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): December 16, 2022
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, 10th 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 | ||
| 5.25% Notes due 2028 | PFXNZ | 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 December 16, 2022, PhenixFIN Corporation issued a press release announcing its financial results for the period ended September 30, 2022. The press release is included as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 99.1 | Press Release dated December 16, 2022 |
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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.
| PHENIXFIN CORPORATION | ||
| DATE: December 16, 2022 | /s/ David Lorber | |
| Name: | David Lorber | |
| Title: | Chief Executive Officer | |
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Exhibit 99.1
PhenixFIN Corporation Announces Fiscal Fourth Quarter 2022 Financial Results
New York, NY, December 16, 2022 -- PhenixFIN Corporation (NASDAQ: PFX) (the “Company”), a publicly traded business development company, today announced its financial results for the fiscal fourth quarter of 2022.
Highlights
| ● | Fourth quarter total investment income was $5.1 million; net investment income of $1.9 million |
| ● | Net asset value (NAV) of $120.8 million, or $57.49 per share as of September 30, 2022, vs. $57.08 per share as of September 30, 2021 |
| ● | Secured a 3-year $50 million credit facility with Woodforest National Bank as lead lender (SOFR + 2.90%) |
| ● | Notice of Redemption issued for the $22.5 million 6.125% unsecured notes due March 30, 2023 |
| ● | Repurchased 16.5% of shares outstanding in Fiscal Year 2022 |
| ● | Weighted average yield to maturity of 10.85% on yield-oriented investments |
| ● | FlexFIN continues to grow with over $40 million allocated to the business |
David Lorber, Chief Executive Officer of the Company, stated:
“We are pleased to announce the signing of a $50mm credit facility led by Woodforest National Bank which we believe further strengthens our balance sheet. With this increased liquidity we will be redeeming the $22.5 million 6.125% unsecured notes due March 30, 2023. This facility should also allow us to expand our investment activity to continue to grow. During the fourth quarter, the portfolio continued to perform given the market environment as we continued generating positive Net Investment Income driven by the deployment of cash balances, the rising interest rate environment, and the general stability in our portfolio. In addition, during our FY2022 we successfully took advantage of our trading discount to NAV through buying back 16.5% of our shares outstanding. Given the volatility of 2022, as we look forward, we are excited about opportunities in the markets to generate returns through both attractive yields and capital appreciation.”
The Company expects to hold an investor update call in early 2023. Details will be announced at a later date.
Selected Fourth Quarter 2022 Financial Results
For the quarter ended September 30, 2022, total investment income totaled $5.1 million, of which $5.0 million was attributable to portfolio interest and dividend income and $0.1 million was attributable to and other income.
For the quarter ended September 30, 2022, total net expenses were $3.2 million and total net investment income was $1.9 million.
For the quarter ended September 30, 2022, the Company recorded a net realized loss of $10.3 million, due to the sale of Path Medical, a legacy investment, and net unrealized loss of $3.7 million, due largely to market volatility in various investments.
Portfolio and Investment Activities
As of September 30, 2022, the fair value of the Company’s investment portfolio totaled $193.0 million and consisted of 44 portfolio companies.
As of September 30, 2022, the Company had 5 portfolio company investments on non-accrual status with a fair market value of $5.2 million.
Liquidity and Capital Resources
At September 30, 2022, the Company had $22.8 million in cash and cash equivalents and $57.5 million and $22.5 million outstanding in aggregate principal amount of its 5.25% unsecured notes due 2028 and 6.125% unsecured notes due 2023, respectively.
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. Effective January 1, 2021, the Company operates under an internalized management structure.
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, increase investment activity, grow the Company, increase net investment income, reduce operating expenses, implement its investment objective, capitalize on investment opportunities, grow its net asset value and perform well in the prevailing market environment, FlexFIN’s ability to perform effectively and generate attractive returns 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.
Past performance is not a guarantee of future results. 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
Consolidated Statements of Assets and Liabilities
| September 30, 2022 | September 30, 2021 | |||||||
| Assets: | ||||||||
| Investments at fair value | ||||||||
| Non-controlled, non-affiliated investments (amortized cost of $147,378,917 and $92,214,167, respectively) | $ | 122,616,275 | $ | 84,152,678 | ||||
| Affiliated investments (amortized cost of $30,585,884 and $75,963,427, respectively) | 12,314,192 | 57,595,245 | ||||||
| Controlled investments (amortized cost of $85,483,093 and $39,490,097, respectively) | 58,026,182 | 9,891,860 | ||||||
