SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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ý | 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 QuarterQuarterly Period Ended SeptemberJune 30, 20192022oTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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Commission File Number |
| Exact name of registrant as specified in its charter, addressaddresses of principal executive offices, telephone numbers and states or other jurisdictions of incorporation or organization |
| I.R.S. Employer Identification Number |
000-56072 |
| New Mountain Guardian III BDC, L.L.C.
|
| 84-1918127
|
| | 787 Seventh Avenue,1633 Broadway, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Organization: Delaware
| | 84-1918127 |
Securities registered pursuant to Section 12(b) of the Act: None
| | | | | | | | | | | | | | |
| Title of each class | Trading Symbol(s) | Trading
Symbol(s)
|
| Name of each exchange on which registered | |
None
| None | N/A | N/A | N/A
|
Securities registered pursuant to Section 12(g) of the Act:
| | | | | | | | |
| Title of each class | |
Units of Limited Liability Company Interests |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”"Exchange Act") 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 xý No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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"large accelerated
filer,” “accelerated filer,” “smallerfiler", "accelerated filer", "smaller reporting
company,”company" and
“emerging"emerging growth
company”company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
| Large accelerated filer o | | Accelerated filer o | |
| Non-accelerated filer xý | | Smaller reporting company o | |
| Emerging growth company xý | | |
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 xý
The number of the registrant’sregistrant's limited liability company units outstanding as of November 13, 2019August 12, 2022 was 9,867,928.
114,906,527. As of June 30, 2022, there was no established public market for the registrant's limited liability company common units.
FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBERJUNE 30,
20192022
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PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
New Mountain Guardian III BDC, L.L.C.
Consolidated
StatementStatements of Assets, Liabilities and
Members’Members' Capital
(in thousands, except units and per unit data)
(unaudited)
| | September 30, 2019 | |
Assets | | | |
Non-controlled/non-affiliated investments at fair value (cost of $229,434) | | $ | 229,629 | |
Cash and cash equivalents | | 84,572 | |
Interest receivable | | 929 | |
Deferred offering costs | | 130 | |
Other assets | | 65 | |
Total assets | | $ | 315,325 | |
Liabilities | | | |
Borrowings | | | |
BMO Subscription Line | | $ | 118,415 | |
Wells Credit Facility | | 39,600 | |
Deferred financing costs (net of accumulated amortization of $38) | | (1,671 | ) |
Net borrowings | | 156,344 | |
Payable for unsettled securities purchased | | 56,465 | |
Accrued organizational and offering expenses | | 1,049 | |
Payable to affiliates | | 494 | |
Interest payable | | 366 | |
Management fee payable | | 110 | |
Other liabilities | | 949 | |
Total liabilities | | 215,777 | |
Commitments and contingencies (See Note 8) | | | |
Members’ Capital | | | |
Common units, 9,867,928 units issued and outstanding | | 98,679 | |
Accumulated distributable earnings | | 869 | |
Total members’ capital | | $ | 99,548 | |
Total liabilities and members’ capital | | $ | 315,325 | |
Outstanding common units | | 9,867,928 | |
Members’ capital per unit | | $ | 10.09 | |
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Assets | | | |
Non-controlled/non-affiliated investments at fair value (cost of $2,070,632 and $1,726,611, respectively) | $ | 2,052,675 | | | $ | 1,725,182 | |
Cash and cash equivalents | 22,338 | | | 24,121 | |
Interest and dividend receivable | 8,269 | | | 7,707 | |
| | | |
| | | |
| | | |
Other assets | 532 | | | 787 | |
Total assets | $ | 2,083,814 | | | $ | 1,757,797 | |
Liabilities | | | |
Borrowings | | | |
Wells Credit Facility | $ | 647,100 | | | $ | 473,100 | |
Unsecured Notes | 275,000 | | | 175,000 | |
| | | |
BMO Subscription Line | — | | | 92,000 | |
Deferred financing costs (net of accumulated amortization of $2,449 and $1,477, respectively) | (6,083) | | | (5,679) | |
Net borrowings | 916,017 | | | 734,421 | |
Distribution payable | 24,935 | | | 19,477 | |
Interest payable | 5,790 | | | 2,876 | |
Incentive fee payable | 4,215 | | | 3,327 | |
Management fee payable | 3,302 | | | 2,370 | |
Payable for unsettled securities purchased | 2,098 | | | 79,176 | |
Payable to affiliate | 371 | | | 310 | |
Deferred tax liability | 156 | | | — | |
Other liabilities | 1,596 | | | 1,561 | |
Total liabilities | 958,480 | | | 843,518 | |
Commitments and contingencies (See Note 8) | | | |
Members' Capital | | | |
Common units, 114,906,527 and 91,925,222 units issued and outstanding, respectively | 1,145,395 | | | 915,583 | |
Accumulated overdistributed earnings | (20,061) | | | (1,304) | |
Total members' capital | $ | 1,125,334 | | | $ | 914,279 | |
Total liabilities and members' capital | $ | 2,083,814 | | | $ | 1,757,797 | |
| | | |
Members' capital per unit | $ | 9.79 | | | $ | 9.95 | |
The accompanying notes are an integral part of these consolidated financial statements.
3
New Mountain Guardian III BDC, L.L.C.
Consolidated Statements of Operations
(in thousands, except units and per unit data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
Investment income | | | | | | | |
Interest income (excluding Payment-in-kind ("PIK") interest income) | $ | 32,594 | | | $ | 11,016 | | | $ | 61,015 | | | $ | 19,770 | |
PIK interest income | 1,771 | | | 219 | | | 3,354 | | | 302 | |
Dividend income | 1,872 | | | 245 | | | 3,686 | | | 245 | |
| | | | | | | |
Fee income | 3,251 | | | 1,401 | | | 5,599 | | | 2,598 | |
Total investment income | 39,488 | | | 12,881 | | | 73,654 | | | 22,915 | |
Expenses | | | | | | | |
Interest and other financing expenses | 7,153 | | | 2,106 | | | 13,455 | | | 3,639 | |
Incentive fee | 4,215 | | | 1,337 | | | 7,750 | | | 2,377 | |
Management fee | 3,302 | | | 1,352 | | | 6,605 | | | 2,397 | |
Administrative expenses | 640 | | | 378 | | | 1,351 | | | 678 | |
Professional fees | 398 | | | 153 | | | 781 | | | 322 | |
Organizational and offering expenses | — | | | 91 | | | — | | | 208 | |
Other general and administrative expenses | 61 | | | 44 | | | 101 | | | 82 | |
Total expenses | 15,769 | | | 5,461 | | | 30,043 | | | 9,703 | |
Less: management fees waived (See Note 5) | — | | | (156) | | | (265) | | | (260) | |
| | | | | | | |
Net expenses | 15,769 | | | 5,305 | | | 29,778 | | | 9,443 | |
Net investment income before income taxes | 23,719 | | | 7,576 | | | 43,876 | | | 13,472 | |
Income tax benefit | (172) | | | — | | | (49) | | | — | |
Net investment income | 23,891 | | | 7,576 | | | 43,925 | | | 13,472 | |
| | | | | | | |
Net change in unrealized (depreciation) appreciation of investments | (15,756) | | | (1,475) | | | (16,528) | | | 737 | |
Provision for taxes | (156) | | | — | | | (156) | | | — | |
Net realized and unrealized (losses) gains | (15,912) | | | (1,475) | | | (16,684) | | | 737 | |
Net increase in members' capital resulting from operations | $ | 7,979 | | | $ | 6,101 | | | $ | 27,241 | | | $ | 14,209 | |
Earnings per unit (basic & diluted) | $ | 0.07 | | | $ | 0.19 | | | $ | 0.26 | | | $ | 0.48 | |
Weighted average common units outstanding - basic & diluted (See Note 10) | 114,906,527 | | | 31,338,974 | | | 104,495,107 | | | 29,374,049 | |
(unaudited)
| | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
| | September 30, 2019 | | September 30, 2019 | |
Investment income | | | | | |
Interest income | | $ | 1,323 | | $ | 1,323 | |
Other income | | 1,407 | | 1,407 | |
Total investment income | | 2,730 | | 2,730 | |
Expenses | | | | | |
Organizational and offering expenses | | 292 | | 942 | |
Interest and other financing expenses | | 431 | | 431 | |
Administrative expenses | | 394 | | 394 | |
Management fee (offset by placement fees of $45 and $45, respectively) | | 362 | | 362 | |
Professional fees | | 102 | | 102 | |
Other general and administrative expenses | | 32 | | 32 | |
Total expenses | | 1,613 | | 2,263 | |
Less: management fees waived (See Note 5) | | (252 | ) | (252 | ) |
Net expenses | | 1,361 | | 2,011 | |
Net investment income | | 1,369 | | 719 | |
Net realized and unrealized gains (losses) | | | | | |
Net change in unrealized appreciation of investments | | 195 | | 195 | |
Net realized gains (losses) on investments | | — | | — | |
Net realized and unrealized gains (losses) | | 195 | | 195 | |
Net increase in members’ capital resulting from operations | | $ | 1,564 | | $ | 914 | |
Earnings per unit (basic & diluted) | | $ | 0.34 | | $ | 0.28 | |
Weighted average common units outstanding - basic & diluted (See Note 10) | | 4,612,278 | | 3,214,618 | |
The accompanying notes are an integral part of these consolidated financial statements.
4
New Mountain Guardian III BDC, L.L.C.
Consolidated Statements of Changes in
Members’Members' Capital
(in thousands, except units and per unit data)units)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
Increase in members' capital resulting from operations: | | | | | | | |
Net investment income | $ | 23,891 | | | $ | 7,576 | | | $ | 43,925 | | | $ | 13,472 | |
| | | | | | | |
Net change in unrealized (depreciation) appreciation of investments | (15,756) | | | (1,475) | | | (16,528) | | | 737 | |
Provision for taxes | (156) | | | — | | | (156) | | | — | |
Net increase in members' capital resulting from operations | 7,979 | | | 6,101 | | | 27,241 | | | 14,209 | |
Capital transactions | | | | | | | |
Contributions | — | | | 25,005 | | | 229,812 | | | 78,555 | |
| | | | | | | |
| | | | | | | |
Placement fees | — | | | (156) | | | (265) | | | (260) | |
Distributions declared to unitholders from net investment income | (24,935) | | | (7,909) | | | (45,733) | | | (13,413) | |
| | | | | | | |
Total net (decrease) increase in members' capital resulting from capital transactions | (24,935) | | | 16,940 | | | 183,814 | | | 64,882 | |
Net (decrease) increase in members' capital | (16,956) | | | 23,041 | | | 211,055 | | | 79,091 | |
Members' capital at the beginning of the period | 1,142,290 | | | 309,825 | | | 914,279 | | | 253,775 | |
Members' capital at the end of the period | $ | 1,125,334 | | | $ | 332,866 | | | $ | 1,125,334 | | | $ | 332,866 | |
| | | | | | | |
Capital unit activity | | | | | | | |
Units issued | — | | | 2,500,500 | | | 22,981,305 | | | 7,855,500 | |
| | | | | | | |
| | | | | | | |
(unaudited)
| | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
| | September 30, 2019 | | September 30, 2019 | |
Increase (decrease) in members’ capital resulting from operations: | | | | | |
Net investment income | | $ | 1,369 | | $ | 719 | |
Net realized gains (losses) on investments | | — | | — | |
Net change in unrealized appreciation of investments | | 195 | | 195 | |
Net increase in members’ capital resulting from operations | | 1,564 | | 914 | |
Capital transactions | | | | | |
Contributions | | 98,680 | | 98,680 | |
Cancellation of Units | | (1 | ) | (1 | ) |
Placement fees | | (45 | ) | (45 | ) |
Total net increase in members’ capital resulting from capital transactions | | 98,634 | | 98,634 | |
Net increase in members’ capital | | 100,198 | | 99,548 | |
Members’ capital at the beginning of the period | | (650 | ) | — | |
Members’ capital at the end of the period | | $ | 99,548 | | $ | 99,548 | |
| | | | | |
Capital share activity | | | | | |
Units issued | | 9,868,028 | | 9,868,028 | |
Units canceled | | (100 | ) | (100 | ) |
Net increase in units outstanding | | 9,867,928 | | 9,867,928 | |
The accompanying notes are an integral part of these consolidated financial statements.
5
New Mountain Guardian III BDC, L.L.C.
Consolidated
StatementStatements of Cash Flows
(unaudited)
| | For the period from May 22, 2019 (inception) to | |
| | September 30, 2019 | |
Cash flows from operating activities | | | |
Net increase in members’ capital resulting from operations | | $ | 914 | |
Adjustments to reconcile net (increase) decrease in members’ capital resulting from operations to net cash (used in) provided by operating activities: | | | |
Net change in unrealized appreciation of investments | | (195 | ) |
Amortization of purchase discount | | (16 | ) |
Amortization of deferred financing costs | | 38 | |
Amortization of deferred offering costs | | 25 | |
Non-cash investment income | | (61 | ) |
(Increase) decrease in operating assets: | | | |
Purchase of investments and delayed draw facilities | | (229,459 | ) |
Proceeds from sales and paydowns of investments | | 57 | |
Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities | | 46 | |
Interest receivable | | (929 | ) |
Deferred offering costs | | (155 | ) |
Other assets | | (65 | ) |
Increase (decrease) in operating liabilities: | | | |
Payable for unsettled securities purchased | | 56,465 | |
Accrued organizational and offering expenses | | 1,049 | |
Payable to affiliates | | 426 | |
Interest payable | | 366 | |
Management fee payable | | 110 | |
Other liabilities | | 146 | |
Net cash flows used in operating activities | | (171,238 | ) |
Cash flows from financing activities | | | |
Net proceeds from issuance of common units | | 98,680 | |
Placement fees paid | | (45 | ) |
Cancellation of common units | | (1 | ) |
Proceeds from BMO Subscription Line | | 118,415 | |
Proceeds from Wells Credit Facility | | 39,600 | |
Deferred financing costs paid | | (839 | ) |
Net cash flows provided by financing activities | | 255,810 | |
Net increase in cash and cash equivalents | | 84,572 | |
Cash and cash equivalents at the beginning of the period | | — | |
Cash and cash equivalents at the end of the period | | $ | 84,572 | |
Supplemental disclosure of cash flow information | | | |
Cash interest paid | | $ | 24 | |
Non-cash financing activities: | | | |
Accrual for offering costs | | $ | 155 | |
Accrual for deferred financing costs | | 871 | |
| | | | | | | | | | | |
| Six Months Ended |
| June 30, 2022 | | June 30, 2021 |
Cash flows from operating activities | | | |
Net increase in members' capital resulting from operations | $ | 27,241 | | | $ | 14,209 | |
Adjustments to reconcile net increase in members' capital resulting from operations to net cash used in operating activities: | | | |
| | | |
Net change in unrealized depreciation (appreciation) of investments | 16,528 | | | (737) | |
Amortization of purchase discount | (1,609) | | | (826) | |
Amortization of deferred financing costs | 972 | | | 227 | |
| | | |
Non-cash investment income | (5,867) | | | (374) | |
(Increase) decrease in operating assets: | | | |
Purchase of investments and delayed draw facilities | (379,347) | | | (272,114) | |
Proceeds from sales and paydowns of investments | 44,585 | | | 41,076 | |
Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities | 263 | | | 83 | |
Cash paid for purchase of drawn portion of revolving credit facilities | (141) | | | (34) | |
Cash paid on drawn revolvers | (19,373) | | | (1,977) | |
Cash repayments on drawn revolvers | 17,468 | | | 2,025 | |
| | | |
Interest and dividend receivable | (562) | | | (1,796) | |
| | | |
Other assets | 255 | | | (232) | |
Increase (decrease) in operating liabilities: | | | |
Payable for unsettled securities purchased | (77,078) | | | 14,332 | |
Interest payable | 2,914 | | | 207 | |
Incentive fee payable | 888 | | | 558 | |
Management fee payable | 932 | | | 227 | |
Deferred tax liability | 156 | | | — | |
Payable to affiliates | 61 | | | 179 | |
Other liabilities | (34) | | | 58 | |
Net cash flows used in operating activities | (371,748) | | | (204,909) | |
Cash flows from financing activities | | | |
Distributions | (40,275) | | | (10,406) | |
Net proceeds from issuance of common units | 229,812 | | | 78,555 | |
| | | |
Proceeds from BMO Subscription Line | 63,000 | | | 154,000 | |
Repayment of BMO Subscription Line | (155,000) | | | (99,000) | |
Proceeds from Wells Credit Facility | 353,000 | | | 84,500 | |
Repayment of Wells Credit Facility | (179,000) | | | — | |
Proceeds from Unsecured Notes | 100,000 | | | — | |
| | | |
Placement fees paid | (265) | | | (140) | |
| | | |
Deferred financing costs paid | (1,307) | | | (1,294) | |
Net cash flows provided by financing activities | 369,965 | | | 206,215 | |
Net (decrease) increase in cash and cash equivalents | (1,783) | | | 1,306 | |
Cash and cash equivalents at the beginning of the period | 24,121 | | | 8,766 | |
Cash and cash equivalents at the end of the period | $ | 22,338 | | | $ | 10,072 | |
| | | |
Supplemental disclosure of cash flow information | | | |
Cash interest paid | $ | 9,278 | | | $ | 2,919 | |
Income taxes paid | 92 | | | — | |
| | | |
| | | |
Non-cash financing activities: | | | |
Distributions declared and payable | $ | 24,935 | | | $ | 7,909 | |
Accrual for deferred financing costs | 204 | | | 20 | |
Accrual for placement fees | — | | | 130 | |
| | | |
The accompanying notes are an integral part of these consolidated financial statements.
6
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments
September
(in thousands)thousands, except shares)
(unaudited)
(unaudited)
Portfolio Company, Location and Industry (1) | | Type of Investment | | Interest Rate (5) | | Acquisition Date | | Maturity / Expiration Date | | Principal Amount or Par Value | | Cost | | Fair Value | | Percent of Members’ Capital | |
Non-Controlled/Non-Affiliated Investments | | | | | | | | | | | | | | | | | |
Funded Debt Investments - Canada | | | | | | | | | | | | | | | | | |
Project Boost Purchaser, LLC** | | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2) | | 10.09% (L + 8.00%/Q) | | 9/17/2019 | | 5/21/2027 | | $ | 12,000 | | $ | 12,000 | | $ | 12,000 | | 12.05 | % |
Total Funded Debt Investments - Canada | | | | | | | | | | $ | 12,000 | | $ | 12,000 | | $ | 12,000 | | 12.05 | % |
Funded Debt Investments - United Arab Emirates | | | | | | | | | | | | | | | | | |
GEMS Menasa (Cayman) Limited** | | | | | | | | | | | | | | | | | |
Education | | First lien | | 7.04% (L + 5.00%/M) | | 7/30/2019 | | 7/30/2026 | | $ | 21,374 | | $ | 21,267 | | $ | 21,427 | | 21.52 | % |
Total Funded Debt Investments - United Arab Emirates | | | | | | | | | | $ | 21,374 | | $ | 21,267 | | $ | 21,427 | | 21.52 | % |
Funded Debt Investments - United States | | | | | | | | | | | | | | | | | |
KAMC Holdings, Inc. | | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2)(3) | | 10.18% (L + 8.00%/Q) | | 8/14/2019 | | 8/13/2027 | | $ | 22,500 | | $ | 22,333 | | $ | 22,331 | | 22.44 | % |
Bluefin Holding, LLC | | | | | | | | | | | | | | | | | |
Software | | Second lien (2) | | 9.86% (L + 7.75%/Q) | | 9/6/2019 | | 9/6/2027 | | 22,000 | | 22,000 | | 22,000 | | 22.10 | % |
MED Parentco, LP | | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien (2) | | 10.29% (L + 8.25%/M) | | 8/2/2019 | | 8/30/2027 | | 22,000 | | 21,836 | | 21,890 | | 21.99 | % |
Bullhorn, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 7.60% (L + 5.50%/Q) | | 9/24/2019 | | 10/1/2025 | | 19,431 | | 19,285 | | 19,285 | | 19.37 | % |
Clarkson Eyecare, LLC | | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(3) | | 8.37% (L + 6.25%/Q) | | 8/21/2019 | | 4/2/2021 | | 11,054 | | 10,947 | | 10,944 | | | |
| | First lien (2) | | 8.39% (L + 6.25%/Q) | | 9/11/2019 | | 4/2/2021 | | 7,369 | | 7,297 | | 7,296 | | | |
| | | | | | | | | | 18,423 | | 18,244 | | 18,240 | | 18.33 | % |
Definitive Healthcare Holdings, LLC | | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (3) | | 8.67% (L + 5.50% + 1.00% PIK/Q)* | | 8/7/2019 | | 7/16/2026 | | 17,638 | | 17,552 | | 17,550 | | 17.63 | % |
PaySimple, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 7.55% (L + 5.50%/M) | | 8/19/2019 | | 8/23/2025 | | 11,123 | | 11,012 | | 10,956 | | 11.01 | % |
Recorded Future, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (3) | | 8.79% (L + 6.75%/M) | | 8/26/2019 | | 7/3/2025 | | 10,417 | | 10,365 | | 10,365 | | 10.41 | % |
OEConnection LLC | | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2) | | 10.27% (L + 8.25%/M) | | 9/25/2019 | | 9/25/2027 | | 7,677 | | 7,600 | | 7,600 | | 7.63 | % |
Integral Ad Science, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (3) | | 9.30% (L + 6.00% + 1.25% PIK/M)* | | 8/27/2019 | | 7/19/2024 | | 7,532 | | 7,457 | | 7,532 | | 7.57 | % |
AG Parent Holdings, LLC | | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2) | | 7.26% (L + 5.00%/Q) | | 7/30/2019 | | 7/31/2026 | | 7,500 | | 7,463 | | 7,477 | | 7.51 | % |
CFS Management, LLC | | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(3) | | 7.95% (L + 5.75%/S) | | 8/6/2019 | | 7/1/2024 | | 7,508 | | 7,471 | | 7,470 | | 7.50 | % |
Sphera Solutions, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 9.13% (L + 7.00%/Q) | | 9/10/2019 | | 6/14/2022 | | 7,485 | | 7,412 | | 7,410 | | 7.44 | % |
Frontline Technologies Group Holdings, LLC | | | | | | | | | | | | | | | | | |
Education | | First lien (2)(3) | | 8.60% (L + 6.50%/Q) | | 8/15/2019 | | 9/18/2023 | | 4,638 | | 4,638 | | 4,638 | | 4.66 | % |
TMK Hawk Parent, Corp. | | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (2) | | 5.57% (L + 3.50%/Q) | | 9/27/2019 | | 8/28/2024 | | 4,698 | | 3,935 | | 3,923 | | 3.94 | % |
JAMF Holdings, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (2)(3) | | 9.18% (L + 7.00%/Q) | | 8/27/2019 | | 11/11/2022 | | 3,253 | | 3,229 | | 3,253 | | 3.27 | % |
iCIMS, Inc. | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Non-Controlled/Non-Affiliated Investments | | | | | | | | | | | | | | | | |
Funded Debt Investments - United States | | | | | | | | | | | | | | | | |
Recorded Future, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 8.13% (L + 5.25%/S) | | 12/30/2021 | | 7/3/2025 | | $ | 42,288 | | | $ | 42,104 | | | $ | 42,076 | | | |
| | First lien (4) | | 8.13% (L + 5.25%/S) | | 8/26/2019 | | 7/3/2025 | | 13,448 | | | 13,382 | | | 13,380 | | | |
| | | | | | | | | | 55,736 | | | 55,486 | | | 55,456 | | | 4.93 | % |
GS Acquisitionco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.26% (L + 5.75%/Q) | | 2/6/2020 | | 5/22/2026 | | 44,394 | | | 44,228 | | | 44,394 | | | |
| | First lien (4) | | 7.26% (L + 5.75%/Q) | | 2/6/2020 | | 5/22/2026 | | 6,446 | | | 6,431 | | | 6,446 | | | |
| | First lien (4)(5) - Drawn | | 8.63% (L + 5.75%/S) | | 2/6/2020 | | 5/22/2026 | | 591 | | | 592 | | | 591 | | | |
| | | | | | | | | | 51,431 | | | 51,251 | | | 51,431 | | | 4.57 | % |
Bottomline Technologies, Inc. | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4) | | 7.50% (SOFR + 5.50%/M) | | 5/12/2022 | | 5/14/2029 | | 49,873 | | | 49,381 | | | 49,374 | | | 4.39 | % |
OA Buyer, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2)(4) | | 7.67% (L + 6.00%/M) | | 12/20/2021 | | 12/20/2028 | | 46,565 | | | 46,128 | | | 45,946 | | | |
| | First lien (2)(4) | | 7.67% (L + 6.00%/M) | | 5/6/2022 | | 12/20/2028 | | 2,940 | | | 2,911 | | | 2,901 | | | |
| | | | | | | | | | 49,505 | | | 49,039 | | | 48,847 | | | 4.34 | % |
Notorious Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Products | | First lien (2)(4) | | 8.00% (L + 6.50%/S) | | 11/23/2021 | | 11/23/2027 | | 41,472 | | | 41,186 | | | 41,161 | | | |
| | First lien (4)(5) - Drawn | | 8.05% (L + 6.50%/S) | | 11/23/2021 | | 5/24/2027 | | 1,566 | | | 1,557 | | | 1,554 | | | |
| | | | | | | | | | 43,038 | | | 42,743 | | | 42,715 | | | 3.80 | % |
CCBlue Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 8.50% (L + 3.50% + 2.75% PIK/Q)* | | 12/20/2021 | | 12/21/2028 | | 40,749 | | | 40,373 | | | 40,342 | | | |
| | First lien (4)(5) - Drawn | | 10.00% (P + 5.25%/Q) | | 12/20/2021 | | 12/21/2028 | | 2,119 | | | 2,098 | | | 2,098 | | | |
| | | | | | | | | | 42,868 | | | 42,471 | | | 42,440 | | | 3.77 | % |
Diamondback Acquisition, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.17% (L + 5.50%/M) | | 9/13/2021 | | 9/13/2028 | | 42,844 | | | 42,455 | | | 42,415 | | | 3.77 | % |
KWOR Acquisition, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (2) | | 6.99% (L + 5.25%/M) | | 12/22/2021 | | 12/22/2028 | | 40,699 | | | 40,412 | | | 40,394 | | | |
| | First lien (5) - Drawn | | 9.00% (P + 4.25%/Q) | | 12/22/2021 | | 12/22/2027 | | 763 | | | 761 | | | 757 | | | |
| | | | | | | | | | 41,462 | | | 41,173 | | | 41,151 | | | 3.66 | % |
Anaplan, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 8.01% (SOFR + 6.50%/M) | | 6/21/2022 | | 6/21/2029 | | 40,440 | | | 40,037 | | | 40,036 | | | 3.56 | % |
IG Investments Holdings, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (2)(4) | | 8.02% (L + 6.00%/Q) | | 9/22/2021 | | 9/22/2028 | | 39,539 | | | 39,179 | | | 39,144 | | | |
| | First lien (4)(5) - Drawn | | 9.75% (P + 5.00%/Q) | | 9/22/2021 | | 9/22/2027 | | 853 | | | 849 | | | 845 | | | |
| | | | | | | | | | 40,392 | | | 40,028 | | | 39,989 | | | 3.55 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
7
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
September
(in thousands)thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Wealth Enhancement Group, LLC | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Drawn | | 7.68% (SOFR + 6.00%/S) | | 8/13/2021 | | 10/4/2027 | | $ | 33,256 | | | $ | 33,188 | | | $ | 33,256 | | | |
| | First lien (4) | | 7.00% (L + 6.00%/S) | | 1/10/2022 | | 10/4/2027 | | 3,106 | | | 3,077 | | | 3,106 | | | |
| | First lien (4) | | 7.52% (SOFR + 6.00%/S) | | 1/10/2022 | | 10/4/2027 | | 2,083 | | | 2,064 | | | 2,083 | | | |
| | First lien (4)(5) - Drawn | | 7.00% (L + 6.00%/Q) | | 8/13/2021 | | 10/4/2027 | | 822 | | | 820 | | | 822 | | | |
| | | | | | | | | | 39,267 | | | 39,149 | | | 39,267 | | | 3.49 | % |
Al Altius US Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 8.28% (L + 5.50%/S) | | 12/20/2021 | | 12/20/2028 | | 38,500 | | | 38,139 | | | 37,846 | | | 3.36 | % |
Galway Borrower LLC | | | | | | | | | | | | | | | | |
Insurance Services | | First lien (2) | | 7.50% (L + 5.25%/Q) | | 9/30/2021 | | 9/29/2028 | | 32,620 | | | 32,323 | | | 31,723 | | | |
| | First lien | | 7.50% (L + 5.25%/Q) | | 9/30/2021 | | 9/29/2028 | | 3,812 | | | 3,778 | | | 3,707 | | | |
| | | | | | | | | | 36,432 | | | 36,101 | | | 35,430 | | | 3.15 | % |
Frontline Technologies Group Holdings, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.49% (L + 5.25%/Q) | | 12/30/2020 | | 9/18/2023 | | 19,554 | | | 19,554 | | | 19,554 | | | |
| | First lien (2)(4) | | 6.49% (L + 5.25%/Q) | | 8/15/2019 | | 9/18/2023 | | 11,926 | | | 11,807 | | | 11,926 | | | |
| | First lien (2)(4) | | 6.49% (L + 5.25%/Q) | | 6/15/2021 | | 9/18/2023 | | 3,727 | | | 3,727 | | | 3,727 | | | |
| | | | | | | | | | 35,207 | | | 35,088 | | | 35,207 | | | 3.13 | % |
VetCor Professional Practices LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4) | | 5.59% (L + 4.25%/Q) | | 12/3/2021 | | 7/2/2025 | | 28,122 | | | 28,003 | | | 28,122 | | | |
| | Second lien (4)(5) - Drawn | | 7.53% (L + 6.50%/S) | | 12/3/2021 | | 7/2/2026 | | 7,026 | | | 6,979 | | | 6,964 | | | |
| | | | | | | | | | 35,148 | | | 34,982 | | | 35,086 | | | 3.12 | % |
Stamps.com Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.87% (L + 5.75%/M) | | 10/5/2021 | | 10/5/2028 | | 19,876 | | | 19,694 | | | 19,677 | | | |
| | First lien (2)(4) | | 6.87% (L + 5.75%/M) | | 12/13/2021 | | 10/5/2028 | | 14,403 | | | 14,268 | | | 14,258 | | | |
| | | | | | | | | | 34,279 | | | 33,962 | | | 33,935 | | | 3.02 | % |
CFS Management, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 8.57% (SOFR + 6.25%/Q) | | 8/6/2019 | | 7/1/2024 | | 24,352 | | | 24,256 | | | 24,352 | | | |
| | First lien (4) | | 8.57% (SOFR + 6.25%/Q) | | 9/1/2021 | | 7/1/2024 | | 5,710 | | | 5,685 | | | 5,710 | | | |
| | First lien (4) | | 8.57% (SOFR + 6.25%/Q) | | 8/6/2019 | | 7/1/2024 | | 2,175 | | | 2,170 | | | 2,175 | | | |
| | First lien (4)(5) - Drawn | | 8.57% (SOFR + 6.25%/Q) | | 2/15/2022 | | 7/1/2024 | | 100 | | | 100 | | | 100 | | | |
| | | | | | | | | | 32,337 | | | 32,211 | | | 32,337 | | | 2.87 | % |
DECA Dental Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 8.00% (L + 5.75%/Q) | | 8/26/2021 | | 8/28/2028 | | 28,811 | | | 28,551 | | | 28,523 | | | |
| | First lien (4)(5) - Drawn | | 8.00% (L + 5.75%/Q) | | 8/26/2021 | | 8/28/2028 | | 3,033 | | | 3,006 | | | 3,002 | | | |
| | First lien (4)(5) - Drawn | | 8.00% (L + 5.75%/Q) | | 8/26/2021 | | 8/26/2027 | | 764 | | | 759 | | | 756 | | | |
| | | | | | | | | | 32,608 | | | 32,316 | | | 32,281 | | | 2.87 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
8
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
Portfolio Company, Location and Industry (1) | | Type of Investment | | Interest Rate (5) | | Acquisition Date | | Maturity / Expiration Date | | Principal Amount or Par Value | | Cost | | Fair Value | | Percent of Members’ Capital | |
Software | | First lien (3) | | 8.56% (L + 6.50%/M) | | 8/27/2019 | | 9/12/2024 | | $ | 2,290 | | $ | 2,267 | | $ | 2,267 | | 2.28 | % |
Alegeus Technologies Holdings Corp. | | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(3) | | 8.54% (L + 6.25%/Q) | | 8/27/2019 | | 9/5/2024 | | 2,134 | | 2,113 | | 2,134 | | 2.14 | % |
