About CION Management
CION Investment Management II, LLC is a Delaware limited liability company and was formed on June 4, 2018
and was previously named CION Management, LLC.
As of the date of this Brochure, CION Management had not begun managing client assets. As a result, as of
the date of this Brochure, CION Management had no regulatory assets under management. Regulatory assets
under management will be calculated and presented in this Brochure according to the requirements of the
Advisers Act and may differ from the calculation and presentation of assets for purposes of other regulatory
filings made by CION Management or the Fund. CION Management’s principal owners are Michael A. Reisner
and Mark Gatto, who are also Co-Chief Executive Officers of the firm.
About the Fund
CION Management’s primary business objective is to provide asset management and other services to the
Fund. The Fund is a limited partnership organized under the Revised Uniform Limited Partnership Act of
the State of Delaware on June 5, 2018. The Fund is a privately-offered pooled alternative investment fund
investing primarily in first lien senior secured loans, including unitranche loans, second lien senior secured
loans and mezzanine debt, which in some cases includes an equity component, and, to a lesser extent,
collateralized securities, structured products and other similar securities, of U.S. and European middle-
market companies.
CION Management also may serve as manager to, or provide related services for, other private investment
funds, business development companies, closed-end or open-end registered investment companies,
collective investment vehicles and/or separate accounts (together with the Fund, the “Funds”) in the future.
Strategic Relationships of CION Management and the Fund
CION Management or its affiliates expect to receive certain fees and/or distributions of operating cash flow
in connection with strategic relationships, including those described below. The fees and/or distributions of
operating cash flow received as a result of the strategic relationships are in addition to the advisory fees paid
directly to CION Management from the Fund.
A Note on the Fund
Investors and other recipients of this Brochure should be aware that while this Brochure includes information
about the Fund, as necessary or appropriate, the Brochure should not be considered to represent a complete
discussion of the features, risks or conflicts associated with the Fund. More complete information about the
Fund is included in the Fund’s Governing Documents, which may be provided to current and eligible
prospective investors only by CION Management or another authorized party. In no event should this
Brochure be considered to be an offer of interests in the Fund or relied upon in any determination to invest
in the Fund. It is also not an offer of, or agreement to provide, advisory services directly to any recipient of
the Brochure. Rather, this Brochure is designed to provide information about CION Management for the
purpose of compliance with CION Management’s obligations under the Advisers Act. Accordingly, the
Brochure responds to relevant regulatory requirements under the Advisers Act, which may differ from the
information provided in the Fund’s Governing Documents. To the extent that there is any conflict between
discussions herein and similar or related discussions in any Governing Document, the relevant Governing
Document shall govern.
CION Management’s Advisory Services
Subject to limited exceptions, CION Management manages the day-to-day investment affairs of the Fund,
including identifying, originating, acquiring and managing investments on its behalf, and earns asset
management and other fees for these services, which can vary based on the amount of assets under
management, investment activities and investment performance. The services CION Management provides
to the Fund also include monitoring and reporting to the Fund on the performance of its investments and
determining when and on what terms to finance, refinance or sell investments and executing such
transactions.
As a general matter, the Fund is managed in accordance with the investment objectives, strategies and
guidelines set forth in its Governing Documents and is not tailored to the individual needs of any
particular investor.
The current focus of CION Management’s investment advisory business is on first lien senior secured loans,
including unitranche loans, second lien senior secured loans and mezzanine debt, which in some cases
includes an equity component, and, to a lesser extent, collateralized securities, structured products and
other similar securities, of U.S. and European middle-market companies, but in the future may expand to
other platforms. These investments are typically made to companies with annual EBITDA between $10
million and $1 billion, with experienced management teams, significant free cash flow, strong competitive
positions and potential for growth. As used herein, EBITDA represents net income before net interest
expense, income tax expense, depreciation and amortization.
CION Management believes that the market for lending to U.S. and European middle-market companies
presents a compelling investment opportunity. CION Management’s management team has witnessed
significant demand for debt capital among middle-market companies that have the characteristics it targets.
CION Management believes that this demand, coupled with the fragmented availability of funding within the
Fund’s target markets, will enable it to achieve favorable transaction pricing.
CION Management seeks favorable risk-adjusted returns by creating and managing a portfolio with
balanced exposures to multiple industry sectors and geographic regions, systematically allocating capital
across multiple segments of the global fixed-income markets, including U.S. and non-U.S. credit
instruments.
CION Management seeks to tailor its investment focus as market conditions evolve. Depending on market
conditions and other factors, CION Management exercises discretion in increasing or decreasing its clients’
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. CION Management relies on its
investment professionals’ experience to structure investments, potentially using all levels of the capital
structure, which it believes will perform in a broad range of economic environments.
