Attached files

file filename
EX-31.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpex-31-3.htm
EX-32.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES - CION Investment Corpex-32.3.htm
EX-31.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpex-31.1.htm
EX-31.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpex-31.2.htm
EX-32.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpex-32.1.htm
EX-32.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - CION Investment Corpex-32.2.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 March 31, 2015

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 from 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 Website, 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 May 8, 2015 was 71,372,505.

  

 


 

CĪON INVESTMENT CORPORATION

TABLE OF CONTENTS

FORM 10-Q

 

 

Page

 

PART I - FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

1

 

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

55

 

Item 4. Controls and Procedures

56

 

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

57

 

Item 1A. Risk Factors

57

 

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

57

 

Item 3. Defaults Upon Senior Securities

57

 

Item 4. Mine Safety Disclosures

57

 

Item 5. Other Information

57

 

Item 6. Exhibits

58

 

Signatures

60

                 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CĪON Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

March 31,

 

December 31,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Investments, at fair value (amortized cost of $466,026

 

 

 

 

 

 

    and $363,564, respectively)

$

465,840

 

$

361,914

 

Cash

 

4,216

 

 

9,474

 

Due from counterparty(1)

 

169,538

 

 

128,388

 

Receivable for common stock purchased

 

-

 

 

1,459

 

Interest receivable on investments

 

2,055

 

 

2,184

 

Receivable due on investment sold

 

3,261

 

 

-

 

Unrealized appreciation on total return swap(1)

 

1,640

 

 

-

 

Receivable due on total return swap(1)

 

6,261

 

 

4,557

 

Prepaid expenses and other assets

 

426

 

 

125

 

 

Total assets

$

653,237

 

$

508,101

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

Liabilities

 

 

 

 

 

 

Payable for investments purchased

$

37,441

 

$

4,106

 

Shareholders' distributions payable(3)

 

4,402

 

 

-

 

Accounts payable and accrued expenses

 

690

 

 

515

 

Commissions payable for common stock purchased ($218 to CĪON Securities, LLC)

 

-

 

 

597

 

Accrued management fees

 

2,760

 

 

1,031

 

Accrued administrative services expense

 

441

 

 

570

 

Accrued recoupment of expense reimbursements from IIG(2)

 

837

 

 

-

 

Due to IIG - offering, organizational and other costs(4)

 

99

 

 

484

 

Unrealized depreciation on total return swap(1)

 

-

 

 

4,409

 

Accrued capital gains incentive fee(5)

 

1,454

 

 

-

 

 

Total liabilities

 

48,124

 

 

11,712

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 4 and Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

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

 

 

 

 

 

 

    64,734,704 and 53,818,629 shares issued and outstanding, respectively

 

65

 

 

54

 

Capital in excess of par value

 

605,048

 

 

502,394

 

Accumulated distributions in excess of net investment income

 

(1,454)

 

 

-

 

Accumulated net unrealized depreciation on investments

 

(186)

 

 

(1,650)

 

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

 

1,640

 

 

(4,409)

 

 

Total shareholders' equity

 

605,113

 

 

496,389

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

653,237

 

$

508,101

 

 

 

 

 

 

 

 

 

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

$

9.35

 

$

9.22

 

 

 

 

 

 

 

 

 

(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 for a discussion of offering, organizational and other costs submitted to the Company for reimbursement by IIG and its affiliates.

 

(5) 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

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended

March 31,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

(unaudited)

Investment income

 

 

 

 

 

Interest income

$

8,444

 

$

2,200

Fee and other income

 

470

 

 

-

Total investment income

 

8,914

 

 

2,200

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Management fees

 

2,760

 

 

909

Administrative services expense

 

454

 

 

415

Capital gains incentive fee(1)

 

1,454

 

 

525

Offering, organizational and other costs - IIG(2)

 

-

 

 

592

General and administrative(3)

 

1,278

 

 

1,058

Total expenses

 

5,946

 

 

3,499

Expense reimbursements from IIG(4)

 

-

 

 

(1,049)

Recoupment of expense reimbursements from IIG(4)

 

837

 

 

-

Net operating expenses

 

6,783

 

 

2,450

Net investment income (loss)

 

2,131

 

 

(250)

 

 

 

 

 

 

 

 

Realized and unrealized gains

 

 

 

 

 

