[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
|
46-2883380
|
(State or other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
|
[ ]
|
|
Accelerated filer
|
|
[X]
|
Non-accelerated filer
|
|
[ ] (do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
[ ]
|
Emerging growth company | [X] |
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II. OTHER INFORMATION
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
Assets
|
September 30, 2017
(Unaudited)
|
June 30, 2017
|
||||||
Non-controlled, non-affiliated investments, at fair value (amortized cost of $280,174,244 and $270,467,740, respectively)
|
$
|
271,862,946
|
$
|
254,907,171
|
||||
Derivatives, at fair value (cost $0 and $0, respectively)
|
6,550,448
|
5,830,501
|
||||||
Cash
|
14,537,986
|
10,646,697
|
||||||
Cash, restricted
|
16,143,582
|
22,616,177
|
||||||
Interest receivable
|
1,702,662
|
1,627,774
|
||||||
Other receivables
|
219,914
|
-
|
||||||
Deferred offering costs
|
37,395
|
186,513
|
||||||
Prepaid expenses and other assets
|
140,751
|
219,045
|
||||||
Total Assets
|
$ |
311,195,684
|
$ |
296,033,878
|
||||
Liabilities
|
||||||||
Notes payable:
|
||||||||
Term loan
|
$ |
102,000,000
|
$ |
102,000,000
|
||||
Revolving credit facility
|
27,260,000
|
—
|
||||||
Deferred debt issuance costs
|
(1,487,038
|
)
|
(578,074
|
)
|
||||
Notes payable, net
|
127,772,962
|
101,421,926
|
||||||
Base management fees payable
|
1,153,880
|
1,132,391
|
||||||
Income-based incentive fees payable
|
240,538
|
274,073
|
||||||
Derivatives, at fair value (cost $0 and $0, respectively)
|
6,550,448
|
5,830,501
|
||||||
Distribution payable
|
3,422,431
|
3,422,307
|
||||||
Payable for investments purchased
|
—
|
12,490,000
|
||||||
Deferred financing costs payable
|
1,654,667
|
620,500
|
||||||
Interest payable
|
232,555
|
205,027
|
||||||
Directors’ fees payable
|
97,043
|
100,000
|
||||||
Accrued expenses and other liabilities
|
397,949
|
589,041
|
||||||
Total Liabilities
|
141,522,473
|
126,085,766
|
||||||
Commitments and Contingencies (Note 6)
|
||||||||
Net Assets
|
||||||||
Common stock, par value $0.001 per share (100,000,000 shares authorized, 13,690,480 and 13,689,221 shares issued and outstanding, respectively)
|
13,689
|
13,689
|
||||||
Additional paid-in capital
|
199,077,936
|
199,066,123
|
||||||
Accumulated net realized loss
|
(18,612,517
|
)
|
(11,231,827
|
)
|
||||
Distributions in excess of net investment income
|
(2,745,559
|
)
|
(2,339,304
|
)
|
||||
Net unrealized depreciation on investments
|
(8,060,338
|
)
|
(15,560,569
|
)
|
||||
Total Net Assets
|
169,673,211
|
169,948,112
|
||||||
Total Liabilities and Net Assets
|
$ |
311,195,684
|
$ |
296,033,878
|
||||
Net Asset Value Per Share
|
$
|
12.39
|
$
|
12.41
|
For the three months ended
September 30, |
||||||||
Investment Income:
|
2017
|
2016
|
||||||
From non-controlled, non-affiliated investments:
|
||||||||
Interest income
|
$
|
6,426,053
|
$
|
7,368,382
|
||||
Payment in-kind interest income
|
292,478
|
—
|
||||||
Other fee Income
|
9,879
|
216,467
|
||||||
Total investment income
|
6,728,410
|
7,584,849
|
||||||
Expenses:
|
||||||||
Base management fees
|
1,153,880
|
1,211,535
|
||||||
Interest expense
|
1,437,829
|
991,390
|
||||||
Professional fees
|
209,041
|
194,589
|
||||||
Offering expense
|
186,513
|
—
|
||||||
Allocation of administrative costs from advisor
|
127,229
|
268,242
|
||||||
Amortization of deferred debt issuance costs
|
125,202
|
364,196
|
||||||
Directors’ fees
|
99,667
|
100,000
|
||||||
Custodian and administrator fees
|
91,996
|
108,689
|
||||||
Insurance expense
|
85,225
|
92,560
|
||||||
Other expenses
|
195,652
|
282,845
|
||||||
Total expenses
|
3,712,234
|
3,614,046
|
||||||
Net expenses
|
3,712,234
|
3,614,046
|
||||||
Net investment income
|
3,016,176
|
3,970,803
|
||||||
N
ET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
|
||||||||
Net realized loss on investments
|
(7,380,690
|
)
|
(8,028,289
|
)
|
||||
Net change in unrealized depreciation in value on investments
|
7,500,231
|
8,362,443
|
||||||
Net realized and unrealized gain on investments
|
119,541
|
334,154
|
||||||
N
ET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
3,135,717
|
$
|
4,304,957
|
||||
Basic and diluted:
|
||||||||
Net investment income per share
|
$
|
0.22
|
$
|
0.29
|
||||
Net increase in net assets resulting from operations per share
|
$
|
0.23
|
$
|
0.31
|
||||
Weighted average shares of common stock outstanding
|
13,689,885
|
13,680,817
|
||||||
Distributions paid per common share
|
$
|
0.2500
|
$
|
0.3516
|
For the three months ended
September 30, |
||||||||
2017
|
2016
|
|||||||
Net assets at beginning of period
|
$
|
169,948,112
|
$
|
162,749,883
|
||||
Increase (decrease) in net assets resulting from operations
|
||||||||
Operations:
|
||||||||
Net investment income
|
3,016,176
|
3,970,803
|
||||||
Net realized gain (loss) on investments
|
(7,380,690
|
)
|
(8,028,289
|
)
|
||||
Net change in unrealized appreciation (depreciation) on investments
|
7,500,231
|
8,362,443
|
||||||
Net increase in net assets resulting from operations
|
3,135,717
|
4,304,957
|
||||||
Stockholder distributions
|
||||||||
Distributions from net investment income
|
(3,422,431
|
)
|
(4,810,208
|
)
|
||||
Net decrease in net assets resulting from stockholder distributions
|
(3,422,431
|
)
|
(4,810,208
|
)
|
||||
Capital transactions
|
||||||||
Reinvestments of stockholder distributions
|
11,813
|
10,884
|
||||||
Net increase in net assets resulting from capital transactions
|
11,813
|
10,884
|
||||||
Total increase (decrease) in net assets
|
(274,901
|
)
|
(494,367
|
)
|
||||
Net assets at end of period (including distributions in excess of net investment income of $(2,745,559) and $(2,575,414), respectively)
|
$
|
169,673,211
|
$
|
162,255,516
|
For the three months ended
September 30, |
||||||||
2017
|
2016
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net increase (decrease) in net assets resulting from operations
|
$
|
3,135,717
|
$
|
4,304,957
|
||||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
|
||||||||
Origination and purchases of investments
|
(46,766,366
|
)
|
(24,280,175
|
)
|
||||
Payment in-kind interest
|
(292,478
|
)
|
—
|
|||||
Sales and repayments of investments
|
30,845,326
|
33,220,366
|
||||||
Net realized loss (gain) on investments in securities
|
7,380,690
|
8,028,289
|
||||||
Net change in unrealized (appreciation) depreciation on investments
|
(7,500,231
|
)
|
(8,362,443
|
)
|
||||
Amortization of discount/premium on investments
|
(622,715
|
)
|
(686,653
|
)
|
||||
Amortization of deferred debt issuance costs
|
125,202
|
|
364,196
|
|||||
Net (increase) decrease in operating assets:
|
||||||||
Cash, restricted
|
6,472,595
|
1,893,477
|
||||||
Interest receivable
|
(74,888
|
)
|
(429,876
|
)
|
||||
Other receivables
|
(219,914
|
)
|
—
|
|||||
Prepaid expenses and other assets
|
78,294
|
144,469
|
||||||
Net increase (decrease) in operating liabilities:
|
||||||||
Payable for investments purchased
|
(12,490,000
|
)
|
871,250
|
|||||
Interest payable
|
27,528
|
(5,626
|
)
|
|||||
Directors’ fees payable
|
(2,957
|
)
|
—
|
|||||
Accrued expenses and other liabilities
|
(191,093
|
)
|
(111,880
|
)
|
||||
Base management fees payable
|
21,490
|
(46,233
|
)
|
|||||
Income-based incentive fees payable
|
(33,535
|
)
|
—
|
|||||
Net Cash Provided by (used in) Operating Activities
|
(20,107,335
|
)
|
14,904,118
|
|||||
Cash Flows from Financing Activities
|
||||||||
Deferred offering costs
|
149,118
|
|||||||
Distributions to shareholders
|
(3,410,493
|
)
|
(4,798,894
|
)
|
||||
Proceeds from borrowing on revolving credit facility
|
27,260,000
|
—
|
||||||
Repayments of borrowing on revolving credit facility
|
—
|
(15,978,329
|
)
|
|||||
Net Cash Provided by (used in) Financing Activities
|
23,988,624
|
(20,777,223
|
)
|
|||||
Net Change in Cash
|
3,891,289
|
(5,873,105
|
)
|
|||||
Cash
|
||||||||
Beginning of period
|
10,646,697
|
18,433,066
|
||||||
End of period
|
$
|
14,537,986
|
$
|
12,559,961
|
||||
Supplemental and non-cash financing cash flow information:
|
||||||||
Cash paid for interest
|
$
|
1,410,301
|
$
|
997,016
|
||||
Issuance of shares pursuant to Dividend Reinvestment Plan
|
11,813
|
10,884
|
Investments
(1)
|
Industry
|
Interest Rate
|
Base Floor Rate
|
Maturity Date
|
Principal Amount/
Shares (2) |
Amortized Cost
|
Fair Value
|
% of Net Assets
|
||||||||
Non-Controlled/Non-Affiliates
|
||||||||||||||||
Senior Secured First Lien Debt Investments
|
||||||||||||||||
AAR Intermediate Holdings, LLC - Revolver
(3)
|
Oilfield Services
|
3M L + 5.00%
|
1.00%
|
9/30/2021
|
$ |
990,099
|
$ |
—
|
$ |
—
|
0.00%
|
|||||
AAR Intermediate Holdings, LLC - Term A
|
Oilfield Services
|
3M L+5.00%
|
1.00%
|
9/30/2021
|
4,950,495
|
4,950,495
|
4,950,495
|
2.92%
|
||||||||
AAR Intermediate Holdings, LLC - Term B
|
Oilfield Services
|
3M L+8.00%
|
1.00%
|
9/30/2021
|
10,403,012
|
4,628,906
|
6,761,958
|
3.99%
|
||||||||
American Gaming Systems Inc.
