Ted Goldthorpe; Chairman of the Board, President, Chief Executive Officer; Logan Ridge Finance Corp
Patrick Schafer; Chief Investment Officer; Logan Ridge Finance Corp
Brandon Satoren; Chief Financial Officer, Chief Accounting Officer, Treasurer, Company Secretary; Logan Ridge Finance Corp
Christopher Nolan; Analyst; Ladenburg Thalmann Financial Services
Operator
Thank you standing by. Good morning, and welcome to Logan Ridge Finance Corporation’s fourth quarter and full year ended December 31, 2024, earnings conference call. An earnings press release was distributed yesterday, March 13, 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 www.loganridgefinance.com, in the Investor Resources section and should be reviewed in conjunction with the company’s Form 10-K filed with the SEC.
As a reminder, this conference call is being recorded for replay purposes. 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.
Actual results may differ materially from those in the forward-looking statements as a result of a number 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 Satoren, Chief Financial Officer; and Patrick Schafer, 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.
Ted Goldthorpe
Good morning, and welcome to our fourth quarter and full year 2024 earnings call. As mentioned, I’m joined today by our Chief Financial Officer, Brandon Satoren; and our Chief Investment Officer, Patrick Schafer. Following my opening remarks, Patrick will provide additional details on our investment activity to date, and Brandon will go through the financials.
2024 was a profoundly transformative year for Logan Ridge as we continue to build upon the record results seen in 2023 and made significant strides to the rotation out of our legacy equity portfolio. This was the strongest year of financial performance for Logan Ridge since Mount Logan Management took over as the company’s investment adviser in July of 2021.
2024’s results were highlighted by the highest total investment income and net investment income in our history at $20.9 million and $4.2 million or $1.56 per share, respectively. The hallmark of 2024, however, was our successful sale of our largest equity position Nth Degree for $17.5 million in cash, which was a significant catalyst for the accretive combination with Portman Ridge announced in January.
This exit was a major achievement in our long-term strategy to rotate out of our legacy equity portfolio, which has been a central focus to the turnaround strategy for Logan Ridge. Further building on our success, I’m very pleased to announce that in February of 2025, we exited our second largest nonyielding equity investment in GA Communications. We also ended the year with no new nonaccruals during the fourth quarter of 2024.
Additionally during 2024, we further strengthened our balance sheet by successfully amending and extending our revolving credit facility with KeyBank. The amendment further termed out our debt capital structure and reduced our cost of financing while also increasing our financial flexibility.
The culmination of these collective achievements paved the way for a combination with Portman Ridge Finance Corporation, which the Board approved in January. A successful combination of the two companies will be a significant milestone for BC Credit — BC Partners Credit platform, we believe, will be accretive for both sets of shareholders. We believe this combination has the potential to provide greater scale, improved operating efficiencies and increased trading volume in the stock, all of which should create incremental value for shareholders.
The next step towards the completion of the merger is the special meeting of shareholders where investors will be asked to vote to approve the merger after the N-14 is declared effective by the SEC. We invite our shareholders to vote for the merger when they receive their proxy cards. Both Portman and Logan’s Board of Directors have unanimously recommended that shareholders vote for the merger.
Due to the strong financial and operational performance seen in 2024, the Board of Directors approved a dividend of $0.36 per share for the fourth quarter 2024, that remains flat to the prior quarter. Reflecting on the year, we’re incredibly proud of what we were able to accomplish.
Looking ahead, we expect to remain active in the market. With a healthy deployment pipeline, our disciplined and prudent investment strategy, and our experienced management team, we believe we are well positioned to continue delivering meaningful returns to our stakeholders. With that, I will turn the call over to Patrick to discuss our portfolio and investment activities.
Patrick Schafer
Thanks, Ted, and hello, everyone. As of December 31, 2024, the fair value of Logan’s portfolio was approximately $172.3 million with exposure to 59 portfolio companies. This compares to 59 portfolio companies with a fair value of approximately $75.6 million as of the prior quarter and 60 portfolio companies with a fair value of $189.7 million as of December 31, 2023.
During the year ended December 31, 2024, we continue to be selective in our investment strategy. We deployed approximately $38.3 million in new and existing investments and had approximately $55 million in repayments and sales, resulting in net repayments and sales of approximately $16.7 million for the year. Of note, net deployments reflect the $17.5 million of proceeds from Nth Degree received in late Q3 and $5.3 million of repayment from Critical Nurse, which was received on the last day of the year.
Now on to portfolio composition. As of December 31, 2024, 66.7% of the company’s investment portfolio at fair value was invested in assets originated by the BC Partners Credit platform, up from 65.4% at the end of last year.
Also as of December 31, 2024, our investment — our debt investment portfolio represented 83.3% of the total portfolio at fair value with a weighted average annualized yield of approximately 10.7%, excluding income from nonaccruals and collateralized loan obligations, and 87.9% of our debt investment portfolio at fair value was bearing interest at a floating rate.
Additionally, as of December 31, 2024, first lien debt represented 64.4% and 64.7% of our total portfolio on a cost and fair value basis, respectively, and the equity portfolio represented 13.4% and 13.8% of the portfolio on a cost and fair value basis, respectively, as of December 31, 2024.
Moving on to nonaccrual status. As of December 31, 2024, the company had four debt investments across three portfolio companies on nonaccrual status with an aggregate amortized cost and fair value of $17.2 million and $7.9 million, respectively, or 9.0% and 4.6% of the investment portfolio at cost and fair value, respectively.