Net realized gain on investments

 

575

 

 

174

Net change in unrealized appreciation on investments

 

1,464

 

 

611

Net realized gain on total return swap(5)

 

6,607

 

 

2,963

Net change in unrealized appreciation on total return swap(5)

 

6,049

 

 

1,208

Total net realized and unrealized gains

 

14,695

 

 

4,956

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations

$

16,826

 

$

4,706

 

 

 

 

 

 

 

 

Per share information—basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets per share resulting from operations

$

0.29

 

$

0.24

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

58,939,554

 

 

19,995,555

 

 

 

 

 

 

 

 

(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 2 for a discussion of offering, organizational and other costs submitted to the Company for reimbursement by IIG and its affiliates.

(3)

See Note 9 for details of the Company's general and administrative expenses.

(4)

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

(5)

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

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended

March 31,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

(unaudited)

Changes in net assets from operations:

 

 

 

 

 

 

Net investment income (loss)

$

2,131

 

$

(250)

 

Net realized gain on investments

 

575

 

 

174

 

Net change in unrealized appreciation on investments

 

1,464

 

 

611

 

Net realized gain on total return swap(1)

 

6,607

 

 

2,963

 

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

 

6,049

 

 

1,208

 

 

Net increase in net assets resulting from operations

 

16,826

 

 

4,706

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

 

 

 

 

 

 

Net investment income

 

(2,131)

 

 

-

 

Net realized gain on total return swap

 

 

 

 

 

 

Net interest and other income from TRS portfolio

 

(6,408)

 

 

(2,360)

 

Net gain on TRS loan sales

 

(199)

 

 

(603)

 

Net realized gain on investments

 

(575)

 

 

(174)

 

Distributions in excess of net investment income(3)

 

(1,454)

 

 

(177)

 

 

Net decrease in net assets from shareholders' distributions

 

(10,767)

 

 

(3,314)

Changes in net assets from capital share transactions:

 

 

 

 

 

 

Issuance of common stock, net of issuance costs of $10,016 and $7,750, respectively

 

99,715

 

 

77,173

 

Reinvestment of shareholder distributions

 

3,410

 

 

2,334

 

Repurchase of common stock

 

(460)

 

 

-

 

 

Net increase in net assets resulting from capital share transactions

 

102,665

 

 

79,507

 

 

 

 

 

 

 

 

Total increase in net assets

 

108,724

 

 

80,899

Net assets at beginning of period

 

496,389

 

 

144,571

Net assets at end of period

$

605,113

 

$

225,470

 

 

 

 

 

 

 

 

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

$

9.35

 

$

9.40

Shares of common stock outstanding at end of period

 

64,734,704

 

 

23,991,865

 

 

 

 

 

 

 

 

Undistributed (distributions in excess of) net investment income at end of period(3)

$

(1,454)

 

$

40

 

 

 

 

 

 

 

 

(1)

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

 

 

 

 

 

(2)

This table presents changes in net assets from shareholders` distributions on a GAAP basis. See Note 5 for a discussion of the sources of distributions paid by the Company.

(3)

Distributions in excess of net investment income represent unearned capital gains incentive fees, which reduce GAAP basis net investment income available for distributions but does not reduce tax basis net investment income.  This tax-related adjustment represents additional distributions for tax purposes.

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

3


CĪON Investment Corporation

Consolidated Statements of Cash Flows

(in thousands)

 

Three Months Ended

March 31,

 

2015

 

2014

 

 

 

 

(unaudited)

 

(unaudited)

Operating activities:

 

 

 

 

 

Net increase in net assets resulting from operations

$

16,826

 

$

4,707

Adjustments to reconcile net increase in net assets resulting from

 

 

 

 

 

operations to net cash used in operating activities:

 

 

 

 

 

 

Net accretion of discount on investments

 

(204)

 

 

(46)

 

Proceeds from principal repayment of investments

 

1,118

 

 

5,289

 

Purchase of investments

 

(115,528)

 

 

(66,997)

 

(Increase) decrease in short term investments, net

 

(22,838)

 

 

380

 

Proceeds from sale of investments

 

35,565

 

 

13,166

 

Net realized gain on investments

 

(575)

 

 

(174)

 

Net unrealized appreciation on investments

 

(1,464)

 

 

(611)

 

