Logan Ridge Finance : March 2024 Presentation

Investor Presentation

March 2024

Important Information

Cautionary Statement Regarding Forward-Looking Statements

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

Forward-looking statements relate to future events or our future financial performance and include, but are not limited to, projected financial performance, expected development of the business, plans and expectations about future investments, our contractual arrangements and relationships with third parties, the ability of our portfolio companies to achieve their objectives, the ability of the Company's investment adviser to attract and retain highly talented professionals, our ability to maintain our qualification as a regulated investment company and as a business development company, our compliance with covenants under our borrowing arrangements, and the future liquidity of the Company. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "outlook", "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.

Forward-looking statements are subject to change at any time based upon economic, market or other conditions, including with respect to the impact of the COVID-19 pandemic and its effects on the Company and its portfolio companies' results of operations and financial condition. More information on these risks and other potential factors that could affect the Company's financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein, is included in the Company's filings with the Securities and Exchange Commission (the "SEC"), including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed quarterly report on Form 10-Q and annual report on Form 10-K, as well as in subsequent filings. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this presentation should not be regarded as a representation by us that our plans and objectives will be achieved. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the SEC.

NASDAQ:LRFC | 2

Stock and Trading Information

	Portman Ridge Finance Corporation
	Exchange:	NASDAQ
	Ticker:	LRFC
	Investment Manager:	Sierra Crest Investment Management LLC
	Affiliation:	BC Partners / BCP Credit
	As of March 12, 2024
	Market Cap	$60.2m
	Share Price	$22.65
	52-week Range	$18.53 - $23.63
	Common Shares Outstanding	2.69m
	Total Dividend Payout TTM	$0.96
	Latest Quarterly Dividend	$0.30
	Analyst Coverage	Ladenburg Thalmann
		NASDAQ:LRFC | 3

About Logan Ridge

Logan Ridge

(NASDAQ: LRFC)

• Focus on direct origination of senior secured debt investments to the lower middle market
• Experienced, strategic management team with a track record of efficiently repositioning publicly listed vehicles to improve trading performance
• Strong shareholder alignment with top priority being to generate shareholder value

Affiliation with

BC Partners

• Externally managed by Mount Logan Management LLC ("Mount Logan"), a wholly-owned subsidiary of Mount Logan Capital Inc. (NEO: MLC)("MLC"); both entities are affiliates of BC Partners Advisors L.P. ("BC Partners") for U.S. regulatory purposes
• Part of BC Partners' $40bn1 platform in private equity, private credit and real estate strategies
• Exemptive relief allows for co-investments across the BC Partners platform

Investment Portfolio

(at 9/30/23)

• $196.9 million of total assets and $93.2 million of net asset value
• As of September 30, 2023, approximately 82.3% of our Debt Investment Portfolio at fair value was bearing interest at a floating rate
• 58 debt + equity portfolio investee companies
• Debt investments on non-accrual status were 5.7% and 8.3% of the investment portfolio at fair value and amortized cost, respectively
• As of September 30, 2023, approximately 55% of the Company's investment portfolio at fair value was invested in assets originated by the BC Partners Credit Platform

1. AUM data as of 9/30/23
2. Reflects commitments to commingled funds, IMAs, and commercially approved commitments. Figures are subject to completion of certain agreements.

3. CLO holdings and Joint Ventures are excluded from investment count.	NASDAQ:LRFC | 4

Investment Objectives and Strategy

Investment Objectives

Investment Strategy

and Philosophy

• Focus on direct origination of senior secured debt investments to the middle market; target portfolio company EBITDA size between $5-50 million
• Deliver sustainable risk-adjusted returns to stockholders; with a focus on capital preservation and downside protection
• Reduce non-income generating exposure over time and opportunistically to enhance NII generation
• Utilize entire BC Partners platform to directly originate loans and investments which allows for greater sourcing capabilities, ability to invest across the liquidity spectrum and participation in larger deals
• Invest in performing, well-established lower middle-market businesses that operate across a wide range of industries
• Management teams with demonstrated track records and aligned incentives
• Focus on identifiable and defensible market positions in industries with favorable dynamics
• Employ fundamental credit analysis, targeting investments in businesses with relatively low levels of cyclicality and operating risk
• Apply the same private equity style investment process employed for over 30 years at BC Partners with a long-term focused investment philosophy
• Investment structures: unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment
• Industry focus: aerospace/defense, business services, consumer products, education, food & beverage, healthcare, industrial & environmental services, logistics & distribution, manufacturing, TMT

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Leverage Dynamics Shift From Banks to Private Credit

Decline in availability of capital

Private capital fills the void

Banks Consolidate

• Starting in the 1990s, banks begin consolidating
• Banks of scale remain (i.e. Bank of America, JP Morgan Chase, Wells Fargo)
• Regulators call for further regulation, with increased scrutiny on credit worthiness

Capital Shifts to

Larger Companies

• Decline in capital access creates opportunity for public companies
• Publicly listed companies achieve 5x higher average market value than 20 years ago
• The high yield market ($300mm or below) declined from 39% in 2004 to 5% in 2019

Private Equity

Rises

• Private equity AUM increases 4x since 2002
• Private equity deal volume surpasses public equity deal volume starting in 2015
• Fundraising and dry powder for private equity reaches record levels

