CION Investment Corp - FORM 10-Q - May 15, 2020

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EX-32.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS - CION Investment Corpcionex-32_3.htm
EX-32.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, - CION Investment Corpcionex-32_2.htm
EX-32.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, - CION Investment Corpcionex-32_1.htm
EX-31.3 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES - CION Investment Corpcionex-31_3.htm
EX-31.2 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBA - CION Investment Corpcionex-31_2.htm
EX-31.1 - CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBA - CION Investment Corpcionex-31_1.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 

[x]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 000-54755 
 
CĪON Investment Corporation
 
 
(Exact name of registrant as specified in its charter)
 
 
Maryland
 
45-3058280
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
3 Park Avenue, 36th Floor
New York, New York
 
10016
(Address of principal executive offices)
 
(Zip Code)
 
(212) 418-4700
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
Not applicable
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
None
Not applicable
Not applicable
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 [x] 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 the 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 [x] 
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 [x]
The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of May 11, 2020 was 113,311,389.



CĪON INVESTMENT CORPORATION
FORM 10-Q
TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CĪON Investment Corporation
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
 
March 31,
2020
 
December 31,
2019
 
 
(unaudited)
 
 
Assets
Investments, at fair value:
 

 

     Non-controlled, non-affiliated investments (amortized cost of $1,690,015 and $1,692,879, respectively)
 
$
1,516,653

 
$
1,630,243

     Non-controlled, affiliated investments (amortized cost of $89,622 and $88,700, respectively)
 
82,411

 
89,326

     Controlled investments (amortized cost of $43,364 and $45,497, respectively)
 
38,556

 
45,503

          Total investments, at fair value (amortized cost of $1,823,001 and $1,827,076, respectively)
 
1,637,620

 
1,765,072

Cash
 
3,727

 
6,135

Due from counterparty
 
5,146

 
3,281

Interest receivable on investments
 
16,784

 
15,261

Receivable due on investments sold and repaid
 
891

 
18,552

Dividends receivable on investments
 
1,412

 
1,106

Prepaid expenses and other assets
 
623

 
985

   Total assets
 
$
1,666,203

 
$
1,810,392

Liabilities and Shareholders' Equity
Liabilities
 
 
 
 
Financing arrangements (net of unamortized debt issuance costs of $3,769 and $4,457, respectively)
 
$
803,090

 
$
836,585

Payable for investments purchased
 
21,329

 
1,568

Accounts payable and accrued expenses
 
1,077

 
815

Interest payable
 
2,769


3,163

Accrued management fees
 
8,451

 
8,869

Accrued subordinated incentive fee on income
 
3,308

 
5,612

Accrued administrative services expense
 
321

 
1,217

Total liabilities
 
840,345

 
857,829

 
 
 
 
 
Commitments and contingencies (Note 4 and Note 11)
 
 
 
 
 
 
 
 
 
Shareholders' Equity
 
 
 
 
Common stock, $0.001 par value; 500,000,000 shares authorized;
 
 
 
 
113,313,249 and 113,381,145 shares issued and outstanding, respectively
 
113

 
113

Capital in excess of par value
 
1,054,913

 
1,054,913

Accumulated distributable losses
 
(229,168
)
 
(102,463
)
Total shareholders' equity
 
825,858

 
952,563

Total liabilities and shareholders' equity
 
$
1,666,203

 
$
1,810,392

Net asset value per share of common stock at end of period
 
$
7.29

 
$
8.40

See accompanying notes to consolidated financial statements.

1


CĪON Investment Corporation
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
 
 
Three Months Ended
March 31,
 
 
2020

2019
 
 
(unaudited)
 
(unaudited)
Investment income
 
 
 
 
Non-controlled, non-affiliated investments
 
 
 
 
     Interest income
 
$
39,421

 
$
47,145

     Fee income
 
604

 
298

     Paid-in-kind interest income
 
1,876

 
653

     Dividend income
 
136

 
90

Non-controlled, affiliated investments
 


 


     Interest income
 
798

 
399

     Paid-in-kind interest income
 
783

 
24

     Dividend income
 
475

 
2,562

Controlled investments
 


 


     Dividend income
 
1,655

 
—

Total investment income
 
45,748

 
51,171

Operating expenses
 
 
 
 
Management fees
 
8,451

 
9,331

Administrative services expense
 
394

 
497

Subordinated incentive fee on income
 
3,308

 
5,375

General and administrative
 
1,470

 
1,389

Interest expense
 
10,464

 
13,040

Total operating expenses
 
24,087

 
29,632

Net investment income
 
21,661

 
21,539

Realized and unrealized losses
 
 
 
 
Net realized losses on:
 
 
 
 
   Non-controlled, non-affiliated investments
 
(3,983
)
 
(957
)
   Non-controlled, affiliated investments
 
(211
)
 
—

   Foreign currency
 
(2
)

(3
)
Net realized losses
 
(4,196
)
 
(960
)
Net change in unrealized depreciation on:
 
 
 
 
   Non-controlled, non-affiliated investments
 
(110,726
)
 
(3,629
)
   Non-controlled, affiliated investments
 
(7,837
)
 
(421
)
   Controlled investments
 
(4,814
)
 
—

   Foreign currency
 
—

 
(113
)
Net change in unrealized depreciation
 
(123,377
)
 
(4,163
)
Net realized and unrealized losses
 
(127,573
)
 
(5,123
)
Net (decrease) increase in net assets resulting from operations
 
$
(105,912
)
 
$
16,416

Per share information—basic and diluted
 
 
 
 
Net (decrease) increase in net assets per share resulting from operations
 
$
(0.93
)
 
$
0.14

Weighted average shares of common stock outstanding
 
113,700,146

 
113,624,760

See accompanying notes to consolidated financial statements.

2


CĪON Investment Corporation
Consolidated Statements of Changes in Net Assets
(in thousands, except share and per share amounts)
 
 
Three Months Ended
March 31,
 
 
2020
 
2019
 
 
(unaudited)
 
(unaudited)
Changes in net assets from operations:
 
 
 
 
Net investment income
 
$
21,661

 
$
21,539

Net realized loss on investments
 
(4,194
)
 
(957
)
Net realized loss on foreign currency
 
(2
)
 
(3
)
Net change in unrealized depreciation on investments
 
(123,377
)
 
(4,050
)
Net change in unrealized depreciation on foreign currency translation
 
—

 
(113
)
Net (decrease) increase in net assets resulting from operations
 
(105,912
)
 
16,416

Changes in net assets from shareholders' distributions:
 
 
 
 
Distributions to shareholders
 
(20,793
)
 
(20,772
)
Net decrease in net assets resulting from shareholders' distributions
 
(20,793
)
 
(20,772
)
Changes in net assets from capital share transactions:
 
 
 
 
Issuance of common stock, net of issuance costs of $0 and $296, respectively
 
—

 
6,220

Reinvestment of shareholders' distributions
 
8,071

 
9,361

Repurchase of common stock
 
(8,071
)
 
(9,361
)
Net increase in net assets resulting from capital share transactions
 
—

 
6,220

 
 
 
 
 
Total (decrease) increase in net assets
 
(126,705
)
 
1,864

Net assets at beginning of period
 
952,563

 
979,271

Net assets at end of period
 
$
825,858

 
$
981,135

Net asset value per share of common stock at end of period
 
$
7.29

 
$
8.65

Shares of common stock outstanding at end of period
 
113,313,249

 
113,401,873

See accompanying notes to consolidated financial statements.

3


CĪON Investment Corporation
Consolidated Statements of Cash Flows
(in thousands)
 
 
Three Months Ended
March 31,
 
 
2020

2019
 
 
(unaudited)
 
(unaudited)
Operating activities:
 
 
 
 
Net (decrease) increase in net assets resulting from operations
 
$
(105,912
)
 
$
16,416

Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash
 
 
 
 
  provided by operating activities:
 
 
 
 
Net accretion of discount on investments
 
(5,181
)
 
(3,017
)
Proceeds from principal repayment of investments
 
182,814

 
95,142

Purchase of investments
 
(175,631
)
 
(143,445
)
Paid-in-kind interest and dividends capitalized
 
(3,270
)
 
(3,239
)
Increase in short term investments, net
 
(27,130
)
 
(13,631
)
Proceeds from sale of investments
 
27,584

 
106,861

Net realized loss on investments
 
4,194

 
957

Net unrealized depreciation on investments
 
123,377

 
4,050

Amortization of debt issuance costs
 
687

 
828

(Increase) decrease in due from counterparty
 
(1,865
)
 
—

(Increase) decrease in interest receivable on investments
 
(828
)
 
505

(Increase) decrease in dividends receivable
 
(306
)
 
—

(Increase) decrease in receivable due on investments sold and repaid
 
17,661

 
(37,605
)
(Increase) decrease in prepaid expenses and other assets
 
362

 
101

Increase (decrease) in payable for investments purchased
 
19,761

 
(3,891
)
Increase (decrease) in accounts payable and accrued expenses
 
262

 
(71
)
Increase (decrease) in interest payable
 
(394
)
 
(264
)
Increase (decrease) in accrued management fees
 
(418
)
 
23

Increase (decrease) in accrued administrative services expense
 
(896
)
 
(816
)
Increase (decrease) in subordinated incentive fee on income payable
 
(2,304
)
 
2,771

Net cash provided by operating activities
 
52,567

 
21,675

Financing activities:
 
 
 
 
Gross proceeds from issuance of common stock
 
—

 
6,516

Commissions and dealer manager fees paid
 
—

 
(296
)
Repurchase of common stock
 
(8,071
)
 
(9,361
)
Shareholders' distributions paid
 
(12,722
)
 
(11,411
)
Repayments under financing arrangements
 
(75,300
)
 
(73,500
)
Borrowings under financing arrangements
 
41,118

 
57,500

Debt issuance costs paid
 
—

 
(1,421
)
Net cash used in financing activities
 
(54,975
)
 
(31,973
)
Net decrease in cash and restricted cash
 
(2,408
)
 
(10,298
)
Cash and restricted cash, beginning of period
 
6,135

 
17,579

Cash and restricted cash, end of period
 
$
3,727

 
$
7,281

 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
10,161

 
$
12,472

Supplemental non-cash financing activities:
 
 
 
 
Reinvestment of shareholders' distributions
 
$
8,071

 
$
9,361

Restructuring of portfolio investment
 
$
—

 
$
2,200

See accompanying notes to consolidated financial statements.

4


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Senior Secured First Lien Debt - 154.3%
 
 
 
 
 
 
 
 
 
 
Academy, Ltd., L+400, 1.00% LIBOR Floor, 7/1/2022(o)
 
1 Month LIBOR
 
Retail
 
$
14,191

 
$
12,765

 
$
13,127

Adams Publishing Group, LLC, L+750, 1.75% LIBOR Floor, 7/2/2023(o)(q)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
13,238

 
13,138

 
12,708

Adapt Laser Acquisition, Inc., L+800, 1.00% LIBOR Floor, 12/31/2023(o)
 
3 Month LIBOR
 
Capital Equipment
 
11,550

 
11,550

 
10,049

Adapt Laser Acquisition, Inc., 0.50% Unfunded, 12/31/2023
 
None
 
Capital Equipment
 
2,000

 
—

 
(260
)
Aegis Toxicology Sciences Corp., L+550, 1.00% LIBOR Floor, 5/9/2025(p)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
9,850

 
9,689

 
8,225

AIS Holdco, LLC, L+500, 0.00% LIBOR Floor, 8/15/2025(p)
 
3 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
5,347

 
5,290

 
4,251

Alchemy US Holdco 1, LLC, L+550, 10/10/2025(j)(p)
 
1 Month LIBOR
 
Construction & Building
 
13,215

 
13,063

 
11,695

Allen Media, LLC, L+550, 0.00% LIBOR Floor, 2/10/2027(p)(q)
 
3 Month LIBOR
 
Media: Diversified & Production
 
25,000

 
25,000

 
22,625

ALM Media, LLC, L+650, 1.00% LIBOR Floor, 11/25/2024(o)(q)
 
1 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
19,750

 
19,378

 
18,960

AMCP Staffing Intermediate Holdings III, LLC, L+675, 1.50% LIBOR Floor, 9/24/2025(r)
 
3 Month LIBOR
 
Services: Business
 
9,975

 
9,921

 
9,476

AMCP Staffing Intermediate Holdings III, LLC, L+675, 1.50% LIBOR Floor, 9/24/2025
 
3 Month LIBOR
 
Services: Business
 
995

 
998

 
946

AMCP Staffing Intermediate Holdings III, LLC, 0.50% Unfunded, 9/24/2025
 
None
 
Services: Business
 
603

 
(3
)
 
(30
)
American Clinical Solutions LLC, 7.00%, 12/31/2022
 
None
 
Healthcare & Pharmaceuticals
 
3,500

 
3,403

 
3,080

American Clinical Solutions LLC, 2.00%, 12/31/2022(x)
 
None
 
Healthcare & Pharmaceuticals
 
6,030

 
4,346

 
1,658

American Media, LLC, L+775, 0.00% LIBOR Floor, 12/31/2023(o)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
12,952

 
12,696

 
12,563

American Media, LLC, L+775, 0.00% LIBOR Floor, 12/31/2023
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
1,532

 
1,539

 
1,486

American Media, LLC, 0.50% Unfunded, 12/31/2023
 
None
 
Media: Advertising, Printing & Publishing
 
170

 
(40
)
 
(5
)
American Teleconferencing Services, Ltd., L+650, 1.00% LIBOR Floor, 12/8/2021(o)(p)(r)
 
3 Month LIBOR
 
Telecommunications
 
19,540

 
18,626

 
14,655

Analogic Corp., L+525, 1.00% LIBOR Floor, 6/21/2024(q)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
4,988

 
4,911

 
4,838

Anthem Sports & Entertainment Inc., L+950, 1.00% LIBOR Floor, 9/9/2024(o)(x)
 
3 Month LIBOR
 
Media: Diversified & Production
 
12,263

 
12,114

 
11,252

Anthem Sports & Entertainment Inc., L+950, 1.00% LIBOR Floor, 9/9/2024
 
3 Month LIBOR
 
Media: Diversified & Production
 
833

 
833

 
812

Anthem Sports & Entertainment Inc., 0.50% Unfunded, 9/9/2024
 
None
 
Media: Diversified & Production
 
1,333

 
—

 
(33
)
APC Automotive Technologies, LLC, L+500, 1.00% LIBOR Floor, 5/10/2025(p)(q)
 
3 Month LIBOR
 
Automotive
 
8,901

 
8,575

 
7,677

APC Automotive Technologies, LLC, L+500, 1.00% LIBOR Floor, 5/10/2024(p)(t)(x)
 
3 Month LIBOR
 
Automotive
 
2,773

 
2,624

 
153

APCO Holdings, LLC, L+550, 0.00% LIBOR Floor, 6/9/2025(p)
 
1 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
10,827

 
10,738

 
10,394

Ascent Resources - Marcellus, LLC, L+650, 1.00% LIBOR Floor, 3/30/2023(p)
 
1 Month LIBOR
 
Energy: Oil & Gas
 
712

 
712

 
712

Associated Asphalt Partners, LLC, L+525, 1.00% LIBOR Floor, 4/5/2024(p)(q)
 
1 Month LIBOR
 
Construction & Building
 
14,652

 
14,152

 
12,985

Avison Young (USA) Inc., L+500, 0.00% LIBOR Floor, 1/31/2026(h)(p)
 
3 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
9,875

 
9,701

 
8,838

Bi-Lo, LLC, L+800, 1.00% LIBOR Floor, 5/31/2024(p)(q)
 
3 Month LIBOR
 
Retail
 
18,864

 
18,127

 
18,204

BK Medical Holding Company, Inc., L+525, 1.00% LIBOR Floor, 6/22/2024(q)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
5,000

 
4,953

 
4,850

Cadence Aerospace, LLC, L+650, 1.00% LIBOR Floor, 11/14/2023(q)(r)
 
3 Month LIBOR
 
Aerospace & Defense
 
31,980

 
31,728

 
29,741

Cardinal US Holdings, Inc., L+500, 1.00% LIBOR Floor, 7/31/2023(p)
 
3 Month LIBOR
 
Services: Business
 
8,288

 
7,920

 
7,252

CB URS Holdings Corp., L+575, 1.00% LIBOR Floor, 9/1/2024(p)(r)
 
1 Month LIBOR
 
Transportation: Cargo
 
16,278

 
16,200

 
13,022

See accompanying notes to consolidated financial statements.

5


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Central Security Group, Inc., L+563, 1.00% LIBOR Floor, 10/6/2021(p)(r)
 
1 Month LIBOR
 
Services: Consumer
 
19,365

 
19,371

 
15,076

Charming Charlie LLC, 20.00%, 5/15/2020(t)(u)
 
None
 
Retail
 
777

 
657

 
404

Charming Charlie LLC, L+1200, 1.00% LIBOR Floor, 4/24/2023(t)(u)(x)
 
1 Month LIBOR
 
Retail
 
2,936

 
—

 
—

Charming Charlie LLC, L+1200, 1.00% LIBOR Floor, 4/24/2023(t)(u)(x)
 
1 Month LIBOR
 
Retail
 
3,595

 
—

 
—

CHC Solutions Inc., 12.00%, 7/20/2023(x)
 
None
 
Healthcare & Pharmaceuticals
 
7,422

 
7,422

 
7,200

CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021(q)(r)(y)
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
17,896

 
17,749

 
16,643

CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021(y)
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
2,424

 
2,424

 
2,254

CircusTrix Holdings, LLC, 1.00% Unfunded, 12/16/2021
 
None
 
Hotel, Gaming & Leisure
 
2,898

 
—

 
(203
)
Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 4/29/2023
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
1,020

 
980

 
990

Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 4/29/2023
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
414

 
414

 
401

Coyote Buyer, LLC, L+600, 1.00% LIBOR Floor, 2/6/2026(o)(q)(r)
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
30,000

 
29,709

 
28,800

Coyote Buyer, LLC, L+600, 1.00% LIBOR Floor, 2/6/2025
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
250

 
248

 
240

Coyote Buyer, LLC, 0.50% Unfunded, 2/6/2025
 
None
 
Chemicals, Plastics & Rubber
 
2,250

 
(23
)
 
(90
)
Crown Subsea Communications Holdings, Inc., L+600, 0.00% LIBOR Floor, 11/2/2025(p)
 
1 Month LIBOR
 
Capital Equipment
 
4,581

 
4,503

 
4,352

David's Bridal, LLC, L+600, 1.00% LIBOR Floor, 6/30/2023(x)
 
3 Month LIBOR
 
Retail
 
710

 
600

 
630

Deluxe Entertainment Services, Inc., L+650, 1.00% LIBOR Floor, 3/25/2024(j)(o)(u)(x)
 
3 Month LIBOR
 
Media: Diversified & Production
 
23,985

 
23,984

 
25,543

DMT Solutions Global Corp., L+700, 0.00% LIBOR Floor, 7/2/2024(p)(r)
 
3 Month LIBOR
 
Services: Business
 
18,250

 
17,838

 
16,790

Eagle Family Foods Group LLC, L+650, 1.00% LIBOR Floor, 6/14/2024(r)
 
6 Month LIBOR
 
Beverage, Food & Tobacco
 
14,738

 
14,488

 
14,222

Entertainment Studios P&A LLC, 6.35%, 5/18/2037(l)
 
None
 
Media: Diversified & Production
 
14,448

 
14,346

 
13,437

Entertainment Studios P&A LLC, 5.00%, 5/18/2037(l)
 
None
 
Media: Diversified & Production
 
—

 
—

 
1,656

EnTrans International, LLC, L+600, 0.00% LIBOR Floor, 11/1/2024(p)(r)
 
1 Month LIBOR
 
Capital Equipment
 
27,375

 
27,150

 
25,185

ES Chappaquiddick LLC, 10.00%, 5/18/2022
 
None
 
Media: Diversified & Production
 
925

 
925

 
946

Evergreen Skills Lux S.À.R.L., L+475, 1.00% LIBOR Floor, 4/28/2021(h)(q)
 
6 Month LIBOR
 
High Tech Industries
 
10,050

 
9,832

 
6,784

Extreme Reach, Inc., L+750, 0.00% LIBOR Floor, 3/29/2024(q)
 
1 Month LIBOR
 
Media: Diversified & Production
 
16,809

 
16,739

 
16,137

Extreme Reach, Inc., L+750, 0.00% LIBOR Floor, 3/29/2024(q)
 
1 Month LIBOR
 
Media: Diversified & Production
 
1,744

 
1,736

 
1,674

F+W Media, Inc., L+650, 1.50% LIBOR Floor, 5/24/2022(t)(u)(x)
 
1 Month LIBOR
 
Media: Diversified & Production
 
1,185

 
1,125

 
—

Flavors Holdings Inc., L+575, 1.00% LIBOR Floor, 4/3/2020(o)(q)
 
3 Month LIBOR
 
Consumer Goods: Non-Durable
 
13,388

 
13,384

 
13,288

Foundation Consumer Healthcare, LLC, L+550, 1.00% LIBOR Floor, 11/2/2023(o)(q)(r)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
40,799

 
40,511

 
40,595

Foundation Consumer Healthcare, LLC, 0.50% Unfunded, 11/2/2023
 
None
 
Healthcare & Pharmaceuticals
 
4,211

 
(19
)
 
(21
)
Genesis Healthcare, Inc., L+600, 0.50% LIBOR Floor, 3/6/2023(h)(o)(r)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
30,000

 
29,801

 
28,463

Geo Parent Corp., L+525, 0.00% LIBOR Floor, 12/19/2025(p)
 
1 Month LIBOR
 
Services: Business
 
14,850

 
14,720

 
14,033

Geon Performance Solutions, LLC, L+625, 1.63% LIBOR Floor, 10/25/2024(o)(q)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
17,370

 
17,263

 
16,328

Geon Performance Solutions, LLC, L+625, 1.63% LIBOR Floor, 10/25/2024
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
550

 
550

 
517

Geon Performance Solutions, LLC, 0.50% Unfunded, 10/25/2024
 
None
 
Chemicals, Plastics & Rubber
 
2,037

 
—

 
(122
)
Harland Clarke Holdings Corp., L+475, 1.00% LIBOR Floor, 11/3/2023(p)(r)
 
3 Month LIBOR
 
Services: Business
 
12,969

 
12,928

 
9,013

See accompanying notes to consolidated financial statements.

6


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Healogics, Inc., L+425, 1.00% LIBOR Floor, 7/1/2021(p)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
4,737

 
4,638

 
4,275

Hilliard, Martinez & Gonzales, LLP, L+1800, 2.00% LIBOR Floor, 12/17/2022(x)
 
1 Month LIBOR
 
Services: Consumer
 
15,098

 
14,964

 
14,834

Homer City Generation, L.P., L+1100, 1.00% LIBOR Floor, 4/5/2023(o)(t)
 
3 Month LIBOR
 
Energy: Oil & Gas
 
14,407

 
13,916

 
7,564

HUMC Holdco, LLC, 9.00%, 6/26/2020
 
None
 
Healthcare & Pharmaceuticals
 
10,000

 
9,988

 
9,600

Hummel Station LLC, L+600, 1.00% LIBOR Floor, 10/27/2022(p)
 
1 Month LIBOR
 
Energy: Oil & Gas
 
9,736

 
9,458

 
9,030

Hyperion Materials & Technologies, Inc., L+550, 1.00% LIBOR Floor, 8/28/2026(o)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
9,975

 
9,786

 
9,127

Independent Pet Partners Intermediate Holdings, LLC, L+900, 1.00% LIBOR Floor, 11/19/2023
 
3 Month LIBOR
 
Retail
 
12,553

 
12,465

 
11,486

Independent Pet Partners Intermediate Holdings, LLC, 1.00% Unfunded, 11/19/2023
 
None
 
Retail
 
7,363

 
(74
)
 
(626
)
Infinity Sales Group, LLC, L+1050, 1.00% LIBOR Floor, 11/23/2022(o)
 
1 Month LIBOR
 
Services: Business
 
6,820

 
6,708

 
6,820

InfoGroup Inc., L+500, 1.00% LIBOR Floor, 4/3/2023(p)(q)(r)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
15,716

 
15,703

 
13,987

Instant Web, LLC, L+650, 1.00% LIBOR Floor, 12/15/2022(o)(q)(r)
 
1 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
37,683

 
37,613

 
34,668

Instant Web, LLC, L+650, 1.00% LIBOR Floor, 12/15/2022
 
1 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
2,704

 
2,704

 
2,555

Isagenix International, LLC, L+575, 1.00% LIBOR Floor, 6/14/2025(p)
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
13,673

 
13,563

 
7,520

Island Medical Management Holdings, LLC, L+650, 1.00% LIBOR Floor, 9/1/2022(q)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
11,780

 
11,694

 
11,161

Jab Wireless, Inc., L+800, 0.00% LIBOR Floor, 5/2/2023(r)
 
1 Month LIBOR
 
Telecommunications
 
13,630

 
13,630

 
13,494

Jenny C Acquisition, Inc., L+1050, 0.00% LIBOR Floor, 10/1/2024(o)(x)
 
6 Month LIBOR
 
Services: Consumer
 
9,906

 
9,822

 
8,887

JP Intermediate B, LLC, L+550, 1.00% LIBOR Floor, 11/20/2025(p)
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
15,940

 
15,643

 
11,955

KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(t)(x)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
7,719

 
7,032

 
1,467

KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(t)(x)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
4,337

 
—

 
—

KNB Holdings Corp., L+550, 1.00% LIBOR Floor, 4/26/2024(p)(r)(t)
 
6 Month LIBOR
 
Consumer Goods: Durable
 
8,238

 
7,969

 
4,613

Labvantage Solutions Inc., L+750, 1.00% LIBOR Floor, 12/29/2020(q)
 
1 Month LIBOR
 
High Tech Industries
 
3,441

 
3,435

 
3,407

Labvantage Solutions Ltd., E+750, 1.00% EURIBOR Floor, 12/29/2020(h)
 
1 Month EURIBOR
 
High Tech Industries
 
€
3,619

 
4,058

 
3,952

LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/2024(o)(q)
 
3 Month LIBOR
 
Services: Business
 
19,814

 
19,572

 
18,105

LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/2024(q)
 
3 Month LIBOR
 
Services: Business
 
4,276

 
4,221

 
3,907

LAV Gear Holdings, Inc., 1.00% Unfunded, 4/7/2021
 
None
 
Services: Business
 
864

 
(8
)
 
(75
)
LD Intermediate Holdings, Inc., L+588, 1.00% LIBOR Floor, 12/9/2022(j)(p)
 
3 Month LIBOR
 
High Tech Industries
 
11,516

 
11,291

 
11,199

LGC US Finco, LLC, L+650, 1.00% LIBOR Floor, 12/20/2025(o)
 
1 Month LIBOR
 
Capital Equipment
 
9,975

 
9,683

 
9,676

Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/2023(o)(q)(r)(x)
 
3 Month LIBOR
 
Services: Consumer
 
43,403

 
42,776

 
36,893

Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/2023
 
3 Month LIBOR
 
Services: Consumer
 
2,500

 
2,500

 
2,125

Lift Brands, Inc., 1.00% Unfunded, 4/16/2023
 
None
 
Services: Consumer
 
2,500

 
—

 
(375
)
Longview Power, LLC, L+600, 1.00% LIBOR Floor, 4/13/2021(o)(t)
 
3 Month LIBOR
 
Energy: Oil & Gas
 
17,745

 
16,454

 
8,695

Manna Pro Products, LLC, L+600, 0.00% LIBOR Floor, 12/8/2023(o)
 
1 Month LIBOR
 
Retail
 
3,431

 
3,431

 
3,396

Manna Pro Products, LLC, L+600, 0.00% LIBOR Floor, 12/8/2023
 
1 Month LIBOR
 
Retail
 
1,115

 
1,115

 
1,104

Manna Pro Products, LLC, 1.00% Unfunded, 5/31/2021
 
None
 
Retail
 
4,413

 
—

 
(44
)
Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/2023(o)(r)
 
3 Month LIBOR
 
Services: Business
 
22,310

 
22,310

 
21,418

Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/2023
 
3 Month LIBOR
 
Services: Business
 
3,000

 
3,000

 
2,880

See accompanying notes to consolidated financial statements.

