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): February 10, 2021
PHENIXFIN CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 814-00818 | 27-4576073 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission file number) | (I.R.S. employer identification no.) |
| 445 Park Avenue, 9th Floor, New York, NY | 10022 | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (212) 859-0390
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:
| ☐ | 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 Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| Common Stock, par value $0.001 per share | PFX | The NASDAQ Global Market | ||
| 6.125% Notes due 2023 | PFXNL | The NASDAQ Global 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 2.02 | Results of Operations and Financial Condition. |
On February 16, 2021, PhenixFIN Corporation issued a press release announcing its financial results for the quarter ended December 31, 2020. The press release is included as Exhibit 99.1 to this Form 8-K.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws. |
Following the internalization of its management, effective January 1, 2021, PhenixFIN Corporation (the “Company”) reviewed certain provisions in its Bylaws and Charter, including provisions relating to the size of the Board of Directors of the Company (the “Board”) and procedures for the removal of directors. On and effective February 10, 2021, the Board approved an amendment to the Bylaws of the Company (the “Amendment”). The Amendment serves first to decrease the size of the Board from seven members to five members (as before, subject to determination from time to time by the shareholders of the Company). Second, the amendment allows for the removal of directors for cause by affirmative vote of the holders of a majority of the capital stock entitled to vote at an election of directors. This second amendment is made without any admission of legal necessity, causation or liability with respect to the action recently filed in the Delaware Court of Chancery by purported stockholders of the Company alleging the previous provision in the Bylaws providing for a vote by holders of 75% of the capital stock entitled to vote to remove a director for cause is inconsistent with the Delaware General Corporate Law.
The above description of the modifications to the Bylaws of the Company does not purport to be a complete statement of such modifications. Such description is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 3.1 to this Form 8-K.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit No. | Description | |
| 3.1 | Amendment No. 3 to the Bylaws of PhenixFIN Corporation, effective February 10, 2021. | |
| 99.1 | Press Release dated February 16, 2021 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, PhenixFIN Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DATE: February 16, 2020
| PHENIXFIN CORPORATION | |
| /s/ David Lorber | |
| Name: David Lorber | |
| Title: Chief Executive Officer |
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Exhibit 3.1
Amendment No. 3 to Bylaws of PhenixFIN Corporation
This Amendment to the bylaws (the “Bylaws”) of PhenixFIN Corporation, a Delaware corporation, (the “Company”) was approved and adopted by the Board of Directors of the Company in accordance with Article 10 of the Bylaws, and is effective as of February 10, 2021 (the “Effective Date”).
1. As of the Effective Date, the first sentence of Section 3.1 of the Bylaws is hereby deleted and replaced in its entirety with the following:
“The number of directors which shall constitute the whole Board of Directors shall be five (5).”
2. As of the Effective Date, Section 3.4(b) of the Bylaws is hereby deleted and replaced in its entirety with the following:
“(b) At a special meeting of stockholders called for the purpose in the manner hereinabove provided, the Board of Directors or any individual director may be removed from office, with cause, by affirmative vote of the holders of a majority of the capital stock entitled to vote at an election of directors, and a new director or directors elected by a vote of the remaining directors.”
Exhibit 99.1
PhenixFIN Corporation Announces First Quarter 2021 Financial Results
New York, NY, February 16, 2021 -- PhenixFIN Corporation (NASDAQ: PFX) (the “Company”), a publicly traded business development company, today announced its financial results for the fiscal first quarter of 2021.
First Quarter 2021 Highlights
| ● | Total investment income of $12.8 million; net investment income of $8.3 million |
| ● | $62.4 million in cash on December 31, 2020 |
| ● | Sale of MCC Senior Loan Strategy JV I LLC (“MCC JV”), resulting in net proceeds of $41 million |
| ● | Full redemption of $74.0 million of the 6.5% Notes due 2021 |
| ● | Net asset value of $144.2 million, or $52.94 per share vs. $55.30 per share as of September 30, 2020 |
David Lorber, Chief Executive Officer of the Company, stated: “The quarter brought significant change for the organization with the announced sale of the MCC JV facility, meaningful debt paydown, and the announced transition to the internalized management structure. I am pleased with the market’s favorable reaction to this change and with the cohesive transition to the internalized management structure for all aspects of the business. The new team is excited for the prospects of PhenixFIN Corporation and we look forward to driving value for shareholders.”