Total Funded Debt Investments - United States | | | | | | | | | | $ | 198,247 | | $ | 196,212 | | $ | 196,321 | | 197.22 | % |
Total Funded Debt Investments | | | | | | | | | | $ | 231,621 | | $ | 229,479 | | $ | 229,748 | | 230.79 | % |
Total Funded Investments | | | | | | | | | | | | $ | 229,479 | | $ | 229,748 | | 230.79 | % |
Unfunded Debt Investments - United States | | | | | | | | | | | | | | | | | |
Recorded Future, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (3)(4) - Undrawn | | — | | 8/26/2019 | | 1/3/2021 | | $ | 833 | | $ | (4 | ) | $ | (4 | ) | | |
| | First lien (3)(4) - Undrawn | | — | | 8/26/2019 | | 7/3/2025 | | 1,250 | | (6 | ) | (6 | ) | | |
| | | | | | | | | | 2,083 | | (10 | ) | (10 | ) | (0.01 | )% |
CFS Management, LLC | | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (3)(4) - Undrawn | | — | | 8/6/2019 | | 7/1/2024 | | 2,214 | | (11 | ) | (11 | ) | (0.01 | )% |
Bullhorn, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (4) - Undrawn | | — | | 9/24/2019 | | 10/1/2021 | | 1,606 | | (12 | ) | (12 | ) | | |
| | First lien (4) - Undrawn | | — | | 9/24/2019 | | 10/1/2025 | | 964 | | (7 | ) | (7 | ) | | |
| | | | | | | | | | 2,570 | | (19 | ) | (19 | ) | (0.02 | )% |
Definitive Healthcare Holdings, LLC | | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (3)(4) - Undrawn | | — | | 8/7/2019 | | 7/16/2021 | | 3,913 | | — | | (19 | ) | | |
| | First lien (3)(4) - Undrawn | | — | | 8/7/2019 | | 7/16/2024 | | 978 | | (5 | ) | (5 | ) | | |
| | | | | | | | | | 4,891 | | (5 | ) | (24 | ) | (0.03 | )% |
PaySimple, Inc. | | | | | | | | | | | | | | | | | |
Software | | First lien (4) - Undrawn | | — | | 8/19/2019 | | 8/24/2020 | | 3,626 | | — | | (55 | ) | (0.05 | )% |
Total Unfunded Debt Investments - United States | | | | | | | | | | $ | 15,384 | | $ | (45 | ) | $ | (119 | ) | (0.12 | )% |
Total Unfunded Debt Investments | | | | | | | | | | $ | 15,384 | | $ | (45 | ) | $ | (119 | ) | (0.12 | )% |
Total Non-Controlled/Non-Affiliated Investments | | | | | | | | | | | | $ | 229,434 | | $ | 229,629 | | 230.67 | % |
Total Investments | | | | | | | | | | | | $ | 229,434 | | $ | 229,629 | | 230.67 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Associations, Inc. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2)(4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | $ | 17,668 | | | $ | 17,598 | | | $ | 17,579 | | | |
| | First lien (4) | | 8.72% (SOFR + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 4,349 | | | 4,331 | | | 4,328 | | | |
| | First lien (4) | | 8.44% (SOFR + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 4,349 | | | 4,331 | | | 4,328 | | | |
| | First lien (4) | | 7.88% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 2,627 | | | 2,615 | | | 2,614 | | | |
| | First lien (4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 2,090 | | | 2,081 | | | 2,079 | | | |
| | | | | | | | | | 31,083 | | | 30,956 | | | 30,928 | | | 2.75 | % |
Eisner Advisory Group LLC | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2)(4) | | 6.39% (SOFR + 4.75%/M) | | 8/16/2021 | | 7/28/2028 | | 28,405 | | | 28,277 | | | 27,979 | | | |
| | First lien (4) | | 6.39% (SOFR + 4.75%/M) | | 8/16/2021 | | 7/28/2028 | | 2,840 | | | 2,828 | | | 2,798 | | | |
| | | | | | | | | | 31,245 | | | 31,105 | | | 30,777 | | | 2.73 | % |
Sun Acquirer Corp. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2)(4) | | 7.42% (L + 5.75%/M) | | 12/30/2021 | | 9/8/2028 | | 24,875 | | | 24,641 | | | 24,626 | | | |
| | First lien (2)(4) | | 7.42% (L + 5.75%/M) | | 9/8/2021 | | 9/8/2028 | | 4,005 | | | 3,973 | | | 3,965 | | | |
| | First lien (4)(5) - Drawn | | 7.42% (L + 5.75%/M) | | 9/8/2021 | | 9/8/2028 | | 1,665 | | | 1,652 | | | 1,648 | | | |
| | First lien (4)(5) - Drawn | | 9.50% (P + 4.75%/Q) | | 9/8/2021 | | 9/8/2027 | | 56 | | | 57 | | | 55 | | | |
| | | | | | | | | | 30,601 | | | 30,323 | | | 30,294 | | | 2.69 | % |
Paw Midco, Inc. | | | | | | | | | | | | | | | | |
AAH Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2)(4) | | 7.14% (L + 5.50%/M) | | 12/22/2021 | | 12/22/2027 | | 20,286 | | | 20,098 | | | 20,083 | | | |
| | Subordinated (4) | | 11.50% PIK/Q * | | 12/22/2021 | | 12/22/2031 | | 10,120 | | | 9,983 | | | 9,969 | | | |
| | | | | | | | | | 30,406 | | | 30,081 | | | 30,052 | | | 2.67 | % |
Ocala Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2)(4) | | 7.88% (L + 3.50% + 2.75% PIK/M)* | | 12/27/2021 | | 11/24/2028 | | 30,286 | | | 29,932 | | | 29,908 | | | 2.66 | % |
GraphPAD Software, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2)(4) | | 6.50% (L + 5.50%/A) | | 12/1/2021 | | 4/27/2027 | | 18,118 | | | 18,036 | | | 17,867 | | | |
| | First lien (2)(4) | | 7.17% (L + 5.50%/A) | | 4/28/2021 | | 4/27/2027 | | 10,395 | | | 10,352 | | | 10,251 | | | |
| | First lien (2)(4) | | 6.50% (L + 5.50%/A) | | 10/14/2021 | | 4/27/2027 | | 1,598 | | | 1,591 | | | 1,576 | | | |
| | | | | | | | | | 30,111 | | | 29,979 | | | 29,694 | | | 2.64 | % |
Icebox Holdco III, Inc. | | | | | | | | | | | | | | | | |
Distribution & Logistics | | Second lien (2) | | 9.00% (L + 6.75%/Q) | | 12/15/2021 | | 12/21/2029 | | 30,000 | | | 29,857 | | | 28,500 | | | 2.53 | % |
Foreside Financial Group, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (2)(4) | | 7.12% (L + 5.50%/M) | | 5/26/2022 | | 9/30/2027 | | 27,450 | | | 27,180 | | | 27,174 | | | 2.41 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
9
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Fortis Solutions Group, LLC | | | | | | | | | | | | | | | | |
Packaging | | First lien (2)(4) | | 7.65% (L + 5.50%/Q) | | 10/15/2021 | | 10/13/2028 | | $ | 20,977 | | | $ | 20,784 | | | $ | 20,768 | | | |
| | First lien (4) | | 7.65% (L + 5.50%/Q) | | 10/15/2021 | | 10/13/2028 | | 5,744 | | | 5,692 | | | 5,687 | | | |
| | First lien (4)(5) - Drawn | | 7.73% (L + 5.50%/Q) | | 10/15/2021 | | 10/15/2027 | | 195 | | | 197 | | | 193 | | | |
| | | | | | | | | | 26,916 | | | 26,673 | | | 26,648 | | | 2.37 | % |
OEC Holdco, LLC (12) | | | | | | | | | | | | | | | | |
OEConnection LLC | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2)(4) | | 8.60% (L + 7.00%/M) | | 12/17/2021 | | 9/25/2027 | | 19,234 | | | 19,057 | | | 19,042 | | | |
| | Second lien (2)(4) | | 8.67% (L + 7.00%/M) | | 9/25/2019 | | 9/25/2027 | | 7,677 | | | 7,620 | | | 7,600 | | | |
| | | | | | | | | | 26,911 | | | 26,677 | | | 26,642 | | | 2.37 | % |
Pioneer Topco I, L.P. (13) | | | | | | | | | | | | | | | | |
Pioneer Buyer I, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 9.25% (L + 7.00% PIK/Q)* | | 11/1/2021 | | 11/1/2028 | | 23,225 | | | 23,022 | | | 22,992 | | | |
| | First lien (4) | | 9.25% (L + 7.00% PIK/Q)* | | 3/11/2022 | | 11/1/2028 | | 3,183 | | | 3,153 | | | 3,151 | | | |
| | | | | | | | | | 26,408 | | | 26,175 | | | 26,143 | | | 2.32 | % |
FS WhiteWater Borrower, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2)(4) | | 8.00% (L + 5.75%/Q) | | 12/20/2021 | | 12/21/2027 | | 17,789 | | | 17,624 | | | 17,611 | | | |
| | First lien (4) | | 8.00% (L + 5.75%/Q) | | 12/20/2021 | | 12/21/2027 | | 5,933 | | | 5,878 | | | 5,874 | | | |
| | First lien (4)(5) - Drawn | | 6.99% (L + 5.75%/Q) | | 12/20/2021 | | 12/21/2027 | | 1,586 | | | 1,572 | | | 1,571 | | | |
| | First lien (4)(5) - Drawn | | 7.39% (L + 5.75%/Q) | | 12/20/2021 | | 12/21/2027 | | 608 | | | 604 | | | 602 | | | |
| | | | | | | | | | 25,916 | | | 25,678 | | | 25,658 | | | 2.28 | % |
Knockout Intermediate Holdings I Inc. (14) | | | | | | | | | | | | | | | | |
Kaseya Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 8.29% (SOFR + 5.75%/S) | | 6/23/2022 | | 6/25/2029 | | 25,847 | | | 25,653 | | | 25,653 | | | 2.28 | % |
Idera, Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien (4) | | 7.82% (L + 6.75%/M) | | 3/8/2021 | | 3/2/2029 | | 26,250 | | | 26,299 | | | 25,612 | | | 2.28 | % |
Energize Holdco LLC | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2)(4) | | 9.00% (L + 6.75%/Q) | | 11/19/2021 | | 12/7/2029 | | 24,900 | | | 24,782 | | | 24,633 | | | 2.19 | % |
Businessolver.com, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 8.00% (L + 5.75%/Q) | | 12/1/2021 | | 12/1/2027 | | 24,533 | | | 24,420 | | | 24,376 | | | 2.17 | % |
| | | | | | | | | | | | | | | | |
Bullhorn, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 8.00% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 18,945 | | | 18,850 | | | 18,945 | | | |
| | First lien (4) | | 8.00% (L + 5.75%/Q) | | 10/5/2021 | | 9/30/2026 | | 1,322 | | | 1,319 | | | 1,322 | | | |
| | First lien (2)(4) | | 8.00% (L + 5.75%/Q) | | 10/5/2021 | | 9/30/2026 | | 1,211 | | | 1,208 | | | 1,211 | | | |
| | First lien (4) | | 8.00% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 877 | | | 872 | | | 877 | | | |
| | First lien (4) | | 8.00% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 393 | | | 391 | | | 393 | | | |
| | First lien (4) | | 8.00% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 313 | | | 312 | | | 313 | | | |
| | | | | | | | | | 23,061 | | | 22,952 | | | 23,061 | | | 2.05 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
10
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Diamond Parent Holdings Corp. (9) | | | | | | | | | | | | | | | | |
Diligent Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 8.63% (L + 5.75%/Q) | | 3/30/2021 | | 8/4/2025 | | $ | 8,416 | | | $ | 8,384 | | | $ | 8,416 | | | |
| | First lien (2)(4) | | 9.13% (L + 6.25%/Q) | | 8/4/2020 | | 8/4/2025 | | 7,412 | | | 7,350 | | | 7,412 | | | |
| | First lien (2)(4) | | 8.63% (L + 5.75%/S) | | 3/4/2021 | | 8/4/2025 | | 4,693 | | | 4,676 | | | 4,693 | | | |
| | First lien (4)(5) - Drawn | | 8.49% (L + 6.25%/Q) | | 8/4/2020 | | 8/4/2025 | | 1,167 | | | 1,171 | | | 1,167 | | | |
| | First lien (4) | | 9.13% (L + 6.25%/Q) | | 8/4/2020 | | 8/4/2025 | | 620 | | | 615 | | | 620 | | | |
| | First lien (4) | | 9.13% (L + 6.25%/Q) | | 8/4/2020 | | 8/4/2025 | | 391 | | | 388 | | | 391 | | | |
| | | | | | | | | | 22,699 | | | 22,584 | | | 22,699 | | | 2.02 | % |
Pye-Barker Fire & Safety, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Drawn | | 7.75% (L + 5.50%/Q) | | 11/26/2021 | | 11/26/2027 | | 17,307 | | | 17,144 | | | 17,307 | | | |
| | First lien (4) | | 7.75% (L + 5.50%/Q) | | 5/19/2021 | | 11/26/2027 | | 4,963 | | | 4,924 | | | 4,963 | | | |
| | | | | | | | | | 22,270 | | | 22,068 | | | 22,270 | | | 1.98 | % |
MRI Software LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.75% (L + 5.50%/Q) | | 1/31/2020 | | 2/10/2026 | | 16,459 | | | 16,406 | | | 16,459 | | | |
| | First lien (2)(4) | | 7.75% (L + 5.50%/Q) | | 3/24/2021 | | 2/10/2026 | | 4,668 | | | 4,659 | | | 4,668 | | | |
| | First lien (4) | | 7.75% (L + 5.50%/Q) | | 1/31/2020 | | 2/10/2026 | | 476 | | | 474 | | | 476 | | | |
| | | | | | | | | | 21,603 | | | 21,539 | | | 21,603 | | | 1.92 | % |
Bluefin Holding, LLC | | | | | | | | | | | | | | | | |
Software | | Second lien (2)(4) | | 9.83% (L + 7.75%/Q) | | 9/6/2019 | | 9/3/2027 | | 22,000 | | | 22,000 | | | 21,347 | | | 1.90 | % |
DOCS, MSO, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2) | | 6.90% (SOFR + 5.75%/M) | | 6/1/2022 | | 6/1/2028 | | 21,248 | | | 21,248 | | | 21,248 | | | 1.89 | % |
MED Parentco, LP | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien (2)(4) | | 9.92% (L + 8.25%/M) | | 8/2/2019 | | 8/30/2027 | | 22,000 | | | 21,879 | | | 20,887 | | | 1.86 | % |
KAMC Holdings, Inc | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2)(4) | | 9.44% (L + 8.00%/Q) | | 8/14/2019 | | 8/13/2027 | | 22,500 | | | 22,378 | | | 19,535 | | | 1.74 | % |
OB Hospitalist Group, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 7.75% (L + 5.50%/Q) | | 9/21/2021 | | 9/27/2027 | | 19,367 | | | 19,194 | | | 19,174 | | | |
| | First lien (4)(5) - Drawn | | 7.17% (L + 5.50%/Q) | | 9/21/2021 | | 9/27/2027 | | 269 | | | 270 | | | 266 | | | |
| | | | | | | | | | 19,636 | | | 19,464 | | | 19,440 | | | 1.73 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Daxko Acquisition Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.17% (L + 5.50%/M) | | 10/15/2021 | | 10/16/2028 | | 17,838 | | | 17,674 | | | 17,615 | | | |
| | First lien (4) | | 7.17% (L + 5.50%/M) | | 10/15/2021 | | 10/16/2028 | | 1,503 | | | 1,489 | | | 1,484 | | | |
| | | | | | | | | | 19,341 | | | 19,163 | | | 19,099 | | | 1.70 | % |
Foundational Education Group, Inc. | | | | | | | | | | | | | | | | |
Education | | Second lien (4) | | 8.82% (SOFR + 6.50%/Q) | | 8/19/2021 | | 8/31/2029 | | 19,706 | | | 19,632 | | | 18,665 | | | 1.66 | % |
RealPage, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 8.17% (L + 6.50%/M) | | 2/18/2021 | | 4/23/2029 | | 19,250 | | | 19,122 | | | 18,288 | | | 1.63 | % |
TigerConnect, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 7.75% (SOFR + 6.75%/S) | | 2/16/2022 | | 2/16/2028 | | 18,409 | | | 18,234 | | | 18,225 | | | 1.62 | % |
The accompanying notes are an integral part of these consolidated financial statements.
11
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
HS Purchaser, LLC / Help/Systems Holdings, Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien | | 7.56% (SOFR + 6.75%/Q) | | 5/11/2021 | | 11/19/2027 | | $ | 18,882 | | | $ | 18,882 | | | $ | 18,126 | | | 1.61 | % |
Project Essential Topco, Inc. (8) | | | | | | | | | | | | | | | | |
Project Essential Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.75% (L + 5.75%/S) | | 4/20/2021 | | 4/20/2028 | | 17,442 | | | 17,311 | | | 17,349 | | | 1.54 | % |
EAB Global, Inc. | | | | | | | | | | | | | | | | |
Education | | Second lien (4) | | 7.54% (L + 6.50%/Q) | | 8/16/2021 | | 8/16/2029 | | 16,548 | | | 16,321 | | | 16,299 | | | 1.45 | % |
Relativity ODA LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 9.15% (L + 6.50% PIK/M)* | | 5/12/2021 | | 5/12/2027 | | 15,622 | | | 15,469 | | | 15,622 | | | 1.39 | % |
Granicus, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 8.75% (L + 6.50%/Q) | | 1/27/2021 | | 1/29/2027 | | 10,668 | | | 10,604 | | | 10,668 | | | |
| | First lien (4) | | 8.75% (L + 6.50%/Q) | | 1/27/2021 | | 1/29/2027 | | 2,987 | | | 2,969 | | | 2,987 | | | |
| | First lien (4)(5) - Drawn | | 8.25% (L + 6.00%/Q) | | 4/23/2021 | | 1/29/2027 | | 1,382 | | | 1,371 | | | 1,382 | | | |
| | | | | | | | | | 15,037 | | | 14,944 | | | 15,037 | | | 1.34 | % |
USRP Holdings, Inc. | | | | | | | | | | | | | | | | |
Federal Services | | First lien (2)(4) | | 7.75% (L + 5.50%/Q) | | 7/22/2021 | | 7/23/2027 | | 13,189 | | | 13,070 | | | 13,057 | | | |
| | First lien (4) | | 7.75% (L + 5.50%/Q) | | 7/22/2021 | | 7/23/2027 | | 1,872 | | | 1,857 | | | 1,853 | | | |
| | | | | | | | | | 15,061 | | | 14,927 | | | 14,910 | | | 1.32 | % |
DCA Investment Holding, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.75% (SOFR + 6.00%/S) | | 3/12/2021 | | 4/3/2028 | | 9,573 | | | 9,513 | | | 9,573 | | | |
| | First lien (4) | | 6.75% (SOFR + 6.00%/Q) | | 3/12/2021 | | 4/3/2028 | | 5,022 | | | 4,999 | | | 5,022 | | | |
| | First lien (4)(5) - Drawn | | 6.75% (SOFR + 6.00%/Q) | | 3/12/2021 | | 4/3/2028 | | 148 | | | 144 | | | 148 | | | |
| | | | | | | | | | 14,743 | | | 14,656 | | | 14,743 | | | 1.31 | % |
iCIMS, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.72% (L + 5.50%/Q) | | 11/16/2020 | | 9/12/2024 | | 12,261 | | | 12,186 | | | 12,261 | | | |
| | First lien (2)(4) | | 6.72% (L + 5.50%/Q) | | 8/27/2019 | | 9/12/2024 | | 2,290 | | | 2,279 | | | 2,290 | | | |
| | | | | | | | | | 14,551 | | | 14,465 | | | 14,551 | | | 1.29 | % |
AmeriVet Partners Management, Inc. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4) | | 7.70% (SOFR + 5.50%/Q) | | 2/25/2022 | | 2/25/2028 | | 13,827 | | | 13,760 | | | 13,758 | | | 1.22 | % |
New Trojan Parent, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien (4) | | 8.92% (L + 7.25%/M) | | 1/22/2021 | | 1/5/2029 | | 13,238 | | | 13,181 | | | 12,658 | | | 1.12 | % |
VT Topco, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien (4) | | 8.42% (L + 6.75%/M) | | 7/30/2021 | | 7/31/2026 | | 7,837 | | | 7,812 | | | 7,837 | | | |
| | Second lien (2)(4) | | 8.67% (L + 7.00%/M) | | 8/6/2020 | | 7/31/2026 | | 4,475 | | | 4,202 | | | 4,475 | | | |
| | | | | | | | | | 12,312 | | | 12,014 | | | 12,312 | | | 1.09 | % |
Syndigo LLC | | | | | | | | | | | | | | | | |
Software | | Second lien (4) | | 10.51% (L + 8.00%/S) | | 12/14/2020 | | 12/15/2028 | | 12,500 | | | 12,430 | | | 12,165 | | | 1.08 | % |
DG Investment Intermediate Holdings 2, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 8.42% (L + 6.75%/M) | | 3/18/2021 | | 3/30/2029 | | 12,188 | | | 12,161 | | | 11,670 | | | 1.04 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
12
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Specialtycare, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.75% (L + 5.75%/Q) | | 6/18/2021 | | 6/18/2028 | | $ | 11,787 | | | $ | 11,662 | | | $ | 11,530 | | | 1.02 | % |
ACI Parent Inc. (11) | | | | | | | | | | | | | | | | |
ACI Group Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 7.75% (L + 5.50%/Q) | | 8/2/2021 | | 8/2/2028 | | 10,791 | | | 10,695 | | | 10,683 | | | |
| | First lien (4)(5) - Drawn | | 7.75% (L + 5.50%/Q) | | 8/2/2021 | | 8/2/2028 | | 470 | | | 466 | | | 466 | | | |
| | | | | | | | | | 11,261 | | | 11,161 | | | 11,149 | | | 0.99 | % |
Beacon Pointe Harmony, LLC | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2)(4) | | 6.70% (L + 5.25%/S) | | 12/29/2021 | | 12/29/2028 | | 10,190 | | | 10,094 | | | 10,088 | | | |
| | First lien (4)(5) - Drawn | | 7.43% (L + 5.25%/Q) | | 12/29/2021 | | 12/29/2028 | | 993 | | | 984 | | | 984 | | | |
| | | | | | | | | | 11,183 | | | 11,078 | | | 11,072 | | | 0.98 | % |
NMC Crimson Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.97% (L + 6.00%/Q) | | 3/1/2021 | | 3/1/2028 | | 11,101 | | | 10,960 | | | 11,011 | | | 0.98 | % |
GC Waves Holdings, Inc. | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2)(4) | | 7.17% (L + 5.50%/M) | | 8/12/2021 | | 8/13/2026 | | 10,604 | | | 10,515 | | | 10,604 | | | 0.94 | % |
Maverick Bidco Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien (4) | | 7.99% (L + 6.75%/Q) | | 4/29/2021 | | 5/18/2029 | | 10,200 | | | 10,174 | | | 10,092 | | | 0.90 | % |
CRCI Longhorn Holdings, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien (4) | | 8.87% (L + 7.25%/M) | | 7/16/2021 | | 8/10/2026 | | 10,000 | | | 9,979 | | | 9,782 | | | 0.87 | % |
Coyote Buyer, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (2)(4) | | 7.00% (L + 6.00%/S) | | 3/13/2020 | | 2/6/2026 | | 8,102 | | | 8,076 | | | 8,102 | | | |
| | First lien (2)(4) | | 10.25% (L + 8.00%/Q) | | 10/15/2020 | | 8/6/2026 | | 1,458 | | | 1,447 | | | 1,458 | | | |
| | First lien (4)(5) - Drawn | | 7.54% (L + 6.00%/Q) | | 3/13/2020 | | 2/6/2025 | | 178 | | | 178 | | | 178 | | | |
| | | | | | | | | | 9,738 | | | 9,701 | | | 9,738 | | | 0.87 | % |
KPSKY Acquisition Inc. | | | | | | | | | | | | | | | | |
Industrial Services | | First lien (2)(4) | | 7.14% (L + 5.50%/M) | | 10/19/2021 | | 10/19/2028 | | 8,633 | | | 8,554 | | | 8,547 | | | |
| | First lien (4)(5) - Drawn | | 9.25% (P + 4.50%/Q) | | 10/19/2021 | | 10/19/2028 | | 931 | | | 922 | | | 921 | | | |
| | | | | | | | | | 9,564 | | | 9,476 | | | 9,468 | | | 0.84 | % |
Infogain Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.99% (L + 5.75%/Q) | | 7/30/2021 | | 7/28/2028 | | 9,198 | | | 9,137 | | | 9,117 | | | |
| | First lien (4)(5) - Drawn | | 6.96% (L + 5.75%/Q) | | 7/30/2021 | | 7/30/2026 | | 139 | | | 140 | | | 138 | | | |
| | | | | | | | | | 9,337 | | | 9,277 | | | 9,255 | | | 0.82 | % |
Huskies Parent, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (2)(4) | | 7.11% (L + 5.50%/Q) | | 12/31/2021 | | 11/3/2028 | | 8,504 | | | 8,444 | | | 8,440 | | | |
| | First lien (4)(5) - Drawn | | 7.18% (L + 5.50%/Q) | | 12/31/2021 | | 11/3/2027 | | 383 | | | 381 | | | 380 | | | |
| | | | | | | | | | 8,887 | | | 8,825 | | | 8,820 | | | 0.78 | % |
Trinity Air Consultants Holdings Corporation | | | | | | | | | | | | | | | | |
Business Services | | First lien (2)(4) | | 7.08% (L + 5.25%/S) | | 6/30/2021 | | 6/29/2027 | | 7,449 | | | 7,384 | | | 7,374 | | | |
| | First lien (4)(5) - Drawn | | 6.85% (L + 5.25%/S) | | 6/30/2021 | | 6/29/2027 | | 1,399 | | | 1,386 | | | 1,385 | | | |
| | | | | | | | | | 8,848 | | | 8,770 | | | 8,759 | | | 0.78 | % |
CG Group Holdings, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (2)(4) | | 9.50% (L + 5.25% + 2.00% PIK/Q) | | 7/19/2021 | | 7/19/2027 | | 8,274 | | | 8,193 | | | 7,746 | | | |
| | First lien (4)(5) - Drawn | | 8.92% (L + 5.25% + 2.00% PIK/M) | | 7/19/2021 | | 7/19/2026 | | 907 | | | 899 | | | 849 | | | |
| | | | | | | | | | 9,181 | | | 9,092 | | | 8,595 | | | 0.76 | % |
Mamba Purchaser, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien | | 8.10% (L + 6.50%/M) | | 9/29/2021 | | 10/15/2029 | | 8,709 | | | 8,656 | | | 8,393 | | | 0.75 | % |
The accompanying notes are an integral part of these consolidated financial statements.
13
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Radwell Parent, LLC | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (4) | | 7.90% (SOFR + 5.75%/Q) | | 3/11/2022 | | 4/1/2029 | | $ | 8,427 | | | $ | 8,366 | | | $ | 8,363 | | | 0.74 | % |
Smile Doctors LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4) | | 7.25% (L + 5.75%/Q) | | 2/14/2022 | | 12/23/2028 | | 7,445 | | | 7,410 | | | 7,409 | | | |
| | First lien (4) | | 7.57% (L + 5.75%/S) | | 2/14/2022 | | 12/23/2028 | | 536 | | | 529 | | | 533 | | | |
| | | | | | | | | | 7,981 | | | 7,939 | | | 7,942 | | | 0.70 | % |
Community Brands ParentCo, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 7.38% (SOFR + 5.75%/M) | | 2/24/2022 | | 2/24/2028 | | 7,199 | | | 7,130 | | | 7,114 | | | 0.63 | % |
Allworth Financial Group, L.P. | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2)(4) | | 6.38% (SOFR + 4.75%/M) | | 1/10/2022 | | 12/23/2026 | | 5,122 | | | 5,075 | | | 5,122 | | | |
| | First lien (4) | | 6.38% (SOFR + 4.75%/M) | | 1/10/2022 | | 12/23/2026 | | 1,550 | | | 1,534 | | | 1,550 | | | |
| | First lien (4)(5) - Drawn | | 6.38% (SOFR + 4.75%/M) | | 1/20/2022 | | 12/23/2026 | | 409 | | | 406 | | | 409 | | | |
| | | | | | | | | | 7,081 | | | 7,015 | | | 7,081 | | | 0.63 | % |
AG Parent Holdings, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2) | | 6.67% (L + 5.00%/M) | | 7/30/2019 | | 7/31/2026 | | 7,313 | | | 7,289 | | | 7,013 | | | 0.62 | % |
Ministry Brands Holdings, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.75% (L + 5.50%/Q) | | 12/31/2021 | | 12/29/2028 | | 7,044 | | | 7,011 | | | 7,009 | | | 0.62 | % |
USIC Holdings, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 8.17% (L + 6.50%/M) | | 5/7/2021 | | 5/14/2029 | | 7,000 | | | 6,968 | | | 6,510 | | | 0.58 | % |
TMK Hawk Parent, Corp. | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (2)(4) | | 5.17% (L + 3.50%/M) | | 9/27/2019 | | 8/28/2024 | | 7,291 | | | 6,657 | | | 6,110 | | | 0.54 | % |
Calabrio, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 9.25% (L + 7.00%/Q) | | 4/16/2021 | | 4/16/2027 | | 5,979 | | | 5,942 | | | 5,979 | | | 0.53 | % |
Safety Borrower Holdings LLC | | | | | | | | | | | | | | | | |
Information Services | | First lien (2)(4) | | 7.50% (L + 5.25%/Q) | | 9/1/2021 | | 9/1/2027 | | 5,728 | | | 5,702 | | | 5,699 | | | |
| | First lien (4)(5) - Drawn | | 9.00% (P + 4.25%/Q) | | 9/1/2021 | | 9/1/2027 | | 128 | | | 128 | | | 127 | | | |
| | | | | | | | | | 5,856 | | | 5,830 | | | 5,826 | | | 0.52 | % |
PDQ.com Corporation | | | | | | | | | | | | | | | | |
Information Technology | | First lien (2)(4) | | 7.25% (L + 5.00%/Q) | | 12/30/2021 | | 8/27/2027 | | 5,686 | | | 5,658 | | | 5,657 | | | 0.50 | % |
IMO Investor Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2)(4) | | 7.65% (SOFR + 6.00%/S) | | 5/11/2022 | | 5/11/2029 | | 5,290 | | | 5,238 | | | 5,237 | | | |
| | First lien (4)(5) - Drawn | | 7.24% (SOFR + 6.00%/M) | | 5/11/2022 | | 5/11/2028 | | 63 | | | 62 | | | 62 | | | |
| | | | | | | | | | 5,353 | | | 5,300 | | | 5,299 | | | 0.47 | % |
Vectra Co. | | | | | | | | | | | | | | | | |
Business Products | | Second lien (4) | | 8.92% (L + 7.25%/M) | | 6/22/2020 | | 3/8/2026 | | 6,248 | | | 5,957 | | | 4,736 | | | 0.42 | % |
Appriss Health Holdings, Inc. (7) | | | | | | | | | | | | | | | | |
Appriss Health, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4) | | 8.25% (L + 7.25%/Q) | | 5/6/2021 | | 5/6/2027 | | 4,688 | | | 4,649 | | | 4,688 | | | 0.42 | % |
Therapy Brands Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | Second lien (2) | | 7.54% (L + 6.75%/S) | | 5/12/2021 | | 5/18/2029 | | 4,222 | | | 4,203 | | | 4,117 | | | 0.36 | % |
Cloudera, Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien (4) | | 7.67% (L + 6.00%/M) | | 8/10/2021 | | 10/8/2029 | | 4,006 | | | 3,997 | | | 3,800 | | | 0.34 | % |
MH Sub I, LLC (Micro Holding Corp.) | | | | | | | | | | | | | | | | |
Software | | Second lien | | 7.92% (L + 6.25%/M) | | 2/12/2021 | | 2/23/2029 | | 3,000 | | | 2,994 | | | 2,847 | | | 0.25 | % |
Alegeus Technologies Holding Corp. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 10.95% (L + 8.25%/A) | | 8/27/2019 | | 9/5/2024 | | 2,134 | | | 2,124 | | | 2,134 | | | 0.19 | % |
The accompanying notes are an integral part of these consolidated financial statements.
14
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Kele Holdco, Inc. | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (2)(4) | | 6.56% (L + 5.50%/M) | | 12/17/2021 | | 2/20/2026 | | $ | 1,865 | | | $ | 1,856 | | | $ | 1,865 | | | 0.16 | % |
Total Funded Debt Investments - United States | | | | | | | | | | $ | 1,904,677 | | | $ | 1,890,777 | | | $ | 1,875,860 | | | 166.69 | % |
Funded Debt Investments - United Kingdom | | | | | | | | | | | | | | | | |
Aston FinCo S.a r.l. / Aston US Finco, LLC** | | | | | | | | | | | | | | | | |
Software | | Second lien (2)(4) | | 9.92% (L + 8.25%/M) | | 10/8/2019 | | 10/8/2027 | | $ | 22,500 | | | $ | 22,375 | | | $ | 22,500 | | | 2.00 | % |
Trident Bidco Limited** | | | | | | | | | | | | | | | | |
Business Services | | First lien (2) | | 6.04% (SOFR + 5.25%/Q) | | 6/7/2022 | | 5/30/2029 | | 19,553 | | | 19,359 | | | 19,358 | | | 1.72 | % |
Total Funded Debt Investments - United Kingdom | | | | | | | | | | $ | 42,053 | | | $ | 41,734 | | | $ | 41,858 | | | 3.72 | % |
Funded Debt Investments - Netherlands | | | | | | | | | | | | | | | | |
Tahoe Finco, LLC** | | | | | | | | | | | | | | | | |
Information Technology | | First lien (2)(4) | | 7.12% (L + 6.00%/M) | | 10/1/2021 | | 9/29/2028 | | $ | 32,801 | | | $ | 32,501 | | | $ | 32,473 | | | 2.89 | % |
Total Funded Debt Investments - Netherlands | | | | | | | | | | $ | 32,801 | | | $ | 32,501 | | | $ | 32,473 | | | 2.89 | % |
Funded Debt Investments - Canada | | | | | | | | | | | | | | | | |
Project Boost Purchaser, LLC** | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2) | | 9.67% (L + 8.00%/M) | | 9/17/2019 | | 5/31/2027 | | $ | 12,000 | | | $ | 12,000 | | | $ | 11,610 | | | 1.03 | % |
Total Funded Debt Investments - Canada | | | | | | | | | | $ | 12,000 | | | $ | 12,000 | | | $ | 11,610 | | | 1.03 | % |
Funded Debt Investments - United Arab Emirates | | | | | | | | | | | | | | | | |
GEMS Menasa (Cayman) Limited** | | | | | | | | | | | | | | | | |
Education | | First lien | | 6.57% (L + 5.00%/Q) | | 7/30/2019 | | 7/31/2026 | | $ | 8,402 | | | $ | 8,373 | | | $ | 7,951 | | | 0.71 | % |
Total Funded Debt Investments - United Arab Emirates | | | | | | | | | | $ | 8,402 | | | $ | 8,373 | | | $ | 7,951 | | | 0.71 | % |
Total Funded Debt Investments | | | | | | | | | | $ | 1,999,933 | | | $ | 1,985,385 | | | $ | 1,969,752 | | | 175.04 | % |
Equity - United States | | | | | | | | | | | | | | | | |
Dealer Tire Holdings, LLC(10) | | | | | | | | | | | | | | | | |
Distribution & Logistics | | Preferred shares (4) | | — | | 9/13/2021 | | — | | 30,082 | | | $ | 32,268 | | | $ | 31,965 | | | 2.84 | % |
OEC Holdco, LLC (12) | | | | | | | | | | | | | | | | |
Business Services | | Preferred shares (3)(4) | | — | | 12/17/2021 | | — | | 17,786 | | | 18,653 | | | 18,362 | | | 1.63 | % |
ACI Parent Inc. (11) | | | | | | | | | | | | | | | | |
Healthcare Services | | Preferred shares (4) | | — | | 8/2/2021 | | — | | 12,500 | | | 13,770 | | | 13,757 | | | 1.22 | % |
Knockout Intermediate Holdings I Inc. (14) | | | | | | | | | | | | | | | | |
Software | | Preferred shares | | — | | 6/23/2022 | | — | | 9,061 | | | 8,948 | | | 8,948 | | | 0.80 | % |
Project Essential Topco, Inc. (8) | | | | | | | | | | | | | | | | |
Project Essential Super Parent, Inc. | | | | | | | | | | | | | | | | |
Software | | Preferred shares (4) | | — | | 4/20/2021 | | — | | 5,000 | | | 5,584 | | | 5,576 | | | 0.49 | % |
Diamond Parent Holdings Corp. (9) | | | | | | | | | | | | | | | | |
Diligent Preferred Issuer, Inc. | | | | | | | | | | | | | | | | |
Software | | Preferred shares (4) | | — | | 4/6/2021 | | — | | 5,000 | | | 5,469 | | | 5,468 | | | 0.49 | % |
Appriss Health Holdings, Inc. (7) | | | | | | | | | | | | | | | | |
Appriss Health Intermediate Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | Preferred shares (4) | | — | | 5/6/2021 | | — | | 1,167 | | | 1,305 | | | 1,319 | | | 0.12 | % |
The accompanying notes are an integral part of these consolidated financial statements.