Net unrealized appreciation on total return swap(1)

 

(6,049)

 

 

(1,208)

 

Increase in due from counterparty(1)

 

(41,150)

 

 

(27,665)

 

Increase in accrued reimbursement of expense support(2)

 

837

 

 

546

 

(Increase) decrease in prepaid expenses and other assets

 

(301)

 

 

53

 

Decrease (increase) in interest receivable on investments

 

129

 

 

(275)

 

Increase in receivable due on investment sold

 

(3,261)

 

 

(6,357)

 

Increase in receivable due on total return swap(1)

 

(1,704)

 

 

(1,008)

 

Increase in payable for investments purchased

 

33,335

 

 

4,105

 

Increase in accrued capital gains incentive fee on unrealized appreciation

 

1,454

 

 

387

 

Increase in accounts payable and accrued expenses

 

146

 

 

56

 

Decrease in accrued administrative services expense

 

(129)

 

 

-

 

Increase in accrued management fees

 

1,729

 

 

-

 

Increase in due to IIG - other(3)

 

-

 

 

379

 

(Decrease) increase in due to IIG - offering, organizational and other costs(3)

 

(385)

 

 

41

Net cash used in operating activities

 

(102,449)

 

 

(75,232)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Gross proceeds from issuance of common stock

 

111,190

 

 

84,924

 

Commissions and dealer manager fees paid

 

(10,584)

 

 

(7,751)

 

Repurchase of common stock

 

(460)

 

 

-

 

Shareholders' distributions paid(4)

 

(2,955)

 

 

(1,876)

Net cash provided by financing activities

 

97,191

 

 

75,297

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

(5,258)

 

 

65

Cash, beginning of period

 

9,474

 

 

450

Cash, end of period

$

4,216

 

$

515

 

 

 

 

 

 

 

 

 

Supplemental non-cash financing activities:

 

 

 

 

 

 

Reinvestment of shareholders` distributions

$

3,410

 

$

2,334

 

Shareholders' distributions payable

$

4,402

 

$

-

 

 

 

 

 

 

 

 

 

(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 2 for a discussion of offering, organizational and other costs submitted to the Company for reimbursement by IIG and its affiliates.

(4)

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 (unaudited)

March 31, 2015

(in thousands)

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Senior Secured First Lien Debt - 13.3%

 

 

 

 

 

 

 

 

 

 

 

Accruent, LLC, L+625, 1.00% LIBOR Floor, 11/25/2019

 

3 Month LIBOR

 

High Tech Industries

 

$

2,985

 

$

2,979

 

$

2,985

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

8,710

 

 

8,670

 

 

8,710

 

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

 

3 Month LIBOR

 

Media: Diversified & Production

 

 

11,123

 

 

10,721

 

 

10,845

 

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

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

14,925

 

 

14,727

 

 

14,776

 

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

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

10,829

 

 

10,317

 

 

10,233

 

Nathan’s Famous, Inc., 10.00%, 3/15/2020(g)

 

None

 

Beverage, Food & Tobacco

 

 

6,000

 

 

6,000

 

 

6,307

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

1,753

 

 

1,727

 

 

1,763

 

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

 

6 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

4,859

 

 

4,778

 

 

4,434

 

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

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

1,438

 

 

1,426

 

 

1,359

 

Studio Movie Grill Holdings, LLC, L+725, 1.00% LIBOR Floor, 9/10/2018(d)

 

1 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

15,943

 

 

15,781

 

 

15,943

 

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

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

705

 

 

695

 

 

697

 

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

 

3 Month LIBOR

 

Capital Equipment

 

 

2,618

 

 

2,584

 

 

2,611

Total Senior Secured First Lien Debt

 

 

 

 

 

 

 

 

 

80,405

 

 

80,663

Senior Secured Second Lien Debt - 49.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access CIG, LLC, L+875, 1.00% LIBOR Floor, 10/17/2022

 

3 Month LIBOR

 

Services: Business

 

 

6,400

 

 

6,029

 

 

6,048

 

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

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

10,344

 

 

10,153

 

 

10,137

 

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

 

3 Month LIBOR

 

Construction & Building

 

 

3,700

 

 

3,666

 

 

3,644

 

AmWINS Group, LLC, L+850, 1.00% LIBOR Floor, 9/4/2020(h)

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

750

 

 

757

 