| Total Investments at fair value | 192,956,649 | 151,639,783 | ||||||
| Cash and cash equivalents | 22,768,066 | 69,433,256 | ||||||
| Receivables: | ||||||||
| Fees receivable | - | 1,872,700 | ||||||
| Interest receivable | 727,576 | 371,576 | ||||||
| Prepaid share repurchase | 489,156 | - | ||||||
| Due from affiliates | 271,962 | - | ||||||
| Dividends receivable | 269,330 | 81,211 | ||||||
| Paydown receivable | 112,500 | 292,015 | ||||||
| Other receivable | 36,992 | - | ||||||
| Other assets | 1,242,677 | 1,401,746 | ||||||
| Total Assets | $ | 218,874,908 | $ | 225,092,287 | ||||
| Liabilities: | ||||||||
| Notes payable (net of debt issuance costs of $2,059,164 and $412,795, respectively) | $ | 77,962,636 | $ | 77,434,005 | ||||
| Due to broker | 16,550,000 | 1,586,000 | ||||||
| Accounts payable and accrued expenses | 2,040,277 | 1,416,524 | ||||||
| Due to affiliate | - | 280,323 | ||||||
| Administrator expenses payable | 74,911 | 67,920 | ||||||
| Interest and fees payable | 503,125 | - | ||||||
| Deferred revenue | 325,602 | - | ||||||
| Other liabilities | 572,949 | 613,534 | ||||||
| Total Liabilities | 98,029,500 | 81,398,306 | ||||||
| Commitments and Contingencies | ||||||||
| Net Assets: | ||||||||
| Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,723,709 shares issued; 2,102,129 and 2,517,221 common shares outstanding, respectively | 2,102 | 2,517 | ||||||
| Capital in excess of par value | 675,401,802 | 688,866,642 | ||||||
| Total distributable earnings (loss) | (554,558,496 | ) | (545,175,178 | ) | ||||
| Total Net Assets | 120,845,408 | 143,693,981 | ||||||
| Total Liabilities and Net Assets | $ | 218,874,908 | $ | 225,092,287 | ||||
| Net Asset Value Per Common Share | $ | 57.49 | $ | 57.08 | ||||
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PHENIXFIN CORPORATION
Consolidated Statements of Operations
| For the Years Ended September 30 | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| Interest Income: | ||||||||||||
| Interest from investments | ||||||||||||
| Non-controlled, non-affiliated investments: | ||||||||||||
| Cash | $ | 5,207,850 | $ | 5,974,807 | $ | 9,137,394 | ||||||
| Payment in-kind | 444,741 | 609,964 | 863,744 | |||||||||
| Affiliated investments: | ||||||||||||
| Cash | 639,733 | 1,099,809 | 1,182,294 | |||||||||
| Payment in-kind | 374,981 | 327,804 | 2,425,557 | |||||||||
| Controlled investments: | ||||||||||||
| Cash | 2,489,381 | 75,000 | 84,505 | |||||||||
| Payment in-kind | - | - | 500,767 | |||||||||
| Total interest income | 9,156,686 | 8,087,384 | 14,194,261 | |||||||||
| Dividend income | 5,503,425 | 21,564,348 | 6,256,250 | |||||||||
| Interest from cash and cash equivalents | 139,942 | 10,402 | 378,077 | |||||||||
| Fee income | 420,279 | 2,566,519 | 692,988 | |||||||||
| Other income | 323,828 | 78,204 | - | |||||||||
| Total Investment Income | 15,544,160 | 32,306,857 | 21,521,576 | |||||||||
| Expenses: | ||||||||||||
| Base management fees | - | 1,146,403 | 6,358,750 | |||||||||
| Interest and financing expenses | 5,113,105 | 5,800,100 | 14,935,017 | |||||||||
| Salaries and benefits | 2,952,106 | 1,993,277 | - | |||||||||
| General and administrative expenses | 1,103,125 | 1,012,147 | 3,285,259 | |||||||||
| Directors fees | 712,000 | 1,039,717 | 1,451,077 | |||||||||
| Insurance expenses | 590,178 | 1,619,536 | 1,463,391 | |||||||||
| Administrator expenses | 301,281 | 612,983 | 2,226,831 | |||||||||
| Professional fees, net | 1,340,828 | 559,975 | (4,768,050 | ) | ||||||||
| Expenses before expense support reimbursement | 12,112,623 | 13,784,138 | 24,952,275 | |||||||||
| Expense support reimbursement | - | - | (710,294 | ) | ||||||||
| Total expenses net of expense support reimbursement | 12,112,623 | 13,784,138 | 24,241,981 | |||||||||
| Net Investment Income (Loss) | 3,431,537 | 18,522,719 | (2,720,405 | ) | ||||||||
| Realized and unrealized gains (losses) on investments | ||||||||||||
| Net realized gains (losses): | ||||||||||||
| Non-controlled, non-affiliated investments | 810,240 | 7,747,672 | (9,973,416 | ) | ||||||||
| Affiliated investments | 4,408,961 | (10,088,405 | ) | (928,990 | ) | |||||||
| Controlled investments | 1,850 | (40,144,795 | ) | (39,076,425 | ) | |||||||
| Total net realized gains (losses) | 5,221,051 | (42,485,528 | ) | (49,978,831 | ) | |||||||
| Net change in unrealized gains (losses): | ||||||||||||
| Non-controlled, non-affiliated investments | (16,701,153 | ) | (5,022,484 | ) | 9,898,237 | |||||||
| Affiliated investments | 96,490 | (10,342,450 | ) | 2,648,353 | ||||||||
| Controlled investments | 2,141,326 | 40,728,006 | (23,178,993 | ) | ||||||||
| Total net change in unrealized gains (losses) | (14,463,337 | ) | 25,363,072 | (10,632,403 | ) | |||||||
| Loss on extinguishment of debt | (296,197 | ) | (122,355 | ) | (2,481,374 | ) | ||||||
| Total realized and unrealized gains (losses) | (9,538,483 | ) | (17,244,811 | ) | (63,092,608 | ) | ||||||
| Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (6,106,946 | ) | $ | 1,277,908 | $ | (65,813,013 | ) | ||||
| Weighted average basic and diluted earnings per common share | $ | (2.63 | ) | $ | 0.48 | $ | (24.16 | ) | ||||
| Weighted average basic and diluted net investment income (loss) per common share | $ | 1.48 | $ | 6.92 | $ | (1.00 | ) | |||||
| Weighted average common shares outstanding - basic and diluted | 2,323,601 | 2,677,891 | 2,723,709 | |||||||||
| Dividends declared per common share | $ | 0.12 | $ | - | $ | - | ||||||
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