UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172020
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 814-01175
BAIN CAPITAL SPECIALTY FINANCE, INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)charter)
Delaware | 81-2878769 | |
(State or | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
200 Clarendon Street, |
| |
| 02116 |
(617) 516-2000
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.001 per share | BCSF | New York Stock Exchange |
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o¨ No o¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | |
Non-accelerated filer | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o¨ No x
As of November 13, 2017,5, 2020, the registrant had 24,931,841.8664,562,265.27 shares of common stock, $0.001 par value, outstanding.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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FORWARD-LOOKING STATEMENTS
Statements contained in this Quarterly Report on Form 10-Q (the “Quarterly Report”) (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Company, BCSF Advisors, LP (the “Advisor”) and/or Bain Capital Credit, LP and its affiliated advisers (collectively, “Bain Capital Credit”). Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Quarterly Report constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors we identify in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 20162019 and in our filings with the Securities and Exchange Commission (the “SEC”).
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions may be based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2019. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Quarterly Report because we are an investment company.
3
Item 1. Consolidated Financial Statements
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Assets and Liabilities
See Notes to Consolidated Financial Statements
4
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Income |
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Investment income from non-controlled/non-affiliate investments: |
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Interest from investments |
| $ | 7,793,040 |
| $ | — |
| $ | 14,467,794 |
| $ | — |
| $ | 43,558 | $ | 50,710 | $ | 135,576 | $ | 126,037 | ||||||||
Dividend income | 34 | 46 | 748 | 62 | |||||||||||||||||||||||||
Other income |
| — |
| — |
| 88,988 |
| — |
| 607 | 236 | 1,106 | 627 | ||||||||||||||||
Total investment income from non-controlled/non-affiliate investments |
| 7,793,040 |
| — |
| 14,556,782 |
| — |
| 44,199 | 50,992 | 137,430 | 126,726 | ||||||||||||||||
Investment income from non-controlled, affiliate investments: | |||||||||||||||||||||||||||||
Investment income from non-controlled/affiliate investments: | |||||||||||||||||||||||||||||
Interest from investments | 56 | - | 56 | - | |||||||||||||||||||||||||
Total investment income from non-controlled/affiliate investments | 56 | - | 56 | - | |||||||||||||||||||||||||
Investment income from controlled affiliate investments: |
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Interest from investments |
| 24,060 |
| — |
| 31,906 |
| — |
| 715 | 781 | 2,225 | 1,023 | ||||||||||||||||
Total investment income from controlled affiliate investments: |
| 24,060 |
| — |
| 31,906 |
| — |
| ||||||||||||||||||||
Dividend income | 1,847 | 915 | 6,473 | 15,425 | |||||||||||||||||||||||||
Other income | - | - | - | 4 | |||||||||||||||||||||||||
Total investment income from controlled affiliate investments | 2,562 | 1,696 | 8,698 | 16,452 | |||||||||||||||||||||||||
Total investment income |
| 7,817,100 |
| — |
| 14,588,688 |
| — |
| 46,817 | 52,688 | 146,184 | 143,178 | ||||||||||||||||
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Expenses |
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Interest and debt financing expenses |
| $ | 223,945 |
| $ | — |
| $ | 621,853 |
| $ | — |
| 14,426 | 19,427 | 49,614 | 46,592 | ||||||||||||
Amortization of deferred offering costs |
| 106,152 |
| — |
| 314,995 |
| — |
| ||||||||||||||||||||
Base management fee |
| 856,260 |
| — |
| 1,704,975 |
| — |
| 8,885 | 8,910 | 26,250 | 23,644 | ||||||||||||||||
Incentive fee |
| 240,003 |
| — |
| 449,824 |
| — |
| - | 4,330 | - | 12,905 | ||||||||||||||||
Organizational costs |
| — |
| 725,768 |
| — |
| 725,768 |
| ||||||||||||||||||||
Professional fees |
| 506,756 |
| 63,878 |
| 1,406,462 |
| 63,878 |
| 296 | 789 | 1,909 | 1,615 | ||||||||||||||||
Directors fees |
| 68,250 |
| 68,753 |
| 204,312 |
| 68,753 |
| 209 | 159 | 555 | 370 | ||||||||||||||||
Other general and administrative expenses |
| 213,822 |
| — |
| 500,313 |
| — |
| 1,545 | 1,243 | 3,878 | 3,672 | ||||||||||||||||
Total expenses |
| 2,215,188 |
| 858,399 |
| 5,202,734 |
| 858,399 |
| ||||||||||||||||||||
Net investment income (loss) |
| 5,601,912 |
| (858,399 | ) | 9,385,954 |
| (858,399 | ) | ||||||||||||||||||||
Total expenses before fee waivers | 25,361 | 34,858 | 82,206 | 88,798 | |||||||||||||||||||||||||
Base management fee waiver | - | (2,582 | ) | - | (6,450 | ) | |||||||||||||||||||||||
Incentive fee waiver | - | (763 | ) | - | (2,745 | ) | |||||||||||||||||||||||
Total expenses, net of fee waivers | 25,361 | 31,513 | 82,206 | 79,603 | |||||||||||||||||||||||||
Net investment income | 21,456 | 21,175 | 63,978 | 63,575 | |||||||||||||||||||||||||
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Net realized and unrealized gains (losses) |
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Net realized gain on non-controlled/non-affiliate investments |
| 48,735 |
| — |
| 81,336 |
| — |
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Net realized loss on foreign currency transactions |
| (583,149 | ) | — |
| (2,104 | ) | — |
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Net realized loss on forward currency exchange contracts |
| — |
| — |
| (220,006 | ) | — |
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Net realized gain (loss) on non-controlled/non-affiliate investments | (24,263 | ) | 27 | (34,667 | ) | (1,394 | ) | ||||||||||||||||||||||
Net realized gain on controlled affiliate investments | - | - | - | 265 | |||||||||||||||||||||||||
Net realized gain (loss) on foreign currency transactions | (19 | ) | 122 | (368 | ) | (190 | ) | ||||||||||||||||||||||
Net realized gain (loss) on forward currency exchange contracts | (130 | ) | 346 | 6,472 | 11,042 | ||||||||||||||||||||||||
Net change in unrealized appreciation on foreign currency translation |
| 448,252 |
| — |
| 9,170 |
| — |
| 194 | 162 | 89 | 461 | ||||||||||||||||
Net change in unrealized depreciation on forward currency exchange contracts |
| (1,234,706 | ) | — |
| (2,643,944 | ) | — |
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Net change in unrealized appreciation on non-controlled/non-affiliate investments |
| 2,920,895 |
| — |
| 5,774,373 |
| — |
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Total net realized and unrealized gains |
| 1,600,027 |
| — |
| 2,998,825 |
| — |
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Net change in unrealized appreciation (depreciation) on forward currency exchange contracts | (11,177 | ) | 9,135 | (7,921 | ) | (14 | ) | ||||||||||||||||||||||
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments | 73,892 | (12,373 | ) | (45,077 | ) | 2,269 | |||||||||||||||||||||||
Net change in unrealized appreciation on non-controlled/affiliate investments | 1,689 | - | 4,697 | - | |||||||||||||||||||||||||
Net change in unrealized appreciation (depreciation) on controlled affiliate investments | (10,185 | ) | (395 | ) | (18,421 | ) | 720 | ||||||||||||||||||||||
Total net gains (losses) | 30,001 | (2,976 | ) | (95,196 | ) | 13,159 | |||||||||||||||||||||||
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Net increase (decrease) in net assets resulting from operations |
| $ | 7,201,939 |
| $ | (858,399 | ) | $ | 12,384,779 |
| $ | (858,399 | ) | $ | 51,457 | $ | 18,199 | $ | (31,218 | ) | $ | 76,734 | |||||||
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Per Common Share Data |
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Basic and diluted net investment income per common share |
| $ | 0.22 |
| $ | (858.40 | ) | $ | 0.53 |
| $ | (858.40 | ) | $ | 0.33 | $ | 0.41 | $ | 1.13 | $ | 1.23 | ||||||||
Basic and diluted increase in net assets resulting from operations per common share |
| $ | 0.29 |
| $ | (858.40 | ) | $ | 0.70 |
| $ | (858.40 | ) | ||||||||||||||||
Basic and diluted increase (decrease) in net assets resulting from operations per common share | $ | 0.80 | $ | 0.35 | $ | (0.55 | ) | $ | 1.49 | ||||||||||||||||||||
Basic and diluted weighted average common shares outstanding |
| 24,921,589 |
| 1,000 |
| 17,725,983 |
| 1,000 |
| 64,562,265 | 51,649,812 | 56,692,267 | 51,587,779 |
See Notes to Consolidated Financial Statements
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Changes in Net Assets
(Unaudited)
|
| For the Nine Months Ended September 30, | |||||
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| 2017 |
| 2016 | |||
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Operations: |
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Net investment income (loss) |
| $ | 9,385,954 |
| $ | (858,399 | ) |
Net realized loss |
| (140,774 | ) | — |
| ||
Net change in unrealized appreciation |
| 3,139,599 |
| — |
| ||
Net increase (decrease) in net assets resulting from operations |
| 12,384,779 |
| (858,399 | ) | ||
Stockholder distributions: |
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Distributions from net investment income |
| (9,149,711 | ) | — |
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Net decrease in net assets resulting from stockholder distributions |
| (9,149,711 | ) | — |
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Capital share transactions: |
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Issuance of common stock |
| 392,735,221 |
| — |
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Reinvestment of stockholder distributions |
| 581,699 |
| — |
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Net increase in net assets resulting from capital share transactions |
| 393,316,920 |
| — |
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Total increase (decrease) in net assets |
| 396,551,988 |
| (858,399 | ) | ||
Net assets at beginning of period |
| 110,344,258 |
| — |
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Net assets at end of period |
| $ | 506,896,246 |
| $ | (858,399 | ) |
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Net asset value per common share |
| $ | 20.33 |
| $ | (858.40 | ) |
Common stock outstanding at end of period |
| 24,931,842 |
| 1,000 |
|
See Notes to Consolidated Financial Statements
As of September 30, | ||||||||
2020 | 2019 | |||||||
Cash | $ | 43,020 | $ | 70,637 | ||||
Restricted cash | 78,895 | 86,402 | ||||||
Foreign cash | 2,009 | 992 | ||||||
Total cash, foreign cash, restricted cash, and cash equivalents shown in the consolidated statements of cash flows | $ | 123,924 | $ | 158,031 |
See Notes to Consolidated Financial Statements
Bain Capital Specialty Finance, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
| For the Nine Months Ended September 30, | |||||
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| 2017 |
| 2016 | |||
Cash flows from operating activities |
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Net increase (decrease) in net assets resulting from operations |
| $ | 12,384,779 |
| $ | (858,399 | ) |
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used in operating activities: |
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Purchases of investments |
| (390,313,756 | ) | — |
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Proceeds from principal payments and sales of investments |
| 26,029,281 |
| — |
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Net realized gain from investments |
| (81,336 | ) | — |
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Net realized loss on foreign currency transactions |
| 2,104 |
| — |
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Net change in unrealized depreciation on forward currency exchange contracts |
| 2,643,944 |
| — |
| ||
Net change in unrealized appreciation on investments |
| (5,774,373 | ) | — |
| ||
Net change in unrealized appreciation on foreign currency translation |
| (9,170 | ) | — |
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Accretion of discounts and amortization of premiums |
| (538,677 | ) | — |
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Amortization of deferred financing costs and upfront commitment fees |
| 273,692 |
| — |
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Amortization of deferred offering costs |
| 314,995 |
| — |
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Changes in operating assets and liabilities: |
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Collateral on forward currency exchange contracts |
| (4,220,000 | ) | — |
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Interest receivable on investments |
| (1,199,757 | ) | — |
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Prepaid insurance |
| 137,797 |
| — |
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Other assets |
| 5,723 |
| — |
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Interest payable |
| 53,308 |
| — |
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Base management fee payable |
| 678,056 |
| — |
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Incentive fee payable |
| 449,824 |
| — |
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Accounts payable and accrued expenses |
| 879,964 |
| 858,399 |
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Directors fees payable |
| (133,806 | ) | — |
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Net cash used in operating activities |
| (358,417,408 | ) | — |
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Cash flows from financing activities |
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Borrowings on revolving credit facility |
| 94,899,918 |
| — |
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Repayments on revolving credit facility |
| (154,563,966 | ) | — |
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Proceeds from issuance of common stock |
| 392,735,221 |
| — |
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Stockholder distributions paid |
| (3,414,688 | ) | — |
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Net cash provided by financing activities |
| 329,656,485 |
| — |
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Net decrease in cash, foreign cash and cash equivalents |
| (28,760,923 | ) | — |
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Effect of foreign currency exchange rates |
| 570,895 |
| — |
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Cash, foreign cash and cash equivalents, beginning of period |
| 66,732,154 |
| — |
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Cash, foreign cash and cash equivalents, end of period |
| $ | 38,542,126 |
| $ | — |
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Supplemental disclosure of cash flow information: |
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Cash interest paid during the period |
| $ | 294,853 |
| $ | — |
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Supplemental disclosure of non-cash information: |
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Reinvestment of stockholder distributions |
| $ | 581,699 |
| $ | — |
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See Notes to Consolidated Financial Statements
Bain Capital Specialty Finance, Inc.
Consolidated Schedule of Investments
As of September 30, 20172020
(Unaudited)(In thousands)
(unaudited)
Portfolio Company (4) |
| Spread Above |
| Interest Rate |
| Maturity Date |
| Principal/ |
| Amortized Cost |
| Fair Value |
| |
Investments and Cash Equivalents 102.6% |
|
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Investments 95.4% |
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Non-Controlled/Non-Affiliate Investments 93.8% |
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Corporate Fixed Income 1.6% |
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Corporate Bond 1.6% |
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Utilities: Electric 1.6% |
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CSVC Acquisition Corp |
| — |
| 7.75 | % | 6/15/2025 |
| $ | 8,478,000 |
| 8,478,000 |
| 8,329,635 |
|
Total Utilities: Electric |
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|
|
| 8,478,000 |
| 8,329,635 |
|
Total Corporate Bond |
|
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|
|
| 8,478,000 |
| 8,329,635 |
|
Total Corporate Fixed Income |
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|
|
| 8,478,000 |
| 8,329,635 |
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Corporate Debt 92.2% |
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Delayed Draw Term Loan 0.2% |
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Capital Equipment 0.0% |
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|
Endries International, Inc. (2) (3) (16) (19) |
| — |
| — |
| 6/1/2023 |
| $ | — |
| (46,687 | ) | — |
|
Total Capital Equipment |
|
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|
|
|
|
|
|
|
| (46,687 | ) | — |
|
Healthcare & Pharmaceuticals 0.0% |
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|
|
Great Expressions Dental Centers PC (2) (3) (16) (19) |
| — |
| — |
| 9/28/2023 |
| $ | — |
| (4,323 | ) | (3,335 | ) |
Total Healthcare & Pharmaceuticals |
|
|
|
|
|
|
|
|
|
| (4,323 | ) | (3,335 | ) |
Hotel, Gaming & Leisure 0.0% |
|
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|
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|
|
NPC International, Inc. (2) (3) (16) (19) |
| — |
| — |
| 4/18/2025 |
| $ | — |
| (19,358 | ) | (20,002 | ) |
Total Hotel, Gaming & Leisure |
|
|
|
|
|
|
|
|
|
| (19,358 | ) | (20,002 | ) |
Media: Diversified & Production 0.2% |
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International Entertainment Investments Limited (3) (5) (6) (12) (19) |
| GBP LIBOR + 4.00 | % | 4.25 | % | 2/28/2022 |
| £ | 599,178 |
| 753,868 |
| 789,214 |
|
Total Media: Diversified & Production |
|
|
|
|
|
|
|
|
|
| 753,868 |
| 789,214 |
|
Services: Business 0.0% |
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Sovos Compliance, LLC (3) (16) (19) |
| — |
| — |
| 3/1/2022 |
| $ | — |
| — |
| — |
|
Total Services: Business |
|
|
|
|
|
|
|
|
|
| — |
| — |
|
Total Delayed Draw Term Loan |
|
|
|
|
|
|
|
|
|
| 683,500 |
| 765,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien last out term loan 3.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Industries 3.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adler & Allan Group Limited (6) (12) (18) (19) |
| GBP LIBOR + 7.50 | % | 8.00 | % | 6/30/2024 |
| £ | 15,141,463 |
| 19,051,907 |
| 19,880,801 |
|
Total Environmental Industries |
|
|
|
|
|
|
|
|
|
| 19,051,907 |
| 19,880,801 |
|
Total First lien last out term loan |
|
|
|
|
|
|
|
|
|
| 19,051,907 |
| 19,880,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien senior secured loan 73.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 4.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anaren, Inc. (16) |
| L + 4.50 | % | 5.83 | % | 2/18/2021 |
| $ | 2,527,521 |
| 2,540,100 |
| 2,543,318 |
|
Novetta, LLC (16) |
| L + 5.00 | % | 6.34 | % | 10/17/2022 |
| $ | 3,864,126 |
| 3,777,183 |
| 3,762,693 |
|
Salient CRGT, Inc. (16) (19) |
| L + 5.75 | % | 6.99 | % | 2/28/2022 |
| $ | 3,787,240 |
| 3,719,186 |
| 3,815,644 |
|
StandardAero Aviation Holdings, Inc. (16) |
| L + 3.75 | % | 4.99 | % | 7/7/2022 |
| $ | 9,949,239 |
| 10,058,122 |
| 10,033,807 |
|
Total Aerospace & Defense |
|
|
|
|
|
|
|
|
|
| 20,094,591 |
| 20,155,462 |
|
Automotive 2.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CST Buyer Company (16) (19) |
| L + 6.25 | % | 7.75 | % | 3/1/2023 |
| $ | 10,269,392 |
| 10,129,641 |
| 10,341,278 |
|
Total Automotive |
|
|
|
|
|
|
|
|
|
| 10,129,641 |
| 10,341,278 |
|
Beverage, Food & Tobacco 3.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K-Mac Holdings Corp. (16) (19) |
| L + 4.75 | % | 5.99 | % | 12/20/2022 |
| $ | 14,130,000 |
| 13,936,854 |
| 14,214,780 |
|
Restaurant Technologies, Inc. (16) |
| L + 4.75 | % | 6.06 | % | 11/23/2022 |
| $ | 5,279,919 |
| 5,233,583 |
| 5,273,319 |
|
Total Beverage, Food & Tobacco |
|
|
|
|
|
|
|
|
|
| 19,170,437 |
| 19,488,099 |
|
Capital Equipment 5.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dorner Manufacturing Corp. (16) (19) |
| L + 5.75 | % | 7.08 | % | 3/15/2023 |
| $ | 8,309,751 |
| 8,119,786 |
| 8,318,060 |
|
DXP Enterprises, Inc. (6) (16) |
| L + 5.50 | % | 6.74 | % | 8/29/2023 |
| $ | 5,243,459 |
| 5,191,828 |
| 5,227,073 |
|
Endries International, Inc. (16) (19) |
| L + 4.75 | % | 5.98 | % | 6/1/2023 |
| $ | 6,556,711 |
| 6,463,498 |
| 6,556,711 |
|
Excelitas Technologies Corp. (16) |
| L + 5.00 | % | 6.34 | % | 11/2/2020 |
| $ | 4,029,177 |
| 4,049,348 |
| 4,042,607 |
|
Wilsonart LLC (16) |
| L + 3.25 | % | 4.59 | % | 12/19/2023 |
| $ | 2,487,500 |
| 2,508,139 |
| 2,498,383 |
|
Total Capital Equipment |
|
|
|
|
|
|
|
|
|
| 26,332,599 |
| 26,642,834 |
|
Chemicals, Plastics & Rubber 1.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASP Chromaflo Intermediate Holdings, Inc. (16) |
| L + 4.00 | % | 5.24 | % | 11/20/2023 |
| $ | 511,278 |
| 509,066 |
| 514,634 |
|
ASP Chromaflo Intermediate Holdings, Inc. (6) (16) |
| L + 4.00 | % | 5.24 | % | 11/20/2023 |
| $ | 664,825 |
| 661,948 |
| 669,188 |
|
Niacet b.v. (6) (16) (19) |
| EURIBOR + 4.50 | % | 5.50 | % | 2/1/2024 |
| € | 3,874,930 |
| 4,142,004 |
| 4,585,013 |
|
Niacet Corporation (16) (19) |
| L + 4.50 | % | 5.83 | % | 2/1/2024 |
| $ | 2,228,800 |
| 2,208,712 |
| 2,234,372 |
|
Total Chemicals, Plastics & Rubber |
|
|
|
|
|
|
|
|
|
| 7,521,730 |
| 8,003,207 |
|
Construction & Building 3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bolt Infrastructure Merger Sub, Inc. (16) |
| L + 4.00 | % | 5.24 | % | 6/21/2024 |
| $ | 2,704,225 |
| 2,691,077 |
| 2,726,197 |
|
Regan Development Holdings Limited (6) (12) (18) (19) |
| EURIBOR + 7.00 | % | 7.50 | % | 5/2/2022 |
| € | 2,825,002 |
| 3,077,840 |
| 3,334,350 |
|
Regan Development Holdings Limited (6) (12) (18) (19) |
| EURIBOR + 7.00 | % | 7.50 | % | 5/2/2022 |
| € | 8,574,506 |
| 9,155,788 |
| 10,120,489 |
|
Regan Development Holdings Limited (6) (12) (18) (19) |
| EURIBOR + 7.00 | % | 7.50 | % | 5/2/2022 |
| € | 1,041,198 |
| 1,182,488 |
| 1,228,926 |
|
Total Capital Equipment |
|
|
|
|
|
|
|
|
|
| 16,107,193 |
| 17,409,962 |
|
Consumer goods: non-durable 4.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FineLine Technologies, Inc. (16) (19) |
| L + 4.75 | % | 6.08 | % | 11/2/2022 |
| $ | 14,696,036 |
| 14,411,227 |
| 14,475,596 |
|
Kronos Acquisition Holdings Inc. (16) |
| L + 4.50 | % | 5.74 | % | 8/26/2022 |
| $ | 2,783,522 |
| 2,776,725 |
| 2,809,269 |
|
Melissa & Doug, LLC (16) (19) |
| L + 4.50 | % | 5.83 | % | 6/19/2024 |
| $ | 3,840,305 |
| 3,822,477 |
| 3,890,709 |
|
Total Consumer goods: non-durable |
|
|
|
|
|
|
|
|
|
| 21,010,429 |
| 21,175,574 |
|
Containers, Packaging & Glass 4.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BWAY Holding Company |
| L + 3.25 | % | 4.48 | % | 4/3/2024 |
| $ | 9,975,000 |
| 9,945,959 |
| 10,006,172 |
|
CSP Technologies North America, LLC (16) (19) |
| L + 5.25 | % | 6.58 | % | 1/29/2022 |
| $ | 12,317,703 |
| 12,317,703 |
| 12,348,497 |
|
Total Containers, Packaging & Glass |
|
|
|
|
|
|
|
|
|
| 22,263,662 |
| 22,354,669 |
|
Energy: Oil & Gas 2.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keane Group, Inc. (6) (16) (19) |
| L + 7.25 | % | 8.63 | % | 8/18/2022 |
| $ | 13,828,125 |
| 13,696,455 |
| 13,828,125 |
|
Total Energy: Oil & Gas |
|
|
|
|
|
|
|
|
|
| 13,696,455 |
| 13,828,125 |
|
Healthcare & Pharmaceuticals 7.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drive DeVilbiss (16) |
| L + 5.50 | % | 6.83 | % | 1/3/2023 |
| $ | 6,757,111 |
| 6,208,247 |
| 6,301,006 |
|
Endo Luxembourg Holding Company S.a.r.l. and NIMA (6) (17) |
| L + 4.25 | % | 5.50 | % | 4/29/2024 |
| $ | 14,962,500 |
| 15,202,423 |
| 15,130,828 |
|
Great Expressions Dental Centers PC (16) (19) |
| L + 4.75 | % | 6.00 | % | 9/28/2023 |
| $ | 8,084,340 |
| 7,974,935 |
| 8,043,918 |
|
Island Medical Management Holdings, LLC (16) (19) |
| L + 5.50 | % | 7.00 | % | 9/1/2022 |
| $ | 10,655,883 |
| 10,498,028 |
| 10,442,766 |
|
Total Healthcare & Pharmaceuticals |
|
|
|
|
|
|
|
|
|
| 39,883,633 |
| 39,918,518 |
|
High Tech Industries 14.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lighthouse Network, LLC (16) (19) |
| L + 4.75 | % | 5.99 | % | 10/13/2023 |
| $ | 12,045,813 |
| 11,938,572 |
| 12,060,871 |
|
Netsmart Technologies, Inc. (16) |
| L + 4.50 | % | 5.83 | % | 4/19/2023 |
| $ | 16,207,234 |
| 16,242,772 |
| 16,379,436 |
|
Qlik Technologies (16) |
| L + 3.50 | % | 4.81 | % | 4/26/2024 |
| $ | 14,962,500 |
| 14,939,310 |
| 14,691,305 |
|
SolarWinds Holdings, Inc. (16) |
| L + 3.50 | % | 4.74 | % | 2/3/2023 |
| $ | 9,949,875 |
| 10,020,448 |
| 9,998,589 |
|
Zywave, Inc. (16) (19) |
| L + 5.00 | % | 6.32 | % | 11/17/2022 |
| $ | 17,773,344 |
| 17,626,339 |
| 17,773,344 |
|
Total High Tech Industries |
|
|
|
|
|
|
|
|
|
| 70,767,441 |
| 70,903,545 |
|
Media: Diversified & Production 4.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deluxe Entertainment Services Group Inc. (16) |
| L + 5.50 | % | 6.81 | % | 2/28/2020 |
| $ | 12,858,859 |
| 12,226,090 |
| 12,947,264 |
|
International Entertainment Investments Limited (6) (12) (19) |
| GBP LIBOR + 4.75 | % | 5.00 | % | 5/31/2022 |
| £ | 7,673,114 |
| 9,263,780 |
| 10,280,438 |
|
Total Media: Diversified & Production |
|
|
|
|
|
|
|
|
|
| 21,489,870 |
| 23,227,702 |
|
Real Estate 2.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spectre (Carrisbrook House) Limited (6) (16) (19) |
| EURIBOR + 7.50 | % | 8.50 | % | 8/9/2021 |
| € | 9,300,000 |
| 10,633,539 |
| 10,647,486 |
|
Total Real Estate |
|
|
|
|
|
|
|
|
|
| 10,633,539 |
| 10,647,486 |
|
Retail 0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CH Hold Corp. (16) |
| L + 3.00 | % | 4.24 | % | 2/1/2024 |
| $ | 1,517,767 |
| 1,514,816 |
| 1,529,466 |
|
Total Retail |
|
|
|
|
|
|
|
|
|
| 1,514,816 |
| 1,529,466 |
|
Services: Business 7.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advantage Sales & Marketing Inc. (16) |
| L + 3.25 | % | 4.49 | % | 7/23/2021 |
| $ | 9,948,718 |
| 9,879,211 |
| 9,451,282 |
|
Camelot Finance LP (6) (16) |
| L + 3.50 | % | 4.74 | % | 10/3/2023 |
| $ | 7,960,000 |
| 8,031,213 |
| 7,999,179 |
|
Genuine Financial Holdings LLC (16) (19) |
| L + 4.75 | % | 6.13 | % | 1/26/2023 |
| $ | 9,518,355 |
| 9,412,082 |
| 9,604,020 |
|
Sovos Compliance, LLC (16) (19) |
| L + 6.00 | % | 7.24 | % | 3/1/2022 |
| $ | 8,709,675 |
| 8,626,295 |
| 8,622,578 |
|
Travel Leaders Group, LLC |
| L + 4.50 | % | 5.81 | % | 1/25/2024 |
| $ | 294,836 |
| 293,539 |
| 298,245 |
|
Total Services: Business |
|
|
|
|
|
|
|
|
|
| 36,242,340 |
| 35,975,304 |
|
Telecommunications 2.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Masergy Holdings, Inc. (16) |
| L + 3.75 | % | 5.08 | % | 12/15/2023 |
| $ | 694,866 |
| 691,789 |
| 700,077 |
|
Polycom, Inc. (16) |
| L + 5.25 | % | 6.48 | % | 9/27/2023 |
| $ | 13,291,168 |
| 13,120,652 |
| 13,484,993 |
|
Total Telecommunications |
|
|
|
|
|
|
|
|
|
| 13,812,441 |
| 14,185,070 |
|
Wholesale 3.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Tire Distributors Inc (16) |
| L + 4.25 | % | 5.49 | % | 9/1/2021 |
| $ | 14,923,469 |
| 15,007,917 |
| 15,032,291 |
|
Total Wholesale |
|
|
|
|
|
|
|
|
|
| 15,007,917 |
| 15,032,291 |
|
Total First lien senior secured loan |
|
|
|
|
|
|
|
|
|
| 365,678,734 |
| 370,818,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolver 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive 0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CST Buyer Company (2) (3) (16) (19) |
| — |
| — |
| 3/1/2023 |
| $ | — |
| (12,158 | ) | 6,282 |
|
Total Automotive |
|
|
|
|
|
|
|
|
|
| (12,158 | ) | 6,282 |
|
Beverage, Food & Tobacco 0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K-Mac Holdings Corp. (3) (16) (19) |
| L + 3.50 | % | 3.88 | % | 2/28/2022 |
| $ | 202,667 |
| 202,667 |
| 212,267 |
|
Total Beverage, Food & Tobacco |
|
|
|
|
|
|
|
|
|
| 202,667 |
| 212,267 |
|
Capital Equipment 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dorner Manufacturing Corp. (3) (16) (19) |
| L + 5.75 | % | 7.08 | % | 3/15/2023 |
| $ | 494,497 |
| 469,385 |
| 497,794 |
|
Endries International, Inc. (3) (16) (19) |
| P + 3.75 | % | 8.00 | % | 6/1/2022 |
| $ | 437,808 |
| 391,780 |
| 437,808 |
|
Total Capital Equipment |
|
|
|
|
|
|
|
|
|
| 861,165 |
| 935,602 |
|
Consumer goods: non-durable 0.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FineLine Technologies, Inc. (3) (16) (19) |
| P + 3.75 | % | 8.00 | % | 11/2/2021 |
| $ | 655,181 |
| 606,915 |
| 615,870 |
|
Total Consumer goods: non-durable |
|
|
|
|
|
|
|
|
|
| 606,915 |
| 615,870 |
|
Healthcare & Pharmaceuticals 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Expressions Dental Centers PC (3) (16) (19) |
| L + 4.75 | % | 6.69 | % | 9/28/2022 |
| $ | 933,600 |
| 918,928 |
| 927,765 |
|
Total Healthcare & Pharmaceuticals |
|
|
|
|
|
|
|
|
|
| 918,928 |
| 927,765 |
|
High Tech Industries 0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zywave, Inc. (2) (3) (16) (19) |
| — |
| — |
| 11/17/2022 |
| $ | — |
| (16,432 | ) | — |
|
Total High Tech Industries |
|
|
|
|
|
|
|
|
|
| (16,432 | ) | — |
|
Services: Business 0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sovos Compliance, LLC (2) (3) (16) (19) |
| — |
| — |
| 3/1/2022 |
| $ | — |
| (14,003 | ) | (14,516 | ) |
Total Services: Business |
|
|
|
|
|
|
|
|
|
| (14,003 | ) | (14,516 | ) |
Total Revolver |
|
|
|
|
|
|
|
|
|
| 2,547,082 |
| 2,683,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second lien senior secured loan 14.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 2.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TECT Power Holdings, LLC (16) (19) |
| L + 8.50 | % | 9.74 | % | 12/27/2021 |
| $ | 14,757,969 |
| 14,474,262 |
| 14,757,969 |
|
Total Aerospace & Defense |
|
|
|
|
|
|
|
|
|
| 14,474,262 |
| 14,757,969 |
|
Beverage, Food & Tobacco 0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant Technologies, Inc. (16) (19) |
| L + 8.75 | % | 10.06 | % | 11/23/2023 |
| $ | 1,693,548 |
| 1,662,852 |
| 1,685,081 |
|
Total Beverage, Food & Tobacco |
|
|
|
|
|
|
|
|
|
| 1,662,852 |
| 1,685,081 |
|
Energy: Oil & Gas 2.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruin E&P Partners, LLC (16) (19) |
| L + 7.38 | % | 8.70 | % | 3/7/2023 |
| $ | 13,020,000 |
| 12,792,871 |
| 13,182,750 |
|
Total Energy: Oil & Gas |
|
|
|
|
|
|
|
|
|
| 12,792,871 |
| 13,182,750 |
|
Healthcare & Pharmaceuticals 5.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TecoStar Holdings, Inc. (16) (19) |
| L + 8.50 | % | 9.81 | % | 11/1/2024 |
| $ | 9,471,942 |
| 9,241,979 |
| 9,471,942 |
|
U.S. Anesthesia Partners, Inc. (16) (19) |
| L + 7.25 | % | 8.49 | % | 6/23/2025 |
| $ | 16,520,000 |
| 16,280,734 |
| 16,520,000 |
|
Total Healthcare & Pharmaceuticals |
|
|
|
|
|
|
|
|
|
| 25,522,713 |
| 25,991,942 |
|
Hotel, Gaming & Leisure 0.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPC International, Inc. (16) |
| L + 7.50 | % | 8.74 | % | 4/18/2025 |
| $ | 4,703,667 |
| 4,681,859 |
| 4,768,342 |
|
Total Hotel, Gaming & Leisure |
|
|
|
|
|
|
|
|
|
| 4,681,859 |
| 4,768,342 |
|
Media: Advertising, Printing & Publishing 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Learfield Communications LLC (16) |
| L + 7.25 | % | 8.49 | % | 12/2/2024 |
| $ | 5,400,000 |
| 5,350,769 |
| 5,413,500 |
|
Total Media: Advertising, Printing & Publishing |
|
|
|
|
|
|
|
|
|
| 5,350,769 |
| 5,413,500 |
|
Retail 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CH Hold Corp. (16) |
| L + 7.25 | % | 8.49 | % | 2/3/2025 |
| $ | 1,215,470 |
| 1,209,989 |
| 1,245,856 |
|
Total Retail |
|
|
|
|
|
|
|
|
|
| 1,209,989 |
| 1,245,856 |
|
Services: Business 1.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPE Inmar Acquisition, Inc. (16) |
| L + 8.00 | % | 9.27 | % | 5/1/2025 |
| $ | 5,058,410 |
| 5,001,638 |
| 5,060,519 |
|
Total Services: Business |
|
|
|
|
|
|
|
|
|
| 5,001,638 |
| 5,060,519 |
|
Telecommunications 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Masergy Holdings, Inc. (16) |
| L + 8.50 | % | 9.83 | % | 12/16/2024 |
| $ | 778,846 |
| 771,658 |
| 788,582 |
|
Total Telecommunications |
|
|
|
|
|
|
|
|
|
| 771,658 |
| 788,582 |
|
Total Second lien senior secured loan |
|
|
|
|
|
|
|
|
|
| 71,468,611 |
| 72,894,541 |
|
Total Corporate Debt |
|
|
|
|
|
|
|
|
|
| 459,429,834 |
| 467,043,081 |
|
Total Non-Controlled/Non-Affiliate Investments |
|
|
|
|
|
|
|
|
|
| 467,907,834 |
| 475,372,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Controlled Affiliate Investments 1.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Debt 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien senior secured loan 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (14) (19) |
| — |
| 10.00 | % | 6/2/2022 |
| $ | 941,502 |
| 941,502 |
| 941,502 |
|
Total Aerospace & Defense |
|
|
|
|
|
|
|
|
|
| 941,502 |
| 941,502 |
|
Total First lien senior secured loan |
|
|
|
|
|
|
|
|
|
| 941,502 |
| 941,502 |
|
Total Corporate Debt |
|
|
|
|
|
|
|
|
|
| 941,502 |
| 941,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity 1.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Interest 1.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 1.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (14) (15) (19) |
| — |
| — |
| — |
| $ | 166,147 |
| 166,147 |
| 166,147 |
|
BCC Jetstream Holdings Aviation (Off I), LLC (6) (10) (11) (14) (15) (19) |
| — |
| — |
| — |
| $ | 4,944,831 |
| 4,944,831 |
| 4,944,831 |
|
Total Aerospace & Defense |
|
|
|
|
|
|
|
|
|
| 5,110,978 |
| 5,110,978 |
|
Healthcare & Pharmaceuticals 0.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCC Tecomet Holdings (E), L.P. (10) (11) (13) (15) (19) |
| — |
| — |
| — |
| $ | 1,952,879 |
| 1,952,879 |
| 1,952,879 |
|
Total Healthcare & Pharmaceuticals |
|
|
|
|
|
|
|
|
|
| 1,952,879 |
| 1,952,879 |
|
Total Equity Interest |
|
|
|
|
|
|
|
|
|
| 7,063,857 |
| 7,063,857 |
|
Total Equity |
|
|
|
|
|
|
|
|
|
| 7,063,857 |
| 7,063,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfunded Commitment 0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense 0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCC Jetstream Holdings Aviation (On II), LLC (7) (10) (11) (14) (15) (19) |
| — |
| — |
| 6/2/2022 |
| $ | — |
| — |
| — |
|
Total Aerospace & Defense |
|
|
|
|
|
|
|
|
|
| — |
| — |
|
Total Unfunded Commitment |
|
|
|
|
|
|
|
|
|
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Controlled Affiliate Investments |
|
|
|
|
|
|
|
|
|
| 8,005,359 |
| 8,005,359 |
| ||
Total Investments |
|
|
|
|
|
|
|
|
|
| $ | 475,913,193 |
| $ | 483,378,075 |
|
Cash Equivalents 7.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Goldman Sachs Financial Square Government Fund |
| — |
| 0.93 | % | — |
|
| — |
| 36,905,818 |
| 36,905,818 |
| ||
Total Cash Equivalents |
|
|
|
|
|
|
|
|
|
| 36,905,818 |
| 36,905,818 |
| ||
Total Investments and Cash Equivalents |
|
|
|
|
|
|
|
|
|
| $ | 512,819,011 |
| $ | 520,283,893 |
|
Control Type | Industry | Portfolio Company | Investment Type | Spread Above Index (1) | Interest Rate | Maturity Date | Principal/Shares (9) | Cost | Market Value | % of NAV (4) | ||||||||||||||||||||||||
Non-Controlled/Non-Affiliate Investments | ||||||||||||||||||||||||||||||||||
Aerospace & Defense | Forming & Machining Industries Inc. (18) (19) (21) | Second Lien Senior Secured Loan | L+ 8.25% | 8.47 | % | 10/9/2026 | $ | 6,540 | 6,485 | 5,216 | ||||||||||||||||||||||||
Forming & Machining Industries Inc. (12) (18) (29) | First Lien Senior Secured Loan | L+ 4.00% | 4.22 | % | 10/9/2025 | $ | 16,651 | 16,537 | 13,622 | |||||||||||||||||||||||||
GSP Holdings, LLC (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 11/6/2025 | $ | 35,996 | 35,733 | 31,136 | |||||||||||||||||||||||||
GSP Holdings, LLC (3) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.75% | 6.75 | % | 11/6/2025 | $ | 1,813 | 1,775 | 1,201 | |||||||||||||||||||||||||
Kellstrom Aerospace Group, Inc (14) (19) (25) | Equity Interest | - | - | - | 1 | 1,963 | 1,255 | |||||||||||||||||||||||||||
Kellstrom Commercial Aerospace, Inc. (3) (18) (19) (21) (24) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 6.88 | % | 7/1/2025 | $ | 5,331 | 5,229 | 4,947 | |||||||||||||||||||||||||
Kellstrom Commercial Aerospace, Inc. (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.50% | 6.50 | % | 7/1/2025 | $ | 33,693 | 33,129 | 31,672 | |||||||||||||||||||||||||
Novetta, LLC (12) (15) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.00 | % | 10/17/2022 | $ | 6,530 | 6,467 | 6,416 | |||||||||||||||||||||||||
Precision Ultimate Holdings, LLC (14) (19) (25) | Equity Interest | - | - | - | 1,417 | 1,417 | 538 | |||||||||||||||||||||||||||
Salient CRGT, Inc. (12) (15) (29) | First Lien Senior Secured Loan | L+ 6.50% | 7.50 | % | 2/28/2022 | $ | 12,269 | 12,294 | 11,410 | |||||||||||||||||||||||||
WCI-HSG HOLDCO, LLC (14) (19) (25) | Preferred Equity | - | - | - | 675 | 675 | 1,493 | |||||||||||||||||||||||||||
WCI-HSG Purchaser, Inc. (3) (12) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | L+ 4.25% | 5.25 | % | 2/24/2025 | $ | 403 | 373 | 363 | |||||||||||||||||||||||||
WCI-HSG Purchaser, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 5.50 | % | 2/24/2025 | $ | 17,645 | 17,450 | 17,380 | |||||||||||||||||||||||||
Whitcraft LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 6.00% | 7.00 | % | 4/3/2023 | $ | 725 | 710 | 675 | |||||||||||||||||||||||||
Whitcraft LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.00% | 7.00 | % | 4/3/2023 | $ | 40,283 | 39,944 | 39,175 | |||||||||||||||||||||||||
WP CPP Holdings, LLC. (12) (15) (21) (29) | Second Lien Senior Secured Loan | L+ 7.75% | 8.75 | % | 4/30/2026 | $ | 11,724 | 11,631 | 9,144 | |||||||||||||||||||||||||
Aerospace & Defense Total | $ | 191,812 | $ | 175,643 | 16.7 | % | ||||||||||||||||||||||||||||
Automotive | CST Buyer Company (3) (5) (15) (19) (21) | First Lien Senior Secured Loan - Revolver | - | - | 10/3/2025 | $ | - | (24 | ) | - | ||||||||||||||||||||||||
CST Buyer Company (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.25% | 6.25 | % | 10/3/2025 | $ | 34,166 | 33,716 | 34,166 | |||||||||||||||||||||||||
JHCC Holdings, LLC (2) (3) (5) (15) (19) (28) | First Lien Senior Secured Loan - Delayed Draw | - | - | 9/9/2025 | $ | - | (35 | ) | (250 | ) | ||||||||||||||||||||||||
JHCC Holdings, LLC (3) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 6.50 | % | 9/9/2025 | $ | 881 | 843 | 768 | |||||||||||||||||||||||||
JHCC Holdings, LLC (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.50% | 6.50 | % | 9/9/2025 | $ | 2,227 | 2,220 | 2,138 | |||||||||||||||||||||||||
JHCC Holdings, LLC (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.50% | 6.50 | % | 9/9/2025 | $ | 29,453 | 29,082 | 28,275 | |||||||||||||||||||||||||
Automotive Total | $ | 65,802 | $ | 65,097 | 6.2 | % | ||||||||||||||||||||||||||||
Banking | Green Street Parent, LLC (2) (3) (5) (18) (19) (29) | First Lien Senior Secured Loan - Revolver | - | - | 8/27/2025 | $ | - | (40 | ) | (145 | ) | |||||||||||||||||||||||
Green Street Parent, LLC (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 5.27 | % | 8/27/2026 | $ | 14,371 | 14,121 | 13,509 | |||||||||||||||||||||||||
Banking Total | $ | 14,081 | $ | 13,364 | 1.3 | % | ||||||||||||||||||||||||||||
Beverage, Food & Tobacco | NPC International, Inc. (15) (27) | First Lien Senior Secured Loan | L+ 3.50% | 4.50 | % | 4/19/2024 | $ | 4,937 | 4,958 | 3,865 | ||||||||||||||||||||||||
NPC International, Inc. (3) (32) | First Lien Senior Secured Loan | L+ 15.50% | 17.00 | % | 1/21/2021 | $ | 412 | 391 | 411 | |||||||||||||||||||||||||
Beverage, Food & Tobacco Total | $ | 5,349 | $ | 4,276 | 0.4 | % | ||||||||||||||||||||||||||||
Capital Equipment | Dorner Manufacturing Corp. (3) (5) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | - | - | 3/15/2022 | $ | - | (8 | ) | - | ||||||||||||||||||||||||
Dorner Manufacturing Corp. (12) (15) (19) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 3/15/2023 | $ | 7,342 | 7,248 | 7,342 | |||||||||||||||||||||||||
East BCC Coinvest II,LLC (14) (19) (25) | Equity Interest | - | - | - | 1,419 | 1,419 | 744 | |||||||||||||||||||||||||||
Electronics For Imaging, Inc. (12) (18) (19) (29) | Second Lien Senior Secured Loan | L+ 9.00% | 9.15 | % | 7/23/2027 | $ | 13,070 | 12,308 | 10,390 | |||||||||||||||||||||||||
Engineered Controls International, LLC (12) (19) (21) (29) (32) | First Lien Senior Secured Loan | L+ 7.00% | 8.50 | % | 11/5/2024 | $ | 32,969 | 32,351 | 32,969 | |||||||||||||||||||||||||
EXC Holdings III Corp. (12) (15) (21) (29) | Second Lien Senior Secured Loan | L+ 7.50% | 8.50 | % | 12/1/2025 | $ | 8,240 | 8,250 | 8,119 | |||||||||||||||||||||||||
FCG Acquisitions, Inc. (14) (19) (25) | Preferred Equity | - | - | - | 4 | 4,251 | 8,671 | |||||||||||||||||||||||||||
FFI Holdings I Corp (3) (5) (15) (19) (30) | First Lien Senior Secured Loan - Revolver | - | - | 1/24/2025 | $ | - | (60 | ) | - | |||||||||||||||||||||||||