7


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Mimeo.com, Inc., 0.25% Unfunded, 12/21/2020
 
None
 
Services: Business
 
10,000

 
—

 
(400
)
Moss Holding Company, L+625, 1.00% LIBOR Floor, 4/17/2023(o)(q)
 
3 Month LIBOR
 
Services: Business
 
19,657

 
19,430

 
18,477

Moss Holding Company, 6.25% Unfunded, 4/17/2023
 
None
 
Services: Business
 
106

 
—

 
(6
)
Moss Holding Company, 0.50% Unfunded, 4/17/2023
 
None
 
Services: Business
 
2,126

 
—

 
(128
)
Moxie Patriot LLC, L+575, 1.00% LIBOR Floor, 12/19/2020(p)
 
3 Month LIBOR
 
Energy: Oil & Gas
 
9,774

 
9,768

 
9,371

Murray Energy Corp., L+725, 1.00% LIBOR Floor, 10/17/2022(t)
 
3 Month LIBOR
 
Metals & Mining
 
3,574

 
3,572

 
384

Murray Energy Corp., L+1100, 2.00% LIBOR Floor, 7/29/2020
 
1 Month LIBOR
 
Metals & Mining
 
662

 
646

 
600

NewsCycle Solutions, Inc., L+700, 1.00% LIBOR Floor, 12/29/2022(q)(r)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
14,664

 
14,569

 
14,224

One Call Corp., L+525, 1.00% LIBOR Floor, 11/25/2022(p)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
3,901

 
3,749

 
3,628

Optio Rx, LLC, L+700, 0.00% LIBOR Floor, 6/28/2024(q)(r)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
19,950

 
19,950

 
19,850

Palmetto Solar, LLC, 12.00%, 12/12/2024
 
None
 
High Tech Industries
 
4,979

 
4,699

 
4,655

Palmetto Solar, LLC, 0.75% Unfunded, 12/12/2021
 
None
 
High Tech Industries
 
15,021

 
—

 
(976
)
PFS Holding Corp., L+350, 1.00% LIBOR Floor, 1/31/2021(p)
 
3 Month LIBOR
 
Retail
 
3,097

 
2,815

 
2,795

PH Beauty Holdings III. Inc., L+500, 0.00% LIBOR Floor, 9/28/2025(p)
 
6 Month LIBOR
 
Consumer Goods: Non-Durable
 
4,875

 
4,834

 
4,485

Pixelle Specialty Solutions LLC, L+650, 1.00% LIBOR Floor, 10/31/2024(p)
 
1 Month LIBOR
 
Forest Products & Paper
 
20,644

 
20,220

 
19,818

Plano Molding Company, LLC, L+750, 1.00% LIBOR Floor, 5/12/2021(o)
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
5,995

 
5,969

 
5,680

Polymer Additives, Inc., L+600, 0.00% LIBOR Floor, 7/31/2025(o)(p)
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
19,750

 
19,424

 
16,195

Polymer Process Holdings, Inc., L+600, 0.00% LIBOR Floor, 5/1/2026(p)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
19,838

 
19,478

 
18,846

Rhino Energy LLC, L+1000, 1.00% LIBOR Floor, 12/27/2022(r)
 
1 Month LIBOR
 
Metals & Mining
 
10,043

 
9,825

 
9,240

SCIH Salt Intermediate Holdings Inc., L+450, 1.00% LIBOR Floor, 3/16/2027
 
3 Month LIBOR
 
Metals & Mining
 
10,000

 
9,900

 
9,200

Securus Technologies Holdings, Inc., L+450, 1.00% LIBOR Floor, 11/1/2024(p)
 
6 Month LIBOR
 
Telecommunications
 
3,980

 
2,931

 
3,865

SEK Holding Co LLC, L+1150, 0.00% LIBOR Floor, 3/14/2022(o)(x)
 
1 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
15,552

 
15,301

 
14,164

Sequoia Healthcare Management, LLC, 12.75%, 8/21/2023(o)(q)
 
None
 
Healthcare & Pharmaceuticals
 
8,954

 
8,888

 
7,969

SIMR, LLC, L+1700, 2.00% LIBOR Floor, 9/7/2023(o)(u)(x)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
15,319

 
15,095

 
14,361

Smart & Final Inc., L+675, 0.00% LIBOR Floor, 6/20/2025(p)
 
1 Month LIBOR
 
Retail
 
9,925

 
9,092

 
9,429

Sorenson Communications, LLC, L+650, 0.00% LIBOR Floor, 4/30/2024(j)(p)
 
3 Month LIBOR
 
Telecommunications
 
14,144

 
13,722

 
13,278

Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 6/30/2021(o)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
12,623

 
12,616

 
11,487

Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 6/30/2021(o)(x)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
1,043

 
1,043

 
991

Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 6/30/2021(o)(x)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
557

 
493

 
507

Stats Intermediate Holdings, LLC, L+525, 0.00% LIBOR Floor, 7/12/2026(p)
 
6 Month LIBOR
 
High Tech Industries
 
9,975

 
9,772

 
8,903

Teladoc, Inc., 0.50% Unfunded, 7/14/2020
 
None
 
High Tech Industries
 
1,250

 
(4
)
 
—

Telestream Holdings Corp., L+645, 1.00% LIBOR Floor, 3/24/2022(k)(o)
 
3 Month LIBOR
 
High Tech Industries
 
8,746

 
8,656

 
8,484

Tenere Inc., L+1000, 1.00% LIBOR Floor, 12/23/2021(o)(q)
 
3 Month LIBOR
 
Capital Equipment
 
28,080

 
27,835

 
28,080

Tensar Corp., L+475, 1.00% LIBOR Floor, 7/9/2021
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
12,980

 
12,686

 
12,850

See accompanying notes to consolidated financial statements.

8


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
The Pasha Group, L+750, 1.00% LIBOR Floor, 1/26/2023(q)
 
2 Month LIBOR
 
Transportation: Cargo
 
5,451

 
5,348

 
5,369

The Pay-O-Matic Corp., L+900, 0.00% LIBOR Floor, 4/5/2021(g)(o)
 
3 Month LIBOR
 
Services: Consumer
 
9,037

 
9,004

 
8,857

Therapure Biopharma Inc., L+875, 0.50% LIBOR Floor, 12/1/2021(h)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
12,974

 
12,949

 
12,017

Volta Charging, LLC, 12.00%, 6/19/2024
 
None
 
Media: Diversified & Production
 
10,000

 
10,000

 
10,000

Volta Charging, LLC, 12.00%, 6/19/2024
 
None
 
Media: Diversified & Production
 
6,150

 
6,117

 
6,150

Volta Charging, LLC, 0.00% Unfunded, 6/19/2021(s)
 
None
 
Media: Diversified & Production
 
5,850

 
—

 
—

West Dermatology Management Holdings, LLC, L+600, 0.00% LIBOR Floor, 2/11/2025(q)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
9,503

 
9,412

 
9,123

West Dermatology Management Holdings, LLC, L+600, 0.00% LIBOR Floor, 2/11/2025
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
1,657

 
1,642

 
1,591

West Dermatology Management Holdings, LLC, 0.75% Unfunded, 2/11/2022
 
None
 
Healthcare & Pharmaceuticals
 
8,840

 
(42
)
 
(354
)
Winebow Holdings, Inc., L+375, 1.00% LIBOR Floor, 7/1/2021(j)(q)
 
1 Month LIBOR
 
Beverage, Food & Tobacco
 
5,984

 
5,528

 
5,371

Wok Holdings Inc., L+650, 0.00% LIBOR Floor, 3/1/2026(p)
 
6 Month LIBOR
 
Beverage, Food & Tobacco
 
12,870

 
12,710

 
10,441

Woodstream Corp., L+600, 1.00% LIBOR Floor, 5/29/2022(r)
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
9,267

 
9,267

 
9,151

Woodstream Corp., L+600, 1.00% LIBOR Floor, 5/29/2022
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
559

 
559

 
552

Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
1,396,530

 
1,274,325

Senior Secured Second Lien Debt - 24.3%
 
 
 
 
 
 
 
 
 
 
1A Smart Start LLC, L+825, 1.00% LIBOR Floor, 8/21/2022(o)(q)
 
6 Month LIBOR
 
High Tech Industries
 
13,800

 
13,636

 
13,179

Access CIG, LLC, L+775, 0.00% LIBOR Floor, 2/27/2026(q)
 
3 Month LIBOR
 
Services: Business
 
17,250

 
17,129

 
15,956

Albany Molecular Research, Inc., L+700, 1.00% LIBOR Floor, 8/30/2025(o)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
10,000

 
9,847

 
9,563

American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2022(o)
 
3 Month LIBOR
 
Construction & Building
 
5,180

 
5,148

 
4,850

Carestream Health, Inc., L+950, 1.00% LIBOR Floor, 6/7/2021(q)(x)
 
6 Month LIBOR
 
Healthcare & Pharmaceuticals
 
10,689

 
10,689

 
10,048

Country Fresh Holdings, LLC, L+850, 1.00% LIBOR Floor, 4/29/2024(x)
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
2,081

 
2,081

 
1,977

Dayton Superior Corp., L+700, 2.00% LIBOR Floor, 12/4/2024
 
3 Month LIBOR
 
Construction & Building
 
1,504

 
1,504

 
1,428

Deluxe Entertainment Services Inc., L+850, 1.00% LIBOR Floor, 9/25/2024(p)(u)(x)
 
3 Month LIBOR
 
Media: Diversified & Production
 
10,077

 
9,872

 
8,503

EagleTree-Carbide Acquisition Corp., L+850, 1.00% LIBOR Floor, 8/28/2025(o)(q)
 
3 Month LIBOR
 
Consumer Goods: Durable
 
25,000

 
24,705

 
24,250

Evergreen Skills Lux S.À.R.L., L+825, 1.00% LIBOR Floor, 4/28/2022(h)(p)(t)
 
3 Month LIBOR
 
High Tech Industries
 
9,999

 
7,886

 
1,800

Global Tel*Link Corp., L+825, 0.00% LIBOR Floor, 11/29/2026(q)
 
3 Month LIBOR
 
Telecommunications
 
11,500

 
11,316

 
10,925

LSCS Holdings, Inc., L+825, 0.00% LIBOR Floor, 3/16/2026(o)
 
3 Month LIBOR
 
Services: Business
 
11,891

 
11,662

 
9,513

Medical Solutions Holdings, Inc., L+838, 1.00% LIBOR Floor, 6/16/2025(o)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
10,000

 
9,881

 
9,400

MedPlast Holdings, Inc., L+775, 0.00% LIBOR Floor, 7/2/2026(r)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
6,750

 
6,692

 
5,805

Ministry Brands, LLC, L+925, 1.00% LIBOR Floor, 6/2/2023(o)(q)
 
2 Month LIBOR
 
Services: Business
 
7,000

 
6,946

 
6,650

Niacet Corp., E+875, 1.00% EURIBOR Floor, 8/1/2024(h)(p)
 
1 Month EURIBOR
 
Chemicals, Plastics & Rubber
 
€
7,489

 
7,991

 
8,137

Patterson Medical Supply, Inc., L+850, 1.00% LIBOR Floor, 8/28/2023(o)(y)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
13,500

 
13,425

 
11,138

PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023(o)
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
10,000

 
9,868

 
8,750

PFS Holding Corp., L+725, 1.00% LIBOR Floor, 1/31/2022(t)
 
3 Month LIBOR
 
Retail
 
4,998

 
4,155

 
—

Premiere Global Services, Inc., L+950, 1.00% LIBOR Floor, 6/6/2024(x)
 
3 Month LIBOR
 
Telecommunications
 
3,158

 
3,055

 
1,184

See accompanying notes to consolidated financial statements.

9


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Securus Technologies Holdings, Inc., L+825, 1.00% LIBOR Floor, 11/1/2025
 
1 Month LIBOR
 
Telecommunications
 
2,942

 
2,916

 
2,424

TMK Hawk Parent, Corp., L+800, 1.00% LIBOR Floor, 8/28/2025(o)
 
1 Month LIBOR
 
Services: Business
 
13,393

 
13,132

 
11,116

Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022(o)(t)
 
1 Month LIBOR
 
Beverage, Food & Tobacco
 
12,823

 
12,594

 
8,014

Zest Acquisition Corp., L+750, 1.00% LIBOR Floor, 3/14/2026(q)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
15,000

 
14,876

 
13,200

Zywave Inc., L+900, 1.00% LIBOR Floor, 11/17/2023(o)(q)
 
3 Month LIBOR
 
High Tech Industries
 
3,445

 
3,401

 
3,355

Total Senior Secured Second Lien Debt
 

 
 
 
 
 
234,407

 
201,165

Collateralized Securities and Structured Products - Equity - 1.3%
 
 
 
 
 
 
 
 
 
 
APIDOS CLO XVI Subordinated Notes, 0.00% Estimated Yield, 1/19/2025(h)
 
(f)
 
Diversified Financials
 
9,000

 
3,671

 
2,088

CENT CLO 19 Ltd. Subordinated Notes, 0.00% Estimated Yield, 10/29/2025(h)
 
(f)
 
Diversified Financials
 
2,000

 
1,163

 
85

Galaxy XV CLO Ltd. Class A Subordinated Notes, 5.76% Estimated Yield, 4/15/2025(h)
 
(f)
 
Diversified Financials
 
4,000

 
2,175

 
777

Ivy Hill Middle Market Credit Fund VIII, Ltd. Subordinated Loan, 11.84% Estimated Yield, 2/2/2026(h)
 
(f)
 
Diversified Financials
 
10,000

 
9,277

 
8,022

Total Collateralized Securities and Structured Products - Equity
 
 
 
 
 
 
 
16,286

 
10,972

Unsecured Debt - 0.6%
 
 
 
 
 
 
 
 
 
 
WPLM Acquisition Corp., 15.00%, 11/24/2025(x)
 
None
 
Media: Advertising, Printing & Publishing
 
5,000

 
4,905

 
4,800

Total Unsecured Debt
 
 
 
 
 
 
 
4,905

 
4,800

Equity - 10.9%
 
 
 
 
 
 
 
 
 
 
Anthem Sports and Entertainment Inc., Class A Preferred Stock Warrants(s)
 
 
 
Media: Diversified & Production
 
769 Units

 
205

 
95

Anthem Sports and Entertainment Inc., Class B Preferred Stock Warrants(s)
 
 
 
Media: Diversified & Production
 
135 Units

 
—

 
—

Anthem Sports and Entertainment Inc., Common Stock Warrants(s)
 
 
 
Media: Diversified & Production
 
2,508 Units

 
—

 
—

Ascent Resources - Marcellus, LLC, Common Shares(s)
 
 
 
Energy: Oil & Gas
 
511,255 Units

 
1,642

 
495

Ascent Resources - Marcellus, LLC, Warrants(s)
 
 
 
Energy: Oil & Gas
 
132,367 Units

 
13

 
2

Avaya Holdings Corp., Common Stock(i)(p)(s)
 
 
 
Telecommunications
 
321,260 Units

 
5,285

 
2,599

BCP Great Lakes Fund LP, Partnership Interests (31.7% ownership)(h)(v)
 
 
 
Diversified Financials
 
N/A

 
12,075

 
10,884

CHC Medical Partners, Inc., Series C Preferred Stock, 12% Dividend(w)
 
 
 
Healthcare & Pharmaceuticals
 
2,727,273 Units

 
5,274

 
4,500

CION SOF Funding, LLC, Membership Interests (87.5% ownership)(h)(v)
 
 
 
Diversified Financials
 
N/A

 
31,289

 
27,672

Conisus Holdings, Inc., Series B Preferred Stock, 12% Dividend(u)(w)
 
 
 
Healthcare & Pharmaceuticals
 
12,677,833 Units

 
13,690

 
13,877

Conisus Holdings, Inc., Common Stock(s)(u)
 
 
 
Healthcare & Pharmaceuticals
 
4,914,556 Units

 
200

 
2,991

Country Fresh Holdings, LLC, Common Stock(s)
 
 
 
Beverage, Food & Tobacco
 
2,985 Units

 
5,249

 
1,417

David's Bridal, Inc., Series A Preferred Stock(s)
 
 
 
Retail
 
1,396 Units

 
140

 
143

David's Bridal, Inc., Series B Preferred Stock(s)
 
 
 
Retail
 
4,183 Units

 
410

 
104

David's Bridal, Inc., Common Stock(s)
 
 
 
Retail
 
39,423 Units

 
—

 
—

David's Bridal, Inc., Reallocation Rights(s)
 
 
 
Retail
 
7,500 Units

 
—

 
—

Dayton HoldCo, LLC, Common Stock(s)
 
 
 
Construction & Building
 
37,264 Units

 
4,136

 
4,913

DESG Holdings, Inc., Common Stock(j)(p)(s)(u)
 
 
 
Media: Diversified & Production
 
1,268,143 Units

 
13,662

 
13,671

HDNet Holdco LLC, Preferred Unit Call Option(s)
 
 
 
Media: Diversified & Production
 
1 Unit

 
—

 
—

See accompanying notes to consolidated financial statements.

10


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
Portfolio Company(a)
 
 
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Independent Pet Partners Intermediate Holdings, LLC, Class A Preferred Units(s)
 
 
 
Retail
 
1,000,000 Units
 
1,000

 
800

Independent Pet Partners Intermediate Holdings, LLC, Warrants(s)
 
 
 
Retail
 
155,880 Units
 
—

 
—

Mooregate ITC Acquisition, LLC, Class A Units(s)
 
 
 
High Tech Industries
 
500 Units
 
563

 
68

Mount Logan Capital Inc., Common Stock(h)(i)(s)(u)
 
 
 
Banking, Finance, Insurance & Real Estate
 
980,284 Units
 
3,335

 
2,091

NS NWN Acquisition, LLC, Voting Units(s)
 
 
 
High Tech Industries
 
346 Units
 
393

 
443

NS NWN Acquisition, LLC, Class A Preferred Units(s)
 
 
 
High Tech Industries
 
111 Units
 
111

 
331

NSG Co-Invest (Bermuda) LP, Partnership Interests(h)(s)
 
 
 
Consumer Goods: Durable
 
1,575 Units
 
1,000

 
218

Palmetto Solar, LLC, Warrants(s)
 
 
 
High Tech Industries
 
346,694 Units
 
295

 
170

Rhino Energy LLC, Warrants(s)
 
 
 
Metals & Mining
 
170,972 Units
 
280

 
13

SIMR Parent, LLC, Class B Common Units(s)(u)
 
 
 
Healthcare & Pharmaceuticals
 
12,283,000 Units
 
8,002

 
970

Spinal USA, Inc. / Precision Medical Inc., Warrants(s)
 
 
 
Healthcare & Pharmaceuticals
 
14,181,915 Units
 
5,806

 
—

Tenere Inc., Warrants(s)
 
 
 
Capital Equipment
 
N/A
 
161

 
1,234

Total Equity
 
 
 
 
 
 
 
114,216

 
89,701

Short Term Investments - 6.9%(m)
 
 
 
 
 
 
 
 
 
 
First American Treasury Obligations Fund, Class Z Shares, 0.28%(n)
 
 
 
 
 
 
 
56,657

 
56,657

Total Short Term Investments
 
 
 
 
 
 
 
56,657

 
56,657

TOTAL INVESTMENTS - 198.3%
 
 
 
 
 
 
 
$
1,823,001

 
1,637,620

LIABILITIES IN EXCESS OF OTHER ASSETS - (98.3%)
 
 
 
 
 
 
 
 
 
(811,762
)
NET ASSETS - 100%
 
 
 
 
 
 
 
 
 
$
825,858

a.
All of the Company’s investments are issued by eligible U.S. portfolio companies, as defined in the Investment Company Act of 1940, as amended, or the 1940 Act, except for investments specifically identified as non-qualifying per note h. below. Unless specifically identified in note x. below, investments do not contain a paid-in-kind, or PIK, interest provision.
b.
The 1, 2, 3, and 6 month London Interbank Offered Rate, or LIBOR, rates were 0.99%, 1.26%, 1.45%, and 1.18%, respectively, as of March 31, 2020.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of March 31, 2020, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to March 31, 2020. The 1 month Euro Interbank Offered Rate, or EURIBOR, rate was (0.39%) as of March 31, 2020.
c.
Fair value determined in good faith by the Company’s board of directors (see Note 9) using significant unobservable inputs unless otherwise noted.
d.
Represents amortized cost for debt securities and cost for equity investments.
e.
Denominated in U.S. dollars unless otherwise noted.
f.
The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
g.
As a result of an arrangement between the Company and the other lenders in the syndication, the Company is entitled to less interest than the stated interest rate of this loan, which is reflected in this schedule, in exchange for a higher payment priority.
h.
The investment or a portion thereof is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets as defined under Section 55 of the 1940 Act. As of March 31, 2020, 92.5% of the Company’s total assets represented qualifying assets.
i.
Fair value determined using level 1 inputs.
j.
Position or a portion thereof unsettled as of March 31, 2020.
k.
In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional amounts as a result of an arrangement between the Company and the other lenders in the syndication in exchange for a lower payment priority.
l.
In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional residual amounts.
m.
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
See accompanying notes to consolidated financial statements.

11


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
n.
7-day effective yield as of March 31, 2020.
o.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 34th Street Funding, LLC, or 34th Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with JPMorgan Chase Bank, National Association, or JPM, as of March 31, 2020 (see Note 8).
p.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Flatiron Funding II, LLC, or Flatiron Funding II, and was pledged as collateral supporting the amounts outstanding under the credit facility with Citibank, N.A., or Citibank, as of March 31, 2020 (see Note 8).
q.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Murray Hill Funding II, LLC, or Murray Hill Funding II, and was pledged as collateral supporting the amounts outstanding under the repurchase agreement with UBS AG, or UBS, as of March 31, 2020 (see Note 8).
r.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 33rd Street Funding, LLC, or 33rd Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with Morgan Stanley N.A., or MS, as of March 31, 2020 (see Note 8).
s.
Non-income producing security.
t.
Investment or a portion thereof was on non-accrual status as of March 31, 2020.
u.
Investment determined to be an affiliated investment as defined in the 1940 Act as the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities but does not control the portfolio company. Fair value as of December 31, 2019 and March 31, 2020, along with transactions during the three months ended March 31, 2020 in these affiliated investments, are as follows:
 
 
 
 
Three Months Ended March 31, 2020
 
 
 
Three Months Ended March 31, 2020
Non-Controlled, Affiliated Investments
 
Fair Value at
December 31, 2019
 
Gross
Additions
(Cost)(1)
 
Gross
Reductions
(Cost)(2)
 
Net Unrealized Gain (Loss)
 
Fair Value at March 31, 2020
 
Net Realized Gain (Loss)
 
Interest
Income(3)
 
Dividend Income
    Charming Charlie, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan B1
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

        First Lien Term Loan B2
 
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
—

        Vendor Payment Financing Facility
 
472

 
7

 
(104
)
 
29

 
404

 
—

 
7

 
—

    Conisus Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Series B Preferred Stock(w)
 
13,270

 
475

 
—

 
132

 
13,877

 
—

 
—

 
475

        Common Stock
 
1,426

 
—

 
—

 
1,565

 
2,991

 
—

 
—

 
—

    DESG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan
 
28,978

 
329

 
—

 
(3,764
)
 
25,543

 
—

 
505

 
—

        Second Lien Term Loan
 
9,717

 
196

 
—

 
(1,410
)
 
8,503

 
—

 
270

 
—

        Common Stock
 
14,763

 
—

 
—

 
(1,092
)
 
13,671

 
—

 
—

 
—

    F+W Media, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan B-1
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

    Mount Logan Capital Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Common Stock
 
2,505

 
—

 
—

 
(414
)
 
2,091

 
—

 
—

 
—

    SIMR, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan
 
14,205

 
242

 
—

 
(86
)
 
14,361

 
—

 
800

 
—

    SIMR Parent, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Class B Common Units
 
3,980

 
—

 
—

 
(3,010
)
 
970

 
—

 
—

 
—

    Petroflow Energy Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan
 
10

 
—

 
(223
)
 
213

 
—

 
(211
)
 
—

 
—

    Totals
 
$
89,326

 
$
1,249

 
$
(327
)
 
$
(7,837
)
 
$
82,411

 
$
(211
)
 
$
1,581

 
$
475

(1)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
(2)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
See accompanying notes to consolidated financial statements.

12


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
(3)
Includes PIK interest income.
v.
Investment determined to be a controlled investment as defined in the 1940 Act as the Company is deemed to exercise a controlling influence over the management or policies of the portfolio company due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of such portfolio company. Fair value as of December 31, 2019 and March 31, 2020, along with transactions during the three months ended March 31, 2020 in these controlled investments are as follows:
 
 
 
 
Three Months Ended March 31, 2020
 
 
 
Three Months Ended March 31, 2020
Controlled Investments
 
Fair Value at
December 31, 2019
 
Gross
Additions
(Cost)(1)
 
Gross
Reductions
(Cost)(2)
 
Net 
Unrealized
Gain (Loss)
 
Fair Value at
March 31, 2020
 
Net Realized
Gain (Loss)
 
Interest
Income(3)
 
Dividend Income
    BCP Great Lakes Fund LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Membership Interests
 
$
14,238

 
$
87

 
$
(2,220
)
 
$
(1,221
)
 
$
10,884

 
$
—

 
$
—

 
$
243

    CION SOF Funding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Membership Interests
 
31,265

 
—

 
—

 
(3,593
)
 
27,672

 
—

 
—

 
1,412

    Totals
 
$
45,503

 
$
87

 
$
(2,220
)
 
$
(4,814
)
 
$
38,556

 
$
—

 
$
—

 
$
1,655

(1)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
(2)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
(3)
Includes PIK interest income.
w.
For the three months ended March 31, 2020, non-cash dividend income of $475 and $135 was recorded on the Company's investment in Conisus Holdings, Inc. and CHC Medical Partners, Inc., respectively.
See accompanying notes to consolidated financial statements.

13


CĪON Investment Corporation
Consolidated Schedule of Investments (unaudited)
March 31, 2020
(in thousands)
x.
For the three months ended March 31, 2020, the following investments contain a PIK interest provision whereby the issuer has either the option or the obligation to make interest payments with the issuance of additional securities:
 
 
 
 
Interest Rate
Portfolio Company
 
Investment Type
 
Cash
 
PIK
 
All-in-Rate
American Clinical Solutions LLC
 
Senior Secured First Lien Debt
 
—
 
2.00%
 
2.00%
Anthem Sports & Entertainment Inc.
 
Senior Secured First Lien Debt
 
8.20%
 
2.75%
 
10.95%
APC Automotive Technologies, LLC
 
Senior Secured First Lien Debt
 
5.38%
 
1.34%
 
6.72%
Carestream Health, Inc.
 
Senior Secured Second Lien Debt
 
10.57%
 
1.00%
 
11.57%
Charming Charlie, LLC
 
Senior Secured First Lien Debt
 
7.05%
 
5.00%
 
12.05%
Charming Charlie, LLC
 
Senior Secured First Lien Debt
 
3.05%
 
9.00%
 
12.05%
CHC Solutions Inc.
 
Senior Secured First Lien Debt
 
8.00%
 
4.00%
 
12.00%
Country Fresh Holdings, LLC
 
Senior Secured Second Lien Debt
 
—
 
9.95%
 
9.95%
David's Bridal, LLC
 
Senior Secured First Lien Debt
 
1.00%
 
6.65%
 
7.65%
Deluxe Entertainment Services, Inc.
 
Senior Secured First Lien Debt
 
6.45%
 
1.50%
 
7.95%
Deluxe Entertainment Services, Inc.
 
Senior Secured Second Lien Debt
 
7.45%
 
2.50%
 
9.95%
F+W Media, Inc.
 
Senior Secured First Lien Debt
 
—
 
8.21%
 
8.21%
Hilliard, Martinez & Gonzales, LLP
 
Senior Secured First Lien Debt
 
—
 
20.00%
 
20.00%
Jenny C Acquisition, Inc.
 
Senior Secured First Lien Debt
 
—
 
12.56%
 
12.56%
KLO Intermediate Holdings, LLC
 
Senior Secured First Lien Debt
 
—
 
9.38%
 
9.38%
Lift Brands, Inc.
 
Senior Secured First Lien Debt
 
8.45%
 
1.00%
 
9.45%
Premiere Global Services, Inc.
 
Senior Secured Second Lien Debt
 
0.50%
 
10.85%
 
11.35%
SEK Holding Co LLC
 
Senior Secured First Lien Debt
 
9.00%
 
3.50%
 
12.50%
SIMR, LLC
 
Senior Secured First Lien Debt
 
12.00%
 
7.00%
 
19.00%
Spinal USA, Inc. / Precision Medical Inc.
 
Senior Secured First Lien Debt
 
—
 
10.47%
 
10.47%
WPLM Acquisition Corp.
 
Unsecured Note
 
—
 
15.00%
 
15.00%
y.
Due to an amendment between the Company and the borrower subsequent to March 31, 2020, the borrower paid all interest amounts accrued as of March 31, 2020 in-kind.
See accompanying notes to consolidated financial statements.

14


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Senior Secured First Lien Debt - 141.9%
 
 
 
 
 
 
 
 
 
 
Academy, Ltd., L+400, 1.00% LIBOR Floor, 7/1/2022(p)
 
1 Month LIBOR
 
Retail
 
$
14,236

 
$
12,656

 
$
11,815

ACProducts, Inc., L+550, 0.00% LIBOR Floor, 2/15/2024(p)
 
1 Month LIBOR
 
Construction & Building
 
4,906

 
4,693

 
4,900

Adams Publishing Group, LLC, L+750, 1.00% LIBOR Floor, 7/2/2023(o)(q)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
13,353

 
13,245

 
13,286

Adams Publishing Group, LLC, 0.38% Unfunded, 7/2/2020(o)
 
None
 
Media: Advertising, Printing & Publishing
 
1,600

 
—

 
(8
)
Adapt Laser Acquisition, Inc., L+800, 1.00% LIBOR Floor, 12/31/2023(o)
 
3 Month LIBOR
 
Capital Equipment
 
11,640

 
11,640

 
10,956

Adapt Laser Acquisition, Inc., 0.50% Unfunded, 12/31/2023
 
None
 
Capital Equipment
 
2,000

 
—

 
(118
)
Aegis Toxicology Sciences Corp., L+550, 1.00% LIBOR Floor, 5/9/2025(p)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
9,875

 
9,706

 
9,357

AIS Holdco, LLC, L+500, 0.00% LIBOR Floor, 8/15/2025(p)
 
3 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
5,382

 
5,322

 
5,005

Alchemy US Holdco 1, LLC, L+550,10/10/2025(p)
 
1 Month LIBOR
 
Construction & Building
 
7,800

 
7,697

 
7,685

Allen Media Broadcasting LLC, L+625, 1.00% LIBOR Floor, 7/3/2024(o)(q)
 
2 Month LIBOR
 
Media: Diversified & Production
 
24,688

 
24,070

 
25,058

Allen Media, LLC, L+650, 1.00% LIBOR Floor, 8/30/2023(o)(p)(q)(r)
 
3 Month LIBOR
 
Media: Diversified & Production
 
67,124

 
65,820

 
67,795

ALM Media, LLC, L+650, 1.00% LIBOR Floor, 11/25/2024(o)(q)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
20,000

 
19,607

 
19,600

AMCP Staffing Intermediate Holdings III, LLC, L+675, 1.50% LIBOR Floor, 9/24/2025(r)
 
3 Month LIBOR
 
Services: Business
 
10,000

 
9,943

 
9,950

AMCP Staffing Intermediate Holdings III, LLC, L+675, 1.50% LIBOR Floor, 9/24/2025
 
3 Month LIBOR
 
Services: Business
 
539

 
539

 
536

AMCP Staffing Intermediate Holdings III, LLC, 0.50% Unfunded, 9/24/2025
 
None
 
Services: Business
 
1,059

 
—

 
(5
)
American Clinical Solutions LLC, 7.00%, 12/31/2022
 
None
 
Healthcare & Pharmaceuticals
 
3,500

 
3,395

 
3,395

American Clinical Solutions LLC, 2.00%, 12/31/2022(x)
 
None
 
Healthcare & Pharmaceuticals
 
6,000

 
4,192

 
4,192

American Media, LLC, L+775, 0.00% LIBOR Floor, 12/31/2023(o)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
15,471

 
15,146

 
15,316

American Media, LLC, L+775, 0.00% LIBOR Floor, 12/31/2023
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
1,574

 
1,539

 
1,559

American Media, LLC, 0.50% Unfunded, 12/31/2023
 
None
 
Media: Advertising, Printing & Publishing
 
128

 
—

 
(1
)
American Teleconferencing Services, Ltd., L+650, 1.00% LIBOR Floor, 12/8/2021(o)(p)(q)(r)
 
3 Month LIBOR
 
Telecommunications
 
19,549

 
18,570

 
11,631

Analogic Corp., L+600, 1.00% LIBOR Floor, 6/21/2024(q)(r)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
24,321

 
23,928

 
24,078

Anthem Sports & Entertainment Inc., L+950, 1.00% LIBOR Floor, 9/9/2024(o)(x)
 
3 Month LIBOR
 
Media: Diversified & Production
 
12,624

 
12,470

 
12,498

Anthem Sports & Entertainment Inc., L+950, 1.00% LIBOR Floor, 9/9/2024
 
3 Month LIBOR
 
Media: Diversified & Production
 
833

 
833

 
833

Anthem Sports & Entertainment Inc., 0.50% Unfunded, 9/9/2024
 
None
 
Media: Diversified & Production
 
1,333

 
—

 
—

APC Automotive Technologies, LLC, L+500, 1.00% LIBOR Floor, 5/10/2025(p)(q)
 
3 Month LIBOR
 
Automotive
 
8,892

 
8,551

 
8,692

APC Automotive Technologies, LLC, L+500, 1.00% LIBOR Floor, 5/10/2024(p)(q)
 
3 Month LIBOR
 
Automotive
 
2,780

 
2,624

 
1,321

APCO Holdings, LLC, L+550, 0.00% LIBOR Floor, 6/9/2025(p)
 
1 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
10,827

 
10,735

 
10,773

Ascent Resources - Marcellus, LLC, L+650, 1.00% LIBOR Floor, 3/30/2023
 
1 Month LIBOR
 
Energy: Oil & Gas
 
712

 
712

 
673

Associated Asphalt Partners, LLC, L+525, 1.00% LIBOR Floor, 4/5/2024(p)
 
1 Month LIBOR
 
Construction & Building
 
10,738

 
10,599

 
9,973

Avison Young (USA) Inc., L+500, 0.00% LIBOR Floor, 1/31/2026(h)(p)
 
3 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
9,900

 
9,719

 
9,745

Bi-Lo, LLC, L+800, 1.00% LIBOR Floor, 5/31/2024(p)(q)
 
2 Month LIBOR
 
Retail
 
12,864

 
12,535

 
12,639

Cadence Aerospace, LLC, L+650, 1.00% LIBOR Floor, 11/14/2023(q)(r)
 
3 Month LIBOR
 
Aerospace & Defense
 
30,685

 
30,430

 
30,378

Cardinal US Holdings, Inc., L+500, 1.00% LIBOR Floor, 7/31/2023(p)
 
3 Month LIBOR
 
Services: Business
 
8,309

 
7,915

 
8,226

See accompanying notes to consolidated financial statements.

