UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31,June 30, 2022

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 814-01363

 

Kayne Anderson BDC, Inc.

 

Delaware 83-0531326

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

   
811 Main Street, 14th Floor, Houston, TX 77002
(Address of principal executive offices) (Zip Code)

 

(713) 493-2020

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
None None None

 

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 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   ☐ No

 

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   ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☐
Emerging growth company☒  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No

 

As of MayAugust 11, 2022, the registrant had 23,548,86831,304,965 shares of common stock, $0.001 par value per share, outstanding. As of MayAugust 11, 2022, there was no public market for the registrant’s shares.

 

 

 

 

 

Table of Contents

 

  Page
PART I.FINANCIAL INFORMATION1
Item 1.Consolidated Financial Statements1
 Consolidated Statements of Assets and Liabilities as of March 31,June 30, 2022 (Unaudited) and December 31, 20211
 Consolidated Statements of Operations for the three and six months ended March 31,June 30, 2022 and 2021 (Unaudited)2
 Consolidated Statement of Changes in Net Assets for the three and six months ended March 31,June 30, 2022 and 2021 (Unaudited)3
 Consolidated Statement of Cash Flows for the threesix months ended March 31,June 30, 2022 and 2021 (Unaudited)4
 Consolidated Schedule of Investments as of March 31,June 30, 2022 (Unaudited) and December 31, 20215
 Notes to Consolidated Financial Statements (Unaudited)1518
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations3337
Item 3.Quantitative and Qualitative Disclosures About Market Risk4248
Item 4.Controls and Procedures4248
   
PART II.OTHER INFORMATION4349
Item 1.Legal Proceedings4349
Item 1A.Risk Factors4349
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds4350
Item 3.Defaults Upon Senior Securities4350
Item 4.Mine Safety Disclosures4350
Item 5.Other Information4350
Item 6.Exhibits4451
   
Signatures4552

 

i

 

 

Forward-Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the company, current and prospective portfolio investments, the industry, beliefs and assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond control of the Company and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:

 

 ●future operating results;

 

 ●business prospects and the prospects of portfolio companies;

 

 ●changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including changes from the impact of the novel coronavirus (SARS-CoV-2) and related respiratory disease pandemic (“COVID-19 pandemic”);

 

 ●the ability of KA Credit Advisors, LLC (our “Advisor”) to locate suitable investments and to monitor and administer investments;

 

 ●the ability of the Advisor and its affiliates to attract and retain highly talented professionals;

 

 ●risk associated with possible disruptions in operations or the economy generally;

 

 ●the timing of cash flows, if any, from the operations of the companies in which the Company invests;

 

 ●the ability of (1) the companies in which the Company invests to achieve their objectives and (2) the Company to continue to effectively manage the business due to disruptions, both of which are caused by the currentongoing COVID-19 pandemic;

 

 ●the dependence of the future success on the general economy and its effect on the industries in which the Company invests;

 

 ●the ability to maintain qualification as a business development company (“BDC”) and as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”);

 

 ●the use of borrowed money to finance a portion of the Company’s investments;

 

 ●the adequacy, availability and pricing of financing sources and working capital for the Company;

 

 ●actual or potential conflicts of interest with the Advisor and its affiliates;

 

 ●contractual arrangements and relationships with third parties;

 

 ●the risk associated with an economic downturn, political instability, interest rate volatility, loss of key personnel, and the illiquid nature of investments of the Company; and

 

 ●the risks, uncertainties and other factors the Company identifies under “Item 1A. Risk Factors” and elsewhere in this quarterly 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 States Securities and Exchange Commission (the “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.

 

ii

 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements.

 

Kayne Anderson BDC, Inc.

Consolidated Statements of Assets and Liabilities

(amounts in 000’s, except share and per share amounts)

 

 March 31,
2022		  December 31,
2021		  June 30,
2022
(Unaudited)		  December 31,
2021		 
Assets: (Unaudited)         
Investments, at fair value:          
Long-term investments (amortized cost of $605,750 and $566,616) $617,067  $578,445 
Short-term investments (amortized cost of $3,004 and $3,674)  3,004   3,674 
Long-term investments (amortized cost of $706,326 and $566,616) $717,964  $578,445 
Short-term investments (amortized cost of $8,405 and $3,674)  8,405   3,674 
Cash and cash equivalents  5,817   2,035   3,414   2,035 
Deferred offering costs  -   29   -   29 
Receivable for principal payments on investments  333   - 
Interest receivable  3,179   2,133   4,350   2,133 
Prepaid expenses and other assets  186   148   245   148 
Total Assets $629,253  $586,464  $734,711  $586,464 
                
Liabilities:                
Corporate Credit Facility (Note 6) $78,000  $-  $78,000  $- 
Unamortized Corporate Credit Facility issuance costs  (2,204)  -   (2,176)  - 
Loan and Security Agreement (Note 6)  -   162,000   -   162,000 
Unamortized Loan and Security Agreement issuance costs  -   (247)  -   (247)
Revolving Funding Facility (Note 6)  150,000   -   150,000   - 
Unamortized Revolving Funding Facility issuance costs  (2,546)  -   (2,449)  - 
Subscription Credit Agreement (Note 6)  14,000   105,000   114,000   105,000 
Unamortized Subscription Credit Facility issuance costs  (340)  (425)  (227)  (425)
Accrued organizational and offering costs  -   6   -   6 
Distributions payable  -   4,615   -   4,615 
Management fee payable  1,137   952   1,498   952 
Incentive fee payable  1,020   65   1,795   65 
Accrued expenses and other liabilities  3,004   2,529   4,507   2,529 
Total Liabilities $242,071  $274,495  $344,948  $274,495 
                
Commitments and contingencies (Note 8)                
                
Net Assets:                
Common Shares, $0.001 par value; 100,000,000 shares authorized; 23,474,784 and 19,227,902 as of March 31, 2022 and December 31, 2021, respectively, issued and outstanding $23  $19 
Common Shares, $0.001 par value; 100,000,000 shares authorized; 23,550,054 and 19,227,902 as of June 30, 2022 and December 31, 2021, respectively, issued and outstanding $24  $19 
Additional paid-in capital  370,206   300,726   371,427   300,726 
Total distributable earnings (deficit)  16,953   11,224   18,312   11,224 
Total Net Assets $387,182  $311,969  $389,763  $311,969 
Total Liabilities and Net Assets $629,253  $586,464  $734,711  $586,464 
Net Asset Value Per Common Share $16.49  $16.22  $16.55  $16.22 

 

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Statements of Operations

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

  For the three months
ended March 31,		 
  2022  2021 
Income:      
Investment income from investments:      
Interest income $11,897  $1,737 
Total Investment Income  11,897   1,737 
         
Expenses:        
Management fees  1,326   176 
Incentive fees  955   - 
Interest expense  2,808   461 
Professional fees  145   108 
Directors fees  107   65 
Offering costs  29   39 
Initial organization costs  -   175 
Other general and administrative expenses  314   98 
Total Expenses  5,684   1,122 
Net Investment Income (Loss)  6,213   615 
         
Realized and unrealized gains (losses) on investments        
Net realized gains (losses):        
Investments  28   32 
Total net realized gains (losses)  28   32 
Net change in unrealized gains (losses):        
Investments  (512)  2,798 
Total net change in unrealized gains (losses)  (512)  2,798 
Total realized and unrealized gains (losses)  (484)  2,830 
         
Net Increase (Decrease) in Net Assets Resulting from Operations $5,729  $3,445 
         
Per Common Share Data:        
Basic and diluted net investment income per common share $0.28  $0.11 
Basic and diluted net increase in net assets resulting from operations $0.26  $0.61 
Weighted Average Common Shares Outstanding - Basic and Diluted  22,393,176   5,667,333 

  For the three months ended
June 30,		  For the six months ended
June 30,		 
  2022  2021  2022  2021 
Income:            
Investment income from investments:            
Interest income $12,991  $3,818   24,892  $5,555 
Total Investment Income  12,991   3,818   24,892   5,555 
                 
Expenses:                
Management fees  1,498   422   2,824   598 
Incentive fees  775   -   1,730   - 
Interest expense  3,014   928   5,822   1,389 
Professional fees  155   185   300   293 
Directors fees  107   80   214   145 
Offering costs  -   67   29   106 
Initial organization costs  -   -   -   175 
Other general and administrative expenses  302   166   615   264 
Total Expenses  5,851   1,848   11,534   2,970 
Net Investment Income (Loss)  7,140   1,970   13,358   2,585 
                 
Realized and unrealized gains (losses) on investments                
Net realized gains (losses):                
Investments  -  15   23   47 
Total net realized gains (losses)  -  15   23   47 
Net change in unrealized gains (losses):                
Investments  322   1,223   (190)  4,021 
Total net change in unrealized gains (losses)  322   1,223   (190)  4,021 
Total realized and unrealized gains (losses)  322   1,238   (167)  4,068 
                 
Net Increase (Decrease) in Net Assets Resulting from Operations $7,462  $3,208   13,191  $6,653 
                 
Per Common Share Data:                
Basic and diluted net investment income per common share $0.30  $0.24   0.58  $0.35 
Basic and diluted net increase in net assets resulting from operations $0.32  $0.38   0.57  $0.91 
Weighted Average Common Shares Outstanding - Basic and Diluted  23,529,376   8,346,491   22,964,415   7,337,219 

 

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Statements of Changes in Net Assets

(amounts in 000’s)

(Unaudited)

 

 For the three months
ended March 31,		  For the three months ended
June 30,		  For the six months ended
June 30,		 
 2022  2021  2022  2021  2022  2021 
Increase (Decrease) in Net Assets Resulting from Operations:              
Net investment income (loss) $6,213  $615  $7,140  $1,970  $13,358  $2,585 
Net realized gains (losses) on investments  28   32   -  15   23   47 
Net change in unrealized gains (losses) on investments  (512)  2,798   322   1,223   (190)  4,021 
Net Increase (Decrease) in Net Assets Resulting from Operations  5,729   3,445   7,462   3,208   13,191   6,653 
                        
Decrease in Net Assets Resulting from Stockholder Distributions                
Dividends and distributions to stockholders  (6,103)  (850)  (6,103)  (850)
Net Decrease in Net Assets Resulting from Stockholder Distributions  (6,103)  (850)  (6,103)  (850)
                
Increase in Net Assets Resulting from Capital Share Transactions                        
Issuance of common shares  68,582   85,000   -   55,000   68,582   140,000 
Reinvestment of distributions  902   -   1,222   21   2,124   21 
Net Increase in Net Assets Resulting from Capital Share Transactions  69,484   85,000   1,222   55,021   70,706   140,021 
Total Increase (Decrease) in Net Assets  75,213   88,445   2,581   57,379   77,794   145,824 
Net Assets, Beginning of Period  311,969   (798)  387,182   87,647   311,969   (798)
Net Assets, End of Period $387,182  $87,647  $389,763  $145,026  $389,763  $145,026 

 

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Statements of Cash Flows

(amounts in 000’s)

(Unaudited)

 

 For the three months
ended March 31,		  For the six months ended
June 30,		 
 2022  2021  2022  2021 
          
Cash Flows from Operating Activities:          
Net increase (decrease) in net assets resulting from operations $5,729  $3,445  $13,191  $6,653 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:                
Net realized (gains)/losses on investments  (28)  (32)  (23)  (47)
Net change in unrealized (gains)/losses on investments  512   (2,798)  190   (4,021)
Net accretion of discount on investments  (750)  (168)  (2,011)  (467)
Sales (purchases) of short-term investments, net  670   (17,377)
Purchases of short-term investments, net  (4,731)  (4,622)
Purchases of portfolio investments  (66,523)  (157,976)  (181,452)  (225,182)
Proceeds from sales of investments and principal repayments  28,167   5,018   

43,777

   10,095 
Paid-in-kind interest from portfolio investments  -   (75)  -   (79)
Amortization of deferred financing cost  519   35   1,005   86 
Increase/(decrease) in operating assets and liabilities:                
(Increase)/decrease in receivable for sales of investments  -   (3,953)  -   (2,208)
(Increase)/decrease in interest and dividends receivable  (1,046)  (714)  (2,217)  (902)
(Increase)/decrease in deferred offering costs  29   11   29   51 
(Increase)/decrease in receivable for principal payments on investments  -   (68)  (333)  - 
(Increase)/decrease in prepaid expenses and other assets  (38)  6   (97)  68 
Increase/(decrease) in payable for investments purchased  -   5,120   -   4,109 
Increase/(decrease) in management fees payable  185   176   546   422 
Increase/(decrease) in incentive fee payable  955   -   1,730   - 
Increase/(decrease) in payable to affiliate  -   141   -   (1,075)
Increase/(decrease) in accrued organizational and offering costs, net  (6)  (40)  (6)  (134)
Increase/(decrease) in accrued other general and administrative expenses  475   594   1,978   1,223 
Net cash used in operating activities  (31,150)  (168,655)  (128,424)  (216,030)
Cash Flows from Financing Activities:                
Borrowings on Corporate Credit Facility, net  78,000   -   78,000   - 
Borrowings on Revolving Funding Facility, net  150,000   -   150,000   - 
Borrowings (repayments) on Loan and Security Agreement, net  (162,000)  50,000 
Borrowings (repayments) on Subscription Credit Facility, net  (91,000)  40,000 
(Payments)/Borrowings on Loan and Security Agreement, net  (162,000)  50,000 
Borrowings on Subscription and Credit Agreement, net  9,000   31,000 
Payments of debt issuance costs  (4,937)  (548)  (5,185)  (555)
Distributions paid in cash  (3,713)  -   (8,594)  (829)
Proceeds from issuance of common shares  68,582   85,000   68,582   140,000 
Net cash provided by financing activities  34,932   174,452   129,803   219,616 
Net increase in cash and cash equivalents  3,782   5,797   1,379   3,586 
Cash and cash equivalents, beginning of period  2,035   10   2,035   10 
Cash and cash equivalents, end of period $5,817  $5,807  $3,414  $3,596 
                
Supplemental and Non-Cash Information:                
Interest paid during the period $1,550  $11  $4,654  $429 
Non-cash financing activities not included herein consisted of reinvestment of dividends $902  $-  $2,124  $21 

 

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31,June 30, 2022

(amounts in 000’s)

(Unaudited)

 