As previously announced on October 9, 2020, the Board of Directors of the Company (the “Board”) approved the sale of the MCC JV facility, leading to the October 21, 2020 redemption of the $74 million 6.5% Notes due January 2021. In addition, on November 18, 2020, the Board approved the adoption of an internalized management structure, effective January 1, 2021, replacing the externalized management structure, including the Investment Management Agreement and Administration Agreement with MCC Advisors LLC (both of which expired on December 31, 2020).
Subsequent to quarter end, on January 11, 2021, the Company announced that the Board of Directors approved a share repurchase program authorizing up to $15 million in share repurchases. Under the share repurchase program, the Company is authorized to repurchase from time to time its common stock in open market or other transactions, subject to applicable regulatory requirements.
First Quarter 2021 Financial Results
For the three months ended December 31, 2020, total investment income was $12.8 million, which consisted, in part, of a November 2020 dividend distribution from JFL-NGS Partners, LLC, a portfolio company, in the amount of $10.3 million. For the three months ended December 31, 2020, interest and PIK income comprised $2.2 million. Net investment income for the three months ended December 31, 2020 was $8.3 million, or $3.06 per share.
For the three months ended December 31, 2020, total net expenses (net of the expense support agreement) were $4.5 million.
For the three months ended December 31, 2020, the Company recorded a net realized loss of $14.8 million.
Portfolio and Investment Activities
As of December 31, 2020, the fair value of the Company’s investment portfolio totaled $159.5 million and consisted of 37 portfolio companies.
As of December 31, 2020, the Company had 9 portfolio company investments on non-accrual status.
Liquidity and Capital Resources
At December 31, 2020, the Company had $62.4 million in cash and $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.
ABOUT PHENIXFIN CORPORATION
PhenixFIN Corporation is a non-diversified, internally managed closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. We completed our initial public offering and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. On November 18, 2020, the Board approved the adoption of an internalized management structure, effective January 1, 2021.
Safe Harbor Statement and Other Disclosures
This press release contains “forward-looking” statements. Such forward-looking statements reflect current views with respect to future events and financial performance, and the Company may make related oral forward-looking statements on or following the date hereof. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, including among other things, PhenixFIN’s ability to deliver value to shareholders and other factors that are enumerated in the Company’s periodic filings with the Securities and Exchange Commission. PhenixFIN Corporation disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release.
The press release contains unaudited financial results. For ease of review, we have excluded the word “approximately” when rounding the results. This press release is for informational purposes only and is not an offer to purchase or a solicitation of an offer to sell shares of PhenixFIN Corporation’s common stock. There can be no assurance that PhenixFIN Corporation will achieve its investment objective.
For PhenixFIN investor relations, please call 212-859-0390. For media inquiries, please contact info@phenixfc.com.
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PHENIXFIN CORPORATION (f/k/a Medley Capital Corporation)
Consolidated Statements of Assets and Liabilities
| December 31, 2020 (Unaudited) | September 30, 2020 | |||||||
| Assets: | ||||||||
| Investments at fair value | ||||||||
| Non-controlled, non-affiliated investments (amortized cost of $90,542,838 and $117,360,954, respectively) | $ | 83,446,768 | $ | 114,321,948 | ||||
| Affiliated investments (amortized cost of $80,340,191 and $92,898,755, respectively) | 70,196,136 | 84,873,023 | ||||||
| Controlled investments (amortized cost of $37,987,321 and $117,874,821, respectively) | 5,898,013 | 47,548,578 | ||||||
| Total Investments at fair value | 159,540,917 | 246,743,549 | ||||||
| Cash and cash equivalents | 62,414,223 | 56,522,148 | ||||||
