8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 15, 2023 (March 9, 2023)

Portman Ridge Finance Corporation

(Exact name of registrant as specified in its charter)

Delaware	814-00735	20-5951150
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

650 Madison Avenue, 23rd Floor New York, New York	10022
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code): (212) 891-2880

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	PTMN	The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 7.01 Regulation FD Disclosure.

On March 9, 2023, Portman Ridge Finance Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended December 31, 2022. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Additionally, on March 10, 2023, the Company made available on its website, http://www.portmanridge.com/home, a supplemental investor presentation with respect to the fourth quarter 2022 earnings release. A copy of the investor presentation is being furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

The information disclosed under this Item 7.01, including Exhibits 99.1 and 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number	Description
99.1	Press Release, dated March 9, 2023
99.2	Investor Presentation, dated March 10, 2023
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PORTMAN RIDGE FINANCE CORPORATION
By:	/s/ Jason T. Roos
Name:	Jason T. Roos
Title:	Chief Financial Officer

Date: March 15, 2023

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Portman Ridge Finance Corporation

Announces Fourth Quarter and Full Year 2022 Financial Results

Increased Core Investment Income, Further Diversified Portfolio, Reduced Non-Accruals, Lowered Cost of Capital and Continued Share Repurchase Program in Full Year 2022

Increases Quarterly Distribution to $0.68 Per Share in the First Quarter of 2023, Marking the Second Consecutive Quarter of an Increased Stockholder Distribution

NEW YORK, March 9, 2023 – Portman Ridge Finance Corporation (Nasdaq: PTMN) (the “Company” or “Portman Ridge”) announced today its financial results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Highlights

• Total investment income for the fourth quarter of 2022 was $18.6 million as compared to $17.3 million for the fourth quarter of 2021.

• Core investment income¹, excluding the impact of purchase price accounting, for the fourth quarter of 2022 was $17.7 million as compared to $17.3 million for the fourth quarter of 2021.

• Net investment income (“NII”) for the fourth quarter of 2022 was $7.1 million ($0.74 per share).

• Net asset value (“NAV”) for the fourth quarter of 2022 was $232.1 million ($24.23 per share).

• Weighted average contractual interest rate on our interest earning Debt Securities Portfolio as of December 31, 2022 and December 31, 2021 was approximately 11.1% and 8.1%, respectively.

• Net deployment of $6.3 million, including new fundings of approximately $22.8 million, offset by approximately $16.5 million of repayments. Approximately 82.0% of new fundings were deployed in First Lien Term Loans.

• Total shares repurchased in open market transactions under the Renewed Stock Repurchase Program during the quarter ended December 31, 2022 were 37,500 at an aggregate cost of approximately $0.8 million.

• Draw of $14.3 million on the $25 million unfunded Class A-1R-R Notes from the 2018-2 Secured Notes to maximize the remaining capacity of the Notes.

Full Year 2022 Milestones

• Restructured and refinanced the Revolving Credit Facility with JPMorgan Chase Bank during the second quarter of 2022 - the agreement placed three-month SOFR as the benchmark interest rate and reduced the applicable margin to 2.80% per annum from 2.85% per annum. Additionally, the Company extended the reinvestment period and scheduled termination date to April 29, 2025 and April 29, 2026, respectively.

¹  Core investment income represents reported total investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers. Portman Ridge believes presenting core investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance.

• Total shares repurchased in open market transactions under the Renewed Stock Repurchase Program during the year ended December 31, 2022 were 167,017 at an aggregate cost of approximately $3.8 million. This compares to 75,377 shares repurchased during the year ended December 31, 2021 at an aggregate cost of approximately $1.8 million.

Subsequent Events

• Increased stockholder distribution to $0.68 per share for the first quarter of 2023, payable on March 31, 2023 to stockholders of record at the close of business on March 20, 2023. This is a $0.01 per share distribution increase as compared to the fourth quarter of 2022 and a $0.05 per share distribution increase as compared to the first quarter of 2022. This also marks the second consecutive quarter of a stockholder distribution increase and the fourth stockholder distribution increase over the last six quarters.

