Investcorp Credit Management BDC, Inc. [ICMB] Filings

10-Q 1 icmb-20240331.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 814-01054

INVESTCORP CREDIT MANAGEMENT BDC, INC.

(Exact Name of Registrant as Specified in Its Charter)

    Maryland

    46-2883380

    (State or other Jurisdiction of
Incorporation or Organization)

    (I.R.S. Employer
Identification No.)

280 Park Avenue

39th Floor

New York, NY 10017

(Address of Principal Executive Offices) (Zip Code)

(212) 599-4700

(Registrant’s Telephone Number, Including Area Code)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	ICMB	The NASDAQ Global Select Market

The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of May 14, 2024 was 14,400,742.


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of March 31, 2024 (unaudited) and June 30, 2023	1
	Consolidated Statements of Operations for the three and nine months ended March 31, 2024 (unaudited) and March 31, 2023 (unaudited)	2
	Consolidated Statements of Changes in Net Assets for the three and nine months ended March 31, 2024 (unaudited) and March 31, 2023 (unaudited)	3
	Consolidated Statements of Cash Flows for the nine months ended March 31, 2024 (unaudited) and March 31, 2023 (unaudited)	4
	Consolidated Schedule of Investments as of March 31, 2024 (unaudited)	5
	Consolidated Schedule of Investments as of June 30, 2023	9
	Notes to Unaudited Consolidated Financial Statements	13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	47

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

SIGNATURES		50

Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Assets and Liabilities


	March 31, 2024
	(Unaudited)		June 30, 2023
Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of $195,540,865 and $219,319,251, respectively)	$	186,948,019	$	210,150,018
Affiliated investments, at fair value (amortized cost of $15,129,208 and $23,979,565, respectively)		5,255,262		9,961,311
Total investments, at fair value (amortized cost of $210,670,073 and $243,298,816, respectively)		192,203,281		220,111,329
Cash		2,728,347		1,093,758
Cash, restricted		10,161,162		8,057,458
Receivable for investments sold		1,972,100		—
Principal receivable		47,692		93,581
Interest receivable		1,304,722		2,041,877
Payment-in-kind interest receivable		59,166		46,088
Due from affiliate		175,916		—
Long-term receivable		618,772		—
Escrow receivable		95,190		—
Other receivables		—		1,050
Prepaid expenses and other assets		604,201		361,719
Total Assets	$	209,970,549	$	231,806,860
Liabilities
Notes payable:
Revolving credit facility	$	57,500,000	$	71,900,000
2026 Notes payable		65,000,000		65,000,000
Deferred debt issuance costs		(1,807,459)		(1,220,556)
Unamortized discount		(142,220)		(195,553)
Notes payable, net		120,550,321		135,483,891
Payable for investments purchased		3,487,533		1,795,297
Dividend payable		2,159,568		2,590,520
Income-based incentive fees payable		128,876		576,023
Base management fees payable		854,328		906,218
Interest payable		2,972,954		2,293,766
Directors' fees payable		—		15,755
Accrued expenses and other liabilities		716,004		445,082
Total Liabilities		130,869,584		144,106,552
Net Assets
Common stock, par value $0.001 per share (100,000,000 shares authorized 14,397,121 and 14,391,775 shares issued and outstanding, respectively)		14,397		14,392
Additional paid-in capital		203,346,421		203,327,714
Distributable earnings (loss)		(124,259,853)		(115,641,798)
Total Net Assets		79,100,965		87,700,308
Total Liabilities and Net Assets	$	209,970,549	$	231,806,860
Net Asset Value Per Share	$	5.49	$	6.09

See notes to unaudited consolidated financial statements.

Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)