15


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
CB URS Holdings Corp., L+575, 1.00% LIBOR Floor, 9/1/2024(p)(r)
 
1 Month LIBOR
 
Transportation: Cargo
 
16,410

 
16,327

 
14,687

Central Security Group, Inc., L+563, 1.00% LIBOR Floor, 10/6/2021(p)(r)
 
1 Month LIBOR
 
Services: Consumer
 
19,416

 
19,424

 
16,892

Charming Charlie LLC, 20.00%, 5/15/2020(t)(u)
 
None
 
Retail
 
845

 
754

 
472

Charming Charlie LLC, L+1200, 1.00% LIBOR Floor, 4/24/2023(t)(u)(x)
 
1 Month LIBOR
 
Retail
 
2,936

 
—

 
—

Charming Charlie LLC, L+1200, 1.00% LIBOR Floor, 4/24/2023(t)(u)(x)
 
1 Month LIBOR
 
Retail
 
3,595

 
—

 
—

CHC Solutions Inc., 12.00%, 7/20/2023(x)
 
None
 
Healthcare & Pharmaceuticals
 
7,347

 
7,347

 
7,347

CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021(q)(r)
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
17,896

 
17,728

 
17,538

CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
2,424

 
2,424

 
2,375

CircusTrix Holdings, LLC, 1.00% Unfunded, 12/16/2021
 
None
 
Hotel, Gaming & Leisure
 
2,892

 
—

 
(58
)
Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 4/29/2023
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
694

 
653

 
694

Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 4/29/2023
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
414

 
413

 
414

Country Fresh Holdings, LLC, 1.00% Unfunded, 4/29/2023
 
None
 
Beverage, Food & Tobacco
 
327

 
—

 
—

Crown Subsea Communications Holdings, Inc., L+600, 0.00% LIBOR Floor, 11/2/2025(p)
 
1 Month LIBOR
 
Capital Equipment
 
5,788

 
5,685

 
5,781

David's Bridal, LLC, L+600, 1.00% LIBOR Floor, 6/30/2023(x)
 
3 Month LIBOR
 
Retail
 
698

 
584

 
698

Deluxe Entertainment Services, Inc., L+650, 1.00% LIBOR Floor, 3/25/2024(j)(u)(x)
 
3 Month LIBOR
 
Media: Diversified & Production
 
23,656

 
23,656

 
28,978

DMT Solutions Global Corp., L+700, 0.00% LIBOR Floor, 7/2/2024(p)(r)
 
6 Month LIBOR
 
Services: Business
 
18,500

 
18,061

 
18,038

Eagle Family Foods Group LLC, L+650, 1.00% LIBOR Floor, 6/14/2024(r)
 
6 Month LIBOR
 
Beverage, Food & Tobacco
 
14,775

 
14,518

 
14,332

Entertainment Studios P&A LLC, 6.35%, 5/18/2037(l)
 
None
 
Media: Diversified & Production
 
14,448

 
14,346

 
13,942

Entertainment Studios P&A LLC, 5.00%, 5/18/2037(l)
 
None
 
Media: Diversified & Production
 
—

 
—

 
2,381

EnTrans International, LLC, L+600, 0.00% LIBOR Floor, 11/1/2024(p)(r)
 
1 Month LIBOR
 
Capital Equipment
 
27,750

 
27,512

 
26,918

ES Chappaquiddick LLC, 10.00%, 5/18/2022
 
None
 
Media: Diversified & Production
 
925

 
925

 
937

Evergreen Skills Lux S.À.R.L., L+475, 1.00% LIBOR Floor, 4/28/2021(h)(p)
 
3 Month LIBOR
 
High Tech Industries
 
10,077

 
9,810

 
7,860

Extreme Reach, Inc., L+750, 0.00% LIBOR Floor, 3/29/2024(q)
 
1 Month LIBOR
 
Media: Diversified & Production
 
17,126

 
17,047

 
17,040

Extreme Reach, Inc., 0.50% Unfunded, 3/29/2024
 
None
 
Media: Diversified & Production
 
1,744

 
(1
)
 
(9
)
F+W Media, Inc., L+650, 1.50% LIBOR Floor, 5/24/2022(t)(u)(x)
 
1 Month LIBOR
 
Media: Diversified & Production
 
1,176

 
1,125

 
—

Flavors Holdings Inc., L+575, 1.00% LIBOR Floor, 4/3/2020(o)(q)
 
3 Month LIBOR
 
Consumer Goods: Non-Durable
 
13,388

 
13,187

 
13,288

Foundation Consumer Healthcare, LLC, L+550, 1.00% LIBOR Floor, 11/2/2023(o)(q)(r)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
46,523

 
46,104

 
46,523

Foundation Consumer Healthcare, LLC, 0.50% Unfunded, 11/2/2023
 
None
 
Healthcare & Pharmaceuticals
 
4,211

 
(20
)
 
—

Genesis Healthcare, Inc., L+600, 0.50% LIBOR Floor, 3/6/2023(h)(o)(r)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
30,000

 
29,783

 
29,475

Geo Parent Corp., L+525, 0.00% LIBOR Floor, 12/19/2025(p)
 
1 Month LIBOR
 
Services: Business
 
14,888

 
14,752

 
14,850

Geon Performance Solutions, LLC, L+625, 1.63% LIBOR Floor, 10/25/2024(o)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
22,414

 
22,259

 
22,414

Geon Performance Solutions, LLC, 0.50% Unfunded, 10/25/2024
 
None
 
Chemicals, Plastics & Rubber
 
2,586

 
—

 
—

Harland Clarke Holdings Corp., L+475, 1.00% LIBOR Floor, 11/3/2023(p)(r)
 
3 Month LIBOR
 
Services: Business
 
13,180

 
13,134

 
10,538

Healogics, Inc., L+425, 1.00% LIBOR Floor, 7/1/2021(p)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
4,749

 
4,632

 
4,251

Hilliard, Martinez & Gonzales, LLP, L+1800, 2.00% LIBOR Floor, 12/17/2022(x)
 
1 Month LIBOR
 
Services: Consumer
 
15,000

 
14,850

 
14,850

See accompanying notes to consolidated financial statements.

16


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Homer City Generation, L.P., L+1100, 1.00% LIBOR Floor, 4/5/2023(o)
 
3 Month LIBOR
 
Energy: Oil & Gas
 
14,444

 
13,953

 
13,812

HUMC Holdco, LLC, 9.00%, 6/26/2020
 
None
 
Healthcare & Pharmaceuticals
 
10,000

 
9,972

 
9,950

Hummel Station LLC, L+600, 1.00% LIBOR Floor, 10/27/2022(p)
 
1 Month LIBOR
 
Energy: Oil & Gas
 
9,761

 
9,456

 
9,224

Hyperion Materials & Technologies, Inc., L+550, 1.00% LIBOR Floor, 8/28/2026(o)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
10,000

 
9,805

 
9,850

Independent Pet Partners Intermediate Holdings, LLC, L+900, 1.00% LIBOR Floor, 11/19/2023
 
3 Month LIBOR
 
Retail
 
12,064

 
11,892

 
11,672

Independent Pet Partners Intermediate Holdings, LLC, 1.00% Unfunded, 11/19/2023
 
None
 
Retail
 
7,852

 
—

 
(255
)
Infinity Sales Group, LLC, L+1050, 1.00% LIBOR Floor, 11/23/2022(o)
 
1 Month LIBOR
 
Services: Business
 
6,820

 
6,670

 
6,820

InfoGroup Inc., L+500, 1.00% LIBOR Floor, 4/3/2023(p)(q)(r)
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
15,756

 
15,743

 
14,968

Instant Web, LLC, L+650, 0.00% LIBOR Floor, 12/15/2022(o)(q)(r)
 
1 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
37,683

 
37,603

 
36,552

Instant Web, LLC, 0.50% Unfunded, 12/15/2022
 
None
 
Media: Advertising, Printing & Publishing
 
2,704

 
—

 
(81
)
International Seaways, Inc., L+600, 1.00% LIBOR Floor, 6/22/2022(h)(p)
 
1 Month LIBOR
 
Transportation: Cargo
 
6,782

 
6,705

 
6,782

Isagenix International, LLC, L+575, 1.00% LIBOR Floor, 6/14/2025(p)
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
13,866

 
13,750

 
11,093

Island Medical Management Holdings, LLC, L+650, 1.00% LIBOR Floor, 9/1/2022(q)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
11,814

 
11,722

 
11,534

Jab Wireless, Inc., L+800, 0.00% LIBOR Floor, 5/2/2023(r)
 
1 Month LIBOR
 
Telecommunications
 
13,700

 
13,700

 
13,700

Jenny C Acquisition, Inc., L+1050, 0.00% LIBOR Floor, 10/1/2024(o)
 
3 Month LIBOR
 
Services: Consumer
 
9,899

 
9,812

 
9,662

JP Intermediate B, LLC, L+550, 1.00% LIBOR Floor, 11/20/2025(p)
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
16,152

 
15,841

 
13,730

KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(t)(x)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
7,499

 
7,028

 
2,250

KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(t)(x)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
4,583

 
4,303

 
458

KNB Holdings Corp., L+550, 1.00% LIBOR Floor, 4/26/2024(p)(r)
 
3 Month LIBOR
 
Consumer Goods: Durable
 
8,293

 
8,180

 
6,427

Labvantage Solutions Ltd., E+750, 1.00% EURIBOR Floor, 12/29/2020(h)
 
1 Month EURIBOR
 
High Tech Industries
 
€
3,705

 
4,153

 
4,155

Labvantage Solutions Inc., L+750, 1.00% LIBOR Floor, 12/29/2020(q)
 
1 Month LIBOR
 
High Tech Industries
 
3,566

 
3,556

 
3,566

LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/2024(o)(q)
 
3 Month LIBOR
 
Services: Business
 
17,361

 
17,132

 
17,057

LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/2024
 
3 Month LIBOR
 
Services: Business
 
4,286

 
4,228

 
4,211

LAV Gear Holdings, Inc., 1.00% Unfunded, 4/7/2021
 
None
 
Services: Business
 
864

 
(8
)
 
(15
)
LD Intermediate Holdings, Inc., L+588, 1.00% LIBOR Floor, 12/9/2022(p)
 
3 Month LIBOR
 
High Tech Industries
 
4,694

 
4,446

 
4,705

Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/2023(o)(q)(r)(x)
 
3 Month LIBOR
 
Services: Consumer
 
43,321

 
42,649

 
42,130

Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/2023
 
3 Month LIBOR
 
Services: Consumer
 
1,050

 
1,050

 
1,021

Lift Brands, Inc., 1.00% Unfunded, 4/16/2023
 
None
 
Services: Consumer
 
3,950

 
—

 
(109
)
Longview Power, LLC, L+600, 1.00% LIBOR Floor, 4/13/2021(o)(q)
 
3 Month LIBOR
 
Energy: Oil & Gas
 
17,745

 
16,376

 
14,551

Manna Pro Products, LLC, L+600, 0.00% LIBOR Floor, 12/8/2023(o)
 
1 Month LIBOR
 
Retail
 
3,439

 
3,439

 
3,405

Manna Pro Products, LLC, 1.00% Unfunded, 5/31/2021
 
None
 
Retail
 
5,528

 
—

 
(55
)
Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/2023(o)(r)
 
3 Month LIBOR
 
Services: Business
 
22,310

 
22,310

 
22,310

Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/2023
 
3 Month LIBOR
 
Services: Business
 
1,500

 
1,500

 
1,500

Mimeo.com, Inc., 0.25% Unfunded, 12/21/2020
 
None
 
Services: Business
 
10,000

 
—

 
—

Mimeo.com, Inc., 1.00% Unfunded, 12/21/2023
 
None
 
Services: Business
 
1,500

 
—

 
—

Moss Holding Company, L+625, 1.00% LIBOR Floor, 4/17/2023(o)(q)
 
3 Month LIBOR
 
Services: Business
 
19,657

 
19,419

 
19,264

See accompanying notes to consolidated financial statements.

17


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Moss Holding Company, 6.25% Unfunded, 4/17/2023
 
None
 
Services: Business
 
106

 
—

 
(2
)
Moss Holding Company, 0.50% Unfunded, 4/17/2023
 
None
 
Services: Business
 
2,126

 
—

 
(43
)
Moxie Patriot LLC, L+575, 1.00% LIBOR Floor, 12/19/2020(p)
 
3 Month LIBOR
 
Energy: Oil & Gas
 
9,799

 
9,792

 
9,554

Murray Energy Corp., L+725, 1.00% LIBOR Floor, 10/17/2022(t)
 
3 Month LIBOR
 
Metals & Mining
 
3,574

 
3,562

 
771

Murray Energy Corp., L+1100, 2.00% LIBOR Floor, 7/29/2020(p)
 
1 Month LIBOR
 
Metals & Mining
 
662

 
643

 
668

NewsCycle Solutions, Inc., L+700, 1.00% LIBOR Floor, 12/29/2022(q)(r)
 
1 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
14,868

 
14,764

 
14,719

One Call Corp., L+525, 1.00% LIBOR Floor, 11/25/2022(p)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
7,915

 
7,582

 
7,598

Palmetto Solar, LLC, 12.00%, 12/12/2024
 
None
 
High Tech Industries
 
858

 
566

 
835

Palmetto Solar, LLC, 0.75% Unfunded, 12/12/2021
 
None
 
High Tech Industries
 
19,142

 
—

 
(526
)
Petroflow Energy Corp., L+800, 1.00% LIBOR Floor, 6/29/2019(o)(t)(u)(x)
 
1 Month LIBOR
 
Energy: Oil & Gas
 
642

 
223

 
10

PFS Holding Corp., L+350, 1.00% LIBOR Floor, 1/31/2021
 
3 Month LIBOR
 
Retail
 
3,097

 
2,738

 
2,079

PH Beauty Holdings III. Inc., L+500, 0.00% LIBOR Floor, 9/28/2025(p)
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
4,888

 
4,845

 
4,692

Pixelle Specialty Solutions LLC, L+600, 1.00% LIBOR Floor, 10/31/2024(p)
 
1 Month LIBOR
 
Forest Products & Paper
 
24,775

 
24,244

 
24,217

Plano Molding Company, LLC, L+750, 1.00% LIBOR Floor, 5/12/2021(o)
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
6,010

 
5,979

 
5,770

Polymer Additives, Inc., L+600, 0.00% LIBOR Floor, 7/31/2025(o)(p)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
19,800

 
19,462

 
18,068

Polymer Process Holdings, Inc., L+600, 0.00% LIBOR Floor, 5/1/2026(p)
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
19,888

 
19,513

 
19,589

Rhino Energy LLC, L+1000, 1.00% LIBOR Floor, 12/27/2022(r)
 
1 Month LIBOR
 
Metals & Mining
 
9,387

 
9,149

 
8,918

Securus Technologies Holdings, Inc., L+450, 1.00% LIBOR Floor, 11/1/2024(p)
 
1 Month LIBOR
 
Telecommunications
 
3,990

 
2,897

 
3,940

SEK Holding Co LLC, L+1150, 0.00% LIBOR Floor, 3/14/2022(o)(x)
 
1 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
15,415

 
15,179

 
14,510

Sequoia Healthcare Management, LLC, 12.75%, 8/21/2023(o)(q)
 
None
 
Healthcare & Pharmaceuticals
 
9,103

 
9,031

 
8,875

SIMR, LLC, L+1700, 2.00% LIBOR Floor, 9/7/2023(o)(u)(x)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
15,091

 
14,853

 
14,205

Smart & Final Inc., L+675, 0.00% LIBOR Floor, 6/20/2025(p)
 
1 Month LIBOR
 
Retail
 
9,950

 
9,091

 
9,627

Sorenson Communications, LLC, L+650, 0.00% LIBOR Floor, 4/30/2024(p)
 
3 Month LIBOR
 
Telecommunications
 
12,536

 
12,089

 
12,473

Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 6/30/2021(o)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
12,654

 
12,653

 
12,464

Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 6/30/2021(o)(x)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
563

 
563

 
555

Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 6/30/2021(o)(x)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
542

 
493

 
533

Stats Intermediate Holdings, LLC, L+525, 0.00% LIBOR Floor, 7/12/2026(p)
 
3 Month LIBOR
 
High Tech Industries
 
10,000

 
9,789

 
9,775

STG-Fairway Acquisitions, Inc., L+525, 1.00% LIBOR Floor, 6/30/2022(p)(q)
 
1 Month LIBOR
 
Services: Business
 
3,929

 
3,866

 
3,929

Teladoc, Inc., 0.50% Unfunded, 7/14/2020(h)
 
None
 
High Tech Industries
 
1,250

 
(8
)
 
—

Telestream Holdings Corp., L+645, 1.00% LIBOR Floor, 3/24/2022(k)(o)
 
2 Month LIBOR
 
High Tech Industries
 
8,769

 
8,668

 
8,593

Tenere Inc., L+1000, 1.00% LIBOR Floor, 12/23/2021(o)(q)
 
3 Month LIBOR
 
Capital Equipment
 
28,480

 
28,196

 
28,480

Tensar Corp., L+475, 1.00% LIBOR Floor, 7/9/2021(p)
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
12,980

 
12,632

 
12,363

The Pasha Group, L+750, 1.00% LIBOR Floor, 1/26/2023(q)
 
2 Month LIBOR
 
Transportation: Cargo
 
5,764

 
5,647

 
5,822

The Pay-O-Matic Corp., L+900, 0.00% LIBOR Floor, 4/5/2021(g)(o)
 
3 Month LIBOR
 
Services: Consumer
 
9,612

 
9,568

 
9,612

Therapure Biopharma Inc., L+875, 0.50% LIBOR Floor, 12/1/2021(h)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
13,913

 
13,882

 
13,148

Volta Charging, LLC, 12.00%, 6/19/2024
 
None
 
Media: Diversified & Production
 
10,000

 
10,000

 
10,000

See accompanying notes to consolidated financial statements.

18


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Volta Charging, LLC, 12.00%, 6/19/2024
 
None
 
Media: Diversified & Production
 
2,000

 
1,961

 
2,000

Volta Charging, LLC, 0.00% Unfunded, 6/19/2021(s)
 
None
 
Media: Diversified & Production
 
10,000

 
—

 
—

Wok Holdings Inc., L+650, 0.00% LIBOR Floor, 3/1/2026(p)
 
6 Month LIBOR
 
Beverage, Food & Tobacco
 
12,903

 
12,736

 
13,064

Woodstream Corp., L+600, 1.00% LIBOR Floor, 5/29/2022(r)
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
9,300

 
9,300

 
9,300

Woodstream Corp., L+600, 1.00% LIBOR Floor, 5/29/2022
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
559

 
559

 
559

Total Senior Secured First Lien Debt
 
 
 
 
 
 

 
1,388,942

 
1,351,767

Senior Secured Second Lien Debt - 26.1%
 
 
 
 
 
 
 
 
 
 
1A Smart Start LLC, L+825, 1.00% LIBOR Floor, 8/21/2022(o)(q)
 
1 Month LIBOR
 
High Tech Industries
 
13,800

 
13,618

 
13,593

Access CIG, LLC, L+775, 0.00% LIBOR Floor, 2/27/2026(q)
 
1 Month LIBOR
 
Services: Business
 
17,250

 
17,126

 
17,207

Albany Molecular Research, Inc., L+700, 1.00% LIBOR Floor, 8/30/2025(o)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
10,000

 
9,842

 
9,975

American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2022(o)
 
1 Month LIBOR
 
Construction & Building
 
5,180

 
5,142

 
5,128

Carestream Health, Inc., L+950, 1.00% LIBOR Floor, 6/7/2021(q)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
10,662

 
10,662

 
10,102

Country Fresh Holdings, LLC, L+850, 1.00% LIBOR Floor, 4/29/2024(x)
 
3 Month LIBOR
 
Beverage, Food & Tobacco
 
2,028

 
2,028

 
2,028

Dayton Superior Corp., L+700, 2.00% LIBOR Floor, 12/4/2024
 
3 Month LIBOR
 
Construction & Building
 
1,507

 
1,507

 
1,507

Deluxe Entertainment Services Inc., L+850, 1.00% LIBOR Floor, 9/25/2024(p)(u)(x)
 
1 Month LIBOR
 
Media: Diversified & Production
 
9,890

 
9,675

 
9,717

EagleTree-Carbide Acquisition Corp., L+850, 1.00% LIBOR Floor, 8/28/2025(o)(q)
 
3 Month LIBOR
 
Consumer Goods: Durable
 
25,000

 
24,695

 
24,750

Evergreen Skills Lux S.À.R.L., L+825, 1.00% LIBOR Floor, 4/28/2022(h)(q)(t)
 
3 Month LIBOR
 
High Tech Industries
 
9,999

 
8,147

 
2,833

Global Tel*Link Corp., L+825, 0.00% LIBOR Floor, 11/29/2026(q)
 
1 Month LIBOR
 
Telecommunications
 
11,500

 
11,312

 
11,586

LSCS Holdings, Inc., L+825, 0.00% LIBOR Floor, 3/16/2026(o)
 
3 Month LIBOR
 
Services: Business
 
11,891

 
11,655

 
11,831

Mayfield Agency Borrower Inc., L+850, 0.00% LIBOR Floor, 3/2/2026(o)(q)(r)
 
1 Month LIBOR
 
Banking, Finance, Insurance & Real Estate
 
20,000

 
19,723

 
20,200

Medical Solutions Holdings, Inc., L+838, 1.00% LIBOR Floor, 6/16/2025(o)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
10,000

 
9,877

 
9,650

MedPlast Holdings, Inc., L+775, 0.00% LIBOR Floor, 7/2/2026(r)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
6,750

 
6,690

 
6,383

Ministry Brands, LLC, L+925, 1.00% LIBOR Floor, 6/2/2023(o)(q)
 
2 Month LIBOR
 
Services: Business
 
7,000

 
6,932

 
7,000

Niacet Corp., E+875, 1.00% EURIBOR Floor, 8/1/2024(h)
 
1 Month EURIBOR
 
Chemicals, Plastics & Rubber
 
€
7,489

 
7,985

 
8,314

Patterson Medical Supply, Inc., L+850, 1.00% LIBOR Floor, 8/28/2023(o)
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
13,500

 
13,419

 
11,813

PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023(o)
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
10,000

 
9,860

 
9,600

PFS Holding Corp., L+725, 1.00% LIBOR Floor, 1/31/2022(p)(t)
 
3 Month LIBOR
 
Retail
 
4,998

 
4,272

 
—

Premiere Global Services, Inc., L+950, 1.00% LIBOR Floor, 6/6/2024(o)(x)
 
3 Month LIBOR
 
Telecommunications
 
3,070

 
2,960

 
1,074

Securus Technologies Holdings, Inc., L+825, 1.00% LIBOR Floor, 11/1/2025(q)
 
1 Month LIBOR
 
Telecommunications
 
2,942

 
2,916

 
2,836

STG-Fairway Acquisitions, Inc., L+925, 1.00% LIBOR Floor, 6/30/2023(o)
 
1 Month LIBOR
 
Services: Business
 
5,000

 
4,957

 
5,000

TMK Hawk Parent, Corp., L+800, 1.00% LIBOR Floor, 8/28/2025(o)
 
3 Month LIBOR
 
Services: Business
 
13,393

 
13,122

 
12,924

TouchTunes Interactive Networks, Inc, L+825, 1.00% LIBOR Floor, 5/29/2022(q)
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
5,226

 
5,201

 
5,226

Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022(o)
 
1 Month LIBOR
 
Beverage, Food & Tobacco
 
12,823

 
12,689

 
10,467

Zest Acquisition Corp., L+750, 1.00% LIBOR Floor, 3/14/2026(q)
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
15,000

 
14,870

 
14,063

Zywave Inc., L+900, 1.00% LIBOR Floor, 11/17/2023(o)
 
3 Month LIBOR
 
High Tech Industries
 
3,445

 
3,398

 
3,446

Total Senior Secured Second Lien Debt
 

 

 


 
264,280

 
248,253

Collateralized Securities and Structured Products - Debt - 0.7%
 

 

 


 


 


See accompanying notes to consolidated financial statements.

19


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
Index Rate(b)
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
Deutsche Bank AG Frankfurt CRAFT 2015-2 Class Credit Linked Note, L+925, 1/16/2022(h)
 
3 Month LIBOR
 
Diversified Financials
 
7,212

 
7,212

 
7,212

Total Collateralized Securities and Structured Products - Debt
 

 
 
 
 

 
7,212

 
7,212

Collateralized Securities and Structured Products - Equity - 1.5%
 

 

 


 


 


APIDOS CLO XVI Subordinated Notes, 6.39% Estimated Yield, 1/19/2025(h)
 
(f)
 
Diversified Financials
 
9,000

 
3,762

 
2,125

CENT CLO 19 Ltd. Subordinated Notes, 37.72% Estimated Yield, 10/29/2025(h)
 
(f)
 
Diversified Financials
 
2,000

 
1,163

 
782

Galaxy XV CLO Ltd. Class A Subordinated Notes, 6.78% Estimated Yield, 4/15/2025(h)
 
(f)
 
Diversified Financials
 
4,000

 
2,229

 
1,730

Ivy Hill Middle Market Credit Fund VIII, Ltd. Subordinated Loan, 11.84% Estimated Yield, 2/2/2026(h)
 
(f)
 
Diversified Financials
 
10,000

 
9,322

 
9,545

Total Collateralized Securities and Structured Products - Equity
 

 
 
 
 

 
16,476

 
14,182

Unsecured Debt - 0.5%
 
 
 
 
 
 
 


 


WPLM Acquisition Corp., 15.00%, 11/24/2025(x)
 
None
 
Media: Advertising, Printing & Publishing
 
5,000

 
4,901

 
4,900

Total Unsecured Debt
 
 
 
 
 
 

 
4,901

 
4,900

Equity - 11.5%
 
 
 
 
 
 
 
 
 
 
Anthem Sports and Entertainment Inc., Class A Preferred Stock Warrants(s)
 
 
 
Media: Diversified & Production
 
769 Units

 
205

 
226

Anthem Sports and Entertainment Inc., Class B Preferred Stock Warrants(s)
 
 
 
Media: Diversified & Production
 
135 Units

 
—

 
—

Anthem Sports and Entertainment Inc., Common Stock Warrants(s)
 
 
 
Media: Diversified & Production
 
2,508 Units

 
—

 
—

Ascent Resources - Marcellus, LLC, Common Shares(s)
 
 
 
Energy: Oil & Gas
 
511,255 Units

 
1,642

 
914

Ascent Resources - Marcellus, LLC, Warrants(s)
 
 
 
Energy: Oil & Gas
 
132,367 Units

 
13

 
4

Avaya Holdings Corp., Common Stock(i)(p)(s)
 
 
 
Telecommunications
 
321,260 Units

 
5,285

 
4,337

BCP Great Lakes Fund LP, Partnership Interests (31.7% ownership)(h)(v)
 
 
 
Diversified Financials
 
N/A

 
14,208

 
14,238

CHC Medical Partners, Inc., Series C Preferred Stock, 12% Dividend(w)
 
 
 
Healthcare & Pharmaceuticals
 
2,727,273 Units

 
5,139

 
5,245

CION SOF Funding, LLC, Membership Interests (87.5% ownership)(h)(v)
 
 
 
Diversified Financials
 
N/A

 
31,289

 
31,265

Conisus Holdings, Inc., Series B Preferred Stock, 12% Dividend(u)(w)
 
 
 
Healthcare & Pharmaceuticals
 
12,677,833 Units

 
13,215

 
13,270

Conisus Holdings, Inc., Common Stock(s)(u)
 
 
 
Healthcare & Pharmaceuticals
 
4,914,556 Units

 
200

 
1,426

Country Fresh Holdings, LLC, Common Stock(s)
 
 
 
Beverage, Food & Tobacco
 
2,985 Units

 
5,249

 
2,618

David's Bridal, Inc., Series A Preferred Stock(s)
 
 
 
Retail
 
1,396 Units

 
140

 
141

David's Bridal, Inc., Series B Preferred Stock(s)
 
 
 
Retail
 
4,183 Units

 
410

 
410

David's Bridal, Inc., Common Stock(s)
 
 
 
Retail
 
39,423 Units

 
—

 
—

David's Bridal, Inc., Reallocation Rights(s)
 
 
 
Retail
 
7,500 Units

 
—

 
—

Dayton HoldCo, LLC, Common Stock(s)
 
 
 
Construction & Building
 
37,264 Units

 
4,136

 
7,903

DESG Holdings, Inc., Common Stock(j)(s)(u)
 
 
 
Media: Diversified & Production
 
1,268,143 Units

 
13,662

 
14,763

HDNet Holdco LLC, Preferred Unit Call Option(s)
 
 
 
Media: Diversified & Production
 
1 Unit

 
—

 
—

Independent Pet Partners Intermediate Holdings, LLC, Class A Preferred Units(s)
 
 
 
Retail
 
1,000,000 Units

 
1,000

 
950

Independent Pet Partners Intermediate Holdings, LLC, Warrants(s)
 
 
 
Retail
 
155,880 Units

 
—

 
1

Mooregate ITC Acquisition, LLC, Class A Units(s)
 
 
 
High Tech Industries
 
500 Units

 
563

 
151

Mount Logan Capital Inc., Common Stock(h)(i)(s)(u)
 
 
 
Banking, Finance, Insurance & Real Estate
 
980,284 Units

 
3,335

 
2,505

NS NWN Acquisition, LLC, Voting Units(s)
 
 
 
High Tech Industries
 
346 Units

 
393

 
585

See accompanying notes to consolidated financial statements.

