 2021, replacing the externalized management structure, including the Investment Management Agreement and Administration Agreement with MCC Advisors LLC (both of which expired on December 31, 2020).

Subsequent to quarter end, on January 11, 2021, the Company announced that the Board of Directors approved a share repurchase program authorizing up to $15 million in share repurchases. Under the share repurchase program, the Company is authorized to repurchase from time to time its common stock in open market or other transactions, subject to applicable regulatory requirements.

First Quarter 2021 Financial Results

For the three months ended December 31, 2020, total investment income was $12.8 million, which consisted, in part, of a November 2020 dividend distribution from JFL-NGS Partners, LLC, a portfolio company, in the amount of $10.3 million.  For the three months ended December 31, 2020, interest and PIK income comprised $2.2 million. Net investment income for the three months ended December 31, 2020 was $8.3 million, or $3.06 per share.

For the three months ended December 31, 2020, total net expenses (net of the expense support agreement) were $4.5 million.

For the three months ended December 31, 2020, the Company recorded a net realized loss of $14.8 million.

Portfolio and Investment Activities

As of December 31, 2020, the fair value of the Company's investment portfolio totaled $159.5 million and consisted of 37 portfolio companies.

As of December 31, 2020, the Company had 9 portfolio company investments on non-accrual status. 

Liquidity and Capital Resources

At December 31, 2020, the Company had $62.4 million in cash and $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.

ABOUT PHENIXFIN CORPORATION

PhenixFIN Corporation is a non-diversified, internally managed closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.  We completed our initial public offering and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. On November 18, 2020, the Board approved the adoption of an internalized management structure, effective January 1, 2021.

SAFE HARBOR STATEMENT AND OTHER DISCLOSURES

This press release contains “forward-looking” statements. Such forward-looking statements reflect current views with respect to future events and financial performance, and the Company may make related oral forward-looking statements on or following the date hereof. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, including among other things, PhenixFIN’s ability to deliver value to shareholders and other factors that are enumerated in the Company’s periodic filings with the Securities and Exchange Commission. PhenixFIN Corporation disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release.

The press release contains unaudited financial results. For ease of review, we have excluded the word "approximately" when rounding the results. This press release is for informational purposes only and is not an offer to purchase or a solicitation of an offer to sell shares of PhenixFIN Corporation’s common stock. There can be no assurance that PhenixFIN Corporation will achieve its investment objective. 

For PhenixFIN investor relations, please call 212-859-0390. For media inquiries, please contact info@phenixfc.com.

PHENIXFIN CORPORATION (f/k/a Medley Capital Corporation)
Consolidated Statements of Assets and Liabilities

		December 31, 2020 (Unaudited)				September 30, 2020
Assets:
Investments at fair value
Non-controlled, non-affiliated investments (amortized cost of $90,542,838 and $117,360,954, respectively)		$	83,446,768			$	114,321,948
Affiliated investments (amortized cost of $80,340,191 and $92,898,755, respectively)			70,196,136				84,873,023
Controlled investments (amortized cost of $37,987,321 and $117,874,821, respectively)			5,898,013				47,548,578
Total Investments at fair value			159,540,917				246,743,549
Cash and cash equivalents			62,414,223				56,522,148
Receivables:
Interest receivable			238,814				624,524
Fees receivable			106,528				119,028
Other assets			1,675,933				2,093,559
Total Assets		$	223,976,415			$	306,102,808
Liabilities:
Notes payable (net of debt issuance costs of $619,167 and $905,624, respectively)		$	77,227,633			$	150,960,662
Interest and fees payable			-				801,805
Due to affiliates			-				53,083
Management and incentive fees payable			1,146,403				1,392,022
Administrator expenses payable			484,412				156,965
Accounts payable and accrued expenses			900,851				2,108,225
Deferred revenue			35,450				10,529
Total Liabilities			79,794,749				155,483,291
Guarantees and Commitments
Net Assets:
Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,723,709 and 2,723,709
common shares issued and outstanding, respectively			2,724				2,724
Capital in excess of par value			672,381,617				672,381,617
Total distributable earnings/(loss)			(528,202,675	)			(521,764,824	)
Total Net Assets			144,181,666				150,619,517
Total Liabilities and Net Assets		$	223,976,415			$	306,102,808
Net Asset Value Per Common Share		$	52.94			$	55.30

PHENIXFIN CORPORATION (f/k/a Medley Capital Corporation)
Consolidated Statements of Operations
(Unaudited)

		For the Three Months Ended
		December 31, 2020				December 31, 2019
Interest Income:
Interest from investments
Non-controlled, non-affiliated investments:
Cash		$	1,671,813			$	3,217,709
Payment in-kind			170,029				199,012
Affiliated investments:
Cash			352,291				209,248
Payment in-kind			-				947,473
Controlled investments:
Cash			1,190				83,208
Payment in-kind			-				495,382
Total interest income			2,195,323				5,152,032
Dividend income			10,263,501				1,837,500
Interest from cash and cash equivalents			940				218,138
Fee income			341,464				283,540
Total Investment Income			12,801,228				7,491,210
Expenses:
Base management fees			1,146,403				2,008,234
Incentive fees			-				-
Interest and financing expenses			2,017,641				5,143,929
General and administrative expenses			377,934				516,842
Administrator expenses			484,412				551,522
Insurance expenses			485,012				297,998
Directors fees			475,717				316,000
Professional fees, net			(515,622	)			(4,416,075	)
Total expenses net of expense support reimbursement			4,471,497				4,418,450
Net Investment Income			8,329,731				3,072,760
Realized and unrealized gains (losses) on investments
Net realized gains/(losses):
Non-controlled, non-affiliated investments			3,893,722				(57,799	)
Affiliated investments			(10,452,928	)			-
Controlled investments			(40,147,570	)			(1,686,837	)
Total net realized gains/(losses)			(46,706,776	)			(1,744,636	)
Net change in unrealized gains/(losses):
Non-controlled, non-affiliated investments			(4,057,063	)			3,747,374
Affiliated investments			(2,118,324	)			9,440,599
Controlled investments			38,236,935				(9,457,114	)
Total net change in unrealized gains/(losses)			32,061,548				3,730,859
Loss on extinguishment of debt			(122,354	)			(889,150	)
Total realized and unrealized gains/(losses)			(14,767,582	)			1,097,073
Net Increase/(Decrease) in Net Assets Resulting from Operations		$	(6,437,851	)		$	4,169,833
Weighted Average Basic and diluted earnings per common share		$	(2.36	)		$	1.53
Weighted Average Basic and diluted net investment income/(loss) per common share		$	3.06			$	1.13
Weighted Average Common Shares Outstanding - Basic and Diluted			2,723,709				2,723,709	(1)

(1

)

Basic and diluted shares has been adjusted for 2019 to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis.

FAQ

What were PhenixFIN's financial results for Q1 2021?

PhenixFIN reported total investment income of $12.8 million and net investment income of $8.3 million for the first quarter of 2021.

What is the significance of the MCC JV sale for PhenixFIN?

The sale of the MCC Senior Loan Strategy JV I LLC resulted in net proceeds of $41 million and allowed for the full redemption of $74 million in notes.

What is the current net asset value of PhenixFIN?

As of December 31, 2020, PhenixFIN's net asset value was $144.2 million, or $52.94 per share.

What changes did PhenixFIN make to its management structure?

PhenixFIN transitioned to an internalized management structure effective January 1, 2021, replacing its externalized management agreements.

Is PhenixFIN planning any share repurchases?

Yes, PhenixFIN has authorized a share repurchase program of up to $15 million.