What changed in this filing

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Item 1. Business

2023-03-16 compared with 2022-03-10 · 81 added, 73 removed, 651 unchanged (19% of the section changed)

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As a BDC, we are subject to certain regulatory restrictions in negotiating or investing in certain investments with entities with which we may be prohibited from doing so under the 1940 Act, such as CIM and its affiliates, unless we obtain an exemptive order from the SEC.

We have filed an application with the SEC seeking an exemptive order from such restrictions, but there can be no assurances the SEC will ultimately grant the relief sought in the exemptive application.

Co-investments made under the exemptive relief, if granted, would be subject to compliance with the conditions and other requirements contained in the exemptive relief provided by the SEC.

We are limited in our ability to engage in co-investment transactions with CIM and its affiliates without exemptive relief from the SEC.

Even if we receive exemptive relief, CIM’s investment committee may determine that we should not participate in a co-investment transaction.

On August 30, 2022, we, CIM and certain of our affiliates were granted an order for exemptive relief, or the Order, by the SEC for us to co-invest with other funds managed by CIM or certain affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

Pursuant to such Order, we generally are permitted to co-invest with certain of our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to us and our shareholders and do not involve overreaching of us or our shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of our shareholders and is consistent with our investment objective and strategies, (3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less advantageous than that on which our affiliates are investing, and (4) the proposed investment by us would not benefit CIM or its affiliates or any affiliated person of any of them (other than the parties to the transaction), except to the extent permitted by the Order and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.

In addition, the Order permits us to co-invest in our existing portfolio companies with certain affiliates that are private funds, even if such private funds did not have an investment in such existing portfolio company.

Even though we were granted the Order by the SEC, CIM’s investment committee may determine that we should not participate in a co-investment transaction.

Portfolio and Investment Activity

As of December 31, 2021, we engaged in the direct purchase of debt and equity securities primarily issued by portfolio companies and lend directly to portfolio companies.

As of December 31, 2022, we engaged in the purchase of debt and equity securities primarily issued by portfolio companies and lend directly to portfolio companies.

The following table summarizes the composition of our investment portfolio at amortized cost and fair value as of December 31, 2022:

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Investments Cost(1) Investments Fair

Value Percentage of

Percentage of

Senior secured first lien debt $ 1,638,995 $ 1,579,512 90.3 %

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(3) The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.

Status of Our Continuous Public Offerings and the NYSE Listing

Our Common Stock and the NYSE Listing

On December 17, 2012, we met our minimum offering requirement of $2,500 in capital raised from persons not affiliated with us, admitted our initial public investors as shareholders and officially commenced operations.

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On October 5, 2021, our shares of common stock commenced trading on the NYSE under the ticker symbol “CION”, or the Listing.

Since commencing our initial continuous public offering on July 2, 2012 and through such initial Listing date, we sold 56,958,440 shares of common stock for corresponding net proceeds of $1,160,307 at an average price per share of $20.37, including shares purchased by our affiliates.

The net proceeds received include gross proceeds received from reinvested shareholder distributions of $237,451 pursuant to our pre-Listing distribution reinvestment plan, for which we issued 13,523,489 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $232,430 pursuant to our pre-Listing share repurchase program, for which we repurchased 13,310,927 shares of common stock.

For a complete description of our pre-Listing distribution reinvestment plan and pre-Listing share repurchase program, refer to Item 5.

Since commencing our initial continuous public offering on July 2, 2012 and through December 31, 2022, we sold 55,299,484 shares of common stock for corresponding net proceeds of $ 1,144,863 at an average price per share of $ 20.70 .

The net proceeds include gross proceeds received from reinvested shareholder distributions of $ 237,451 pursuant to our pre-Listing distribution reinvestment plan, for which we issued 13,523,489 shares of common stock, and gross proceeds paid for shares of common stock repurchased of $ 247,874 , for which we repurchased 14,969,883 shares of common stock.

As of December 31, 2022, 14,969,883 shares of common stock repurchased had been retired.

For a complete description of our pre-Listing distribution reinvestment plan and pre-Listing and post-Listing share repurchase programs, refer to Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities in this report.

On February 26, 2023, our shares of common stock also listed and commenced trading on the Tel Aviv Stock Exchange Ltd., or the TASE, under the ticker symbol “CION”.

Distributions

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On September 15, 2021, we changed the timing of declaring and paying regular distributions to shareholders from monthly to quarterly commencing with the fourth quarter of 2021.