 

752

 

Blue Ribbon, LLC, L+825, 1.00% LIBOR Floor, 11/13/2022

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

15,000

 

 

14,848

 

 

14,813

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

5,000

 

 

5,003

 

 

4,925

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

20,000

 

 

19,650

 

 

19,800

 

Elements Behavioral Health, Inc., L+875, 1.00% LIBOR Floor, 2/11/2020

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

5,000

 

 

4,957

 

 

4,965

 

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

 

3 Month LIBOR

 

Environmental Industries

 

 

5,000

 

 

4,954

 

 

4,850

 

Flexera Software LLC, L+700, 1.00% LIBOR Floor, 4/2/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

833

 

 

815

 

 

821

 

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

 

1 Month LIBOR

 

Automotive

 

 

90

 

 

89

 

 

88

 

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

 

6 Month LIBOR

 

Services: Consumer

 

 

800

 

 

797

 

 

802

 

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

 

3 Month LIBOR

 

Services: Business

 

 

9,910

 

 

9,846

 

 

9,712

 

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

 

3 Month LIBOR

 

Telecommunications

 

 

9,500

 

 

9,486

 

 

9,280

 

GTCR Valor Companies, Inc., L+850, 1.00% LIBOR Floor, 11/30/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

5,000

 

 

4,957

 

 

4,825

 

H.D. Vest, Inc., L+825, 1.25% LIBOR Floor, 6/18/2019

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

17,500

 

 

17,419

 

 

17,371

 

Hilex Poly Co. LLC, L+875, 1.00% LIBOR Floor, 6/5/2022(h)

 

3 Month LIBOR

 

Containers, Packaging & Glass

 

 

12,409

 

 

12,161

 

 

12,440

 

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

 

3 Month LIBOR

 

Services: Business

 

 

5,860

 

 

5,834

 

 

5,772

 

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

 

3 Month LIBOR

 

Services: Business

 

 

9,830

 

 

9,838

 

 

9,535

 

Lanyon Solutions, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

2,273

 

 

2,263

 

 

2,205

 

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

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

1,417

 

 

1,405

 

 

1,421

 

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

 

3 Month LIBOR

 

Services: Business

 

 

2,000

 

 

1,991

 

 

1,830

 

Mitchell International, Inc., L+750, 1.00% LIBOR Floor, 10/11/2021(h)

 

1 Month LIBOR

 

High Tech Industries

 

 

4,000

 

 

3,974

 

 

3,990

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

7,820

 

 

7,763

 

 

7,703

 

Navex Global, Inc., L+875, 1.00% LIBOR Floor, 11/18/2022

 

6 Month LIBOR

 

High Tech Industries

 

 

8,000

 

 

7,844

 

 

7,920

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

2,969

 

 

2,984

 

 

2,954

 

Pike Corporation, L+850, 1.00% LIBOR Floor, 6/22/2022(h)

 

1 Month LIBOR

 

Energy: Electricity

 

 

10,000

 

 

9,833

 

 

9,975

 

PODS, LLC, L+825, 1.00% LIBOR Floor, 2/2/2023(h)

 

3 Month LIBOR

 

Services: Consumer

 

 

9,984

 

 

9,924

 

 

10,059

 

PSC Industrial Holdings Corp., L+825, 1.00% LIBOR Floor, 12/5/2021

 

1 Month LIBOR

 

Services: Business

 

 

10,000

 

 

9,805

 

 

9,975

 

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

 

3 Month LIBOR

 

Telecommunications

 

 

4,500

 

 

4,475

 

 

4,444

 

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

 

3 Month LIBOR

 

Services: Business

 

 

1,511

 

 

1,497

 

 

1,534

 

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

 

3 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

6,220

 

 

6,220

 

 

6,251

 

Survey Sampling International, LLC, L+900, 1.00% LIBOR Floor, 12/16/2021

 

1 Month LIBOR

 

Services: Business

 

 

15,000

 

 

14,708

 

 

14,737

 

TASC, Inc., 12.00%, 5/23/2021(g)

 

None

 

Services: Business

 

 

7,332

 

 

7,105

 

 

7,790

 

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

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

1,106

 

 

1,089

 

 

1,090

 

TMK Hawk Parent, Corp., L+750, 1.00% LIBOR Floor, 10/1/2022

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

15,000

 

 

14,855

 

 

15,000

 

TransFirst Inc., L+800, 1.00% LIBOR Floor, 11/11/2022

 

6 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

7,087

 

 

7,019

 

 

7,126

 

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

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

3,486

 

 

3,527

 

 

3,525

 

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

 

3 Month LIBOR

 

Services: Business

 

 

15,000

 

 

14,931

 

 

14,850

 

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

 

6 Month LIBOR

 

Automotive

 

 

14,000

 

 

13,905

 

 

14,070

See accompanying notes to consolidated financial statements.

