Logan Ridge Finance Corporation

Good morning and welcome to Logan Ridge Finance Corporation's first quarter ended March 31, 2025 earnings conference call. An earnings press release was distributed yesterday, May 8, 2025 after the close of the market. A copy of the release along with a supplemental earnings presentation is available on the company's website at .loganrichfinance.com in the investor resources section and should be reviewed in conjunction with the company's Form 10Q filed with the SEC. As a reminder, this conference call is being recorded for replay purposes. And please note that today's conference call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Hacks or results may differ materially from those in the forward-looking statements as a result of numbers of factors, including those described in the company's filings with the SEC. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President and Director of Logan Ridge Finance Corporation, Brandon Satoran, Chief Financial Officer, and Patrick Schaeffer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Logan Ridge Finance Corporation. Please go ahead, Ted.

Good morning. Welcome to our first quarter, 2025 earnings call. As mentioned, I am joined today by our Chief Financial Officer, Brandon Satoran, and our Chief Investment Officer, Patrick Schaeffer. Following my opening remarks, Patrick will provide additional details on our investment activity to date, and Brandon will walk through the financials. Following record results in 2024, Logan Ridge continued to make significant strides in strengthening its portfolio, despite the large write-down on the company's legacy term loan, the Sequoia Healthcare. Notably, during the quarter, the company grew its portfolio with net deployment, and as previously announced, Logan Ridge continued rotating out of legacy equity portfolio with the successful exit of its second largest non-yielding equity investment, GA Communications. This exit stand is another important achievement in our long-term strategy to rotate out of the legacy equity portfolio, which is now being reduced to just .8% of our portfolio fair value, down from .8% as of the prior quarter, and .2% in the first quarter of 2024. Looking forward, with a continued monetization of the legacy equity portfolio, we believe the company is well positioned to continue to grow earnings and increase long-term shareholder value as we navigate this dynamic market shape by renewed uncertainty, increased market volatility, and shifting geopolitical dynamics. Finally, we remain very excited about the opportunities that the combination with Portland Ridge presents. This action offers the potential for increased scale, improved liquidity, and enhanced operational efficiencies. All of this will strengthen our ability to deliver greater value to shareholders. The combination of these companies represents a significant milestone and is a culmination of years of work repositioning the portfolio that BC Partners Credit has executed since taking over as the external manager in 2021. We encourage all shareholders to attend the meeting and vote for the proposed merger, as recommended by the board of directors of both companies. We are excited about the road ahead and look forward to sharing more updates soon. With that, I will turn the call over to Patrick Schaefer to discuss our portfolio and investment activity.

Thanks, Ted. Hello, everyone. As of March 31, 2025, the fair value of Logan's portfolio was approximately $169.6 million with exposure of 59 portfolio companies. This compares to 59 portfolio companies with a fair value of approximately $172.3 million as of the prior quarter. As Ted mentioned, during the quarter ended March 31, 2025, we continued to be selective in our investment strategy. We deployed approximately $15.1 million into new and existing investments and had approximately $12.5 million in repayments and sales, resulting in net deployment of

approximately $2.7 million for the quarter. On portfolio composition, as of March 31, 2025,

.8% of the company's investment portfolio at fair value was invested in assets originated by the BC Partners Credit platform, up from .7% at the end of last quarter. Also, as of March 31, 2025, our debt investment portfolio represented .6% of the total portfolio at fair value, the weighted average annualized yield of approximately 10.7%, excluding income from non-accruals and collateralized loan obligations. And .7% of our debt investment portfolio at fair value was bearing interest at a floating raise. Additionally, as of March 31, 2025, first-leaning debt represented .7% and .6% of our total portfolio on cost and fair value basis respectively, while the equity portfolio was reduced to 12% from .8% of the portfolio on a cost and fair value basis respectively. The reduction in the equity portfolio on a fair value basis during the first quarter of 2025, as compared to the previous quarter, was due to the exit of our second-largest non-yielding equity position in GA Communications, marking another milestone for our long-term strategy to rotate out of the legacy equity portfolio. On the non-acquirl status, as of March 31, 2025, the company had four debt investments across three portfolio companies on non-acquirl status with an aggregate and amortized cost and fair value of $17.2 million and $3.7 million respectively, or .7% and .2% of the investment portfolio at cost and fair value respectively. This has remained consistent with the fourth quarter of 2024 with the same four debt investments in three portfolio companies with a cost and fair value of $17.2 million and $7.9 million respectively, or .0% and .6% of the investment portfolio's cost and fair value respectively. I now turn the call over to Brandon.