Distributions in respect of future quarters will be evaluated by management and the board of directors based on circumstances and expectations existing at the time of consideration.

Distributions in respect of future quarters and any special distributions will be evaluated by management and the board of directors based on circumstances and expectations existing at the time of consideration.

Declared distributions are paid quarterly.

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March 31, 2020 (thirteen record dates) $ 0.3657 $ 20,793

June 30, 2019 (thirteen record dates) 0.3657 20,801

September 30, 2019 (thirteen record dates) 0.3657 20,798

December 31, 2019 (fourteen record dates) 0.3939 22,401

Total distributions for the year ended December 31, 2019 $ 1.4910 $ 84,772

March 31, 2020 (thirteen record dates) $ 0.3657 $ 20,793

June 30, 2020 (no record dates) — —

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Total distributions for the year ended December 31, 2021 $ 1.2592 $ 71,530

On November 12, 2021, our co-chief executive officers declared a regular quarterly distribution of $0.28 per share for the first quarter of 2022 payable on March 30, 2022 to shareholders of record as of March 23, 2022.

On March 8, 2022, our co-chief executive officers declared a regular quarterly distribution of $0.28 per share for the second quarter of 2022 payable on June 8, 2022 to shareholders of record as of June 1, 2022.

March 31, 2022 (one record date) $ 0.2800 $ 15,948

June 30, 2022 (one record date) 0.2800 15,949

September 30, 2022 (one record date) 0.3100 17,604

December 31, 2022 (two record dates) 0.5800 32,074

Total distributions for the year ended December 31, 2022 $ 1.4500 $ 81,575

(1) The per share distribution amount has been retroactively adjusted to reflect the Reverse Stock Split as discussed in Note 3 to the consolidated financial statements included within this report..

On March 13, 2023, our co-chief executive officers declared a regular quarterly distribution of $0.34 per share for the first quarter of 2023 payable on March 31, 2023 to shareholders of record as of March 24, 2023.

CIM is a registered investment adviser and our affiliate.

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• The middle-market is a large addressable market .

According to GE Capital’s National Center for the Middle Market 2nd Quarter 2021 Middle Market Indicator, there are approximately 200,000 U.S.

According to the National Center for the Middle Market Year-End 2022 Middle Market Indicator, there are approximately 200,000 U.S.

middle-market companies employing approximately 48 million people.

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middle market generates more than $10 trillion in annual revenue.

GE defines middle-market companies as those with $10 million to $1 billion in annual revenue, which we believe has significant overlap with our definition of middle-market companies that generally possess EBITDA of $75 million or less.

The National Center for the Middle Market defines middle-market companies as those with $10 million to $1 billion in annual revenue, which we believe has significant overlap with our definition of middle-market companies that generally possess EBITDA of $75 million or less.

• There have been secular changes in ownership structures of U.S.

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• There is a large pool of uninvested private equity capital likely to seek additional senior debt capital to finance strategic transactions.

We expect that middle-market private equity firms will continue to invest the nearly $1 trillion raised since 2010 in middle-market companies, as reported in Pitchbook’s 3Q 2021 U.S.

We expect that middle-market private equity firms will continue to invest the approximately $1.1 trillion raised since 2012 in middle-market companies, as reported in Pitchbook’s 3Q 2022 U.S.

PE Middle Market Report, and that these private equity firms will seek to support their investments with senior loans from other sources, such as us.

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Therefore, adding to the imbalance in the availability of credit is the significant amount of unallocated private equity capital raised since 2012 described above, much of which will require debt financing in the coming years.

As depicted in the chart below, almost $1.4 trillion of unfunded private equity commitments were outstanding through the second quarter of 2021 (Source:

Pitchbook's 2021 Annual Private Fund Strategies Report).

As depicted in the chart below, almost $1.24 trillion of unfunded private equity commitments were outstanding through the third quarter of 2022 (Source:

Pitchbook's Q3 2022 Global Private Market Fundraising Report).

PE Capital Overhang ($B) by Year

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1 Excludes all facilities in default.

S&P Capital IQ LCD and S&P/LSTA Leveraged Loan Index.

S&P Capital IQ LCD and Morningstar LSTA US Leveraged Loan Index.

Average Discounted Spread of Leveraged Loans 2

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Spread calculations have been adjusted to be based off of the bid rather than par (that is assuming that the discounted margin is as a percent of the current market value rather than the par amount of the loan).

S&P Capital IQ LCD and S&P/LSTA Leveraged Loan Index.