Management Commentary

• Ted Goldthorpe, Chief Executive Officer of Portman Ridge, stated, “We are pleased to report another strong quarter of earnings growth despite operating under difficult market conditions, a challenging economic environment, rising interest rates, and market volatility. Our core investment income in 2022 increased by $0.8 million in comparison to 2021 as we continue to see the impact that rising rates have in generating incremental revenue from our sourced investments. Additionally, our amended and extended credit facility with JPMorgan Chase has reduced our cost of capital, helping further reduce our expenses relative to our asset base. As we continue to execute our prudent investment strategy in 2023, we believe we are well-positioned to take advantage of opportunities that arise from the current market environment by continuing to be selective and resourceful in our investment decision-making. We are also anticipating incremental earnings momentum from the lag in our realized SOFR rates across our portfolio to come through over the next few quarters. Overall, our strong performance both this past quarter and this recently completed fiscal year coupled with our expectations of strong performance in the quarters ahead has allowed us to raise our dividend for the second straight quarter to $0.68 per share and we believe that we are situated to continue delivering attractive returns to our shareholders in 2023.”

Selected Financial Highlights

• Total investment income for the year ended 2022 was $69.6 million, of which $55.8 million was attributable to interest income from the Debt Securities Portfolio. This compares to total investment income of $80.1 million for the year ended 2021, of which $63.8 million was attributable to interest income from the Debt Securities Portfolio.

• Core investment income for full year 2022, excluding the impact of purchase price accounting, was $64.2 million, an increase of $0.8 million as compared to core investment income of $63.4 million for full year 2021.

• Net investment income (“NII”) for full year 2022 was $28.9 million ($3.00 per share) as compared to $42.0 million ($4.92 per share) for full year 2021. The year-over-year decrease was largely to do a reduction in non-cash amortization.

• Net asset value (“NAV”) for full year 2022 was $232.1 million ($24.23 per share) as compared to $280.1 million ($28.88 per share) for full year 2021; the decline was driven by mark-to-market movements.

• Non-accruals on debt investments, as of December 31, 2022, remained relatively low at four debt investments, which compares to three investments on non-accrual status as of both September 30, 2022 and June 30, 2022 and seven investments on non-accrual status as of December 31, 2021. As of December 31, 2022, debt investments on non-accrual status represented 0.0% and 0.6% of the Company’s investment portfolio at fair value and amortized cost, respectively. This compares to debt investments on non-accrual status representing 0.5% and 2.8% of the Company’s investment portfolio at fair value and amortized cost, respectively, as of December 31, 2021.

• Total investments at fair value as of December 31, 2022 was $576.5 million; when excluding CLO funds, Joint Ventures, and short-term investments, these investments are spread across 31 different industries and 119 different entities with an average par balance per entity of approximately $3.3 million. This compares to $550.0 million of total investments at fair value (excluding derivatives) as of December 31, 2021, comprised of investments in 113 different entities (excluding CLO funds, Joint Ventures, and short-term investments).

• Par value of outstanding borrowings, as of December 31, 2022, was $378.2 million with an asset coverage ratio of total assets to total borrowings of 160%. On a net basis, leverage as of December 31, 2022 was 1.49x² compared to net leverage of 1.01x² as of December 31, 2021.

Results of Operations

Operating results for the years ended December 31, 2022 and 2021 were as follows:

	For the Year Ended December 31,
($ in thousands)	2022			2021
Total investment income	$	69,614		$	80,086
Total expenses		40,724			38,082
Net Investment Income		28,890			42,004
Net realized gain (loss) on investments		(31,185	)		(4,258	)
Net unrealized gain (loss) on investments		(17,915	)		(8,443	)
Tax (provision) benefit on realized and unrealized (gains) losses on investments		(786	)		(1,442	)
Net realized and unrealized appreciation (depreciation) on investments, net of taxes		(49,886	)		(14,143	)
Realized gains (losses) on extinguishments of debt		—			(1,835	)
Net Increase (Decrease) In Net Assets Resulting from Operations	$	(20,996	)	$	26,026
Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share(3):
Basic and Diluted:	$	(2.18	)	$	3.05
Net Investment Income Per Common Share(3):
Basic and Diluted:	$	3.00		$	4.92
Weighted Average Shares of Common Stock Outstanding—Basic and Diluted(3)		9,634,468			8,536,079

²  Net leverage is calculated as the ratio between (A) debt, excluding unamortized debt issuance costs, less available cash and cash equivalents, and restricted cash and (B) NAV. Portman Ridge believes presenting a net leverage ratio is useful and appropriate supplemental disclosure because it reflects the Company’s financial condition net of $33.1 million and $68.3 million of cash and cash equivalents and restricted cash for the years ended December 31, 2022 and December 31, 2021, respectively. However, the net leverage ratio is a non-U.S. GAAP measure and should not be considered as a replacement for the regulatory asset coverage ratio and other similar information presented in accordance with U.S. GAAP. Instead, the net leverage ratio should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial condition.

