Attached files

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EX-31.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpexhibit31.3.htm
EX-32.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpexhibit32.2.htm
EX-31.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpexhibit31.1.htm
EX-31.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpexhibit31.2.htm
EX-32.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpexhibit32.1.htm
EX-32.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpexhibit32.3.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

[x]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended September 30, 2014

OR

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-54755

 

CĪON Investment Corporation

(Exact name of registrant as specified in its charter)

 

 

Maryland

 

45-3058280

 

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

3 Park Avenue, 36th Floor
New York, New York

 

10016

(Address of principal executive offices)

 

(Zip Code)

 

 

(212) 418-4700

 

 

 

 

(Registrant’s telephone number, including area code)

 

 

 

 

 

 

 

 

 

Not applicable

 

 

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

 

             

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [x] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [  ] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer [  ]

 

Accelerated Filer [  ]

Non-Accelerated Filer [x] (Do not check if a smaller reporting company)

 

Smaller Reporting Company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [x]

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of November 10, 2014 was 46,571,392.

  

 


 

CĪON INVESTMENT CORPORATION

TABLE OF CONTENTS

FORM 10-Q

 

 

Page

 

PART I – FINANCIAL INFORMATION   

 

 

Item 1. Financial Statements

 

 

Consolidated Balance Sheets

1

 

Consolidated Statements of Operations

2

 

Consolidated Statements of Changes in Net Assets

3

 

Consolidated Statements of Cash Flows

4

 

Consolidated Schedule of Investments

5

 

Notes to Consolidated Financial Statements

9

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

37

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

57

 

Item 4. Controls and Procedures

58

 

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

59

 

Item 1A. Risk Factors

59

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

59

 

Item 3. Defaults Upon Senior Securities

59

 

Item 4. Mine Safety Disclosures

59

 

Item 5. Other Information

59

 

Item 6. Exhibits

60

 

Signatures

62

  

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CĪON Investment Corporation

Consolidated Balance Sheets

 

 

September 30,

 

December 31,

 

 

 

2014

 

2013

 

 

 

(unaudited)

 

 

 

Assets

 

Investments, at fair value (amortized cost of $311,488,307

 

 

 

 

 

 

    and $103,414,685, respectively)

$

312,176,748

 

$

104,518,913

 

Cash

 

14,845,190

 

 

449,912

 

Due from counterparty(1)

 

99,900,239

 

 

40,703,777

 

Reimbursements from IIG, net(2)

 

83,320

 

 

545,593

 

Prepaid expenses

 

239,858

 

 

98,990

 

Interest receivable on investments

 

1,380,331

 

 

415,416

 

Receivable due on investments sold

 

8,628,948

 

 

535,513

 

Unrealized appreciation on total return swap(1)

 

 -  

 

 

1,548,617

 

Receivable due on total return swap(1)

 

2,731,506

 

 

1,801,665

 

Total assets

$

439,986,140

 

$

150,618,396

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

Liabilities

 

 

 

 

 

 

Payable for investments purchased

$

37,416,374

 

$

3,462,700

 

Shareholders' distributions payable(3)

 

2,880,906

 

 

895,704

 

Accounts payable and accrued expenses

 

562,661

 

 

608,938

 

Accrued management fees

 

1,739,759

 

 

 -  

 

Accrued administrative services expense

 

376,806

 

 

 -  

 

Accrued recoupment of expense reimbursements from IIG(2)

 

22,530

 

 

 -  

 

Due to IIG - offering expenses

 

 -  

 

 

550,000

 

Unrealized depreciation on total return swap(1)

 

340,858

 

 

 -  

 

Accrued capital gains incentive fee(4)

 

688,520

 

 

530,569

 

Total liabilities

 

44,028,414

 

 

6,047,911

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 4 and Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Common stock, $0.001 par value; 500,000,000 shares authorized;

 

 

 

 

 

 

    42,532,137 and 15,510,178 shares issued and outstanding, respectively

 

42,532

 

 

15,510

 

Capital in excess of par value

 

396,256,131

 

 

142,402,255

 

Accumulated distributions in excess of net investment income

 

(688,520)

 

 

(500,125)

 

Accumulated net unrealized appreciation on investments

 

688,441

 

 

1,104,228

 

Accumulated net unrealized (depreciation) appreciation on total return swap(1)

 

(340,858)

 

 

1,548,617

 

Total shareholders' equity

 

395,957,726

 

 

144,570,485

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

439,986,140

 

$

150,618,396

 

 

 

 

 

 

 

 

 

Net asset value per share of common stock at end of period

$

9.31

 

$

9.32

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

42,532,137

 

 

15,510,178

 

 

 

 

 

 

 

 

 

(1) See Note 7 for a discussion of the Company’s total return swap agreement.

 

(2) See Note 4 for a discussion of expense reimbursements from ICON Investment Group, LLC, or IIG, and recoupment of expense reimbursements.

 

(3) See Note 5 for a discussion of the sources of distributions paid by the Company.

 

(4) See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fee.