S&P Capital IQ LCD and Morningstar LSTA US Leveraged Loan Index.

Characteristics of and Risks Related to Investments in Private Companies

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Finally, these companies often do not have third-party debt ratings or audited financial statements.

We must therefore rely on the ability of CIM to obtain adequate information through their due diligence efforts to evaluate the creditworthiness of, and risks involved with, investing in these companies.

We must therefore rely on the ability of CIM to obtain adequate information through its due diligence efforts to evaluate the creditworthiness of, and risks involved with, investing in these companies.

These companies and their financial information will also generally not be subject to the Sarbanes-Oxley Act, and other rules and regulations that govern public companies that are designed to protect investors.

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• Broad portfolio.

We seek to create a portfolio of companies engaged in a variety of industries and located in a variety of geographic locations, thereby potentially reducing the risk of a downturn in any one industry, including, without limitation, as a result of COVID-19, or geographic location having a disproportionate impact on the value of our portfolio.

We seek to create a portfolio of companies engaged in a variety of industries and located in a variety of geographic locations, thereby potentially reducing the risk of a downturn in any one industry, including, without limitation, as a result of COVID-19, inflation, rising interest rates, supply-chain disruptions, the risk of recession, or geographic location having a disproportionate impact on the value of our portfolio.

We are not a “diversified company” as such term is defined under the 1940 Act.

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We leverage these proprietary relationships and CIM’s expertise, which we believe enables us to be highly selective with a diverse array of investment opportunities that offer the most favorable risk/reward characteristics.

• We are CIM’s only client resulting its investment professionals sourcing for and managing a single investment platform.

• We are CIM’s only client resulting in its investment professionals sourcing for and managing a single investment platform.

Since we are CIM’s only client, its investment professionals solely source for and manage our investment portfolio, which we believe results in sourcing focus and efficiencies.

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The mix of investments in our portfolio and other aspects regarding the implementation of our strategy may change materially over time.

Although CIM focuses primarily on senior secured first lien debt, CIM can tailor our investment focus as market conditions evolve.

Although we focus primarily on senior secured first lien debt, CIM can tailor our investment focus as market conditions evolve.

Depending on market conditions and other factors, we may, as noted above, increase or decrease our exposure to less senior portions of the capital structure, where returns tend to be stronger in a more stable or growing economy, but less secure in weak economic environments.

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Generally, our first lien secured loans are expected to have maturities of three to seven years, offer some form of amortization, and have first priority security interests in the assets of the borrower.

We expect that our first lien secured loans typically will have variable interest rates ranging between 4.0% and 9.0% over a standard benchmark, such as the prime rate or LIBOR.

We expect that our first lien secured loans typically will have variable interest rates ranging between 4.0% and 9.0% over a standard benchmark, such as the prime rate, LIBOR or the Secured Overnight Financing Rate, or SOFR.

In some cases, a portion of the total interest may accrue or be paid in kind.

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These higher returns come in the form of higher interest and in some cases the potential for equity participation through warrants, though to a lesser extent than with mezzanine loans.

Generally, we expect these loans to carry a fixed rate of 10.0% to 13.0% or a floating current yield of 7.0% to 12.0% over the prime rate or LIBOR.

Generally, we expect these loans to carry a fixed rate of 10.0% to 13.0% or a floating current yield of 7.0% to 12.0% over the prime rate, LIBOR or SOFR.

In addition, we may receive additional returns from any warrants we may receive in connection with these investments.

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Due to reduced liquidity, the relative scarcity of capital and extensive due diligence and expertise required on the part of the investor, we believe that private debt securities typically offer higher returns than corporate bonds of equivalent credit quality.

CION/EagleTree Partners, LLC

On December 21, 2021, we formed CION/EagleTree Partners, LLC, or CION/EagleTree, an off-balance sheet joint venture partnership with ET-BC Debt Opportunities, LP, or ET-BC, which is an affiliate of EagleTree Capital, LP, or EagleTree.

EagleTree made a Firm-level investment with proprietary capital.

CION/EagleTree jointly pursue debt opportunities and special situation, crossover, subordinated and other junior capital investments that leverages our and EagleTree's combined sourcing and portfolio management capabilities.

We contributed a portfolio of second lien loans and equity investments and ET-BC contributed proprietary Firm-level cash in exchange for 85% and 15%, respectively, of the senior secured notes, participating preferred equity, and common share interests of CION/EagleTree.