20


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
Portfolio Company(a)
 
 
 
Industry
 
Principal/
Par Amount/
Units(e)
 
Cost(d)
 
Fair
Value(c)
NS NWN Acquisition, LLC, Class A Preferred Units(s)
 
 
 
High Tech Industries
 
111 Units
 
110

 
331

NSG Co-Invest (Bermuda) LP, Partnership Interests(h)(s)
 
 
 
Consumer Goods: Durable
 
1,575 Units
 
1,000

 
528

Palmetto Solar, LLC, Warrants(s)
 
 
 
High Tech Industries
 
346,694 Units
 
295

 
295

Rhino Energy LLC, Warrants(s)
 
 
 
Metals & Mining
 
170,972 Units
 
280

 
16

SIMR Parent, LLC, Class B Common Units(s)(u)
 
 
 
Healthcare & Pharmaceuticals
 
12,283,000 Units
 
8,002

 
3,980

Spinal USA, Inc. / Precision Medical Inc., Warrants(o)(s)
 
 
 
Healthcare & Pharmaceuticals
 
14,181,915 Units
 
5,806

 
1,560

Tenere Inc., Warrants(s)
 
 
 
Capital Equipment
 
N/A
 
161

 
1,569

Total Equity
 
 
 
 
 
 
 
115,738

 
109,231

Short Term Investments - 3.1%(m)
 
 
 
 
 
 
 
 
 
 
First American Treasury Obligations Fund, Class Z Shares, 1.49% (n)
 
 
 
 
 
 
 
29,527

 
29,527

Total Short Term Investments
 
 
 
 
 
 
 
29,527

 
29,527

TOTAL INVESTMENTS - 185.3%
 
 
 
 
 
 
 
$
1,827,076

 
1,765,072

LIABILITIES IN EXCESS OF OTHER ASSETS - (85.3%)
 
 
 
 
 
 
 
 

 
(812,509
)
NET ASSETS - 100%
 
 
 
 
 
 
 
 

 
$
952,563

a.
All of the Company’s investments are issued by eligible U.S. portfolio companies, as defined in the 1940 Act, except for investments specifically identified as non-qualifying per note h. below. Unless specifically identified in note x. below, investments do not contain a PIK interest provision.
b.
The 1, 2, 3 and 6 month LIBOR rates were 1.76%, 1.83%, 1.91% and 1.91%, respectively, as of December 31, 2019.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of December 31, 2019, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to December 31, 2019. The 1 month EURIBOR rate was (0.51%) as of December 31, 2019.
c.
Fair value determined in good faith by the Company’s board of directors (see Note 9) using significant unobservable inputs unless otherwise noted.
d.
Represents amortized cost for debt securities and cost for equity investments.
e.
Denominated in U.S. dollars unless otherwise noted.
f.
The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
g.
As a result of an arrangement between the Company and the other lenders in the syndication, the Company is entitled to less interest than the stated interest rate of this loan, which is reflected in this schedule, in exchange for a higher payment priority.
h.
The investment or a portion thereof is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets as defined under Section 55 of the 1940 Act. As of December 31, 2019, 91.5% of the Company’s total assets represented qualifying assets.
i.
Fair value determined using level 1 inputs.
j.
Position or a portion thereof unsettled as of December 31, 2019.
k.
In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional amounts as a result of an arrangement between the Company and the other lenders in the syndication in exchange for a lower payment priority.
l.
In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional residual amounts.
m.
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
n.
7-day effective yield as of December 31, 2019.
o.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 34th Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with JPM as of December 31, 2019 (see Note 8).
See accompanying notes to consolidated financial statements.

21


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
p.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Flatiron Funding II, and was pledged as collateral supporting the amounts outstanding under the credit facility with Citibank as of December 31, 2019 (see Note 8).
q.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Murray Hill Funding II, and was pledged as collateral supporting the amounts outstanding under the repurchase agreement with UBS as of December 31, 2019 (see Note 8).
r.
Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 33rd Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with MS as of December 31, 2019 (see Note 8).
s.
Non-income producing security.
t.
Investment or a portion thereof was on non-accrual status as of December 31, 2019.
u.
Investment determined to be an affiliated investment as defined in the 1940 Act as the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities but does not control the portfolio company. Fair value as of December 31, 2018 and 2019, along with transactions during the year ended December 31, 2019 in these affiliated investments, are as follows:
 
 
 
 
Year Ended December 31, 2019
 
 
 
Year Ended December 31, 2019
Non-Controlled, Affiliated Investments
 
Fair Value at December 31, 2018
 
Gross Additions
(Cost)(1)
 
Gross Reductions
(Cost)(2)
 
Net Unrealized Gain (Loss)
 
Fair Value at December 31, 2019
 
Net Realized Gain (Loss)
 
Interest
Income(3)
 
Dividend Income
    Charming Charlie, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan B1
 
$
1,021

 
$
—

 
$
(2,619
)
 
$
1,598

 
$
—

 
$
(2,619
)
 
$
—

 
$
—

        First Lien Term Loan B2
 
1,249

 
—

 
(1,912
)
 
663

 
—

 
(1,912
)
 
—

 
—

        Vendor Payment Financing Facility
 
157

 
890

 
(293
)
 
(282
)
 
472

 
—

 
57

 
—

        Common Stock
 
—

 
—

 
(1,302
)
 
1,302

 
—

 
(1,302
)
 
—

 
—

    Conisus Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Series B Preferred Stock(w)
 
10,903

 
4,015

 
—

 
(1,648
)
 
13,270

 
—

 
—

 
4,015

        Common Stock
 
197

 
—

 
—

 
1,229

 
1,426

 
—

 
—

 
—

    DESG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan
 
—

 
23,656

 
—

 
5,322

 
28,978

 
—

 
303

 
—

        Second Lien Term Loan
 
—

 
9,675

 
—

 
42

 
9,717

 
—

 
162

 
—

        Common Stock
 
—

 
13,662

 
—

 
1,101

 
14,763

 
—

 
—

 
—

    F+W Media, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien DIP Term Loan
 
—

 
521

 
(521
)
 
—

 
—

 
—

 
101

 
—

        First Lien Term Loan B-1
 
1,137

 
51

 
(43
)
 
(1,145
)
 
—

 
—

 
51

 
—

        First Lien Term Loan B-2
 
161

 
—

 
(2,759
)
 
2,598

 
—

 
(2,759
)
 
—

 
—

        Common Stock
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

    Mount Logan Capital Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Common Stock
 
2,645

 
—

 
—

 
(140
)
 
2,505

 
—

 
—

 
—

    SIMR, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan
 
14,757

 
452

 
(619
)
 
(385
)
 
14,205

 
—

 
1,778

 
—

    SIMR Parent, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Class B Common Units
 
7,382

 
502

 
—

 
(3,904
)
 
3,980

 
—

 
—

 
—

    Petroflow Energy Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        First Lien Term Loan
 
2,363

 
—

 
(2,511
)
 
158

 
10

 
—

 
19

 
—

    TexOak Petro Holdings LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Second Lien Term Loan
 
—

 
—

 
(2,592
)
 
2,592

 
—

 
(2,592
)
 
—

 
—

        Membership Interests
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

    Totals
 
$
41,972

 
$
53,424

 
$
(15,171
)
 
$
9,101

 
$
89,326

 
$
(11,184
)
 
$
2,471

 
$
4,015

See accompanying notes to consolidated financial statements.

22


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
(1)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
(2)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
(3)
Includes PIK interest income.
v.
Investment determined to be a controlled investment as defined in the 1940 Act as the Company is deemed to exercise a controlling influence over the management or policies of the portfolio company due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of such portfolio company. Fair value as of December 31, 2018 and 2019, along with transactions during the year ended December 31, 2019 in these controlled investments, are as follows:
 
 
 
 
Year Ended December 31, 2019
 
 
 
Year Ended December 31, 2019
Controlled Investments
 
Fair Value at
December 31, 2018
 
Gross
Additions
(Cost)(1)
 
Gross
Reductions
(Cost)(2)
 
Net 
Unrealized
Gain (Loss)
 
Fair Value at
December 31, 2019
 
Net Realized
Gain (Loss)
 
Interest
Income(3)
 
Dividend Income
    BCP Great Lakes Fund LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Membership Interests
 
$
—

 
$
14,208

 
$
—

 
$
30

 
$
14,238

 
$
—

 
$
—

 
$
47

    CION SOF Funding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Membership Interests
 
—

 
31,289

 
—

 
(24
)
 
31,265

 
—

 
—

 
1,076

    Totals
 
$
—

 
$
45,497

 
$
—

 
$
6

 
$
45,503

 
$
—

 
$
—

 
$
1,123

(1)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
(2)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
(3)
Includes PIK interest income.
w.
For the year ended December 31, 2019, non-cash dividend income of $4,015 and $474 was recorded on the Company's investment in Conisus Holdings, Inc. and CHC Medical Partners, Inc., respectively.
See accompanying notes to consolidated financial statements.

23


CĪON Investment Corporation
Consolidated Schedule of Investments
December 31, 2019
(in thousands)
x.
For the year ended December 31, 2019, the following investments contain a PIK interest provision whereby the issuer has either the option or the obligation to make interest payments with the issuance of additional securities:
 
 
 
 
Interest Rate
Portfolio Company
 
Investment Type
 
Cash
 
PIK
 
All-in-Rate
American Clinical Solutions LLC
 
Senior Secured First Lien Debt
 
—
 
2.00%
 
2.00%
Anthem Sports & Entertainment Inc.
 
Senior Secured First Lien Debt
 
8.69%
 
2.75%
 
11.44%
Charming Charlie, LLC
 
Senior Secured First Lien Debt
 
7.05%
 
5.00%
 
12.05%
Charming Charlie, LLC
 
Senior Secured First Lien Debt
 
3.05%
 
9.00%
 
12.05%
CHC Solutions Inc.
 
Senior Secured First Lien Debt
 
8.00%
 
4.00%
 
12.00%
Country Fresh Holdings, LLC
 
Senior Secured Second Lien Debt
 
—
 
10.44%
 
10.44%
David's Bridal, LLC
 
Senior Secured First Lien Debt
 
1.00%
 
6.92%
 
7.92%
Deluxe Entertainment Services, Inc.
 
Senior Secured First Lien Debt
 
6.71%
 
1.50%
 
8.21%
Deluxe Entertainment Services, Inc.
 
Senior Secured Second Lien Debt
 
7.71%
 
2.50%
 
10.21%
F+W Media, Inc.
 
Senior Secured First Lien Debt
 
—
 
8.21%
 
8.21%
Hilliard, Martinez & Gonzales, LLP
 
Senior Secured First Lien Debt
 
—
 
20.00%
 
20.00%
KLO Intermediate Holdings, LLC
 
Senior Secured First Lien Debt
 
—
 
9.50%
 
9.50%
Lift Brands, Inc.
 
Senior Secured First Lien Debt
 
9.10%
 
0.50%
 
9.60%
Petroflow Energy Corp.
 
Senior Secured First Lien Debt
 
—
 
9.71%
 
9.71%
Premiere Global Services, Inc.
 
Senior Secured Second Lien Debt
 
0.50%
 
10.98%
 
11.48%
SEK Holding Co LLC
 
Senior Secured First Lien Debt
 
9.77%
 
3.50%
 
13.27%
SIMR, LLC
 
Senior Secured First Lien Debt
 
12.00%
 
7.00%
 
19.00%
Spinal USA, Inc. / Precision Medical Inc.
 
Senior Secured First Lien Debt
 
—
 
11.30%
 
11.30%
WPLM Acquisition Corp.
 
Unsecured Note
 
—
 
15.00%
 
15.00%
See accompanying notes to consolidated financial statements.

24
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)


Note 1. Organization and Principal Business    
CĪON Investment Corporation, or the Company, was incorporated under the general corporation laws of the State of Maryland on August 9, 2011. On December 17, 2012, the Company successfully raised gross proceeds from unaffiliated outside investors of at least $2,500, or the minimum offering requirement, and commenced operations. The Company is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the 1940 Act. The Company elected to be treated for federal income tax purposes as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.
The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. The Company’s portfolio is comprised primarily of investments in senior secured debt, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities, unsecured debt and equity, of private and thinly-traded U.S. middle-market companies.
The Company is managed by CION Investment Management, LLC, or CIM, a registered investment adviser and an affiliate of the Company. Pursuant to an investment advisory agreement with the Company, CIM oversees the management of the Company’s activities and is responsible for making investment decisions for the Company’s investment portfolio. On November 5, 2019, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment advisory agreement with CIM for a period of twelve months commencing December 17, 2019. The Company and CIM previously engaged Apollo Investment Management, L.P., or AIM, a subsidiary of Apollo Global Management, Inc., or, together with its subsidiaries, Apollo, a leading global alternative investment manager, to act as the Company’s investment sub-adviser.
On July 11, 2017, the members of CIM entered into a third amended and restated limited liability company agreement of CIM, or the Third Amended CIM LLC Agreement, for the purpose of creating a joint venture between AIM and CION Investment Group, LLC, or CIG, an affiliate of the Company. Under the Third Amended CIM LLC Agreement, AIM became a member of CIM and was issued a newly-created class of membership interests in CIM pursuant to which AIM, among other things, shares in the profits, losses, distributions and expenses of CIM with the other members in accordance with the terms of the Third Amended CIM LLC Agreement, which results in CIG and AIM each owning a 50% economic interest in CIM.
On July 10, 2017, the Company’s independent directors unanimously approved the termination of the investment sub-advisory agreement with AIM, effective as of July 11, 2017. Although the investment sub-advisory agreement and AIM's engagement as the Company’s investment sub-adviser were terminated, AIM's investment professionals continue to perform certain services for CIM and the Company, including, without limitation, identifying investment opportunities for approval by CIM's investment committee. AIM is not paid a separate fee in exchange for such services, but is entitled to receive distributions as a member of CIM as described above.
On December 4, 2017, the members of CIM entered into a fourth amended and restated limited liability company agreement of CIM, or the Fourth Amended CIM LLC Agreement. Under the Fourth Amended CIM LLC Agreement, AIM's investment professionals perform certain services for CIM, which include, among other services, (i) assistance with identifying and providing information about potential investment opportunities for approval by CIM’s investment committee; and (ii) providing (a) trade and settlement support; (b) portfolio and cash reconciliation; (c) market pipeline information regarding syndicated deals, in each case, as reasonably requested by CIM; and (d) monthly valuation reports and support for all broker-quoted investments. All of the Company's investment decisions are the sole responsibility of, and are made at the sole discretion of, CIM's investment committee, which consists entirely of CIG senior personnel.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and pursuant to the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of December 31, 2019 and for the year then ended included in the Company’s Annual Report on Form 10-K. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020. The consolidated balance sheet and the consolidated schedule of investments as of December 31, 2019 are derived from the 2019 audited consolidated financial statements and include the accounts of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company does not consolidate its interest in CION SOF Funding, LLC, or CION SOF. See Note 7 for a description of the Company’s investment in CION SOF.

25
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The Company evaluates subsequent events through the date that the consolidated financial statements are issued.
Recently Adopted Accounting Standards
In August 2018, the Financial Accounting Standards Board, or the FASB, issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13, which modifies the disclosure requirements for fair value measurements in Topic 820 by removing, modifying, or adding certain disclosures. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted ASU 2018-13 during the three months ended March 31, 2020, which did not have a significant impact on the Company’s disclosures on fair value measurements.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and highly liquid investments with original maturity dates of three months or less. The Company’s cash and cash equivalents are held principally at one financial institution and at times may exceed insured limits. The Company periodically evaluates the creditworthiness of this institution and has not experienced any losses on such deposits.
Foreign Currency Translations
The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the foreign exchange rate on the date of valuation. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Short Term Investments
Short term investments include an investment in a U.S. Treasury obligations fund, which seeks to provide current income and daily liquidity by purchasing U.S. Treasury securities and repurchase agreements that are collateralized by such securities. The Company had $56,657 and $29,527 of such investments at March 31, 2020 and December 31, 2019, respectively, which are included in investments, at fair value on the accompanying consolidated balance sheets and on the consolidated schedules of investments.
Offering Costs
Offering costs included, among other things, legal fees and other costs pertaining to the preparation of the Company’s registration statements in connection with the continuous public offerings of the Company’s shares. Certain initial offering costs that were funded by CIG on behalf of the Company were submitted by CIG for reimbursement upon meeting the minimum offering requirement on December 17, 2012. These costs were capitalized and amortized over a twelve month period as an adjustment to capital in excess of par value. All other offering costs were expensed as incurred by the Company. The Company's follow-on continuous public offering ended on January 25, 2019.
Income Taxes
The Company elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. To qualify and maintain qualification as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements and distribute to shareholders, for each taxable year, at least 90% of the Company’s “investment company taxable income”, which is generally equal to the sum of the Company’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. If the Company continues to qualify as a RIC and continues to satisfy the annual distribution requirement, the Company will not be subject to corporate level federal income taxes on any income that the Company distributes to its shareholders. On March 19, 2020, the Company temporarily suspended the payment of distributions to shareholders commencing with the month ending April 30, 2020, whether in cash or pursuant to the Company’s distribution reinvestment plan, as amended and restated. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income. The Company will also be subject to nondeductible federal excise taxes if the Company does not distribute at least 98.0% of net ordinary income, 98.2% of capital gains, if any, and any recognized and undistributed income from prior years for which it paid no federal income taxes. 

26
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Two of the Company’s wholly-owned consolidated subsidiaries, View ITC, LLC and View Rise, LLC, or collectively the Taxable Subsidiaries, have elected to be treated as taxable entities for U.S. federal income tax purposes. As a result, the Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense or benefit, and the related tax assets and liabilities, as a result of its ownership of certain portfolio investments. The income tax expense or benefit, if any, and the related tax assets and liabilities, where material, are reflected in the Company’s consolidated financial statements. There were no deferred tax assets or liabilities as of March 31, 2020.
Book/tax differences relating to permanent differences are reclassified among the Company’s capital accounts, as appropriate. Additionally, the tax character of distributions is determined in accordance with income tax regulations that may differ from GAAP (see Note 5).
Uncertainty in Income Taxes
The Company evaluates its tax positions to determine if the tax positions taken meet the minimum recognition threshold for the purposes of measuring and recognizing tax liabilities in the consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by the taxing authorities. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the consolidated statements of operations. The Company did not have any uncertain tax positions during the periods presented herein. 
The Company is subject to examination by U.S. federal, New York State, New York City and Maryland income tax jurisdictions for 2016, 2017, and 2018.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, which spread to over 100 countries, including the United States, and spread to every state in the United States. The World Health Organization designated COVID-19 as a pandemic, and numerous countries, including the United States, declared national emergencies with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 continued to be identified in additional countries, many countries reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses. Such actions created and will continue to create disruption in global supply chains, and adversely impacted many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying the consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2020; however, uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of March 31, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may materially differ from those estimates.
Valuation of Portfolio Investments
The fair value of the Company’s investments is determined quarterly in good faith by the Company’s board of directors pursuant to its consistently applied valuation procedures and valuation process in accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or ASC 820. ASC 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-tier fair value hierarchy that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Inputs used to measure these fair values are classified into the following hierarchy:
Level 1 -
Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.
Level 2 -
Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3 -
Unobservable inputs for the asset or liability. The inputs used in the determination of fair value may require significant management judgment or estimation. Such information may be the result of consensus pricing information or broker quotes that include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by the disclaimer would result in classification as a Level 3 asset, assuming no additional corroborating evidence.

27
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The level in the fair value hierarchy for each fair value measurement has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the value that would be received upon an actual sale of such investments. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses that the Company ultimately realizes on these investments to materially differ from the valuations currently assigned.
The Company’s investments, excluding short term investments, consist primarily of debt securities that are traded on a private over-the-counter market for institutional investments. CIM attempts to obtain market quotations from at least two brokers or dealers for each investment (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). CIM utilizes mid-market pricing to determine fair value unless a different point within the range is more representative. Because of the private nature of this marketplace (meaning actual transactions are not publicly reported) and the non-binding nature of consensus pricing and/or quotes, the Company believes that these valuation inputs result in Level 3 classification within the fair value hierarchy.
Notwithstanding the foregoing, if in the reasonable judgment of CIM, the price of any investment held by the Company and determined in the manner described above does not accurately reflect the fair value of such investment, CIM will value such investment at a price that reflects such investment’s fair value and report such change in the valuation to the board of directors or its designee as soon as practicable. Investments that carry certain restrictions on sale will typically be valued at a discount from the public market value of the investment.
Any investments that are not publicly traded or for which a market price is not otherwise readily available are valued at a price that reflects its fair value. With respect to such investments, if CIM is unable to obtain market quotations, the investments are reviewed and valued using one or more of the following types of analyses:
i.
Market comparable statistics and public trading multiples discounted for illiquidity, minority ownership and other factors for companies with similar characteristics.
ii.
Valuations implied by third-party investments in the applicable portfolio companies.
iii.
Discounted cash flow analysis, including a terminal value or exit multiple.
Determination of fair value involves subjective judgments and estimates. Accordingly, these notes to the Company’s consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the Company’s consolidated financial statements. Below is a description of factors that the Company’s board of directors may consider when valuing the Company’s equity and debt investments where a market price is not readily available:
•
the size and scope of a portfolio company and its specific strengths and weaknesses;
•
prevailing interest rates for like securities;
•
expected volatility in future interest rates;
•
leverage; 
•
call features, put features and other relevant terms of the debt;
•
the borrower’s ability to adequately service its debt;
•
the fair market value of the portfolio company in relation to the face amount of its outstanding debt;
•
the quality of collateral securing the Company’s debt investments;
•
multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in some cases, book value or liquidation value; and
•
other factors deemed applicable.

28
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

All of these factors may be subject to adjustment based upon the particular circumstances of a portfolio company or the Company’s actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners, or acquisition, recapitalization, and restructuring expenses or other related or non-recurring items. The choice of analyses and the weight assigned to such factors may vary across investments and may change within an investment if events occur that warrant such a change.
The discounted cash flow model deemed appropriate by CIM is prepared for the applicable investments and reviewed by designated members of CIM’s management team. Such models are prepared at least quarterly or on an as needed basis. The model uses the estimated cash flow projections for the underlying investments and an appropriate discount rate is determined based on the latest financial information available for the borrower, prevailing market trends, comparable analysis and other inputs. The model, key assumptions, inputs, and results are reviewed by designated members of CIM’s management team with final approval from the board of directors.
Consistent with the Company’s valuation policy, the Company evaluates the source of inputs, including any markets in which the Company’s investments are trading, in determining fair value.
The Company periodically benchmarks the broker quotes from the brokers or dealers against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management in purchasing and selling these investments, the Company believes that these quotes are reliable indicators of fair value. The Company may also use other methods to determine fair value for securities for which it cannot obtain market quotations through brokers or dealers, including the use of an independent valuation firm. Designated members of CIM’s management team and the Company's board of directors review and approve the valuation determinations made with respect to these investments in a manner consistent with the Company’s valuation process.

As a practical expedient, the Company uses net asset value, or NAV, as the fair value for its equity investments in CION SOF and BCP Great Lakes Fund LP. CION SOF and BCP Great Lakes Fund LP record their underlying investments at fair value on a quarterly basis in accordance with ASC 820.
Revenue Recognition
Securities transactions are accounted for on the trade date. The Company records interest and dividend income on an accrual basis beginning on the trade settlement date or the ex-dividend date, respectively, to the extent that the Company expects to collect such amounts.  For investments in equity tranches of collateralized loan obligations, the Company records income based on the effective interest rate determined using the amortized cost and estimated cash flows, which is updated periodically. Loan origination fees, original issue discounts, or OID, and market discounts/premiums are recorded and such amounts are amortized as adjustments to interest income over the respective term of the loan using the effective interest rate method. Upon the prepayment of a loan or security, prepayment premiums, any unamortized loan origination fees, OID, or market discounts/premiums are recorded as interest income.
The Company may have investments in its investment portfolio that contain a PIK interest provision. PIK interest is accrued as interest income if the portfolio company valuation indicates that such PIK interest is collectible and recorded as interest receivable up to the interest payment date. On the interest payment dates, the Company will capitalize the accrued interest receivable attributable to PIK as additional principal due from the borrower. Additional PIK securities typically have the same terms, including maturity dates and interest rates, as the original securities. In order to maintain RIC status, substantially all of this income must be paid out to shareholders in the form of distributions, even if the Company has not collected any cash. For additional information on investments that contain a PIK interest provision, see the consolidated schedules of investments as of March 31, 2020 and December 31, 2019.
Loans and debt securities, including those that are individually identified as being impaired under Accounting Standards Codification 310, Receivables, or ASC 310, are generally placed on non-accrual status immediately if, in the opinion of management, principal or interest is not likely to be paid, or when principal or interest is past due 90 days or more. Interest accrued but not collected at the date a loan or security is placed on non-accrual status is reversed against interest income. Interest income is recognized on non-accrual loans or debt securities only to the extent received in cash. However, where there is doubt regarding the ultimate collectibility of principal, cash receipts, whether designated as principal or interest, are thereafter applied to reduce the carrying value of the loan or debt security. Loans or securities are restored to accrual status only when interest and principal payments are brought current and future payments are reasonably assured.

Dividend income on preferred equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

29
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The Company may receive fees for capital structuring services that are fixed based on contractual terms, are normally paid at the closing of the investments, are generally non-recurring and non-refundable and are recognized as revenue when earned upon closing of the investment. The services that CIM provides vary by investment, but generally include reviewing existing credit facilities, arranging bank financing, arranging equity financing, structuring financing from multiple lenders, structuring financing from multiple equity investors, restructuring existing loans, raising equity and debt capital, and providing general financial advice, which concludes upon closing of the investment. In certain instances where the Company is invited to participate as a co-lender in a transaction and does not provide significant services in connection with the investment, a portion of loan fees paid to the Company in such situations will be deferred and amortized over the estimated life of the loan as interest income.

Other income includes amendment fees that are fixed based on contractual terms and are generally non-recurring and non-refundable and are recognized as revenue when earned upon closing of the transaction. Other income also includes fees for managerial assistance and other consulting services, loan guarantees, commitments, and other services rendered by the Company to its portfolio companies. Such fees are fixed based on contractual terms and are recognized as fee income when earned.
Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation
Gains or losses on the sale of investments are calculated by using the weighted-average method. The Company measures realized gains or losses by the difference between the net proceeds from the sale and the weighted-average amortized cost of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.
Capital Gains Incentive Fee
Pursuant to the terms of the investment advisory agreement the Company entered into with CIM, the incentive fee on capital gains earned on liquidated investments of the Company’s investment portfolio during operations is determined and payable in arrears as of the end of each calendar year. Such fee equals 20% of the Company’s incentive fee capital gains (i.e., the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a cumulative basis and to the extent that all realized capital losses and unrealized capital depreciation exceed realized capital gains as well as the aggregate realized net capital gains for which a fee has previously been paid, the Company would not be required to pay CIM a capital gains incentive fee. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.
While the investment advisory agreement with CIM neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of the American Institute for Certified Public Accountants, or AICPA, Technical Practice Aid for investment companies, the Company accrues capital gains incentive fees on unrealized gains. This accrual reflects the incentive fees that would be payable to CIM if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though CIM is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.
Net (Decrease) Increase in Net Assets per Share
Net (decrease) increase in net assets per share is calculated based upon the daily weighted average number of shares of common stock outstanding during the reporting period.
Distributions
Distributions to shareholders are recorded as of the record date. The amount paid as a distribution is declared by the Company's co-chief executive officers and ratified by the board of directors on a quarterly basis. Net realized capital gains, if any, are distributed at least annually.
Note 3. Share Transactions
The Company’s initial continuous public offering commenced on July 2, 2012 and ended on December 31, 2015. The Company’s follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019.

30
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The following table summarizes transactions with respect to shares of the Company’s common stock during the three months ended March 31, 2020 and 2019:
 
Three Months Ended
March 31,
 
2020
 
2019
 
Shares
 
Amount
 
Shares
 
Amount
Gross shares/proceeds from the offering
—

 
$
—

 
696,264

 
$
6,516

Reinvestment of distributions
1,008,333

 
8,071

 
1,075,226

 
9,361

Total gross shares/proceeds
1,008,333

 
8,071

 
1,771,490

 
15,877

Sales commissions and dealer manager fees
—

 
—

 
—

 
(296
)
    Net shares/proceeds
1,008,333

 
8,071

 
1,771,490

 
15,581

Share repurchase program
(1,076,229
)
 
(8,071
)
 
(1,078,856
)
 
(9,361
)
    Net shares/proceeds (for) from share transactions
(67,896
)
 
$
—

 
692,634

 
$
6,220

Since commencing its initial continuous public offering on July 2, 2012 and through March 31, 2020, the Company sold 113,313,249 shares of common stock for net proceeds of $1,155,287 at an average price per share of $10.20. The net proceeds include gross proceeds received from reinvested shareholder distributions of $206,735, for which the Company issued 23,122,333 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $206,734, for which the Company repurchased 23,300,829 shares of common stock.