³  The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021. As a result, the share and per share amounts have been adjusted retroactively to reflect the split for all periods prior to August 26, 2021.

Investment Income

The composition of our investment income for the years ended December 31, 2022 and 2021 was as follows:

	For the Year Ended December 31,
($ in thousands)	2022			2021
Interest from investments in debt excluding accretion	$	44,771		$	42,787
Purchase discount accounting		5,425			16,644
PIK Investment Income		5,608			4,345
CLO Income		4,044			4,754
JV Income		8,591			9,178
Service Fees		1,175			2,378
Investment Income	$	69,614		$	80,086
Less: Purchase discount accounting	$	(5,425	)	$	(16,644	)
Core Investment Income	$	64,189		$	63,442

Fair Value of Investments

The composition of our investment portfolio as of December 31, 2022 and December 31, 2021 at cost and fair value was as follows:

($ in thousands)	December 31, 2022							December 31, 2021
Security Type	Cost/Amortized Cost		Fair Value		%(4)			Cost/Amortized Cost		Fair Value			%(4)
Senior Secured Loan	$	435,856	$	418,722		73		$	361,556	$	364,701			66
Junior Secured Loan		65,776		56,400		10			82,996		70,549			13
Senior Unsecured Bond		416		43		0			416		43			0
Equity Securities		28,848		21,905		4			26,680		22,586			4
CLO Fund Securities		34,649		20,453		3			51,561		31,632			6
Asset Manager Affiliates(5)		17,791		—		—			17,791		—			—
Joint Ventures		68,850		58,955		10			64,365		60,474			11
Derivatives		31		—		—			31		(2,412	)		—
Total	$	652,217	$	576,478		100	%	$	605,396	$	547,573			100	%

⁴  Represents percentage of total portfolio at fair value

⁵  Represents the equity investment in the Asset Manager Affiliates

Interest Rate Risk

As of December 31, 2022, the Company had $378.2 million (par value) of borrowings outstanding with a weighted average interest rate of 6.1%, of which $108.0 million par value had a fixed rate and $270.2 million par value had a floating rate. This balance was comprised of $92.0 million of outstanding borrowings under the Senior Secured Revolving Credit Facility, $178.2 million of 2018-2 Secured Notes due 2029, and $108.0 million of 4.875% Notes due 2026.

As of December 31, 2022 and December 31, 2021, the fair value of investments and cash were as follows:

($ in thousands)	For the Year Ended, December 31,
Security Type	December 31, 2022		December 31, 2021
Cash and cash equivalents	$	5,148	$	28,919
Restricted Cash		27,983		39,421
Senior Secured Loan		418,722		364,701
Junior Secured Loan		56,400		70,549
Senior Unsecured Bond		43		43
Equity Securities		21,905		22,586
CLO Fund Securities		20,453		31,632
Asset Manager Affiliates		—		—
Joint Ventures		58,955		60,474
Derivatives		—		(2,412	)
Total	$	609,609	$	615,913

As of December 31, 2022, the Company had unrestricted cash of $5.1 million and restricted cash of $28.0 million. This compares to unrestricted cash of $28.9 million and restricted cash of $39.4 million as of December 31, 2021. As of December 31, 2022, the Company had $23.0 million of available borrowing capacity under the Senior Secured Revolving Credit Facility, and no remaining borrowing capacity under the 2018-2 Secured Notes.

Interest Rate Volatility

The Company’s investment income is affected by fluctuations in various interest rates, including LIBOR and prime rates.

As of December 31, 2022, approximately 90.0% of our Debt Securities Portfolio at par value were either floating rate with a spread to an interest rate index such as LIBOR or the prime rate. 78.8% of these floating rate loans contain LIBOR floors ranging between 0.50% and 2.00%. We generally expect that future portfolio investments will predominately be floating rate investments.

