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NEW YORK - Portman Ridge Finance (NASDAQ:PTMN) Corporation (NASDAQ: PTMN) and Logan Ridge Finance Corporation (NASDAQ: LRFC) have announced an agreement to merge, with PTMN as the surviving entity. Currently valued at $151.92 million in market capitalization, PTMN has maintained strong dividend payments for 18 consecutive years with a substantial 16.74% dividend yield. The merger is anticipated to significantly increase Portman Ridge’s size and scale, potentially leading to increased trading volume, improved liquidity, and lower operating expenses. According to InvestingPro, PTMN maintains a healthy financial profile with a "GOOD" overall health score of 2.57.
The combined company, to be managed by Sierra Crest Investment Management LLC, is expected to have assets exceeding $600 million and a net asset value (NAV) around $270 million, based on September 30, 2024, balance sheets. The merger is projected to be immediately accretive to PTMN’s NAV by 1.3% and to its Core Net Investment Income (NII) due to anticipated annual operating expense efficiencies of $2.8 million and an Incentive Fee Waiver. PTMN’s strong financial position is evidenced by its current ratio of 3.47, indicating robust liquidity. Discover more detailed financial metrics and insights with a InvestingPro subscription, which includes access to comprehensive Pro Research Reports covering 1,400+ US equities.
Both companies have overlapping investment strategies, with more than 70% of LRFC’s portfolio expected to be BC Partners-originated assets at closing, and over 60% overlapping with PTMN. This portfolio overlap is seen as a way to mitigate integration risk.
LRFC shareholders are set to receive 1.50 newly issued PTMN common stock shares for each LRFC share, based on a fixed exchange ratio. This values LRFC shares at a premium to their prior closing prices.
The merger, unanimously approved by the Boards of Directors of PTMN and LRFC, is subject to shareholder approvals and other customary closing conditions. It is expected to be completed in the second quarter of 2025.
Sierra Crest has agreed to waive up to $1.5 million of incentive fees over eight quarters following the merger’s close, subject to certain conditions. Additionally, both PTMN and LRFC plan to declare and pay regular quarterly dividends before the merger’s anticipated closure.
The companies will host a joint conference call today at 4:00 PM ET to discuss the merger details.
This news is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to purchase any securities. The forward-looking statements in the press release involve risks and uncertainties, and actual results may differ materially from those projected.
In other recent news, Portman Ridge Finance Corporation unveiled its third-quarter earnings, highlighting several strategic moves. Despite a temporary dip in earnings due to cash and portfolio management activities, the company successfully refinanced $85 million of 2018-2 secured notes, a move projected to cut interest expenses by $265,000. However, the company saw a decrease in investment income and net asset value from the previous quarter.
In addition to the refinancing, Portman Ridge repurchased 33,429 shares for approximately $600,000 and declared a quarterly distribution of $0.69 per share, indicating confidence in its financial strategy. The company’s investment portfolio remains diversified across 28 industries, with 72 unique companies, and non-accrual investments accounted for 1.6% of the portfolio at fair value as of September 30, 2024.
Despite reporting a weighted average contractual interest rate of 6.9% and a realized loss primarily due to the exit of QualTek, the company maintains a strong market position and a prudent investment strategy. Management anticipates significant shareholder returns by the end of 2024. These are some of the recent developments regarding Portman Ridge Finance Corporation.
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