5


CĪON Investment Corporation

Consolidated Schedule of Investments (unaudited) (continued)

March 31, 2015

(in thousands)

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

 

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

 

1 Month LIBOR

 

Beverage, Food & Tobacco

 

 

7,488

 

 

7,339

 

 

7,001

 

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

 

3 Month LIBOR

 

Aerospace & Defense

 

 

1,435

 

 

1,429

 

 

1,428

Total Senior Secured Second Lien Debt

 

 

 

 

 

 

 

 

297,144

 

297,458

Collateralized Securities and Structured Products - Debt - 4.7%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000

 

 

2,034

 

 

1,980

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

610

 

 

619

 

 

604

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,400

 

 

5,400

 

 

5,388

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000

 

 

4,533

 

 

4,478

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000

 

 

1,862

 

 

1,837

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,500

 

 

2,312

 

 

2,194

 

JPMorgan Chase Bank, N.A. Credit Link Note, L+1225, 12/20/2021(g)

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000

 

 

5,000

 

 

4,953

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

7,500

 

 

7,018

 

 

6,813

Total Collateralized Securities and Structured Products - Debt

 

 

 

 

 

 

 

28,778

 

 

28,247

Collateralized Securities and Structured Products - Equity - 4.3%

 

 

 

 

 

 

 

 

 

 

 

 

APIDOS CLO XVI Subordinated Notes, 12.24% Estimated Yield, 1/19/2025(g)(h)

 

(e)

 

Diversified Financials

 

 

9,000

 

 

6,005

 

 

6,005

 

CENT CLO 19 Limited Subordinated Notes, 11.80% Estimated Yield, 10/29/2025(g)(h)

 

(e)

 

Diversified Financials

 

 

2,000

 

 

1,534

 

 

1,534

 

Dryden XXIII Senior Loan Fund Subordinated Notes, 12.09% Estimated Yield, 7/17/2023(g)(h)

 

(e)

 

Diversified Financials

 

 

9,250

 

 

6,752

 

 

6,753

 

Galaxy XV CLO LTD Class A Subordinated Notes, 12.45% Estimated Yield, 4/15/2025(g)(h)

 

(e)

 

Diversified Financials

 

 

4,000

 

 

2,872

 

 

2,872

 

Ivy Hill Middle Market Credit Fund IX, Ltd. Subordinated Notes, 15.00% Estimated Yield, 10/18/2025(g)

 

(e)

 

Diversified Financials

 

 

8,146

 

 

7,444

 

 

7,413

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, 15.00% Estimated Yield, 10/20/2025(g)

 

(e)

 

Diversified Financials

 

 

2,000

 

 

1,904

 

 

1,707

Total Collateralized Securities and Structured Products - Equity

 

 

 

 

 

 

 

26,511

 

 

26,284

Short Term Investments - 5.5%(i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

33,188

 

 

33,188

 

 

33,188

Total Short Term Investments

 

 

 

 

 

 

 

 

 

33,188

 

 

33,188

TOTAL INVESTMENTS - 77.0%

 

 

 

 

 

 

 

 

$

466,026

 

$

465,840

OTHER ASSETS IN EXCESS OF LIABILITIES - 23.0%

 

 

 

 

 

 

 

 

 

 

 

$

139,273

NET ASSETS - 100%

 

 

 

 

 

 

 

 

 

 

 

$

605,113

TOTAL RETURN SWAP - 0.3%

 

 

 

 

 

Notional

Amount

 

 

 

 

Unrealized Appreciation

 

Citibank TRS Facility (see Note 7)

 

 

 

 

 

$

593,494

 

 

 

 

$

1,640

 

 

(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 (g) below. The Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio. Unless specifically identified, investments do not contain a paid-in-kind, or PIK, interest provision.