FFI Holdings I Corp (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 1/24/2025 | $ | 68,579 | 68,081 | 68,579 | |||||||||||||||||||||||||
Tidel Engineering, L.P. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/1/2023 | $ | - | - | - | ||||||||||||||||||||||||||
Tidel Engineering, L.P. (7) (15) (19) (29) | First Lien Senior Secured Loan | L+ 6.25% | 7.25 | % | 3/1/2024 | $ | 37,835 | 37,835 | 37,646 | |||||||||||||||||||||||||
Velvet Acquisition B.V. (6) (18) (19) (21) | Second Lien Senior Secured Loan | EURIBOR+ 8.00% | 8.00 | % | 4/17/2026 | € | 6,013 | 7,340 | 7,049 | |||||||||||||||||||||||||
Capital Equipment Total | $ | 179,015 | $ | 181,509 | 17.3 | % | ||||||||||||||||||||||||||||
Chemicals, Plastics & Rubber | AP Plastics Group, LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 8/2/2021 | $ | - | - | - | |||||||||||||||||||||||||
AP Plastics Group, LLC (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 5.25% | 6.25 | % | 8/1/2022 | $ | 19,856 | 19,646 | 19,856 | |||||||||||||||||||||||||
Niacet b.v. (6) (15) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 4.50% | 5.50 | % | 2/1/2024 | € | 3,603 | 3,866 | 4,097 | |||||||||||||||||||||||||
Plaskolite, Inc. (15) (29) | First Lien Senior Secured Loan | L+ 4.25% | 5.25 | % | 12/15/2025 | $ | 2,258 | 2,222 | 2,229 | |||||||||||||||||||||||||
Chemicals, Plastics & Rubber Total | $ | 25,734 | $ | 26,182 | 2.5 | % | ||||||||||||||||||||||||||||
Construction & Building | Chase Industries, Inc.(15) (19) (26) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.50% (1.5% PIK) | 8.00 | % | 5/12/2025 | $ | 1,161 | 1,158 | 929 | ||||||||||||||||||||||||
Chase Industries, Inc. (15) (19) (26) | First Lien Senior Secured Loan | L+ 5.50% (1.5% PIK) | 8.00 | % | 5/12/2025 | $ | 12,288 | 12,244 | 9,830 | |||||||||||||||||||||||||
Elk Parent Holdings, LP (14) (19) (25) | Equity Interest | - | - | - | 1 | 12 | 119 | |||||||||||||||||||||||||||
Elk Parent Holdings, LP (14) (19) (25) | Preferred Equity | - | - | - | 120 | 1,202 | 1,293 | |||||||||||||||||||||||||||
PP Ultimate Holdings B, LLC (14) (19) (25) | Equity Interest | - | - | - | 1 | 1,352 | 1,575 | |||||||||||||||||||||||||||
Profile Products LLC (2) (3) (5) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 12/20/2024 | $ | - | (54 | ) | (48 | ) | ||||||||||||||||||||||||
Profile Products LLC (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 12/20/2024 | $ | 36,260 | 35,697 | 35,807 | |||||||||||||||||||||||||
Regan Development Holdings Limited (6) (17) (19) | First Lien Senior Secured Loan | EURIBOR+ 6.50% | 7.00 | % | 4/18/2022 | € | 2,087 | 2,274 | 2,447 | |||||||||||||||||||||||||
Regan Development Holdings Limited (6) (17) (19) | First Lien Senior Secured Loan | EURIBOR+ 6.50% | 7.00 | % | 4/18/2022 | € | 677 | 768 | 793 | |||||||||||||||||||||||||
Regan Development Holdings Limited (6) (17) (19) | First Lien Senior Secured Loan | EURIBOR+ 6.50% | 7.00 | % | 4/18/2022 | € | 6,335 | 6,854 | 7,426 | |||||||||||||||||||||||||
YLG Holdings, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.25% | 7.25 | % | 10/31/2025 | $ | 4,113 | 4,106 | 4,100 | |||||||||||||||||||||||||
YLG Holdings, Inc. (2) (3) (5) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 10/31/2025 | $ | - | (72 | ) | (21 | ) | ||||||||||||||||||||||||
YLG Holdings, Inc. (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 10/31/2025 | $ | 38,571 | 38,265 | 38,474 | |||||||||||||||||||||||||
Construction & Building Total | $ | 103,806 | $ | 102,724 | 9.8 | % | ||||||||||||||||||||||||||||
Consumer Goods: Durable | New Milani Group LLC (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 2.50% | 3.50 | % | 6/6/2024 | $ | 16,969 | 16,858 | 15,951 | ||||||||||||||||||||||||
TLC Holdco LP (14) (19) (25) | Equity Interest | - | - | - | 1,188 | 1,186 | 1,411 | |||||||||||||||||||||||||||
TLC Purchaser, Inc. (2) (3) (5) (19) | First Lien Senior Secured Loan - Delayed Draw | - | - | 10/13/2025 | $ | - | (60 | ) | (89 | ) | ||||||||||||||||||||||||
TLC Purchaser, Inc. (2) (3) (5) (19) (21) | First Lien Senior Secured Loan - Revolver | - | - | 10/13/2025 | $ | - | (149 | ) | (111 | ) | ||||||||||||||||||||||||
TLC Purchaser, Inc. (12) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 10/13/2025 | $ | 42,401 | 41,663 | 41,871 | |||||||||||||||||||||||||
Consumer Goods: Durable Total | $ | 59,498 | $ | 59,033 | 5.6 | % | ||||||||||||||||||||||||||||
Consumer Goods: Non-Durable | FineLine Technologies, Inc. (15) (19) (21) (26) | First Lien Senior Secured Loan - Revolver | L+ 4.25% | 5.25 | % | 11/4/2022 | $ | 2,633 | 2,620 | 2,534 | ||||||||||||||||||||||||
FineLine Technologies, Inc. (12) (15) (19) (21) (29) (26) | First Lien Senior Secured Loan | L+ 4.25% | 5.25 | % | 11/4/2022 | $ | 31,364 | 31,264 | 30,188 | |||||||||||||||||||||||||
MND Holdings III Corp (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 3.50% | 4.50 | % | 6/19/2024 | $ | 10,641 | 10,655 | 8,679 | |||||||||||||||||||||||||
RoC Opco LLC (3) (5) (15) (19) (21) | First Lien Senior Secured Loan - Revolver | - | - | 2/25/2025 | $ | - | (153 | ) | - | |||||||||||||||||||||||||
RoC Opco LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 7.25% | 8.25 | % | 2/25/2025 | $ | 40,589 | 39,796 | 40,589 | |||||||||||||||||||||||||
Solaray, LLC (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.00% | 7.00 | % | 9/11/2023 | $ | 14,462 | 14,462 | 14,173 | |||||||||||||||||||||||||
Solaray, LLC (3) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 4.50% | 5.50 | % | 9/9/2022 | $ | 7,424 | 7,391 | 7,424 | |||||||||||||||||||||||||
Solaray, LLC (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 6.00% | 7.00 | % | 9/11/2023 | $ | 42,280 | 42,280 | 41,434 | |||||||||||||||||||||||||
WU Holdco, Inc. (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.25% | 6.25 | % | 3/26/2026 | $ | 5,602 | 5,547 | 5,602 | |||||||||||||||||||||||||
WU Holdco, Inc. (3) (5) (18) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/26/2025 | $ | - | (49 | ) | - | |||||||||||||||||||||||||
WU Holdco, Inc. (7) (15) (21) (19) | First Lien Senior Secured Loan | L+ 5.25% | 6.25 | % | 3/26/2026 | $ | 39,419 | 38,719 | 39,419 | |||||||||||||||||||||||||
Consumer Goods: Non-Durable Total | $ | 192,532 | $ | 190,042 | 18.1 | % | ||||||||||||||||||||||||||||
Containers, Packaging, & Glass | Automate Intermediate Holdings II S.à r.l. (6) (18) (19) (21) | Second Lien Senior Secured Loan | L+ 7.75% | 7.90 | % | 7/22/2027 | $ | 11,870 | 11,653 | 11,752 | ||||||||||||||||||||||||
Containers, Packaging, & Glass Total | $ | 11,653 | $ | 11,752 | 1.1 | % | ||||||||||||||||||||||||||||
Energy: Electricity | Infinite Electronics International Inc. (12) (18) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.00% | 4.15 | % | 7/2/2025 | $ | 19,602 | 19,590 | 18,867 | ||||||||||||||||||||||||
Infinite Electronics International Inc. (18) (19) (21) | Second Lien Senior Secured Loan | L+ 8.00% | 8.15 | % | 7/2/2026 | $ | 2,480 | 2,437 | 2,368 | |||||||||||||||||||||||||
Energy: Electricity Total | $ | 22,027 | $ | 21,235 | 2.0 | % | ||||||||||||||||||||||||||||
Energy: Oil & Gas | Amspec Services, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 4.75% | 5.75 | % | 7/2/2024 | $ | 4,114 | 4,069 | 4,114 | ||||||||||||||||||||||||
Amspec Services, Inc. (7) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 7/2/2024 | $ | 43,765 | 43,344 | 43,765 | |||||||||||||||||||||||||
Energy: Oil & Gas Total | $ | 47,413 | $ | 47,879 | 4.6 | % | ||||||||||||||||||||||||||||
Environmental Industries | Adler & Allan Group Limited (6) (17) (19) (21) (22) (26) | First Lien Last Out | GBP LIBOR+ 8.25% (2% PIK) | 10.75 | % | 9/30/2022 | £ | 13,340 | 16,936 | 17,223 | ||||||||||||||||||||||||
Environmental Industries Total | $ | 16,936 | $ | 17,223 | 1.6 | % | ||||||||||||||||||||||||||||
FIRE: Finance | Allworth Financial Group, L.P. (3) (7) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 5.66 | % | 12/31/2025 | $ | 486 | 465 | 480 | ||||||||||||||||||||||||
Allworth Financial Group, L.P. (7) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.50% | 6.50 | % | 12/31/2025 | $ | 14,956 | 14,824 | 14,919 | |||||||||||||||||||||||||
FIRE: Finance Total | $ | 15,289 | $ | 15,399 | 1.5 | % | ||||||||||||||||||||||||||||
FIRE: Insurance | Ivy Finco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.50% | 6.23 | % | 5/19/2025 | £ | 7,217 | 8,979 | 9,155 | ||||||||||||||||||||||||
Ivy Finco Limited (3) (6) (18) (19) | First Lien Senior Secured Loan | GBP LIBOR+ 5.50% | 5.83 | % | 5/19/2025 | £ | 7,077 | 8,813 | 8,964 | |||||||||||||||||||||||||
Margaux Acquisition Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.75% | 6.75 | % | 12/19/2024 | $ | 7,899 | 7,843 | 7,712 | |||||||||||||||||||||||||
Margaux Acquisition, Inc. (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.75% | 6.75 | % | 12/19/2024 | $ | 2,872 | 2,820 | 2,815 | |||||||||||||||||||||||||
Margaux Acquisition Inc. (7) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 12/19/2024 | $ | 28,698 | 28,244 | 28,124 | |||||||||||||||||||||||||
Margaux UK Finance Limited (3) (5) (6) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 12/19/2024 | £ | - | (9 | ) | - | |||||||||||||||||||||||||
Margaux UK Finance Limited (6) (15) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.75% | 6.75 | % | 12/19/2024 | £ | 7,648 | 9,817 | 9,874 | |||||||||||||||||||||||||
FIRE: Insurance Total | $ | 66,507 | $ | 66,644 | 6.4 | % | ||||||||||||||||||||||||||||
FIRE: Real Estate | Spectre (Carrisbrook House) Limited (6) (15) (19) | First Lien Senior Secured Loan | EURIBOR+ 7.50% | 8.50 | % | 8/9/2021 | € | 9,300 | 10,856 | 10,901 | ||||||||||||||||||||||||
FIRE: Real Estate Total | $ | 10,856 | $ | 10,901 | 1.0 | % | ||||||||||||||||||||||||||||
Forest Products & Paper | Solenis International LLC (18) (21) | Second Lien Senior Secured Loan | L+ 8.50% | 8.76 | % | 6/26/2026 | $ | 10,601 | 10,326 | 9,922 | ||||||||||||||||||||||||
Forest Products & Paper Total | $ | 10,326 | $ | 9,922 | 0.9 | % | ||||||||||||||||||||||||||||
Healthcare & Pharmaceuticals | CB Titan Holdings, Inc. (14) (19) (25) | Preferred Equity | - | - | - | 1,953 | 1,953 | 2,775 | ||||||||||||||||||||||||||
CPS Group Holdings, Inc. (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/3/2025 | $ | - | (67 | ) | - | |||||||||||||||||||||||||
CPS Group Holdings, Inc. (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.50% | 6.50 | % | 3/3/2025 | $ | 55,486 | 55,039 | 55,486 | |||||||||||||||||||||||||
Datix Bidco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan - Revolver | GBP LIBOR+ 4.50% | 5.22 | % | 10/28/2024 | £ | 973 | 1,154 | 1,243 | |||||||||||||||||||||||||
Datix Bidco Limited (6) (18) (19) (21) | Second Lien Senior Secured Loan | GBP LIBOR+ 7.75% | 8.43 | % | 4/27/2026 | £ | 12,134 | 16,355 | 15,510 | |||||||||||||||||||||||||
Datix Bidco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | BBSW+ 4.50% | 4.68 | % | 4/28/2025 | AUD | 4,212 | 3,212 | 2,982 | |||||||||||||||||||||||||
Golden State Buyer, Inc. (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.75% | 4.90 | % | 6/22/2026 | $ | 15,115 | 14,985 | 14,964 | |||||||||||||||||||||||||
Great Expressions Dental Centers PC (15) (19) (26) | First Lien Senior Secured Loan - Revolver | L+ 4.75% (0.5% PIK) | 6.25 | % | 9/28/2022 | $ | 1,190 | 1,184 | 943 | |||||||||||||||||||||||||
Great Expressions Dental Centers PC (12) (15) (19) (26) | First Lien Senior Secured Loan | L+ 2.50% (2.75% PIK) | 6.25 | % | 9/28/2023 | $ | 7,769 | 7,750 | 6,157 | |||||||||||||||||||||||||
Island Medical Management Holdings, LLC (15) (19) (26) (29) | First Lien Senior Secured Loan | L+ 6.50% | 7.50 | % | 9/1/2023 | $ | 8,654 | 8,587 | 7,788 | |||||||||||||||||||||||||
Medical Depot Holdings, Inc. (12) (15) (26) (34) | First Lien Senior Secured Loan | L+ 7.50% | 8.50 | % | 1/3/2023 | $ | 16,436 | 15,457 | 11,999 | |||||||||||||||||||||||||
Mendel Bidco, Inc. (6) (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 4.50% | 4.50 | % | 6/17/2027 | € | 10,033 | 11,158 | 11,585 | |||||||||||||||||||||||||
Mendel Bidco, Inc. (18) (19) (21) | First Lien Senior Secured Loan | L+ 4.50% | 4.73 | % | 6/17/2027 | $ | 19,966 | 19,525 | 19,367 | |||||||||||||||||||||||||
Mertus 522. GmbH (6) (18) (19) (21) | First Lien Senior Secured Loan - Delayed Draw | EURIBOR+ 6.25% | 6.25 | % | 5/28/2026 | € | 13,131 | 14,120 | 15,084 | |||||||||||||||||||||||||
Mertus 522. GmbH (6) (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 6.25% | 6.25 | % | 5/28/2026 | € | 22,468 | 24,606 | 25,811 | |||||||||||||||||||||||||
TecoStar Holdings, Inc. (12) (15) (19) (21) (29) | Second Lien Senior Secured Loan | L+ 8.50% | 9.68 | % | 11/1/2024 | $ | 9,472 | 9,308 | 9,211 | |||||||||||||||||||||||||
U.S. Anesthesia Partners, Inc. (12) (15) (19) (21) | Second Lien Senior Secured Loan | L+ 7.25% | 8.25 | % | 6/23/2025 | $ | 16,520 | 16,356 | 15,818 | |||||||||||||||||||||||||
Healthcare & Pharmaceuticals Total | $ | 220,682 | $ | 216,723 | 20.7 | % | ||||||||||||||||||||||||||||
High Tech Industries | AMI US Holdings Inc. (3) (12) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 5.91 | % | 4/1/2024 | $ | 1,256 | 1,231 | 1,238 | ||||||||||||||||||||||||
AMI US Holdings Inc. (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.50% | 6.59 | % | 4/1/2025 | $ | 13,058 | 12,848 | 12,927 | |||||||||||||||||||||||||
Appriss Holdings, Inc. (3) (7) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 5.65 | % | 5/30/2025 | $ | 2,329 | 2,279 | 2,246 | |||||||||||||||||||||||||
Appriss Holdings, Inc. (7) (12) (18) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.50% | 5.75 | % | 5/29/2026 | $ | 48,508 | 47,978 | 47,659 | |||||||||||||||||||||||||
CB Nike IntermediateCo Ltd (3) (5) (15) (19) (21) | First Lien Senior Secured Loan - Revolver | - | - | 10/31/2025 | $ | - | (75 | ) | - | |||||||||||||||||||||||||
CB Nike IntermediateCo Ltd (6) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.75% | 5.75 | % | 10/31/2025 | $ | 35,157 | 34,549 | 35,157 | |||||||||||||||||||||||||
CMI Marketing Inc (3) (5) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | - | - | 5/24/2023 | $ | - | (11 | ) | - | |||||||||||||||||||||||||
CMI Marketing Inc (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 5.50 | % | 5/24/2024 | $ | 15,140 | 15,040 | 15,140 | |||||||||||||||||||||||||
Drilling Info Holdings, Inc (12) (18) (21) (29) | First Lien Senior Secured Loan | L+ 4.25% | 4.40 | % | 7/30/2025 | $ | 22,438 | 22,370 | 20,530 | |||||||||||||||||||||||||
Element Buyer, Inc. (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.25% | 6.25 | % | 7/18/2025 | $ | 11,220 | 11,246 | 11,220 | |||||||||||||||||||||||||
Element Buyer, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.25% | 6.25 | % | 7/19/2024 | $ | 850 | 808 | 850 | |||||||||||||||||||||||||
Element Buyer, Inc. (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 5.25% | 6.25 | % | 7/18/2025 | $ | 37,486 | 37,771 | 37,486 | |||||||||||||||||||||||||
Everest Bidco (6) (15) (19) (21) | Second Lien Senior Secured Loan | GBP LIBOR+ 7.50% | 8.50 | % | 7/3/2026 | £ | 10,216 | 13,127 | 13,124 | |||||||||||||||||||||||||
MeridianLink, Inc. (15) (29) | First Lien Senior Secured Loan | L+ 3.75% | 4.75 | % | 5/30/2025 | $ | 1,811 | 1,793 | 1,789 | |||||||||||||||||||||||||
MRI Software LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.50% | 6.50 | % | 2/10/2026 | $ | 25,233 | 25,135 | 25,233 | |||||||||||||||||||||||||
MRI Software LLC (3) (5) (15) (19) (28) | First Lien Senior Secured Loan - Delayed Draw | - | - | 2/10/2026 | $ | - | (10 | ) | - | |||||||||||||||||||||||||
MRI Software LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 2/10/2026 | $ | - | 43 | - | ||||||||||||||||||||||||||
Netsmart Technologies, Inc. (21) (31) | Second Lien Senior Secured Loan | P+ 6.50% | 9.75 | % | 10/19/2023 | $ | 2,749 | 2,749 | 2,749 | |||||||||||||||||||||||||
nThrive, Inc. (15) (19) (21) | Second Lien Senior Secured Loan | L+ 9.75% | 10.75 | % | 4/20/2023 | $ | 8,000 | 7,984 | 7,280 | |||||||||||||||||||||||||
Park Place Technologies (15) (19) (21) | Second Lien Senior Secured Loan | L+ 8.00% | 9.00 | % | 3/30/2026 | $ | 6,733 | 6,687 | 6,396 | |||||||||||||||||||||||||
Symplr Software, Inc. (2) (3) (5) (7) (18) (19) | First Lien Senior Secured Loan - Revolver | - | - | 11/30/2023 | $ | - | (48 | ) | (112 | ) | ||||||||||||||||||||||||
Symplr Software, Inc. (7) (18) (19) (21) | First Lien Senior Secured Loan | L+ 5.50% | 5.72 | % | 11/28/2025 | $ | 60,597 | 59,843 | 59,234 | |||||||||||||||||||||||||
Symplr Software, Inc. (7) (18) (19) | First Lien Senior Secured Loan | L+ 6.00% | 6.23 | % | 11/28/2025 | $ | 3,783 | 3,745 | 3,754 | |||||||||||||||||||||||||
Utimaco, Inc. (6) (18) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.50% | 5.16 | % | 8/9/2027 | $ | 14,849 | 14,525 | 14,701 | |||||||||||||||||||||||||
Ventiv Topco, Inc. (14) (19) (25) | Equity Interest | - | - | - | 28 | 2,833 | 3,729 | |||||||||||||||||||||||||||
Ventiv Holdco, Inc. (3) (7) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 5.66 | % | 9/3/2025 | $ | 426 | 381 | 409 | |||||||||||||||||||||||||
Ventiv Holdco, Inc. (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 5.50% | 6.50 | % | 9/3/2025 | $ | 24,117 | 23,806 | 23,996 | |||||||||||||||||||||||||
VPARK BIDCO AB (6) (16) (19) (21) | First Lien Senior Secured Loan | CIBOR+ 4.00% | 4.75 | % | 3/10/2025 | DKK | 56,999 | 9,187 | 8,974 | |||||||||||||||||||||||||
VPARK BIDCO AB (6) (16) (19) (21) | First Lien Senior Secured Loan | NIBOR+ 4.00% | 4.75 | % | 3/10/2025 | NOK | 74,020 | 9,217 | 7,914 | |||||||||||||||||||||||||
Zywave, Inc. (3) (5) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | - | - | 11/17/2022 | $ | - | (7 | ) | - | |||||||||||||||||||||||||
Zywave, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.00 | % | 11/17/2022 | $ | 17,236 | 17,173 | 17,236 | |||||||||||||||||||||||||
High Tech Industries Total | $ | 384,197 | $ | 380,859 | 36.3 | % | ||||||||||||||||||||||||||||
Hotel, Gaming & Leisure | Aimbridge Acquisition Co., Inc. (12) (18) (19) (21) (29) | Second Lien Senior Secured Loan | L+ 7.50% | 7.66 | % | 2/1/2027 | $ | 20,193 | 19,694 | 18,174 | ||||||||||||||||||||||||
Captain D's LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 4.50% | 5.50 | % | 12/15/2023 | $ | 1,393 | 1,383 | 1,383 | |||||||||||||||||||||||||
Captain D's LLC (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 5.50 | % | 12/15/2023 | $ | 12,809 | 12,729 | 12,745 | |||||||||||||||||||||||||
Quidditch Acquisition, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 7.00% | 8.00 | % | 3/21/2025 | $ | 18,880 | 18,868 | 17,559 | |||||||||||||||||||||||||
Hotel, Gaming & Leisure Total | $ | 52,674 | $ | 49,861 | 4.7 | % | ||||||||||||||||||||||||||||
Media: Advertising, Printing & Publishing | Ansira Holdings, Inc. (15) (19) (26) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.50% | 7.50 | % | 12/20/2024 | $ | 4,464 | 4,460 | 3,817 | ||||||||||||||||||||||||
Ansira Holdings, Inc. (3) (19) (23) (31) | First Lien Senior Secured Loan - Revolver | P+ 4.75% | 7.58 | % | 12/20/2024 | $ | 3,400 | 3,400 | 3,400 | |||||||||||||||||||||||||
Ansira Holdings, Inc. (7) (15) (19) (26) | First Lien Senior Secured Loan | L+ 6.50% | 7.50 | % | 12/20/2024 | $ | 36,493 | 36,428 | 31,201 | |||||||||||||||||||||||||
Cruz Bay Publishing, Inc. (3) (15) (19) (26) | First Lien Senior Secured Loan - Delayed Draw | P+ 6.00% | 9.25 | % | 2/1/2021 | $ | 705 | 696 | 705 | |||||||||||||||||||||||||
Cruz Bay Publishing (3) (15) (19) | First Lien Senior Secured Loan - Revolver | P+ 4.00% | 7.25 | % | 2/1/2021 | $ | 1,978 | 1,978 | 1,978 | |||||||||||||||||||||||||
Cruz Bay Publishing, Inc. (7) (15) (19) (26) | First Lien Senior Secured Loan | L+ 6.75% | 7.75 | % | 2/1/2021 | $ | 3,882 | 3,882 | 3,882 | |||||||||||||||||||||||||
Cruz Bay Publishing, Inc. (7) (15) (19) (26) | First Lien Senior Secured Loan | P+ 6.75% | 10.00 | % | 2/1/2021 | $ | 1,309 | 1,309 | 1,309 | |||||||||||||||||||||||||
Media: Advertising, Printing & Publishing Total | $ | 52,153 | $ | 46,292 | 4.4 | % | ||||||||||||||||||||||||||||
Media: Broadcasting & Subscription | Vital Holdco Limited (6) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.75% | 5.75 | % | 5/29/2026 | $ | 35,357 | 34,630 | 35,357 | ||||||||||||||||||||||||
Vital Holdco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 4.75% | 4.75 | % | 5/29/2026 | € | 7,917 | 8,636 | 9,281 | |||||||||||||||||||||||||
Media: Broadcasting & Subscription Total | $ | 43,266 | $ | 44,638 | 4.2 | % | ||||||||||||||||||||||||||||
Media: Diversified & Production | 9 Story Media Group Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | CDOR+ 5.50% | 6.50 | % | 4/30/2026 | CAD | 56 | 41 | 40 | ||||||||||||||||||||||||
9 Story Media Group Inc. (6) (15) (19) (21) | First Lien Senior Secured Loan | CDOR+ 5.50% | 6.50 | % | 4/30/2026 | CAD | 7,329 | 5,371 | 5,382 | |||||||||||||||||||||||||
9 Story Media Group Inc. (6) (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 5.50% | 5.50 | % | 4/30/2026 | € | 3,947 | 4,514 | 4,523 | |||||||||||||||||||||||||
Efficient Collaborative Retail Marketing Company, LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.25% | 6.25 | % | 6/15/2022 | $ | 2,267 | 2,267 | 2,267 | |||||||||||||||||||||||||
Efficient Collaborative Retail Marketing Company, LLC (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 6.75% | 7.75 | % | 6/15/2022 | $ | 15,095 | 15,159 | 14,416 | |||||||||||||||||||||||||
Efficient Collaborative Retail Marketing Company, LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.75% | 7.75 | % | 6/15/2022 | $ | 9,788 | 9,830 | 9,347 | |||||||||||||||||||||||||
International Entertainment Investments Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 4.75% | 5.27 | % | 5/31/2023 | £ | 8,686 | 10,648 | 10,934 | |||||||||||||||||||||||||
Media: Diversified & Production Total | $ | 47,830 | $ | 46,909 | 4.5 | % | ||||||||||||||||||||||||||||
Retail | Batteries Plus Holding Corporation (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 7/6/2022 | $ | - | - | - | |||||||||||||||||||||||||
Batteries Plus Holding Corporation (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.75% | 7.75 | % | 7/6/2022 | $ | 28,672 | 28,672 | 28,672 | |||||||||||||||||||||||||
Retail Total | $ | 28,672 | $ | 28,672 | 2.7 | % | ||||||||||||||||||||||||||||
Services: Business | AMCP Clean Acquisition Company, LLC (12) (18) (19) (29) | First Lien Senior Secured Loan - Delayed Draw | L+ 4.25% | 4.41 | % | 7/10/2025 | $ | 3,865 | 3,857 | 2,512 | ||||||||||||||||||||||||
AMCP Clean Acquisition Company, LLC (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.25% | 4.47 | % | 7/10/2025 | $ | 15,971 | 15,943 | 10,381 | |||||||||||||||||||||||||
Comet Bidco Limited (6) (18) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.00% | 5.09 | % | 9/30/2024 | £ | 7,362 | 9,505 | 7,259 | |||||||||||||||||||||||||
Elevator Holdco Inc. (14) (19) (25) | Equity Interest | - | - | - | 2 | 2,448 | 1,677 | |||||||||||||||||||||||||||
Hightower Holding, LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.00 | % | 1/31/2025 | $ | 40,953 | 40,804 | 40,953 | |||||||||||||||||||||||||
Refine Intermediate, Inc. (3) (18) (19) | First Lien Senior Secured Loan - Revolver | GBP LIBOR+ 4.75% | 4.80 | % | 9/3/2026 | $ | 534 | 412 | 494 | |||||||||||||||||||||||||
Refine Intermediate, Inc. (15) (19) (21) | First Lien Senior Secured Loan | L+ 4.75% | 5.75 | % | 3/3/2027 | $ | 21,894 | 21,380 | 21,730 | |||||||||||||||||||||||||
SumUp Holdings Luxembourg S.à.r.l. (6) (15) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 8.00% | 9.00 | % | 8/1/2024 | € | 15,715 | 17,433 | 18,421 | |||||||||||||||||||||||||
SumUp Holdings Luxembourg S.à.r.l. (6) (15) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 8.00% | 9.00 | % | 8/1/2024 | € | 16,697 | 18,223 | 19,573 | |||||||||||||||||||||||||
TEI Holdings Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 7.00% | 8.00 | % | 12/23/2025 | $ | 3,471 | 3,426 | 3,200 | |||||||||||||||||||||||||
TEI Holdings Inc. (7) (12) (15) (19) (21) (26) (29) | First Lien Senior Secured Loan | L+ 7.00% | 8.00 | % | 12/23/2026 | $ | 48,682 | 48,094 | 45,761 | |||||||||||||||||||||||||
Services: Business Total | $ | 181,525 | $ | 171,961 | 16.4 | % | ||||||||||||||||||||||||||||
Services: Consumer | Pearl Intermediate Parent LLC (18) (29) | Second Lien Senior Secured Loan | L+ 6.25% | 6.40 | % | 2/13/2026 | $ | 2,571 | 2,585 | 2,508 | ||||||||||||||||||||||||
Surrey Bidco Limited (6) (17) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 6.00% | 6.50 | % | 5/11/2026 | £ | 5,000 | 6,155 | 5,971 | |||||||||||||||||||||||||
Trafalgar Bidco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.00% | 5.05 | % | 9/11/2024 | £ | 6,011 | 7,751 | 7,761 | |||||||||||||||||||||||||
Zeppelin BidCo Pty Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | BBSY+ 6.00% | 6.23 | % | 6/28/2024 | AUD | 20,621 | 14,069 | 14,455 | |||||||||||||||||||||||||
Services: Consumer Total | $ | 30,560 | $ | 30,695 | 2.9 | % | ||||||||||||||||||||||||||||
Telecommunications | Conterra Ultra Broadband Holdings, Inc. (18) (29) | First Lien Senior Secured Loan | L+ 4.50% | 4.65 | % | 4/30/2026 | $ | 6,402 | 6,375 | 6,338 | ||||||||||||||||||||||||
Horizon Telcom, Inc. (15) (19) (29) | First Lien Senior Secured Loan - Revolver | L+ 4.75% | 5.75 | % | 6/15/2023 | $ | 116 | 113 | 114 | |||||||||||||||||||||||||
Horizon Telcom, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan - Delayed Draw | L+ 4.75% | 5.75 | % | 6/15/2023 | $ | 925 | 919 | 907 | |||||||||||||||||||||||||
Horizon Telcom, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.75% | 5.75 | % | 6/15/2023 | $ | 13,625 | 13,505 | 13,353 | |||||||||||||||||||||||||
Masergy Holdings, Inc. (15) (29) | Second Lien Senior Secured Loan | L+ 7.50% | 8.50 | % | 12/16/2024 | $ | 857 | 862 | 812 | |||||||||||||||||||||||||
Telecommunications Total | $ | 21,774 | $ | 21,524 | 2.0 | % | ||||||||||||||||||||||||||||
Transportation: Cargo | A&R Logistics, Inc. (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 5/5/2025 | $ | - | (95 | ) | (91 | ) | |||||||||||||||||||||||
A&R Logistics, Inc. (7) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.00% | 7.20 | % | 5/5/2025 | $ | 43,644 | 42,906 | 42,990 | |||||||||||||||||||||||||
A&R Logistics, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.00% | 7.20 | % | 5/5/2025 | $ | 2,454 | 2,411 | 2,418 | |||||||||||||||||||||||||
A&R Logistics, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.00% | 7.00 | % | 5/5/2025 | $ | 6,050 | 5,972 | 5,959 | |||||||||||||||||||||||||
A&R Logistics, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.50% | 7.50 | % | 5/5/2025 | $ | 2,750 | 2,723 | 2,750 | |||||||||||||||||||||||||
ARL Holdings, LLC. (14) (19) (25) | Equity Interest | - | - | - | - | 445 | 509 | |||||||||||||||||||||||||||
ARL Holdings, LLC. (14) (19) (25) | Equity Interest | - | - | - | 9 | 9 | 10 | |||||||||||||||||||||||||||
ENC Holding Corporation (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.00% | 4.22 | % | 5/30/2025 | $ | 10,198 | 10,186 | 9,892 | |||||||||||||||||||||||||
Grammer Investment Holdings LLC (14) (19) (25) | Equity Interest | - | - | - | 1,011 | 1,011 | 943 | |||||||||||||||||||||||||||
Grammer Investment Holdings LLC (19) (25) (26) | Preferred Equity | 10% PIK | 10.00 | % | - | 7 | 714 | 726 | ||||||||||||||||||||||||||
Grammer Investment Holdings LLC (14) (19) (25) | Warrants | - | - | - | 122 | - | - | |||||||||||||||||||||||||||
Grammer Purchaser, Inc. (2) (3) (12) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | - | - | 9/30/2024 | $ | - | 5 | (11 | ) | |||||||||||||||||||||||||
Grammer Purchaser, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | L+ 4.50% | 5.50 | % | 9/30/2024 | $ | 10,128 | 9,966 | 10,027 | |||||||||||||||||||||||||
Omni Logistics, LLC (15) (19) | Subordinated Debt | L+ 11.50% | 12.50 | % | 1/19/2024 | $ | 15,000 | 14,787 | 15,000 | |||||||||||||||||||||||||
PS HoldCo, LLC (12) (15) (29) | First Lien Senior Secured Loan | L+ 4.75% | 5.75 | % | 3/13/2025 | $ | 23,100 | 23,090 | 21,869 | |||||||||||||||||||||||||
Transportation: Cargo Total | $ | 114,130 | $ | 112,991 | 10.8 | % | ||||||||||||||||||||||||||||
Transportation: Consumer | Direct Travel, Inc. (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 8.50% | 9.50 | % | 12/1/2021 | $ | 1,467 | 1,467 | 1,265 | ||||||||||||||||||||||||
Direct Travel, Inc. (7) (13) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 8.50% | 9.50 | % | 12/1/2021 | $ | 2,913 | 2,913 | 2,512 | |||||||||||||||||||||||||
Direct Travel, Inc. (15) (19) (21) | First Lien Senior Secured Loan - Revolver | L+ 6.50% | 7.50 | % | 12/1/2021 | $ | 4,250 | 4,250 | 3,666 | |||||||||||||||||||||||||
Direct Travel, Inc. (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 8.50% | 9.50 | % | 12/1/2021 | $ | 49,540 | 49,540 | 42,729 | |||||||||||||||||||||||||
Toro Private Investments II, L.P. (14) (19) (25) | Equity Interest | - | - | - | 3,090 | 3,090 | 1,497 | |||||||||||||||||||||||||||
Toro Private Investments II, L.P. (12) (18) (29) | First Lien Senior Secured Loan | L+ 5.00% | 5.22 | % | 5/29/2026 | $ | 6,749 | 4,426 | 4,228 | |||||||||||||||||||||||||
Transportation: Consumer Total | $ | 65,686 | $ | 55,897 | 5.3 | % | ||||||||||||||||||||||||||||
Wholesale | Abracon Group Holding, LLC. (14) (19) (25) | Equity Interest | - | - | - | 2 | 1,833 | 1,306 | ||||||||||||||||||||||||||
Abracon Group Holding, LLC. (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 7/18/2024 | $ | - | (27 | ) | (71 | ) | ||||||||||||||||||||||||
Abracon Group Holding, LLC. (7) (15) (19) (21) | First Lien Senior Secured Loan | L+ 5.75% | 6.75 | % | 7/18/2024 | $ | 35,639 | 35,500 | 34,748 | |||||||||||||||||||||||||
Aramsco, Inc. (3) (7) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.25% | 5.40 | % | 8/28/2024 | $ | 1,806 | 1,769 | 1,747 | |||||||||||||||||||||||||
Aramsco, Inc. (7) (18) (19) (21) | First Lien Senior Secured Loan | L+ 5.25% | 5.40 | % | 8/28/2024 | $ | 24,103 | 23,771 | 23,682 | |||||||||||||||||||||||||
Armor Group, LP (14) (19) (25) | Equity Interest | - | - | - | 10 | 1,012 | 1,668 | |||||||||||||||||||||||||||
PetroChoice Holdings, Inc. (12) (15) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.00 | % | 8/19/2022 | $ | 9,870 | 9,812 | 8,595 | |||||||||||||||||||||||||
PetroChoice Holdings, Inc. (12) (15) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.00 | % | 8/19/2022 | $ | 6,531 | 6,435 | 5,687 | |||||||||||||||||||||||||
Wholesale Total | $ | 80,105 | $ | 77,362 | 7.4 | % | ||||||||||||||||||||||||||||
Non-Controlled/Non-Affiliate Investments Total | $ | 2,361,890 | $ | 2,303,209 | 219.3 | % | ||||||||||||||||||||||||||||
Non-Controlled/Affiliate Investments | ||||||||||||||||||||||||||||||||||
Beverage, Food & Tobacco | ADT Pizza, LLC (10) (14) (19) (25) | Equity Interest | - | - | - | 6,720 | 6,720 | 11,417 | ||||||||||||||||||||||||||
Beverage, Food& Tobacco Total | $ | 6,720 | $ | 11,417 | 1.1 | % | ||||||||||||||||||||||||||||
Energy: Oil & Gas | Blackbrush Oil & Gas, L.P. (10) (14) (19) | Equity Interest | - | - | - | 1,123 | - | - | ||||||||||||||||||||||||||
Blackbrush Oil & Gas, L.P. (10) (14) (19) | Preferred Equity | - | - | - | 36,084 | 10,104 | 10,104 | |||||||||||||||||||||||||||
Blackbrush Oil & Gas, L.P. (10) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.00 | % | 9/3/2025 | $ | 12,028 | 12,028 | 12,028 | |||||||||||||||||||||||||
Energy: Oil& Gas | $ | 22,132 | $ | 22,132 | 2.1 | % | ||||||||||||||||||||||||||||
Non-Controlled/Affiliate Investments Total | $ | 28,852 | $ | 33,549 | 3.2 | % | ||||||||||||||||||||||||||||
Controlled Affiliate Investments | ||||||||||||||||||||||||||||||||||
Aerospace & Defense | ACC Holdco, LLC (10) (11) (19) (25) | Preferred Equity | - | 16.00 | % | - | 10,828 | 10,823 | 10,828 | |||||||||||||||||||||||||
Air Comm Corporation LLC (10) (11) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.50% | 7.50 | % | 6/30/2025 | $ | 27,092 | 26,401 | 26,482 | |||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (Off I), LLC (10) (11) (19) (20) (25) | Equity Interest | - | - | - | 11,863 | 11,863 | 11,777 | |||||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20) (25) | Equity Interest | - | - | - | 1,116 | 1,116 | 792 | |||||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20) (26) | First Lien Senior Secured Loan | - | 10.00 | % | 6/2/2022 | $ | 6,614 | 6,614 | 6,614 | |||||||||||||||||||||||||
Gale Aviation (Offshore) Co (10) (11) (19) (25) | Equity Interest | - | - | - | 81,107 | 81,107 | 66,406 | |||||||||||||||||||||||||||
Aerospace& Defense Total | $ | 137,924 | $ | 122,899 | 11.7 | % | ||||||||||||||||||||||||||||
Controlled Affiliate Investments Total | $ | 137,924 | $ | 122,899 | 11.7 | % | ||||||||||||||||||||||||||||
Investments Total | $ | 2,528,666 | $ | 2,459,657 | 234.2 | % | ||||||||||||||||||||||||||||
Cash Equivalents | ||||||||||||||||||||||||||||||||||
Cash Equivalents | Goldman Sachs Financial Square Government Fund Institutional Share Class (30) | Cash Equivalents | - | 0.03 | % | - | $ | 101,970 | 101,970 | 101,970 | ||||||||||||||||||||||||
Cash Equivalents Total | $ | 101,970 | $ | 101,970 | 9.7 | % | ||||||||||||||||||||||||||||
Investments and Cash Equivalents Total | $ | 2,630,636 | $ | 2,561,627 | 243.9 | % |
Forward Foreign Currency Exchange Contracts(8)
Currency Purchased |
| Currency Sold |
| Counterparty |
| Settlement Date |
| Unrealized | ||
USD 16,380,814 |
| EURO 15,080,000 |
| Bank of New York Mellon |
| 3/6/2018 |
| $ | (1,585,689 | ) |
USD 12,118,964 |
| EURO 10,080,000 |
| Bank of New York Mellon |
| 6/22/2018 |
| 30,700 |
| |
USD 20,063,392 |
| POUND STERLING 15,200,000 |
| Citibank |
| 6/22/2018 |
| (459,946 | ) | |
USD 9,647,586 |
| POUND STERLING 7,635,000 |
| Bank of New York Mellon |
| 3/6/2018 |
| (629,009 | ) | |
|
|
|
|
|
|
|
| $ | (2,643,944 | ) |
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) (8) | ||||||
US DOLLARS 183 | CANADIAN DOLLAR 256 | Bank of New York Mellon | 4/14/2021 | $ | (9 | ) | ||||
US DOLLARS 088 | CANADIAN DOLLAR 122 | Bank of New York Mellon | 4/15/2021 | (3 | ) | |||||
US DOLLARS 141 | EURO 129 | Bank of New York Mellon | 4/15/2021 | (11 | ) | |||||
POUND STERLING 6,460 | US DOLLARS 8,406 | Bank of New York Mellon | 9/10/2021 | 46 | ||||||
US DOLLARS 7,609 | EURO 6,840 | Citibank | 3/26/2021 | (445 | ) | |||||
US DOLLARS 5,616 | CANADIAN DOLLAR 7,662 | Citibank | 4/15/2021 | (129 | ) | |||||
US DOLLARS 4,217 | EURO 3,731 | Citibank | 4/15/2021 | (177 | ) | |||||
US DOLLARS 12,756 | EURO 11,200 | Citibank | 5/21/2021 | (448 | ) | |||||
US DOLLARS 25,559 | EURO 22,820 | Goldman Sachs | 3/9/2021 | (1,301 | ) | |||||
US DOLLARS 82,431 | EURO 72,370 | Goldman Sachs | 5/21/2021 | (2,887 | ) | |||||
US DOLLARS 16,734 | AUSTRALIAN DOLLARS 23,870 | Goldman Sachs | 6/7/2021 | (383 | ) | |||||
US DOLLARS 94,608 | POUND STERLING 75,000 | Goldman Sachs | 6/7/2021 | (2,409 | ) | |||||
US DOLLARS 8,606 | DANISH KRONE 56,290 | Goldman Sachs | 6/7/2021 | (257 | ) | |||||
US DOLLARS 8,187 | NORWEGIAN KRONE 74,020 | Goldman Sachs | 9/10/2021 | 274 | ||||||
$ | (8,139 | ) |
(1) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Euro Interbank Offered Rate (“EURIBOR” or “E”), British Pound Sterling LIBOR Rate (“GBP LIBOR”), the Norwegian Interbank Offered Rate (“NIBOR” or “N”), the Copenhagen Interbank Offered Rate (“CIBOR” or “C”), Canadian Dollar LIBOR Rate (“CDOR LIBOR”), the Bank Bill Swap Rate ("BBSW"), the Bank Bill Swap Bid Rate ("BBSY"), or the Prime Rate (“P”Prime” or "P") and which reset daily, monthly, quarterly or semiannually. Investments or a portion thereof may bear Payment-in-Kind ("PIK"). For each, the Company has provided the PIK or the spread over LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, CDOR, BBSW, BBSY, or Prime and the current weighted average interest rate in effect at September 30, 2017.2020. Certain investments are subject to a LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, CDOR, BBSW, or Prime interest rate floor.
(2) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(3) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The investment may be subject to an unusedunused/letter of credit facility fee.
(4) Percentages are based on the Company’s net assets of $506,896,246$1,050,459 as of September 30, 2017.2020.
(5) Used for capital expenditures. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(6) The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2017,2020, non-qualifying assets totaled 20.6%17.3% of the Company’s total assets.
(7) The assets to be issued will be determined at Assets or a portion thereof are pledged as collateral for the time the funds are called.BCSF Complete Financing Solution LLC. See Note 6 "Debt".
(8) Unrealized appreciation/(depreciation) on forward currency exchange contracts.
(9) The principal amount (par amount) for all debt securities is denominated in U.S. dollars, unless otherwise noted. £ represents Pound Sterling, and € represents Euro.Euro, NOK represents Norwegian krone, AUD represents Australian, CAD represents Canadian Dollar and DKK represents Kroner.
(10) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Investment” of the Company as the Company owns five percent5% or more of the portfolio company’s securities.
(11)As defined in the 1940 Act, the Company is deemed to “Control” this portfolio company as the Company either owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company.
(12) The Company holdsAssets or a portion thereof are pledged as collateral for the 2018-1 Issuer. See Note 6 "Debt".
(13) $7 of the total par amount for this investment through Intermediary Entities (as defined)security is at P+ 5.50%. The investment disclosed in this consolidated schedule
(14) Non-Income Producing.
(15) Loan includes interest rate floor of investments reflects the ultimate1.00%.
(16) Loan includes interest in which the Company has rights, and obligations, if any.rate floor of 0.75%.
(13) The Company holds non-controlling, non-affiliate(17) Loan includes interest in TecoStar Holdings, Inc. common stock through this investment.rate floor of 0.50%.
(14)(18) Loan includes interest rate floor of 0.00%.
(19) Security valued using unobservable inputs (Level 3).
(20) The Company holds non-controlling, affiliate interest in an aircraft-owning special purpose vehicle through this investment.
(15) Non-Income Producing.(21) Assets or a portion thereof are pledged as collateral for the BCSF Revolving Credit Facility. See Note 6 "Debt".
(16)(22) The Company generally earns a higher interest rate on the “last out” tranche of debt, to the extent the debt has been allocated to “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(23) $1,133 of the total par amount for this security is at L+ 5.75%.
(24) $1,621 of the total par amount for this security is at P+ 4.50%.
(25) Security exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of September 30, 2020, the aggregate fair value of these securities is $143,263 or 13.64% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:
Investment | Acquisition Date | |
BCC Jetstream Holdings Aviation (On II), LLC - Equity Interest | 6/1/2017 | |
BCC Jetstream Holdings Aviation (Off I), LLC - Equity Interest | 6/1/2017 | |
CB Titan Holdings, Inc. - Preferred Equity | 11/14/2017 | |
Abracon Group Holding, LLC. - Equity Interest | 7/18/2018 | |
Armor Group, LP - Equity Interest | 8/28/2018 | |
Grammer Investment Holdings LLC - Warrants | 10/1/2018 | |
Grammer Investment Holdings LLC - Equity Interest | 10/1/2018 | |
Grammer Investment Holdings LLC - Preferred Equity | 10/1/2018 | |
ADT Pizza, LLC - Equity Interest | 10/29/2018 | |
PP Ultimate Holdings B, LLC - Equity Interest | 12/20/2018 | |
FCG Acquisitions, Inc. - Preferred Equity | 1/24/2019 | |
WCI-HSG HOLDCO, LLC - Preferred Equity | 2/22/2019 | |
Toro Private Investments II, L.P. - Equity Interest | 3/19/2019 | |
ARL Holdings, LLC. - Equity Interest | 5/3/2019 | |
ARL Holdings, LLC. - Equity Interest | 5/3/2019 | |
ACC Holdco, LLC. - Equity Interest | 6/28/2019 | |
Kellstrom Aerospace Group, Inc - Equity Interest | 7/1/2019 | |
East BCC Coinvest II,LLC - Equity Interest | 7/23/2019 | |
Gale Aviation (Offshore) Co - Equity Interest | 8/2/2019 | |
Ventiv Topco, Inc. - Equity Interest | 9/3/2019 | |
TLC Holdco LP - Equity Interest | 10/11/2019 | |
Elk Parent Holdings, LP - Equity Interest | 11/1/2019 | |
Elk Parent Holdings, LP - Preferred Equity | 11/1/2019 | |
Precision Ultimate Holdings, LLC - Equity Interest | 11/6/2019 | |
Elevator Holdco Inc. - Equity Interest | 12/23/2019 | |
Blackbrush Oil & Gas, L.P. - Equity Interest | 9/3/2020 | |
Blackbrush Oil & Gas, L.P. - Preferred Equity | 9/3/2020 |
(26) Denotes that all or a portion of the debt investment includes PIK interest during the period.
(27) Asset has been placed on non-accrual.
(28) Assets or a portion thereof are pledged as collateral for the BCSF Complete Financing Solution Holdco LLC. See Note 6 "Debt".
(29) Assets or a portion thereof are pledged as collateral for the 2019-1 Issuer. See Note 6 "Debt".
(30) Cash equivalents include $78,895 of restricted cash.
(31) Loan includes interest rate floor of 1.00%2.00%.
(17)(32) Loan includes interest rate floor of 0.75%1.50%.
(18) Loan includes interest rate floor of 0.50%.
(19) Security valued using unobservable inputs (Level 3).
See Notes to Consolidated Financial Statements.Statements
Bain Capital Specialty Finance, Inc.