	For the three months ended March 31,				For the nine months ended March 31,
	2024		2023		2024		2023
Investment Income:
Interest income
Non-controlled, non-affiliated investments	$	5,561,333	$	6,314,620	$	16,180,220	$	18,184,247
Affiliated investments		28,830		—		29,370		(20,611)
Total interest income		5,590,163		6,314,620		16,209,590		18,163,636
Payment in-kind interest income
Non-controlled, non-affiliated investments		613,765		401,978		1,281,265		584,645
Affiliated investments		19,553		17,491		57,633		51,938
Total payment-in-kind interest income		633,318		419,469		1,338,898		636,583
Dividend income
Non-controlled, non-affiliated investments		54,138		—		54,138		101,755
Affiliated investments		—		—		—		—
Total dividend income		54,138		—		54,138		101,755
Payment in-kind dividend income
Non-controlled, non-affiliated investments		198,123		173,253		580,556		511,395
Affiliated investments		—		—		—		—
Total payment-in-kind dividend income		198,123		173,253		580,556		511,395
Other fee income
Non-controlled, non-affiliated investments		142,347		98,498		575,801		670,926
Affiliated investments		—		—		—		—
Total other fee income		142,347		98,498		575,801		670,926
Total investment income		6,618,089		7,005,840		18,758,983		20,084,295
Expenses:
Interest expense		2,174,195		2,166,739		6,649,314		6,119,083
Base management fees		951,799		1,043,306		2,910,978		3,204,391
Income-based incentive fees		—		—		(72,942)		(147,145)
Provision for tax expense		111,646		77,575		321,890		187,763
Professional fees		354,934		271,784		981,322		815,347
Allocation of administrative costs from Adviser		225,856		375,900		1,118,276		1,127,700
Amortization of deferred debt issuance costs		152,591		173,333		423,885		520,000
Amortization of original issue discount - 2026 Notes		17,777		17,777		53,332		53,332
Insurance expense		125,766		120,093		351,734		395,734
Directors' fees		75,157		75,625		221,407		226,875
Custodian and administrator fees		68,031		74,397		214,892		217,913
Other expenses		379,406		151,093		595,233		426,908
Total expenses		4,637,158		4,547,622		13,769,321		13,147,901
Waiver of base management fees		(97,431)		(89,939)		(292,326)		(296,566)
Waiver of income-based incentive fees		—		—		—		—
Net expenses		4,539,727		4,457,683		13,476,995		12,851,335
Net investment income		2,078,362		2,548,157		5,281,988		7,232,960
Net realized and unrealized gain/(loss) on investments:
Net realized gain (loss) from investments
Non-controlled, non-affiliated investments		(31,984)		(26,890,095)		(5,903,023)		(26,890,095)
Affiliated investments		(6,239,984)		—		(6,239,984)		—
Net realized gain (loss) from investments		(6,271,968)		(26,890,095)		(12,143,007)		(26,890,095)
Net change in unrealized appreciation (depreciation) in value of investments
Non-controlled, non-affiliated investments		1,089,608		24,505,471		576,387		22,391,835
Affiliated investments		5,515,738		(1,267,677)		4,144,308		(1,564,478)
Net change in unrealized appreciation (depreciation) on investments		6,605,346		23,237,794		4,720,695		20,827,357
Total realized gain (loss) and change in unrealized appreciation (depreciation) on investments		333,378		(3,652,301)		(7,422,312)		(6,062,738)
Net increase (decrease) in net assets resulting from operations	$	2,411,740	$	(1,104,144)	$	(2,140,324)	$	1,170,222
Basic and diluted:
Net investment income per share	$	0.14	$	0.18	$	0.37	$	0.50
Earnings per share	$	0.17	$	(0.08)	$	(0.15)	$	0.08
Weighted average shares of common stock outstanding		14,396,951		14,389,868		14,394,574		14,388,295
Distributions paid per common share	$	0.15	$	0.15	$	0.45	$	0.45

See notes to unaudited consolidated financial statements.

Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Changes in Net Assets (Unaudited)


	For the three months ended March 31,
	2024		2023
Net assets at beginning of period	$	78,840,983	$	91,477,635
Net increase (decrease) in net assets resulting from operations:
Net investment income		2,078,362		2,548,157
Net realized gain (loss) from investments		(6,271,968)		(26,890,095)
Net change in unrealized appreciation (depreciation) on investments		6,605,346		23,237,794
Net increase (decrease) in net assets resulting from operations		2,411,740		(1,104,144)

Stockholder distributions:
Distributions from net investment income		(2,159,568)		(2,158,506)
Distributions from capital gains		—		—
Net decrease in net assets resulting from stockholder distributions		(2,159,568)		(2,158,506)

Capital transactions:
Issuance of common shares ($0 and $0, respectively)		—		—
Reinvestments of stockholder distributions		7,810		11,562
Net increase (decrease) in net assets resulting from capital transactions		7,810		11,562
Net increase (decrease) in net assets		259,982		(3,251,088)
Net assets at end of period	$	79,100,965	$	88,226,547


	For the nine months ended March 31,
	2024		2023
Net assets at beginning of period	$	87,700,308	$	93,509,392
Increase (decrease) in net assets resulting from operations:
Net investment income		5,281,988		7,232,960
Net realized gain (loss) from investments		(12,143,007)		(26,890,095)
Net change in unrealized appreciation (depreciation) on investments		4,720,695		20,827,357
Net increase (decrease) in net assets resulting from operations		(2,140,324)		1,170,222
Stockholder distributions:
Distributions from net investment income		(6,477,731)		(6,474,816)
Distributions from capital gains		—		—
Net decrease in net assets resulting from stockholder distributions		(6,477,731)		(6,474,816)
Capital transactions:
Issuance of common shares (0 and 0 , respectively)		—		—
Reinvestments of stockholder distributions

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