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

1


 

CĪON Investment Corporation

Consolidated Statements of Operations

(unaudited)

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

Investment income

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

4,793,982

 

$

494,701

 

$

10,628,790

 

$

808,321

Fee income

 

287,578

 

 

 -  

 

 

287,578

 

 

 -  

Total investment income

 

5,081,560

 

 

494,701

 

 

10,916,368

 

 

808,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

1,739,759

 

 

248,225

 

 

3,951,772

 

 

413,748

Administrative services expense

 

376,806

 

 

144,462

 

 

1,222,421

 

 

715,653

Capital gains incentive fee(1)

 

(497,508)

 

 

128,766

 

 

247,565

 

 

303,494

Offering expenses - IIG

 

 -  

 

 

 -  

 

 

591,475

 

 

 -  

General and administrative(2)

 

866,405

 

 

667,704

 

 

2,942,020

 

 

1,928,582

Total expenses

 

2,485,462

 

 

1,189,157

 

 

8,955,253

 

 

3,361,477

Expense reimbursements from IIG(3)

 

 -  

 

 

(1,296,834)

 

 

(1,048,858)

 

 

(3,263,743)

Recoupment of expense reimbursements from IIG(3)

 

 22,530  

 

 

 -  

 

 

622,156

 

 

 -  

Net operating expenses

 

2,507,992

 

 

(107,677)

 

 

8,528,551

 

 

97,734

Net investment income

 

2,573,568

 

 

602,378

 

 

2,387,817

 

 

710,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gains

 

 

 

 

 

 

 

 

 

 

 

Net realized gain on investments

 

971,457

 

 

1,381

 

 

1,355,562

 

 

16,352

Net change in unrealized (depreciation) appreciation on investments

 

(1,629,436)

 

 

220,148

 

 

(415,787)

 

 

535,161

Net realized gain on total return swap(4)

 

4,135,243

 

 

799,698

 

 

11,898,784

 

 

1,591,711

Net change in unrealized (depreciation) appreciation on total return swap(4)

 

(1,912,752)

 

 

284,001

 

 

(1,889,475)

 

 

371,569

Total net realized and unrealized gains

 

1,564,512

 

 

1,305,228

 

 

10,949,084

 

 

2,514,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations

$

4,138,080

 

$

1,907,606

 

$

13,336,901

 

$

3,225,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share information—basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets per share resulting from operations

$

0.11

 

$

0.32

 

$

0.46

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

37,849,989

 

 

6,019,520

 

 

28,878,907

 

 

3,371,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fee.

(2)

See Note 9 for details of the Company's general and administrative expenses. See Note 2 for details of the Company's organization costs and offering expenses included in general and administrative expense.

(3)

See Note 4 for a discussion of expense reimbursements from IIG and recoupment of expense reimbursements.

(4)

See Note 7 for a discussion of the Company’s total return swap agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

2


 

CĪON Investment Corporation

Consolidated Statements of Changes in Net Assets

(unaudited)

 

 

 

 

Nine Months Ended

September 30,

 

 

 

2014

 

2013

Changes in net assets from operations:

 

 

 

 

 

 

Net investment income

$

2,387,817

 

$

710,587

 

Net realized gain on investments

 

1,355,562

 

 

16,352

 

Net change in unrealized (depreciation) appreciation on investments

 

(415,787)

 

 

535,161

 

Net realized gain on total return swap(1)

 

11,898,784

 

 

1,591,711

 

Net change in unrealized (depreciation) appreciation on total return swap(1)

 

(1,889,475)

 

 

371,569

 

 

Net increase in net assets resulting from operations

 

13,336,901

 

 

3,225,380

Changes in net assets from shareholders' distributions:(2)

 

 

 

 

 

 

Net investment income

 

 (2,387,817) 

 

 

 (208,988) 

 

Net realized gain on total return swap

 

 

 

 

 

 

            Net interest and other income from TRS portfolio

 

(9,794,608)

 

 

(997,321)

 

            Net gain on TRS loan sales

 

(2,104,176)

 

 

(594,488)

 

Net realized gain on investments

 

(1,355,562)

 

 

(16,396)

 

Other sources(3)

 

(188,395)

 

 

 -  

 

 

Net decrease in net assets from shareholders' distributions

 

(15,830,558)

 

 

(1,817,193)

Changes in net assets from capital share transactions:

 

 

 

 

 

 

Issuance of common stock, net of issuance costs of $24,028,217 and $6,545,134, respectively

 

246,453,505

 

 

65,858,114

 

Reinvestment of shareholder distributions

 

7,620,124

 

 

641,967

 

Repurchase of common stock

 

(192,731)

 

 

 -  

 

Amortization of deferred offering expenses

 

 -  

 

 

(747,945)

 

 

Net increase in net assets resulting from capital share transactions

 

253,880,898

 

 

65,752,136

 

 

 

 

 

 

 

 

Total increase in net assets

 

251,387,241

 

 

67,160,323

Net assets at beginning of period

 

144,570,485

 

 

4,487,115

Net assets at end of period

$

395,957,726

 

$

71,647,438

 

 

 

 

 

 

 

 

Net asset value per share of common stock at end of period

$

9.31

 

$

9.29

Shares of common stock outstanding at end of period

 

42,532,137

 

 

7,715,146

 

 

 

 

 

 

 

 

Undistributed (distributions in excess of) net investment income at end of period

$

(688,520)

 

$

504,291

 

 

 

 

 

 

 

 

(1) See Note 7 for a discussion of the Company’s total return swap agreement.

 

 

 

 

 

(2) See Note 5 for a discussion of the sources of distributions paid by the Company.

 

 

 

 

 

(3) Includes adjustments made to GAAP basis net investment income to arrive at taxable income available for distributions.