We and ET-BC are not required to make any additional capital contributions to CION/EagleTree.

Our equity investment in CION/EagleTree is not redeemable.

All portfolio and other material decisions regarding CION/EagleTree must be submitted to its board of managers, which is comprised of four members, two of whom were selected by us and the other two were selected by ET-BC.

Further, all portfolio and other material decisions require the affirmative vote of at least one board member from us and one board member from ET-BC.

We also serve as administrative agent to CION/EagleTree to provide servicing functions and other administrative services.

In certain cases, these servicing functions and other administrative services may be performed by CIM.

On December 21, 2021, CION/EagleTree issued senior secured notes of $61,629 to us and $10,875 to ET-BC, or the CION/EagleTree Notes.

The CION/EagleTree Notes bear interest at a fixed rate of 14.0% per year and are secured by a first priority security interest in all of the assets of CION/EagleTree.

The obligations of CION/EagleTree under the CION/EagleTree Notes are non-recourse to us.

Operating and Regulatory Structure

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provided that, the annual base management fee is reduced to 1.0% of the average value of our gross assets (including cash pledged as collateral for our secured financing arrangements, but excluding other cash and cash equivalents so that investors do not pay the base management fee on such assets) purchased with leverage resulting in our asset coverage ratio dropping below 200%.

At our Special Meeting of Shareholders on December 30, 2021, shareholders approved a proposal to reduce our asset coverage ratio to 150%.

Such asset coverage ratio became effective on December 31, 2021.

At our Special Meeting of Shareholders on December 30, 2021, shareholders approved a proposal to reduce our asset coverage ratio to 150%, which became effective on December 31, 2021.

The annual base management fee is payable to CIM quarterly in arrears and is calculated based on the two most recently completed calendar quarters.

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Investment Rating Investments

Fair Value Percentage of

Investment Portfolio Investments

Fair Value Percentage of

Percentage of

Investment Portfolio

Percentage of

Investment Portfolio

1 $ 24,450 1.4 % $ 47,221 2.8 %

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Investments for which market quotations are readily available are recorded at such market quotations.

With respect to investments for which market quotations are not readily available, our board of directors determines the fair value of investments in good faith utilizing the input of our audit committee, CIM, and any other professionals or materials that our board of directors deems worthy and relevant, including independent third-party valuation firms, if applicable.

With respect to investments for which market quotations are not readily available, our board of directors determines the fair value of investments, including through delegation to CIM as our valuation designee, in good faith utilizing the input of our audit committee, CIM, and any other professionals or materials that our board of directors deems worthy and relevant, including independent third-party valuation firms, if applicable.

Managerial Assistance .

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We also seek to exit investments in secondary market transactions when price targets are achieved or circumstances otherwise warrant.

Financing Arrangements

Use of Leverage - Our Financing Arrangements

To seek to enhance our returns, we employ leverage as market conditions permit and at the discretion of CIM.

Our (i) $575 million senior secured credit facility, or the JPM Credit Facility, with JPMorgan Chase Bank, National Association, or JPM, (ii) $150 million repurchase agreement, or the UBS Facility, with UBS AG, or UBS, (iii) $125 million senior unsecured notes due in 2026, or the 2026 Notes, and (iv) $30 million unsecured term loan, or the More Term Loan, with More Provident Funds Ltd., or More, allow us to borrow money and lever our investment portfolio, subject to the limitations of the 1940 Act, with the objective of increasing our yield.

Our (i) $675 million senior secured credit facility, or the JPM Credit Facility, with JPMorgan Chase Bank, National Association, or JPM, (ii) $150 million repurchase agreement, or the UBS Facility, with UBS AG, or UBS, (iii) $125 million senior unsecured notes due in 2026, or the 2026 Notes, (iv) $30 million unsecured term loan, or the 2021 More Term Loan, with More Provident Funds Ltd., or More, (v) $50 million unsecured term loan facility, or the 2022 More Term Loan, with More, and (vi) approximately $80.7 million in Series A unsecured notes due in 2026, or the Series A Notes, allow us to borrow money and lever our investment portfolio, subject to the limitations of the 1940 Act, with the objective of increasing our yield.

This is known as “leverage” and could increase or decrease returns to our shareholders.

The use of leverage involves significant risks.

As of December 31, 2022, our total outstanding consolidated indebtedness, at par value, was approximately $957.5 million, $752.5 million of which was secured and was indebtedness of our subsidiaries, and we had $72.5 million of commitments available to be borrowed under our existing secured financing arrangements.