(b)

The 1, 3 and 6 month London Interbank Offered Rate, or LIBOR, rates were 0.18%, 0.27% and 0.40%, respectively, as of March 31, 2015.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of March 31, 2015, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to March 31, 2015.

(c)

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

(d)

As discussed in Note 10, the Company is committed, upon the satisfaction of certain conditions, to fund an additional $1,207 and $4,010 as of March 31, 2015 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.  As of May 8, 2015, the Company is committed, upon the satisfaction of certain conditions, to fund an additional $1,207 and $3,540 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.

(e)

The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

(f)

Great Lakes CLO 2014-1 Class E Notes, Ivy Hill Middle Market Credit Fund VII Class E Notes and NXT Capital CLO 2014-1 Class E Notes were rated Ba2 on Moody's credit scale as of March 31, 2015. JFIN CLO 2014 Class E Notes were rated BB on S&P's credit scale as of March 31, 2015.

(g)

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 March 31, 2015, 87.3% 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, 83.3% of the Company’s total assets represented qualifying assets as of March 31, 2015.

(h)

Position or portion thereof unsettled as of March 31, 2015.

(i)

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

(j)

Effective yield as of March 31, 2015 is <0.01%.

See accompanying notes to consolidated financial statements.

6


CĪON Investment Corporation

Consolidated Schedule of Investments

December 31, 2014

(in thousands)

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Senior Secured First Lien Debt - 13.9%

 

 

 

 

 

 

 

 

 

 

 

Accruent, LLC, L+625, 1.00% LIBOR Floor, 11/25/2019

 

3 Month LIBOR

 

High Tech Industries

 

$

2,993

 

$

2,986

 

$

2,993

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

8,214

 

 

8,170

 

 

8,214

 

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

 

3 Month LIBOR

 

Media: Diversified & Production

 

 

6,443

 

 

6,220

 

 

6,298

 

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

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

14,963

 

 

14,753

 

 

14,814

 

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

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

10,828

 

 

10,281

 

 

10,098

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

1,758

 

 

1,730

 

 

1,745

 

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

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

4,871

 

 

4,782

 

 

4,746

 

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

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

1,442

 

 

1,429

 

 

1,377

 

Studio Movie Grill Holdings, LLC, L+725, 1.00% LIBOR Floor, 9/10/2018(d)

 

3 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

13,588

 

 

13,401

 

 

13,452

 

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

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

1,611

 

 

1,586

 

 

1,571

 

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

 

3 Month LIBOR

 

Capital Equipment

 

 

3,955

 

 

3,901

 

 

3,896

Total Senior Secured First Lien Debt

 

 

 

 

 

 

 

 

69,239

 

69,204

Senior Secured Second Lien Debt - 49.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access CIG, LLC, L+875, 1.00% LIBOR Floor, 10/17/2022

 

1 Month LIBOR

 

Services: Business

 

 

6,400

 

 

6,018

 

 

6,048

 

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

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

10,344

 

 

10,149

 

 

10,137

 

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

 

3 Month LIBOR

 

Construction & Building

 

 

3,700

 

 

3,663

 

 

3,626

 

Blue Ribbon, LLC, L+825, 1.00% LIBOR Floor, 11/13/2022

 

1 Month LIBOR

 

Beverage, Food & Tobacco

 

 

8,000

 

 

7,900

 

 

7,900

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

5,000

 

 

5,003

 

 

4,975

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

20,000

 

 

19,663

 

 

19,800

 

Elements Behavioral Health, Inc., L+875, 1.00% LIBOR Floor, 2/11/2020

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

5,000

 

 

4,955

 

 

4,970

 

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

 

3 Month LIBOR

 

Environmental Industries

 

 

5,000

 

 

4,952

 

 

4,850

 

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

 

1 Month LIBOR

 

Automotive

 

 

90

 

 

88

 

 

88

 

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

 

3 Month LIBOR

 

Services: Consumer

 

 

800

 

 

797

 

 

792

 

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

 

1 Month LIBOR

 

Services: Business

 

 

9,910

 

 

9,856

 

 

9,637

 

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

 

3 Month LIBOR

 

Telecommunications

 

 

9,500

 

 

9,484

 

 

9,369

 

GTCR Valor Companies, Inc., L+850, 1.00% LIBOR Floor, 11/30/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