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

3


 

CĪON Investment Corporation

Consolidated Statements of Cash Flows

(unaudited)

 

 

Nine Months Ended

September 30,

 

2014

 

2013

Operating activities:

 

 

 

 

 

Net increase in net assets resulting from operations

$

13,336,901

 

$

3,225,380

Adjustments to reconcile net increase in net assets resulting from

 

 

 

 

 

operations to net cash used in operating activities:

 

 

 

 

 

 

Net accretion of discount on investments

 

(235,154)

 

 

(14,225)

 

Proceeds from principal repayment of investments

 

47,872,665

 

 

769,044

 

Purchase of investments

 

(304,984,125)

 

 

(39,867,686)

 

Increase in short term investments, net

 

(22,678,233)

 

 

(9,914,471)

 

Proceeds from sale of investments

 

73,306,787

 

 

1,141,330

 

Net realized gain on investments

 

(1,355,562)

 

 

(16,352)

 

Net unrealized depreciation (appreciation) on investments

 

415,787

 

 

(535,161)

 

Net unrealized depreciation (appreciation) on total return swap(1)

 

1,889,475

 

 

(371,569)

 

Increase in due from counterparty

 

(59,196,462)

 

 

(19,081,599)

 

Decrease (increase) in reimbursements from IIG, net(2)

 

462,273

 

 

(1,234,427)

 

Increase in prepaid expenses

 

(140,868)

 

 

(52,217)

 

Increase in interest receivable on investments

 

(964,915)

 

 

(163,288)

 

Increase in receivable due on investments sold

 

(8,093,435)

 

 

(26,342)

 

Increase in receivable due on total return swap(1)

 

(929,841)

 

 

(2,732,420)

 

Increase in payable for investments purchased

 

33,953,674

 

 

2,822,200

 

Increase (decrease) in accounts payable and accrued expenses

 

(46,277)

 

 

559,464

 

Increase in accrued management fees

 

1,739,759

 

 

 -  

 

Increase in accrued administrative services expense

 

376,806

 

 

 -  

 

Increase (decrease) in due to IIG - offering expenses

 

(550,000)

 

 

550,000

 

Increase in accrued recoupment of expense reimbursements from IIG(2)

 

22,530

 

 

 -  

 

Increase in accrued capital gains incentive fee

 

157,951

 

 

 -  

Net cash used in operating activities

 

(225,640,264)

 

 

(64,942,339)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Gross proceeds from issuance of common stock

 

270,481,722

 

 

72,403,248

 

Commissions and dealer manager fees paid

 

(24,028,217)

 

 

(6,568,234)

 

Repurchase of common stock

 

(192,731)

 

 

 -  

 

Shareholders' distributions paid(3)

 

(6,225,232)

 

 

(728,187)

 

Repayment of financing arrangement

 

 -  

 

 

(72,682)

Net cash provided by financing activities

 

240,035,542

 

 

65,034,145

 

 

 

 

 

 

 

 

 

Net increase in cash

 

14,395,278

 

 

91,806

Cash, beginning of period

 

449,912

 

 

 -  

Cash, end of period

$

14,845,190

 

$

91,806

 

 

 

 

 

 

 

 

 

Supplemental non-cash financing activities:

 

 

 

 

 

 

Deferred offering expenses charged to shareholders' equity

$

 -  

 

$

747,945

 

Reinvestment of shareholders' distributions

$

7,620,124

 

$

641,967

 

Shareholders' distributions payable

$

2,880,906

 

$

447,039

 

 

 

 

 

 

 

 

 

(1) See Note 7 for a discussion of the Company’s total return swap agreement.

(2) See Note 4 for a discussion of expense reimbursements from IIG and recoupment of expense reimbursements.

(3) See Note 5 for a discussion of the sources of distributions paid by the Company.

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

4


 

CĪON Investment Corporation

Consolidated Schedule of Investments

September 30, 2014

(unaudited)

 

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Senior Secured First Lien Term Loans - 16.9%

 

 

 

 

 

 

 

 

 

 

 

Accruent, LLC, L+450, 1.25% LIBOR Floor, 11/25/2019

 

3 Month LIBOR

 

High Tech Industries

 

$

 4,468,325  

 

$

 4,458,061  

 

$

 4,457,154  

 

Blue Bird Body Company, L+550, 1.00% LIBOR Floor, 6/26/2020

 

3 Month LIBOR

 

Automotive

 

 

 2,463,235  

 

 

 2,341,084  

 

 

 2,432,445  

 

Distribution International, Inc., L+650, 1.00% LIBOR Floor, 7/16/2019

 

3 Month LIBOR

 

Construction & Building

 

 

 2,468,750  

 

 

 2,452,018  

 

 

 2,474,922  

 

ECI Acquisition Holdings, Inc., L+625, 1.00% LIBOR Floor, 3/11/2019(d)

 

3 Month LIBOR

 

High Tech Industries

 

 

 8,234,620  

 

 

 8,187,990  

 

 

 8,193,447  

 

F+W Media, Inc., L+650, 1.25% LIBOR Floor, 6/30/2019

 

3 Month LIBOR

 

Media: Diversified & Production

 

 

 6,526,340  

 

 

 6,293,422  

 

 

 6,518,182  

 

Ignite Restaurant Group, Inc., L+700, 1.00% LIBOR Floor, 2/13/2019

 

3 Month LIBOR

 

Beverage, Food, & Tobacco

 

 

 15,000,000  

 

 

 14,779,231  

 

 

 14,850,000  

 

Infogroup Inc., L+600, 1.50% LIBOR Floor, 5/26/2018(e)

 

6 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

 10,828,481  

 

 

 10,249,470  

 

 

 10,219,379  

 

SK Spice S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(f)

 

3 Month LIBOR

 

Chemicals, Plastics, & Rubber

 

 

 1,762,203  

 

 

