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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
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-32.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS - CION Investment Corpex-32.3.htm
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-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-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

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 June 30, 2016

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 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 August 5, 2016 was 106,322,520.

  

 


 

CĪON INVESTMENT CORPORATION

FORM 10-Q

TABLE OF CONTENTS

 

 

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 Schedules of Investments

5

 

Notes to Consolidated Financial Statements

11

 

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

42

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

61

 

Item 4. Controls and Procedures

62

 

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

63

 

Item 1A. Risk Factors

63

 

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

63

 

Item 3. Defaults Upon Senior Securities

63

 

Item 4. Mine Safety Disclosures

63

 

Item 5. Other Information

63

 

Item 6. Exhibits

64

 

Signatures

66

                 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CĪON Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

June 30,

 

December 31,

 

2016

 

2015

 

(unaudited)

 

 

 

Assets

Investments, at fair value (amortized cost of $763,396 and $699,036, respectively)

$

735,798

 

$

669,799

Cash

 

8,415

 

 

39,741

Restricted cash

 

2,000

 

 

2,000

Due from counterparty(1)

 

217,831

 

 

226,316

Receivable for common stock purchased

 

-

 

 

5,459

Interest receivable on investments

 

4,978

 

 

5,973

Receivable due on investments sold

 

1,496

 

 

50

Receivable due on total return swap(1)

 

6,576

 

 

6,175

Prepaid expenses and other assets

 

920

 

 

243

    Total assets

$

978,014

 

$

955,756

 

 

 

 

 

 

Liabilities and Shareholders' Equity

Liabilities

 

 

 

 

 

Payable for investments purchased

$

11,894

 

$

9,800

Accounts payable and accrued expenses

 

947

 

 

692

Commissions payable for common stock purchased ($35 and $171 to CĪON Securities, LLC, respectively)

 

79

 

 

474

Accrued management fees

 

4,612

 

 

4,430

Accrued administrative services expense

 

434

 

 

617

Accrued recoupment of expense support from IIG(2)

 

548

 

 

480

Due to IIG - offering, organizational and other costs(3)

 

54

 

 

37

Unrealized depreciation on total return swap(1)

 

27,601

 

 

34,900

    Total liabilities

 

46,169

 

 

51,430

 

 

 

 

 

 

Commitments and contingencies (Note 4 and Note 11)

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

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

 

 

 

 

 

     106,020,384 and 103,814,361 shares issued and outstanding, respectively

 

106

 

 

104

Capital in excess of par value

 

987,494

 

 

968,359

Undistributed net investment income

 

474

 

 

-

Accumulated net unrealized depreciation on investments

 

(27,598)

 

 

(29,237)

Accumulated net realized loss from total return swap(1)

 

(1,030)

 

 

-

Accumulated net unrealized depreciation on total return swap(1)

 

(27,601)

 

 

(34,900)

    Total shareholders' equity

 

931,845

 

 

904,326

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

978,014

 

$

955,756

 

 

 

 

 

 

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

$

8.79

 

$

8.71

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

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

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

June 30,

 

Six Months Ended

June 30,

 

2016

 

2015

 

2016

 

2015

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Investment income

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

17,727

 

$

11,647

 

$

34,806

 

$

20,091

Fee and other income

 

103

 

 

271

 

 

295

 

 

741

    Total investment income

 

17,830

 

 

11,918

 

 

35,101

 

 

20,832

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

4,612

 

 

3,491

 

 

9,124

 

 

6,251

Administrative services expense

 

434

 

 

420

 

 

726

 

 

874

Capital gains incentive fee(1)

 

-

 

 

(243)

 

 

-

 

 

1,211

General and administrative(2)

 

1,299

 

 

2,043

 

 

3,052

 

 

3,321

Interest expense

 

107

 

 

109

 

 

227

 

 

109

    Total operating expenses

 

6,452

 

 

5,820

 

 

13,129

 

 

11,766

Recoupment of expense support from IIG(3)

 

548

 

 

1,592

 

 

667

 

 

2,429

    Net operating expenses

 

7,000

 

 

7,412

 

 

13,796

 

 

14,195

    Net investment income

 

10,830

 

 

4,506

 

 

21,305

 

 

6,637

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gains

 

 

 

 

 

 

 

 

 

 

 

Net realized gain on investments

 

707

 

 

-

 

 

699

 

 

575

Net change in unrealized appreciation on investments

 