Consolidated Schedule of Investments
As of December 31, 20162019
(In thousands)
Portfolio Company |
| Industry |
| Asset Type |
| Spread |
| Interest Rate |
| Maturity Date |
| Principal/ |
| Amortized Cost |
| Fair Value |
| Percentage of | ||||
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FineLine Technologies, Inc. |
| Capital Equipment |
| First lien senior secured loan |
| L+4.75 | % | 5.75 | % | 11/2/2022 |
| $ | 14,807,089 |
| $ | 14,482,151 |
| $ | 14,659,018 |
| 13.3 | % |
FineLine Technologies, Inc. |
| Capital Equipment |
| Revolver (3) |
| L+4.75 | % | 5.68 | % | 11/2/2021 |
| $ | 393,109 |
| 336,017 |
| 366,901 |
| 0.3 | % | ||
|
|
|
|
|
|
|
| Total Capital Equipment |
|
|
| 14,818,168 |
| 15,025,919 |
| 13.6 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
ASP Chromaflo Intermediate Holdings, Inc. |
| Chemicals, Plastics & Rubber |
| First lien senior secured loan |
| L+4.00 | % | 5.00 | % | 11/20/2023 |
| $ | 515,142 |
| 512,574 |
| 520,293 |
| 0.5 | % | ||
ASP Chromaflo Intermediate Holdings, Inc. |
| Chemicals, Plastics & Rubber |
| First lien senior secured loan |
| L+4.00 | % | 5.00 | % | 11/20/2023 |
| $ | 669,849 |
| 666,510 |
| 676,550 |
| 0.6 | % | ||
|
|
|
|
|
|
|
| Total Chemicals, Plastics, & Rubber |
|
|
| 1,179,084 |
| 1,196,843 |
| 1.1 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Drive DeVilbiss |
| Healthcare & Pharmaceuticals |
| First lien senior secured loan |
| L+5.50 | % | 6.50 | % | 12/21/2022 |
| $ | 6,886,228 |
| 6,266,467 |
| 6,318,114 |
| 5.7 | % | ||
Great Expressions Dental Centers PC |
| Healthcare & Pharmaceuticals |
| First lien senior secured loan |
| L+4.75 | % | 5.75 | % | 9/28/2023 |
| $ | 8,145,585 |
| 8,027,008 |
| 8,104,857 |
| 7.4 | % | ||
Great Expressions Dental Centers PC |
| Healthcare & Pharmaceuticals |
| Delayed draw term loan (2) (3) |
| — |
| — |
| 9/28/2023 |
| $ | — |
| (4,849 | ) | (3,335 | ) | 0.0 | % | ||
Great Expressions Dental Centers PC |
| Healthcare & Pharmaceuticals |
| Revolver (3) |
| P+3.75 | % | 7.25 | % | 9/28/2022 |
| $ | 166,714 |
| 149,845 |
| 160,879 |
| 0.2 | % | ||
|
|
|
|
|
|
|
| Total Healthcare & Pharmaceuticals |
|
|
| 14,438,471 |
| 14,580,515 |
| 13.3 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Harbortouch Payments, LLC |
| High Tech Industries |
| First lien senior secured loan |
| L+4.75 | % | 5.75 | % | 10/13/2023 |
| $ | 12,136,840 |
| 12,017,183 |
| 12,167,182 |
| 11.0 | % | ||
Netsmart Technologies, Inc. |
| High Tech Industries |
| First lien senior secured loan |
| L+4.50 | % | 5.50 | % | 4/19/2023 |
| $ | 9,974,937 |
| 9,969,553 |
| 10,027,934 |
| 9.1 | % | ||
Zywave, Inc. |
| High Tech Industries |
| First lien senior secured loan |
| L+5.00 | % | 6.00 | % | 11/17/2022 |
| $ | 17,907,651 |
| 17,730,634 |
| 17,728,575 |
| 16.1 | % | ||
Zywave, Inc. |
| High Tech Industries |
| Revolver (2) (3) |
| — |
| — |
| 11/17/2022 |
| $ | — |
| (18,827 | ) | (19,187 | ) | 0.0 | % | ||
|
|
|
|
|
|
|
| Total High Tech Industries |
|
|
| 39,698,543 |
| 39,904,504 |
| 36.2 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Deluxe Entertainment Services Group Inc. |
| Media: Diversified & Production |
| First lien senior secured loan |
| L+6.00 | % | 7.00 | % | 2/28/2020 |
| $ | 16,127,446 |
| 15,345,715 |
| 16,046,808 |
| 14.5 | % | ||
|
|
|
|
|
| Total Media: Diversified & Production |
|
|
| 15,345,715 |
| 16,046,808 |
| 14.5 | % | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Learfield Communications LLC |
| Services: Business |
| Second lien senior secured loan |
| L+7.25 | % | 8.25 | % | 12/2/2024 |
| $ | 5,400,000 |
| 5,346,301 |
| 5,410,125 |
| 4.9 | % | ||
Restaurant Technologies, Inc. |
| Services: Business |
| First lien senior secured loan |
| L+4.75 | % | 5.75 | % | 11/23/2022 |
| $ | 5,306,452 |
| 5,253,787 |
| 5,299,819 |
| 4.8 | % | ||
Restaurant Technologies, Inc. |
| Services: Business |
| Second lien senior secured loan |
| L+8.75 | % | 9.75 | % | 11/23/2023 |
| $ | 1,693,548 |
| 1,659,838 |
| 1,685,081 |
| 1.5 | % | ||
|
|
|
|
|
|
|
| Total Services: Business |
|
|
| 12,259,926 |
| 12,395,025 |
| 11.2 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Masergy Holdings, Inc. |
| Telecommunications |
| First lien senior secured loan |
| L+4.50 | % | 5.50 | % | 12/15/2023 |
| $ | 700,117 |
| 696,644 |
| 706,024 |
| 0.6 | % | ||
Masergy Holdings, Inc. |
| Telecommunications |
| Second lien senior secured loan |
| L+8.50 | % | 9.50 | % | 12/16/2024 |
| $ | 778,846 |
| 771,112 |
| 778,846 |
| 0.7 | % | ||
Polycom, Inc. |
| Telecommunications |
| First lien senior secured loan |
| L+6.50 | % | 7.50 | % | 9/27/2023 |
| $ | 7,253,125 |
| 7,043,836 |
| 7,307,524 |
| 6.6 | % | ||
|
|
|
|
|
|
|
| Total Telecommunications |
|
|
| 8,511,592 |
| 8,792,394 |
| 7.9 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
TOTAL INVESTMENTS - 97.8% |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 106,251,499 |
| $ | 107,942,008 |
| 97.8 | % |
Control Type | Industry | Portfolio Company | Investment Type | Spread Above Index (1) | Interest Rate | Maturity Date | Principal/Shares (9) | Cost | Market Value | % of NAV (4) | ||||||||||||||||||||||||||||
Non-Controlled/Non-Affiliate Investments | ||||||||||||||||||||||||||||||||||||||
Aerospace & Defense | Forming & Machining Industries Inc. (18) (19) (21) | Second Lien Senior Secured Loan | L+ 8.25% | 10.19 | % | 10/9/2026 | $ | 6,540 | 6,480 | 6,278 | ||||||||||||||||||||||||||||
Forming & Machining Industries Inc. (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.00% | 5.94 | % | 10/9/2025 | $ | 16,778 | 16,648 | 16,275 | |||||||||||||||||||||||||||||
GSP Holdings, LLC (7) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.50% | 7.39 | % | 11/6/2025 | $ | 36,268 | 35,917 | 35,542 | |||||||||||||||||||||||||||||
GSP Holdings, LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 7.29 | % | 11/6/2025 | $ | 227 | 182 | 136 | |||||||||||||||||||||||||||||
Kellstrom Aerospace Group, Inc (14) (19) (25) | Equity Interest | - | - | - | 1 | 1,963 | 1,911 | |||||||||||||||||||||||||||||||
Kellstrom Commercial Aerospace, Inc. (2) (3) (5) (18) (19) | First Lien Senior Secured Loan - Delayed Draw | - | - | 7/1/2025 | $ | - | (35 | ) | (77 | ) | ||||||||||||||||||||||||||||
Kellstrom Commercial Aerospace, Inc. (3) (18) (19) (26) | First Lien Senior Secured Loan - Revolver | L+ 5.00% | 8.35 | % | 7/1/2025 | $ | 5,758 | 5,639 | 5,630 | |||||||||||||||||||||||||||||
Kellstrom Commercial Aerospace, Inc. (12) (18) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.00% | 7.10 | % | 7/1/2025 | $ | 33,949 | 33,304 | 33,270 | |||||||||||||||||||||||||||||
Novetta, LLC (12) (15) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.80 | % | 10/17/2022 | $ | 6,581 | 6,497 | 6,484 | |||||||||||||||||||||||||||||
Precision Ultimate Holdings, LLC (14) (19) (25) | Equity Interest | - | - | - | 1,417 | 1,417 | 1,417 | |||||||||||||||||||||||||||||||
Salient CRGT, Inc. (12) (15) (29) | First Lien Senior Secured Loan | L+ 6.50% | 8.29 | % | 2/28/2022 | $ | 12,723 | 12,770 | 12,087 | |||||||||||||||||||||||||||||
TCFI Aevex LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 6.25% | 8.20 | % | 5/13/2025 | $ | 2,627 | 2,571 | 2,627 | |||||||||||||||||||||||||||||
TCFI Aevex LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.25% | 8.24 | % | 5/13/2025 | $ | 38,515 | 37,854 | 38,515 | |||||||||||||||||||||||||||||
WCI-HSG HOLDCO, LLC (14) (19) (25) | Preferred equity | - | - | - | 675 | 675 | 968 | |||||||||||||||||||||||||||||||
WCI-HSG Purchaser, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 4.25% | 6.04 | % | 2/24/2025 | $ | 403 | 369 | 396 | |||||||||||||||||||||||||||||
WCI-HSG Purchaser, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 6.30 | % | 2/24/2025 | $ | 17,779 | 17,551 | 17,735 | |||||||||||||||||||||||||||||
WP CPP Holdings, LLC. (12) (15) (21) (29) | Second Lien Senior Secured Loan | L+ 7.75% | 9.68 | % | 4/30/2026 | $ | 11,724 | 11,620 | 11,584 | |||||||||||||||||||||||||||||
Aerospace & Defense Total | $ | 191,422 | $ | 190,778 | 18.7 | % | ||||||||||||||||||||||||||||||||
Automotive | CST Buyer Company (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 10/3/2025 | $ | - | (31 | ) | - | ||||||||||||||||||||||||||||
CST Buyer Company (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 7.55 | % | 10/3/2025 | $ | 36,890 | 36,286 | 36,890 | |||||||||||||||||||||||||||||
JHCC Holdings, LLC (2) (3) (5) (18) (19) (28) | First Lien Senior Secured Loan - Delayed Draw | - | - | 9/9/2025 | $ | - | (40 | ) | (43 | ) | ||||||||||||||||||||||||||||
JHCC Holdings, LLC (3) (18) (19) | First Lien Senior Secured Loan - Revolver | P+ 4.50% | 10.00 | % | 9/9/2025 | $ | 1,013 | 972 | 999 | |||||||||||||||||||||||||||||
JHCC Holdings, LLC (7) (18) (19) | First Lien Senior Secured Loan | L+ 5.50% | 7.21 | % | 9/9/2025 | $ | 29,676 | 29,335 | 29,528 | |||||||||||||||||||||||||||||
Automotive Total | $ | 66,522 | $ | 67,374 | 6.6 | % | ||||||||||||||||||||||||||||||||
Banking | Green Street Parent, LLC (2) (3) (5) (18) (19) | First Lien Senior Secured Loan - Revolver | - | - | 8/27/2025 | $ | - | (46 | ) | (48 | ) | |||||||||||||||||||||||||||
Green Street Parent, LLC (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 5.25% | 7.05 | % | 8/27/2026 | $ | 14,480 | 14,201 | 14,190 | |||||||||||||||||||||||||||||
Transaction Network Services, Inc. (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.00% | 5.93 | % | 8/15/2022 | $ | 11,630 | 11,501 | 11,324 | |||||||||||||||||||||||||||||
Banking Total | $ | 25,656 | $ | 25,466 | 2.5 | % | ||||||||||||||||||||||||||||||||
Beverage, Food & Tobacco | Hearthside Food Solutions, LLC | Corporate Bond | - | 8.50 | % | 6/1/2026 | $ | 10,000 | 9,814 | 9,382 | ||||||||||||||||||||||||||||
NPC International, Inc. (12) (15) (21) (33) | Second Lien Senior Secured Loan | L+ 7.50% | 9.43 | % | 4/18/2025 | $ | 9,159 | 9,190 | 1,101 | |||||||||||||||||||||||||||||
NPC International, Inc. (15) (33) | First Lien Senior Secured Loan | L+ 3.50% | 5.42 | % | 4/19/2024 | $ | 4,937 | 4,963 | 2,328 | |||||||||||||||||||||||||||||
Beverage, Food & Tobacco Total | $ | 23,967 | $ | 12,811 | 1.3 | % | ||||||||||||||||||||||||||||||||
Capital Equipment | Dorner Manufacturing Corp. (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/15/2022 | $ | - | (12 | ) | - | ||||||||||||||||||||||||||||
Dorner Manufacturing Corp. (12) (15) (19) | First Lien Senior Secured Loan | L+ 5.75% | 7.71 | % | 3/15/2023 | $ | 7,890 | 7,766 | 7,890 | |||||||||||||||||||||||||||||
East BCC Coinvest II,LLC (14) (19) (25) | Equity Interest | - | - | - | 1,419 | 1,419 | 1,419 | |||||||||||||||||||||||||||||||
Electronics For Imaging, Inc. (18) (19) (21) | Second Lien Senior Secured Loan | L+ 9.00% | 10.94 | % | 7/23/2027 | $ | 13,070 | 12,253 | 12,220 | |||||||||||||||||||||||||||||
Engineered Controls International, LLC (12) (19) (21) (29) (32) | First Lien Senior Secured Loan | L+ 7.00% | 8.70 | % | 11/5/2024 | $ | 33,599 | 32,861 | 32,843 | |||||||||||||||||||||||||||||
EXC Holdings III Corp. (12) (15) (21) (29) | Second Lien Senior Secured Loan | L+ 7.50% | 9.59 | % | 12/1/2025 | $ | 8,240 | 8,252 | 7,993 | |||||||||||||||||||||||||||||
FCG Acquisitions, Inc. (14) (19) (25) | Preferred equity | - | - | - | 4 | 4,251 | 7,263 | |||||||||||||||||||||||||||||||
FFI Holdings I Corp (3) (5) (15) (19) (28) | First Lien Senior Secured Loan - Delayed Draw | - | - | 1/24/2025 | $ | - | (9 | ) | 3 | |||||||||||||||||||||||||||||
FFI Holdings I Corp (3) (15) (19) (30) | First Lien Senior Secured Loan - Revolver | L+ 5.75% | 7.95 | % | 1/24/2025 | $ | 3,438 | 3,368 | 3,465 | |||||||||||||||||||||||||||||
FFI Holdings I Corp (7) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.75% | 7.60 | % | 1/24/2025 | $ | 68,421 | 67,842 | 68,763 | |||||||||||||||||||||||||||||
Tidel Engineering, L.P. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/1/2023 | $ | - | - | - | ||||||||||||||||||||||||||||||
Tidel Engineering, L.P. (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.25% | 8.19 | % | 3/1/2024 | $ | 38,302 | 38,302 | 38,302 | |||||||||||||||||||||||||||||
Velvet Acquisition B.V. (6) (18) (19) (21) | Second Lien Senior Secured Loan | EURIBOR+ 8.00% | 8.00 | % | 4/17/2026 | € | 6,013 | 7,325 | 6,752 | |||||||||||||||||||||||||||||
Capital Equipment Total | $ | 183,618 | $ | 186,913 | 18.4 | % | ||||||||||||||||||||||||||||||||
Chemicals, Plastics & Rubber | AP Plastics Group, LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 8/2/2021 | $ | - | - | - | |||||||||||||||||||||||||||||
AP Plastics Group, LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.25% | 6.94 | % | 8/1/2022 | $ | 19,856 | 19,566 | 19,756 | |||||||||||||||||||||||||||||
Niacet b.v. (15) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 4.50% | 5.50 | % | 2/1/2024 | € | 3,684 | 3,949 | 4,126 | |||||||||||||||||||||||||||||
Plaskolite, Inc. (15) (29) | First Lien Senior Secured Loan | L+ 4.25% | 6.04 | % | 12/15/2025 | $ | 8,933 | 8,773 | 8,564 | |||||||||||||||||||||||||||||
Chemicals, Plastics & Rubber Total | $ | 32,288 | $ | 32,446 | 3.2 | % | ||||||||||||||||||||||||||||||||
Construction & Building | Chase Industries, Inc. (15) (19) (29) | First Lien Senior Secured Loan - Delayed Draw | L+ 4.00% | 5.94 | % | 5/12/2025 | $ | 1,115 | 1,115 | 1,111 | ||||||||||||||||||||||||||||
Chase Industries, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.00% (1.5% PIK) | 7.44 | % | 5/12/2025 | $ | 11,812 | 11,762 | 11,753 | |||||||||||||||||||||||||||||
Crown Subsea (12) (18) (29) | First Lien Senior Secured Loan | L+ 6.00% | 7.69 | % | 11/3/2025 | $ | 9,696 | 9,566 | 9,675 | |||||||||||||||||||||||||||||
Elk Parent Holdings, LP (14) (19) (25) | Equity Interest | - | - | - | 1 | 12 | 12 | |||||||||||||||||||||||||||||||
Elk Parent Holdings, LP (14) (19) (25) | Preferred Equity | - | - | - | 120 | 1,202 | 1,202 | |||||||||||||||||||||||||||||||
PP Ultimate Holdings B, LLC (14) (19) (25) | Equity Interest | - | - | - | 1 | 1,352 | 1,613 | |||||||||||||||||||||||||||||||
Profile Products LLC (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 12/20/2024 | $ | - | (64 | ) | (10 | ) | ||||||||||||||||||||||||||||
Profile Products LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.50% | 7.44 | % | 12/20/2024 | $ | 35,003 | 34,367 | 34,915 | |||||||||||||||||||||||||||||
Regan Development Holdings Limited (6) (17) (19) | First Lien Senior Secured Loan | EURIBOR+ 6.50% | 7.00 | % | 4/18/2022 | € | 2,051 | 2,235 | 2,303 | |||||||||||||||||||||||||||||
Regan Development Holdings Limited (6) (17) (19) | First Lien Senior Secured Loan | EURIBOR+ 6.50% | 7.00 | % | 4/18/2022 | € | 665 | 755 | 747 | |||||||||||||||||||||||||||||
Regan Development Holdings Limited (6) (17) (19) | First Lien Senior Secured Loan | EURIBOR+ 6.50% | 7.00 | % | 4/18/2022 | € | 6,226 | 6,710 | 6,992 | |||||||||||||||||||||||||||||
YLG Holdings, Inc. (2) (3) (15) (19) (28) | First Lien Senior Secured Loan - Delayed Draw | - | - | 10/31/2025 | € | - | - | (51 | ) | |||||||||||||||||||||||||||||
YLG Holdings, Inc. (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.75% | - | 10/31/2025 | € | - | (83 | ) | (171 | ) | ||||||||||||||||||||||||||||
YLG Holdings, Inc. (7) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.75% | 7.66 | % | 10/31/2025 | € | 38,862 | 38,484 | 38,085 | |||||||||||||||||||||||||||||
Construction & Building Total | $ | 107,413 | $ | 108,176 | 10.6 | % | ||||||||||||||||||||||||||||||||
Consumer Goods: Durable | New Milani Group LLC (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.94 | % | 6/6/2024 | $ | 17,100 | 16,968 | 16,672 | ||||||||||||||||||||||||||||
TLC Holdco LP (14) (19) (25) | Equity Interest | - | - | - | 1,188 | 1,186 | 1,188 | |||||||||||||||||||||||||||||||
TLC Purchaser, Inc. (2) (3) (5) (19) | First Lien Senior Secured Loan - Delayed Draw | - | - | 10/13/2025 | $ | - | (69 | ) | (71 | ) | ||||||||||||||||||||||||||||
TLC Purchaser, Inc. (3) (19) | First Lien Senior Secured Loan - Revolver | P+ 4.75% | 9.50 | % | 10/13/2025 | $ | 3,916 | 3,745 | 3,738 | |||||||||||||||||||||||||||||
TLC Purchaser, Inc. (12) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.75% | 7.49 | % | 10/13/2025 | $ | 42,721 | 41,882 | 41,867 | |||||||||||||||||||||||||||||
Consumer Goods: Durable Total | $ | 63,712 | $ | 63,394 | 6.2 | % | ||||||||||||||||||||||||||||||||
Consumer Goods: Non-Durable | FineLine Technologies, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | P+ 3.25% | 8.00 | % | 11/4/2022 | $ | 1,966 | 1,944 | 1,952 | ||||||||||||||||||||||||||||
FineLine Technologies, Inc. (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.25% | 6.05 | % | 11/4/2022 | $ | 31,384 | 31,217 | 31,228 | |||||||||||||||||||||||||||||
Kronos Acquisition Holdings Inc. (18) (19) (21) | First Lien Senior Secured Loan | L+ 7.00% | 8.80 | % | 5/15/2023 | $ | 2,647 | 2,605 | 2,627 | |||||||||||||||||||||||||||||
MND Holdings III Corp (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 3.50% | 5.44 | % | 6/19/2024 | $ | 11,642 | 11,667 | 10,944 | |||||||||||||||||||||||||||||
RoC Opco LLC (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 2/25/2025 | $ | - | (176 | ) | - | |||||||||||||||||||||||||||||
RoC Opco LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 7.25% | 9.19 | % | 2/25/2025 | $ | 40,793 | 39,888 | 40,793 | |||||||||||||||||||||||||||||
Solaray, LLC (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.00% | 7.85 | % | 9/11/2023 | $ | 14,573 | 14,573 | 14,501 | |||||||||||||||||||||||||||||
Solaray, LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 4.50% | 6.40 | % | 9/9/2022 | $ | 11,674 | 11,629 | 11,674 | |||||||||||||||||||||||||||||
Solaray, LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.00% | 7.82 | % | 9/11/2023 | $ | 42,610 | 42,610 | 42,397 | |||||||||||||||||||||||||||||
WU Holdco, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.50% | 7.44 | % | 3/26/2026 | $ | 832 | 778 | 832 | |||||||||||||||||||||||||||||
WU Holdco, Inc. (3) (5) (18) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/26/2025 | $ | - | (56 | ) | - | |||||||||||||||||||||||||||||
WU Holdco, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.50% | 7.44 | % | 3/26/2026 | $ | 39,705 | 38,923 | 39,705 | |||||||||||||||||||||||||||||
Consumer Goods: Non-Durable Total | $ | 195,602 | $ | 196,653 | 19.3 | % | ||||||||||||||||||||||||||||||||
Containers, Packaging, & Glass | Automate Intermediate Holdings II S.à r.l. (6) (18) (19) (21) | Second Lien Senior Secured Loan | L+ 7.75% | 9.55 | % | 7/22/2027 | $ | 11,870 | 11,637 | 11,633 | ||||||||||||||||||||||||||||
Containers, Packaging, & Glass Total | $ | 11,637 | $ | 11,633 | 1.1 | % | ||||||||||||||||||||||||||||||||
Energy: Electricity | Infinite Electronics International Inc. (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.00% | 5.80 | % | 7/2/2025 | $ | 19,752 | 19,739 | 19,654 | ||||||||||||||||||||||||||||
Infinite Electronics International Inc. (18) (19) (21) | Second Lien Senior Secured Loan | L+ 8.00% | 9.80 | % | 7/2/2026 | $ | 2,480 | 2,433 | 2,480 | |||||||||||||||||||||||||||||
Energy: Electricity Total | $ | 22,172 | $ | 22,134 | 2.2 | % | ||||||||||||||||||||||||||||||||
Energy: Oil & Gas | Amspec Services, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | P+ 3.75% | 9.00 | % | 7/2/2024 | $ | 2,125 | 2,071 | 2,125 | ||||||||||||||||||||||||||||
Amspec Services, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.25% | 8.19 | % | 7/2/2024 | $ | 44,100 | 43,605 | 44,100 | |||||||||||||||||||||||||||||
Blackbrush Oil & Gas, L.P. (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 8.00% | 9.89 | % | 2/9/2024 | $ | 32,075 | 31,588 | 31,754 | |||||||||||||||||||||||||||||
Energy: Oil & Gas Total | $ | 77,264 | $ | 77,979 | 7.7 | % | ||||||||||||||||||||||||||||||||
Environmental Industries | Adler & Allan Group Limited (6) (17) (19) (21) (22) | First Lien Last Out | GBP LIBOR+ 8.25% (2% PIK) | 11.04 | % | 9/30/2022 | £ | 13,279 | 16,814 | 17,612 | ||||||||||||||||||||||||||||
Environmental Industries Total | $ | 16,814 | $ | 17,612 | 1.7 | % | ||||||||||||||||||||||||||||||||
FIRE: Insurance | Ivy Finco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.00% | 5.70 | % | 5/19/2025 | £ | 7,217 | 8,950 | 9,381 | ||||||||||||||||||||||||||||
Ivy Finco Limited (3) (6) (18) (19) | First Lien Senior Secured Loan | GBP LIBOR+ 5.00% | 5.70 | % | 5/19/2025 | £ | 2,691 | 3,194 | 3,382 | |||||||||||||||||||||||||||||
Margaux Acquisition Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.00% | 8.10 | % | 12/19/2024 | $ | 2,186 | 2,020 | 2,186 | |||||||||||||||||||||||||||||
Margaux Acquisition, Inc. (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 12/19/2024 | $ | - | (48 | ) | - | |||||||||||||||||||||||||||||
Margaux Acquisition Inc. (7) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.50% | 7.60 | % | 12/19/2024 | $ | 28,916 | 28,392 | 28,916 | |||||||||||||||||||||||||||||
Margaux UK Finance Limited (3) (5) (6) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 12/19/2024 | £ | - | (10 | ) | - | |||||||||||||||||||||||||||||
Margaux UK Finance Limited (6) (7) (15) (19) | First Lien Senior Secured Loan | GBP LIBOR+ 5.50% | 6.50 | % | 12/19/2024 | £ | 7,706 | 9,869 | 10,221 | |||||||||||||||||||||||||||||
FIRE: Insurance Total | $ | 52,367 | $ | 54,086 | 5.3 | % | ||||||||||||||||||||||||||||||||
FIRE: Real Estate | Spectre (Carrisbrook House) Limited (6) (15) (19) | First Lien Senior Secured Loan | EURIBOR+ 7.50% | 8.50 | % | 8/9/2021 | € | 9,300 | 10,786 | 10,443 | ||||||||||||||||||||||||||||
FIRE: Real Estate Total | $ | 10,786 | $ | 10,443 | 1.0 | % | ||||||||||||||||||||||||||||||||
Forest Products & Paper | Solenis International LLC (18) (21) | Second Lien Senior Secured Loan | L+ 8.50% | 10.41 | % | 6/26/2026 | $ | 10,601 | 10,301 | 9,700 | ||||||||||||||||||||||||||||
Forest Products & Paper Total | $ | 10,301 | $ | 9,700 | 1.0 | % | ||||||||||||||||||||||||||||||||
Healthcare & Pharmaceuticals | CB Titan Holdings, Inc. (14) (19) (25) | Preferred equity | - | - | - | 1,953 | 1,953 | 3,378 | ||||||||||||||||||||||||||||||
Clarkson Eyecare, LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.25% | 8.05 | % | 4/2/2021 | $ | 23,118 | 22,747 | 23,118 | |||||||||||||||||||||||||||||
Clarkson Eyecare, LLC (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.25% | 8.05 | % | 4/2/2021 | $ | 15,284 | 15,031 | 15,284 | |||||||||||||||||||||||||||||
Clinical Innovations, LLC (3) (15) (19) (22) | First Lien Last Out - Revolver | L+ 5.50% | 7.21 | % | 10/17/2022 | $ | 772 | 757 | 772 | |||||||||||||||||||||||||||||
Clinical Innovations, LLC (12) (15) (19) (22) (29) | First Lien Last Out | L+ 5.50% | 7.30 | % | 10/17/2023 | $ | 10,916 | 10,744 | 10,916 | |||||||||||||||||||||||||||||
Clinical Innovations (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.50% | 7.30 | % | 10/17/2023 | $ | 511 | 500 | 511 | |||||||||||||||||||||||||||||
CPS Group Holdings, Inc. (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 3/3/2025 | $ | - | (64 | ) | - | |||||||||||||||||||||||||||||
CPS Group Holdings, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.25% | 7.19 | % | 3/3/2025 | $ | 55,905 | 55,390 | 55,905 | |||||||||||||||||||||||||||||
Datix Bidco Limited (3) (5) (6) (18) (19) | First Lien Senior Secured Loan - Revolver | - | - | 10/28/2024 | £ | - | (21 | ) | - | |||||||||||||||||||||||||||||
Datix Bidco Limited (6) (18) (19) (21) | Second Lien Senior Secured Loan | GBP LIBOR+ 7.75% | 8.63 | % | 4/27/2026 | £ | 12,134 | 16,314 | 16,093 | |||||||||||||||||||||||||||||
Datix Bidco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | BBSW+ 4.50% | 5.50 | % | 4/28/2025 | AUD4,212 | 3,205 | 2,958 | ||||||||||||||||||||||||||||||
Golden State Buyer, Inc. (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.75% | 6.55 | % | 6/22/2026 | $ | 15,230 | 15,084 | 14,887 | |||||||||||||||||||||||||||||
Great Expressions Dental Centers PC (3) (15) (19) (34) | First Lien Senior Secured Loan - Revolver | L+ 4.75% (0.5% PIK) | 7.22 | % | 9/28/2022 | $ | 1,017 | 1,009 | 789 | |||||||||||||||||||||||||||||
Great Expressions Dental Centers PC (12) (15) (19) | First Lien Senior Secured Loan | L+ 5.25% | 7.17 | % | 9/28/2023 | $ | 7,609 | 7,540 | 6,125 | |||||||||||||||||||||||||||||
Island Medical Management Holdings, LLC (15) (19) (29) | First Lien Senior Secured Loan | L+ 6.50% | 8.30 | % | 9/1/2022 | $ | 9,160 | 9,071 | 8,428 | |||||||||||||||||||||||||||||
Medical Depot Holdings, Inc. (12) (15) (21) | First Lien Senior Secured Loan | L+ 7.50% | 9.44 | % | 1/3/2023 | $ | 16,189 | 14,935 | 12,293 | |||||||||||||||||||||||||||||
Mendel Bidco, Inc. (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 4.50% | 4.50 | % | 6/17/2027 | € | 10,033 | 11,134 | 10,985 | |||||||||||||||||||||||||||||
Mendel Bidco, Inc. (12) (18) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 6.45 | % | 6/17/2027 | $ | 19,966 | 19,492 | 19,467 | |||||||||||||||||||||||||||||
Mertus 522. GmbH (3) (6) (18) (19) | First Lien Senior Secured Loan - Delayed Draw | EURIBOR+ 5.75% | 5.75 | % | 5/28/2026 | € | 875 | 602 | 946 | |||||||||||||||||||||||||||||
Mertus 522. GmbH (6) (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 5.75% | 5.75 | % | 5/28/2026 | € | 22,468 | 24,540 | 25,167 | |||||||||||||||||||||||||||||
TecoStar Holdings, Inc. (12) (15) (19) (21) | Second Lien Senior Secured Loan | L+ 8.50% | 10.24 | % | 11/1/2024 | $ | 9,472 | 9,282 | 9,472 | |||||||||||||||||||||||||||||
U.S. Anesthesia Partners, Inc. (12) (15) (19) (21) | Second Lien Senior Secured Loan | L+ 7.25% | 9.05 | % | 6/23/2025 | $ | 16,520 | 16,334 | 16,520 | |||||||||||||||||||||||||||||
Healthcare & Pharmaceuticals Total | $ | 255,579 | $ | 254,014 | 24.9 | % | ||||||||||||||||||||||||||||||||
High Tech Industries | AMI US Holdings Inc. (3) (6) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | 7.25 | % | 4/1/2024 | $ | 767 | 737 | 767 | ||||||||||||||||||||||||||||
AMI US Holdings Inc. (6) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.50% | 7.19 | % | 4/1/2025 | $ | 13,157 | 12,916 | 13,157 | |||||||||||||||||||||||||||||
Appriss Holdings, Inc. (3) (5) (18) (19) | First Lien Senior Secured Loan - Revolver | - | - | 5/30/2025 | $ | - | (61 | ) | - | |||||||||||||||||||||||||||||
Appriss Holdings, Inc. (7) (18) (19) | First Lien Senior Secured Loan | L+ 5.50% | 7.44 | % | 5/29/2026 | $ | 48,876 | 48,272 | 48,876 | |||||||||||||||||||||||||||||
CB Nike IntermediateCo Ltd (3) (6) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.00% | 6.93 | % | 10/31/2025 | $ | 1,550 | 1,464 | 1,461 | |||||||||||||||||||||||||||||
CB Nike IntermediateCo Ltd (6) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.93 | % | 10/31/2025 | $ | 35,422 | 34,729 | 34,714 | |||||||||||||||||||||||||||||
CMI Marketing Inc (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 5/24/2023 | $ | - | (14 | ) | - | |||||||||||||||||||||||||||||
CMI Marketing Inc (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 6.30 | % | 5/24/2024 | $ | 15,256 | 15,136 | 15,256 | |||||||||||||||||||||||||||||
Drilling Info Holdings, Inc (12) (18) (21) (29) | First Lien Senior Secured Loan | L+ 4.25% | 6.05 | % | 7/30/2025 | $ | 22,609 | 22,532 | 22,496 | |||||||||||||||||||||||||||||
Element Buyer, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.25% | 7.05 | % | 7/18/2025 | $ | 3,366 | 3,466 | 3,366 | |||||||||||||||||||||||||||||
Element Buyer, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.25% | 7.05 | % | 7/19/2024 | $ | 1,417 | 1,368 | 1,417 | |||||||||||||||||||||||||||||
Element Buyer, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.25% | 7.05 | % | 7/18/2025 | $ | 37,772 | 38,104 | 37,772 | |||||||||||||||||||||||||||||
Elo Touch Solutions, Inc. (18) (29) | First Lien Senior Secured Loan | L+ 6.50% | 8.24 | % | 12/15/2025 | $ | 3,261 | 3,168 | 3,244 | |||||||||||||||||||||||||||||
Everest Bidco (6) (15) (19) (21) | Second Lien Senior Secured Loan | GBP LIBOR+ 7.50% | 8.50 | % | 7/3/2026 | £ | 10,216 | 13,098 | 13,076 | |||||||||||||||||||||||||||||
MeridianLink, Inc. (15) (29) | First Lien Senior Secured Loan | L+ 4.00% | 5.80 | % | 5/30/2025 | $ | 1,825 | 1,804 | 1,798 | |||||||||||||||||||||||||||||
Netsmart Technologies, Inc. (15) (19) (21) | Second Lien Senior Secured Loan | L+ 7.50% | 9.30 | % | 10/19/2023 | $ | 2,749 | 2,749 | 2,735 | |||||||||||||||||||||||||||||
nThrive, Inc. (15) (19) (21) | Second Lien Senior Secured Loan | L+ 9.75% | 11.55 | % | 4/20/2023 | $ | 8,000 | 7,986 | 7,080 | |||||||||||||||||||||||||||||
Park Place Technologies (15) (21) | Second Lien Senior Secured Loan | L+ 8.00% | 9.80 | % | 3/30/2026 | $ | 6,733 | 6,688 | 6,682 | |||||||||||||||||||||||||||||
Symplr Software, Inc. (3) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 6.00% | 7.95 | % | 11/30/2023 | $ | 4,499 | 4,445 | 4,499 | |||||||||||||||||||||||||||||
Symplr Software, Inc. (7) (18) (19) | First Lien Senior Secured Loan | L+ 6.00% | 7.94 | % | 11/28/2025 | $ | 61,060 | 60,211 | 61,060 | |||||||||||||||||||||||||||||
Utimaco, Inc. (6) (18) (19) (21) (29) | First Lien Senior Secured Loan | L+ 4.50% | 6.42 | % | 8/9/2027 | $ | 14,849 | 14,490 | 14,775 | |||||||||||||||||||||||||||||
Ventiv Topco, Inc. (14) (19) (25) | Equity Interest | - | - | - | 28 | 2,833 | 2,886 | |||||||||||||||||||||||||||||||
Ventiv Holdco, Inc. (2) (3) (5) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.50% | - | 9/3/2025 | $ | - | (49 | ) | (17 | ) | ||||||||||||||||||||||||||||
Ventiv Holdco, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.50% | 7.44 | % | 9/3/2025 | $ | 24,299 | 23,948 | 24,178 | |||||||||||||||||||||||||||||
VPARK BIDCO AB (6) (19) (21) | First Lien Senior Secured Loan | CIBOR+ 4.00% | 4.75 | % | 3/10/2025 | DKK56,999 | 9,160 | 8,566 | ||||||||||||||||||||||||||||||
VPARK BIDCO AB (6) (16) (19) (21) | First Lien Senior Secured Loan | NIBOR+ 4.00% | 5.86 | % | 3/10/2025 | NOK74,020 | 9,197 | 8,430 | ||||||||||||||||||||||||||||||
Zywave, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.00% | 6.80 | % | 11/17/2022 | $ | 428 | 419 | 429 | |||||||||||||||||||||||||||||
Zywave, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.93 | % | 11/17/2022 | $ | 17,370 | 17,290 | 17,370 | |||||||||||||||||||||||||||||
High Tech Industries Total | $ | 356,086 | $ | 356,073 | 35.0 | % | ||||||||||||||||||||||||||||||||
Hotel, Gaming & Leisure | Aimbridge Acquisition Co., Inc. (12) (18) (19) (21) (29) | Second Lien Senior Secured Loan | L+ 7.50% | 9.19 | % | 2/1/2027 | $ | 20,193 | 19,649 | 19,688 | ||||||||||||||||||||||||||||
Captain D’s LLC (3) (15) (19) (35) | First Lien Senior Secured Loan - Revolver | P+ 3.50% | 7.45 | % | 12/15/2023 | $ | 1,285 | 1,273 | 1,266 | |||||||||||||||||||||||||||||
Captain D’s LLC (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.50% | 6.44 | % | 12/15/2023 | $ | 13,037 | 12,940 | 12,907 | |||||||||||||||||||||||||||||
Quidditch Acquisition, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 7.00% | 8.80 | % | 3/21/2025 | $ | 19,023 | 19,004 | 19,213 | |||||||||||||||||||||||||||||
Hotel, Gaming & Leisure Total | $ | 52,866 | $ | 53,074 | 5.2 | % | ||||||||||||||||||||||||||||||||
Media: Advertising, Printing & Publishing | A-L Parent LLC (12) (15) (21) | Second Lien Senior Secured Loan | L+ 7.25% | 9.05 | % | 12/2/2024 | $ | 4,050 | 4,020 | 3,594 | ||||||||||||||||||||||||||||
Ansira Holdings, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 5.75% | 7.51 | % | 12/20/2022 | $ | 2,936 | 2,926 | 2,458 | |||||||||||||||||||||||||||||
Ansira Holdings, Inc. (15) (19) (24) | First Lien Senior Secured Loan - Revolver | L+ 5.00% | 7.22 | % | 12/20/2022 | $ | 7,084 | 7,084 | 7,084 | |||||||||||||||||||||||||||||
Ansira Holdings, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.75% | 7.55 | % | 12/20/2022 | $ | 35,877 | 35,791 | 32,020 | |||||||||||||||||||||||||||||
Cruz Bay Publishing, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | P+ 5.00% | 9.75 | % | 2/28/2020 | $ | 876 | 865 | 876 | |||||||||||||||||||||||||||||
Cruz Bay Publishing (3) (15) (19) | First Lien Senior Secured Loan - Revolver | P+ 3.00% | 7.75 | % | 2/28/2020 | $ | 2,298 | 2,298 | 2,298 | |||||||||||||||||||||||||||||
Cruz Bay Publishing, Inc. (7) (15) (19) (27) | First Lien Senior Secured Loan | L+ 5.75% | 7.70 | % | 2/28/2020 | $ | 4,824 | 4,824 | 4,824 | |||||||||||||||||||||||||||||
Cruz Bay Publishing, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.75% | 8.46 | % | 2/28/2020 | $ | 1,611 | 1,611 | 1,611 | |||||||||||||||||||||||||||||
Media: Advertising, Printing & Publishing Total | $ | 59,419 | $ | 54,765 | 5.4 | % | ||||||||||||||||||||||||||||||||
Media: Broadcasting & Subscription | Vital Holdco Limited (6) (12) (15) (19) (21) (29) | First Lien Senior Secured Loan | L+ 5.25% | 7.05 | % | 5/29/2026 | $ | 35,357 | 34,552 | 35,357 | ||||||||||||||||||||||||||||
Vital Holdco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 5.25% | 5.25 | % | 5/29/2026 | € | 7,917 | 8,613 | 8,890 | |||||||||||||||||||||||||||||
Media: Broadcasting & Subscription Total | $ | 43,165 | $ | 44,247 | 4.3 | % | ||||||||||||||||||||||||||||||||
Media: Diversified & Production | Efficient Collaborative Retail Marketing Company, LLC (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 6/15/2022 | $ | - | - | - | |||||||||||||||||||||||||||||
Efficient Collaborative Retail Marketing Company, LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.75% | 8.69 | % | 6/15/2022 | $ | 15,095 | 15,185 | 15,095 | |||||||||||||||||||||||||||||
Efficient Collaborative Retail Marketing Company, LLC (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.75% | 8.69 | % | 6/15/2022 | $ | 9,788 | 9,847 | 9,788 | |||||||||||||||||||||||||||||
International Entertainment Investments Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 4.00% | 4.86 | % | 5/31/2023 | £ | 8,686 | 10,638 | 11,520 | |||||||||||||||||||||||||||||
Media: Diversified & Production Total | $ | 35,670 | $ | 36,403 | 3.6 | % | ||||||||||||||||||||||||||||||||
Retail | Batteries Plus Holding Corporation (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 7/6/2022 | $ | - | - | - | |||||||||||||||||||||||||||||
Batteries Plus Holding Corporation (7) (15) (19) | First Lien Senior Secured Loan | L+ 6.75% | 8.55 | % | 7/6/2022 | $ | 28,827 | 28,827 | 28,827 | |||||||||||||||||||||||||||||
Calceus Acquisition, Inc. (12) (18) (29) | First Lien Senior Secured Loan | L+ 5.50% | 7.30 | % | 2/12/2025 | $ | 5,997 | 5,947 | 6,000 | |||||||||||||||||||||||||||||
Retail Total | $ | 34,774 | $ | 34,827 | 3.4 | % | ||||||||||||||||||||||||||||||||
Services: Business | AMCP Clean Acquisition Company, LLC (12) (18) (29) | First Lien Senior Secured Loan - Delayed Draw | L+ 4.25% | 6.19 | % | 6/16/2025 | $ | 3,894 | 3,886 | 3,806 | ||||||||||||||||||||||||||||
AMCP Clean Acquisition Company, LLC (12) (18) (29) | First Lien Senior Secured Loan | L+ 4.25% | 6.19 | % | 6/16/2025 | $ | 16,093 | 16,062 | 15,731 | |||||||||||||||||||||||||||||
Comet Bidco Limited (6) (18) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.00% | 5.70 | % | 9/30/2024 | £ | 7,362 | 9,488 | 9,605 | |||||||||||||||||||||||||||||
Elevator Holdco Inc. (14) (19) (25) | Equity Interest | - | - | - | 2 | 2,448 | 2,448 | |||||||||||||||||||||||||||||||
Hightower Holding, LLC (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | - | - | 1/31/2025 | $ | - | (15 | ) | (17 | ) | ||||||||||||||||||||||||||||
Hightower Holding, LLC (12) (15) (19) (21) (29) (31) | First Lien Senior Secured Loan | L+ 5.00% | 6.80 | % | 1/31/2025 | $ | 34,589 | 34,432 | 34,503 | |||||||||||||||||||||||||||||
SumUp Holdings Luxembourg S.à.r.l. (6) (15) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 8.00% | 9.00 | % | 8/1/2024 | € | 15,957 | 17,658 | 17,873 | |||||||||||||||||||||||||||||
SumUp Holdings Luxembourg S.à.r.l. (3) (6) (15) (19) (21) | First Lien Senior Secured Loan | EURIBOR+ 8.00% | 9.00 | % | 8/1/2024 | € | 7,480 | 7,823 | 8,351 | |||||||||||||||||||||||||||||
TEI Holdings Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 6.00% | 7.83 | % | 12/23/2025 | $ | 1,509 | 1,464 | 1,464 | |||||||||||||||||||||||||||||
TEI Holdings Inc. (7) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 6.00% | 7.93 | % | 12/23/2026 | $ | 49,050 | 48,340 | 48,559 | |||||||||||||||||||||||||||||
Valet Waste Holdings, Inc (12) (18) (21) (29) | First Lien Senior Secured Loan | L+ 3.75% | 5.55 | % | 9/29/2025 | $ | 23,747 | 23,700 | 23,539 | |||||||||||||||||||||||||||||
Services: Business Total | $ | 165,286 | $ | 165,862 | 16.3 | % | ||||||||||||||||||||||||||||||||
Services: Consumer | Pearl Intermediate Parent LLC (18) (29) | Second Lien Senior Secured Loan | L+ 6.25% | 8.05 | % | 2/13/2026 | $ | 2,571 | 2,587 | 2,545 | ||||||||||||||||||||||||||||
Surrey Bidco Limited (6) (17) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 6.00% | 6.78 | % | 5/11/2026 | £ | 5,000 | 6,138 | 6,466 | |||||||||||||||||||||||||||||
Trafalgar Bidco Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | GBP LIBOR+ 5.00% | 5.70 | % | 9/11/2024 | £ | 6,011 | 7,727 | 7,733 | |||||||||||||||||||||||||||||
Zeppelin BidCo Pty Limited (6) (18) (19) (21) | First Lien Senior Secured Loan | BBSY+ 6.00% | 6.90 | % | 6/28/2024 | AUD20,621 | 14,006 | 14,050 | ||||||||||||||||||||||||||||||
Services: Consumer Total | $ | 30,458 | $ | 30,794 | 3.0 | % | ||||||||||||||||||||||||||||||||
Telecommunications | Conterra Ultra Broadband Holdings, Inc. (18) (29) | First Lien Senior Secured Loan | L+ 4.50% | 6.30 | % | 4/30/2026 | $ | 6,451 | 6,420 | 6,448 | ||||||||||||||||||||||||||||
Horizon Telcom, Inc. (3) (12) (15) (19) (29) | First Lien Senior Secured Loan - Delayed Draw | L+ 4.75% | 6.46 | % | 6/15/2023 | $ | 481 | 465 | 464 | |||||||||||||||||||||||||||||
Horizon Telcom, Inc. (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 6/15/2023 | $ | - | (2 | ) | (1 | ) | ||||||||||||||||||||||||||||
Horizon Telcom, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 4.75% | 6.44 | % | 6/15/2023 | $ | 13,730 | 13,577 | 13,592 | |||||||||||||||||||||||||||||
Masergy Holdings, Inc. (15) (29) | Second Lien Senior Secured Loan | L+ 7.50% | 9.46 | % | 12/16/2024 | $ | 857 | 863 | 840 | |||||||||||||||||||||||||||||
Telecommunications Total | $ | 21,323 | $ | 21,343 | 2.1 | % | ||||||||||||||||||||||||||||||||
Transportation: Cargo | A&R Logistics, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.75% | 7.85 | % | 5/5/2025 | $ | 1,053 | 940 | 1,053 | ||||||||||||||||||||||||||||
A&R Logistics, Inc. (7) (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.75% | 7.85 | % | 5/5/2025 | $ | 43,976 | 43,130 | 43,976 | |||||||||||||||||||||||||||||
A&R Logistics, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.75% | 7.85 | % | 5/5/2025 | $ | 2,473 | 2,424 | 2,473 | |||||||||||||||||||||||||||||
A&R Logistics, Inc. (7) (15) (19) | First Lien Senior Secured Loan | L+ 5.75% | 7.66 | % | 5/5/2025 | $ | 6,096 | 6,004 | 6,096 | |||||||||||||||||||||||||||||
ARL Holdings, LLC. (14) (19) (25) | Equity Interest | - | - | - | - | 445 | 448 | |||||||||||||||||||||||||||||||
ARL Holdings, LLC. (14) (19) (25) | Equity Interest | - | - | - | 9 | 9 | 8 | |||||||||||||||||||||||||||||||
ENC Holding Corporation (12) (18) (29) | First Lien Senior Secured Loan | L+ 4.00% | 5.94 | % | 5/30/2025 | $ | 10,272 | 10,259 | 10,041 | |||||||||||||||||||||||||||||
Grammer Investment Holdings LLC (14) (19) (25) | Equity Interest | - | - | - | 1,011 | 1,011 | 1,021 | |||||||||||||||||||||||||||||||
Grammer Investment Holdings LLC (19) (25) | Preferred Equity | 10% PIK | 10.00 | % | - | 6 | 646 | 679 | ||||||||||||||||||||||||||||||
Grammer Investment Holdings LLC (14) (19) (25) | Warrants | - | - | - | 122 | - | 122 | |||||||||||||||||||||||||||||||
Grammer Purchaser, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | L+ 4.50% | 6.30 | % | 9/30/2024 | $ | 52 | 56 | 42 | |||||||||||||||||||||||||||||
Grammer Purchaser, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan - Revolver | L+ 4.50% | 6.31 | % | 9/30/2024 | $ | 10,206 | 10,043 | 10,104 | |||||||||||||||||||||||||||||
Omni Logistics, LLC (15) (19) | Subordinated Debt | L+ 11.50% | 13.30 | % | 1/19/2024 | $ | 15,000 | 14,752 | 15,000 | |||||||||||||||||||||||||||||
PS HoldCo, LLC (12) (15) (29) | First Lien Senior Secured Loan | L+ 4.75% | 6.55 | % | 3/13/2025 | $ | 23,277 | 23,265 | 22,084 | |||||||||||||||||||||||||||||
Toro Private Investments II, L.P. (6) (14) (19) (25) | Equity Interest | - | - | - | 3,090 | 3,090 | 3,090 | |||||||||||||||||||||||||||||||
Transportation: Cargo Total | $ | 116,074 | $ | 116,237 | 11.4 | % | ||||||||||||||||||||||||||||||||
Transportation: Consumer | Direct Travel, Inc. (3) (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.50% | 8.44 | % | 12/1/2021 | $ | 1,471 | 1,382 | 1,471 | ||||||||||||||||||||||||||||
Direct Travel, Inc. (7) (15) (19) | First Lien Senior Secured Loan - Delayed Draw | L+ 6.50% | 8.45 | % | 12/1/2021 | $ | 2,920 | 2,920 | 2,920 | |||||||||||||||||||||||||||||
Direct Travel, Inc. (3) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 12/1/2021 | $ | - | - | - | ||||||||||||||||||||||||||||||
Direct Travel, Inc. (7) (15) (19) (23) | First Lien Senior Secured Loan | L+ 6.50% | 8.40 | % | 12/1/2021 | $ | 49,667 | 49,667 | 49,667 | |||||||||||||||||||||||||||||
Toro Private Holdings III, Ltd (6) (12) (18) (29) | Second Lien Senior Secured Loan | L+ 9.00% | 10.94 | % | 5/28/2027 | $ | 8,998 | 8,504 | 7,604 | |||||||||||||||||||||||||||||
Transportation: Consumer Total | $ | 62,473 | $ | 61,662 | 6.1 | % | ||||||||||||||||||||||||||||||||
Utilities: Electric | CSVC Acquisition Corp | Corporate Bond | - | 7.75 | % | 6/15/2025 | $ | 13,478 | 12,598 | 8,126 | ||||||||||||||||||||||||||||
Utilities: Electric Total | $ | 12,598 | $ | 8,126 | 0.8 | % | ||||||||||||||||||||||||||||||||
Wholesale | Abracon Group Holding, LLC. (14) (19) (25) | Equity Interest | - | - | - | 2 | 1,833 | 1,294 | ||||||||||||||||||||||||||||||
Abracon Group Holding, LLC. (2) (3) (5) (15) (19) | First Lien Senior Secured Loan - Revolver | - | - | 7/18/2024 | $ | - | (32 | ) | (28 | ) | ||||||||||||||||||||||||||||
Abracon Group Holding, LLC. (7) (13) (15) (19) | First Lien Senior Secured Loan | L+ 5.75% | 7.70 | % | 7/18/2024 | $ | 36,094 | 35,929 | 35,733 | |||||||||||||||||||||||||||||
Aramsco, Inc. (3) (18) (19) | First Lien Senior Secured Loan - Revolver | L+ 5.25% | 7.05 | % | 8/28/2024 | $ | 621 | 579 | 553 | |||||||||||||||||||||||||||||
Aramsco, Inc. (7) (18) (19) | First Lien Senior Secured Loan | L+ 5.25% | 7.05 | % | 8/28/2024 | $ | 24,288 | 23,902 | 23,802 | |||||||||||||||||||||||||||||
Armor Group, LP (14) (19) (25) | Equity Interest | - | - | - | 10 | 1,012 | 1,085 | |||||||||||||||||||||||||||||||
PetroChoice Holdings, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.93 | % | 8/19/2022 | $ | 9,948 | 9,867 | 9,500 | |||||||||||||||||||||||||||||
PetroChoice Holdings, Inc. (12) (15) (19) (29) | First Lien Senior Secured Loan | L+ 5.00% | 6.93 | % | 8/19/2022 | $ | 6,582 | 6,452 | 6,286 | |||||||||||||||||||||||||||||
Wholesale Total | $ | 79,542 | $ | 78,225 | 7.7 | % | ||||||||||||||||||||||||||||||||
Non-Controlled/Non-Affiliate Investments Total | $ | 2,416,854 | $ | 2,403,250 | 236.0 | % | ||||||||||||||||||||||||||||||||
Non-Controlled/Affiliate Investments | ||||||||||||||||||||||||||||||||||||||
Beverage, Food & Tobacco | ADT Pizza, LLC (10) (14) (19) (25) | Equity Interest | - | - | - | 6,720 | 6,720 | 6,720 | ||||||||||||||||||||||||||||||
Beverage, Food & Tobacco Total | $ | 6,720 | $ | 6,720 | 0.6 | % | ||||||||||||||||||||||||||||||||
Non-Controlled/Affiliate Investments Total | $ | 6,720 | $ | 6,720 | 0.6 | % | ||||||||||||||||||||||||||||||||
Controlled Affiliate Investments | ||||||||||||||||||||||||||||||||||||||
Aerospace & Defense | ACC Holdco, LLC (10) (11) (19) (25) | Preferred equity | - | 16.00 | % | - | 10,828 | 10,824 | 10,828 | |||||||||||||||||||||||||||||
Air Comm Corporation LLC (10) (11) (12) (18) (19) (21) (29) | First Lien Senior Secured Loan | L+ 6.50% | 8.44 | % | 6/30/2025 | $ | 27,298 | 26,516 | 27,161 | |||||||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (Off I), LLC (6) (10) (11) (19) (20) (25) | Equity Interest | - | - | - | 11,863 | 11,863 | 13,091 | |||||||||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20) (25) | Equity Interest | - | - | - | 1,116 | 1,116 | 1,869 | |||||||||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20) | First Lien Senior Secured Loan | - | 10.00 | % | 6/2/2022 | $ | 6,363 | 6,363 | 6,363 | |||||||||||||||||||||||||||||
Gale Aviation (Offshore) Co (6) (10) (11) (19) (25) | Equity Interest | - | - | - | 57,007 | 57,007 | 57,773 | |||||||||||||||||||||||||||||||
Aerospace & Defense Total | $ | 113,689 | $ | 117,085 | 11.5 | % | ||||||||||||||||||||||||||||||||
Controlled Affiliate Investments Total | $ | 113,689 | $ | 117,085 | 11.5 | % | ||||||||||||||||||||||||||||||||
Investments Total | $ | 2,537,263 | $ | 2,527,055 | 248.1 | % | ||||||||||||||||||||||||||||||||
Cash Equivalents | ||||||||||||||||||||||||||||||||||||||
Cash Equivalents | Goldman Sachs Financial Square Government Fund Institutional Share Class (36) | Cash Equivalents | - | 1.64 | % | - | $ | 66,965 | 66,965 | 66,965 | ||||||||||||||||||||||||||||
Cash Equivalents Total | $ | 66,965 | $ | 66,965 | 6.6 | % | ||||||||||||||||||||||||||||||||
Investments and Cash Equivalents Total | $ | 2,604,228 | $ | 2,594,020 | 254.7 | % |
(1) The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or the Prime Rate (“P”) and which reset daily, quarterly or semiannually.Forward Foreign Currency Exchange Contracts
For each, the Company has provided the spread over LIBOR or Prime Rate and the weighted average current interest rate in effect at December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor.
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) (8) | ||||||
US DOLLARS 8,720 | POUND STERLING 6,400 | Bank of New York Mellon | 9/21/2020 | $ | 288 | |||||
POUND STERLING 6,220 | US DOLLARS 8,192 | Bank of New York Mellon | 9/21/2020 | - | ||||||
US DOLLARS 12,177 | EURO 10,370 | Bank of New York Mellon | 1/10/2020 | 552 | ||||||
EURO 3,270 | US DOLLARS 2,930 | Bank of New York Mellon | 1/10/2020 | - | ||||||
US DOLLARS 11,874 | EURO 10,300 | Bank of New York Mellon | 6/15/2020 | 194 | ||||||
US DOLLARS 412 | POUND STERLING 310 | Citibank | 9/23/2020 | (1 | ) | |||||
US DOLLARS 25,257 | POUND STERLING 19,410 | Goldman Sachs | 1/10/2020 | (465 | ) | |||||
US DOLLARS 68,701 | POUND STERLING 53,430 | Goldman Sachs | 6/15/2020 | (2,399 | ) | |||||
US DOLLARS 83,784 | EURO 72,370 | Goldman Sachs | 6/15/2020 | 1,716 | ||||||
US DOLLARS 16,897 | AUSTRALIAN DOLLARS 24,180 | Goldman Sachs | 6/15/2020 | (167 | ) | |||||
US DOLLARS 8,885 | DANISH KRONE 57,000 | Goldman Sachs | 6/15/2020 | 225 | ||||||
US DOLLARS 8,257 | NORWEGIAN KRONE 74,020 | Goldman Sachs | 3/20/2020 | (161 | ) | |||||
$ | (218 | ) |
(2) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(1)The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Euro Interbank Offered Rate (“EURIBOR” or “E”), British Pound Sterling LIBOR Rate (“GBP LIBOR”), the Norwegian Interbank Offered Rate (“NIBOR” or “N”), the Copenhagen Interbank Offered Rate (“CIBOR” or “C”), the Bank Bill Swap Rate (“BBSW”), the Bank Bill Swap Bid Rate (“BBSY”), or the Prime Rate (“Prime” or “P”) and which reset daily, monthly, quarterly or semiannually. Investments or a portion thereof may bear Payment-in-Kind (“PIK”). For each, the Company has provided the PIK or the spread over LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, BBSY, or Prime and the current weighted average interest rate in effect at December 31, 2019. Certain investments are subject to a LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, or Prime interest rate floor. |
(2)The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. |
(3)Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The investment may be subject to an unused/letter of credit facility fee. |
(4)Percentages are based on the Company’s net assets of $1,018,400 as of December 31, 2019. |
(5)The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. |
(6)The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2019, non-qualifying assets totaled 15.6% of the Company’s total assets. |
(7)Assets or a portion thereof are pledged as collateral for the BCSF Complete Financing Solution LLC. See Note 6 “Debt”. |
(8)Unrealized appreciation/(depreciation) on forward currency exchange contracts. |
(9)The principal amount (par amount) for all debt securities is denominated in U.S. dollars, unless otherwise noted. £ represents Pound Sterling, € represents Euro, NOK represents Norwegian krone, AUD represents Australian and DKK represents Kroner. |
(10)As defined in the 1940 Act, the Company is deemed to be an “Affiliated Investment” of the Company as the Company owns 5% or more of the portfolio company’s securities. |
(11)As defined in the 1940 Act, the Company is deemed to “Control” this portfolio company as the Company either owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. |
(12)Assets or a portion thereof are pledged as collateral for the 2018-1 Issuer. See Note 6 “Debt”. |
(13)$91 of the total par amount for this security is at P+ 4.75%. |
(14)Non-Income Producing. |
(15)Loan includes interest rate floor of 1.00%. |
(16)Loan includes interest rate floor of 0.75%. |
(17)Loan includes interest rate floor of 0.50%. |
(18)Loan includes interest rate floor of 0.00%. |
(19)Security valued using unobservable inputs (Level 3). |
(20)The Company holds non-controlling, affiliate interest in an aircraft-owning special purpose vehicle through this investment. |
(21)Assets or a portion thereof are pledged as collateral for the BCSF Revolving Credit Facility. See Note 6 “Debt”. |
(22)The Company generally earns a higher interest rate on the “last out” tranche of debt, to the extent the debt has been allocated to “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder. |
(23)$127 of the total par amount for this security is at P+ 5.50%. |
(3) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion.
(24)$1,643 of the total par amount for this security is at P+ 4.00%. |
(25)Security exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2019, the aggregate fair value of these securities is $123,733 or 12.15% of the Company’s net assets. The acquisition dates of the restricted securities are as follows: |
(4) Percentages are based on the Company’s net assets of $110,344,258 as of December 31, 2016.
Investment | Acquisition Date | |
BCC Jetstream Holdings Aviation (On II), LLC - Equity Interest | 6/1/2017 | |
BCC Jetstream Holdings Aviation (Off I), LLC - Equity Interest | 6/1/2017 | |
CB Titan Holdings, Inc. - Preferred Equity | 11/14/2017 | |
Impala Private Investments, LLC - Equity Interest | 11/10/2017 | |
Abracon Group Holding, LLC. - Equity Interest | 7/18/2018 | |
Armor Group, LP - Equity Interest | 8/28/2018 | |
Grammer Investment Holdings LLC - Warrants | 10/1/2018 | |
Grammer Investment Holdings LLC - Equity Interest | 10/1/2018 | |
Grammer Investment Holdings LLC - Preferred Equity | 10/1/2018 | |
ADT Pizza, LLC - Equity Interest | 10/29/2018 | |
PP Ultimate Holdings B, LLC - Equity Interest | 12/20/2018 | |
FCG Acquisitions, Inc. - Preferred equity | 1/24/2019 | |
WCI-HSG HOLDCO, LLC - Preferred equity | 2/22/2019 | |
Toro Private Investments II, L.P. - Equity Interest | 3/19/2019 | |
ARL Holdings, LLC. - Equity Interest | 5/3/2019 | |
ARL Holdings, LLC. - Equity Interest | 5/3/2019 | |
ACC Holdco, LLC. - Equity Interest | 6/28/2019 | |
Kellstrom Aerospace Group, Inc - Equity Interest | 7/1/2019 | |
East BCC Coinvest II,LLC - Equity Interest | 7/23/2019 | |
Gale Aviation (Offshore) Co - Equity Interest | 8/2/2019 | |
Ventiv Topco, Inc. - Equity Interest | 9/3/2019 | |
TLC Holdco LP - Equity Interest | 10/11/2019 | |
Elk Parent Holdings, LP - Equity Interest | 11/1/2019 | |
Elk Parent Holdings, LP - Preferred equity | 11/1/2019 | |
Precision Ultimate Holdings, LLC - Equity Interest | 11/6/2019 | |
Elevator Holdco Inc. - Equity Interest | 12/23/2019 |
(26) $4,606 of the total par amount for this security is at P+ 4.00%. |
(27) $71 of the total par amount for this security is at P+ 4.75%. |
(28) Assets or a portion thereof are pledged as collateral for the BCSF Complete Financing Solution Holdco LLC. See Note 6 “Debt”. |
(29) Assets or a portion thereof are pledged as collateral for the 2019-1 Issuer. See Note 6 “Debt”. |
(30) $747 of the total par amount for this security is at P+ 4.75%. |
(31) $87 of the total par amount for this security is at P+ 4.00%. |
(32) Loan includes interest rate floor of 1.50%. |
(33) Asset has been placed on non-accrual |
(34) $350 of the total par amount for this security is at P+ 3.75%. |
(35) $540 of the total par amount for this security is at L+ 4.50% |
(36) Cash equivalents include $31,434 of restricted cash. |
See Notes to Consolidated Financial Statements.Statements
BAIN CAPITAL SPECIALTY FINANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)(unaudited)
(in thousands, except share and per share data)
Note 1. Organization
Bain Capital Specialty Finance, Inc. (the “Company”) was formed on October 5, 2015 and commenced investment operations on October 13, 2016. The Company has elected to be treated and is regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes the Company has elected to be subjecttreated and intends to taxoperate in a manner so as to continuously qualify as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), effective with its taxable year ended December 31, 2016.. The Company is externally managed by BCSF Advisors, LP (the “Advisor” or “BCSF Advisors”), our investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisor also provides the administrative services necessary for the Company to operate (in such capacity, the “Administrator” or “BCSF Advisors”).
On November 19, 2018, the Company closed its initial public offering (the “IPO”), which was a Qualified IPO, issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018.
The Company’s investment objectiveprimary focus is capitalizing on opportunities within its Advisor’s Senior Direct Lending Strategy, which seeks to provide risk-adjusted returns and current income to investorsits stockholders by investing primarily in middle-market companies.companies with between $10.0 million and $150.0 million in EBITDA. The Company intends to focusfocuses on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. The Company generally seeks to retain voting control in respect of the loans or particular classes of securities in which the Company invests through maintaining affirmative voting positions or negotiating consent rights that allow the Company to retain a blocking position. The Company may also invest in mezzanine debt and other junior securities and in secondary purchases of assets or portfolios, as described below. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. The Company may also invest, from time to time, in equity securities, distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.
There was no operating activity from January 1, 2016 to September 30, 2016, however, the Company incurred organizational costs during this period which are presented on the consolidated statements of operations. The Company completedOur operations comprise only a sale of its common stock and commenced operations on October 13, 2016.single reportable segment.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.US GAAP”). The Company’s consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein.herein and are not necessarily indicative of the full fiscal year. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 —Financial Services—Investment Companies.Companies. The functional currency of the Company is U.S. dollars and these consolidated financial statements have been prepared in that currency. Certain prior period information has been reclassified to conform to the current period presentation and this had no effect on the Company’s consolidated financial position or the consolidated results of operations as previously reported.
The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
Basis of Consolidation
Basis of Consolidation
As provided under Regulation S-X and ASC 946, theThe Company will generally not consolidate itsany wholly, or substantially, owned subsidiary when the design and purpose of the subsidiary is to act as an extension of the Company’s investment in a company other than a wholly ownedoperations and to facilitate the execution of the Company’s investment company subsidiary or a controlled operating company whose business consists of providing services to the Company.strategy. Accordingly, the Company consolidated the results of the Company’s wholly owned subsidiaryits subsidiaries BCSF I, LLC, which was formed on September 20, 2017,BCSF II-C, LLC, BCSF CFSH, LLC, BCSF CFS, LLC, BCC Middle Market CLO 2018-1, LLC, and BCC Middle Market CLO 2019-1, LLC in its consolidated financial statements. All intercompany transactions and balances have been eliminated in consolidation. BCSF I, LLC did not have any operating activity as of and for the period ended September 30, 2017. Since the Company is an investment company, portfolio investments held by the Company are not consolidated into the consolidated financial statements. The portfolio investments held by the Company (including its investments held by consolidated subsidiaries) are included on the consolidated statements of assets and liabilities as investments at fair value.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S.US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.
Valuation of Portfolio Investments
Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers. Generally, investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the boardBoard of directorsDirectors of the Company (the “Board”), based on, among other things, the input of the Advisor, the Company’s Audit Committeeaudit committee of the Board (the “Audit Committee”) and one or more independent third partythird-party valuation firms engaged by the Board.
With respect to unquoted securities,portfolio investments, the Company will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below:
· The Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Advisor responsible for the portfolio investment or by an independent valuation firm.
· | The Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Advisor responsible for the portfolio investment or by an independent valuation firm; | |
· | Preliminary valuation conclusions are then documented and discussed with the Company’s senior management and the Advisor. Agreed upon valuation recommendations are presented to the Audit Committee; | |
· | The Audit Committee of the Board reviews the valuations presented and recommends values for each of the investments to the Board; and | |
· | The Board will discuss valuations and determine the fair value of each investment in good faith based upon, among other things, the input of the Advisor, independent valuation firms, where applicable, and the Audit Committee. |
· Preliminary valuation conclusions are then documented and discussed with the Company’s senior management and the Advisor. Agreed upon valuation recommendations are presented to the Audit Committee.
· The Audit Committee of the Board reviews the valuations presented and recommends values for each of the investments to the Board.
· The Board will discuss valuations and determine the fair value of each investment in good faith based upon, among other things, the input of the Advisor, independent valuation firms, where applicable, and the Audit Committee.
In following this approach, the types of factors that are taken into account in the fair value pricing of investments include, as relevant, but are not limited to: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company’s ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion. The Company currently conducts this valuation process on a quarterly basis.
The Company applies ASC Topic 820, Fair Value Measurement(“ (“ASC 820”), which establishes a framework for measuring fair value in accordance with U.S.US GAAP and required disclosures of fair value measurements. The fair value of a financial instrument is the amount that would be received in an orderly transaction between market participants at the measurement date. The Company determines the fair value of investments consistent with its valuation policy. The Company discloses the fair value of its investments in a hierarchy which prioritizes and ranks the level of market observability used in the determination of fair value. In accordance with ASC 820, these levels are summarized below:
· Level 1 — Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.
· �� Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
· Level 3 — Valuations based on inputs that are unobservable and significant to the fair value measurement.