   Interest Maturity Principal/ Amortized Fair Percentage 
Portfolio Company(1) Investment Interest Rate Maturity
Date		 Principal  /
Par		 Amortized
Cost(2)(3)		 Fair
Value		 Percentage
of Net Assets		  Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                    
Private Credit Investments(4)                    
Aerospace & defense                    
Blade (US) Holdings, Inc. First lien senior secured loan 7.00% (L + 6.00%) 8/31/2027 $4,854 $4,756 $4,854 1.2%
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 9.20% (S + 7.00%) 4/1/2024 $2,194  $2,178  $2,194   0.6%
 First lien senior secured delayed draw loan 7.00% (L + 6.00%) 3/3/2023 - - - 0.0% First lien senior secured loan 9.20% (S + 7.00%) 4/1/2024  1,931   1,914   1,931   0.5%
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 8.01% (L + 7.00%) 4/1/2022 2,199 2,199 2,199 0.6%
Precinmac (US) Holdings, Inc. First lien senior secured delayed draw loan 7.63% (S + 6.00%) 8/31/2027  1,119   1,098   1,119   0.3%
 First lien senior secured loan 7.63% (S + 6.00%) 8/31/2027  4,842   4,757   4,842   1.2%
 First lien senior secured loan 8.00% (L + 7.00%) 4/1/2022  1,937  1,917  1,937  0.5% First lien senior secured loan 7.63% (S + 6.00%) 8/31/2027  593   578   593   0.1%
   8,990 8,872 8,990 2.3%    10,679   10,525   10,679   2.7%
Asset management & custody banks                             
Atria Wealth Solutions, Inc. First lien senior secured loan 7.01% (L + 6.00%) 11/30/2022  5,178  5,153  5,178  1.3% First lien senior secured delayed draw loan 8.32% (S + 6.00%) 2/29/2024  -   -   -   0.0%
 First lien senior secured loan 8.32% (S + 6.00%) 2/29/2024  5,165   5,086   5,165   1.3%
   5,178 5,153 5,178 1.3%    5,165   5,086   5,165   1.3%
Auto components                             
Speedstar Holding LLC First lien senior secured loan 8.00% (L + 7.00%) 1/22/2027 4,993 4,899 5,043 1.3% First lien senior secured delayed draw loan 8.24% (L + 7.00%) 1/22/2027  -   -   -   0.0%
 First lien senior secured delayed draw loan 8.00% (L + 7.00%) 1/22/2027 - - - 0.0% First lien senior secured loan 8.24% (L + 7.00%) 1/22/2027  4,933   4,844   4,982   1.3%
Vehicle Accessories, Inc. First lien senior secured loan 6.50% (S + 5.50%) 11/30/2026 21,386 21,033 21,386 5.5% First lien senior secured loan 8.07% (S + 5.75%) 11/30/2026  21,333   20,995   21,333   5.4%
 First lien senior secured revolving loan 6.50% (S + 5.50%) 11/30/2026  167  140  167  0.1% First lien senior secured revolving loan 8.07% (S + 5.75%) 11/30/2026  1,078   1,052   1,078   0.3%
   26,546 26,072 26,596 6.9%    27,344   26,891   27,393   7.0%
Building products                             
BCI Burke Holding Corp. First lien senior secured loan 6.75% (L + 5.75%) 12/14/2027 17,260 16,972 17,260 4.5% First lien senior secured delayed draw loan 7.32% (L + 5.75%) 12/14/2023  -   -   -   0.0%
 First lien senior secured delayed draw loan 6.75% (L + 5.75%) 12/14/2023 - - - 0.0% First lien senior secured loan 7.32% (L + 5.75%) 12/14/2027  17,217   16,943   17,217   4.4%
 First lien senior secured revolving loan 6.75% (L + 5.75%) 6/14/2027 429 403 429 0.1% First lien senior secured revolving loan 7.32% (L + 5.75%) 6/14/2027  70   46   70   0.0%
Eastern Wholesale Fence First lien senior secured loan 8.00% (L + 7.00%) 10/30/2025 3,308 3,208 3,308 0.9% First lien senior secured loan 8.58% (L + 7.00%) 10/30/2025  3,288   3,194   3,288   0.9%
 First lien senior secured loan 8.00% (L + 7.00%) 10/30/2025 18,338 17,861 18,338 4.7% First lien senior secured loan 8.58% (L + 7.00%) 10/30/2025  18,223   17,779   18,223   4.7%
 First lien senior secured revolving loan 8.00% (L + 7.00%) 10/30/2025  1,701  1,671  1,701  0.4% First lien senior secured revolving loan 8.58% (L + 7.00%) 10/30/2025  1,701   1,673   1,701   0.4%
   41,036 40,115 41,036 10.6%    40,499   39,635   40,499   10.4%
Chemicals                             
Cyalume Technologies Holdings, Inc. First lien senior secured loan 6.51% (L + 5.50%) 10/25/2024 1,652 1,641 1,652 0.5% First lien senior secured loan 7.25% (L + 5.00%) 10/25/2024  1,334   1,324   1,334   0.3%
Fralock Buyer LLC First lien senior secured loan 6.50% (L + 5.50%) 4/17/2024 9,251 9,113 9,251 2.4% First lien senior secured loan 7.17% (L + 5.50%) 4/17/2024  9,251   9,125   9,182   2.4%
 First lien senior secured loan 6.50% (L + 5.50%) 4/17/2024 2,446 2,408 2,446 0.6% First lien senior secured loan 7.17% (L + 5.50%) 4/17/2024  2,440   2,409   2,422   0.6%
 First lien senior secured revolving loan 6.50% (L + 5.50%) 4/17/2024 - - - 0.0% First lien senior secured revolving loan 7.17% (L + 5.50%) 4/17/2024  -   -   -   0.0%
USALCO, LLC First lien senior secured loan 7.01% (L + 6.00%) 10/19/2027 19,327 18,891 19,327 5.0%
 First lien senior secured revolving loan 7.00% (L + 6.00%) 10/19/2026  827  780  827  0.2%
   33,503 32,833 33,503 8.7%
Commercial services & supplies           
Advanced Environmental Monitoring (5) First lien senior secured loan 8.50% (L + 7.50%) 1/29/2026 7,372 7,171 7,372 1.9%
American Equipment Holdings LLC First lien senior secured delayed draw loan 7.00% (L + 6.00%) 11/5/2023 6,367 6,248 6,367 1.6%
Shrieve Chemical Company, LLC First lien senior secured loan 8.01% (L + 6.00%) 12/2/2024  614   600   614   0.2%

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of June 30, 2022

(amounts in 000’s)

(Unaudited)

    Interest Maturity Principal/  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                      
Private Credit Investments(4)                      
                       
USALCO, LLC First lien senior secured loan 8.25% (L + 6.00%) 10/19/2027  19,278   18,861   19,278   4.9%
  First lien senior secured revolving loan 7.67% (L + 6.00%) 10/19/2026  1,208   1,164   1,208   0.3%
         34,125   33,483   34,038   8.7%
Commercial services & supplies                      
Advanced Environmental Monitoring (5) First lien senior secured loan 9.61% (S + 7.50%) 1/29/2026  10,159   9,888   10,159   2.6%
Allentown, LLC First lien senior secured delayed draw loan 7.60% (S + 6.00%) 10/22/2023  -   -   -   0.0%
  First lien senior secured loan 7.60% (S + 6.00%) 4/22/2027  7,701   7,627   7,701   2.0%
  First lien senior secured revolving loan 7.60% (S + 6.00%) 4/22/2027  255   245   255   0.1%
American Equipment Holdings LLC First lien senior secured delayed draw loan 7.94% (S + 6.00%) 11/5/2023  6,335   6,215   6,335   1.6%
  First lien senior secured delayed draw loan 7.94% (S + 6.00%) 11/5/2026  -   -   -   0.0%
  First lien senior secured loan 7.94% (S + 6.00%) 11/5/2026  1,764   1,731   1,764   0.5%
  First lien senior secured loan 7.94% (S + 6.00%) 11/5/2026  2,117   2,077   2,117   0.5%
  First lien senior secured loan 7.94% (S + 6.00%) 11/5/2026  16,470   16,071   16,470   4.2%
  First lien senior secured revolving loan 7.94% (S + 6.00%) 11/5/2026  -   -   -   0.0%
Arborworks Acquisition LLC First lien senior secured loan 8.37% (L + 7.00%) 11/9/2026  20,008   19,656   19,308   5.0%
  First lien senior secured revolving loan 9.00% (L + 7.00%) 11/9/2026  1,875   1,793   1,810   0.5%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured loan 7.54% (L + 6.25%) 2/1/2027  16,455   16,155   16,455   4.2%
  First lien senior secured revolving loan 7.50% (L + 6.25%) 2/1/2027  604   573   604   0.1%
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 8.14% (S + 6.50%) 5/7/2027  6,310   6,200   6,310   1.6%
  First lien senior secured delayed draw loan 8.12% (S + 6.50%) 5/7/2027  1,763   1,729   1,763   0.5%
  First lien senior secured loan 8.11% (S + 6.50%) 5/7/2027  4,819   4,658   4,819   1.2%
  First lien senior secured revolving loan 7.86% (S + 6.50%) 5/7/2027  -   -   -   0.0%

 

See accompanying notes to consolidated financial statements.

 


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31,June 30, 2022

(amounts in 000’s)

(Unaudited)

 

   Interest Maturity Principal/ Amortized Fair Percentage 
Portfolio Company(1) Investment Interest Rate Maturity
Date		 Principal  /
Par		 Amortized
Cost(2)(3)		 Fair
Value		 Percentage
of Net Assets		  Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                    
Private Credit Investments(4)                    
 First lien senior secured loan 7.00% (L + 6.00%) 11/5/2026 18,275 17,934 18,275 4.7%
 First lien senior secured revolving loan 7.00% (L + 6.00%) 11/5/2026 1,040 1,001 1,040 0.3%
Arborworks Acquisition LLC First lien senior secured loan 8.00% (L + 7.00%) 11/9/2026 20,160 19,699 19,656 5.1%
 First lien senior secured revolving loan 8.00% (L + 7.00%) 11/9/2026 - - - 0.0%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured loan 7.25% (L + 6.25%) 2/1/2027 16,496 16,180 16,496 4.3%
 First lien senior secured revolving loan 7.25% (L + 6.25%) 2/1/2027 604 572 604 0.2%
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 7.00% (L + 6.00%) 5/7/2027 6,326 6,223 6,326 1.6%
 First lien senior secured loan 7.00% (L + 6.00%) 5/7/2027 3,491 3,430 3,491 0.9%
 First lien senior secured revolving loan 7.00% (L + 6.00%) 5/7/2027 1,786 1,741 1,786 0.5%         
PMFC Holding, LLC First lien senior secured delayed draw loan 7.50% (L + 6.50%) 7/31/2023 2,840 2,825 2,840 0.7% First lien senior secured delayed draw loan 7.74% (L + 6.50%) 7/31/2023  2,833   2,821   2,833   0.7%
 First lien senior secured loan 7.50% (L + 6.50%) 7/31/2023 5,662 5,631 5,662 1.5% First lien senior secured loan 7.74% (L + 6.50%) 7/31/2023  5,647   5,623   5,647   1.4%
 First lien senior secured revolving loan 7.50% (L + 6.50%) 7/31/2023 445 445 445 0.1% First lien senior secured revolving loan 7.98% (L + 6.50%) 7/31/2023  342   342   342   0.1%
Regiment Security Partners LLC First lien senior secured loan 8.00% (L + 7.00%) 9/15/2026 6,520 6,402 6,520 1.7% First lien senior secured delayed draw loan 10.04% (S + 8.00%) 9/15/2023  2,648   2,576   2,648   0.7%
 First lien senior secured delayed draw loan 8.00% (L + 7.00%) 9/15/2023 - - - 0.0% First lien senior secured loan 10.04% (S + 8.00%) 9/15/2026  6,500   6,385   6,500   1.7%
 First lien senior secured revolving loan 8.01% (L + 7.00%) 9/15/2026 931 910 931 0.2% First lien senior secured revolving loan 10.04% (S + 8.00%) 9/15/2026  931   904   931   0.2%
The Kleinfelder Group, Inc. First lien senior secured loan 6.25% (L + 5.25%) 11/29/2024  12,857  12,746  12,857  3.3% First lien senior secured loan 7.50% (L + 5.25%) 11/29/2024  12,825   12,725   12,729   3.3%
   111,172 109,158 110,668 28.6%    128,361   125,994   127,500   32.7%
Containers & packaging                             
Drew Foam Companies, Inc. First lien senior secured loan 7.01% (L + 6.00%) 11/5/2025  7,432  7,350  7,432  1.9% First lien senior secured loan 8.25% (L + 6.00%) 11/5/2025  7,413   7,337   7,413   1.9%
   7,432 7,350 7,432 1.9%    7,413   7,337   7,413   1.9%
Diversified telecommunication services                             
Corbett Technology Solutions, Inc. First lien senior secured delayed draw loan 6.00% (L + 5.00%) 4/29/2023 9,506 9,416 9,506 2.5% First lien senior secured delayed draw loan 7.10% (L + 5.00%) 4/29/2023  9,482   9,396   9,482   2.4%
 First lien senior secured loan 6.00% (L + 5.00%) 10/29/2027 1,755 1,738 1,755 0.4% First lien senior secured loan 6.61% (L + 5.00%) 10/29/2027  1,751   1,734   1,751   0.5%
 First lien senior secured loan 6.00% (L + 5.00%) 10/29/2027 13,530 13,258 13,530 3.5% First lien senior secured loan 6.24% (L + 5.00%) 10/29/2027  13,497   13,237   13,497   3.5%
 First lien senior secured revolving loan 6.00% (L + 5.00%) 10/29/2027 889 757 889 0.2% First lien senior secured revolving loan 7.03% (L + 5.00%) 10/29/2027  1,525   1,393   1,525   0.4%
Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 6.00% (L + 5.00%) 4/5/2026  5,289  5,201  5,289  1.4% First lien senior secured loan 7.25% (L + 5.00%) 11/30/2024  5,276   5,193   5,223   1.3%
   30,969 30,370 30,969 8.0%    31,531   30,953   31,478   8.1%
Electronic equipment, instruments & components                  
Process Insights, Inc. First lien senior secured loan 8.85% (S + 7.50%) 10/30/2025  3,059   3,000   3,059   0.8%
    3,059   3,000   3,059   0.8%
Food products                             
IF&P Foods, LLC (FreshEdge) First lien senior secured loan 6.75% (L + 5.25%) 8/15/2023  33,800   33,196   33,800   8.7%
Siegel Egg Co., LLC First lien senior secured loan 7.00% (L + 6.00%) 12/29/2026 15,742 15,466 15,742 4.1% First lien senior secured loan 6.50% (L + 5.50%) 12/29/2026  15,702   15,438   15,702   4.0%
 First lien senior secured revolving loan 7.00% (L + 6.00%) 12/29/2026  2,370  2,311  2,370  0.6% First lien senior secured revolving loan 6.92% (L + 5.50%) 12/29/2026  1,476   1,419   1,476   0.4%
   18,112 17,777 18,112 4.7%    50,978   50,053   50,978   13.1%
Health care providers & services           
Brightview, LLC First lien senior secured loan 6.75% (L + 5.75%) 4/12/2024 13,100 12,947 13,100 3.4%
 First lien senior secured delayed draw loan 6.75% (L + 5.75%) 4/12/2024 - - - 0.0%
 First lien senior secured revolving loan 6.75% (L + 5.75%) 4/12/2024 - - - 0.0%
Dermatologists of Southwestern Ohio, LLC First lien senior secured loan 9.50% (L + 8.50%) 4/20/2022 1,279 1,267 1,279 0.3%
Guardian Dentistry Partners First lien senior secured delayed draw loan 7.00% (L + 6.00%) 8/20/2026 2,103 1,878 2,103 0.6%
 First lien senior secured loan 7.00% (L + 6.00%) 8/20/2026 8,201 8,100 8,201 2.1%

 

See accompanying notes to consolidated financial statements.