15
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Pioneer Topco I, L.P. (13) | | | | | | | | | | | | | | | | |
Software | | Ordinary shares (4) | | — | | 11/1/2021 | | — | | 10 | | | $ | — | | | $ | — | | | — | % |
Total Shares - United States | | | | | | | | | | | | $ | 85,997 | | | $ | 85,395 | | | 7.59 | % |
Total Shares | | | | | | | | | | | | $ | 85,997 | | | $ | 85,395 | | | 7.59 | % |
Total Funded Investments | | | | | | | | | | | | $ | 2,071,382 | | | $ | 2,055,147 | | | 182.63 | % |
Unfunded Debt Investments - United States | | | | | | | | | | | | | | | | |
Allworth Financial Group, L.P. | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Undrawn | | — | | 1/20/2022 | | 1/20/2024 | | $ | 4,708 | | | $ | — | | | $ | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 1/10/2022 | | 12/23/2026 | | 1,573 | | | (14) | | | — | | | |
| | | | | | | | | | 6,281 | | | (14) | | | — | | | — | % |
Coyote Buyer, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (4)(5) - Undrawn | | — | | 3/13/2020 | | 2/6/2025 | | 414 | | | (2) | | | — | | | — | % |
Appriss Health Holdings, Inc. (7) | | | | | | | | | | | | | | | | |
Appriss Health, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 5/6/2021 | | 5/6/2027 | | 313 | | | (3) | | | — | | | — | % |
Bullhorn, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 10/5/2021 | | 11/8/2022 | | 1,382 | | | (3) | | | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 9/24/2019 | | 9/30/2026 | | 964 | | | (4) | | | — | | | |
| | | | | | | | | | 2,346 | | | (7) | | | — | | | — | % |
Calabrio, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 4/16/2021 | | 4/16/2027 | | 720 | | | (4) | | | — | | | — | % |
CFS Management, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 2/15/2022 | | 2/15/2024 | | 1,036 | | | (6) | | | — | | | — | % |
DCA Investment Holding, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 3/12/2021 | | 3/10/2023 | | 1,443 | | | — | | | — | | | — | % |
Diamond Parent Holdings Corp. (9) | | | | | | | | | | | | | | | | |
Diligent Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 8/4/2020 | | 8/4/2025 | | 1,167 | | | (15) | | | — | | | — | % |
DOCS, MSO, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (5) - Undrawn | | — | | 6/1/2022 | | 6/3/2024 | | 7,412 | | | — | | | — | | | |
| | First lien (5) - Undrawn | | — | | 6/1/2022 | | 6/1/2028 | | 1,977 | | | — | | | — | | | |
| | | | | | | | | | 9,389 | | | — | | | — | | | — | % |
Granicus, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 4/23/2021 | | 4/21/2023 | | 911 | | | — | | | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 1/27/2021 | | 1/29/2027 | | 1,207 | | | (7) | | | — | | | |
| | | | | | | | | | 2,118 | | | (7) | | | — | | | — | % |
GS AcquisitionCo, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 10/7/2021 | | 11/2/2022 | | 7,987 | | | — | | | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 2/6/2020 | | 5/22/2026 | | 1,772 | | | (11) | | | — | | | |
| | | | | | | | | | 9,759 | | | (11) | | | — | | | — | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
16
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
MRI Software LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 2/11/2022 | | 8/16/2023 | | $ | 4,347 | | | $ | — | | | $ | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 1/31/2020 | | 2/10/2026 | | 1,170 | | | (4) | | | — | | | |
| | | | | | | | | | 5,517 | | | (4) | | | — | | | — | % |
Pye-Barker Fire & Safety, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 11/26/2021 | | 11/26/2023 | | 6,874 | | | — | | | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 11/26/2021 | | 11/26/2024 | | 741 | | | (6) | | | — | | | |
| | | | | | | | | | 7,615 | | | (6) | | | — | | | — | % |
Relativity ODA LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 5/12/2021 | | 5/12/2027 | | 1,439 | | | (15) | | | — | | | — | % |
Wealth Enhancement Group, LLC | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Undrawn | | — | | 8/13/2021 | | 6/3/2022 | | 6,601 | | | (35) | | | — | | | |
| | First lien (4)(5) - Undrawn | | — | | 8/13/2021 | | 10/4/2027 | | 1,658 | | | (4) | | | — | | | |
| | | | | | | | | | 8,259 | | | (39) | | | — | | | — | % |
YLG Holdings, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 10/22/2021 | | 10/22/2023 | | 10,490 | | | — | | | — | | | — | % |
KPSKY Acquisition Inc. | | | | | | | | | | | | | | | | |
Industrial Services | | First lien (4)(5) - Undrawn | | — | | 10/19/2021 | | 10/19/2023 | | 60 | | | — | | | (1) | | | (0.00) | % |
Recorded Future, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 8/26/2019 | | 7/3/2025 | | 1,630 | | | (7) | | | (8) | | | (0.00) | % |
Safety Borrower Holdings LLC | | | | | | | | | | | | | | | | |
Information Services | | First lien (4)(5) - Undrawn | | — | | 9/1/2021 | | 9/1/2027 | | 384 | | | (2) | | | (2) | | | |
| | First lien (4)(5) - Undrawn | | — | | 9/1/2021 | | 9/1/2022 | | 1,279 | | | — | | | (6) | | | |
| | | | | | | | | | 1,663 | | | (2) | | | (8) | | | (0.00) | % |
Huskies Parent, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 12/31/2021 | | 11/3/2027 | | 341 | | | (3) | | | (3) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/31/2021 | | 11/3/2023 | | 751 | | | — | | | (6) | | | |
| | | | | | | | | | 1,092 | | | (3) | | | (9) | | | (0.00) | % |
Associations, Inc. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 7/2/2021 | | 7/2/2027 | | 1,772 | | | (7) | | | (9) | | | (0.00) | % |
Radwell Parent, LLC | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (4)(5) - Undrawn | | — | | 3/11/2022 | | 4/1/2028 | | 449 | | | (3) | | | (3) | | | |
| | First lien (4)(5) - Undrawn | | — | | 3/11/2022 | | 4/1/2024 | | 1,124 | | | (8) | | | (8) | | | |
| | | | | | | | | | 1,573 | | | (11) | | | (11) | | | (0.00) | % |
Project Essential Topco, Inc. (8) | | | | | | | | | | | | | | | | |
Project Essential Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 4/20/2021 | | 4/20/2027 | | 2,259 | | | (16) | | | (12) | | | (0.00) | % |
CG Group Holdings, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (4)(5) - Undrawn | | — | | 7/19/2021 | | 7/19/2026 | | 226 | | | (3) | | | (14) | | | (0.00) | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
17
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Ministry Brands Holdings, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 12/31/2021 | | 12/30/2027 | | $ | 678 | | | $ | (3) | | | $ | (3) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/31/2021 | | 12/30/2023 | | 2,260 | | | — | | | (11) | | | |
| | | | | | | | | | 2,938 | | | (3) | | | (14) | | | (0.00) | % |
Community Brands ParentCo, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 2/24/2022 | | 2/24/2028 | | 425 | | | (4) | | | (5) | | | |
| | First lien (4)(5) - Undrawn | | — | | 2/24/2022 | | 2/26/2024 | | 849 | | | — | | | (10) | | | |
| | | | | | | | | | 1,274 | | | (4) | | | (15) | | | (0.00) | % |
Infogain Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 7/30/2021 | | 7/30/2026 | | 1,714 | | | (13) | | | (15) | | | (0.00) | % |
Sun Acquirer Corp. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 9/8/2021 | | 9/8/2027 | | 503 | | | (5) | | | (5) | | | |
| | First lien (4)(5) - Undrawn | | — | | 9/8/2021 | | 9/8/2023 | | 1,290 | | | (10) | | | (13) | | | |
| | | | | | | | | | 1,793 | | | (15) | | | (18) | | | (0.00) | % |
Trinity Air Consultants Holdings Corporation | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 6/30/2021 | | 6/29/2027 | | 727 | | | (6) | | | (7) | | | |
| | First lien (4)(5) - Undrawn | | — | | 6/30/2021 | | 6/29/2023 | | 1,145 | | | — | | | (11) | | | |
| | | | | | | | | | 1,872 | | | (6) | | | (18) | | | (0.00) | % |
IMO Investor Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 5/11/2022 | | 5/11/2028 | | 567 | | | (6) | | | (6) | | | |
| | First lien (4)(5) - Undrawn | | — | | 5/11/2022 | | 5/13/2024 | | 1,260 | | | — | | | (13) | | | |
| | | | | | | | | | 1,827 | | | (6) | | | (19) | | | (0.00) | % |
IG Investments Holdings, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 9/22/2021 | | 9/22/2027 | | 2,249 | | | (22) | | | (22) | | | (0.00) | % |
OB Hospitalist Group, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 9/21/2021 | | 9/27/2027 | | 2,253 | | | (23) | | | (23) | | | (0.00) | % |
Knockout Intermediate Holdings I Inc. (14) | | | | | | | | | | | | | | | | |
Kaseya Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (5) - Undrawn | | — | | 6/23/2022 | | 6/24/2024 | | 1,578 | | | — | | | (12) | | | |
| | First lien (5) - Undrawn | | — | | 6/23/2022 | | 6/25/2029 | | 1,578 | | | (12) | | | (12) | | | |
| | | | | | | | | | 3,156 | | | (12) | | | (24) | | | (0.00) | % |
Daxko Acquisition Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/16/2023 | | 708 | | | — | | | (9) | | | |
| | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/15/2027 | | 1,331 | | | (12) | | | (17) | | | |
| | | | | | | | | | 2,039 | | | (12) | | | (26) | | | (0.00) | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
18
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Specialtycare, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 6/18/2021 | | 6/18/2026 | | $ | 280 | | | $ | (3) | | | $ | (6) | | | |
| | First lien (4)(5) - Undrawn | | — | | 6/18/2021 | | 6/18/2023 | | 1,015 | | | (5) | | | (22) | | | |
| | | | | | | | | | 1,295 | | | (8) | | | (28) | | | (0.00) | % |
TigerConnect, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4)(5) - Undrawn | | — | | 2/16/2022 | | 2/16/2023 | | 759 | | | — | | | (8) | | | |
| | First lien (4)(5) - Undrawn | | — | | 2/16/2022 | | 2/16/2028 | | 2,630 | | | (25) | | | (26) | | | |
| | | | | | | | | | 3,389 | | | (25) | | | (34) | | | (0.00) | % |
KWOR Acquisition, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (5) - Undrawn | | — | | 12/22/2021 | | 12/22/2027 | | 4,890 | | | (37) | | | (37) | | | (0.00) | % |
NMC Crimson Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 3/1/2021 | | 3/1/2023 | | 4,898 | | | — | | | (40) | | | (0.00) | % |
Ocala Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 12/27/2021 | | 5/24/2024 | | 3,196 | | | — | | | (40) | | | (0.00) | % |
Pioneer Topco I, L.P. (13) | | | | | | | | | | | | | | | | |
Pioneer Buyer I, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 11/1/2021 | | 11/1/2027 | | 4,008 | | | (36) | | | (40) | | | (0.00) | % |
Bottomline Technologies, Inc. | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Undrawn | | — | | 5/12/2022 | | 5/15/2028 | | 4,156 | | | (41) | | | (41) | | | (0.00) | % |
Businessolver.com, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 12/1/2021 | | 12/1/2023 | | 6,622 | | | — | | | (42) | | | (0.00) | % |
Therapy Brands Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | Second lien (2)(5) - Undrawn | | — | | 5/12/2021 | | 5/18/2023 | | 1,778 | | | — | | | (44) | | | (0.00) | % |
ACI Parent Inc. (11) | | | | | | | | | | | | | | | | |
ACI Group Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 8/2/2021 | | 8/2/2027 | | 1,144 | | | (10) | | | (11) | | | |
| | First lien (4)(5) - Undrawn | | — | | 8/2/2021 | | 8/2/2023 | | 3,534 | | | — | | | (35) | | | |
| | | | | | | | | | 4,678 | | | (10) | | | (46) | | | (0.00) | % |
Beacon Pointe Harmony, LLC | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Undrawn | | — | | 12/29/2021 | | 12/29/2027 | | 1,057 | | | (10) | | | (11) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/29/2021 | | 6/29/2023 | | 4,291 | | | — | | | (42) | | | |
| | | | | | | | | | 5,348 | | | (10) | | | (53) | | | (0.01) | % |
AmeriVet Partners Management, Inc. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 2/25/2022 | | 2/25/2028 | | 1,214 | | | (6) | | | (6) | | | |
| | First lien (4)(5) - Undrawn | | — | | 2/25/2022 | | 2/25/2024 | | 9,710 | | | — | | | (49) | | | |
| | | | | | | | | | 10,924 | | | (6) | | | (55) | | | (0.01) | % |
CCBlue Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 12/20/2021 | | 12/21/2023 | | 5,827 | | | — | | | (58) | | | (0.01) | % |
The accompanying notes are an integral part of these consolidated financial statements.
19
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Notorious Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Products | | First lien (4)(5) - Undrawn | | — | | 11/23/2021 | | 5/24/2027 | | $ | 2,048 | | | $ | (15) | | | $ | (15) | | | |
| | First lien (4)(5) - Undrawn | | — | | 11/23/2021 | | 11/23/2023 | | 6,023 | | | — | | | (45) | | | |
| | | | | | | | | | 8,071 | | | (15) | | | (60) | | | (0.01) | % |
FS WhiteWater Borrower, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 12/20/2021 | | 12/21/2027 | | 1,776 | | | (18) | | | (18) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/20/2021 | | 12/21/2023 | | 4,373 | | | — | | | (44) | | | |
| | | | | | | | | | 6,149 | | | (18) | | | (62) | | | (0.01) | % |
PDQ.com Corporation | | | | | | | | | | | | | | | | |
Information Technology | | First lien (4)(5) - Undrawn | | — | | 12/30/2021 | | 8/28/2023 | | 14,286 | | | — | | | (71) | | | (0.01) | % |
Diamondback Acquisition, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 9/13/2021 | | 9/13/2023 | | 7,203 | | | — | | | (72) | | | (0.01) | % |
Foreside Financial Group, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 5/26/2022 | | 9/30/2027 | | 1,790 | | | (18) | | | (18) | | | |
| | First lien (4)(5) - Undrawn | | — | | 5/26/2022 | | 5/26/2024 | | 5,966 | | | — | | | (60) | | | |
| | | | | | | | | | 7,756 | | | (18) | | | (78) | | | (0.01) | % |
OA Buyer, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 12/20/2021 | | 12/20/2028 | | 5,959 | | | (55) | | | (79) | | | (0.01) | % |
DECA Dental Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 8/26/2021 | | 8/26/2027 | | 1,528 | | | (15) | | | (15) | | | |
| | First lien (4)(5) - Undrawn | | — | | 8/26/2021 | | 8/28/2023 | | 6,875 | | | — | | | (69) | | | |
| | | | | | | | | | 8,403 | | | (15) | | | (84) | | | (0.01) | % |
USRP Holdings, Inc. | | | | | | | | | | | | | | | | |
Federal Services | | First lien (4)(5) - Undrawn | | — | | 7/22/2021 | | 7/23/2027 | | 432 | | | (4) | | | (4) | | | |
| | First lien (4)(5) - Undrawn | | — | | 7/22/2021 | | 7/23/2023 | | 8,516 | | | — | | | (85) | | | |
| | | | | | | | | | 8,948 | | | (4) | | | (89) | | | (0.01) | % |
Fortis Solutions Group, LLC | | | | | | | | | | | | | | | | |
Packaging | | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/15/2027 | | 2,733 | | | (27) | | | (27) | | | |
| | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/13/2023 | | 2,782 | | | — | | | (28) | | | |
| | First lien (4)(5) - Undrawn | | — | | 6/24/2022 | | 6/24/2024 | | 5,001 | | | — | | | (50) | | | |
| | | | | | | | | | 10,516 | | | (27) | | | (105) | | | (0.01) | % |
Al Altius US Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 12/20/2021 | | 12/13/2023 | | 9,300 | | | — | | | (158) | | | (0.02) | % |
GraphPAD Software, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 4/28/2021 | | 4/27/2027 | | 1,500 | | | (6) | | | (22) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/1/2021 | | 11/29/2023 | | 9,932 | | | (44) | | | (138) | | | |
| | | | | | | | | | 11,432 | | | (50) | | | (160) | | | (0.02) | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
20
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Galway Borrower LLC | | | | | | | | | | | | | | | | |
Insurance Services | | First lien (5) - Undrawn | | — | | 9/30/2021 | | 9/30/2027 | | $ | 2,519 | | | $ | (22) | | | $ | (69) | | | |
| | First lien (5) - Undrawn | | — | | 9/30/2021 | | 9/29/2023 | | 3,721 | | | — | | | (102) | | | |
| | | | | | | | | | 6,240 | | | (22) | | | (171) | | | (0.02) | % |
VetCor Professional Practices LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 12/3/2021 | | 7/2/2024 | | 3,137 | | | (12) | | | — | | | |
| | Second lien (4)(5) - Undrawn | | — | | 12/3/2021 | | 12/4/2023 | | 21,202 | | | — | | | (187) | | | |
| | | | | | | | | | 24,339 | | | (12) | | | (187) | | | (0.02) | % |
Paw Midco, Inc. | | | | | | | | | | | | | | | | |
AAH Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 12/22/2021 | | 12/22/2027 | | 2,427 | | | (22) | | | (24) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/22/2021 | | 12/22/2023 | | 22,329 | | | — | | | (223) | | | |
| | | | | | | | | | $ | 24,756 | | | $ | (22) | | | $ | (247) | | | (0.02) | % |
Total Unfunded Debt Investments - United States | | | | | | | | | | $ | 314,063 | | | $ | (729) | | | $ | (2,447) | | | (0.22) | % |
Unfunded Debt Investments - Netherlands | | | | | | | | | | | | | | | | |
Tahoe Finco, LLC** | | | | | | | | | | | | | | | | |
Information Technology | | First lien (4)(5) - Undrawn | | — | | 10/1/2021 | | 10/1/2027 | | $ | 2,460 | | | $ | (21) | | | $ | (25) | | | (0.00) | % |
Total Unfunded Debt Investments - Netherlands | | | | | | | | | | $ | 2,460 | | | $ | (21) | | | $ | (25) | | | (0.00) | % |
Total Unfunded Debt Investments | | | | | | | | | | $ | 316,523 | | | $ | (750) | | | $ | (2,472) | | | (0.22) | % |
Total Non-Controlled/Non-Affiliated Investments | | | | | | | | | | | | $ | 2,070,632 | | | $ | 2,052,675 | | | 182.41 | % |
Total Investments | | | | | | | | | | | | $ | 2,070,632 | | | $ | 2,052,675 | | | 182.41 | % |
(1)New Mountain Guardian III BDC, L.L.C. (the “Company”"Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”"Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities”"restricted securities" under the Securities Act. (2)Investment is pledged as collateral for the Wells Credit Facility, a revolving credit facility among the Company as Collateral Manager,collateral manager, New Mountain Guardian III SPV, L.L.C. (“("GIII SPV”SPV") as the Borrower,borrower, Wells Fargo Bank, National Association as the Administrative Agent,administrative agent, and Collateral Custodian.collateral custodian, and the lenders party thereto. See Note 6. Borrowings, for details. (3)Investment is held in New Mountain Guardian III OEC, Inc.
(4)The fair value of the Company’sCompany's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details. (4)(5)Par Valuevalue amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.(6)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), Secured Overnight Financing Rate (SOFR), the Prime Rate (P) and the alternative base rate (Base) and which resets monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment, the current interest rate provided reflects the rate in effect as of June 30, 2022.
(7)The Company holds investments in two wholly-owned subsidiaries of Appriss Health Holdings, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Health, LLC, and preferred equity in Appriss Health Intermediate Holdings, Inc. The preferred equity in Appriss Health Intermediate Holdings, Inc. is entitled to receive cumulative preferential dividends at a rate of 11.00% per annum.
(8)The Company holds investments in two subsidiaries of Project Essential Topco, Inc. The Company holds a first lien term loan and first lien revolver in Project Essential Bidco, Inc. and preferred equity in Project Essential Super Parent, Inc. The preferred equity in Project Essential Super Parent, Inc. is entitled to receive cumulative preferential dividends at a rate of L + 9.50% per annum.
(9)The Company holds investments in two wholly-owned subsidiaries of Diamond Parent Holdings Corp. The Company holds three first lien term loans, two first lien delayed draws and a first lien revolver in Diligent Corporation and preferred equity in Diligent Preferred Issuer Inc. The preferred equity in Diligent Preferred Issuer, Inc. is entitled to receive cumulative preferential dividends at a rate of 10.50% per annum.
(10)The Company holds preferred equity in Dealer Tire Holdings, LLC., that is entitled to receive cumulative preferential dividends at a rate of 7.00% per annum.
The accompanying notes are an integral part of these consolidated financial statements.
21
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(in thousands, except shares)
(unaudited)
(11)The Company holds investments in ACI Parent Inc. and a wholly-owned subsidiary of ACI Parent Inc. The Company holds a first lien term loan, a first lien delayed draw and a first lien revolver in ACI Group Holdings, Inc. and preferred equity in ACI Parent Inc. The preferred equity in ACI Parent Inc. is entitled to receive cumulative preferential dividends at a rate of 11.75% per annum.
(12)The Company holds investments in OEC Holdco, LLC, and a wholly-owned subsidiary of OEC Holdco, LLC. The Company holds two second lien term loans in OEConnection LLC, and preferred equity in OEC Holdco, LLC. The preferred equity is entitled to receive preferential dividends at a rate of 11.00% per annum.
(13)The Company holds investments in Pioneer Topco I, L.P. and a wholly-owned subsidiary of Pioneer Topco I, L.P. The Company holds two first lien term loans and a first lien revolver in Pioneer Buyer I, LLC, and common equity in Pioneer Topco I, L.P.
(14)The Company holds preferred equity in Knockout Intermediate Holdings I Inc. and a first lien term loan, a first lien revolver and a first lien delayed draw in Kaseya, Inc., a wholly-owned subsidiary of Knockout Intermediate Holdings I, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of 11.75% per annum.
* All or a portion of interest contains payment-in-kind ("PIK") interest. See Note 2. Summary of Significant Accounting Policies—Revenue Recognition, for details.
** Indicates assets that the Company deems to be "non-qualifying assets" under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70.0% of the Company's total assets at the time of acquisition of any additional non-qualifying assets. As of June 30, 2022, 4.50% of the Company's total assets are represented by investments at fair value that are considered non-qualifying assets.
The accompanying notes are an integral part of these consolidated financial statements.
22
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
June 30, 2022
(unaudited)
| | | | | | | | |
| | June 30, 2022 |
Investment Type | | Percent of Total Investments at Fair Value |
First lien | | 76.91 | % |
Second lien | | 18.44 | % |
Subordinated | | 0.49 | % |
Equity and other | | 4.16 | % |
Total investments | | 100.00 | % |
| | | | | | | | |
| | June 30, 2022 |
Industry Type | | Percent of Total Investments at Fair Value |
Software | | 33.47 | % |
Business Services | | 15.92 | % |
Healthcare Services | | 13.98 | % |
Consumer Services | | 8.05 | % |
Financial Services | | 7.21 | % |
Healthcare Information Technology | | 6.02 | % |
Distribution & Logistics | | 3.74 | % |
Education | | 2.09 | % |
Consumer Products | | 2.08 | % |
Information Technology | | 1.85 | % |
Insurance Services | | 1.72 | % |
Packaging | | 1.29 | % |
Specialty Chemicals & Materials | | 0.89 | % |
Federal Services | | 0.72 | % |
Industrial Services | | 0.46 | % |
Information Services | | 0.28 | % |
Business Products | | 0.23 | % |
Total investments | | 100.00 | % |
| | | | | | | | |
| | June 30, 2022 |
Interest Rate Type | | Percent of Total Investments at Fair Value |
Floating rates | | 95.63 | % |
Fixed rates | | 4.37 | % |
Total investments | | 100.00 | % |
The accompanying notes are an integral part of these consolidated financial statements.
23
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Non-Controlled/Non-Affiliated Investments | | | | | | | | | | | | | | | | |
Funded Debt Investments - United States | | | | | | | | | | | | | | | | |
Recorded Future, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 7.00% (L + 6.00%/Q) | | 12/30/2021 | | 7/3/2025 | | $ | 42,500 | | | $ | 42,288 | | | $ | 42,288 | | | |
| | First lien | | 7.00% (L + 6.00%/Q) | | 8/26/2019 | | 7/3/2025 | | 13,515 | | | 13,439 | | | 13,448 | | | |
| | | | | | | | | | 56,015 | | | 55,727 | | | 55,736 | | | 6.10 | % |
OA Buyer, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2) | | 6.75% (L + 6.00%/Q) | | 12/20/2021 | | 12/20/2028 | | 46,682 | | | 46,217 | | | 46,215 | | | 5.06 | % |
GS Acquisitionco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.75% (L + 5.75%/S) | | 2/6/2020 | | 5/22/2026 | | 44,621 | | | 44,435 | | | 44,621 | | | |
| | First lien (4)(5) - Drawn | | 6.75% (L + 5.75%/Q) | | 2/6/2020 | | 5/22/2026 | | 1,122 | | | 1,119 | | | 1,122 | | | |
| | | | | | | | | | 45,743 | | | 45,554 | | | 45,743 | | | 5.00 | % |
Diamondback Acquisition, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.25% (L + 5.50%/M) | | 9/13/2021 | | 9/13/2028 | | 43,059 | | | 42,644 | | | 42,629 | | | 4.66 | % |
Notorious Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Products | | First lien (2)(4) | | 7.50% (L + 6.50%/Q) | | 11/23/2021 | | 11/23/2027 | | 41,680 | | | 41,373 | | | 41,368 | | | |
| | First lien (4)(5) - Drawn | | 7.50% (L + 6.50%/Q) | | 11/23/2021 | | 5/24/2027 | | 602 | | | 598 | | | 598 | | | |
| | | | | | | | | | 42,282 | | | 41,971 | | | 41,966 | | | 4.59 | % |
KWOR Acquisition, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (2) | | 6.00% (L + 5.25%/M) | | 12/22/2021 | | 12/22/2028 | | 40,700 | | | 40,394 | | | 40,394 | | | |
| | First lien (5) - Drawn | | 7.50% (P + 4.25%/Q) | | 12/22/2021 | | 12/22/2027 | | 565 | | | 561 | | | 561 | | | |
| | | | | | | | | | 41,265 | | | 40,955 | | | 40,955 | | | 4.48 | % |
IG Investments Holdings, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (2)(4) | | 6.75% (L + 6.00%/Q) | | 9/22/2021 | | 9/22/2028 | | 39,738 | | | 39,354 | | | 39,341 | | | |
| | First lien (4)(5) - Drawn | | 6.75% (L + 6.00%/M) | | 9/22/2021 | | 9/22/2027 | | 1,551 | | | 1,537 | | | 1,536 | | | |
| | | | | | | | | | 41,289 | | | 40,891 | | | 40,877 | | | 4.47 | % |
CCBlue Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2) | | 7.00% (L + 3.50% + 2.75% PIK/Q)* | | 12/20/2021 | | 12/21/2028 | | 40,259 | | | 39,859 | | | 39,857 | | | 4.36 | % |
Al Altius US Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 6.25% (L + 5.50%/S) | | 12/20/2021 | | 12/21/2028 | | 38,500 | | | 38,116 | | | 38,115 | | | 4.17 | % |
Frontline Technologies Group Holdings, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.25% (L + 5.25%/Q) | | 12/30/2020 | | 9/18/2023 | | 19,800 | | | 19,800 | | | 19,800 | | | |
| | First lien (2)(4) | | 6.25% (L + 5.25%/Q) | | 8/15/2019 | | 9/18/2023 | | 12,076 | | | 11,912 | | | 12,076 | | | |
| | First lien (2)(4) | | 6.25% (L + 5.25%/Q) | | 6/15/2021 | | 9/18/2023 | | 3,773 | | | 3,773 | | | 3,773 | | | |
| | | | | | | | | | 35,649 | | | 35,485 | | | 35,649 | | | 3.90 | % |
Galway Borrower LLC | | | | | | | | | | | | | | | | |
Insurance Services | | First lien (2)(4) | | 6.00% (L + 5.25%/Q) | | 9/30/2021 | | 9/29/2028 | | 32,785 | | | 32,467 | | | 32,457 | | | |
| | First lien (4) | | 6.00% (L + 5.25%/Q) | | 9/30/2021 | | 9/29/2028 | | 2,261 | | | 2,254 | | | 2,238 | | | |
| | | | | | | | | | 35,046 | | | 34,721 | | | 34,695 | | | 3.80 | % |
Stamps.com Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.50% (L + 5.75%/Q) | | 10/5/2021 | | 10/5/2028 | | 19,926 | | | 19,732 | | | 19,726 | | | |
| | First lien (2) | | 6.50% (L + 5.75%/Q) | | 12/13/2021 | | 10/5/2028 | | 14,439 | | | 14,295 | | | 14,294 | | | |
| | | | | | | | | | 34,365 | | | 34,027 | | | 34,020 | | | 3.72 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
24
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
DECA Dental Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.50% (L + 5.75%/Q) | | 8/26/2021 | | 8/28/2028 | | $ | 28,956 | | | $ | 28,679 | | | $ | 28,667 | | | |
| | First lien (4)(5) - Drawn | | 6.50% (L + 5.75%/Q) | | 8/26/2021 | | 8/28/2028 | | 3,048 | | | 3,019 | | | 3,018 | | | |
| | | | | | | | | | 32,004 | | | 31,698 | | | 31,685 | | | 3.47 | % |
Eisner Advisory Group LLC | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2) | | 6.00% (L + 5.25%/Q) | | 8/16/2021 | | 7/28/2028 | | 28,548 | | | 28,411 | | | 28,619 | | | |
| | First lien | | 6.00% (L + 5.25%/Q) | | 8/16/2021 | | 7/28/2028 | | 2,855 | | | 2,841 | | | 2,862 | | | |
| | | | | | | | | | 31,403 | | | 31,252 | | | 31,481 | | | 3.44 | % |
Sun Acquirer Corp. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2)(4) | | 6.50% (L + 5.75%/Q) | | 12/30/2021 | | 9/8/2028 | | 25,000 | | | 24,750 | | | 24,750 | | | |
| | First lien (2)(4) | | 6.50% (L + 5.75%/Q) | | 9/8/2021 | | 9/8/2028 | | 4,025 | | | 3,991 | | | 3,985 | | | |
| | First lien (4)(5) - Drawn | | 6.50% (L + 5.75%/Q) | | 9/8/2021 | | 9/8/2028 | | 1,585 | | | 1,570 | | | 1,569 | | | |
| | | | | | | | | | 30,610 | | | 30,311 | | | 30,304 | | | 3.31 | % |
GraphPAD Software, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2)(4) | | 6.50% (L + 5.50%/A) | | 12/1/2021 | | 4/27/2027 | | 18,209 | | | 18,119 | | | 18,119 | | | |
| | First lien (2)(4) | | 6.50% (L + 5.50%/A) | | 4/28/2021 | | 4/27/2027 | | 10,448 | | | 10,401 | | | 10,395 | | | |
| | First lien (2)(4) | | 6.50% (L + 5.50%/A) | | 10/14/2021 | | 4/27/2027 | | 1,606 | | | 1,598 | | | 1,598 | | | |
| | | | | | | | | | 30,263 | | | 30,118 | | | 30,112 | | | 3.29 | % |
Icebox Holdco III, Inc. | | | | | | | | | | | | | | | | |
Distribution & Logistics | | Second lien (2) | | 7.25% (L + 6.75%/Q) | | 12/15/2021 | | 12/21/2029 | | 30,000 | | | 29,850 | | | 29,850 | | | 3.26 | % |
Paw Midco, Inc. | | | | | | | | | | | | | | | | |
AAH Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2) | | 6.25% (L + 5.50%/Q) | | 12/22/2021 | | 12/22/2027 | | 20,388 | | | 20,185 | | | 20,184 | | | |
| | Subordinated | | 11.50% PIK/Q* | | 12/22/2021 | | 12/22/2031 | | 9,533 | | | 9,390 | | | 9,390 | | | |
| | | | | | | | | | 29,921 | | | 29,575 | | | 29,574 | | | 3.23 | % |
Ocala Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (2) | | 6.50% (L + 5.75%/Q) | | 12/27/2021 | | 11/24/2028 | | 29,913 | | | 29,539 | | | 29,539 | | | 3.23 | % |
Associations, Inc. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2)(4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 15,098 | | | 15,028 | | | 15,023 | | | |
| | First lien (4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 4,295 | | | 4,275 | | | 4,273 | | | |
| | First lien (4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 4,295 | | | 4,275 | | | 4,273 | | | |
| | First lien (4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 2,594 | | | 2,582 | | | 2,581 | | | |
| | First lien (4) | | 7.50% (L + 4.00% + 2.50% PIK/Q)* | | 7/2/2021 | | 7/2/2027 | | 2,064 | | | 2,054 | | | 2,053 | | | |
| | | | | | | | | | 28,346 | | | 28,214 | | | 28,203 | | | 3.08 | % |
CFS Management, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.50% (L + 5.50%/S) | | 8/6/2019 | | 7/1/2024 | | 22,431 | | | 22,326 | | | 22,431 | | | |
| | First lien (4)(5) - Drawn | | 6.50% (L + 5.50%/Q) | | 9/1/2021 | | 7/1/2024 | | 2,721 | | | 2,708 | | | 2,721 | | | |
| | First lien (4) | | 6.50% (L + 5.50%/S) | | 8/6/2019 | | 7/1/2024 | | 2,186 | | | 2,180 | | | 2,186 | | | |
| | | | | | | | | | 27,338 | | | 27,214 | | | 27,338 | | | 2.99 | % |
OEC Holdco, LLC (12) | | | | | | | | | | | | | | | | |
OEConnection LLC | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2) | | 7.50% (L + 7.00%/M) | | 12/17/2021 | | 9/25/2027 | | 19,234 | | | 19,043 | | | 19,042 | | | |
| | Second lien (2) | | 7.50% (L + 7.00%/M) | | 9/25/2019 | | 9/25/2027 | | 7,677 | | | 7,616 | | | 7,600 | | | |
| | | | | | | | | | 26,911 | | | 26,659 | | | 26,642 | | | 2.91 | % |
Idera, Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien | | 7.50% (L + 6.75%/S) | | 3/8/2021 | | 3/2/2029 | | 26,250 | | | 26,302 | | | 26,381 | | | 2.89 | % |
The accompanying notes are an integral part of these consolidated financial statements.
25
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Vehlo Purchaser, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 5.75% (L + 5.00%/M) | | 8/27/2021 | | 8/27/2027 | | $ | 19,539 | | | $ | 19,354 | | | $ | 19,343 | | | |
| | First lien (4)(5) - Drawn | | 5.75% (L + 5.00%/M) | | 8/27/2021 | | 8/27/2027 | | 5,667 | | | 5,613 | | 5,610 | | |
| | First lien (4)(5) - Drawn | | 5.75% (L + 5.00%/M) | | 8/27/2021 | | 8/27/2027 | | 840 | | | 833 | | 831 | | |
| | | | | | | | | | 26,046 | | | 25,800 | | 25,784 | | 2.82 | % |
Energize Holdco LLC | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2) | | 7.25% (L + 6.75%/Q) | | 11/19/2021 | | 12/7/2029 | | 24,900 | | | 24,776 | | 24,775 | | 2.71 | % |
Businessolver.com, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 6.50% (L + 5.75%/S) | | 12/1/2021 | | 12/1/2027 | | 24,595 | | | 24,473 | | 24,472 | | 2.68 | % |
FS WhiteWater Borrower, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (2) | | 6.50% (L + 5.75%/Q) | | 12/20/2021 | | 12/21/2027 | | 17,878 | | | 17,700 | | 17,700 | | |
| | First lien (5) - Drawn | | 6.50% (L + 5.75%/Q) | | 12/20/2021 | | 12/21/2027 | | 4,457 | | | 4,413 | | 4,413 | | |
| | | | | | | | | | 22,335 | | | 22,113 | | 22,113 | | 2.42 | % |
Pioneer Topco I, L.P. (13) | | | | | | | | | | | | | | | | |
Pioneer Buyer I, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 7.75% (L + 7.00% PIK/Q)* | | 11/1/2021 | | 11/1/2028 | | 22,332 | | | 22,117 | | 22,109 | | 2.42 | % |
MED Parentco, LP | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien (2) | | 8.35% (L + 8.25%/M) | | 8/2/2019 | | 8/30/2027 | | 22,000 | | | 21,870 | | 22,028 | | 2.41 | % |
Bluefin Holding, LLC | | | | | | | | | | | | | | | | |
Software | | Second lien (2)(4) | | 7.93% (L + 7.75%/Q) | | 9/6/2019 | | 9/3/2027 | | 22,000 | | | 22,000 | | 22,000 | | 2.41 | % |
Bullhorn, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.75% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 19,042 | | | 18,938 | | 19,042 | | |
| | First lien (2)(4) | | 6.75% (L + 5.75%/Q) | | 10/5/2021 | | 9/30/2026 | | 1,216 | | | 1,213 | | 1,216 | | |
| | First lien (4) | | 6.75% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 881 | | | 876 | | 881 | | |
| | First lien (4) | | 6.75% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 395 | | | 393 | | 395 | | |
| | First lien (4) | | 6.75% (L + 5.75%/Q) | | 9/24/2019 | | 9/30/2026 | | 315 | | | 313 | | 315 | | |
| | | | | | | | | | 21,849 | | | 21,733 | | 21,849 | | 2.39 | % |
Diamond Parent Holdings Corp. (9) | | | | | | | | | | | | | | | | |
Diligent Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.75% (L + 5.75%/Q) | | 3/30/2021 | | 8/4/2025 | | 8,458 | | | 8,422 | | 8,416 | | |
| | First lien (2)(4) | | 7.25% (L + 6.25%/Q) | | 8/4/2020 | | 8/4/2025 | | 7,449 | | | 7,379 | | 7,523 | | |
| | First lien (2)(4) | | 6.75% (L + 5.75%/Q) | | 3/4/2021 | | 8/4/2025 | | 4,717 | | | 4,697 | | 4,693 | | |
| | First lien (4) | | 7.25% (L + 6.25%/Q) | | 8/4/2020 | | 8/4/2025 | | 393 | | | 389 | | 397 | | |
| | | | | | | | | | 21,017 | | | 20,887 | | 21,029 | | 2.30 | % |
Fortis Solutions Group, LLC | | | | | | | | | | | | | | | | |
Packaging | | First lien (2)(4) | | 6.25% (L + 5.50%/Q) | | 10/15/2021 | | 10/13/2028 | | 21,083 | | | 20,877 | | 20,871 | | 2.28 | % |
Wealth Enhancement Group, LLC** | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Drawn | | 6.75% (L + 5.75%/Q) | | 8/13/2021 | | 10/4/2027 | | 19,382 | | | 19,336 | | 19,382 | | |
| | First lien (4)(5) - Drawn | | 6.75% (L + 5.75%/Q) | | 8/13/2021 | | 10/4/2027 | | 876 | | | 875 | | 876 | | |
| | | | | | | | | | 20,258 | | | 20,211 | | 20,258 | | 2.22 | % |
Foundational Education Group, Inc. | | | | | | | | | | | | | | | | |
Education | | Second lien | | 7.00% (L + 6.50%/S) | | 8/19/2021 | | 8/31/2029 | | 19,706 | | | 19,628 | | 19,706 | | 2.15 | % |
RealPage, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 7.25% (L + 6.50%/M) | | 2/18/2021 | | 4/23/2029 | | 19,250 | | | 19,115 | | 19,635 | | 2.15 | % |
KAMC Holdings, Inc | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2)(4) | | 8.16% (L + 8.00%/Q) | | 8/14/2019 | | 8/13/2027 | | 22,500 | | | 22,368 | | 19,622 | | 2.15 | % |
The accompanying notes are an integral part of these consolidated financial statements.