· | Level 1 — Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date. | |
· | Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. | |
· | Level 3 — Valuations based on inputs that are unobservable and significant to the fair value measurement. |
A financial instrument’s level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuations of Level 2 investments are generally based on quotations received from pricing services, dealers or brokers. Consideration is given to the source and nature of the quotations and the relationship of recent market activity to the quotations provided.
Transfers between levels, if any, are recognized at the beginning of the quarterreporting period in which the transfers occur. The Company evaluates the source of inputs used in the determination of fair value, including any markets in which the investments, or similar investments, are trading. When the fair value of an investment is determined using inputs from a pricing service (or principal market makers), the Company considers various criteria in determining whether the investment should be classified as a Level 2 or Level 3 investment. Criteria considered includes the pricing methodologies of the pricing services (or principal market makers) to determine if the inputs to the valuation are observable or unobservable, as well as the number of prices obtained and an assessment of the quality of the prices obtained. The level of an investment within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment.
The fair value assigned to these investments is based upon available information and may fluctuate from period to period. In addition, it does not necessarily represent the amount that might ultimately be realized upon sale. Due to inherent uncertainty of valuation, the estimated fair value of investments may differ from the value that would have been used had a ready market for the security existed, and the difference could be material.
Securities Transactions, Revenue Recognition and Expenses
The Company records its investment transactions on a trade date basis. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specified identification method. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Commitment fees are recorded on an accrual basis and recognized as interest income. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized intoagainst or againstaccreted into interest income using the effective interest method or straight-line method, as applicable. For the Company’s investments in revolving bank loans, the cost basis of the investmentsinvestment purchased is adjusted for the cash received for the discount on the total balance committed. The fair value is also adjusted for price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative value until it is offset by the future amounts called and funded. Upon prepayment of a loan or debt security, any prepayment premium, unamortized upfront loan origination fees and unamortized discount are recorded as interest income.
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Distributions received from an equity interest, limited liability company or a limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.
Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. PIK is recorded as interest or dividend income, as applicable. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.
Certain structuring fees and amendment fees are recorded as other income when earned. Administrative agent fees received by the Company are recorded as other income when the services are rendered.
Expenses are recorded on an accrual basis.
Non-Accrual Loans
Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments
received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest are paid and, in management’s judgment, principal and interest payments are likely to remain current. The Company may make exceptions to this treatment if a loan has sufficient collateral value and is in the process of collection. As of September 30, 20172020 and December 31, 2016, no securities had2019, one and two loans have been placed on non-accrual status.status, respectively.
Distributions
Distributions to common stockholders are recorded on the record date. The amount to be distributed, if any, is determined by the Board each quarter, and is generally based upon the earnings estimated by the Advisor. Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with U.S.US GAAP. The Company may pay distributions to its stockholders in a year in excess of its net ordinaryinvestment company taxable income and net capital gainsgain for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. This excess generally would be a tax-free return of capital in the period and generally would reduce the stockholder’s tax basis in its shares. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent;permanent, they are charged or credited to paid-in capital in excess of par, accumulated undistributed net investment income or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses.
The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and, depending upon the level of the Company’s taxable income earned in a year, the Company may choose to carry forward taxable income for distribution in the following year and incur applicable U.S. federal excise tax. The specific tax characteristics of the Company’s distributions will be reported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.
The Company distributes net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, the Company may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to stockholders.
Dividend Reinvestment Plan
The Company has adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends.dividends and distributions. Prior to the listing of the Company’s shares on a national securities exchange (a “Listing”),IPO, stockholders who elected to “opt in” to the Company’s dividend reinvestment plan will havehad their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.
Subsequent to a Listing,the IPO, stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.
Stockholders can elect to “opt in” or “opt out” of the Company’s dividend reinvestment plan in their Subscription Agreements, as later defined. The elections of stockholders that make an election prior to a Listing shall remain effective after the Listing.Offering Costs
SegmentsOffering costs consist primarily of fees and expenses incurred in connection with the offering of shares, legal, printing and other costs associated with the preparation and filing of applicable registration statements. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of paid-in-capital upon each such offering.
In accordance with ASC Topic 280 — Segment Reporting, the Company has determined that our operations comprise only a single reportable segment.
Cash, Restricted Cash, and Cash Equivalents
Cash and cash equivalents consist of deposits held at custodian banks and highly liquid investments, such as money market funds, with original maturities of three months or less. Cash and cash equivalents are carried at cost or amortized cost, which approximates fair value. The Company may deposit its cash and cash equivalents in financial institutions and, at certain times, such balances may exceed the Federal Deposit Insurance Corporation insurance limits. Cash equivalents are presented separately on the consolidated schedules of investments. Restricted cash is collected and held by the trustee who has been appointed as custodian of the assets securing certain of the Company’s financing transactions.
Foreign Currency Translation
The accounting records of the Company are maintained in U.S. dollars. The fair values of foreign securities, currency holdingsforeign cash and other assets and liabilities denominated in foreign currency are translated to U.S. dollars based on the current exchange rates at the end of each business day. Income and expenses denominated in foreign currencies are translated at current exchange rates when accrued or incurred. Unrealized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates are included in the net change in unrealized appreciation (depreciation) on foreign currency translation on the consolidated statements of operations. Net realized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to changes in foreign currency exchange rates are included in net realized gain (loss) on foreign currency transactions on the consolidated statements of operations. The portion of both realized and unrealized gains and losses on investments that result from changes in foreign currency exchange rates is not separately disclosed, but is included in net realized gain (loss) on investments and net change in unrealized appreciation (depreciation) on investments, respectively, on the consolidated statements of operations.
Forward Currency Exchange Contracts
The Company may enter into forward currency exchange contracts to reduce the Company’s exposure into foreign currency exchange rate fluctuations in the value of foreign currencies. A forward currency exchange contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The Company does not utilize hedge accounting and as such the Company recognizes the value of its derivatives at fair value on the consolidated statements of assets and liabilities with changes in the net unrealized appreciation (depreciation) on forward currency exchange contracts recorded on the consolidated statements of operations. Forward currency exchange contracts are valued using the prevailing forward currency exchange rate of the underlying currencies. Unrealized appreciation (depreciation) on forward currency exchange contracts are recorded on the consolidated statements of assets and liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Cash collateral maintained in accounts held by counterparties is included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities. Notional amounts and the gross fair value of forward currency exchange contracts assets and liabilities are presented separately on the consolidated scheduleschedules of investments.
Changes in net unrealized appreciation (depreciation) are recorded on the consolidated statements of operations in net change in unrealized appreciation (depreciation) on forward currency exchange contracts. Net realized gains and losses are recorded on the consolidated statements of operations in net realized gain (loss) on forward currency exchange contracts.
Realized gains and losses on forward currency exchange contracts are determined using the difference between the fair market value of the forward currency exchange contract at the time it was opened and the fair market value at the time it was closed or covered. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms.
Deferred Financing Costs and Debt Issuance Costs
The Company records costs related to issuance of revolving debt obligations as deferred financing costs. These costs are deferred and amortized using the effective yield method, or straight-line method for revolving credit facilities, over the stated maturity life of the obligation.
Organziational The Company records costs related to the issuance of term debt obligations as debt issuance costs. These costs are deferred and Offering Costs
Organizationalamortized using the effective interest method. These costs consist of primarily legal, incorporation and accounting fees incurred in connection withare presented as a reduction to the organizationoutstanding principal amount of the Company. Organizational costs are expensed as incurred and are shown interm debt obligations on the Company’s consolidated statements of operations.assets and liabilities.
Offering costs consist primarily of fees and expenses incurred in connection with the offering of shares, legal, printing and other costs associated with the preparation and filing of applicable registration statements. Offering costs of the Company incurred prior to the commencement of operations have been recognized as a deferred charge and are amortized on a straight line basis over 12 months beginning on the date of commencement of operations and are shown in the Company’s consolidated statements of operations.Income Taxes
Income Taxes
The Company has elected to be treated as a BDC under the 1940 Act. The Company has elected to be treated for U.S. federal income tax purposes as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not be subject to
corporate-level U.S. federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually as dividends to its stockholders. As a result, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.
The Company intends to comply with the applicable provisions of the Code pertaining to RICs and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the consolidated financial statements. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders through September 30, 2020 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until the Company files our tax return for the tax year ending December 31, 2020. The character of income and gains that the Company distributes is determined in accordance with income tax regulations that may differ from GAAP. BCSF I, LLC, BCSF II-C, LLC, BCSF CFSH, LLC, BCSF CFS, LLC, BCC Middle Market CLO 2018-1, LLC, and BCC Middle Market CLO 2019-1, LLC are disregarded entities for tax purposes and are consolidated with the tax return of the Company.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes, if any, are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Management has analyzed the Company’s tax positions and has concluded that no liability for unrecognized tax benefits related to uncertain tax positions on returns to be filed by the Company for all open tax years should be recorded. The Company identifies its major tax jurisdiction as the United States, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. As of September 30, 2020, the tax years that remain subject to examination are from 2016 forward.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In January 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. The Company does not believe these changes will have a material impact on its consolidated financial statements and disclosures.
In November 2016,March 2020, the FASB issued ASU 2016-18, Statement of Cash FlowsNo. 2020-04, “Reference Rate Reform (Topic 230): Restricted Cash (“848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2016-18”). ASU 2016-18 requires that the statements of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. This new guidance2020-04 is effective for fiscal years,all entities as of March 12, 2020 through December 31, 2022. The expedients and interim periods within those fiscal years, beginningexceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 15, 2017, and early adoption is permitted and is to be applied on a retrospective basis. The Company does not believe these changes will have a material impact on its consolidated financial statements and disclosures.
In31, 2022, except for hedging transactions as of December 2016, the FASB issued ASU 2016-19, “Technical Corrections and Improvements,” which amends ASC Topic 820 to clarify the difference between a valuation approach and a valuation technique, and requires31, 2022, that an entity to disclose when there has been a change in a valuation approach, a valuation technique or both. This new guidance is effective prospectivelyelected certain optional expedients for fiscal years beginning after December 15, 2016, as well as for interim periods within those fiscal years. The Company has evaluatedand that are retained through the impactend of this new guidance on its consolidated financial statements and disclosures, and determined that ASU 2016-19 did not have and is expected not to have a material impact on its consolidated financial statements and disclosures.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is expected to reduce the number of transactions that need to be further evaluated as businesses. This new guidance is effective prospectively for fiscal years beginning after December 15, 2017, as well as for interim periods within those fiscal years. Early adoption is permitted for certain types of transactions. The Company does not believe these changes will have a material impact on its consolidated financial statements and disclosures.
In March 2017, the FASB issued ASU 2017-08, “Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium by requiring the premium to be amortized to the earliest call date. This new guidance is effective prospectively for fiscal years beginning after December 15, 2018, as well as for interim periods within those fiscal years. Early adoption is permitted for certain types of transactions.hedging relationship. The Company is currently evaluating the impact this change will haveof adopting ASU 2020-04 on itsthe Company’s consolidated financial statements and disclosures.statements.
Note 3. Investments
The following table shows the composition of the investment portfolio, at amortized cost and fair value as of September 30, 20172020 (with corresponding percentage of total portfolio investments):
|
| As of September 30, 2017 | |||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of | |||
First Lien Senior Secured Loan |
| $ | 369,870,176 |
| 77.7 | % | $ | 375,229,243 |
| 77.6 | % |
First Lien Last Out Loan |
| 19,051,907 |
| 4.0 |
| 19,880,801 |
| 4.1 |
| ||
Second Lien Senior Secured Loan |
| 71,449,253 |
| 15.0 |
| 72,874,539 |
| 15.1 |
| ||
Corporate Bond |
| 8,478,000 |
| 1.8 |
| 8,329,635 |
| 1.7 |
| ||
Equity Interest |
| 7,063,857 |
| 1.5 |
| 7,063,857 |
| 1.5 |
| ||
Total |
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % |
As of September 30, 2020 | ||||||||||||||||
Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||
First Lien Senior Secured Loans | $ | 2,180,248 | 86.2 | % | $ | 2,128,629 | 86.5 | % | ||||||||
First Lien Last Out Loans | 16,936 | 0.7 | 17,223 | 0.7 | ||||||||||||
Second Lien Senior Secured Loans | 166,137 | 6.5 | 155,542 | 6.3 | ||||||||||||
Subordinated Debt | 14,787 | 0.6 | 15,000 | 0.6 | ||||||||||||
Equity Interests | 120,836 | 4.8 | 107,373 | 4.4 | ||||||||||||
Preferred Equity | 29,722 | 1.2 | 35,890 | 1.5 | ||||||||||||
Warrants | — | 0.0 | — | 0.0 | ||||||||||||
Total | $ | 2,528,666 | 100.0 | % | $ | 2,459,657 | 100.0 | % |
The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 20162019 (with corresponding percentage of total portfolio investments):
|
| As of December 31, 2016 | |||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of | |||
First Lien Senior Secured Loan |
| $ | 98,474,248 |
| 92.7 | % | $ | 100,067,956 |
| 92.7 | % |
Second Lien Senior Secured Loan |
| 7,777,251 |
| 7.3 |
| 7,874,052 |
| 7.3 |
| ||
Total |
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % |
As of December 31, 2019 | ||||||||||||||||
Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||
First Lien Senior Secured Loans | $ | 2,167,932 | 85.4 | % | $ | 2,165,844 | 85.7 | % | ||||||||
First Lien Last Out Loans | 28,315 | 1.1 | 29,300 | 1.2 | ||||||||||||
Second Lien Senior Secured Loans | 187,565 | 7.4 | 175,670 | 7.0 | ||||||||||||
Subordinated Debt | 14,752 | 0.6 | 15,000 | 0.5 | ||||||||||||
Corporate Bonds | 22,412 | 0.9 | 17,508 | 0.7 | ||||||||||||
Equity Interests | 96,736 | 3.8 | 99,293 | 3.9 | ||||||||||||
Preferred Equity | 19,551 | 0.8 | 24,318 | 1.0 | ||||||||||||
Warrants | — | 0.0 | 122 | 0.0 | ||||||||||||
Total | $ | 2,537,263 | 100.0 | % | $ | 2,527,055 | 100.0 | % |
The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of September 30, 20172020 (with corresponding percentage of total portfolio investments):
|
| As of September 30, 2017 | As of September 30, 2020 | ||||||||||||||||||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of | Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||||
United States |
| $ | 403,449,556 |
| 84.8 | % | $ | 407,380,530 |
| 84.3 | % | $ | 2,092,558 | 82.8 | % | $ | 2,034,586 | 82.7 | % | ||||||||
United Kingdom |
| 29,069,555 |
| 6.1 |
| 30,950,453 |
| 6.4 |
| 124,790 | 4.9 | 123,395 | 5.0 | ||||||||||||||
Cayman Islands | 81,107 | 3.2 | 66,406 | 2.7 | |||||||||||||||||||||||
Luxembourg | 51,735 | 2.0 | 53,974 | 2.2 | |||||||||||||||||||||||
Germany | 38,726 | 1.6 | 40,895 | 1.7 | |||||||||||||||||||||||
Israel | 34,474 | 1.4 | 35,157 | 1.4 | |||||||||||||||||||||||
Ireland |
| 24,049,655 |
| 5.0 |
| 25,331,251 |
| 5.2 |
| 20,752 | 0.8 | 21,567 | 0.9 | ||||||||||||||
Luxembourg |
| 15,202,423 |
| 3.2 |
| 15,130,828 |
| 3.1 |
| ||||||||||||||||||
Jersey | 17,792 | 0.7 | 18,119 | 0.7 | |||||||||||||||||||||||
Sweden | 18,404 | 0.7 | 16,888 | 0.7 | |||||||||||||||||||||||
Australia | 14,069 | 0.6 | 14,455 | 0.6 | |||||||||||||||||||||||
France | 13,127 | 0.5 | 13,124 | 0.5 | |||||||||||||||||||||||
Netherlands |
| 4,142,004 |
| 0.9 |
| 4,585,013 |
| 1.0 |
| 11,206 | 0.4 | 11,146 | 0.5 | ||||||||||||||
Canada | 9,926 | 0.4 | 9,945 | 0.4 | |||||||||||||||||||||||
Total |
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % | $ | 2,528,666 | 100.0 | % | $ | 2,459,657 | 100.0 | % |
The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of December 31, 20162019 (with corresponding percentage of total portfolio investments):
|
| As of December 31, 2016 | As of December 31, 2019 | ||||||||||||||||||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of | Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||||
United States |
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % | $ | 2,160,607 | 85.2 | % | $ | 2,146,830 | 85.0 | % | ||||||||
United Kingdom | 123,327 | 4.9 | 126,455 | 5.0 | |||||||||||||||||||||||
Cayman Islands | 57,007 | 2.2 | 57,773 | 2.3 | |||||||||||||||||||||||
Luxembourg | 45,622 | 1.8 | 45,461 | 1.8 | |||||||||||||||||||||||
Israel | 36,193 | 1.4 | 36,175 | 1.4 | |||||||||||||||||||||||
Germany | 25,142 | 1.0 | 26,113 | 1.0 | |||||||||||||||||||||||
Ireland | 20,486 | 0.8 | 20,485 | 0.8 | |||||||||||||||||||||||
Sweden | 18,357 | 0.7 | 16,996 | 0.7 | |||||||||||||||||||||||
Australia | 14,006 | 0.6 | 14,050 | 0.6 | |||||||||||||||||||||||
France | 13,098 | 0.5 | 13,076 | 0.5 | |||||||||||||||||||||||
Jersey | 12,144 | 0.5 | 12,763 | 0.5 | |||||||||||||||||||||||
Netherlands | 11,274 | 0.4 | 10,878 | 0.4 | |||||||||||||||||||||||
Total |
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % | $ | 2,537,263 | 100.0 | % | $ | 2,527,055 | 100.0 | % |
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of September 30, 20172020 (with corresponding percentage of total portfolio investments):
|
| As of September 30, 2017 | |||||||||
|
| Amortized |
| Percentage of |
| Fair |
| Percentage of | |||
High Tech Industries |
| $ | 70,751,009 |
| 14.9 | % | $ | 70,903,545 |
| 14.7 | % |
Healthcare & Pharmaceuticals |
| 68,273,830 |
| 14.3 |
| 68,787,769 |
| 14.2 |
| ||
Services: Business |
| 41,229,975 |
| 8.7 |
| 41,021,307 |
| 8.5 |
| ||
Aerospace & Defense |
| 40,621,333 |
| 8.5 |
| 40,965,911 |
| 8.5 |
| ||
Capital Equipment |
| 27,147,077 |
| 5.7 |
| 27,578,436 |
| 5.7 |
| ||
Energy: Oil & Gas |
| 26,489,326 |
| 5.6 |
| 27,010,875 |
| 5.6 |
| ||
Media: Diversified & Production |
| 22,243,738 |
| 4.7 |
| 24,016,916 |
| 5.0 |
| ||
Containers, Packaging & Glass |
| 22,263,662 |
| 4.7 |
| 22,354,669 |
| 4.6 |
| ||
Consumer goods: non-durable |
| 21,617,344 |
| 4.5 |
| 21,791,444 |
| 4.5 |
| ||
Beverage, Food & Tobacco |
| 21,035,956 |
| 4.4 |
| 21,385,447 |
| 4.4 |
| ||
Environmental Industries |
| 19,051,907 |
| 4.0 |
| 19,880,801 |
| 4.1 |
| ||
Construction & Building |
| 16,107,193 |
| 3.4 |
| 17,409,962 |
| 3.6 |
| ||
Wholesale |
| 15,007,917 |
| 3.1 |
| 15,032,291 |
| 3.1 |
| ||
Telecommunications |
| 14,584,099 |
| 3.1 |
| 14,973,652 |
| 3.1 |
| ||
Real Estate |
| 10,633,539 |
| 2.2 |
| 10,647,486 |
| 2.2 |
| ||
Automotive |
| 10,117,483 |
| 2.1 |
| 10,347,560 |
| 2.1 |
| ||
Utilities: Electric |
| 8,478,000 |
| 1.8 |
| 8,329,635 |
| 1.7 |
| ||
Chemicals, Plastics & Rubber |
| 7,521,730 |
| 1.6 |
| 8,003,207 |
| 1.7 |
| ||
Media: Advertising, Printing & Publishing |
| 5,350,769 |
| 1.1 |
| 5,413,500 |
| 1.1 |
| ||
Hotel, Gaming & Leisure |
| 4,662,501 |
| 1.0 |
| 4,748,340 |
| 1.0 |
| ||
Retail |
| 2,724,805 |
| 0.6 |
| 2,775,322 |
| 0.6 |
| ||
|
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % |
As of September 30, 2020 | ||||||||||||||||
Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||
High Tech Industries | $ | 384,197 | 15.2 | % | $ | 380,859 | 15.5 | % | ||||||||
Aerospace & Defense | 329,736 | 13.0 | 298,542 | 12.1 | ||||||||||||
Healthcare & Pharmaceuticals | 220,682 | 8.6 | 216,723 | 8.9 | ||||||||||||
Consumer Goods: Non-Durable | 192,532 | 7.5 | 190,042 | 7.8 | ||||||||||||
Capital Equipment | 179,015 | 7.1 | 181,509 | 7.4 | ||||||||||||
Services: Business | 181,525 | 7.2 | 171,961 | 7.0 | ||||||||||||
Transportation: Cargo | 114,130 | 4.5 | 112,991 | 4.6 | ||||||||||||
Construction & Building | 103,806 | 4.1 | 102,724 | 4.2 | ||||||||||||
Wholesale | 80,105 | 3.2 | 77,362 | 3.1 | ||||||||||||
Energy: Oil & Gas | 69,545 | 2.8 | 70,011 | 2.8 | ||||||||||||
FIRE: Insurance (1) | 66,507 | 2.6 | 66,644 | 2.7 | ||||||||||||
Automotive | 65,802 | 2.6 | 65,097 | 2.6 | ||||||||||||
Consumer Goods: Durable | 59,498 | 2.4 | 59,033 | 2.4 | ||||||||||||
Transportation: Consumer | 65,686 | 2.6 | 55,897 | 2.3 | ||||||||||||
Hotel, Gaming & Leisure | 52,674 | 2.1 | 49,861 | 2.0 | ||||||||||||
Media: Diversified & Production | 47,830 | 1.9 | 46,909 | 1.9 | ||||||||||||
Media: Advertising, Printing & Publishing | 52,153 | 2.1 | 46,292 | 1.9 | ||||||||||||
Media: Broadcasting & Subscription | 43,266 | 1.7 | 44,638 | 1.8 | ||||||||||||
Services: Consumer | 30,560 | 1.2 | 30,695 | 1.2 | ||||||||||||
Retail | 28,672 | 1.1 | 28,672 | 1.2 | ||||||||||||
Chemicals, Plastics & Rubber | 25,734 | 1.0 | 26,182 | 1.1 | ||||||||||||
Telecommunications | 21,774 | 0.9 | 21,524 | 0.9 | ||||||||||||
Energy: Electricity | 22,027 | 0.9 | 21,235 | 0.9 | ||||||||||||
Environmental Industries | 16,936 | 0.7 | 17,223 | 0.7 | ||||||||||||
Beverage, Food & Tobacco | 12,069 | 0.5 | 15,693 | 0.6 | ||||||||||||
FIRE: Finance (1) | 15,289 | 0.6 | 15,399 | 0.6 | ||||||||||||
Banking | 14,081 | 0.6 | 13,364 | 0.5 | ||||||||||||
Containers, Packaging, & Glass | 11,653 | 0.5 | 11,752 | 0.5 | ||||||||||||
FIRE: Real Estate (1) | 10,856 | 0.4 | 10,901 | 0.4 | ||||||||||||
Forest Products & Paper | 10,326 | 0.4 | 9,922 | 0.4 | ||||||||||||
Total | $ | 2,528,666 | 100.0 | % | $ | 2,459,657 | 100.0 | % |
(1) Finance, Insurance, and Real Estate (“FIRE”).
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 20162019 (with corresponding percentage of total portfolio investments):
|
| As of December 31, 2016 | As of December 31, 2019 | ||||||||||||||||||||||||
|
| Amortized |
| Percentage of |
| Fair |
| Percentage of | Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||||
High Tech Industries |
| $ | 39,698,543 |
| 37.4 | % | $ | 39,904,504 |
| 37.0 | % | $ | 356,086 | 14.0 | % | $ | 356,073 | 14.1 | % | ||||||||
Aerospace & Defense | 305,111 | 12.0 | 307,863 | 12.2 | |||||||||||||||||||||||
Healthcare & Pharmaceuticals | 255,579 | 10.1 | 254,014 | 10.1 | |||||||||||||||||||||||
Consumer Goods: Non-Durable | 195,602 | 7.7 | 196,653 | 7.8 | |||||||||||||||||||||||
Capital Equipment | 183,618 | 7.2 | 186,913 | 7.4 | |||||||||||||||||||||||
Services: Business | 165,286 | 6.5 | 165,862 | 6.5 | |||||||||||||||||||||||
Transportation: Cargo | 116,074 | 4.6 | 116,237 | 4.6 | |||||||||||||||||||||||
Construction & Building | 107,413 | 4.2 | 108,176 | 4.3 | |||||||||||||||||||||||
Wholesale | 79,542 | 3.1 | 78,225 | 3.1 | |||||||||||||||||||||||
Energy: Oil & Gas | 77,264 | 3.0 | 77,979 | 3.1 | |||||||||||||||||||||||
Automotive | 66,522 | 2.6 | 67,374 | 2.7 | |||||||||||||||||||||||
Consumer Goods: Durable | 63,712 | 2.5 | 63,394 | 2.5 | |||||||||||||||||||||||
Transportation: Consumer | 62,473 | 2.5 | 61,662 | 2.3 | |||||||||||||||||||||||
Media: Advertising, Printing & Publishing | 59,419 | 2.3 | 54,765 | 2.2 | |||||||||||||||||||||||
FIRE: Insurance (1) | 52,367 | 2.1 | 54,086 | 2.1 | |||||||||||||||||||||||
Hotel, Gaming & Leisure | 52,866 | 2.1 | 53,074 | 2.1 | |||||||||||||||||||||||
Media: Broadcasting & Subscription | 43,165 | 1.7 | 44,247 | 1.8 | |||||||||||||||||||||||
Media: Diversified & Production |
| 15,345,715 |
| 14.4 |
| 16,046,808 |
| 14.9 |
| 35,670 | 1.4 | 36,403 | 1.4 | ||||||||||||||
Capital Equipment |
| 14,818,168 |
| 14.0 |
| 15,025,919 |
| 13.9 |
| ||||||||||||||||||
Healthcare & Pharmaceuticals |
| 14,438,471 |
| 13.6 |
| 14,580,515 |
| 13.5 |
| ||||||||||||||||||
Services: Business |
| 12,259,926 |
| 11.5 |
| 12,395,025 |
| 11.5 |
| ||||||||||||||||||
Retail | 34,774 | 1.4 | 34,827 | 1.4 | |||||||||||||||||||||||
Chemicals, Plastics & Rubber | 32,288 | 1.3 | 32,446 | 1.3 | |||||||||||||||||||||||
Services: Consumer | 30,458 | 1.2 | 30,794 | 1.2 | |||||||||||||||||||||||
Banking | 25,656 | 1.0 | 25,466 | 1.0 | |||||||||||||||||||||||
Energy: Electricity | 22,172 | 0.9 | 22,134 | 0.9 | |||||||||||||||||||||||
Telecommunications |
| 8,511,592 |
| 8.0 |
| 8,792,394 |
| 8.1 |
| 21,323 | 0.8 | 21,343 | 0.8 | ||||||||||||||
Chemicals, Plastics & Rubber |
| 1,179,084 |
| 1.1 |
| 1,196,843 |
| 1.1 |
| ||||||||||||||||||
|
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % | ||||||||||||||||
Beverage, Food & Tobacco | 30,687 | 1.2 | 19,531 | 0.8 | |||||||||||||||||||||||
Environmental Industries | 16,814 | 0.7 | 17,612 | 0.7 | |||||||||||||||||||||||
Containers, Packaging & Glass | 11,637 | 0.5 | 11,633 | 0.5 | |||||||||||||||||||||||
FIRE: Real Estate (1) | 10,786 | 0.4 | 10,443 | 0.4 | |||||||||||||||||||||||
Forest Products & Paper | 10,301 | 0.4 | 9,700 | 0.4 | |||||||||||||||||||||||
Utilities: Electric | 12,598 | 0.6 | 8,126 | 0.3 | |||||||||||||||||||||||
Total | $ | 2,537,263 | 100.0 | % | $ | 2,527,055 | 100.0 | % |
(1) Finance, Insurance, and Real Estate (“FIRE”).
Antares Bain Capital Complete Financing Solution
Prior to April 30, 2019, the Company was party to a limited liability company agreement with Antares Midco Inc. (“Antares”) pursuant to which it invested in ABC Complete Financing Solution LLC, which made investments through its subsidiary, Antares Bain Capital Complete Financing Solution LLC (together with ABC Complete Financing Solution LLC, “ABCS”). ABCS, an unconsolidated Delaware limited liability company, was formed on September 27, 2017 and commenced operations on November 29, 2017. ABCS’ principal purpose was to make investments, primarily in senior secured unitranche loans. The Company recorded its investment in ABCS at fair value. Distributions of income received from ABCS, if any, were recorded as dividend income from controlled affiliate investments in the consolidated statements of operations. Distributions received from ABCS in excess of income earned at ABCS, if any, were recorded as a return of capital and reduced the amortized cost of controlled affiliate investments.
The Company has made certainand Antares, as members of ABCS, agreed to contribute capital up to (subject to the terms of their agreement) $950.0 million in aggregate to purchase equity interests in ABCS, with the Company and Antares contributing up to $425.0 million and $525.0 million, respectively. Funding of such commitments generally required the consent of both Antares Credit Opportunities Manager LLC and the Advisor on behalf of Antares and the Company, respectively. ABCS was capitalized with capital contributions from its members on a pro-rata basis based on their maximum capital contributions as transactions were funded after they had been approved.
Investment decisions of ABCS required the consent of both the Advisor and Antares Credit Opportunities Manager LLC, as representatives of the Company and Antares, respectively. Each of the Advisor and Antares sourced investments for ABCS.
On April 30, 2019, the Company formed BCSF Complete Financing Solution Holdco, LLC (“BCSF CFSH, LLC”) and BCSF Complete Financing Solution, LLC (“BCSF Unitranche” or “BCSF CFS, LLC”), wholly-owned, newly-formed, subsidiaries. The Company received its proportionate share of all assets which represented 44.737% of ABCS. The portfolio of investments that was distributed comprised of 25 senior secured unitranche loans with affiliated investment funds through intermediary entities (together,a fair value of $919.0 million and cash of $3.2 million. The Company also assumed the “Intermediary Entities”).obligation to fund outstanding unfunded commitments of $31.4 million. In connection with the distribution, the Company recognized a realized gain of $0.3 million. The Company is issuedno longer a specified interestmember of ABCS. The assets the Company received from ABCS have been included in connectionthe Company’s consolidated financial statements and notes thereto.
In conjunction with the investments made throughdistribution from ABCS, on April 30, 2019, BCSF CFS, LLC entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary Entities, such thatand Bank. On the date of the ABCS distribution, the Company receiveshad $577.5 million outstanding on the rights and commitments of such investments. These rights, and unfunded obligations, if any, are based uponJPM Credit Facility. See Note 6 for additional information on the Company’s pro-rata specified interest of such investments.JPM Credit Facility.
AtBelow is selected statements of operations information for the three and nine months ended September 30, 2017, investments held through specified interests in the Intermediary Entities are disclosed on the consolidated schedule of investments and in the footnotes as if the Company directly owned such investment and the specified interests are included in non-controlled/non-affiliate investments on the consolidated statements of assets and liabilities. At December 31, 2016, no investments were held through specified interests in the Intermediary Entities.2019:
Selected Statements of Operations Information
For the Three Months Ended | For the Nine Months Ended | |||||||
September 30, 2019 | September 30, 2019 | |||||||
Interest income | $ | — | $ | 53,494 | ||||
Fee income | — | 217 | ||||||
Total revenues | — | 53,711 | ||||||
Credit facility expenses (1) | — | 22,008 | ||||||
Other fees and expenses | — | 6,661 | ||||||
Total expenses | — | 28,669 | ||||||
Net investment income | — | 25,042 | ||||||
Net increase in members’ capital from operations | $ | — | $ | 25,042 |
(1) The ABCS distribution was effective April 30, 2019.
Note 4. Fair Value Measurements
Fair Value Disclosures
The following table presents fair value measurements of investments by major class, cash equivalents and derivatives as of September 30, 2017,2020, according to the fair value hierarchy:
|
| Fair Value Measurements | |||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Investments: |
|
|
|
|
|
|
|
|
| ||||
First Lien Senior Secured Loan |
| $ | — |
| $ | 174,050,621 |
| $ | 201,178,622 |
| $ | 375,229,243 |
|
First Lien Last Out Loan |
| — |
| — |
| 19,880,801 |
| 19,880,801 |
| ||||
Second Lien Senior Secured Loan |
| — |
| 17,276,799 |
| 55,597,740 |
| 72,874,539 |
| ||||
Corporate Bond |
| — |
| 8,329,635 |
| — |
| 8,329,635 |
| ||||
Equity Interest |
| — |
| — |
| 7,063,857 |
| 7,063,857 |
| ||||
Total Investments |
| $ | — |
| $ | 199,657,055 |
| $ | 283,721,020 |
| $ | 483,378,075 |
|
|
|
|
|
|
|
|
|
|
| ||||
Cash equivalents |
| $ | 36,905,818 |
| $ | — |
| $ | — |
| $ | 36,905,818 |
|
Forward currency exchange contracts (liability) |
| $ | — |
| $ | (2,643,944 | ) | $ | — |
| $ | (2,643,944 | ) |
Fair Value Measurements | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments: | ||||||||||||||||
First Lien Senior Secured Loans | $ | — | $ | 134,926 | $ | 1,993,703 | $ | 2,128,629 | ||||||||
First Lien Last Out Loans | — | — | 17,223 | 17,223 | ||||||||||||
Second Lien Senior Secured Loans | — | 39,650 | 115,892 | 155,542 | ||||||||||||
Subordinated Debt | — | — | 15,000 | 15,000 | ||||||||||||
Equity Interests | — | — | 107,373 | 107,373 | ||||||||||||
Preferred Equity | — | — | 35,890 | 35,890 | ||||||||||||
Warrants | — | — | — | — | ||||||||||||
Total Investments | $ | — | $ | 174,576 | $ | 2,285,081 | $ | 2,459,657 | ||||||||
Cash equivalents | $ | 101,970 | $ | — | $ | — | $ | 101,970 | ||||||||
Forward currency exchange contracts (asset) | $ | — | $ | 23 | $ | — | $ | 23 | ||||||||
Forward currency exchange contracts (liability) | $ | — | $ | 8,162 | $ | — | $ | 8,162 |
The following table presents fair value measurements of investments by major class, cash equivalents and derivatives as of December 31, 2016,2019, according to the fair value hierarchy:
|
| Fair Value Measurements | Fair Value Measurements | ||||||||||||||||||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Investments: |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
First Lien Senior Secured Loan |
| $ | — |
| $ | 67,332,649 |
| $ | 32,735,307 |
| $ | 100,067,956 |
| ||||||||||||||||
Second Lien Senior Secured Loan |
| — |
| 7,874,052 |
| — |
| 7,874,052 |
| ||||||||||||||||||||
First Lien Senior Secured Loans | $ | — | $ | 176,223 | $ | 1,989,621 | $ | 2,165,844 | |||||||||||||||||||||
First Lien Last Out Loans | — | — | 29,300 | 29,300 | |||||||||||||||||||||||||
Second Lien Senior Secured Loans | — | 51,643 | 124,027 | 175,670 | |||||||||||||||||||||||||
Subordinated Debt | — | — | 15,000 | 15,000 | |||||||||||||||||||||||||
Corporate Bonds | — | 17,508 | — | 17,508 | |||||||||||||||||||||||||
Equity Interests | — | — | 99,293 | 99,293 | |||||||||||||||||||||||||
Preferred Equity | — | — | 24,318 | 24,318 | |||||||||||||||||||||||||
Warrants | — | — | 122 | 122 | |||||||||||||||||||||||||
Total Investments |
| $ | — |
| $ | 75,206,701 |
| $ | 32,735,307 |
| $ | 107,942,008 |
| $ | — | $ | 245,374 | $ | 2,281,681 | $ | 2,527,055 | ||||||||
Cash equivalents | $ | 66,965 | $ | — | $ | — | $ | 66,965 | |||||||||||||||||||||
Forward currency exchange contracts (asset) | — | 1,034 | — | 1,034 | |||||||||||||||||||||||||
Forward currency exchange contracts (liability) | $ | — | $ | 1,252 | $ | — | $ | 1,252 |
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2017:2020:
|
| First Lien |
| First Lien |
| Second Lien |
| Equity |
| Total |
| |||||
Balance as of January 1, 2017 |
| $ | 32,735,307 |
| $ | — |
| $ | — |
| $ | — |
| $ | 32,735,307 |
|
Purchases of investments and other adjustments to cost |
| 147,030,155 |
| 19,040,991 |
| 52,742,302 |
| 7,063,857 |
| 225,877,305 |
| |||||
Net accretion of discounts (amortization of premiums) |
| 248,403 |
| 10,916 |
| 31,200 |
| — |
| 290,519 |
| |||||
Proceeds from principal repayments and sales of investments |
| (3,464,688 | ) | — |
| — |
| — |
| (3,464,688 | ) | |||||
Net change in unrealized appreciation on investments |
| 4,184,224 |
| 828,894 |
| 1,139,157 |
| — |
| 6,152,275 |
| |||||
Net realized gains on investments |
| 15,638 |
| — |
| — |
| — |
| 15,638 |
| |||||
Transfers from Level 3 |
| — |
| — |
| — |
| — |
| — |
| |||||
Transfers to Level 3 |
| 20,429,583 |
| — |
| 1,685,081 |
| — |
| 22,114,664 |
| |||||
Balance as of September 30, 2017 |
| $ | 201,178,622 |
| $ | 19,880,801 |
| $ | 55,597,740 |
| $ | 7,063,857 |
| $ | 283,721,020 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Change in unrealized appreciation attributable to investments still held at September 30, 2017 |
| $ | 4,184,224 |
| $ | 828,894 |
| $ | 1,139,157 |
| $ | — |
| $ | 6,152,275 |
|
First Lien Senior Secured Loans | First Lien Last Out Loans | Second Lien Senior Secured Loans | Subordinated Debt | Equity Interests | Preferred Equity | Warrants | Total Investments | |||||||||||||||||||||||||
Balance as of January 1, 2020 | $ | 1,989,621 | $ | 29,300 | $ | 124,027 | $ | 15,000 | $ | 99,293 | $ | 24,318 | $ | 122 | $ | 2,281,681 | ||||||||||||||||
Purchases of investments and other adjustments to cost (1) | 339,482 | 2,561 | — | — | 24,100 | 10,104 | — | 376,247 | ||||||||||||||||||||||||
Paid-in-kind interest | 2,858 | 88 | — | — | — | 67 | — | 3,013 | ||||||||||||||||||||||||
Net accretion of discounts (amortization of premiums) | 3,475 | 54 | 288 | 35 | — | — | — | 3,852 | ||||||||||||||||||||||||
Proceeds from principal repayments and sales of investments (1) | (256,113 | ) | (14,308 | ) | (4,420 | ) | — | — | — | — | (274,841 | ) | ||||||||||||||||||||
Net change in unrealized appreciation (depreciation) on investments | (40,313 | ) | (699 | ) | (4,757 | ) | (35 | ) | (16,020 | ) | 1,401 | (122 | ) | (60,545 | ) | |||||||||||||||||
Net realized gains (losses) on investments | (126 | ) | 227 | (4,115 | ) | — | — | — | — | (4,014 | ) | |||||||||||||||||||||
Transfers out of Level 3 | (74,759 | ) | — | (2,735 | ) | — | — | — | — | (77,494 | ) | |||||||||||||||||||||
Transfers to Level 3 | 29,578 | — | 7,604 | — | — | — | — | 37,182 | ||||||||||||||||||||||||
Balance as of September 30, 2020 | $ | 1,993,703 | $ | 17,223 | $ | 115,892 | $ | 15,000 | $ | 107,373 | $ | 35,890 | $ | — | $ | 2,285,081 | ||||||||||||||||
Change in unrealized appreciation (depreciation) attributable to investments still held at September 30, 2020 | $ | (38,878 | ) | $ | (512 | ) | $ | (5,657 | ) | $ | (35 | ) | $ | (16,020 | ) | $ | 1,401 | $ | (122 | ) | $ | (59,823 | ) |
(1) Includes reorganizatons and restructuring of investments.
Transfers between levels, if any, are recognized at the beginning of the quarter in which transfers occur. For the nine months ended September 30, 2020, transfers from Level 2 to Level 3 were primarily due to decreased price transparency. For the nine months ended September 30, 2020, transfers from Level 3 to Level 2 were primarily due to increased price transparency.
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2019:
| First Lien Senior Secured Loans | First Lien Last Out Loans | Second Lien Senior Secured Loans | Subordinated Debt | Investment Vehicles | Equity Interest | Preferred Equity | Warrants | Total Investments | |||||||||||||||||||
Balance as of January 1, 2019 | $ | 439,487 | $ | 27,487 | $ | 145,555 | $ | 39,625 | $ | 279,363 | $ | 26,521 | $ | 2,807 | $ | — | $ | 960,845 | ||||||||||
Purchases of investments and other adjustments to cost | 691,236 | 422 | 43,955 | — | 64,741 | 19,833 | 16,659 | — | 836,846 | |||||||||||||||||||
Distribution to Company from ABCS | 918,870 | — | — | — | (346,329 | ) | — | — | — | 572,541 | ||||||||||||||||||
Paid-in-kind interest | 19 | — | — | — | — | — | 15 | — | 34 | |||||||||||||||||||
Net accretion of discounts (amortization of premiums) | 1,618 | 71 | 205 | 33 | — | — | — | — | 1,927 | |||||||||||||||||||
Proceeds from principal repayments and sales of investments | (328,263 | ) | (172 | ) | (41,490 | ) | (25,000 | ) | 1,432 | (779 | ) | — | — | (394,272 | ) | |||||||||||||
Net change in unrealized appreciation (depreciation) on investments | (1,841 | ) | (500 | ) | (1,152) | 305 | 528 | (33 | ) | 1,973 | 129 | (591 | ) | |||||||||||||||
Net realized gains (losses) on investments | 4 | (1 | ) | 270 | — | 265 | 160 | — | — | 698 | ||||||||||||||||||
Transfers out of Level 3 | (59,955 | ) | — | (17,384 | ) | — | — | — | — | — | (77,339 | ) | ||||||||||||||||
Transfers to Level 3 | 103,975 | — | 6,156 | — | — | — | — | — | 110,131 | |||||||||||||||||||
Balance as of September 30, 2019 | $ | 1,765,150 | $ | 27,307 | $ | 136,115 | $ | 14,963 | $ | — | $ | 45,702 | $ | 21,454 | $ | 129 | $ | 2,010,820 | ||||||||||
Change in unrealized appreciation (depreciation) attributable to investments still held at September 30, 2019 | $ | (2,506 | ) | $ | (500 | ) | $ | (2,075 | ) | $ | 305 | $ | — | $ | (33 | ) | $ | 1,970 | $ | 129 | $ | (2,710 | ) |
Transfers between levels, if any, are recognized at the beginning of the quarter in which transfers occur. For the nine months ended September 30, 2017,2019, transfers from Level 2 to Level 3 were primarily due to decreased price transparency. For the nine months ended September 30, 2019, transfers from Level 3 to Level 2 were primarily due to increased price transparency.
Significant Unobservable Inputs
ASC 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner.
|
| As of September 30, 2017 | |||||||
|
| Fair Value |
| Valuation |
| Significant |
| Range of Significant | |
First Lien Senior Secured Loan |
| $ | 133,078,118 |
| Discounted Cash Flows |
| Comparative Yields |
| 3.5%-8.6% (7.3%) |
First Lien Last Out Loan |
| 19,880,801 |
| Discounted Cash Flows |
| Comparative Yields |
| 10.0%-10.0% (10.0%) | |
Second Lien Senior Secured Loan |
| 40,749,911 |
| Discounted Cash Flows |
| Comparative Yields |
| 8.7%-10.0% (9.4%) | |
Equity Interest |
| 1,952,879 |
| Discounted Cash Flows |
| Comparative Yields |
| 9.7%-9.7% (9.7%) | |
Total investments |
| $ | 195,661,709 |
|
|
|
|
|
|
(1) Included within theThe valuation techniques and significant unobservable inputs used in Level 3 assets of $283,721,020 is an amount of $88,059,311 in which the Advisor did not develop the unobservable inputs for the determination of fair value (examples include single source quotation and prior or pending transactions).measurements of assets as of September 30, 2020 were as follows:
As of September 30, 2020 | ||||||||||||
Fair Value of Level 3 Assets (1) | Valuation Technique | Significant Unobservable Inputs | Range of Significant Unobservable Inputs (Weighted Average (2)) | |||||||||
First Lien Senior Secured Loans | $ | 1,844,361 | Discounted Cash Flows | Comparative Yields | 4.9%-16.1% (7.5%) | |||||||
First Lien Senior Secured Loans | 63,065 | Comparable Company Multiple | EBITDA Multiple | 6.0x-6.2x (6.1x) | ||||||||
First Lien Senior Secured Loans | 18,642 | Discounted Cash Flows | Discount Rate | 10.0 | % | |||||||
First Lien Senior Secured Loans | 17,205 | Collateral Analysis | Recovery Rate | 100.0 | % | |||||||
First Lien Last Out | 17,223 | Discounted Cash Flows | Comparative Yields | 11.3 | % | |||||||
Second Lien Senior Secured Loans | 115,892 | Discounted Cash Flows | Comparative Yields | 8.4%-16.1% (10.8%) | ||||||||
Subordinated Debt | 15,000 | Discounted Cash Flows | Comparative Yields | 13.3 | % | |||||||
Equity Interests | 28,398 | Comparable Company Multiple | EBITDA Multiple | 7.0x-17.8x (10.3x) | ||||||||
Equity Interests | 78,975 | Discounted Cash Flows | Discount Rate | 10.0%-16.4% (15.4%) | ||||||||
Preferred Equity | 25,786 | Comparable Company Multiple | EBITDA Multiple | 7.8x-14.8x (11.1x) | ||||||||
Preferred Equity | 10,104 | Discounted Cash Flows | Discount Rate | 10.0 | % | |||||||
Warrants | - | Comparable Company Multiple | EBITDA Multiple | 7.8 | x | |||||||
Total investments | $ | 2,234,651 |
(2) Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.
As of December 31, 2016, the valuation of Level 3 assets was based on recent transactions, and as such, the Advisor did not develop any unobservable inputs.
(1) | Included within the Level 3 assets of $2,285,081 is an amount of $50,430 for which the Advisor did not develop the unobservable inputs for the determination of fair value (examples include single source quotation and prior or pending transactions such as investments originated in the quarter or imminent payoffs). |
(2) | Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category. |
The Company used the discounted cash flowsincome approach and market approach to determine the fair value of certain Level 3 assets as of September 30, 2017.2020. The significant unobservable inputinputs used in the discounted cash flowsincome approach isare the comparative yield.yield and discount rate. The comparative yield isand discount rate are used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the comparative yield or discount rate would result in a decrease/increase, respectively, in the fair value. The significant unobservable inputs used in the market approach are the comparable company multiple and the recovery rate. The multiple is used to estimate the enterprise value of the underlying investment. An increase/decrease in the multiple would result in an increase/decrease, respectively, in the fair value. The recovery rate represents the extent to which proceeds can be recovered. An increase/decrease in the recovery rate would result in an increase/decrease, respectively, in the fair value.
The valuation techniques and significant unobservable inputs used in Level 3 fair value measurements of assets as of December 31, 2019 were as follows:
As of December 31, 2019 | ||||||||||||
Fair Value of Level 3 Assets (1) | Valuation Technique | Significant Unobservable Inputs | Range of Significant Unobservable Inputs (Weighted Average(2)) | |||||||||
First Lien Senior Secured Loans | $ | 1,475,477 | Discounted Cash Flows | Comparative Yields | 4.4%-15.8% (7.7%) | |||||||
First Lien Senior Secured Loans | 6,363 | Discounted Cash Flows | Discount Rate | 10.0%-10.0% (10.0%) | ||||||||
First Lien Senior Secured Loans | 23,181 | Collateral Analysis | Recovery Rate | 100 | % | |||||||
First Lien Last Out Loans | 29,300 | Discounted Cash Flows | Comparative Yields | 7.1%-12.5% (10.3%) | ||||||||
Second Lien Senior Secured Loans | 115,014 | Discounted Cash Flows | Comparative Yields | 6.1%-17.0% (10.4%) | ||||||||
Subordinated Debt | 15,000 | Discounted Cash Flows | Comparative Yields | 15.3 | % | |||||||
Equity Interests | 21,495 | Comparable Company Multiple | EBITDA Multiple | 6.8x-17.5x (9.8x) | ||||||||
Equity Interests | 24,514 | Discounted Cash Flows | Discount Rate | 10.0%-18.8% (13.4%) | ||||||||
Preferred Equity | 23,116 | Comparable Company Multiple | EBITDA Multiple | 7.3x-12.5x (11.0x) | ||||||||
Warrants | 122 | Comparable Company Multiple | EBITDA Multiple | 7.3 | x | |||||||
Total investments | $ | 1,733,582 |
(1) | Included within the Level 3 assets of $2,281,681 is an amount of $548,099 for which the Advisor did not develop the unobservable inputs for the determination of fair value (examples include single source quotation and prior or pending transactions). |
(2) | Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category. |
The Company used the income approach and market approach to determine the fair value of certain Level 3 assets as of December 31, 2019. The significant unobservable input used in the income approach is the comparative yield. The significant unobservable inputs used in the income approach are the comparative yield and discount rate. The comparative yield and discount rate are used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the comparative yield or discount rate would result in a decrease/increase, respectively, in the fair value. The significant unobservable input used in the market approach is the comparable company multiple. The multiple is used to estimate the enterprise value of the underlying investment. An increase/decrease in the multiple would result in an increase/decrease, respectively, in the fair value.
The fair value of the Company’sBCSF Revolving Credit Facility (as defined in Note 6), which is categorized as Level 3 within the fair value hierarchy as of September 30, 20172020 and December 31, 2016,2019, approximates itsthe carrying value.value of such facility. The fair values of the 2018-1 Notes (as defined in Note 6), which are categorized as Level 3 within the fair value hierarchy as of September 30, 2020 and December 31, 2019, approximate the carrying value of such notes. The fair value of the JPM Credit Facility (as defined in Note 6), which is categorized as Level 3 within the fair value hierarchy as of September 30, 2020 and December 31, 2019, approximates the carrying value of such facility. The fair values of the 2019-1 Debt (as defined in Note 6), which are categorized as Level 3 within the fair value hierarchy as of September 30, 2020 and December 31, 2019, approximate the carrying value of such debt. The fair values of the 2023 Notes (as defined in Note 6), which are categorized as Level 3 within the fair value hierarchy as of September 30, 2020, approximate the carrying value of such notes.
Note 5. Related Party Transactions
Investment Advisory Agreement
The Company has agreed to repay the Advisor for initial organizational costs incurred prior to the commencement of our operations up to a maximum of $1.5 million and operating costs incurred prior to the commencement of our operations. During the period from October 5, 2015 (date of inception) to October 13, 2016, $0.5 million of the Company’s expenses were paid by a related party of the Advisor and were reimbursed by the Company after the commencement of operations. There were no payables and $0.2 million payable to the Advisor to repay initial organizational costs included in “Accounts payable and accrued expenses” on the consolidated statements of assets and liabilities as of September 30, 2017 and December 31, 2016, respectively.
The Company has entered into anthe first amended and restated investment advisory agreement as of October 6, 2016,November 14, 2018 (the “Investment Advisory Agreement”) with the Advisor, pursuant to which the Advisor manages the Company’s investment program and related activities. On November 28, 2018, the Board, including a majority of the Independent Directors, approved a second amended and restated advisory agreement (the “Amended Advisory Agreement”) between the Company and BCSF Advisors, LP (“the Advisor”). On February 1, 2019, Shareholders approved the Amended Advisory Agreement which replaced the existing Investment Advisory Agreement.
Base Management Fee
The Company pays the Advisor a base management fee (the “Base Management Fee”), accrued and payable quarterly in arrears. The Base Management Fee is calculated at an annual rate of 1.50%1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters (and, in the case of our first quarter, our gross assets as of such quarter-end).quarters. Such amount shall be appropriately adjusted (based on the actual number of days elapsed relative to the total number of days in such calendar quarter) for any share issuance or repurchases by the Company during a calendar quarter. The Base Management Fee for any partial quarter will be appropriately prorated.
The Advisor, however, Effective February 1, 2019, the base management fee has agreedbeen revised to waive its right to receive Base Management Fee in excessa tiered management fee structure so that the base management fee of 0.75%1.5% (0.375% per quarter) of the aggregate gross assets excluding cash (including capital drawn to pay the Company’s expenses) during any period prior to a Qualified IPO. A “Qualified IPO” is an initial public offeringaverage value of the Company’s common stock that results ingross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an unaffiliated public floatasset coverage ratio down to 200%, but a lower base management fee of at least1.0% (0.25% per quarter) of the loweraverage value of (A) $75the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company’s asset coverage ratio below 200%.
For the three months ended September 30, 2020 and 2019, management fees were $8.9 million and (B) 15% of$8.9 million, respectively. For the aggregate capital commitments received prior to the date of such initial public offering. If a Qualified IPO does not occur, such fee waiver will remain in place through liquidation of the Company. The Advisor will not be permitted to recoup any waived amounts at any timenine months ended September 30, 2020 and the waiver agreement may only be modified or terminated prior to a Qualified IPO with the approval of the Board.
2019, management fees were $26.3 million and $23.6 million, respectively. For the three and nine months ended September 30, 2017, Base Management Fee charged amounted to $0.92020, $0.0 million was contractually waived and $1.7$0.0 million respectively. was voluntarily waived. For the three months ended September 30, 2019, $0.0 million was contractually waived and $2.6 million was voluntarily waived. For the nine months ended September 30, 2019, $0.0 million was contractually waived and $6.4 million was voluntarily waived.
As of September 30, 20172020 and December 31, 2016, $0.92019, management fees payable were $8.9 million and $0.2$7.3 million, remained payable, respectively.
Incentive Fee
The incentive fee consists of two parts that are determined independently of each other such that one component may be payable even if the other is not.
The first part, the Incentive Fee based on income incentive fee,(the “Income Fee”), is calculated and payable quarterly in arrears and equals:
(a) 100% of the excess of our pre-incentive fee net investment income for the immediately preceding calendar quarter, over a preferred return of 1.5% per quarter (6% annualized) (the “Hurdle”), until the Advisor has received a “catch-up” equal to:
(i) 15% of the pre-incentive fee net investment income for the current quarter prior to a Qualified IPO, or
(ii) 17.5% of the pre-incentive fee net investment income for the current quarter after a Qualified IPO; and
(b) (i) 15% of all remaining pre-incentive fee net investment income above the “catch-up” prior to a Qualified IPO, or
(ii) 17.5% of all remaining pre-incentive fee net investment income above the “catch-up” after a Qualified IPO.as detailed below.
