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New words:
Area, Article, Avetta, Carrier, CLEAResult, Discover, effectuated, EURIBOR, Fire, Hospitality, Index, Lennar, Netsmart, SCA, Trinseo, USIC, validly, Wide
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commence
Financial report summary
?Risks
- We are a relatively new company and have a limited operating history.
- Our Board of Trustees may change our operating policies and strategies without prior notice or shareholder approval, the effects of which may be adverse to our results of operations and financial condition.
- Our Board of Trustees may amend our Declaration of Trust without prior shareholder approval.
- Price declines in the medium- and large-sized U.S. corporate debt market may adversely affect the fair value of our portfolio, reducing our NAV through increased net unrealized depreciation.
- Our ability to achieve our investment objectives depends on the Adviser’s ability to manage and support our investment process and if the Advisory Agreement were to be terminated, or if the Adviser loses any members of its senior management team, our ability to achieve our investment objectives could be significantly harmed.
- Any failure by the Adviser to manage and support our investment process may hinder the achievement of our investment objectives.
- Because our business model depends to a significant extent upon relationships with private equity sponsors, investment banks and commercial banks, the inability of the Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
- We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.
- As required by the 1940 Act, a significant portion of our investment portfolio is and will be recorded at fair value as determined in good faith and, as a result, there is and will be uncertainty as to the value of our portfolio investments.
- There is a risk that investors in our shares may not receive distributions or that our distributions may decrease over time.
- The amount of any distributions we may make is uncertain. Our distributions may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from our continuous offering of Common Shares. Therefore,
- portions of the distributions that we make may represent a return of capital to you that will reduce your tax basis in your shares and reduce the amount of funds we have for investment in targeted assets.
- We have not established any limit on the amount of funds we may use from available sources, such as borrowings, if any, or proceeds from the Private Offering, to fund distributions (which may reduce the amount of capital we ultimately invest in assets).
- Although we expect to adopt a share repurchase program, we have discretion to not repurchase your shares or to suspend the program.
- The timing of our repurchase offers pursuant to our share repurchase program may be at a time that is disadvantageous to our shareholders.
- The price at which we may repurchase Common Shares pursuant to our share repurchase program will be determined in accordance with the Adviser’s valuation policy and, as a result, there may be uncertainty as to the value of our Common Shares.
- Economic events that may cause our shareholders to request that we repurchase their Common Shares may materially adversely affect our cash flow and our results of operations and financial condition.
- Investors may fail to pay their undrawn Capital Commitment.
- It may be difficult to bring suit or foreclosure in non-U.S. countries.
- Any unrealized losses we experience on our portfolio may be an indication of future realized losses, which could reduce our income available for distribution.
- We may not be able to obtain all required state licenses.
- ESG and Sustainability Risks
- Certain ERISA-Related Risks
- Our investments in prospective portfolio companies may be risky, and we could lose all or part of our investment.
- Asset-backed securities and structured products present additional risks.
- International investments create additional risks.
- We are subject to certain risks related to the Warehousing Transaction.
- Our investments in private investment funds, including hedge funds, private equity funds, limited liability companies and other business entities, subject us indirectly to the underlying risks of such private investment funds and additional fees and expenses.
- Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
- There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.
- We generally will not control our portfolio companies.
- Declines in market values or fair market values of our investments could result in significant net unrealized depreciation of our portfolio, which in turn would reduce our net asset value.
- We are exposed to risks associated with changes in interest rates.
- Any second priority liens on collateral securing debt investments that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.
- Economic recessions or downturns or restrictions on trade could impair our portfolio companies and adversely affect our operating results.
- Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies.
- Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies.
- A covenant breach or other default by our portfolio companies may adversely affect our operating results.
- Our portfolio companies may be highly leveraged.
- Investing in large private U.S. borrowers may limit the Company’s ability to achieve high growth rates during times of economic expansion.