 1,732,556  

 

 

 1,785,332  

 

Smile Brands Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019

 

6 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

 5,346,000  

 

 

 5,246,622  

 

 

 5,259,128  

 

Sprint Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

 1,445,581  

 

 

 1,433,079  

 

 

 1,449,195  

 

Survey Sampling International, LLC, L+450, 1.00% LIBOR Floor, 12/12/2019

 

1 Month LIBOR

 

Services: Business

 

 

 3,209,375  

 

 

 3,180,711  

 

 

 3,193,328  

 

TOPPS Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

 2,094,175  

 

 

 2,059,387  

 

 

 2,067,998  

 

US Joiner Holding Company, L+600, 1.00% LIBOR Floor, 4/16/2020

 

3 Month LIBOR

 

Capital Equipment

 

 

 3,965,038  

 

 

 3,908,724  

 

 

 3,955,125  

Total Senior Secured First Lien Term Loans

 

 

 

 

 

 

 

 

 

 66,322,355  

 

 

 66,855,635  

Senior Secured Second Lien Term Loans - 45.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Active Network, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

 2,359,592  

 

 

 2,348,777  

 

 

 2,375,077  

 

ALM Media, LLC, L+800, 1.00% LIBOR Floor, 7/30/2021

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

 10,343,750  

 

 

 10,139,402  

 

 

 10,473,047  

 

American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2021

 

3 Month LIBOR

 

Construction & Building

 

 

 3,700,000  

 

 

 3,663,000  

 

 

 3,700,000  

 

Drew Marine Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(f)

 

3 Month LIBOR

 

Chemicals, Plastics, & Rubber

 

 

 5,000,000  

 

 

 5,003,069  

 

 

 5,025,000  

 

EISI LLC, L+850, 1.00% LIBOR Floor, 9/23/2020

 

3 Month LIBOR

 

High Tech Industries

 

 

 20,000,000  

 

 

 19,650,840  

 

 

 19,650,000  

 

Elements Behavioral Health, Inc., L+825, 1.00% LIBOR Floor, 2/11/2020

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

 5,000,000  

 

 

 4,953,277  

 

 

 4,950,000  

 

Emerald 3 Limited, L+700, 1.00% LIBOR Floor, 5/16/2022(f)

 

3 Month LIBOR

 

Environmental Industries

 

 

 5,000,000  

 

 

 4,950,000  

 

 

 4,975,000  

 

FRAM Group Holdings Inc., L+900, 1.50% LIBOR Floor, 1/29/2018

 

3 Month LIBOR

 

Automotive

 

 

 107,482  

 

 

 105,205  

 

 

 106,676  

 

GCA Services Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020

 

6 Month LIBOR

 

Services: Consumer

 

 

 800,000  

 

 

 796,649  

 

 

 800,000  

 

Genex Holdings, Inc., L+775, 1.00% LIBOR Floor, 5/30/2022(e)

 

1 Month LIBOR

 

Services: Business

 

 

 9,910,000  

 

 

 9,860,629  

 

 

 9,860,450  

 

Global Tel*Link Corporation, L+775, 1.25% LIBOR Floor, 11/23/2020

 

3 Month LIBOR

 

Services: Business

 

 

 9,500,000  

 

 

 9,484,836  

 

 

 9,452,500  

 

H.D. Vest, Inc., L+800, 1.25% LIBOR Floor, 6/18/2019

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

 854,000  

 

 

 845,594  

 

 

 845,460  

 

IBC Capital Limited, L+700, 1.00% LIBOR Floor, 9/9/2022(e)(f)

 

1 Month LIBOR

 

Containers, Packaging, & Glass

 

 

 7,506,000  

 

 

 7,487,265  

 

 

 7,506,000  

 

Institutional Shareholder Services Inc., L+750, 1.00% LIBOR Floor, 4/30/2022

 

3 Month LIBOR

 

Services: Business

 

 

 5,860,000  

 

 

 5,833,066  

 

 

 5,830,700  

 

Landslide Holdings, Inc., L+725, 1.00% LIBOR Floor, 2/25/2021

 

3 Month LIBOR

 

Services: Business

 

 

 9,830,121  

 

 

 9,847,210  

 

 

 9,756,395  

 

Learfield Communications, Inc., L+775, 1.00% LIBOR Floor, 10/9/2021

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

 1,417,333  

 

 

 1,404,226  

 

 

 1,415,561  

 

Mergermarket USA, Inc., L +650, 1.00% LIBOR Floor, 2/4/2022

 

6 Month LIBOR

 

Services: Business

 

 

 2,000,000  

 

 

 1,990,000  

 

 

 1,945,000  

 

MSC.Software Corporation, L+750, 1.00% LIBOR Floor, 5/29/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

 7,820,000  

 

 

 7,759,267  

 

 

 7,702,700  

 

Pelican Products, Inc., L+825, 1.00% LIBOR Floor, 4/11/2021

 

3 Month LIBOR

 

Chemicals, Plastics, & Rubber

 

 

 2,441,459  

 

 

 2,459,770  

 

 

 2,450,614  

 

Securus Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021

 

3 Month LIBOR

 

Telecommunications

 

 

 4,500,000  

 

 

 4,472,352  

 

 

 4,477,500  

 

SI Organization, Inc., L+800, 1.00% LIBOR Floor, 5/23/2020

 

3 Month LIBOR

 

Services: Business

 

 

 1,511,000  

 

 

 1,496,440  

 

 

 1,537,442  

 

SMG, L+825, 1.00% LIBOR Floor, 2/27/2021

 