14,244

 

 

967

 

 

1,639

 

 

2,431

Net realized gain on total return swap(4)

 

7,249

 

 

8,515

 

 

15,611

 

 

15,122

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

 

8,907

 

 

(3,250)

 

 

7,299

 

 

2,799

    Total net realized and unrealized gains

 

31,107

 

 

6,232

 

 

25,248

 

 

20,927

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations

$

41,937

 

$

10,738

 

$

46,553

 

$

27,564

 

 

 

 

 

 

 

 

 

 

 

 

Per share information—basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets per share resulting from operations

$

0.40

 

$

0.15

 

$

0.45

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

104,835,705

 

 

72,323,545

 

 

104,396,643

 

 

65,668,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 10 for details of the Company's general and administrative expenses.

 

 

 

 

 

 

 

 

 

 

 

 

(3)  See Note 4 for a discussion of expense support from IIG and recoupment of expense support.

 

 

 

 

 

 

 

 

 

 

 

 

(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

(in thousands, except share and per share amounts)

 

 

 

Six Months Ended

June 30,

 

 

 

2016

 

2015

 

 

 

(unaudited)

 

(unaudited)

Changes in net assets from operations:

 

 

 

 

 

 

Net investment income

$

21,305

 

$

6,637

 

Net realized gain on investments

 

699

 

 

575

 

Net change in unrealized appreciation on investments

 

1,639

 

 

2,431

 

Net realized gain on total return swap(1)

 

15,611

 

 

15,122

 

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

 

7,299

 

 

2,799

 

 

Net increase in net assets resulting from operations

 

46,553

 

 

27,564

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

 

 

 

 

 

 

Net investment income

 

(20,831)

 

 

(6,637)

 

Net realized gain on total return swap

 

 

 

 

 

 

Net interest and other income from TRS portfolio

 

(16,225)

 

 

(13,853)

 

Net gain on TRS loan sales(4)

 

(416)

 

 

(1,269)

 

Net realized gain on investments

 

(699)

 

 

(575)

 

Distributions in excess of net investment income(3)

 

-

 

 

(1,656)

 

 

Net decrease in net assets from shareholders' distributions

 

(38,171)

 

 

(23,990)

Changes in net assets from capital share transactions:

 

 

 

 

 

 

Issuance of common stock, net of issuance costs of $736 and $21,967, respectively

 

7,998

 

 

221,494

 

Reinvestment of shareholders' distributions

 

19,403

 

 

9,852

 

Repurchase of common stock

 

(8,264)

 

 

(858)

 

 

Net increase in net assets resulting from capital share transactions

 

19,137

 

 

230,488

 

 

 

 

 

 

 

 

Total increase in net assets

 

27,519

 

 

234,062

Net assets at beginning of period

 

904,326

 

 

496,389

Net assets at end of period

$

931,845

 

$

730,451

 

 

 

 

 

 

 

 

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

$

8.79

 

$

9.33

Shares of common stock outstanding at end of period

 

106,020,384

 

 

78,325,613

 

 

 

 

 

 

 

 

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

$

474

 

$

(1,656)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 certain expenses, which are not deductible on a tax-basis.  Unearned capital gains incentive fees and certain offering expenses reduce GAAP basis net investment income, but do not reduce tax basis net investment income. These tax-related adjustments represent additional net investment income available for distribution for tax purposes.

 

 

 

 

 

 

 

 

(4)

During the six months ended June 30, 2016, the Company realized losses of $1,030, which are not currently deductible on a tax-basis. 

See accompanying notes to consolidated financial statements.

3


CĪON Investment Corporation

Consolidated Statements of Cash Flows

(in thousands)

 

Six Months Ended

June 30,

 

2016

 

2015

 

 

 

 

(unaudited)

 

(unaudited)

Operating activities:

 

 

 

 

 

Net increase in net assets resulting from operations

$

46,553

 

$

27,564

Adjustments to reconcile net increase in net assets resulting from

 

 

 

 

 

operations to net cash used in operating activities:

 

 

 

 

 

 

Net accretion of discount on investments

 

(836)

 

 

(451)

 

Proceeds from principal repayment of investments

 

87,356

 

 

3,510

 

Purchase of investments

 

(149,048)

 

 

(289,195)

 

Paid-in-kind interest

 

(367)

 

 

-

 

(Increase) decrease in short term investments, net

 