26
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
OB Hospitalist Group, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.25% (L + 5.50%/Q) | | 9/21/2021 | | 9/27/2027 | | $ | 19,465 | | | $ | 19,277 | | | $ | 19,270 | | | |
| | First lien (4)(5) - Drawn | | 6.25% (L + 5.50%/M) | | 9/21/2021 | | 9/27/2027 | | 269 | | | 267 | | 266 | | |
| | | | | | | | | | 19,734 | | | 19,544 | | 19,536 | | 2.14 | % |
HS Purchaser, LLC / Help/Systems Holdings, Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien | | 7.50% (L + 6.75%/Q) | | 5/11/2021 | | 11/19/2027 | | 18,882 | | | 18,882 | | 18,890 | | 2.07 | % |
Daxko Acquisition Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.25% (L + 5.50%/Q) | | 10/15/2021 | | 10/16/2028 | | 17,928 | | | 17,753 | | 17,748 | | 1.94 | % |
Project Essential Topco, Inc. (8) | | | | | | | | | | | | | | | | |
Project Essential Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.75% (L + 5.75%/S) | | 4/20/2021 | | 4/20/2028 | | 17,530 | | | 17,389 | | 17,377 | | 1.90 | % |
MRI Software LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.50% (L + 5.50%/S) | | 1/31/2020 | | 2/10/2026 | | 16,544 | | | 16,483 | | 16,544 | | |
| | First lien (4) | | 6.50% (L + 5.50%/S) | | 1/31/2020 | | 2/10/2026 | | 478 | | | 476 | | 478 | | |
| | First lien (2)(4) | | 6.50% (L + 5.50%/Q) | | 3/24/2021 | | 2/10/2026 | | 154 | | | 154 | | 154 | | |
| | | | | | | | | | 17,176 | | | 17,113 | | 17,176 | | 1.88 | % |
EAB Global, Inc. | | | | | | | | | | | | | | | | |
Education | | Second lien (4) | | 7.00% (L + 6.50%/S) | | 8/16/2021 | | 8/16/2029 | | 16,548 | | | 16,308 | | 16,299 | | 1.78 | % |
Pye-Barker Fire & Safety, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Drawn | | 6.25% (L + 5.50%/Q) | | 11/26/2021 | | 11/26/2027 | | 11,159 | | | 11,048 | | 11,159 | | |
| | First lien (4) | | 6.25% (L + 5.50%/Q) | | 5/19/2021 | | 11/26/2027 | | 4,988 | | | 4,944 | | 4,988 | | |
| | | | | | | | | | 16,147 | | | 15,992 | | 16,147 | | 1.77 | % |
Granicus, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.50% (L + 6.50%/Q) | | 1/27/2021 | | 1/29/2027 | | 10,722 | | | 10,651 | | 10,642 | | |
| | First lien (4) | | 7.50% (L + 6.50%/Q) | | 1/27/2021 | | 1/29/2027 | | 3,002 | | | 2,982 | | 2,980 | | |
| | First lien (4)(5) - Drawn | | 7.00% (L + 6.00%/Q) | | 4/23/2021 | | 1/29/2027 | | 1,389 | | | 1,376 | | 1,375 | | |
| | | | | | | | | | 15,113 | | | 15,009 | | 14,997 | | 1.64 | % |
USRP Holdings, Inc. | | | | | | | | | | | | | | | | |
Federal Services | | First lien (2) | | 6.25% (L + 5.50%/Q) | | 7/22/2021 | | 7/23/2027 | | 13,256 | | | 13,126 | | 13,123 | | |
| | First lien (5) - Drawn | | 6.25% (L + 5.50%/Q) | | 7/22/2021 | | 7/23/2027 | | 1,882 | | | 1,864 | | 1,863 | | |
| | First lien (5) - Drawn | | 6.25% (L + 5.50%/Q) | | 7/22/2021 | | 7/23/2027 | | 7 | | | 7 | | 7 | | |
| | | | | | | | | | 15,145 | | | 14,997 | | 14,993 | | 1.64 | % |
Relativity ODA LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 8.50% (L + 7.50% PIK/M)* | | 5/12/2021 | | 5/12/2027 | | 15,166 | | | 15,001 | | 14,976 | | 1.64 | % |
iCIMS, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.50% (L + 6.50%/S) | | 11/16/2020 | | 9/12/2024 | | 12,261 | | | 12,171 | | 12,261 | | |
| | First lien (2)(4) | | 7.50% (L + 6.50%/S) | | 8/27/2019 | | 9/12/2024 | | 2,290 | | | 2,277 | | 2,290 | | |
| | | | | | | | | | 14,551 | | | 14,448 | | 14,551 | | 1.59 | % |
New Trojan Parent, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien | | 7.75% (L + 7.25%/Q) | | 1/22/2021 | | 1/5/2029 | | 13,238 | | | 13,177 | | 13,238 | | 1.45 | % |
Syndigo LLC | | | | | | | | | | | | | | | | |
Software | | Second lien | | 8.75% (L + 8.00%/S) | | 12/14/2020 | | 12/15/2028 | | 12,500 | | | 12,422 | | 12,516 | | 1.37 | % |
VT Topco, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 7.50% (L + 6.75%/M) | | 7/30/2021 | | 7/31/2026 | | 7,837 | | | 7,810 | | 7,857 | | |
| | Second lien (2) | | 6.85% (L + 6.75%/M) | | 8/6/2020 | | 7/31/2026 | | 4,475 | | | 4,175 | | 4,486 | | |
| | | | | | | | | | 12,312 | | | 11,985 | | 12,343 | | 1.35 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
27
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
DG Investment Intermediate Holdings 2, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 7.50% (L + 6.75%/M) | | 3/18/2021 | | 3/30/2029 | | $ | 12,188 | | | $ | 12,159 | | | $ | 12,279 | | | 1.34 | % |
NMC Crimson Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.75% (L + 6.00%/S) | | 3/1/2021 | | 3/1/2028 | | 11,101 | | | 10,950 | | 10,934 | | 1.20 | % |
ACI Parent Inc. (11) | | | | | | | | | | | | | | | | |
ACI Group Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.25% (L + 5.50%/Q) | | 8/2/2021 | | 8/2/2028 | | 10,845 | | | 10,743 | | 10,737 | | |
| | First lien (4)(5) - Drawn | | 6.25% (L + 5.50%/Q) | | 8/2/2021 | | 8/2/2028 | | 29 | | | 28 | | 28 | | |
| | | | | | | | | | 10,874 | | | 10,771 | | 10,765 | | 1.18 | % |
DCA Investment Holding, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2) | | 7.00% (L + 6.25%/Q) | | 3/12/2021 | | 3/12/2027 | | 9,626 | | | 9,562 | | 9,589 | | |
| | First lien (5) - Drawn | | 7.00% (L + 6.25%/Q) | | 3/12/2021 | | 3/12/2027 | | 929 | | | 923 | | 926 | | |
| | | | | | | | | | 10,555 | | | 10,485 | | 10,515 | | 1.15 | % |
Beacon Pointe Harmony, LLC** | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2) | | 6.00% (L + 5.25%/Q) | | 12/29/2021 | | 12/29/2028 | | 10,216 | | | 10,114 | | 10,114 | | 1.11 | % |
CRCI Longhorn Holdings, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien (4) | | 7.35% (L + 7.25%/M) | | 7/16/2021 | | 8/10/2026 | | 10,000 | | | 9,977 | | 10,000 | | 1.09 | % |
Coyote Buyer, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (2)(4) | | 7.00% (L + 6.00%/S) | | 3/13/2020 | | 2/6/2026 | | 8,144 | | | 8,114 | | 8,144 | | |
| | First lien (2)(4) | | 9.00% (L + 8.00%/S) | | 10/15/2020 | | 8/6/2026 | | 1,465 | | | 1,453 | | 1,465 | | |
| | | | | | | | | | 9,609 | | | 9,567 | | 9,609 | | 1.05 | % |
Kaseya Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 7.50% (L + 5.50% + 1.00% PIK/Q)* | | 3/4/2020 | | 5/2/2025 | | 5,161 | | | 5,112 | | 5,161 | | |
| | First lien (2)(4) | | 7.50% (L + 5.50% + 1.00% PIK/Q)* | | 3/4/2020 | | 5/2/2025 | | 2,047 | | | 2,031 | | 2,047 | | |
| | First lien (2)(4) | | 7.50% (L + 5.50% + 1.00% PIK/Q)* | | 9/8/2021 | | 5/2/2025 | | 1,702 | | | 1,688 | | 1,702 | | |
| | First lien (4)(5) - Drawn | | 7.50% (L + 5.50% + 1.00% PIK/Q)* | | 9/8/2021 | | 5/2/2025 | | 337 | | | 334 | | 337 | | |
| | First lien (2)(4) | | 7.50% (L + 5.50% + 1.00% PIK/Q)* | | 8/3/2020 | | 5/2/2025 | | 230 | | | 227 | | 230 | | |
| | | | | | | | | | 9,477 | | | 9,392 | | 9,477 | | 1.04 | % |
Infogain Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4) | | 6.75% (L + 5.75%/S) | | 7/30/2021 | | 7/28/2028 | | 9,244 | | | 9,178 | | 9,175 | | 1.00 | % |
CG Group Holdings, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (2)(4) | | 6.25% (L + 5.25%/Q) | | 7/19/2021 | | 7/19/2027 | | 8,302 | | | 8,214 | | 8,209 | | |
| | First lien (4)(5) - Drawn | | 6.25% (L + 5.25%/M) | | 7/19/2021 | | 7/19/2026 | | 906 | | | 897 | | 896 | | |
| | | | | | | | | | 9,208 | | | 9,111 | | 9,105 | | 1.00 | % |
KPSKY Acquisition Inc. | | | | | | | | | | | | | | | | |
Industrial Services | | First lien (2)(4) | | 6.25% (L + 5.50%/M) | | 10/19/2021 | | 10/19/2028 | | 8,676 | | | 8,592 | | 8,590 | | |
| | First lien (4)(5) - Drawn | | 7.75% (P + 4.50%/Q) | | 10/19/2021 | | 10/19/2028 | | 496 | | | 491 | | 491 | | |
| | | | | | | | | | 9,172 | | | 9,083 | | 9,081 | | 0.99 | % |
Maverick Bidco Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien (4) | | 7.50% (L + 6.75%/Q) | | 4/29/2021 | | 5/18/2029 | | 9,000 | | | 8,979 | | 8,978 | | 0.98 | % |
Mamba Purchaser, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | Second lien | | 7.00% (L + 6.50%/M) | | 9/29/2021 | | 10/15/2029 | | 8,709 | | | 8,654 | | | 8,720 | | | 0.95 | % |
The accompanying notes are an integral part of these consolidated financial statements.
28
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Huskies Parent, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (2) | | 6.25% (L + 5.50%/Q) | | 12/31/2021 | | 11/3/2028 | | $ | 8,525 | | | $ | 8,461 | | | $ | 8,461 | | | |
| | First lien (5) - Drawn | | 6.25% (L + 5.50%/M) | | 12/31/2021 | | 11/3/2027 | | 85 | | | 84 | | 84 | | |
| | | | | | | | | | 8,610 | | | 8,545 | | 8,545 | | 0.93 | % |
Trinity Air Consultants Holdings Corporation | | | | | | | | | | | | | | | | |
Business Services | | First lien (2)(4) | | 6.00% (L + 5.25%/S) | | 6/30/2021 | | 6/29/2027 | | 7,449 | | | 7,379 | | 7,374 | | |
| | First lien (4)(5) - Drawn | | 6.00% (L + 5.25%/M) | | 6/30/2021 | | 6/29/2027 | | 581 | | | 576 | | 576 | | |
| | | | | | | | | | 8,030 | | | 7,955 | | 7,950 | | 0.87 | % |
AG Parent Holdings, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2) | | 5.10% (L + 5.00%/M) | | 7/30/2019 | | 7/31/2026 | | 7,350 | | | 7,324 | | 7,336 | | 0.80 | % |
USIC Holdings, Inc. | | | | | | | | | | | | | | | | |
Business Services | | Second lien | | 7.25% (L + 6.50%/M) | | 5/7/2021 | | 5/14/2029 | | 7,000 | | | 6,967 | | 7,070 | | 0.77 | % |
Ministry Brands Holdings, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2) | | 6.25% (L + 5.50%/Q) | | 12/31/2021 | | 12/29/2028 | | 7,062 | | | 7,027 | | 7,026 | | 0.77 | % |
TMK Hawk Parent, Corp. | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (2)(4) | | 3.60% (L + 3.50%/M) | | 9/27/2019 | | 8/28/2024 | | 7,328 | | | 6,558 | | 6,180 | | 0.68 | % |
Vectra Co. | | | | | | | | | | | | | | | | |
Business Products | | Second lien | | 7.35% (L + 7.25%/M) | | 6/22/2020 | | 3/8/2026 | | 6,248 | | | 5,924 | | 6,130 | | 0.67 | % |
Calabrio, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4) | | 8.00% (L + 7.00%/Q) | | 4/16/2021 | | 4/16/2027 | | 5,979 | | | 5,939 | | 5,942 | | 0.65 | % |
Safety Borrower Holdings LLC | | | | | | | | | | | | | | | | |
Information Services | | First lien (2)(4) | | 6.75% (L + 5.75%/S) | | 9/1/2021 | | 9/1/2027 | | 5,756 | | | 5,729 | | 5,728 | | 0.63 | % |
PDQ.com Corporation | | | | | | | | | | | | | | | | |
Information Technology | | First lien (2)(4) | | 6.00% (L + 5.00%/Q) | | 12/30/2021 | | 8/27/2027 | | 5,714 | | | 5,686 | | 5,686 | | 0.62 | % |
GC Waves Holdings, Inc.** | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2)(4)(5) - Drawn | | 6.25% (L + 5.50%/Q) | | 8/12/2021 | | 8/13/2026 | | 5,643 | | | 5,590 | | 5,643 | | 0.62 | % |
Quest Software US Holdings Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien | | 8.38% (L + 8.25%/Q) | | 10/13/2021 | | 5/18/2026 | | 4,774 | | | 4,780 | | 4,781 | | 0.52 | % |
Appriss Health Holdings, LLC (7) | | | | | | | | | | | | | | | | |
Appriss Health, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4) | | 8.25% (L + 7.25%/Q) | | 5/6/2021 | | 5/6/2027 | | 4,688 | | | 4,645 | | 4,641 | | 0.51 | % |
Therapy Brands Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | Second lien (2)(4) | | 7.50% (L + 6.75%/Q) | | 5/12/2021 | | 5/18/2029 | | 4,222 | | | 4,201 | | 4,201 | | 0.46 | % |
Cloudera, Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien | | 6.50% (L + 6.00%/M) | | 8/10/2021 | | 10/8/2029 | | 4,006 | | | 3,997 | | 4,016 | | 0.44 | % |
Specialtycare, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 6.75% (L + 5.75%/Q) | | 6/18/2021 | | 6/18/2028 | | 3,612 | | | 3,561 | | 3,558 | | 0.39 | % |
MH Sub I, LLC (Micro Holding Corp.) | | | | | | | | | | | | | | | | |
Software | | Second lien | | 6.35% (L + 6.25%/M) | | 2/12/2021 | | 2/23/2029 | | 3,000 | | | 2,993 | | 3,030 | | 0.33 | % |
VetCor Professional Practices LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (5) - Drawn | | 5.00% (L + 4.25%/Q) | | 12/3/2021 | | 7/2/2025 | | 2,753 | | | 2,740 | | 2,740 | | 0.30 | % |
Alegeus Technologies Holding Corp. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (2)(4) | | 9.25% (L + 8.25%/S) | | 8/27/2019 | | 9/5/2024 | | 2,134 | | | 2,122 | | | 2,134 | | | 0.23 | % |
Kele Holdco, Inc. | | | | | | | | | | | | | | | | |
Distribution & Logistics | | First lien (2) | | 7.00% (L + 6.00%/M) | | 12/17/2021 | | 2/20/2026 | | 1,875 | | | 1,866 | | | 1,866 | | | 0.20 | % |
Total Funded Debt Investments - United States | | | | | | | | | | $ | 1,590,091 | | | $1,577,456 | | $1,577,559 | | 172.55 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
29
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Funded Debt Investments - Netherlands | | | | | | | | | | | | | | | | |
Tahoe Finco, LLC** | | | | | | | | | | | | | | | | |
Information Technology | | First lien (2)(4) | | 6.75% (L + 6.00%/Q) | | 10/1/2021 | | 9/29/2028 | | $ | 32,801 | | | $ | 32,483 | | | $ | 32,473 | | | 3.55 | % |
Total Funded Debt Investments - Netherlands | | | | | | | | | | $ | 32,801 | | | $ | 32,483 | | | $ | 32,473 | | | 3.55 | % |
Funded Debt Investments - United Kingdom | | | | | | | | | | | | | | | | |
Aston FinCo S.a r.l. / Aston US Finco, LLC** | | | | | | | | | | | | | | | | |
Software | | Second lien (2)(4) | | 8.35% (L + 8.25%/M) | | 10/8/2019 | | 10/8/2027 | | $ | 22,500 | | | $ | 22,366 | | | $ | 22,500 | | | 2.46 | % |
Total Funded Debt Investments - United Kingdom | | | | | | | | | | $ | 22,500 | | | $ | 22,366 | | | $ | 22,500 | | | 2.46 | % |
Funded Debt Investments - Canada | | | | | | | | | | | | | | | | |
Project Boost Purchaser, LLC** | | | | | | | | | | | | | | | | |
Business Services | | Second lien (2)(4) | | 8.10% (L + 8.00%/M) | | 9/17/2019 | | 5/31/2027 | | $ | 12,000 | | | $ | 12,000 | | | $ | 12,000 | | | 1.31 | % |
Total Funded Debt Investments - Canada | | | | | | | | | | $ | 12,000 | | | $ | 12,000 | | | $ | 12,000 | | | 1.31 | % |
Funded Debt Investments - United Arab Emirates | | | | | | | | | | | | | | | | |
GEMS Menasa (Cayman) Limited** | | | | | | | | | | | | | | | | |
Education | | First lien | | 6.00% (L + 5.00%/S) | | 7/30/2019 | | 7/31/2026 | | $ | 8,444 | | | $ | 8,413 | | | $ | 8,488 | | | 0.93 | % |
Total Funded Debt Investments - United Arab Emirates | | | | | | | | | | $ | 8,444 | | | $ | 8,413 | | | $ | 8,488 | | | 0.93 | % |
Total Funded Debt Investments | | | | | | | | | | $ | 1,665,836 | | | $ | 1,652,718 | | | $ | 1,653,020 | | | 180.80 | % |
Equity - United States | | | | | | | | | | | | | | | | |
Dealer Tire Holdings, LLC | | | | | | | | | | | | | | | | |
Distribution & Logistics | | Preferred shares (4)(10) | | — | | 9/13/2021 | | — | | 30,082 | | | $ | 32,268 | | | $ | 32,172 | | | 3.52 | % |
OEC Holdco, LLC (12) | | | | | | | | | | | | | | | | |
Business Services | | Preferred shares (3) | | — | | 12/17/2021 | | — | | 17,786 | | | 17,608 | | | 17,608 | | | 1.93 | % |
ACI Parent Inc. (11) | | | | | | | | | | | | | | | | |
Healthcare Services | | Preferred shares (4) | | — | | 8/2/2021 | | — | | 12,500 | | | 12,994 | | | 12,989 | | | 1.42 | % |
Project Essential Topco, Inc. (8) | | | | | | | | | | | | | | | | |
Project Essential Super Parent, Inc. | | | | | | | | | | | | | | | | |
Software | | Preferred shares (4) | | — | | 4/20/2021 | | — | | 5,000 | | | 5,299 | | | 5,293 | | | 0.58 | % |
Diamond Parent Holdings Corp. (9) | | | | | | | | | | | | | | | | |
Diligent Preferred Issuer, Inc. | | | | | | | | | | | | | | | | |
Software | | Preferred shares (4) | | — | | 4/6/2021 | | — | | 5,000 | | | 5,193 | | | 5,190 | | | 0.57 | % |
Appriss Health Holdings, LLC (7) | | | | | | | | | | | | | | | | |
Appriss Health Intermediate Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | Preferred shares (4) | | — | | 5/6/2021 | | — | | 1,167 | | | 1,235 | | | 1,233 | | | 0.13 | % |
Pioneer Topco I, L.P. (13) | | | | | | | | | | | | | | | | |
Software | | Ordinary shares (4) | | — | | 11/1/2021 | | — | | 10 | | | — | | — | | — | % |
Total Shares - United States | | | | | | | | | | | | $ | 74,597 | | | $ | 74,485 | | | 8.15 | % |
Total Shares | | | | | | | | | | | | $ | 74,597 | | | $ | 74,485 | | | 8.15 | % |
Total Funded Investments | | | | | | | | | | | | $ | 1,727,315 | | | $ | 1,727,505 | | | 188.95 | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
30
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Unfunded Debt Investments - United States | | | | | | | | | | | | | | | | |
Diamond Parent Holdings Corp. (9) | | | | | | | | | | | | | | | | |
Diligent Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 8/4/2020 | | 2/4/2022 | | $ | 1,433 | | | $ | (13) | | | $ | 14 | | | |
| | First lien (4)(5) - Undrawn | | — | | 8/4/2020 | | 8/4/2025 | | 2,335 | | | (13) | | — | | |
| | | | | | | | | | 3,768 | | | (26) | | 14 | | 0.00 | % |
YLG Holdings, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 10/22/2021 | | 10/22/2023 | | 10,490 | | | — | | — | | — | % |
GC Waves Holdings, Inc.** | | | | | | | | | | | | | | | | |
Financial Services | | First lien (2)(4)(5) - Undrawn | | — | | 8/12/2021 | | 8/11/2023 | | 4,991 | | | — | | — | | — | % |
Coyote Buyer, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (4)(5) - Undrawn | | — | | 3/13/2020 | | 2/6/2025 | | 592 | | | (2) | | — | | — | % |
Wealth Enhancement Group, LLC** | | | | | | | | | | | | | | | | |
Financial Services | | First lien (4)(5) - Undrawn | | — | | 8/13/2021 | | 6/3/2022 | | 17,042 | | | — | | — | | |
| | First lien (4)(5) - Undrawn | | — | | 8/13/2021 | | 10/4/2027 | | 1,400 | | | (4) | | — | | |
| | | | | | | | | | 18,442 | | | (4) | | — | | — | % |
MRI Software LLC | | | | | | | | | | | | | | | | |
Software | | First lien (2)(4)(5) - Undrawn | | — | | 3/24/2021 | | 3/24/2022 | | 4,535 | | | — | | — | | |
| | First lien (4)(5) - Undrawn | | — | | 1/31/2020 | | 2/10/2026 | | 1,170 | | | (4) | | — | | |
| | | | | | | | | | 5,705 | | | (4) | | — | | — | % |
Kaseya Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 8/3/2020 | | 5/2/2025 | | 156 | | | (2) | | — | | |
| | First lien (4)(5) - Undrawn | | — | | 9/8/2021 | | 9/8/2023 | | 465 | | | (4) | | — | | |
| | | | | | | | | | 621 | | | (6) | | — | | — | % |
Pye-Barker Fire & Safety, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 11/26/2021 | | 11/26/2023 | | 13,100 | | | — | | — | | |
| | First lien (4)(5) - Undrawn | | — | | 11/26/2021 | | 11/26/2024 | | 741 | | | (7) | | — | | |
| | | | | | | | | | 13,841 | | | (7) | | — | | — | % |
GS Acquisitionco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 2/6/2020 | | 5/22/2026 | | 1,240 | | | (8) | | — | | |
| | First lien (4)(5) - Undrawn | | — | | 10/7/2021 | | 11/2/2022 | | 14,450 | | | — | | — | | |
| | | | | | | | | | 15,690 | | | (8) | | — | | — | % |
Bullhorn, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 9/24/2019 | | 9/30/2026 | | 964 | | | (5) | | — | | |
| | First lien (4)(5) - Undrawn | | — | | 10/5/2021 | | 11/8/2022 | | 2,710 | | | (7) | | — | | |
| | | | | | | | | | 3,674 | | | (12) | | — | | — | % |
CFS Management, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 9/1/2021 | | 9/1/2023 | | 3,002 | | | (19) | | — | | — | % |
The accompanying notes are an integral part of these consolidated financial statements.
31
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
CG Group Holdings, LLC | | | | | | | | | | | | | | | | |
Specialty Chemicals & Materials | | First lien (4)(5) - Undrawn | | — | | 7/19/2021 | | 7/19/2026 | | $ | 226 | | | $ | (3) | | | $ | (3) | | | (0.00) | % |
Maverick Bidco Inc. | | | | | | | | | | | | | | | | |
Software | | Second lien (4)(5) - Undrawn | | — | | 4/29/2021 | | 11/18/2022 | | 1,200 | | | — | | (3) | | (0.00) | % |
Appriss Health Holdings, LLC (7) | | | | | | | | | | | | | | | | |
Appriss Health, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 5/6/2021 | | 5/6/2027 | | 313 | | | (3) | | (3) | | (0.00) | % |
Calabrio, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 4/16/2021 | | 4/16/2027 | | 720 | | | (5) | | (4) | | (0.00) | % |
KPSKY Acquisition Inc. | | | | | | | | | | | | | | | | |
Industrial Services | | First lien (4)(5) - Undrawn | | — | | 10/19/2021 | | 10/19/2023 | | 497 | | | — | | (5) | | (0.00) | % |
DCA Investment Holding, LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (5) - Undrawn | | — | | 3/12/2021 | | 3/10/2023 | | 1,455 | | | — | | (5) | | (0.00) | % |
Recorded Future, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (5) - Undrawn | | — | | 8/26/2019 | | 7/3/2025 | | 1,630 | | | (9) | | (8) | | (0.00) | % |
Associations, Inc. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 7/2/2021 | | 7/2/2027 | | 1,772 | | | (8) | | (9) | | (0.00) | % |
Therapy Brands Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | Second lien (2)(4)(5) - Undrawn | | — | | 5/12/2021 | | 5/18/2023 | | 1,778 | | | — | | (9) | | (0.00) | % |
Safety Borrower Holdings LLC | | | | | | | | | | | | | | | | |
Information Services | | First lien (4)(5) - Undrawn | | — | | 9/1/2021 | | 9/1/2027 | | 512 | | | (2) | | (3) | | |
| | First lien (4)(5) - Undrawn | | — | | 9/1/2021 | | 9/1/2022 | | 1,279 | | | — | | (6) | | |
| | | | | | | | | | 1,791 | | | (2) | | (9) | | (0.00) | % |
Specialtycare, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 6/18/2021 | | 6/18/2026 | | 280 | | | (4) | | (4) | | |
| | First lien (4)(5) - Undrawn | | — | | 6/18/2021 | | 6/18/2023 | | 335 | | | — | | (5) | | |
| | | | | | | | | | 615 | | | (4) | | (9) | | (0.00) | % |
Huskies Parent, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (5) - Undrawn | | — | | 12/31/2021 | | 11/3/2027 | | 638 | | | (5) | | (5) | | |
| | First lien (5) - Undrawn | | — | | 12/31/2021 | | 11/3/2023 | | 751 | | | — | | (6) | | |
| | | | | | | | | | 1,389 | | | (5) | | (11) | | (0.00) | % |
Infogain Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 7/30/2021 | | 7/30/2026 | | 1,854 | | | (13) | | (14) | | (0.00) | % |
Ministry Brands Holdings, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (5) - Undrawn | | — | | 12/31/2021 | | 12/30/2027 | | 678 | | | (3) | | (3) | | |
| | First lien (5) - Undrawn | | — | | 12/31/2021 | | 12/30/2023 | | 2,260 | | | — | | (11) | | |
| | | | | | | | | | 2,938 | | | (3) | | (14) | | (0.00) | % |
IG Investments Holdings, LLC | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 9/22/2021 | | 9/22/2027 | | 1,551 | | | (16) | | (16) | | (0.00) | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
32
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
Relativity ODA LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 5/12/2021 | | 5/12/2027 | | $ | 1,439 | | | $ | (16) | | | $ | (18) | | | (0.00) | % |
Granicus, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 1/27/2021 | | 1/29/2027 | | 1,207 | | | (8) | | (9) | | |
| | First lien (4)(5) - Undrawn | | — | | 4/23/2021 | | 4/21/2023 | | 911 | | | — | | (9) | | |
| | | | | | | | | | 2,118 | | | (8) | | (18) | | (0.00) | % |
Sun Acquirer Corp. | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (4)(5) - Undrawn | | — | | 9/8/2021 | | 9/8/2027 | | 559 | | | (5) | | (6) | | |
| | First lien (4)(5) - Undrawn | | — | | 9/8/2021 | | 9/8/2023 | | 1,378 | | | (10) | | (14) | | |
| | | | | | | | | | 1,937 | | | (15) | | (20) | | (0.00) | % |
Project Essential Topco, Inc. (8) | | | | | | | | | | | | | | | | |
Project Essential Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 4/20/2021 | | 4/20/2027 | | 2,259 | | | (18) | | (20) | | (0.00) | % |
OB Hospitalist Group, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 9/21/2021 | | 9/27/2027 | | 2,254 | | | (23) | | (23) | | (0.00) | % |
Trinity Air Consultants Holdings Corporation | | | | | | | | | | | | | | | | |
Business Services | | First lien (4)(5) - Undrawn | | — | | 6/30/2021 | | 6/29/2027 | | 145 | | | (1) | | (1) | | |
| | First lien (4)(5) - Undrawn | | — | | 6/30/2021 | | 6/29/2023 | | 2,544 | | | — | | (25) | | |
| | | | | | | | | | 2,689 | | | (1) | | (26) | | (0.00) | % |
Businessolver.com, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (5) - Undrawn | | — | | 12/1/2021 | | 12/1/2023 | | 6,622 | | | — | | (33) | | (0.00) | % |
Daxko Acquisition Corporation | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/15/2027 | | 1,331 | | | (13) | | (13) | | |
| | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/16/2023 | | 2,211 | | | — | | (22) | | |
| | | | | | | | | | 3,542 | | | (13) | | (35) | | (0.00) | % |
KWOR Acquisition, Inc. | | | | | | | | | | | | | | | | |
Business Services | | First lien (5) - Undrawn | | — | | 12/22/2021 | | 12/22/2027 | | 5,087 | | | (38) | | (38) | | (0.00) | % |
Ocala Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (5) - Undrawn | | — | | 12/27/2021 | | 5/24/2024 | | 3,196 | | | — | | (40) | | (0.00) | % |
Pioneer Topco I, L.P. (13) | | | | | | | | | | | | | | | | |
Pioneer Buyer I, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 11/1/2021 | | 11/1/2027 | | 4,009 | | | (39) | | (40) | | (0.00) | % |
ACI Parent Inc. (11) | | | | | | | | | | | | | | | | |
ACI Group Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 8/2/2021 | | 8/2/2027 | | 1,144 | | | (11) | | (11) | | |
| | First lien (4)(5) - Undrawn | | — | | 8/2/2021 | | 8/2/2023 | | 3,977 | | | — | | (40) | | |
| | | | | | | | | | 5,121 | | | (11) | | (51) | | (0.01) | % |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
33
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
GraphPAD Software, LLC | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (4)(5) - Undrawn | | — | | 4/28/2021 | | 4/27/2027 | | $ | 1,500 | | | $ | (7) | | | $ | (8) | | | |
| | First lien (4)(5) - Undrawn | | — | | 12/1/2021 | | 11/29/2023 | | 9,932 | | | (49) | | | (49) | | | |
| | | | | | | | | | 11,432 | | | (56) | | | (57) | | | (0.01) | % |
OA Buyer, Inc. | | | | | | | | | | | | | | | | |
Healthcare Information Technology | | First lien (5) - Undrawn | | — | | 12/20/2021 | | 12/20/2028 | | 5,959 | | | (59) | | | (60) | | | (0.01) | % |
Beacon Pointe Harmony, LLC** | | | | | | | | | | | | | | | | |
Financial Services | | First lien (5) - Undrawn | | — | | 12/29/2021 | | 12/29/2027 | | 1,057 | | | (11) | | | (11) | | | |
| | First lien (5) - Undrawn | | — | | 12/29/2021 | | 6/29/2023 | | 5,284 | | | — | | | (53) | | | |
| | | | | | | | | | 6,341 | | | (11) | | | (64) | | | (0.01) | % |
Notorious Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Products | | First lien (4)(5) - Undrawn | | — | | 11/23/2021 | | 5/24/2027 | | 3,012 | | | (23) | | | (23) | | | |
| | First lien (4)(5) - Undrawn | | — | | 11/23/2021 | | 11/23/2023 | | 6,023 | | | — | | | (45) | | | |
| | | | | | | | | | 9,035 | | | (23) | | | (68) | | | (0.01) | % |
PDQ.com Corporation | | | | | | | | | | | | | | | | |
Information Technology | | First lien (4)(5) - Undrawn | | — | | 12/30/2021 | | 8/28/2023 | | 14,286 | | | — | | | (71) | | | (0.01) | % |
Diamondback Acquisition, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 9/13/2021 | | 9/13/2023 | | 7,203 | | | — | | | (72) | | | (0.01) | % |
NMC Crimson Holdings, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 3/1/2021 | | 3/1/2023 | | 4,898 | | | — | | | (73) | | | (0.01) | % |
Galway Borrower LLC | | | | | | | | | | | | | | | | |
Insurance Services | | First lien (4)(5) - Undrawn | | — | | 9/30/2021 | | 9/30/2027 | | 2,519 | | | (24) | | | (25) | | | |
| | First lien (4)(5) - Undrawn | | — | | 9/30/2021 | | 9/29/2023 | | 5,289 | | | (15) | | | (53) | | | |
| | | | | | | | | | 7,808 | | | (39) | | | (78) | | | (0.01) | % |
CCBlue Bidco, Inc. | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (5) - Undrawn | | — | | 12/20/2021 | | 12/21/2023 | | 7,946 | | | — | | | (79) | | | (0.01) | % |
USRP Holdings, Inc. | | | | | | | | | | | | | | | | |
Federal Services | | First lien (5) - Undrawn | | — | | 7/22/2021 | | 7/23/2027 | | 425 | | | (4) | | | (4) | | | |
| | First lien (5) - Undrawn | | — | | 7/22/2021 | | 7/23/2023 | | 8,516 | | | — | | | (85) | | | |
| | | | | | | | | | 8,941 | | | (4) | | | (89) | | | (0.01) | % |
DECA Dental Holdings LLC | | | | | | | | | | | | | | | | |
Healthcare Services | | First lien (4)(5) - Undrawn | | — | | 8/26/2021 | | 8/26/2027 | | 2,292 | | | (22) | | | (23) | | | |
| | First lien (4)(5) - Undrawn | | — | | 8/26/2021 | | 8/28/2023 | | 6,875 | | | — | | | (69) | | | |
| | | | | | | | | | 9,167 | | | (22) | | | (92) | | | (0.01) | % |
Al Altius US Bidco, Inc. | | | | | | | | | | | | | | | | |
Software | | First lien (5) - Undrawn | | — | | 12/20/2021 | | 12/13/2023 | | 9,300 | | | — | | | (93) | | | (0.01) | % |
The accompanying notes are an integral part of these consolidated financial statements.