3 Month LIBOR

 

Hotel, Gaming, & Leisure

 

 

 6,220,000  

 

 

 6,220,000  

 

 

 6,282,200  

 

TASC, Inc, 12.00%, 5/23/2021

 

3 Month LIBOR

 

Services: Business

 

 

 3,141,620  

 

 

 2,989,356  

 

 

 3,055,225  

 

Telecommunications Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

 675,178  

 

 

 670,430  

 

 

 673,491  

 

TMK Hawk Parent, Corp., L+750, 1.00% LIBOR Floor, 8/22/2022(e)

 

3 Month LIBOR

 

Beverage, Food, & Tobacco

 

 

 15,000,000  

 

 

 14,850,000  

 

 

 14,925,000  

 

U.S. Renal Care, Inc., L+900, 1.25% LIBOR Floor, 1/3/2020

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

 485,500  

 

 

 492,123  

 

 

 492,782  

 

Vestcom International, Inc., L+775, 1.00% LIBOR Floor, 9/30/2022(e)

 

1 Month LIBOR

 

Services: Business

 

 

 15,000,000  

 

 

 14,925,000  

 

 

 15,000,000  

 

Wand Intermediate I LP, L+725, 1.00% LIBOR Floor, 9/19/2022

 

3 Month LIBOR

 

Automotive

 

 

 19,000,000  

 

 

 18,857,840  

 

 

 19,071,250  

 

Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022

 

1 Month LIBOR

 

Beverage, Food, & Tobacco

 

 

 5,487,489  

 

 

 5,494,711  

 

 

 5,473,770  

 

WP CPP Holdings, LLC, L+775, 1.00% LIBOR Floor, 4/30/2021

 

1 Month LIBOR

 

Aerospace & Defense

 

 

 1,435,000  

 

 

 1,428,547  

 

 

 1,440,381  

Total Senior Secured Second Lien Term Loans

 

 

 

 

 

 

 

 

 

 180,478,881  

 

 

 181,249,221  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

CĪON Investment Corporation

Consolidated Schedule of Investments

September 30, 2014

(unaudited)

 

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Collateralized Securities - 7.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deutsche Bank AG Frankfurt CRAFT 2013-1A Class Credit Linked Note, L+925, 4/17/2020(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000,000

 

 

2,037,173

 

 

2,000,000

 

Deutsche Bank AG Frankfurt CRAFT 2013-1X Class Credit Linked Note, L+925, 4/17/2020(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

610,000

 

 

619,989

 

 

610,000

 

Deutsche Bank AG Frankfurt CRAFT 2014-1 Class Credit Linked Note, L+965, 5/15/2019(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

5,400,000

 

 

5,400,000

 

 

5,400,000

 

Great Lakes CLO 2014-1, Ltd. Class E Notes, L+525, 4/15/2025(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000,000

 

 

4,510,232

 

 

4,400,000

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Class E Notes, L+565, 10/20/2025(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000,000

 

 

1,857,941

 

 

1,818,900

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, Residual, 10/20/2025(f)

 

N/A

 

Diversified Financials

 

 

2,000,000

 

 

1,901,056

 

 

1,749,840

 

JFIN CLO 2014, Ltd. Class E Notes, L+500, 4/20/2025(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

2,500,000

 

 

2,302,802

 

 

2,231,250

 

JPMorgan Chase Bank, N.A. Credit Link Note, L+1,225, 12/20/2021

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000,000

 

 

5,000,000

 

 

5,050,000

 

NXT Capital CLO 2014-1, LLC, Class E Notes, L+550, 4/23/2026(f)

 

3 Month LIBOR

 

Diversified Financials

 

 

7,500,000

 

 

6,995,976

 

 

6,750,000

Total Collateralized Securities

 

 

 

 

 

 

 

 

 

30,625,169

 

 

30,009,990

Short Term Investments - 8.6%(g)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First American Treasury Obligations Fund, Class Z Shares(h)

 

 

 

 

 

 

 34,061,902  

 

 

 34,061,902  

 

 

34,061,902

Total Short Term Investments

 

 

 

 

 

 

 

 

 

 34,061,902  

 

 

34,061,902

TOTAL INVESTMENTS - 78.8%

 

 

 

 

 

 

 

 

$

 311,488,307  

 

$

312,176,748

OTHER ASSETS IN EXCESS OF LIABILITIES - 21.2%

 

 

 

 

 

 

 

 

 

 

 

$

83,780,978

NET ASSETS - 100%

 

 

 

 

 

 

 

 

 

 

 

$

395,957,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL RETURN SWAP - (0.1%)

 

 

 

 

 

Notional

Amount

 

 

 

 

Unrealized Appreciation / (Depreciation)

 

Citibank TRS Facility (see Note 7)

 

 

 

 

 

$

 365,510,975  

 

 

 

 

$

 (340,858) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

All of the Company's debt investments are issued by eligible U.S. portfolio companies, as defined in the Investment Company Act of 1940, as amended, or the 1940 Act, except for investments specifically identified as non-qualifying per note (f) below. The Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio.

(b)

The 1, 3, and 6 month London Interbank Offered Rate, or LIBOR, rates were 0.15%, 0.24%, and 0.33%, respectively, as of September 30, 2014.  The applicable LIBOR rate as of September 30, 2014 for the loan listed may not be the applicable LIBOR rate, as the loan may have been priced or repriced based on a LIBOR rate prior to September 30, 2014.

(c)

Fair value determined by the Company’s board of directors (see Note 8).