5,000

 

 

4,955

 

 

4,850

 

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

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

854

 

 

846

 

 

848

 

Hilex Poly Co. LLC, L+875, 1.00% LIBOR Floor, 6/5/2022

 

3 Month LIBOR

 

Containers, Packaging & Glass

 

 

10,000

 

 

9,751

 

 

9,800

 

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

 

3 Month LIBOR

 

Services: Business

 

 

5,860

 

 

5,834

 

 

5,772

 

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

 

3 Month LIBOR

 

Services: Business

 

 

9,830

 

 

9,842

 

 

9,535

 

Lanyon Solutions, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021

 

3 Month LIBOR

 

High Tech Industries

 

 

2,273

 

 

2,263

 

 

2,216

 

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

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

1,417

 

 

1,405

 

 

1,410

 

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

 

3 Month LIBOR

 

Services: Business

 

 

2,000

 

 

1,990

 

 

1,895

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

7,820

 

 

7,761

 

 

7,664

 

Navex Global, Inc., L+875, 1.00% LIBOR Floor, 11/18/2022

 

3 Month LIBOR

 

Services: Business

 

 

8,000

 

 

7,841

 

 

7,880

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

2,441

 

 

2,459

 

 

2,387

 

Pike Corporation, L+850, 1.00% LIBOR Floor, 6/22/2022

 

1 Month LIBOR

 

Energy: Electricity

 

 

6,000

 

 

5,850

 

 

5,932

 

PSC Industrial Holdings Corp., L+825, 1.00% LIBOR Floor, 12/5/2021

 

1 Month LIBOR

 

Services: Business

 

 

10,000

 

 

9,800

 

 

9,850

 

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

 

3 Month LIBOR

 

Telecommunications

 

 

4,500

 

 

4,472

 

 

4,444

 

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

 

3 Month LIBOR

 

Services: Business

 

 

1,511

 

 

1,497

 

 

1,496

 

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

 

3 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

6,220

 

 

6,220

 

 

6,251

 

Survey Sampling International, LLC, L+900, 1.00% LIBOR Floor, 12/16/2021

 

3 Month LIBOR

 

Services: Business

 

 

15,000

 

 

14,701

 

 

14,738

 

TASC, Inc., 12.00%, 5/23/2021(h)

 

3 Month LIBOR

 

Services: Business

 

 

7,332

 

 

7,099

 

 

7,497

 

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

 

3 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

675

 

 

671

 

 

667

 

TMK Hawk Parent, Corp., L+750, 1.00% LIBOR Floor, 10/1/2022

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

15,000

 

 

14,852

 

 

14,925

 

TransFirst Inc., L+800, 1.00% LIBOR Floor, 11/11/2022

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

7,087

 

 

7,016

 

 

7,019

 

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

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

486

 

 

492

 

 

487

 

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

 

6 Month LIBOR

 

Services: Business

 

 

15,000

 

 

14,927

 

 

14,775

 

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

 

3 Month LIBOR

 

Automotive

 

 

14,000

 

 

13,899

 

 

14,035

 

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

 

1 Month LIBOR

 

Beverage, Food & Tobacco

 

 

5,488

 

 

5,494

 

 

5,323

 

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

 

3 Month LIBOR

 

Aerospace & Defense

 

 

1,435

 

 

1,429

 

 

1,370

Total Senior Secured Second Lien Debt

 

 

 

 

 

 

 

 

245,894

 

245,258

See accompanying notes to consolidated financial statements.

7


CĪON Investment Corporation

Consolidated Schedule of Investments (continued)

December 31, 2014

(in thousands)

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Collateralized Securities and Structured Products - Debt - 5.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000

 

 

2,035

 

 

1,999

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

610

 

 

620

 

 

610

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,400

 

 

5,400

 

 

5,400

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000

 

 

4,522

 

 

4,325

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000

 

 

1,860

 

 

1,815

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,500

 

 

2,308

 

 

2,168

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000

 

 

5,000

 

 

5,048

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

7,500

 

 

7,007

 

 

6,600

Total Collateralized Securities and Structured Products - Debt

 

 

 

 

 

 

 

 

28,752

 

27,965

Collateralized Securities and Structured Products - Equity - 1.8%

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Hill Middle Market Credit Fund IX, Ltd. Subordinated Notes, 14% Estimated Yield, 10/18/2025(g)