CION Management’s investment strategy generally focuses on debt and equity instruments with the
following characteristics, although not all investments meet all of the below criteria and CION
Management takes additional factors into consideration:
First
Lien Senior Secured Loans. First lien senior secured loans are situated at the top of the capital
structure. Because these loans have priority in payment, they carry the least risk among all
investments in a company. Generally, the first lien senior 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. CION Management expects that the first lien senior 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 the Secured Overnight Financing Rate (SOFR). In some cases, a
portion of the total interest may accrue or be paid in kind.
Unitranche Loans. Unitranche loans provide all of the debt needed to finance a leveraged buyout or
other corporate transaction, both senior and subordinated, but generally in a first lien position, while
the borrower generally pays a blended, uniform interest rate rather than different rates for different
tranches. Unitranche loans generally require payments of both principal and interest throughout the
life of the loan. Unitranche loans generally have contractual maturities of five to six years and interest
is generally paid quarterly. Generally, CION Management expects these securities to carry a blended
yield that is between first lien secured and subordinated debt interest rates. Unitranche loans provide
a number of advantages for borrowers, including the following: simplified documentation, greater
certainty of execution and reduced decision-making complexity throughout the life of the loan. In
addition, the Fund may receive additional returns from any warrants it may receive in connection
with these investments. In some cases, a portion of the total interest may accrue or be paid in kind.
Second Lien Senior Secured Loans. Second lien senior secured loans are immediately junior to first
lien senior secured loans and have substantially the same maturities, collateral and covenant
structures as first lien senior secured loans. Second lien senior secured loans, however, are granted
a second priority security interest in the assets of the borrower. In return for this junior ranking,
second lien senior secured loans generally offer higher returns compared to first lien senior secured
debt. 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, CION Management expects these loans to carry a fixed rate of 8.0% to 13.0% or a floating
current yield of 7.0% to 12.0% over the prime rate or SOFR. In addition, the Fund may receive
additional returns from any warrants it may receive in connection with these investments. In some
cases, a portion of the total interest may accrue or be paid in kind.
Unsecured Debt. In addition to first lien senior secured loans and second lien senior secured loans,
CION Management also may invest in unsecured debt, including corporate bonds and subordinated
debt. Unsecured debt investments usually rank junior in priority of payment to first lien senior
secured loans and second lien senior secured loans, but are situated above preferred equity and
common stock in the capital structure. In return for their junior status compared to first lien senior
secured loans and second lien senior secured loans, unsecured debt investments typically offer
higher returns through both higher interest rates and possible equity ownership in the form of
warrants, enabling the lender to participate in the capital appreciation of the borrower. These
warrants typically require only a nominal cost to exercise. CION Management intends to generally
target unsecured debt with interest-only payments throughout the life of the security, with the
principal due at maturity. Typically, unsecured debt investments have maturities of five to ten years.
Generally, CION Management expects these securities to carry a fixed rate of 10% to 15%. In addition,
the Fund may receive additional returns from any warrants it may receive in connection with these
investments. In some cases, a portion of the total interest may accrue or be paid in kind.
Collateralized Securities, Structured Products and Other Similar Securities. The Fund may also invest
in collateralized securities, structured products and other similar securities, which may include CDOs,
CBOs, CLOs, structured notes and credit-linked notes. These investments may be structured as trusts
or other types of pooled investment vehicles. They may also involve the deposit with or purchase by
an entity of the underlying investments and the issuance by that entity of one or more classes of
securities backed by, or representing interests in, the underlying investments or referencing an
indicator related to such investments. CDOs, CBOs and CLOs are types of asset-backed securities
issued by special purpose vehicles created to reapportion the risk and return characteristics of a pool
of assets. The underlying pool for a CLO, for example, may include domestic and foreign senior loans,
senior unsecured loans and subordinate corporate loans.
Equity and Equity-Related Securities. While CION Management intends to maintain its focus on
investments in debt securities, from time to time, when CION Management sees the potential for
significant gains, or in connection with securing particularly favorable terms in a debt investment, it
may make non-control investments in preferred or common equity, typically in conjunction with a
private equity sponsor CION Management believes to be of high quality. Alternatively, the Fund may
hold equity-related securities consisting primarily of warrants or other equity interests generally
obtained in connection with its unsecured debt investments. In the future, the Fund may achieve
liquidity through a merger or acquisition of a portfolio company, a public offering of a portfolio
company’s stock or by exercising its right, if any, to require a portfolio company to repurchase the
equity-related securities it holds. With respect to any preferred or common equity investments, CION
Management expects to target an annual investment return of at least 20%.
See also Item 8, “Methods of Analysis, Investment Strategies and Risk of Loss” for further discussion of
risks associated with these investments.
Assets Under Management:
Except as provided herein, CION Management will manage each client account on a discretionary basis. As of
the date of this Brochure, CION Management had not begun managing client assets. As a result, as of the
date of this Brochure, CION Management managed $0 on a discretionary basis and $0 on a non-
discretionary basis.