(4)
|
Entertainment and Leisure
|
1M L+5.50%
|
1.00%
|
2/15/2024
|
17,955,000
|
17,913,393
|
17,955,000
|
10.58%
|
||||||||
CareerBuilder, LLC
(5)
|
Business Services
|
3M L+6.75%
|
1.00%
|
7/27/2023
|
18,000,000
|
17,472,076
|
17,460,000
|
10.29%
|
||||||||
Dayton Superior Corporation
(4)
|
Construction & Building
|
3M L+8.00%
|
1.00%
|
11/15/2021
|
9,925,000
|
9,671,591
|
9,329,500
|
5.50%
|
||||||||
FPC Holdings, Inc.
(4)
|
Trucking and Leasing
|
3M L+4.00%
|
1.25%
|
11/19/2019
|
9,586,590
|
8,678,616
|
9,442,791
|
5.56%
|
||||||||
Immucor, Inc.
(4)
|
Healthcare-Products/Services
|
1M L+5.00%
|
1.00%
|
6/15/2021
|
7,481,250
|
7,409,395
|
7,481,250
|
4.41%
|
||||||||
Liberty Oilfield Services, LLC
(5)
|
Oilfield Services
|
3M L+7.625%
|
1.00%
|
9/19/2022
|
10,000,000
|
9,801,082
|
9,800,000
|
5.78%
|
||||||||
Medical Solutions L.L.C.
(4)
|
Healthcare-Products/Services
|
3M L+4.25%
|
1.00%
|
6/14/2024
|
3,990,000
|
3,970,732
|
3,990,000
|
2.35%
|
||||||||
Montreign Operating Company, LLC
(4)
|
Entertainment and Leisure
|
1M L+8.25%
|
1.00%
|
1/24/2023
|
13,232,821
|
13,285,381
|
13,232,821
|
7.80%
|
||||||||
PR Wireless, Inc.
(5)
|
Telecommunications
|
3M L+9.00%
|
1.00%
|
6/29/2020
|
16,447,500
|
15,556,909
|
15,460,650
|
9.11%
|
||||||||
Premiere Global Services, Inc.
(4)(6)
|
Business Services
|
2M L+6.50%
|
1.00%
|
12/8/2021
|
11,203,974
|
10,559,498
|
11,091,934
|
6.54%
|
||||||||
Redbox Automated Retail, LLC
(4)
|
Retail
|
1M L+7.50%
|
1.00%
|
9/27/2021
|
7,000,000
|
6,822,772
|
7,000,000
|
4.12%
|
||||||||
U.S. Well Services, LLC
|
Oilfield Services
|
1M L+11.00%
|
1.00%
|
2/2/2022
|
4,050,773
|
4,050,773
|
4,050,773
|
2.39%
|
||||||||
U.S. Well Services, LLC - Revolver
(3)
|
Oilfield Services
|
2M L+6.00%
|
1.00%
|
2/2/2022
|
920,856
|
620,850
|
620,850
|
0.36%
|
||||||||
Total Senior Secured First Lien Debt Investments
|
146,137,370
|
135,392,469
|
138,628,022
|
81.70%
|
||||||||||||
Senior Secured Second Lien Debt Investments
|
||||||||||||||||
AP NMT Acquisition BV
(4)(7)(8)
|
Media
|
3M L+9.00%
|
1.00%
|
8/13/2022
|
20,000,000
|
19,053,779
|
17,200,000
|
10.14%
|
||||||||
Bird Electric Enterprises, LLC - Revolver
(3)
|
Utilities
|
|
3M L + 5.00%
|
—
|
6/14/2022
|
1,000,000
|
—
|
—
|
0.00%
|
|||||||
Caelus Energy Alaska 03, LLC
(4)
|
Oil and Gas
|
3M L+7.50%
|
1.25%
|
4/15/2020
|
26,000,000
|
24,449,009
|
22,880,000
|
13.48%
|
||||||||
Intermedia Holdings, Inc.
(4)
|
Business Services
|
3M L+9.50%
|
1.00%
|
2/1/2025
|
5,000,000
|
4,905,370
|
4,900,000
|
2.89%
|
||||||||
International Wire Goup, Inc.
(5)
|
Metals and Mining
|
Fixed 10.75%
|
—
|
8/1/2021
|
11,254,000
|
11,073,449
|
10,466,220
|
6.17%
|
||||||||
Lionbridge Technologies, Inc.
(4)
|
Business Services
|
1M L+9.75%
|
1.00%
|
2/28/2025
|
12,000,000
|
11,774,554
|
11,760,000
|
6.93%
|
||||||||
Montrose Environmental Group, Inc.
|
Environmental Services
|
1M L+9.50%
|
1.00%
|
9/30/2020
|
20,000,000
|
19,600,621
|
19,600,000
|
11.55%
|
||||||||
Premiere Global Services, Inc.
(4)
|
Business Services
|
3M L+9.50%
|
1.00%
|
6/6/2022
|
15,000,000
|
14,632,517
|
14,700,000
|
8.66%
|
||||||||
TouchTunes Interactive Networks, Inc.
(5)
|
Entertainment
and Leisure
|
3M L+8.25%
|
1.00%
|
5/27/2022
|
7,000,000
|
6,974,010
|
7,000,000
|
4.13%
|
||||||||
Trident USA Health Services, LLC
(4)
|
Healthcare-Products/Services
|
3M L+9.50%
|
1.25%
|
7/31/2020
|
21,878,286
|
21,836,452
|
12,689,406
|
7.48%
|
||||||||
Total Senior Secured Second Lien Debt Investments
|
139,132,286
|
134,299,761
|
121,195,626
|
71.43%
|
Investments
(1)
|
Industry
|
Interest
Rate |
Base
Floor
Rate
|
Maturity Date
|
Principal Amount/
Shares (2) |
Amortized Cost
|
Fair Value
|
% of Net Assets
|
||||||||
Equity, Warrants and Other Investments
|
||||||||||||||||
AAR Intermediate Holdings, LLC
(Equity Interest)
(9)(10)
|
Oilfield Services
|
$ |
11,880
|
$ |
—
|
$ |
1
|
0.00%
|
||||||||
Bird Electric Enterprises, LLC, Class C
Preferred Units
(11)
|
Utilities
|
10
|
7,518,750
|
7,518,750
|
4.43%
|
|||||||||||
Endeavour International Holding B.V., $3.01
strike (Warrants)
(7)(9)
|
Oil and Gas
|
4/30/2018
|
160,000
|
368,000
|
1
|
0.00%
|
||||||||||
PR Wireless, Inc., $0.01 strike (Warrants)
(9)
|
Telecommunications
|
6/24/2027
|
201
|
1,374,009
|
—
|
0.00%
|
||||||||||
U.S. Well Services, LLC
(9) (12)
|
Oilfield Services
|
Class A Units
|
2,519,434
|
1,221,256
|
4,207,455
|
2.48%
|
||||||||||
Oilfield Services
|
Class B Units
|
920,856
|
-
|
313,091
|
0.19%
|
|||||||||||
Total Equity, Warrants and Other Investments
|
3,612,381
|
10,482,015
|
12,039,298
|
7.10%
|
||||||||||||
Total Non-Controlled/Non-Affiliates
|
$ |
288,882,037
|
$280,174,244
|
271,862,946
|
160.23%
|
|||||||||||
Liabilities in excess of other assets
|
(102,189,734)
|
(60.23)%
|
||||||||||||||
Net Assets
|
$ |
169,673,211
|
100.00%
|
|
Industry
|
Interest
Rate
|
Maturity
Date
|
Notional
Amount
|
Amortized
Cost
|
Fair
Value
|
% of
Net
Assets
|
|||||||||||
Derivatives
|
||||||||||||||||||
Assets
|
||||||||||||||||||
Embedded derivative—Notes Payable
(13)
|
Diversified Financial Services
|
12/5/2019 | $ |
102,000,000
|
$ |
—
|
$ |
6,550,448
|
3.87%
|
|||||||||
Total Assets
|
102,000,000
|
—
|
6,550,448
|
3.87%
|
||||||||||||||
|
|
|
|
|||||||||||||||
Liabilities
|
||||||||||||||||||
Total Return Swap
(9)(13)
|
Diversified Financial Services
|
1M L + 2.75%
|
12/5/2019 |
102,000,000
|
—
|
(6,550,448)
|
(3.87)%
|
|||||||||||
Total Liabilities
|
102,000,000
|
—
|
(6,550,448)
|
(3.87)%
|
||||||||||||||
Total Derivatives
|
$ |
204,000,000
|
$
|
—
|
$
|
—
|
—
|
(1)
|
All investments are non-controlled and non-affiliated issuers. All investments are valued in good faith by the board of directors.