To ensure that the offering price per share, net of sales commissions and dealer manager fees, equaled or exceeded the net asset value per share on each subscription closing date and distribution reinvestment date, certain of the Company’s directors increased the offering price per share of common stock on certain dates. Due to a decline in the Company’s net asset value per share to an amount more than 2.5% below the Company’s then-current net offering price, certain of the Company’s directors decreased the offering price per share of common stock effective January 2, 2019 and January 9, 2019 from $9.50 to $9.45 and from $9.45 to $9.40, respectively. 
Share Repurchase Program
On a quarterly basis prior to March 31, 2020, the Company offered to repurchase shares on such terms as determined by the Company’s board of directors in its complete and absolute discretion unless, in the judgment of the independent directors of the Company’s board of directors, such repurchases would not be in the best interests of the Company’s shareholders or would violate applicable law.
On March 19, 2020, the Company's board of directors, including the independent directors, temporarily suspended the Company's share repurchase program commencing with the second quarter of 2020. Share repurchases for future quarters will be reevaluated by the board of directors based on circumstances and expectations existing at the time of consideration.
The Company limited the number of shares repurchased during any calendar year to the number of shares it could have repurchased with the proceeds it received from the issuance of shares pursuant to its fifth amended and restated distribution reinvestment plan. At the discretion of the Company’s board of directors, it could have used cash on hand, cash available from borrowings and cash from liquidation of investments as of the end of the applicable period to repurchase shares. The Company offered to repurchase such shares at a price equal to the estimated net asset value per share on each date of repurchase.
Any future periodic repurchase offers are subject in part to the Company’s available cash and compliance with the BDC and RIC qualification and diversification rules promulgated under the 1940 Act and the Code, respectively. Furthermore, any future repurchase offers will be subject to a determination by the independent directors of the Company’s board of directors that such repurchase offers would be in the best interests of the Company’s shareholders and permitted by applicable law.
The following table summarizes the share repurchases completed during the year ended December 31, 2019 and the three months ended March 31, 2020:

31
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Three Months Ended
 
Repurchase Date
 
Shares Repurchased
 
Percentage of Shares Tendered That Were Repurchased
 
Repurchase Price Per Share
 
Aggregate Consideration for Repurchased Shares
2019
 
 
 
 
 
 
 
 
 
 
March 31, 2019
 
March 27, 2019
 
1,078,856

 
30%
 
$
8.68

 
$
9,361

June 30, 2019
 
June 26, 2019
 
1,038,641

 
15%
 
8.59

 
8,926

September 30, 2019
 
September 25, 2019
 
1,035,307

 
15%
 
8.27

 
8,562

December 31, 2019
 
December 26, 2019
 
1,089,259

 
17%
 
8.22

 
8,950

    Total for the year ended December 31, 2019
4,242,063

 
 
 
 
 
$
35,799

 
 
 
 
 
 
 
 
 
 
 
2020
 
 
 
 
 
 
 
 
 
 
March 31, 2020
 
March 30, 2020
 
1,076,229

 
13%
 
$
7.50

 
$
8,071

    Total for the three months ended March 31, 2020
1,076,229

 
 
 
 
 
$
8,071

Note 4. Transactions with Related Parties
For the three months ended March 31, 2020 and 2019, fees and other expenses incurred by the Company related to CIM and its affiliates were as follows:
 
 
 
 
 
 
Three Months Ended
March 31,
Entity
 
Capacity
 
Description
 
2020
 
2019
CION Securities, LLC
 
Dealer manager
 
Dealer manager fees(1)
 
$
—

 
$
124

CIM
 
Investment adviser
 
Management fees(2)
 
8,451

 
9,331

CIM
 
Investment adviser
 
Incentive fees(2)
 
3,308

 
5,375

CIM
 
Administrative services provider
 
Administrative services expense(2)
 
394

 
497

Apollo Investment Administration, L.P.
 
Administrative services provider
 
Transaction costs(2)
 
7

 
30

 
 
 
 
 
 
$
12,160

 
$
15,357

(1)
Amounts charged directly to equity.
(2)
Amounts charged directly to operations.
On December 28, 2016, the Company entered into an amended and restated follow-on dealer manager agreement with CIM and CION Securities, LLC (formerly, ICON Securities, LLC), or CION Securities, in connection with the Company's follow-on continuous public offering, which ended on January 25, 2019. Under the amended and restated dealer manager agreement, the dealer manager fee was reduced from up to 3% to up to 2% of gross offering proceeds and selling commissions to the selling dealers were reduced from up to 7% to up to 3% of gross offering proceeds. Such costs were charged against capital in excess of par value when incurred. Since commencing its initial continuous public offering on July 2, 2012 through January 25, 2019, the Company paid or accrued sales commissions of $65,278 to the selling dealers and dealer manager fees of $32,628 to CION Securities.

32
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The Company has entered into an investment advisory agreement with CIM. On November 5, 2019, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment advisory agreement for a period of twelve months commencing December 17, 2019.  Pursuant to the investment advisory agreement, CIM is paid an annual base management fee equal to 2.0% of the average value of the Company’s gross assets, less cash and cash equivalents, and an incentive fee based on the Company’s performance, as described below. The base management fee is payable quarterly in arrears and is calculated based on the two most recently completed calendar quarters. The incentive fee consists of two parts. The first part, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based on “pre-incentive fee net investment income” for the immediately preceding quarter and is subject to a hurdle rate, measured quarterly and expressed as a rate of return on adjusted capital, as defined in the investment advisory agreement, equal to 1.875% per quarter, or an annualized rate of 7.5%. The Company receives 100% of pre-incentive fee net investment income once the hurdle rate is exceeded until the annualized rate of 9.375% is exceeded, at which point the Company receives 20% of the amount of pre-incentive fee net investment income that exceeds the annualized rate of 9.375%. For the three months ended March 31, 2020 and 2019, the liabilities recorded for subordinated incentive fees were $3,308 and $5,375, respectively. The second part of the incentive fee, which is referred to as the capital gains incentive fee, is described in Note 2. 

The Company accrues the capital gains incentive fee based on net realized gains and net unrealized appreciation; however, under the terms of the investment advisory agreement, the fee payable to CIM is based on net realized gains and unrealized depreciation and no such fee is payable with respect to unrealized appreciation unless and until such appreciation is actually realized. For the three months ended March 31, 2020 and 2019, the Company had no liability for and did not record any capital gains incentive fees.

Under the terms of the investment advisory agreement, CIM and certain of its affiliates, which includes CIG, are entitled to receive reimbursement of up to 1.5% of the gross proceeds raised until all offering and organizational costs have been reimbursed. The Company’s payment of offering and organizational costs will not exceed 1.5% of the actual gross proceeds raised from the offerings (without giving effect to any potential expense support from CIG and its affiliates, which includes CIM). With respect to any reimbursements for offering and organizational costs, the Company interprets the 1.5% limit based on actual gross proceeds raised at the time of such reimbursement.  In addition, the Company will not issue any of its shares or other securities for services or for property other than cash or securities except as a dividend or distribution to its security holders or in connection with a reorganization. 
Reinvestment of shareholder distributions and share repurchases are excluded from the gross proceeds from the Company’s offerings for purposes of determining the total amount of offering and organizational costs that can be paid by the Company. As of March 31, 2020, the Company raised gross offering proceeds of $1,155,286, of which it can pay up to $17,329 in offering and organizational costs (which represents 1.5% of the actual gross offering proceeds raised). Through March 31, 2020, the Company paid $10,701 of such costs, leaving an additional $6,628 that can be paid.

On April 1, 2018, the Company entered into an administration agreement with CIM pursuant to which CIM furnishes the Company with administrative services including accounting, investor relations and other administrative services necessary to conduct its day-to-day operations. CIM is reimbursed for administrative expenses it incurs on the Company’s behalf in performing its obligations, provided that such reimbursement is for the lower of CIM’s actual costs or the amount that the Company would have been required to pay for comparable administrative services in the same geographic location. Such costs are reasonably allocated to the Company on the basis of assets, revenues, time records or other reasonable methods. The Company does not reimburse CIM for any services for which it receives a separate fee or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a person with a controlling interest in CIM. On November 5, 2019, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the administration agreement with CIM for a period of twelve months commencing December 17, 2019.

On January 1, 2019, the Company entered into a servicing agreement with CIM’s affiliate, Apollo Investment Administration, L.P., or AIA, pursuant to which AIA furnishes the Company with administrative services including, but not limited to, loan and high yield trading services, trade and settlement support, and monthly valuation reports and support for all broker quoted investments. AIA is reimbursed for administrative expenses it incurs on the Company’s behalf in performing its obligations, provided that such reimbursement is reasonable, and costs and expenses incurred are documented. The servicing agreement may be terminated at any time, without the payment of any penalty, by either party, upon 60 days' written notice to the other party.
On January 30, 2013, the Company entered into the expense support and conditional reimbursement agreement with CIG, whereby CIG agreed to provide expense support to the Company in an amount that is sufficient to: (1) ensure that no portion of the Company’s distributions to shareholders will be paid from its offering proceeds or borrowings, and/or (2) reduce the Company’s operating expenses until it has achieved economies of scale sufficient to ensure that it bears a reasonable level of expense in relation to its investment income. On December 16, 2015, the Company further amended and restated the expense support and conditional reimbursement agreement for purposes of including AIM as a party to the agreement. On January 2, 2018, the Company entered into an expense support and conditional reimbursement agreement with CIM for purposes of, among other things, replacing CIG and AIM with CIM as the expense support provider pursuant to the terms of the expense support and conditional reimbursement agreement. On December 20, 2019, the Company and CIM amended the expense support and conditional reimbursement agreement to extend the termination date of such agreement from December 31, 2019 to December 31, 2020.

33
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Pursuant to the expense support and conditional reimbursement agreement, the Company will have a conditional obligation to reimburse CIM for any amounts funded by CIM under such agreement (i) if expense support amounts funded by CIM exceed operating expenses incurred during any fiscal quarter, (ii) if the sum of the Company’s net investment income for tax purposes, net capital gains and the amount of any dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent not included in net investment income or net capital gains for tax purposes) exceeds the distributions paid by the Company to shareholders, and (iii) during any fiscal quarter occurring within three years of the date on which CIM funded such amount. The obligation to reimburse CIM for any expense support provided by CIM under such agreement is further conditioned by the following: (i) in the period in which reimbursement is sought, the ratio of operating expenses to average net assets, when considering the reimbursement, cannot exceed the ratio of operating expenses to average net assets, as defined, for the period when the expense support was provided; (ii) in the period when reimbursement is sought, the annualized distribution rate cannot fall below the annualized distribution rate for the period when the expense support was provided; and (iii) the expense support can only be reimbursed within three years from the date the expense support was provided.

Expense support, if any, will be determined as appropriate to meet the objectives of the expense support and conditional reimbursement agreement. For the three months ended March 31, 2020 and 2019, the Company did not receive any expense support from CIM. See Note 5 for additional information on the sources of the Company’s distributions. The Company did not record any obligation to repay expense support from CIM during the three months ended March 31, 2019 or 2020, respectively. The Company did not repay any expense support to CIM during the three months ended March 31, 2019 or 2020. The Company may or may not be requested to reimburse any expense support provided in the future.
The Company or CIM may terminate the expense support and conditional reimbursement agreement at any time. CIM has indicated that it expects to continue such expense support to ensure that the Company bears a reasonable level of expenses in relation to its income. If the Company terminates the investment advisory agreement with CIM, the Company may be required to repay all unreimbursed expense support funded by CIM within three years of the date of termination. There will be no acceleration or increase of such repayment obligation at termination of the investment advisory agreement with CIM. The specific amount of expense support provided by CIM, if any, will be determined at the end of each quarter. There can be no assurance that the expense support and conditional reimbursement agreement will remain in effect or that CIM will support any portion of the Company’s expenses in future quarters.
As of March 31, 2020 and December 31, 2019, the total liability payable to CIM and its affiliates was $12,160 and $15,771, respectively, which primarily related to fees earned by CIM during the three months ended March 31, 2020 and December 31, 2019, respectively.
Because CIM’s senior management team is comprised of substantially the same personnel as the senior management team of the Company’s affiliate, ICON Capital, LLC, which is the investment manager to certain equipment finance funds, or equipment funds, such members of senior management provide investment advisory and management services to the equipment funds in addition to the Company. In the event that CIM undertakes to provide investment advisory services to other clients in the future, it will strive to allocate investment opportunities in a fair and equitable manner consistent with the Company’s investment objective and strategies so that the Company will not be disadvantaged in relation to any other client of the investment adviser or its senior management team. However, it is currently possible that some investment opportunities will be provided to other clients of CIM rather than to the Company.
Indemnifications
The investment advisory agreement, the administration agreement and the dealer manager agreement each provide certain indemnifications from the Company to the other relevant parties to such agreements. The Company’s maximum exposure under these agreements is unknown. However, the Company has not experienced claims or losses pursuant to these agreements and believes the risk of loss related to such indemnifications to be remote. 
Note 5. Distributions
From February 1, 2014 through July 17, 2017, the Company’s board of directors authorized and declared on a monthly basis a weekly distribution amount per share of common stock. On July 18, 2017, the Company's board of directors authorized and declared on a quarterly basis a weekly distribution amount per share of common stock. Effective September 28, 2017, the Company's board of directors delegated to management the authority to determine the amount, record dates, payment dates and other terms of distributions to shareholders, which will be ratified by the board of directors, each on a quarterly basis. Beginning on March 19, 2020, management changed the timing of declaring distributions from quarterly to monthly and temporarily suspended the payment of distributions to shareholders commencing with the month ending April 30, 2020, whether in cash or pursuant to the Company's distribution reinvestment plan, as amended and restated. Distributions in respect of future months will be reevaluated by management and the board of directors based on circumstances and expectations existing at the time of consideration. Declared distributions were paid monthly.

34
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The Company’s board of directors declared or ratified distributions for 53 and 13 record dates during the year ended December 31, 2019 and the three months ended March 31, 2020, respectively.
The following table presents cash distributions per share that were declared during the year ended December 31, 2019 and the three months ended March 31, 2020:
 
 
Distributions
Three Months Ended
 
Per Share
 
Amount
2019
 
 
 
 
March 31, 2019 (thirteen record dates)
 
$
0.1829

 
$
20,772

June 30, 2019 (thirteen record dates)
 
0.1829

 
20,801

September 30, 2019 (thirteen record dates)
 
0.1829

 
20,798

December 31, 2019 (fourteen record dates)
 
0.1969

 
22,401

Total distributions for the year ended December 31, 2019
 
$
0.7456

 
$
84,772

 
 
 
 
 
2020
 
 
 
 
March 31, 2020 (thirteen record dates)
 
$
0.1829

 
$
20,793

Total distributions for the three months ended March 31, 2020
 
$
0.1829

 
$
20,793


The Company has adopted an “opt in” distribution reinvestment plan for shareholders. As a result, if the Company makes a distribution, shareholders will receive distributions in cash unless they specifically “opt in” to the fifth amended and restated distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of the Company’s common stock.

On December 8, 2016, the Company amended and restated its distribution reinvestment plan pursuant to the fifth amended and restated distribution reinvestment plan, or the Fifth Amended DRIP. The Fifth Amended DRIP became effective as of, and first applied to the reinvestment of cash distributions paid on, February 1, 2017.  Under the Fifth Amended DRIP, cash distributions to participating shareholders will be reinvested in additional shares of common stock at a purchase price equal to the estimated net asset value per share of common stock as of the date of issuance.

The Company may fund its cash distributions to shareholders from any sources of funds available to the Company, including borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies and expense support from CIM, which is subject to repayment by the Company within three years. The Company has not established limits on the amount of funds it may use from available sources to make distributions. For the three months ended March 31, 2020 and the year ended December 31, 2019, none of the Company's distributions resulted from expense support from CIM. The purpose of this arrangement is to avoid such distributions being characterized as a return of capital. Shareholders should understand that any such distributions are not based on the Company’s investment performance, and can only be sustained if the Company achieves positive investment performance in future periods and/or CIM provides such expense support. Shareholders should also understand that the Company’s future repayments of expense support will reduce the distributions that they would otherwise receive. CIM has no obligation to provide expense support to the Company in future periods.
The following table reflects the sources of cash distributions on a GAAP basis that the Company has declared on its shares of common stock during the three months ended March 31, 2020 and 2019:
 
 
Three Months Ended
March 31,
 
 
2020
 
2019
Source of Distribution
 
Per Share
 
Amount
 
Percentage
 
Per Share
 
Amount
 
Percentage
Net investment income
 
$
0.1829

 
$
20,793

 
100.0
%
 
$
0.1829

 
$
20,772

 
100.0
%
Total distributions
 
$
0.1829

 
$
20,793

 
100.0
%
 
$
0.1829

 
$
20,772

 
100.0
%
It is the Company's policy to comply with all requirements of the Code applicable to RICs and to distribute substantially all of its taxable income to its shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, the Company intends not to be subject to corporate level federal income tax or federal excise taxes. Accordingly, no federal income tax provision was required for the year ended December 31, 2019.

35
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Income and capital gain distributions are determined in accordance with the Code and federal tax regulations, which may differ from amounts determined in accordance with GAAP. These book/tax differences, which could be material, are primarily due to differing treatments of income and gains on various investments held by the Company. Permanent book/tax differences result in reclassifications to capital in excess of par value, accumulated undistributed net investment income and accumulated undistributed realized gain on investments.
The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributions paid for the full year. The tax characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV. All distributions for 2019 were characterized as ordinary income distributions for federal income tax purposes.

The tax components of accumulated earnings for the current year will be determined at year end. As of December 31, 2019, the components of accumulated losses on a tax basis were as follows:
 
December 31, 2019
Undistributed ordinary income
$
2,959

Other accumulated losses
(1,810
)
Net unrealized depreciation on investments
(103,765
)
Total accumulated losses
$
(102,616
)
As of March 31, 2020, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $9,674; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $227,861; the net unrealized depreciation was $218,187; and the aggregate cost of securities for Federal income tax purposes was $1,855,807.
As of December 31, 2019, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $24,416; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $128,181; the net unrealized depreciation was $103,765; and the aggregate cost of securities for Federal income tax purposes was $1,868,837.
Note 6. Investments
The composition of the Company’s investment portfolio as of March 31, 2020 and December 31, 2019 at amortized cost and fair value was as follows:
 
 
March 31, 2020
 
December 31, 2019
 
 
Cost(1)
 
Fair
Value
 
Percentage of
Investment
Portfolio
 
Cost(1)
 
Fair
Value
 
Percentage of
Investment
Portfolio
Senior secured first lien debt
 
$
1,396,530

 
$
1,274,325

 
80.6
%
 
$
1,388,942

 
$
1,351,767

 
77.9
%
Senior secured second lien debt
 
234,407

 
201,165

 
12.7
%
 
264,280

 
248,253

 
14.3
%
Collateralized securities and structured products - debt
 
—

 
—

 
—

 
7,212

 
7,212

 
0.4
%
Collateralized securities and structured products - equity
 
16,286

 
10,972

 
0.7
%
 
16,476

 
14,182

 
0.8
%
Unsecured debt
 
4,905

 
4,800

 
0.3
%
 
4,901

 
4,900

 
0.3
%
Equity
 
114,216

 
89,701

 
5.7
%
 
115,738

 
109,231

 
6.3
%
Subtotal/total percentage
 
1,766,344

 
1,580,963

 
100.0
%
 
1,797,549

 
1,735,545

 
100.0
%
Short term investments(2)
 
56,657

 
56,657

 
 
 
29,527

 
29,527

 
 
Total investments
 
$
1,823,001

 
$
1,637,620

 
 
 
$
1,827,076

 
$
1,765,072

 
 
(1)
Cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, for debt investments and cost for equity investments.
(2)
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

36
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The following tables show the composition of the Company’s investment portfolio by industry classification and geographic dispersion, and the percentage, by fair value, of the total investment portfolio assets in such industries and geographies as of March 31, 2020 and December 31, 2019:
 
 
March 31, 2020
 
December 31, 2019
Industry Classification
 
Investments at
Fair Value
 
Percentage of
Investment Portfolio
 
Investments at
Fair Value
 
Percentage of
Investment Portfolio
Healthcare & Pharmaceuticals
 
$
286,586

 
18.1
%
 
$
294,947

 
17.0
%
Services: Business
 
171,713

 
10.9
%
 
191,126

 
11.0
%
Media: Diversified & Production
 
132,468

 
8.4
%
 
206,159

 
11.9
%
Chemicals, Plastics & Rubber
 
121,045

 
7.7
%
 
102,906

 
5.9
%
Media: Advertising, Printing & Publishing
 
115,946

 
7.3
%
 
120,810

 
7.0
%
Services: Consumer
 
86,297

 
5.5
%
 
94,058

 
5.4
%
Capital Equipment
 
78,316

 
4.9
%
 
73,586

 
4.2
%
High Tech Industries
 
65,754

 
4.2
%
 
60,197

 
3.5
%
Telecommunications
 
62,424

 
3.9
%
 
61,577

 
3.6
%
Beverage, Food & Tobacco
 
62,308

 
3.9
%
 
68,440

 
3.9
%
Retail
 
60,952

 
3.9
%
 
53,599

 
3.1
%
Diversified Financials
 
49,528

 
3.1
%
 
66,897

 
3.9
%
Banking, Finance, Insurance & Real Estate
 
39,738

 
2.5
%
 
62,738

 
3.6
%
Construction & Building
 
35,871

 
2.3
%
 
37,096

 
2.1
%
Energy: Oil & Gas
 
35,869

 
2.3
%
 
48,742

 
2.8
%
Consumer Goods: Non-Durable
 
33,156

 
2.1
%
 
33,609

 
1.9
%
Aerospace & Defense
 
29,741

 
1.9
%
 
30,378

 
1.8
%
Consumer Goods: Durable
 
29,081

 
1.8
%
 
31,705

 
1.8
%
Forest Products & Paper
 
19,818

 
1.2
%
 
24,217

 
1.4
%
Metals & Mining
 
19,437

 
1.2
%
 
10,373

 
0.6
%
Hotel, Gaming & Leisure
 
18,694

 
1.2
%
 
25,081

 
1.4
%
Transportation: Cargo
 
18,391

 
1.2
%
 
27,291

 
1.6
%
Automotive
 
7,830

 
0.5
%
 
10,013

 
0.6
%
Subtotal/total percentage
 
1,580,963

 
100.0
%
 
1,735,545

 
100.0
%
Short term investments
 
56,657

 
 
 
29,527

 
 
Total investments
 
$
1,637,620

 
 
 
$
1,765,072

 
 

37
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

 
 
March 31, 2020
 
December 31, 2019
Geographic Dispersion(1)
 
Investments at
Fair Value
 
Percentage of
Investment Portfolio
 
Investments at
Fair Value
 
Percentage of
Investment Portfolio
United States
 
$
1,524,687

 
96.4
%
 
$
1,656,031

 
95.4
%
Canada
 
24,413

 
1.6
%
 
27,648

 
1.7
%
Cayman Islands
 
10,972

 
0.7
%
 
14,182

 
0.8
%
Luxembourg
 
8,584

 
0.6
%
 
10,693

 
0.6
%
Netherlands
 
8,137

 
0.5
%
 
8,314

 
0.5
%
Cyprus
 
3,952

 
0.2
%
 
4,155

 
0.2
%
Bermuda
 
218

 
—

 
528

 
—

Germany
 
—

 
—

 
7,212

 
0.4
%
Marshall Islands
 
—

 
—

 
6,782

 
0.4
%
Subtotal/total percentage
 
1,580,963

 
100.0
%
 
1,735,545

 
100.0
%
Short term investments
 
56,657

 
 
 
29,527

 
 
Total investments
 
$
1,637,620

 
 
 
$
1,765,072

 
 
(1)
The geographic dispersion is determined by the portfolio company's country of domicile.
As of March 31, 2020 and December 31, 2019, investments on non-accrual status represented 2.1% and 0.4%, respectively, of the Company's investment portfolio on a fair value basis.
The Company’s investment portfolio may contain senior secured investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or unfunded commitments, which may require the Company to provide funding when requested in accordance with the terms of the underlying agreements. As of March 31, 2020 and December 31, 2019, the Company’s unfunded commitments amounted to $76,759 and $83,694, respectively. As of May 13, 2020, the Company’s unfunded commitments amounted to $68,119. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.  Refer to Note 11 for further details on the Company’s unfunded commitments.
Note 7. CION SOF

CION SOF was organized on May 21, 2019 as a Delaware limited liability company, and commenced operations on October 2, 2019 when the Company and BCP Special Opportunities Fund I, LP, or BCP, entered into the limited liability company agreement of CION SOF for purposes of establishing the manner in which the parties would invest in and co-manage CION SOF. CION SOF invests primarily in senior secured loans of U.S. middle-market companies. The Company and BCP contributed a portfolio of loans to CION SOF representing membership equity of $31,289 and $4,470, respectively, in exchange for 87.5% and 12.5% of the membership interests of CION SOF, respectively. The Company and BCP are not required to make any additional capital contributions to CION SOF. The Company’s equity investment in CION SOF is not redeemable. All portfolio and other material decisions regarding CION SOF must be submitted to its board of managers, which is comprised of four members, two of whom were selected by the Company and the other two were selected by BCP. Further, all portfolio and other material decisions require the affirmative vote of at least one board member from the Company and one board member from BCP.

The Company also serves as administrative agent to CION SOF to provide loan servicing functions and other administrative services. In certain cases, these loan servicing functions and other administrative services may be performed by CIM.

On October 2, 2019, CION SOF entered into a senior secured credit facility with MS, or the SOF Credit Facility, for borrowings of up to a maximum amount of $75,000. Advances under the SOF Credit Facility are available through October 2, 2022 and bear interest at a floating rate equal to the three-month LIBOR, plus a spread of (i) 3.0% per year through October 1, 2022 and (i) 3.5% per year thereafter through October 2, 2024. CION SOF's obligations to MS under the SOF Credit Facility are secured by a first priority security interest in all of the assets of CION SOF. On October 2, 2019, CION SOF drew down $64,702 of borrowings under the SOF Credit Facility. As of December 31, 2019 and March 31, 2020, the principal amount outstanding on the SOF Credit Facility was $60,702 and $64,144, respectively. The obligations of CION SOF under the SOF Credit Facility are non-recourse to the Company.

For the three months ended March 31, 2020, the Company recorded $1,412 in dividend income from its equity interest in CION SOF.

38
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

In accordance with ASU 2015-02, Consolidation, the Company has determined that CION SOF is a variable interest entity, or VIE. However, the Company is not the primary beneficiary and therefore does not consolidate CION SOF. The Company's maximum exposure to losses from CION SOF is limited to its equity contribution to CION SOF.

The following table sets forth the individual investments in CION SOF's portfolio as of March 31, 2020:
Portfolio Company
 
Index Rate(a)
 
Industry
 
Principal/
Par Amount/
Units
 
Cost(b)
 
Fair
Value
Senior Secured First Lien Debt
 
 
 
 
 
 
 
 
 
 
Anthem Sports & Entertainment Inc., L+950, 1.00% LIBOR Floor, 9/9/2024
 
3 Month LIBOR
 
Media: Diversified & Production
 
$
3,864

 
$
3,829

 
$
3,545

Cadence Aerospace, LLC, L+650, 1.00% LIBOR Floor, 11/14/2023
 
3 Month LIBOR
 
Aerospace & Defense
 
4,975

 
4,885

 
4,626

Central Security Group, Inc., L+563, 1.00% LIBOR Floor, 10/6/2021
 
1 Month LIBOR
 
Services: Consumer
 
4,974

 
4,878

 
3,872

CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
5,985

 
5,890

 
5,566

Coyote Buyer, LLC, L+600, 1.00% LIBOR Floor, 2/6/2026
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
5,000

 
4,951

 
4,800

Extreme Reach, Inc., L+750, 0.00% LIBOR Floor, 3/29/2024
 
1 Month LIBOR
 
Media: Diversified & Production
 
4,819

 
4,753

 
4,626

Foundation Consumer Healthcare, LLC, L+550, 1.00% LIBOR Floor, 11/2/2023
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
4,953

 
4,953

 
4,929

Genesis Healthcare, Inc., L+600, 0.50% LIBOR Floor, 3/6/2023
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
5,000

 
4,912

 
4,744

Geon Performance Solutions, LLC, L+625, 1.63% LIBOR Floor, 10/25/2024
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
4,988

 
4,987

 
4,688

Jab Wireless, Inc., L+800, 0.00% LIBOR Floor, 5/2/2023
 
1 Month LIBOR
 
Telecommunications
 
5,970

 
5,970

 
5,910

LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/2024
 
3 Month LIBOR
 
Services: Business
 
4,975

 
4,883

 
4,546

Manna Pro Products, LLC, L+600, 0.00% LIBOR Floor, 12/8/2023
 
1 Month LIBOR
 
Retail
 
5,970

 
5,916

 
5,910

NewsCycle Solutions, Inc., L+700, 1.00% LIBOR Floor, 12/29/2022
 
3 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
4,865

 
4,823

 
4,719

Optio Rx, LLC, L+700, 0.00% LIBOR Floor, 6/28/2024
 
3 Month LIBOR
 
Healthcare & Pharmaceuticals
 
4,988

 
4,987

 
4,963

PH Beauty Holdings III. Inc., L+500, 0.00% LIBOR Floor, 9/28/2025
 
6 Month LIBOR
 
Consumer Goods: Non-Durable
 
4,975

 
4,719

 
4,577

Pixelle Specialty Solutions LLC, L+650, 1.00% LIBOR Floor, 10/31/2024
 
1 Month LIBOR
 
Forest Products & Paper
 
3,975

 
3,762

 
3,816

Polymer Process Holdings, Inc., L+600, 0.00% LIBOR Floor, 5/1/2026
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
4,975

 
4,905

 
4,726

Woodstream Corp., L+600, 1.00% LIBOR Floor, 5/29/2022
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
4,982

 
4,962

 
4,920

Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
88,965

 
85,483

Senior Secured Second Lien Debt
 
 
 
 
 
 
 
 
 
 
1A Smart Start LLC, L+825, 1.00% LIBOR Floor, 8/21/2022
 
6 Month LIBOR
 
High Tech Industries
 
4,000

 
3,914

 
3,820

PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
5,000

 
4,933

 
4,375

Total Senior Secured Second Lien Debt
 
 
 
 
 
 
 
8,847

 
8,195

Short Term Investments(c)
 
 
 
 
 
 
 
 
 
 
First American Treasury Obligations Fund, Class Z Shares, 0.28%(d)
 
 
 
 
 
 
 
2,180

 
2,180

Total Short Term Investments
 
 
 
 
 
 
 
2,180

 
2,180

TOTAL INVESTMENTS
 
 
 
 
 
 
 
$
99,992

 
$
95,858

a.
The 1, 3 and 6 month LIBOR rates were 0.99%, 1.45% and 1.18%, respectively, as of March 31, 2020. The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of March 31, 2020, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to March 31, 2020.
b.
Represents amortized cost for debt securities and cost for equity investments.
c.
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
d.
7-day effective yield as of March 31, 2020.