- Investing in middle-market companies involves a number of significant risks, any one of which could have a material adverse effect on our operating results.
- We may not realize gains from our equity investments.
- An investment strategy focused primarily on privately held companies presents certain challenges, including, but not limited to, the lack of available information about these companies.
- Any investments in securities or assets of publicly traded companies are subject to the risks inherent in investing in public securities.
- A lack of liquidity in certain of our investments may adversely affect our business.
- We may not have the funds or ability to make additional investments in our portfolio companies.
- Our investments may include original issue discount and payment-in-kind instruments.
- We may use a wide range of investment techniques that could expose us to a diverse range of risks.
- We may from time to time enter into total return swaps, credit default swaps or other derivative transactions which expose us to certain risks, including credit risk, market risk, liquidity risk and other risks similar to those associated with the use of leverage.
- We may enter into repurchase agreements or reverse repurchase agreements.
- We may enter into securities lending agreements.
- We may acquire various financial instruments for purposes of “hedging” or reducing our risks, which may be costly and ineffective and could reduce our cash available for distribution to our shareholders.
- Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.
- Technological innovations and industry disruptions may negatively impact us.
- We may invest through joint ventures, partnerships or other special purpose vehicles and our investments through these vehicles may entail greater risks, and investments in which we have a non-controlling interest may involve risks specific to third-party management of those investments.
- Syndication of Co-Investments.
- The Adviser and its affiliates, including our officers and some of our Trustees, face conflicts of interest as a result of compensation arrangements with us and the Adviser, which could result in actions that are not in the best interests of our shareholders.
- We may be obligated to pay the Adviser incentive compensation on income that we have not received.
- We may be obligated to pay the Adviser 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 the Adviser’s senior management and investment teams have to our affiliates and to other clients.
- The time and resources that individuals employed by the Adviser devote to us may be diverted and we may face additional competition due to the fact that individuals employed by the Adviser are not prohibited from raising money for or managing other entities that make the same types of investments that we target.
- Our shares may be purchased by the Adviser or its affiliates.
- The Adviser relies on key personnel, the loss of any of whom could impair its ability to successfully manage us.
- The compensation we pay to the Adviser is determined without independent assessment on our behalf, and these terms may be less advantageous to us than if such terms had been the subject of arm’s-length negotiations.
- The Placement Agents’ influence on the Private Offering gives them the ability to increase the fees payable to the Adviser.
- The Adviser’s liability is limited under each of the Advisory Agreement and the Administration Agreement, and we are required to indemnify it against certain liabilities, which may lead it to act in a riskier manner on our behalf than it would when acting for its own account.
- Failure to maintain our status as a BDC would reduce our operating flexibility.
- We are uncertain of our future sources for funding our future capital needs and if we cannot obtain debt or equity financing on acceptable terms, or at all, our ability to acquire investments and to expand our operations will be adversely affected.
- The requirement that we invest a sufficient portion of our assets in qualifying assets could preclude us from investing in accordance with our current business strategy; conversely, the failure to invest a sufficient portion of our assets in qualifying assets could result in our failure to maintain our status as a BDC.
- Regulations governing our operation as a BDC and a RIC affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.
- Our ability to enter into transactions with our affiliates is restricted.
- We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.
- When we use leverage, the potential for loss on amounts invested in us will be magnified and may increase the risk of investing in us. Leverage may also adversely affect the return on our assets, reduce cash available for distribution to our shareholders and result in losses.
- We may default under our credit facilities.
- Provisions in a credit facility may limit our investment discretion.
- We may invest in derivatives or other assets that expose us to certain risks, including market risk, liquidity risk and other risks similar to those associated with the use of leverage.
- Changes in interest rates may affect our cost of capital and net investment income.
- We may form one or more CLOs, which may subject us to certain structured financing risks.
- We will be subject to corporate-level income tax if we are unable to qualify as a RIC under Subchapter M of the 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.
