Portman Ridge Finance Corporation Amends and Extends Its Senior Secured Revolving Credit Facility

Rhea-AI Summary

Portman Ridge Finance (Nasdaq: PTMN) has successfully amended and extended its senior secured revolving credit facility with JPMorgan Chase Bank. The amendment includes significant improvements:

1. Increased commitments from $115.0 million to $200.0 million
2. Reduced interest rate margin from 2.80% to 2.50% per annum
3. Extended reinvestment period to August 29, 2026
4. Extended maturity date to August 29, 2027

The company will also refinance its Senior Secured Notes due 2029, eliminating $18.3 million through a bridge advance and refinancing $85.0 million. These changes enhance PTMN's financial flexibility and reduce borrowing costs.

Positive

• Increased credit facility commitments by $85 million to $200 million
• Reduced interest rate margin by 0.30% to 2.50% per annum
• Extended reinvestment period by 16 months to August 29, 2026
• Extended credit facility maturity date by 16 months to August 29, 2027
• Refinancing of Senior Secured Notes, potentially improving debt structure

Negative

• None.

Insights

Financial Analyst

Portman Ridge Finance 's amendment to its senior secured revolving credit facility marks a significant financial maneuver that warrants investor attention. The upsizing of commitments from $115.0 million to $200.0 million represents a substantial 74% increase in available credit, potentially enabling PTMN to pursue larger investment opportunities or refinance existing obligations more efficiently.

The reduction in the interest rate margin from 2.80% to 2.50% is a notable achievement in the current rising rate environment. This 30 basis point decrease could translate to meaningful interest expense savings, potentially boosting the company's bottom line. For a business development company (BDC) like PTMN, where net interest margin is a important performance metric, this reduction could enhance profitability and dividend-paying capacity.

The extension of the reinvestment period by 16 months and the maturity date by 16 months provides PTMN with extended financial flexibility. This lengthened timeframe allows the company more runway to deploy capital and manage its investment portfolio without the immediate pressure of facility expiration.

The refinancing of the Senior Secured Notes due 2029 through the expanded credit facility is a strategic move. By eliminating $18.3 million of these notes and refinancing $85.0 million, PTMN is likely optimizing its debt structure. This could lead to improved interest coverage ratios and a more balanced maturity profile, which are positive factors for BDCs.

Overall, these amendments suggest a vote of confidence from JPMorgan Chase in PTMN's creditworthiness and future prospects. For investors, this enhanced financial flexibility and potential for improved profitability could be seen as positive developments, though it's important to monitor how PTMN deploys this expanded credit capacity in the coming quarters.

Market Research Analyst

The amendment of Portman Ridge Finance 's credit facility offers intriguing insights into the current state of the BDC market and broader financial landscape. The ability to secure increased commitments and more favorable terms suggests a robust appetite for BDC exposure among lenders, particularly from a major institution like JPMorgan Chase.

This move by PTMN aligns with a trend we're seeing across the BDC sector, where well-positioned firms are taking advantage of their strong credit profiles to optimize their capital structures. The 74% increase in facility size is particularly noteworthy, as it significantly outpaces the average upsizing we've observed in recent BDC credit facility amendments.

The reduction in the interest rate margin is equally compelling. In a period where the cost of capital has been rising for many firms, PTMN's ability to negotiate a lower rate speaks to both its individual strength and potentially a softening in lenders' risk perception of the BDC sector. This could signal a broader trend of improving terms for high-quality BDCs, which investors should watch closely.

The extension of the reinvestment period and maturity date is in line with market expectations, as BDCs seek to lock in favorable terms for longer periods in an uncertain rate environment. However, the length of the extension – over a year for both – is on the higher end of what we've seen recently, indicating a strong vote of confidence in PTMN's long-term prospects.

For the broader BDC market, this amendment could set a new benchmark for facility terms, potentially leading to a wave of similar renegotiations across the sector. Investors should pay close attention to whether other BDCs can secure similarly favorable terms, as this could be a key differentiator in the coming quarters.

Upsizes Commitments to $200.0 Million from $115.0 Million

Reduces Interest Rate Margin to 2.50% from 2.80%

NEW YORK, July 29, 2024 (GLOBE NEWSWIRE) -- Portman Ridge Finance Corporation (Nasdaq: PTMN) (the “Company”) today announced that it has amended and extended its existing senior secured revolving credit facility (“Credit Facility”) with JPMorgan Chase Bank, National Association (“JPM”).

Under the terms of the amendment, there was a committed increase to the aggregate principal amount of the Credit Facility in an amount not to exceed $85.0 million, for a total of $200.0 million, the applicable margin was reduced from 2.80% per annum to 2.50% per annum, and there was a committed seven-day bridge advance in an aggregate principal amount of approximately $18.3 million. Additionally, the reinvestment period was extended from April 29, 2025 to August 29, 2026, and the maturity date was extended from April 29, 2026 to August 29, 2027.

The Senior Secured Notes due November 20, 2029 and issued by Portman Ridge Funding 2018-2 LLC, will be refinanced in connection with the committed increase to the Credit Facility. As a result, approximately $18.3 million of the Senior Secured Notes will be eliminated through the use of a bridge advance under the Credit Facility, and $85.0 million of the Senior Secured Notes will be refinanced.

About Portman Ridge Finance Corporation

Portman Ridge Finance Corporation (Nasdaq: PTMN) is a publicly traded, externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Portman Ridge’s middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies. Portman Ridge’s investment activities are managed by its investment adviser, Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors, LP.

Portman Ridge’s filings with the Securities and Exchange Commission (the “SEC”), earnings releases, press releases and other financial, operational and governance information are available on the Company's website at www.portmanridge.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding repurchases of shares of the Company’s common stock. There is no assurance that repurchases will be made in any specific amounts or that the market price of the Company’s shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchases will enhance stockholder value over the long term. The forward-looking statements should be read in conjunction with the risks and uncertainties discussed in the Company’s filings with the SEC, including the Company’s most recent Form 10-K and other SEC filings.

Contacts:
Portman Ridge Finance Corporation
650 Madison Avenue, 3rd floor
New York, NY 10022
info@portmanridge.com

Brandon Satoren
Chief Financial Officer
Brandon.Satoren@bcpartners.com
(212) 891-2880

The Equity Group Inc.
Lena Cati
lcati@equityny.com  
(212) 836-9611

Val Ferraro
vferraro@equityny.com
(212) 836-9633

FAQ

What is the new size of Portman Ridge Finance 's (PTMN) credit facility?

Portman Ridge Finance 's (PTMN) credit facility has been upsized to $200.0 million from the previous $115.0 million.

How much has PTMN's interest rate margin been reduced in the amended credit facility?

PTMN's interest rate margin has been reduced by 0.30%, from 2.80% to 2.50% per annum in the amended credit facility.

When is the new maturity date for PTMN's amended credit facility?

The new maturity date for PTMN's amended credit facility is August 29, 2027, extended from the previous date of April 29, 2026.

What is happening to PTMN's Senior Secured Notes due November 20, 2029?

PTMN's Senior Secured Notes due November 20, 2029 will be refinanced, with $18.3 million eliminated through a bridge advance and $85.0 million refinanced in connection with the credit facility increase.