(d)

The Company is committed to fund an additional $1,724,000 as of September 30, 2014 and November 10, 2014 (see Note 6 and Note 10).

(e)

Position or portion thereof unsettled as of September 30, 2014.

(f)

The investment is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of that company’s total assets as defined under Section 55 of the 1940 Act. As of September 30, 2014, 88.8% of the Company’s total assets represented qualifying assets. In addition, as described in Note 7, the Company calculates its compliance with the qualifying asset test on a “look through” basis by treating each loan underlying the total return swap as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 85.8% of the Company’s total assets represented qualifying assets as of September 30, 2014.

(g)

Short term investments represent an investment in a fund that invests in highly liquid investments with original maturity dates of three months or less.

(h)

Effective yield as of September 30, 2014 is <0.01%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

6


 

CĪON Investment Corporation

Consolidated Schedule of Investments

December 31, 2013

 

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Senior Secured First Lien Term Loans - 42.7%

 

 

 

 

 

 

 

 

 

 

 

ABRA, Inc., L+600, 1.25% LIBOR Floor, 5/10/2018(d)

 

3 Month LIBOR

 

Automotive

 

$

5,980,924

 

$

5,921,292

 

$

5,921,115

 

Captive Resources Midco, LLC, L+550, 1.25% LIBOR Floor, 10/31/2018

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

987,500

 

 

972,809

 

 

987,500

 

CHI Overhead Doors, L+425, 1.25% LIBOR Floor, 3/18/2019

 

3 Month LIBOR

 

Construction & Building

 

 

936,944

 

 

932,772

 

 

938,701

 

Collision Holding Company, LLC, L+775, 1.25% LIBOR Floor, 5/10/2018

 

3 Month LIBOR

 

Automotive

 

 

1,568,127

 

 

1,552,492

 

 

1,552,445

 

Custom Ecology, Inc., L+550, 1.25% LIBOR Floor, 6/26/2019

 

3 Month LIBOR

 

Environmental Industries

 

 

1,900,450

 

 

1,882,554

 

 

1,909,952

 

Distribution International, Inc., L+650, 1.00% LIBOR Floor, 7/16/2019

 

3 Month LIBOR

 

Construction & Building

 

 

2,487,500

 

 

2,468,327

 

 

2,476,555

 

F+W Media, Inc., L+650, 1.25% LIBOR Floor, 6/30/2019

 

3 Month LIBOR

 

Media: Diversified & Production

 

 

1,990,000

 

 

1,839,629

 

 

1,920,350

 

Fender Musical Instruments Corp., L+450, 1.25% LIBOR Floor, 4/3/2019

 

6 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

447,500

 

 

443,456

 

 

455,193

 

H.D. Vest, Inc., L+450, 1.25% LIBOR Floor, 12/18/2018

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

597,438

 

 

593,254

 

 

594,450

 

ILC Industries, LLC, L+650, 1.50% LIBOR Floor, 7/11/2018

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

4,456,187

 

 

4,471,616

 

 

4,467,327

 

Landslide Holdings, Inc., L+425, 1.00% LIBOR Floor, 8/9/2019

 

3 Month LIBOR

 

Services: Business

 

 

2,449,690

 

 

2,426,101

 

 

2,469,594

 

Merrill Corp., L+625, 1.00% LIBOR Floor, 3/8/2018

 

1 Month LIBOR

 

Services: Business

 

 

649,021

 

 

643,301

 

 

661,729

 

National Surgical Hospitals, Inc., L+450, 1.25% LIBOR Floor, 8/1/2019

 

1 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

3,491,250

 

 

3,456,338

 

 

3,526,163

 

Packaging Coordinators, Inc., L+425, 1.25% LIBOR Floor, 5/10/2020

 

6 Month LIBOR

 

Containers, Packaging & Glass

 

 

1,500,000

 

 

1,492,500

 

 

1,500,000

 

Plano Molding Co., Inc., L+425, 1.00% LIBOR Floor, 10/11/2018

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

2,500,000

 

 

2,484,517

 

 

2,500,000

 

Prowler Acquisition Corp., L+475, 1.25% LIBOR Floor, 3/19/2019

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

1,925,000

 

 

1,905,750

 

 

1,915,375

 

SK Spice S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(e)

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

1,775,550

 

 

1,740,993

 

 

1,760,014

 

Smile Brands Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019

 

12 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

4,987,500

 

 

4,892,609

 

 

4,931,391

 

Sprint Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

1,194,000

 

 

1,182,670

 

 

1,208,925

 

Survey Sampling International, LLC, L+450, 1.00% LIBOR Floor, 12/12/2019

 

3 Month LIBOR

 

Services: Business

 

 

9,250,000

 

 

9,158,059

 

 

9,157,500

 

The TOPPS Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

2,110,000

 

 

2,068,064

 

 

2,104,725

 

Travel Leaders Group, LLC, L+600, 1.00% LIBOR Floor, 12/5/2018

 

3 Month LIBOR

 

Services: Consumer

 

 

4,900,000

 

 

4,607,683

 

 

4,814,250

 

Wastequip, LLC, L+450, 1.00% LIBOR Floor, 8/9/2019

 

6 Month LIBOR

 

Capital Equipment

 

 

2,985,000

 

 

2,970,869

 

 

3,014,850

 

Westway Group, L+400, 1.00% LIBOR Floor, 2/27/2020

 

6 Month LIBOR

 

Services: Business

 

 

992,500

 

 

988,030

 

 

999,326

Total Senior Secured First Lien Term Loans

 

 

 

 

 

 

 

 

 

61,095,685

 