34
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Company, Location and Industry(1) | | Type of Investment | | Interest Rate (6) | | Acquisition Date | | Maturity/Expiration Date | | Principal Amount, Par Value or Shares | | Cost | | Fair Value | | Percent of Members' Capital |
| | | | | | | | | | | | | | | | |
FS WhiteWater Borrower, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (5) - Undrawn | | — | | 12/20/2021 | | 12/21/2022 | | $ | 1,502 | | | $ | — | | | $ | (15) | | | |
| | First lien (5) - Undrawn | | — | | 12/20/2021 | | 12/21/2027 | | 2,384 | | | (24) | | | (24) | | | |
| | First lien (5) - Undrawn | | — | | 12/20/2021 | | 12/21/2023 | | 5,959 | | | — | | | (60) | | | |
| | | | | | | | | | 9,845 | | | (24) | | | (99) | | | (0.02) | % |
Fortis Solutions Group, LLC | | | | | | | | | | | | | | | | |
Packaging | | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/15/2027 | | 2,928 | | | (28) | | | (29) | | | |
| | First lien (4)(5) - Undrawn | | — | | 10/15/2021 | | 10/13/2023 | | 8,540 | | | — | | | (85) | | | |
| | | | | | | | | | 11,468 | | | (28) | | | (114) | | | (0.02) | % |
Vehlo Purchaser, LLC | | | | | | | | | | | | | | | | |
Software | | First lien (4)(5) - Undrawn | | — | | 8/27/2021 | | 8/27/2027 | | 3,358 | | | (34) | | | (34) | | | |
| | First lien (4)(5) - Undrawn | | — | | 8/27/2021 | | 8/28/2023 | | 8,325 | | | — | | | (83) | | | |
| | | | | | | | | | 11,683 | | | (34) | | | (117) | | | (0.02) | % |
Paw Midco, Inc. | | | | | | | | | | | | | | | | |
AAH Topco, LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (5) - Undrawn | | — | | 12/22/2021 | | 12/22/2027 | | 2,427 | | | (24) | | | (24) | | | |
| | First lien (5) - Undrawn | | — | | 12/22/2021 | | 12/22/2023 | | 22,329 | | | — | | | (223) | | | |
| | | | | | | | | | 24,756 | | | (24) | | | (247) | | | (0.03) | % |
VetCor Professional Practices LLC | | | | | | | | | | | | | | | | |
Consumer Services | | First lien (5) - Undrawn | | — | | 12/3/2021 | | 7/2/2024 | | 3,137 | | | (15) | | | (16) | | | |
| | First lien (5) - Undrawn | | — | | 12/3/2021 | | 12/4/2023 | | 25,469 | | | — | | | (127) | | | |
| | Second lien (5) - Undrawn | | — | | 12/3/2021 | | 12/4/2023 | | 28,229 | | | — | | | (212) | | | |
| | | | | | | | | | 56,835 | | | (15) | | | (355) | | | (0.04) | % |
Total Unfunded Debt Investments - United States | | | | | | | | | | $ | 357,721 | | | $ | (680) | | | $ | (2,298) | | | (0.26) | % |
Unfunded Debt Investments - Netherlands | | | | | | | | | | | | | | | | |
Tahoe Finco, LLC** | | | | | | | | | | | | | | | | |
Information Technology | | First lien (4)(5) - Undrawn | | — | | 10/1/2021 | | 10/1/2027 | | $ | 2,460 | | | $ | (24) | | | $ | (25) | | | (0.00) | % |
Total Unfunded Debt Investments - Netherlands | | | | | | | | | | $ | 2,460 | | | $ | (24) | | | $ | (25) | | | (0.00) | % |
Total Unfunded Debt Investments | | | | | | | | | | $ | 360,181 | | | $ | (704) | | | $ | (2,323) | | | (0.26) | % |
Total Non-Controlled/Non-Affiliated Investments | | | | | | | | | | | | $ | 1,726,611 | | | $ | 1,725,182 | | | 188.69 | % |
Total Investments | | | | | | | | | | | | $ | 1,726,611 | | | $ | 1,725,182 | | | 188.69 | % |
| | | | | | | | | | | | | | | | |
(1)New Mountain Guardian III BDC, L.L.C. (the "Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act.
(2)Investment is pledged as collateral for the Wells Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Guardian III SPV, L.L.C. ("GIII SPV") as the Borrower, Wells Fargo Bank, National Association as the Administrative Agent, and Collateral Custodian. See Note 6. Borrowings, for details.
(3)Investment is held in New Mountain Guardian III OEC, Inc.
(4)The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.
The accompanying notes are an integral part of these consolidated financial statements.
35
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
(in thousands, except shares)
(5)Par value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(6)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of September 30, 2019.December 31, 2021. (7)The accompanying notes are an integral partCompany holds investments in two wholly-owned subsidiaries of these consolidated financial statements.New Mountain Guardian III BDC, L.L.C.
Consolidated ScheduleAppriss Health Holdings, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Health, LLC, and preferred equity in Appriss Health Intermediate Holdings, Inc. The preferred equity in Appriss Health Intermediate Holdings, Inc. is entitled to receive cumulative preferential dividends at a rate of Investments (Continued)11.00% per annum.
September 30, 2019(8)(The Company holds investments in thousands)two subsidiaries of Project Essential Topco, Inc. The Company holds a first lien term loan and first lien revolver in Project Essential Bidco, Inc. and preferred equity in Project Essential Super Parent, Inc. The preferred equity in Project Essential Super Parent, Inc. is entitled to receive cumulative preferential dividends at a rate of L + 9.50% per annum.
(unaudited)
(9)The Company holds investments in two wholly-owned subsidiaries of Diamond Parent Holdings Corp. The Company holds three first lien term loans, two first lien delayed draws and a first lien revolver in Diligent Corporation and preferred equity in Diligent Preferred Issuer Inc. The preferred equity in Diligent Preferred Issuer, Inc. is entitled to receive cumulative preferential dividends at a rate of 10.50% per annum.
(10)The Company holds preferred equity in Dealer Tire Holdings, LLC., that is entitled to receive cumulative preferential dividends at a rate of 7.00% per annum.
(11)The Company holds investments in ACI Parent Inc. and a wholly-owned subsidiary of ACI Parent Inc. The Company holds a first lien term loan, a first lien delayed draw and a first lien revolver in ACI Group Holdings, Inc. and preferred equity in ACI Parent Inc. The preferred equity in ACI Parent Inc. is entitled to receive cumulative preferential dividends at a rate of 11.75% per annum.
(12)The Company holds investments in OEC Holdco, LLC, and a wholly-owned subsidiary of OEC Holdco, LLC. The Company holds two second lien term loans in OEConnection LLC, and preferred equity in OEC Holdco, LLC. The preferred equity is entitled to receive preferential dividends at a rate of 11.00% per annum.
(13)The Company holds investments in Pioneer Topco I, L.P. and a wholly-owned subsidiary of Pioneer Topco I, L.P. The Company holds a first lien term loan and a first lien revolver in Pioneer Buyer I, LLC, and common equity in Pioneer Topco I, L.P.
*All or a portion of interest contains PIK interest. See Note 2. Summary of Significant Accounting Policies—Revenue Recognition, for details.
**
Indicates assets that the Company deems to be “non-qualifying assets”"non-qualifying assets" under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’sCompany's total assets at the time of acquisition of any additional non-qualifying assets. As of September 30, 2019, 10.6%December 31, 2021, 6.34% of the Company’sCompany's total assets are represented by investments at fair value that are considered non-qualifying assets.The accompanying notes are an integral part of these consolidated financial statements.
36
New Mountain Guardian III BDC, L.L.C.
Consolidated Schedule of Investments (Continued)
December 31, 2021
September 30, 2019
(unaudited)
|
| September 30, 2019
|
| | | | | |
| | December 31, 2021 |
Investment Type |
| Percent of Total Investments at Fair Value |
|
First lien | | 62.63 72.68 | % |
Second lien | | 37.37 22.46 | % |
Total investments Subordinated | | 100.00 0.54 | % |
|
| September 30, 2019
|
|
Equity and other | | 4.32 | % |
Total investments | | 100.00 | % |
| | | | | | | | |
| | December 31, 2021 |
Industry Type |
| Percent of Total Investments at Fair Value |
|
Software | | 36.14 36.44 | % |
HealthcareBusiness Services
| | 24.91 16.02 | % |
BusinessHealthcare Services
| | 18.26 12.77 | % |
Education
| | 11.35
| %
|
Healthcare Information Technology | | 7.63 6.71 | % |
Consumer Services | | 6.50 | % |
Distribution & Logistics | | 1.71 4.06 | % |
Total investments Financial Services | | 100.00 3.91 | % |
|
| September 30, 2019
|
|
Education | | 2.58 | % |
Consumer Products | | 2.43 | % |
Information Technology | | 2.21 | % |
Insurance Services | | 2.01 | % |
Packaging | | 1.20 | % |
Specialty Chemicals & Materials | | 1.08 | % |
Federal Services | | 0.86 | % |
Industrial Services | | 0.53 | % |
Business Products | | 0.36 | % |
Information Services | | 0.33 | % |
Total investments | | 100.00 | % |
| | | | | | | | |
| | December 31, 2021 |
Interest Rate Type |
| Percent of Total Investments at Fair Value |
|
Floating rates | | 100.00 95.45 | % |
Fixed rates | | — 4.55 | % |
Total investments | | 100.00 | % |
The accompanying notes are an integral part of these consolidated financial statements.
37
Notes to the Consolidated Financial Statements of
New Mountain Guardian III BDC, L.L.C.
September
(in thousands, except
shareunit data)
Note 1. Formation and Business Purpose
New Mountain Guardian III BDC, L.L.C. (the
‘‘Company’’"Company") is a Delaware limited liability company formed on May 22, 2019. The Company is a
closed-end, non-diversified management investment company that has elected to be regulated as a business development company
(‘‘BDC’’("BDC") under the Investment Company Act of 1940, as amended (the
‘‘1940 Act’’"1940 Act"). The Company
intends to electhas elected to be treated for
United States (‘‘U.S.
’’) federal income tax purposes as a regulated investment company
(‘‘RIC’’("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the
‘‘Code’’"Code").
New Mountain Finance Advisers BDC, L.L.C. (the
‘‘Investment Adviser’’"Investment Adviser") is a wholly-owned subsidiary of New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates,
‘‘New"New Mountain
Capital’’Capital") whose ultimate owners include Steven B. Klinsky,
other current and former New Mountain Capital professionals and related
other vehicles.vehicles and a minority investor. The Investment Adviser manages the
Company’sCompany's day-to-day operations and provides it with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to the
Company’s.Company's. New Mountain Finance Administration, L.L.C. (the
‘‘Administrator’’"Administrator"), a wholly-owned subsidiary of New Mountain Capital,
intends to provideprovides the administrative services necessary to conduct the
Company’sCompany's day-to-day operations.
The Administrator has hired a third-party sub-administrator to assist with the provision of administrative services.
The Company conducted a private offering (the
“Private Offering”"Private Offering") of units of the
Company’sCompany's limited liability company interests (the
“Units”"Units")
to investors in reliance on exemptions from the registration requirements of the Securities Act.. Units
will bewere offered for subscription continuously throughout the Closing Period (as defined below). Each investor in the Private Offering made a capital commitment (each, a
“Capital Commitment”"Capital Commitment") to purchase Units pursuant to a subscription agreement entered into with the Company (a
“Subscription Agreement”"Subscription Agreement").
The Company expects closingsClosings of the Private Offering
will occur,occurred, from time to time, in the Investment
Adviser’sAdviser's sole discretion, during the 18-month period
(the “Closing Period”) following the initial closing of Capital Commitments, which occurred on July 15,
2019.2019 (the "Closing Period"). Pursuant to the Limited Liability Company Agreement, as amended and restated on July 22, 2021 (the "Third A&R LLC Agreement"), the Closing Period was extended to and ended on October 15, 2021. The Company
may acceptaccepted and
drawdrew down
on Capital Commitments from investors throughout the Closing
Period.Period and drew down on Capital Commitments throughout the Investment Period (as defined below). At the end of the Closing Period, the Company had aggregate Capital Commitments from investors of $1,149,065. The Company commenced loan origination and investment activities contemporaneously with the initial drawdown from investors in the Private Offering, which occurred on August 2, 2019 (the
“Initial Drawdown,” and the date on which the Initial Drawdown occured)"Initial Drawdown"). The
“Investment Period”"Investment Period" began on July 15, 2019 and will continue until
July 15, 2023, the four-year anniversary of such date. The term of the Company is
until July 15, 2025, six years from July 15, 2019, subject to (i) a one year extension as determined by the Investment Adviser in its sole discretion and (ii) an additional one year extension as determined by the
Company’sCompany's board of directors.
The Company established New Mountain Guardian III SPV, L.L.C.
(“("GIII
SPV”SPV") as a wholly-owned direct subsidiary, whose assets are used to secure GIII
SPV’sSPV's credit facility.
The Company’sCompany established New Mountain Guardian III OEC, Inc. ("GIII OEC") as a wholly-owned direct subsidiary, which serves as a tax blocker corporation by holding equity or equity-like investments in one of the Company's portfolio companies organized as a limited liability company; the Company consolidates its tax blocker corporation for accounting purposes but the tax blocker corporation is not consolidated for U.S. federal income tax purposes, and may incur U.S. federal income tax expense as a result of its ownership of the portfolio company.
The Company's investment objective is to generate current income and capital appreciation primarily by investing in or originating debt investments in companies that the Investment Adviser believes are ‘‘defensive growth’’"defensive growth" companies in non-cyclical industry niches where the Investment Adviser has developed strong proprietary research and operational advantages. The Company makes investments through both primary originations and open-market secondary purchases. The Company predominantly targets loans to, and invests in, U.S.middleU.S. middle market businesses, a market segment the Company believes continues to be underserved by other lenders.businesses. The Company defines middle market businesses as those businesses with annual earnings before interest, taxes, depreciation, and amortization (‘‘EBITDA’’("EBITDA") between $10,000 and $200,000. In some cases, the Company's investments may also include equity interests. The primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. As of SeptemberJune 30, 2019,2022, the Company’sCompany's top five industry concentrations were software, business services, healthcare services, businessconsumer services education and healthcare information technology.financial services.
Note 2. Summary of Significant Accounting Policies
Basis of accounting—The Company’sCompany's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘GAAP’’("GAAP"). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services—Services—Investment Companies, (‘‘ ("ASC 946’’946"). The Company consolidates its wholly-owned direct subsidiarysubsidiaries GIII SPV.SPV and GIII OEC.
The
Company’sCompany's consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition for the period(s) presented. All intercompany transactions have been eliminated. Revenues are recognized when earned and expenses when incurred. The financial results of the
Company’sCompany's portfolio investments are not consolidated in the financial statements.
The
Company’sCompany's interim consolidated financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 6
orand 10 of Regulation S-X. Accordingly, the Company’s interim consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period, have been included. The current
period’speriod's results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31,
2019.2022.
Investments—The Company applies fair value accounting in accordance with GAAP. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected on the Company’sCompany's Consolidated StatementStatements of Assets, Liabilities and Members’Members' Capital at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Company’sCompany's Consolidated Statements of Operations as “Net"Net change in unrealized appreciation (depreciation) of investments”investments" and realizations on portfolio investments reflected in the Company’sCompany's Consolidated Statements of Operations as “Net"Net realized gains (losses) on investments”investments". The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, the
Company’sCompany's board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where its portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. The
Company’sCompany's quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services. (2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP. a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment’sinvestment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and b.For investments other than bonds, the Company looks at the number of quotes readily available and performs the following procedures: i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. The Company will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, the Company will use one or more of the methodologies outlined below to determine fair value; and
ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quoteinternally and if the investment’sinvestment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:
a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring; b.Preliminary valuation conclusions will then be documented and discussed with the Company’sCompany's senior management; c.If an investment falls into (3) above for four consecutive quarters and if the investment’sinvestment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which the Company does not have a readily available market quotation will be reviewed by an independent valuation firm engaged by the Company’sCompany's board of directors; and d.When deemed appropriate by the Company’sCompany's management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided. For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. 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 the
Company’sCompany's investments may fluctuate from period to period and the fluctuations could be material.
See Note 3. Investments, for further discussion relating to investments.
Cash and cash equivalents—Cash and cash equivalents include cash and short-term, highly liquid investments. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near maturity that there is insignificant risk of changes in value. These securities have original maturities of three months or less. The Company did not hold any cash equivalents as of SeptemberJune 30, 2019.2022 and December 31, 2021.
Sales and paydowns of investments:Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. The Company has loans and certain preferred equity investments in theits portfolio that contain a payment-in-kind (“PIK”("PIK") interest or dividend provision. PIK interest isand dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest isand dividends are added to the principal balanceor share balances on the capitalization datedates and isare generally due at maturity or when redeemed by the issuer. For both the three and six months ended SeptemberJune 30, 2019 and the period from May 22, 2019 (inception) to September 30, 2019,2022, the Company recognized PIK interest from investments of $61.$1,771 and $3,354, respectively, and PIK dividends from investments of $1,872 and $3,686, respectively. For the three and six months ended June 30, 2021, the Company recognized PIK interest from investments of $219 and $302, respectively, and PIK dividends from investments of $245 and $245, respectively.
Non-accrual income:Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalizedun-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’smanagement's judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’smanagement's judgment, are likely to remain current.
As of June 30, 2022 and December 31, 2021, no investments were on non-accrual status.
OtherFee income: OtherFee income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. OtherFee income may also include fees from bridge loans. The Company may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-termshort-
term in nature and may expire unfunded. A fee is received by the Company for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Income received in exchange for the provision of services such as recurring administration services are also recognized as fee income in the period in which it was earned.
Interest and other financing expenses—Interest and other financing fees are recorded on an accrual basis by the Company. See Note 6. Borrowings, for details.
Organizational expenses—Organizational expenses include costs and expenses incurred in connection with the formation and organization of the Company and are expensed as incurred in the Consolidated Statements of Operations. Any organizational and offering expenses paid by the Company in excess of the lesser of $2,000 or 0.50% of the aggregate Capital Commitments will be applied as a reduction to the base management fee paid to the Investment Adviser and cannot be recouped by the Investment Adviser.Deferred offering costs—The Company’s deferred offering costs consists of fees and expenses incurred in connection with the offering of the Company’s Units. Upon the issuance of Units, deferred offering costs are then amortized into expense to Organizational and Offering Expenses on the Consolidated Statements of Operations on a straight line basis over a period of 12 months beginning on the date of commencement of operations. Deferred offering costs are included on the Company’s Consolidated Statement of Assets, Liabilities and Members’ Capital. Any organizational and offering expenses paid by the Company in excess of the lesser of $2,000 or 0.50% of the aggregate Capital Commitments will be applied as a reduction to the base management fee paid to the Investment Adviser and cannot be recouped by the Investment Adviser.
Deferred financing costs—The deferred financing costs of the Company consist of capitalized expenses related to the origination and amending of the Company’sCompany's borrowings. The Company amortizes these costs into expense over the stated life of the related borrowing. See Note 6. Borrowings, for details.
Income taxes—The Company intends to electhas elected to be treated as a RIC for U.S. federal income tax purposes under Subchapter M of the Code with the filing of its first tax return for the year ending December 31, 2019, and thereafter intends to comply with the requirements to qualify and maintain its status as a RIC annually. As a RIC, the Company is not subject to U.S. federal income tax on the portion of taxable income and gains timely distributed to its unitholders. To continue to qualify and be subject to tax
treatment as a RIC, the Company is required to meet certain income and asset diversification tests in addition to
timely distributing at least 90.0% of its investment company taxable income, as defined by the Code. Since U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes.
Differences between taxable income and the results of operations for financial reporting purposes may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for
U.S. federal income tax purposes.
For U.S. federal income tax purposes, distributions paid to unitholders of the Company are reported as ordinary income, return of capital, long term capital gains or a combination thereof.
The Company will be subject to a 4.0% nondeductible federal excise tax on certain undistributed income unless the Company distributes, in a timely manner as required by the Code, an amount at least equal to the sum of (1) 98.0% of its
respective net ordinary income earned for the calendar year and (2) 98.2% of its respective capital gain net income for the one-year period ending October 31 in the calendar year.
Certain consolidated subsidiaries of the Company are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for U.S. federal income tax purposes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and U.S. federal income tax purposes.
For the three and six months ended June 30, 2022, the Company recognized a total income tax benefit (provision) of approximately $16 and $(107), respectively, for the Company's consolidated subsidiary. For the three and six months ended June 30, 2022, the Company recorded current income tax benefit of approximately $172 and $49, respectively, and deferred income tax provision of $156 and $156, respectively, for the Company's consolidated subsidiary. For the three and six months ended June 30, 2021, no current income tax expense or deferred income tax provision were recognized by the Company for its consolidated subsidiary.
As of June 30, 2022 and December 31, 2021, the Company had $156 and $0, respectively, of deferred tax liabilities primarily relating to deferred taxes attributable to certain differences between the computation of income for the U.S. federal income tax purposes as compared to GAAP.
Based on its analysis, the Company has determined that there were no uncertain tax positions that do not meet the more likely than not threshold as defined by Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”) through December 31, 2021. The 2019 through 2021 tax years and forward remains subject to examination by the U.S. federal, state, and local tax authorities.
Distributions—Distributions to the Company’sCompany's unitholders are recorded on the record date as set by the Company's board of directors. The Company intends to make timely distributions to its unitholders that will be sufficient to enable the Company to qualify and maintain its status as a RIC. The Company intends to distribute approximately all of its net investment
income on a quarterly basis and substantially all of its taxable income on an annual basis, except that the Company may retain certain net capital gains for reinvestment.
Earnings per Unit—The Company’sCompany's earnings per unit (“EPU”("EPU") amounts have been computed based on the weighted-average number of Units outstanding for the period. Basic EPU is computed by dividing net increase (decrease) in members’members' capital resulting from operations by the weighted average number of Units outstanding during the period of computation. Diluted EPU is computed by dividing net increase (decrease) in members’members' capital resulting from operations by the weighted average number of Units assuming all potential sharesUnits had been issued, and its related net impact to members’members' capital accounted for, and the additional Units were dilutive. Diluted EPU reflects the potential dilution, using the as-if-converted method for convertible debt, which could occur if all potentially dilutive securities were exercised.
Foreign securities—The accounting records of the Company are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with “Net"Net change in unrealized appreciation (depreciation) of investments”investments" and “Net"Net realized gains (losses) on investments”investments" in the Company’sCompany's Consolidated Statements of Operations. Investments denominated in foreign currencies may be negatively affected by movements in the rate of exchange between the U.S. dollar and such foreign currencies. This movement is beyond the control of the Company and cannot be predicted.
Use of estimates—The preparation of the Company’sCompany's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Company’sCompany's consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in the economic environment, financial markets, and other metrics used in determining these estimates could cause actual results to differ from the estimates used, and the differences could be material.
At
SeptemberJune 30,
2019,2022, the
Company’sCompany's investments consisted of the following:
Investment Cost and Fair Value by Type
| | | | | | | | | | | |
| Cost | | Fair Value |
First lien | $ | 1,582,755 | | | $ | 1,578,852 | |
Second lien | 391,897 | | | 378,459 | |
Subordinated | 9,983 | | | 9,969 | |
Equity and other | 85,997 | | | 85,395 | |
Total investments | $ | 2,070,632 | | | $ | 2,052,675 | |
Table of Contents | | Cost | | Fair Value | |
First lien | | $ | 143,665 | | $ | 143,808 | |
Second lien | | 85,769 | | 85,821 | |
Total investments | | $ | 229,434 | | $ | 229,629 | |
Investment Cost and Fair Value by Industry
| | | | | | | | | | | |
| Cost | | Fair Value |
Software | $ | 689,439 | | | $ | 686,931 | |
Business Services | 332,045 | | | 326,701 | |
Healthcare Services | 289,134 | | | 286,875 | |
Consumer Services | 165,700 | | | 165,198 | |
Financial Services | 148,139 | | | 148,081 | |
Healthcare Information Technology | 124,293 | | | 123,530 | |
Distribution & Logistics | 78,993 | | | 76,792 | |
Education | 44,326 | | | 42,915 | |
Consumer Products | 42,728 | | | 42,655 | |
Information Technology | 38,138 | | | 38,034 | |
Insurance Services | 36,079 | | | 35,259 | |
Packaging | 26,646 | | | 26,543 | |
Specialty Chemicals & Materials | 18,788 | | | 18,319 | |
Federal Services | 14,923 | | | 14,821 | |
Industrial Services | 9,476 | | | 9,467 | |
Information Services | 5,828 | | | 5,818 | |
Business Products | 5,957 | | | 4,736 | |
Total investments | $ | 2,070,632 | | | $ | 2,052,675 | |
At December 31, 2021, the Company's investments consisted of the following:
Investment Cost and Fair Value by Type
| | | | | | | | | | | |
| Cost | | Fair Value |
First lien | $ | 1,254,285 | | | $ | 1,253,901 | |
Second lien | 388,339 | | | 387,406 | |
Subordinated | 9,390 | | | 9,390 | |
Equity and other | 74,597 | | | 74,485 | |
Total investments | $ | 1,726,611 | | | $ | 1,725,182 | |
Table of Contents | | Cost | | Fair Value | |
Software | | $ | 82,998 | | $ | 82,984 | |
Healthcare Services | | 57,116 | | 57,200 | |
Business Services | | 41,933 | | 41,931 | |
Education | | 25,905 | | 26,065 | |
Healthcare Information Technology | | 17,547 | | 17,526 | |
Distribution & Logistics | | 3,935 | | 3,923 | |
Total investments | | $ | 229,434 | | $ | 229,629 | |
Investment Cost and Fair Value by Industry
| | | | | | | | | | | |
| Cost | | Fair Value |
Software | $ | 627,811 | | | $ | 628,680 | |
Business Services | 277,885 | | | 276,357 | |
Healthcare Services | 220,144 | | | 220,301 | |
Healthcare Information Technology | 115,837 | | | 115,772 | |
Consumer Services | 112,867 | | | 112,204 | |
Distribution & Logistics | 70,542 | | | 70,068 | |
Financial Services | 67,152 | | | 67,432 | |
Education | 44,349 | | | 44,493 | |
Consumer Products | 41,948 | | | 41,898 | |
Information Technology | 38,145 | | | 38,063 | |
Insurance Services | 34,682 | | | 34,617 | |
Packaging | 20,849 | | | 20,757 | |
Specialty Chemicals & Materials | 18,673 | | | 18,711 | |
Federal Services | 14,993 | | | 14,904 | |
Industrial Services | 9,083 | | | 9,076 | |
Business Products | 5,924 | | | 6,130 | |
Information Services | 5,727 | | | 5,719 | |
Total investments | $ | 1,726,611 | | | $ | 1,725,182 | |
As of
SeptemberJune 30,
2019,2022, the Company had unfunded commitments on revolving credit facilities
of $81,889 and
no unfunded commitments on bridge
facilities of $3,192 and $0, respectively.facilities. As of
SeptemberJune 30,
2019,2022, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of
$12,192.$234,634. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the
Company’sCompany's Consolidated Schedule of Investments as of
SeptemberJune 30,
2019.2022.
As of December 31, 2021, the Company had unfunded commitments on revolving credit facilities of $71,664 and no unfunded commitments on bridge facilities. As of December 31, 2021, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $288,517. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company's Consolidated Schedule of Investments as of December 31, 2021.
Investment Risk Factors—First and second lien debt that the Company invests in is almost entirely rated below investment grade or may be unrated. Debt investments rated below investment grade are often referred to as “leveraged loans”"leveraged loans", “high yield”"high yield" or “junk”"junk" debt investments, and may be considered “high risk”"high risk" compared to debt investments that are rated investment grade. These debt investments are considered speculative because of the credit risk of the issuers. Such issuers are considered more likely than investment grade issuers to default on their payments of interest and principal, and such risk of default could reduce the members’members' capital and income distributions of the Company. In addition, some of the Company’sCompany's debt investments will not fully amortize during their lifetime, which could result in a loss or a substantial amount of unpaid principal and interest due upon maturity. First and second lien debt may also lose significant market value before a default occurs. Furthermore, an active trading market may not exist for these first and second lien debt investments. This illiquidity may make it more difficult to value the debt.
Subordinated debt is generally subject to similar risks as those associated with first and second lien debt, except that such debt is subordinated in payment and/or lower in lien priority. Subordinated debt is subject to the additional risk that the cash flow of the borrower and the property securing the debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured and unsecured obligations of the borrower.
The Company may directly invest in the equity of private companies or, in some cases, equity investments could be made in connection with a debt investment. Equity investments may or may not fluctuate in value, resulting in recognized realized gains or losses upon disposition.
The Company’s operating results and portfolio companies may be negatively impacted by the COVID-19 pandemic. At the time of this Quarterly Report on Form 10-Q, public health restriction have been partially or fully lifted throughout most of the United States and globally. However, new variants of COVID-19, challenges regarding distribution, hesitancy and efficacy of COVID-19 vaccines and treatments, and the reintroduction of related advisories and restrictions may prolong the
effects of the COVID-19 pandemic. To the extent our portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on our future net investment income, the fair value of our portfolio investments and our financial condition.
While general economic conditions have improved since the beginning of the COVID-19 pandemic, we continue to see reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both in the United States and globally. The COVID-19 pandemic has and continues to 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, 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. 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 COVID-19 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.
Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may continue to experience downturns, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States and other major markets.
Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure ("ASC 820820") establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. The hierarchy classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and the Company has the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by ASC 820, the Company, to the extent that it holds such investments, does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following: ·•Quoted prices for similar assets or liabilities in active markets;·•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);·•Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and·•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.
The following table summarizes the levels in the fair value hierarchy that the
Company’sCompany's portfolio investments fall into as of
SeptemberJune 30,
2019: | | Total | | Level I | | Level II | | Level III | |
First lien | | $ | 143,808 | | $ | — | | $ | 32,827 | | $ | 110,981 | |
Second lien | | 85,821 | | — | | 21,890 | | 63,931 | |
Total investments | | $ | 229,629 | | $ | — | | $ | 54,717 | | $ | 174,912 | |
2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Level I | | Level II | | Level III |
First lien | $ | 1,578,852 | | | $ | — | | | $ | 50,292 | | | $ | 1,528,560 | |
Second lien | 378,459 | | | — | | | 94,334 | | | 284,125 | |
Subordinated | 9,969 | | | — | | | — | | | 9,969 | |
Equity and other | 85,395 | | | — | | | — | | | 85,395 | |
Total investments | $ | 2,052,675 | | | $ | — | | | $ | 144,626 | | | $ | 1,908,049 | |
The following table summarizes the levels in the fair value hierarchy that the Company's portfolio investments fall into as of December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Level I | | Level II | | Level III |
First lien | $ | 1,253,901 | | | $ | — | | | $ | 47,305 | | | $ | 1,206,596 | |
Second lien | 387,406 | | | — | | | 165,511 | | | 221,895 | |
Subordinated | 9,390 | | | — | | | — | | | 9,390 | |
Equity and other | 74,485 | | | — | | | — | | | 74,485 | |
Total investments | $ | 1,725,182 | | | $ | — | | | $ | 212,816 | | | $ | 1,512,366 | |
The following table summarizes the changes in fair value of Level III portfolio investments for
both the three months ended
SeptemberJune 30,
2019 and the period from May 22, 2019 (inception) to September 30, 2019,2022, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at
SeptemberJune 30,
2019: | | Total | | First Lien | | Second Lien | |
Fair value, May 22, 2019 and June 30, 2019 | | $ | — | | $ | — | | $ | — | |
Total gains or losses included in earnings: | | | | | | | |
Net change in unrealized depreciation | | (9 | ) | (9 | ) | — | |
Purchases, including capitalized PIK and revolver fundings | | 174,966 | | 111,035 | | 63,931 | |
Proceeds from sales and paydowns of investments | | (45 | ) | (45 | ) | — | |
Fair Value, September 30, 2019 | | $ | 174,912 | | $ | 110,981 | | $ | 63,931 | |
Unrealized depreciation for the period relating to those Level III assets that were still held by the Company at the end of the period: | | $ | (9 | ) | $ | (9 | ) | $ | — | |
There2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | First Lien | | Second Lien | | Subordinated | | Equity and other |
Fair Value, March 31, 2022 | $ | 1,666,499 | | | $ | 1,320,336 | | | $ | 260,072 | | | $ | 9,687 | | | $ | 76,404 | |
Total gains or losses included in earnings: | | | | | | | | | |
| | | | | | | | | |
Net change in unrealized depreciation of investments | (9,323) | | | (1,138) | | | (6,603) | | | (4) | | | (1,578) | |
Purchases, including capitalized PIK and revolver fundings | 263,385 | | | 252,530 | | | — | | | 286 | | | 10,569 | |
Proceeds from paydowns of investments | (45,552) | | | (45,552) | | | — | | | — | | | — | |
Transfers into Level III(1) | 88,913 | | | 37,417 | | | 51,496 | | | — | | | — | |
Transfers out of Level III(1) | (55,873) | | | (35,033) | | | (20,840) | | | — | | | — | |
Fair Value, June 30, 2022 | $ | 1,908,049 | | | $ | 1,528,560 | | | $ | 284,125 | | | $ | 9,969 | | | $ | 85,395 | |
Unrealized depreciation for the period relating to those Level III assets that were still held by the Company at the end of the period: | $ | (9,700) | | | $ | (1,515) | | | $ | (6,603) | | | $ | (4) | | | $ | (1,578) | |
(1)As of June 30, 2022, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.
The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended June 30, 2021, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at June 30, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | First Lien | | Second Lien | | | | Equity and other |
Fair Value, March 31, 2021 | $ | 463,293 | | | $ | 320,817 | | | $ | 142,476 | | | | | $ | — | |
Total gains or losses included in earnings: | | | | | | | | | |
| | | | | | | | | |
Net change in unrealized depreciation of investments | (1,405) | | | (24) | | | (1,379) | | | | | (2) | |
Purchases, including capitalized PIK and revolver fundings | 103,747 | | | 72,469 | | | 20,144 | | | | | 11,134 | |
Proceeds from paydowns of investments | (4,092) | | | (4,092) | | | — | | | | | — | |
Transfers into Level III(1) | 10,721 | | | 10,721 | | | — | | | | | — | |
Transfers out of Level III(1) | (70,360) | | | (25,812) | | | (44,548) | | | | | — | |
Fair Value, June 30, 2021 | $ | 501,904 | | | $ | 374,079 | | | $ | 116,693 | | | | | $ | 11,132 | |
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period: | $ | (1,378) | | | $ | 3 | | | $ | (1,379) | | | | | $ | (2) | |
(1)As of June 30, 2021, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.
The following table summarizes the changes in fair value of Level III portfolio investments for the six months ended June 30, 2022, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | First Lien | | Second Lien | | Subordinated | | Equity and other |
Fair Value, December 31, 2021 | $ | 1,512,366 | | | $ | 1,206,596 | | | $ | 221,895 | | | $ | 9,390 | | | $ | 74,485 | |
Total gains or losses included in earnings: | | | | | | | | | |
| | | | | | | | | |
Net change in unrealized depreciation of investments | (8,306) | | | (614) | | | (7,193) | | | (9) | | | (490) | |
Purchases, including capitalized PIK and revolver fundings | 402,913 | | | 382,758 | | | 8,167 | | | 588 | | | 11,400 | |
Proceeds from paydowns of investments | (57,019) | | | (57,019) | | | — | | | — | | | — | |
Transfers into Level III(1) | 131,306 | | | 31,481 | | | 99,825 | | | — | | | — | |
Transfers out of Level III(1) | (73,211) | | | (34,642) | | | (38,569) | | | — | | | — | |
Fair Value, June 30, 2022 | $ | 1,908,049 | | | $ | 1,528,560 | | | $ | 284,125 | | | $ | 9,969 | | | $ | 85,395 | |
Unrealized depreciation for the period relating to those Level III assets that were still held by the Company at the end of the period: | $ | (8,683) | | | $ | (991) | | | $ | (7,193) | | | $ | (9) | | | $ | (490) | |
(1)As of June 30, 2022, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.