- Some of our investments may be subject to corporate-level income tax.
- Our portfolio investments may present special tax issues.
- If we are not treated as a “publicly offered regulated investment company,” as defined in the Code, U.S. shareholders that are individuals, trusts or estates will be taxed as though they received a distribution of some of our expenses.
- Legislative or regulatory tax changes could adversely affect investors.
- If we are unable to raise substantial funds, then we will be more limited in the number and type of investments we may make, our expenses may be higher relative to our total assets, and the value of your investment in us may be reduced in the event our assets under-perform.
- We face risks associated with the deployment of our capital.
- We may have difficulty sourcing investment opportunities.
- We may have difficulty paying distributions and the tax character of any distributions is uncertain.
- An investment in our Common Shares or our Series A Preferred Shares has and will have limited liquidity.
- There are restrictions on the ability of holders of our Common Shares and Preferred Shares to transfer shares, including restrictions typically associated with a private offering of securities under Regulation D and other exemptions from registration under the Securities Act, and these restrictions could limit the liquidity of an investment our Common Shares and in our Series A Preferred Shares and the price at which holders may be able to sell the shares.
- Certain investors are and will be subject to Exchange Act filing requirements.
- Shareholders may experience dilution.
- Investing in our shares involves a high degree of risk.
- The NAV of our shares may fluctuate significantly.
- Our Preferred Shares, including our Series A Preferred Shares and any additional series of Preferred Shares we may determine to issue in the future, could adversely affect the value of the Common Shares.
- An investment in Preferred Shares with a fixed interest rate, such as the Series A Preferred Shares bears interest rate risk.
- Our Series A Preferred Shares are subject to a risk of early redemption, and holders may not be able to reinvest their funds.
- Our Preferred Shares are subordinate to the rights of holders of senior indebtedness.
- Holders of our Series A Preferred Shares bear dividend risk.
- If we fail to pay dividends on our Series A Preferred Shares for two years, the holders of our Series A Preferred Shares will be entitled to elect a majority of our directors.
- Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.
- Global economic, political and market conditions, including potential downgrades of the U.S. credit rating, may adversely affect our business, results of operations and financial condition.
- The ongoing invasion of Ukraine by Russia may have a material adverse impact on us and our portfolio companies.
- We and our portfolio companies may maintain cash balances at financial institutions that exceed federally insured limits and may otherwise be materially affected by adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties.
- We may experience fluctuations in our quarterly results.
- We and the Adviser could be the target of litigation.
- Our business and operations could be negatively affected if we become subject to shareholder activism, which could cause us to incur significant expense, hinder the execution of our investment strategy or impact our share value.
- If we, our affiliates and our and their respective third-party service providers are unable to maintain the availability of electronic data systems and safeguard the security of data, our ability to conduct business may be compromised, which could impair our liquidity, disrupt our business, damage our reputation or otherwise adversely affect our business.
- As an SEC-reporting company, we are subject to regulations not applicable to private companies, such as provisions of the Sarbanes-Oxley Act. Efforts to comply with such regulations involve significant expenditures, and non-compliance with such regulations may adversely affect us.
- We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our shares less attractive to investors.
- Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of operations.
Management Discussion
- (1)Such revenues represent $20,964 and $4,399 of cash income earned as well as $1,443 and $75 in non-cash portions relating to accretion of discount and PIK interest for the three months ended September 30, 2024 and 2023, respectively. Such revenues represent $46,793 and $5,337 of cash income earned as well as $2,294 and $90 in non-cash portions relating to accretion of discount and PIK interest for the nine months ended September 30, 2024 and 2023, respectively. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.
- The level of interest income we receive is generally related to the balance of income-producing investments, multiplied by the weighted average yield of our investments. We expect the dollar amount of interest and any dividend income that we earn to increase as the size of our investments portfolio increases.
- The increase in interest income, fee income and dividend income for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 is primarily due to the increase in the size of our investment portfolio.