 

(e)

 

Diversified Financials

 

 

8,146

 

 

7,427

 

 

7,413

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, 14% Estimated Yield, 10/20/2025(g)

 

(e)

 

Diversified Financials

 

 

2,000

 

 

1,902

 

 

1,724

Total Collateralized Securities and Structured Products - Equity

 

 

 

 

 

 

 

 

9,329

 

9,137

Short Term Investments - 2.1%(i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

10,350

 

 

10,350

 

 

10,350

Total Short Term Investments

 

 

 

 

 

 

 

 

 

10,350

 

 

10,350

TOTAL INVESTMENTS - 72.9%

 

 

 

 

 

 

 

 

$

363,564

 

$

361,914

OTHER ASSETS IN EXCESS OF LIABILITIES - 27.1%

 

 

 

 

 

 

 

 

 

 

 

$

134,475

NET ASSETS - 100%

 

 

 

 

 

 

 

 

 

 

 

$

496,389

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL RETURN SWAP - (0.9%)

 

 

 

 

 

Notional

Amount

 

 

 

 

Unrealized Depreciation

 

Citibank TRS Facility (see Note 7)

 

 

 

 

 

$

431,979

 

 

 

 

$

(4,409)

 

 

(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 (g) below. The Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio. Unless specifically identified, investments do not contain a paid-in-kind, or PIK, interest provision.

(b)

The 1, 3 and 6 month London Interbank Offered Rate, or LIBOR, rates were 0.17%, 0.26% and 0.36%, respectively, as of December 31, 2014.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of December 31, 2014, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to December 31, 2014.

(c)

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

(d)

As discussed in Note 10, the Company is committed, upon the satisfaction of certain conditions, to fund an additional $1,724 and $6,388 as of December 31, 2014 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.  As of March 25, 2015, the Company is committed, upon the satisfaction of certain conditions,  to fund an additional $1,207 and $4,245 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.

(e)

The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

(f)

Great Lakes CLO 2014-1 Class E Notes, Ivy Hill Middle Market Credit Fund VII Class E Notes and NXT Capital CLO 2014-1 Class E Notes were rated Ba2 on Moody's credit scale as of December 31, 2014. JFIN CLO 2014 Class E Notes were rated BB on S&P's credit scale as of December 31, 2014.

(g)

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, 2014, 89.3% 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, 86.8% of the Company’s total assets represented qualifying assets as of December 31, 2014.

(h)

Position or portion thereof unsettled as of December 31, 2014.

(i)

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

(j)

Effective yield as of December 31, 2014 is <0.01%.

 

 

See accompanying notes to consolidated financial statements.

8


CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

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, 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, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities 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, 2014 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, 2015. The consolidated balance sheet and the consolidated schedule of investments as of December 31, 2014 are derived from the 2014 audited consolidated financial statements.

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

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 $33,188 and $10,350 of such investments at March 31, 2015 and December 31, 2014, respectively, which are included in investments, at fair value on the accompanying consolidated balance sheets and on the consolidated schedule of investments.

Offering, Organizational and Other Pre-Effective Costs

Offering costs 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 costs were funded by IIG and its affiliates and there was no liability for these offering costs to the Company until IIG and its affiliates submitted such costs for reimbursement. Upon meeting the minimum offering requirement on December 17, 2012, the Company incurred and capitalized offering costs of $1,000 that were submitted for reimbursement by IIG (see Note 4). These costs were fully amortized over a twelve month period as an adjustment to capital in excess of par value. The remaining offering costs funded by IIG and its affiliates were incurred when IIG and its affiliates submitted such costs for reimbursement during the year ended December 31, 2014.   

9


CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Organizational 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 organizational costs were funded by IIG and its affiliates and there was no liability for these organizational costs to the Company until IIG and its affiliates submitted such costs for reimbursement. The Company incurred these costs when IIG and its affiliates submitted such costs for reimbursement during the year ended December 31, 2014.

The following table summarizes offering, organizational and other costs incurred by IIG and by the Company from January 31, 2012 (Inception) through March 31, 2015:

 

 

 

Offering, Organizational and Other Costs Incurred by IIG

Period

 

Organizational Costs

 

Offering Costs

 

Other Pre-Effective Costs(5)

 

Total

Year Ended