39
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)


The following table sets forth the individual investments in CION SOF's portfolio as of December 31, 2019:
Portfolio Company
 
Index Rate(a)
 
Industry
 
Principal/
Par Amount/
Units
 
Cost(b)
 
Fair
Value
Senior Secured First Lien Debt
 
 
 
 
 
 
 
 
 
 
Allen Media, LLC, L+650, 1.00% LIBOR Floor, 8/30/2023
 
3 Month LIBOR
 
Media: Diversified & Production
 
$
5,920

 
$
5,738

 
$
5,979

Analogic Corp., L+600, 1.00% LIBOR Floor, 6/21/2024
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
4,923

 
4,876

 
4,874

Anthem Sports & Entertainment Inc., L+950, 1.00% LIBOR Floor, 9/9/2024
 
3 Month LIBOR
 
Media: Diversified & Production
 
3,978

 
3,939

 
3,938

Cadence Aerospace, LLC, L+650, 1.00% LIBOR Floor, 11/14/2023
 
3 Month LIBOR
 
Aerospace & Defense
 
4,987

 
4,892

 
4,937

Central Security Group, Inc., L+563, 1.00% LIBOR Floor, 10/6/2021
 
1 Month LIBOR
 
Services: Consumer
 
4,987

 
4,876

 
4,339

CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021
 
1 Month LIBOR
 
Hotel, Gaming & Leisure
 
5,985

 
5,877

 
5,865

Extreme Reach, Inc., L+750, 0.00% LIBOR Floor, 3/29/2024
 
1 Month LIBOR
 
Media: Diversified & Production
 
4,909

 
4,839

 
4,885

Genesis Healthcare, Inc., L+600, 0.50% LIBOR Floor, 3/6/2023
 
1 Month LIBOR
 
Healthcare & Pharmaceuticals
 
5,000

 
4,905

 
4,913

Jab Wireless, Inc., L+800, 0.00% LIBOR Floor, 5/2/2023
 
1 Month LIBOR
 
Telecommunications
 
6,000

 
6,000

 
6,000

LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/2024
 
3 Month LIBOR
 
Services: Business
 
4,987

 
4,891

 
4,900

Manna Pro Products, LLC, L+600, 0.00% LIBOR Floor, 12/8/2023
 
1 Month LIBOR
 
Retail
 
5,985

 
5,927

 
5,925

NewsCycle Solutions, Inc., L+700, 1.00% LIBOR Floor, 12/29/2022
 
1 Month LIBOR
 
Media: Advertising, Printing & Publishing
 
4,933

 
4,886

 
4,883

PH Beauty Holdings III. Inc., L+500, 0.00% LIBOR Floor, 9/28/2025
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
4,987

 
4,722

 
4,788

Polymer Process Holdings, Inc., L+600, 0.00% LIBOR Floor, 5/1/2026
 
1 Month LIBOR
 
Chemicals, Plastics & Rubber
 
4,987

 
4,914

 
4,913

Woodstream Corp., L+600, 1.00% LIBOR Floor, 5/29/2022
 
1 Month LIBOR
 
Consumer Goods: Non-Durable
 
5,000

 
4,976

 
5,000

Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
76,258

 
76,139

Senior Secured Second Lien Debt
 
 
 
 
 
 
 
 
 
 
1A Smart Start LLC, L+825, 1.00% LIBOR Floor, 8/21/2022
 
1 Month LIBOR
 
High Tech Industries
 
4,000

 
3,907

 
3,940

ABG Intermediate Holdings 2 LLC, L+775, 1.00% LIBOR Floor, 9/29/2025
 
1 Month LIBOR
 
Retail
 
3,000

 
3,005

 
3,000

PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023
 
3 Month LIBOR
 
Chemicals, Plastics & Rubber
 
5,000

 
4,928

 
4,800

STG-Fairway Acquisitions, Inc., L+925, 1.00% LIBOR Floor, 6/30/2023
 
1 Month LIBOR
 
Services: Business
 
5,000

 
4,809

 
5,000

Total Senior Secured Second Lien Debt
 
 
 
 
 
 
 
16,649

 
16,740

Short Term Investments(c)
 
 
 
 
 
 
 
 
 
 
First American Treasury Obligations Fund, Class Z Shares, 1.49%(d)
 
 
 
 
 
 
 
2,757

 
2,757

Total Short Term Investments
 
 
 
 
 
 
 
2,757

 
2,757

TOTAL INVESTMENTS
 
 
 
 
 
 
 
$
95,664

 
$
95,636

a.
The 1 and 3 month LIBOR rates were 1.76% and 1.91%, respectively, as of December 31, 2019.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of December 31, 2019, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to December 31, 2019.
b.
Represents amortized cost for debt securities and cost for equity investments.
c.
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
d.
7-day effective yield as of December 31, 2019.

40
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

The following tables include certain summarized financial information for CION SOF as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020:
Selected Balance Sheet Information:
 
March 31, 2020
 
December 31, 2019
Investments, at fair value (amortized cost of $99,992 and $95,664, respectively)
 
$
95,858

 
$
95,636

Cash and other assets
 
38

 
363

Receivable for investments sold and repaid
 
145

 
80

Interest receivable on investments
 
675

 
727

   Total assets
 
$
96,716

 
$
96,806

 
 
 
 
 
Credit facility (net of unamortized debt issuance costs of $1,064 and $1,123, respectively)
 
63,080

 
59,579

Other liabilities
 
2,011

 
1,495

   Total liabilities
 
$
65,091

 
$
61,074

Members' capital
 
31,625

 
35,732

   Total liabilities and members' capital
 
$
96,716

 
$
96,806


Selected Statement of Operations Information:
 
Three Months Ended March 31, 2020
Total revenues
 
$
2,589

Total expenses
 
942

Net change in unrealized depreciation on investments
 
(4,107
)
Net decrease in net assets
 
$
(2,460
)

Note 8. Financing Arrangements

The following table presents summary information with respect to the Company’s outstanding financing arrangements as of March 31, 2020: 
Financing Arrangement(1)
 
Type of Financing Arrangement
 
Rate
 
Amount Outstanding
 
Amount Available
 
Maturity Date
JPM Credit Facility
 
Term Loan Credit Facility
 
L+3.00%
 
$
250,000

 
$
25,000

 
August 24, 2021
UBS Facility
 
Repurchase Agreement
 
L+3.50%
 
200,000

 
—

 
May 19, 2020
Citibank Credit Facility
 
Revolving Credit Facility
 
L+2.00%
 
229,442

 
120,558

 
March 30, 2022
MS Credit Facility
 
Revolving Credit Facility
 
L+3.00%
 
127,417

 
22,583

 
December 19, 2022
 
 
 
 
 
 
$
806,859

 
$
168,141

 
 
(1)
See the relevant discussion below for material events subsequent to March 31, 2020.

JPM Credit Facility

On August 26, 2016, 34th Street entered into a senior secured credit facility with JPM. The senior secured credit facility with JPM, or the JPM Credit Facility, provided for borrowings in an aggregate principal amount of $150,000, of which $25,000 may be funded as a revolving credit facility, each subject to conditions described in the JPM Credit Facility. On August 26, 2016, 34th Street drew down $57,000 of borrowings under the JPM Credit Facility. On August 21, 2018, 34th Street drew down $25,577 of additional borrowings under the Amended JPM Credit Facility (as defined below).
    
On September 30, 2016, July 11, 2017, November 28, 2017 and May 23, 2018, 34th Street amended and restated the JPM Credit Facility, or the Amended JPM Credit Facility, with JPM. Under the Amended JPM Credit Facility entered into on September 30, 2016, the aggregate principal amount available for borrowings was increased from $150,000 to $225,000, of which $25,000 may be funded as a revolving credit facility, subject to conditions described in the Amended JPM Credit Facility. On September 30, 2016, 34th Street drew down $167,423 of additional borrowings under the Amended JPM Credit Facility, a portion of which was used to purchase the portfolio of loans from Credit Suisse Park View BDC, Inc. Under the Amended JPM Credit Facility entered into on July 11, 2017 and November 28, 2017, certain immaterial administrative amendments were made as a result of the termination of AIM as the Company's investment sub-adviser as discussed in Note 1. Under the Amended JPM Credit Facility entered into on May 23, 2018, (i) the aggregate principal amount available for borrowings was increased from $225,000 to $275,000, of which $25,000 may be funded as a revolving credit facility, subject to conditions described in the Amended JPM Credit Facility, (ii) the reinvestment period was extended until August 24, 2020 and (iii) the maturity date was extended to August 24, 2021.

    

41
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

On May 15, 2020, 34th Street amended and restated the Amended JPM Credit Facility, or the Second Amended JPM Credit Facility, with JPM in order to fully repay all amounts outstanding under the Citibank Credit Facility and the MS Credit Facility (as described below). Under the Second Amended JPM Credit Facility, the aggregate principal amount available for borrowings was increased from $275,000 to $700,000, of which $75,000 may be funded as a revolving credit facility, subject to conditions described in the Second Amended JPM Credit Facility, during the reinvestment period. Under the Second Amended JPM Credit Facility, the reinvestment period was extended until May 15, 2022 and the maturity date was extended to May 15, 2023. Advances under the Second Amended JPM Credit Facility bear interest at a floating rate equal to the three-month LIBOR, plus a spread of 3.25% per year. On May 15, 2020, 34th Street drew down $358,878 of borrowings under the Second Amended JPM Credit Facility.
    
Advances under the Second Amended JPM Credit Facility bear interest at a floating rate equal to the three-month LIBOR, plus a spread of 3.25% per year, which was increased from 3.00% under the Second Amended JPM Credit Facility. Interest is payable quarterly in arrears. All advances under the Second Amended JPM Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, by no later than May 15, 2023, which was extended from August 24, 2021. 34th Street may prepay advances pursuant to the terms and conditions of the Second Amended JPM Credit Facility, subject to a 1% premium in certain circumstances. In addition, 34th Street will be subject to a non-usage fee of 1.0% per year on the amount, if any, of the aggregate principal amount available under the Second Amended JPM Credit Facility that has not been borrowed during the period from August 23, 2018, and ending on, but excluding, May 15, 2022. The non-usage fees, if any, are payable quarterly in arrears.

As of March 31, 2020 and December 31, 2019, the principal amount outstanding on the Amended JPM Credit Facility was $250,000.

The Company contributed loans and other corporate debt securities to 34th Street in exchange for 100% of the membership interests of 34th Street, and may contribute additional loans and other corporate debt securities to 34th Street in the future. 34th Street’s obligations to JPM under the Amended JPM Credit Facility are secured by a first priority security interest in all of the assets of 34th Street. The obligations of 34th Street under the Amended JPM Credit Facility are non-recourse to the Company, and the Company’s exposure under the Amended JPM Credit Facility is limited to the value of the Company’s investment in 34th Street.  

In connection with the Amended JPM Credit Facility, 34th Street has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. As of and for the three months ended March 31, 2020, 34th Street was in compliance with all covenants and reporting requirements.

The Company incurred debt issuance costs of $4,052 in connection with obtaining and amending the JPM Credit Facility, which were recorded as a direct reduction to the outstanding balance of the Amended JPM Credit Facility, which is included in the Company’s consolidated balance sheet as of March 31, 2020 and will amortize to interest expense over the term of the Amended JPM Credit Facility. At March 31, 2020, the unamortized portion of the debt issuance costs was $850.

For the three months ended March 31, 2020 and 2019, the components of interest expense, average borrowings, and weighted average interest rate for the Amended JPM Credit Facility were as follows:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Stated interest expense
 
$
3,036

 
$
3,549

Amortization of deferred financing costs
 
152

 
306

Non-usage fee
 
63

 
62

Total interest expense
 
$
3,251

 
$
3,917

Weighted average interest rate(1)
 
4.90
%
 
5.78
%
Average borrowings
 
$
250,000

 
$
250,000

(1)
Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Amended JPM Credit Facility and is annualized for periods covering less than one year.

UBS Facility

On May 19, 2017, the Company, through two newly-formed, wholly-owned, special-purpose financing subsidiaries, entered into a financing arrangement with UBS pursuant to which up to $125,000 was made available to the Company.
Pursuant to the financing arrangement, assets in the Company's portfolio may be contributed from time to time to Murray Hill Funding II through Murray Hill Funding, LLC, or Murray Hill Funding, each a newly-formed, wholly-owned, special-purpose financing subsidiary of the Company. On May 19, 2017, the Company contributed assets to Murray Hill Funding II. The assets held by Murray Hill Funding II secure the obligations of Murray Hill Funding II under Class A Notes, or the Notes, issued by Murray Hill Funding II. Pursuant to an Indenture, dated May 19, 2017, between Murray Hill Funding II and U.S. Bank National Association, or U.S. Bank, as trustee, or the Indenture, the aggregate principal amount of Notes that may be issued by Murray Hill Funding II from time to time was $192,308. Murray Hill Funding purchased the Notes issued by Murray Hill Funding II at a purchase price equal to their par value. Murray Hill Funding makes capital contributions to Murray Hill Funding II to, among other things, maintain the value of the portfolio of assets held by Murray Hill Funding II.

42
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Principal on the Notes will be due and payable on the stated maturity date of May 19, 2027. Pursuant to the Indenture, Murray Hill Funding II has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar transactions. The Indenture contains events of default customary for similar transactions, including, without limitation: (a) the failure to make principal payments on the Notes at their stated maturity or any earlier redemption date or to make interest payments on the Notes and such failure is not cured within three business days; (b) the failure to disburse amounts in accordance with the priority of payments and such failure is not cured within three business days; and (c) the occurrence of certain bankruptcy and insolvency events with respect to Murray Hill Funding II or Murray Hill Funding.

Murray Hill Funding, in turn, entered into a repurchase transaction with UBS, pursuant to the terms of a Global Master Repurchase Agreement and the related Annex and Master Confirmation thereto, each dated May 19, 2017, or collectively, the UBS Facility. Pursuant to the UBS Facility, on May 19, 2017 and June 19, 2017, UBS purchased Notes held by Murray Hill Funding for an aggregate purchase price equal to 65% of the principal amount of Notes purchased. Subject to certain conditions, the maximum principal amount of Notes that may be purchased under the UBS Facility was $192,308. Accordingly, the aggregate maximum amount payable to Murray Hill Funding under the UBS Facility would not exceed $125,000. Murray Hill Funding will repurchase the Notes sold to UBS under the UBS Facility by no later than May 19, 2020. The repurchase price paid by Murray Hill Funding to UBS will be equal to the purchase price paid by UBS for the repurchased Notes (giving effect to any reductions resulting from voluntary partial prepayment(s)). If the UBS Facility is accelerated prior to May 19, 2020 due to an event of default or a mandatory or voluntary full payment by Murray Hill Funding, then Murray Hill Funding must pay to UBS a fee equal to the present value of the spread portion of the financing fees that would have been payable to UBS from the date of acceleration through May 19, 2020 had the acceleration not occurred. The financing fee under the UBS Facility is equal to the three-month LIBOR plus a spread of up to 3.50% per year for the relevant period.

On December 1, 2017, Murray Hill Funding II amended and restated the Indenture, or the Amended Indenture, pursuant to which the aggregate principal amount of Notes that may be issued by Murray Hill Funding II was increased from $192,308 to $266,667. Murray Hill Funding will purchase the Notes to be issued by Murray Hill Funding II from time to time. On December 1, 2017, Murray Hill Funding entered into a First Amended and Restated Master Confirmation to the Global Master Repurchase Agreement, or the Amended Master Confirmation, which sets forth the terms of the repurchase transaction between Murray Hill Funding and UBS under the UBS Facility. As part of the Amended Master Confirmation, on December 15, 2017 and April 2, 2018, UBS purchased the increased aggregate principal amount of Notes held by Murray Hill Funding for an aggregate purchase price equal to 75% of the principal amount of Notes issued. As a result of the Amended Master Confirmation, the aggregate maximum amount payable to Murray Hill Funding and made available to the Company under the UBS Facility was increased from $125,000 to $200,000. No other material terms of the UBS Facility were revised in connection with the amended UBS Facility, or the Amended UBS Facility.

UBS may require Murray Hill Funding to post cash collateral if, without limitation, the sum of the market value of the portfolio of assets and the cash and eligible investments held by Murray Hill Funding II, together with any posted cash collateral, is less than the required margin amount under the UBS Facility; provided, however, that Murray Hill Funding will not be required to post cash collateral with UBS until such market value has declined at least 10% from the initial market value of the portfolio assets.

The Company has no contractual obligation to post any such cash collateral or to make any payments to UBS on behalf of Murray Hill Funding. The Company may, but is not obligated to, increase its investment in Murray Hill Funding for the purpose of funding any cash collateral or payment obligations for which Murray Hill Funding becomes obligated in connection with the Amended UBS Facility. The Company’s exposure under the Amended UBS Facility is limited to the value of the Company’s investment in Murray Hill Funding.  

Pursuant to the Amended UBS Facility, Murray Hill Funding has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar transactions. The Amended UBS Facility contains events of default customary for similar financing transactions, including, without limitation: (a) failure to transfer the Notes to UBS on the applicable purchase date or repurchase the Notes from UBS on the applicable repurchase date; (b) failure to pay certain fees and make-whole amounts when due; (c) failure to post cash collateral as required; (d) the occurrence of insolvency events with respect to Murray Hill Funding; and (e) the admission by Murray Hill Funding of its inability to, or its intention not to, perform any of its obligations under the Amended UBS Facility.
    
Murray Hill Funding paid an upfront fee and incurred certain other customary costs and expenses totaling $2,637 in connection with obtaining the Amended UBS Facility, which were recorded as a direct reduction to the outstanding balance of the Amended UBS Facility, which is included in the Company’s consolidated balance sheets and will amortize to interest expense over the term of the Amended UBS Facility. At March 31, 2020, the unamortized portion of the upfront fee and other expenses was $125.


43
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

As of March 31, 2020, Notes in the aggregate principal amount of $266,667 had been purchased by Murray Hill Funding from Murray Hill Funding II and subsequently sold to UBS under the Amended UBS Facility for aggregate proceeds of $200,000. The carrying amount outstanding under the Amended UBS Facility approximates its fair value. The Company funded each purchase of Notes by Murray Hill Funding through a capital contribution to Murray Hill Funding. As of March 31, 2020, the amount due at maturity under the Amended UBS Facility was $200,000. The Notes issued by Murray Hill Funding II and purchased by Murray Hill Funding eliminate in consolidation on the Company’s consolidated financial statements.

As of March 31, 2020, the fair value of assets held by Murray Hill Funding II was $343,149.

For the three months ended March 31, 2020 and 2019, the components of interest expense, average borrowings, and weighted average interest rate for the Amended UBS Facility were as follows:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Stated interest expense
 
$
2,703

 
$
3,072

Amortization of deferred financing costs
 
234

 
232

Total interest expense
 
$
2,937

 
$
3,304

Weighted average interest rate(1)
 
5.35
%
 
6.14
%
Average borrowings
 
$
200,000

 
$
200,000

(1)
Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Amended UBS Facility and is annualized for periods covering less than one year.

Citibank Credit Facility
    
On March 29, 2017, Flatiron Funding II entered into a senior secured credit facility with Citibank. The senior secured credit facility with Citibank, or the Citibank Credit Facility, provided for a revolving credit facility in an aggregate principal amount of $325,000, subject to compliance with a borrowing base. On July 11, 2017, Flatiron Funding II amended the Citibank Credit Facility, or the Amended Citibank Credit Facility, with Citibank to make certain immaterial administrative amendments as a result of the termination of AIM as the Company's investment sub-adviser as discussed in Note 1.

On March 14, 2019, Flatiron Funding II further amended the Citibank Credit Facility, or the Second Amended Citibank Credit Facility, with Citibank to (i) increase the aggregate principal amount available for borrowings from $325,000 to $350,000, subject to compliance with a borrowing base, (ii) extend the reinvestment period for two years until March 29, 2021 and (iii) extend the maturity date until March 30, 2022.
    
As of March 31, 2020 and December 31, 2019, the principal amount outstanding on the Second Amended Citibank Credit Facility was $229,442 and $278,542, respectively. On May 15, 2020, Flatiron Funding II repaid all amounts outstanding on the Second Amended Citibank Credit Facility using a portion of the proceeds from the Second Amended JPM Credit Facility.
Advances under the Second Amended Citibank Credit Facility bore interest at a floating rate equal to (1) the higher of (a) the Citibank prime rate, (b) the federal funds rate plus 1.5% or (c) the three-month LIBOR plus 1.0%, plus (2) a spread of 2% per year. In addition, Flatiron Funding II was subject to a non-usage fee of 0.75% per year of the amount of the aggregate principal amount available under the Second Amended Citibank Credit Facility that had not been borrowed. Flatiron Funding II incurred certain customary costs and expenses in connection with obtaining and amending the Citibank Credit Facility.

The Company incurred debt issuance costs of $3,373 in connection with obtaining and amending the Citibank Credit Facility, which were recorded as a direct reduction to the outstanding balance of the Second Amended Citibank Credit Facility, which is included in the Company’s consolidated balance sheets and amortized to interest expense over the term of the Second Amended Citibank Credit Facility. At March 31, 2020, the unamortized portion of the debt issuance costs was $1,379.

Flatiron Funding II’s obligations to Citibank under the Second Amended Citibank Credit Facility were secured by a first priority security interest in all of the assets of Flatiron Funding II. The obligations of Flatiron Funding II under the Second Amended Citibank Credit Facility were non-recourse to the Company, and the Company’s exposure under the Second Amended Citibank Credit Facility was limited to the value of the Company’s investment in Flatiron Funding II. 

In connection with the Second Amended Citibank Credit Facility, Flatiron Funding II made certain representations and warranties and was required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. As of and for the three months ended March 31, 2020, Flatiron Funding II was in compliance with all covenants and reporting requirements.


44
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

For the three months ended March 31, 2020 and 2019, the components of interest expense, average borrowings, and weighted average interest rate for the Second Amended Citibank Credit Facility were as follows:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Stated interest expense
 
$
2,369

 
$
3,184

Non-usage fee
 
177

 
115

Amortization of deferred financing costs
 
172

 
162

Total interest expense
 
$
2,718

 
$
3,461

Weighted average interest rate(1)
 
3.91
%
 
4.92
%
Average borrowings
 
$
256,609

 
$
268,497

(1)
Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Second Amended Citibank Credit Facility and is annualized for periods covering less than one year.

MS Credit Facility

On December 19, 2017, 33rd Street entered into a senior secured credit facility, or the MS Credit Facility, with MS. The MS Credit Facility provided for a revolving credit facility in an aggregate principal amount of up to $200,000, subject to compliance with a borrowing base.
    
On July 9, 2018, 33rd Street amended and restated the MS Credit Facility to make certain immaterial administrative amendments. 33rd Street further amended and restated the MS Credit Facility, or the Amended MS Credit Facility, with MS on December 18, 2018. Pursuant to the Amended MS Credit Facility, 33rd Street could have prepaid advances pursuant to the terms and conditions of the loan and servicing agreement, subject to a 1% premium if the amount of the Amended MS Credit Facility was reduced or terminated on or prior to December 19, 2020.
    
Pursuant to the terms of the loan and servicing agreement, on March 15, 2019, 33rd Street reduced the aggregate principal amount available for borrowings under the Amended MS Credit Facility from $200,000 to $150,000.

On June 5, 2018, June 12, 2018, June 28, 2018, March 11, 2020 and March 23, 2020, 33rd Street drew down $25,000, $75,000, $50,000, $10,000 and $4,917 of borrowings under the Amended MS Credit Facility, respectively. On May 8, 2019, May 23, 2019, July 29, 2019 and November 6, 2019, 33rd Street repaid $20,000, $5,000, $10,000 and $2,500 of borrowings under the Amended MS Credit Facility, respectively. As of March 31, 2020 and December 31, 2019, the principal amount outstanding on the Amended MS Credit Facility was $127,417 and $112,500, respectively. On May 15, 2020, 33rd Street repaid all amounts outstanding on the Amended MS Credit Facility using a portion of the proceeds from the Second Amended JPM Credit Facility.
    
Advances under the Amended MS Credit Facility were available through December 19, 2020 and bore interest at a floating rate equal to the three-month LIBOR, plus a spread of 3.0% per year through December 19, 2020. All advances under the Amended MS Credit Facility and all accrued and unpaid interest thereunder were due and payable by no later than December 19, 2022. 33rd Street incurred certain customary costs and expenses in connection with obtaining and amending the MS Credit Facility.

In connection with the Amended MS Credit Facility, 33rd Street made certain representations and warranties and was required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Amended MS Credit Facility contained customary events of default for similar financing transactions.

33rd Street's obligations to MS under the Amended MS Credit Facility were secured by a first priority security interest in all of the assets of 33rd Street. The obligations of 33rd Street under the Amended MS Credit Facility were non-recourse to the Company, and the Company's exposure under the Amended MS Credit Facility was limited to the value of the Company's investment in 33rd Street. 33rd Street appointed CIM to manage its portfolio.

33rd Street paid an upfront fee and incurred certain other customary costs and expenses totaling $2,591 in connection with obtaining and amending the MS Credit Facility, which the Company initially recorded as prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized to interest expense over the term of the Amended MS Credit Facility. On June 5, 2018, unamortized upfront fees were recorded as a direct reduction to the outstanding balance of the Amended MS Credit Facility, which is included in the Company’s consolidated balance sheet as of March 31, 2020. At March 31, 2020, the unamortized portion of the upfront fee and other expenses was $1,415.


45
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

For the three months ended March 31, 2020 and 2019, the components of interest expense, average borrowings, and weighted average interest rate for the Amended MS Credit Facility were as follows:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Stated interest expense
 
$
1,362

 
$
2,154

Amortization of deferred financing costs
 
129

 
128

Non-usage fee
 
67

 
76

Total interest expense
 
$
1,558

 
$
2,358

Weighted average interest rate(1)
 
4.90
%
 
5.95

Average borrowings
 
$
115,294

 
$
150,000

(1)
Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Amended MS Credit Facility and is annualized for periods covering less than one year.

46
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Note 9. Fair Value of Financial Instruments
 
The following table presents fair value measurements of the Company’s portfolio investments as of March 31, 2020 and December 31, 2019, according to the fair value hierarchy: 
 
March 31, 2020(1)
 
December 31, 2019(2)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Senior secured first lien debt
$
—

 
$
—

 
$
1,274,325

 
$
1,274,325

 
$
—

 
$
—

 
$
1,351,767

 
$
1,351,767

Senior secured second lien debt
—

 
—

 
201,165

 
201,165

 
—

 
—

 
248,253

 
248,253

Collateralized securities and structured products - debt
—

 
—

 
—

 
—

 
—

 
—

 
7,212

 
7,212

Collateralized securities and structured products - equity
—

 
—

 
10,972

 
10,972

 
—

 
—

 
14,182

 
14,182

Unsecured debt
—

 
—

 
4,800

 
4,800

 
—

 
—

 
4,900

 
4,900

Equity
4,690

 
—

 
46,455

 
51,145

 
6,842

 
—

 
56,886

 
63,728

Short term investments
56,657

 
—

 
—

 
56,657

 
29,527

 
—

 
—

 
29,527

Total Investments
$
61,347

 
$
—

 
$
1,537,717

 
$
1,599,064

 
$
36,369

 
$
—

 
$
1,683,200

 
$
1,719,569

(1)
Excludes the Company's $27,672 investment in CION SOF and $10,884 investment in BCP Great Lakes Fund LP, which were measured at NAV.
(2)
Excludes the Company's $31,265 investment in CION SOF and $14,238 investment in BCP Great Lakes Fund LP, which were measured at NAV.

The following tables provide a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended March 31, 2020 and 2019:
 
Three Months Ended
March 31, 2020
 
Senior Secured First Lien Debt
 
Senior Secured Second Lien Debt
 
Collateralized Securities and Structured Products - Debt
 
Collateralized Securities and Structured Products - Equity
 
Unsecured Debt
 
Equity
 
Total
Beginning balance, December 31, 2019
$
1,351,767

 
$
248,253

 
$
7,212

 
$
14,182

 
$
4,900

 
$
56,886

 
$
1,683,200

Investments purchased
177,154

 
354

 
—

 
—

 
—

 
611

 
178,119

Net realized (loss) gain
(4,195
)
 
1

 
—

 
—

 
—

 
—

 
(4,194
)
Net change in unrealized depreciation
(85,030
)
 
(17,215
)
 
—

 
(3,020
)
 
(104
)
 
(11,042
)
 
(116,411
)
Accretion of discount
4,689

 
488

 
—

 
—

 
4

 
—

 
5,181

Sales and principal repayments
(170,060
)
 
(30,716
)
 
(7,212
)
 
(190
)
 
—

 
—

 
(208,178
)
Ending balance, March 31, 2020
$
1,274,325

 
$
201,165

 
$
—

 
$
10,972

 
$
4,800

 
$
46,455

 
$
1,537,717

Change in net unrealized depreciation on investments still held as of March 31, 2020(1)
$
(81,934
)
 
$
(16,670
)
 
$
—

 
$
(3,020
)
 
$
(104
)
 
$
(11,042
)
 
$
(112,770
)
(1)
Included in net change in unrealized (depreciation) appreciation on investments in the consolidated statements of operations.