The following table summarizes the changes in fair value of Level III portfolio investments for the six months ended June 30, 2021, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at June 30, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | First Lien | | Second Lien | | | | Equity and other |
Fair Value, December 31, 2020 | $ | 416,846 | | | $ | 285,360 | | | $ | 131,486 | | | | | $ | — | |
Total gains or losses included in earnings: | | | | | | | | | |
| | | | | | | | | |
Net change in unrealized appreciation (depreciation) of investments | 437 | | | 749 | | | (310) | | | | | (2) | |
Purchases, including capitalized PIK and revolver fundings | 174,521 | | | 143,243 | | | 20,144 | | | | | 11,134 | |
Proceeds from paydowns of investments | (31,380) | | | (31,380) | | | — | | | | | — | |
| | | | | | | | | |
Transfers out of Level III(1) | (58,520) | | | (23,893) | | | (34,627) | | | | | — | |
Fair Value, June 30, 2021 | $ | 501,904 | | | $ | 374,079 | | | $ | 116,693 | | | | | $ | 11,132 | |
Unrealized appreciation (depreciation) for the period relating to those Level III assets that were still held by the Company at the end of the period: | $ | 643 | | | $ | 955 | | | $ | (310) | | | | | $ | (2) | |
(1)As of June 30, 2021, portfolio investments were transferred out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.
Except as noted in the tables above, there were no
other transfers in or out of Level I, II, or III during the three
and six months ended
SeptemberJune 30,
20192022 and
the period from May 22, 2019 (inception) to SeptemberJune 30,
2019.2021. Transfers into Level III occur as quotations obtained through pricing services are deemed not representative of fair value as of the balance sheet date and such assets are internally valued. As quotations obtained through pricing services are substantiated through additional market sources, investments are transferred out of Level III. In addition, transfers out of Level III and transfers into Level III occur based on the increase or decrease in the availability of certain observable inputs.
Investments will be transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred. The Company invests in revolving credit facilities. These investments are categorized as Level III investments as these assets are not actively traded and their fair values are often implied by the term loans of the respective portfolio companies.
The Company generally uses the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. The Company typically determines the fair value of its performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio
company’scompany's performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:Prior to investment, as part of its due diligence process, the Company evaluates the overall performance and financial stability of the portfolio company. Post investment, the Company analyzes each portfolio company’scompany's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”)EBITDA growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. The Company also attempts to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of its original investment thesis. This analysis is specific to each portfolio company. The Company leverages the knowledge gained from its original due diligence process, augmented by this subsequent monitoring, to continually refine its outlook for each of its portfolio companies and ultimately form the valuation of its investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private valuation. For debt investments, the Company may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of the
Company’sCompany's debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, the Company may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for the
Company’sCompany's debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:The Company may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA)EBITDA or revenue multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk
factors, as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company EBITDA
or revenue multiples to the portfolio
company’scompany's latest twelve month
(“LTM”("LTM") EBITDA or
revenue or projected EBITDA
or revenue to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA
multipleor revenue multiples will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of
SeptemberJune 30,
20192022 and December 31, 2021, the Company used the relevant EBITDA
or revenue multiple ranges set forth in the table below to determine the enterprise value of its portfolio companies. The Company believes these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach: The Company also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security’ssecurity's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’sinvestment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach whichand a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to-maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of SeptemberJune 30, 20192022 and December 31, 2021, the Company used the discount ranges set forth in the table below to value investments in its portfolio companies. The unobservable inputs used in the fair value measurement of the
Company’sCompany's Level III investments as of
SeptemberJune 30,
20192022 were as follows:
| | | | | | | | Range | |
Type | | Fair Value as of September 30, 2019 | | Approach | | Unobservable Input | | Low | | High | | Weighted Average | |
First lien | | $ | 66,108 | | Market & income approach | | EBITDA multiple | | 11.0 | x | 35.0 | x | 21.7 | x |
| | | | | | Revenue multiple | | 3.5 | x | 11.0 | x | 7.8 | x |
| | | | | | Discount rate | | 7.6 | % | 9.5 | % | 8.5 | % |
| | 10,901 | | Market quote | | Broker quote | | N/A | | N/A | | N/A | |
| | 33,972 | | Other | | N/A(1) | | N/A | | N/A | | N/A | |
Second lien | | 22,331 | | Market & income approach | | EBITDA multiple | | 12.0 | x | 14.0 | x | 13.0 | x |
| | | | | | Discount rate | | 10.0 | % | 10.0 | % | 10.0 | % |
| | 41,600 | | Other | | N/A(1) | | N/A | | N/A | | N/A | |
| | $ | 174,912 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Range |
Type | Fair Value as of June 30, 2022 | | Approach | | Unobservable Input | | Low | | High | | Weighted Average |
First lien | $ | 1,381,244 | | | Market & income approach | | EBITDA multiple | | 7.0x | | 70.0x | | 19.2x |
| | | | | Revenue multiple | | 6.0x | | 19.5x | | 10.0x |
| | | | | Discount rate | | 7.9 | % | | 12.4 | % | | 9.7 | % |
| 41,045 | | | Market quote | | Broker quote | | N/A | | N/A | | N/A |
| 106,271 | | | Other | | N/A (1) | | N/A | | N/A | | N/A |
Second lien | 268,442 | | | Market & income approach | | EBITDA multiple | | 10.0x | | 32.0x | | 18.4x |
| | | | | Discount rate | | 10.4 | % | | 21.4 | % | | 11.5 | % |
| 15,683 | | | Market quote | | Broker quote | | N/A | | N/A | | N/A |
| | | | | | | | | | | |
Subordinated | 9,969 | | | Market & income approach | | EBITDA multiple | | 14.0x | | 20.3x | | 17.3x |
| | | | | Discount rate | | 12.4 | % | | 15.3 | % | | 13.8 | % |
| | | | | | | | | | | |
Equity and other | 76,447 | | | Market & income approach | | EBITDA multiple | | 10.0x | | 26.5x | | 14.5x |
| | | | | Revenue multiple | | 11.5x | | 19.5x | | 16.5x |
| | | | | Discount rate | | 12.0 | % | | 15.2 | % | | 13.1 | % |
| 8,948 | | | Other | | N/A (1) | | N/A | | N/A | | N/A |
| | | | | | | | | | | |
| | | | | | | | | | | |
| $ | 1,908,049 | | | | | | | | | | | |
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
The unobservable inputs used in the fair value measurement of the Company's Level III investments as of December 31, 2021 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Range |
Type | Fair Value as of December 31, 2021 | | Approach | | Unobservable Input | | Low | | High | | Weighted Average |
First lien | $ | 820,340 | | | Market & income approach | | EBITDA multiple | | 8.0x | | 70.0x | | 19.2x |
| | | | | Revenue multiple | | 4.0x | | 19.5x | | 9.1x |
| | | | | Discount rate | | 5.0 | % | | 14.3 | % | | 7.1 | % |
| 10,510 | | | Market quote | | Broker quote | | N/A | | N/A | | N/A |
| 375,746 | | | Other | | N/A (1) | | N/A | | N/A | | N/A |
Second lien | 115,588 | | | Market & income approach | | EBITDA multiple | | 12.0x | | 32.0x | | 20.9x |
| | | | | Discount rate | | 7.5 | % | | 14.1 | % | | 9.0 | % |
| 16,532 | | | Market quote | | Broker quote | | N/A | | N/A | | N/A |
| 89,775 | | | Other | | N/A (1) | | N/A | | N/A | | N/A |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Subordinated | 9,390 | | | Other | | N/A (1) | | N/A | | N/A | | N/A |
Equity and other | 56,877 | | | Market & income approach | | EBITDA multiple | | 11.0x | | 26.5x | | 14.9x |
| | | | | Revenue multiple | | 9.8x | | 19.5x | | 16.5x |
| | | | | Discount rate | | 8.0 | % | | 12.9 | % | | 11.3 | % |
| 17,608 | | | Other | | N/A (1) | | N/A | | N/A | | N/A |
| $ | 1,512,366 | | | | | | | | | | | |
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
The fair value of the
credit facilities,Wells Credit Facility (as defined below), which
areis categorized as Level
3III within the fair value hierarchy as of
SeptemberJune 30,
2019,2022 and December 31, 2021, approximates
theirits carrying value.
The fair value of the BMO Subscription Line (as defined below), which was categorized as Level III within the fair value hierarchy as of December 31, 2021, approximates its carrying value. The carrying value of the Unsecured Notes (as defined below) approximates its fair value as of June 30, 2022 and December 31, 2021, based on a comparison of market interest rates for the Company's borrowings and similar entities and is considered Level III. Additionally, the carrying amounts of the
Company’sCompany's assets and liabilities, other than investments at fair value, approximate fair value due to their short maturities.
Fair value risk factors—The Company seeks investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the Company’sCompany's portfolio companies conduct their operations, as well as general economic, political and politicalhealth conditions (including the COVID-19 pandemic), may have a significant negative impact on the operations and profitability of the Company’sCompany's investments and/or on the fair value of the Company’sCompany's investments. The Company’sCompany's investments are subject to the risk of non-payment of scheduled interest or principal, resulting in a reduction in income to the Company and their corresponding fair valuations. Also, there may be risk associated with the concentration of investments inone geographic region or in certain industries. These events are beyond the control of the Company and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.
Note 5. Agreements and Related Parties
The Company entered into an investment advisory and management agreement
(the “Investment Management Agreement”)(as defined below) with the Investment Adviser. Under the
Investment Management Agreement,investment advisory and management agreement, the Investment Adviser
will managemanages the day-to-day operations of, and
provideprovides investment advisory services, to the Company. For providing these services, the Investment Adviser receives an annual base management fee and incentive fee from the Company.
The Company's board of directors initially approved an investment advisory and management agreement (the "Prior Investment Management Agreement") between the Company and the Investment Adviser on June 18, 2019. Following approval from the Company's initial unitholders, the Prior Investment Management Agreement became effective on July 15, 2019. Pursuant to Section 15(a)(2) of the 1940 Act, the Prior Investment Management Agreement had an initial term of two years, concluding on July 15, 2021, which term could be continued only so long as such continuance was approved annually by the Company's board of directors, including a majority of the directors who are not considered "interested persons" of the Company, as the term is used under Section 2(a)(19) of the 1940 Act. Before the Prior Investment Management Agreement’s
expiration, the Company inadvertently failed to present the Prior Investment Management Agreement for renewal to its board of directors as required by Section 15(a)(2) of the 1940 Act. The failure to renew the term of the Prior Investment Management Agreement for the succeeding annual period beginning July 15, 2021 was wholly inadvertent and unintentional and did not reflect the intent and desire of the Company's board of directors or the Investment Adviser. Therefore, the Prior Investment Management Agreement was, unbeknownst to all parties involved, terminated as a technical matter effective as of July 15, 2021.
On February 16, 2022, the Company's board of directors approved a new investment advisory and management agreement (the "Investment Management Agreement") between the Company and the Investment Adviser. The Prior Investment Management Agreement and the Investment Management Agreement are identical in all material respects, including the compensation and other terms set forth therein, with the exception of the dates of execution, effectiveness and termination. On March 3, 2022, a majority of the outstanding voting securities of the Company approved the Investment Management Agreement via written consent. On March 21, 2022, the Company filed an Information Statement on Schedule 14C pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended, reflecting the unitholders' approval of the Investment Management Agreement. As a result of this approval, the Investment Management Agreement became effective on April 11, 2022. The Investment Management Agreement will have a term of two years beginning April 11, 2022, and thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (A) the vote of the board of directors, or by the vote of a majority of the outstanding voting securities of the Company and (B) the vote of a majority of the Company's directors who are not parties to this the Investment Management Agreement or "interested persons" (as such term is defined in Section 2(a)(19) of the 1940 Act) of any such party, in accordance with the requirements of the 1940 Act.
Pursuant to the Investment Management Agreement, the base management fee is payable quarterly in arrears at an annual rate of 1.15% of the aggregate contributed capital from all unitholders (including any outstanding borrowings under any subscription line drawn in lieu of capital calls) less any return of capital distributions and less any cumulative realized losses since inception (calculated net of any subsequently reversed realized losses and net of any realized gains) as of the last day of the applicable quarter.
For the period from the effective date of the Investment Management Agreement, July 15, 2019, through June 30, 2020, the base management fee will be reduced by 50% (0.575% through June 30, 2020). The base management fee could
also be reduced by any voluntary fee waivers made by the Investment Adviser. The management fee will be reduced, but not below zero, by any amounts paid by the Company or its subsidiaries to a placement agent, any organizational and offering expenses in excess of the lesser of $2,000 or 0.50% of the aggregate Capital Commitments and any fund expenses in excess of the Specified Expenses Cap
as(as defined
below.below).
The Investment Adviser has entered into agreements with placement agents that provide for ongoing payments from the Investment Adviser based upon the amount of a
unitholder’sunitholder's Capital Commitment or capital contributions. Neither the Company nor any unitholders will bear any of the fees paid to placement agents of the Company as any such fees paid by the Company will offset the management fees.
The incentive fee will consist of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on a percentage of the
Company’sCompany's income and a portion is based on a percentage of the
Company’sCompany's capital gains, each as described below.
Incentive Fee on Pre-Incentive Fee Net Investment Income
The portion based on the
Company’sCompany's income (the
‘‘Income"Income Incentive
Fee’’Fee") is based on pre-incentive fee net investment
income.Pre-incentive fee net investment income expressed as a rate of return on the value of our members’ capital at the end of the immediate preceding quarter, is compared to a ‘‘hurdle rate’’ of return of 1.75% per quarter (7.0% annualized).
The Company will pay the Investment Adviser an incentive fee quarterly in arrears with respect to the Company’s pre-incentive fee net investment income in each calendar quarter as follows:
· no incentive fee based on pre-incentive fee net investment income in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle rate of 1.75%;
· 100% of the dollar amount of our 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 rate but is less than or equal to a rate of return of 2.059% (8.235% annualized). The Company refers to this portion of the Company’s pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.059%) as the ‘‘catch-up.’’ The ‘‘catch-up’’ is meant to provide the Investment Adviser with approximately 15.0% of our pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 2.059% in any calendar quarter; and
· 15.0% of the dollar amount of the Company’s pre-incentive fee net investment income, if any, that exceeds a rate of return of 2.059% (8.235% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 15.0% of all pre-incentive fee net investment income thereafter is allocated to the Investment Adviser. ‘‘("Pre-Incentive Fee Net Investment Income’’Income"). Pre-Incentive Fee Net Investment Income means interest income, dividend income and any otherfee income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, upfront, diligence and consulting fees or other fees that we receive from Portfolio Companies)portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the management fee, expenses payable under the Administration Agreement, and any interest expense and distributions paid on any issued and outstanding preferred units, but
excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of our members' capital at the end of the immediate preceding quarter, is compared to a "hurdle rate" of return of 1.75% per quarter (7.0% annualized).
The Company will pay the Investment Adviser an incentive fee quarterly in arrears with respect to the Company's Pre-Incentive Fee Net Investment Income in each calendar quarter as follows:
•no incentive fee based on Pre-Incentive Fee Net Investment Income in any calendar quarter in which the Company's Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 1.75%;
•100% of the dollar amount of our 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 rate but is less than or equal to a rate of return of 2.059% (8.235% annualized). The Company refers to this portion of the Company's Pre-Incentive Fee Net Investment Income (which exceeds the hurdle rate but is less than 2.059%) as the "catch-up." The "catch-up" is meant to provide the Investment Adviser with approximately 15.0% of our Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply if this net investment income exceeds 2.059% in any calendar quarter; and
•15.0% of the dollar amount of the Company's Pre-Incentive Fee Net Investment Income, if any, that exceeds a rate of return of 2.059% (8.235% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 15.0% of all Pre-Incentive Fee Net Investment Income thereafter is allocated to the Investment Adviser.
For the three and six months ended June 30, 2022 and June 30, 2021, there were no incentive fees waived. The fees that are payable under the Investment Management Agreement for any partial period will be appropriately prorated.
Incentive Fee on Capital Gains
The second component of the incentive fee is the capital gains incentive fee. The Company will pay the Investment Adviser an incentive fee with respect to our cumulative realized capital gains computed net of all realized capital losses and unrealized capital depreciation since inception
(‘‘("Cumulative Net Realized
Gains’’Gains") based on the waterfall below:
a.First, no incentive fee is payable to the Investment Adviser on Cumulative Net Realized Gains until total return of capital distributions, distributions of net investment income and distributions of net realized capital gains to unitholders is equal to total capital contributions; b.Second, no incentive is payable to the Investment Adviser on Cumulative Net Realized Gains until the Company has paid cumulative distributions equal to an annualized, cumulative internal rate of return of 7.0% on the total contributed capital to the Company calculated from the date that each such amount was due to be contributed to the Company until the date each such distribution is paid; c.Third, upon a distribution that results in cumulative distributions exceeding the amounts in clause (a) and (b) above, an incentive fee on capital gains payable to the Investment Adviser equal to 100%100.0% of the amount of Cumulative Net Realized Gains until the Investment Adviser has received (together with amounts the Investment Adviser has received under Income Incentive Fees) an amount equal to 15.0% of the sum of (i) the cumulative distributions to unitholders made pursuant to clause (b) above, (ii) Income Incentive Fee paid to the Investment Adviser and (iii) amounts paid to the Investment Adviser pursuant to this clause (c); and d.Thereafter, an incentive fee on capital gains equal to 15.0% of additional undistributed Cumulative Net Realized Gains. Upon termination of the Company, the Investment Adviser will be required to return incentive fees to the Company to the extent that: (i) the Investment Adviser has received cumulative incentive fees in excess of 15.0% of the sum of (A) the
Company’sCompany's cumulative distributions other than return of capital contributions and (B) the incentive fees paid to the Investment Adviser; or (ii) the unitholders have not received a 7.0% cumulative internal rate of return; provided that in no event will such restoration be more than the incentive fees received by the Investment Adviser.
In accordance with GAAP, the Company accrues a hypothetical capital gains incentive fee based upon the cumulative net realized capital gains and realized capital losses and the cumulative net unrealized capital appreciation and unrealized capital depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on realized capital gains computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value.
Notwithstanding the foregoing, the Investment Adviser has agreed to reduce and/or waive its management fee (the
“Specified"Specified Expenses
Cap”Cap") each year such that the Company will not be required to pay Specified Expenses (as defined below) in excess of a maximum aggregate amount in any calendar year (prorated for partial years and portions of years for which each applicable prong of the cap applies) equal to: (1) during the Closing Period, 0.40% of the greater of (A) $750,000 and (B) actual aggregate Capital Commitments as of the end of such calendar year, (2) at the end of the Closing Period until the end of the Investment Period, 0.40% of aggregate committed capital and (3) after the end of the Investment Period, 0.40% of
Members’Members' Capital. Further, if the actual Capital Commitments of the Company at the end of the Closing Period are less than $750,000, the prong of the Specified Expenses Cap in clause (1) above will be retroactively adjusted to equal 0.40% of aggregate Capital Commitments at the end of the Closing Period, and the Investment Adviser has agreed to further reduce
and/or waive its management fee for the year in which the Closing Period ends in an amount equal to the difference between (A) the amount that
would have been required to be waived/reimbursed pursuant to clause (1) above as adjusted and (B) the amount previously waived/reimbursed pursuant to clause (1) above.
“Specified Expenses”"Specified Expenses" of the Company means all Company Expenses (as defined in the
Third A&R LLC Agreement) incurred in the operation of the Company with the exception of: (i) the management fee, (ii) any incentive fees, (iii) Organizational and Offering Expenses (as defined in the
limited liability company agreement, (the “LLC Agreement”))Third A&R LLC Agreement) (which are subject to
the Organizational and Offering
ExpenseExpenses Cap), (iv) Placement Fees (as defined in the
Third A&R LLC Agreement), (v) interest on and fees and expenses arising out of all Company indebtedness and other financing, (vi) costs of any litigation and damages (including the costs of any indemnity or contribution right granted to any placement agent or third-party finder engaged by the Company or its affiliates) and (vii) for the avoidance of doubt, if applicable, any investor level withholding or other taxes.
If, while the Investment Adviser is the investment adviser to the Company, the annualized Specified Expenses for a given calendar year are less than the Specified Expenses Cap, the Investment Adviser shall be entitled to reimbursement by the Company of the compensation waived and other expenses borne by the Investment Adviser (the
“Reimbursement Amount”"Reimbursement Amount") on behalf of the Company pursuant to the expense limitation and reimbursement agreement between the Company and the Investment Adviser (the
“Expense"Expense Limitation and Reimbursement
Agreement”Agreement") during any of the previous thirty-six (36) months, and provided that such amount paid to the Investment Adviser will in no event exceed the total Reimbursement Amount and will not include any amounts previously reimbursed. The Reimbursement Amount plus the annualized Specified Expenses for a given calendar year shall not exceed the Specified Expenses Cap. The Investment Adviser may recapture a Specified Expense in any year within the thirty-six month period after the Investment Adviser bears the expense. For the three
and six months ended
SeptemberJune 30,
20192022 and
the period from May 22, 2019 (inception) to SeptemberJune 30,
2019,2021, there have been no reimbursements from the Investment Adviser pursuant to this provision.
The Expense Limitation and Reimbursement Agreement may be amended by mutual agreement of the parties, provided that any amendment that could result in an increase in expenses borne by the Company also must be approved by vote of a majority of the outstanding Units.
The following table summarizes the management fees and incentive fees incurred by the Company for the three and six months ended SeptemberJune 30, 20192022 and June 30, 2021.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
Management fee | $ | 3,302 | | | $ | 1,352 | | | $ | 6,605 | | | $ | 2,397 | |
Less: management fee waiver | — | | | (156) | | | (265) | | | (260) | |
Net management fee | 3,302 | | | 1,196 | | | 6,340 | | | 2,137 | |
Incentive fee, excluding accrued incentive fees on capital gains | $ | 4,215 | | | $ | 1,337 | | | $ | 7,750 | | | $ | 2,377 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
For the
period from May 22, 2019 (inception) to Septemberthree and six months ended June 30,
2019. | | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
| | September 30, 2019 | | September 30, 2019 | |
Management fee | | $ | 362 | | $ | 362 | |
Less: management fee waiver | | (252 | ) | (252 | ) |
Total management fee | | 110 | | 110 | |
| | | | | | | |
As of September2022 and June 30, 2019,2021, no incentive fee on capital gains was accrued or owed under the Investment Management Agreement by the Company, as pre-incentive fee net investment income, expressed as a rate of return on the value of our members’ capital at the end of the immediately preceding quarter did not exceed the ‘‘hurdle rate’’ of return of 1.75% per quarter. As of September 30, 2019, no capital gains incentive fee was owed under the Investment Management Agreement by the Company, as cumulative net realized capital gains did not exceed cumulative unrealized capital depreciation.
Company.
The Company has entered into
the Administration Agreementan administration agreement, as amended and restated, with the Administrator
(the "Administration Agreement") under which the Administrator provides administrative services. The Administrator maintains, or oversees the maintenance of, the
Company’sCompany's consolidated financial records, prepares reports filed with the
United StatesU.S. Securities and Exchange Commission (the
“SEC”"SEC"), generally monitors the payment of the
Company’sCompany's expenses and oversees the performance of administrative and professional services rendered by others. The
Administrator has hired a third-party sub-administrator to assist with the provision of administrative services. The Company
will reimbursereimburses the Administrator for the
Company’sCompany's allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to the Company under the Administration Agreement, including compensation of the
Company’sCompany's chief financial officer and chief compliance officer, and their respective staffs. Pursuant to the Administration Agreement and further restricted by the Company, the Administrator may, in its own discretion, submit to the Company for reimbursement some or all of the expenses that the Administrator has incurred on behalf of the Company during any quarterly period. As a result, the amount of expenses for which the Company will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to the Company for reimbursement in the future. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three
and six months ended
SeptemberJune 30,
20192022, approximately $199 and
$457 respectively, of indirect administrative expenses were included in administrative expenses, none of which were waived by the
period from May 22, 2019 (inception) to SeptemberAdministrator. For the three and six months ended June 30,
2019,2021, approximately
$346$207 and
$346,$366, respectively, of indirect administrative expenses were included in administrative expenses, none of which were waived by the Administrator. As of
SeptemberJune 30,
2019,2022 and December 31, 2021, approximately
$346$199 and $220, respectively, of indirect administrative expenses was included in payable to affiliates.
The Company, the Investment Adviser and the Administrator have also entered into a Trademark License Agreement, as amended
(the "Trademark License Agreement"), with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the
“New Mountain”"New Mountain Capital" name. Under the Trademark License Agreement, as amended, subject to certain conditions, the Company, the Investment Adviser and the Administrator will have a right to use the
“New Mountain”"New Mountain Capital" name, for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Company. Other than with respect to this limited license, the Company, the Investment Adviser and the Administrator will have no legal right to the
“New Mountain”"New Mountain Capital" name.
The Company has adopted a formal code of ethics that governs the conduct of its officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act, the Delaware General Corporation Law and the Delaware Limited Liability Company Act.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to the
Company’sCompany's investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for the Company or for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that the Company should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff and consistent with the Investment
Adviser’sAdviser's allocation procedures. On
December 18, 2017,October 8, 2019, the SEC issued an exemptive order (the
“Exemptive Order”"Exemptive Order")
, to the Investment Adviser and certain of its affiliates, which superseded a prior order issued on
June 5,December 18, 2017, which permits the Company to co-invest in portfolio companies with certain
funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, the Company is permitted to co-invest with its affiliates if a “required majority”"required majority" (as defined in Section 57(o) of the 1940 Act) of the Company’sCompany's independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to the Company and its unitholders and do not involve overreaching in respect of the Company or its unitholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of the Company’sCompany's unitholders and is consistent with its then-current investment objective and strategies.
In addition, pursuant to an exemptive order issued by the SEC on April 8, 2020 and applicable to all BDCs through December 31, 2020 (the "Temporary Relief"), the Company was permitted, subject to the satisfaction of certain conditions, to co-invest in our existing portfolio companies with certain affiliates that are private funds if such private funds did not have an investment in such existing portfolio company. Without the Temporary Relief, such private funds would not be able to participate in such co-investments with the Company unless the private funds had previously acquired securities of the portfolio company in a co-investment transaction with the Company. Although the Temporary Relief expired on December 31, 2020, the SEC’s Division of Investment Management had indicated that until March 31, 2022, it would not recommend enforcement action, to the extent that any BDC with an existing co-investment order continues to engage in certain transactions described in the Temporary Relief, pursuant to the same terms and conditions described therein. The Temporary Relief is no longer effective; however, the Company filed an application to amend its existing Exemptive Order on May 24, 2022, as amended on June 22, 2022, to permit the Company to continue to co-invest in its existing portfolio companies with certain affiliates that are private funds if such private funds did not have an investment in such existing portfolio company, subject to certain conditions. There can be no assurance if and when the Company will receive the exemptive order.
BMO Subscription Line—On July 30, 2019, the Company entered into a Loan Authorization Agreement with BMO Harris Bank N.A. (“BMO”("BMO") (as amended, from time to time, and most recently amended on March 9, 2022, the “BMO"BMO Subscription Line”Line"), which allowsallowed the Company to borrow on a revolving credit basis an aggregate principal amount which cannotcould not exceed the lower of $250,000 or 80.0% of the remaining unfunded Capital Commitments of the Company. AllOn March 25, 2022, all outstanding borrowings under the BMO Subscription Line are due on BMO’s demand within 15 business days or onwere repaid and the date 6 months after each advance. The BMO Subscription Line is collateralized by the unfunded Capital Commitments of each of the Company’s unitholders. All fees associatedfacility was terminated in connection with the origination offinal drawdown on Capital Commitments.
From July 30, 2019 to March 9, 2022, the BMO Subscription Line
are capitalized on the Consolidated Statement of Assets, Liabilities and Members’ Capital and amortized and charged against income as other financing costs over the life of the BMO Subscription Line. As of the most recent amendment, the BMO Subscription Line bearsbore interest at the greater of the prime commercial rate minus 0.25% per annum or the three-month London Interbank Offered Rate
(“LIBOR”("LIBOR") for each day plus 2.50% per annum.
For both As of the three months ended September 30, 2019 andmost recent amendment on March 9, 2022, in addition to certain other changes, the period from May 22, 2019 (inception)BMO Subscription Line was amended to September 30, 2019,bear interest at the greater of the prime commercial rate minus 0.25% per annum or the Secured Overnight Financing Rate ("SOFR") Quoted Rate (as defined below) for such day plus 2.50% per annum. SOFR Quoted Rate means as of any day of determination, 3-month Term SOFR on the date that is two U.S. Government Securities Business Days prior to such day of determination as such rate is published by the Term SOFR Administrator plus a credit spread adjustment of 0.15%.
The following table summarizes the interest expense and amortization of financing costs incurred on the BMO Subscription Line were $314for the three and $10, respectively.six months ended June 30, 2022 and June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022(1) | | June 30, 2021 |
Interest expense | $ | — | | | $ | 938 | | | $ | 653 | | | $ | 1,545 | |
Amortization of financing costs | — | | | 1 | | | 7 | | | 4 | |
Weighted average interest rate | — | % | | 3.0 | % | | 3.0 | % | | 3.0 | % |
Effective interest rate | — | % | | 3.0 | % | | 3.1 | % | | 3.0 | % |
Average debt outstanding | $ | — | | | $ | 125,407 | | | $ | 94,578 | | | $ | 103,871 | |
(1)For the six months ended June 30, 2022, amounts reported represent the period from January 1, 2022 to March 25, 2022 (termination of the BMO Subscription Line).
As of
September 30, 2019,December 31, 2021, the outstanding balance on the BMO Subscription Line was
$118,415$92,000, and the Company was in compliance with the applicable covenants in the BMO Subscription Line on such date.
Wells Credit Facility—On August 30, 2019, the Company’sCompany's wholly-owned subsidiary, GIII SPV, entered into athe Loan and Security Agreement (the ‘‘Wells(as amended, from time to time, the "Wells Credit Facility’’Facility") as the Borrower,borrower, the Company as Collateral Managercollateral manager and Equityholder,equityholder, the lenders from time to time party thereto, and Wells Fargo Bank, National Association ("Wells Fargo") as the Administrative Agentadministrative agent and the Collateral Custodian,collateral custodian, which is structured as a secured revolving credit facility.facility (See Note 13. Subsequent Events, for a description of Amendment No. 6, dated July 7, 2022, to the Wells Credit Facility). The Wells Credit Facility will mature on August 30, 2024July 15, 2025 and has an initiala maximum facility amount of $150,000$725,000, which may increase in size, under certain circumstances, up to a total of $300,000.$800,000. Under the Wells Credit Facility, GIII SPV is permitted to borrow up to 25.0%, 45.0%, 55.0%, 70.0% or 75.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association.Fargo. The Wells Credit Facility is non-recourse to the Company and is collateralized by all of the investments of GIII SPV on an investment by investment basis. All fees associated with the origination, amending or upsizing of the Wells Credit Facility are capitalized on the Company’sCompany's Consolidated StatementStatements of Assets, Liabilities and Members’Members' Capital and charged against income as other financing expenses over the life of the Wells Credit Facility. The Wells Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of GIII SPV investments, but rather to the performance of the underlying portfolio companies.The
As of the amendment on March 11, 2022 and through the time of this Quarterly Report on Form 10-Q, the Wells Credit Facility bears interest at a rate of
Daily Simple SOFR plus 1.80% per annum for Broadly Syndicated Loans (as defined in the Fourth Amendment to the Loan and Security Agreement) and Daily Simple SOFR plus 2.30% per annum for all other investments. Previously, the Wells Credit Facility bore interest at a rate of LIBOR plus
1.75%1.65% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus
2.25%2.15% per annum for all other investments. The Wells Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the
Fourth Amendment to the Loan and Security Agreement).
For both
The following table summarizes the three months ended September 30, 2019 and the period from May 22, 2019 (inception) to September 30, 2019, interest expense, non-usage fees and amortization of financing costs incurred on the Wells Credit Facility were $12, $64for the three and $28, respectively.six months ended June 30, 2022 and June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
Interest expense | $ | 3,852 | | | $ | 997 | | | $ | 7,191 | | | $ | 1,640 | |
Non-usage fee | 227 | | | 43 | | | 265 | | | 207 | |
Amortization of financing costs | 325 | | | 118 | | | 624 | | | 223 | |
Weighted average interest rate | 2.9 | % | | 2.3 | % | | 2.6 | % | | 2.4 | % |
Effective interest rate | 3.4 | % | | 2.8 | % | | 3.0 | % | | 3.0 | % |
Average debt outstanding | $ | 519,001 | | | $ | 168,232 | | | $ | 546,868 | | | $ | 138,664 | |
As of SeptemberJune 30, 2019,2022 and December 31, 2021, the outstanding balance on the Wells Credit Facility was $39,600$647,100 and $473,100, respectively, and GIII SPV was in compliance with the applicable covenants in the Wells Credit Facility on such date.dates.
Unsecured Notes—On August 4, 2021, the Company entered into a Master Note Purchase Agreement (the "Note Purchase Agreement") with certain institutional investors (the "Purchasers"). Pursuant to the Note Purchase Agreement, on
August 4, 2021, the Company issued to the Purchasers, in a private placement, $125,000 in aggregate principal amount of 3.57% Series 2021A Senior Notes, Tranche A, due July 15, 2025 (the "2021A Tranche A Notes"), and on December 21, 2021, at a second closing, the Company issued $50,000 in aggregate principal amount of 3.62% Series 2021A Senior Notes, Tranche B, due July 15, 2025 (the "2021A Tranche B Notes" and, together with the Tranche A Notes, the "2021A Unsecured Notes"). On March 10, 2022, the Company entered into a first supplement (the "Supplement") to its Note Purchase Agreement with certain Purchasers. Pursuant to the Supplement, on March 10, 2022, the Company issued to the Purchasers $100,000 in aggregate principal amount of 3.95% Series 2022A Senior Notes due July 15, 2025 (the “2022A Unsecured Notes”).
All fees associated with the origination of the 2021A Unsecured Notes and the 2022A Unsecured Notes (together, the "Unsecured Notes") are capitalized on the Company's Consolidated Statements of Assets, Liabilities and Members' Capital and charged against income as other financing expenses over the life of the Unsecured Notes.
The 2021A Tranche A Notes and the 2021A Tranche B Notes bear interest at an annual rate of 3.57% and 3.62%, respectively, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2022. The 2022A Unsecured Notes bear interest at an annual rate of 3.95%, payable semi-annual on January 15 and July 15 of each year, which will commence on July 15, 2022. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the Unsecured Notes or the Company cease to have an investment grade rating or (ii) the Asset Coverage Ratio (as defined in the Note Purchase Agreement) is less than 1.83 to 1.00.
The Company is obligated to offer to prepay the Unsecured Notes (i) each time the Company receives an aggregate amount of net proceeds from the repayment, or sale, of loans or investments that constitute Company Level Assets (as defined in the Note Purchase Agreement) and (ii) each time the Company receives an aggregate amount of net proceeds, or if the Company is permitted to receive an aggregate amount of net proceeds, from the distribution of Wells Residual Equity (as defined in the Note Purchase Agreement), in each case that is at least equal to the lesser of (A) $25,000 and (B) 10% of the aggregate principal of Unsecured Notes issued under the Note Purchase Agreement and the Supplement.
The Note Purchase Agreement also contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a business development company under the 1940 Act and a regulated investment company under Subchapter M of the Code, minimum stockholders’ equity, and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of the Company or certain subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Note Purchase Agreement includes certain additional covenants and terms, including, without limitation, a requirement that the Company will not permit the Asset Coverage Ratio to be less than the greater of (x) 1.50 to 1.00 and (y) the minimum asset coverage required to be held by the Company to comply with the 1940 Act.