 


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31,June 30, 2022

(amounts in 000’s)

(Unaudited)

 

Portfolio Company(1) Investment Interest Rate Maturity
Date		 Principal  /
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
OMH-HealthEdge Holdings, LLC First lien senior secured loan 7.50% (L + 6.00%) 10/24/2025  12,344   12,093   12,344   3.2%
  First lien senior secured loan 7.50% (L + 6.00%) 10/24/2025  5,362   5,245   5,362   1.4%
SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/30/2026  6,733   6,561   6,733   1.7%
  First lien senior secured loan 6.50% (L + 5.50%) 12/30/2026  12,037   11,776   12,037   3.1%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
West Dermatology Management Holdings, LLC First lien senior secured loan 7.00% (L + 6.00%) 2/11/2025  1,970   1,954   1,970   0.5%
         63,129   61,821   63,129   16.3%
Household durables                      
Curio Brands, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/21/2027  18,054   17,595   18,054   4.7%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/21/2023  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/21/2027  -   -   -   0.0%
         18,054   17,595   18,054   4.7%
Household products                      
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured loan 6.00% (L + 5.00%) 11/8/2026  20,568   20,147   20,568   5.3%
  First lien senior secured revolving loan 6.00% (L + 5.00%) 11/8/2026  -   -   -   0.0%
         20,568   20,147   20,568   5.3%
IT services                      
Improving Acquisition LLC First lien senior secured loan 6.50% (L + 5.50%) 7/26/2023  601   597   601   0.2%
         601   597   601   0.2%
Leisure products                      
MacNeill Pride Group First lien senior secured delayed draw loan 7.25% (S + 6.25%) 4/22/2026  1,956   1,934   1,956   0.5%
  First lien senior secured delayed draw loan 7.25% (S + 6.25%) 4/22/2026  159   111   159   0.1%
  First lien senior secured loan 7.25% (S + 6.25%) 4/22/2026  8,684   8,584   8,684   2.2%
  First lien senior secured revolving loan 7.25% (S + 6.25%) 4/22/2026  1,079   1,050   1,079   0.3%
Trademark Global LLC First lien senior secured delayed draw loan 7.00% (L + 6.00%) 7/30/2023  -   -   -   0.0%
  First lien senior secured loan 7.00% (L + 6.00%) 7/30/2024  11,481   11,391   11,251   2.9%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 7/30/2024  2,880   2,853   2,820   0.7%
         26,239   25,923   25,949   6.7%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 7.25% (S + 6.25%) 3/6/2027  2,025   2,004   2,025   0.5%
         2,025   2,004   2,025   0.5%
Personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured loan 6.75% (L + 5.75%) 11/1/2025  12,098   11,993   12,098   3.1%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 11/1/2025  -   -   -   0.0%
PH Beauty Holdings III, Inc. First lien senior secured loan 5.51% (L + 5.00%) 9/28/2025  9,617   9,285   9,617   2.5%
         21,715   21,278   21,715   5.6%
Pharmaceuticals                      
Foundation Consumer Brands First lien senior secured loan 

6.50% (L + 5.50%)

 2/12/2027  8,485   8,412   8,485   2.2%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 2/12/2027  -   -   -   0.0%
         8,485   8,412   8,485   2.2%
Professional services                      
4 Over International, LLC First lien senior secured loan 7.51% (L + 6.50%) 12/7/2023  2,488   2,422   

2,488

   0.6%
  First lien senior secured loan 7.51% (L + 6.50%) 10/29/2027  22,251   21,726   22,251   5.7%
         24,739   24,148   24,739   6.3%
Software                      
Peak Technologies First lien senior secured loan 8.07% (L + 7.07%) 4/1/2026  1,059   1,038   1,059   0.3%
    Interest Maturity Principal/  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                  
Private Credit Investments(4)                  
                   
Health care providers & services                  
Brightview, LLC First lien senior secured delayed draw loan 8.63% (L + 5.75%) 4/12/2024  -   -   -   0.0%
  First lien senior secured loan 8.63% (L + 5.75%) 4/12/2024  13,067   12,934   13,067   3.4%
  First lien senior secured revolving loan 8.63% (L + 5.75%) 4/12/2024  -   -   -   0.0%
Guardian Dentistry Partners First lien senior secured delayed draw loan 7.67% (S + 6.00%) 8/20/2026  4,663   4,449   4,663   1.2%
  First lien senior secured loan 7.67% (S + 6.00%) 8/20/2026  8,180   8,084   8,180   2.1%
Light Wave Dental Management LLC First lien senior secured delayed draw loan 8.16% (S + 6.50%) 11/11/2023  913   820   913   0.2%
  First lien senior secured delayed draw loan 8.16% (S + 6.50%) 12/31/2023  4,116   4,076   4,116   1.1%
  First lien senior secured delayed draw loan 8.16% (S + 6.50%) 12/31/2023  2,896   2,867   2,896   0.7%
  First lien senior secured loan 8.16% (S + 6.50%) 12/31/2023  8,475   8,386   8,475   2.2%
  First lien senior secured loan 8.16% (S + 6.50%) 12/31/2023  4,533   4,489   4,533   1.2%
  First lien senior secured revolving loan 8.16% (S + 6.50%) 12/31/2023  -   -   -   0.0%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 7.50% (L + 6.00%) 10/24/2025  12,312   12,079   12,312   3.1%
  First lien senior secured loan 7.50% (L + 6.00%) 10/24/2025  5,349   5,239   5,349   1.4%
SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 7.65% (S + 5.50%) 12/30/2026  10,233   10,027   10,233   2.6%
  First lien senior secured loan 6.76% (S + 5.50%) 12/30/2026  12,009   11,760   12,009   3.1%
  First lient senior secured revolving loan 6.76% (S + 5.50%) 12/30/2026  -   -   -   0.0%
         86,746   85,210   86,746   22.3%
Household durables                      
Curio Brands, LLC First lien senior secured delayed draw loan 6.92% (L + 5.50%) 12/21/2023  3,296   3,296   3,296   0.9%
  First lien senior secured loan 7.75% (L + 5.50%) 12/21/2027  18,054   17,610   18,054   4.6%
  First lien senior secured revolving loan 7.13% (L + 5.50%) 12/21/2027  1,290   1,290   1,290   0.3%
         22,640   22,196   22,640   5.8%

 

See accompanying notes to consolidated financial statements.

 


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31,June 30, 2022

(amounts in 000’s)

(Unaudited)

 

Portfolio Company(1) Investment Interest Rate Maturity
Date		 Principal  /
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
  First lien senior secured loan 8.09% (L + 7.09%) 4/1/2026  12,736   12,623   12,736   3.3%
         13,795   13,661   13,795   3.6%
Specialty retail                      
Sundance Holdings Group, LLC (5) First lien senior secured loan 7.00% (L + 6.00%) 5/1/2024  8,936   8,634   8,936   2.3%
         8,936   8,634   8,936   2.3%
Textiles, apparel & luxury goods                      
BEL USA, LLC First lien senior secured loan 7.00% (S + 6.00%) 11/2/2023  114   114   114   0.0%
  First lien senior secured loan 7.00% (S + 6.00%) 11/2/2023  6,946   6,844   6,946   1.8%
YS Garments, LLC First lien senior secured loan 6.50% (L + 5.50%) 8/9/2024  7,879   7,738   7,879   2.0%
         14,939   14,696   14,939   3.8%
Trading companies & distributors                      
Broder Bros., Co. First lien senior secured loan 7.39% (L + 6.00%) 12/2/2022  5,139   4,908   5,139   1.3%
CGI Automated Manufacturing, LLC First lien senior secured delayed draw loan 7.00% (S + 6.00%) 12/17/2026  3,804   3,699   3,804   1.0%
  First lien senior secured loan 7.00% (S + 6.00%) 12/17/2026  21,582   20,908   21,582   5.6%
  First lien senior secured revolving loan 7.00% (S + 6.00%) 12/17/2026  -   -   -   0.0%
EIS Legacy, LLC First lien senior secured loan 6.50% (L + 5.50%) 5/1/2023  18,415   17,972   18,415   4.7%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 11/1/2027  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 11/1/2027  -   -   -   0.0%
I.D. Images Acquisition, LLC First lien senior secured delayed draw loan 7.26% (L + 6.25%) 1/30/2023  2,627   2,604   2,627   0.7%
  First lien senior secured loan 7.26% (L + 6.25%) 7/30/2026  15,531   15,328   15,531   4.0%
  First lien senior secured revolving loan 7.25% (L + 6.25%) 7/30/2026  1,198   1,168   1,198   0.3%
Refrigeration Sales Corp. First lien senior secured loan 7.50% (L + 6.50%) 6/22/2026  6,910   6,806   6,910   1.8%
United Safety & Survivability Corporation (USSC) First lien senior secured loan 7.01% (L + 6.00%) 9/30/2027  12,658   12,427   12,658   3.3%
  First lien senior secured delayed draw loan 7.01% (L + 6.00%) 9/30/2023  -   -   -   0.0%
  First lien senior secured revolving loan 7.01% (L + 6.00%) 9/30/2027  402   380   402   0.1%
         88,266   86,200   88,266   22.8%
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured delayed draw loan 6.50% (L + 5.50%) 8/10/2023  7,170   7,038   7,170   1.9%
  First lien senior secured loan 6.51% (L + 5.50%) 8/10/2027  9,242   9,067   9,242   2.4%
  First lien senior secured loan 6.50% (L + 5.50%) 8/10/2027  5,970   5,829   5,970   1.5%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 8/10/2027  -   -   -   0.0%
         22,382   21,934   22,382   5.8%
Total Private Credit Debt Investments        616,811   604,750   616,067   159.1%
    Interest Maturity Principal/  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Household products                  
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured loan 6.67% (L + 5.00%) 11/8/2026  20,253   19,859   20,253   5.2%
  First lien senior secured revolving loan 6.67% (L + 5.00%) 11/8/2026  -   -   -   0.0%
         20,253   19,859   20,253   5.2%
IT services                      
Improving Acquisition LLC First lien senior secured loan 8.01% (L + 5.50%) 7/26/2023  600   597   600   0.2%
         600   597   600   0.2%
Leisure products                      
MacNeill Pride Group First lien senior secured delayed draw loan 8.57% (S + 6.25%) 4/22/2026  1,951   1,930   1,951   0.5%
  First lien senior secured delayed draw loan 8.57% (S + 6.25%) 4/22/2026  2,189   2,144   2,189   0.6%
  First lien senior secured loan 8.57% (L + 6.25%) 4/22/2026  8,663   8,568   8,663   2.2%
  First lien senior secured revolving loan 8.57% (S + 6.25%) 4/22/2026  1,378   1,351   1,378   0.4%
Trademark Global LLC First lien senior secured delayed draw loan 7.92% (L + 6.25%) 7/30/2024  -   -   -   0.0%
  First lien senior secured loan 7.92% (L + 6.25%) 7/30/2024  11,452   11,366   11,051   2.8%
  First lien senior secured revolving loan 7.92% (L + 6.25%) 7/30/2024  2,880   2,859   2,779   0.7%
         28,513   28,218   28,011   7.2%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 8.57% (S + 6.25%) 3/6/2027  2,019   2,000   2,019   0.5%
         2,019   2,000   2,019   0.5%
Personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured loan 7.42% (L + 5.75%) 11/1/2025  11,805   11,710   11,805   3.0%
  First lien senior secured revolving loan 7.42% (L + 5.75%) 11/1/2025  -   -   -   0.0%
PH Beauty Holdings III, Inc. First lien senior secured loan 6.57% (L + 5.00%) 9/28/2025  9,592   9,281   9,472   2.5%
         21,397   20,991   21,277   5.5%
Pharmaceuticals                      
Foundation Consumer Brands First lien senior secured loan 6.92% (L + 5.50%) 2/12/2027  8,069   8,005   8,069   2.1%
  First lien senior secured revolving loan 6.92% (L + 5.50%) 2/12/2027  -   -   -   0.0%
         8,069   8,005   8,069   2.1%
Professional services                      
4 Over International, LLC First lien senior secured loan 8.25% (L + 6.50%) 12/7/2023  2,475   2,419   2,475   0.6%
  First lien senior secured loan 8.25% (L + 6.50%) 12/7/2023  22,126   21,625   22,126   5.7%
         24,601   24,044   24,601   6.3%

 

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31,June 30, 2022

(amounts in 000’s)

(Unaudited)

 

  Number of
Units / Shares		  Cost  Fair
Value		  Percentage
of Net Assets		 
Equity Investments            
Auto components            
Vehicle Accessories, Inc. – Class A common (6)  128.250   -   -   0.0%
Vehicle Accessories, Inc. – preferred (6)  250.000   250   250   0.1%
   378.250   250   250   0.1%
Commercial services & supplies                
BLP Buyer, Inc. (Bishop Lifting Products) – Class A common (7)  500.000   500   500   0.1%
                 
Food products                
Siegel Parent, LLC (8)  0.250   250   250   0.1%
Total Private Equity Investments  878.500   1,000   1,000   0.3%
                 