(13,201)

 

 

10,330

 

Proceeds from sale of investments

 

12,415

 

 

55,801

 

Net realized gain on investments

 

(699)

 

 

(575)

 

Net unrealized appreciation on investments

 

(1,639)

 

 

(2,431)

 

Net unrealized appreciation on total return swap(1)

 

(7,299)

 

 

(2,799)

 

Amortization of deferred financing costs

 

125

 

 

-

 

(Increase) decrease in due from counterparty(1)

 

8,485

 

 

(46,635)

 

(Increase) decrease in interest receivable on investments

 

1,015

 

 

(1,824)

 

(Increase) decrease in receivable due on investments sold

 

(1,446)

 

 

(8,209)

 

(Increase) decrease in receivable due on total return swap(1)

 

(401)

 

 

(3,471)

 

(Increase) decrease in prepaid expenses and other assets

 

(402)

 

 

(547)

 

Increase (decrease) in payable for investments purchased

 

2,094

 

 

23,826

 

Increase (decrease) in accounts payable and accrued expenses

 

255

 

 

166

 

Increase (decrease) in accrued management fees

 

182

 

 

2,461

 

Increase (decrease) in accrued administrative services expense

 

(183)

 

 

(151)

 

Increase (decrease) in accrued recoupment of expense support from IIG(2)

 

68

 

 

1,592

 

Increase (decrease) in due to IIG - offering, organizational and other costs(3)

 

17

 

 

(400)

 

Increase (decrease) in accrued capital gains incentive fee on unrealized appreciation

 

-

 

 

1,211

Net cash used in operating activities

 

(16,956)

 

 

(230,227)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Gross proceeds from issuance of common stock

 

14,193

 

 

244,920

 

Commissions and dealer manager fees paid

 

(1,131)

 

 

(22,540)

 

Repurchase of common stock

 

(8,264)

 

 

(858)

 

Shareholders' distributions paid(4)

 

(18,768)

 

 

(8,759)

 

Borrowings under revolving credit facility

 

-

 

 

22,000

 

Increase in restricted cash

 

-

 

 

(2,000)

 

Deferred financing costs paid

 

(400)

 

 

(278)

Net cash (used in) provided by financing activities

 

(14,370)

 

 

232,485

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

(31,326)

 

 

2,258

Cash, beginning of period

 

39,741

 

 

9,474

Cash, end of period

$

8,415

 

$

11,732

 

 

 

 

 

 

 

 

 

Supplemental non-cash financing activities:

 

 

 

 

 

 

Cash paid for interest

$

101

 

$

60

 

Reinvestment of shareholders' distributions(4)

$

19,403

 

$

9,852

 

Shareholders' distributions payable

$

-

 

$

5,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

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

 

 

 

 

 

 

 

 

 

(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)

June 30, 2016

(in thousands)

  

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Cost(m)

 

Fair

Value(c)

Senior Secured First Lien Debt - 18.1%

 

 

 

 

 

 

 

 

 

 

 

American Teleconferencing Services, Ltd., L+650, 1.00% LIBOR Floor, 12/8/2021

 

3 Month LIBOR

 

Telecommunications

 

$

19,749

 

$

17,800

 

$

17,972

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

8,561

 

 

8,530

 

 

8,475

 

F+W Media, Inc., L+725, 1.25% LIBOR Floor, 6/30/2019

 

3 Month LIBOR

 

Media: Diversified & Production

 

 

10,290

 

 

9,991

 

 

8,335

 

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

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

11,126

 

 

11,021

 

 

11,015

 

Infogroup Inc., L+550, 1.50% LIBOR Floor, 5/26/2018

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

15,661

 

 

15,258

 

 

15,112

 

Intertain Group Ltd., L+650, 1.00% LIBOR Floor, 4/8/2022(g)

 

3 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

1,868

 

 

1,835

 

 

1,858

 

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

 

None

 

Beverage, Food & Tobacco

 

 

6,000

 

 

6,000

 

 

6,409

 

Nextech Systems, LLC, L+725, 1.00% LIBOR Floor, 6/22/2021

 

1 Month LIBOR

 

High Tech Industries

 

 

16,000

 

 

15,359

 

 

15,357

 

Plano Molding Company, LLC, L+600, 1.00% LIBOR Floor, 5/12/2021

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

10,890

 

 

10,797

 

 

10,155

 

