Business Context and Reporting Period
This Form 8-K filing by CION Investment Corporation (CIC) covers events occurring between December 21, 2018, and December 26, 2018. The report details a reduction in the public offering price, the declaration of weekly cash distributions for the first quarter of 2019, and the extension of an expense support agreement with its investment adviser.
Key Financial Metrics
- Public Offering Price: Reduced from $9.55 to $9.50 per share.
- Net Offering Price: $9.03 per share (net of selling commissions and dealer manager fees).
- Estimated Net Asset Value (NAV): $8.81 per share as of December 26, 2018.
- Weekly Cash Distribution: $0.014067 per share.
- Annual Distribution Rate: 7.70% (based on the $9.50 public offering price).
Material Changes
CIC decreased its public offering price by $0.05 per share effective December 26, 2018. This adjustment was triggered by a decline in the estimated NAV per share to an amount more than 2.5% below the then-current net offering price. Despite the price reduction, the weekly cash distribution amount remained unchanged.
Outlook, Management Commentary, and Agreements
- Expense Support Agreement: On December 26, 2018, CIC entered into an amended agreement with CION Investment Management, LLC, extending the termination date from December 31, 2018, to December 31, 2019. No other material terms were amended.
- Distribution Policy: The Board delegated authority to executive officers to determine distribution terms, subject to quarterly ratification. Regular weekly distributions of $0.014067 per share were declared for January through March 2019.
- Pricing Policy: The filing confirms adherence to the share pricing policy requiring price reductions when NAV falls significantly below the offering price.
Investor Verification Checklist
- Verify the impact of the reduced offering price on the premium/discount to NAV.
- Confirm the terms of the extended Expense Support Agreement (Exhibit 10.1) to ensure no hidden liabilities were introduced.
- Monitor future NAV trends to assess if further price reductions are necessary to maintain the pricing policy threshold.
- Review the sustainability of the 7.70% annual distribution rate relative to the company's investment income.