Total Private Investments      605,750   617,067   159.4%

    Interest Maturity Principal/  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                      
Private Credit Investments(4)                      
Software                      
Peak Technologies First lien senior secured loan 8.58% (S + 6.50%) 4/1/2026  10,532   10,322   10,532   2.7%
  First lien senior secured loan 8.72% (L + 7.05%) 4/1/2026  397   390   397   0.1%
  First lien senior secured loan 8.74% (L + 6.50%) 4/1/2026  659   646   659   0.2%
  First lien senior secured loan 8.62% (L + 6.95%) 4/1/2026  3,742   3,668   3,742   1.0%
  First lien senior secured loan 8.68% (L + 7.09%) 4/1/2026  929   911   929   0.2%
  First lien senior secured loan 8.76% (L + 7.09%) 4/1/2026  12,704   12,594   12,704   3.2%
         28,963   28,531   28,963   7.4%
Specialty retail                      
Sundance Holdings Group, LLC (5) First lien senior secured loan 8.11% (L + 6.00%) 5/1/2024  8,871   8,606   8,871   2.3%
         8,871   8,606   8,871   2.3%
Textiles, apparel & luxury goods                      
BEL USA, LLC First lien senior secured loan 7.42% (S + 6.00% includes 1.275% PIK) 11/2/2023  114   113   114   0.0%
  First lien senior secured loan 7.42% (S + 6.00%) 11/2/2023  6,928   6,843   6,928   1.8%
YS Garments, LLC First lien senior secured loan 7.54% (L + 5.50%) 8/9/2024  7,821   7,696   7,821   2.0%
         14,863   14,652   14,863   3.8%
Trading companies & distributors                      
Broder Bros., Co. First lien senior secured loan 7.39% (L + 6.00%) 12/2/2022  4,824   4,685   4,824   1.2%
CGI Automated Manufacturing, LLC First lien senior secured delayed draw loan 8.32% (S + 6.50%) 6/17/2023  3,757   3,652   3,757   1.0%
  First lien senior secured loan 8.32% (S + 6.50%) 12/17/2026  3,293   3,204   3,293   0.8%
  First lien senior secured loan 8.32% (S + 6.50%) 12/17/2026  18,016   17,473   18,016   4.6%
  First lien senior secured revolving loan 8.32% (S + 6.50%) 12/17/2026  -   -   -   0.0%
EIS Legacy, LLC First lien senior secured delayed draw loan 7.07% (L + 5.50%) 5/1/2023  -   -   -   0.0%
  First lien senior secured loan 7.07% (L + 5.50%) 11/1/2026  18,369   17,943   18,369   4.7%
  First lien senior secured revolving loan 7.07% (L + 5.50%) 11/1/2026  -   -   -   0.0%
I.D. Images Acquisition, LLC First lien senior secured delayed draw loan 8.50% (L + 6.25%) 1/30/2023  2,621   2,599   2,621   0.7%
  First lien senior secured loan 8.50% (L + 6.25%) 7/30/2026  8,369   8,243   8,369   2.1%
  First lien senior secured loan 8.50% (L + 6.25%) 7/30/2026  1,100   1,083   1,100   0.3%
  First lien senior secured loan 8.50% (L + 6.25%) 7/30/2026  6,023   5,972   6,023   1.6%
  First lien senior secured revolving loan 8.50% (L + 6.25%) 7/30/2026  1,152   1,122   1,152   0.3%
Refrigeration Sales Corp. First lien senior secured loan 8.60% (L + 6.50%) 6/22/2026  6,910   6,813   6,910   1.8%

 

  Number of
Shares		  Cost  Fair
Value		  Percentage
of Net Assets		 
Short-Term Investments            
First American Treasury Obligations Fund - Institutional Class Z, 0.19% (9)  3,004   3,004   3,004   0.8%
Total Short-Term Investments  3,004   3,004   3,004   0.8%
                 
Total Investments     $608,754  $620,071   160.2%
                 
Liabilities in Excess of Other Assets          (232,889)  (60.2)%
Net Assets         $387,182   100.0%

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of June 30, 2022

(amounts in 000’s)

(Unaudited)

    Interest Maturity Principal/  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                      
Private Credit Investments(4)                      
                       
United Safety & Survivability Corporation (USSC) First lien senior secured delayed draw loan 8.50% (L + 6.00%) 9/30/2023  -   -   -   0.0%
  First lien senior secured loan 8.50% (L + 6.00%) 9/30/2027  12,627   12,405   12,500   3.2%
  First lien senior secured revolving loan 8.50% (L + 6.00%) 9/30/2027  803   783   795   0.2%
         87,864   85,977   87,729   22.5%
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured delayed draw loan 7.05% (S + 5.50%) 8/10/2023  7,152   7,026   7,152   1.8%
  First lien senior secured delayed draw loan 7.05% (S + 5.50%) 8/10/2023  1,411   1,336   1,411   0.4%
  First lien senior secured loan 7.05% (S + 5.50%) 8/10/2027  9,219   9,051   9,219   2.4%
  First lien senior secured loan 7.05% (S + 5.50%) 8/10/2027  5,955   5,820   5,955   1.5%
  First lien senior secured revolving loan 7.05% (S + 5.50%) 8/10/2027  -   -   -   0.0%
         23,737   23,233   23,737   6.1%
Total Private Credit Debt Investments        718,290   705,076   716,581   183.9%

  Number     Fair  Percentage 
  of Units  Cost  Value  of Net Assets 
Private Equity Investments            
Auto components            
Vehicle Accessories, Inc. - Class A common (6)(7)  128.250   -   -   0.0%
Vehicle Accessories, Inc. - preferred (6)(7)  250.000   250   258   0.1%
   378.250   250   258   0.1%
Commercial services & supplies                
American Equipment Holdings LLC (6)  250.000   250   250   0.1%
BLP Buyer, Inc. (Bishop Lifting Products) - Class A common (6)(8)  500.000   500   500   0.1%
   750.000   750   750   0.2%
Food products                
Siegel Parent, LLC (9)  0.250   250   375   0.1%
Total Private Equity Investments  1,128.500   1,250   1,383   0.4%
                 
Total Private Investments      706,326   717,964   184.3%

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of June 30, 2022

(amounts in 000’s)

(Unaudited)

  Number of     Fair  Percentage 
  Shares  Cost  Value  of Net Assets 
Short-Term Investments            
First American Treasury Obligations Fund - Institutional Class Z, 1.27% (10)  8,405   8,405   8,405   2.2%
Total Short-Term Investments  8,405   8,405   8,405   2.2%
                 
Total Investments     $714,731  $726,369   186.5%
                 
Liabilities in Excess of Other Assets          (336,606)  (86.5)%
Net Assets         $389,763   100.0%

 

(1)As of March 31,June 30, 2022, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.
  
(2)The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
  
(3)As of March 31,June 30, 2022, the tax cost of the Company’s investments approximates their amortized cost.
  
(4)

Loan contains a variable rate structure, that may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), the Secured Overnight Funding Rate (“SOFR” or “S”) (which can include one-, three- or six-month SOFR), or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate).

  
(5)

The Company may be entitled to receive additional interest as a result of an arrangement with other lenders in the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss. Certain lenders represent a “first out” portion of the investment and have priority to the “last-out” portion with respect to payments of principal and interest.

(6)

Non-income producing security.

(7)The Company owns 0.19% of the common equity and 0.43% of the preferred equity of Vehicle Accessories, Inc.

(7)
(8)The Company owns 0.53% of the common equity BLP Buyer, Inc. (Bishop Lifting Products).
  
(8)(9)The Company owns 50% of a pass-through LLC, KSCF IV Equity Aggregator, LLC (the “Aggregator”), which holds 500 Class A units of Siegel Parent, LLC. The Aggregator’s ownership of Siegel Parent, LLC is 1.14%. Through the Company’s ownership of the Aggregator, the Company owns 250 Class A units of Siegel Parent, LLC.
  
(9)(10)The indicated rate is the yield as of March 31,June 30, 2022.

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal /
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Automobiles & components                  
Speedstar Holding LLC First lien senior secured loan 8.00% (L + 7.00%) 1/22/2027 $5,005  $4,906  $5,055   1.6%
  First lien senior secured delayed draw loan 8.00% (L + 7.00%) 1/22/2027  -   -   -   0.0%
Vehicle Accessories, Inc. First lien senior secured loan 6.50% (L + 5.50%) 11/30/2026  18,382   18,034   18,382   5.9%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 11/30/2026  -   -   -   0.0%
         23,387   22,940   23,437   7.5%
Capital goods                      
Blade (US) Holdings, Inc. First lien senior secured loan 7.00% (L + 6.00%) 8/31/2027  4,866   4,763   4,866   1.6%
  First lien senior secured delayed draw loan 7.00% (L + 6.00%) 3/3/2023  -   -   -   0.0%
Broder Bros., Co. First lien senior secured loan 8.00% (L + 7.00%) 12/2/2022  5,369   5,044   5,369   1.7%
CGI Automated Manufacturing, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/17/2026  18,478   18,020   18,478   5.9%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/17/2026  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/17/2026  -   -   -   0.0%
Eastern Wholesale Fence First lien senior secured revolving loan 8.00% (L + 7.00%) 10/30/2025  1,035   1,002   1,035   0.3%
  First lien senior secured loan 8.00% (L + 7.00%) 10/30/2025  3,317   3,210   3,317   1.1%
  First lien senior secured loan 8.00% (L + 7.00%) 10/30/2025  18,384   17,873   18,384   5.9%
EIS Legacy, LLC First lien senior secured loan 6.50% (L + 5.50%) 11/1/2027  18,462   17,998   18,462   5.9%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 11/1/2027  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 11/1/2027  -   -   -   0.0%
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 8.00% (L + 7.00%) 4/1/2022  2,205   2,194   2,205   0.7%
  First lien senior secured loan 8.00% (L + 7.00%) 4/1/2022  1,942   1,939   1,942   0.6%
I.D. Images Acquisition, LLC First lien senior secured delayed draw loan 7.25% (L + 6.25%) 1/30/2023  2,634   2,609   2,634   0.9%
  First lien senior secured revolving loan��7.25% (L + 6.25%) 7/30/2026  450   420   450   0.2%
  First lien senior secured loan 7.25% (L + 6.25%) 7/30/2026  15,570   15,353   15,570   5.0%
Refrigeration Sales Corp. First lien senior secured loan 7.50% (L + 6.50%) 6/22/2026  6,945   6,835   6,945   2.2%
United Safety & Survivability Corporation (USSC) First lien senior secured loan 7.00% (L + 6.00%) 9/30/2027  12,690   12,439   12,690   4.1%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 9/30/2027  402   379   402   0.1%
  First lien senior secured delayed draw loan 7.00% (L + 6.00%) 9/30/2023  -   -   -   0.0%
         112,749   110,078   112,749   36.2%
Commercial & professional services                      
4 Over International, LLC First lien senior secured loan 7.50% (L + 6.50%) 10/29/2027  24,875   24,249   24,875   8.0%

 

See accompanying notes to consolidated financial statements.

 


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

 

Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal /
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Advanced Environmental Monitoring (5) First lien senior secured loan 8.00% (L + 7.00%) 1/29/2026  7,372   7,159   7,372   2.4%
American Equipment Holdings LLC First lien senior secured delayed draw loan 7.00% (L + 6.00%) 11/3/2026  6,367   6,242   6,367   2.1%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 11/3/2026  425   383   425   0.1%
  First lien senior secured loan 7.00% (L + 6.00%) 11/3/2026  16,511   16,188   16,511   5.3%
Arborworks Acquisition LLC First lien senior secured revolving loan 7.00% (L + 6.00%) 11/9/2026  1,469   1,378   1,469   0.5%
  First lien senior secured loan 8.00% (L + 7.00%) 11/9/2026  20,312   19,914   20,312   6.5%
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 7.00% (L + 6.00%) 5/7/2027  4,737   4,641   4,737   1.5%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 5/7/2027  -   -   -   0.0%
  First lien senior secured loan 7.00% (L + 6.00%) 5/7/2027  3,500   3,388   3,500   1.1%
PMFC Holding, LLC First lien senior secured delayed draw loan 7.50% (L + 6.50%) 7/31/2023  2,847   2,829   2,847   0.9%
  First lien senior secured loan 7.50% (L + 6.50%) 7/31/2023  5,676   5,639   5,676   1.8%
  First lien senior secured revolving loan 7.50% (L + 6.50%) 7/31/2023  -   -   -   0.0%
Regiment Security Partners LLC First lien senior secured loan 8.00% (L + 7.00%) 9/15/2026  6,539   6,389   6,539   2.1%
  First lien senior secured delayed draw loan 8.00% (L + 7.00%) 9/15/2023  -   -   -   0.0%
  First lien senior secured revolving loan 8.00% (L + 7.00%) 9/15/2026  -   -   -   0.0%
The Kleinfelder Group, Inc. First lien senior secured loan 6.25% (L + 5.25%) 11/15/2027  12,889   12,766   12,889   4.1%
         113,519   111,165   113,519   36.4%
Consumer durables & apparel                      
BCI Burke Holding Corp. First lien senior secured loan 6.75% (L + 5.75%) 12/14/2027  17,303   16,997   17,303   5.5%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 6/14/2027  389   360   389   0.1%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 12/14/2023  -   -   -   0.0%
BEL USA, LLC First lien senior secured loan 9.50% (L + 8.00%) 11/2/2023  148   147   146   0.0%
  First lien senior secured loan 8.50% (L + 7.00%, includes 1.275% PIK) 11/2/2023  8,988   8,835   8,853   2.8%
Curio Brands, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/21/2027  18,054   17,575   18,054   5.8%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/21/2023  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/21/2027  -   -   -   0.0%
MacNeill Pride Group First lien senior secured revolving loan 7.50% (L + 6.50%) 4/22/2026  1,429   1,407   1,429   0.5%
  First lien senior secured delayed draw loan 7.50% (L + 6.50%) 4/22/2026  1,961   1,937   1,961   0.6%
  First lien senior secured loan 7.50% (L + 6.50%) 4/22/2026  8,706   8,598   8,706   2.8%
New Era Cap Company, Inc. First lien senior secured loan 7.50% (L + 6.50%) 9/10/2023  12,724   12,624   12,724   4.1%
Trademark Global LLC First lien senior secured loan 7.00% (L + 6.00%) 7/30/2024  11,510   11,404   11,510   3.7%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 7/30/2024  2,280   2,254   2,280   0.7%
  First lien senior secured delayed draw loan 7.00% (L + 6.00%) 7/30/2023  -   -   -   0.0%
YS Garments, LLC First lien senior secured loan 7.00% (L + 6.00%) 8/9/2024  7,936   7,779   7,936   2.6%
         91,428   89,917   91,291   29.2%
Diversified financials                      
Atria Wealth Solutions, Inc. First lien senior secured loan 7.00% (L + 6.00%) 11/30/2022  5,191   5,156   5,191   1.7%
         5,191   5,156   5,191   1.7%
Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal/
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Automobiles & components                  
Speedstar Holding LLC First lien senior secured loan 8.00% (L + 7.00%) 1/22/2027 $5,005  $4,906  $5,055   1.6%
  First lien senior secured delayed draw loan 8.00% (L + 7.00%) 1/22/2027  -   -   -   0.0%
Vehicle Accessories, Inc. First lien senior secured loan 6.50% (L + 5.50%) 11/30/2026  18,382   18,034   18,382   5.9%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 11/30/2026  -   -   -   0.0%
         23,387   22,940   23,437   7.5%
Capital goods                      
Blade (US) Holdings, Inc. First lien senior secured loan 7.00% (L + 6.00%) 8/31/2027  4,866   4,763   4,866   1.6%
  First lien senior secured delayed draw loan 7.00% (L + 6.00%) 3/3/2023  -   -   -   0.0%
Broder Bros., Co. First lien senior secured loan 8.00% (L + 7.00%) 12/2/2022  5,369   5,044   5,369   1.7%
CGI Automated Manufacturing, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/17/2026  18,478   18,020   18,478   5.9%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/17/2026  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/17/2026  -   -   -   0.0%
Eastern Wholesale Fence First lien senior secured revolving loan 8.00% (L + 7.00%) 10/30/2025  1,035   1,002   1,035   0.3%
  First lien senior secured loan 8.00% (L + 7.00%) 10/30/2025  3,317   3,210   3,317   1.1%
  First lien senior secured loan 8.00% (L + 7.00%) 10/30/2025  18,384   17,873   18,384   5.9%
EIS Legacy, LLC First lien senior secured loan 6.50% (L + 5.50%) 11/1/2027  18,462   17,998   18,462   5.9%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 11/1/2027  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 11/1/2027  -   -   -   0.0%
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 8.00% (L + 7.00%) 4/1/2022  2,205   2,194   2,205   0.7%
  First lien senior secured loan 8.00% (L + 7.00%) 4/1/2022  1,942   1,939   1,942   0.6%
I.D. Images Acquisition, LLC First lien senior secured delayed draw loan 7.25% (L + 6.25%) 1/30/2023  2,634   2,609   2,634   0.9%
  First lien senior secured revolving loan 7.25% (L + 6.25%) 7/30/2026  450   420   450   0.2%
  First lien senior secured loan 7.25% (L + 6.25%) 7/30/2026  15,570   15,353   15,570   5.0%
Refrigeration Sales Corp. First lien senior secured loan 7.50% (L + 6.50%) 6/22/2026  6,945   6,835   6,945   2.2%
United Safety & Survivability Corporation (USSC) First lien senior secured loan 7.00% (L + 6.00%) 9/30/2027  12,690   12,439   12,690   4.1%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 9/30/2027  402   379   402   0.1%
  First lien senior secured delayed draw loan 7.00% (L + 6.00%) 9/30/2023  -   -   -   0.0%
         112,749   110,078   112,749   36.2%
Commercial & professional services                      
4 Over International, LLC First lien senior secured loan 7.50% (L + 6.50%) 10/29/2027  24,875   24,249   24,875   8.0%