47
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

 
Three Months Ended
March 31, 2019
 
Senior Secured First Lien Debt
 
Senior Secured Second Lien Debt
 
Collateralized Securities and Structured Products - Debt
 
Collateralized Securities and Structured Products - Equity
 
Equity
 
Total
Beginning balance, December 31, 2018
$
1,462,989

 
$
323,365

 
$
15,193

 
$
14,827

 
$
29,076

 
$
1,845,450

Investments purchased
134,777

 
9,824

 
—

 
—

 
4,254

 
148,855

Net realized loss
(895
)
 
(13
)
 
(49
)
 
—

 
—

 
(957
)
Net change in unrealized (depreciation) appreciation
(2,837
)
 
(2,471
)
 
(114
)
 
755

 
(346
)
 
(5,013
)
Accretion of discount
2,663

 
354

 
—

 
—

 
—

 
3,017

Sales and principal repayments
(183,229
)
 
(20,867
)
 
—

 
(107
)
 
—

 
(204,203
)
Ending balance, March 31, 2019
$
1,413,468

 
$
310,192

 
$
15,030

 
$
15,475

 
$
32,984

 
$
1,787,149

Change in net unrealized (depreciation) appreciation on investments still held as of March 31, 2019(1)
$
(3,537
)
 
$
(2,397
)
 
$
(114
)
 
$
755

 
$
(346
)
 
$
(5,639
)
(1)
Included in net change in unrealized (depreciation) appreciation on investments in the consolidated statements of operations.
Significant Unobservable Inputs
The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of investments as of March 31, 2020 and December 31, 2019 were as follows:
 
 
March 31, 2020
 
 
Fair Value
 
Valuation Techniques/
Methodologies
 
Unobservable
Inputs
 
Range
 
Weighted Average(1)
Senior secured first lien debt
 
$
1,166,046

 
Discounted Cash Flow
 
Discount Rates
 
6.3%
 
—
 
23.1%
 
10.9%
 
 
47,442

 
Broker Quotes
 
Broker Quotes
 
N/A
 
N/A
 
 
34,547

 
Market Comparable Approach
 
EBITDA Multiple
 
2.13x
 
—
 
7.50x
 
4.79x
 
 
25,886

 
 
Revenue Multiple
 
0.28x
 
—
 
2.72x
 
1.87x
 
 
404

 
Other(2)
 
Other(2)
 
N/A
 
N/A
Senior secured second lien debt
 
190,167

 
Discounted Cash Flow
 
Discount Rates
 
9.5%
 
—
 
17.7%
 
12.4%
 
 
9,814

 
Broker Quotes
 
Broker Quotes
 
N/A
 
N/A
 
 
1,184

 
Market Comparable Approach
 
EBITDA Multiple
 
6.50x
 
—
 
9.25x
 
9.25x
Collateralized securities and structured products - equity
 
8,884

 
Discounted Cash Flow
 
Discount Rates
 
15.5%
 
—
 
18.0%
 
15.7%
 
 
2,088

 
Other(2)
 
Other(2)
 
N/A
 
N/A
Unsecured debt
 
4,800

 
Discounted Cash Flow
 
Discount Rates
 
16.1%
 
N/A
Equity
 
25,817

 
Market Comparable Approach
 
EBITDA Multiple
 
3.25x
 
—
 
9.50x
 
5.98x
 
 
6,661

 
 
Revenue Multiple
 
0.25x
 
—
 
1.63x
 
0.48x
 
 
13,877

 
Discounted Cash flow
 
Discount Rates
 
21.6%
 
N/A
 
 
100

 
Options Pricing Model
 
Expected Volatility
 
50.0%
 
—
 
96.0%
 
64.6%
Total
 
$
1,537,717

 
 
 
 
 
 
 
 
 
 
 
 
(1)
Weighted average amounts are based on the estimated fair values.
(2)
Fair value based on expected outcome of proposed corporate transactions and/or other factors.

48
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

 
 
December 31, 2019
 
 
Fair Value
 
Valuation Techniques/
Methodologies
 
Unobservable
Inputs
 
Range
 
Weighted Average(1)
Senior secured first lien debt
 
$
1,115,676

 
Discounted Cash Flow
 
Discount Rates
 
5.0%
 
-
 
24.7%
 
10.0%
 
 
225,310

 
Broker Quotes
 
Broker Quotes
 
N/A
 
N/A
 
 
7,591

 
Market Comparable Approach
 
EBITDA Multiple
 
5.25x
 
-
 
9.00x
 
7.49x
 
 
3,190

 
Other(2)
 
Other(2)
 
N/A
 
N/A
Senior secured second lien debt
 
139,363

 
Discounted Cash Flow
 
Discount Rates
 
9.0%
 
-
 
14.9%
 
11.0%
 
 
107,816

 
Broker Quotes
 
Broker Quotes
 
N/A
 
N/A
 
 
1,074

 
Market Comparable Approach
 
EBITDA Multiple
 
5.25x
 
-
 
7.55x
 
7.55x
Collateralized securities and structured products - debt
 
7,212

 
Other(2)
 
Other(2)
 
N/A
 
N/A
Collateralized securities and structured products - equity
 
11,274

 
Discounted Cash Flow
 
Discount Rates
 
12.5%
 
-
 
16.0%
 
13.0%
 
 
2,908

 
Other(2)
 
Other(2)
 
N/A
 
N/A
Unsecured debt
 
4,900

 
Discounted Cash Flow
 
Discount Rates
 
15.5%
 
N/A
Equity
 
33,230

 
Market Comparable Approach
 
EBITDA Multiple
 
4.50x
 
-
 
13.00x
 
7.18x
 
 
9,456

 
 
Revenue Multiple
 
0.30x
 
-
 
3.50x
 
0.77x
 
 
13,270

 
Discounted Cash Flow
 
Discount Rates
 
21.6%
 
N/A
 
 
914

 
Broker Quotes
 
Broker Quotes
 
N/A
 
N/A
 
 
16

 
Options Pricing Model
 
Expected Volatility
 
60.0%
 
-
 
92.0%
 
61.7%
Total
 
$
1,683,200

 
 
 
 
 
 
 
 
 
 
 
 
(1)
Weighted average amounts are based on the estimated fair values.
(2)
Fair value based on expected outcome of proposed corporate transactions and/or other factors.
The significant unobservable inputs used in the fair value measurement of the Company’s senior secured first lien debt, senior secured second lien debt, collateralized securities and structured products, unsecured debt and equity are discount rates, EBITDA multiples, revenue multiples, broker quotes and expected volatility. A significant increase or decrease in discount rates would result in a significantly lower or higher fair value measurement, respectively. A significant increase or decrease in the EBITDA multiples, revenue multiples, expected proceeds from proposed corporate transactions, broker quotes and expected volatility would result in a significantly higher or lower fair value measurement, respectively.

49
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Note 10. General and Administrative Expense
General and administrative expense consisted of the following items for the three months ended March 31, 2020 and 2019:
 
Three Months Ended March 31,
 
2020
 
2019
Transfer agent expense
$
395

 
$
265

Professional fees
297

 
553

Valuation expense
276

 
115

Accounting and administration costs
146

 
15

Director fees and expenses
116

 
121

Insurance expense
108

 
101

Dues and subscriptions
82

 
135

Printing and marketing expense
15

 
22

Due diligence fees
—

 
61

Other expenses
35

 
1

Total general and administrative expense
$
1,470

 
$
1,389

Note 11. Commitments and Contingencies
The Company entered into certain contracts with related and other parties that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not experienced claims or losses pursuant to these contracts and believes the risk of loss related to such indemnifications to be remote.

50
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

As of March 31, 2020 and December 31, 2019, the Company’s unfunded commitments were as follows:
Unfunded Commitments
 
March 31, 2020(1)
 
December 31, 2019(1)
Palmetto Solar, LLC
 
$
15,021

 
$
19,142

Mimeo.com, Inc.
 
10,000

 
11,500

West Dermatology Management Holdings, LLC
 
8,840

 
—

Independent Pet Partners Intermediate Holdings, LLC
 
7,363

 
7,852

Volta Charging, LLC
 
5,850

 
10,000

Manna Pro Products, LLC
 
4,413

 
5,528

Foundation Consumer Healthcare, LLC
 
4,211

 
4,211

BCP Great Lakes Fund LP
 
2,924

 
792

CircusTrix Holdings, LLC
 
2,898

 
2,892

Lift Brands, Inc.
 
2,500

 
3,950

Coyote Buyer, LLC
 
2,250

 
—

Moss Holding Company
 
2,232

 
2,232

Echo US Holdings, LLC
 
2,037

 
2,586

Adapt Laser Acquisition, Inc.
 
2,000

 
2,000

Anthem Sports & Entertainment Inc.
 
1,333

 
1,333

Teladoc, Inc.
 
1,250

 
1,250

LAV Gear Holdings, Inc.
 
864

 
864

AMCP Staffing Intermediate Holdings III, LLC
 
603

 
1,059

American Media, Inc.
 
170

 
128

Instant Web, LLC
 
—

 
2,704

Extreme Reach, Inc.
 
—

 
1,744

Adams Publishing Group, LLC
 
—

 
1,600

Country Fresh Holdings, LLC
 
—

 
327

Total
 
$
76,759

 
$
83,694

(1)
Unless otherwise noted, the funding criteria for these unfunded commitments had not been met at the date indicated.
Unfunded commitments to provide funds to companies are not recorded on the Company’s consolidated balance sheets. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. The Company intends to use cash on hand, short-term investments, proceeds from borrowings, and other liquid assets to fund these commitments should the need arise. For information on the companies to which the Company is committed to fund additional amounts as of March 31, 2020 and December 31, 2019, refer to the table above and the consolidated schedules of investments. As of May 13, 2020, the Company was committed, upon the satisfaction of certain conditions, to fund an additional $68,119.
The Company will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (i.e., advances from its financing arrangements and/or cash flows from operations). The Company will not fund its unfunded commitments from future net proceeds generated by securities offerings, if any. The Company follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments. Specifically, the Company prepares detailed analyses of the level of its unfunded commitments relative to its then available liquidity on a daily basis.  These analyses are reviewed and discussed on a weekly basis by the Company's executive officers and senior members of CIM (including members of the investment committee) and are updated on a “real time” basis in order to ensure that the Company has adequate liquidity to satisfy its unfunded commitments.
As of March 31, 2020, no contingencies have been recorded on the Company’s consolidated financial statements as a result of COVID-19, however as the global pandemic continues and the economic implications worsen, it may have long-term impacts on the Company’s financial condition, results of operations, and cash flows. Refer to Note 2 for a further discussion of COVID-19.

51
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Note 12. Fee Income
Fee income consists of amendment fees and capital structuring and other fees. The following table summarizes the Company’s fee income for the three months ended March 31, 2020 and 2019:
 
Three Months Ended
March 31,
 
2020
 
2019
Amendment fees
$
489

 
$
298

Capital structuring and other fees
115

 
—

Total
$
604

 
$
298


Income from all fees was non-recurring.

52
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

Note 13. Financial Highlights

The following is a schedule of financial highlights as of and for the three months ended March 31, 2020 and 2019:
 
 
Three Months Ended
March 31,
 
 
2020
 
2019
Per share data:(1)
 
 
 
 
Net asset value at beginning of period
 
$
8.40

 
$
8.69

Results of operations:
 
 
 
 
Net investment income
 
0.19

 
0.19

Net realized and change in unrealized losses(2)
 
(1.12
)
 
(0.05
)
Net (decrease) increase in net assets resulting from operations(2)
 
(0.93
)
 
0.14

Shareholder distributions:
 
 
 
 
Distributions from net investment income
 
(0.18
)
 
(0.18
)
Net decrease in net assets from shareholders' distributions
 
(0.18
)
 
(0.18
)
Capital share transactions:
 
 
 
 
Issuance of common stock above net asset value(3)
 
—

 
—

Repurchases of common stock(4)
 
—

 
—

Net increase in net assets resulting from capital share transactions
 
—

 
—

Net asset value at end of period
 
$
7.29

 
$
8.65

Shares of common stock outstanding at end of period
 
113,313,249

 
113,401,873

Total investment return-net asset value(5)
 
(11.25
)%
 
1.68
%
Net assets at beginning of period
 
$
952,563

 
$
979,271

Net assets at end of period
 
$
825,858

 
$
981,135

Average net assets
 
$
917,565

 
$
987,393

Ratio/Supplemental data:
 
 
 
 
Ratio of net investment income to average net assets(6)
 
2.36
 %
 
2.18
%
Ratio of gross operating expenses to average net assets(6)(7)
 
2.62
 %
 
3.00
%
Ratio of expenses to average net assets(6)
 
2.62
 %
 
3.00
%
Portfolio turnover rate(8)
 
10.53
 %
 
7.92
%
Asset coverage ratio(9)
 
2.02

 
2.11

(1)
The per share data for the three months ended March 31, 2020 and 2019 was derived by using the weighted average shares of common stock outstanding during each period.
(2)
The amount shown for net realized loss and net change in unrealized depreciation on investments is the balancing figure derived from the other figures in the schedule. The amount shown at this caption for a share outstanding throughout the period may not agree with the change in the aggregate gains and losses in portfolio securities for the period because of the timing of sales and repurchases of the Company’s shares in relation to fluctuating market values for the portfolio. As a result, net (decrease) increase in net assets resulting from operations in this schedule may vary from the consolidated statements of operations.

53
CĪON Investment Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 2020
(in thousands, except share and per share amounts)

(3)
The continuous issuance of shares of common stock may have caused an incremental increase in net asset value per share due to the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date. The per share impact of the continuous issuance of shares of common stock was an increase to net asset value of less than $0.01 per share during the three months ended March 31, 2019.
(4)
Repurchases of common stock may cause an incremental decrease in net asset value per share due to the repurchase of shares at a price in excess of net asset value per share on each repurchase date. The per share impact of repurchases of common stock was a decrease to net asset value of less than $0.01 per share during the three months ended March 31, 2020 and 2019.
(5)
Total investment return-net asset value is a measure of the change in total value for shareholders who held the Company’s common stock at the beginning and end of the period, including distributions paid or payable during the period. Total investment return-net asset value is based on (i) the beginning period net asset value per share on the first day of the period, (ii) the net asset value per share on the last day of the period of (A) one share plus (B) any fractional shares issued in connection with the reinvestment of monthly distributions, and (iii) the value of distributions payable, if any, on the last day of the period. The total investment return-net asset value calculation assumes that monthly cash distributions are reinvested in accordance with the Company's distribution reinvestment plan then in effect as described in Note 5. The total investment return-net asset value does not consider the effect of the sales load from the sale of the Company’s common stock. The total investment return-net asset value includes the effect of the issuance of shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. Total returns covering less than a full year are not annualized.
(6)
Ratio is not annualized.
(7)
Ratio of gross operating expenses to average net assets does not include expense support provided by CIM, if any.
(8)
Portfolio turnover rate is calculated using the lesser of year-to-date sales or purchases over the average of the invested assets at fair value, excluding short term investments, and is not annualized.
(9)
Asset coverage ratio is equal to (i) the sum of (a) net assets at the end of the period and (b) total senior securities outstanding at the end of the period (excluding unfunded commitments), divided by (ii) total senior securities outstanding at the end of the period.

54


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our” or similar terms include CĪON Investment Corporation and its consolidated subsidiaries.
The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019. In addition to historical information, the following discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking information that involves risks and uncertainties. Amounts and percentages presented herein may have been rounded for presentation and all dollar amounts, excluding share and per share amounts, are presented in thousands unless otherwise noted.
Forward-Looking Statements
Some of the statements within this Quarterly Report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Quarterly Report on Form 10-Q may include statements as to:
•
our future operating results;
•
our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives as a result of COVID-19;
•
the impact of the investments that we expect to make;
•
the ability of our portfolio companies to achieve their objectives;
•
our current and expected financings and investments;
•
the adequacy of our cash resources, financing sources and working capital;
•
the use of borrowed money to finance a portion of our investments;
•
the timing of cash flows, if any, from the operations of our portfolio companies;
•
our contractual arrangements and relationships with third parties;
•
the actual and potential conflicts of interest with CIM and Apollo and their respective affiliates;
•
the ability of CIM's and AIM's investment professionals to locate suitable investments for us and the ability of CIM to monitor and administer our investments;
•
the ability of CIM and its affiliates to attract and retain highly talented professionals;
•
the dependence of our future success on the general economy and its impact on the industries in which we invest, including COVID-19 and the related economic disruptions caused thereby;
•
the effects of a changing interest rate environment;
•
our ability to source favorable private investments;
•
our tax status;
•
the effect of changes to tax legislation and our tax position;
•
the tax status of the companies in which we invest; and
•
the timing and amount of distributions and dividends from the companies in which we invest.
In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q. Other factors that could cause actual results to differ materially include: 
•
changes in the economy;
•
risks associated with possible disruption in our operations or the economy generally due to terrorism, pandemics, or natural disasters; and
•
future changes in laws or regulations and conditions in our operating areas.

55


We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to review any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Overview
We were incorporated under the general corporation laws of the State of Maryland on August 9, 2011 and commenced operations on December 17, 2012 upon raising proceeds of $2,500 from persons not affiliated with us, CIM or Apollo. We are an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. We elected to be treated for federal income tax purposes as a RIC, as defined under Subchapter M of the Code.
Our investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. Our portfolio is comprised primarily of investments in senior secured debt, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities, unsecured debt and equity, of private and thinly-traded U.S. middle-market companies. In connection with our debt investments, we may receive equity interests such as warrants or options as additional consideration. We may also purchase equity interests in the form of common or preferred stock in our target companies, either in conjunction with one of our debt investments or through a co-investment with a financial sponsor.
We are managed by CIM, our affiliate and a registered investment adviser. Pursuant to an investment advisory agreement with us, CIM oversees the management of our activities and is responsible for making investment decisions for our portfolio. On November 5, 2019, our board of directors, including a majority of directors who are not interested persons, approved the renewal of the investment advisory agreement with CIM for a period of twelve months commencing December 17, 2019. We and CIM previously engaged AIM to act as our investment sub-adviser.
On July 11, 2017, the members of CIM entered into the Third Amended CIM LLC Agreement for the purpose of creating a joint venture between AIM and CIG. Under the Third Amended CIM LLC Agreement, AIM became a member of CIM and was issued a newly-created class of membership interests in CIM pursuant to which AIM, among other things, shares in the profits, losses, distributions and expenses of CIM with the other members in accordance with the terms of the Third Amended CIM LLC Agreement, which results in CIG and AIM each owning a 50% economic interest in CIM.
On July 10, 2017, our independent directors unanimously approved the termination of the investment sub-advisory agreement with AIM, effective as of July 11, 2017, as part of the new and ongoing relationship among us, CIM and AIM. Although the investment sub-advisory agreement and AIM's engagement as our investment sub-adviser were terminated, AIM's investment professionals continue to perform certain services for CIM and us, including, without limitation, identifying investment opportunities for approval by CIM's investment committee. AIM is not paid a separate fee in exchange for such services, but is entitled to receive distributions as a member of CIM as described above.
On December 4, 2017, the members of CIM entered into the Fourth Amended CIM LLC Agreement. Under the Fourth Amended CIM LLC Agreement, AIM’s investment professionals perform certain services for CIM, which include, among other services, (i) assistance with identifying and providing information about potential investment opportunities for approval by CIM’s investment committee; and (ii) providing (a) trade and settlement support; (b) portfolio and cash reconciliation; (c) market pipeline information regarding syndicated deals, in each case, as reasonably requested by CIM; and (d) monthly valuation reports and support for all broker-quoted investments. All of our investment decisions are the sole responsibility of, and are made at the sole discretion of, CIM's investment committee, which consists entirely of CIG personnel.
We seek to meet our investment objective by utilizing the experienced management team of CIM, which includes its access to the relationships and human capital of its affiliates in sourcing, evaluating and structuring transactions, as well as monitoring and servicing our investments. We focus primarily on the senior secured debt of private and thinly-traded U.S. middle-market companies, which we define as companies that generally possess annual EBITDA of $50 million or less, with experienced management teams, significant free cash flow, strong competitive positions and potential for growth.

56


Revenue
We primarily generate revenue in the form of interest income on the debt securities that we hold and capital gains on debt or other equity interests that we acquire in portfolio companies. The majority of our senior debt investments bear interest at a floating rate. Interest on debt securities is generally payable quarterly or monthly. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued, but unpaid, interest generally will become due at the maturity date. In addition, we may generate revenue in the form of commitment and capital structuring fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees generated in connection with our investments will be recognized when earned.
Operating Expenses
Our primary operating expenses are the payment of advisory fees and subordinated incentive fees on income under the investment advisory agreement and interest expense on our financing arrangements. Our investment advisory fees compensate CIM for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments. We bear all other expenses of our operations and transactions.

Recent Developments - COVID-19
The rapid spread of COVID-19, and associated impacts on the U.S. and global economies and the financial and credit markets, has negatively impacted, and is likely to continue to negatively impact, our business operations and the business operations of some of our portfolio companies. We cannot at this time fully predict the impact of COVID-19 on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our portfolio companies’ operating results or our own results of operations or financial condition, including, without limitation, our ability to pay distributions. We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress. These developments could result in a decrease in the value of our investments.
COVID-19 has already had adverse effects on our investment income and we expect that such adverse effects will continue for some time. These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments. In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas. These market disruptions and illiquidity are likely to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions caused by COVID-19 can also be expected to increase our funding costs and limit our access to the capital markets. These events have limited our investment originations, which is likely to continue for the immediate future, and have also had a material negative impact on our operating results.
We will continue to carefully monitor the impact of COVID-19 on our business and the business of our portfolio companies. Because the full effects of COVID-19 are not capable of being known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows, including its effects on us with respect to our compliance with covenants in our loan facilities with lenders. We do, however, expect that it will continue to have a negative impact on our business and the financial condition of our portfolio companies.
Portfolio Investment Activity for the Three Months Ended March 31, 2020 and 2019
The following table summarizes our investment activity, excluding short term investments and PIK securities, for the three months ended March 31, 2020 and 2019:
 
 
Three Months Ended
March 31,
Net Investment Activity
 
2020
 
2019
Purchases and drawdowns
 
 
 
 
    Senior secured first lien debt
 
$
175,543

 
$
134,130

    Senior secured second lien debt
 
—

 
9,824

    Equity
 
88

 
1,691

Sales and principal repayments
 
(210,398
)
 
(204,203
)
Net portfolio activity
 
$
(34,767
)
 
$
(58,558
)

57


The following tables summarize the composition of our investment portfolio at amortized cost and fair value as of March 31, 2020 and December 31, 2019:
 
 
March 31, 2020
 
 
Investments Cost(1)
 
Investments Fair
Value
 
Percentage of
Investment
Portfolio
Senior secured first lien debt
 
$
1,396,530

 
$
1,274,325

 
80.6
%
Senior secured second lien debt
 
234,407

 
201,165

 
12.7
%
Collateralized securities and structured products - equity
 
16,286

 
10,972

 
0.7
%
Unsecured debt
 
4,905

 
4,800

 
0.3
%
Equity
 
114,216

 
89,701

 
5.7
%
Subtotal/total percentage
 
1,766,344

 
1,580,963

 
100.0
%
Short term investments(2)
 
56,657

 
56,657

 
 
Total investments
 
$
1,823,001

 
$
1,637,620

 
 
Number of portfolio companies
 
 
 
134

Average annual EBITDA of portfolio companies
 
$78.8 million
 
Median annual EBITDA of portfolio companies
 
$54.6 million
 
Purchased at a weighted average price of par
 
97.96
%
Gross annual portfolio yield based upon the purchase price(3)
 
8.52
%
(1)
Represents amortized cost for debt investments and cost for equity investments. Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on our investments.
(2)
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
(3)
The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.
 
December 31, 2019
 
Investments Cost(1)
 
Investments Fair
Value
 
Percentage of
Investment
Portfolio
Senior secured first lien debt
$
1,388,942

 
$
1,351,767

 
77.9
%
Senior secured second lien debt
264,280

 
248,253

 
14.3
%
Collateralized securities and structured products - debt
7,212

 
7,212

 
0.4
%
Collateralized securities and structured products - equity
16,476

 
14,182

 
0.8
%
Unsecured debt
4,901

 
4,900

 
0.3
%
Equity
115,738

 
109,231

 
6.3
%
Subtotal/total percentage
1,797,549

 
1,735,545

 
100.0
%
Short term investments(2)
29,527

 
29,527

 
 

Total investments
$
1,827,076

 
$
1,765,072

 
 
Number of portfolio companies
 
 

 
136

Average annual EBITDA of portfolio companies
 
$81.7 million
 
Median annual EBITDA of portfolio companies
 
$56.1 million
 
Purchased at a weighted average price of par
 
97.68
%
Gross annual portfolio yield based upon the purchase price(3)
 
9.33
%
(1)
Represents amortized cost for debt investments and cost for equity investments. Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on our investments.
(2)
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

58


(3)
The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.
The following table summarizes the composition of our investment portfolio by the type of interest rate as of March 31, 2020 and December 31, 2019, excluding short term investments of $56,657 and $29,527, respectively:
 
 
March 31, 2020
 
December 31, 2019
Interest Rate Allocation
 
Investments Cost
 
Investments Fair Value
 
Percentage of
Investment
Portfolio
 
Investments Cost
 
Investments Fair Value
 
Percentage of
Investment
Portfolio
Floating interest rate investments
 
$
1,604,188

 
$
1,451,604

 
91.8
%
 
$
1,648,380

 
$
1,594,594

 
91.8
%
Fixed interest rate investments
 
79,636

 
70,526

 
4.5
%
 
66,460

 
65,233

 
3.8
%
Non-income producing equity
 
51,888

 
32,768

 
2.1
%
 
51,887

 
45,213

 
2.6
%
Other income producing investments
 
30,632

 
26,065

 
1.6
%
 
30,822

 
30,505

 
1.8
%
Total investments
 
$
1,766,344

 
$
1,580,963

 
100.0
%
 
$
1,797,549

 
$
1,735,545

 
100.0
%
The following table shows the composition of our investment portfolio by industry classification and the percentage, by fair value, of the total assets in such industries as of March 31, 2020 and December 31, 2019:
 
 
March 31, 2020
 
December 31, 2019
Industry Classification
 
Investments Fair Value
 
Percentage of
Investment Portfolio
 
Investments Fair Value
 
Percentage of
Investment Portfolio
Healthcare & Pharmaceuticals
 
$
286,586

 
18.1
%
 
$
294,947

 
17.0
%
Services: Business
 
171,713

 
10.9
%
 
191,126

 
11.0
%
Media: Diversified & Production
 
132,468

 
8.4
%
 
206,159

 
11.9
%
Chemicals, Plastics & Rubber
 
121,045

 
7.7
%
 
102,906

 
5.9
%
Media: Advertising, Printing & Publishing
 
115,946

 
7.3
%
 
120,810

 
7.0
%
Services: Consumer
 
86,297

 
5.5
%
 
94,058

 
5.4
%
Capital Equipment
 
78,316

 
4.9
%
 
73,586

 
4.2
%
High Tech Industries
 
65,754

 
4.2
%
 
60,197

 
3.5
%
Telecommunications
 
62,424

 
3.9
%
 
61,577

 
3.6
%
Beverage, Food & Tobacco
 
62,308

 
3.9
%
 
68,440

 
3.9
%
Retail
 
60,952

 
3.9
%
 
53,599

 
3.1
%
Diversified Financials
 
49,528

 
3.1
%
 
66,897

 
3.9
%
Banking, Finance, Insurance & Real Estate
 
39,738

 
2.5
%
 
62,738

 
3.6
%
Construction & Building
 
35,871

 
2.3
%
 
37,096

 
2.1
%
Energy: Oil & Gas
 
35,869

 
2.3
%
 
48,742

 
2.8
%
Consumer Goods: Non-Durable
 
33,156

 
2.1
%
 
33,609

 
1.9
%
Aerospace & Defense
 
29,741

 
1.9
%
 
30,378

 
1.8
%
Consumer Goods: Durable
 
29,081

 
1.8
%
 
31,705

 
1.8
%
Forest Products & Paper
 
19,818

 
1.2
%
 
24,217

 
1.4
%
Metals & Mining
 
19,437

 
1.2
%
 
10,373

 
0.6
%
Hotel, Gaming & Leisure
 
18,694

 
1.2
%
 
25,081

 
1.4
%
Transportation: Cargo
 
18,391

 
1.2
%
 
27,291

 
1.6
%
Automotive
 
7,830

 
0.5
%
 
10,013

 
0.6
%
Subtotal/total percentage
 
1,580,963

 
100.0
%
 
1,735,545

 
100.0
%
Short term investments
 
56,657

 
 

 
29,527

 
 
Total investments
 
$
1,637,620

 
 
 
$
1,765,072

 
 

59


Our investment portfolio may contain senior secured investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreements. As of March 31, 2020 and December 31, 2019, our unfunded commitments amounted to $76,759 and $83,694, respectively. As of May 13, 2020, our unfunded commitments amounted to $68,119. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for us. Refer to the section “Commitments and Contingencies and Off-Balance Sheet Arrangements” for further details on our unfunded commitments.
Investment Portfolio Asset Quality
CIM uses an investment rating system to characterize and monitor our expected level of returns on each investment in our portfolio. These ratings are just one of several factors that CIM uses to monitor our portfolio, are not in and of themselves determinative of fair value or revenue recognition and are presented for indicative purposes. CIM rates the credit risk of all investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors.
The following is a description of the conditions associated with each investment rating used in this ratings system:
Investment Rating
 
Description
1
 
Indicates the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit.
2
 
Indicates a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing in accordance with our analysis of its business and the full return of principal and interest or dividend is expected.
3
 
Indicates that the risk to our ability to recoup the cost of such investment has increased since origination or acquisition, but full return of principal and interest or dividend is expected. A portfolio company with an investment rating of 3 requires closer monitoring.
4
 
Indicates that the risk to our ability to recoup the cost of such investment has increased significantly since origination or acquisition, including as a result of factors such as declining performance and noncompliance with debt covenants, and we expect some loss of interest, dividend or capital appreciation, but still expect an overall positive internal rate of return on the investment.
5
 
Indicates that the risk to our ability to recoup the cost of such investment has increased materially since origination or acquisition and the portfolio company likely has materially declining performance. Loss of interest or dividend and some loss of principal investment is expected, which would result in an overall negative internal rate of return on the investment.
For investments rated 3, 4, or 5, CIM enhances its level of scrutiny over the monitoring of such portfolio company.
The following table summarizes the composition of our investment portfolio based on the 1 to 5 investment rating scale at fair value as of March 31, 2020 and December 31, 2019, excluding short term investments of $56,657 and $29,527, respectively:
    
 
 
March 31, 2020
 
December 31, 2019
Investment Rating
 
Investments
Fair Value
 
Percentage of
Investment Portfolio
 
Investments
Fair Value
 
Percentage of
Investment Portfolio
1
 
$
25,970

 
1.7
%
 
$
154,264

 
8.9
%
2
 
1,241,913

 
78.6
%
 
1,278,576

 
73.7
%
3
 
228,229

 
14.4
%
 
282,140

 
16.3
%
4
 
46,328

 
2.9
%
 
16,463

 
0.9
%
5
 
38,523

 
2.4
%
 
4,102

 
0.2
%
 
 
$
1,580,963

 
100.0
%
 
$
1,735,545

 
100.0
%
The amount of the investment portfolio in each rating category may vary substantially from period to period resulting primarily from changes in the composition of such portfolio as a result of new investment, repayment and exit activities. In addition, changes in the rating of investments may be made to reflect our expectation of performance and changes in investment values.

