Logan Ridge Finance : June 2024 Presentation

Investor Presentation

June 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. 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

Logan Ridge Finance Corporation

	Exchange:	NASDAQ
	Ticker:	LRFC
	Investment Manager:	Mount Logan Management LLC
	Affiliation:	BC Partners / BCP Credit
	As of May 31, 2024
	Market Cap	$60.0m
	Share Price	$22.40
	52-week Range	$18.53 - $23.63
	Common Shares Outstanding	2.68m
	Total Dividend Payout TTM	$1.21
	Latest Quarterly Dividend	$0.33
	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 stockholder alignment with top priority of generating stockholder 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' c.€40bn1 platform in private equity, private credit and real estate strategies
• Exemptive relief allows for co-investments with other funds and proprietary accounts managed by Mount Logan or its affiliates, subject to certain conditions

Investment Portfolio

(at 3/31/24)

• $213.42 million of total assets and $90.2 million of net asset value
• As of March 31, 2024, approximately 88.5% of our debt investment portfolio at fair value was bearing interest at a floating rate
• 62 debt + equity portfolio companies
• Debt investments on non-accrual status were 5.3% and 8.3% of the investment portfolio at fair value and amortized cost, respectively
• As of March 31, 2024, approximately 60% of the Company's investment portfolio at fair value was invested in assets originated by the BC Partners Credit Platform ("BCP Credit")

1.	AUM data as of 3/31/24
2.	Reflects commitments to commingled funds, IMAs, and commercially approved commitments. Figures are subject to completion of certain agreements.	NASDAQ:LRFC | 4

Investment Objectives and Strategy

	▪ Generate both current income and capital appreciation through debt and equity investments
	▪	Invest in first lien loans, second lien loans and subordinated loans, and, to a lesser extent, equity securities
		issued by lower middle-market companies and traditional middle-market companies
Investment Objectives	▪	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

Investment Strategy

and Philosophy

• 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
• 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: first lien loans, second lien loans, unitranche loans (including last out), subordinated loans, equity investment and co-investment
• Industry focus: healthcare, business services, financials, information technology, industrials, consumer discretionary, healthcare management, automobile part manufacturer, advertising & marketing services, communication services

NASDAQ:LRFC | 5

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 (e.g. 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" (unallocated capital commitments) 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 or excluded, private credit experiences a steep increase in deal flow

1990s

2000s

2010s

2020s

Source: CapIQ and Preqin

NASDAQ:LRFC | 6

Recent Events Accelerate the Long-Term Trend

Cumulative loan growth for U.S. domestically chartered commercial banks

Week

Source: FDIC and Apollo Chief Economist (2/9/2024).

NASDAQ:LRFC | 7

Private Credit Increases Market Share

Share Gains by Alternative Asset Managers

Capital Provided ($ trillions)

45

40

35

30

25

20

15

10

5

0

2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
							Banks		Fund Managers

Source: Board of Governors of the Federal Reserve, ICI/Preqin/HFR.

NASDAQ:LRFC | 8

Private Equity Continues to Drive Private Credit

	30
	25
000s)	20
(in
Companiesof	15
Number	10
5

-

Median holding period for buyout backed exits (years)

Global Active Buyout-Backed Companies

			Global Buyout Unrealized Value	28	$4
				27
	24	25
	22		$3
	21
	20
	19
	18
	17
	16
	15
	14 14				$2
	13
	12
	11
	9
6	7				$1
6

5

4 4

$0

2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
3.1	3.5	3.9	3.8	4.1	4.2	3.8	3.7	3.5	3.6	4.3	4.6	5.2	5.7	6.0	5.9	5.4	5.5	5.3	5.4	5.3	5.3	5.9	6.1

Unrealized Value ($ in Trillions)

Source: Bain's 2024 Global Private Equity Report

NASDAQ:LRFC | 9

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:

1. Borrowers seek certainty of terms o Flexibility in structuring

Preservation of Capital

• Strong covenants:

o	Minimum EBITDA	o Max. Gross / Net Leverage
o	Fixed-Charge Coverage	o	Industry-Specific Key
	Ratio		Performance Indicators
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

Covenant-Lite Share of New Issue Loans, 2020-2023

70%									66%
60%												57%
		51%								53%	54%
						49%
50%
				38%			41%
40%
		30%	29%
30%
20%	14%						17%
	10%10%
10%	6%
												0%
0%
<=$250M		$250-$500M			$500-$1B	>$1B
			2020			2021		2022			2023
Source: Covenant Review, Barclays Research (04/11/2024).

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

NASDAQ:LRFC | 10