 

See accompanying notes to consolidated financial statements.

13

 


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

 

Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal /
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Food & beverage                  
Siegel Egg Co., LLC First lien senior secured loan 7.00% (L + 6.00%) 12/29/2026  15,742   15,450   15,742   5.1%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 12/29/2026  1,029   966   1,029   0.3%
         16,771   16,416   16,771   5.4%
Health care equipment & services                      
Brightview, LLC First lien senior secured loan 6.75% (L + 5.75%) 4/12/2024  13,133   12,956   13,133   4.2%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 4/12/2024  -   -   -   0.0%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 4/12/2024  -   -   -   0.0%
Dermatologists of Southwestern Ohio, LLC First lien senior secured loan 9.50% (L + 8.50%) 4/20/2022  1,282   1,270   1,282   0.4%
Guardian Dentistry Partners First lien senior secured loan 6.75% (L + 5.75%) 8/20/2026  8,222   7,860   8,222   2.6%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 8/20/2026  -   -   -   0.0%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 6.50% (L + 5.25%) 10/24/2025  12,375   12,138   12,375   4.0%
SGA Dental Partners Holdings, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/30/2026  12,069   11,681   12,069   3.9%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
West Dermatology Management Holdings, LLC First lien senior secured loan 7.00% (L + 6.00%) 2/11/2025  1,975   1,957   1,975   0.6%
         49,056   47,862   49,056   15.7%
Household & personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured loan 6.75% (L + 5.75%) 11/1/2025  12,129   12,014   12,129   3.9%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 11/1/2025  -   -   -   0.0%
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured loan 6.00% (L + 5.00%) 11/8/2026  20,988   20,537   20,988   6.7%
  First lien senior secured revolving loan 6.00% (L + 5.00%) 11/8/2026  -   -   -   0.0%
PH Beauty Holdings III, Inc. First lien senior secured loan 5.18% (L + 5.00%) 9/28/2025  9,642   9,287   9,642   3.1%
         42,759   41,838   42,759   13.7%
Materials                      
Cyalume Technologies Holdings, Inc. First lien senior secured loan 6.50% (L + 5.50%) 8/30/2024  1,657   1,644   1,657   0.5%
Drew Foam Companies, Inc. First lien senior secured loan 7.00% (L + 6.00%) 11/5/2025  7,450   7,360   7,450   2.4%
Fralock Buyer LLC First lien senior secured loan 6.50% (L + 5.50%) 4/17/2024  9,251   9,091   9,251   3.0%
  First lien senior secured loan 6.50% (L + 5.50%) 4/17/2024  2,453   2,413   2,453   0.8%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 4/17/2024  -   -   -   0.0%
USALCO, LLC First lien senior secured revolving loan 7.00% (L + 6.00%) 10/19/2026  191   142   191   0.1%
  First lien senior secured loan 7.00% (L + 6.00%) 10/19/2027  19,375   18,918   19,375   6.2%
         40,377   39,568   40,377   13.0%

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

 

Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal /
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Pharmaceuticals, biotech & life sciences                  
Foundation Consumer Brands First lien senior secured loan 7.38% (L + 6.38%) 2/12/2027  8,485   8,407   8,485   2.7%
  First lien senior secured revolving loan 7.38% (L + 6.38%) 2/12/2027  -   -   -   0.0%
         8,485   8,407   8,485   2.7%
Retailing                      
Sundance Holdings Group, LLC (5) First lien senior secured loan 7.00% (L + 6.00%) 5/1/2024  9,522   9,164   9,522   3.1%
         9,522   9,164   9,522   3.1%
Software & services                      
Improving Acquisition LLC First lien senior secured loan 7.50% (L + 6.50%) 7/26/2024  603   598   603   0.2%
Peak Technologies First lien senior secured loan 8.09% (L + 7.09%) 4/1/2026  12,800   12,678   12,800   4.1%
  First lien senior secured loan 7.50% (L + 6.50%) 4/1/2026  662   649   662   0.2%
         14,065   13,925   14,065   4.5%
Telecommunication services                      
Centerline Communications, LLC First lien senior secured loan 6.50% (L + 5.50%) 8/10/2027  9,265   9,082   9,265   3.0%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 8/10/2023  5,746   5,622   5,746   1.9%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 8/10/2027  1,200   1,166   1,200   0.4%
  First lien senior secured loan 6.50% (L + 5.50%) 8/10/2027  5,985   5,870   5,985   1.9%
Corbett Technology Solutions, Inc. First lien senior secured revolving loan 6.00% (L + 5.00%) 10/29/2027  381   248   381   0.1%
  First lien senior secured delayed draw loan 6.00% (L + 5.00%) 4/29/2023  9,530   9,435   9,530   3.1%
  First lien senior secured loan 6.00% (L + 5.00%) 10/27/2027  13,564   13,298   13,564   4.3%
Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 6.00% (L + 5.00%) 4/5/2026  5,302   5,209   5,302   1.7%
         50,973   49,930   50,973   16.4%
Total Private Credit Debt Investments        578,282   566,366   578,195   185.5%
Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal/
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Advanced Environmental Monitoring (5) First lien senior secured loan 8.00% (L + 7.00%) 1/29/2026  7,372   7,159   7,372   2.4%
American Equipment Holdings LLC First lien senior secured delayed draw loan 7.00% (L + 6.00%) 11/3/2026  6,367   6,242   6,367   2.1%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 11/3/2026  425   383   425   0.1%
  First lien senior secured loan 7.00% (L + 6.00%) 11/3/2026  16,511   16,188   16,511   5.3%
Arborworks Acquisition LLC First lien senior secured revolving loan 7.00% (L + 6.00%) 11/9/2026  1,469   1,378   1,469   0.5%
  First lien senior secured loan 8.00% (L + 7.00%) 11/9/2026  20,312   19,914   20,312   6.5%
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 7.00% (L + 6.00%) 5/7/2027  4,737   4,641   4,737   1.5%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 5/7/2027  -   -   -   0.0%
  First lien senior secured loan 7.00% (L + 6.00%) 5/7/2027  3,500   3,388   3,500   1.1%
PMFC Holding, LLC First lien senior secured delayed draw loan 7.50% (L + 6.50%) 7/31/2023  2,847   2,829   2,847   0.9%
  First lien senior secured loan 7.50% (L + 6.50%) 7/31/2023  5,676   5,639   5,676   1.8%
  First lien senior secured revolving loan 7.50% (L + 6.50%) 7/31/2023  -   -   -   0.0%
Regiment Security Partners LLC First lien senior secured loan 8.00% (L + 7.00%) 9/15/2026  6,539   6,389   6,539   2.1%
  First lien senior secured delayed draw loan 8.00% (L + 7.00%) 9/15/2023  -   -   -   0.0%
  First lien senior secured revolving loan 8.00% (L + 7.00%) 9/15/2026  -   -   -   0.0%
The Kleinfelder Group, Inc. First lien senior secured loan 6.25% (L + 5.25%) 11/15/2027  12,889   12,766   12,889   4.1%
         113,519   111,165   113,519   36.4%
Consumer durables & apparel                      
BCI Burke Holding Corp. First lien senior secured loan 6.75% (L + 5.75%) 12/14/2027  17,303   16,997   17,303   5.5%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 6/14/2027  389   360   389   0.1%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 12/14/2023  -   -   -   0.0%
BEL USA, LLC First lien senior secured loan 9.50% (L + 8.00%) 11/2/2023  148   147   146   0.0%
  First lien senior secured loan 8.50% (L + 7.00%, includes 1.275% PIK) 11/2/2023  8,988   8,835   8,853   2.8%
Curio Brands, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/21/2027  18,054   17,575   18,054   5.8%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/21/2023  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/21/2027  -   -   -   0.0%
MacNeill Pride Group First lien senior secured revolving loan 7.50% (L + 6.50%) 4/22/2026  1,429   1,407   1,429   0.5%
  First lien senior secured delayed draw loan 7.50% (L + 6.50%) 4/22/2026  1,961   1,937   1,961   0.6%
  First lien senior secured loan 7.50% (L + 6.50%) 4/22/2026  8,706   8,598   8,706   2.8%

 

See accompanying notes to consolidated financial statements.


14

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal/
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
New Era Cap Company, Inc. First lien senior secured loan 7.50% (L + 6.50%) 9/10/2023  12,724   12,624   12,724   4.1%
Trademark Global LLC First lien senior secured loan 7.00% (L + 6.00%) 7/30/2024  11,510   11,404   11,510   3.7%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 7/30/2024  2,280   2,254   2,280   0.7%
  First lien senior secured delayed draw loan 7.00% (L + 6.00%) 7/30/2023  -   -   -   0.0%
YS Garments, LLC First lien senior secured loan 7.00% (L + 6.00%) 8/9/2024  7,936   7,779   7,936   2.6%
         91,428   89,917   91,291   29.2%
Diversified financials                      
Atria Wealth Solutions, Inc. First lien senior secured loan 7.00% (L + 6.00%) 11/30/2022  5,191   5,156   5,191   1.7%
         5,191   5,156   5,191   1.7%
                       

Food & beverage

                      
                       
Siegel Egg Co., LLC First lien senior secured loan 7.00% (L + 6.00%) 12/29/2026  15,742   15,450   15,742   5.1%
  First lien senior secured revolving loan 7.00% (L + 6.00%) 12/29/2026  1,029   966   1,029   0.3%
         16,771   16,416   16,771   5.4%
Health care equipment & services                      
Brightview, LLC First lien senior secured loan 6.75% (L + 5.75%) 4/12/2024  13,133   12,956   13,133   4.2%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 4/12/2024  -   -   -   0.0%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 4/12/2024  -   -   -   0.0%
Dermatologists of Southwestern Ohio, LLC First lien senior secured loan 9.50% (L + 8.50%) 4/20/2022  1,282   1,270   1,282   0.4%
Guardian Dentistry Partners First lien senior secured loan 6.75% (L + 5.75%) 8/20/2026  8,222   7,860   8,222   2.6%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 8/20/2026  -   -   -   0.0%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 6.50% (L + 5.25%) 10/24/2025  12,375   12,138   12,375   4.0%
SGA Dental Partners Holdings, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/30/2026  12,069   11,681   12,069   3.9%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
West Dermatology Management Holdings, LLC First lien senior secured loan 7.00% (L + 6.00%) 2/11/2025  1,975   1,957   1,975   0.6%
         49,056   47,862   49,056   15.7%
Household & personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured loan 6.75% (L + 5.75%) 11/1/2025  12,129   12,014   12,129   3.9%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 11/1/2025  -   -   -   0.0%
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured loan 6.00% (L + 5.00%) 11/8/2026  20,988   20,537   20,988   6.7%
  First lien senior secured revolving loan 6.00% (L + 5.00%) 11/8/2026  -   -   -   0.0%
PH Beauty Holdings III, Inc. First lien senior secured loan 5.18% (L + 5.00%) 9/28/2025  9,642   9,287   9,642   3.1%
         42,759   41,838   42,759   13.7%

See accompanying notes to consolidated financial statements.