Rimini Street, Inc., 15.00%, 6/24/2020(n)

 

None

 

High Tech Industries

 

 

5,526

 

 

5,416

 

 

5,416

 

Rimini Street, Inc., 15.00%, 6/24/2017

 

None

 

High Tech Industries

 

 

11,974

 

 

11,738

 

 

11,734

 

SmartBear Software Inc., L+750, 1.00% LIBOR Floor, 12/30/2020

 

3 Month LIBOR

 

High Tech Industries

 

 

18,824

 

 

18,472

 

 

18,636

 

Smile Brands Group, Inc., L+775, 1.25% LIBOR Floor, 8/16/2019(n)

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

3,690

 

 

3,639

 

 

3,243

 

Southcross Holdings Borrower LP, 9.00%, 4/13/2023(h)(n)

 

None

 

Energy: Oil & Gas

 

 

167

 

 

146

 

 

147

 

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

 

3 Month LIBOR

 

Energy: Oil & Gas

 

 

7,344

 

 

6,821

 

 

5,581

 

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

 

3 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

19,096

 

 

19,063

 

 

19,096

 

Telestream Holdings Corp., L+950, 1.00% LIBOR Floor, 1/15/2020

 

3 Month LIBOR

 

High Tech Industries

 

 

7,246

 

 

7,107

 

 

7,101

 

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

 

3 Month LIBOR

 

Consumer Goods: Non-Durable

 

 

3,176

 

 

3,146

 

 

3,156

Total Senior Secured First Lien Debt

 

 

 

 

 

 

 

 

 

172,139

 

 

168,798

Senior Secured Second Lien Debt - 46.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABG Intermediate Holdings 2 LLC, L+850, 1.00% LIBOR Floor, 5/27/2022(d)

 

3 Month LIBOR

 

Retail

 

 

18,666

 

 

18,340

 

 

18,059

 

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

 

3 Month LIBOR

 

Services: Business

 

 

16,030

 

 

15,426

 

 

15,629

 

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

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

10,344

 

 

10,189

 

 

9,568

 

American Residential Services LLC, L+750, 1.00% LIBOR Floor, 12/31/2021

 

3 Month LIBOR

 

Construction & Building

 

 

3,700

 

 

3,671

 

 

3,663

 

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

 

3 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

3,825

 

 

3,855

 

 

3,842

 

C.H.I. Overhead Doors, Inc., L+775, 1.00% LIBOR Floor, 7/31/2023

 

6 Month LIBOR

 

Construction & Building

 

 

7,791

 

 

7,740

 

 

7,558

 

Concenta Inc., L+800, 1.00% LIBOR Floor, 6/1/2023

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

5,714

 

 

5,662

 

 

5,657

 

Confie Seguros Holding II Co., L+900, 1.25% LIBOR Floor, 5/8/2019

 

1 Month LIBOR

 

Banking, Finance, Insurance & Real Estate

 

 

13,827

 

 

13,284

 

 

13,274

 

Deltek, Inc., L+850, 1.00% LIBOR Floor, 6/26/2023

 

3 Month LIBOR

 

Services: Business

 

 

12,445

 

 

12,259

 

 

12,585

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

9,500

 

 

9,455

 

 

8,882

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

20,000

 

 

19,734

 

 

19,200

 

Elements Behavioral Health, Inc., L+1200, 1.00% LIBOR Floor, 2/11/2020(n)

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

5,337

 

 

5,300

 

 

4,536

 

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

 

3 Month LIBOR

 

Environmental Industries

 

 

3,000

 

 

2,976

 

 

2,745

 

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

 

1 Month LIBOR

 

High Tech Industries

 

 

9,385

 

 

9,104

 

 

9,151

 

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

 

1 Month LIBOR

 

Services: Business

 

 

11,410

 

 

11,331

 

 

10,840

 

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

 

3 Month LIBOR

 

Telecommunications

 

 

9,500

 

 

9,489

 

 

7,921

 

Infiltrator Water Technologies, LLC, L+875, 1.00% LIBOR Floor, 5/26/2023

 

3 Month LIBOR

 

Construction & Building

 

 

13,917

 

 

13,724

 

 

13,812

 

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

 

3 Month LIBOR

 

Services: Business

 

 

7,860

 

 

7,781

 

 

7,624

 

Kronos Inc., L+850, 1.25% LIBOR Floor, 4/30/2020

 

