NEWS – SUMMARIZED BY PERPLEXITY

Extra Payment to LRFC Shareholders

Logan Ridge Finance Corporation (LRFC) announced today that its investment adviser, Mount Logan Management LLC, will finance an incremental cash payment of $0.47 per share to LRFC shareholders of record as of May 6, 2025. This extra payment is contingent upon the closing of LRFC’s merger with Portman Ridge Finance Corporation (PTMN). When combined with the previously announced tax distribution of at least $1,000,000 (or $0.38 per share) and the 1.5x PTMN shares to be received for each LRFC share, this ensures LRFC shareholders receive 100% of LRFC’s net asset value (NAV) as of March 31, 2025, adjusted for estimated transaction costs^[1].

Post-Acquisition Changes at PTMN

Following the successful merger, Portman Ridge Finance Corporation will rebrand as BCP Investment Corporation (BCIC) and begin trading under the new ticker symbol “BCIC” on Nasdaq. In 2026, the company will transition from quarterly to monthly base distributions, while maintaining the possibility of quarterly supplemental distributions equivalent to about 50% of incremental net investment income above the base monthly payout. Additionally, the company, its management, adviser, and affiliates plan to acquire up to 20% of the outstanding common stock over the next 24 months if the shares trade below 80% of NAV, with purchases starting no earlier than 60 days after the merger closes^[2].

Strategic Rationale and Shareholder Alignment

These changes are designed to enhance shareholder value and align interests with investors. The additional cash payment to LRFC shareholders addresses feedback to ensure they receive full value for their shares, while the rebranding and distribution changes at PTMN (soon BCIC) aim to increase liquidity and market appeal. The planned stock repurchases and potential tender offers further demonstrate management’s commitment to supporting the share price and maximizing long-term value for all shareholders^[1][2].

Footnotes
Source: LRFC and PTMN joint press release dated June 17, 2025.
The $0.47 per share payment is in addition to the previously announced tax distribution and share exchange ratio.
NAV as of March 31, 2025, is subject to adjustment for transaction costs.
Rebranding and ticker symbol change to “BCIC” are effective upon merger close; distribution policy changes take effect in 2026.
Share repurchase plan is contingent on market price conditions and will not commence until at least 60 days post-merger.

Top Off

The payment to be made by the external manager of LRFC of $0.47 per share to the shareholders of record should cost about $1.25mn.

This will bring the total amount to be paid out to LRFC shareholders – along with the shares – to $2.5mn, or $0.85 per share.

This last payment should be sufficient to quell any objection from LRFC shareholders or in any lawsuit that might have been brought about the fairness of the merger.

Next Up

Once the transaction is completed, the external manager of PTMN – Sierra Crest Investment Management LLC, an affiliate of BC Partners – has the challenge of contending with the recent weak performance at both entities.

Big One

In the IQ 2025, LRFC’s Net Asset Value Per Share dropped from $32.04 at year end 2024 to $29.66 – a (7.5%) reduction.

Revenues and recurring earnings were also sharply down:

Me Too

PTMN, too, had its financial challenges as well.

NAVPS fell (2.9%) for the most recent quarter and over (16%) over the past 12 months. Over 6 years, under the current manager, the BDC’s NAVPS has been cut in half.

As with LRFC, revenues and recurring earnings, fell off:

Credit Woes

Moreover, the combined BDCs have to contend with an estimated $40mn at cost of non-performing loans. (LRFC has 3 investments on non-accrual and PTMN 6). The total cost of the two BDC portfolios will be roughly $580mn.

Post Acquisition Changes

However, changing the merged BDC’s name and ticker and switching to a monthly dividend versus a quarterly payout won’t by themselves improve financial performance.

Nor will the complex arrangement by which the “Company, along with its management, its adviser and their affiliates intend to acquire up to 20% of the Company’s outstanding common stock over the next 24 months”.

A new identity; dividend frequency changes and share purchases are all tried and true methods for boosting BDC stock prices at any time and have been employed by many market participants.

However, the BDC’s basic strategy of focusing on companies in the lower and core middle market (EBITDA $10mn-$50mn) remains unchanged as does the external management team and the Board of PTMN.

A Penny Saved

The main variables that should benefit PTMN/BCIC going forward are the $2.8mn of estimated annual costs savings – some permanent and others temporary fee waivers – contemplated in the merger:

Outlook

The 4 BDC analysts covering PTMN project the BDC – once the merger is complete – will earn recurring earnings of $0.52 per share in the IIIQ 2025, as compared to $0.47 in the IQ 2025 pre-combination.

VIEWS

Reactive

PTMN’s management has had to take these measures because the market has hammered the stock in recent weeks.

As this chart shows, PTMN has lost a third of its market value since February 27 of this year:

Ditto for LRFC’s own stock price.

At time of writing on June 17, 2025, LRFC is trading at 56% of its NAVPS and PTMN 62% – almost the worst performance by this metric of any BDC.

Not Optimistic

However – and this is our unvarnished opinion – these steps taken (including the fee waivers) are unlikely to be enough to arrest the decline in PTMN’s NAVPS, earnings and dividend (recently reduced to 0.47 a share from $0.54).

First of all, in a world of ever bigger BDCs the merger still leaves PTMN under-sized compared to most of its peers.

Second, there appears to be no change in the current strategy or management team, neither of which has performed too well in recent years.

Third, a good portion of income generated is in Pay In Kind Form. Management argues that in most cases that was the plan all along and the PIK numbers were artificially high most recently.

Nonetheless, as much as 75% – but probably more like 50% – of PTMN’s recent NII has been received as “paper”.

With That Said

There may be a short time price bounce from these announced measures but with the continuing question marks about performance fundamentals any enthusiasm is likely to fade.

Of course, BC Partners could surprise us all by materially improving the new BDC’s performance – including selling off excess equity stakes to boost earnings – but that will take multiple quarters to show up, even if achieved.