15

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

Portfolio Company(1) Investment Interest
Rate		 Maturity
Date		 Principal/
Par		  Amortized
Cost(2)(3)		  Fair
Value		  Percentage
of Net Assets		 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Materials                      
Cyalume Technologies Holdings, Inc. First lien senior secured loan 6.50% (L + 5.50%) 8/30/2024  1,657   1,644   1,657   0.5%
Drew Foam Companies, Inc. First lien senior secured loan 7.00% (L + 6.00%) 11/5/2025  7,450   7,360   7,450   2.4%
Fralock Buyer LLC First lien senior secured loan 6.50% (L + 5.50%) 4/17/2024  9,251   9,091   9,251   3.0%
  First lien senior secured loan 6.50% (L + 5.50%) 4/17/2024  2,453   2,413   2,453   0.8%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 4/17/2024  -   -   -   0.0%
USALCO, LLC First lien senior secured revolving loan 7.00% (L + 6.00%) 10/19/2026  191   142   191   0.1%
  First lien senior secured loan 7.00% (L + 6.00%) 10/19/2027  19,375   18,918   19,375   6.2%
         40,377   39,568   40,377   13.0%
                       

Pharmaceuticals, biotech & life sciences

                      
                       
Foundation Consumer Brands First lien senior secured loan 7.38% (L + 6.38%) 2/12/2027  8,485   8,407   8,485   2.7%
  First lien senior secured revolving loan 7.38% (L + 6.38%) 2/12/2027  -   -   -   0.0%
         8,485   8,407   8,485   2.7%
Retailing                      
Sundance Holdings Group, LLC (5) First lien senior secured loan 7.00% (L + 6.00%) 5/1/2024  9,522   9,164   9,522   3.1%
         9,522   9,164   9,522   3.1%
Software & services                      
Improving Acquisition LLC First lien senior secured loan 7.50% (L + 6.50%) 7/26/2024  603   598   603   0.2%
Peak Technologies First lien senior secured loan 8.09% (L + 7.09%) 4/1/2026  12,800   12,678   12,800   4.1%
  First lien senior secured loan 7.50% (L + 6.50%) 4/1/2026  662   649   662   0.2%
         14,065   13,925   14,065   4.5%
Telecommunication services                      
Centerline Communications, LLC First lien senior secured loan 6.50% (L + 5.50%) 8/10/2027  9,265   9,082   9,265   3.0%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 8/10/2023  5,746   5,622   5,746   1.9%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 8/10/2027  1,200   1,166   1,200   0.4%
  First lien senior secured loan 6.50% (L + 5.50%) 8/10/2027  5,985   5,870   5,985   1.9%
Corbett Technology Solutions, Inc. First lien senior secured revolving loan 6.00% (L + 5.00%) 10/29/2027  381   248   381   0.1%
  First lien senior secured delayed draw loan 6.00% (L + 5.00%) 4/29/2023  9,530   9,435   9,530   3.1%
  First lien senior secured loan 6.00% (L + 5.00%) 10/27/2027  13,564   13,298   13,564   4.3%
Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 6.00% (L + 5.00%) 4/5/2026  5,302   5,209   5,302   1.7%
         50,973   49,930   50,973   16.4%
Total Private Credit Debt Investments        578,282   566,366   578,195   185.5%

See accompanying notes to consolidated financial statements.

16

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

 

  Number of
Units		  Cost  Fair
Value		  Percentage
of Net Assets		 
Equity Investments            
Food & beverage            
Siegel Parent, LLC (6)  0.250   250   250   0.1%
Total Private Equity Investments  0.250   250   250   0.1%
                 
Total Private Investments     $566,616  $578,445   185.6%

 

  Number of
Shares		  Cost  Fair
Value		  Percentage
of Net Assets		 
Short-Term Investments            
First American Treasury Obligations Fund - Institutional Class Z, 0.01% (7)  3,674   3,674   3,674   1.2%
Total Short-Term Investments  3,674   3,674   3,674   1.2%
                 
Total Investments     $570,290  $582,119   186.8%
                 
Liabilities in Excess of Other Assets          (270,150)  (86.8)%
Net Assets         $311,969   100.0%

 

(1)As of December 31, 2021, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

 

(2)The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(3)As of December 31, 2021, the tax cost of the Company’s investments approximates their amortized cost.

 

(4)Loan contains a variable rate structure, that may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate).

 

(5)The Company may be entitled to receive additional interest as a result of an arrangement with other lenders in the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss. Certain lenders represent a “first out” portion of the investment and have priority to the “last-out” portion with respect to payments of principal and interest.

 

(6)The Company owns 50% of a pass-through LLC, KSCF IV Equity Aggregator, LLC (the “Aggregator”), which holds 500 Class A units of Siegel Parent, LLC.  The Aggregator’s ownership of Siegel Parent, LLC is 1.1442%. Through the Company’s ownership of the Aggregator, the Company owns 250 Class A units of Siegel Parent, LLC.

 

(7)The indicated rate is the yield as of December 31, 2021.

 

See accompanying notes to consolidated financial statements.

 

1417

 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 1. Organization

 

Organization

 

Kayne Anderson BDC, Inc. (the “Company”) is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, the Company intends to qualify as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

 

The Company was formed as a Delaware limited liability company to make investments in middle-market companies and commenced operations on February 5, 2021. On this same date, prior to the Company’s election to be regulated as a BDC under the 1940 Act, the Company completed a conversion from a Delaware limited liability company into a Delaware corporation and Kayne Anderson BDC, Inc. succeeded to the business of Kayne Anderson BDC, LLC.

 

As of March 31,June 30, 2022, the Company has entered into subscription agreements with investors for an aggregate capital commitment of $701,450$761,694 to purchase shares of the Company’s common stock (including a $33,250$13,250 capital commitment that is contingent on the Company meeting certain conditions). See Note 11 – Subsequent Events.

 

KA Credit Advisors, LLC (the “Advisor”) is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P. (“KACALP” or “Kayne Anderson”). The Advisor is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under the Investment Advisory Act of 1940. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of five directors, three of whom are independent (including the Board’s chairperson).

 

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies.

 

The Company conducts private offerings of its Common Stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any private offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of its Common Stock (“Shares”) pursuant to a subscription agreement entered into with the Company. Investors will be required to fund drawdowns to purchase Shares up to the amount of their respective Capital Commitments each time the Company delivers a notice to the investors. Following the initial closing of the private offering (the “Initial Closing”) on February 5, 2021 and prior to any Liquidity Event (as defined below), the Advisor may, in its sole discretion, permit additional closings of the private offering. A “Liquidity Event” is defined as (a) an initial public offering of Shares (the “Initial Public Offering”) or the listing of Shares on an exchange (together with the Initial Public Offering, an “Exchange Listing”), (b) the sale of the Company or (c) a disposition of the Company’s investments and distribution of the net proceeds (after repayment of borrowed funds or other forms of leverage) to the Company’s investors.


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 2. Significant Accounting Policies

 

A. Basis of Presentation—the accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company is an investment company and follows accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 — “Financial Services — Investment Companies.” In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair statement of the consolidated financial statements for the periods presented, have been included.

 

B. Consolidation—As provided under Regulation S-X and ASC Topic 946 – “Financial Services – Investment Companies”, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company’s wholly-owned subsidiaries, Kayne Anderson BDC Financing, LLC, (“KABDCF”) and KABDC Corp, LLC, in its consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

 

C. Use of Estimates—the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Actual results could differ materially from those estimates.

 

D. Cash and Cash Equivalents—cash and cash equivalents include short-term, liquid investments with an original maturity of three months or less and include money market fund accounts.

 

E. Investment Valuation, Fair Value—the Company conducts the valuation of its investments consistent with GAAP and the 1940 Act. The Company’s investments will be valued no less frequently than quarterly, in accordance with the terms of Topic 820 of the Financial Accounting Standards Board’s Accounting Standards Codification, Fair Value Measurement and Disclosures (“ASC 820”).

 

Traded Investments (Level 1 or Level 2)

 

Investments for which market quotations are readily available will typically be valued at those market quotations. Traded investments such as corporate bonds, preferred stock, bank notes, loans or loan participations are valued by using the bid price provided by an independent pricing service, by an independent broker, the agent bank, syndicate bank or principal market maker. When price quotes for investments are not available, or such prices are stale or do not represent fair value in the judgment of the Company’s Advisor, fair market value will be determined using the Company’s valuation process for investments that are privately issued or otherwise restricted as to resale.

 

The Company may also invest, to a lesser extent, in equity securities purchased in conjunction with debt investments. While the Company anticipates these equity securities to be issued by privately held companies, the Company may hold equity securities that are publicly traded. Equity securities listed on any exchange other than the NASDAQ Stock Market, Inc. (“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask prices on such day. Securities admitted to trade on the NASDAQ are valued at the NASDAQ official closing price. Equity securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. Equity securities traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the closing bid prices.

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Non-Traded Investments (Level 3)

 

Investments that are privately issued or otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment of the Company’s Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of the Company’s Advisor is stale or does not represent fair value, shall each be valued in a manner that most fairly reflects fair value of the security on the valuation date. The Company expects that a significant majority of its investments will be Level 3 investments. Unless otherwise determined by the Board, the following valuation process is used for the Company’s Level 3 investments:

 

●Investment Team Valuation. The applicable investments are valued by senior professionals of Kayne Anderson who are responsible for the portfolio investments. The value of each portfolio company or investment will be initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments), a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs will be used to determine a preliminary value. The investments will be valued no less frequently than quarterly, with new investments valued at the time such investment was made.

 

●Investment Team Valuation Documentation. Preliminary valuation conclusions will be determined by the Company’s executive officers. Such valuation and supporting documentation is submitted to the Audit Committee (a committee of the Board) and the Board on a quarterly basis.

 

●Audit Committee. The Audit Committee meets to consider the valuations submitted by our executive officers at the end of each quarter. Between meetings of the Audit Committee, the executive officers of the Company are authorized to make valuation determinations. All valuation determinations of the Audit Committee are subject to ratification by the Board at its next regular meeting.

 

●Valuation Firm. Quarterly, third-party valuation firms engaged by the Board review the valuation methodologies and calculations employed for each of the Company’s investments that the Company has placed on the “watch list” and approximately 25% of its remaining investments. These third-party valuation firms will review all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The Company expects the quarterly report issued by these third-party valuation firms will assist the Board in determining the fair values of the investments reviewed.

 

●Board Determination. The Company’s Board meets quarterly to consider the valuations provided by the Company’s executive officers and the Audit Committee and ratify valuations for the applicable investments. The Company’s Board considers the report provided by the third-party valuation firms in reviewing and determining in good faith the fair value of the applicable portfolio investments.


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

The Board of Directors will be ultimately responsible for the determination, in good faith, of the fair value of our portfolio investments. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

 

F. Interest Income Recognition— Interest income is recorded on an accrual basis and includes the accretion of discounts, amortization of premiums and payment-in-kind (“PIK”) interest. Discounts from and premiums to par value on investments purchased are accreted/amortized into interest income over the life of the respective security using the effective yield method. To the extent loans contain PIK provisions, PIK interest, computed at the contractual rate specified in each applicable agreement, is accrued and recorded as interest income and added to the principal balance of the loan. PIK interest income added to the principal balance is generally collected upon repayment of the outstanding principal. To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends for the year the income was earned, even though the Company has not yet collected the cash. The amortized cost of investments represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest.

 

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon the Company’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid or there is no longer any reasonable doubt that such principal or interest will be collected in full and, in the Company’s judgment, principal and interest are likely to remain current. The Company may make exceptions to this policy if the loan has sufficient collateral value (i.e., typically measured as enterprise value of the portfolio company) or is in the process of collection.

 

G. Debt Issuance Costs—Costs incurred by the Company related to the issuance of its debt (credit facilities) are capitalized and amortized over the period the debt is outstanding. The Company has classified the costs incurred to issue its credit facilities as a deduction from the carrying value of the credit facilities on the Statement of Assets and Liabilities. For the purpose of calculating the Company’s asset coverage ratios pursuant to the 1940 Act, deferred issuance costs are not deducted from the carrying value of debt or preferred stock.

 

H. Dividends to Common Stockholders—Distributions to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Company’s board of directors each quarter and is generally based upon the earnings estimated by management and considers the level of undistributed taxable income carried forward from the prior year for distribution in the current year. Net realized capital gains, if any, are generally distributed, although the Company may decide to retain such capital gains for investment.

 

I. Organizational Costs—organizational expenses include costs and expenses relating to the formation and organization of the Company. The Company has reimbursed the Advisor for these costs which are expensed as incurred.

 

J. Offering Costs—offering costs include costs and expenses incurred in connection with the offering of the Company’s common stock. These initial costs were capitalized as deferred offering expenses and included in prepaid expenses and other assets on the Statement of Assets and Liabilities. These costs were amortized over a twelve-month period beginning with the commencement of operations. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s share offerings, the preparation of the Company’s registration statement and registration fees. The Company reimbursed the Advisor for these costs.

 

K. Income Taxes—it is the Company’s intention to continue to be treated as and to qualify each year for special tax treatment afforded a RIC under the Code. As long as the Company meets certain requirements that govern its sources of income, diversification of assets and timely distribution of earnings to stockholders, the Company will not be subject to U.S. federal income tax.

 

The Company must pay distributions equal to 90% of its investment company taxable income (ordinary income and short-term capital gains) to qualify as a RIC and it must distribute all of its taxable income (ordinary income, short-term capital gains and long-term capital gains) to avoid federal income taxes. The Company will be subject to federal income tax on any undistributed portion of income. For purposes of the distribution test, the Company may elect to treat as paid on the last day of its taxable year all or part of any distributions that are declared after the end of its taxable year if such distributions are declared before the due date of its tax return, including any extensions (October 15th).


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

All RICs are subject to a non-deductible 4% excise tax on income that is not distributed on a timely basis in accordance with the calendar year distribution requirements. To avoid the tax, the Company must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary income for the calendar year, (ii) 98.2% of its net capital gains for the one-year period ending on December 31, the last day of our taxable year, and (iii) undistributed amounts from previous years on which the Company paid no U.S. federal income tax. A distribution will be treated as paid during the calendar year if it is paid during the calendar year or declared by the Company in October, November or December, payable to stockholders of record on a date during such months and paid by the Company during January of the following year. Any such distributions paid during January of the following year will be deemed to be received by stockholders on December 31 of the year the distributions are declared, rather than when the distributions are actually received.

 

The Company does not currently qualify as a “publicly offered regulated investment company,” as defined in the Code. A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market, or (iii) held by at least 500 persons at all times during the taxable year. The Company cannot determine when it will qualify as a publicly offered RIC. If the Company does not qualify as a publicly offered RIC during the tax year, a non-corporate shareholder’s allocable portion of the Company’s affected expenses, including its management fees, may be treated as an additional distribution to shareholders. A non-corporate shareholder’s allocable portion of these expenses may be treated as miscellaneous itemized deductions that are not currently deductible by such shareholders.

 

The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

 

L. LIBOR Transition — The U.K. Financial Conduct Authority (“FCA”) announced that certain London Interbank Offered Rate (“LIBOR”) tenors in certain currencies ceased to be provided at the end of 2021 with all remaining tenors ceasing in June 2023. Alternatives to LIBOR have been established, or are in development in most major currencies, including the Secured Overnight Financing Rate (“SOFR”) that is intended to replace U.S. dollar LIBOR. Markets are developing in response to these new reference rates. Uncertainty existsThe LIBOR transition has become increasingly well-defined in advance of its anticipated discontinuation, but uncertainty remains related to the liquidity impact of the change in rates, and how to appropriately adjust these rates at the time of transition. Although SOFR appears to be the preferred replacement rate for LIBOR, atAt this time, it is not possible to predict fully the full effectultimate outcome of any such changes or any establishment of alternative reference rates.these changes.

