CIFC Corp. said Tuesday it unloaded a middle market CLO it had put on the block last year.
CIFC’s wholly-owned indirect subsidiaries, DFR Middle Market Holdings and Deerfield Capital Management, sold 100% of each of the unrated subordinated note and class D deferrable mezzanine notes tranches issued by DFR Middle Market CLO Ltd., together with the rights to manage the CLO, for $36.5 million.
In November, CIFC disclosed in a regulatory filing that it was exploring the sale of its interest in the deal, one of 30 it manages, to an unnamed third party. At the time, the company said it might also call and liquidate the CLO in January 2012 if it were unable to obtain a satisfactory sales price.
DRF MM CLO was consolidated on CIFC's balance sheet, and the company said in the November filing that it could incur a loss, on a GAAP basis, of between $5 million and $15 million as a result of sale. The company also said that its maximum exposure to loss on its investment in the CLO is limited to its initial investment of $69 million, including $50 million of subordinated notes and $29 million of debt.
CIFC acquired the DFR MM CLO through its acquisition of Deerfield Capital, which closed in April 2011. The company manages a total of $11.2 billion in CLOs, according to information posted on its website.
In its Tuesday announcement, CIFC said the sale, together with other asset sales and dispositions, represents the completion of a repositioning of its core business as a fee-based asset manager in order to free up capital to support further growth.