3 Month LIBOR

 

High Tech Industries

 

 

3,738

 

 

3,725

 

 

3,791

 

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

 

3 Month LIBOR

 

Services: Business

 

 

9,830

 

 

9,822

 

 

9,584

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

2,273

 

 

2,265

 

 

2,228

 

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

 

3 Month LIBOR

 

Services: Business

 

 

3,380

 

 

3,324

 

 

2,974

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

14,909

 

 

14,443

 

 

13,928

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

15,000

 

 

14,815

 

 

12,750

 

MWI Holdings, Inc., L+925, 1.00% LIBOR Floor, 12/28/2020(h)

 

3 Month LIBOR

 

Construction & Building

 

 

10,000

 

 

9,750

 

 

9,900

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

16,245

 

 

16,018

 

 

15,757

 

Onex TSG Holdings II Corp., L+850, 1.00% LIBOR Floor, 7/31/2023

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

12,249

 

 

12,133

 

 

12,065

 

Patterson Medical Supply, Inc., L+775, 1.00% LIBOR Floor, 8/28/2023

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

13,500

 

 

13,375

 

 

13,297

 

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

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

3,469

 

 

3,480

 

 

3,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

5


CĪON Investment Corporation

Consolidated Schedule of Investments (unaudited) (continued)

June 30, 2016

(in thousands)

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Cost(m)

 

Fair

Value(c)

 

PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023

 

3 Month LIBOR

 

Chemicals, Plastics & Rubber

 

 

15,000

 

 

14,723

 

 

14,737

 

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

 

3 Month LIBOR

 

Energy: Electricity

 

 

12,500

 

 

12,344

 

 

12,438

 

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

 

3 Month LIBOR

 

Services: Business

 

 

10,000

 

 

9,837

 

 

9,550

 

RP Crown Parent, LLC, L+1000, 1.25% LIBOR Floor, 12/21/2019

 

3 Month LIBOR

 

High Tech Industries

 

 

5,000

 

 

4,771

 

 

4,169

 

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

 

3 Month LIBOR

 

Telecommunications

 

 

4,500

 

 

4,478

 

 

3,983

 

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

 

3 Month LIBOR

 

Hotel, Gaming & Leisure

 

 

6,142

 

 

6,142

 

 

5,911

 

Sterling Midco Holdings, Inc., L+775, 1.00% LIBOR Floor, 6/19/2023

 

3 Month LIBOR

 

Services: Business

 

 

10,462

 

 

10,430

 

 

10,096

 

STG-Fairway Acquisitions, Inc., L+925, 1.00% LIBOR Floor, 6/30/2023

 

3 Month LIBOR

 

Services: Business

 

 

10,000

 

 

9,860

 

 

9,500

 

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

 

3 Month LIBOR

 

Services: Business

 

 

15,000

 

 

14,745

 

 

14,700

 

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

 

None

 

Services: Business

 

 

6,175

 

 

6,010

 

 

6,229

 

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

 

6 Month LIBOR

 

Media: Broadcasting & Subscription

 

 

1,606

 

 

1,570

 

 

1,542

 

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

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

15,000

 

 

14,871

 

 

14,962

 

U.S. Renal Care, Inc., L+800, 1.00% LIBOR Floor, 12/29/2023

 

3 Month LIBOR

 

Healthcare & Pharmaceuticals

 

 

10,000

 

 

9,812

 

 

9,850

 

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

 

3 Month LIBOR

 

Services: Business

 

 

15,000

 

 

14,938

 

 

14,475

 

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

 

3 Month LIBOR

 

Automotive

 

 

16,000

 

 

15,877

 

 

14,360

 

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

 

1 Month LIBOR

 

Beverage, Food & Tobacco

 

 

12,823

 

 

12,524

 

 

11,413

Total Senior Secured Second Lien Debt

 

 

 

 

 

 

 

 

445,402

 

431,875

Collateralized Securities and Structured Products - Debt - 4.3%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,000

 

 

2,025

 

 

1,940

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

610

 

 

617

 

 

592

 

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

 

 

5,184

 

Deutsche Bank AG Frankfurt CRAFT 2015-2 Class Credit Linked Note, L+925, 1/16/2022(g)

 

3 Month LIBOR

 

Diversified Financials

 

 

15,500

 

 

15,500

 

 

14,725

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000

 

 

4,592

 

 

3,525

 

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

 