 

M. Commitments and Contingencies—in the normal course of business, the Company may enter into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications. 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 3. Agreements and Related Party Transactions

 

A. Administration Agreement—on February 5, 2021, the Company entered into an Administration Agreement with its Advisor, which serves as its Administrator and will provide or oversee the performance of its required administrative services and professional services rendered by others, which will include (but are not limited to), accounting, payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and filing of its tax returns, and preparation of financial reports provided to its stockholders and filed with the SEC.

 

The Company will reimburse the Administrator for its costs and expenses incurred in performing its obligations under the Administration Agreement, which may include, after completion of our Exchange Listing, its allocable portion of office facilities, overhead, and compensation paid to or compensatory distributions received by its officers (including our Chief Compliance Officer and Chief Financial Officer) and its respective staff who provide services to the Company. As the Company reimburses the Administrator for its expenses, the Company will indirectly bear such cost. The Administration Agreement may be terminated by either party with 60 days’ written notice.

 

B. Investment Advisory Agreement—on February 5, 2021, the Company entered into an Investment Advisory Agreement with its Advisor. Pursuant to the Investment Advisory Agreement with its Advisor, the Company will pay its Advisor a fee for investment advisory and management services consisting of two components—a base management fee and an incentive fee. The Advisor may, from time-to-time, grant waivers on the Company’s obligations, including waivers of the base management fee and/or incentive fee, under the Investment Advisory Agreement. The Investment Advisory Agreement may be terminated by either party with 60 days’ written notice.

 

The Company has agreed to reimburse the Advisor and its affiliates for the third-party costs incurred on its behalf in connection with the formation and the offering of shares of the Company’s common stock. Amounts shown as payables to affiliates on the Statement of Assets and Liabilities represent organizational expenses and offering costs of the Company that were paid by the Advisor and its affiliates on behalf of the Company.

 

Base Management Fee

 

Prior to an Exchange Listing, the base management fee will be calculated at an annual rate of 0.90% of the fair market value of the Company’s investments including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase. After an Exchange Listing, the base management fee will be calculated at an annual rate of 1.50% of the fair market value of the Company’s investments. However, following an Exchange Listing, if borrowed funds or other forms of leverage utilized to finance the Company’s investments is greater than a debt-to-equity ratio of 1.0x, the base management fee will be 1.00% of the fair market value of the portion of the Company’s investments financed with borrowed funds or other forms of leverage above a 1.0x debt-to-equity ratio.

 

The base management fee will be payable quarterly in arrears and calculated based on the average of the Company’s fair market value of investments, at the end of the two most recently completed calendar quarters, including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase. Base management fees for any partial quarter will be appropriately pro-rated.

 

For the three months ended March 31,June 30, 2022 and 2021, the Company incurred base management fees of $1,326$1,498 and $176,$422, respectively.

For the six months ended June 30, 2022 and 2021, the Company incurred base management fees of $2,824 and $598, respectively.

 

Incentive Fee

 

The Company will also pay the Advisor an incentive fee. The incentive fee will consist of two parts—an incentive fee on income and an incentive fee on capital gains. Described in more detail below, these components of the incentive fee will be largely independent of each other with the result that one component may be payable even if the other is not.

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Incentive Fee on Income

 

The incentive fee based on income (the “income incentive fee”) is determined and paid quarterly in arrears in cash. The Company’s quarterly pre-incentive fee net investment income must exceed a preferred return of 1.50% of the Company’s NAVnet asset value (“NAV”) at the end of the immediately preceding calendar quarter (6.0% annualized but not compounded) (the “Hurdle Amount”) in order for the Company to receive an income incentive fee. The income incentive fee is calculated as follows:

 

●Prior to an Exchange Listing: 100% of our pre-incentive fee net investment income for the immediately preceding calendar quarter in excess of 1.50% of the Company’s NAV at the end of the immediately preceding calendar quarter until the Advisor has received 10% of the total pre-incentive fee net income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.6667%, 10% of all remaining pre-incentive fee net investment income for that quarter.

 

●After an Exchange Listing: 100% of the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter in excess of 1.50% of the Company’s NAV at the end of the immediately preceding calendar quarter until the Advisor has received 15% of the total pre-incentive fee net income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.7647%, 15% of all remaining pre-incentive fee net investment income for that quarter.

 

Incentive Fee on Capital Gains

 

The incentive fee on capital gains (the “capital gains incentive fee”) will be calculated and payable in arrears in cash as follows:

 

●Prior to an Exchange Listing: 10% of the Company’s realized capital gains, if any, on a cumulative basis from formation through (a) the day before an Exchange Listing, (b) upon consummation of a Liquidity Event or (c) upon the termination of the Investment Advisory Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis. For the purpose of computing the capital gain incentive fee, the calculation methodology will look through derivative financial instruments or swaps as if the Company owned the reference assets directly.

 

●After an Exchange Listing: 15% of the Company’s realized capital gains, if any, on a cumulative basis from formation through the end of a given calendar year or upon termination of the Investment Advisory Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.

 

Payment of Incentive Fees

 

Prior to an Exchange Listing, any incentive fees earned by the Advisor shall accrue as earned but only become payable in cash to the Advisor upon consummation of an Exchange Listing. To the extent the Company does not complete an Exchange Listing, the incentive fees will be payable to the Advisor (a) upon consummation of a sale of the Company or (b) once substantially all the proceeds from a Company Liquidation payable to the Company’s stockholders have been distributed to such stockholders.

 

For the three months ended March 31,June 30, 2022, the Company incurred incentive fees on income of $953 and$775 (none on realized gains $2 (total of $955)capital gains).

 

For the three months ended March 31,June 30, 2021 the Company did not incur any incentive fees on income or capital gains.

For the six months ended June 30, 2022, the Company incurred incentive fees on income of $1,728 and on capital gains of $2 (total of $1,730).

For the six months ended June 30, 2021, the Company did not incur any incentive fee on income or capital gains.

 

C. Other—KACALP, an affiliate of the Advisor, made an equity contribution of $10 to the Company on December 18, 2018. 

 

On February 5, 2021, the Company purchased its initial portfolio of investments for $103,031 from an affiliate of the Company’s Advisor (the “Warehousing Entity”). This purchase of its initial portfolio of investments was funded with a portion of the proceeds from the sale of the Company’s common stock on this same date (5,666,667 shares of our common stock to investors at a price of $15.00 per share for an aggregate offering amount of $85,000) to investors and with borrowings under the Company’s credit facility.

 

The initial portfolio purchased from the WarehouseWarehousing Entity consisted of 18 loans, with an average outstanding balance of $5,876, an average purchase price of 97.4% of principal value and an average yield on that date of 8.8%. None of these loans in the initial portfolio were in default or non-accrual status. All of the loans are senior secured and the borrowers are middle and upper middle market companies. The purchase of the initial portfolio was completed before the Company elected to be treated as a business development company under the 1940 Act. This initial acquisition and all related transactions are referred to as the “Formation Transactions.”

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 4. Investments

 

The following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of March 31,June 30, 2022 and December 31, 2021:

 

 March 31, 2022  December 31, 2021  June 30,
2022		 December 31,
2021		 
 Amortized Fair Amortized Fair  Amortized Fair Amortized Fair 
 Cost  Value  Cost  Value  Cost Value Cost Value 
First-lien senior secured debt investments $604,750  $616,067  $566,366  $578,195  $705,076  $716,581  $566,366  $578,195 
Equity investments  1,000   1,000   250   250   1,250   1,383   250   250 
Short-term investments  3,004   3,004   3,674   3,674   8,405   8,405   3,674   3,674 
Total Investments $608,754  $620,071  $570,290  $582,119  $714,731  $726,369  $570,290  $582,119 

 

As of March 31,June 30, 2022 and December 31, 2021, all of the Company’s investments were qualifying assets as defined by Section 55(a) of the 1940 Act.

 

Beginning with the three months ended March 31, 2022, the Company uses Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of its portfolio companies. As of December 31, 2021, the Company used GICS, Level 2 – Industry Group.

 

The industry composition of long-term investments based on fair value as of March 31,June 30, 2022 and December 31, 2021 was as follows:

 

  March 31,June 30,
2022		 
Commercial services & supplies  18.017.9%
Trading companies & distributors  14.312.2%
Health care providers & services  10.212.1%
Food products7.2%
Building products  6.75.6%
Chemicals  5.44.7%
Diversified telecommunication services  5.04.4%
Software4.0%
Leisure products3.9%
Auto components  4.4%
Leisure products4.23.9%
Professional services  4.03.4%
Wireless telecommunication services  3.6%
Personal products3.53.3%
Household productsdurables  3.33.2%
FoodPersonal products  3.0%
Household durablesproducts  2.92.8%
Textiles, apparel & luxury goods  2.4%
Software2.2%
Specialty retail1.52.1%
Aerospace & defense  1.5%
Specialty retail1.2%
Pharmaceuticals  1.41.1%
Containers & packaging  1.21.0%
Asset management & custody banks  0.90.7%
Electronic equipment, instruments & components0.4%
Machinery  0.3%
IT services  0.1%
Total  100.0%

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

  December 31,
2021		 
Commercial & professional services  19.6%
Capital goods  19.5%
Consumer durables & apparel  15.8%
Telecommunication services  8.8%
Health care equipment & services  8.5%
Household & personal products  7.4%
Materials  7.0%
Automobiles & components  4.1%
Food & beverage  2.9%
Software & services  2.4%
Retailing  1.6%
Pharmaceuticals, biotech & life sciences  1.5%
Diversified financials  0.9%
Total  100.0%


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 5. Fair Value

 

The Fair Value Measurement Topic of the FASB Accounting Standards Codification (ASC 820) defines fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants under current market conditions at the measurement date. As required by ASC 820, the Company has performed an analysis of all investments measured at fair value to determine the significance and character of all inputs to their fair value determination. Inputs are the assumptions, along with considerations of risk, that a market participant would use to value an asset or a liability. In general, observable inputs are based on market data that is readily available, regularly distributed and verifiable that the Company obtains from independent, third-party sources. Unobservable inputs are developed by the Company based on its own assumptions of how market participants would value an asset or a liability.

 

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories.

 

Level1 — Valuations based on quoted unadjusted prices for identical instruments in active markets traded on a national exchange to which the Company has access at the date of measurement.

 

Level2 — Valuations based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.

 

Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Company’s own assumptions that market participants would use to price the asset or liability based on the best available information.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

 

The following tables presents the fair value hierarchy of investments as of March 31,June 30, 2022 and December 31, 2021. Note that the valuation levels below are not necessarily an indication of the risk or liquidity associated with the underlying investment.

 

  Fair Value Hierarchy as of March 31, 2022 
Investments: Level 1  Level 2  Level 3  Total 
First-lien senior secured debt investments $-  $      -  $616,067  $616,067 
Equity investments  -   -   1,000   1,000 
Short-term investments  3,004   -   -   3,004 
Total Investments $3,004  $-  $617,067  $620,071 

 Fair Value Hierarchy as of December 31, 2021  Fair Value Hierarchy as of June 30, 2022 
Investments: Level 1  Level 2  Level 3  Total  Level 1 Level 2 Level 3 Total 
First-lien senior secured debt investments $-  $      -  $578,195  $578,195  $- $       - $716,581 $716,581 
Equity investments  -   -   250   250 
Private equity investments - - 1,383 1,383 
Short-term investments  3,674   -   -   3,674   8,405  -  -  8,405 
Total Investments $3,674  $-  $578,445  $582,119  $8,405 $- $717,964 $726,369 

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

  Fair Value Hierarchy as of December 31, 2021 
Investments: Level 1  Level 2  Level 3  Total 
First-lien senior secured debt investments $-  $      -  $578,195  $578,195 
Private equity investments  -   -   250   250 
Short-term investments  3,674   -   -   3,674 
Total Investments $3,674  $-  $578,445  $582,119 

The following table presentstables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and six months ended March 31,June 30, 2022 and 2021:

 

 First-lien      
 senior secured Equity    
For the three months ended March 31, 2022 debt investments  investments  Total 
For the three months ended June 30, 2022 First-lien
senior secured
debt
investments		  Private
equity
investments		  Total 
Fair value, beginning of period $578,195  $250  $578,445  $616,067  $1,000  $617,067 
Purchases of investments  65,773   750   66,523   114,678   250   114,928 
Proceeds from sales of investments and principal repayments  (28,167)  -   (28,167)  (15,615)  -   (15,615)
Net change in unrealized gain (loss)  (512)  -   (512)  189   133   322 
Net realized gain (loss)  28   -   28   -   -   - 
Net accretion of discount on investments  750   -   750   1,262   -   1,262 
Transfers into (out of) Level 3  -   -   -   -   -   - 
Fair value, end of period $616,067  $1,000  $617,067  $716,581  $1,383  $717,964 

 

 First-lien      
 senior secured Equity   
For the three months ended March 31, 2021 debt investments  investments  Total 
For the three months ended June 30, 2021 First-lien
senior secured
debt investments		  Private
equity
investments		  Total 
Fair value, beginning of period $   -  $           -  $-  $151,957  $            -  $151,957 
Purchases of investments  149,311   -   149,311   55,122   -   55,122 
Proceeds from sales of investments and principal repayments  (304)  -   (304)  (3,344)  -   (3,344)
Net change in unrealized gain (loss)  2,782   -   2,782   1,126   -   1,126 
Net realized gain (loss)  -   -   -   -   -   - 
Net accretion of discount on investments  168   -   168   298   -   298 
Transfers into (out of) Level 3  -   -   -   -   -   - 
Fair value, end of period $151,957  $-  $151,957  $205,159  $-  $205,159 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

For the six months ended June 30, 2022 First-lien
senior secured
debt investments		  Private
equity
investments		  Total 
Fair value, beginning of period $578,195  $250  $578,445 
Purchases of investments  180,452   1,000   181,452 
Proceeds from sales of investments and principal repayments  (43,777)  -   (43,777)
Net change in unrealized gain (loss)  (323)  133   (190)
Net realized gain (loss)  23   -   23 
Net accretion of discount on investments  2,011   -   2,011 
Transfers into (out of) Level 3  -   -   - 
Fair value, end of period $716,581  $1,383  $717,964 

For the six months ended June 30, 2021 

First-lien
senior secured

debt investments

 Private
Equity
investments		  Total 
Fair value, beginning of period $-  $                -  $- 
Purchases of investments  204,434   -   204,434 
Proceeds from sales of investments and principal repayments  (3,649)  -   (3,649)
Net change in unrealized gain (loss)  3,908   -   3,908 
Net realized gain (loss)  -   -   - 
Net accretion of discount on investments  466   -   466 
Transfers into (out of) Level 3      -   - 
Fair value, end of period $205,159  $-  $205,159 

 

For the three and six months ended March 31,June 30, 2022 and 2021, the Company did not recognize any transfers to or from Level 3. The increase in unrealized gain (loss) relates to investments that were held during the period. The Company includes these unrealized gains and losses on the Statement of Operations – Net Change in Unrealized Gains (Losses).