The second part, the capital gains incentive fee, is determined and payable in arrears as of the end of each fiscal year (or upon a Qualified IPO or termination of the Investment Advisory Agreement), and equals:detailed below.
(a) prior to a Qualified IPO, 15% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of the fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees (the “Cumulative Capital Gains”), or
(b) after a Qualified IPO, 17.5% of the Cumulative Capital Gains.
Incentive Fee on Pre-Incentive Fee Net Investment Income
Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receivethe Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the Base Management Fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature such as market discount, original issue discount (“OID”), debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.
Pre-incentive fee net investment income does not include any realized or unrealized capital gains or losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the Hurdle rate for a quarter, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses.
Pre-incentivePrior to the calendar quarter that commenced on January 1, 2019 the incentive on income was calculated as follows:
(i) | 15.0% of the pre-incentive fee net investment income for the current quarter prior to the IPO; or | |
(ii) | 17.5% of the pre-incentive fee net income for the current quarter after the IPO; and | |
(i) | 15.0% of all remaining pre-incentive fee net investment income above the “catch-up” prior to the IPO, or | |
(ii) | 17.5% of all remaining pre-incentive fee net investment income above the “catch-up” after the IPO. |
Beginning with the calendar quarter that commenced on January 1, 2019, the incentive fee based on income is calculated and payable quarterly in arrears based on the aggregate pre-incentive fee net investment income will bein respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commenced on or after January 1, 2019 (or the appropriate portion thereof in the case of any of the Company’s first eleven calendar quarters that commence on or after January 1, 2019) (in either case, the “Trailing Twelve Quarters”). This calculation is referred to as the “Three-Year Lookback.”
With respect to any calendar quarter that commenced on or after January 1, 2019, pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters is compared to a “Hurdle Amount” equal to the product of (i) the “hurdle rate”hurdle rate of 1.5% per quarter (6% annualized) and (ii) the Company’ssum of our net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the endbeginning of the immediately preceding calendar quarter. If market interest rates rise, the Company may be able to invest our funds in debt instruments that provide for a higher return, which would increase our pre-incentive fee net investment income and make it easier for the Advisor to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income. Our pre-incentive fee net investment income used to calculate this part of the incentive fee is also included in the amount of our total assets (other than cash but including assets purchased with borrowed amounts) used to calculate the Base Management Fee.
Prior to the occurrence of a Qualified IPO, the Company will pay the income incentive fee in each applicable calendar quarter as follows:
· no income incentive fee in any calendar quarter in whichcomprising the Company’s pre-incentive fee net investment income does not exceed the Hurdle Amount;
· 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds therelevant Trailing Twelve Quarters. The Hurdle Amount but is less than or equalwill be calculated after making appropriate adjustments to an amount (the “Pre-Qualified IPO Catch-Up Amount”) determined on a quarterly basis by multiplying 1.7647% by the Company’s net asset valueour NAV at the beginning of each applicable calendar quarter. The Pre-Qualified IPO Catch-Up Amount is intendedquarter for our subscriptions (which shall include all issuances by us of shares of our Common Stock, including issuances pursuant to provide the Advisor with anCompany’s dividend reinvestment plan) and distributions during the applicable calendar quarter.
Commencing on January 1, 2019, the quarterly incentive fee of 15%based on all ofincome is calculated, subject to the Company’sIncentive Fee Cap (as defined below), based on the amount by which (A) aggregate pre-incentive fee net investment income whenin respect of the Company’srelevant Trailing Twelve Quarters exceeds (B) the Hurdle Amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” The incentive fee based on income that is paid to the Advisor in respect of a particular calendar quarter will equal the Excess Income Amount less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
The incentive fee based on income for each calendar quarter is determined as follows:
(i) | No incentive fee based on income is payable to the Advisor for any calendar quarter for which there is no Excess Income Amount; |
(ii) | 100% of the aggregate pre-incentive fee net investment income in respect of the Trailing Twelve Quarters with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Amount, but is less than or equal to an amount, which the Company refers to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by our NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters; and |
(iii) | 17.5% of the aggregate pre-incentive fee net investment income in respect of the Trailing Twelve Quarters that exceeds the Catch-up Amount. |
Incentive Fee Cap
With respect to any calendar quarter that commences on or after January 1, 2019, the incentive fee based on income is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in respect of any calendar quarter is an amount equal to 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
“Cumulative Net Return” during the relevant Trailing Twelve Quarters means (x) the pre-incentive fee net investment income reachesin respect of the Pre-Qualified IPO Catch-Up Amountrelevant Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the relevant Trailing Twelve Quarters. If, in any calendar quarter; andquarter, the Incentive Fee Cap is zero or a negative value, the Company will pay no incentive fee based on income to the Advisor in respect of that quarter. If, in any quarter, the Incentive Fee Cap for such quarter is a positive value but is less than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the Incentive Fee Cap in respect of such quarter. If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the incentive fee calculated as described above for such quarter without regard to the Incentive Fee Cap.
· for“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in respect of such period and (ii) aggregate capital gains, whether realized or unrealized, in respect of such period.
For the three months ended September 30, 2020 and 2019, the Company incurred $0.0 million and $4.3 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the consolidated statements of operations. The Advisor has voluntarily waived $0.0 million and $0.8 million, respectively, of the income incentive fees earned by the Advisor during the three months ended September 30, 2020 and 2019. Such income incentive fee waiver is irrevocable and such waived income incentive fees will not be subject to recoupment in future periods. This income incentive fee waiver does not impact any calendar quarterincome incentive fees earned by the Advisor in future periods.
For the nine months ended September 30, 2020 and 2019, the Company incurred $0.0 million and $12.9 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the Company’s pre-incentive fee net investmentconsolidated statements of operations. The Advisor has voluntarily waived $0.0 million and $2.7 million, respectively, of the income exceedsincentive fees earned by the Pre-Qualified IPO Catch-Up Amount,Advisor during the nine months ended September 30, 2020 and 2019. As a result of the income incentive fee shall equal 15%waivers, the Company incurred $3.6 and $10.2 million of the amount of the Company’s pre-incentive fee net investment income incentive fees (after waivers) for the calendar quarter.
Onthree and afternine months ended September 30, 2019, respectively. Such income incentive fee waiver is irrevocable and such waived income incentive fees will not be subject to recoupment in future periods. This income incentive fee waiver does not impact any income incentive fees earned by the occurrenceAdvisor in future periods.
As of a Qualified IPO, the Company will paySeptember 30, 2020 and December 31, 2019, there was $0.0 million and $4.5 million, respectively, related to the income incentive fee accrued in each calendar quarter as follows:
· no income incentive fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the Hurdle Amount;
· 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Post-Qualified IPO Catch-Up Amount”) determined on a quarterly basis by multiplying 1.8182% by the Company’s net asset value at the beginning of each applicable calendar quarter. The Post-Qualified IPO Catch-Up Amount is intended to provide the Advisor with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income reaches the Post-Qualified IPO Catch-Up Amount in any calendar quarter; and
· for any calendar quarter in which the Company’s pre-incentive fee net investment income exceeds the Post-Qualified IPO Catch-Up Amount, the income incentive fee shall equal 17.5% of the amount of the Company’s pre-incentive fee net investment income for the calendar quarter.
These calculations will be appropriately pro-rated for any period of less than three months and adjusted for any share issuances or repurchases by the Company during the current quarter. The Company does not currently intend to institute a share repurchase program and share repurchases will be effected only in extremely limited circumstances in accordance with applicable law. If the Qualified IPO occurs on a date other than the first day of a calendar quarter, the income incentive fee shall be calculated for such calendar quarter at a weighted rate calculated based on the fee rates applicable before and after a Qualified IPO based on the number of days in such calendar quarter before and after a Qualified IPO.
There was no income incentive fee payable toon the Advisor under the Investment Advisory Agreement asconsolidated statements of September 30, 2017assets and December 31, 2016.liabilities.
Annual Incentive Fee Based on Capital Gains
The second part of the incentive fee is a capital gains incentive fee that will be determined and payable in arrears in cash as of the end of each fiscal year (or upon termination of the InvestmentAmended Advisory Agreement, as of the termination date), and equals (i) 15% of our realized capital gains as of the end of the fiscal year prior to a Qualifiedthe IPO, and (ii) 17.5% of our realized capital gains as of the end of the fiscal year after a Qualifiedthe IPO. In determining the capital gains incentive fee payable to the Advisor, the Company calculates the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since our inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in our portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the cost of such investment. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the cost of such investment. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the cost of such investment. At the end of the applicable year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to our portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year will equal 15% before a Qualifiedthe IPO or 17.5% after a Qualifiedthe IPO, as applicable, of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of our portfolio in all prior years.
If a QualifiedBecause the IPO occursoccurred on a date other than the first day of a fiscal year, a capital gains incentive fee shall bewas calculated as of the day before the Qualified IPO, with such capital gains incentive fee paid to the Advisor following the end of the fiscal year in which the Qualified IPO occurred. For the avoidance of doubt, such capital gains incentive fee shall bewas equal to 15% of the Company’s realized capital gains on a cumulative basis from inception through the day before the Qualified IPO, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. Following a Qualifiedthe IPO, solely for the purposes of calculating the capital gains incentive fee, the Company will be deemed to have previously paid capital gains incentive fees prior to a Qualifiedthe IPO equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid capital gains incentive fees for all periods prior to a Qualifiedthe IPO by (b) the percentage obtained by dividing (x) 17.5% by (y) 15%. In the event that the InvestmentAmended Advisory Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a capital gains incentive fee.
There was no capital gains incentive fee payable to the Advisor under the InvestmentAmended Advisory Agreement as of September 30, 20172020 and December 31, 2016.2019.
U.S.US GAAP requires that the incentive fee accrual considersconsider the cumulative aggregate realized gains and losses and unrealized capital appreciation or depreciation of investments or other financial instruments in the calculation, as an incentive fee would be payable if such realized gains and losses or unrealized capital appreciation or depreciation were realized, even though such realized gains and losses and unrealized capital appreciation or depreciation is not permitted to be considered in calculating the fee actually payable under the investment advisory agreementAmended Advisory Agreement (“GAAP Incentive Fee”). There can be no assurance that such unrealized appreciation or depreciation will be realized in the future. Accordingly, such fee, as calculated and accrued, would not necessarily be payable under the investment advisory agreement,Amended Advisory Agreement, and may never be paid based upon the computation of incentive fees in subsequent periods.period.
For the three and nine months ended September 30, 2017,2020 and 2019, the Company incurred $0.2$0.0 million and $0.4$0.0 million respectively, of incentive fees related to the GAAP Incentive Fee which is included inFee. For the nine months ended September 30, 2020 and 2019, the Company incurred $0.0 million and $0.0 million of incentive fee onfees related to the consolidated statements of operations.GAAP Incentive Fee. As of September 30, 20172020 and December 31, 2016,2019, there was $0.7$0.0 million and $0.3$0.0 million related to the GAAP Incentive Fee accrued in incentive fee payable on the consolidated statements of assets and liabilities.liabilities, respectively.
Administration Agreement
The Company has entered into an administration agreement (the “Administration Agreement”) with the Advisoradvisor (in such capacity, the “Administrator”), pursuant to which the Administrator will provide the administrative services necessary for us to operate, and the Company will utilize the Administrator’s office facilities, equipment and recordkeeping services. Pursuant to the Administration Agreement, the Administrator has agreed to oversee our public reporting requirements and tax reporting and monitor our expenses and the performance of professional services rendered to us by others. The Administrator has also hired a sub-administrator to assist in the provision of administrative services. The Company maywill reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to the business and affairs of the Company, and will be subject to oversight by the Board. The Company incurred expenses related to the Administrator of $0.0 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Company incurred expenses related to the Administrator of $0.0 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. As of September 30, 2020 and December 31, 2019, there were $0.0 and $0.0 in expenses related to the Administrator that were payable and included in “accounts payable and accrued expenses” in the consolidated statements of assets and liabilities, respectively. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. The Company incurred expenses related to the sub-administrator of $0.1 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Company incurred expenses related to the sub-administrator of $0.4 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Administrator will waive its right to be reimbursednot seek reimbursement in the event that any such reimbursements would cause any distributions to our stockholders to constitute a return of capital. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and the Company will reimburse the expenses of these parties incurred and paid by the Advisor on our behalf.
Co-investmentsResource Sharing Agreement
WeThe Company’s investment activities are managed by the Advisor, an investment adviser that is registered with the SEC under the Advisers Act. The Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis.
The Advisor has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Bain Capital Credit, LP (“Bain Capital Credit”), pursuant to which Bain Capital Credit provides the Advisor with experienced investment professionals (including the members of the Advisor’s Credit Committee) and access to the resources of Bain Capital Credit so as to enable the Advisor to fulfill its obligations under the Amended Advisory Agreement. Through the Resource Sharing Agreement, the Advisor intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Bain Capital Credit’s investment professionals. There can be no assurance that Bain Capital Credit will perform its obligations under the Resource Sharing Agreement. The Resource Sharing Agreement may be terminated by either party on 60 days’ notice, which if terminated may have a material adverse consequence on the Company’s operations.
Co-investments
The Company will invest alongside our affiliates, subject to compliance with applicable regulations and our allocation procedures. Certain types of negotiated co-investments maywill be made only in accordance with the terms of the exemptive order wethe Company received from the SEC initially on August 23, 2016, as amended on March 23, 2018 (the “Order”). Under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our Board of Directors’Board’s approved criteria. In certain situations where co-investment with one or more funds managed by the Advisor or its affiliates is not covered by the Order, the personnel of the Advisor or its affiliates will need to decide which fundfunds will proceed with the investment. Such personnel will make these determinations based on policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations.
Revolving Advisor Loan
On March 27, 2020, the Company entered into an unsecured revolving loan agreement (the “Revolving Advisor Loan”) with BCSF Advisors, LP, the investment adviser of the Company. The Revolving Advisor Loan has a maximum credit limit of $50.0 million and a maturity date of March 27, 2023. The Revolving Advisor Loan accrues interest at the Applicable Federal Rate from the date of such loan until the loan is repaid in full. Please Note 6 for additional details.
Related Party Commitments
The Advisor has made commitments of $10.8 million and $10.7 million to the Company as of September 30, 2017 and December 31, 2016, respectively, of which $4.8 million and $2.7 million have been called by the Company as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 20172020 and December 31, 2016,2019, the Advisor held 241,504.73487,444.14 and 133,355.50389,695.20 shares of the Company,Company’s common stock, respectively. An affiliate of the Advisor is the investment manager to certain pooled investment companiesvehicles which are investors in the Company. Collectively, these investors have made commitments to the Company of $555.3 millionheld 12,875,920.66 and $497.1 million as of September 30, 2017 and December 31, 2016, respectively, of which $222.1 million and $99.4 million, respectively, has been called by the Company as of September 30, 2017 and December 31, 2016, respectively. These investors held 11,067,142.81 and 4,971,069.309,539,043.66 shares of the Company at September 30, 20172020 and December 31, 2016,2019, respectively.
Non-Controlled/Affiliate and Controlled Affiliate Investments
Transactions during the nine months ended September 30, 2020 in which the issuer was either an Affiliated Person or an Affiliated Person that the Company is deemed to Control are as follows:
Portfolio Company | Fair Value as of December 31, 2019 | Gross Additions | Gross Reductions | Change in Unrealized Gains (Losses) | Realized Gains (Losses) | Fair Value as of September 30, 2020 | Dividend and Interest Income | Other Income | ||||||||||||||||||||||||
Non-Controlled/affiliate investment | ||||||||||||||||||||||||||||||||
ADT Pizza, LLC, Equity Interest (1) | $ | 6,720 | $ | — | $ | — | $ | 4,697 | $ | — | $ | 11,417 | $ | — | $ | — | ||||||||||||||||
Blackbrush Oil & Gas, L.P. Equity Interest (1) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Blackbrush Oil & Gas, L.P. Preferred Equity (1) | — | 10,104 | — | — | — | 10,104 | — | — | ||||||||||||||||||||||||
Blackbrush Oil & Gas, L.P. First Lien Senior Secured Loan (1) | — | 12,028 | — | — | — | 12,028 | 56 | — | ||||||||||||||||||||||||
Total Non-Controlled/affiliate investment | $ | 6,720 | $ | 22,132 | $ | — | $ | 4,697 | $ | — | $ | 33,549 | $ | 56 | $ | — | ||||||||||||||||
Controlled affiliate investment | ||||||||||||||||||||||||||||||||
ACC Holdco, LLC, Preferred Equity | $ | 10,828 | $ | — | $ | — | $ | — | $ | — | $ | 10,828 | $ | 921 | $ | — | ||||||||||||||||
Air Comm Corporation LLC, First Lien Senior Secured Loan | 27,161 | 91 | (206 | ) | (564 | ) | — | 26,482 | 1,741 | — | ||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest | 1,869 | — | — | (1,077 | ) | — | 792 | 75 | — | |||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan | 6,363 | 251 | — | — | — | 6,614 | 484 | — | ||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest | 13,091 | — | — | (1,314 | ) | — | 11,777 | 801 | — | |||||||||||||||||||||||
Gale Aviation (Offshore) Co, Equity Interest | 57,773 | 24,099 | — | (15,466 | ) | — | 66,406 | 4,676 | — | |||||||||||||||||||||||
Total Controlled affiliate investment | $ | 117,085 | $ | 24,441 | $ | (206 | ) | $ | (18,421 | ) | $ | — | $ | 122,899 | $ | 8,698 | $ | — | ||||||||||||||
Total | $ | 123,805 | $ | 46,573 | $ | (206 | ) | $ | (13,724 | ) | $ | — | $ | 156,448 | $ | 8,754 | $ | — |
(1) Non-income producing.
Transactions during the year ended December 31, 2019 in which the issuer was either an Affiliated Person or an Affiliated Person that the Company is deemed to Control are as follows:
Portfolio Company | Fair Value as of December 31, 2018 | Gross Additions | Gross Reductions | Change in Unrealized Gains (Losses) | Realized Gains (Losses) | Fair Value as of December 31, 2019 | Dividend and Interest Income | Other Income | ||||||||||||||||||||||||
Non-Controlled/affiliate investment | ||||||||||||||||||||||||||||||||
ADT Pizza, LLC, Equity Interest (1) | $ | 6,720 | $ | — | $ | — | $ | — | $ | — | $ | 6,720 | $ | — | $ | — | ||||||||||||||||
Total Non-Controlled/affiliate investment | $ | 6,720 | $ | — | $ | — | $ | — | $ | — | $ | 6,720 | $ | — | $ | — | ||||||||||||||||
Controlled affiliate investment | ||||||||||||||||||||||||||||||||
ACC Holdco, LLC, Preferred Equity | $ | — | $ | 11,707 | $ | (882 | ) | $ | 3 | $ | — | $ | 10,828 | $ | 955 | $ | 4 | |||||||||||||||
Air Comm Corporation LLC, First Lien Senior Secured Loan | — | 26,653 | (137 | ) | 645 | — | 27,161 | 1,266 | — | |||||||||||||||||||||||
Antares Bain Capital Complete Financing Solution LLC, Investment Vehicle | 279,363 | 1,432 | (281,589 | ) | 529 | 265 | — | 13,875 | ||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest | 1,243 | 384 | — | 242 | — | 1,869 | 107 | — | ||||||||||||||||||||||||
BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan | 4,163 | 2,219 | (19 | ) | — | — | 6,363 | 543 | — | |||||||||||||||||||||||
BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest | 13,479 | — | — | (388 | ) | — | 13,091 | 1,115 | — | |||||||||||||||||||||||
Gale Aviation (Offshore) Co, Equity Interest | — | 57,626 | (617 | ) | 764 | 57,773 | 627 | |||||||||||||||||||||||||
Total Controlled affiliate investment | $ | 298,248 | $ | 100,021 | $ | (283,244 | ) | $ | 1,795 | $ | 265 | $ | 117,085 | $ | 18,488 | $ | 4 | |||||||||||||||
Total | $ | 304,968 | $ | 100,021 | $ | (283,244 | ) | $ | 1,795 | $ | 265 | $ | 123,805 | $ | 18,488 | $ | 4 |
(1) Non-income producing.
Note 6. BorrowingsDebt
In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain exceptions, effective February 2, 2019, the Company is permitted to borrow amounts such that its asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required. As of September 30, 2020 and December 31, 2019, the Company’s asset coverage ratio based on aggregated borrowings outstanding was 169% and 164%, respectively.
The Company’s outstanding borrowings as of September 30, 2020 and December 31, 2019 were as follows:
As of September 30, 2020 | As of December 31, 2019 | |||||||||||||||||||||||
Total Aggregate Principal Amount Committed | Principal Amount Outstanding | Carrying Value (1) | Total Aggregate Principal Amount Committed | Principal Amount Outstanding | Carrying Value (1) | |||||||||||||||||||
BCSF Revolving Credit Facility | $ | 425,000 | $ | 307,774 | $ | 307,774 | $ | 500,000 | $ | 268,015 | $ | 268,015 | ||||||||||||
2018-1 Notes | 365,700 | 365,700 | 363,962 | 365,700 | 365,700 | 363,832 | ||||||||||||||||||
JPM Credit Facility | 450,000 | 299,183 | 299,183 | 666,581 | 546,754 | 546,754 | ||||||||||||||||||
2019-1 Debt | 398,750 | 398,750 | 396,207 | 398,750 | 398,750 | 396,034 | ||||||||||||||||||
Revolving Advisor Loan | 50,000 | — | — | — | — | — | ||||||||||||||||||
2023 Notes | 150,000 | 150,000 | 146,726 | — | — | — | ||||||||||||||||||
Total Debt | $ | 1,839,450 | $ | 1,521,407 | $ | 1,513,852 | $ | 1,931,031 | $ | 1,579,219 | $ | 1,574,635 |
(1) | Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs. |
The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the nine months ended September 30, 2020 and year ended December 31, 2019 were 3.7% and 4.7%, respectively.
The following table shows the contractual maturities of our debt obligations as of September 30, 2020:
Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1 — 3 years | 3 — 5 years | More than 5 years | ||||||||||||||||
BCSF Revolving Credit Facility | $ | 307,774 | $ | — | $ | 307,774 | $ | — | $ | — | ||||||||||
2018-1 Notes | 365,700 | — | — | — | 365,700 | |||||||||||||||
JPM Credit Facility | 299,183 | — | — | 299,183 | — | |||||||||||||||
2019-1 Debt | 398,750 | — | — | — | 398,750 | |||||||||||||||
2023 Notes | 150,000 | — | 150,000 | — | — | |||||||||||||||
Total Debt Obligations | $ | 1,521,407 | $ | — | $ | 457,774 | $ | 299,183 | $ | 764,450 |
BCSF Revolving Credit Facility
On December 22, 2016,October 4, 2017, the Company entered into athe revolving credit agreement (the “Revolving“BCSF Revolving Credit Agreement”Facility”) with Sumitomo Mitsui Banking Corporationus, as equity holder, BCSF I, LLC, a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, as borrower, and Goldman Sachs Bank USA, as sole lead arranger (“SMBC”Goldman Sachs”). The BCSF Revolving Credit Facility was subsequently amended on May 15, 2018 to reflect certain clarifications regarding margin requirements and hedging currencies. The maximum commitment amount under the revolving credit facility (the “RevolvingBCSF Revolving Credit Facility”)Facility is $150.0$500.0 million, and may be increased up to $350.0 million (“Maximum Commitment”) with the consent of SMBC or reduced upon request$750.0 million. Proceeds of the Company. Proceedsloans under the BCSF Revolving Credit Facility may be used for any purposeto acquire certain qualifying loans and such other uses as permitted under our organizational documents, including general corporate purposes such as the making of investments. TheBCSF Revolving Credit Agreement containsFacility. The BCSF Revolving Credit Facility includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
On January 8, 2020, the Company entered into an amended and restated credit agreement of its BCSF Revolving Credit Facility. The amendment amended the existing credit facility to, among other things, modify various financial covenants, including removing a liquidity covenant and adding a net asset value covenant with respect to the Company, as sponsor.
On March 31, 2020, the Parties entered into Omnibus Amendment No. 1 to the amended and restated credit agreement. The amendment amended the existing credit facility to, among other things, provide for enhanced flexibility to purchase or contribute and borrow against revolving loans and delayed draw term loans, and to count certain additional assets in the calculation of collateral for the outstanding advances; increase the spread payable under the facility from 2.50% to 3.25% per annum; include additional events of default to the existing credit facility, including but not limited to, maintaining an asset coverage ratio of total assetsa qualified equity raise not effected on or prior to total borrowings ofJune 22, 2020; and, after June 22, 2020, require the Company to maintain at least $50.0 million of unencumbered liquidity or pay down the facility by at least $50.0 million.
On May 27, 2020, the Parties entered into Amendment No. 2 to 1. As of September 30, 2017the amended and December 31, 2016,restated credit agreement. The amendment amended the existing credit facility to, among other things, (i) permit the Company to incur a lien on assets purchased with the proceeds of the rights offering and (ii) remove the requirement that the Company maintain $50.0 million in unencumbered cash after the completion of the rights offering, instead requiring a pay down of $50.0 million within two business days after the closing of the rights offering, which was in compliance with these covenants.subsequently paid.
On August 14, 2020, the Parties entered into the second amended and restated credit agreement and the third amended and restated margining agreement (collectively, the “Amendment”), which amended and restated the terms of the existing credit facility (the “Amended and Restated Credit Facility”). The Amendment amends the existing credit facility to, among other things, (i) decrease the financing limit from $500.0 million to $425.0 million, (ii) decrease the interest rate on financing from LIBOR plus 3.25% per annum to LIBOR plus 3.00% per annum, and (iii) provide enhanced flexibility to contribute and borrow against revolving and delayed draw loans and modify certain other terms relating to collaterals.
Assets that are pledged as collateral for the BCSF Revolving Credit Facility are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the BCSF Revolving Credit Agreement are secured by the capital commitments and unfunded capital contributions to the Company.Facility.
Borrowings under the BCSF Revolving Credit Facility bear interest at the London Interbank Offered Rate (“LIBOR”)LIBOR plus a marginmargin. As of 140 basis points per annum.September 30, 2020, the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 3.00%. As of December 31, 2019, the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 2.50%. The Company pays an unused commitment fee of: (a) where the Maximum Commitment which is unused on such date is greater than fifty (50) percent of the Maximum Commitment, a rate of 2030 basis points (0.20%) per annum; or (b) where the Maximum Commitment which is unused on such date is less than or equal to fifty (50) percent of the Maximum Commitment, a rate of 15 basis points (0.15%(0.30%) per annum. Interest is payable quarterly in arrears either on a one month, two month, three month or six month LIBOR period.arrears. Any amounts borrowed under the BCSF Revolving Credit Facility, and all accrued and unpaid interest, will be due and payable, on the earliest of: (a) December 22, 2019;October 5, 2022 and (b) the date upon which SMBC declares the obligations, or the obligationsall loans shall become due and payable after the occurrencein full, whether by acceleration or otherwise.
As of an event of defaultSeptember 30, 2020 and December 31, 2019, there were $307.8 million and $268.0 million borrowings under the BCSF Revolving Credit Facility; (c) the date upon whichFacility, respectively, and the Company terminateswas in compliance with the commitments underterms of the BCSF Revolving Credit Facility; and (d) 45 days prior to the earlier of (1) the date upon which the commitment period under the subscription agreements terminates and (2) the date upon which the ability to make capital calls and receive capital contributions otherwise terminates.Facility.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the BCSF Revolving Credit Facility were as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,823 | �� | $ | 4,441 | |||
Unused facility fee | 106 | 109 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 297 | 269 | ||||||
Total interest and debt financing expenses | $ | 3,226 | $ | 4,819 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the BCSF Revolving Credit Facility were as follows:
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 12,428 | $ | 13,844 | ||||
Unused facility fee | 270 | 316 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 830 | 798 | ||||||
Total interest and debt financing expenses | $ | 13,528 | $ | 14,958 |
2018-1 Notes
On September 28, 2018 (the “2018-1 Closing Date”), we, through BCC Middle Market CLO 2018-1 LLC (the “2018-1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018-1 Notes”) are secured by a diversified portfolio of the 2018-1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the “2018-1 Portfolio”). At the 2018-1 Closing Date, the 2018-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.
The CLO Transaction was executed through a private placement of the following 2018-1 Notes:
2018-1 Notes | Principal Amount | Spread above Index | Interest rate at September 30, 2020 | ||||||||
Class A-1 A | $ | 205,900 | 1.55% + 3 Month LIBOR | 1.82 | % | ||||||
Class A-1 B | 45,000 | 1.50% + 3 Month LIBOR (first 24 months) | 1.77 | % | |||||||
1.80% + 3 Month LIBOR (thereafter) | |||||||||||
Class A-2 | 55,100 | 2.15% + 3 Month LIBOR | 2.42 | % | |||||||
Class B | 29,300 | 3.00% + 3 Month LIBOR | 3.27 | % | |||||||
Class C | 30,400 | 4.00% + 3 Month LIBOR | 4.27 | % | |||||||
Total 2018-1 Notes | 365,700 | ||||||||||
Membership Interests | 85,450 | Non-interest bearing | Not applicable | ||||||||
Total | $ | 451,150 |
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018-1 Issuer in exchange for its sale to the 2018-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. As of September 30, 2020, the Company’s Membership Interests are pledged as collateral to the BCSF Revolving Credit Facility.
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes are included in the consolidated financial statements. The Membership Interests are eliminated in consolidation.
The Company serves as portfolio manager of the 2018-1 Issuer pursuant to a portfolio management agreement between the Company and the 2018-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.
During the reinvestment period (four years from the closing date of the CLO Transaction), pursuant to the indenture governing the 2018-1 Notes, all principal collections received on the underlying collateral may be used by the 2018-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2018-1 Issuer and in accordance with the 2018-1 Issuer’s investment strategy and the terms of the indenture.
The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price of at least equal to 5% of the aggregate amount of all obligations issued by the 2018-1 Issuer for so long as the 2018-1 Notes remain outstanding.
The 2018-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports and providing required services in connection with the administration of the 2018-1 Issuer.
As of September 30, 2020, there were 58 first lien and second lien senior secured loans with a total fair value of approximately $404.6 million and cash of $42.2 million securing the 2018-1 Notes. As of December 31, 2019, there were 61 first lien and second lien senior secured loans with a total fair value of approximately $435.8 million and cash of $9.1 million securing the 2018-1 Notes. Assets that are pledged as collateral for the 2018-1 Notes are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture governing the 2018-1 Notes. Such assets are included in the Company’s consolidated financial statements. The creditors of the 2018-1 Issuer have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2018-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture governing the 2018-1 Notes. As of September 30, 2020 and December 31, 2019, the Company was in compliance with its covenants related to the 2018-1 Notes.
Costs of $1.1$2.1 million were incurred in connection with obtainingdebt securitization of the Revolving Credit Facility,2018-1 Notes by the 2018-1 Issuer which have been recorded as deferred financingdebt issuance costs and presented as a reduction to the outstanding principal amount of the 2018-1 Notes on the consolidated statements of assets and liabilities and are being amortized over the life of the Revolving Credit Facility on a straight-line basis.2018-1 Issuer using the effective interest method. The unamortized balance of deferred financingthe unamortized debt issuance costs were $0.8related to the 2018-1 Issuer was $1.7 million and $1.1$1.9 million as of September 30, 20172020 and December 31, 2016,2019, respectively.
In accordance withFor the 1940 Act, with certain exceptions, the Company is only allowed to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 2 to 1 after such borrowing. As ofthree months ended September 30, 2017,2020 and 2019, the Company did not have any outstanding borrowings. Ascomponents of December 31, 2016,interest expense related to the Company’s asset coverage ratio was 2.87 to 1.
The Company’s outstanding borrowings as of September 30, 20172018-1 Issuer were as follows:
|
| Total Aggregate |
| Principal |
| Carrying | ||||
Revolving Credit Facility |
| $ | 150,000,000 |
| $ | — |
| $ | — |
|
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,246 | $ | 4,022 | ||||
Amortization of debt issuance costs and upfront commitment fees | 44 | 44 | ||||||
Total interest and debt financing expenses | $ | 2,290 | $ | 4,066 |
The Company’s outstanding borrowings as of December 31, 2016 were as follows:
|
| Total Aggregate |
| Principal |
| Carrying | ||||
Revolving Credit Facility |
| $ | 150,000,000 |
| $ | 59,100,000 |
| $ | 59,100,000 |
|
The Company may borrow amounts in U.S. dollars or certain other permitted currencies. There was no outstanding debt denominated in foreign currencies as of September 30, 2017 and December 31, 2016.
The summary information regardingFor the Revolving Credit Facility for the three and nine months ended September 30, 2017 was2020 and 2019, the components of interest expense related to the 2018-1 Issuer were as follows:
|
| For the Three |
| For the Nine | For the Nine Months Ended September 30, | ||||||||||
|
| September 30, 2017 | 2020 | 2019 | |||||||||||
Borrowing interest expense |
| $ | 60,412 |
| $ | 133,065 |
| $ | 8,752 | $ | 12,499 | ||||
Unused facility fee |
| 71,300 |
| 215,096 |
| ||||||||||
Amortization of deferred financing costs and upfront commitment fees |
| 92,233 |
| 273,692 |
| ||||||||||
Amortization of debt issuance costs and upfront commitment fees | 130 | 130 | |||||||||||||
Total interest and debt financing expenses |
| $ | 223,945 |
| $ | 621,853 |
| $ | 8,882 | $ | 12,629 |
Citibank Revolving Credit Facility
On February 19, 2019, the Company entered into a credit and security agreement (the “Credit Agreement” or the “Citibank Revolving Credit Facility”) with the Company as equity holder and servicer, BCSF II-C, LLC as Borrower, Citibank, N.A., as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian. The Credit Agreement was effective as of February 19, 2019.
The weighted averagefacility amount under the Credit Agreement is $350.0 million. Proceeds of the loans under the Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the Credit Agreement. The period from the closing date until February 19, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the Credit Agreement. The final maturity date is the earliest of: (a) the business day designated by the Borrower as the final maturity date upon not less than three business days’ prior written notice to the Administrative Agent, the Collateral Agent, the Lenders, the Custodian and the Collateral Administrator, (b) February 19, 2022 and (c) the date on which the Administrative Agent provides notice of the declaration of the final maturity date after the occurrence of an event of default. The Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
Borrowings under the Citibank Revolving Credit Facility bear interest at LIBOR plus a margin. During the period prior to the last day of the reinvestment period, borrowings under the Credit Agreement will bear interest at a rate equal to the three-month LIBOR plus 1.60%. Commencing on the last day of the reinvestment period, the interest rate (excluding deferred upfront financing costs and unused fees) on our debt outstanding was 2.27% and 2.25%, respectively,borrowings under the Credit Agreement will reset to three-month LIBOR plus 2.60% for the remaining term of the Credit Agreement. We pay an unused commitment fee based on a corresponding utilization rate; (i) 0 basis points (0.00%) per annum when greater than or equal to 85.0% utilization, (ii) 25 basis points (0.25%) per annum when greater than or equal to 75.0% but less than 85.0% utilization, (iii) 50 basis points (0.50%) per annum when greater than or equal to 50.0% but less than 75.0% utilization, (iv) 75 basis points (0.75%) per annum when greater than or equal to 25.0% but less than 50% utilization, or (v) 100 basis points (1.00%) per annum when less than 25.0% utilization.
On August 28, 2019, the Citibank Revolving Credit Facility was terminated. The proceeds from the 2019-1 Debt were used to repay the total outstanding debt.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the Citibank Revolving Credit Facility were as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | — | $ | 1,174 | ||||
Unused facility fee | — | 134 | ||||||
Amortization of deferred financing costs and upfront commitment fees | — | 108 | ||||||
Total interest and debt financing expenses | $ | — | $ | 1,416 |
For the nine months ended September 30, 2017.2020 and 2019, the components of interest expense related to the Citibank Revolving Credit Facility were as follows:
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | — | $ | 4,104 | ||||
Unused facility fee | — | 357 | ||||||
Amortization of deferred financing costs and upfront commitment fees | — | 124 | ||||||
Total interest and debt financing expenses | $ | — | $ | 4,585 |
JPM Credit Facility
On April 30, 2019, the Company entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. The facility amount under the JPM Credit Agreement was $666.6 million. Borrowings under the JPM Credit Facility bore interest at LIBOR plus 2.75%.
On January 29, 2020, the Company entered into an amended and restated loan and security agreement (the "Amended Loan and Security Agreement") as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. The Amended Loan and Security Agreement amended the Existing Loan and Security Agreement to, among other things, (1) decrease the financing limit under the agreement from $666.6 million to $500.0 million; (2) decrease the minimum facility amount from $466.6 million to $300.0 million period from January 29, 2020 to July 29, 2020 (the minimum facility amount will increase to $350.0 million after July 29, 2020 until the end of the reinvestment period); (3) decrease the interest rate on financing from 2.75% per annum over the applicable LIBOR to 2.375% per annum over the applicable LIBOR; and (4) extend the scheduled termination date of the agreement from November 29, 2022 to January 29, 2025.
On March 20, 2020, the Company entered into a second amended and restated loan and security agreement between the parties (the "Second Amended Loan and Security Agreement"). The Second Amended Loan and Security Agreement, among other things, provides flexibility to contribute and borrow against revolving loans, reduce the amount required to be reserved for unfunded revolvers and delayed draw obligations and decreases the financing limit by $50.0 million within 90 days or, based on the occurrence of certain events, such earlier period as may be set forth in the Second Amended Loan and Security Agreement. The Company shall pay to the Administrative Agent $50.0 million to the prepayment of Advances and the Financing Commitments shall be reduced by the amount of principal so prepaid on the earlier of two Business days following the closing of the Rights Offering and June 18, 2020, which the Company subsequently paid.
On July 2, 2020, the Company entered into a third amended and restated loan and security agreement with respect to the JPM Credit Agreement to, among other things, adjust the advance rates and make certain changes of an updating nature.
The facility amount under the JPM Credit Agreement is $450.0 million. Proceeds of the loans under the JPM Credit Facility may be used to acquire certain qualifying loans and such other uses as permitted under the JPM Credit Agreement. The period from the effective date of the amendment until January 29, 2023 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the JPM Credit Facility.
The maturity date is the earliest of: (a) January 29, 2025, (b) the date on which the secured obligations become due and payable following the occurrence of an event of default, (c) the date on which the advances are repaid in full and (d) the date after a market value cure failure occurs on which all portfolio investments have been sold and proceeds therefrom have been received by the Borrower. The stated maturity date of January 29, 2025 may be extended for successive one year periods by mutual agreement of the Borrower and the Administrative Agent.
The JPM Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
Borrowings under the JPM Credit Facility bear interest at LIBOR plus a margin. As of September 30, 2020, the JPM Credit Facility was accruing interest expense at a rate of LIBOR plus 2.375%. The Company pays an unused commitment fee of between 37.5 basis points (0.375%) and 75 basis points (0.75%) per annum depending on the size of the unused portion of the facility. Interest is payable quarterly in arrears.
As of September 30, 2020 and December 31, 2019, there were $299.2 million and $546.8 million of borrowings under the JPM Credit Facility, respectively, and the Company was in compliance with the terms of the JPM Credit Facility.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the JPM Credit Facility were as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,444 | $ | 7,232 | ||||
Unused facility fee | 94 | 202 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 65 | 20 | ||||||
Total interest and debt financing expenses | $ | 2,603 | $ | 7,454 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the JPM Credit Facility were as follows:
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 11,469 | $ | 12,387 | ||||
Unused facility fee | 310 | 328 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 402 | 33 | ||||||
Total interest and debt financing expenses | $ | 12,181 | $ | 12,748 |
2019-1 Debt
On August 28, 2019, the Company, through BCC Middle Market CLO 2019-1 LLC (the “2019-1 Issuer”), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019-1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), a Delaware limited liability company, completed its $501.0 million term debt securitization (the “2019-1 CLO Transaction”). The notes issued in connection with the 2019-1 CLO Transaction (the “2019-1 Notes”) are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans, the majority of which are senior secured loans (the “2019-1 Portfolio”). The Co-Issuers also issued Class A-1L Loans (the “Loans” and, together with the 2019-1 Notes, the “2019-1 Debt”). The Loans are also secured by the 2019-1 Portfolio. At the 2019-1 closing date, the 2019-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019-1 CLO Transaction.
The 2019-1 CLO Transaction was executed through a private placement of the following 2019-1 Debt:
2019-1 Debt | Principal Amount | Spread above Index | Interest rate at September 30, 2020 | |||||||
Class A-1L | $ | 50,000 | 1.70% + 3 Month LIBOR | 1.98 | % | |||||
Class A-1 | 222,500 | 1.70% + 3 Month LIBOR | 1.98 | % | ||||||
Class A-2A | 50,750 | 2.70% + 3 Month LIBOR | 2.98 | % | ||||||
Class A-2B | 13,000 | 4.23% (Fixed) | 4.23 | % | ||||||
Class B | 30,000 | 3.60% + 3 Month LIBOR | 3.88 | % | ||||||
Class C | 32,500 | 4.75% + 3 Month LIBOR | 5.03 | % | ||||||
Total 2019-1 Debt | 398,750 | |||||||||
Membership Interests | 102,250 | Non-interest bearing | Not applicable | |||||||
Total | $ | 501,000 |
The Loans and the Class A-1, A-2A, A-2B, and B Notes were issued at par. The Class C Notes were issued at a discount. The Notes are scheduled to mature on October 15, 2031. The Company received 100% of the membership interests (the “Membership Interests”) in the 2019-1 Issuer in exchange for its sale to the 2019-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. As of September 30, 2020, the Company’s Membership Interests are pledged as collateral to the BCSF Revolving Credit Facility.
The Loans and Class A-1, A-2A, A-2B, B, and C Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation.
The Company serves as portfolio manager of the 2019-1 Issuer pursuant to a portfolio management agreement between the Company and the 2019-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.
During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019-1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019-1 Issuer and in accordance with the 2019-1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable.
The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019-1 Co-Issuers for so long as the 2019-1 Debt remains outstanding.
The 2019-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019-1 Issuer.
As of September 30, 2020, there were 66 first lien and second lien senior secured loans with a total fair value of approximately $444.1 million and cash of $36.7 million securing the 2019-1 Debt. As of December 31, 2019, there were 65 first lien and second lien senior secured loans with a total fair value of approximately $471.3 million and cash of $22.4 million securing the 2019-1 Notes. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of September 30, 2020, the Company was in compliance with its covenants related to the 2019-1 Debt.
Costs of the offering, including the discount of the Class C Notes, of $2.8 million were incurred in connection with debt securitization of the 2019-1 Debt by the 2019-1 Co-Issuers which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019-1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life of the 2019-1 Issuer using the effective interest method. The balance of the unamortized debt issuance costs related to the 2019-1 Issuer was $2.5 million and $2.7 million as of September 30, 2020 and December 31, 2019, respectively.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the 2019-1 Co-Issuers were as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,755 | $ | 1,651 | ||||
Amortization of debt issuance costs and upfront commitment fees | 58 | 21 | ||||||
Total interest and debt financing expenses | $ | 2,813 | $ | 1,672 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the 2019-1 Co-Issuers were as follows:
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 10,490 | $ | 1,651 | ||||
Amortization of debt issuance costs and upfront commitment fees | 172 | 21 | ||||||
Total interest and debt financing expenses | $ | 10,662 | $ | 1,672 |
Revolving Advisor Loan
On March 27, 2020, the Company entered into an unsecured revolving loan agreement (the “Revolving Advisor Loan”) with BCSF Advisors, LP, the investment adviser of the Company. The Revolving Advisor Loan has a maximum credit limit of $50.0 million and a maturity date of March 27, 2023. The Revolving Advisor Loan accrues interest at the Applicable Federal Rate from the date of such loan until the loan is repaid in full. As of September 30, 2020, there were no borrowings under the Revolving Advisor Loan.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the Revolving Advisor Loan were as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | — | $ | — | ||||
Total interest and debt financing expenses | $ | — | $ | — |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the Revolving Advisor Loan were as follows:
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 58 | $ | — | ||||
Total interest and debt financing expenses | $ | 58 | $ | — |
2023 Notes
On June 10, 2020, the Company entered into a Master Note Purchase Agreement with institutional investors listed on the Purchaser Schedule thereto (the “Note Purchase Agreement”), in connection with the Company’s issuance of $150.0 million aggregate principal amount of its 8.50% senior unsecured notes due 2023 (the “ 2023 Notes”). The sale of the 2023 Notes generated net proceeds of approximately $146.4 million, including an offering discount of $1.5 million and debt issuance costs in connection with the transaction, including fees and commissions, of $2.1 million.
The Notes will mature on June 10, 2023 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Note Purchase Agreement. The Notes will bear interest at a rate of 8.50% per year payable semi-annually on June 10 and December 10 of each year, commencing on December 10, 2020. As of September 30, 2020, the Company was in compliance with the terms of the Note Purchase Agreement governing the 2023 Notes.
As of September 30, 2020 and December 31, 2019, the components of the carrying value of the 2023 Notes were as follows:
September 30, 2020 | December 31, 2019 | |||||||
Principal amount of debt | $ | 150,000 | $ | — | ||||
Unamortized debt issuance cost | (1,969 | ) | — | |||||
Original issue discount, net of accretion | (1,305 | ) | — | |||||
Carrying value of 2023 Notes | $ | 146,726 | $ | — |
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the 2023 Notes were as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 3,188 | $ | — | ||||
Amortization of debt issuance cost | 184 | — | ||||||
Accretion of original issue discount | 122 | — | ||||||
Total interest and debt financing expenses | $ | 3,494 | $ | — |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the 2023 Notes were as follows:
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 3,932 | $ | — | ||||
Amortization of debt issuance cost | 222 | — | ||||||
Accretion of original issue discount | 149 | — | ||||||
Total interest and debt financing expenses | $ | 4,303 | $ | — |
Note 7. Derivatives
The Company is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by the Company may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency.
The Company may enter into forward currency exchange contracts to reduce the Company’s exposure into foreign currency exchange rate fluctuations in the value of foreign currencies, as described in Note 2. The Company did not hold any derivatives as of, or for the year ended, December 31, 2016. The fair value of derivative contracts open as of September 30, 20172020 and December 31, 2019 is included on the consolidated schedule of investments by contract. The Company postedhad collateral receivable of $4.2$3.6 million for September 30, 2020 and collateral payable of $0.3 million for December 31, 2019 with the counterparties on foreign currency exchange contracts at September 30, 2017. The Company did not post or receive collateral related to foreign currency exchange contracts at December 31, 2016.contracts. Collateral amounts posted are included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities. Collateral payable is included in collateral payable on forward currency exchange contracts on the consolidated statements of assets and liabilities.
For the three and nine months ended September 30, 2017,2020, the Company’s average U.S. dollar notional exposure to forward currency exchange contracts was $44.3$276.5 million and $25.6$258.5 million, respectively. For the three and nine months ended September 30, 2019, the Company’s average U.S. dollar notional exposure to forward currency exchange contracts was $205.9 million and $172.1 million, respectively.
By using derivative instruments, the Company is exposed to the counterparty’s credit risk - risk—the risk that derivative counterparties may not perform in accordance with the contractual provisions offset by the value of any collateral received. The Company’s exposure to credit risk associated with counterparty non-performance is limited to collateral posted and the unrealized gains inherent in such transactions that are recognized in the consolidated statements of assets and liabilities. The Company minimizes counterparty credit risk through credit monitoring procedures, executing master netting arrangements and managing margin and collateral requirements, as appropriate.
The Company presents forward currency exchange contracts on a net basis by counterparty on the consolidated statements of assets and liabilities. The Company has elected not to offset assets and liabilities in the consolidated statements of assets and liabilities that may be received or paid as part of collateral arrangements, even when an enforceable master netting arrangement or other arrangement is in place that provides the Company, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
The following table presents both gross and net information about derivative instruments eligible for offset in the consolidated statements of assets and liabilities as of September 30, 2017. 2020:
Counterparty | Account in the consolidated statements of assets and liabilities | Gross amount of assets on the consolidated statements of assets and liabilities | Gross amount of (liabilities) on the consolidated statements of assets and liabilities | Net amount of assets or (liabilities) presented on the consolidated statements of assets and liabilities | Cash Collateral paid (received) (1) | Net Amounts (2) | ||||||||||||||||
Bank of New York | Unrealized appreciation on forward currency contracts | $ | 23 | $ | — | $ | 23 | $ | — | $ | 23 | |||||||||||
Citibank | Unrealized depreciation on forward currency contracts | $ | — | $ | (1,199 | ) | $ | (1,199 | ) | $ | 1,199 | $ | — | |||||||||
Goldman Sachs | Unrealized depreciation on forward currency contracts | $ | — | $ | (6,963 | ) | $ | (6,963 | ) | $ | — | $ | (6,963 | ) |
(1) | Amount excludes excess cash collateral paid. |
(2) | Net amount represents the net amount due (to) from counterparty in the event of default based on the contractual set-off rights under the agreement. Net amount excludes any over-collateralized amounts. |
The Company did not have any offsettingfollowing table presents both gross and net information about derivative instruments eligible for offset in the consolidated statements of assets and liabilities as of December 31, 2016.2019:
Counterparty |
| Account in the |
| Gross amount of |
| Gross amount of |
| Net amount of assets |
| Cash |
| Net | Account in the consolidated statements of assets and liabilities | Gross amount of assets on the consolidated statements of assets and liabilities | Gross amount of (liabilities) on the consolidated statements of assets and liabilities | Net amount of assets or (liabilities) presented on the consolidated statements of assets and liabilities | Cash Collateral paid (received) (1) | Net Amounts (2) | ||||||||||||||||||||||
Bank of New York |
| Unrealized depreciation on forward currency contracts |
| $ | — |
| $ | (2,183,998 | ) | $ | (2,183,998 | ) | $ | 2,183,998 |
| $ | — |
| Unrealized appreciation on forward currency contracts | $ | 1,034 | $ | — | $ | 1,034 | $ | (341 | ) | $ | 693 | ||||||||||
Citibank |
| Unrealized depreciation on forward currency contracts |
| — |
| (459,946 | ) | (459,946 | ) | 459,946 |
| — |
| Unrealized appreciation on forward currency contracts | $ | — | $ | (1 | ) | $ | (1 | ) | $ | 1 | $ | — | ||||||||||||||
Goldman Sachs | Unrealized appreciation on forward currency contracts | $ | — | $ | (1,251 | ) | $ | (1,251 | ) | $ | — | $ | (1,251 | ) |
(1) | Amount excludes excess cash collateral paid. |
(2) | Net amount represents the net amount due (to) from counterparty in the event of default based on the contractual set-off rights under the agreement. Net amount excludes any over-collateralized amounts. |
(1) Amount excludes excess cash collateral paid.
(2) Net amount represents the net amount due (to) from counterparty in the event of default based on the contractual set-off rights under the agreement. Net amount excludes any over-collateralized amounts.
The effect of transactions in derivative instruments to the consolidated statements of operations during the three months ended September 30, 2020 and 2019 was as follows:
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Net realized gains (losses) on forward currency exchange contracts | $ | (130 | ) | $ | 346 | |||
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts | (11,177 | ) | 9,135 | |||||
Total net realized and unrealized gains (losses) on forward currency exchange contracts | $ | (11,307 | ) | $ | 9,481 |
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of $11.5 million and ($8.1) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2020 and 2019, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($11.3) million and $9.5 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $0.2 million and $1.4 million for the three months ended September 30, 2020 and 2019, respectively.
The effect of transactions in derivative instruments to the consolidated statements of operations during the nine months ended September 30, 20172020 and 2019 was as follows:
|
| For the Three |
| For the Nine | |||
|
| September 30, 2017 | |||||
Net realized loss on forward currency exchange contracts |
| $ | — |
| $ | (220,006 | ) |
Net change in unrealized depreciation on forward currency exchange contracts |
| (1,234,706 | ) | (2,643,944 | ) | ||
Total net realized and unrealized losses on forward currency exchange contracts |
| $ | (1,234,706 | ) | $ | (2,863,950 | ) |
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Net realized gain on forward currency exchange contracts | $ | 6,472 | $ | 11,042 | ||||
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts | (7,921 | ) | (14 | ) | ||||
Total net realized and unrealized gains (losses) on forward currency exchange contracts | $ | (1,449 | ) | $ | 11,028 |
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of $3.6 million and ($8.4) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2020 and 2019, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($1.4) million and $11.0 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $2.2 million and $2.6 million for the nine months ended September 30, 2020 and 2019, respectively.
Note 8. Distributions
The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2017:2020:
Date Declared |
| Record Date |
| Payment Date |
| Amount |
| Total | |||
May 9, 2017 |
| May 12, 2017 |
| May 19, 2017 |
| $ | 0.07 |
| $ | 1,174,052 |
|
June 21, 2017 |
| June 29, 2017 |
| August 11, 2017 |
| $ | 0.11 |
| $ | 2,739,972 |
|
September 27, 2017 |
| September 28, 2017 |
| November 14, 2017 |
| $ | 0.21 |
| $ | 5,235,687 |
|
Total distributions declared |
|
|
|
|
| $ | 0.39 |
| $ | 9,149,711 |
|
Date Declared | Record Date | Payment Date | Amount Per Share | Total Distributions | |||||||
February 20, 2020 | March 31, 2020 | April 30, 2020 | $ | 0.41 | $ | 21,176 | |||||
May 4, 2020 | June 30, 2020 | July 30, 2020 | $ | 0.34 | $ | 21,951 | |||||
July 30, 2020 | September 30, 2020 | October 30, 2020 | $ | 0.34 | $ | 21,951 | |||||
Total distributions declared | $ | 1.09 | $ | 65,078 |
The distributions declared during the nine months ended September 30, 2020 were derived from investment company taxable income and net capital gain, if any.
The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2019:
Date Declared | Record Date | Payment Date | Amount Per Share | Total Distributions | |||||||
February 21, 2019 | March 29, 2019 | April 12, 2019 | $ | 0.41 | $ | 21,108 | |||||
May 7, 2019 | June 28, 2019 | July 29, 2019 | $ | 0.41 | $ | 21,176 | |||||
August 1, 2019 | September 30, 2019 | October 30, 2019 | $ | 0.41 | $ | 21,176 | |||||
Total distributions declared | $ | 1.23 | $ | 63,460 |
The distributions declared during the nine months ended September 30, 2019 were derived from investment company taxable income and net capital gain, if any.
The federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon ourthe Company’s investment company taxable income for the full fiscal year and distributions paid during the full year.
Note 9. Common Stock/Capital
The Company has authorized 100,000,000,000 shares of its common stock with a par value of $0.001 per share. The Company has authorized 10,000,000,000 shares of its preferred stock with a par value of $0.001 per share. Shares of preferred stock have not been issued.
