Alternative Investment Solutions

INVEST IN AMERICAN COMPANIES

CION Investment Corporation

CURRENT MARKET VALUES

Current
Offering Price*
$9.70
Current
Distribution Rate**
7.54%
OVERVIEW

What is CION?

CION Investment Corporation is a credit-focused business development company that primarily invests in the debt of private and thinly-traded U.S. Middle Market companies.

OUR TARGET

Middle Market companies with significant free cash flow(1)

The U.S. middle market is a large and vital part of both the American and global economy. It is comprised of approximately 200,000 businesses that employ approximately 48 million people and generate more than $5.7 trillion of gross revenues annually. In fact, if the U.S. middle market were its own economy, its GDP would rank 3rd in the world, trailing only the United States and China.

 

(1) According to GE Capital Q1 2017 Middle Market Indicator. GE defines middle-market companies as those with $10 million – $1 billion in annual revenue, which we believe has significant overlap with CION’s definition of the middle-market (companies with EBITDA of $50 million and under).

OUR STRATEGY

Senior Secured, Floating Rate Debt

CION intends to focus primarily on investments in senior secured loans, which are typically situated at the top of the capital structure and carry the least risk among all investments in a company. This is because senior secured loans typically have a first claim on a company’s property, plant, equipment, inventory and cash flows.(1)

 

(1) Although senior secured loans may carry the least amount of risk amongst the capital structure, they should not be misconstrued as carrying no risk at all. For example, the fact that a loan is secured does not guarantee that CION will receive the principal and interest payments according to the loan’s terms, or at all, or that CION will be able to collect on the loan should CION be forced to enforce its remedies.

Fund FAQs

CION was formed as an externally managed, non-diversified closed end management investment company that intends to focus primarily on investments in senior secured loans, and to a lesser extent, second lien loans and mezzanine loans of private and thinly-traded U.S. middle market companies. As such, we refer to CION as a middle market loan fund that is structured as a BDC and intends to be taxed as a RIC.
A Business Development Company (“BDC”) is a type of closed-end fund that elects to be treated as a business development company under the Investment Company Act of 1940. As such, BDCs are subject to certain provisions of the 1940 Act, as well as the Securities Act of 1933, or the Securities Act, and the Securities Act of 1934, or the Exchange Act. BDCs make investments in private or thinly-traded public companies in the form of debt or equity capital, with the goal of generating current income and/or capital growth. BDCs can be internally or externally managed and qualify to elect to be treated as RICs for federal tax purposes.

BDCs are investment vehicles that allow everyday investors the opportunity to invest primarily in the debt or equity capital of middle market companies*. This investment strategy has predominantly only been available to institutional and high net work individuals through private, non-traded vehicles. BDCs, such as CION Investment Corporation, afford qualified investors the opportunity to invest in this segment of the economy with the benefit of increased transparency and governance of a public investment.

Financial planners generally recommend that investors hold a diversified investment portfolio, including traditional investments, such as stocks, bonds and mutual funds, and alternative investments, such as non-traded BDCs. An investment in a non-traded BDC may be regarded as an alternative investment and the appropriate proportion of an investor's wealth portfolio that should be allocated to alternative investments will vary from investor to investor based on individual investment objectives, liquidity needs and risk tolerance.

*The definition of middle market companies varies from sponsor to sponsor. CION defines the middle market as companies with annual EBITDA of $50 million or less.
CION intends to target U.S. middle market companies (EBITDA of $50 million or less) with experienced management teams, significant free cash flow, strong competitive positions and potential for capital growth. CION also intends to focus primarily on investments in senior secured loans, which are typically situated at the top of the capital structure and carry the least risk among all investments in a company*.