Thanks, Patrick. For the quarter ended March 31, 2025, Logan Ridge generated $4.6 million of investment income, which represents a $0.8 million decrease, or $0.29 per share, as compared to $5.4 million reported for the quarter ended December 31, 2024. The decrease in investment income on a per share basis from the prior quarter was primarily driven by, one, a decrease of $0.17 per share as a result of lower non-recurring paydown and fee income. A decrease of $0.05 per share from lower base rates. A decrease of $0.05 per share as a result of the majority of the current quarter's deployment occurring in the second half of the quarter relative to the timing of repayments and sales. And five, a decrease of $0.02 per share in CLO income. For the quarter ended March 31, 2025, Logan Ridge reported $3.7 million of operating expenses, which represents a decrease of $0.2 million, or $0.08 per share, from the prior quarter. The decrease is primarily due to a decrease in interest and financing expenses in addition to lower base management fees and general and administrative expenses compared to the prior quarter. Accordingly, net investment income for the first quarter of 2025 was $0.9 million, or per share, which represents a decrease of $0.6 million, or $0.21 per share, compared to $1.5 million, or $0.50 per share that Logan Ridge earned in the fourth quarter of 2024. As of March 31, 2025, our net asset value was $78.8 million, representing a decrease of $6.3 million, or .4% as compared to the prior quarter net asset value of $85.1 million as of December 31, 2024. On a per share basis, the company's net asset value was $29.66 as of March 31, 2025, representing a $2.38 per share decrease, or .5% as compared to $32.04 per share in the prior quarter. The decrease in net asset value from the prior quarter was largely due to the $4.4 million write down on the company's legacy investment in Sequoia, which has been on and on a crawl since we began managing the portfolio in 2021. Finally, as of March 31, 2025, the company had $5.1 million in cash and cash equivalents, as well as $31.5 million of unused borrowing capacity available for deployment in new investments. With that, I will turn the call back over to Ted. Thank you, Brandon.

To our shareholders, thank you for your continued support. This concludes our prepared remarks, and I'll now turn over the call to the operator for questions.

We will now begin the question and answer session. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star one again. And our first question comes from the line of Christopher Nolan with Leidenberg-Tallman. Christopher, please go ahead.

Hey, guys. With the pending merger with Portman, assuming it goes through, does that entail a full valuation review of Logan's investments?

Yeah, similar to any of the M&A deals that we've done, you have to strike a new nab for both Portman and Logan within 48 hours of share issuance. So the short

answer

is yes.

Okay, so the entire portfolio for both companies is basically revalued. Is that done by an outsider, outside organization with the board, or how does that...

It's generally done consistent with our practices. So for, you know, to the extent, depending on the timing, we'll have third-party marks for certain of the names, we'll do all the liquid pricing, we'll do our own internal models. I would think of it as kind of a regular way process for us.

Okay, the only reason I ask all this is, you know, just because of all the uncertainty in the economy, you know, is this one of these things where the discount rate can be increased more than otherwise, things like that?

The

short answer is,

you know, it's linked to liquid benchmarks usually, which quite frankly have been relatively muted, right? So like, you know, credit really hasn't widened that much since the last quarter. So we don't think there'll be a huge impact. If it impacts Logan, it'll impact Portman

as well. Okay, that's it for me. Thanks, Chris. Good question, though. Again, if you would like to ask a question, see the press star followed by the number one on your telephone keypad. And your next question comes from the line of

Steven Martin with Plater Capital. Steven, please go ahead.

All right, thanks a lot. You know, I'll ask the same question here. Can you talk about the non-accruals and what the prospect is for recovering some of that? And what's left in the portfolio that has that kind of risk? Because you talked about what you inherited when you took over the portfolio, but the NAV was about $42 a share then, and it's $30 now.

Yeah, so Steve, I would say like far and away the biggest asset in the non-accruals has always been Sequoia. So I think from that perspective, I don't think we expect sort of meaningful recovery and sort of a turn back on of interest from that one. Again, it's been a non-accrual since even before we took over management. So I would think generally speaking that, you know, I would say there's not a lot of incremental upside from the non-accrual book converting onto the controls. With respect to the rest of the book, I mean, again, as we kind of in the notes, you know, over 70% of the portfolio is originated, and then you have a 10% of equity portfolio, which is largely sort of legacy versus VC. So if you think about it, there's maybe 20, a little bit less than 20% of the portfolio that is sort of legacy capital names and the vast majority of the funds is an investment in Eastport, which is generally performing pretty well and pretty stable. So I would say there's not a ton of risk on sort of the legacy capital portfolio from a non-accrual perspective, but acknowledge that they do have sort of one, there is one large position on the debt side, but that is generally performing well.

Okay. And, you know, you guys have sourced 75, 80% of the book now, of the debt book. You know, are any of you, are any of the VC loans in non-accrual and what's the status of the VC loans?

Yeah. So in terms of VC names on non-accrual, so, and again, there are three. It's MMI, which is a legacy name, Sequoia, legacy name, and then Lucky Bucks, which has been on non-accrual for close to two years now.

And that would be a VC name. Okay. So see the answer is one of, you know, one of three.

And what about in general, obviously you don't have this probably at hand. If you looked at the VC sourced book, what is the discount to PAR or how would you characterize the mark on the VC, the VC sourced book?

Yeah. I mean, the short answer that I had to get back to you with the specific one, the long answer is if you strip out Lucky Bucks, which is kind of on the non-accrual, I think there's maybe one name that I can think of off the top of my head that is marked at something that is less than sort of 90, and that would be Datalink, which is in the high 80s. And then we do have some liquid names in the book, similar to Pormin. So again, I can get back to you, Steve, with the number. I don't have one off the top of my head

though. Okay. Thanks a lot. That concludes our question and answer session. I would like to turn the call over

to Ted Goldfer for closing remarks. Ted?

Thanks everyone for joining us today. We'll continue to provide our shareholders with updates about the proposed merger with Portman Ridge as those become available. As always, please reach out to us with any questions which we're happy to discuss. We look forward to speaking to you guys again soon. Thank you.

That concludes today's conference call. You may now disconnect.