Since October 2016,Prior to the IPO, the Company hashad issued 24,931,841.8643,982,137.46 shares in the private placement of the Company’s common shares (the “Private Offering”). Each investor hashad entered into a separate subscription agreement relating to ourthe Company’s common stock (the “Subscription Agreement”Agreements”). Each investor hashad made a capital commitment to purchase shares of ourthe Company’s common stock pursuant to the Subscription Agreement.Agreements. Investors will bewere required to make capital contributions to purchase shares of the Company’s common stock each time the Company deliversdelivered a drawdown notice, which will bewere delivered at least 10 business days prior to the required funding date in an aggregate amount not to exceed their respective capital commitments. The number of shares to be issued to a stockholder iswas determined by dividing the total dollar amount of the contribution by a stockholder by the net asset value per share of the common stock as of the last day of the Company’s fiscal quarter or such other date and price per share as determined by the Board.Board in accordance with the requirements of the 1940 Act. As of September 30, 2017 and December 31, 2016,2018, aggregate commitments relating to the Private Offering were $1.3 billion and $546.4 million. The remaining unfunded capitalbillion. All outstanding commitments related to these Subscription Agreements totaled $752.6 million and $436.6 million aswere cancelled due to the completion of September 30, 2017 and December 31, 2016, respectively.the IPO on November 15, 2018. As of September 30, 20172020 and December 31, 2016,2019, BCSF Advisors, LP contributed in aggregate $4.8$8.8 million to the Company and received 241,504.73487,444.14 shares of the Company and contributed $2.7$7.8 million to the Company and received 133,355.50389,695.20 shares of the Company, respectively. At September 30, 20172020 and December 31, 2016,2019, BCSF Advisors, LP owned 0.97%0.75% and 2.43%0.75%, respectively, of the outstanding common sharesstock of the Company.
On November 19, 2018, the Company closed its initial public offering (the “IPO”) issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The following table summarizesoffering generated proceeds, before expenses, of $147.3 million. All outstanding commitments were cancelled due to the totalcompletion of the initial public offering.
For the three months ended September 30, 2020 and 2019, there were zero shares issued and amount received related to capital drawdowns delivered pursuant to the Subscription Agreementsdividend reinvestment plan. For the nine months ended September 30, 2020 and 2019, there were zero and 167,674.81 shares issued pursuant to the dividend reinvestment plan, respectively.
BCSF Investments, LLC and certain individuals, including Michael A. Ewald, the Company’s Chief Executive Officer and a Managing Director of Bain Capital Credit; Jonathan S. Lavine, Co-Managing Partner of Bain Capital, LP and Founder and Chief Investment Officer of Bain Capital Credit; John Connaughton, Co-Managing Partner of Bain Capital, LP; Jeffrey B. Hawkins, Chairman of the Company’s Board of Directors and a Managing Director of Bain Capital Credit; and Michael J. Boyle, the Company’s Vice President and Treasurer and a Managing Director of Bain Capital Credit, adopted the 10b5-1 Plan in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act, under which such parties would buy up to $20 million in the aggregate of the Company’s common stock in the open market during the threeperiod beginning after four full calendar weeks after the closing of the IPO and nine months endedending on the earlier of the date on which the capital committed to the 10b5-1 has been exhausted or one year after the closing of the IPO. As of December 31, 2019, zero dollars remain under the 10b5-1 Plan and no further purchases are intended under the 10b5-1 Plan.
On May 7, 2019, the Company’s Board of Directors authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Securities Exchange Act of 1934. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of September 30, 2017:2020, there have been no repurchases of common stock.
|
| For the Three Months Ended |
| For the Nine Months Ended | |||||||
|
| September 30, 2017 | |||||||||
|
| Shares |
| Amount |
| Shares |
| Amount | |||
Total capital drawdowns |
| — |
| $ | — |
| 19,412,229.47 |
| $ | 392,735,246 |
|
Dividend reinvestment |
| 23,007.05 |
| 465,874 |
| 28,730.04 |
| 581,699 |
| ||
Total capital drawdowns and dividend reinvestment |
| 23,007.05 |
| $ | 465,874 |
| 19,440,959.51 |
| $ | 393,316,945 |
|
On May 4, 2020, the Company's Board of Directors approved a transferable subscription rights offering to our stockholders of record as of May 13, 2020. The rights entitled record stockholders to subscribe for up to an aggregate of 12,912,453 shares of our common stock. Record stockholders received one right for each share of common stock owned on the record date. The rights entitled the holders to purchase one new share of common stock for every four rights held, and record stockholders who fully exercised their rights were entitled to subscribe, subject to certain limitations and allotment rules, for additional shares that remain unsubscribed as a result of any unexercised rights. The rights were transferable and on the New York Stock Exchange under the symbol “BCSF RT”. The rights offering expired June 5, 2020. Based on the terms of the offering and the market price of the stock during the applicable period, holders of rights participating in the offering were entitled to purchase one new share of common stock for every four rights held at a subscription price of $10.2163 per share. On June 16, 2020, the Company closed its transferrable rights offering and issued 12,912,453 shares. The offering generated net proceeds, before expenses, of $129.6 million, including the underwriting discount and commissions of $2.3 million.
Note 10. Commitments and Contingencies
Commitments
The Company’s investment portfolio may contain debt investments that are in the form of lines of credit and unfunded delayed draw commitments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements.
As of September 30, 2017,2020, the Company had $41.3 million of unfunded commitments under loan and financing agreements as follows:
|
| Expiration Date (1) |
| Unfunded Commitments (2) | ||
First Lien Senior Secured Loans |
|
|
|
|
| |
CST Buyer Company — Revolver |
| 3/1/2023 |
| $ | 897,478 |
|
Dorner Manufacturing Corp. — Revolver |
| 3/15/2023 |
| 604,385 |
| |
Endries International, Inc. — Delayed Draw Term Loan |
| 6/1/2023 |
| 3,278,355 |
| |
Endries International, Inc. — Revolver |
| 6/1/2022 |
| 2,840,547 |
| |
FineLine Technologies, Inc. — Revolver |
| 11/2/2021 |
| 1,965,543 |
| |
Great Expressions Dental Centers PC — Delayed Draw Term Loan |
| 9/28/2023 |
| 667,000 |
| |
Great Expressions Dental Centers PC — Revolver |
| 9/28/2022 |
| 233,400 |
| |
International Entertainment Investments Limited — Delayed Draw Term Loan |
| 2/28/2022 |
| 553,640 |
| |
K-Mac Holdings Corp. — Revolver |
| 2/28/2022 |
| 1,397,333 |
| |
Sovos Compliance, LLC — Delayed Draw Term Loan |
| 3/1/2022 |
| 4,838,710 |
| |
Sovos Compliance, LLC — Revolver |
| 3/1/2022 |
| 1,451,615 |
| |
Zywave, Inc. — Revolver |
| 11/17/2022 |
| 1,279,118 |
| |
Total First Lien Senior Secured Loans |
|
|
| $ | 20,007,124 |
|
Second Lien Senior Secured Loans |
|
|
|
|
| |
NPC International, Inc. — Delayed Draw Term Loan |
| 4/18/2025 |
| 8,000,716 |
| |
Total Second Lien Senior Secured Loans |
|
|
| $ | 8,000,716 |
|
Other Unfunded Commitments |
|
|
|
|
| |
BCC Jetstream Holdings Aviation (On II), LLC |
|
|
| 13,247,520 |
| |
Total Other Unfunded Commitments |
|
|
| $ | 13,247,520 |
|
Total |
|
|
| $ | 41,255,360 |
|
(1) Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.
(2) Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate at September 30, 2017.
As of December 31, 2016, the Company had $5.2$153.0 million of unfunded commitments under loan and financing agreements as follows:
|
| Expiration Date (1) |
| Unfunded Commitments | ||
First Lien Senior Secured Loans |
|
|
|
|
| |
FineLine Technologies, Inc. — Revolver |
| 11/2/2021 |
| $ | 2,227,615 |
|
Great Expressions Dental Centers PC — Delayed Draw Term Loan |
| 9/28/2023 |
| 667,000 |
| |
Great Expressions Dental Centers PC — Revolver |
| 9/28/2022 |
| 1,000,286 |
| |
Zywave, Inc. — Revolver |
| 11/17/2022 |
| 1,279,118 |
| |
Total First Lien Senior Secured Loans |
|
|
| $ | 5,174,019 |
|
Total |
|
|
| $ | 5,174,019 |
|
Expiration Date (1) | Unfunded Commitments (2) | |||||||
First Lien Senior Secured Loans | ||||||||
9 Story Media Group Inc. - Revolver | 4/30/2026 | $ | 71 | |||||
A&R Logistics, Inc. - Revolver | 5/5/2025 | 6,096 | ||||||
Abracon Group Holding, LLC. - Revolver | 7/18/2024 | 2,833 | ||||||
Allworth Financial Group, L.P. - Revolver | 12/31/2025 | 1,944 | ||||||
AMI US Holdings Inc. - Revolver | 4/1/2024 | 488 | ||||||
Amspec Services, Inc. - Revolver | 7/2/2024 | 1,553 | ||||||
Ansira Holdings, Inc. - Revolver | 12/20/2024 | 3,683 | ||||||
AP Plastics Group, LLC - Revolver | 8/2/2021 | 8,500 | ||||||
Appriss Holdings, Inc. - Revolver | 5/30/2025 | 2,383 | ||||||
Aramsco, Inc. - Revolver | 8/28/2024 | 1,581 | ||||||
Batteries Plus Holding Corporation - Revolver | 7/6/2022 | 4,250 | ||||||
Captain D's LLC - Revolver | 12/15/2023 | 480 | ||||||
CB Nike IntermediateCo Ltd - Revolver | 10/31/2025 | 4,428 | ||||||
CMI Marketing Inc - Revolver | 5/24/2023 | 2,112 | ||||||
CPS Group Holdings, Inc. - Revolver | 3/3/2025 | 4,933 | ||||||
Cruz Bay Publishing, Inc. - Delayed Draw | 2/1/2021 | 1,098 | ||||||
Cruz Bay Publishing, Inc. - Revolver | 2/1/2021 | 856 | ||||||
CST Buyer Company - Revolver | 10/3/2025 | 2,190 | ||||||
Dorner Manufacturing Corp - Revolver | 3/15/2022 | 1,099 | ||||||
Efficient Collaborative Retail Marketing Company, LLC - Revolver | 6/15/2022 | 1,275 | ||||||
Element Buyer, Inc. - Revolver | 7/19/2024 | 3,400 | ||||||
FFI Holdings I Corp - Revolver | 1/24/2025 | 5,432 | ||||||
Grammer Purchaser, Inc. - Revolver | 9/30/2024 | 1,050 | ||||||
Green Street Parent, LLC - Revolver | 8/27/2025 | 2,419 | ||||||
GSP Holdings, LLC - Revolver | 11/6/2025 | 2,720 | ||||||
JHCC Holdings, LLC - Delayed Draw | 9/9/2025 | 6,262 | ||||||
JHCC Holdings, LLC - Revolver | 9/9/2025 | 1,952 | ||||||
Kellstrom Commercial Aerospace, Inc. - Revolver | 7/1/2025 | 1,066 | ||||||
Margaux Acquisition Inc. - Delayed Draw | 12/19/2024 | 1,409 | ||||||
Margaux UK Finance Limited - Revolver | 12/19/2024 | 644 | ||||||
MRI Software LLC - Delayed Draw | 2/10/2026 | 1,016 | ||||||
MRI Software LLC - Revolver | 2/10/2026 | 1,782 | ||||||
NPC International, Inc. - First Lien Senior Secured Loan | 1/21/2021 | 402 | ||||||
Profile Products LLC - Revolver | 12/20/2024 | 3,833 | ||||||
Refine Intermediate, Inc. - Revolver | 9/3/2026 | 4,806 | ||||||
RoC Opco LLC - Revolver | 2/25/2025 | 10,241 | ||||||
Solaray, LLC - Revolver | 9/9/2022 | 5,327 | ||||||
Symplr Software, Inc. - Revolver | 11/30/2023 | 4,965 | ||||||
TEI Holdings Inc. - Revolver | 12/23/2025 | 1,056 | ||||||
Tidel Engineering, L.P. - Revolver | 3/1/2023 | 4,250 | ||||||
TLC Purchaser, Inc. - Delayed Draw | 10/13/2025 | 7,119 | ||||||
TLC Purchaser, Inc. - Revolver | 10/13/2025 | 8,900 | ||||||
Ventiv Holdco, Inc. - Revolver | 9/3/2025 | 2,981 | ||||||
WCI-HSG Purchaser, Inc. - Revolver | 2/24/2025 | 2,284 | ||||||
Whitcraft LLC - Revolver | 4/3/2023 | 1,087 | ||||||
WU Holdco, Inc. - Revolver | 3/26/2025 | 3,944 | ||||||
YLG Holdings, Inc. - Delayed Draw | 10/31/2025 | 1,008 | ||||||
YLG Holdings, Inc. - Revolver | 10/31/2025 | 8,545 | ||||||
Zywave, Inc. - Revolver | 11/17/2022 | 1,279 | ||||||
Total First Lien Senior Secured Loans | $ | 153,032 |
(1) | Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity. | |
(2) | Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of September 30, 2020. |
(1) Commitments are generally subject to borrowers meeting certain criteria suchAs of December 31, 2019, the Company had $215.8 million of unfunded commitments under loan and financing agreements as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.follows:
Expiration Date (1) | Unfunded Commitments (2) | |||||
First Lien Senior Secured Loans | ||||||
A&R Logistics, Inc. - Revolver | 5/5/2025 | $ | 5,043 | |||
Abracon Group Holding, LLC. - Revolver | 7/18/2024 | 2,833 | ||||
AMI US Holdings Inc. - Revolver | 4/1/2024 | 977 | ||||
Amspec Services, Inc. - Revolver | 7/2/2024 | 3,542 | ||||
Ansira Holdings, Inc. - Delayed Draw | 12/20/2022 | 1,509 | ||||
AP Plastics Group, LLC - Revolver | 8/2/2021 | 8,500 | ||||
Appriss Holdings, Inc. - Revolver | 5/30/2025 | 4,711 | ||||
Aramsco, Inc. - Revolver | 8/28/2024 | 2,766 | ||||
Batteries Plus Holding Corporation - Revolver | 7/6/2022 | 4,250 | ||||
Captain D’s LLC - Revolver | 12/15/2023 | 577 | ||||
CB Nike Intermediate Co Ltd - Revolver | 10/31/2025 | 2,878 | ||||
Clinical Innovations, LLC - Revolver | 10/17/2022 | 380 | ||||
CMI Marketing Inc. - Revolver | 5/24/2023 | 2,112 | ||||
CPS Group Holdings, Inc. - Revolver | 3/3/2025 | 4,933 | ||||
Cruz Bay Publishing, Inc. - Delayed Draw | 2/28/2020 | 1,098 | ||||
Cruz Bay Publishing, Inc. - Revolver | 2/28/2020 | 535 | ||||
CST Buyer Company - Revolver | 10/3/2025 | 2,190 | ||||
Datix Bidco Limited - Revolver | 10/28/2024 | 1,290 | ||||
Direct Travel, Inc. - Delayed Draw | 12/1/2021 | 7,030 | ||||
Direct Travel, Inc. - Revolver | 12/1/2021 | 4,250 | ||||
Dorner Manufacturing Corp - Revolver | 3/15/2022 | 1,099 | ||||
Efficient Collaborative Retail Marketing Company, LLC - Revolver | 6/15/2022 | 3,542 | ||||
Element Buyer, Inc. - Delayed Draw | 7/18/2025 | 7,933 | ||||
Element Buyer, Inc. - Revolver | 7/19/2024 | 2,833 | ||||
FFI Holdings I Corp - Delayed Draw | 1/24/2025 | 677 | ||||
FFI Holdings I Corp - Revolver | 1/24/2025 | 1,994 | ||||
Fineline Technologies, Inc. - Revolver | 11/4/2022 | 655 | ||||
Grammer Purchaser, Inc. - Revolver | 9/30/2024 | 998 | ||||
Great Expressions Dental Center PC - Revolver | 9/28/2022 | 150 | ||||
Green Street Parent, LLC - Revolver | 8/27/2025 | 2,419 | ||||
GSP Holdings, LLC - Revolver | 11/6/2025 | 4,307 | ||||
Hightower Holding, LLC - Delayed Draw | 1/31/2025 | 6,640 | ||||
Horizon Telcom, Inc. - Delayed Draw | 6/15/2023 | 1,256 | ||||
Horizon Telcom, Inc. - Revolver | 6/15/2023 | 116 | ||||
Ivy Finco Limited - First Lien Senior Secured Loan | 5/19/2025 | 5,817 | ||||
JHCC Holdings, LLC - Delayed Draw | 9/9/2025 | 8,500 | ||||
JHCC Holdings, LLC - Revolver | 9/9/2025 | 1,820 | ||||
Kellstrom Commercial Aerospace, Inc. - Delayed Draw | 7/1/2025 | 3,838 | ||||
Kellstrom Commercial Aerospace, Inc. - Revolver | 7/1/2025 | 640 | ||||
Margaux Acquisition Inc. - Delayed Draw | 12/19/2024 | 7,139 | ||||
Margaux Acquisition Inc. - Revolver | 12/19/2024 | 2,872 | ||||
Margaux UK Finance Limited - Revolver | 12/19/2024 | 662 | ||||
Mertus 522. GmbH - Delayed Draw | 5/28/2026 | 13,761 | ||||
Profile Products LLC - Revolver | 12/20/2024 | 3,833 | ||||
RoC Opco LLC - Revolver | 2/25/2025 | 10,241 | ||||
Solaray, LLC - Revolver | 9/9/2022 | 1,077 | ||||
SumUp Holdings Luxembourg S.à.r.l. - First Lien Senior Secured Loan | 8/1/2024 | 10,638 | ||||
Symplr Software, Inc. - Revolver | 11/30/2023 | 466 | ||||
TCFI Aevex LLC - Revolver | 5/13/2025 | 138 | ||||
TEI Holdings Inc. - Revolver | 12/23/2025 | 3,018 | ||||
Tidel Engineering, L.P. - Revolver | 3/1/2023 | 4,250 | ||||
TLC Purchaser, Inc. - Delayed Draw | 10/13/2025 | 7,119 | ||||
TLC Purchaser, Inc. - Revolver | 10/13/2025 | 4,984 | ||||
Ventiv Holdco, Inc. - Revolver | 9/3/2025 | 3,407 | ||||
WCI-HSG Purchaser, Inc. - Revolver | 2/24/2025 | 2,284 | ||||
WU Holdco, Inc. - Delayed Draw | 3/26/2026 | 4,801 | ||||
WU Holdco, Inc. - Revolver | 3/26/2025 | 3,944 | ||||
YLG Holdings, Inc. - Delayed Draw | 10/31/2025 | 5,127 | ||||
YLG Holdings, Inc. - Revolver | 10/31/2025 | 8,545 | ||||
Zywave, Inc. - Revolver | 11/17/2022 | 851 | ||||
Total First Lien Senior Secured Loans | $ | 215,795 |
(1) | Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity. |
(2) | Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of December 31, 2019. |
Contingencies
In the normal course of business, the Company may enter into certain contracts that provide a variety of indemnities. The Company’s maximum exposure under these indemnities is unknown as it would involve future claims that may be made against the Company. Currently, the Company is not aware of any such claims and no such claims are expected to occur. As such, the Company does not consider it necessary to record a liability in this regard.
Note 11. Directors Fees
Our independent directors’ annual fee is $75,000. The independent directors also receive$2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each regular Board meeting and $1,000 for each special meeting. They also receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended. In addition, the Chairman of the Audit Committee receives an additional annual fee of $7,500. The Chairman of the Nominating and Corporate Governance Committee receives an additional annual fee of $2,500. No compensation is expected to be paid to directors who are “interested persons” with respectto us, as such term is defined in Section 2(a)(19) of the 1940 Act.
As of September 30, 2017, the Company had no accrued and unpaid compensation to members of the Board. As of December 31, 2016, the Company had accrued and unpaid compensation to members of the Board of $0.1 million.
Note 12. Earnings (Loss) Per Share
In accordance with the provisions of ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of September 30, 2017 and December 31, 2016, there were no dilutive shares.
The following information sets forth the computation of the weighted average basic and diluted net increase (decrease) in net assets per share resulting from operations for the three and nine months ended September 30, 2017 and 2016:
|
| For the Three Months Ended |
| For the Nine Months Ended |
| ||||||||
Basic and diluted |
| 2017 |
| 2016 |
| 2017 |
| 2016 |
| ||||
Net increase (decrease) in net assets resulting from operations |
| $ | 7,201,939 |
| $ | (858,399 | ) | $ | 12,384,779 |
| $ | (858,399 | ) |
Weighted average common shares outstanding |
| 24,921,589 |
| 1,000 |
| 17,725,983 |
| 1,000 |
| ||||
Earnings (loss) per common share |
| $ | 0.29 |
| $ | (858.40 | ) | $ | 0.70 |
| $ | (858.40 | ) |
Note 13. Financial Highlights
As the Advisor was the sole investor at September 30, 2016, presentation of financial highlights as of and for the period from January 1, 2016, to September 30, 2016, is not required.
The following is a schedule of financial highlights for the nine months ended September 30, 2017:2020 and 2019:
|
| September 30, 2017 |
| |
Per share data: |
|
|
| |
Net asset value at beginning of period |
| $ | 20.10 |
|
Net investment income (1) |
| 0.53 |
| |
Net realized gains (losses) (1) (9) |
| (0.01 | ) | |
Net change in unrealized appreciation (depreciation) (1) (2) (10) |
| 0.10 |
| |
Net increase in net assets resulting from operations (1) (11) (12) |
| 0.62 |
| |
Stockholder distributions from net investment income (3) |
| (0.39 | ) | |
|
|
|
| |
Net asset value at end of period |
| $ | 20.33 |
|
|
|
|
| |
Net assets at end of period |
| $ | 506,896,246 |
|
Shares outstanding at end of period |
| 24,931,841.86 |
| |
Total return based on net asset value (4) |
| 3.10 | % | |
Ratios: |
|
|
| |
Ratio of net investment income to average net assets (5) (8) |
| 3.43 | % | |
Ratio of total expenses to average net assets (5) (8) |
| 1.84 | % | |
Supplemental data: |
|
|
| |
Ratio of interest and debt financing expenses to average net assets (5) (8) |
| 0.22 | % | |
Ratio of expenses (without incentive fees) to average net assets (5) (8) |
| 1.72 | % | |
Ratio of incentive fees to average net assets (5) (7) |
| 0.12 | % | |
Average debt outstanding |
| $ | 8,187,767 |
|
Portfolio turnover (6) |
| 8.65 | % | |
Total committed capital, end of period |
| $ | 1,255,119,125 |
|
Ratio of total contributed capital to total committed capital, end of period |
| 40.04 | % | |
Year of formation |
| 2015 |
|
For the Nine months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Per share data: | ||||||||
Net asset value at beginning of period | $ | 19.72 | $ | 19.46 | ||||
Net investment income (1) | 1.13 | 1.23 | ||||||
Net realized gain (loss) (1) (7) | (0.50 | ) | 0.19 | |||||
Net change in unrealized appreciation (depreciation) (1) (2) (8) | (1.18 | ) | 0.06 | |||||
Net increase (decrease) in net assets resulting from operations (1) (9) (10) | (0.55 | ) | 1.48 | |||||
Stockholder distributions from income (3) | (1.09 | ) | (1.23 | ) | ||||
Dilution due to issuance of common stock | (1.81 | ) | - | |||||
Net asset value at end of period | $ | 16.27 | $ | 19.71 | ||||
Net assets at end of period | $ | 1,050,459 | $ | 1,081,225 | ||||
Shares outstanding at end of period | 64,562,265.27 | 51,649,812.27 | ||||||
Per share market value at end of period | $ | 10.20 | $ | 18.97 | ||||
Total return based on market value (12) | (42.59 | )% | 20.55 | % | ||||
Total return based on net asset value (4) | (11.92 | )% | 7.72 | % | ||||
Ratios: | ||||||||
Ratio of net investment income to average net assets (5)(11)(13) | 8.68 | % | 8.50 | % | ||||
Ratio of total net expenses to average net assets (5)(11)(13) | 11.16 | % | 10.37 | % | ||||
Supplemental data: | ||||||||
Ratio of interest and debt financing expenses to average net assets (5)(13) | 6.73 | % | 6.14 | % | ||||
Ratio of expenses (without incentive fees) to average net assets (5) (11)(13) | 11.16 | % | 9.37 | % | ||||
Ratio of incentive fees and management fees, net of contractual and voluntary waivers, to average net assets (5)(11)(13) | 3.56 | % | 3.48 | % | ||||
Average principal debt outstanding | $ | 1,594,268 | $ | 1,225,077 | ||||
Portfolio turnover (6) | 13.58 | % | 35.54 | % |
(1) The per share data was derived by using the weighted average shares outstanding during the nine months ended September 30, 2017.
(2) Net change in unrealized appreciation (depreciation) on investments per share may not be consistent with the consolidated statements of operations due to the timing of shareholder transactions.
(1) | The per share data was derived by using the weighted average shares outstanding during the period. |
(2) | Net change in unrealized appreciation (depreciation) on investments per share may not be consistent with the consolidated statements of operations due to the timing of shareholder transactions. |
(3) | The per share data for distributions reflects the actual amount of distributions declared during the period. |
(4) | Total return based on net asset value is calculated as the change in net asset value per share during the period, assuming dividends and distributions, including those distributions that have been declared. Total return has not been annualized. |
(5) | The computation of average net assets during the period is based on averaging net assets for the periods reported. |
(6) | Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value for the periods reported. |
(7) | Net realized gain (loss) includes net realized gain (loss) on investments, net realized gain (loss) on forward currency exchange contracts and net realized gain (loss) on foreign currency transactions. |
(8) | Net change in unrealized appreciation (depreciation) includes net change in unrealized appreciation (depreciation) on investments, net change in unrealized appreciation (depreciation) on forward currency exchange contracts and net change in unrealized appreciation (depreciation) on foreign currency translation. |
(9) | The sum of quarterly per share amounts presented in previously filed financial statements on Form 10-Q may not equal earnings per share. This is due to changes in the number of weighted average shares outstanding and the effects of rounding. |
(10) | Net increase in net assets resulting from operations per share in these financial highlights may be different from the net increase in net assets per share on the consolidated statements of operations due to changes in the number of weighted average shares outstanding and the effects of rounding. |
(11) | The ratio of voluntary incentive fee waiver to average net assets was 0.00% and (0.27%) for the nine months ended September 30, 2020 and 2019, respectively (Note 5). The ratio of voluntary management fee waiver to average net assets was 0.00% and (0.64%) for the nine months ended September 30, 2020 and 2019, respectively (Note 5). The ratio of net investment income without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the nine months ended September 30, 2020 would be 8.68%. The ratio of net investment income without the voluntary incentive fee waiver to average net assets for the nine months ended September 30, 2019 would be 7.60%. The ratio of total expenses without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the nine months ended September 30, 2020 would be 11.16%. The ratio of total expenses without the voluntary incentive fee waiver to average net assets for the nine months ended September 30, 2019 would be 11.28%. |
(12) | Total return based on market value (not annualized) is calculated as the change in market value per share during the period, assuming dividends and distributions, plus the declared distributions, divided by the beginning market price for the period. Total return has not been annualized. |
(13) | Ratio is annualized. Incentive fees, voluntary incentive fee waivers, and voluntary management fee waivers, if any, included within the ratio are not annualized. |
(3) The per share data for distributions reflects the actual amount of distributions declared during the period.
(4) Total return based on net asset value is calculated as the change in net asset value per share during the nine months ended September 30, 2017, assuming dividends and distributions, if any, are reinvested in accordance with the Company’s dividend reinvestment plan. Total return has not been annualized.
(5) The computation of average net assets during the period is based on averaging net assets for the nine months ended September 30, 2017.
(6) Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value for the nine months ended September 30, 2017.
(7) Ratio is not annualized.
(8) Ratio is annualized. Incentive fees included within the ratio are not annualized.
(9) Net realized gains (losses) includes net realized gain on investments, net realized loss on forward currency exchange contracts and net realized loss on foreign currency transactions.
(10) Net change in unrealized appreciation (depreciation) includes net change in unrealized appreciation on investments, net change in unrealized depreciation on forward currency exchange contracts and net change in unrealized appreciation on foreign currency translation.
(11) The sum of quarterly per share amounts may not equal earnings per share. This is due to changes in the number of weighted average shares outstanding and the effects of rounding.
(12) Net increase in net assets resulting from operations per share in these financial highlights may be different from the net increase in net assets per share on the consolidated statements of operations due to rounding.
Note 14.12. Subsequent Events
On October 4, 2017, Bain Capital Specialty Finance, Inc. (the “Company”) entered into a revolving credit agreement (the “BCSF Revolving Credit Agreement”) with the Company as Equity Holder, BCSF I, LLC as Borrower, and Goldman Sachs Bank USA, as Sole Lead Arranger, Syndication Agent and Administrative Agent (“Goldman Sachs”), and U.S. Bank National Association as Collateral Administrator, Collateral Agent and Collateral Custodian (“U.S. Bank”). The BCSF Revolving Credit Agreement is effective as of October 4, 2017.
The facility amount underCompany’s management has evaluated the BCSF Revolving Credit Agreement is $500.0 million, which may be increased to $750.0 million. Proceedsevents and transactions that have occurred through November 5, 2020, the issuance date of the loans underconsolidated financial statements, and noted no items requiring disclosure in this Form 10-Q or adjustment of the BCSF Revolving Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the BCSF Revolving Credit Agreement.consolidated financial statements.
The maturity date is the earliest of: (a) October 5, 2022 and (b) the date upon which all loans shall become due and payable in full, whether by acceleration or otherwise.
The BCSF Revolving Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
BCSF I, LLC is a wholly owned subsidiary of the Company. BCSF I, LLC has entered into an investment management agreement as of October 4, 2017, with the Company, pursuant to which the Company manages the BCSF I, LLC investment program and related activities. All intercompany transactions between BCSF I, LLC and the Company are eliminated in consolidation.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
TheYou should read the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing in our Annual Report on Form 10-K (the “Annual Report”) for the year ended December 31, 2016,2019, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 29, 2017.February 26, 2020. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes and other financial information appearing elsewhere in this quarterly reportQuarterly Report on Form 10-Q (the “Quarterly Report”).
Overview
Bain Capital Specialty Finance, Inc. (the “Company”, “we”, “our” and “us”) was formed on October 5, 2015 as a Delaware corporation structured asis an externally managed closed-end, non-diversified management investment company. The Company commenced investment operationsspecialty finance company focused on October 13, 2016. The Company haslending to middle market companies. We have elected to be treated and is regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the(together with the rules and regulations promulgated thereunder, the “1940 Act”). In addition, the Company has elected to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a RIC, the Company will not be subject to tax on its income to the extent that it distributes substantially all of its income each taxable year and satisfies other applicable income tax requirements.
The Company isWe are managed by BCSF Advisors, LP (the(our “Advisor” or “BCSF Advisors”), a subsidiary of Bain Capital Credit, LP (“Bain Capital Credit”). Our Advisor is registered as an investment adviser that is registered with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). TheOur Advisor also provides the administrative services necessary for the Companyus to operate (in such capacity, theour “Administrator” or “BCSF Advisors”). The Company management consistsSince we commenced operations on October 13, 2016 through September 30, 2020, we have invested approximately $3.7 billion in aggregate principal amount of investmentdebt and administrative professionals from the Advisorequity investments prior to any subsequent exits or repayments. We seek to generate current income and, Administrator along with the boardto a lesser extent, capital appreciation through direct originations of directors (the “Board”). The Advisor directssecured debt, including first lien, first lien/last-out, unitranche and executes the investment operationssecond lien debt, investments in strategic joint ventures, equity investments and, capital raising activities of the Company subject to oversight from the Board, which sets the broad policies of the Company. The Board has delegated investment management of the Company’s investment assets to the Advisor. The Board consists of five directors, three of whom are independent.a lesser extent, corporate bonds.
Our primary focus is capitalizing on opportunities within Bain Capital Credit’s senior direct lendingour Senior Direct Lending strategy, which seeks to provide risk-adjusted returns and current income to investorsour stockholders by investing primarily in middle-market companies with between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). However, we may, from time to time, invest in larger or smaller companies. We intendgenerally seek to retain effective voting control in respect of the loans or particular classes of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities, including common and preferred equity, on an opportunistic basis, and in secondary purchases of assets or portfolios as described below. Investmentsbut such investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchasesnot the principal focus of assets or portfolios that primarily consist of middle-market corporate debt. Weour investment strategy. In addition, we may also invest, from time to time, in equity securities, distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities. Our investments are subject to a number of risks. Leverage is expected to be utilized to help us meet our investment objective. Any such leverage, if incurred, would be expected to increase the total capital available for investment by us.
We maygenerate revenues primarily through receipt of interest income from the investments we hold. In addition, we generate income from various loan origination and other fees, dividends on direct equity investments and capital gains on the sales of investments. The companies in which we invest in debt securities which are either rated below investment grade or not rated by any rating agency but, if they were rated, would be rated below investment grade. Below investment grade securities, which are often referreduse our capital for a variety of reasons, including to as “junk,” have predominantly speculative characteristics with respectsupport organic growth, to the issuer’s capacityfund changes of control, to pay interestfund acquisitions, to make capital investments and repay principal. They may also be illiquidfor refinancing and difficult to value.
As a BDC, we may also invest up to 30% of our portfolio opportunistically in “non-qualifying” portfolio investments, such as investments in non-U.S. companies.
We may borrow money from time to time within the levels permitted by the 1940 Act (which generally allows us to incur leverage for up to one-half of our assets). In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook.recapitalizations.
Investments
We expect that ourOur level of investment activity willmay vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the level of investment and capital expenditures of such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make. DuringDue to the quarter ended September 30, 2017,impact of COVID-19 and related measures taken to contain its spread, the Company’s investment pace was slower thanfuture duration and breadth of the target. However,adverse impact of COVID-19 on the Advisor currently believes that, asbroader markets in which the Company continuesinvests cannot currently be accurately predicted and future investment activity of the Company will be subject to ramp up its portfolio,these effects and the investment pace will increase towards the target rate over time.related uncertainty.
As a BDC, we may not acquire any assets other than “qualifying assets” specified in the Investment Company1940 Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the SEC, “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.
As a BDC, we may also invest up to 30% of our portfolio opportunistically in “non-qualifying” portfolio investments, such as investments in non-U.S. companies.
Market OverviewRevenues
With respect to returns, while loan spreads have tightened in the past few quarters, yields have remained relatively stable due to upward movement in LIBOR rates. During recent quarters, the Advisor has also noted stable all-in-yields. In addition, as we move later in the credit cycle, the Advisor has observed that sponsors and companies are more frequently utilizing EBITDA add-backs to demonstrate run-rate profitability. In an environment where the Advisor believes corporate profits are nearing cyclical peaks, the Advisor is increasingly skeptical of these add-backs and always incorporates such add-backs into its loan underwriting process. Despite the aforementioned headwinds, the Advisor continues to believe the investment set broadly provides attractive risk/return investment opportunities for the Company although caution is warranted.
Revenues
We primarily generate revenue in the form of interest income on debt investments and distributions on equity investments and, to a lesser extent, capital gains, and distributions, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind (“PIK”) interest. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original
issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts into or against income over the life of the loan. We record contractual prepayment premiums on loans and debt securities as interest income.
Our debt investment portfolio consists of primarily floating rate loans. As of September 30, 2017, 98.1%2020 and December 31, 2019, 99.2% and 99.0%, respectively, of our debt investments, based on fair value, bearbore interest at a floating rate,rates, which may be subject to interest rate floors. Variable-rate investments subject to a floor generally reset periodically to the applicable floor, only if the floor exceeds the index. Trends in base interest rates, such as LIBOR, may affect our net investment income over the long term. In addition, our results may vary from period to period depending on the interest rates of new investments made during the period compared to investments that were sold or repaid during the period; these results reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macroeconomic trends.
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.
Expenses
Our primary operating expenses will include the payment of fees to theour Advisor under the Investmentsecond amended and restated investment advisory agreement (the “Amended Advisory Agreement,Agreement”), our allocable portion of overhead expenses under the administration agreement (the “Administration Agreement”) and other operating costs, including those described below. The Base Management Fee and Incentive Fee compensate our Advisor for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We will bear all other out-of-pocket costs and expenses of our operations and transactions, including:
· our initial organizational costs incurred prior to the commencement of our operations up to a maximum of $1.5 million;
· | our operational and organizational cost; |
· operating costs incurred prior to the commencement of our operations;
· | the costs of any public offerings of our common stock and other securities, including registration and listing fees; |
· the cost of calculating our net asset value, including the cost of any third-party valuation services;
· | costs of calculating our net asset value (including the cost and expenses of any third-party valuation services); |
· the cost of effecting sales and repurchases of shares of our common stock and other securities;
· | fees and expenses payable to third parties relating to evaluating, making and disposing of investments, including our Advisor’s or its affiliates’ travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments, monitoring our investments and, if necessary, enforcing our rights; |
· fees payable to third parties relating to making investments, including the Advisor’s or its affiliates’ travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;
· | interest payable on debt and other borrowing costs, if any, incurred to finance our investments; |
· interest expense and other costs associated with our indebtedness;
· | costs of effecting sales and repurchases of our common stock and other securities; |
· transfer agent and custodial fees;
· | distributions on our common stock; |
· out-of-pocket fees and expenses associated with marketing efforts;
· | transfer agent and custody fees and expenses; |
· federal and state registration fees and any stock exchange listing fees;
· U.S. federal, state and local taxes;
· independent directors’ fees and expenses;
· brokerage commissions and markups;
· fidelity bond, directors’ and officers’ liability insurance and other insurance premiums;
· direct
· | the allocated costs
|
· | other expenses incurred by BCSF Advisors or us in connection with administering our business, including payments made to third-party providers of goods or services; |
· | brokerage fees and commissions; |
· | federal and state registration fees; |
· | U.S. federal, state and local taxes; |
· | Independent Director fees and expenses; |
· | costs associated with our reporting and compliance obligations under the 1940 Act and applicable U.S. federal and state securities laws; |
· | costs of any reports, proxy statements or other notices to our stockholders, including printing costs; |
· | costs of holding stockholder meetings; |
· | our fidelity bond; |
· | directors’ and officers’ errors and omissions liability insurance, and any other insurance premiums; |
· | litigation, indemnification and other non-recurring or extraordinary expenses; |
· | direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, staff, audit, compliance, tax and legal costs; |
· | fees and expenses associated with marketing efforts; |
· | dues, fees and charges of any trade association of which we are a member; and |
· | all other expenses reasonably incurred by us or the Administrator in connection with administering our business. |
To the extent that expenses to be borne by us are paid by BCSF Advisors, we will generally reimburse BCSF Advisors for such expenses. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator. We will also reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, thatincluding certain rent and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment and fees paid to third-party providers for goods or services. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based uponon the percentage of time certain individuals devote, on an estimated basis, to our allocable portion (subjectbusiness and affairs, and will be subject to oversight by our Board of Directors (our “Board”). We incurred expenses related to the reviewAdministrator of $0.0 million and approval$0.2 million for the three months ended September 30, 2020 and 2019, respectively, and $0.0 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The sub-administrator is paid its compensation for performing its sub-administrative services under the Board)sub-administration agreement. We incurred expenses related to the sub-administrator of overhead.
All$0.1 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively, and $0.4 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively, which is included in other general and administrative expenses on the consolidated statements of the foregoing expenses are ultimately borne by our stockholders.
From time to time, the Administrator or its affiliates may pay third-party providers of goods or services. Weoperations. BCSF Advisors will reimburse the Administrator or such affiliates thereof for any such amounts paid on our behalf. The Administrator will waive its right tonot be reimbursed into the eventextent that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses are ultimately borne by our stockholders.
Leverage
We may borrow money from time to time. However, our ability to incur indebtedness (including by issuing preferred stock), as of September 30, 2020, is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150%. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. As of September 30, 2020, the Company’s asset coverage was 169%.
Impact of COVID-19
In late 2019 and early 2020, a novel coronavirus (SARS-CoV-2) and related respiratory disease ("COVID-19") emerged in China and spread rapidly to across the world, including to the U.S. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. The extent to which the COVID-19 pandemic will adversely impact the Company’s business, financial condition, liquidity and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of this outbreak, and any future outbreaks.
It is clear that these types of events are negatively impacting and will, for at least some time, continue to negatively impact the Company and portfolio companies and in many instances the impact will be profound. For example, smaller and middle market companies in which we may invest are being significantly impacted by these emerging events and the uncertainty caused by these events. With respect to loans to such companies, the Company will be impacted if, among other things, (i) amendments and waivers are granted (or are required to be granted) to borrowers permitting deferral of loan payments or allowing for payment-in-kind (“PIK”) interest payments, (ii) borrowers default on their loans, are unable to refinance their loans at maturity, or go out of business permanently, and/or (iii) the value of loans held by the Company decreases as a result of such events and the uncertainty they cause. Such emerging events, to the extent experienced, will cause the Company to suffer a loss on its investments or interest thereon. The Company will also enter intobe negatively affected if the operations and effectiveness of the Adviser or a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted as a result of stay-at-home orders or other related interruptions to regular business operations.
With respect to the Company’s investments, we have taken incremental steps in actively overseeing all of our individual portfolio companies. These measures include, among other things, (i) frequent communication with our portfolio company management teams and related private equity sponsors to understand the expected financial performance impact of the COVID-19 pandemic; (ii) re-underwriting our portfolio companies to understand the impact if the current economic environment persists; and (iii) the creation of an internal working group focused on understanding the potential financial needs of our portfolio companies and engaging with these companies and their private equity sponsors, as needed.
The effects of the COVID-19 pandemic on economic and market conditions have increased the Company’s demands to provide capital to its existing portfolio companies. During the month of March 2020, we received unprecedented draw requests on revolving credit and delayed draw facilities we provided to our portfolio companies as many of them sought to husband excess cash as a defensive measure in these uncertain times. All of those draws were met in a timely fashion and we maintain adequate cash and additional borrowing capacity in reserve to meet any further such draw requests.
The Company experienced a significant reduction in our net asset value as of September 30, 2020 as compared to our net asset value as of December 31, 2019. The significant decrease is primarily the result of unrealized depreciation across the fair value of the Company’s investments resulting from the COVID-19 pandemic and the dilution impact from the Company’s rights offering.
As of September 30, 2020, the Company was in compliance with its asset coverage requirements under the 1940 Act. In addition, the Company was in compliance with all financial covenants within its credit facilities as of September 30, 2020. However, any continued increase in realized or otherunrealized depreciation of our investment portfolio or further significant reductions in our net asset value as a result of the effects of the COVID-19 pandemic or otherwise increase the risk of breaching the relevant covenants and requirements. Any breach of these requirements may adversely affect the Company's access to sufficient debt arrangementsand equity capital. The effects of the COVID-19 pandemic may also cause the Company to partially fund our operations, and could incur costs and expenses including commitment, origination, or structuring fees and the related interest costs associated with any amounts borrowed.limit distributions.
It is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on the Company, the Adviser and portfolio companies.
Portfolio and Investment Activity
During the three months ended September 30, 2017,2020, we invested $69.4$30.8 million, including PIK, in 1924 portfolio companies, and had $7.4$89.9 million in aggregate amount of principal repayments and sales, resulting in a net decrease in investments of $59.1 million for the period. Of the $30.8 million invested during the three months ended September 30, 2020, $11.9 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
During the three months ended September 30, 2019, we invested $274.6 million, including PIK, in 39 portfolio companies, and had $184.2 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $62.0$90.4 million for the period.
During the nine months ended September 30, 2017,2020, we invested $394.9$357.7 million, including PIK, in 5059 portfolio companies, and had $26.0$337.7 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $368.9$20.0 million for the period. Of the $357.7 million invested during the nine months ended September 30, 2020, $197.0 million was related to drawdowns on delayed draw term loans and revolvers of our portfolio companies.
During the nine months ended September 30, 2019, we invested $953.3 million, including PIK, in 80 portfolio companies, including ABCS as a single portfolio company, and had $754.5 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $198.8 million for the period. These amounts exclude the ABCS distribution transaction on April 30, 2019. On April 30, 2019, the Company received a distribution from ABCS. The portfolio of investments that were distributed comprised of 25 senior secured unitranche loans with a fair value of $919.0 million.
The following table shows the composition of the investment portfolio and associated yield data as of September 30, 2017:2020 (dollars in thousands):
|
| As of September 30, 2017 | |||||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of |
| Weighted |
| ||
First Lien Senior Secured Loan |
| $ | 369,870,176 |
| 77.7 | % | $ | 375,229,243 |
| 77.6 | % | 6.1 | % |
First Lien Last Out Loan |
| 19,051,907 |
| 4.0 |
| 19,880,801 |
| 4.1 |
| 8.0 |
| ||
Second Lien Senior Secured Loan |
| 71,449,253 |
| 15.0 |
| 72,874,539 |
| 15.1 |
| 9.1 |
| ||
Corporate Bond |
| 8,478,000 |
| 1.8 |
| 8,329,635 |
| 1.7 |
| 7.8 |
| ||
Equity Interest |
| 7,063,857 |
| 1.5 |
| 7,063,857 |
| 1.5 |
| N/A |
| ||
Total |
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % | 6.6 | % |
As of September 30, 2020 | ||||||||||||||||||||||||
Weighted Average Yield (1) at | ||||||||||||||||||||||||
Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | Amortized Cost | Market Value | |||||||||||||||||||
First Lien Senior Secured Loans | $ | 2,180,248 | 86.2 | % | $ | 2,128,629 | 86.5 | % | 6.6 | % | 6.8 | % | ||||||||||||
First Lien Last Out Loans | 16,936 | 0.7 | 17,223 | 0.7 | 10.9 | 10.8 | ||||||||||||||||||
Second Lien Senior Secured Loans | 166,137 | 6.5 | 155,542 | 6.3 | 8.6 | 9.2 | ||||||||||||||||||
Subordinated Debt | 14,787 | 0.6 | 15,000 | 0.6 | 12.7 | 12.5 | ||||||||||||||||||
Equity Interests | 120,836 | 4.8 | 107,373 | 4.4 | 7.8 | 8.3 | ||||||||||||||||||
Preferred Equity | 29,722 | 1.2 | 35,890 | 1.5 | 15.0 | 15.0 | ||||||||||||||||||
Warrants | — | 0.0 | — | 0.0 | N/A | N/A | ||||||||||||||||||
Total | $ | 2,528,666 | 100.0 | % | $ | 2,459,657 | 100.0 | % | 6.9 | % | 7.1 | % |
(1) Based upon the par value of our debt investments
(1) | Weighted average yields are computed as (a) the annual stated interest rate or yield earned on the relevant accruing debt and other income producing securities, divided by (b) the total relevant investments at amortized cost or at fair value, as applicable. The weighted average yield does not represent the total return to our stockholders. |
The following table shows the composition of the investment portfolio and associated yield data as of December 31, 2016:2019 (dollars in thousands):
|
| As of December 31, 2016 | |||||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of |
| Weighted |
| ||
First Lien Senior Secured Loan |
| $ | 98,474,248 |
| 92.7 | % | $ | 100,067,956 |
| 92.7 | % | 6.1 | % |
Second Lien Senior Secured Loan |
| 7,777,251 |
| 7.3 |
| 7,874,052 |
| 7.3 |
| 8.7 |
| ||
Total |
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % | 6.3 | % |
(1) Based upon the par value of our debt investments
As of December 31, 2019 | ||||||||||||||||||||||||
Weighted Average Yield (1) at | ||||||||||||||||||||||||
Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | Amortized Cost | Market Value | |||||||||||||||||||
First Lien Senior Secured Loans | $ | 2,167,932 | 85.4 | % | $ | 2,165,844 | 85.7 | % | 7.5 | % | 7.5 | % | ||||||||||||
First Lien Last Out Loans | 28,315 | 1.1 | 29,300 | 1.2 | 9.9 | 9.5 | ||||||||||||||||||
Second Lien Senior Secured Loans | 187,565 | 7.4 | 175,670 | 7.0 | 9.7 | 10.0 | ||||||||||||||||||
Subordinated Debt | 14,752 | 0.6 | 15,000 | 0.5 | 13.5 | 13.3 | ||||||||||||||||||
Corporate Bonds | 22,412 | 0.9 | 17,508 | 0.7 | 8.5 | 10.8 | ||||||||||||||||||
Equity Interests | 96,736 | 3.8 | 99,293 | 3.9 | 7.7 | 7.5 | ||||||||||||||||||
Preferred Equity | 19,551 | 0.8 | 24,318 | 1.0 | 15.1 | 15.1 | ||||||||||||||||||
Warrants | — | 0.0 | 122 | 0.0 | N/A | N/A | ||||||||||||||||||
Total | $ | 2,537,263 | 100.0 | % | $ | 2,527,055 | 100.0 | % | 7.8 | % | 7.8 | % |
(1) | Weighted average yields are computed as (a) the annual stated interest rate or yield earned on the relevant acquiring debt and other income producing securities, divided by (b) the total relevant investments at amortized cost or at fair value, as applicable. The weighted average yield does not represent the total return to our stockholders. |
The following table presents certain selected information regarding our investment portfolio as of September 30, 2017:2020:
As of | ||||
September 30, | ||||
Number of portfolio companies |
| 107 | ||
Percentage of debt bearing a floating rate (1) |
| 99.2 | % | |
Percentage of debt bearing a fixed rate (1) |
| 0.8 | % |
(1) Measured on a fair value basis
(1) | Measured on a fair value basis. |
The following table presents certain selected information regarding our investment portfolio as of December 31, 2016:2019:
As of | ||||
December 31, | ||||
Number of portfolio companies |
| 114 | ||
Percentage of debt bearing a floating rate (1) |
| 99.0 | % | |
Percentage of debt bearing a fixed rate (1) |
| 1.0 | % |
(1) Measured on a fair value basis
(1) | Measured on a fair value basis. |
The following table shows the amortized cost and fair value of our performing and non-accrual investments as of September 30, 2017:2020 (dollars in thousands):
|
| As of September 30, 2017 | As of September 30, 2020 | ||||||||||||||||||||||||
|
| Amortized Cost |
| Percentage at |
| Fair Value |
| Percentage at | Amortized Cost | Percentage at Amortized Cost | Fair Value | Percentage at Fair Value | |||||||||||||||
Performing |
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % | $ | 2,523,708 | 99.8 | % | $ | 2,455,792 | 99.8 | % | ||||||||
Non-accrual |
| — |
| — |
| — |
| — |
| 4,958 | 0.2 | 3,865 | 0.2 | ||||||||||||||
Total |
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % | $ | 2,528,666 | 100 | % | $ | 2,459,657 | 100 | % |
The following table shows the amortized cost and fair value of our performing and non-accrual investments as of December 31, 2016:2019 (dollars in thousands):
55
|
| As of December 31, 2016 |
| ||||||||
|
| Amortized Cost |
| Percentage at |
| Fair Value |
| Percentage at | |||
Performing |
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % |
Non-accrual |
| — |
| — |
| — |
| — |
| ||
Total |
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % |
As of December 31, 2019 | ||||||||||||||||
Amortized Cost | Percentage at Amortized Cost | Fair Value | Percentage at Fair Value | |||||||||||||
Performing | $ | 2,523,110 | 99.4 | % | $ | 2,523,626 | 99.9 | % | ||||||||
Non-accrual | 14,153 | 0.6 | 3,429 | 0.1 | ||||||||||||
Total | $ | 2,537,263 | 100.0 | % | $ | 2,527,055 | 100.0 | % |
Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2020, there had been one loan placed on non-accrual in the Company's portfolio, comprising 0.2% of the Company's portfolio, based on fair value. This is compared to two loans on non-accrual as of December 31, 2019, comprising 0.1% of the Company's portfolio, based on fair value.