In periods of rising or lowering interest rates, the cost of the portion of debt associated with the 4.875% Notes Due 2026 would remain the same, given that this debt is at a fixed rate, while the interest rate on borrowings under the Revolving Credit Facility would fluctuate with changes in interest rates.

Generally, the Company would expect that an increase in the base rate index for floating rate investment assets would increase gross investment income and a decrease in the base rate index for such assets would decrease gross investment income (in either case, such increase/decrease may be limited by interest rate floors/minimums for certain investment assets).

				Impact on net investment income from a change in interest rates at:
($ in thousands)	1%			2%			3%
Increase in interest rate	$	1,963		$	3,927		$	5,890
Decrease in interest rate	$	(1,963	)	$	(3,927	)	$	(5,625	)

Conference Call and Webcast

We will hold a conference call on Friday, March 10, 2023, at 9:00 am Eastern Time to discuss our fourth quarter and full year 2022 financial results. To access the call, stockholders, prospective stockholders and analysts should dial (800) 715-9871 approximately 10 minutes prior to the start of the conference call and use the conference ID 9307995.

A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on the Company’s website www.portmanridge.com in the Investor Relations section under Events and Presentations. The webcast can also be accessed by clicking the following link: https://edge.media-server.com/mmc/p/kad4ywz6. The online archive of the webcast will be available on the Company’s website shortly after the call.

About Portman Ridge Finance Corporation

Portman Ridge Finance Corporation (Nasdaq: PTMN) is a publicly traded, externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Portman Ridge’s middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies. Portman Ridge’s investment activities are managed by its investment adviser, Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors, LP.

Portman Ridge’s filings with the Securities and Exchange Commission (the “SEC”), earnings releases, press releases and other financial, operational and governance information are available on the Company’s website at www.portmanridge.com.

About BC Partners Advisors L.P. and BC Partners Credit

BC Partners is a leading international investment firm with over €40 billion of assets under management in private equity, private credit and real estate strategies. Established in 1986, BC Partners has played an active role in developing the European buyout market for three decades. Today, BC Partners executives operate across markets as an integrated team through the firm’s offices in North America and Europe. Since inception, BC Partners has completed 117 private equity investments in companies with a total enterprise value of €149 billion and is currently investing its eleventh private equity fund. For more information, please visit www.bcpartners.com.

BC Partners Credit was launched in February 2017 and has pursued a strategy focused on identifying attractive credit opportunities in any market environment and across sectors, leveraging the deal sourcing and infrastructure made available from BC Partners.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. The matters discussed in this press release, as well as in future oral and written statements by management of Portman Ridge Finance Corporation, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.

Forward-looking statements relate to future events or our future financial performance and include, but are not limited to, projected financial performance, expected development of the business, plans and expectations about future investments and the future liquidity of the Company. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “outlook”, “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.

Important assumptions include our ability to originate new investments, and achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation that such plans, estimates, expectations or objectives will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) uncertainty of the expected financial performance of the Company; (2) expected synergies and savings associated with. merger transactions effectuated by the Company; (3) the ability of the Company and/or its adviser to implement its business strategy; (4) evolving legal, regulatory and tax regimes; (5) changes in general economic and/or industry specific conditions, including but not limited to the impact of inflation; (6) the impact of increased competition; (7) business prospects and the prospects of the Company’s portfolio companies; (8) contractual arrangements with third parties; (9) any future financings by the Company; (10) the ability of Sierra Crest Investment Management LLC to attract and retain highly talented professionals; (11) the Company’s ability to fund any unfunded commitments; (12) any future distributions by the Company; (13) changes in regional or national economic conditions, including but not limited to the impact of the COVID-19 pandemic, and their impact on the industries in which we invest; and(14) other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the SEC. The forward-looking statements should be read in conjunction with the risks and uncertainties discussed in the Company’s filings with the SEC, including the Company’s most recent Form 10-K and other SEC filings. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the SEC.

Contacts:

Portman Ridge Finance Corporation

650 Madison Avenue, 23rd floor

New York, NY 10022

info@portmanridge.com

Jason Roos

Jason.Roos@bcpartners.com

(212) 891-2880

The Equity Group Inc.