 

1,874

 

 

1,638

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

2,500

 

 

2,336

 

 

1,782

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

5,000

 

 

5,000

 

 

5,000

 

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

 

3 Month LIBOR

 

Diversified Financials

 

 

7,500

 

 

7,072

 

 

5,902

Total Collateralized Securities and Structured Products - Debt

 

 

 

 

 

 

 

44,416

 

 

40,288

Collateralized Securities and Structured Products - Equity - 3.7%

 

 

 

 

 

 

 

 

 

 

 

 

Anchorage Capital CLO 2012-1, Ltd. Subordinated Notes, 10.33% Estimated Yield, 1/13/2025(g)

 

(e)

 

Diversified Financials

 

 

4,000

 

 

3,007

 

 

2,372

 

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

 

(e)

 

Diversified Financials

 

 

9,000

 

 

5,126

 

 

3,749

 

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

 

(e)

 

Diversified Financials

 

 

2,000

 

 

1,380

 

 

1,124

 

Dryden XXIII Senior Loan Fund Subordinated Notes, 10.78% Estimated Yield, 7/17/2023(g)

 

(e)

 

Diversified Financials

 

 

9,250

 

 

5,293

 

 

3,518

 

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

 

(e)

 

Diversified Financials

 

 

4,000

 

 

2,559

 

 

2,114

 

Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, 12.80% Estimated Yield, 10/20/2025(g)

 

(e)

 

Diversified Financials

 

 

2,000

 

 

1,726

 

 

1,382

 

Ivy Hill Middle Market Credit Fund VIII, Ltd. Subordinated Loan, 10.35% Estimated Yield, 2/2/2026(d)(g)

 

(e)

 

Diversified Financials

 

 

10,000

 

 

10,000

 

 

9,980

 

Ivy Hill Middle Market Credit Fund IX, Ltd. Subordinated Notes, 11.42% Estimated Yield, 10/18/2025(g)

 

(e)

 

Diversified Financials

 

 

8,146

 

 

6,450

 

 

6,324

 

Ivy Hill Middle Market Credit Fund X, Ltd. Subordinated Notes, 14.00% Estimated Yield, 7/24/2027(g)

 

(e)

 

Diversified Financials

 

 

4,760

 

 

4,115

 

 

3,834

Total Collateralized Securities and Structured Products - Equity

 

 

 

 

 

 

 

39,656

 

 

34,397

Unsecured Debt -  3.0%

 

 

 

 

 

 

 

 

 

 

 

 

Alliant Holdings I, L.P., 8.25%, 8/1/2023

 

None

 

Banking, Finance, Insurance & Real Estate

 

 

7,255

 

 

7,239

 

 

7,182

 

American Tire Distributors, Inc., 10.25%, 3/1/2022

 

None

 

Automotive

 

 

5,000

 

 

4,861

 

 

4,403

 

NFP Corp., 9.00%, 7/15/2021

 

None

 

Banking, Finance, Insurance & Real Estate

 

 

9,000

 

 

8,961

 

 

8,691

 

Radio One, Inc., 9.25%, 2/15/2020

 

None

 

Media: Broadcasting & Subscription

 

 

9,000

 

 

8,554

 

 

7,999

Total Unsecured Debt

 

 

 

 

 

 

 

29,615

 

 

28,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

6


CĪON Investment Corporation

Consolidated Schedule of Investments (unaudited) (continued)

June 30, 2016

(in thousands)

Portfolio Company(a)

 

 

 

Industry

 

Number of Shares

 

Cost(m)

 

Fair

Value(c)

Equity - 0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southcross Holdings LP, Class A-II Units(l)

 

 

 

Energy: Oil & Gas

 

 

188

 

 

75

 

 

72

 

Southcross Holdings GP LLC, Units(l)

 

 

 

Energy: Oil & Gas

 

 

188

 

 

-

 

 

-

Total Equity

 

 

 

 

 

 

 

 

 

75

 

 

72

Short Term Investments - 3.5%(i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First American Treasury Obligations Fund, Class Z Shares, 0.23%(j)(k)

 

 

 

 

 

 

 

32,093

 

 

32,093

Total Short Term Investments

 

 

 

 

 

 

 

 

 

32,093

 

 

32,093

TOTAL INVESTMENTS - 79.0%

 

 

 

 

 

 

 

 

$

763,396

 

 