The Unsecured Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to the Company's existing and future unsecured indebtedness that is not so subordinated; and effectively junior in right of payment to any of the Company's secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries and financing vehicles.
For the three months ended June 30, 2022, interest expense and amortization of financing costs incurred on the Unsecured Notes were $2,544 and $195, respectively. The weighted average interest rate and effective interest rate on the Unsecured Notes for the three months ended June 30, 2022 were 3.7% and 4.0%, respectively. For the six months ended June 30, 2022, interest expense and amortization of financing costs incurred on the Unsecured Notes were $4,354 and $341, respectively. The weighted average interest rate and effective interest rate on the Unsecured Notes for the six months ended June 30, 2022 were 3.7% and 4.0%, respectively.
As of June 30, 2022 and December 31, 2021, the outstanding balance on the Unsecured Notes was $275,000 and $175,000, respectively, and the Company was in compliance with the applicable covenants in the Note Purchase Agreement on such dates.
Leverage risk factors—The Company utilizes and may utilize leverage to the maximum extent permitted by the law for investment and other general business purposes. The Company’sCompany's lenders will have fixed dollar claims on certain assets that are superior to the claims of the Company’sCompany's common unitholders, and the Company would expect such lenders to seek recovery against these assets in the event of a default. The use of leverage also magnifies the potential for gain or loss on amounts invested. Leverage may magnify interest rate risk (particularly on the Company’sCompany's fixed-rate investments), which is the risk that the prices of portfolio investments will fall or rise if market interest rates for those types of securities rise or fall. As a result, leverage may cause greater changes in the Company’s members’Company's members' capital. Similarly, leverage may cause a sharper decline in the Company’s
Company's income than if the Company had not borrowed. Such a decline could negatively affect the
Company’sCompany's ability to make distributions to its unitholders. Leverage is generally considered a speculative investment technique. The
Company’sCompany's ability to service any debt incurred will depend largely on financial performance and will be subject to prevailing economic conditions and competitive pressures.
The Company
intends to electhas elected to be treated
for U.S. federal income tax purposes as a RIC under Subchapter M of the Code,
with the filing of its first tax return for the year ending December 31, 2019, and
thereafter intends to comply with the requirements to continue to qualify and maintain its status as a RIC annually. In order to continue to qualify and be subject to tax
treatment as a RIC, among other things, the Company is required to timely distribute to its unitholders at least 90.0% of
its investment company taxable income, as defined by the Code, for each year. The Company,
among other things, intends to make
and will continue to take the requisite
timely distributions to its unitholders, and as such, the Company will generally be relieved from U.S. federal, state, and local income taxes (excluding excise taxes which may be imposed under the Code).
Additionally, as a BDC, the Company must not acquire any assets other than
“qualifying assets” specified"qualifying assets" as defined in
Section 55(a) of the 1940 Act unless, at the time the acquisition is made, at least 70.0% of its total assets are qualifying assets (with certain limited exceptions). In addition, the Company must offer to make available to all
eligible"eligible portfolio
companiescompanies" (as defined in the 1940 Act) significant managerial assistance.
Note 8. Commitments and Contingencies
In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company may also enter into future funding commitments such as revolving credit facilities, bridge financing commitments or delayed draw commitments. As of
SeptemberJune 30,
2019,2022, the Company had unfunded commitments on revolving credit facilities of
$3,192,$81,889, no outstanding bridge financing commitments, and other future funding commitments of
$12,192.$234,634. As of December 31, 2021, the Company had unfunded commitments on revolving credit facilities of $71,664, no outstanding bridge financing commitments and other future funding commitments of $288,517. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the
Company’sCompany's Consolidated
ScheduleSchedules of Investments.
The Company also has revolving borrowings available under the Wells Credit Facility as of SeptemberJune 30, 2019.2022 and had revolving borrowings available under the Wells Credit Facility and BMO Subscription Line as of December 31, 2021. See Note 6. Borrowings, for details. The Company may from time to time enter into financing commitment letters. As of
SeptemberJune 30,
2019,2022 and December 31, 2021, the Company had commitment letters to purchase investments in the aggregate par amount of
$22,500$30,414 and $45,900, respectively, which could require funding in the future.
COVID-19 Developments
The Company's operating results and portfolio companies may be negatively impacted by the ongoing COVID-19 pandemic. The Company has been closely monitoring, and will continue to monitor, the impact of the COVID-19 pandemic, including new variants of COVID-19, on all aspects of our business, including how it will impact the Company's portfolio companies, employees, due diligence, and the financial markets. Any effects of the COVID-19 pandemic will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.
The extent of the impact of the COVID-19 pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy, all of which are highly uncertain and cannot be predicted. To the extent the Company's portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on the Company's future net investment income, the fair value of the Company's portfolio investments and financial condition.
While general economic conditions have improved since the beginning of the COVID-19 pandemic, the Company continues to see reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both in the United States and globally. Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may continue to experience downturns, and the Company anticipate its business and operations could be materially adversely affected by a prolonged recession in the United States and other major markets.
For additional discussion on the Company's portfolio companies, see Item 2 — Monitoring of Portfolio Investments.
Note 9.
Members’Members' Capital
On July 5, 2019,
The following table summarizes the Companytotal Units issued 100 Unitsand proceeds received related to capital drawdowns delivered pursuant to the Investment AdviserSubscription Agreements for the six months ended June 30, 2022.
| | | | | | | | | | | | | | | | | | | | |
Drawdown Date | | Unit Issue Date | | Units Issued | | Aggregate Offering Price |
March 10, 2022 | | March 24, 2022 | | 22,981,305 | | | $ | 229,812 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
The following table summarizes the total Units issued and proceeds of $1. On July 19, 2019, the Companyreceived related to capital drawdowns delivered a drawdown notice to its investors relatingpursuant to the issuance of 4,933,964 UnitsSubscription Agreements for an aggregate purchase price of $49,340. the six months ended June 30, 2021.
| | | | | | | | | | | | | | | | | | | | |
Drawdown Date | | Unit Issue Date | | Units Issued | | Aggregate Offering Price |
February 26, 2021 | | February 26, 2021 | | 5,250,000 | | | $ | 52,500 | |
February 26, 2021 | | March 11, 2021 | | 105,000 | | | 1,050 | |
May 25, 2021 | | June 9, 2021 | | 2,500,500 | | | 25,005 | |
| | | | | | |
| | | | | | |
| | | | 7,855,500 | | | $ | 78,555 | |
The Units were issued to investorsfollowing table reflects the distributions declared on August 2, 2019. On August 21, 2019, the Company delivered a drawdown notice to its investors relating toCompany's common units for the issuance of 4,933,964 Unitssix months ended June 30, 2022.
| | | | | | | | | | | | | | | | | | | | |
Date Declared | | Record Date | | Payment Date | | Per Unit Amount |
March 29, 2022 | | March 30, 2022 | | April 20, 2022 | | $ | 0.181 | |
June 27, 2022 | | June 29, 2022 | | July 20, 2022 | | 0.217 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | $ | 0.398 | |
The following table reflects the distributions declared on the Company's common units for an aggregate purchase price of $49,340. The Units were issued to investors on September 5, 2019.On Septemberthe six months ended June 30, 2019, the Investment Adviser’s 100 Units were canceled and the proceeds of the purchase, $1, were returned.
As of September 30, 2019, no distributions had been declared or paid by the Company.
2021. | | | | | | | | | | | | | | | | | | | | |
Date Declared | | Record Date | | Payment Date | | Per Unit Amount |
February 24, 2021 | | February 25, 2021 | | April 13, 2021 | | $ | 0.12 | |
March 26, 2021 | | March 30, 2021 | | April 13, 2021 | | 0.08 | |
June 2, 2021 | | June 8, 2021 | | July 13, 2021 | | 0.16 | |
June 25, 2021 | | June 29, 2021 | | July 13, 2021 | | 0.09 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | $ | 0.45 | |
Note 10. Earnings Per Unit
The following information sets forth the computation of basic net increase in the
Company’s members’Company's members' capital per unit resulting from operations for the three
and six months ended
SeptemberJune 30,
20192022 and
the period from May 22, 2019 (inception) to SeptemberJune 30,
2019: | | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
| | September 30, 2019 | | September 30, 2019 | |
Earnings per unit—basic & diluted | | | | | |
Numerator for basic & diluted earnings per unit: | | $ | 1,564 | | $ | 914 | |
Denominator for basic & diluted weighted average unit: | | 4,612,278 | | 3,214,618 | |
Basic & diluted earnings per unit: | | $ | 0.34 | | $ | 0.28 | |
2021: | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
Earnings per unit—basic & diluted | | | | | | | |
Numerator for basic & diluted earnings per unit: | $ | 7,979 | | | $ | 6,101 | | | $ | 27,241 | | | $ | 14,209 | |
Denominator for basic & diluted weighted average unit: | 114,906,527 | | | 31,338,974 | | | 104,495,107 | | | 29,374,049 | |
Basic & diluted earnings per unit: | $ | 0.07 | | | $ | 0.19 | | | $ | 0.26 | | | $ | 0.48 | |
Note 11. Financial Highlights
The following information sets forth the
Company’sCompany's financial highlights
from May 22, 2019 (inception) to Septemberfor the six months ended June 30,
2019. | | For the period from May 22, 2019 (inception) to | |
| | September 30, 2019 | |
Per unit data(1): | | | |
Members’ capital, May 22, 2019 | | $ | — | |
Net investment income | | 0.22 | |
Net realized and unrealized gains (losses)(2) | | (0.12 | ) |
Total net increase | | 0.10 | |
Issuance of Units | | 10.00 | |
Placement fees | | (0.01 | ) |
Members’ capital, September 30, 2019 | | $ | 10.09 | |
Total return based on members’ capital(3) | | 0.88 | % |
Units outstanding at end of period | | 9,867,928 | |
Average weighted units outstanding for the period | | 3,214,618 | |
Average members’ capital for the period | | $ | 32,153 | |
Ratio to average members’ capital: | | | |
Net investment income(4) | | 11.35 | % |
Total expenses, before waivers/reimbursements(4) | | 14.29 | % |
Total expenses, net of waivers/reimbursements(4) | | 12.12 | % |
Asset coverage ratio | | 163.00 | % |
Portfolio turnover | | 0.05 | % |
| | | |
Capital Commitments | | $ | 246,698 | |
Funded Capital Commitments | | $ | 98,679 | |
% of Capital Commitments Funded | | 40.00 | % |
2022 and June 30, 2021.
| | | | | | | | | | | | | |
| Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | |
Per unit data(1): | | | | | |
Members' capital, December 31, 2021 and December 31, 2020, respectively | $ | 9.95 | | | $ | 10.00 | | | |
Net investment income | 0.42 | | | 0.46 | | | |
Net realized and unrealized (losses) gains(2) | (0.18) | | | 0.01 | | | |
Total net increase | 0.24 | | | 0.47 | | | |
| | | | | |
| | | | | |
Distributions declared to unitholders from net investment income | (0.40) | | | (0.45) | | | |
| | | | | |
| | | | | |
Members' capital, June 30, 2022 and June 30, 2021, respectively | $ | 9.79 | | | $ | 10.02 | | | |
Total return based on members' capital(3) | 2.48 | % | | 4.72 | % | | |
Units outstanding at end of period | 114,906,527 | | | 33,234,958 | | | |
Average weighted units outstanding for the period | 104,495,107 | | | 29,374,049 | | | |
Average members' capital for the period | $ | 1,038,968 | | | $ | 294,980 | | | |
Ratio to average members' capital: | | | | | |
Net investment income(4) | 8.53 | % | | 9.28 | % | | |
Total expenses, before waivers/reimbursements(4) | 5.82 | % | | 6.56 | % | | |
Total expenses, net of waivers/reimbursements(4) | 5.77 | % | | 6.38 | % | | |
| | | | | |
Average debt outstanding—Unsecured Notes | $ | 237,431 | | | $ | — | | | |
Average debt outstanding—BMO Subscription Line(5) | $ | 94,578 | | | $ | 103,871 | | | |
Average debt outstanding—Wells Credit Facility | $ | 546,868 | | | $ | 138,664 | | | |
Asset coverage ratio | 222.04 | % | | 203.20 | % | | |
Portfolio turnover | 2.49 | % | | 8.30 | % | | |
| | | | | |
Capital Commitments | $ | 1,149,065 | | | $ | 553,916 | | | |
Funded Capital Commitments | $ | 1,149,065 | | | $ | 332,350 | | | |
% of Capital Commitments funded | 100.00 | % | | 60.00 | % | | |
(1)Per unit data is based on weighted average units outstanding for the respective period (except for issuance of Units,distributions declared to unitholders, which isare based on actual rate per unit). (2)The total amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of capital drawdowns.transactions, which for the six months ended June 30, 2022 and June 30, 2021 were $(0.02) and $(0.02), respectively.
(3)Total return is calculated assuming an initiala purchase priceat members' capital per Unit on the first day of $10.00 per unitthe year and a sale at “members’members' capital per Unit”Unit on the last day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at the members’members' capital per Unit on the last day of the respective quarter. Total return calculation is not annualized. (4)Annualized, except organizational and offering costs.
(5)For the six months ended June 30, 2022, average debt outstanding represents the period from January 1, 2022 to March 25, 2022 (termination of the BMO Subscription Line).
Note 12. Recent Accounting Standards Updates
In August 2018,March 2020, the FASBFinancial Accounting Standards Board issued Accounting Standards Update No. 2018-13, Fair Value Measurement2020-04, Reference Rate Reform (Topic 820)848): Disclosure Framework-Changes toFacilitation of the Disclosure Requirements for Fair Value Measurement (“Effects of Reference Rate Reform on Financial Reporting ("ASU 2018-13”2020-04"). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard will modifyis effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the disclosureimpact of the optional guidance on the Company's consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the six months ended June 30, 2022.
Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for
determining fair value
measurements by removing, modifying, or adding certain disclosures. ASU 2018-13 is effectivein good faith for
annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period.purposes of the 1940 Act. The Company is
permittedevaluating the impact of adopting Rule 2a-5 on the consolidated financial statements and intends to
early adopt any removedcomply with the new rule’s requirements on or
modified disclosures upon issuance of ASU 2018-13 and delay adoption ofbefore the
additional disclosures until their effective date. The Company has elected to early adopt ASU 2018-13 as ofcompliance date in September
30, 2019.2022.
Note 13. Subsequent Events
On October 8, 2019, the SEC issued an exemptive order (the “New Order”) permittingJuly 7, 2022 , the Company entered into Amendment No. 6 to Loan and certain ofSecurity Agreement (together with the Company’s affiliatesexhibits and schedules thereto, the "Sixth Amendment"), which amended the Wells Credit Facility. Pursuant to co-invest togetherthe Sixth Amendment, in portfolio companies subjectaddition to certain conditions included therein. The New Order supersedesother changes, State Street Bank and Trust Company became a lender under the Company’s existing co-investment exemptive order, which was granted byWells Credit Facility. As of July 7, 2022, the SEC on December 18, 2017, and expands on the Company’s abilitymaximum facility amount increased from $725,000 to co-invest with certain affiliates.$800,000.
Table of Contents
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
unitholdersUnitholders and the
boardBoard of
directorsDirectors of New Mountain Guardian III BDC, L.L.C.
Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated statement of assets, liabilities and members’ capital of New Mountain Guardian III BDC, L.L.C. and
subsidiarysubsidiaries (the
“Company”"Company"), including the consolidated schedule of investments, as of
SeptemberJune 30,
2019,2022, and the related consolidated statements of operations and changes in members’ capital for the three-month
periodand six-month periods ended
SeptemberJune 30,
20192022 and
2021, the
period from May 22, 2019 (inception) to September 30, 2019, andconsolidated statements of cash flows for the
period from May 22, 2019 (inception) to Septembersix-month periods ended June 30,
2019,2022 and 2021, and the related notes (collectively referred to as the
“interim"interim financial
information”information"). Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets, liabilities and members’ capital of the Company, including the consolidated schedule of investments, as of December 31, 2021, and the related consolidated statements of operations, changes in members’ capital and cash flows for the year then ended (not presented herein); and in our report dated March 9, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets, liabilities and members’ capital as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated statement of assets, liabilities and members’ capital from which it has been derived.
This interim financial information is the responsibility of the
Company’sCompany's management. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviewreviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion./s/ DELOITTE & TOUCHE LLP
| |
| |
November 13, 2019
| |
opinion.
/s/ DELOITTE & TOUCHE LLP
August 12, 2022
Item 2.
Management’s Management's Discussion and Analysis of Financial Condition and Results of OperationsThe information in
management’smanagement's discussion and analysis of financial condition and results of operations relates to New Mountain Guardian III BDC, L.L.C., including its wholly-owned direct
subsidiarysubsidiaries (collectively,
“we”"we",
“us”"us",
“our”"our",
“GIII”"GIII" or the
“Company”"Company").
Forward-Looking Statements
The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this report. Some of the statements in this report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:
·•statements concerning the impact of a protracted decline in the liquidity of credit markets;·•the general economy, including interest and inflation rates, and itsthe impact of the COVID-19 pandemic thereon;
•the impact of interest rate volatility, including the decommissioning of LIBOR and rising interest rates, on the industries in which we invest;our business and our portfolio companies;
·•our future operating results, our business prospects, and the adequacy of our cash resources and working capital;capital, and the impact of the COVID-19 pandemic thereon;
·•the ability of our portfolio companies to achieve their objectives;objectives and the impact of the COVID-19 pandemic thereon;
·•our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of our investments;·•the ability of New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”"Investment Adviser") or its affiliates to attract and retain highly talented professionals;·•actual and potential conflicts of interest with the Investment Adviser and New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, “New"New Mountain Capital”Capital") whose ultimate owners include Steven B. Klinsky, other current and former New Mountain Capital professionals and related vehicles and other vehicles;a minority investor; and·•the risk factors set forth in Item 1A.—Risk Factorscontained in our registration statementAnnual Report on Form 10 filed with10-K for the SECyear ended December 31, 2021 and in this quarterly reportQuarterly Report on Form 10-Q.Forward-looking statements are identified by their use of such terms and phrases such as “anticipate”"anticipate", “believe”"believe", “continue”"continue", “could”"could", “estimate”"estimate", “expect”"expect", “intend”"intend", “may”"may", “plan”"plan", “potential”"potential", “project”"project", “seek”"seek", “should”"should", “target”"target", “will”"will", “would”"would" or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Item 1A.—Risk Factors contained in our registration statementannual report on Form 10 filed with10-K for the SECyear ended December 31, 2021 and in this quarterly reportQuarterly Report on Form 10-Q. We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the United StatesU.S. Securities and Exchange Commission (the “SEC”"SEC"), including annual reports on Form 10-K, registration statements on Form 10, quarterly reports on Form 10-Q and current reports on Form 8-K.8-K
. We are a Delaware limited liability company formed on May 22, 2019. We are a
closed-end, non-diversified management investment company that has elected to be regulated as a business development company
(‘‘BDC’’("BDC") under the Investment Company Act of 1940, as amended (the
‘‘1940 Act’’"1940 Act"). We
intend to electhave elected to be treated for
United States (‘‘U.S.
’’) federal income tax purposes as a regulated investment company
(‘‘RIC’’("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the
‘‘Code’’"Code").
The Investment Adviser is a wholly-owned subsidiary of New Mountain
Capital. New Mountain Capital
Group, L.P. whose ultimate owners include Steven B. Klinsky and related other vehicles.is a firm with a track record of investing in the middle market. The Investment Adviser manages our day-to-day operations and provides us with investment advisory
and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to our’s.ours. New Mountain Finance Administration, L.L.C. (the ‘‘Administrator’’
"Administrator"), a wholly-owned subsidiary of New Mountain Capital,
intends to provideprovides the administrative services necessary to conduct our day-to-day operations.
The Administrator has hired a third-party sub-administrator to assist with the provision of administrative services.
We conducted a private offering (the
“Private Offering”"Private Offering") of units of our limited liability company interests (the
“Units”"Units") to investors in reliance on exemptions from the registration requirements of the Securities
Act.Act of 1933, as amended (the "Securities Act"). Units
will bewere offered for subscription continuously throughout the Closing Period (as defined below). Each investor in the Private Offering made a capital commitment (each, a
“Capital Commitment”"Capital Commitment") to purchase Units pursuant to a subscription agreement entered into with us (a
“Subscription Agreement”"Subscription Agreement").
We expect closingsClosings of the Private Offering
will occur,occurred, from time to time, in the Investment
Adviser’sAdviser's sole discretion, during the 18-month period
(the “Closing Period”) following the initial closing of Capital Commitments, which occurred on July 15,
2019.2019 (the "Closing Period"). Pursuant to the Limited Liability Company Agreement, as amended and restated on July 22, 2021 (the "Third A&R LLC Agreement"), the Closing Period was extended to and ended on October 15, 2021. We
may acceptaccepted and
drawdrew down
on Capital Commitments from investors throughout the Closing
Period.Period and drew down on Capital Commitments throughout the Investment Period (as defined below). At the end of the Closing Period, we had aggregate Capital Commitments from investors of $1.15 billion. We commenced our loan origination and investment activities contemporaneously with the initial drawdown from investors in the Private Offering, which occurred on August 2, 2019 (the
“Initial Drawdown,” and the date on which the Initial Drawdown occured)"Initial Drawdown"). The
“Investment Period”investment period began on July 15, 2019 and will continue until
July 15, 2023, the four-year anniversary of such
date.date (the "Investment Period"). Our term is
until July 15, 2025, six years from July 15, 2019, subject to (i) a one year extension as determined by the Investment Adviser in its sole discretion and (ii) an additional one year extension as determined by our board of directors.
We established New Mountain Guardian III SPV, L.L.C.
(“("GIII
SPV”SPV") as a wholly-owned direct subsidiary whose assets are used to secure GIII
SPV’sSPV's credit facility.
We established New Mountain Guardian III OEC, Inc. ("GIII OEC") as a wholly-owned direct subsidiary, which serves as a tax blocker corporation by holding equity or equity-like investments in one of our portfolio companies organized as a limited liability company; we consolidate our tax blocker corporation for accounting purposes but the tax blocker corporation is not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expense as a result of our ownership of the portfolio company.
Our investment objective is to generate current income and capital appreciation primarily by investing in or originating debt investments in companies that the Investment Adviser believes are
‘‘defensive growth’’"defensive growth" companies in non-cyclical industry niches where the Investment Adviser has developed strong proprietary research and operational advantages. We make investments through both primary originations and open-market secondary purchases. We predominantly target loans to, and invest in, U.S. middle market
businesses, a market segment we believe continues to be underserved by other lenders.businesses. We define middle market businesses as those businesses with annual earnings before interest, taxes, depreciation, and amortization
(‘‘EBITDA’’("EBITDA") between $10.0 million and $200.0 million.
In some cases, we may also include equity interest. The primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. As of
SeptemberJune 30,
2019,2022, our top five industry concentrations were software,
business services, healthcare services,
businessconsumer services
education and
healthcare information technology.financial services.
As of
SeptemberJune 30,
2019,2022, our
members’members' capital was approximately
$99.5$1,125.3 million and our portfolio had a fair value of approximately
$229.6$2,052.7 million in
20100 portfolio companies.
On October 8, 2019,July 7, 2022 , we entered into Amendment No. 6 to Loan and Security Agreement (together with the SEC issued an exemptive order (the “New Order”exhibits and schedules thereto, the "Sixth Amendment") permitting uswhich amended the Wells Credit Facility. Pursuant to the Sixth Amendment, in addition to certain other changes, State Street Bank and certainTrust Company became a lender under the Wells Credit Facility. As of July 7, 2022, the maximum facility amount increased from $725.0 million to $800.0 million.
COVID-19 Developments
Our operating results and portfolio companies may be negatively impacted by the ongoing COVID-19 pandemic. We have been closely monitoring, and will continue to monitor, the impact of the COVID-19 pandemic, including new variants of COVID-19, on all aspects of our affiliates to co-invest together inbusiness, including how it will impact our portfolio companies, subject to certain conditions included therein. employees, due diligence, and the financial markets. Any effects of the COVID-19 pandemic will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.
The New Order supersedesextent of the impact of the COVID-19 pandemic on the financial performance of our existing co-investment exemptive order,current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy, all of which was grantedare highly uncertain and cannot be predicted. To the extent our portfolio companies are adversely impacted by the SEC on December 18, 2017, and expandseffects of the COVID-19 pandemic, it may have a material adverse impact on our abilityfuture net investment income, the fair value of our portfolio investments and our financial condition.
While general economic conditions have improved since the beginning of the COVID-19 pandemic, we continue to
co-invest with certain affiliates.see reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both in the United States and globally. Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may continue to experience downturns, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States and other major markets.
For additional discussion on our portfolio companies, see "— Monitoring of Portfolio Investments".
Critical Accounting
PoliciesEstimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States
of America (“GAAP”("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting
policies.estimates.
We consolidate our wholly-owned direct subsidiarysubsidiaries GIII SPV.SPV and GIII OEC. We are an investment company following accounting and reporting guidance as described in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, (“("ASC 946”946").
Valuation and Leveling of Portfolio Investments
For the period from May 22, 2019 (inception) to September 30, 2019,
At all times, consistent with GAAP and the 1940 Act, we conduct a valuation of
our assets, which impacts our
members’members' capital.
We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services. (2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP. a. Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the
investment’sinvestment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b. For investments other than bonds, we look at the number of quotes readily available and perform the following procedures:
i. Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes
obtained;obtained. We will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, we will use one or more of the methodologies outlined below to determine fair value; and
ii. Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the
investment’sinvestment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers or dealers are valued through a multi-step valuation process: a. Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b. Preliminary valuation conclusions will then be documented and discussed with our senior management;
c. If an investment falls into (3) above for four consecutive quarters and if the
investment’sinvestment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and
d. When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being
performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. 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 fluctuate from period to period and the fluctuations could be material.
GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ ("ASC 820”820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price. Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
·•Quoted prices for similar assets or liabilities in active markets;·•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);·•Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and·•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.
The following table summarizes the levels
See Item 1.—Financial Statements—Note 4. Fair Value in thethis Quarterly Report on Form 10-Q for additional information on fair value hierarchy that our portfolio investments fall into as of SeptemberJune 30, 2019:(in thousands) | | Total | | Level I | | Level II | | Level III | |
First lien | | $ | 143,808 | | $ | — | | $ | 32,827 | | $ | 110,981 | |
Second lien | | 85,821 | | — | | 21,890 | | 63,931 | |
Total investments | | $ | 229,629 | | $ | — | | $ | 54,717 | | $ | 174,912 | |
2022.
We generally use the following framework when determining the fair value of investments where there areis little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall
underlying portfolio
company’scompany's performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post investment, we analyze each portfolio company’scompany's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting our revenue and earnings before interest, taxes, depreciation, and amortization EBITDA growth, margin trends, liquidity position, covenant compliance and changes to our capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation. For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:We may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA)EBITDA or revenue multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA or revenue multiples to the portfolio company’scompany's latest twelve month (“LTM”("LTM") EBITDA or revenue or projected EBITDA or revenue to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multipleor revenue multiples will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of September 30, 2019, we used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of our portfolio companies. We believe these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach: We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security’ssecurity's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’sinvestment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach whichand a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes and average yield-to-maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2019, we used the discount ranges set forth
See Item 1.—Financial Statements—Note 4. Fair Value in the table below to value investments in our portfolio companies.Thethis Quarterly Report on Form 10-Q for additional information on unobservable inputs used in the fair value measurement of our Level III investments as of SeptemberJune 30, 2019 were as follows:
| | | | | | | | Range | |
(in thousands) Type | | Fair value as of September 30, 2019 | | Approach | | Unobservable Input | | Low | | High | | Weighted Average | |
First lien | | $ | 66,108 | | Market & income approach | | EBITDA multiple | | 11.0 | x | 35.0 | x | 21.7 | x |
| | | | | | Revenue multiple | | 3.5 | x | 11.0 | x | 7.8 | x |
| | | | | | Discount rate | | 7.6 | % | 9.5 | % | 8.5 | % |
| | 10,901 | | Market quote | | Broker quote | | N/A | | N/A | | N/A | |
| | 33,972 | | Other | | N/A(1) | | N/A | | N/A | | N/A | |
Second lien | | 22,331 | | Market & income approach | | EBITDA multiple | | 12.0 | x | 14.0 | x | 13.0 | x |
| | | | | | Discount rate | | 10.0 | % | 10.0 | % | 10.0 | % |
| | 41,600 | | Other | | N/A(1) | | N/A | | N/A | | N/A | |
| | $ | 174,912 | | | | | | | | | | | |
2022.
(1) Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
Revenue recognition
RecognitionSales and paydowns of investments: Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”("PIK") interest or dividend provision. PIK interest isand dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest isand dividends are added to the principal balance on the capitalization date and isare generally due at maturity or when redeemed by the issuer. For both the three and six months ended SeptemberJune 30, 2019 and the period from May 22, 2019 (inception) to September 30, 2019, the Company2022, we recognized PIK interest from investments of $0.1 million.approximately $1.8 million and $3.4 million, respectively, and PIK dividends from investments of approximately $1.9 million and $3.7 million, respectively. For the three and six months ended June 30, 2021, we recognized PIK interest from investments of approximately $0.2 million and $0.3 million, respectively, and PIK dividends from investments of approximately $0.2 million and $0.2 million, respectively.
Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
Non-accrual income:Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’smanagement's judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’smanagement's judgment, are likely to remain current. As of June 30, 2022 and December 31, 2021, no investments were on non-accrual status.
OtherFee income: OtherFee income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. OtherFee income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received by us for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Income received in exchange for the provision of services such as recurring administration services are also recognized as fee income in the period in which it was earned.Monitoring of Portfolio Investments
We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy.We have recently consolidated our portfolio monitoring procedures by combining our previously bifurcated system that separately (1) rated investments based on their performance compared to expectations and (2) assigned a risk rating to each investment based on the expected impact from the COVID-19 pandemic. As described more fully below, our new portfolio monitoring procedures are designed to provide a simple yet comprehensive analysis of our portfolio companies based on their operating performance and underlying business characteristics, which in turn forms the basis of its Risk Rating (as defined below). We use an investment
risk rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio.
We useAs such, we assign each investment a
four-level numeric rating scale as follows:composite score ("Risk Rating") based on two metrics – 1) Operating Performance and 2) Business Characteristics:
·• Investment Rating 1—InvestmentOperating Performance assesses the health of the investment in context of its financial performance and the market environment it faces. The metric is performing materially above expectations;expressed in Tiers of "1" to "4", with "1" being the worst and "4" being the best:
·◦ Investment Rating 2—InvestmentTier 1 – Severe business underperformance and/or severe market headwinds
◦Tier 2 – Significant business underperformance and/or significant market headwinds
◦Tier 3 – Moderate business underperformance and/or moderate market headwinds
◦Tier 4 – Business performance is performing materially in-line with expectations. All new loans are rated 2 at initial purchase;or above expectations
·• InvestmentBusiness Characteristics assesses the health of the investment in context of the underlying portfolio company's business and credit quality, the underlying portfolio company's current balance sheet, and the level of support from the equity sponsor. The metric is expressed as on a qualitative scale of "A" to "C", with "A" being the best and "C" being the worst.
The Risk Rating 3—Investmentfor each investment is a composite of these two metrics. The Risk Rating is expressed in categories of Red, Orange, Yellow and Green with Red reflecting an investment performing materially below expectations whereand Green reflecting an investment that is in-line with or above expectations. The mapping of the riskcomposite scores to these categories are below:
•Red – 1C (e.g., Tier 1 for Operating Performance and C for Business Characteristics)
•Orange – 2C and 1B
•Yellow – 3C, 2B, and 1A
•Green – 4C, 3B, 2A, 4B, 3A, and· 4A Investment Rating 4—Investment is performing substantially below expectations and risks have increased substantially since the original investment. Payments may be delinquent. There is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit.
The following table shows the
distributionRisk Ratings of our
investments on the 1 to 4 investment rating scale at fair valueportfolio companies as of
SeptemberJune 30,
2019:(in millions) | | As of September 30, 2019 | |
Investment Rating | | Cost | | Percent | | Fair Value | | Percent | |
Investment Rating 1 | | $ | 5.5 | | 2.4 | % | $ | 5.5 | | 2.4 | % |
Investment Rating 2 | | 223.9 | | 97.6 | % | 224.1 | | 97.6 | % |
Investment Rating 3 | | — | | — | % | — | | — | % |
Investment Rating 4 | | — | | — | % | — | | — | % |
| | $ | 229.4 | | 100.0 | % | $ | 229.6 | | 100.0 | % |
2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(in millions) | | As of June 30, 2022 |
Risk Rating | | Cost | | Percent | | Fair Value | | Percent |
Red | | $ | — | | | — | % | | $ | — | | | — | % |
Orange | | — | | | — | % | | — | | | — | % |
Yellow | | 44.1 | | | 2.1 | % | | 39.0 | | | 1.9 | % |
Green | | 2,026.5 | | | 97.9 | % | | 2,013.7 | | | 98.1 | % |
| | $ | 2,070.6 | | | 100.0 | % | | $ | 2,052.7 | | | 100.0 | % |
As of
SeptemberJune 30,
2019,2022, all investments in our portfolio had
an Investmenta Green Risk Rating,
with the exception of
1 or 2.four portfolio companies that had a Yellow Risk Rating.
Portfolio and Investment Activity
The fair value of our investments,
as determined in good faith by our board of directors, was approximately
$229.6$2,052.7 million in
20100 portfolio companies at
SeptemberJune 30,
2019.2022 and approximately $1,725.2 million in 90 companies at December 31, 2021.
The following table shows our portfolio and investment activity for the
period from May 22, 2019 (inception) to Septembersix months ended June 30,
2019: | | For the period from May 22, 2019 (inception) to | |
(in millions) | | September 30, 2019 | |
New investments in 20 portfolio companies | | $ | 229.4 | |
Debt repayments in existing portfolio companies | | (0.1 | ) |
Sales of securities in 0 portfolio companies | | — | |
Change in unrealized appreciation on 6 portfolio companies | | 0.3 | |
Change in unrealized depreciation on 9 portfolio companies | | (0.1 | ) |
| | | | |
2022 and June 30, 2021:
| | | | | | | | | | | | | | |
| | Six Months Ended |
(in millions) | | June 30, 2022 | | June 30, 2021 |
New investments in 38 and 30 portfolio companies, respectively | | $ | 379.2 | | | $ | 272.1 | |
Debt repayments in existing portfolio companies | | (44.6) | | | (41.1) | |
Sales of securities in 0 and 0 portfolio companies, respectively | | — | | | — | |
Change in unrealized appreciation on 19 and 19 portfolio companies, respectively | | 1.3 | | | 3.1 | |
Change in unrealized depreciation on 81 and 35 portfolio companies, respectively | | (17.8) | | | (2.4) | |
Recent Accounting Standards Updates
See ItemPart 1.—Financial Statements—Note 12. Recent Accounting Standards Updates for details on recent accounting standards updates.
Results of Operations for the Three Months Ended June 30, 2022 and June 30, 2021
Revenue
| | | | | | | | | | | | | | | | |
| | Three Months Ended |
(in thousands) | | June 30, 2022 | | June 30, 2021 | | |
Total interest income | | $ | 34,365 | | | $ | 11,235 | | | |
Dividend income | | 1,872 | | | 245 | | | |
Fee income | | 3,251 | | | 1,401 | | | |
Total investment income | | $ | 39,488 | | | $ | 12,881 | | | |
Our total investment income increased by approximately $26.6 million, or 207%, for the three months ended June 30, 2022 as compared to Septemberthe three months ended June 30, 20192021. For the three months ended June 30, 2022, total investment income of approximately $39.5 million consisted of approximately $31.6 million in cash interest from investments, approximately $1.8 million in PIK and non-cash interest from investments, net amortization of purchase premiums and discounts of approximately $1.0 million, approximately $1.9 million in PIK dividends from investments and approximately $3.2 million in fee income. The increase in interest income of approximately $23.1 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily due to interest income earned which is attributable to larger invested balances,
driven by proceeds from drawdowns on Capital Commitments, higher drawn balances on our revolving credit facility and the
period from May 22, 2019 (inception) to September 30, 2019Revenue
| | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
(in thousands) | | September 30, 2019 | | September 30, 2019 | |
Interest income | | $ | 1,323 | | $ | 1,323 | |
Other income | | 1,407 | | 1,407 | |
Total investment income | | $ | 2,730 | | $ | 2,730 | |
Investmentissuance of our Unsecured Notes (as defined below). Our increase in dividend income for the three months ended SeptemberJune 30, 2019 and for the period from May 22, 2019 (inception)2022 as compared to September 30, 2019 is driven by our deployment of capital and increasing invested balance.