60


Current Investment Portfolio
The following table summarizes the composition of our investment portfolio at fair value as of May 13, 2020:
 
 
 
 
Investments Fair
Value
 
Percentage of
Investment
Portfolio
Senior secured first lien debt
 
 
 
$
1,264,499

 
80.5
%
Senior secured second lien debt
 
 
 
199,827

 
12.7
%
Collateralized securities and structured products - equity
 
 
 
10,942

 
0.7
%
Unsecured debt
 
 
 
4,800

 
0.3
%
Equity
 
 
 
91,430

 
5.8
%
Subtotal/total percentage
 
 
 
1,571,498

 
100.0
%
Short term investments(2)
 
 
 
55,579

 
 
Total investments
 
 
 
$
1,627,077

 
 
Number of portfolio companies
 
 
 
134

Average annual EBITDA of portfolio companies
 
$79.3 million
 
Median annual EBITDA of portfolio companies
 
$54.6 million
 
Purchased at a weighted average price of par
 
 
 
 
 
97.66
%
Gross annual portfolio yield based upon the purchase price(2)
 
 
 
 
 
8.58
%
(1)
Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
(2)
The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.
Results of Operations for the Three Months Ended March 31, 2020 and 2019
Our results of operations for the three months ended March 31, 2020 and 2019 were as follows:
 
Three Months Ended
March 31,
 
2020
 
2019
Investment income
$
45,748

 
$
51,171

Net operating expenses
24,087

 
29,632

Net investment income
21,661

 
21,539

Net realized loss on investments and foreign currency
(4,196
)
 
(960
)
Net change in unrealized depreciation on investments
(123,377
)
 
(4,050
)
Net change in unrealized depreciation on foreign currency translation
—

 
(113
)
Net (decrease) increase in net assets resulting from operations
$
(105,912
)
 
$
16,416

Investment Income
For the three months ended March 31, 2020 and 2019, we generated investment income of $45,748 and $51,171, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 136 and 155 portfolio companies held during each respective period. Our average investment portfolio size, excluding our short term investments, decreased $165,850, from $1,824,104 for the three months ended March 31, 2019 to $1,658,254 for the three months ended March 31, 2020, as (i) the non-income producing equity portion of our portfolio increased from 1.4% as of March 31, 2019 to 2.1% as of March 31, 2020 and (ii) the size of our investment portfolio as a whole decreased. COVID-19 could cause liquidity issues at our portfolio companies, which could restrict their ability to make cash interest payments to us. Additionally, we may experience full or partial losses on our investments, which may ultimately reduce our investment income in future periods.

61


Operating Expenses
The composition of our operating expenses for the three months ended March 31, 2020 and 2019 was as follows:
 
Three Months Ended
March 31,
 
2020
 
2019
Management fees
$
8,451

 
$
9,331

Administrative services expense
394

 
497

Subordinated incentive fee on income
3,308

 
5,375

General and administrative
1,470

 
1,389

Interest expense
10,464

 
13,040

Total operating expenses
$
24,087

 
$
29,632

The decrease in interest expense was primarily the result of lower LIBOR rates during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019. The decrease in interest expense was also the result of lower average borrowings on our financing arrangements during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, which also resulted in a decrease in total assets and a decrease in management fees during the three months ended March 31, 2020.
The composition of our general and administrative expenses for the three months ended March 31, 2020 and 2019 was as follows:
 
Three Months Ended
March 31,
 
2020
 
2019
Transfer agent expense
$
395

 
$
265

Professional fees
297

 
553

Valuation expense
276

 
115

Accounting and administration costs
146

 
15

Director fees and expenses
116

 
121

Insurance expense
108

 
101

Dues and subscriptions
82

 
135

Printing and marketing expense
15

 
22

Due diligence fees
—

 
61

Other expenses
35

 
1

Total general and administrative expense
$
1,470

 
$
1,389


Net Investment Income

Our net investment income totaled $21,661 and $21,539 for the three months ended March 31, 2020 and 2019, respectively. A decrease in investment income during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 was offset by a decrease in operating expenses during the same period.
Net Realized Loss on Investments and Foreign Currency
Our net realized loss on investments and foreign currency totaled $(4,196) and $(960) for the three months ended March 31, 2020 and 2019, respectively. This change was driven primarily by realized losses on the liquidation of certain portfolio companies during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019. COVID-19 may cause us to experience full or partial losses on our investments, which may result in realized losses upon the exit of our investments.

62


Net Change in Unrealized Depreciation on Investments
The net change in unrealized depreciation on our investments totaled $(123,377) and $(4,050) for the three months ended March 31, 2020 and 2019, respectively. This change was driven primarily by the outbreak and spread of COVID-19 around the world during the three months ended March 31, 2020, which caused significant uncertainty and volatility in the U.S. and global economies as well as in the financial and credit markets. To the extent that the credit risk of our portfolio companies increases as a result of financial impacts due to COVID-19, we may incur additional unrealized depreciation in future periods.
Net Change in Unrealized Depreciation on Foreign Currency Translation
The net change in unrealized depreciation on foreign currency translation totaled $0 and $(113) for the three months ended March 31, 2020 and 2019, respectively. This depreciation was driven primarily by unfavorable changes in foreign currency exchange rates around March 31, 2019.
Net (Decrease) Increase in Net Assets Resulting from Operations
For the three months ended March 31, 2020 and 2019, we recorded a net (decrease) increase in net assets resulting from operations of $(105,912) and $16,416, respectively, as a result of our operating activity for the respective periods. The decrease was driven primarily by the outbreak and spread of COVID-19 around the world during the three months ended March 31, 2020, which caused significant uncertainty and volatility in the U.S. and global economies as well as in the financial and credit markets.
This “Results of Operations” discussion should also be read in conjunction with “Recent Developments - COVID-19” above.
Net Asset Value per Share, Annual Investment Return and Total Return Since Inception 

Our net asset value per share was $7.29 and $8.40 on March 31, 2020 and December 31, 2019, respectively. After considering (i) the overall changes in net asset value per share, (ii) paid distributions of approximately $0.1829 per share during the three months ended March 31, 2020, and (iii) the assumed reinvestment of those distributions in accordance with our distribution reinvestment plan then in effect, the total investment return-net asset value was (11.25)% for the three-month period ended March 31, 2020. Total investment return-net asset value does not represent and may be higher than an actual return to shareholders because it excludes all sales commissions and dealer manager fees. Total investment return-net asset value is a measure of the change in total value for shareholders who held our common stock at the beginning and end of the period, including distributions paid or payable during the period, and is described further in Note 13 to our consolidated financial statements included in this report.
Initial shareholders who subscribed to the offering in December 2012 with an initial investment of $10,000 and an initial purchase price equal to $9.00 per share (public offering price excluding sales load) have seen an annualized return of 5.24% and a cumulative total return of 45.13% through March 31, 2020 (see chart below). Initial shareholders who subscribed to the offering in December 2012 with an initial investment of $10,000 and an initial purchase price equal to $10.00 per share (the initial public offering price including sales load) have seen an annualized return of 3.73% and a cumulative total return of 30.62% through March 31, 2020. Over the same time period, the S&P/LSTA Leveraged Loan Index, a primary measure of senior debt covering the U.S. leveraged loan market, which currently consists of approximately 1,000 credit facilities throughout numerous industries, recorded an annualized return of 2.12% and a cumulative total return of 16.51%. In addition, the BofA Merrill Lynch US High Yield Index, a primary measure of short-term US dollar denominated below investment grade corporate debt publicly issued in the US domestic market, recorded an annualized return of 3.56% and a cumulative total return of 29.02% over the same period.

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growthof10000a27.jpg
(1) Cumulative performance: December 17, 2012 to March 31, 2020
The calculations for the Growth of $10,000 Initial Investment are based upon (i) an initial investment of $10,000 in our common stock at the beginning of the period, at a share price of $10.00 per share (including sales load) and $9.00 per share (excluding sales load), (ii) assumes reinvestment of monthly distributions in accordance with our distribution reinvestment plan then in effect, (iii) the sale of the entire investment position at the net asset value per share on the last day of the period, and (iv) the distributions declared and payable to shareholders, if any, on the last day of the period.

Financial Condition, Liquidity and Capital Resources

We generate cash primarily from cash flows from interest, fees and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. We also employ leverage to seek to enhance our returns as market conditions permit and at the discretion of CIM. On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum "asset coverage" ratio from 200% to 150% and, as a result, to potentially increase the ratio of a BDC's debt to equity from a maximum of 1-to-1 to a maximum of 2-to-1, so long as certain approval and disclosure requirements are satisfied. We currently have not determined whether to seek to utilize such additional leverage. We generated cash from the net proceeds from our continuous public offerings. Our initial continuous public offering commenced on July 2, 2012 and ended on December 31, 2015. Our follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019.

The outbreak and spread of COVID-19 have caused severe stress and uncertainty in the U.S. and global economies as well as in the financial and credit markets. Given the uncertainty as to the full severity and duration of the pandemic and its effects on us with respect to our compliance with covenants in our loan facilities with lenders and our borrowers’ ability to timely meet their financial obligations to us, management and our board of directors determined that it was in the best interest of our company and all of our shareholders to take certain steps disclosed below during the three months ended March 31, 2020 that were necessary to improve our cash position and preserve financial flexibility in the short term. This “Financial Condition, Liquidity and Capital Resources” discussion should also be read in conjunction with “Recent Developments - COVID-19” above.
    
On March 19, 2020, our co-chief executive officers determined to (i) change the timing of declaring distributions to shareholders from quarterly to monthly; and (ii) temporarily suspend the payment of distributions to shareholders commencing with the month ending April 30, 2020, whether in cash or pursuant to our distribution reinvestment plan, as amended and restated. Distributions in respect of future months will be reevaluated by management and our board of directors based on circumstances and expectations existing at the time of consideration.

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On March 19, 2020, our board of directors, including the independent directors, determined to temporarily suspend our share repurchase program commencing with the second quarter of 2020. Share repurchases for future quarters will be reevaluated by our board of directors based on circumstances and expectations existing at the time of consideration.

During the three months ended March 31, 2020, we indefinitely deferred the payment of subordinated incentive fees to CIM in the amount of $3,308.

As of March 31, 2020 and December 31, 2019, we had $56,657 and $29,527 in short term investments, respectively, invested in a fund that primarily invests in U.S. government securities.

JPM Credit Facility
As of March 31, 2020, our outstanding borrowings under the Amended JPM Credit Facility were $250,000 and the aggregate unfunded principal amount in connection with the Amended JPM Credit Facility was $25,000. As of May 15, 2020, our outstanding borrowings under the Second Amended JPM Credit Facility were $595,035 and the aggregate unfunded principal amount in connection with the Second Amended JPM Credit Facility was $104,965. For a detailed discussion of our Second Amended JPM Credit Facility, refer to Note 8 to our consolidated financial statements included in this report.
UBS Facility
As of March 31, 2020 and May 15, 2020, our outstanding borrowings under the Amended UBS Facility were $200,000 and no additional principal amount was available for borrowing under the Amended UBS Facility. We intend to extend the Amended UBS Facility prior to May 19, 2020, otherwise we will pursue an orderly wind down of the transaction. For a detailed discussion of our Amended UBS Facility, refer to Note 8 to our consolidated financial statements included in this report.

Citibank Credit Facility

As of March 31, 2020, our outstanding borrowings under the Second Amended Citibank Credit Facility were $229,442 and the aggregate unfunded principal amount in connection with the Second Amended Citibank Credit Facility was $120,558. On May 15, 2020, all outstanding borrowings under the Second Amended Citibank Credit Facility were repaid using a portion of the proceeds from the Second Amended JPM Credit Facility. For a detailed discussion of our Second Amended Citibank Credit Facility, refer to Note 8 to our consolidated financial statements included in this report.
MS Credit Facility
As of March 31, 2020, our outstanding borrowings under the Amended MS Credit Facility were $127,417 and the aggregate unfunded principal amount in connection with the Amended MS Credit Facility was $22,583. On May 15, 2020, all outstanding borrowings under the Amended MS Credit Facility were repaid using a portion of the proceeds from the Second Amended JPM Credit Facility. For a detailed discussion of our Amended MS Credit Facility, refer to Note 8 to our consolidated financial statements included in this report.
Unfunded Commitments
As of March 31, 2020 and May 13, 2020, our unfunded commitments amounted to $76,759 and $68,119, respectively. For a detailed discussion of our unfunded commitments, refer to Note 11 to our consolidated financial statements included in this report.
Cash and cash equivalents as of March 31, 2020, taken together with our available borrowing capacity under our financing arrangements, is expected to be sufficient for our investing activities and to conduct our operations in the near term. However, disruption in the financial markets caused by COVID-19 may restrict our access to financing. We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing will likely not be on as favorable terms as we could have obtained prior to the outbreak of COVID-19. Furthermore, because of declining values of certain of our assets, we may need to post additional unencumbered assets to secure certain of our financing arrangements, leaving less remaining unencumbered assets for future financing. These factors may limit our ability to make new investments and adversely impact our results of operations.
Recent Accounting Pronouncements

See Note 2 to our consolidated financial statements included in this report for a discussion of certain recent accounting pronouncements that are applicable to us.

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Critical Accounting Policies
Our consolidated financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the consolidated financial statements, we also utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming our estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.
Valuation of Portfolio Investments
The value of our assets is determined quarterly and at such other times that an event occurs that materially affects the valuation. The valuation is made pursuant to Section 2(a)(41) of the 1940 Act, which requires that we value our assets as follows: (i) the market price for those securities for which a market quotation is readily available, and (ii) for all other securities and assets, at fair value, as determined in good faith by our board of directors. As a BDC, Section 2(a)(41) of the 1940 Act requires the board of directors to determine in good faith the fair value of portfolio securities for which a market price is not readily available, and it does so in conjunction with the application of our valuation procedures by CIM.
There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each asset while employing a valuation process that is consistently followed. Determinations of fair value involve subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations in our consolidated financial statements.
Valuation Methods
With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:
•
our quarterly valuation process begins with each portfolio company or investment being initially valued by certain of CIM’s investment professionals and certain members of its management team, with such valuation taking into account information received from various sources, including independent valuation firms, if applicable;
•
preliminary valuation conclusions are then documented and discussed with members of CIM’s management team;
•
designated members of CIM’s management team review the preliminary valuation, and, if applicable, deliver such preliminary valuation to an independent valuation firm for its review;
•
designated members of CIM’s management team and, if appropriate, the relevant investment professionals meet with the independent valuation firm to discuss the preliminary valuation;
•
designated members of CIM’s management team respond and supplement the preliminary valuation to reflect any comments provided by the independent valuation firm;
•
our audit committee meets with members of CIM’s management team and the independent valuation firms to discuss the assistance provided and the results of the independent valuation firms' review; and
•
our board of directors discusses the valuation and determines the fair value of each investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of CIM, the audit committee and any third-party valuation firm, if applicable.

In addition to the foregoing, certain investments for which a market price is not readily available are evaluated on a quarterly basis by an independent valuation firm and certain other investments are on a rotational basis reviewed by an independent valuation firm. Finally, certain investments are not evaluated by an independent valuation firm unless certain aspects of such investments in the aggregate meet certain criteria.
Given the expected types of investments, excluding short term investments and stock of publicly traded companies that are classified as Level 1, management expects our portfolio holdings to be classified as Level 3. Due to the uncertainty inherent in the valuation process, particularly for Level 3 investments, such fair value estimates may differ significantly from the values that would have been used had an active market for the investments existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses that we ultimately realize on these investments to materially differ from the valuations currently assigned. Inputs used in the valuation process are subject to variability in the future and can result in materially different fair values.
For an additional discussion of our investment valuation process, refer to Note 2 to our consolidated financial statements included in this report.

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Related Party Transactions

For a discussion of our relationship with related parties including CION Securities, CIM, CIG, and AIA and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.
Contractual Obligations

On August 26, 2016, 34th Street entered into the JPM Credit Facility with JPM, as amended and restated on September 30, 2016, July 11, 2017, November 28, 2017 May 23, 2018 and May 15, 2020. See Note 8 to our consolidated financial statements for a more detailed description of the JPM Credit Facility.

On March 29, 2017, Flatiron Funding II entered into the Citibank Credit Facility with Citibank, as amended on July 11, 2017 and March 14, 2019. See Note 8 to our consolidated financial statements for a more detailed description of the Citibank Credit Facility.
    
On May 19, 2017, Murray Hill Funding II entered into the UBS Facility with UBS, as amended on December 1, 2017. See Note 8 to our consolidated financial statements for a more detailed description of the UBS Facility.

On December 19, 2017, 33rd Street entered into the MS Credit Facility with MS, as amended on July 9, 2018 and December 18, 2018. See Note 8 to our consolidated financial statements for a more detailed description of the MS Credit Facility.
Commitments and Contingencies and Off-Balance Sheet Arrangements
Commitments and Contingencies
We have entered into certain contracts with other parties that contain a variety of indemnifications. Our maximum exposure under these arrangements is unknown. However, we have not experienced claims or losses pursuant to these contracts and believe the risk of loss related to such indemnifications to be remote.
Our investment portfolio may contain debt investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or other unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreements. For further details on such debt investments, refer to Note 11 to our consolidated financial statements included in this report.
Off-Balance Sheet Arrangements
    
We currently have no off-balance sheet arrangements, except for those discussed in Note 11 to our consolidated financial statements included in this report.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Uncertainty with respect to the economic effects of COVID-19 has introduced significant volatility in the financial markets, and the effect of such volatility could materially impact our market risks, including those listed below. We are subject to financial market risks, including changes in interest rates. As of March 31, 2020, 91.8% of our investments paid variable interest rates. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments, especially to the extent that we hold variable rate investments, and to declines in the value of any fixed rate investments we may hold. To the extent that a majority of our investments may be in variable rate investments, an increase in interest rates could make it easier for us to meet or exceed our incentive fee hurdle rate, as defined in our investment advisory agreement, and may result in a substantial increase in our net investment income, and also to the amount of incentive fees payable to CIM with respect to our pre-incentive fee net investment income. In recent weeks, the U.S. Federal Reserve and other central banks have reduced certain interest rates in response to COVID-19 and market conditions. A prolonged reduction in interest rates may reduce our net investment income.
    
Under the terms of the Amended JPM Credit Facility, advances currently bear interest at a floating rate equal to the three-month LIBOR, plus a spread of 3.25% per year. Under the terms of the Second Amended Citibank Credit Facility, advances bore interest at a floating rate equal to the three-month LIBOR plus 2.00%. Pursuant to the terms of the Amended UBS Facility, we currently pay a financing fee equal to the three-month LIBOR plus a spread of 3.50%. Under the terms of the Amended MS Credit Facility, advances bore interest at a floating rate equal to the three-month LIBOR plus a spread of 3.00% per year. In addition, we may seek to further borrow funds in order to make additional investments. Our net investment income will be impacted, in part, by the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we would be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we have debt outstanding, our cost of funds would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments. We expect that our long-term investments will be financed primarily with equity and long-term debt. Our interest rate risk management techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates could have a material adverse effect on our business, financial condition and results of operations.
    
The following table shows the effect over a twelve month period of changes in interest rates on our net interest income, excluding short term investments, assuming no changes in our investment portfolio, the Second Amended Citibank Credit Facility, the Amended JPM Credit Facility, the Amended UBS Facility or the Amended MS Credit Facility in effect as of March 31, 2020:
Basis Point Change in Interest Rates
 
(Decrease) Increase in Net Interest Income(1)
 
Percentage Change in Net Interest Income
Down 100 basis points
 
$
(2,525
)
 
(2.3
)%
Down 50 basis points
 
(2,137
)
 
(1.9
)%
No change to current base rate (1.38% as of March 31, 2020)
 
—

 
—

Up 50 basis points
 
3,855

 
3.5
 %
Up 100 basis points
 
7,884

 
7.2
 %
Up 200 basis points
 
16,191

 
14.8
 %
Up 300 basis points
 
25,018

 
22.8
 %
(1)
This table assumes no change in defaults or prepayments by portfolio companies over the next twelve months.

The interest rate sensitivity analysis presented above does not consider the potential impact of the changes in fair value of our fixed rate debt investments and the net asset value of our common stock in the event of sudden changes in interest rates. Approximately 4.5% of our investments paid fixed interest rates as of March 31, 2020. Rising market interest rates will most likely lead to fair value declines for fixed interest rate investments and a decline in the net asset value of our common stock, while declining market interest rates will most likely lead to an increase in the fair value of fixed interest rate investments and an increase in the net asset value of our common stock.
In addition, we may have risk regarding portfolio valuation as discussed in Note 2 to our consolidated financial statements included in this report.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures 
In connection with the preparation of this Quarterly Report on Form 10-Q for the three months ended March 31, 2020, we carried out an evaluation, under the supervision and with the participation of our management, including our Co-Chief Executive Officers and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) and Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended. Based on the foregoing evaluation, the Co-Chief Executive Officers and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

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In designing and evaluating our disclosure controls and procedures, we recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.  Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Disclosure controls and procedures cannot detect or prevent all error and fraud. Some inherent limitations in disclosure controls and procedures include costs of implementation, faulty decision-making, simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all anticipated and unanticipated future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with established policies or procedures.
Evaluation of internal control over financial reporting
There have been no changes in our internal control over financial reporting during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies and other third parties. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
The risk factors presented below supplement, update, supersede and/or replace, as appropriate, the risk factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.
Global markets could enter a period of severe disruption and instability due to catastrophic events, such as terrorist attacks, acts of war, natural disasters, and outbreaks of epidemic, pandemic or contagious diseases, which could impair our portfolio companies’ financial positions and operating results and affect the industries in which we invest and, in turn, harm our operating results.
The U.S. and global markets have, from time to time, experienced periods of disruption due to events such as terrorist attacks; acts of war; natural disasters, such as earthquakes, tsunamis, fires, floods or hurricanes; and outbreaks of epidemic, pandemic or contagious diseases. Such events have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability. In particular, outbreaks of epidemic, pandemic or contagious diseases may cause serious harm to our business, operating results and financial condition. Historically, disease pandemics such as the Ebola virus, Middle East Respiratory Syndrome, and Severe Acute Respiratory Syndrome (or the H1N1 virus), have diverted resources and priorities towards the treatment of such diseases. During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, which spread to over 100 countries, including the United States, and spread to every state in the United States. The World Health Organization designated COVID-19 as a pandemic, and numerous countries, including the United States, declared national emergencies with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 continued to be identified in additional countries, many countries reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses. Such actions created and will continue to create disruption in global supply chains, and adversely impacted global commercial activity and a number of industries. See “Item 1A. Risk Factors - Risks Related to Our Business and Structure - The current outbreak of COVID-19 has caused severe disruptions in the U.S. and global economy and already has had and is expected to continue to have a materially adverse impact on our financial condition and results of operations.”
Any prolonged disruptions in the business of our portfolio companies, including a disruption in their supply chains, may adversely affect their ability to obtain the necessary raw materials or components to make their products or cause a decline in the demand for their products or services, leading to a negative impact on their operating results. In addition, such events may lead to restrictions on travel to and from the affected areas, making it more difficult for our portfolio companies to conduct their businesses. As a result of pandemic outbreaks, including COVID-19, businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Governmental mandates may require forced shutdowns of our portfolio companies’ facilities for extended or indefinite periods. In addition, these widespread outbreaks of illness, particularly in North America, Europe, or other locations significant to the operations of our portfolio companies, could adversely affect their workforce, resulting in serious health issues and absenteeism, and may cause serious harm to our results of operations, business, or prospects.
Furthermore, future terrorist activities, military or security operations, natural disasters, disease outbreaks, pandemics or other similar events could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact our portfolio companies. During these periods of disruption, general economic conditions may deteriorate with material and adverse consequences for the broader financial and credit markets, and the availability of debt and equity capital for the market as a whole, and financial services firms in particular. Such economic adversity could impair our portfolio companies’ financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results. These conditions may reoccur for a prolonged period of time or materially worsen in the future.
The current outbreak of COVID-19 has caused severe disruptions in the U.S. and global economy and already has had and is expected to continue to have a materially adverse impact on our financial condition and results of operations.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus, COVID-19, which spread to over 100 countries, including the United States, and spread to every state in the United States. On March 11, 2020, the World Health Organization designated COVID-19 as a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 continued to be identified in additional countries, many countries reacted by instituting quarantines, restrictions on travel, closing financial markets and/or restricting trading, and limiting hours of operations of non-essential businesses. Such actions created and will continue to create disruption in global supply chains, and adversely impacted many industries, including industries in which our portfolio companies operate. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown.

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The outbreak of COVID-19 has had, and is expected to continue to have, a material adverse impact on our NAV, financial condition, liquidity, results of operations, and the businesses of our portfolio companies, among other factors. We expect that these impacts are likely to continue to some extent as the outbreak persists and potentially even longer. Although many or all facets of our business have been or could be impacted by COVID-19, we currently believe the following impacts to be the most material to us:

•
Our NAV has significantly decreased as a result of the outbreak. As of March 31, 2020, our NAV per share was $7.29 as compared to $8.40 as of December 31, 2019. We expect our NAV per share in the future will be different, and possibly materially different, from our March 31, 2020 NAV per share. The recent decrease was the result of significant mark downs in the fair value of our investment portfolio, including our quoted syndicated loan investments and our private loan and other investments. The fair value of these investments deteriorated as a result of market conditions triggered by COVID-19, including increased credit risk for our portfolio companies as their businesses were impacted by the outbreak and technical selling pressure as other market participants began selling assets in an effort to realize liquidity. It is possible that the fair value of our investments, and therefore our NAV per share, could continue to decrease during the period of the COVID-19 outbreak and potentially longer. We believe our investments in portfolio companies in certain industries have been and will continue to be most affected by the COVID-19 outbreak, but the majority of our investments have been and may continue to be affected by the outbreak.

•
The portfolio companies that are borrowers of our loans may not be able to make interest payments, which would adversely impact our net income and results of operations. Many of these portfolio companies’ businesses are adversely affected by COVID-19 and are experiencing lost revenue as quarantines and other social disruption have slowed or stopped purchases of their products or services or have forced them to limit or suspend operations. Furthermore, although most of our loans are secured by first lien security interests in the applicable portfolio company’s assets, if a portfolio company defaults on its loan there is no guarantee we will be able to recover the principal amount of the loan.

•
Disruption in the financial markets caused by the COVID-19 outbreak may restrict our access to financing. We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing may not be on as favorable terms as we could have obtained prior to the outbreak of the pandemic. Furthermore, because of declining values of certain of our assets, we may need to post additional unencumbered assets to secure certain of our financing arrangements, leaving less remaining unencumbered assets for future financing. These factors may limit our ability to make new investments and adversely impact our results of operations.

Additionally, we may experience other negative impacts to our business as a result of COVID-19 that could exacerbate other risks described in this report, including:

•
weakening financial conditions of or the bankruptcy or insolvency of portfolio companies, which may result in the inability of such portfolio companies to meet debt obligations, delays in collecting accounts receivable, defaults, or forgiveness or deferral of interest payments from such portfolio companies;

•
deteriorations in credit and financing market conditions, which may adversely impact our ability to access financing for our investments on favorable terms or at all;

•
operational impacts on our service providers, vendors and counterparties, including our lenders and other providers of financing, brokers and other counterparties that we purchase and sell assets to and from, and legal and diligence professionals that we rely on for acquiring our investments;

•
limitations on our ability to ensure business continuity in the event our, or our third-party service providers’, continuity of operations plan is not effective or improperly implemented or deployed during a disruption;

•
the availability of key personnel of our service providers as they face changed circumstances and potential illness during the pandemic;

•
difficulty in valuing our assets in light of significant changes in the financial markets, including difficulty in forecasting discount rates and making market comparisons, and circumstances affecting our service providers’ personnel during the pandemic;

•
limitations on our ability to raise new capital;

•
significant changes to the valuations of pending investments; and

71


•
limitations on our ability to make distributions to and/or repurchase shares from our shareholders due to material adverse impacts on our cash flows from operations or liquidity.
The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and the performance of our investments. The full extent of the impact and effects of COVID-19 will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, and uncertainty with respect to the duration of the global economic slowdown. COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, financial condition, results of operations and ability to pay distributions to our shareholders.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We did not engage in any unregistered sales of equity securities during the three months ended March 31, 2020.
The table below provides information concerning our repurchases of shares of our common stock during the three months ended March 31, 2020 pursuant to our share repurchase program.
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
January 1 to January 31, 2020
 
—

 
$
—

 
—

 
—

February 1 to February 29, 2020
 
—

 
—

 
—

 
—

March 1 to March 31, 2020
 
1,076,229

 
7.50

 
1,076,229

 
(1
)
Total
 
1,076,229

 
$
7.50

 
1,076,229

 
(1
)
(1)
A description of the maximum number of shares of our common stock that may be repurchased is set forth in a detailed discussion of the terms of our share repurchase program in Note 3 to our unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.

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Item 6. Exhibits
Exhibit
Number
 
Description of Document
2.1
 
3.1
 
3.2
 
4.1
 
4.2
 
4.3
 
10.1
 
10.2
 
10.3
 
10.4
 
10.5
 
10.6
 


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Exhibit
Number
 
Description of Document
10.7
 
10.8
 
10.9
 
10.10
 
10.11
 
10.12
 
10.13
 
10.14
 
10.15
 
10.16
 


74


Exhibit
Number
 
Description of Document
10.17
 
10.18
 
10.19
 
10.20
 
10.21
 
10.22
 
10.23
 
10.24
 
10.25
 
10.26
 
10.27
 
10.28
 
10.29
 
31.1
 
31.2
 
31.3
 
32.1
 
32.2
 
32.3
 


75


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, thereunto duly authorized.
Date: May 15, 2020
CĪON Investment Corporation
(Registrant)
By: /s/ Michael A. Reisner
Michael A. Reisner
Co-Chief Executive Officer
(Principal Executive Officer)
By: /s/ Mark Gatto
Mark Gatto
Co-Chief Executive Officer
(Principal Executive Officer)
By: /s/ Keith S. Franz
Keith S. Franz
Chief Financial Officer
(Principal Financial and Accounting Officer)


76

CION Investment Corp Reports