|
(2)
|
Principal amount includes capitalized PIK interest.
|
(3)
|
Refer to Note 6 for more detail on the unfunded commitments.
|
(4)
|
A portion or all is held by the Company indirectly through CM Finance SPV, Ltd. and pledged as collateral for the Total Return Swaps.
|
(5)
|
A portion or all is held by the Company indirectly through CM Finance SPV, LLC and pledged as collateral for the revolving credit facility held through Citibank, N.A.
|
(6)
|
Security, or a portion thereof, unsettled as of September 30, 2017.
|
(7)
|
The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. Non-qualifying assets represent 5.53% of total assets.
|
(8)
|
A portfolio company domiciled in the Netherlands. The jurisdiction of the security issuer may be a different country than the domicile of the portfolio company.
|
(9)
|
Securities are non-income producing.
|
(10)
|
CM Finance Inc's investment in AAR Intermediate Holdings, LLC (Equity Interest) is held through its wholly owned subsidiary, CM Portfolio Companies, LLC. |
(11)
|
CM Finance Inc’s investment in Bird Electric Enterprises, LLC, Class C Preferred Units is held through its wholly owned subsidiary, Bird Electric Blocker, LLC.
|
(12)
|
CM Finance Inc’s investments in U.S. Well Services, LLC Class A and Class B Units are held through its wholly owned subsidiary, U.S. Well Services Blocker, LLC.
|
(13)
|
Refer to Note 5 for more detail on the Total Return Swaps and the Embedded derivatives—Notes Payable.
|
Investments
(1)
|
Industry
|
Interest Rate
|
Base
Floor Rate |
Maturity
Date |
Principal
Amount/ Shares (2) |
Amortized
Cost |
Fair Value
|
% of
Net Assets |
|||||||
Non-Controlled/Non-Affiliates
|
|||||||||||||||
Senior Secured First Lien Debt Investments
|
|||||||||||||||
AAR Intermediate Holdings, LLC - Revolver
(3)
|
Oilfield Services
|
3M L + 5.00%
|
1.00%
|
9/30/2021
|
$
|
198,020
|
$
|
198,020
|
$
|
198,020
|
0.12%
|
||||
AAR Intermediate Holdings, LLC - Term A
|
Oilfield Services
|
3M L + 5.00%
|
1.00%
|
9/30/2021
|
4,950,495
|
4,950,495
|
4,950,495
|
2.91%
|
|||||||
AAR Intermediate Holdings, LLC - Term B
|
Oilfield Services
|
3M L + 4.00% PIK
|
1.00%
|
9/30/2021
|
10,398,827
|
4,624,720
|
6,759,238
|
3.98%
|
|||||||
American Gaming Systems, Inc.
(4)
|
Entertainment and Leisure
|
3M L + 5.50%
|
1.00%
|
2/15/2024
|
18,000,000
|
17,955,003
|
17,955,000
|
10.56%
|
|||||||
Dayton Superior Corporation
(4)
|
Construction & Building
|
3M L + 8.00%
|
1.00%
|
11/15/2021
|
9,950,000
|
9,686,413
|
9,950,000
|
5.85%
|
|||||||
FPC Holdings, Inc.
(4)
|
Trucking and Leasing
|
3M L + 4.00%
|
1.25%
|
11/19/2019
|
9,586,590
|
8,588,755
|
9,203,126
|
5.41%
|
|||||||
Immucor, Inc.
(4)(5)
|
Healthcare-Products/Services
|
3M L + 5.00%
|
1.00%
|
6/15/2021
|
7,500,000
|
7,425,000
|
7,425,000
|
4.37%
|
|||||||
Medical Solutions L.L.C.
(4)
|
Healthcare-Products/Services
|
3M L + 4.25%
|
1.00%
|
6/14/2024
|
4,000,000
|
3,980,000
|
3,980,000
|
2.34%
|
|||||||
Melissa & Doug, LLC
(5)
|
Consumer Products
|
3M L + 4.50%
|
1.00%
|
6/19/2024
|
1,000,000
|
995,000
|
995,000
|
0.59%
|
|||||||
Montreign Operating Company, LLC
(4)(5)
|
Entertainment and Leisure
|
1M L + 8.25%
|
1.00%
|
1/24/2023
|
13,232,821
|
13,287,467
|
13,232,821
|
7.79%
|
|||||||
PR Wireless, Inc.
(6)
|
Telecommunications
|
3M L + 9.00%
|
1.00%
|
6/29/2020
|
16,490,000
|
15,522,048
|
15,500,600
|
9.12%
|
|||||||
Premiere Global Services, Inc.
(4)
|
Business Services
|
3M L + 6.50%
|
1.00%
|
12/8/2021
|
11,355,789
|
10,668,572
|
11,242,231
|
6.61%
|
|||||||
Redbox Automated Retail, LLC
(4)
|
Retail
|
3M L + 7.50%
|
1.00%
|
9/27/2021
|
7,437,500
|
7,241,540
|
7,437,500
|
4.38%
|
|||||||
U.S. Well Services, LLC
|
Oilfield Services
|
1M L + 11.00%
|
1.00%
|
2/2/2022
|
3,969,450
|
3,969,450
|
3,969,450
|
2.34%
|
|||||||
U.S. Well Services, LLC - Revolver
(3)
|
Oilfield Services
|
1M L + 6.00%
|
1.00%
|
2/2/2022
|
507,514
|
507,514
|
507,514
|
0.30%
|
|||||||
YRC Worldwide, Inc.
(4)(7)
|
Trucking and Leasing
|
1M L + 7.50%
|
1.00%
|
2/13/2019
|
13,937,359
|
13,901,008
|
13,797,986
|
8.12%
|
|||||||
Total Senior Secured First Lien Debt Investments
|
132,514,365
|
123,501,005
|
127,103,981
|
74.79%
|
|||||||||||
Senior Secured Second Lien Debt Investments
|
|||||||||||||||
AP NMT Acquisition BV
(4)(7)(8)
|
Media
|
3M L + 9.00%
|
1.00%
|
8/13/2022
|
20,000,000
|
19,020,080
|
15,400,000
|
9.06%
|
|||||||
Bird Electric Enterprises, LLC
(9)(10)
|
Utilities
|
3M L + 14.00%,
3.00% PIK |
1.00%
|
10/9/2020
|
15,037,500
|
14,809,248
|
7,518,750
|
4.43%
|
|||||||
Caelus Energy Alaska 03, LLC
(4)
|
Oil and Gas
|
3M L + 7.50%
|
1.25%
|
4/15/2020
|
26,000,000
|
24,147,353
|
22,100,000
|
13.00%
|
|||||||
Intermedia Holdings, Inc.
(4)
|
Business Services
|
3M L + 9.50%
|
1.00%
|
2/1/2025
|
5,000,000
|
4,903,645
|
4,900,000
|
2.88%
|
|||||||
International Wire Group, Inc.
(6)
|
Metals and Mining
|
10.75%
|
—
|
8/1/2021
|
11,254,000
|
11,064,076
|
11,057,055
|
6.51%
|
|||||||
Lionbridge Technologies, Inc.
(4)
|
Business Services
|
3M L + 9.75%
|
1.00%
|
2/28/2025
|
12,000,000
|
11,768,297
|
11,760,000
|
6.92%
|
|||||||
Premiere Global Services, Inc.
(4)
|
Business Services
|
3M L + 9.50%
|
1.00%
|
6/6/2022
|
15,000,000
|
14,622,459
|
14,700,000
|
8.65%
|
|||||||
TNS, Inc.