Private Credit

Rises

• Investors begin increasing allocations to private credit
• Market volatility and inflation creates opportunities for private credit
• With traditional banks shuttered, private credit experiences a steep increase in deal flow

1990s

2000s

2010s

2020s

Source: CapIQ and Preqin

NASDAQ:LRFC | 6

Private Credit Increases Market Share

Private Credit Historical AUM since 2000

($bn)

$400																																						$368
$300																																						$274
																																						$210
$200																																						$164
																																					$135
																																			$85	$108
$100																							$66	$61	$68
								$29	$30			$35	$39
$3	$5	$11			$42
$0
Dec-05	Dec-06	Dec-07Dec-08	Dec-09	Dec-10Dec-11	Dec-12Dec-13	Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20Dec-21Sep-22
																	Dry Powder													Unrealized Value

				Historical Performance LTM Across Asset Classes						Private Credit Historical AUM since 2000
105																											103.1	100%
100																																				80%
																											95.5
95
90																																				60%
85																																				40%
80																											81.9						52%
																										79.7	20%
																																										30%
75																																												16%
																																			0%
70
																																				1999	2009	2019
				Private Equity						Venture			S&P Total Return				Private Debt					Banks			Non-Banks (Institutional Investors & Finance Companies)

Source: CapIQ, Preqin, S&P LCD Quarterly.

NASDAQ:LRFC | 7

Why Private Credit

Privately

Negotiated

Terms and

Structure

• Private transactions have an extensive focus on due diligence and downside protection
• Credit deal flow remains robust:
• • Borrowers seek certainty of terms
  • Flexibility in structuring

Preservation of Capital

• Strong covenants:

o	Minimum EBITDA	o Max. Gross / Net Leverage
o	FCCR	o	Industry-Specific KPIs
o	Maximum CapEx	o	Negative Covenants /
o	Minimum Cash		Consent Rights
• Structural protections:
o	Asset Liens	o	Call Protection
o	Parent Guarantee	o	Structured Return
o	Liquidation Preference	o Excess Cash flow Sweep
o	Change of Control	o	Scheduled Amortization

Leverage by Company

7.0x			5.7x	5.8x
6.0x
4.7x	4.9x
5.0x
4.0x
3.0x
2.0x
1.0x
0.0x
	<$15m	$15 - $30m	$30m - $50m	>$50m

Source: Proskauer 2021 Private Credit Insights

Cumulative Default Rate for Issuance Size

6.0%			5.0%	5.3%
5.0%
4.0%		3.7%
3.0%
2.0%	1.3%
1.0%
0.0%
	By count of defaults for loans closed between 1995 - 4Q 2022
	Less than $100m	$100-$249m	$250-$499m	$500m or greater

Source: S&P Global Market Intelligence as of Q4 2022

Source: S&P Global Market Intelligence, FDIC.gov. Private Credit Insights, and Preqin.

NASDAQ:LRFC | 8

Why Private Credit (continued)

Floating Rate

Loans may

Benefit from

Rising Rates

• Rising rates cause fixed income investors to struggle
• Floating rates are highly attractive, as income can increase with rising interest rates

12.0%
											10.1%
10.0%											9.3%
8.0%
6.3%	5.8%
6.0%
							4.8%
								3.7%	4.1%
4.0%
2.0%
-0.1%
0.0%
		Rising							Flat			Falling
-2.0%			-1.4%
					Floating-Rate Loans		US Aggregate		US Treasury
Source: Credit Suisse and Bloomberg Indices. "Rising" indicated by an increase of more than 50bps. "Falling" indicated by a decrease of more than 50bps. Data reflects rolling 12-month periods
from 01/31/1993 through 12/21/2022.											NASDAQ:LRFC | 9

Portfolio Overview(1)

	TOP TEN PORTFOLIO INDUSTRIES			TOTAL PORTFOLIO BY ASSET TYPE		DEBT PORTFOLIO BY ASSET TYPE
Advertising & Marketing Services,								Joint Venture,			Subordinated,
Other, 7.5%	Healthcare,			Equity, 16.6%	0.2%
2.4%						16.1%
	28.0%
Automobile Part Manufacturer,
2.7%						Collateralized Loan
Textile Equipment Manufacturer,					Obligations, 1.2%
2.7%											2nd lien, 4.9%
Healthcare Management,
5.0%							Subordinated,
Consumer Discretionary,						13.2%	1st lien,
							64.8%					1st lien,
5.5%
													79.0%
Industrials, 7.9%
					Business Services,		2nd lien,
	Information			4.0%
		15.8%
	Technology, 11.0%
	Financials,
			11.5%
		~$187.1 million						~$187.1 million				~$153.5 million
	FIRST LIEN DEBT AS A PERCENTAGE OF TOTAL DEBT PORTFOLIO
								81.1%	81.0%	80.9%	81.4%	81.3%	79.0%
										73.6%

69.2%

65.0%

51.0%

46.0%

Q4 2015	Q4 2016	Q4 2017	Q4 2018	Q4 2019	Q4 2020	Q4 2021	Q4 2022	Q1 2023	Q2 2023	Q3 2023

1. Portfolio statistics represent fair value as of September 30, 2023

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