Lena Cati

lcati@equityny.com

(212) 836-9611

Val Ferraro

vferraro@equityny.com

(212) 836-9633

PORTMAN RIDGE FINANCE CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	December 31, 2022			December 31, 2021
ASSETS
Investments at fair value:
Non-controlled/non-affiliated investments (amortized cost: 2022 - $518,699; 2021 - $479,153)	$	483,698		$	452,482
Non-controlled affiliated investments (amortized cost: 2022 - $75,196; 2021 - $74,082)		73,827			74,142
Controlled affiliated investments (cost: 2022 - $58,322; 2021 - $52,130)		18,953			23,361
Total Investments at Fair Value (cost: 2022 - $652,217; 2021 - $605,365)	$	576,478		$	549,985
Cash and cash equivalents		5,148			28,919
Restricted cash		27,983			39,421
Interest receivable		4,828			5,514
Receivable for unsettled trades		1,395			20,193
Due from affiliates		930			507
Other assets		2,724			3,762
Total Assets	$	619,486		$	648,301
LIABILITIES
2018-2 Secured Notes (net of discount of: 2022 - $1,226; 2021 - $1,403)	$	176,937		$	162,460
4.875% Notes Due 2026 (net of discount of: 2022 - $1,704; 2021 - $2,157; net of deferred financing costs of: 2022 - $818; 2021 - $951)		105,478			104,892
Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of deferred financing costs of: 2022 - $1,107; 2021 - $732)		90,893			79,839
Derivative liabilities (cost: 2021 - $31)		—			2,412
Payable for unsettled trades		1,276			5,397
Accounts payable, accrued expenses and other liabilities		4,614			4,819
Accrued interest payable		3,722			2,020
Due to affiliates		900			1,799
Management and incentive fees payable		3,543			4,541
Total Liabilities	$	387,363		$	368,179
NET ASSETS
Common stock, par value $0.01 per share, 20,000,000 common shares authorized; 9,916,856 issued, and 9,581,536 outstanding at December 31, 2022, and 9,867,998 issued, and 9,699,695 outstanding at December 31, 2021	$	96		$	97
Capital in excess of par value		736,784			733,095
Total distributable (loss) earnings		(504,757	)		(453,070	)
Total Net Assets	$	232,123		$	280,122
Total Liabilities and Net Assets	$	619,486		$	648,301
Net Asset Value Per Common Share (1)	$	24.23		$	28.88

(1) The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented.

PORTMAN RIDGE FINANCE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

	For the Year Ended December 31,
	2022			2021			2020
INVESTMENT INCOME
Interest income:
Non-controlled/non-affiliated investments	$	51,090		$	60,236		$	24,335
Non-controlled affiliated investments		3,150			4,775			7,416
Total interest income	$	54,240		$	65,011		$	31,751
Payment-in-kind income:
Non-controlled/non-affiliated investments	$	4,950		$	3,355		$	3,218
Non-controlled affiliated investments		477			166			—
Controlled affiliated investments		181			—			—
Total payment-in-kind income	$	5,608		$	3,521		$	3,218
Dividend income:
Non-controlled affiliated investments	$	4,450		$	4,006		$	2,649
Controlled affiliated investments		4,141			5,170			4,263
Total dividend income	$	8,591		$	9,176		$	6,912
Fees and other income:
Non-controlled/non-affiliated investments	$	1,135		$	4,006		$	2,649
Non-controlled affiliated investments		40			5,170			4,263
Total fees and other income	$	1,175		$	9,176		$	6,912
Interest from cash and time deposits	$	—		$	—		$	15
Total investment income	$	69,614		$	80,086		$	42,764
EXPENSES
Management fees	$	8,349		$	7,916		$	4,579
Performance-based incentive fees		6,126			7,075			4,858
Interest and amortization of debt issuance costs		17,701			13,644			10,284
Professional fees		3,400			3,660			2,836
Administrative services expense		3,364			3,219			1,941
Other general and administrative expenses		1,784			2,568			1,823
Total expenses	$	40,724		$	38,082		$	26,321
Management and performance-based incentive fees waived	$	—		$	—		$	(557	)
Net expenses	$	40,724		$	38,082		$	25,764
NET INVESTMENT INCOME	$	28,890		$	42,004		$	17,000
Realized And Unrealized Gains (Losses) On Investments:
Net realized gains (losses) from investment transactions
Non-controlled/non-affiliated investments	$	(28,893	)	$	(4,397	)	$	7,120
Non-controlled affiliated investments		(197	)		139			485
Derivatives		(2,095	)		—			—
Net realized gain (loss) on investments	$	(31,185	)	$	(4,258	)	$	7,605
Net change in unrealized appreciation (depreciation) on:
Non-controlled/non-affiliated investments	$	(8,298	)	$	(8,047	)	$	21,366
Non-controlled affiliated investments		(1,428	)		282			(11,723	)
Controlled affiliated investments		(10,601	)		625			(1,755	)
Derivatives		2,412			(1,303	)		(1,075	)
Net unrealized gain (loss) on investments	$	(17,915	)	$	(8,443	)	$	6,813
Tax (provision) benefit on realized and unrealized (gains) losses on investments	$	(786	)		(1,442	)		—
Net realized and unrealized appreciation (depreciation) on investments, net of taxes	$	(49,886	)		(14,143	)		14,418
Realized gains (losses) on extinguishments of debt	$	—			(1,835	)		155
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(20,996	)	$	26,026		$	31,573
Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share (1):
Basic and Diluted:	$	(2.18	)	$	3.05		$	6.32
Net Investment Income Per Common Share (1):
Basic and Diluted:	$	3.00		$	4.92		$	3.40
Weighted Average Shares of Common Stock Outstanding—Basic and Diluted (1)		9,634,468			8,536,079			4,998,759