(6)
|
Telecommunications
|
1M L + 8.00%
|
1.00%
|
8/14/2020
|
15,092,924
|
15,095,599
|
15,092,924
|
8.88%
|
|||||||
TouchTunes Interactive Networks, Inc.
|
Entertainment and Leisure
|
3M L + 8.25%
|
1.00%
|
5/27/2022
|
7,000,000
|
6,973,432
|
7,000,000
|
4.12%
|
|||||||
Trident USA Health Services, LLC
(4)
|
Healthcare-Products/Services
|
3M L + 9.50%
|
1.25%
|
7/31/2020
|
21,878,286
|
21,807,281
|
17,065,063
|
10.04%
|
|||||||
Total Senior Secured Second Lien Debt Investments
|
148,262,710
|
144,211,470
|
126,593,792
|
74.49%
|
Investments
(1)
|
Industry
|
Maturity
Date |
Principal
Amount/ Shares (2) |
Amortized
Cost |
Fair Value
|
% of
Net Assets |
||||||||||||
Equity, Warrants and Other Investments
(11)
|
||||||||||||||||||
AAR Intermediate Holdings, LLC (Equity Interest)
|
Oilfield Services
|
$
|
11,880
|
$
|
—
|
$
|
1
|
—
|
||||||||||
Endeavour International Holding B.V., $3.01 strike (Warrants)
(7)
|
Oil and Gas
|
4/30/2018
|
160,000
|
160,000
|
80
|
—
|
||||||||||||
PR Wireless, Inc., $0.01 strike (Warrants)
|
Telecommunications
|
6/24/2027
|
201
|
1,374,009
|
—
|
—
|
||||||||||||
U.S. Well Services, LLC
|
Oilfield Services
|
Class A Units
|
|
2,519,434
|
1,221,256
|
1,129,744
|
0.66
|
%
|
||||||||||
Class B Units
|
920,856
|
— |
79,573
|
0.05
|
%
|
|||||||||||||
Total Equity, Warrants and Other Investments
|
3,612,371
|
2,755,265
|
1,209,398
|
0.71
|
%
|
|||||||||||||
Total Non-Controlled/Non-Affiliates
|
$
|
284,389,446
|
$
|
270,467,740
|
$
|
254,907,171
|
149.99
|
%
|
||||||||||
Liabilities in excess of other assets
|
(84,959,059
|
) |
(49.99
|
%)
|
||||||||||||||
Net Assets
|
$ |
169,948,112
|
100.00
|
%
|
Industry
|
Interest
Rate
|
Maturity
Date |
Notional
Amount |
Amortized
Cost |
Fair
Value |
% of
Net Assets |
||||||||||||
Derivatives
|
||||||||||||||||||
Assets
|
||||||||||||||||||
Embedded derivative - Notes Payable
(12)
|
Diversified Financial Services
|
12/5/2019 | $ |
102,000,000
|
—
|
$ |
5,830,501
|
3.43
|
%
|
|||||||||
Total Assets
|
102,000,000
|
—
|
5,830,501
|
3.43
|
%
|
|||||||||||||
Liabilities
|
||||||||||||||||||
Total Return Swap
(11)(12)
|
Diversified Financial Services
|
1M L + 2.75%
|
12/5/2019
|
102,000,000
|
—
|
(5,830,501
|
)
|
(3.43
|
%)
|
|||||||||
Total Liabilities
|
102,000,000
|
—
|
(5,830,501
|
)
|
(3.43
|
%)
|
||||||||||||
Total Derivatives
|
$
|
204,000,000
|
$
|
—
|
$
|
—
|
—
|
(1)
|
All investments are non-controlled and non-affiliated issuers. All investments are valued in good faith by the board of directors.
|
(2)
|
Principal amount includes capitalized PIK interest.
|
(3)
|
Refer to Note 6 for more detail on the unfunded commitment.
|
(4)
|
Held by the Company indirectly through CM Finance SPV, Ltd. and pledged as collateral for the Total Return Swaps.
|
(5)
|
Security, or a portion thereof, unsettled as of June 30, 2017.
|
(6)
|
Held by the Company indirectly through CM Finance SPV, LLC and pledged as collateral for the revolving credit facility held through Citibank, N.A.
|
(7)
|
The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. Non-qualifying assets represent 9.86% of total assets.
|
(8)
|
A portfolio company domiciled in the Netherlands. The jurisdiction of the security issuer may be a different country than the domicile of the portfolio company.
|
(9)
|
Classified as non-accrual asset.
|
(10)
|
Includes 2.00% default rate.
|
(11)
|
Securities are non-income producing.
|
(12)
|
Refer to Note 5 for more detail on the Total Return Swaps and the Embedded derivatives—Notes Payable.
|
1M
L -
|
1 month LIBOR (1.22% as of June 30, 2017)
|
3M
L -
|
3 month LIBOR (1.30% as of June 30, 2017)
|
PIK -
|
Payment-In-Kind
|
|
|
As of
June 30, 2017 |
||
Additional paid-in capital
|
$
|
(742,700
|
)
|
|
Distributions in excess of net investment income
|
165,192
|
|||
Accumulated net realized gain (loss)
|
577,508
|
As of
June 30, 2017 |
||||
Undistributed net investment income
|
$
|
1,314,066
|
||
Accumulated capital gains (losses)
|
—
|
|||
Capital loss carryover
|
(11,231,827
|
) | ||
Unrealized appreciation (depreciation)
|
(17,062,588
|
) | ||
Distributions payable
|
(3,422,307
|
) | ||
Components of tax distributable earnings at year end
|
$
|
(30,402,656
|
) |
|
Three Months Ended September 30,
|
|||||||
|
2017
|
2016
|
||||||
Investment purchases, at cost (including PIK interest)
|
$
|
47,058,844
|
$
|
24,280,175
|
||||
Investment sales and repayments
|
30,845,326
|
33,220,366
|
|
Investment at
Amortized Cost |
Percentage
|
Investments at
Fair Value |
Percentage
|
||||||||||||
Senior Secured First Lien Debt Investments
|
$
|
135,392,468
|
48.32
|
%
|
$
|
138,628,022
|
50.99
|
%
|
||||||||
Senior Secured Second Lien Debt Investments
|
134,299,761
|
47.94
|
121,195,626
|
44.58
|
||||||||||||
Equity, Warrants and Other Investments
|
10,482,015
|
3.74
|
12,039,298
|
4.43
|
||||||||||||
Embedded derivative— Notes Payable
|
—
|
—
|
6,550,448
|
2.41
|
||||||||||||
Total Return Swap
|
—
|
—
|
(6,550,448
|
)
|
(2.41
|
)
|
||||||||||
Total
|
$
|
280,174,244
|
100.00
|
%
|
$
|
271,862,946
|
100.00
|
%
|
Investment at
Amortized Cost |
Percentage
|
Investments at
Fair Value |
Percentage
|
|||||||||||||
Senior Secured First Lien Debt Investments
|
$
|
123,501,005
|
45.66
|
%
|
$
|
127,103,981
|
49.86
|
%
|
||||||||
Senior Secured Second Lien Debt Investments
|
144,211,470
|
53.32
|
126,593,792
|
49.66
|
||||||||||||
Equity, Warrants and Other Investments
|
2,755,265
|
1.02
|
1,209,398
|
0.48
|
||||||||||||
Embedded derivative - Notes Payable
|
—
|
— | 5,830,501 |
2.29
|
||||||||||||
Total Return Swap
|
—
|
— | (5,830,501 | ) |
(2.29
|
)
|
||||||||||
Total
|
$
|
270,467,740
|
100.00 | % | $ | 254,907,171 |
100.00
|
%
|
|
Investments at
Fair Value |
Percentage of
Total Portfolio |
||||||
Business Services
|
$
|
59,911,934
|
22.04
|
%
|
||||
Entertainment and Leisure
|
38,187,821
|
14.05
|
||||||
Oilfield Services
|
30,704,623
|
11.29
|
||||||
Healthcare-Products/Services
|
24,160,656
|
8.89
|
||||||
Oil and Gas
|
22,880,001
|
8.42
|
||||||
Environmental Services
|
19,600,000
|
7.21
|
||||||
Media
|
17,200,000
|
6.33
|
||||||
Telecommunications
|
15,460,650
|
5.69
|
||||||
Metals and Mining
|
10,466,220
|
3.85
|
||||||
Trucking and Leasing
|
9,442,791
|
3.47
|
||||||
Construction & Building
|
9,329,500
|
3.43
|
||||||
Utilities
|
7,518,750
|
2.77
|
||||||
Retail
|
7,000,000
|
2.56
|
||||||
Total
|
$
|
271,861,946
|
100.00
|
%
|
Investments at
Fair Value |
|
Percentage of
Total Portfolio |
||||||
Business Services | $ | 42,602,231 | 16.71 | % | ||||
Entertainment and Leisure
|
38,187,821
|
14.98
|
||||||
Telecommunications
|
30,593,524
|
12.00
|
||||||
Healthcare-Products/Services
|
28,470,063
|
11.17
|
||||||
Trucking and Leasing
|
23,001,112
|
9.02
|
||||||
Oil and Gas
|
22,100,080
|
8.67
|
||||||
Oilfield Services
|
17,594,035
|
6.90
|
||||||
Media
|
15,400,000
|
6.04
|
||||||
Metals and Mining
|
11,057,055
|
4.34
|
||||||
Construction & Building
|
9,950,000
|
3.91
|
||||||
Utilities
|
7,518,750
|
2.95
|
||||||
Retail
|
7,437,500
|
2.92
|
||||||
Consumer Products
|
995,000
|
0.39
|
||||||
Total
|
$
|
254,907,171
|
100.00
|
%
|
|
Fair Value
|