See Note 8 to our consolidated financial statements contained in this annual report on Form 10-K for additional information regarding our financing arrangements.

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As a BDC, Section 2(a)(41) of the 1940 Act requires the board of directors to determine in good faith the fair value of portfolio securities for which a market price is not readily available, and it does so in conjunction with the application of our valuation procedures by CIM.

In accordance with Rule 2a-5 of the 1940 Act, our board of directors has designated CIM as our “valuation designee.” Our board of directors and the audit committee of our board of directors, which is comprised solely of our independent directors, oversees the activities, methodology and processes of the valuation designee.

There is no single standard for determining fair value in good faith.

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In addition, we may generally issue new shares of our common stock at a price below net asset value in rights offerings to existing shareholders, in payment of distributions and in certain other limited circumstances.

At our reconvened Annual Meeting of Shareholders held on August 9, 2021, our shareholders approved our ability to sell or otherwise issue during the next year shares of our common stock at a price below our then current NAV per share in one or more public or private offerings of our common stock not exceeding 25% of such then outstanding shares.

If we issue such shares and again receive such approval from shareholders in the future, we may issue shares of our common stock at a price below the then current NAV per share of common stock.

On September 15, 2022, our shareholders approved our ability to sell or otherwise issue during the next year shares of our common stock at a price below our then current NAV per share in one or more public or private offerings of our common stock not exceeding 25% of such then outstanding shares.

If we issue such shares and again receive such approval from shareholders in 2023 or otherwise in the future, we may issue shares of our common stock at a price below the then current NAV per share of common stock.

As a BDC, we are subject to certain regulatory restrictions in negotiating or investing in certain investments.

For example, we generally are not permitted to co-invest with certain entities affiliated with CIM in transactions originated by CIM or its affiliates unless we obtain an exemptive order from the SEC.

Co-investments made under the exemptive relief, if granted, would be subject to compliance with the conditions and other requirements contained in the exemptive relief provided by the SEC.

We are limited in our ability to engage in co-investment transactions with CIM and its affiliates without exemptive relief from the SEC.

Even if we receive exemptive relief, CIM’s investment committee may determine that we should not participate in a co-investment transaction.

On August 30, 2022, we, CIM and certain of our affiliates were granted the Order by the SEC for us to co-invest with other funds managed by CIM or certain affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

Even though we were granted the Order by the SEC, CIM’s investment committee may determine that we should not participate in a co-investment transaction.

We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions.

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We intend to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.

As a non-accelerated filer, we are currently exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, which would require that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.

This may increase the risk that material weaknesses or other deficiencies in our internal control over financial reporting go undetected.

Due to our Listing, we will no longer be a “non-accelerated filer” as defined in Rule 12b-2 of the Exchange Act and as a result, commencing with our Annual Report on Form 10-K for the year ending December 31, 2022, we will be required to comply with the independent auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

Due to our Listing, we are no longer a “non-accelerated filer” as defined in Rule 12b-2 of the Exchange Act and as a result, commencing with this Annual Report on Form 10-K for the year ended December 31, 2022, we are required to comply with the independent auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, which requires our independent registered public accounting firm to provide an attestation report on the effectiveness of our internal control over financial reporting.

Complying with Section 404(b) requires a rigorous compliance program as well as adequate time and resources.

We will be subject to significant documentation and administrative burdens as a result of being required to comply with Section 404(b), which will require us to utilize additional resources, and our internal controls may not be determined to be effective, which may adversely affect investor confidence in us and, as a result, the value of our securities.

We are subject to significant documentation and administrative burdens as a result of being required to comply with Section 404(b), which requires us to utilize additional resources, and our internal controls may not be determined to be effective, which may adversely affect investor confidence in us and, as a result, the value of our securities.

Our primary competitors provide financing to middle-market companies and include other BDCs, commercial and investment banks, commercial financing companies, CLOs, private funds, including hedge funds, and, to the extent they provide an alternative form of financing, private equity funds.

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We believe we are in compliance with these rules and standards.

On February 26, 2023, our common stock also listed on the TASE under the symbol “CION”, which subjects us to various TASE listing standards including corporate governance listing standards.

We believe we are also in compliance with these rules and standards.

We are periodically examined by the SEC for compliance with the 1940 Act.

We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement.

We provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement.

Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our shareholders arising from willful misconduct, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.