Operating Expenses
| | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
(in thousands) | | September 30, 2019 | | September 30, 2019 | |
Management fee | | $ | 362 | | $ | 362 | |
Less: management fee waiver | | (252 | ) | (252 | ) |
Total management fee | | 110 | | 110 | |
Interest and other financing expenses | | 431 | | 431 | |
Professional fees | | 102 | | 102 | |
Administrative expenses | | 394 | | 394 | |
Organizational and offering expenses | | 292 | | 942 | |
Other general and administrative expenses | | 32 | | 32 | |
Net expenses | | $ | 1,361 | | $ | 2,011 | |
Management fees before waivers for the both the three months ended September 30, 2019 and for the period from May 22, 2019 (inception) to September 30, 2019 were $0.4 million. Per the Investment Management Agreement, the management fee will be reduced by 50% until June 30, 2020. The base management fee2021 was also reduced by a voluntary fee waiver made by the Investment Adviser. This resulteddue to 4 new investments in net management fees of $0.1 million.
We have incurred expenses related to our formation, organization and continuous offering of our common units. Forpreferred securities. Fee income during the three months ended SeptemberJune 30, 20192022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and for the periodamendment fees received from May 22, 2019 (inception) to September 30, 2019, we incurred organizational costs of $0.310 different portfolio companies.
Operating Expenses
| | | | | | | | | | | | | | | | |
| | Three Months Ended |
(in thousands) | | June 30, 2022 | | June 30, 2021 | | |
Management fee | | $ | 3,302 | | | $ | 1,352 | | | |
Less: management fee waiver | | — | | | (156) | | | |
Net management fee | | 3,302 | | | 1,196 | | | |
Interest and other financing expenses | | 7,153 | | | 2,106 | | | |
Incentive fee | | 4,215 | | | 1,337 | | | |
Administrative expenses | | 640 | | | 378 | | | |
Professional fees | | 398 | | | 153 | | | |
Organizational and offering expenses | | — | | | 91 | | | |
Other general and administrative expenses | | 61 | | | 44 | | | |
Net expenses before income taxes | | 15,769 | | | 5,305 | | | |
Income tax benefit | | (172) | | | — | | | |
Net expenses after income taxes | | $ | 15,597 | | | $ | 5,305 | | | |
Our total net operating expenses increased by $10.3 million
and $0.9 million, respectively. We anticipate formation costs to decrease in relation to our income as we move further away from the date of inception. For bothfor the three months ended
SeptemberJune 30,
2019 and for the period from May 22, 2019 (inception)2022 as compared to
September 30, 2019, we incurred offering costs of less than $0.1 million.Interest and credit facility expenses for both the three months ended SeptemberJune 30, 20192021. Our management fee increased by approximately $2.1 million, net of a management fee waiver, and our incentive fee increased by approximately $2.9 million for the period from May 22, 2019 (inception)three months ended June 30, 2022 as compared to Septemberthe three months ended June 30, 2019 were $0.42021. The increase in management fees and incentive fees was attributable to larger managed and invested capital balances.
Interest and other financing expenses increased by approximately $5.0 million
during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, primarily due to
higher drawn balances on our
entry intorevolving credit facility and our issuance of the
BMO Subscription LineUnsecured Notes (as defined below) in August 2021, December 2021 and
Wells Credit Facility.March 2022.
Administrative expenses increased by approximately $0.3 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, primarily due to higher fees charged for administrative services performed over our larger managed and invested balances. Organization and offering expenses decreased by approximately $0.1 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, primarily due to the end of Closing Period on October 15, 2021. Total professional fees, and total other general and administrative expenses increased by approximately $0.2 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 due to increased costs as we continued to deploy capital contributions.
Net Realized Gains (Losses) and Net Change in Unrealized
(Depreciation) Appreciation
(Depreciation) | | Three Months Ended | | For the period from May 22, 2019 (inception) to | |
(in thousands) | | September 30, 2019 | | September 30, 2019 | |
Net realized gains (losses) on investments | | $ | — | | $ | — | |
Net change in unrealized appreciation of investments | | 195 | | 195 | |
Net realized and unrealized gains | | $ | 195 | | $ | 195 | |
We had
| | | | | | | | | | | | | | | | |
| | Three Months Ended |
(in thousands) | | June 30, 2022 | | June 30, 2021 | | |
Net realized losses on investments | | $ | — | | | $ | — | | | |
Net change in depreciation of investments | | (15,756) | | | (1,475) | | | |
Provision for taxes | | (156) | | | — | | | |
Net realized and unrealized losses | | $ | (15,912) | | | $ | (1,475) | | | |
Our net unrealized gainsdepreciation resulted in a net loss of approximately $0.2$16.0 million for the three months ended SeptemberJune 30, 2019 and2022 as compared to net unrealized depreciation resulting in a net loss of approximately $1.5 million for the periodthree months ended June 30, 2021. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the three months ended June 30, 2022 was primarily driven by the overall decrease in market prices of our investments during the period. The provision for income taxes was attributable to an equity investment that is held as of June 30, 2022 in one of our wholly-owned subsidiaries. The net loss for
the three months ended June 30, 2021 was primarily driven by the unrealized depreciation recognized on KAMC Holdings, Inc. during the period.
Results of Operations for the Six Months Ended June 30, 2022 and June 30, 2021
Revenue
| | | | | | | | | | | | | | | | |
| | Six Months Ended |
(in thousands) | | June 30, 2022 | | June 30, 2021 | | |
Total interest income | | $ | 64,369 | | | $ | 20,072 | | | |
Dividend income | | 3,686 | | | 245 | | | |
Fee income | | 5,599 | | | 2,598 | | | |
Total investment income | | $ | 73,654 | | | $ | 22,915 | | | |
Our total investment income increased by approximately $50.7 million, or 221%, for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. For the six months ended June 30, 2022, total investment income of approximately $73.7 million consisted of approximately $59.4 million in cash interest from May 22, 2019 (inception)investments, approximately $3.4 million in PIK and non-cash interest from investments, net amortization of purchase premiums and discounts of approximately $1.6 million, approximately $3.7 million in PIK dividends from investments and approximately $5.6 million in fee income.
The increase in interest income of approximately $44.3 during the six months ended June 30, 2022 as compared to Septemberthe six months ended June 30, 20192021 was primarily due to higher LIBOR and SOFR rates on larger invested balances, driven by proceeds from drawdowns on Capital Commitments, higher drawn balances on our revolving credit facility and the issuance of our Unsecured Notes (as defined below). Our increase in dividend income for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was due to 4 new investments in preferred securities. Fee income during the six months ended June 30, 2022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and amendment fees received from 24 different portfolio companies.
Operating Expenses
| | | | | | | | | | | | | | | | |
| | Six Months Ended |
(in thousands) | | June 30, 2022 | | June 30, 2021 | | |
Management fee | | $ | 6,605 | | | $ | 2,397 | | | |
Less: management fee waiver | | (265) | | | (260) | | | |
Net management fee | | 6,340 | | | 2,137 | | | |
Interest and other financing expenses | | 13,455 | | | 3,639 | | | |
Incentive fee | | 7,750 | | | 2,377 | | | |
Administrative expenses | | 1,351 | | | 678 | | | |
Professional fees | | 781 | | | 322 | | | |
Organizational and offering expenses | | — | | | 208 | | | |
Other general and administrative expenses | | 101 | | | 82 | | | |
Net expenses before income taxes | | 29,778 | | | 9,443 | | | |
Income tax benefit | | (49) | | | — | | | |
Net expenses after income taxes | | $ | 29,729 | | | $ | 9,443 | | | |
Our total net operating expenses increased by $20.3 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Our management fee increased by approximately $4.2 million, net of a management fee waiver, and our incentive fee increased by approximately $5.4 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase in management fees and incentive fees was attributable to larger managed and invested capital balances.
Interest and other financing expenses increased by approximately $9.8 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to higher drawn balances on our revolving credit facility and our issuance of the Unsecured Notes (as defined below) in August 2021, December 2021 and March 2022.
Administrative expenses increased by approximately $0.7 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to higher fees charged for administrative services performed
over our larger managed and invested balances. Organization and offering expenses decreased by approximately $0.2 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to the end of Closing Period on October 15, 2021. Total professional fees, and total other general and administrative expenses increased by approximately $0.5 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due to increased costs as we continued to deploy capital contributions.
Net Realized Gains (Losses) and Net Change in Unrealized (Depreciation) Appreciation
| | | | | | | | | | | | | | | | |
| | Six Months Ended |
(in thousands) | | June 30, 2022 | | June 30, 2021 | | |
Net realized losses on investments | | $ | — | | | $ | — | | | |
Net change in (depreciation) appreciation of investments | | (16,528) | | | 737 | | | |
Provision for taxes | | (156) | | | — | | | |
Net realized and unrealized (losses) gains | | $ | (16,684) | | | $ | 737 | | | |
Our net unrealized depreciation resulted in a net loss of approximately $16.7 million for the six months ended June 30, 2022 as compared to net unrealized appreciation resulting in a net gain of approximately $0.7 million for the six months ended June 30, 2021. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the six months ended June 30, 2022 was primarily driven by the overall decrease in market prices of our investments during the period. The provision for income taxes was attributable to an equity investment that is held as of June 30, 2022 in one of our wholly-owned subsidiaries. The net gain for the six months ended June 30, 2021 was primarily driven by the overall increase in market prices of our investments during the period.
Liquidity, Capital Resources, Off-Balance Sheet Arrangements, Borrowings and Contractual Obligations
Liquidity and Capital Resources
The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our unitholders or for other general corporate purposes.
On July 15, 2019, we entered into Subscription Agreements with several investors providing for the private placement of the our Units. On July 19, 2019, we delivered a drawdown notice to our investors relating to the issuance of 4,933,964 Units for an aggregate purchase price of $49.3 million. The Units were issued to investors on August 2, 2019. On August 21, 2019, we delivered a drawdown notice to our investors relating to the issuance of 4,933,964 Units for an aggregate purchase price of $49.3 million. The Units were issued to investors on September 5, 2019.
We expect to generate cash from (1) drawing down capital in respect of Units, (2) cash flows from investments and operations and (3)(2) borrowings from banks or other lenders. We will seek to enter into any bank debt, credit facility or other financing arrangements on at least customary market terms;terms, however, we cannot assure you we will be able to do so. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. As permitted by the Small Business Credit Availability Act (the “SBCA”) uponUpon organization, the Investment Adviser, as the initial Unitholder,unitholder, has authorized us to adopt the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to us. In connection with their subscriptions of the Units, our unitholders were required to acknowledge our ability to operate with an asset coverage ratio that may be as low as 150.0%. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity).As of SeptemberJune 30, 2019,2022, our asset coverage ratio was 163.0%222.0%.At September
Since our inception on May 22, 2019, we have entered into Subscription Agreements with several investors on various dates. Closings of the Private Offering occurred, from time to time, in the Investment Adviser's sole discretion, during the Closing Period, which ended on October 15, 2021. On June 30, 2019,2022 and December 31, 2021, we had aggregate capital commitments and undrawn capital commitments from investors as follows:
| | | | | | | | | | | | | | |
(in millions) | | June 30, 2022 | | December 31, 2021 |
Capital Commitments | | $ | 1,149.1 | | | $ | 1,149.1 | |
Unfunded Capital Commitments | | — | | | 229.8 | |
% of Capital Commitments funded | | 100.0 | % | | 80.0 | % |
As of June 30, 2022 and December 31, 2021, we had cash and cash equivalents of approximately
$84.6 million.$22.3 million and $24.1 million, respectively. Our cash used in operating activities for the
period from May 22, 2019 (inception) to Septembersix months ended June 30,
2019 was2022 and June 30, 2021, were approximately
$171.2 million.$371.7 million and $204.9 million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and
drawdowns on Capital Commitments.borrowings from banks or other lenders.
Off-Balance Sheet Arrangements
We may become a party to financial instruments with off-balance sheet risk in the normal course of business 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 in the balance sheet. As of June 30, 2022 and December 31, 2021, we had outstanding commitments to third parties to fund investments totaling $316.5 million and $360.2 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.
We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of June 30, 2022 and December 31, 2021, we had commitment letters to purchase investments in the aggregate par amount of $30.4 million and $45.9 million, respectively, which could require funding in the future. As of June 30, 2022 and December 31, 2021, we had not entered into any bridge financing commitments which could require funding in the future.
BMO Subscription Line—On July 30, 2019, we entered into a Loan Authorization Agreement with BMO Harris Bank N.A. (“BMO”("BMO") (as amended, from time to time, and most recently amended on March 9, 2022, the “BMO"BMO Subscription Line”Line"), which allowsallowed us to borrow on a revolving credit basis an aggregate principal amount which cannotcould not exceed the lower of $250.0 million$250,000 or 80.0% of the remaining unfunded Capital Commitments. AllOn March 25, 2022, all outstanding borrowings under the BMO Subscription Line are due on BMO’s demand within 15 business days or onwere repaid and the date 6 months after each advance. The BMO Subscription Line is collateralized by the unfunded Capital Commitments of each of our unitholders. All fees associatedfacility was terminated in connection with the origination offinal drawdown on Capital Commitments.
From July 30, 2019 to March 9, 2022, the BMO Subscription Line
are capitalized on the Consolidated Statement of Assets, Liabilities and Members’ Capital and charged against income as other financing costs over the life of the BMO Subscription Line. As of the most recent amendment, the BMO Subscription Line bearsbore interest at the greater of the prime commercial rate minus 0.25% per annum or the three-month London Interbank Offered Rate
(“LIBOR”("LIBOR") for each day plus 2.50% per annum.
For both As of the three months ended September 30, 2019 and the period from May 22, 2019 (inception)most recent amendment on March 9, 2022, in addition to September 30, 2019, interest expense was $0.3 million and amortization of financing costs incurred oncertain other changes, the BMO Subscription Line was less than $0.1 million, respectively.
amended to bear interest at the greater of the prime commercial rate minus 0.25% per annum or the three-month SOFR Quoted Rate (as defined below) for such day plus 2.50% per annum. SOFR Quoted Rate means as of any day of determination, 3-month Term SOFR on the date that is two U.S. Government Securities Business Days prior to such day of determination as such rate is published by the Term SOFR Administrator plus a credit spread adjustment of 0.15%.
As of
September 30, 2019,December 31, 2021, the outstanding balance on the BMO Subscription Line was
$118.4$92.0 million, and we were in compliance with the applicable covenants in the BMO Subscription Line on such date.
See Item 1.—Financial Statements—Note 6. Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the BMO Subscription Line for the three and six months ended June 30, 2022 and June 30, 2021.
Wells Credit Facility—On August 30, 2019, our wholly-owned subsidiary, GIII SPV, entered into athe Loan and Security Agreement (the ‘‘Wells(as amended, from time to time, the "Wells Credit Facility’’Facility") as the Borrower,borrower, us as Collateral Managercollateral manager and Equityholder,equityholder, the lenders from time to time party thereto, and Wells Fargo Bank, National Association ("Wells Fargo") as the Administrative Agentadministrative agent and the Collateral Custodian,collateral custodian, which is structured as a secured revolving credit facility.facility(See Item 1.—Financial Statements—Note 13. Subsequent Events in this Quarterly Report on Form 10-Q for a description of Amendment No. 6, dated July 7, 2022, to the Wells Credit Facility). The Wells Credit Facility will mature on August 30, 2024July 15, 2025 and has an initiala maximum facility amount of $150.0$725.0 million, which may increase in size, under certain circumstances, up to a total of $300.0$800.0 million. Under the Wells Credit Facility, GIII SPV is permitted to borrow up to 25.0%, 45.0%, 55.0%, 70.0% or 75.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association.Fargo. The Wells Credit Facility is non-recourse to us and is collateralized by all of the investments of GIII SPV on an investment by investment basis. All fees associated with the origination, amending or upsizing of the Wells Credit Facility are capitalized on our Consolidated StatementStatements of Assets, Liabilities and Members’Members' Capital and charged against income as other financing expenses over the life of the Wells Credit Facility. The Wells Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of GIII SPV investments, but rather to the performance of the underlying portfolio companies.The
As of the amendment on March 11, 2022 and through the time of this Quarterly Report on Form 10-Q, the Wells Credit Facility bears interest at a rate of Daily Simple SOFR plus 1.80% per annum for Broadly Syndicated Loans (as defined in the Fourth Amendment to the Loan and Security Agreement) and Daily Simple SOFR plus 2.30% per annum for all other investments. Previously, the Wells Credit Facility bore interest at a rate of LIBOR plus 1.75%1.65% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.25%2.15% per annum for all other investments. The Wells Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Fourth Amendment to the Loan and Security Agreement).
For both the three months ended September 30, 2019 and the period from May 22, 2019 (inception) to September 30, 2019, non-usage fees were $0.1 million and both interest expense and amortizationTable of financing costs incurred on the Wells Credit Facility were less than $0.1 million, respectively.
Contents
As of
SeptemberJune 30,
2019,2022 and December 31, 2021, the outstanding balance on the Wells Credit Facility was
$39.6$647.1 million
and $473.1 million, respectively, and GIII SPV was in compliance with the applicable covenants in the Wells Credit Facility on such
date.dates.
Off-Balance Sheet ArrangementsSee We may becomeItem 1.—Financial Statements—Note 6. Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Wells Credit Facility for the three and six months ended June 30, 2022 and June 30, 2021.
Unsecured Notes—On August 4, 2021, we entered into a partyMaster Note Purchase Agreement (the "Note Purchase Agreement") with certain institutional investors (the "Purchasers"). Pursuant to financial instrumentsthe Note Purchase Agreement, on August 4, 2021, we issued to the Purchasers, in a private placement, $125.0 million in aggregate principal amount of 3.57% Series 2021A Senior Notes, Tranche A, due July 15, 2025 (the "2021A Tranche A Notes"), and on December 21, 2021, at a second closing, we issued $50.0 million in aggregate principal amount of 3.62% Series 2021A Senior Notes, Tranche B, due July 15, 2025 (the "2021A Tranche B Notes" and, together with off-balance sheet riskthe Tranche A Notes, the "2021A Unsecured Notes"). On March 10, 2022, we entered into a first supplement (the "Supplement") to the Note Purchase Agreement with certain Purchasers. Pursuant to the Supplement, on March 10, 2022, we issued to the Purchasers $100.0 million in aggregate principal amount of 3.95% Series 2022A Senior Notes due July 15, 2025 (the “2022A Unsecured Notes”).
All fees associated with the origination of the 2021A Unsecured Notes and the 2022A Unsecured Notes (together, the "Unsecured Notes") are capitalized on our Consolidated Statements of Assets, Liabilities and Members' Capital and charged against income as other financing expenses over the life of the Unsecured Notes.
The 2021A Tranche A Notes and the 2021A Tranche B Notes bear interest at an annual rate of 3.57% and 3.62%, respectively, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2022. The 2022A Unsecured Notes bear interest at an annual rate of 3.95%, payable semi-annual on January 15 and July 15 of each year, which will commence on July 15, 2022. These interest rates are subject to increase in the normal courseevent that: (i) subject to certain exceptions, the Unsecured Notes or we cease to have an investment grade rating or (ii) the Asset Coverage Ratio (as defined in the Note Purchase Agreement) is less than 1.83 to 1.00.
We are obligated to offer to prepay the Unsecured Notes (i) each time we receive an aggregate amount of businessnet proceeds from the repayment, or sale, of loans or investments that constitute Company Level Assets (as defined in the Note Purchase Agreement) and (ii) each time we receive an aggregate amount of net proceeds, or if we are permitted to meetreceive an aggregate amount of net proceeds, from the financial needsdistribution of Wells Residual Equity (as defined in the Note Purchase Agreement), in each case that is at least equal to the lesser of (A) $25.0 million and (B) 10% of the aggregate principal of the Unsecured Notes issued under the Note Purchase Agreement.
The Note Purchase Agreement also contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our portfolio companies. These instruments may include commitments to extend creditstatus as a business development company under the 1940 Act, and involve, to varying degrees, elements of liquidity and credit risk in excessa regulated investment company under Subchapter M of the amount recognizedCode, minimum stockholders’ equity, and prohibitions on certain fundamental changes at us or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of ours or certain subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Note Purchase Agreement includes certain additional covenants and terms, including, without limitation, a requirement that we will not permit the Asset Coverage Ratio to be less than the greater of (x) 1.50 to 1.00 and (y) the minimum asset coverage required to be held by us to comply with the 1940 Act.
The Unsecured Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; and effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles.
As of June 30, 2022 and December 31, 2021, the outstanding balance on the Unsecured Notes was $275.0 million and $175.0 million, respectively, and we were in compliance with the applicable covenants in the balance sheet. AsUnsecured Notes on such dates.
See Item 1.—Financial Statements—Note 6. Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Unsecured Notes for the three and six months ended June 30, 2022.
A summary of our significant contractual payment obligations as of SeptemberJune 30, 20192022 is as follows: | | Contractual Obligations Payments Due by Period | |
(in millions) | | Total | | Less than 1 Year | | 1 - 3 Years | | 3 - 5 Years | | More than 5 Years | |
BMO Subscription Line(1) | | $ | 118.4 | | $ | 118.4 | | $ | — | | $ | — | | $ | — | |
Wells Credit Facility(2) | | 39.6 | | — | | — | | 39.6 | | — | |
Total Contractual Obligations | | $ | 158.0 | | $ | 118.4 | | $ | — | | $ | 39.6 | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Contractual Obligations Payments Due by Period |
(in millions) | Total | | Less than 1 Year | | 1 - 3 Years | | 3 - 5 Years | | More than 5 Years |
Unsecured Notes (1) | $ | 275.0 | | | $ | — | | | $ | — | | | $ | 275.0 | | | $ | — | |
Wells Credit Facility (2) | 647.1 | | | — | | | — | | | 647.1 | | | — | |
Total Contractual Obligations | $ | 922.1 | | | $ | — | | | $ | — | | | $ | 922.1 | | | $ | — | |
(1)$175.0 million of the 2021A Unsecured Notes will mature on July 15, 2025 unless earlier repurchased, $100.0 million of the 2022A Unsecured Notes will mature on July 15, 2025 unless earlier repurchased.
(2)Under the terms of the BMO Subscription Line, all outstanding borrowings under that facility ($118.4 million as of September 30, 2019) are due on BMO’s demand within 15 business days or on the date 6 months after each advance. The BMO Subscription Line will terminate when all Capital Commitments have been funded.(2) Under the terms of the $150.0$725.0 million Wells Credit Facility, all outstanding borrowings under that facility ($39.6647.1 million as of SeptemberJune 30, 2019)2022) must be repaid on or before August 30, 2024.July 15, 2025. As of SeptemberJune 30, 2019,2022, there was approximately $110.4$77.9 million of possible capacity remaining under the Wells Credit Facility.
See "Borrowings", for material details on the Wells Credit Facility.
We have entered into the investment advisory and management agreement (the
“Investment"Investment Management
Agreement”Agreement") with the Investment Adviser in accordance with the 1940 Act. Under the Investment Management Agreement, the Investment Adviser has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee and (2) an incentive fee based on our performance.
We have also entered into an administration agreement
as amended and restated (the
“Administration Agreement”"Administration Agreement") with the Administrator. Under the Administration Agreement, the Administrator has agreed to arrange office space for us and provide office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct our respective day-to-day operations. The Administrator has also agreed to maintain, or oversee the maintenance of, our financial records, our reports to unitholders and reports filed with the SEC.
The Administrator has hired a third-party sub-administrator to assist with the provision of administrative services.
If any of the contractual obligations discussed above are terminated, our costs under any new agreements that are entered into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and the Administration Agreement.
Distributions and Dividends
There were no
Distributions declared for the six months ended June 30, 2022 and June 30, 2021 totaled approximately $45.7 million and $13.4 million, respectively.
Tax characteristics of all distributions paid are reported to unitholders on Form 1099 after the end of the calendar year. For the years ended December 31, 2021 and December 31, 2020, total distributions declared
or paid to unitholders forwere $44.3 million and $16.7 million, respectively, of which the
period from May 22, 2019 (inception) to September 30, 2019.distributions were comprised of approximately 98.47% and 100.00%, respectively, of ordinary income, 1.53% and 0.00%, respectively, of long-term capital gains and 0.00% and 0.00%, respectively of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors.
We intend to pay quarterly distributions to our unitholders in amounts sufficient to qualify as and maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.
We have entered into a number of business relationships with affiliated or related parties, including the following:
·•We have entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.·•We have entered into the Expense Limitation and Reimbursement Agreement with the Investment Adviser. The Investment Adviser has agreed to reduce and/or waive its management fee (the "Specified Expenses Cap") each year such that we will not be required to pay certain expenses in excess of a maximum aggregate amount defined in the Expense Limitation and Reimbursement Agreement.
•We have entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our office space and provides office equipment and administrative services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement. The Administrator has hired a third-party sub-administrator to assist with the provision of administrative services. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our chief financial officer and chief compliance officer and their respective staffs. Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period. As a result, the amount of expenses for which we will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to us for reimbursement in the future. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and six months ended SeptemberJune 30, 2019 and the period from May 22, 2019 (inception) to September 30, 2019,2022, approximately $0.3$0.2 million and $0.3$0.5 million, respectively, of indirect administrative expenses were included in administrative expenses, none of which were waived by the Administrator. As of SeptemberJune 30, 2019, $0.32022, $0.2 million of indirect administrative expenses were included in payable to affiliates on the Consolidated StatementStatements of Assets, Liabilities and Liabilities.Members' Capital.
·•We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name “New Mountain”"New Mountain Capital".In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware Limited Liability Company Act.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to our investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment
Adviser’sAdviser's allocation procedures. On
December 18, 2017,October 8, 2019, the SEC issued an exemptive order (the
“Exemptive Order”"Exemptive Order")
, to the Investment Adviser and certain of its affiliates, which superseded a prior order issued on
June 5,December 18, 2017, which permits us to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, we are permitted to co-invest with our affiliates if a
“required majority”"required majority" (as defined in Section
57(o)57 (o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our unitholders and do not involve overreaching in respect of us or our unitholders on the part of any person concerned, and (2) the potential
co-investment transaction is consistent with the interests of our unitholders and is consistent with our then-current investment objective and strategies.
We filed an application to amend the Exemptive Order on May 24, 2022, as amended on June 22, 2022. See Item 1.—Financial Statements—Note 5. Agreements and Related Parties in this Quarterly Report on Form 10-Q for more information.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk We are subject to certain financial market risks, such as interest rate fluctuations.
In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities that we hold. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks had reduced certain interest rates and LIBOR has decreased. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. However, in March 2022, the Federal Reserve raised interest rates by 0.25%, the first increase since December 2018. Since then, the Federal Reserve has raise rates by an additional 2.00% and indicated that it would consider future rate hikes if inflation does not slow. During the three and six months ended June 30, 2022, certain of the loans held in our portfolio had floating LIBOR or SOFR interest rates. As of
SeptemberJune 30,
2019, 100.0%2022, approximately 95.6% of investments at fair value (excluding unfunded debt
investments and non-interest bearing equity investments) represent floating-rate investments with a LIBOR
or SOFR floor (includes investments bearing prime interest rate contracts) and
noneapproximately 4.4% of
our investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit
facilities arefacility is also subject to floating interest rates and
areis currently paid based on floating
LIBORSOFR rates and prime interest rates.
The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase by 100, 200 or 300 basis points, or decrease by 25 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on
SeptemberJune 30,
2019.2022. Interest expense is calculated based on the terms of our outstanding revolving credit
facilities.facilities and unsecured notes. For our floating rate credit facilities, we use the outstanding balance as of
SeptemberJune 30,
2019.2022. Interest expense on our floating rate credit facilities is calculated using the interest rate as of
SeptemberJune 30,
2019,2022, adjusted for the hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of
SeptemberJune 30,
2019.2022. These hypothetical calculations are based on a model of the investments in our portfolio, held as of
SeptemberJune 30,
2019,2022, and are only adjusted for assumed changes in the underlying base interest rates.
Actual results could differ significantly from those estimated in the table.
| | | | | | |
Change in Interest Rates |
| Estimated Percentage Change in Interest Income Net of Interest Expense (unaudited) |
|
-25–25 Basis Points
| (2.04) | (0.35 % | )%
|
Base Interest Rate | — | — % | %
|
+100 Basis Points | 9.04 | 1.40 % | %
|
+200 Basis Points | 18.51 | 2.81 % | %
|
+300 Basis Points | 27.98 | 4.21 % | %
|
Item 4.
Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures As of
SeptemberJune 30,
20192022 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange
Act)Act of 1934, as amended). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic
United States Securities and Exchange CommissionSEC filings is recorded, processed, summarized and reported within the time periods specified in the
United States Securities and Exchange Commission’sSEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
(b)Changes in Internal ControlsControl Over Financial ReportingManagement has not identified any change
There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended SeptemberJune 30, 20192022 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
The terms
“we”"we",
“us”"us",
“our”"our" and the
“Company”"Company" refers to New Mountain Guardian III BDC, L.L.C. and its consolidated subsidiaries.
We, and our consolidated subsidiaries, the Investment Adviser and the Administrator are not currently subject to any material
pending legal proceedings
threatened against us as of
SeptemberJune 30,
2019.2022. From time to time, we
or our consolidated subsidiary may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our registration statementAnnual Report on Form 10,10-K for the fiscal year ended December 31, 2021, which could materially affect our business, financial condition and/or operating results, including the Risk Factor titled “Fund-Level Borrowings”"Fund-Level Borrowings". The risks described in our registration statementAnnual Report on Form 1010-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Other than as set forth below, thereThere have been no material changes during the period from May 22, 2019 (inception) to Septemberthree months ended June 30, 2019 2022to the risk factors discussed inItem 1A. Risk Factors in our registration statementAnnual Report on Form 10.10-K. Uncertainty relating to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities.
Concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association, or the ‘‘BBA,’’ in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear if at that time whether or not LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large US financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by 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. If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established, which may have an adverse effect on our results of operations. In addition, if LIBOR ceases to exist, we may need to renegotiate any LIBOR based revolving credit facilities to replace LIBOR with the new standard that is established in its place. If we are unable to do so, amounts drawn under the revolving credit facility may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.
Item 2.
Unregistered Sales of Equity Securities and Use of ProceedsThe following table summarizes
None, other than those already disclosed in certain current reports on Form 8-K filed with the
total Units issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the three months ended September 30, 2019.Unit Issue Date | | Units Issued | | Proceeds Received | |
| | | | (in millions) | |
July 5, 2019 | | 100 | | $ | 0.0 | |
August 2, 2019 | | 4,933,964 | | 49.3 | |
September 5, 2019 | | 4,933,964 | | 49.3 | |
| | 9,868,028 | | $ | 98.6 | |
On September 30, 2019, the Investment Adviser’s 100 Units were canceled and the proceeds of the purchase, $1 thousand, were returned.
The primary use of existing funds and any funds raised in the future is and is expected to continue to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our unitholders or for other general corporate purposes.
Each of the above issuances and sales of the common Units were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Regulation D or Regulation S under the Securities Act. Each purchaser of common Units was required to represent that it is (i) either an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act or, in the case of Units sold outside the United States, not a “U.S. person” in accordance with Regulation S of the Securities Act and (ii) was acquiring the common Units purchased by it for investment and not with a view to resell or distribute. We did not engage in general solicitation or advertising, and did not offer securities to the public, in connection with such issuances and sales.
SEC.
Item 3.
Defaults Upon Senior SecuritiesSecurities.
Item 4.
Mine Safety DisclosuresItem 5.Other Information
None.
Item 6.
Exhibits(a) Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the
United StatesU.S. Securities and Exchange Commission:
Exhibit
Number
|
| Description
| | | | | | |
3.1 Exhibit Number | | Description |
3.1 | | | |
3.2 | | |
3.2
| | |
4.1 | | |
4.1
| | |
10.1 | | |
10.1
| | |
| | |
10.2
| | Administration Agreement between New Mountain Guardian III BDC, L.L.C. and New Mountain Finance Administration, L.L.C., dated July 15, 2019(2)
|
| | |
10.3
| | Trademark Agreement between New Mountain Guardian III BDC, L.L.C. and New Mountain Capital, L.L.C., dated June 18, 2019(2)
|
| | |
10.4
| | Custody Agreement between New Mountain Guardian III BDC, L.L.C. and U.S. Bank National Association, dated July 3, 2019(2)
|
| | |
10.5
| | Expense Limitation and Reimbursement Agreement between New Mountain Guardian III BDC, L.L.C. and New Mountain Finance Advisers BDC, L.L.C., dated July 15, 2019(2)
|
| | |
10.6
| | Loan Authorization Agreement between New Mountain Guardian III BDC, L.L.C. and BMO Harris Bank N.A., dated July 30, 2019(2)
|
| | |
10.7
| | Form of Custodian Agreement between New Mountain Guardian III BDC, L.L.C. and State Street Bank and Trust Company(2)
|
| | |
10.8
| | Transfer Agency and Registrar Services Agreement by and between New Mountain Guardian III BDC, L.L.C. and American Stock Transfer & Trust Company, LLC, dated August 1, 2019(2)
|
| | |
10.9
| | Loan and Security Agreement betweenas the borrower, New Mountain Guardian III BDC, L.L.C., as the collateral manager, New Mountain Guardian III SPV,BDC, L.L.C., as the borrower, each of the lenders from time to time party theretoequityholder and seller, Wells Fargo Bank, National Association, as the administrative agent and collateral custodian, dated August 30, 2019(2)the lenders party thereto(4)
|
10.2 | | | Form of Amendment No. 6 to Loan and Security Agreement, dated July 7, 2022, among New Mountain Guardian III SPV, L.L.C., as the borrower, New Mountain Guardian III BDC, L.L.C., as the collateral manager, New Mountain Guardian III BDC, L.L.C., as the equityholder and seller, Wells Fargo Bank, National Association, as the administrative agent and the lenders party thereto(5) |
31.1 10.3 | | | |
31.1 | | | |
31.2 | | |
31.2
| | |
32.1 | | |
32.1
| | |
32.2 | | |
32.2
| | |
(1)Previously filed in connection with New Mountain Guardian III BDC, L.L.C.’s's registration statement on Form 10 (File No. 000-56072) filed on July 15, 2019. (2)Previously filed in connection with New Mountain Guardian III BDC, L.L.C.’s registration statement's report on Form 10 Pre-Effective Amendment No. 1 (File No. 000-56072)10-Q filed on SeptemberNovember 13, 2019.
(3)Previously filed in connection with New Mountain Guardian III BDC, L.L.C.'s report on Form 8-K filed on July 23, 2021.
(4)Previously filed in connection with New Mountain Guardian III BDC, L.L.C.'s report on Form 8-K filed on July 1, 2022.
(5)Previously filed in connection with New Mountain Guardian III BDC, L.L.C.'s report on Form 8-K filed on July 12, 2022.
(6)Previously filed in connection with New Mountain Guardian III BDC, L.L.C.'s report on Form 8-K filed on April 13, 2022.
* Filed herewith.
Pursuant to the requirements of Section 13 or 15(d) 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 on
November 13, 2019.August 12, 2022. | | | | | | | | | | | |
| NEW MOUNTAIN GUARDIAN III BDC, L.L.C. |
| | | |
| By: | | /s/ ROBERT A. HAMWEE |
| | | Robert A. Hamwee |
|
|
Chief Executive Officer |
|
| (Principal Executive Officer)
|
| | | |
| By: | | /s/ SHIRAZ Y. KAJEE |
| | | Shiraz Y. Kajee |
|
| Chief Financial Officer and Treasurer
|
|
| (Principal Financial and Accounting Officer)
|
47