Percentage of Total Investments
|
||||||
U.S. West
|
$
|
75,940,704
|
27.93
|
%
|
||||
U.S. Southeast
|
48,733,834
|
17.92
|
||||||
U.S. Northeast
|
42,459,041
|
15.62
|
||||||
U.S. Midwest
|
38,250,000
|
14.07
|
||||||
U.S. Southwest
|
36,589,961
|
13.46
|
||||||
Europe
|
17,200,000
|
6.33
|
||||||
U.S. Mid-Atlantic
|
12,689,406
|
4.67
|
||||||
Total
|
$ |
271,862,946
|
100.00
|
%
|
Fair Value
|
Percentage Total Portfolio
|
|||||||
U.S. West
|
$
|
56,376,504
|
22.12
|
%
|
||||
U.S. Southeast
|
48,867,831
|
19.17
|
||||||
U.S. Northeast
|
44,044,876
|
17.28
|
||||||
U.S. Southwest
|
32,844,487
|
12.88
|
||||||
U.S. Mid-Atlantic
|
32,157,987
|
12.62
|
||||||
U.S. Midwest
|
25,215,486
|
9.89
|
||||||
Europe
|
15,400,000
|
6.04
|
||||||
Total
|
$
|
254,907,171
|
100.00
|
%
|
|
Assets
|
Liabilities
|
Notional
|
Contracts
|
||||||||||||
Credit Risk:
|
||||||||||||||||
Total Return Swaps
|
$
|
—
|
$
|
6,550,448
|
$
|
102,000,000
|
1
|
|||||||||
Embedded derivatives
|
||||||||||||||||
Notes Payable
|
6,550,448
|
— | 102,000,000 |
1
|
||||||||||||
Gross fair value of derivative contracts
|
$
|
6,550,448
|
$
|
6,550,448
|
||||||||||||
Counterparty netting
|
—
|
— | ||||||||||||||
Net fair value of derivative contracts
|
$
|
6,550,448
|
$
|
6,550,448
|
||||||||||||
Collateral not offset
|
—
|
— | ||||||||||||||
Net amount
|
$
|
6,550,448
|
$ |
6,550,448
|
Assets
|
Liabilities |
Notional
|
Contracts
|
|||||||||||||
Credit Risk:
|
||||||||||||||||
Total Return Swaps
|
$
|
—
|
$
|
5,830,501
|
$
|
102,000,000
|
1
|
|||||||||
Embedded derivatives
|
||||||||||||||||
Notes Payable
|
5,830,501
|
— | 102,000,000 |
1
|
||||||||||||
Gross fair value of derivative contracts
|
$
|
5,830,501
|
$
|
5,830,501
|
||||||||||||
Counterparty netting
|
—
|
—
|
||||||||||||||
Net fair value of derivative contracts
|
$
|
5,830,501
|
$
|
5,830,501
|
||||||||||||
Collateral not offset
|
—
|
—
|
||||||||||||||
Net amount
|
$
|
5,830,501
|
$ |
5,830,501
|
|
Included in net change in unrealized appreciation (depreciation) on
investments and derivatives |
|||||||
|
For the three months ended September 30,
|
|||||||
|
2017
|
2016
|
||||||
Total Return Swaps
|
$
|
719,947
|
$
|
212,527
|
||||
Embedded derivatives
|
||||||||
Notes Payable
|
(719,947
|
)
|
(212,527
|
)
|
||||
Total
|
$
|
—
|
$
|
—
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Assets
|
||||||||||||||||
Investments
|
||||||||||||||||
Senior Secured First Lien Debt Investments
|
$
|
—
|
$
|
—
|
$
|
138,628,022
|
$
|
138,628,022
|
||||||||
Senior Secured Second Lien Debt Investments
|
—
|
—
|
121,195,626
|
121,195,626
|
||||||||||||
Equity, Warrants and Other Investments
|
—
|
—
|
12,039,298
|
12,039,298
|
||||||||||||
Total Investments
|
—
|
—
|
271,862,946
|
271,862,946
|
||||||||||||
Derivatives
|
||||||||||||||||
Embedded Derivative Notes Payable
|
—
|
—
|
6,550,448
|
6,550,448
|
||||||||||||
Total Derivatives
|
—
|
—
|
6,550,448
|
6,550,448
|
||||||||||||
Total Assets
|
$
|
—
|
$
|
—
|
$
|
278,413,394
|
$
|
278,413,394
|
||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Total Return Swaps
|
$
|
—
|
$
|
—
|
$
|
6,550,448
|
|
$
|
6,550,448
|
|
||||||
Total Derivatives
|
—
|
—
|
6,550,448
|
|
6,550,448
|
|
||||||||||
Total Liabilities
|
$
|
—
|
$
|
—
|
$
|
6,550,448
|
|
$
|
6,550,448
|
|
Level 1
|
Level 2 |
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Investments
|
||||||||||||||||
Senior Secured First Lien Debt Investments
|
$
|
—
|
$ | — |
$
|
127,103,981
|
$
|
127,103,981
|
||||||||
Senior Secured Second Lien Debt Investments
|
—
|
— |
126,593,792
|
126,593,792
|
||||||||||||
Equity, Warrants and Other Investments
|
—
|
— |
1,209,398
|
1,209,398
|
||||||||||||
Total Investments
|
—
|
— |
254,907,171
|
254,907,171
|
||||||||||||
Derivatives
|
||||||||||||||||
Embedded derivative Notes Payable
|
—
|
— |
5,830,501
|
5,830,501
|
||||||||||||
Total Derivatives
|
—
|
— |
5,830,501
|
5,830,501
|
||||||||||||
Total Assets
|
$
|
—
|
$ | — |
$
|
260,737,672
|
$
|
260,737,672
|
||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Total Return Swaps
|
$
|
—
|
$ | — |
$
|
5,830,501
|
|
$
|
5,830,501
|
|
||||||
Total Derivatives
|
—
|
— |
5,830,501
|
|
5,830,501
|
|
||||||||||
Total Liabilities
|
$
|
—
|
$ | — |
$
|
5,830,501
|
|
$
|
5,830,501
|
|
|
Senior Secured
First Lien Debt Investments |
Senior Secured
Second Lien Debt Investments |
Equity, Warrants
and Other Investments |
Total
Investments |
|||||||||||||
Balance as of June 30, 2017
|
$
|
127,103,981
|
$
|
126,593,792
|
$
|
1,209,398
|
$
|
254,907,171
|
|||||||||
Purchases (including PIK interest)
|
27,458,844
|
19,600,000
|
-
|
47,058,844
|
|||||||||||||
Sales
|
(15,752,403
|
)
|
(15,092,924
|
)
|
-
|
|
(30,845,327
|
)
|
|||||||||
Amortization
|
258,578
|
364,138
|
-
|
622,716
|
|||||||||||||
Net realized gains (losses)
|
(69,580
|
)
|
(7,311,110
|
)
|
-
|
|
(7,380,690
|
)
|
|||||||||
Transfers in
|
- | - | 7,518,750 | 7,518,750 | |||||||||||||
Transfers out
|
- | (7,518,750 | ) | - | (7,518,750 | ) | |||||||||||
Net change in unrealized (depreciation) appreciation
|
(371,398
|
)
|
4,560,480
|
3,311,150
|
7,500,232
|
||||||||||||
Balance as of September 30, 2017
|
$
|
138,628,022
|
$
|
121,195,626
|
$
|
12,039,298
|
$
|
271,862,946
|
|||||||||
Change in unrealized gains (losses) relating to assets and liabilities still held as of September 30, 2017
|
$
|
(470,447
|
)
|
$
|
(2,753,277
|
)
|
$
|
3,311,150
|
$
|
87,426
|
|
Total Return Swaps
|
Embedded derivatives-
Notes Payable |
Total Derivatives
|
|||||||||
Balance as of June 30, 2017
|
$
|
(5,830,501
|
)
|
$
|
5,830,501
|
$
|
—
|
|||||
Net change in unrealized (depreciation) appreciation
|
(719,947
|
)
|
719,947
|
—
|
||||||||
Balance as of September 30, 2017
|
$
|
(6,550,448
|
)
|
$
|
6,550,448
|
$
|
—
|
|||||
Change in unrealized gains (losses) relating to assets and liabilities still held as of September 30, 2017
|
$
|
(719,947
|
)
|
$
|
719,947
|
$
|
—
|
|
Senior Secured
First Lien Debt Investments |
Senior Secured
Second Lien Debt Investments |
Equity, Warrants
and Other Investments |
Total
Investments |
||||||||||||
Balance as of June 30, 2016
|
$
|
157,088,252
|
$
|
114,871,040
|
$
|
154,872
|
$
|
272,114,164
|
||||||||
Purchases (including PIK interest)
|
24,280,175
|
—
|
—
|
24,280,175
|
||||||||||||
Sales
|
(15,220,366
|
)
|
(18,000,000
|
)
|
—
|
(33,220,366
|
)
|
|||||||||
Amortization
|
531,692
|
154,961
|
—
|
686,653
|
||||||||||||
Net realized gains (losses)
|
(6,777,231
|
)
|
—
|
(1,251,058
|
)
|
(8,028,289
|
)
|
|||||||||
Transfers in
|
—
|
—
|
—
|
—
|
||||||||||||
Transfers out
|
—
|
—
|
—
|
—
|
||||||||||||
Net change in unrealized (depreciation) appreciation
|
6,901,065
|
210,168
|
1,251,210
|
8,362,443
|
||||||||||||
Balance as of September 30, 2016
|
$
|
166,803,587
|
$
|
97,236,169
|
$
|
155,024
|
$
|
264,194,780
|
||||||||
Change in unrealized gains (losses) relating to assets and liabilities still held as of September 30, 2016
|
$
|
175,079
|
$
|
199,006
|
$
|
152
|
374,237
|
|
Total
Return Swaps |
Embedded
derivatives - Notes Payable |
Total
Derivatives |
|||||||||
Balance as of June 30, 2016
|
$
|
(9,071,659
|
)
|
$
|
9,071,659
|