This remained relatively stable since the third quarter of 2024, with four debt investments in three portfolio companies with a cost and fair value of 17.2% — $70.2 million and $8.2 million, respectively, or 8.8% and 4.6% of the investment companies — investment portfolios cost and fair value, respectively. I’ll now turn the call over to Brandon.
Brandon Satoren
Thanks, Patrick. Turning to our financial results for the quarter ended December 31, 2024. For the quarter ended December 31, 2024, Logan Ridge generated $5.4 million of investment income, a $0.3 million increase as compared to $5.1 million reported for the quarter ended September 30, 2024.
The increase in investment income compared to the prior quarter was primarily due to the receipt of $0.3 million of nonrecurring other income as well as an increase of $0.1 million in distributions received from our Great Lakes joint venture. For the quarter ended December 31, 2024, Logan Ridge had $3.9 million of total expenses, which decreased by $0.3 million from $4.2 million of total expenses reported in the prior quarter.
The decrease is primarily due to lower average outstanding debt as well as a full quarter’s benefit of (technical difficulty) basis point spread reduction on the KeyBank credit facility as part of the August 2024 amendment. Accordingly, net investment income for the fourth quarter was $1.5 million or $0.56 per share, an increase of $0.5 million or $0.19 per share from the third quarter of 2024.
Our net asset value as of December 31, 2024, was $85.1 million, representing a $1.2 million decrease or 1.4% compared to the prior quarter net asset value of $86.3 million as of September 30, 2024. On a per share basis, net asset value was $32.04 per share as of December 31, 2024, representing a $0.27 decrease per share or 0.6% as compared to $32.31 per share as of September 30, 2024. The difference between the decrease of 1.4% and 0.6% is the accretive effective our buyback programs.
Finally, as of December 31, 2024, the company had $15 million in cash and cash equivalents as well as $26.2 million of unused borrowing capacity available for deployment in new investments. With that, I will turn the call back over to Ted.
Ted Goldthorpe
Thank you, Brandon. To our shareholders, thank you so much for your continued support. This concludes our prepared remarks. I will now turn the call over to the operator for any questions.
Operator
Thank you. (Operator Instructions)
Christopher Nolan, Ladenburg Thalmann.
Christopher Nolan
Congratulations on a good quarter. And I guess looking — and a lot of the questions, I think, were answered in the last call, but looking forward, do you anticipate the Logan portfolio just to be subsumed to Portman Ridge? Or is there going to be anything else where you might be lowering the equity exposure more? I mean how do you see the combined portfolio going forward, I guess, is the succinct we ask?
Ted Goldthorpe
Chris, I’ll go first. Yes, I mean, I think it’s going to be just a straight merger. Obviously, Patrick had mentioned in his remarks, we were able to exit another equity position this quarter. So I think, from our perspective, it’s still a big focus of ours, but I don’t think there’s a big — we’re not going to leave behind a Subco or a CVR or anything like that. I think the intention is just to kind of blend the portfolios together.
Patrick Schafer
Yes, that’s right. I mean, as Ted said, between Nth Degree, which was during last year, and then GA Communications, which we noted is Q1, that equity percentage just of Logan is going to go down that much more. And in a pro forma company, it’s going to be that much smaller. So I think we’re still going to focus on a go-forward basis of reducing those equity exposures and reinvesting the proceeds. But I don’t think we’re going to take a different tact with the equity positions or our general investment thesis on a pro forma basis.
I think we would prefer to reduce those as much as possible. And as you’ve seen more so in Portman than Logan, just because there was an existing equity book, we have a number of positions within Portman, where we have kind of a mix of a first lien debt and like a structured preferred equity, and that’s sort of how we kind of use our equity bucket there is something that is not common.
But it’s either warrants that we’re getting for free or something that’s more structured that we think is ultimately kind of a very, very high double digit — very, very high teens or low 20% return over time through structuring as opposed to through enterprise value creation and dividends.
So I think our Portman business has a bit of a different strategy on how we use equity bucket to try and focus on yield generating equity positions as opposed to NAV generating necessarily. So I don’t think any of that will change, and we’ll continue to be as active as we can on reducing those equity positions post-closing.
Christopher Nolan
Okay. And then for the Board of Directors going forward, I mean do both companies sort of have significant overlaps in Board members? Or is it going to be sort of a combination of two different groups?
Patrick Schafer
No. So the Logan Board members are 100% overlap with Portman. There are additional board members on Portman and how we set up the special committees. But the — all of the Logan Board members are existing Portman Board members. So that will effectively kind of go away as doing double Director duty.
Christopher Nolan
Okay. And any consideration of — given the merger and all the strategic discussions, how about putting the Board member compensation purely in stock? I mean, after all, it’s a dividend paying stock and it sort of really aligns interests. Any discussion on that?
Ted Goldthorpe
We haven’t talked about that. I mean historically, it was the same issue for management. Because we’re getting obviously management fees to manage the vehicle, we’re not — there’s a 40 Act Rule where we’re actually not allowed to pay executives in stock. I actually would assume that applies to the Board as well, but I don’t know. I mean, historically, we’ve looked into paying our executives in stock, and you’re not allowed to under the 40 Act.
I don’t know if that’s the case for the Board, but I would assume it’s the same thing. But I don’t know. I would have to check that.
Operator
As there are no further questions at this time, I would now like to turn the call over to Ted Goldthorpe for closing remarks.
Ted Goldthorpe
Great. Well, thank you very much. And everybody, have a great weekend. And again, we also — we just want to thank our shareholders one last time. Thank you very much.
Operator
This concludes today’s call. You may now disconnect.