(1) The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the weighted average shares outstanding and per share values have been adjusted retroactively to reflect the split for all periods presented.

EX-99.2

Q4 and Full Year 2022 Earnings Presentation March 10, 2023 Exhibit 99.2

Important Information Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements. The matters discussed in this presentation, as well as in future oral and written statements by management of Portman Ridge Finance Corporation (“PTMN”, “Portman Ridge” or the “Company”), that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance and include, but are not limited to, projected financial performance, expected development of the business, plans and expectations about future investments, our contractual arrangements and relationships with third parties, the ability of our portfolio companies to achieve their objectives, the ability of the Company’s investment adviser to attract and retain highly talented professionals, our ability to maintain our qualification as a regulated investment company and as a business development company, our compliance with covenants under our borrowing arrangements, and the future liquidity of the Company. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," “outlook”, "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Forward-looking statements are subject to change at any time based upon economic, market or other conditions, including with respect to the impact of the COVID-19 pandemic and its effects on the Company and its portfolio companies’ results of operations and financial condition. More information on these risks and other potential factors that could affect the Company’s financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein, is included in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed quarterly report on Form 10-Q and annual report on Form 10-K, as well as in subsequent filings. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this presentation should not be regarded as a representation by us that our plans and objectives will be achieved. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the SEC.