$
|
—
|
|||||
Net change in unrealized (depreciation) appreciation
|
212,527
|
(212,527
|
)
|
—
|
||||||||
Balance as of September 30, 2016
|
$
|
(8,859,132
|
)
|
$
|
8,859,132
|
$
|
—
|
|||||
Change in unrealized gains (losses) relating to assets and liabilities still held as of September 30, 2016
|
$
|
212,527
|
$
|
(212,527
|
)
|
$
|
—
|
Fair Value as of September 30,
2017
|
Valuation
Methodology
|
Unobservable
Input(s)
|
Weighted Average
|
Range
|
|||||||||
Senior Secured First Lien Debt Investments
|
$
|
98,135,201
|
Yield Analysis
|
Market Yields
|
9.7
|
%
|
4.3% - 18.4
|
%
|
|||||
Senior Secured First Lien Debt Investments
|
13,232,821
|
Yield Analysis
|
Market Comparable
|
101.0
|
%
|
100.8% - 101.3
|
%
|
||||||
Senior Secured First Lien Debt Investments
|
27,260,000
|
Recent Purchase
|
Recent Purchase
|
N/A
|
N/A
|
||||||||
Senior Secured Second Lien Debt Investments
|
101,595,626
|
Yield Analysis
|
Market Yields
|
17.9
|
%
|
8.4% - 68.9
|
%
|
||||||
Senior Secured Second Lien Debt Investments
|
19,600,000
|
Recent Purchase
|
Recent Purchase
|
N/A
|
N/A
|
||||||||
Equity, Warrants and Other Investments
|
12,039,298
|
EV Multiple
|
EBITDA multiple
|
9.74
|
x
|
1.15x - 14.90
|
x
|
||||||
Total Return Swaps
|
(6,550,448
|
)
|
Intrinsic Value
|
Intrinsic Value
|
N/A
|
N/A
|
|||||||
Embedded Derivatives - Notes Payable
|
6,550,448
|
Intrinsic Value
|
Intrinsic Value
|
N/A
|
N/A
|
|
Fair Value as of
June 30, 2017
|
Valuation
Methodology
|
Unobservable
Input(s)
|
Weighted
Average
|
Range
|
||||||||
Senior Secured First Lien Debt Investments
|
$
|
83,516,160
|
Yield Analysis
|
Market Yields
|
9.7
|
%
|
5.2%-17.8
|
%
|
|||||
Senior Secured First Lien Debt Investments
|
43,587,821
|
Recent Purchase
|
Recent Purchase
|
N/A
|
N/A
|
||||||||
Senior Secured Second Lien Debt Investments
|
108,536,737
|
Yield Analysis
|
Market Yields
|
14.6
|
%
|
7.4%-33.8
|
%
|
||||||
Senior Secured Second Lien Debt Investments
|
18,057,055
|
Recent Purchase
|
Recent Purchase
|
N/A
|
N/A
|
||||||||
Equity, Warrants and Other Investments
|
1,209,398 |
EV Multiple
|
Revenue
|
2.0
|
x
|
2.0
|
x
|
||||||
Total Return Swaps
|
(5,830,501
|
)
|
Intrinsic Value
|
Intrinsic Value
|
N/A
|
N/A
|
|||||||
Embedded derivatives—Note Payable
|
5,830,501
|
Intrinsic Value
|
Intrinsic Value
|
N/A
|
N/A
|
Declared
|
|
Ex-Date
|
|
Record Date
|
|
Pay Date
|
|
Amount
|
|
|
Fiscal Quarter
|
|
August 24, 2017
|
|
September 7, 2017
|
|
September 8, 2017
|
|
October 5, 2017
|
|
$
|
0.2500
|
|
|
1st 2018
|
November 7, 2017
|
|
December 14, 2017
|
|
December 15, 2017
|
|
January 4, 2018
|
|
$
|
0.2500
|
|
|
2nd 2018
|
Investments
|
Unfunded
Commitment |
Annual
Non-use Fee |
Expiration Date
|
|||||||||
AAR Intermediate Holdings, LLC
|
$
|
990,099
|
0.50
|
9/30/21
|
||||||||
Bird Electric Enterprises LLC | 1,000,000 | 6.50 | 6/14/22 | |||||||||
U.S. Well Services, LLC
|
300,006
|
0.00
|
1/31/22
|
|||||||||
Total Unfunded Commitments
|
$
|
2,290,105
|
Investments
|
Unfunded
Commitment |
Annual
Non-use Fee |
Expiration Date
|
|||||||||
AAR Intermediate Holdings, LLC
|
$
|
792,079 |
0.50
|
|
9/30/21
|
|
||||||
U.S. Well Services, LLC | 413,342 | 0.00 | 1/31/22 | |||||||||
Total Unfunded Commitments
|
$
|
1,205,421 |
Declaration Date
|
Record Date
|
Payment Date
|
Amount Per Share
|
|||||
March 14, 2014
|
March 24, 2014
|
March 31, 2014
|
$
|
0.1812
|
||||
May 14, 2014
|
June 16, 2014
|
July 1, 2014
|
$
|
0.3375
|
||||
September 4, 2014
|
September 18, 2014
|
October 1, 2014
|
$
|
0.3375
|
||||
November 6, 2014
|
December 18, 2014
|
January 5, 2015
|
$
|
0.3375
|
||||
January 28, 2015
|
March 18, 2015
|
April 2, 2015
|
$
|
0.3469
|
||||
May 6, 2015
|
June 8, 2015
|
July 5, 2015
|
$
|
0.3469
|
||||
June 10, 2015*
|
September 1, 2015
|
September 15, 2015
|
$
|
0.4300
|
||||
June 10, 2015
|
September 18, 2015
|
October 2, 2015
|
$
|
0.3469
|
||||
November 3, 2015
|
December 18, 2015
|
January 5, 2016
|
$
|
0.3469
|
||||
February 2, 2016
|
March 18, 2016
|
April 7, 2016
|
$
|
0.3516
|
||||
April 28, 2016
|
June 17, 2016
|
July 7, 2016
|
$
|
0.3516
|
||||
August 25, 2016
|
September 16, 2016
|
October 6, 2016
|
$
|
0.3516
|
||||
November 3, 2016
|
December 16, 2016
|
January 5, 2017
|
$
|
0.3516
|
||||
November 3, 2016
|
March 17, 2017
|
April 6, 2017
|
$
|
0.2500
|
||||
May 2, 2017
|
June 16, 2017
|
July 6, 2017
|
$
|
0.2500
|
||||
August 24, 2017
|
September 8, 2017
|
October 5, 2017
|
$
|
0.2500
|
||||
November 7, 2017
|
December 15, 2017
|
January 4, 2018
|
$
|
0.2500
|
*
|
Special distribution
|
|
Three months ended September 30,
|
|||||||||||||||
|
2017
|
2016
|
||||||||||||||
|
Distribution Amount
|
Percentage
|
Distribution Amount
|
Percentage
|
||||||||||||
Ordinary income and short-term capital gains
|
$
|
3,422,431
|
100
|
%
|
$
|
4,810,208
|
100
|
%
|
||||||||
Long-term capital gains
|
—
|
—
|
—
|
—
|
||||||||||||
Total
|
$
|
3,422,431
|
100
|
%
|
$
|
4,810,208
|
100
|
%
|
|
Three months ended September 30,
|
|||||||||||||||
|
2017
|
2016
|
||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||
Balance at beginning of period
|
13,689,221
|
$
|
200,568,530
|
13,679,686
|
$
|
200,482,695
|
||||||||||
Reinvestments of shareholder distributions
|
1,259
|
11,813
|
1,224
|
10,884
|
||||||||||||
Balance at end of period
|
13,690,480
|
$
|
200,580,343
|
13,680,910
|
$
|
200,493,579
|
|
Three months
ended September 30, 2017 |
|
|
Three months
ended September 30, 2016 |
|
||
Per Share Data:
(1)
|
|
||||||
Net asset value, beginning of period
|
$
|
12.41 |
|
|
$
|
11.90
|
|
Net investment income
|
0.22
|
|
|
|
0.29
|
|
|
Net realized and unrealized gains (losses)
|
0.01
|
|
|
|
0.02
|
||
Net increase in net assets resulting from operations
|
0.23
|
|
|
|
0.31
|
|
|
Capital transactions
(2)
|
|
||||||
Dividends from net investment income
|
(0.25
|
) |
|
|
(0.35
|
)
|
|
Distributions from net realized gains
|
—
|
|
|
|
—
|
||
Net decrease in net assets resulting from capital transactions
|
(0.25
|
) |
|
|
(0.35
|
)
|
|
Net asset value, end of period
|
$
|
12.39 |
|
|
$
|
11.86
|
|
Market value per share, end of period
|
$
|
9.35 |
|
|
$
|
9.10
|
|
Total return based on market value
(3)(4)
|
(3.95
|
)%
|
|
|
6.51
|
%
|
|
Shares outstanding at end of period
|
13,690,480
|
|
|
|
13,680,910
|
|
|
Ratio/Supplemental Data:
|
|
||||||
Net assets, at end of period
|
$
|
169,673,211 |
|
|
$
|
162,255,516
|
|
Ratio of total expenses to average net assets
(5)
|
8.70
|
%
|
|
|
8.82
|
%
|
|
Ratio of net expenses to average net assets
(5)
|
8.70
|
%
|
|
|
8.82
|
%
|
|
Ratio of interest expense and fees and amortization of deferred debt issuance costs to average net assets
(5)
|
3.66
|
%
|
|
|
3.31
|
%
|
|
Ratio of net investment income before fee waiver to average net assets
(5)
|
7.07
|
%
|
|
|
9.69
|
%
|
|
Ratio of net investment income after fee waiver to average net assets
(5)
|
7.07
|
%
|
|
|
9.69
|
%
|
|
Total Notes Payable
|
$
|
129,260,000 |
|
|
$
|
116,500,000
|
|
Asset Coverage Ratio
(6)
|
2.31
|
|
|
|
2.39
|
|
|
Portfolio Turnover Rate
(4)
|
12
|
%
|
|
|
13
|
%
|
(1)
|
The per share data was derived by using the shares outstanding during the period.