*Although senior secured loans may carry the least amount of risk amongst the capital structure, they should not be misconstrued as carrying no risk at all. For example, the fact that a loan is secured does not guarantee that CION will receive the principal and interest payments according to the loan's terms, or at all, or that CION will be able to collect on the loan should CION be forced to enforce its remedies.
An investment in our common stock involves a high degree of risk and may be considered speculative. You should carefully consider the information found in the “Risk Factors” section of our prospectus before deciding to invest in shares of our common stock. The following are some of the risks an investment in us involves:
  • Our investments in prospective portfolio companies are risky, and we could lose all or part of our investment.
  • We are a non-diversified investment company within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"), and therefore we are not limited with respect to the proportion of our investment that may be invested in securities of a single issuer.
  • We are a relatively new company and have a limited operating history.
  • As a company with relatively few investments, our continuous public offering may be deemed to be a “blind pool” offering.  An investor may not have the opportunity to evaluate historical data or assess investments prior to purchasing our shares.
  • As required by the 1940 Act, a significant portion of our investment portfolio is recorded at fair value as determined in good faith by our board of directors and, as a result, there is uncertainty as to the value of our portfolio investments.
  • Unless we experience substantial net capital appreciation and realized gains, the purchase price in our periodic repurchase offers will be at a price lower than the price paid for your shares.
  • The amount of distributions that we pay is uncertain. We may pay distributions from offering proceeds, borrowings or the sale of assets to the extent our cash flow from operations, net investment income or earnings are not sufficient to fund declared distributions.  We have not established any limit on the amount of funds we may use from net offering proceeds or borrowings to make distributions.  Our distributions may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from this offering. Therefore, portions of the distributions that we pay may represent a return of capital to you for tax purposes that will lower your tax basis in your common stock and reduce the amount of funds we have for investments in targeted assets. In addition, a substantial portion of our distributions have resulted, and future distributions may result, from expense reimbursements from IIG, which are subject to repayment by us.
  • Before managing us, CĪON Investment Management, LLC ("CIM"), our investment adviser, had not managed a Business Development Company ("BDC") or a Regulated  Investment Company ("RIC"). Therefore, CIM may not be able to successfully operate our business or achieve our investment objective.
  • CIM and Apollo Investment Management, L.P., our investment sub-adviser (“AIM”, and together with its subsidiaries, “Apollo”), and their respective affiliates, including our officers and some of our directors, will face conflicts of interest caused by compensation arrangements with us and our affiliates that could result in actions that are not in your best interests.
  • We may be obligated to pay CIM incentive compensation even if we incur a net loss due to a decline in the value of our portfolio.
  • There may be conflicts of interest related to obligations that CIM’s and Apollo’s respective senior management and investment teams have to other clients.
  • Our base management and incentive fees may induce CIM to make, and AIM to recommend, speculative investments or incur leverage.
  • The compensation we pay to CIM was determined without independent assessment on our behalf, and these terms may be less advantageous to us than if they had been the subject of arm’s-length negotiations.
  • This is a “best efforts” offering and, if we are unable to raise substantial funds, then we will be more limited in the number and type of investments we may make and the value of your investment in us may be reduced in the event our assets underperform.
  • Because there is no public trading market for shares of our common stock and we are not obligated to effectuate a liquidity event by a specified date, it will be difficult for you to sell your shares.
  • Beginning in the first quarter of 2014, we began offering to repurchase your shares of our common stock on a quarterly basis.  As a result, you will have limited opportunities to sell your shares of our common stock and, to the extent you are able to sell your shares of our common stock under the program, you may not be able to recover the amount of your investment in our common stock.
  • We will be exposed to risks associated with changes in interest rates. In addition, changes in interest rates may affect our cost of capital and net investment income.
  • We expect to borrow money to make investments.  As a result, the potential for loss on amounts invested in us will be magnified and may increase the risk of investing in us.  Borrowed money may also adversely affect the return on our assets, reduce cash available for distribution to our shareholders, and result in losses.
  • The amended total return swap, or the TRS, entered into by our wholly-owned financing subsidiary exposes us to certain risks, including market risk, liquidity risk and other risks similar to those associated with the use of leverage.
  • We will be subject to corporate-level income tax if we are unable to qualify as a RIC under Subchapter M of the Internal Revenue Code or to satisfy RIC distribution requirements.
  • We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.
  • The net asset value of our common stock may fluctuate significantly.
See “Risk Factors” and the other information included in the prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.
An investor must have either (i) a net worth (not including home, home furnishings, and personal automobiles) of at least $70,000 and an annual gross income of at least $70,000, or (ii) a net worth (not including home, home furnishings, and personal automobiles) of at least $250,000. Some states may impose different suitability standards. Please consult the prospectus, as amended and supplemented, for details.

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