Investcorp Credit Management BDC (NASDAQ:ICMB) reported a decline in net asset value and a rise in non-accruals for the quarter ended December 31, 2025, as management emphasized a continued focus on liquidity and capital preservation in what it described as an uncertain market environment.
Strategic review and dividend decision
President and CEO Suhail Shaikh said the company’s board formed “a special committee of independent directors to review strategic alternatives and maximize value for shareholders.” Chief Financial Officer Robert Andrew Muns noted at the outset of the call that management would not be taking questions about the strategic review process.
Refinancing extends debt maturity profile
Shaikh said that on March 30 the company “successfully refinanced the $65 million 4 7/8 notes due April 1 with new $65 million unsecured notes provided by our advisor’s affiliate.” According to Shaikh, the new unsecured notes carry a floating-rate coupon of “SOFR plus 550 basis points” and mature on July 1, 2029.
Quarterly performance: NII down, NAV declines
Shaikh reported net investment income (NII) before taxes of $0.3 million, or $0.02 per share, for the quarter, representing a $0.02 per share decrease from the prior quarter. He attributed the sequential decline primarily to a reduction in income-producing assets, including placing Easy Way’s term loan on non-accrual, as well as “an increase in professional fees and other expenses that is typically experienced in the December quarter.”
Net asset value (NAV) per share decreased to $4.25 from $5.04 in the prior quarter. Shaikh said net assets fell “approximately 16% sequentially,” largely due to “fair value adjustments and the payment of a dividend in excess of NII.” He added that the fair value adjustments “primarily reflect changes in market valuation levels and updated exit timing assumptions in the current environment rather than broad-based deterioration across the rest of the portfolio.”
Muns provided additional detail, stating that net assets ended the quarter at $61.3 million, down $11.4 million from the prior quarter. He said the change consisted of a $9.4 million decrease from operations and a $2.0 million decrease related to a dividend paid in excess of NII.
Portfolio activity and credit quality
Credit metrics weakened during the quarter as non-accruals rose. Shaikh said non-accruals increased to 6.9% of the portfolio at fair value from 4.4% in the previous quarter, driven by the addition of Easy Way, which he described as “a manufacturer of customizable outdoor furniture products sold through retail channels.”
Despite the non-accrual increase, Shaikh said the portfolio remained diversified across 18 industries, with no single investment representing more than about 3% of fair value. He also noted software exposure was “less than 3% of fair value” at quarter end.
Muns reported that the fair value of the portfolio was $172.7 million as of December 31, 2025, down from $196.1 million at September 30, and that the portfolio included 37 borrowers. He said approximately 81% of investments were in first lien debt, with the remaining 19% in equity, warrants, and other positions. He added that 98% of the debt portfolio was floating-rate and 2% fixed-rate, with a weighted average spread on floating-rate investments of 4.5%, “relatively unchanged” from the prior quarter.
On yields, Muns said the weighted average yield of the debt portfolio was 10.6%, down 31 basis points sequentially.
Investment realizations, leverage, and liquidity
Shaikh said new investment activity was “muted” as the company focused on liquidity management. During the quarter, ICMB invested $1.5 million in a first lien term loan to existing portfolio company Axiom Global, which Shaikh said was used “to fund a dividend to existing shareholders.” Shaikh described Axiom as “the leading provider of flexible expert legal talent for enterprise customers” and said the company’s yield at cost was approximately 8.8%.
He also said ICMB fully realized three portfolio company investments totaling $8.2 million in proceeds, with an internal rate of return of approximately 10.6%. The realizations included term loan investments in CareerBuilder and LABL, Inc., as well as a preferred equity investment in Advanced Solutions International, which was recapitalized during the quarter.
Muns said gross leverage at quarter end was 2.02 times and net leverage was 1.78 times, compared with 1.75 times gross and 1.59 times net in the prior quarter. He added the company paid down about $14 million of debt in February, which improved the asset coverage ratio from 150% to 155%.
On liquidity, Muns said the company had about $15 million of cash at December 31, of which approximately $10.4 million was restricted. He added that ICMB had $41.1 million of unused commitments under its Capital One revolving credit facility, with approximately $8.7 million available under the borrowing base.
Shareholder question focuses on fees and alignment
During the question-and-answer session, Justin Scott of Lone Star Research asked whether the manager would consider reducing fees during the strategic review period and raised concerns about alignment between the adviser and shareholders. In response, Shaikh said the company had been “waiving fees on an ongoing basis,” adding, “That tool always exists for us and if we have to.”
Shaikh also pointed to the refinancing as evidence of alignment, saying an affiliate of the manager provided the $65 million of capital to refinance the notes and “also owns about 25% of the shares.” He concluded, “I think we consider ourselves fully aligned with shareholders, and we’ll use whatever means necessary to keep that alignment going.”
In closing remarks, Shaikh reiterated management’s near-term priorities as “preserving capital, maintaining disciplined underwriting, and actively managing our non-accrual positions,” while acknowledging he expects market conditions to “remain challenging in the near term.”
About Investcorp Credit Management BDC (NASDAQ:ICMB)
Investcorp Credit Management BDC Inc (NASDAQ: ICMB) is a closed-end, non-diversified management investment company that provides investors exposure to private credit markets through direct lending strategies. As a business development company, ICMB focuses on originating, structuring and managing tailored financing solutions for U.S. middle-market corporations. The company’s portfolio includes senior secured loans, second-lien debt, subordinated debt and equity co-investments, with an emphasis on risk-adjusted returns and capital preservation.
The company is externally managed by Investcorp Credit Management US LLC, part of the Investcorp group, a global alternative investment firm founded in 1982.