|
(2)
|
The per share data for dividends and distributions declared reflects the actual amount of the dividends and distributions declared per share during the period.
|
(3)
|
Total returns are historical and are calculated by determining the percentage change in the market value with all dividends and distributions, if any, reinvested. Dividends and distributions are assumed to be reinvested at prices obtained under the company’s dividend reinvestment plan. Total investment return does not reflect sales load.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Asset coverage ratio is equal to (i) the sum of (A) net assets at the end of the period and (B) debt outstanding at the end of the period, divided by (ii) total debt outstanding at the end of the period.
|
|
Three Months Ended September 30,
|
|||||||
|
2017
|
2016
|
||||||
Loan Amendment/Consent Fee
|
$ |
9,879
|
$
|
216,467
|
||||
Other Fee Income
|
$
|
9,879
|
$
|
216,467
|
Tax cost
|
$
|
280,174,244
|
||
Gross unrealized appreciation
|
7,134,749
|
|||
Gross unrealized depreciation
|
(15,446,047
|
)
|
||
Net unrealized investment depreciation
|
$
|
(8,311,298
|
)
|
Tax cost
|
$
|
271,969,759
|
||
Gross unrealized appreciation
|
3,709,069
|
|||
Gross unrealized depreciation
|
(20,771,659
|
)
|
||
Net unrealized investment depreciation
|
$
|
(17,062,590
|
)
|
|
•
|
|
our future operating results;
|
|
•
|
|
our business prospects and the prospects of our portfolio companies;
|
|
•
|
|
the effect of investments that we expect to make;
|
|
•
|
|
our contractual arrangements and relationships with Stifel Venture Corp. (“Stifel”) and certain funds managed by Cyrus Capital Partners, L.P. (“Cyrus Capital”);
|
|
•
|
|
our contractual arrangements and relationships with lenders and other third parties;
|
|
•
|
|
actual and potential conflicts of interest with CM Investment Partners LLC (the “Adviser”);
|
|
•
|
|
the dependence of our future success on the general economy, interest rates and the effects of each on the industries in which we invest;
|
|
•
|
|
the ability of our portfolio companies to achieve their objectives or service their debt obligations to us;
|
|
•
|
|
the use of borrowed money to finance a portion of our investments;
|
|
•
|
|
the adequacy of our financing sources and working capital;
|
|
•
|
|
the timing of cash flows, if any, from the operations of our portfolio companies;
|
|
•
|
|
the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;
|
|
•
|
|
the ability of the Adviser to attract and retain highly talented professionals;
|
|
•
|
|
our ability to qualify and maintain our qualification as a regulated investment company ("RIC") and as a business development company ("BDC");
|
|
•
|
|
our ability to obtain exemptive relief from the Securities and Exchange Commission ("SEC"); and
|
|
•
|
|
the effect of changes to tax legislation and our tax position and other legislative and regulatory changes.
|
|
•
|
|
our quarterly valuation process begins with each portfolio company or investment being initially valued by the members of the Adviser’s investment team responsible for the portfolio investment;
|
|
•
|
|
preliminary valuation conclusions are then documented and discussed by our senior management and the Adviser;
|
|
•
|
|
on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors;
|
|
•
|
|
the valuation committee of our board of directors then reviews these preliminary valuations and makes a recommendation to our board of directors regarding the fair value of each investment; and
|
|
•
|
|
the board of directors then reviews and discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the independent valuation firm and the valuation committee.
|
|
•
|
|
our organization and our offering;
|
|
•
|
|
valuing our assets and calculating our net asset value per share (including the cost and expenses of any independent valuation firm(s));
|
|
•
|
|
fees and expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments;
|
|
•
|
|
interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio acquisition efforts;
|
|
•
|
|
offerings of our common stock and other securities;
|
|
•
|
|
administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent, equipment and the allocable portion of the cost of our chief compliance officer, chief financial officer and his staffs’ compensation and compensation-related expenses);
|
|
•
|
|
transfer agent and custody fees and expenses;
|
|
•
|
|
federal and state registration fees;
|
|
•
|
|
costs of registration and listing our shares on any securities exchange;
|
|
•
|
|
federal, state and local taxes;
|
|
•
|
|
independent directors’ fees and expenses;
|
|
•
|
|
costs of preparing and filing reports or other documents required by the SEC or other regulators;
|
|
•
|
|
costs of any reports, proxy statements or other notices to stockholders including printing costs;
|
|
•
|
|
costs associated with individual or group stockholders;
|
|
•
|
|
costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
|
|
•
|
|
direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and
|
|
•
|
|
all other non-investment advisory expenses incurred by us or the Adviser in connection with administering our business.
|
|
Percentage
of Total Portfolio at September 30, 2017 |
|
Percentage
of Total Portfolio at June 30, 2017 |
|
Business Services
|
22.04
|
%
|
16.71
|
%
|
Entertainment and Leisure
|
14.05
|
|
14.98
|
|
Oilfield Services
|
11.29
|
|
6.90
|
|
Healthcare-Products/Services
|
8.89
|
|
11.17
|
|
Oil and Gas
|
8.42
|
|
8.67
|
|
Environmental Services
|
7.21
|
—
|
||
Media
|
6.33
|
|
6.04
|
|
Telecommunications
|
5.69
|
|
12.00
|
|
Metals and Mining
|
3.85
|
|
4.34
|
|
Trucking and Leasing
|
3.47
|
|
9.02
|
|
Construction & Building
|
3.43
|
|
3.91
|
|
Utilities
|
2.77
|
|
2.95
|
|
Retail
|
2.56
|
|
2.92
|
|
Consumer Products
|
—
|
|
0.39
|
|
Total
|
100.00
|
%
|
100.00
|
%
|
Investment Rating 1
|
|
Investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.
|
Investment Rating 2
|
|
Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans will initially be rated 2.
|
Investment Rating 3
|
|
Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with their financial covenants.
|
Investment Rating 4
|
|
Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are often in workout. Investments with a rating of 4 will be those for which some loss of return but no loss of principal is expected.
|
Investment Rating 5
|
|
Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are almost always in workout. Investments with a rating of 5 will be those for which some loss of return and principal is expected.
|
As of September 30, 2017
|
As of June 30, 2017
|
||||||||||||||||||||||||
Fair Value
|
% of
Portfolio |
Number of
Investments |
Fair Value
|
% of
Portfolio |
Number of
Investments |
||||||||||||||||||||
1
|
$
|
—
|
—
|
%
|
—
|
$
|
—
|
—
|
%
|
—
|
|||||||||||||||
2
|
230,750,166
|
84.9
|
18
|
212,729,243
|
83.5
|
18
|
|||||||||||||||||||
3
|
14,142,664
|
5.2
|
2
|
27,899,860
|
10.9
|
3
|
|||||||||||||||||||
4
|
19,451,364
|
7.2
|
1
|
6,759,238
|
2.7
|
1
|
|||||||||||||||||||
5
|
7,518,752
|
2.7
|
2
|
7,518,830
|
2.9
|
2
|
|||||||||||||||||||
Total
|
$
|
271,862,946
|
100.0
|
%
|
23
|
$
|
254,907,171
|
100.0
|
%
|
24
|
10.1 | Amendment Agreement, dated as of September 1, 2017, by and among CM Finance SPV LTD., U.S. Bank National Association, CM Investment Partners LLC and CM Finance Inc* | |
*
|
Filed herewith
|
(1)
|
Incorporated by reference to Registrant’s Registration Statement on Form N-2 (File No. 333-192370), filed on November 15, 2013.