Core investment income represents reported total investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers. Portman Ridge believes presenting core investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. Net leverage is calculated as the ratio between (A) debt, excluding unamortized debt issuance costs, less available cash and cash equivalents, and restricted cash and (B) NAV. Portman Ridge believes presenting a net leverage ratio is useful and appropriate supplemental disclosure because it reflects the Company’s financial condition net of $33.1 million and $68.3 million of cash and cash equivalents and restricted cash for the years ended December 31, 2022 and December 31, 2021, respectively. However, the net leverage ratio is a non-U.S. GAAP measure and should not be considered as a replacement for the regulatory asset coverage ratio and other similar information presented in accordance with U.S. GAAP. Instead, the net leverage ratio should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial condition. Full Year Highlights Full Year 2022 Highlights Total investment income for the year ended 2022 was $69.6 million, of which $55.8 million was attributable to interest income from the Debt Securities Portfolio. This compares to total investment income of $80.1 million for the year ended 2021, of which $63.8 million was attributable to interest income from the Debt Securities Portfolio. Core total investment income(1) for full year 2022, excluding the impact of purchase price accounting, was $64.2 million, an increase of $0.8 million as compared to core investment income of $63.4 million for full year 2021. Net investment income (“NII”) for full year 2022 was $28.9 million ($3.00 per share) as compared to $42.0 million ($4.92 per share) for full year 2021. The year-over-year decrease was largely to do a reduction in non-cash amortization. Net asset value (“NAV”) for full year 2022 was $232.1 million ($24.23 per share) as compared to $280.1 million ($28.88 per share) for full year 2021; the decline was driven by mark-to-market movements. Non-accruals on debt investments, as of December 31, 2022, remained relatively low at four debt investments as compared to seven debt investments on non-accrual status as of December 31, 2021. As of December 31, 2022, debt investments on non-accrual status represented 0.0% and 0.6% of the Company’s investment portfolio at fair value and amortized cost, respectively. This compares to debt investments on non-accrual status representing 0.5% and 2.8% of the Company’s investment portfolio at fair value and amortized cost, respectively, as of December 31, 2021. Total investments at fair value as of December 31, 2022 was $576.5 million; when excluding CLO funds, Joint Ventures, and short-term investments, these investments are spread across 31 different industries and 119 different entities with an average par balance per entity of approximately $3.3 million. This compares to $550.0 million of total investments at fair value (excluding derivatives) as of December 31, 2021, comprised of investments in 113 different entities (excluding CLO funds, Joint Ventures, and short-term investments). Par value of outstanding borrowings, as of December 31, 2022, was $378.2 million with an asset coverage ratio of total assets to total borrowings of 160%. On a net basis, leverage as of December 31, 2022 was 1.49x(2) compared to net leverage of 1.01x(2) as of December 31, 2021. Stockholder distribution increased from $0.63 in March 2022 to $0.68 in March 2023. The latest increase to $0.68 represents two consecutive quarters of stockholder distribution increases and the fourth stockholder distribution increase over the last six quarters. Total shares repurchased in open market transactions under the Renewed Stock Repurchase Program during the year ended December 31, 2022 were 167,017 at an aggregate cost of approximately $3.8 million. This compares to 75,377 shares repurchased during the year ended December 31, 2021 at an aggregate cost of approximately $1.8 million. Restructured and refinanced the Revolving Credit Facility with JPMorgan Chase Bank during the second quarter of 2022 - the agreement placed three-month SOFR as the benchmark interest rate and reduced the applicable margin to 2.80% per annum from 2.85% per annum. Additionally, the Company extended the reinvestment period and scheduled termination date to April 29, 2025 and April 29, 2026, respectively. Draw of $14.3 million on the $25 million unfunded Class A-1R-R Notes from the 2018-2 Secured Notes to maximize the capacity of the Notes.

Financial Highlights For the year ended December 31, 2020, $557 thousand of incentive fees were waived due to the Externalization Agreement. The 2020 Performance-based incentive fees shown above are net of consideration of this waiver. Core net investment income represents reported total net investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the GARS and HCAP mergers, while also considering the impact of accretion from these mergers on expenses, such as incentive fees. Portman Ridge believes presenting core net investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. Core net investment income figures for 2021 have been adjusted from the figures included in the Company’s prior presentations in order to conform with presentation of 2022 Core net investment income figures herein; 2020 figures remain unchanged to due immateriality behind adjusted methodology. See slide 8 for a presentation of Reported net investment income in comparison to Core net investment income and a reconciliation thereof.

3 month LIBOR per Bloomberg as of February 28, 2023. As of December 31, 2022, approximately 67% of our floating rate assets were on LIBOR contract. Shown below, those contracts have taken a significant amount of time to reset and still remain below the prevailing 3 month LIBOR rate. Rising Rates (1)

Over the last three years, Portman has experienced an average of $1.5mm in income related to repayment / prepayment activity as compared to the current quarter of $0.3mm. Limited Repayment Activity

All per share information assumes the ending 12/31/2022 share count, including Q4 2022. The below analysis begins with Q4 2022 net investment income and assumes no other changes to the portfolio (including accrual status of each portfolio company), investment income, professional expenses or administrative expenses other than the following: Current benchmarks assumes that all assets and liabilities that have LIBOR based contracts are reset at 4.97% plus applicable spreads and all assets and liabilities that have SOFR based contracts are reset at 4.89% plus applicable spreads beginning on January 1, 2023. NII Per Share Bridge

Core Earning Analysis Core net investment income represents reported total net investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the GARS and HCAP mergers, while also considering the impact of accretion from these mergers on expenses. Portman Ridge believes presenting core net investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. Core net investment income figures for 2021 have been adjusted from the figures included in the Company's prior presentations in order to conform with presentation of 2022 Core net investment income figures herein; 2020 figures remain unchanged due to immateriality behind adjusted methodology.