| Receivables: | ||||||||
| Interest receivable | 238,814 | 624,524 | ||||||
| Fees receivable | 106,528 | 119,028 | ||||||
| Other assets | 1,675,933 | 2,093,559 | ||||||
| Total Assets | $ | 223,976,415 | $ | 306,102,808 | ||||
| Liabilities: | ||||||||
| Notes payable (net of debt issuance costs of $619,167 and $905,624, respectively) | $ | 77,227,633 | $ | 150,960,662 | ||||
| Interest and fees payable | - | 801,805 | ||||||
| Due to affiliates | - | 53,083 | ||||||
| Management and incentive fees payable | 1,146,403 | 1,392,022 | ||||||
| Administrator expenses payable | 484,412 | 156,965 | ||||||
| Accounts payable and accrued expenses | 900,851 | 2,108,225 | ||||||
| Deferred revenue | 35,450 | 10,529 | ||||||
| Total Liabilities | 79,794,749 | 155,483,291 | ||||||
| Guarantees and Commitments | ||||||||
| Net Assets: | ||||||||
| Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,723,709 and 2,723,709 common shares issued and outstanding, respectively | 2,724 | 2,724 | ||||||
| Capital in excess of par value | 672,381,617 | 672,381,617 | ||||||
| Total distributable earnings/(loss) | (528,202,675 | ) | (521,764,824 | ) | ||||
| Total Net Assets | 144,181,666 | 150,619,517 | ||||||
| Total Liabilities and Net Assets | $ | 223,976,415 | $ | 306,102,808 | ||||
| Net Asset Value Per Common Share | $ | 52.94 | $ | 55.30 | ||||
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PHENIXFIN CORPORATION (f/k/a Medley Capital Corporation)
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended | ||||||||
| December 31, 2020 | December 31, 2019 | |||||||
| Interest Income: | ||||||||
| Interest from investments | ||||||||
| Non-controlled, non-affiliated investments: | ||||||||
| Cash | $ | 1,671,813 | $ | 3,217,709 | ||||
| Payment in-kind | 170,029 | 199,012 | ||||||
| Affiliated investments: | ||||||||
| Cash | 352,291 | 209,248 | ||||||
| Payment in-kind | - | 947,473 | ||||||
| Controlled investments: | ||||||||
| Cash | 1,190 | 83,208 | ||||||
| Payment in-kind | - | 495,382 | ||||||
| Total interest income | 2,195,323 | 5,152,032 | ||||||
| Dividend income | 10,263,501 | 1,837,500 | ||||||
| Interest from cash and cash equivalents | 940 | 218,138 | ||||||
| Fee income | 341,464 | 283,540 | ||||||
| Total Investment Income | 12,801,228 | 7,491,210 | ||||||
| Expenses: | ||||||||
| Base management fees | 1,146,403 | 2,008,234 | ||||||
| Incentive fees | - | - | ||||||
| Interest and financing expenses | 2,017,641 | 5,143,929 | ||||||
| General and administrative expenses | 377,934 | 516,842 | ||||||
| Administrator expenses | 484,412 | 551,522 | ||||||
| Insurance expenses | 485,012 | 297,998 | ||||||
| Directors fees | 475,717 | 316,000 | ||||||
| Professional fees, net | (515,622 | ) | (4,416,075 | ) | ||||
| Total expenses net of expense support reimbursement | 4,471,497 | 4,418,450 | ||||||
| Net Investment Income | 8,329,731 | 3,072,760 | ||||||
| Realized and unrealized gains (losses) on investments | ||||||||
| Net realized gains/(losses): | ||||||||
| Non-controlled, non-affiliated investments | 3,893,722 | (57,799 | ) | |||||
| Affiliated investments | (10,452,928 | ) | - | |||||
| Controlled investments | (40,147,570 | ) | (1,686,837 | ) | ||||
| Total net realized gains/(losses) | (46,706,776 | ) | (1,744,636 | ) | ||||
| Net change in unrealized gains/(losses): | ||||||||
| Non-controlled, non-affiliated investments | (4,057,063 | ) | 3,747,374 | |||||
| Affiliated investments | (2,118,324 | ) | 9,440,599 | |||||
| Controlled investments | 38,236,935 | (9,457,114 | ) | |||||
| Total net change in unrealized gains/(losses) | 32,061,548 | 3,730,859 | ||||||
| Loss on extinguishment of debt | (122,354 | ) | (889,150 | ) | ||||
| Total realized and unrealized gains/(losses) | (14,767,582 | ) | 1,097,073 | |||||
| Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | (6,437,851 | ) | $ | 4,169,833 | |||
| Weighted Average Basic and diluted earnings per common share | $ | (2.36 | ) | $ | 1.53 | |||
| Weighted Average Basic and diluted net investment income/(loss) per common share | $ | 3.06 | $ | 1.13 | ||||
| Weighted Average Common Shares Outstanding - Basic and Diluted | 2,723,709 | 2,723,709 | (1) | |||||
| (1) | Basic and diluted shares has been adjusted for 2019 to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis. |
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