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CM Finance Inc Reports Results for its Fiscal Second Quarter Ended December 31, 2018

February 6, 2019

NEW YORK, Feb. 06, 2019 (GLOBE NEWSWIRE) -- CM Finance Inc (NASDAQ: CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal second quarter ended December 31, 2018.

HIGHLIGHTS

-- CMFN made investments in nine portfolio companies with a total cost of $50.1mm. The weighted average yield of debt investments made in the quarter was 10.77% -- Eight investments were fully realized, and one investment had a significant partial realization. Realizations during the quarter had a weighted average internal rate of return (“IRR”) of 12.21% -- The weighted average yield on debt investments, at cost, increased 18 basis points to 11.08% compared to 10.90% as of September 30, 2018 -- Net asset value (“NAV”) per share decreased by 7.41% to $11.49, compared to $12.41 as of September 30, 2018

Portfolio results, as of December 31, 2018: Total assets $302.0mm Investment portfolio, at fair value $283.3mm Net assets $156.4mm Weighted average yield on debt investments, at cost 11.08% Net asset value per share $11.49 Portfolio activity in the current quarter: Number of new investments 14 Total capital invested $50.1mm Proceeds from repayments, sales, and amortization $84.5mm Number of portfolio companies, end of period 29 Net investment income (NII) $3.7mm Net investment income per share $0.25 Net decrease in net assets from operations $9.4mm Net decrease in net assets from operations per share $0.69 Quarterly per share distribution paid on October 5, 2018 $0.25

Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said, “While the fair value of the portfolio declined during the quarter, we believe that we take a prudent and conservative approach to both investing and valuing our portfolio and we see significant opportunity as we look forward in 2019. We have fully written down our positions in Trident USA Health Services, LLC, and have no other positions on non-accrual today. Our team continues to reposition our portfolio, currently emphasizing senior secured positions, building a diversified, resilient portfolio that will perform throughout the cycle. We are very happy with the progress we have made.”

On February 5, 2019, the Company’s Board of Directors declared a distribution for the quarter ending March 31, 2019 of $0.25 per share, payable on April 4, 2019, to shareholders of record as of March 15, 2019. This represents a 12.5% yield on the Company’s $8.00 share price as of the close on February 5, 2018. Distributions may include net investment income, capital gains and/or return of capital; however, the Company does not expect the distribution to be comprised of a return of capital. The tax status of distributions will be determined at the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made investments in nine portfolio companies. These investments totaled $50.1mm at cost and were made at a weighted average yield of 10.77%. The Company also realized $84.5mm of repayments, sales, and amortization, primarily related to the repayments of American Gaming Systems Inc., Montrose Environmental Group, Inc., FPC Holdings, Inc, and Hostway Corp. Additionally, we had a partial realization of our investments in U.S. Well Services, LLC, including the full realization of our position in U.S. Well Services, LLC’s revolving credit facility. Realized and unrealized gains and losses accounted for a decrease in the Company’s net investments of approximately $13.1mm, or $0.96 per share. The total net decrease in net assets resulting from operations for the quarter was $9.4mm, or $0.69 per share.

As of December 31, 2018, the Company’s investment portfolio consisted of investments in 29 portfolio companies, of which 63.7% were first lien investments, 31.7% were second lien investments, 4.1% were unitranche loans, and 0.5% were in equities, warrants and other positions. The Company’s debt portfolio consisted of 94.4% floating rate investments and 5.2% fixed rate investments. As of December 31, 2018, the Company had one investment on non-accrual status, Trident USA Health Services, LLC.

Capital Resources

As of December 31, 2018, the Company had $6.2mm in cash, $6.0mm in restricted cash and $50.0mm of capacity under its revolving credit facility with UBS AG, London Branch.

Share Repurchases

During the quarter, the Company repurchased 30,999 shares of common stock on the open market for $257,336 (including commissions).

Subsequent Events

Subsequent to December 31, 2018 and through February 5, 2019, we invested $23.4 million in new and existing portfolio companies, and received repayment or sales proceeds of $29.0 million