 

61,787,430

Senior Secured Second Lien Term Loans - 15.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Active Network, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

2,820,000

 

 

2,805,900

 

 

2,876,400

 

Camp International Holding Company, L+725, 1.00% LIBOR Floor, 11/30/2019

 

1 Month LIBOR

 

Services: Business

 

 

2,029,000

 

 

2,029,000

 

 

2,073,384

 

Centaur Gaming, L+750, 1.25% LIBOR Floor, 2/20/2020

 

6 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

500,000

 

 

495,297

 

 

515,000

 

Digital Insight Corporation, L+775, 1.00% LIBOR Floor, 10/16/2020

 

3 Month LIBOR

 

Services: Business

 

 

385,000

 

 

381,237

 

 

393,181

 

Drew Marine Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(e)

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

5,000,000

 

 

5,003,467

 

 

5,037,500

 

GCA Services Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020

 

6 Month LIBOR

 

Services: Consumer

 

 

800,000

 

 

796,341

 

 

813,876

 

H.D. Vest, Inc., L+800, 1.25% LIBOR Floor, 6/18/2019

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

854,000

 

 

844,079

 

 

845,460

 

Healogics, Inc., L+800, 1.25% LIBOR Floor, 2/5/2020

 

6 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

500,000

 

 

495,426

 

 

511,250

 

Learfield Communications, Inc., L+775, 1.00% LIBOR Floor, 10/9/2021

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

1,417,333

 

 

1,403,174

 

 

1,452,766

 

LTS Buyer, LLC, L+675, 1.25% LIBOR Floor, 4/12/2021

 

6 Month LIBOR

 

Telecommunications

 

 

500,000

 

 

495,233

 

 

505,835

 

Securus Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021(f)

 

3 Month LIBOR

 

Telecommunications

 

 

3,500,000

 

 

3,461,450

 

 

3,467,205

 

SESAC Holdco II, LLC, L+875, 1.25% LIBOR Floor, 8/8/2019

 

1 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

1,500,000

 

 

1,522,110

 

 

1,537,500

 

Sprint Industrial Holdings, LLC, L+1,000, 1.25% LIBOR Floor, 11/14/2019

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

500,000

 

 

490,421

 

 

505,000

 

Telecommunications Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

543,290

 

 

538,266

 

 

554,156

 

WP CPP Holdings, LLC, L+775, 1.00% LIBOR Floor, 4/30/2021

 

3 Month LIBOR

 

Aerospace & Defense

 

 

1,435,000

 

 

1,427,930

 

 

1,463,701

Total Senior Secured Second Lien Term Loans

 

 

 

 

 

 

 

 

 

22,189,331

 

 

22,552,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

7


 

CĪON Investment Corporation

Consolidated Schedule of Investments

December 31, 2013

 

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Collateralized Securities - 6.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Class E Notes, L+565, 10/20/2025(e)

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000,000

 

 

1,850,000

 

 

 1,850,000  

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, Residual, 10/20/2025(e)

 

N/A

 

Diversified Financials

 

 

2,000,000

 

 

1,896,000

 

 

 1,945,600  

 

JPMorgan Chase Bank, N.A. Credit Link Note, L+1,225, 12/20/2021(e)

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000,000

 

 

5,000,000

 

 

 5,000,000  

Total Collateralized Securities

 

 

 

 

 

 

 

 

 

8,746,000

 

 

 8,795,600  

Short Term Investments - 7.9%(g)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First American Treasury Obligations Fund, Class Z Shares(h)

 

 

 

 

 

 

11,383,669

 

 

11,383,669

 

 

 11,383,669  

Total Short Term Investments

 

 

 

 

 

 

 

 

 

11,383,669

 

 

 11,383,669  

TOTAL INVESTMENTS - 72.3%

 

 

 

 

 

 

 

 

$

103,414,685

 

$

 104,518,913  

OTHER ASSETS IN EXCESS OF LIABILITIES - 27.7%

 

 

 

 

 

 

 

 

 

 

 

$

 40,051,572  

NET ASSETS - 100%

 

 

 

 

 

 

 

 

 

 

 

$

 144,570,485  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL RETURN SWAP - 1.1%

 

 

 

 

 

Notional

Amount

 

 

 

 

Unrealized Appreciation

 

Citibank TRS Facility (see Note 7)

 

 

 

 

 

$

148,199,937

 

 

 

 

$

 1,548,617  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

All of the Company's debt investments are issued by eligible U.S. portfolio companies, as defined in the 1940 Act, except for investments specifically identified as non-qualifying per note (e) below. The Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio.

(b)

The 1, 3, 6 and 12 month LIBOR rates were 0.17%, 0.25%, 0.35% and 0.58%, respectively, as of December 31, 2013. The applicable LIBOR rate as of December 31, 2013 for the loan listed may not be the applicable LIBOR rate, as the loan may have been priced or repriced based on a LIBOR rate prior to December 31, 2013.

(c)

Fair value determined by the Company’s board of directors (see Note 8).

(d)

The Company is committed to fund an additional $2,450,758 as of December 31, 2013 (see Note 6 and Note 10). The Company is committed to fund an additional $1,330,667 as of March 7, 2014.

(e)

The investment is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of that company’s total assets as defined under Section 55 of the 1940 Act. As of December 31, 2013, 88.2% of the Company’s total assets represented qualifying assets. In addition, as described in Note 7, the Company calculates its compliance with the qualifying asset test on a “look through” basis by treating each loan underlying the total return swap as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 76.1% of the Company’s total assets represented qualifying assets as of December 31, 2013.