|
CM FINANCE INC
|
|||
By:
|
/s/ Michael C. Mauer
|
||
Michael C. Mauer
|
|||
Chief Executive Officer
|
|||
By:
|
/s/ Rocco DelGuercio
|
||
Rocco DelGuercio
|
|||
Chief Financial Officer
|
1. |
Definitions
|
2. |
Amendments to the Indenture
|
(a) |
With effect from the date of this Agreement, the Issuer, the Trustee and the Bank agree that the Indenture shall be amended in accordance with the provisions set out in
Exhibit A
hereto and that this shall constitute a supplemental indenture in accordance with Article VIII of the Indenture.
|
(b) |
The Collateral Manager and the Valuation Agent consent to the amendments to the Indenture set out in
Exhibit A
hereto.
|
3. |
Amendments to the CAA, the ACA, the RCNA and the Contribution Agreement
|
(a) |
With effect from the date of this Agreement, the Issuer, the Collateral Manager and the Administrator agree that the CAA shall be amended in accordance with the provisions set out in
Exhibit B
hereto.
|
(b) |
With effect from the date of this Agreement, the Issuer, the Trustee and the Custodian agree that the ACA shall be amended in accordance with the provisions set out in
Exhibit C
hereto.
|
(c) |
With effect from the date of this Agreement, the Issuer and the Sole Shareholder agree that the Contribution Agreement shall be amended in accordance with the provisions set out in
Exhibit D
hereto.
|
(d) |
With effect from the date of this Agreement, the Issuer, the Class A-R Noteholders, the Revolving Credit Note Agent and the Trustee agree that the RCNA shall be amended in accordance with the provisions set out in
Exhibit E
hereto.
|
4. |
Miscellaneous
|
(a) |
Successors and Assigns
. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No person or entity other than the parties hereto and their respective successors and permitted assigns shall have any rights under this Agreement.
|
(b) |
Entire Agreement
. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided herein) with respect thereto.
|
(c) |
Headings
. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.
|
(d) |
Governing Law
. This Agreement shall be construed in accordance with, and this Agreement and any matters arising out of or relating in any way whatsoever to this Agreement (whether in contract, tort or otherwise) shall be governed by, the law of the State of New York.
|
(e) |
Jurisdiction
. With respect to any suit, action or proceedings relating to this Agreement or any matter between the parties arising under or in connection with this Agreement ("
Proceedings
"), each party irrevocably: (i) submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan and the United States District Court for the Southern District of New York, and any appellate court from any thereof; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes any party from bringing Proceedings in any other jurisdiction, nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.
|
(f) |
Waiver of Jury Trial Right
. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS
. Each party hereby (a) certifies that no representative, agent or attorney of any other has represented, expressly or otherwise, that such other would not, in the event of a Proceeding, seek to enforce the foregoing waiver; and (b) acknowledges that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this paragraph.
|
(g) |
Counterparts
. This Agreement (and each amendment, modification and waiver in respect of this Agreement) may be executed and delivered in any number of counterparts (including by e-mail (PDF) or facsimile), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, and each of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of this Agreement by e-mail (PDF) or facsimile shall be deemed to constitute due and sufficient delivery of such counterpart.
|
(h) |
Severability
. If any term, provision, covenant or condition of this Agreement, or the application thereof to any party hereto or any circumstance, is held to be unenforceable, invalid or illegal (in whole or in part) for any reason (in any relevant jurisdiction), the remaining terms, provisions, covenants and conditions of this Agreement, modified by the deletion of the unenforceable, invalid or illegal portion (in any relevant jurisdiction), will continue in full force and effect, and such unenforceability, invalidity, or illegality will not otherwise affect the enforceability, validity or legality of the remaining terms, provisions, covenants and conditions of this Agreement, so long as this Agreement, as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the deletion of such portion of this Agreement, will not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.
|
EXECUTED as a DEED by CM FINANCE SPV LTD.,
|
||
as Issuer
|
||
By:
|
||
Name:
|
||
Title:
|
||
U.S. BANK NATIONAL ASSOCIATION
,
|
||
as Trustee and as Bank
|
||
By:
|
||
Name:
|
||
Title:
|
||
U.S. BANK NATIONAL ASSOCIATION
,
|
||
as Collateral Administrator
|
||
By:
|
||
Name:
|
||
Title:
|
1) |
Section 1.1
: The definition of "Administrative Expenses" in Section 1.1 shall be deleted in its entirety and replaced with the following:
|
2) |
Section 1.1
: The definition of “Corporate Trust Office” in Section 1.1 shall be deleted in its entirety and replaced with the following:
|
3) |
Section 5.1
: The words "one Business Day" in the last sentence of Section 5.1 shall be deleted and replaced with the words "three Business Days".
|
4) |
Section 6.1(d)
: The words "Sections 5.1(e) or 5.1(i)" in the first paragraph of Section 6.1(d) shall be deleted and replaced with the words "Sections 5.1(c), 5.1(d), 5.1(e), 5.1(f), 5.1(g), 5.1(h), 5.1(i), 5.1(j) or 5.1(k) "
|
5) |
Section 6.3(g)
: The words "and supervised" in Section 6.3(g) shall be deleted.
|
6) |
Section 6.17(a)
: Section 6.17(a) shall be deleted in its entirety and replaced with the following:
|
7) |
Section 14.3(a)(i)
: Section 14.3(a)(i) shall be amended by deleting the words:
|
8) |
Section 6.18
: A new Section 6.18 shall be added to the Indenture, as follows:
|
9) |
Section 11.1(a):
Section 11.1(a) shall be deleted in its entirety and replaced with the following:
|
(i) |
On each Payment Date, unless an Enforcement Event has occurred, all amounts transferred to the Payment Account from the Interest Collection Subaccount shall be applied (A)
first
, first, to the payment of accrued and unpaid Administrative Expenses, provided that Administrative Expenses payable under this sub-clause (A) shall exclude any amounts to the extent that payment of such amounts would result in the aggregate amounts of Administrative Expenses paid under this sub-clause (A) would exceed U.S.$120,000 (prorated for the partial calendar year 2017 and the year in which the Maturity or final payment of the Notes occurs, based on the actual number of days elapsed in such partial year and a 360 day year) in the applicable calendar year; (B)
second
to the payment of accrued and unpaid interest on the Class A Notes and the Class A-R Notes pro rata according to the respective Aggregate Outstanding Amounts thereof; and (C)
third
, to pay any accrued and unpaid Administrative Expenses to the extent not paid pursuant to sub-clause (A) above.
|
(ii) |
On the date of Maturity, unless an Enforcement Event has occurred, all amounts transferred to the Payment Account from the Principal Collection Subaccount shall be applied (A)
first
, pro rata, to the repayment of (1) principal of the Class A Notes until the Class A Notes have been paid in full; and (2) the Outstanding Class A-R Funded Amount until the Outstanding Class A-R Funded Amount has been reduced to zero; (B)
second
, to pay any accrued and unpaid Administrative Expenses to the extent not paid pursuant to clause (i) above; and (C)
third
, all remaining Principal Collections shall be paid to the Issuer (in accordance with directions of the Issuer to the Trustee).
|
(iii) |
If a declaration of acceleration of the maturity of the Notes has occurred following an Event of Default and such declaration of acceleration has not been rescinded (an Enforcement Event), the Trustee shall apply proceeds in respect of the Portfolio Assets on each date or dates fixed by the Trustee (each such date to occur on a Payment Date), in accordance with clause (i) (in the case of Interest Collections) and clause (ii) (in the case of Principal Collections) of this Section 11.1(a)."
|
1) |
Section 4(d)
: The second, third and fourth sentence of Section 4(d) shall be deleted.
|
2) |
Section 8(c)(i)
: In the first sentence of Section 8(c)(i), the words
|
1) |
Section 4(d)
: The following sentence shall be added at the end of Section 4(d):
|
2) |
Section 6(a)
: Section 6(a) shall be deleted in its entirety and replaced with the following:
|
1) |
Section 11(b)
: The word "Notes" in Section 11(b) shall be deleted and replaced with the words "Secured Obligations".
|
2) |
Section 11(c)
: The word "Notes" in Section 11(c) shall be deleted and replaced with the words "Secured Obligations".
|
3) |
Section 19
: A new Section 19 shall be added to the Contribution Agreement, as follows:
|
1) |
Section 7.14
: A new Section 7.14 shall be added to the RCNA, as follows:
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CM Finance Inc;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Michael C. Mauer
|
||
Michael C. Mauer
|
||
Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CM Finance Inc;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Rocco DelGuercio
|
||
Rocco DelGuercio
|
||
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
/s/ Michael C. Mauer
|
|
Name: Michael C. Mauer
|
|
Date: November 7, 2017
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
/s/ Rocco DelGuercio
|
|
Name: Rocco DelGuercio
|
|
Date: November 7, 2017
|