CM Finance Inc and Subsidiaries Consolidated Statements of Assets and Liabilities -------------------------------------------------------------------- - ----------------- - - ------------- - December 31, 2018 June 30, 2018 ----------------- - ------------- - Assets Non-controlled, non-affiliated investments, at fair value (amortized $ 283,335,302 $ 293,592,013 cost of $307,290,045 and $ 302,647,282, respectively) Derivatives, at fair value (cost of $0 and $0, respectively) 94,380 229,918 Cash 6,197,259 5,620,441 Cash, restricted 5,981,651 2,706,273 Receivable for investments sold 397,146 7,751,875 Interest receivable 3,282,163 4,011,450 Deferred offering costs 121,922 121,922 Other receivables 2,515,625 245,550 Prepaid expenses and other assets 58,954 255,139 Total Assets $ 301,984,402 $ 314,534,581 ----------------- - ------------- - Liabilities Notes payable: Term loan $ 102,000,000 $ 102,000,000 Revolving credit facility - 17,823,000 Baby bonds payable: 34,500,000 - Deferred debt issuance costs (2,494,517 ) (1,953,771 ) ----------------- - ------------- - Notes payable, net 134,005,483 117,869,229 Payable for investments purchased 2,985,000 12,569,450 Dividend payable 3,410,713 3,417,848 Deferred financing costs payable 1,037,000 2,071,167 Income-based incentive fees payable 1,566,513 2,294,678 Base management fees payable 1,405,297 1,319,853 Accrued provision for taxes - 2,579,337 Derivatives, at fair value (cost $0 and $0, respectively) 94,380 229,918 Interest payable 845,566 303,153 Directors’ fees payable 93,448 99,296 Accrued expenses and other liabilities 104,694 257,986 ----------------- - ------------- - Total Liabilities 145,548,094 143,011,915 Commitments and Contingencies (Note 6) Net Assets Common stock, par value $0.001 per share (100,000,000 shares authorized, 13,613,116 and 13,649,504 shares issued and outstanding, 13,613 13,649 respectively) Additional paid-in capital 198,392,175 198,700,999 Accumulated net realized loss (21,270,472 ) (21,087,280 ) Undistributed (distributions in excess of) net investment income 3,255,732 2,950,567 Net unrealized depreciation on investments (23,954,740 ) (9,055,269 ) Total Net Assets 156,436,308 171,522,666 Total Liabilities and Net Assets $ 301,984,402 $ 314,534,581 ----------------- - ------------- - Net Asset Value Per Share $ 11.49 $ 12.57 See notes to unaudited consolidated financial statements.

CM Finance Inc and Subsidiaries Consolidated Statements of Operations ----------------------------------------------- - ----------- - - ---------- - ----------- - - ---------- - For the three months ended For the six months ended December 31, December 31, ----------------------------- ------------------------------- 2018 2017 2018 2017 --------------- ------------ --------------- -------------- Investment Income: Interest income $ 8,481,251 $ 7,538,152 $ 16,136,091 $ 13,964,204 Payment in-kind interest income 540,308 722,039 953,928 1,014,517 Dividend income - - 31,275 - Payment in-kind dividend income - 189,583 - 189,583 Other fee income 277,365 - 432,520 9,879 ----------- - ---------- ----------- - ---------- - Total investment income 9,298,924 8,449,774 17,553,814 15,178,183 Expenses: Interest expense 2,156,537 1,601,261 4,421,394 3,039,090 Base management fees 1,405,297 1,161,353 2,757,152 2,315,233 Income-based incentive fees 753,721 921,782 874,042 906,758 Provision for tax expense 12,946 - 12,946 - Professional fees 233,528 236,024 466,328 445,064 Allocation of administrative costs from advisor 341,633 184,561 679,696 311,790 Amortization of deferred debt issuance costs 195,377 179,514 390,754 304,716 Insurance expense 84,440 85,225 168,880 205,439 Directors’ fees 101,250 99,000 202,500 198,667 Custodian and administrator fees 7,500 113,443 15,000 170,451 Offering expense 51,750 - 103,500 186,513 Other expenses 236,033 180,482 355,214 391,158 ----------- - ---------- ----------- - ---------- - Total expenses 5,580,012 4,762,645 10,447,406 8,474,879 Waiver of income-based incentive fees - - (22,000 ) - ----------- - ---------- ---------- - Net expenses 5,580,012 4,762,645 10,425,406 8,474,879 ----------- - ---------- ----------- - ---------- - Net investment income 3,718,912 3,687,129 7,128,408 6,703,304 Net realized and unrealized gain/(loss) on investments: Net realized gain (loss) from investments 75,000 - (183,192 ) (7,380,690 ) Net change in unrealized appreciation (13,176,208 ) 1,172,018 (14,899,471 ) 8,672,249 (depreciation) in value of investments ----------- - Total realized and unrealized gain (loss) on (13,101,208 ) 1,172,018 (15,082,663 ) 1,291,559 investments ----------- - ---------- ----------- - ---------- - Net increase (decrease) in net assets resulting from operations $ (9,382,296 ) $ 4,859,147 $ (7,954,255 ) $ 7,994,863 ----------- - ---------- ----------- - ---------- - Basic and diluted: Net investment income per share $ 0.27 $ 0.27 $ 0.52 $ 0.49 Earnings per share $ (0.69 ) $ 0.35 $ (0.58 ) $ 0.58 Weighted average shares of common stock 13,638,869 13,690,480 13,644,483 13,690,182 outstanding Distributions paid per common share $ 0.25 $ 0.25 $ 0.50 $ 0.50 See notes to unaudited consolidated financial statements.

About CM Finance Inc

The Company is an externally-managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through debt and related equity investments by targeting investment opportunities with favorable risk-adjusted returns. The Company seeks to invest primarily in middle-market companies that have annual revenues of at least $50mm and earnings before interest, taxes, depreciation and amortization of at least $15mm. The Company’s investment activities are managed by its investment adviser, CM Investment Partners LLC. To learn more about CM Finance Inc, please visit www.cmfn-inc.com.

Forward-Looking Statements

Statements included herein may contain “forward-looking statements,” which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein except as required by law. All forward-looking statements speak only as of the date of this press release.

ContactsCM Finance IncInvestor Relations Email: investorrelations@cmipllc.comPhone: 212-257-5199

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