The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents and foreign cash as of September 30, 2020 (dollars in thousands):
As of September 30, 2020 | ||||||||||||||||
Amortized Cost | Percentage of Total | Fair Value | Percentage of Total | |||||||||||||
Cash and cash equivalents | $ | 43,020 | 1.6 | % | $ | 43,020 | 1.7 | % | ||||||||
Foreign cash | 2,029 | 0.1 | 2,009 | 0.1 | ||||||||||||
Restricted cash | 78,895 | 3.0 | 78,895 | 3.1 | ||||||||||||
First Lien Senior Secured Loans | 2,180,248 | 82.1 | 2,128,629 | 82.3 | ||||||||||||
First Lien Last Out Loans | 16,936 | 0.6 | 17,223 | 0.7 | ||||||||||||
Second Lien Senior Secured Loans | 166,137 | 6.3 | 155,542 | 5.9 | ||||||||||||
Subordinated Debt | 14,787 | 0.6 | 15,000 | 0.6 | ||||||||||||
Equity Interests | 120,836 | 4.6 | 107,373 | 4.2 | ||||||||||||
Preferred Equity | 29,722 | 1.1 | 35,890 | 1.4 | ||||||||||||
Warrants | — | 0.0 | — | 0.0 | ||||||||||||
Total | $ | 2,652,610 | 100.0 | % | $ | 2,583,581 | 100.0 | % |
The following table shows the amortized cost and fair value of the investment portfolio, and cash and cash equivalents and foreign cash as of September 30, 2017:December 31, 2019 (dollars in thousands):
|
| As of September 30, 2017 | |||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of | |||
Cash and cash equivalents |
| $ | 37,813,409 |
| 7.4 | % | $ | 37,813,409 |
| 7.2 | % |
Foreign cash |
| 719,766 |
| 0.1 |
| 728,717 |
| 0.1 |
| ||
First Lien Senior Secured Loan |
| 369,870,176 |
| 71.9 |
| 375,229,243 |
| 71.9 |
| ||
First Lien Last Out Loan |
| 19,051,907 |
| 3.7 |
| 19,880,801 |
| 3.8 |
| ||
Second Lien Senior Secured Loan |
| 71,449,253 |
| 13.9 |
| 72,874,539 |
| 14.0 |
| ||
Corporate Bond |
| 8,478,000 |
| 1.6 |
| 8,329,635 |
| 1.6 |
| ||
Equity Interest |
| 7,063,857 |
| 1.4 |
| 7,063,857 |
| 1.4 |
| ||
Total |
| $ | 514,446,368 |
| 100.0 | % | $ | 521,920,201 |
| 100.0 | % |
The following table shows the amortized cost and fair value of the investment portfolio and cash as of December 31, 2016:
|
| As of December 31, 2016 | |||||||||
|
| Amortized Cost |
| Percentage of |
| Fair Value |
| Percentage of | |||
Cash |
| $ | 66,732,154 |
| 38.6 | % | $ | 66,732,154 |
| 38.2 | % |
First Lien Senior Secured Loan |
| 98,474,248 |
| 56.9 |
| 100,067,956 |
| 57.3 |
| ||
Second Lien Senior Secured Loan |
| 7,777,251 |
| 4.5 |
| 7,874,052 |
| 4.5 |
| ||
Total |
| $ | 172,983,653 |
| 100.0 | % | $ | 174,674,162 |
| 100.0 | % |
As of December 31, 2019 | ||||||||||||||||
Amortized Cost | Percentage of Total | Fair Value | Percentage of Total | |||||||||||||
Cash and cash equivalents | $ | 36,531 | 1.4 | % | $ | 36,531 | 1.4 | % | ||||||||
Foreign cash | 854 | 0.0 | 810 | 0.0 | ||||||||||||
Restricted cash and cash equivalents | 31,505 | 1.2 | 31,505 | 1.3 | ||||||||||||
First Lien Senior Secured Loans | 2,167,932 | 83.2 | 2,165,844 | 83.4 | ||||||||||||
First Lien Last Out Loans | 28,315 | 1.1 | 29,300 | 1.1 | ||||||||||||
Second Lien Senior Secured Loans | 187,565 | 7.2 | 175,670 | 6.8 | ||||||||||||
Subordinated Debt | 14,752 | 0.5 | 15,000 | 0.6 | ||||||||||||
Corporate Bonds | 22,412 | 0.9 | 17,508 | 0.7 | ||||||||||||
Equity Interests | 96,736 | 3.7 | 99,293 | 3.8 | ||||||||||||
Preferred Equity | 19,551 | 0.8 | 24,318 | 0.9 | ||||||||||||
Warrants | — | 0.0 | 122 | 0.0 | ||||||||||||
Total | $ | 2,606,153 | 100.0 | % | $ | 2,595,901 | 100.0 | % |
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of September 30, 20172020 (with corresponding percentage of total portfolio investments) (dollars in thousands):
|
| As of September 30, 2017 | As of September 30, 2020 | ||||||||||||||||||||||||
|
| Amortized |
| Percentage of |
| Fair |
| Percentage of | Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||||
High Tech Industries |
| $ | 70,751,009 |
| 14.9 | % | $ | 70,903,545 |
| 14.7 | % | $ | 384,197 | 15.2 | % | $ | 380,859 | 15.5 | % | ||||||||
Aerospace & Defense | 329,736 | 13.0 | 298,542 | 12.1 | |||||||||||||||||||||||
Healthcare & Pharmaceuticals |
| 68,273,830 |
| 14.3 |
| 68,787,769 |
| 14.2 |
| 220,682 | 8.6 | 216,723 | 8.9 | ||||||||||||||
Consumer Goods: Non-Durable | 192,532 | 7.5 | 190,042 | 7.8 | |||||||||||||||||||||||
Capital Equipment | 179,015 | 7.1 | 181,509 | 7.4 | |||||||||||||||||||||||
Services: Business |
| 41,229,975 |
| 8.7 |
| 41,021,307 |
| 8.5 |
| 181,525 | 7.2 | 171,961 | 7.0 | ||||||||||||||
Aerospace & Defense |
| 40,621,333 |
| 8.5 |
| 40,965,911 |
| 8.5 |
| ||||||||||||||||||
Capital Equipment |
| 27,147,077 |
| 5.7 |
| 27,578,436 |
| 5.7 |
| ||||||||||||||||||
Energy: Oil & Gas |
| 26,489,326 |
| 5.6 |
| 27,010,875 |
| 5.6 |
| ||||||||||||||||||
Media: Diversified & Production |
| 22,243,738 |
| 4.7 |
| 24,016,916 |
| 5.0 |
| ||||||||||||||||||
Containers, Packaging & Glass |
| 22,263,662 |
| 4.7 |
| 22,354,669 |
| 4.6 |
| ||||||||||||||||||
Consumer goods: non-durable |
| 21,617,344 |
| 4.5 |
| 21,791,444 |
| 4.5 |
| ||||||||||||||||||
Beverage, Food & Tobacco |
| 21,035,956 |
| 4.4 |
| 21,385,447 |
| 4.4 |
| ||||||||||||||||||
Environmental Industries |
| 19,051,907 |
| 4.0 |
| 19,880,801 |
| 4.1 |
| ||||||||||||||||||
Transportation: Cargo | 114,130 | 4.5 | 112,991 | 4.6 | |||||||||||||||||||||||
Construction & Building |
| 16,107,193 |
| 3.4 |
| 17,409,962 |
| 3.6 |
| 103,806 | 4.1 | 102,724 | 4.2 | ||||||||||||||
Wholesale |
| 15,007,917 |
| 3.1 |
| 15,032,291 |
| 3.1 |
| 80,105 | 3.2 | 77,362 | 3.1 | ||||||||||||||
Energy: Oil & Gas | 69,545 | 2.8 | 70,011 | 2.8 | |||||||||||||||||||||||
FIRE: Insurance (1) | 66,507 | 2.6 | 66,644 | 2.7 | |||||||||||||||||||||||
Automotive | 65,802 | 2.6 | 65,097 | 2.6 | |||||||||||||||||||||||
Consumer Goods: Durable | 59,498 | 2.4 | 59,033 | 2.4 | |||||||||||||||||||||||
Transportation: Consumer | 65,686 | 2.6 | 55,897 | 2.3 | |||||||||||||||||||||||
Hotel, Gaming & Leisure | 52,674 | 2.1 | 49,861 | 2.0 | |||||||||||||||||||||||
Media: Diversified & Production | 47,830 | 1.9 | 46,909 | 1.9 | |||||||||||||||||||||||
Media: Advertising, Printing & Publishing | 52,153 | 2.1 | 46,292 | 1.9 | |||||||||||||||||||||||
Media: Broadcasting & Subscription | 43,266 | 1.7 | 44,638 | 1.8 | |||||||||||||||||||||||
Services: Consumer | 30,560 | 1.2 | 30,695 | 1.2 | |||||||||||||||||||||||
Retail | 28,672 | 1.1 | 28,672 | 1.2 | |||||||||||||||||||||||
Chemicals, Plastics & Rubber | 25,734 | 1.0 | 26,182 | 1.1 | |||||||||||||||||||||||
Telecommunications |
| 14,584,099 |
| 3.1 |
| 14,973,652 |
| 3.1 |
| 21,774 | 0.9 | 21,524 | 0.9 | ||||||||||||||
Real Estate |
| 10,633,539 |
| 2.2 |
| 10,647,486 |
| 2.2 |
| ||||||||||||||||||
Automotive |
| 10,117,483 |
| 2.1 |
| 10,347,560 |
| 2.1 |
| ||||||||||||||||||
Utilities: Electric |
| 8,478,000 |
| 1.8 |
| 8,329,635 |
| 1.7 |
| ||||||||||||||||||
Chemicals, Plastics & Rubber |
| 7,521,730 |
| 1.6 |
| 8,003,207 |
| 1.7 |
| ||||||||||||||||||
Media: Advertising, Printing & Publishing |
| 5,350,769 |
| 1.1 |
| 5,413,500 |
| 1.1 |
| ||||||||||||||||||
Hotel, Gaming & Leisure |
| 4,662,501 |
| 1.0 |
| 4,748,340 |
| 1.0 |
| ||||||||||||||||||
Retail |
| 2,724,805 |
| 0.6 |
| 2,775,322 |
| 0.6 |
| ||||||||||||||||||
|
| $ | 475,913,193 |
| 100.0 | % | $ | 483,378,075 |
| 100.0 | % | ||||||||||||||||
Energy: Electricity | 22,027 | 0.9 | 21,235 | 0.9 | |||||||||||||||||||||||
Environmental Industries | 16,936 | 0.7 | 17,223 | 0.7 | |||||||||||||||||||||||
Beverage, Food & Tobacco | 12,069 | 0.5 | 15,693 | 0.6 | |||||||||||||||||||||||
FIRE: Finance (1) | 15,289 | 0.6 | 15,399 | 0.6 | |||||||||||||||||||||||
Banking | 14,081 | 0.6 | 13,364 | 0.5 | |||||||||||||||||||||||
Containers, Packaging, & Glass | 11,653 | 0.5 | 11,752 | 0.5 | |||||||||||||||||||||||
FIRE: Real Estate (1) | 10,856 | 0.4 | 10,901 | 0.4 | |||||||||||||||||||||||
Forest Products & Paper | 10,326 | 0.4 | 9,922 | 0.4 | |||||||||||||||||||||||
Total | $ | 2,528,666 | 100.0 | % | $ | 2,459,657 | 100.0 | % |
(1) | Finance, Insurance and Real Estate (“FIRE”). |
The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 20162019 (with corresponding percentage of total portfolio investments) (dollars in thousands):
|
| As of December 31, 2016 | As of December 31, 2019 | ||||||||||||||||||||||||
|
| Amortized |
| Percentage of |
| Fair |
| Percentage of | Amortized Cost | Percentage of Total Portfolio | Fair Value | Percentage of Total Portfolio | |||||||||||||||
High Tech Industries |
| $ | 39,698,543 |
| 37.4 | % | $ | 39,904,504 |
| 37.0 | % | $ | 356,086 | 14.0 | % | $ | 356,073 | 14.1 | % | ||||||||
Aerospace & Defense | 305,111 | 12.0 | 307,863 | 12.2 | |||||||||||||||||||||||
Healthcare & Pharmaceuticals | 255,579 | 10.1 | 254,014 | 10.1 | |||||||||||||||||||||||
Consumer Goods: Non-Durable | 195,602 | 7.7 | 196,653 | 7.8 | |||||||||||||||||||||||
Capital Equipment | 183,618 | 7.2 | 186,913 | 7.4 | |||||||||||||||||||||||
Services: Business | 165,286 | 6.5 | 165,862 | 6.5 | |||||||||||||||||||||||
Transportation: Cargo | 116,074 | 4.6 | 116,237 | 4.6 | |||||||||||||||||||||||
Construction & Building | 107,413 | 4.2 | 108,176 | 4.3 | |||||||||||||||||||||||
Wholesale | 79,542 | 3.1 | 78,225 | 3.1 | |||||||||||||||||||||||
Energy: Oil & Gas | 77,264 | 3.0 | 77,979 | 3.1 | |||||||||||||||||||||||
Automotive | 66,522 | 2.6 | 67,374 | 2.7 | |||||||||||||||||||||||
Consumer Goods: Durable | 63,712 | 2.5 | 63,394 | 2.5 | |||||||||||||||||||||||
Transportation: Consumer | 62,473 | 2.5 | 61,662 | 2.3 | |||||||||||||||||||||||
Media: Advertising, Printing & Publishing | 59,419 | 2.3 | 54,765 | 2.2 | |||||||||||||||||||||||
FIRE: Insurance (1) | 52,367 | 2.1 | 54,086 | 2.1 | |||||||||||||||||||||||
Hotel, Gaming & Leisure | 52,866 | 2.1 | 53,074 | 2.1 | |||||||||||||||||||||||
Media: Broadcasting & Subscription | 43,165 | 1.7 | 44,247 | 1.8 | |||||||||||||||||||||||
Media: Diversified & Production |
| 15,345,715 |
| 14.4 |
| 16,046,808 |
| 14.9 |
| 35,670 | 1.4 | 36,403 | 1.4 | ||||||||||||||
Capital Equipment |
| 14,818,168 |
| 14.0 |
| 15,025,919 |
| 13.9 |
| ||||||||||||||||||
Healthcare & Pharmaceuticals |
| 14,438,471 |
| 13.6 |
| 14,580,515 |
| 13.5 |
| ||||||||||||||||||
Services: Business |
| 12,259,926 |
| 11.5 |
| 12,395,025 |
| 11.5 |
| ||||||||||||||||||
Retail | 34,774 | 1.4 | 34,827 | 1.4 | |||||||||||||||||||||||
Chemicals, Plastics & Rubber | 32,288 | 1.3 | 32,446 | 1.3 | |||||||||||||||||||||||
Services: Consumer | 30,458 | 1.2 | 30,794 | 1.2 | |||||||||||||||||||||||
Banking | 25,656 | 1.0 | 25,466 | 1.0 | |||||||||||||||||||||||
Energy: Electricity | 22,172 | 0.9 | 22,134 | 0.9 | |||||||||||||||||||||||
Telecommunications |
| 8,511,592 |
| 8.0 |
| 8,792,394 |
| 8.1 |
| 21,323 | 0.8 | 21,343 | 0.8 | ||||||||||||||
Chemicals, Plastics & Rubber |
| 1,179,084 |
| 1.1 |
| 1,196,843 |
| 1.1 |
| ||||||||||||||||||
|
| $ | 106,251,499 |
| 100.0 | % | $ | 107,942,008 |
| 100.0 | % | ||||||||||||||||
Beverage, Food & Tobacco | 30,687 | 1.2 | 19,531 | 0.8 | |||||||||||||||||||||||
Environmental Industries | 16,814 | 0.7 | 17,612 | 0.7 | |||||||||||||||||||||||
Containers, Packaging & Glass | 11,637 | 0.5 | 11,633 | 0.5 | |||||||||||||||||||||||
FIRE: Real Estate (1) | 10,786 | 0.4 | 10,443 | 0.4 | |||||||||||||||||||||||
Forest Products & Paper | 10,301 | 0.4 | 9,700 | 0.4 | |||||||||||||||||||||||
Utilities: Electric | 12,598 | 0.6 | 8,126 | 0.3 | |||||||||||||||||||||||
Total | $ | 2,537,263 | 100.0 | % | $ | 2,527,055 | 100.0 | % |
The Company has made certain investments with affiliated investment funds through intermediary entities (together, the “Intermediary Entities”). The Company is issued a specified interest in connection with the investments made through the Intermediary Entities, such that the Company receives the rights and commitments of such investments. These rights, and unfunded obligations, if any, are based upon the Company’s pro-rata specified interest of such investments. A creditor having a claim that relates to a particular investment held by the Intermediary Entities may be able to satisfy such claim against all assets of such entity, without regard to the allocation of the rights between the Company and the other investors in such entity; however, the Company believes the likelihood of such an event is remote.
(1) | Finance, Insurance, and Real Estate (“FIRE”). |
At September 30, 2017, investments held through specified interests in the Intermediary Entities are disclosed on the consolidated schedule of investments and in the footnotes as if the Company directly owned such investment and the specified interests are included in non-controlled/non-affiliate investments on the consolidated statements of assets and liabilities. At December 31, 2016, no investments were held through specified interests in the Intermediary Entities.
TheOur Advisor monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company. The Advisor has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:
· | assessment of success in adhering to the portfolio company’s business plan and compliance with covenants; |
· assessment of success in adhering to the portfolio company’s business plan and compliance with covenants;
· | periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments; |
· | comparisons to our other portfolio companies in the industry, if any; |
· | attendance at and participation in board meetings or presentations by portfolio companies; and |
· | review of monthly and quarterly financial statements and financial projections of portfolio companies. |
· periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments;
· comparisons to our other portfolio companies in the industry, if any;
· attendance at and participation in board meetings or presentations by portfolio companies; and
· review of monthly and quarterly financial statements and financial projections of portfolio companies.
TheOur Advisor rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3 or 4, theour Advisor enhances its level of scrutiny over the monitoring of such portfolio company. Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.
· An investment is rated 1 if, in the opinion of the Advisor, it is performing above underwriting expectations, and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company or the likelihood of a potential exit.
· | An investment is rated 1 if, in the opinion of our Advisor, it is performing above underwriting expectations, and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company or the likelihood of a potential exit. |
· An investment is rated 2 if, in the opinion of the Advisor, it is performing as expected at the time of our underwriting and there are generally no concerns about the portfolio company’s performance or ability to meet covenant requirements, interest payments or principal amortization, if applicable. All new investments or acquired investments in new portfolio companies are initially given a rating of 2.
· | An investment is rated 2 if, in the opinion of our Advisor, it is performing as expected at the time of our underwriting and there are generally no concerns about the portfolio company’s performance or ability to meet covenant requirements, interest payments or principal amortization, if applicable. All new investments or acquired investments in new portfolio companies are initially given a rating of 2. |
· An investment is rated 3 if, in the opinion of the Advisor, the investment is performing below underwriting expectations and there may be concerns about the portfolio company’s performance or trends in the industry, including as a result of factors such as declining performance, non-compliance with debt covenants or delinquency in loan payments (but generally not more than 180 days past due).
· | An investment is rated 3 if, in the opinion of our Advisor, the investment is performing below underwriting expectations and there may be concerns about the portfolio company’s performance or trends in the industry, including as a result of factors such as declining performance, non-compliance with debt covenants or delinquency in loan payments (but generally not more than 180 days past due). |
· An investment is rated 4 if, in the opinion of the Advisor, the investment is performing materially below underwriting expectations. For debt investments, most of or all of the debt covenants are out of compliance and payments are substantially delinquent. Investments rated 4 are not anticipated to be repaid in full, if applicable, and there is significant risk that we may realize a substantial loss on our investment.
· | An investment is rated 4 if, in the opinion of our Advisor, the investment is performing materially below underwriting expectations. For debt investments, most of or all of the debt covenants are out of compliance and payments are substantially delinquent. Investments rated 4 are not anticipated to be repaid in full, if applicable, and there is significant risk that we may realize a substantial loss on our investment. |
The following table shows the composition of our portfolio on the 1 to 4 rating scale as of September 30, 2017:2020 (dollars in thousands):
|
| As of September 30, 2017 | As of September 30, 2020 | |||||||||||||||||||||||
Investment Performance Rating |
| Fair |
| Percentage of |
| Number of |
| Percentage of | Fair Value | Percentage of Total | Number of Companies(1) | Percentage of Total | ||||||||||||||
1 |
| $ | — |
| — | % | — |
| — | % | $ | 47,427 | 1.9 | % | 3 | 2.8 | % | |||||||||
2 |
| 483,378,075 |
| 100.0 |
| 56 |
| 100.0 |
| 2,086,072 | 84.8 | 87 | 81.3 | |||||||||||||
3 |
| — |
| — |
| — |
| — |
| 321,882 | 13.1 | 16 | 15.0 | |||||||||||||
4 |
| — |
| — |
| — |
| — |
| 4,276 | 0.2 | 1 | 0.9 | |||||||||||||
Total |
| $ | 483,378,075 |
| 100.0 | % | 56 |
| 100.0 | % | $ | 2,459,657 | 100.0 | % | 107 | 100.0 | % |
(1) | Number of investment rated companies may not agree to total portfolio companies due to investments across investment types and structures. |
The following table shows the composition of our portfolio on the 1 to 4 rating scale as of December 31, 2016:2019 (dollars in thousands):
|
| As of December 31, 2016 | ||||||||
Investment Performance Rating |
| Fair |
| Percentage of |
| Number of |
| Percentage of | ||
1 |
| $ | — |
| — | % | — |
| — | % |
2 |
| 107,942,008 |
| 100.0 |
| 12 |
| 100.0 |
| |
3 |
| — |
| — |
| — |
| — |
| |
4 |
| — |
| — |
| — |
| — |
| |
Total |
| $ | 107,942,008 |
| 100.0 | % | 12 |
| 100.0 | % |
As of December 31, 2019 | ||||||||||||||||
Investment Performance Rating | Fair Value | Percentage of Total | Number of Companies | Percentage of Total | ||||||||||||
1 | $ | 140,892 | 5.6 | % | 4 | 3.5 | % | |||||||||
2 | 2,355,401 | 93.2 | 106 | 93.0 | ||||||||||||
3 | 27,333 | 1.1 | 3 | 2.6 | ||||||||||||
4 | 3,429 | 0.1 | 1 | 0.9 | ||||||||||||
Total | $ | 2,527,055 | 100.0 | % | 114 | 100.0 | % |
Results of Operations
Antares Bain Capital Complete Financing Solution
Operating resultsPrior to April 30, 2019, the Company was party to a limited liability company agreement with Antares Midco Inc. (“Antares”) pursuant to which it invested in ABC Complete Financing Solution LLC, which made investments through its subsidiary, Antares Bain Capital Complete Financing Solution LLC (together with ABC Complete Financing Solution LLC, “ABCS”). ABCS, an unconsolidated Delaware limited liability company, was formed on September 27, 2017 and commenced operations on November 29, 2017. ABCS’ principal purpose was to make investments, primarily in senior secured unitranche loans. The Company recorded its investment in ABCS at fair value. Distributions of income received from ABCS, if any, were recorded as dividend income from controlled affiliate investments in the consolidated statements of operations. Distributions received from ABCS in excess of income earned at ABCS, if any, were recorded as a return of capital and reduced the amortized cost of controlled affiliate investments.
We and Antares, as members of ABCS, agreed to contribute capital up to (subject to the terms of their agreement) $950.0 million in aggregate to purchase equity interests in ABCS, with us and Antares contributing up to $425.0 million and $525.0 million, respectively. Funding of such commitments generally required the consent of both Antares Credit Opportunities Manager LLC and the Advisor on behalf of Antares and us, respectively. ABCS was capitalized with capital contributions from its members on a pro-rata basis based on their maximum capital contributions as transactions were funded after they had been approved.
Investment decisions of ABCS required the consent of both the Advisor and Antares Credit Opportunities Manager LLC, as representatives of us and Antares, respectively. Each of the Advisor and Antares sourced investments for ABCS.
On April 30, 2019, we formed BCSF Complete Financing Solution Holdco, LLC (“BCSF CFSH, LLC”) and BCSF Complete Financing Solution, LLC (“BCSF Unitranche” or “BCSF CFS, LLC”), wholly-owned, newly-formed, subsidiaries. We received our proportionate share of all assets which represented 44.737% of ABCS. The portfolio of investments that was distributed to us comprised of 25 senior secured unitranche loans with a fair value of $919.0 million and cash of $3.2 million. We also assumed the obligation to fund outstanding unfunded commitments of $31.4 million. In connection with the distribution, we recognized a realized gain of $0.3 million. We are no longer a member of ABCS. The assets we received from ABCS have been included in the Company’s consolidated financial statements and notes thereto.
In conjunction with the distribution from ABCS, on April 30, 2019, BCSF CFS, LLC entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. On the date of the ABCS distribution, the Company had $577.5 million outstanding on the JPM Credit Facility.
Below is selected statements of operations information for the three and nine months ended September 30, 2017 were as follows:
|
| For the Three |
| For the Nine | |||
|
| September 30, 2017 | |||||
Total investment income from non-controlled/non-affiliate investments |
| $ | 7,793,040 |
| $ | 14,556,782 |
|
Total investment income from controlled affiliate investments |
| 24,060 |
| 31,906 |
| ||
Total expenses |
| 2,215,188 |
| 5,202,734 |
| ||
Net investment income |
| 5,601,912 |
| 9,385,954 |
| ||
Net realized gain on non-controlled/non-affiliate investments |
| 48,735 |
| 81,336 |
| ||
Net realized loss on foreign currency transactions |
| (583,149 | ) | (2,104 | ) | ||
Net realized loss on forward currency exchange contracts |
| — |
| (220,006 | ) | ||
Net change in unrealized appreciation on foreign currency translation |
| 448,252 |
| 9,170 |
| ||
Net change in unrealized depreciation on forward currency exchange contracts |
| (1,234,706 | ) | (2,643,944 | ) | ||
Net change in unrealized appreciation on non-controlled/non-affiliate investments |
| 2,920,895 |
| 5,774,373 |
| ||
Net increase in net assets resulting from operations |
| $ | 7,201,939 |
| $ | 12,384,779 |
|
Operating results for the three and nine months ended September 30, 2016 were as follows:
|
| For the Three |
| For the Nine | |||
|
| September 30, 2016 | |||||
Total investment income from non-controlled/non-affiliate investments |
| $ | — |
| $ | — |
|
Total investment income from controlled affiliate investments |
| — |
| — |
| ||
Total expenses |
| 858,399 |
| 858,399 |
| ||
Net investment loss |
| (858,399 | ) | (858,399 | ) | ||
Net realized gain on non-controlled/non-affiliate investments |
| — |
| — |
| ||
Net realized loss on foreign currency transactions |
| — |
| — |
| ||
Net realized loss on forward currency exchange contracts |
| — |
| — |
| ||
Net change in unrealized appreciation on foreign currency translation |
| — |
| — |
| ||
Net change in unrealized depreciation on forward currency exchange contracts |
| — |
| — |
| ||
Net change in unrealized appreciation on non-controlled/non-affiliate investments |
| — |
| — |
| ||
Net decrease in net assets resulting from operations |
| $ | (858,399 | ) | $ | (858,399 | ) |
Investment Income2019 (dollars in thousands):
DuringSelected Statements of Operations Information
For the Three Months Ended | For the Nine Months Ended | |||||||
September 30, 2019 | September 30, 2019 | |||||||
Interest income | $ | — | $ | 53,494 | ||||
Fee income | — | 217 | ||||||
Total revenues | — | 53,711 | ||||||
Credit facility expenses (1) | — | 22,008 | ||||||
Other fees and expenses | — | 6,661 | ||||||
Total expenses | — | 28,669 | ||||||
Net investment income | — | 25,042 | ||||||
Net increase in members’ capital from operations | $ | — | $ | 25,042 |
(1) | The ABCS distribution was effective April 30, 2019. |
Results of Operations
Our operating results for the three months ended September 30, 2017, the Company’s investment income was comprised of $7.8 million of interest income, which includes $0.2 million from the accretion of discounts.2020 and 2019 were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Total investment income | $ | 46, 817 | $ | 52,688 | ||||
Total expenses, net of fee waivers | 25,361 | 31,513 | ||||||
Net investment income | 21,456 | 21,175 | ||||||
Net realized gain (loss) | (24,412 | ) | 495 | |||||
Net change in unrealized appreciation (depreciation) | 54,413 | (3,471 | ) | |||||
Net increase in net assets resulting from operations | $ | 51,457 | $ | 18,199 |
During
Our operating results for the nine months ended September 30, 2017,2020 and 2019 were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Total investment income | $ | 146,184 | $ | 143,178 | ||||
Total expenses, net of fee waivers | 82,206 | 79,603 | ||||||
Net investment income | 63,978 | 63,575 | ||||||
Net realized gain (loss) | (28,563 | ) | 9,723 | |||||
Net change in unrealized appreciation (depreciation) | (66,633 | ) | 3,436 | |||||
Net increase (decrease) in net assets resulting from operations | $ | (31,218 | ) | $ | 76,734 |
Net increase in net assets resulting from operations can vary from period to period as a result of various factors, including additional financing, new investment commitments, the Company’srecognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. Due to these factors, comparisons may not be meaningful.
Investment Income
The composition of our investment income for the three months ended September 30, 2020 and 2019 was comprised of $14.6 million of interestas follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Interest income | $ | 44,329 | $ | 51,491 | ||||
Dividend income | 1,881 | 961 | ||||||
Other income | 607 | 236 | ||||||
Total investment income | $ | 46,817 | $ | 52,688 |
Interest income from investments, which includes $0.5 million from theinterest and accretion of discounts and fees, decreased to $44.3 million for the three months ended September 30, 2020 from $51.5 million for the three months ended September 30, 2019, primarily due to the decrease in LIBOR between the periods. Our investment portfolio at amortized cost stayed relatively flat at $2,528.7 million as wellof September 30, 2020 compared to $2,529.1 million as of September 30, 2019. Accelerated unamortized discounts from paydowns decreased to $0.1 million for the three months ended September 30, 2020 from $0.4 million for the three months ended September 30, 2019. Dividend income increased to $1.9 million for the three months ended September 30, 2020 from $1.0 million for the three months ended September 30, 2019, primarily due to the growth of other income.our equity investment in Gale Aviation (Offshore) Co. Other income increased to approximately $0.6 million for the three months ended September 30, 2020 from $0.2 million for the three months ended September 30, 2019, primarily due to an increase in amendment fees earned on certain investments. As of September 30, 2020, the weighted average yield of our investment portfolio at amortized cost decreased to 6.9% from 7.7% as of September 30, 2019.
The composition of our investment income for the nine months ended September 30, 2020 and 2019 was as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Interest income | $ | 137,857 | $ | 127,060 | ||||
Dividend income | 7,221 | 15,487 | ||||||
Other income | 1,106 | 631 | ||||||
Total investment income | $ | 146,184 | $ | 143,178 |
Interest income from investments, which includes interest and accretion of discounts and fees, increased to $137.9 million for the nine months ended September 30, 2020 from $127.1 million for the nine months ended September 30, 2019, primarily due to the closing of the ABCS distribution transaction. Our investment portfolio at amortized cost stayed relatively flat at $2,528.7 million as of September 30, 2020 compared to $2,529.1 million as of September 30, 2019. Accelerated unamortized discounts from paydowns decreased to $1.8 million for the nine months ended September 30, 2020 from $3.5 million for the nine months ended September 30, 2019. Dividend income decreased to $7.2 million for the nine months ended September 30, 2020 from $15.5 million for the nine months ended September 30, 2019, primarily due to the closing of the ABCS distribution transaction. Other income increased to $1.1 million for the nine months ended September 30, 2020 from $0.6 million for the nine months ended September 30, 2019, primarily due to an increase in amendment fees earned on certain investments and prepayment fees.
Operating Expenses
The composition of our operating expenses for the three and nine months ended September 30, 20172020 and 2019 was as follows:follows (dollars in thousands):
|
| For the Three |
| For the Nine | |||
|
| September 30, 2017 | |||||
Interest and debt financing expenses |
| $ | 223,945 |
| $ | 621,853 |
|
Amortization of deferred offering costs |
| 106,152 |
| 314,995 |
| ||
Base management fee |
| 856,260 |
| 1,704,975 |
| ||
Incentive fee |
| 240,003 |
| 449,824 |
| ||
Organizational costs |
| — |
| — |
| ||
Professional fees |
| 506,756 |
| 1,406,462 |
| ||
Directors fees |
| 68,250 |
| 204,312 |
| ||
Other general and administrative expenses |
| 213,822 |
| 500,313 |
| ||
Total expenses |
| $ | 2,215,188 |
| $ | 5,202,734 |
|
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Interest and debt financing expenses | $ | 14,426 | $ | 19,427 | ||||
Base management fee | 8,885 | 8,910 | ||||||
Incentive fee | — | 4,330 | ||||||
Professional fees | 296 | 789 | ||||||
Directors fees | 209 | 159 | ||||||
Other general and administrative expenses | 1,545 | 1,243 | ||||||
Total expenses, before fee waivers | $ | 25,361 | $ | 34,858 | ||||
Base management fee waiver | — | (2,582 | ) | |||||
Incentive fee waiver | — | (763 | ) | |||||
Total expenses, net of fee waivers | $ | 25,361 | $ | 31,513 |
The composition of our operating expenses for the three and nine months ended September 30, 20162020 and 2019 was as follows:follows (dollars in thousands):
|
| For the Three |
| For the Nine | For the Nine Months Ended September 30, | ||||||||||
|
| September 30, 2016 | 2020 | 2019 | |||||||||||
Interest and debt financing expenses |
| $ | — |
| $ | — |
| $ | 49,614 | $ | 46,592 | ||||
Amortization of deferred offering costs |
| — |
| — |
| ||||||||||
Base management fee |
| — |
| — |
| 26,250 | 23,644 | ||||||||
Incentive fee |
| — |
| — |
| — | 12,905 | ||||||||
Organizational costs |
| 725,768 |
| 725,768 |
| ||||||||||
Professional fees |
| 63,878 |
| 63,878 |
| 1,909 | 1,615 | ||||||||
Directors fees |
| 68,753 |
| 68,753 |
| 555 | 370 | ||||||||
Other general and administrative expenses |
| — |
| — |
| 3,878 | 3,672 | ||||||||
Total expenses |
| $ | 858,399 |
| $ | 858,399 |
| ||||||||
Total expenses, before fee waivers | $ | 82,206 | $ | 88,798 | |||||||||||
Base management fee waiver | — | (6,450 | ) | ||||||||||||
Incentive fee waiver | — | (2,745 | ) | ||||||||||||
Total expenses, net of fee waivers | $ | 82,206 | $ | 79,603 |
Interest and Debt Financing Expenses
Interest and debt financing expenses includes interest, amortization of deferred financing costs, upfront commitment feeson our borrowings totaled approximately $14.4 million and fees on$19.4 million for the unused portion of the revolving credit facility (the “Revolving Credit Facility”) with Sumitomo Mitsui Banking Corporation (“SMBC”). As ofthree months ended September 30, 2017, there were no2020 and 2019, respectively. Interest and debt financing expense for the three months ended September 30, 2020 as compared to September 30, 2019 decreased primarily due to a decrease in LIBOR between periods, since 89% of our debt outstanding borrowings under the Revolving Credit Facility. As of December 31, 2016, the Revolving Credit Facility had an outstanding balance of $59.1 million.is floating rate. Interest and debt financing expenses on our borrowings totaled approximately $49.6 million and $46.6 million for the three and nine months ended September 30, 2017 were approximately $0.2 million2020 and $0.6 million,2019, respectively. There was noInterest and debt outstanding as offinancing expense for the nine months ended September 30, 2017. 2020 as compared to September 30, 2019 increased primarily due to the issuance of our 2019-1 Debt in August 2019 and the issuance of our 2023 Notes in June 2020. The weighted average principal debt balance outstanding for the three months ended September 30, 2020 was $1,552.4 million compared to $1,547.8 million for the three months ended September 30, 2019. The weighted average principal debt balance outstanding for the nine months ended September 30, 2020 was $1,594.3 million compared to $1,225.1 million for the nine months ended September 30, 2019.
The weighted average interest rate (excluding deferred upfront financing costs and unused fees) on our debt outstanding was 2.16%3.7% and 4.7% as of September 30, 2020 and December 31, 2019, respectively.
Management Fees
Management fees (net of waivers) increased to $8.9 million for the three months ended September 30, 2020 from $6.3 million for the three months ended September 30, 2019. Management fees (gross of waivers) stayed flat at $8.9 million for the three months ended September 30, 2020 and 2019, respectively. Management fees waived for the three months ended September 30, 2020 and 2019 were $0.0 million and $2.6 million, respectively. As of December 31, 2016.2019, the voluntary management fee waiver related to ABCS expired.
Management fees (net of waivers) increased to $26.3 million for the nine months ended September 30, 2020 from $17.2 million for the nine months ended September 30, 2019. Management fees (gross of waivers) increased to $26.3 million for the nine months ended September 30, 2020 from $23.6 million for the nine months ended September 30, 2019, primarily due to an increase in assets. Management fees waived for the nine months ended September 30, 2020 and 2019 were $0.0 million and $6.4 million, respectively. As of December 31, 2019, the voluntary management fee waiver related to ABCS expired.
Incentive Fees
Incentive fee (net of waivers) decreased to $0.0 million for the three months ended September 30, 2020 from $3.6 million for the three months ended September 30, 2019. The Company did not incur an incentive fee for the three months ended September 30, 2020 due to the Incentive Fee Cap. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the three months ended September 30, 2020 and $0.8 million for the three months ended September 30, 2019. For the three months ended September 30, 2020 there were no incentive fees related to the GAAP Incentive Fee.
Incentive fee (net of waivers) decreased to $0.0 million for the nine months ended September 30, 2020 from $10.2 million for the nine months ended September 30, 2019. The Company did not incur an incentive fee for the nine months ended September 30, 2020 due to the Incentive Fee Cap. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.0 million for the nine months ended September 30, 2020 and $2.7 million for the nine months ended September 30, 2019. For the nine months ended September 30, 2020 there were no incentive fees related to the GAAP Incentive Fee.
Professional Fees and Other General and Administrative Expenses
Professional fees and other general and administrative expenses decreased to $1.8 million for the three months ended September 30, 2020 from $2.0 million for the three months ended September 30, 2019, primarily due to a decrease in costs associated with servicing our investment portfolio and legal fees related to deferred financing and debt issuance costs.
Professional fees and other general and administrative expenses increased to $5.8 million for the nine months ended September 30, 2020 from $5.3 million for the nine months ended September 30, 2019, primarily due to an increase in costs associated with servicing our investment portfolio.
Net ChangeRealized and Unrealized Gains and Losses
The following table summarizes our net realized and unrealized gains (losses) for the three months ended September 30, 2020 and 2019 (dollars in Unrealized Appreciation (Depreciation)thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Net realized gain on investments | $ | 407 | $ | 218 | ||||
Net realized loss on investments | (24,670 | ) | (191 | ) | ||||
Net realized gain on foreign currency transactions | 28 | 127 | ||||||
Net realized loss on foreign currency transactions | (47 | ) | (5 | ) | ||||
Net realized gain on forward currency exchange contracts | 342 | 346 | ||||||
Net realized loss on forward currency exchange contracts | (472 | ) | — | |||||
Net realized gains (losses) | $ | (24,412 | ) | $ | 495 | |||
Change in unrealized appreciation on investments | $ | 84,532 | $ | 11,255 | ||||
Change in unrealized depreciation on investments | (19,136 | ) | (24,023 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 65,396 | (12,768 | ) | |||||
Unrealized appreciation on foreign currency translation | 194 | 162 | ||||||
Unrealized depreciation on forward currency exchange contracts | (11,177 | ) | 9,135 | |||||
Net change in unrealized appreciation (depreciation) on foreign currency and forward currency exchange contracts | (10,983 | ) | 9,297 | |||||
Net change in unrealized appreciation (depreciation) | $ | 54,413 | $ | (3,471 | ) |
For the three months ended September 30, 2020, and 2019, we had net realized gains (losses) on Investmentsinvestments of ($24.3) million and Forward Currency Exchange Contracts$0.0 million, respectively. During the three months ended September 30, 2020, we recorded gross realized losses of $24.7 million primarily from the sale of debt investments in four portfolio companies. For the three months ended September 30, 2020 and 2019, we had net realized gains (losses) on foreign currency transactions of ($0.0) million and $0.1 million, respectively. For the three months ended September 30, 2020 and 2019, we had net realized gains (losses) on forward currency contracts of ($0.1) million and $0.3 million, respectively, primarily as a result of settling GBP and NOK forward contracts.
For the three months ended September 30, 2017,2020, we had $2.9$84.5 million in net unrealized appreciation on 7687 portfolio company investments, which was offset by $19.1 million in 56unrealized depreciation on 26 portfolio companies. company investments. Unrealized appreciation for the three months ended September 30, 20172020 resulted from an increase in fair value, primarily due to a tightening spread environment, positive investment-related adjustments, and the reversal of unrealized depreciation from the sale of our debt investments. Unrealized depreciation was primarily due to negative valuation adjustments.
For the three months ended September 30, 2019, we had $11.3 million in unrealized appreciation on 46 portfolio company investments, which was offset by $24.0 million in unrealized depreciation on 82 portfolio company investments. Net unrealized depreciation for the three months ended September 30, 2019 resulted from a decrease in fair value, primarily due to negative valuation adjustments.
For the three months ended September 30, 2020 and 2019, we had unrealized depreciation on forward currency exchange contracts of ($11.2) million and $9.1 million, respectively. For the three months ended September 30, 2020, unrealized depreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK, AUD and CAD forward contracts. For the three months ended September 30, 2019, unrealized depreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and AUD forward contracts.
The following table summarizes our net realized and unrealized gains (losses) for the nine months ended September 30, 2020 and 2019 (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Net realized gain on investments | $ | 772 | $ | 1,610 | ||||
Net realized loss on investments | (35,439 | ) | (2,739 | ) | ||||
Net realized gain on foreign currency transactions | 134 | 60 | ||||||
Net realized loss on foreign currency transactions | (502 | ) | (250 | ) | ||||
Net realized gain on forward currency exchange contracts | 6,545 | 11,042 | ||||||
Net realized loss on forward currency exchange contracts | (73 | ) | — | |||||
Net realized gains (losses) | $ | (28,563 | ) | $ | 9,723 | |||
Change in unrealized appreciation on investments | $ | 32,391 | $ | 31,462 | ||||
Change in unrealized depreciation on investments | (91,192 | ) | (28,473 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | (58,801 | ) | 2,989 | |||||
Unrealized appreciation on foreign currency translation | 89 | 461 | ||||||
Unrealized depreciation on forward currency exchange contracts | (7,921 | ) | (14 | ) | ||||
Net change in unrealized appreciation (depreciation) on foreign currency and forward currency exchange contracts | (7,832 | ) | 447 | |||||
Net change in unrealized appreciation (depreciation) | $ | (66,633 | ) | $ | 3,436 |
For the nine months ended September 30, 2017,2020, and 2019, we had $5.8net realized gains (losses) on investments of ($34.7) million and ($1.1) million, respectively. During the nine months ended September 30, 2020, we recorded gross realized losses of $35.4 million primarily from the sale or liquidation of debt investments in seven portfolio companies. For the nine months ended September 30, 2020 and 2019, we had net realized gains (losses) on foreign currency transactions of ($0.4) million and ($0.2) million, respectively. For the nine months ended September 30, 2020 and 2019, we had net realized gains (losses) on forward currency contracts of $6.5 million and $11.0 million, respectively, primarily as a result of settling GBP, DKK, EUR and NOK forward contracts.
For the nine months ended September 30, 2020, we had $32.4 million in unrealized appreciation on 7643 portfolio company investments which was primarily related to unrealized appreciation due to the reversal of unrealized depreciation upon pay-off and positive valuation adjustments, which was offset by $91.2 million in 56unrealized depreciation on 79 portfolio companies.company investments. Unrealized depreciation for the nine months ended September 30, 2020 resulted from a decrease in fair value, primarily due to negative valuation adjustments.
For the nine months ended September 30, 2019, we had $31.5 million in unrealized appreciation on 88 portfolio company investments, which was offset by $28.5 million in unrealized depreciation on 62 portfolio company investments. Net unrealized appreciation for the nine months ended September 30, 20172019 resulted from an increase in fair value, primarily due to positive valuation adjustments.
DuringFor the nine months ended September 30, 2017,2020 and 2019, we entered intohad unrealized appreciation (depreciation) on forward currency exchange contracts to reduce our exposure to foreign currency exchange rate fluctuations.of ($7.9) million and $0.0 million, respectively. For the three and nine months ended September 30, 2017, we had $1.2 million and $2.6 million, respectively, in2020, unrealized depreciation on forward currency exchange contracts which was substantially offset by an increase in the unrealized appreciation on our investments due to foreign currency fluctuations.
Net Realized Gain (Loss) on Investments
DuringEUR, GBP, DKK, NOK, AUD and CAD forward contracts. For the three and nine months ended September 30, 2017, we had sales2019, unrealized depreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and principal repaymentsAUD forward contracts.
The following table summarizes the impact of $7.4foreign currency for the three months ended September 30, 2020 and 2019 (dollars in thousands):
For the Three months ended September 30, | ||||||||
2020 | 2019 | |||||||
Net change in unrealized appreciation (depreciation) on investments due to foreign currency | $ | 10,911 | $ | (8,349 | ) | |||
Net realized gain (loss) on investments due to foreign currency | 396 | (2 | ) | |||||
Net change in unrealized appreciation on foreign currency translation | 194 | 162 | ||||||
Net realized gain (loss) on foreign currency transactions | (19 | ) | 122 | |||||
Net change in unrealized appreciation (depreciation) on forward currency exchange contracts | (11,177 | ) | 9,135 | |||||
Net realized gain (loss) on forward currency exchange contracts | (130 | ) | 346 | |||||
Foreign currency impact to net increase in net assets resulting from operations | $ | 175 | $ | 1,414 |
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of $11.5 million and $26.0($8.1) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2020 and 2019, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($11.3) million and $9.5 million, respectively, resultingincluded in $0.05the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $0.2 million and $0.08$1.4 million for the three months ended September 30, 2020 and 2019, respectively.
The following table summarizes the impact of foreign currency for the nine months ended September 30, 2020 and 2019 (dollars in thousands):
For the Nine months ended September 30, | ||||||||
2020 | 2019 | |||||||
Net change in unrealized appreciation (depreciation) on investments due to foreign currency | $ | 3,521 | $ | (8,773 | ) | |||
Net realized gain on investments due to foreign currency | 396 | 64 | ||||||
Net change in unrealized appreciation on foreign currency translation | 89 | 461 | ||||||
Net realized loss on foreign currency transactions | (368 | ) | (190 | ) | ||||
Net change in unrealized depreciation on forward currency exchange contracts | (7,921 | ) | (14 | ) | ||||
Net realized gain on forward currency exchange contracts | 6,472 | 11,042 | ||||||
Foreign currency impact to net increase in net assets resulting from operations | $ | 2,189 | $ | 2,590 |
Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of $3.6 million and ($8.4) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2020 and 2019, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of ($1.4) million and $11.0 million, respectively, included in the above table, the net impact of foreign currency on total net realized gains.gains (losses) on the consolidated statements of operations is $2.2 million and $2.6 million for the nine months ended September 30, 2020 and 2019, respectively.
Net Increase (Decrease) in Net Assets Resulting from Operations
For the three and nine months ended September 30, 2017,2020 and 2019, the net increase in net assets resulting from operations was $7.2$51.5 million and $12.4$18.2 million, respectively. Based on the weighted average shares of common stock outstanding for the three and nine months ended September 30, 2017,2020 and 2019, our per share net increase in net assets resulting from operations was $0.29$0.80 and $0.70,$0.35, respectively.
Cash Flows
For the nine months ended September 30, 2017, cash, foreign cash2020 and cash equivalents decreased by $28.2 million. During2019, the same period, we used $358.4net increase (decrease) in net assets resulting from operations was ($31.2) million and a net increase in operating activities, primarily as a resultnet assets resulting from operations of purchases$76.7 million, respectively. Based on the weighted average shares of investments, slightly offset by proceeds from principal payments of investments. Duringcommon stock outstanding for the nine months ended September 30, 2017, we generated $329.6 million
2020 and 2019, our per share net increase (decrease) in net assets resulting from financing activities, primarily from the issuance of common stock, slightly offset by repayments on our Revolving Credit Facility.operations was ($0.55) and $1.49, respectively.
Financial Condition, Liquidity and Capital Resources
At September 30, 2017Our liquidity and December 31, 2016, we had $38.5 million and $66.7 million in cash, foreign cashcapital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, 2018-1 Notes, 2019-1 Debt, 2023 Notes, and cash equivalents on hand, respectively.flows from operations. The primary uses of our cash are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) the cost of operations (including payingpayments to the Advisor)Advisor under the Investment Advisory and Administration Agreements); (3) debt service, repayment, and other financing costs; and, (4) cash distributions to the holders of our common shares.
We expectintend to continue to generate additional cash primarily from (1)cash flows from operations, future borrowings and future offerings of securities. We may from time to time raise additional equity or debt capital through registered offerings, enter into additional debt facilities, or increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our common or preferred shares; (2) borrowings fromliquidity requirements, contractual and regulatory restrictions and other factors. We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of September 30, 2020 and December 31, 2019, our asset coverage ratio was 169% and 164%, respectively.
At September 30, 2020 and December 31, 2019, we had $123.9 million and $68.8 million in cash, foreign cash, restricted cash and cash equivalents, respectively.
At September 30, 2020, we had approximately $117.2 million of availability on our BCSF Revolving Credit Facility, $150.8 million of availability on our JPM Credit Facility and $50.0 million of availability on our Revolving Advisor Loan, subject to existing terms and regulatory requirements. At December 31, 2019, we had approximately $232.0 million of availability on our BCSF Revolving Credit Facility and from other banks or lenders;$119.8 million of availability on our JPM Credit Facility, subject to existing terms and (3) cash flows from operations.regulatory requirements.
Cash on hand, combined with our uncalled capital commitmentsFor the nine months ended September 30, 2020, cash, foreign cash, restricted cash, and cash equivalents increased by $55.1 million. During the nine months ended September 30, 2020, we provided $53.6 million in cash for operating activities. The increase in cash used for operating activities was primarily related to the purchase of $752.6investments of $351.7 million and $150.0a net decrease in net assets resulting from operations of ($31.2) million, undrawn amountwhich was offset by proceeds from principal payments and sales of investments of $353.4 million, net realized losses from investments of $34.7 million, and the net change in unrealized depreciation on our Revolving Credit Facility, is expected to be sufficient for our investing activities and to conduct our operations for at least the next twelve months.
Capital Share Activity
The Company has entered into subscription agreements (collectively, the “Subscription Agreements”) with investors providing for the private placementinvestments of our common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase our common shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of 10 business days’ prior notice. As of September 30, 2017, we had received capital commitments of $1.3 billion, of which $10.8 million was from BCSF Advisors, LP. As of September 30, 2017, we had received capital contributions to the Company totaling $502.6 million, of which $4.8 million was from BCSF Advisors, LP. As of December 31, 2016, we had received capital contributions totaling $109.8 million, of which $2.7 million was from BCSF Advisors, LP.$58.8 million.
During the nine months ended September 30, 2017, the Company received additional capital commitments to the Company2020, we generated $2.0 million from financing activities, primarily from issuance of $708.7 million. Pursuant to the Subscription Agreements, we have delivered capital drawdown notices to our investors relating tocommon stock of $131.9 million and borrowings on our debt from BCSF Revolving Credit Facility, JPM Credit Facility, Revolving Advisor Loan, and the issuance of 19,412,229.52the 2023 Notes of $527.8 million, offset by repayments on our common shares for an aggregate offeringdebt of $392.7$585.4 million and distributions paid during the period of $64.3 million. Proceeds from the issuance were used for investing activities and for other general corporate purposes.
As ofFor the nine months ended September 30, 20172019, cash, foreign cash, restricted cash, and December 31, 2016, the Company received all amounts relating to the capital drawdown notices.cash equivalents increased by $124.8 million. During the nine months ended September 30, 2017,2019, we used $259.3 million in cash for operating activities, primarily to purchase investments of $1,068.9 million, which was offset by proceeds from principal payments and sales of investments of $730.3 million, and a net increase in net assets resulting from operations of $76.7 million.
During the nine months ended September 30, 2019, we generated $385.0 million from financing activities, primarily from borrowings on our debt from BCSF Revolving Credit Facility, Citibank Revolving Credit Facility, JPM Credit Facility, and the issuance of our 2019-1 Debt, offset by repayments on debt of $700.9 million and distributions paid during the period of $60.1 million.
Equity
On November 19, 2018, we closed our initial public offering (the “IPO”) issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated net proceeds, after expenses, of $145.4 million. All outstanding capital commitments from the Company’s Private Offering were cancelled as of the completion of the IPO.
BCSF Investments, LLC and certain individuals adopted the 10b5-1 Plan in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act, under which such parties would buy up to $20 million in the aggregate of our common stock in the open market during the period beginning after four full calendar weeks after the closing of the IPO and ending on the earlier of the date on which the capital committed to the 10b5-1 has been exhausted or one year after the closing of the IPO. As of December 31, 2019, zero dollars remain under the 10b5-1 Plan and no further purchases are intended under the 10b5-1 Plan.
During the nine months ended September 30, 2020, we did not issue shares of our common stock to investors who have opted into our dividend reinvestment plan. During the nine months ended September 30, 2019, we issued 28,730.04167,674.81 shares of our common stock to investors who have opted into our dividend reinvestment plan.
Revolving Credit AgreementOn May 7, 2019, the Company’s Board of Directors authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Exchange Act. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of September 30, 2020, there have been no repurchases of common stock.
On May 4, 2020, the Company's Board of Directors approved a transferable subscription rights offering to our stockholders of record as of May 13, 2020. The rights entitled record stockholders to subscribe for up to an aggregate of 12,912,453 shares of our common stock. Record stockholders received one right for each share of common stock owned on the record date. The rights entitled the holders to purchase one new share of common stock for every four rights held, and record stockholders who fully exercised their rights were entitled to subscribe, subject to certain limitations and allotment rules, for additional shares that remain unsubscribed as a result of any unexercised rights. The rights were transferable and listed on the New York Stock Exchange under the symbol “BCSF RT”. The rights offering expired June 5, 2020. Based on the terms of the offering and the market price of the stock during the applicable period, holders of rights participating in the offering were entitled to purchase one new share of common stock for every four rights held at a subscription price of $10.2163 per share. On June 16, 2020, the Company closed its transferrable rights offering and issued 12,912,453 shares. The offering generated net proceeds, before expenses, of $129.6 million, including the underwriting discount and commissions of $2.3 million.
Debt
Debt consisted of the following as of September 30, 2020 and December 22, 2016,31, 2019 (dollars in thousands):
As of September 30, 2020 | As of December 31, 2019 | |||||||||||||||||||||||
Total Aggregate Principal Amount Committed | Principal Amount Outstanding | Carrying Value (1) | Total Aggregate Principal Amount Committed | Principal Amount Outstanding | Carrying Value (1) | |||||||||||||||||||
BCSF Revolving Credit Facility | $ | 425,000 | $ | 307,774 | $ | 307,774 | $ | 500,000 | $ | 268,015 | $ | 268,015 | ||||||||||||
2018-1 Notes | 365,700 | 365,700 | 363,962 | 365,700 | 365,700 | 363,832 | ||||||||||||||||||
JPM Credit Facility | 450,000 | 299,183 | 299,183 | 666,581 | 546,754 | 546,754 | ||||||||||||||||||
2019-1 Debt | 398,750 | 398,750 | 396,207 | 398,750 | 398,750 | 396,034 | ||||||||||||||||||
Revolving Advisor Loan | 50,000 | — | — | — | — | — | ||||||||||||||||||
2023 Notes | 150,000 | 150,000 | 146,726 | — | — | — | ||||||||||||||||||
Total Debt | $ | 1,839,450 | $ | 1,521,407 | $ | 1,513,852 | $ | 1,931,031 | $ | 1,579,219 | $ | 1,574,635 |
(1) | Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs. |
67
BCSF Revolving Credit Facility
On October 4, 2017, we entered into athe revolving credit agreement (the “Revolving“BCSF Revolving Credit Agreement”Facility”) with SMBC.us, as equity holder, BCSF I, LLC, a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, as borrower, and Goldman Sachs Bank USA, as sole lead arranger (“Goldman Sachs”). The BCSF Revolving Credit Facility was subsequently amended on May 15, 2018 to reflect certain clarifications regarding margin requirements and hedging currencies. The maximum commitment amount under the BCSF Revolving Credit Facility is $150.0$500.0 million, and may be increased up to $350.0 million (“Maximum Commitment”) with the consent of SMBC or reduced upon request$750.0 million. Proceeds of the Company. Proceedsloans under the BCSF Revolving Credit Facility may be used for any purposeto acquire certain qualifying loans and such other uses as permitted under our organizational documents, including general corporate purposes such as the making of investments. TheBCSF Revolving Credit Agreement containsFacility. The BCSF Revolving Credit Facility includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
On January 8, 2020, the Company entered into an amended and restated credit agreement of its BCSF Revolving Credit Facility. The amendment amended the existing credit facility to, among other things, modify various financial covenants, including removing a liquidity covenant and adding a net asset value covenant with respect to the Company, as sponsor.
On March 31, 2020, the Parties entered into Omnibus Amendment No. 1 to the amended and restated credit agreement. The amendment amended the existing credit facility to, among other things, provide for enhanced flexibility to purchase or contribute and borrow against revolving loans and delayed draw term loans, and to count certain additional assets in the calculation of collateral for the outstanding advances; increase the spread payable under the facility from 2.50% to 3.25% per annum; include additional events of default to the existing credit facility, including but not limited to, maintaining an asset coverage ratio of total assetsa qualified equity raise not effected on or prior to total borrowings ofJune 22, 2020; and, after June 22, 2020, require the Company maintain at least $50.0 million of unencumbered liquidity or pay down the facility by at least $50.0 million.