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Recent Developments

Joint Venture with EagleTree Capital, LP

On December 21, 2021, we formed CION/EagleTree Partners, LLC, or CION/EagleTree, an off-balance sheet joint venture partnership, with an affiliate of EagleTree Capital, LP, or EagleTree, through which EagleTree made a Firm-level investment with proprietary capital.

CION/EagleTree will jointly pursue debt opportunities and special situation, crossover, subordinated and other junior capital investments that leverage our and EagleTree's combined sourcing and portfolio management capabilities.

The initial holdings of CION/EagleTree consisted of a diversified portfolio of approximately $97 million of second lien loans and equity investments that were held by us immediately prior to closing and approximately $15 million of proprietary Firm-level cash contributed by an affiliate of EagleTree.

The initial equity ownership of CION/EagleTree is 85% by us and 15% by an affiliate of EagleTree.

Each of us and EagleTree will have equal voting rights on the board of directors of CION/EagleTree.

Expense Support Agreement with CIM

Pursuant to an expense support and conditional reimbursement agreement entered into on January 2, 2018 between us and CIM, CIM agreed to provide expense support to us in an amount that was sufficient to:

(i) ensure that no portion of our distributions to shareholders was paid from our offering proceeds or borrowings, and/or (ii) reduce our operating expenses until we achieved economies of scale sufficient to ensure that we bore a reasonable level of expense in relation to our investment income.

Under certain conditions, CIM would have been entitled to reimbursement of such expense support.

On December 31, 2021, we and CIM allowed the expense support and conditional reimbursement agreement to expire in accordance with its terms.

The rapid spread of COVID-19, and associated impacts on the U.S.

and global economies and the financial and credit markets, initially had negatively impacted, and may again negatively impact, our business operations and the business operations of some of our portfolio companies.

We cannot at this time fully predict the impact of COVID-19, including new variants, such as Delta and Omicron, on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our portfolio companies’ operating results or our own results of operations or financial condition, including, without limitation, our ability to pay distributions to our shareholders.

We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress.

These developments could result in a decrease in the value of certain of our investments.

COVID-19 initially had adverse effects on our investment income and may again have adverse effects in the future.

These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments.

In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas.

These market disruptions and illiquidity initially had an adverse effect on our business, financial condition, results of operations and cash flows.

These events initially limited our investment originations, which may occur again in the future and may also have a material negative impact on our operating results.

We will continue to carefully monitor the impact of COVID-19 on our business and the business of our portfolio companies.

Because the full effects of COVID-19 are not capable of being known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows, including its effects on us with respect to our compliance with covenants in our financing arrangements with lenders.

Series A Notes

On February 28, 2023, we entered into a Deed of Trust, or the Deed of Trust, with Mishmeret Trust Company Ltd., as trustee, under which we issued approximately $80.7 million in aggregate principal amount of our Series A Notes.

The Series A Notes offering in Israel closed on February 28, 2023 and the Series A Notes listed and commenced trading on the TASE on February 28, 2023.

After the deduction of fees and other offering expenses, we received net proceeds of approximately $77.9 million, which we intend to use to make investments in portfolio companies in accordance with our investment objectives and for working capital and general corporate purposes.

The Series A Notes are rated A1.il by Midroog Ltd., an affiliate of Moody’s.

The Series A Notes will mature on August 31, 2026 and may be redeemed in whole or in part at our option at par plus a “make-whole” premium, if applicable, as set forth in the Deed of Trust.

The Series A Notes bear interest at a rate equal to SOFR plus a credit spread of 3.82% per year, which will be paid quarterly on February 28, May 31, August 31, and November 30 of each year, commencing on May 31, 2023.

The Series A Notes are our general unsecured obligations that rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the Series A Notes, rank pari passu with all our existing and future unsecured unsubordinated indebtedness, rank effectively junior to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.

The Deed of Trust contains other terms and conditions, including, without limitation, affirmative and negative covenants such as (i) information reporting, (ii) maintenance of our status as a business development company within the meaning of the 1940 Act, (iii) minimum shareholders’ equity of $525 million, (iv) a minimum asset coverage ratio of not less than 150%, and (v) an unencumbered asset coverage ratio of 1.25 to 1.00.

In addition, the Deed of Trust contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness in an outstanding aggregate principal amount of at least $50,000,000, certain judgments and orders, and certain events of bankruptcy.

On February 26, 2023, our shares of common stock listed and commenced trading on the TASE under the ticker symbol “CION”.

Q1 2013 Regular Distribution

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business