(f)

Position or portion thereof unsettled as of December 31, 2013.

(g)

Short term investments represent an investment in a fund that invests in highly liquid investments with original maturity dates of three months or less.

(h)

Effective yield as of December 31, 2013 is <0.01%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

8


CĪON Investment Corporation

Notes to Consolidated Financial Statements 

September 30, 2014

(unaudited)

 

Note 1. Organization and Principal Business

 

CĪON Investment Corporation, or the Company, was incorporated under the general corporation laws of the State of Maryland on August 9, 2011. On December 17, 2012, the Company successfully raised gross proceeds from unaffiliated outside investors of at least $2,500,000, or the minimum offering requirement, and commenced operations. The Company is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the 1940 Act. The Company elected to be treated for federal income tax purposes as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. The Company’s portfolio is comprised primarily of investments in senior secured loans and, to a lesser extent, second lien loans, collateralized loan obligations and long-term subordinated loans, referred to as mezzanine loans, of private and thinly traded U.S. middle-market companies.

The Company is managed by CĪON Investment Management, LLC, or CIM, a registered investment adviser and an affiliate of the Company. CIM oversees the management of the Company’s activities and is responsible for making investment decisions for the Company’s investment portfolio. The Company and CIM have engaged Apollo Investment Management, L.P., or AIM, a subsidiary of Apollo Global Management, LLC, or, together with its subsidiaries, Apollo, a leading global alternative investment manager, to act as the Company’s investment sub-adviser. On October 31, 2014, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment sub-advisory agreement with AIM for a period of twelve months commencing December 17, 2014.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of December 31, 2013 and for the year then ended included in the Company’s Annual Report on Form 10-K. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014. The consolidated balance sheet and the consolidated schedule of investments as of December 31, 2013 are derived from the 2013 audited consolidated financial statements.

The Company evaluates subsequent events through the date that the consolidated financial statements are issued.

Certain reclassifications have been made to the accompanying consolidated financial statements in prior periods to conform to the current period presentation.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and highly liquid investments with original maturity dates of three months or less. The Company’s cash and cash equivalents are held principally at one financial institution and at times may exceed insured limits. The Company periodically evaluates the creditworthiness of this institution and has not experienced any losses on such deposits.

Short Term Investments

Short term investments include an investment in a U.S. Treasury Obligations Fund, which seeks to provide current income and daily liquidity by purchasing U.S. Treasury securities and repurchase agreements that are collateralized by such securities. The Company had $34,061,902 and $11,383,669 of such investments at September 30, 2014 and December 31, 2013, respectively, which are included in investments, at fair value on the accompanying consolidated balance sheets and on the consolidated schedule of investments.

Organization Costs and Offering Expenses

Organization costs include, among other things, the cost of organizing the Company as a Maryland corporation, including the cost of legal services and other fees pertaining to the organization of the Company. All organization costs have been funded by IIG and its affiliates, and there is no liability for these organization costs to the Company until IIG and its affiliates submit such costs for reimbursement. The Company will expense organization costs when incurred, if and when IIG and its affiliates submit such costs for reimbursement.

 

9


CĪON Investment Corporation

Notes to Consolidated Financial Statements 

September 30, 2014

(unaudited)

 

Offering expenses include, among other things, legal fees and other costs pertaining to the preparation of the Company’s registration statement in connection with the continuous public offering of the Company’s shares. Certain offering expenses have been funded by IIG and its affiliates, and there is no liability for these offering expenses to the Company until IIG and its affiliates submit such costs for reimbursement. Upon meeting the minimum offering requirement on December 17, 2012, the Company incurred and capitalized offering expenses of $1,000,000 that were submitted for reimbursement by IIG (see Note 4). These expenses were fully amortized over a twelve month period as an adjustment to capital in excess of par value. The Company will expense any additional offering expenses incurred by IIG and its affiliates if and when IIG and its affiliates submit such costs for reimbursement.

The following table summarizes organization costs and offering expenses incurred by IIG and by the Company from January 31, 2012 (Inception) through September 30, 2014:

 

 

 

 

Organization Costs and Offering Expenses Incurred by IIG

Period

 

Organization Costs

 

Offering Expenses

 

Other Pre-Effective Costs(5)

 

Total

Year Ended

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012(1)

 

$

191,717

 

$

1,619,621

 

$

200,507

 

$

2,011,845

December 31, 2013

 

 

 -  

 

 

 -  

 

 

 -  

 

 

 -  

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2014

 

 

 -  

 

 

 -  

 

 

 -  

 

 

 -  

June 30, 2014

 

 

 -  

 

 

 -  

 

 

 -  

 

 

 -  

September 30, 2014

 

 

 -  

 

 

 -  

 

 

 -  

 

 

 -  

Total

 

 

191,717

 

 

1,619,621

 

 

200,507

 

 

2,011,845

Expenses submitted for reimbursement by IIG(2)

 

 

 -  

 

 

(1,591,475)

 

 

 -  

 

 

(1,591,475)

Total Unreimbursed Expenses Incurred by IIG

 

$

191,717

 

$

28,146

 

$

200,507

 

$

420,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organization Costs and Offering Expenses Incurred by the Company(3)

Period

 

Organization Costs

 

Offering Expenses

 

Other Pre-Effective Costs(5)

 

Total

Year Ended

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012(1)

 

$

 -  

 

$

29,652

 

$

 -  

 

$

29,652

December 31, 2013

 

 

 -  

 

 

1,786,978

 

 

 -  

 

 

1,786,978

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2014