Logan Ridge Finance Corporation Reports 3.7% Increase in Total Investment Income for 2024

Logan Ridge Finance Corporation (LRFC) reported total investment income of $20.9 million for the year ended December 31, 2024, a 3.7% increase from the $20.2 million reported in 2023. This increase was primarily driven by a larger interest-earning debt portfolio. The company's net investment income for 2024 was $4.2 million, compared to $3.8 million in 2023. Operating expenses increased by 2.5% to $16.7 million in 2024, primarily due to higher interest and financing expenses and general and administrative expenses. Net realized gains on investments totaled $8.5 million in 2024, a significant improvement from the $16.4 million in net realized losses reported in 2023. The net change in unrealized appreciation (depreciation) on investments was a negative $12.3 million in 2024, compared to a positive $10.1 million in 2023.

Significant changes from the previous fiscal year include a decrease in the base management fee from $3.7 million to $3.5 million due to lower average assets under management, and a shift from net realized losses to net realized gains on investments. The company also experienced a decrease in net assets resulting from operations, from a loss of $2.5 million in 2023 to a loss of less than $0.1 million in 2024. The company's weighted average annualized yield on its debt investment portfolio (excluding non-accruals and CLOs) was 10.7% as of December 31, 2024, compared to 11.1% as of December 31, 2023. As of December 31, 2024, LRFC had investments in 59 portfolio companies, totaling approximately $172.3 million in fair value.

During 2024, LRFC made approximately $38.3 million in investments and had approximately $55 million in repayments and sales of investments, resulting in net repayments and sales of approximately $16.7 million. The company also notes that on January 29, 2025, it entered into a merger agreement with Portman Ridge Finance Corporation, subject to stockholder approvals and other closing conditions. This merger, if completed, would result in a reduction in percentage ownership and voting power for LRFC stockholders in the combined company. The company also highlights the potential for disruptions and uncertainties related to the pending merger.

LRFC's liquidity and capital resources as of December 31, 2024, included $15 million in cash and cash equivalents and total net assets of $85.1 million. The company utilizes a senior secured revolving credit agreement with KeyBank National Association, with $48.8 million outstanding as of December 31, 2024. LRFC also had $50 million in 2026 Notes and $7.5 million in 2032 Convertible Notes outstanding as of the same date. The company's asset coverage ratio was 179% as of December 31, 2024.

LRFC's outlook is contingent upon the successful completion of the merger with Portman Ridge Finance Corporation and prevailing economic conditions. The company acknowledges several risk factors, including those related to its business structure, investments, securities, and the potential impact of economic downturns, market volatility, and geopolitical instability. The company also notes the inherent risks associated with its investment strategy, which focuses on smaller, privately held companies and below investment-grade securities. The company's ability to maintain its RIC tax treatment and make distributions to shareholders is also subject to various conditions and uncertainties.