On May 27, 2020, the Parties entered into Amendment No. 2 to 1. Asthe amended and restated credit agreement. The amendment amended the existing credit facility to, among other things, (i) permit the Company to incur a lien on assets purchased with the proceeds of September 30, 2017the rights offering and December 31, 2016, we were(ii) remove the requirement that the Company maintain $50.0 million in compliance with these covenants.unencumbered cash after the completion of the rights offering, instead requiring a pay down of $50.0 million within two business days after the closing of the rights offering, which was subsequently paid.
On August 14, 2020, the Parties entered into the second amended and restated credit agreement and the third amended and restated margining agreement (collectively, the “Amendment”), which amended and restated the terms of the existing credit facility (the “Amended and Restated Credit Facility”). The Amendment amends the existing credit facility to, among other things, (i) decrease the financing limit from $500.0 million to $425.0 million, (ii) decrease the interest rate on financing from LIBOR plus 3.25% per annum to LIBOR plus 3.00% per annum, and (iii) provide enhanced flexibility to contribute and borrow against revolving and delayed draw loans and modify certain other terms relating to collaterals.
Assets that are pledged as collateral for the BCSF Revolving Credit Facility are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the BCSF Revolving Credit Agreement are secured by the capital commitments and unfunded capital contributions to the Company.Facility.
Borrowings under the BCSF Revolving Credit Facility bear interest at the London Interbank Offered Rate (“LIBOR”)LIBOR plus a marginmargin. As of 140 basis points per annum. We paySeptember 30, 2020, the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 3.00%. As of December 31, 2019, the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 2.50%. The Company pays an unused commitment fee of: (a) where the Maximum Commitment which is unused on such date is greater than fifty (50) percent of the Maximum Commitment, a rate of 2030 basis points (0.20%) per annum; or (b) where the Maximum Commitment which is unused on such date is less than or equal to fifty (50) percent of the Maximum Commitment, a rate of 15 basis points (0.15%(0.30%) per annum. Interest is payable quarterly in arrears either on a one month, two month, three month or six month LIBOR period.arrears. Any amounts borrowed under the BCSF Revolving Credit Facility, and all accrued and unpaid interest, will be due and payable, on the earliest of: (a) December 22, 2019;October 5, 2022 and (b) the date upon which SMBC declares the obligations, or the obligationsall loans shall become due and payable after the occurrence of an event of default under the Revolving Credit Facility; (c) the date upon which we terminate the commitments under the Revolving Credit Facility; and (d) 45 days prior to the earlier of (1) the date upon which the commitment period under the subscription agreements terminates and (2) the date upon which the ability to make capital calls and receive capital contributions otherwise terminates.in full, whether by acceleration or otherwise.
For the three and nine months ended September 30, 2017, the components of interest expense were as follows:
|
| For the Three |
| For the Nine | |||
|
| September 30, 2017 | |||||
Borrowing interest expense |
| $ | 60,412 |
| $ | 133,065 |
|
Unused facility fee |
| 71,300 |
| 215,096 |
| ||
Amortization of deferred financing costs and upfront commitment fees |
| 92,233 |
| 273,692 |
| ||
Total interest and debt financing expenses |
| $ | 223,945 |
| $ | 621,853 |
|
As of September 30, 2017,2020 and December 31, 2019, there were no outstanding$307.8 million and $268.0 million borrowings under the BCSF Revolving Credit Facility, respectively, and we were in compliance with the terms of the BCSF Revolving Credit Facility.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the BCSF Revolving Credit Facility were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,823 | $ | 4,441 | ||||
Unused facility fee | 106 | 109 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 297 | 269 | ||||||
Total interest and debt financing expenses | $ | 3,226 | $ | 4,819 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the BCSF Revolving Credit Facility were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 12,428 | $ | 13,844 | ||||
Unused facility fee | 270 | 316 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 830 | 798 | ||||||
Total interest and debt financing expenses | $ | 13,528 | $ | 14,958 |
2018-1 Notes
On September 28, 2018 (the “2018-1 Closing Date”), we, through BCC Middle Market CLO 2018-1 LLC (the “2018-1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018-1 Notes”) are secured by a diversified portfolio of the 2018-1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the “2018-1 Portfolio”). At the 2018-1 Closing Date, the 2018-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.
The CLO Transaction was executed through a private placement of the following 2018-1 Notes (dollars in thousands):
2018-1 Notes | Principal Amount | Spread above Index | Interest rate at September 30, 2020 | |||||||
Class A-1 A | $ | 205,900 | 1.55% + 3 Month LIBOR | 1.82 | % | |||||
Class A-1 B | 45,000 | 1.50% + 3 Month LIBOR (first 24 months) | 1.77 | % | ||||||
1.80% + 3 Month LIBOR (thereafter) | ||||||||||
Class A-2 | 55,100 | 2.15% + 3 Month LIBOR | 2.42 | % | ||||||
Class B | 29,300 | 3.00% + 3 Month LIBOR | 3.27 | % | ||||||
Class C | 30,400 | 4.00% + 3 Month LIBOR | 4.27 | % | ||||||
Total 2018-1 Notes | 365,700 | |||||||||
Membership Interests | 85,450 | Non-interest bearing | Not applicable | |||||||
Total | $ | 451,150 |
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018-1 Issuer in exchange for its sale to the 2018-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. As of September 30, 2020, the Company’s Membership Interests are pledged as collateral to the BCSF Revolving Credit Facility.
The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes are included in the consolidated financial statements. The Membership Interests are eliminated in consolidation.
The Company serves as portfolio manager of the 2018-1 Issuer pursuant to a portfolio management agreement between the Company and the 2018-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.
During the reinvestment period (four years from the closing date of the CLO Transaction), pursuant to the indenture governing the 2018-1 Notes, all principal collections received on the underlying collateral may be used by the 2018-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2018-1 Issuer and in accordance with the 2018-1 Issuer’s investment strategy and the terms of the indenture.
The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price of at least equal to 5% of the aggregate amount of all obligations issued by the 2018-1 Issuer for so long as the 2018-1 Notes remain outstanding.
The 2018-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2018-1 Issuer.
As of September 30, 2020, there were 58 first lien and second lien senior secured loans with a total fair value of approximately $404.6 million and cash of $42.2 million securing the 2018-1 Notes. As of December 31, 2016, we had $59.12019, there were 61 first lien and second lien senior secured loans with a total fair value of approximately $435.8 million and cash of $9.1 million securing the 2018-1 Notes. Assets that are pledged as collateral for the 2018-1 Notes are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture governing the 2018-1 Notes. Such assets are included in the Company’s consolidated financial statements. The creditors of the 2018-1 Issuer have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2018-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture governing the 2018-1 Notes. As of September 30, 2020 and December 31, 2019, the Company was in compliance with its covenants related to the 2018-1 Notes.
Costs of $2.1 million were incurred in connection with debt securitization of the 2018-1 Notes by the 2018-1 Issuer which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2018-1 Notes on the consolidated statements of assets and liabilities and are being amortized over the life of the 2018-1 Issuer using the effective interest method. The balance of the unamortized debt issuance costs related to the 2018-1 Issuer was $1.7 million and $1.9 million as of September 30, 2020 and December 31, 2019, respectively.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the 2018-1 Issuer were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,246 | $ | 4,022 | ||||
Amortization of debt issuance costs and upfront commitment fees | 44 | 44 | ||||||
Total interest and debt financing expenses | $ | 2,290 | $ | 4,066 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the 2018-1 Issuer were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 8,752 | $ | 12,499 | ||||
Amortization of debt issuance costs and upfront commitment fees | 130 | 130 | ||||||
Total interest and debt financing expenses | $ | 8,882 | $ | 12,629 |
Citibank Revolving Credit Facility
On February 19, 2019, the Company entered into a credit and security agreement (the “Credit Agreement” or the “Citibank Revolving Credit Facility”) with the Company as equity holder and servicer, BCSF II-C, LLC as Borrower, Citibank, N.A., as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian. The Credit Agreement was effective as of February 19, 2019.
The facility amount under the Credit Agreement is $350.0 million. Proceeds of the loans under the Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the Credit Agreement. The period from the closing date until February 19, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the Credit Agreement. The final maturity date is the earliest of: (a) the business day designated by the Borrower as the final maturity date upon not less than three business days’ prior written notice to the Administrative Agent, the Collateral Agent, the Lenders, the Custodian and the Collateral Administrator, (b) February 19, 2022 and (c) the date on which the Administrative Agent provides notice of the declaration of the final maturity date after the occurrence of an event of default. The Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
Borrowings under the Citibank Revolving Credit Facility bear interest at LIBOR plus a margin. During the period prior to the last day of the reinvestment period, borrowings under the Credit Agreement will bear interest at a rate equal to the three-month LIBOR plus 1.60%. Commencing on the last day of the reinvestment period, the interest rate on borrowings under the Credit Agreement will reset to three-month LIBOR plus 2.60% for the remaining term of the Credit Agreement. We pay an unused commitment fee based on a corresponding utilization rate; (i) 0 basis points (0.00%) per annum when greater than or equal to 85.0% utilization, (ii) 25 basis points (0.25%) per annum when greater than or equal to 75.0% but less than 85.0% utilization, (iii) 50 basis points (0.50%) per annum when greater than or equal to 50.0% but less than 75.0% utilization, (iv) 75 basis points (0.75%) per annum when greater than or equal to 25.0% but less than 50% utilization, or (v) 100 basis points (1.00%) per annum when less than 25.0% utilization.
On August 28, 2019, the Citibank Revolving Credit Facility was terminated. The proceeds from the 2019-1 Debt were used to repay the total outstanding debt.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the Citibank Revolving Credit Facility were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | — | $ | 1,174 | ||||
Unused facility fee | — | 134 | ||||||
Amortization of deferred financing costs and upfront commitment fees | — | 108 | ||||||
Total interest and debt financing expenses | $ | — | $ | 1,416 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the Citibank Revolving Credit Facility were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | — | $ | 4,104 | ||||
Unused facility fee | — | 357 | ||||||
Amortization of deferred financing costs and upfront commitment fees | — | 124 | ||||||
Total interest and debt financing expenses | $ | — | $ | 4,585 |
JPM Credit Facility
On April 30, 2019, the Company entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. The facility amount under the JPM Credit Agreement was $666.6 million. Borrowings under the JPM Credit Facility bore interest at LIBOR plus 2.75%.
On January 29, 2020, the Company entered into an amended and restated loan and security agreement (the "Amended Loan and Security Agreement") as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. The Amended Loan and Security Agreement amended the Existing Loan and Security Agreement to, among other things, (1) decrease the financing limit under the agreement from $666.6 million to $500.0 million; (2) decrease the minimum facility amount from $466.6 million to $300.0 million period from January 29, 2020 to July 29, 2020 (the minimum facility amount will increase to $350.0 million after July 29, 2020 until the end of the reinvestment period); (3) decrease the interest rate on financing from 2.75% per annum over the applicable LIBOR to 2.375% per annum over the applicable LIBOR; and (4) extend the scheduled termination date of the agreement from November 29, 2022 to January 29, 2025.
On March 20, 2020, the Company entered into a second amended and restated loan and security agreement between the parties (the "Second Amended Loan and Security Agreement"). The Second Amended Loan and Security Agreement, among other things, provides flexibility to contribute and borrow against revolving loans, reduce the amount required to be reserved for unfunded revolvers and delayed draw obligations and decreases the financing limit by $50.0 million within 90 days or, based on the occurrence of certain events, such earlier period as may be set forth in the Second Amended Loan and Security Agreement. The Company shall pay to the Administrative Agent $50.0 million to the prepayment of Advances and the Financing Commitments shall be reduced by the amount of principal so prepaid on the earlier of two Business days following the closing of the Rights Offering and June 18, 2020, which the Company subsequently paid.
On July 2, 2020, the Company entered into a third amended and restated loan and security agreement with respect to the JPM Credit Agreement to, among other things, adjust the advance rates and make certain changes of an updating nature.
The facility amount under the JPM Credit Agreement is currently $450.0 million. Proceeds of the loans under the JPM Credit Facility may be used to acquire certain qualifying loans and such other uses as permitted under the JPM Credit Agreement. The period from the effective date of the amendment until January 29, 2023 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the JPM Credit Facility.
The maturity date is the earliest of: (a) January 29, 2025, (b) the date on which the secured obligations become due and payable following the occurrence of an event of default, (c) the date on which the advances are repaid in full and (d) the date after a market value cure failure occurs on which all portfolio investments have been sold and proceeds therefrom have been received by the Borrower. The stated maturity date of January 29, 2025 may be extended for successive one year periods by mutual agreement of the Borrower and the Administrative Agent.
The JPM Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.
Borrowings under the JPM Credit Facility bear interest at LIBOR plus a margin. As of September 30, 2020, the JPM Credit Facility was accruing interest expense at a rate of LIBOR plus 2.375%. The Company pays an unused commitment fee of between 37.5 basis points (0.375%) and 75 basis points (0.75%) per annum depending on the size of the unused portion of the facility. Interest is payable quarterly in arrears.
As of September 30, 2020 and December 31, 2019, there were $299.2 million and $546.8 million of borrowings under the JPM Credit Facility, respectively, and we were in compliance with the terms of the RevolvingJPM Credit FacilityFacility.
We intendFor the three months ended September 30, 2020 and 2019, the components of interest expense related to continue to utilize the RevolvingJPM Credit Facility on a revolving basiswere as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,444 | $ | 7,232 | ||||
Unused facility fee | 94 | 202 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 65 | 20 | ||||||
Total interest and debt financing expenses | $ | 2,603 | $ | 7,454 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to fund investments and for other general corporate purposes. See “Note 6. Borrowings” for more detail on the RevolvingJPM Credit Facility.Facility were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 11,469 | $ | 12,387 | ||||
Unused facility fee | 310 | 328 | ||||||
Amortization of deferred financing costs and upfront commitment fees | 402 | 33 | ||||||
Total interest and debt financing expenses | $ | 12,181 | $ | 12,748 |
2019-1 Debt
ToOn August 28, 2019, the extent we determine that additional capital would allow us to take advantageCompany, through BCC Middle Market CLO 2019-1 LLC (the “2019-1 Issuer”), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of additional investment opportunities, if the Company, and BCC Middle Market CLO 2019-1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), a Delaware limited liability company, completed its $501.0 million term debt securitization (the “2019-1 CLO Transaction”). The notes issued in connection with the 2019-1 CLO Transaction (the “2019-1 Notes”) are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market for debt financing presents attractively priced debt financing opportunities,loans, the majority of which are senior secured loans (the “2019-1 Portfolio”). The Co-Issuers also issued Class A-1L Loans (the “Loans” and, together with the 2019-1 Notes, the “2019-1 Debt”). The Loans are also secured by the 2019-1 Portfolio. At the 2019-1 closing date, the 2019-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or iflosses recognized in the Board otherwise determines that leveraging our portfolio would be2019-1 CLO Transaction.
The 2019-1 CLO Transaction was executed through a private placement of the following 2019-1 Debt (dollars in our best interestthousands):
2019-1 Debt | Principal Amount | Spread above Index | Interest rate at September 30, 2020 | |||||||
Class A-1L | $ | 50,000 | 1.70% + 3 Month LIBOR | 1.98 | % | |||||
Class A-1 | 222,500 | 1.70% + 3 Month LIBOR | 1.98 | % | ||||||
Class A-2A | 50,750 | 2.70% + 3 Month LIBOR | 2.98 | % | ||||||
Class A-2B | 13,000 | 4.23% (Fixed) | 4.23 | % | ||||||
Class B | 30,000 | 3.60% + 3 Month LIBOR | 3.88 | % | ||||||
Class C | 32,500 | 4.75% + 3 Month LIBOR | 5.03 | % | ||||||
Total 2019-1 Debt | 398,750 | |||||||||
Membership Interests | 102,250 | Non-interest bearing | Not applicable | |||||||
Total | $ | 501,000 |
The Loans and the bestClass A-1, A-2A, A-2B, and B Notes were issued at par. The Class C Notes were issued at a discount. The Notes are scheduled to mature on October 15, 2031. The Company received 100% of the membership interests of our stockholders, we may enter into credit facilities in addition to our Revolving Credit Facility. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined(the “Membership Interests”) in the 1940 Act, is at least 22019-1 Issuer in exchange for its sale to 1 after such borrowing.the 2019-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. As of September 30, 2017,2020, the Company’s Membership Interests are pledged as collateral to the BCSF Revolving Credit Facility.
The Loans and Class A-1, A-2A, A-2B, B, and C Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation.
The Company serves as portfolio manager of the 2019-1 Issuer pursuant to a portfolio management agreement between the Company didand the 2019-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not havecharge any outstanding borrowings.management fee or subordinated interest to which it may be entitled.
During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019-1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019-1 Issuer and in accordance with the 2019-1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable.
The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019-1 Co-Issuers for so long as the 2019-1 Debt remains outstanding.
The 2019-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019-1 Issuer.
As of September 30, 2020, there were 66 first lien and second lien senior secured loans with a total fair value of approximately $444.1 million and cash of $36.7 million securing the 2019-1 Debt. As of December 31, 2016, our2019, there were 65 first lien and second lien senior secured loans with a total fair value of approximately $471.3 million and cash of $22.4 million securing the 2019-1 Notes. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, ratiominimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of September 30, 2020, the Company was 2.87in compliance with its covenants related to 1. Wethe 2019-1 Debt.
Costs of the offering, including the discount of the Class C Notes, of $2.8 million were incurred in connection with debt securitization of the 2019-1 Debt by the 2019-1 Co-Issuers which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019-1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life of the 2019-1 Issuer using the effective interest method. The balance of the unamortized debt issuance costs related to the 2019-1 Issuer was $2.5 million and $2.7 million as of September 30, 2020 and December 31, 2019, respectively.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the 2019-1 Co-Issuers were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 2,755 | $ | 1,651 | ||||
Amortization of debt issuance costs and upfront commitment fees | 58 | 21 | ||||||
Total interest and debt financing expenses | $ | 2,813 | $ | 1,672 |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the 2019-1 Co-Issuers were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 10,490 | $ | 1,651 | ||||
Amortization of debt issuance costs and upfront commitment fees | 172 | 21 | ||||||
Total interest and debt financing expenses | $ | 10,662 | $ | 1,672 |
Revolving Advisor Loan
On March 27, 2020, the Company entered into an unsecured revolving loan agreement (the “Revolving Advisor Loan”) with BCSF Advisors, LP, the investment adviser of the Company. The Revolving Advisor Loan has a maximum credit limit of $50.0 million and a maturity date of March 27, 2023. The Revolving Advisor Loan accrues interest at the Applicable Federal Rate from the date of such loan until the loan is repaid in full. As of September 30, 2020, there were no borrowings under the Revolving Advisor Loan.
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the Revolving Advisor Loan were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | — | $ | — | ||||
Total interest and debt financing expenses | $ | — | $ | — |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the Revolving Advisor Loan were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 58 | $ | — | ||||
Total interest and debt financing expenses | $ | 58 | $ | — |
2023 Notes
On June 10, 2020, the Company entered into a Master Note Purchase Agreement with institutional investors listed on the Purchaser Schedule thereto (the “Note Purchase Agreement”), in connection with the Company’s issuance of $150.0 million aggregate principal amount of its 8.50% senior unsecured notes due 2023 (the “ 2023 Notes”). The sale of the 2023 Notes generated net proceeds of approximately $146.4 million, including an offering discount of $1.5 million and debt issuance costs in connection with the transaction, including fees and commissions, of $2.1 million.
The Notes will mature on June 10, 2023 and may also refinancebe redeemed in whole or repay any of our indebtednessin part at the Company’s option at any time basedor from time to time at the redemption prices set forth in the Note Purchase Agreement. The Notes will bear interest at a rate of 8.50% per year payable semi-annually on our financial conditionJune 10 and market conditions.December 10 of each year, commencing on December 10, 2020. As of September 30, 2020, the Company was in compliance with the terms of the Note Purchase Agreement governing the 2023 Notes.
As of September 30, 2020 and December 31, 2019, the components of the carrying value of the 2023 Notes were as follows (dollars in thousands):
September 30, 2020 | December 31, 2019 | |||||||
Principal amount of debt | $ | 150,000 | $ | — | ||||
Unamortized debt issuance cost | (1,969 | ) | — | |||||
Original issue discount, net of accretion | (1,305 | ) | — | |||||
Carrying value of 2023 Notes | $ | 146,726 | $ | — |
For the three months ended September 30, 2020 and 2019, the components of interest expense related to the 2023 Notes were as follows (dollars in thousands):
For the Three Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 3,188 | $ | — | ||||
Amortization of debt issuance cost | 184 | — | ||||||
Amortization of original issue discount | 122 | — | ||||||
Total interest and debt financing expenses | $ | 3,494 | $ | — |
For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the 2023 Notes were as follows (dollars in thousands):
For the Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Borrowing interest expense | $ | 3,932 | $ | — | ||||
Amortization of debt issuance cost | 222 | — | ||||||
Amortization of original issue discount | 149 | — | ||||||
Total interest and debt financing expenses | $ | 4,303 | $ | — |
Distribution Policy
The following table summarizes distributions declared during the nine months ended September 30, 2020 (dollars in thousands, except per share data):
Date Declared | Record Date | Payment Date | Amount Per Share | Total Distributions | ||||||||
February 20, 2020 | March 31, 2020 | April 30, 2020 | $ | 0.41 | $ | 21,176 | ||||||
May 4, 2020 | June 30, 2020 | July 30, 2020 | $ | 0.34 | $ | 21,951 | ||||||
July 30, 2020 | September 30, 2020 | October 30, 2020 | $ | 0.34 | $ | 21,951 | ||||||
Total distributions declared | $ | 1.09 | $ | 65,078 |
The following table summarizes distributions declared during the nine months ended September 30, 2019 (dollars in thousands, except per share data):
Date Declared | Record Date | Payment Date | Amount Per Share | Total Distributions | ||||||||
February 21, 2019 | March 29, 2019 | April 12, 2019 | $ | 0.41 | $ | 21,108 | ||||||
May 7, 2019 | June 28, 2019 | July 29, 2019 | $ | 0.41 | $ | 21,176 | ||||||
August 1, 2019 | September 30, 2019 | October 30, 2019 | $ | 0.41 | $ | 21,176 | ||||||
Total distributions declared | $ | 1.23 | $ | 63,460 |
Distributions to common stockholders are recorded on the record date. To the extent that we have income available, we intend to distribute quarterly distributions to our stockholders. Our quarterly distributions, if any, will be determined by the Board. Any distributions to our stockholders will be declared out of assets legally available for distribution.
We have elected to be subjecttreated, and intend to taxoperate in a manner so as to continuously qualify, as a RICregulated investment company (a “RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our taxable year ended December 31, 2016. To qualify for and maintain RIC tax treatment, among other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount generally at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses. In order to avoid the imposition of certain excise taxes imposed on RICs, we currently intend tomust distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year; (2) 98.2% of our capital gains in excess of capital losses, adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year; and (3) the sum of any net ordinary income andplus capital gaingains net income for preceding years that were not distributed during such years and on which we did not incur any U.S.paid no federal income tax.
We intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain all or a portion of our net capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to our stockholders.
The Company hasWe have adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends.dividends and distributions. Prior to the listing of the Company’s shares on a national securities exchange (a “Listing”),IPO, stockholders who “opt“opted in” to our dividend reinvestment plan had their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions. Subsequent to the Company’sIPO, stockholders who do not “opt out” of our dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions. Subsequent to a Listing, stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’sour common stock, rather than receiving cash dividends and distributions. Stockholders cancould elect to “opt in” or “opt out” of the Company’sour dividend reinvestment plan in their Subscription Agreements, as defined.subscription agreements, through the private offering. The elections of stockholders that make an election prior to a Listingthe IPO shall remain effective after the Listing. Any dividends reinvested through the issuance of shares through our dividend reinvestment plan will increase our gross assets on which the base management fee and the incentive fee are determined and paid to the Advisor.IPO.
The following table summarizes distributions declared during the nine months ended September 30, 2017:
Date Declared |
| Record Date |
| Payment Date |
| Amount |
| Total | |||
May 9, 2017 |
| May 12, 2017 |
| May 19, 2017 |
| $ | 0.07 |
| $ | 1,174,052 |
|
June 21, 2017 |
| June 29, 2017 |
| August 11, 2017 |
| $ | 0.11 |
| $ | 2,739,972 |
|
September 27, 2017 |
| September 28, 2017 |
| November 14, 2017 |
| $ | 0.21 |
| $ | 5,235,687 |
|
Total distributions declared |
|
|
|
|
| $ | 0.39 |
| $ | 9,149,711 |
|
The U.S. federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon our investment company taxable income for the full fiscal year and distributions paid during the full year.
Commitments and Off-Balance Sheet Arrangements
As of September 30, 2017 and December 31, 2016, the Company had unfunded capital commitments related to Subscription Agreements of $752.6 million and $436.6 million, respectively.
We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the statements of assets and liabilities.
As of September 30, 2017, our off-balance sheet arrangements consisted2020, the Company had $153.0 million of the following:unfunded commitments under loan and financing agreements as follows (dollars in thousands):
|
| Expiration Date (1) |
| Unfunded Commitments (2) | ||
First Lien Senior Secured Loans |
|
|
|
|
| |
CST Buyer Company — Revolver |
| 3/1/2023 |
| $ | 897,478 |
|
Dorner Manufacturing Corp. — Revolver |
| 3/15/2023 |
| 604,385 |
| |
Endries International, Inc. — Delayed Draw Term Loan |
| 6/1/2023 |
| 3,278,355 |
| |
Endries International, Inc. — Revolver |
| 6/1/2022 |
| 2,840,547 |
| |
FineLine Technologies, Inc. — Revolver |
| 11/2/2021 |
| 1,965,543 |
| |
Great Expressions Dental Centers PC — Delayed Draw Term Loan |
| 9/28/2023 |
| 667,000 |
| |
Great Expressions Dental Centers PC — Revolver |
| 9/28/2022 |
| 233,400 |
| |
International Entertainment Investments Limited — Delayed Draw Term Loan |
| 2/28/2022 |
| 553,640 |
| |
K-Mac Holdings Corp. — Revolver |
| 2/28/2022 |
| 1,397,333 |
| |
Sovos Compliance, LLC — Delayed Draw Term Loan |
| 3/1/2022 |
| 4,838,710 |
| |
Sovos Compliance, LLC — Revolver |
| 3/1/2022 |
| 1,451,615 |
| |
Zywave, Inc. — Revolver |
| 11/17/2022 |
| 1,279,118 |
| |
Total First Lien Senior Secured Loans |
|
|
| $ | 20,007,124 |
|
Second Lien Senior Secured Loans |
|
|
|
|
| |
NPC International, Inc. — Delayed Draw Term Loan |
| 4/18/2025 |
| 8,000,716 |
| |
Total Second Lien Senior Secured Loans |
|
|
| $ | 8,000,716 |
|
Other Unfunded Commitments |
|
|
|
|
| |
BCC Jetstream Holdings Aviation (On II), LLC |
|
|
| 13,247,520 |
| |
Total Other Unfunded Commitments |
|
|
| $ | 13,247,520 |
|
Total |
|
|
| $ | 41,255,360 |
|
Expiration Date (1) | Unfunded Commitments (2) | |||||
First Lien Senior Secured Loans | ||||||
9 Story Media Group Inc. - Revolver | 4/30/2026 | $ | 71 | |||
A&R Logistics, Inc. - Revolver | 5/5/2025 | 6,096 | ||||
Abracon Group Holding, LLC. - Revolver | 7/18/2024 | 2,833 | ||||
Allworth Financial Group, L.P. - Revolver | 12/31/2025 | 1,944 | ||||
AMI US Holdings Inc. - Revolver | 4/1/2024 | 488 | ||||
Amspec Services, Inc. - Revolver | 7/2/2024 | 1,553 | ||||
Ansira Holdings, Inc. - Revolver | 12/20/2024 | 3,683 | ||||
AP Plastics Group, LLC - Revolver | 8/2/2021 | 8,500 | ||||
Appriss Holdings, Inc. - Revolver | 5/30/2025 | 2,383 | ||||
Aramsco, Inc. - Revolver | 8/28/2024 | 1,581 | ||||
Batteries Plus Holding Corporation - Revolver | 7/6/2022 | 4,250 | ||||
Captain D's LLC - Revolver | 12/15/2023 | 480 | ||||
CB Nike IntermediateCo Ltd - Revolver | 10/31/2025 | 4,428 | ||||
CMI Marketing Inc - Revolver | 5/24/2023 | 2,112 | ||||
CPS Group Holdings, Inc. - Revolver | 3/3/2025 | 4,933 | ||||
Cruz Bay Publishing, Inc. - Delayed Draw | 2/1/2021 | 1,098 | ||||
Cruz Bay Publishing, Inc. - Revolver | 2/1/2021 | 856 | ||||
CST Buyer Company - Revolver | 10/3/2025 | 2,190 | ||||
Dorner Manufacturing Corp - Revolver | 3/15/2022 | 1,099 | ||||
Efficient Collaborative Retail Marketing Company, LLC - Revolver | 6/15/2022 | 1,275 | ||||
Element Buyer, Inc. - Revolver | 7/19/2024 | 3,400 | ||||
FFI Holdings I Corp - Revolver | 1/24/2025 | 5,432 | ||||
Grammer Purchaser, Inc. - Revolver | 9/30/2024 | 1,050 | ||||
Green Street Parent, LLC - Revolver | 8/27/2025 | 2,419 | ||||
GSP Holdings, LLC - Revolver | 11/6/2025 | 2,720 | ||||
JHCC Holdings, LLC - Delayed Draw | 9/9/2025 | 6,262 | ||||
JHCC Holdings, LLC - Revolver | 9/9/2025 | 1,952 | ||||
Kellstrom Commercial Aerospace, Inc. - Revolver | 7/1/2025 | 1,066 | ||||
Margaux Acquisition Inc. - Delayed Draw | 12/19/2024 | 1,409 | ||||
Margaux UK Finance Limited - Revolver | 12/19/2024 | 644 | ||||
MRI Software LLC - Delayed Draw | 2/10/2026 | 1,016 | ||||
MRI Software LLC - Revolver | 2/10/2026 | 1,782 | ||||
NPC International, Inc. - First Lien Senior Secured Loan | 1/21/2021 | 402 | ||||
Profile Products LLC - Revolver | 12/20/2024 | 3,833 | ||||
Refine Intermediate, Inc. - Revolver | 9/3/2026 | 4,806 | ||||
RoC Opco LLC - Revolver | 2/25/2025 | 10,241 | ||||
Solaray, LLC - Revolver | 9/9/2022 | 5,327 | ||||
Symplr Software, Inc. - Revolver | 11/30/2023 | 4,965 | ||||
TEI Holdings Inc. - Revolver | 12/23/2025 | 1,056 | ||||
Tidel Engineering, L.P. - Revolver | 3/1/2023 | 4,250 | ||||
TLC Purchaser, Inc. - Delayed Draw | 10/13/2025 | 7,119 | ||||
TLC Purchaser, Inc. - Revolver | 10/13/2025 | 8,900 | ||||
Ventiv Holdco, Inc. - Revolver | 9/3/2025 | 2,981 | ||||
WCI-HSG Purchaser, Inc. - Revolver | 2/24/2025 | 2,284 | ||||
Whitcraft LLC - Revolver | 4/3/2023 | 1,087 | ||||
WU Holdco, Inc. - Revolver | 3/26/2025 | 3,944 | ||||
YLG Holdings, Inc. - Delayed Draw | 10/31/2025 | 1,008 | ||||
YLG Holdings, Inc. - Revolver | 10/31/2025 | 8,545 | ||||
Zywave, Inc. - Revolver | 11/17/2022 | 1,279 | ||||
Total First Lien Senior Secured Loans | $ | 153,032 |
(1) | Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity. | |
(2) | Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of September 30, 2020. |
(1) Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.
(2) Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate at September 30, 2017.
As of December 31, 2016, our off-balance sheet arrangements consisted2019, the Company had $215.8 million of the following:unfunded commitments under loan and financing agreements as follows:
|
| Expiration Date (1) |
| Unfunded Commitments | ||
First Lien Senior Secured Loan |
|
|
|
|
| |
FineLine Technologies, Inc. — Revolver |
| 11/2/2021 |
| $ | 2,227,615 |
|
Great Expressions Dental Centers PC — Delayed Draw Term Loan |
| 9/28/2023 |
| 667,000 |
| |
Great Expressions Dental Centers PC — Revolver |
| 9/28/2022 |
| 1,000,286 |
| |
Zywave, Inc. — Revolver |
| 11/17/2022 |
| 1,279,118 |
| |
Total First Lien Senior Secured Loan |
|
|
| $ | 5,174,019 |
|
Total |
|
|
| $ | 5,174,019 |
|
Expiration Date (1) | Unfunded Commitments (2) | ||||||
First Lien Senior Secured Loans | |||||||
A&R Logistics, Inc. - Revolver | 5/5/2025 | $ | 5,043 | ||||
Abracon Group Holding, LLC. - Revolver | 7/18/2024 | 2,833 | |||||
AMI US Holdings Inc. - Revolver | 4/1/2024 | 977 | |||||
Amspec Services, Inc. - Revolver | 7/2/2024 | 3,542 | |||||
Ansira Holdings, Inc. - Delayed Draw | 12/20/2022 | 1,509 | |||||
AP Plastics Group, LLC - Revolver | 8/2/2021 | 8,500 | |||||
Appriss Holdings, Inc. - Revolver | 5/30/2025 | 4,711 | |||||
Aramsco, Inc. - Revolver | 8/28/2024 | 2,766 | |||||
Batteries Plus Holding Corporation - Revolver | 7/6/2022 | 4,250 | |||||
Captain D’s LLC - Revolver | 12/15/2023 | 577 | |||||
CB Nike Intermediate Co Ltd - Revolver | 10/31/2025 | 2,878 | |||||
Clinical Innovations, LLC - Revolver | 10/17/2022 | 380 | |||||
CMI Marketing Inc. - Revolver | 5/24/2023 | 2,112 | |||||
CPS Group Holdings, Inc. - Revolver | 3/3/2025 | 4,933 | |||||
Cruz Bay Publishing, Inc. - Delayed Draw | 2/28/2020 | 1,098 | |||||
Cruz Bay Publishing, Inc. - Revolver | 2/28/2020 | 535 | |||||
CST Buyer Company - Revolver | 10/3/2025 | 2,190 | |||||
Datix Bidco Limited - Revolver | 10/28/2024 | 1,290 | |||||
Direct Travel, Inc. - Delayed Draw | 12/1/2021 | 7,030 | |||||
Direct Travel, Inc. - Revolver | 12/1/2021 | 4,250 | |||||
Dorner Manufacturing Corp - Revolver | 3/15/2022 | 1,099 | |||||
Efficient Collaborative Retail Marketing Company, LLC - Revolver | 6/15/2022 | 3,542 | |||||
Element Buyer, Inc. - Delayed Draw | 7/18/2025 | 7,933 | |||||
Element Buyer, Inc. - Revolver | 7/19/2024 | 2,833 | |||||
FFI Holdings I Corp - Delayed Draw | 1/24/2025 | 677 | |||||
FFI Holdings I Corp - Revolver | 1/24/2025 | 1,994 | |||||
Fineline Technologies, Inc. - Revolver | 11/4/2022 | 655 | |||||
Grammer Purchaser, Inc. - Revolver | 9/30/2024 | 998 | |||||
Great Expressions Dental Center PC - Revolver | 9/28/2022 | 150 | |||||
Green Street Parent, LLC - Revolver | 8/27/2025 | 2,419 | |||||
GSP Holdings, LLC - Revolver | 11/6/2025 | 4,307 | |||||
Hightower Holding, LLC - Delayed Draw | 1/31/2025 | 6,640 | |||||
Horizon Telcom, Inc. - Delayed Draw | 6/15/2023 | 1,256 | |||||
Horizon Telcom, Inc. - Revolver | 6/15/2023 | 116 | |||||
Ivy Finco Limited - First Lien Senior Secured Loan | 5/19/2025 | 5,817 | |||||
JHCC Holdings, LLC - Delayed Draw | 9/9/2025 | 8,500 | |||||
JHCC Holdings, LLC - Revolver | 9/9/2025 | 1,820 | |||||
Kellstrom Commercial Aerospace, Inc. - Delayed Draw | 7/1/2025 | 3,838 | |||||
Kellstrom Commercial Aerospace, Inc. - Revolver | 7/1/2025 | 640 | |||||
Margaux Acquisition Inc. - Delayed Draw | 12/19/2024 | 7,139 | |||||
Margaux Acquisition Inc. - Revolver | 12/19/2024 | 2,872 | |||||
Margaux UK Finance Limited - Revolver | 12/19/2024 | 662 | |||||
Mertus 522. GmbH - Delayed Draw | 5/28/2026 | 13,761 | |||||
Profile Products LLC - Revolver | 12/20/2024 | 3,833 | |||||
RoC Opco LLC - Revolver | 2/25/2025 | 10,241 | |||||
Solaray, LLC - Revolver | 9/9/2022 | 1,077 | |||||
SumUp Holdings Luxembourg S.à.r.l. - First Lien Senior Secured Loan | 8/1/2024 | 10,638 | |||||
Symplr Software, Inc. - Revolver | 11/30/2023 | 466 | |||||
TCFI Aevex LLC - Revolver | 5/13/2025 | 138 | |||||
TEI Holdings Inc. - Revolver | 12/23/2025 | 3,018 | |||||
Tidel Engineering, L.P. - Revolver | 3/1/2023 | 4,250 | |||||
TLC Purchaser, Inc. - Delayed Draw | 10/13/2025 | 7,119 | |||||
TLC Purchaser, Inc. - Revolver | 10/13/2025 | 4,984 | |||||
Ventiv Holdco, Inc. - Revolver | 9/3/2025 | 3,407 | |||||
WCI-HSG Purchaser, Inc. - Revolver | 2/24/2025 | 2,284 | |||||
WU Holdco, Inc. - Delayed Draw | 3/26/2026 | 4,801 | |||||
WU Holdco, Inc. - Revolver | 3/26/2025 | 3,944 | |||||
YLG Holdings, Inc. - Delayed Draw | 10/31/2025 | 5,127 | |||||
YLG Holdings, Inc. - Revolver | 10/31/2025 | 8,545 | |||||
Zywave, Inc. - Revolver | 11/17/2022 | 851 | |||||
Total First Lien Senior Secured Loans | $ | 215,795 |
(1) Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.
(1) | Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity. |
(2) | Unfunded commitments denominated in currencies other than U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of December 31, 2019. |
Significant Accounting Estimates and Critical Accounting Policies
Basis of Presentation
The Company’s unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.US GAAP”). The Company’s unaudited consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 1, 6, 10 and 1012 of Regulation S-X. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein and are not necessarily indicative of the full fiscal year. We have determined we meet the definition of an investment company and followsfollow the accounting and reporting guidance in the ASCFinancial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC 946”). Our financial currency is U.S. dollars and these consolidated financial statements have been prepared in that currency.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S.US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.
Revenue Recognition
We record our investment transactions on a trade date basis. RealizedWe record realized gains and losses are based on the specific identification method. InterestWe record interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized into or against interest income using the effective interest method or straight-line method, as applicable. Upon prepayment of a loan or debt security,We record any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recordedreceived upon prepayment of a loan or debt security as interest income.
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for such distributions in the case of private portfolio companies, and on the ex-dividend date for publicly traded portfolio companies. Distributions received from a limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.
Certain investments may have contractual PIK interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. We record PIK is recorded as interest or dividend income, as applicable. If at any point the Company believeswe believe PIK ismay not expected to be realized, we place the investment generating PIK will beon non-accrual status. When a PIK investment is placed on non-accrual status. Accrued PIKstatus, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.as applicable.
Certain structuring fees and amendment fees are recorded as other income when earned. AdministrativeWe record administrative agent fees received by us are recorded as other income when the services are rendered.
Valuation of Portfolio Investments
Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If we cannot obtain a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be currentrepresentative with the market, we value certain investments held by the Company will be valuedus on the basis of prices provided by principal market makers. Generally investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained.obtained, in some cases, primarily illiquid securities, multiple quotes may not be available and the mid of the bid/ask from one broker will be used. To validate market quotations, the Company utilizeswe utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the Board, based on among other things, the input of theour Advisor, the Company’sour Audit Committee and one or more independent third partythird-party valuation firms engaged by theour Board.
With respect to unquoted securities, the Company willwe value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company willwe use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below:
· The Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Advisor responsible for the portfolio investment or by an independent valuation firm.
· | Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Advisor responsible for the portfolio investment or by an independent valuation firm; |
· Preliminary valuation conclusions are then documented and discussed with the Company’s senior management and the Advisor. Agreed upon valuation recommendations are presented to the Audit Committee.
· | Preliminary valuation conclusions are then documented and discussed with our senior management and our Advisor. Agreed upon valuation recommendations are presented to our Audit Committee; |
· The Audit Committee of the Board reviews the valuations presented and recommends values for each of the investments to the Board.
· | Our Audit Committee of our Board reviews the valuations presented and recommends values for each of the investments to our Board; |
· | At least once annually, the valuation for each portfolio investment constituting a material portion of the Company’s portfolio will be reviewed by an independent valuation firm; and |
· The Board will discuss valuations and determine the fair value of each investment in good faith based upon, among other things, the input of the Advisor, independent valuation firms, where applicable, and the Audit Committee.
· | Our Board discusses valuations and determines the fair value of each investment in good faith based upon, among other things, the input of our Advisor, independent valuation firms, where applicable, and our Audit Committee. |
In following this approach, the types of factors that are taken into account in the fair value pricing of investments include, as relevant, but are not limited to: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio companies ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion. The Company currently conducts this valuation process on a quarterly basis.
Recent Accounting PronouncementsContractual Obligations
In January 2016,We have entered into the FASB issued Accounting Standards Update (“ASU”) 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”)Amended Advisory Agreement with our Advisor (which supersedes the Investment Advisory Agreement dated November 14, 2018 we had previously entered into). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting relatedOur Advisor has agreed to (1) the classification and measurement of investmentsserve as our investment adviser in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associatedaccordance with the fairterms of the Amended Advisory Agreement. Under the Amended Advisory Agreement, we have agreed to pay an annual base management fee as well as an incentive fee based on our investment performance.
On October 11, 2018, the Board approved, subject to completion of the IPO, the Investment Advisory Agreement. Beginning with the calendar quarter that commences January 1, 2019, this Investment Advisory Agreement incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any, during the applicable three-year lookback period.
On November 28, 2018, our Board, including a majority of our Independent Directors, approved the Amended Advisory Agreement. On February 1, 2019 the Company’s stockholders approved the Amended Advisory Agreement. Pursuant to this Agreement, effective February 1, 2019, the base management fee of 1.5% (0.375% per quarter) of the average value of financial instruments. This guidance is effectivethe Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an asset coverage ratio of 200%, but a lower base management fee of 1.0% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company’s asset coverage ratio below 200%.
We have entered into an Administration Agreement with the Administrator pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. We reimburse the Administrator for annualits costs and interim periods beginning after December 15, 2017,expenses and early adoption is not permitted for public business entities. The Company does not believe these changes willour allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment.
If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Amended Advisory Agreement and Administration Agreement.
A summary of the maturities of our principal amounts of debt and other contractual payment obligations as of September 30, 2020 are as follows (dollars in thousands):
Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1 — 3 years | 3 — 5 years | More than 5 years | ||||||||||||||||
BCSF Revolving Credit Facility | $ | 307,774 | $ | — | $ | 307,774 | $ | — | $ | — | ||||||||||
2018-1 Notes | 365,700 | — | — | — | 365,700 | |||||||||||||||
JPM Credit Facility | 299,183 | — | — | 299,183 | — | |||||||||||||||
2019-1 Debt | 398,750 | — | — | — | 398,750 | |||||||||||||||
2023 Notes | 150,000 | — | 150,000 | — | — | |||||||||||||||
Total Debt Obligations | $ | 1,521,407 | $ | — | $ | 457,774 | $ | 299,183 | $ | 764,450 |
Subsequent Events
We have a material impact on itsevaluated the events and transactions that have occurred through November 5, 2020, the issuance date of the consolidated financial statements, and disclosures.
In November 2016,noted no items requiring disclosure in this Form 10-Q or adjustment of the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statements of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted and is to be applied on a
retrospective basis. The Company does not believe these changes will have a material impact on its consolidated financial statements and disclosures.
In December 2016, the FASB issued ASU 2016-19, “Technical Corrections and Improvements,” which amends ASC Topic 820 to clarify the difference between a valuation approach and a valuation technique, and requires an entity to disclose when there has been a change in a valuation approach, a valuation technique or both. This new guidance is effective prospectively for fiscal years beginning after December 15, 2016, as well as for interim periods within those fiscal years. The Company has evaluated the impact of this new guidance on its financial statements and disclosures, and determined that ASU 2016-19 did not have and is expected not to have a material impact on its consolidated financial statements and disclosures.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is expected to reduce the number of transactions that need to be further evaluated as businesses. This new guidance is effective prospectively for fiscal years beginning after December 15, 2017, as well as for interim periods within those fiscal years. Early adoption is permitted for certain types of transactions. The Company does not believe these changes will have a material impact on its consolidated financial statements and disclosures.
In March 2017, the FASB issued ASU 2017-08, “Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium by requiring the premium to be amortized to the earliest call date. This new guidance is effective prospectively for fiscal years beginning after December 15, 2018, as well as for interim periods within those fiscal years. Early adoption is permitted for certain types of transactions. The Company is currently evaluating the impact this change will have on its consolidated financial statements and disclosures.statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates. We will generally invest in illiquid loans and securities including debt and equity securities of middle-market companies. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
Assuming that the statement of financial condition as of September 30, 20172020 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.rates (dollars in thousands):
. | Net Increase | |||||||||||||||||||
|
| Increase |
| Increase |
| Net Increase |
| Increase (Decrease) in | Increase (Decrease) in | (Decrease) in | ||||||||||
Change in Interest Rates |
| Interest Income |
| Interest Expense |
| Net Investment Income |
| Interest Income | Interest Expense | Net Investment Income | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Down 25 basis points |
| $ | (1,103,505 | ) | $ | — |
| $ | (1,103,505 | ) | $ | (1,027 | ) | $ | (3,177 | ) | $ | 2,150 | ||
Up 100 basis points |
| 4,543,493 |
| — |
| 4,543,493 |
| 9,615 | 13,584 | (3,969 | ) | |||||||||
Up 200 basis points |
| 9,463,263 |
| — |
| 9,463,263 |
| 33,181 | 27,168 | 6,013 | ||||||||||
Up 300 basis points |
| 14,424,774 |
| — |
| 14,424,774 |
| 57,107 | 40,752 | 16,355 |
From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our Revolving Credit Agreement. Instead of entering into a foreign exchange forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of September 30, 20172020 (the end of the period covered by this report), our management has carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Based on that evaluation our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2019, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. During the nine months ended September 30, 2017,2020, other than as set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
The outbreak of COVID-19 has caused, and for an unknown period of time, will continue to cause, disruptions in global debt and equity markets and economies in regions in which we operate.
In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly to across the world, including to the U.S. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) government imposition of various forms of “stay at home” orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit and other financing instruments; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns to the Company, among other things. Itis impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on the Company, the Adviser and portfolio companies. Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.
Although it is impossible to predict the precise nature and consequences of these events, or of any political or policy decisions and regulatory changes occasioned by emerging events or uncertainty on applicable laws or regulations that impact the Company, our portfolio companies and our investments, it is clear that these types of events are negatively impacting and will, for at least some time, continue to negatively impact the Company and portfolio companies and in many instances the impact will be profound. For example, many of the smaller and middle market companies in which we may invest are being significantly negatively impacted by these emerging events and the uncertainty caused by these events. With respect to loans to such companies, the Company will be impacted if, among other things, (i) amendments and waivers are granted (or are required to be granted) to borrowers permitting deferral of loan payments or allowing for payment-in-kind (“PIK”) interest payments, (ii) borrowers default on their loans, are unable to refinance their loans at maturity, or go out of business permanently, and/or (iii) the value of loans held by the Company decreases as a result of such events and the uncertainty they cause. Such emerging events, to the extent experienced, will cause the Company to suffer a loss on its investments or interest thereon. The Company will also be negatively affected if the operations and effectiveness of the Adviser or a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted as a result of stay-at-home orders or other related interruptions to regular business operations. The Company has limited exposure to cyclical industries, including those currently experiencing significant distress, such as the energy, hospitality, and airline industries. The Company has no direct investments in commercial aviation companies and has focused on identifying portfolio companies in defensive industries such as technology, aerospace & defense and healthcare & pharmaceuticals with an emphasis on the durability of a portfolio company’s cash flow profile. For more information regarding the impact of current events and market conditions on the Company and our portfolio companies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Uncertainty can result in or coincide with, among other things: increased volatility in the financial markets for securities, derivatives, loans, credit and currency; a decrease in the reliability of market prices and difficulty in valuing assets (including portfolio company assets); greater fluctuations in spreads on debt investments and currency exchange rates; increased risk of default (by both government and private obligors and issuers); further social, economic, and political instability; nationalization of private enterprise; greater governmental involvement in the economy or in social factors that impact the economy; changes to governmental regulation and supervision of the loan, securities, derivatives and currency markets and market participants and decreased or revised monitoring of such markets by governments or self-regulatory organizations and reduced enforcement of regulations; limitations on the activities of investors in such markets; controls or restrictions on foreign investment, capital controls and limitations on repatriation of invested capital; the significant loss of liquidity and the inability to purchase, sell and otherwise fund investments or settle transactions (including, but not limited to, a market freeze); unavailability of currency hedging techniques; substantial, and in some periods extremely high, rates of inflation, which can last many years and have substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties in obtaining and/or enforcing legal judgments.
We currently are operating in a period of capital markets disruption, significant volatility and economic uncertainty.
The global capital markets are experiencing a period of disruption and instability resulting in increasing spreads between the yields realized on riskier debt securities and those realized on risk-free securities, lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector and the re-pricing of credit risk in the broadly syndicated market. Highly disruptive market conditions have resulted in increasing volatility and illiquidity in the global credit, debt and equity markets generally. The duration and ultimate effect of such market conditions cannot be accurately forecasted. Extreme uncertainty regarding economic markets is resulting in declines in the market values of potential investments and declines in the market values of investments after they are made or acquired by us and affecting the potential for liquidity events involving such investments or portfolio companies. During periods of market disruption, portfolio companies may be more likely to seek to draw on unfunded commitments we have made, and the risk of being unable to fund such commitments is heightened during such periods. Applicable accounting standards require us to determine the fair value of our investments as the amount that would be received in an orderly transaction between market participants at the measurement date. While most of our investments are not publicly traded, as part of our valuation process we consider a number of measures, including comparison to publicly traded securities. As a result, volatility in the public capital markets can adversely affect our investment valuations.
During any such periods of market disruption and instability, we and other companies in the financial services sector may have limited access, if any, to alternative markets for debt and equity capital. Equity capital may be difficult to raise because, subject to some limited exceptions that will apply to us as a BDC, we will generally not be able to issue additional shares of our common stock at a price less than NAV without first obtaining approval for such issuance from our stockholders and our Independent Directors. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness. The debt capital that will be available, if any, may be at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.
A prolonged period of market illiquidity may cause us to reduce the volume of loans and debt securities we originate and/or fund and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
Adverse developments in the credit markets may impair our ability to enter into new debt financing arrangements and otherwise negatively impact our current debt financing arrangements.
In past economic downturns, such as the financial crisis in the United States that began in mid-2007 and during other times of extreme market volatility, many commercial banks and other financial institutions stopped lending or significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited refinancing and loan modification transactions and reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing lending facilities. If these conditions recur, for example as a result of the COVID-19 outbreak, it may be difficult for us to enter into a new credit or other borrowing facility, obtain other financing to finance the growth of our investments, or refinance any outstanding indebtedness on acceptable economic terms, or at all.
So far, the COVID-19 outbreak has resulted in, and until fully resolved is likely to continue to result in, among other things, increased draws by borrowers on revolving lines of credit and increased requests by borrowers for amendments, modifications and waivers of their credit agreements to avoid default or change payment terms, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans. In addition, the duration and effectiveness of responsive measures implemented by governments and central banks cannot be predicted. The commencement, continuation, or cessation of government and central bank policies and economic stimulus programs, including changes in monetary policy involving interest rate adjustments or governmental policies, may contribute to the development of or result in an increase in market volatility, illiquidity and other adverse effects that could negatively impact the credit markets and the Company.
The expected discontinuation of LIBOR could have a significant impact on our business.
In July 2017, the head of the United Kingdom Financial Conduct Authority announced the intention to phase out the use of LIBOR by the end of 2021. Such announcement indicates that the continuation of LIBOR and other Reference Rates on the current basis cannot and will not be guaranteed after 2021. This announcement and any additional regulatory or market changes may have an adverse impact on our portfolio companies, our performance or our financial condition. Any replacement rate that is chosen may be less favorable than the current rates. Until the announcement of the replacement rate, our portfolio companies may continue to invest in instruments that reference LIBOR or otherwise use LIBOR due to favorable liquidity or pricing.
The expected discontinuation of LIBOR could have a significant impact on our business. We anticipate significant operational challenges for the transition away from LIBOR including, amending existing loan agreements with borrowers on investments that may have not been modified with fallback language and adding effective fallback language to new agreements in the event that LIBOR is discontinued before maturity. There may also be additional issues associated with our current processes and information systems that will need to be identified and evaluated by us. Due to the uncertainty of the replacement for LIBOR, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined. Further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.
In advance of 2021, regulators and market participants will seek to work together to identify or develop successor reference rates and how the calculation of associated spreads (if any) should be adjusted. The Federal Reserve Board, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by U.S. Treasury securities, called the Secured Overnight Financing Rate (“SOFR”). The first publication of SOFR was released in April 2018. Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR at this time is uncertain. Additionally, prior to 2021, it is expected that industry trade associations and participants will focus on the transition mechanisms by which the reference rates and spreads (if any) in existing contracts or instruments may be amended, whether through marketwide protocols, fallback contractual provisions, bespoke negotiations or amendments or otherwise. Nonetheless, the termination of LIBOR presents risks to us and our portfolio companies. At this time, it is not possible to exhaustively identify or predict the effect of any such changes, any establishment of alternative reference rates or any other reforms that may be enacted in the United Kingdom or elsewhere.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended September 30, 2017, we issued 23,007.05 shares of common stock under our dividend reinvestment plan. The issuances were not subject to the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”). The cash paid for shares of common stock issued under our dividend reinvestment plan during the quarter ended September 30, 2017 was approximately $465,874. Other than the shares issued under our dividend reinvestment plan during the quarter ended September 30, 2017, we did not sell any unregistered equity securities.None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
None.
Item 6. Exhibits, Financial Statement Schedules
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 20172020 (and are numbered in accordance with Item 601 of Regulation S-K under the Securities Act).
Exhibit Number | Description of Document | |
31.2* | ||
| ||
32* | ||
|
* Filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bain Capital Specialty Finance, Inc. | ||||
Date: November | By: | /s/ Michael A. Ewald | ||
Name: | Michael A. Ewald | |||
Title: | Chief Executive Officer | |||
Date: November | By: | /s/ Sally F. Dornaus | ||
Name: | Sally F. Dornaus | |||
Title: | Chief Financial Officer |