735,798

OTHER ASSETS IN EXCESS OF LIABILITIES - 21.0%

 

 

 

 

 

 

 

 

 

 

 

 

196,047

NET ASSETS - 100%

 

 

 

 

 

 

 

 

 

 

 

$

931,845

TOTAL RETURN SWAP - (3.0)%

 

 

 

 

 

Notional

Amount

 

 

 

 

Unrealized

Depreciation

 

Citibank TRS Facility (see Note 7)

 

 

 

 

 

$

689,708

 

 

 

 

$

(27,601)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

All of the Company’s 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. Except for CĪON / Capitala Senior Loan Fund I, LLC, or CCSLF, the Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio. See Note 6 for a description of the Company's investment in CCSLF. 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 0.47%, 0.65%, and 0.92%, respectively, as of June 30, 2016.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of June 30, 2016, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to June 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)

Fair value determined by the Company’s board of directors (see Note 9).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(d)

As discussed in Note 11, on June 30, 2016 and August 4, 2016, the Company was committed, upon the satisfaction of certain conditions, to fund an additional $1,119, $1,111, and $363 to ABG Intermediate Holdings 2 LLC, Ivy Hill Middle Market Credit Fund VIII, Ltd., 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 June 30, 2016. JFIN CLO 2014 Class E Notes were rated BB on S&P's credit scale as of June 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(g)

The investment or a portion thereof 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 the company’s total assets as defined under Section 55 of the 1940 Act. As of June 30, 2016, 89.5% 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, 86.9% of the Company’s total assets represented qualifying assets as of June 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(h)

Position or portion thereof unsettled as of June 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

7-day effective yield as of June 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(k)

Security or a portion thereof was pledged as collateral supporting the amounts outstanding, if any, under the revolving credit facility with East West Bank as of June 30, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(l)

Non-income producing security.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(m)

Represents amortized cost for debt securities and cost for equity investments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(n)

For the six months ended June 30, 2016, the following investments contain a PIK interest provision whereby the issuer has either the option or the obligation to make interest payments with the issuance of additional securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate

 

 

Interest Amount

 

 

Portfolio Company

 

Investment Type

 

Cash

 

PIK

 

All-in-Rate

 

Cash

 

PIK

 

Total

 

 

Elements Behavioral Health, Inc.

 

Senior Secured Second Lien Debt

 

 -    

 

13.00%

 

13.00%

 

$

-

 

$

333

 

$

333

 

 

Rimini Street, Inc.

 

Senior Secured First Lien Debt

 

12.00%

 

3.00%

 

15.00%

 

$

13

 

$

3

 

$

16

 

 

Smile Brands Group, Inc.

 

Senior Secured First Lien Debt

 

7.50%

 

1.50%

 

9.00%

 

$

156

 

$

31

 

$

187

 

 

Southcross Holdings Borrower LP(o)

 

Senior Secured First Lien Debt

 

3.50%

 

5.50%

 

9.00%

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(o)

Prior to June 30, 2016, the underlying loan was assigned to the Company and removed from the TRS.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

7


CĪON Investment Corporation

Consolidated Schedule of Investments

December 31, 2015

(in thousands)

  

Portfolio Company(a)

 

Index Rate(b)

 

Industry

 

Principal/Par

Amount

 

Amortized

Cost

 

Fair

Value(c)

Senior Secured First Lien Debt - 11.5%

 

 

 

 

 

 

 

 

 

 

 

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

 

3 Month LIBOR

 

High Tech Industries

 

$

2,962

 

$

2,957

 

$

2,933

 

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

 

3 Month LIBOR

 

High Tech Industries

 

 

8,583

 

 

8,548

 

 

8,497

 

F+W Media, Inc., L+725, 1.25% LIBOR Floor, 6/30/2019

 

3 Month LIBOR

 

Media: Diversified & Production

 

 

10,414

 

 

10,090

 

 

10,153

 

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

 

3 Month LIBOR

 

Beverage, Food & Tobacco

 

 

11,639

 

 

11,510

 

 

11,522

 

Infogroup Inc., L+550, 1.50% LIBOR Floor, 5/26/2018

 

3 Month LIBOR

 

Media: Advertising, Printing & Publishing

 

 

15,743

 

 

15,242

 

 

14,956

 

Intertain Group Ltd., L+650, 1.00% LIBOR Floor, 4/8/2022(g)

 

3 Month LIBOR