Net Asset Value Rollforward Excluding gains from merger activity. Impact includes merger transaction costs. Includes the transaction purchase of portfolio assets from JMP Group LLC on October 26, 2021 Net leverage is calculated as the ratio between (A) debt, excluding unamortized debt issuance costs, less available cash and cash equivalents, and restricted cash and (B) NAV. Portman Ridge believes presenting a net leverage ratio is useful and appropriate supplemental disclosure because it reflects the Company’s financial condition net of $33.1 million, $39.1 million, $44.0 million, $83.6 million and $68.3 million of cash and cash equivalents and restricted cash for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively. However, the net leverage ratio is a non-U.S. GAAP measure and should not be considered as a replacement for the regulatory asset coverage ratio and other similar information presented in accordance with U.S. GAAP. Instead, the net leverage ratio should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial condition.

As of December 31, 2022. Figures shown do not include short term investments, CLO holdings, F3C JV or Series A-Great Lakes Funding II LLC, and derivatives. Shown as % of debt and equity investments at fair market value. Current Portfolio Profile(1) Diversified Portfolio of Assets Diversification by Borrower(2) Asset Mix(2) Industry Diversification(2) 119 Debt + Equity Portfolio Investee Companies $3.3mm / 1% Average Debt Position Size U.S Centric Investments: Nearly 100% US-Based Companies Focus on Non-Cyclical Industries with High FCF Generation Credit quality has been stable to improving during the rotation period Top 5 Borrowers, 15.9%

For comparability purposes, portfolio trends metrics exclude short-term investments and derivatives. Excludes select investments where the metric is not applicable, appropriate, data is unavailable for the underlying statistic analyzed Includes assets purchased from affiliate of HCAP’s former manager in a separate transaction. CLO holdings and Joint Ventures are excluded from investment count. Excluding non-accrual and partial non-accrual investments and excluding CLO holdings and Joint Ventures. Portfolio Trends(1)(2)

Based on FMV. As of December 31, 2022, four of the Company’s debt investments were on non-accrual status and represented 0.0% and 0.6% of the Company’s investment portfolio at fair value and amortized cost, respectively Credit Quality

At Fair Value. Does not include activity in short-term investments and derivatives. Portfolio Composition (1)

M&A Value Realization Our track record demonstrates BC Partners’ ability to efficiently realize the value of legacy portfolios acquired while rotating into BC Partners’ sourced assets We remain in the process of implementing the same strategy with the acquired and fully redeemed HCAP assets but were successful in several monetizations during the quarter OHAI GARS HCAP

Appendix

The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented. Balance Sheet

The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the weighted average shares outstanding and per share values have been adjusted retroactively to reflect the split for all periods presented. Income Statement

Cash and Cash Equivalents Unrestricted cash and cash equivalents totaled $5.1 million as of December 31, 2022 Restricted cash of $28.0 million as of December 31, 2022 Debt Summary As of December 31, 2022, par value of outstanding borrowings was $378.2 million; there was $23.0 million of available borrowing capacity under the Senior Secured Revolving Credit Facility and no available borrowing capacity under the 2018-2 Secured Notes. On November 18, 2022, the Company drew $14.3 million on the $25 million unfunded Class A-1R-R Notes from the 2018-2 Secured Notes to maximize the capacity of the Notes. The Reinvestment Period ended on November 20, 2022 and the remaining amount of the unfunded Class A-1R-R Notes terminated on this date. On April 29, 2022, the Company refinanced its Revolving Credit Facility with JP Morgan Chase as administrative agent. The amended agreement places three-month SOFR as the benchmark interest rate and reduces the applicable margin to 2.80% per annum from 2.85% per annum. Other amendments include the extension of the reinvestment period and scheduled termination date to April 29, 2025, and April 29, 2026, respectively. Corporate Leverage & Liquidity

The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the distribution per share amounts have been adjusted retroactively to reflect the split for all periods presented. Regular Distribution Information (1)

XML

Document and Entity Information	Mar. 09, 2023
Cover [Abstract]
Entity Registrant Name	Portman Ridge Finance Corp
Amendment Flag	false
Entity Central Index Key	0001372807
Document Type	8-K
Document Period End Date	Mar. 09, 2023
Entity Incorporation State Country Code	DE
Entity File Number	814-00735
Entity Tax Identification Number	20-5951150
Entity Address, Address Line One	650 Madison Avenue
Entity Address, Address Line Two	23rd Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10022
City Area Code	(212)
Local Phone Number	891-2880
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $0.01 per share
Trading Symbol	PTMN
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false