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Valuation Techniques and Unobservable Inputs

 

Non-traded debt investments are typically valued using either a market yield analysis or an enterprise value analysis. For debt investments that are not determined to be credit impaired, the Company uses a market yield analysis to determine fair value. If the debt investment is credit impaired (which is determined by performing an enterprise value analysis), the Company will use the enterprise value analysis or a liquidation basis analysis to determine fair value. As of March 31,June 30, 2022, none of the Company’s non-traded debt investments were determined to be credit impaired, and the Company used a market yield analysis to determine fair value on these investments.

 

To determine the estimated market yield for our debt investments, the Company analyzes changes in the risk/reward (measured by yields and leverage) of middle market indices as compared to changes in risk/reward for the underlying investment (the “Market Approach”) and estimates the appropriate credit spread for such debt investment. In this context, the fair market value of the investment is impacted by the structure and pricing of the security relative to current market yields and credit spreads for similar investments in similar businesses as well as the financial performance of such business. In performing this analysis, the Company considers data sources including, but not limited to: (i) industry publications, such as S&P Global’s High-End Middle Market Lending Review; Thomson Reuter’s Refinitiv Middle Market Monthly Stats; CapitalIQ; Pitchbook News; The Lead Left, and other data sources; (ii) comparable investments reviewed or completed by affiliates of the Advisor, and (iii) information obtained and provided by the Advisor’s independent valuation managers.

 

To determine if a debt investment is credit impaired, the Company estimates the enterprise value of the business and compares such estimate to the outstanding indebtedness of such business. The Company utilizes the following valuation methodologies to determine the estimated enterprise value of the company: (i) analysis of valuations of publicly traded companies in a similar line of business (“public company analysis”), (ii) analysis of valuations of M&A transaction valuations for companies in a similar line of business (“precedent transaction analysis”), (iii) discounted cash flows (“DCF analysis”) and (iv) other valuation methodologies.

 

In determining the non-traded debt investment valuations, the following factors are considered, where relevant: the nature and realizable value of any collateral; the company’s ability to make interest payments, amortization payments (if any) and other fixed charges; call features, put features and other relevant terms of the debt security; the company’s historical and projected financial results; the markets in which the company does business; changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be valued; and other relevant factors.

 

Equity investments in private companies are typically valued using one of or a combination of the following valuation techniques: (i) public company analysis, (ii) precedent transaction analysis and (iii) DCF analysis.

 

Under all of these valuation techniques, the Company estimates operating results of the companies in which we invest, including earnings before interest expense, income tax expense, depreciation and amortization (“EBITDA”) and free cash flow. These estimates utilize unobservable inputs such as historical operating results, which may be unaudited, and projected operating results, which will be based on operating assumptions for such company. Investment performance data utilized will be the most recently available as of the measurement date which in many cases may reflect up to a one quarter lag in information. These estimates will be sensitive to changes in assumptions specific to such company as well as general assumptions for the industry. Other unobservable inputs utilized in the valuation techniques outlined above include: discounts for lack of marketability, selection of publicly traded companies, selection of similar precedent transactions, selected ranges for valuation multiples and expected required rates of return (discount rates).

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Quantitative Table for Valuation Techniques

 

The following table presentstables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of March 31,June 30, 2022 and December 31, 2021. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to the Company’s determination of fair value.

 

 As of March 31, 2022  As of June 30, 2022 
 Fair Value Valuation
Technique		 Unobservable
Input		 Range Weighted
Average		  Fair
Value		 Valuation
Technique		 Unobservable
Input		 Range Weighted
Average		 
First-lien senior secured debt investments $616,067  Market Approach - Yield Analysis Credit Spreads 5.00% - 8.50%  5.96% $716,581 Market Approach - Yield Analysis Credit Spreads 5.00% - 8.50% 6.01%
Private equity investments $1,008 Precedent Transaction Analysis Transaction Price 1.0 1.0 
         $

375

 

Precedent Transaction Analysis

 EBITDA Multiples 

9.00% - 9.00%

 

9.00

%
Equity investments $1,000   Precedent Transaction Analysis Transaction Price 1.0  1.0 
 $617,067            $717,964     

 

 As of December 31, 2021  As of December 31, 2021 
 Fair Value Valuation
Technique		 Unobservable
Input		 Range Weighted
Average		  Fair
Value		 Valuation
Technique		 Unobservable
Input		 Range Weighted
Average		 
First-lien senior secured debt investments $578,195  Market Approach - Yield Analysis Credit Spreads 5.00% - 8.50%  6.00% $578,195 Market Approach - Yield Analysis Credit Spreads 5.00% - 8.50% 6.00%
Private equity investments $250  Precedent Transaction Analysis Transaction Price 1.0 1.0 
         $578,445         
Equity investments $250   Precedent Transaction Analysis Transaction Price 1.0  1.0 
 $578,445           

 

Note 6. Debt

 

Subscription Credit Agreement 

 

As of March 31,June 30, 2022, the Company had a $175,000 credit agreement (the “Subscription Credit Agreement”) with certain lenders party thereto. The Subscription Credit Agreement permits the Company to borrow up to $175,000, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate under the Subscription Credit Agreement is equal to SOFR plus 1.975% (subject to a 0.275% SOFR floor). The Company is also required to pay a commitment fee of 0.25% per annum on any unused portion of the Subscription Credit Agreement. The Subscription Credit Agreement will expire on December 31, 2022. See Note 11 – Subsequent Events.

 

For the threesix months ended March 31,June 30, 2022 and 2021, the average amount of borrowings outstanding under the Subscription Credit Agreement was $52,567$54,110 and $15,091,$15,911, respectively, with a weighted average interest rate of 2.25%2.50% and 2.28%2.26%, respectively. As of March 31,June 30, 2022, the Company had $14,000$114,000 outstanding under the Subscription Credit Agreement at a weighted average interest rate of 2.30%3.40%.

Loan and Security Agreement

On February 18, 2022, the Company and Kayne Anderson BDC Financing LLC (“KABDCF”) established two new credit facilities (described below) and fully repaid the $150,000 outstanding balance on the Loan and Security Agreement (the “LSA”), which was entered into by KABDCF in February 2021. Advances under LSA had an interest rate of LIBOR plus 4.25% (subject to a 1.00% LIBOR floor).

For the three months ended March 31, 2022 and 2021, the average amount of borrowings outstanding under the LSA were $82,667 and $38,236, respectively, with a weighted average interest rate of 5.25% for both periods.

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Corporate Credit Facility

 

On February 18, 2022, the Company entered into a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $275,000. The Corporate Credit Facility’s commitment termination date and the final maturity date are February 18, 2026 and February 18, 2027, respectively. The Corporate Credit Facility also provides for a feature that allows the Company, under certain circumstances, to increase the overall size of the Corporate Credit Facility to a maximum of $550,000. The interest rate on the Corporate Credit Facility is equal to Term SOFR (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.35% per annum (which includes a SOFR adjustment spread of 0.10%) or an “alternate base rate” (as defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.25%. The Company is also required to pay a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility.

 

Under the Corporate Credit Facility, the Company is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, and (e) maintaining a ratio of total assets (less total liabilities not representing indebtedness) to total indebtedness of the Company and its consolidated subsidiaries of not less than 1.5:1.0. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Corporate Credit Facility. Amounts available to borrow under the Corporate Credit Facility are subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as determined pursuant to the Corporate Credit Facility) that are pledged as collateral. The Corporate Credit Facility is secured by certain assets in the Company’s portfolio and excludes investments held by KABDCFKayne Anderson BDC Financing LLC (“KABDCF”) under the Revolving Funding Facility (as defined below).

 

For the threesix months ended March 31,June 30, 2022, the average amount of borrowings outstanding under the Corporate Credit Facility was $36,400$57,315 with a weighted average interest rate of 2.48%2.91%. As of March 31,June 30, 2022, the Company had $78,000 outstanding under the Corporate Credit Facility at a weighted average interest rate of 2.58%3.20%. See Note 11 – Subsequent Events.

 

Revolving Funding Facility

 

On February 18, 2022, the Company and KABDCF entered into a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $250,000. The Revolving Funding Facility is secured by all of the assets held by KABDCF and the Company has agreed that it will not grant or allow a lien on the membership interest of KABDCF. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are February 18, 2025 and February 18, 2027, respectively. The interest rate on the Revolving Funding Facility is equal to daily SOFR plus 2.35% per annum. KABDCF is also required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility. Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by KABDCF and is subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on, loan size, payment frequency and status, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and KABDCF are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding Facility.

  

For the threesix months ended March 31,June 30, 2022, the average amount of borrowings outstanding under the Revolving Funding Facility was $70,000$110,221 with a weighted average interest rate of 2.45%2.80%. As of March 31,June 30, 2022, the Company had $150,000 outstanding under the Revolving Funding Facility at a weighted average interest rate of 2.62%3.79%.

Loan and Security Agreement

On February 18, 2022, the Company and KABDCF established two new credit facilities (described above) and fully repaid the $150,000 outstanding balance on the Loan and Security Agreement (the “LSA”), which was entered into by KABDCF in February 2021. Advances under LSA had an interest rate of LIBOR plus 4.25% (subject to a 1.00% LIBOR floor).

For the six months ended 2022, the average amount of borrowings outstanding under the LSA were $41,105 with a weighted average interest rate of 5.25%.

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Debt obligations consisted of the following as of March 31,June 30, 2022 and December 31, 2021:

 

 March 31, 2022  June 30, 2022 
 Aggregate
Principal
Committed		 Outstanding
Principal		 Amount
Available(1)		 Net
Carrying
Value(2)		  Aggregate Principal Committed Outstanding Principal Amount Available(1) Net Carrying Value(2) 
Corporate Credit Facility $275,000 $78,000 $180,462 $75,796  $275,000 $78,000 $197,000 $75,824 
Loan and Security Agreement (LSA)  -  -  -  -
Revolving Funding Facility 250,000 150,000 31,290 147,454  250,000 150,000 30,007 147,551 
Subscription Credit Agreement  175,000  14,000  161,000  13,660   175,000  114,000  61,000  113,773 
Total debt $700,000 $242,000 $372,752 $236,910  $700,000 $342,000 $288,007 $337,148 

 

(1)The amount available reflects any limitations related to theeach credit facility’s borrowing base as of March 31,June 30, 2022.

(2)The carrying value of the Corporate Credit Facility, Revolving Funding Facility, and Subscription Credit Agreement are presented net of deferred financing costs totaling $5,090.$4,852.

 

  December 31, 2021 
  Aggregate
Principal
Committed		  Outstanding
Principal		  Amount
Available(1)		  Net
Carrying
Value(2)		 
Loan and Security Agreement (LSA) $200,000  $162,000  $13,685  $161,753 
Subscription Credit Agreement  150,000   105,000   45,000   104,575 
Total debt $350,000  $267,000  $58,685  $266,328 

 

(1)The amount available reflects any limitations related to each credit facility’s borrowing base as of December 31, 2021.

 

(2)The carrying value of the LSA and Subscription Credit Agreement are presented net of deferred financing costs totaling $672.

 

For the three and six months ended March 31,June 30, 2022 and 2021, the components of interest expense were as follows:

 

 For the three months ended
March 31,		 
 2022 2021  For the three months ended 
      June 30,
2022		 June 30,
2021		 
Interest expense $2,289 $426  $2,528 $877 
Amortization of debt issuance costs(1)  519  35 
Amortization of debt issuance costs  486  51 
Total interest expense $2,808 $461  $3,014 $928 
Average interest rate 4.7% 5.7% 4.3% 5.6%
Average borrowings $241,633 $53,327  $283,637 $66,407 

 

(1)Includes write-offs of $244 of debt issue costs related to the termination of the LSA on February 18, 2022.
  For the six months ended 
  June 30,
2022		  June 30,
2021		 
Interest expense $4,817  $1,303 
Amortization of debt issuance costs  1,005   86 
Total interest expense $5,822  $1,389 
Average interest rate  4.5%  5.6%
Average borrowings $262,751  $61,479 

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 7. Share Transactions

 

Common Stock Issuances

 

The following table summarizes the number of common stock shares issued and aggregate proceeds received from such issuances related to the Company’s capital call notices pursuant to subscription agreements with investors for the threesix months ended March 31,June 30, 2022 and 2021.

 

For the three months ended March 31, 2022
 For the six months ended June 30, 2022 
 Offering     Aggregate  Offering Common Aggregate 
 price per Common stock offering  price per stock offering 
Common stock issue date share  shares issued  amount  share  shares issued  amount 
January 24, 2022 $16.36   4,191,292  $68,582  $16.36   4,191,292  $68,582 
Total common stock issued      4,191,292  $68,582       4,191,292  $68,582 

 

For the three months ended March 31, 2021
 For the six months ended June 30, 2021 
 Offering   Aggregate  Offering Common Aggregate 
 price per Common stock offering  price per stock offering 
Common stock issue date share shares issued amount  share  shares issued  amount 
February 5, 2021 $15.00  5,666,667 $85,000  $15.00   5,666,667  $85,000 
April 23, 2021 $15.57   3,532,434   55,000 
Total common stock issued    5,666,667 $85,000       9,199,101  $140,000 

 

As of March 31,June 30, 2022, the Company had subscription agreements with investors for an aggregate capital commitment of $701,450$761,694 to purchase shares of common stock (including a $33,250$13,250 capital commitment that is contingent on the Company meeting certain conditions). Of this amount, the Company had $333,367$393,611 of undrawn commitments at March 31,June 30, 2022. See Note 11 – Subsequent Events.

 

Dividends and Dividend Reinvestment

 

ForThe following table summarizes the three months ended March 31, 2022 and 2021, no dividends were declared and payable by the Company.Company for the six months ended June 30, 2022. See Note 11 – Subsequent Events.

Dividend declaration date Dividend
record date		 Dividend
payment date		 Dividend
per share		 
April 19, 2022 April 20, 2022 April 26, 2022 $0.26 
Total dividends declared     $0.26 

The following table summarizes the dividends declared and payable by the Company for the six months ended June 30, 2021.

Dividend declaration date Dividend
record date		 Dividend
payment date		 Dividend
per share		 
April 23, 2021 April 20, 2021 May 14, 2021 $0.15 
Total dividends declared     $0.15 

The following table summarizes the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan for the six months ended June 30, 2022. See Note 11 – Subsequent Events.

  Dividend  DRIP    
  payment  shares  DRIP 
Dividend record date  date  issued  value 
December 29, 2021   January 18, 2022   55,590  $902 
April 20, 2022   April 26, 2022   75,270   1,222 
        130,860  $2,124 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

The following table summarizes the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan for the threesix months ended March 31, 2022. See Note 11 – Subsequent Events.June 30, 2021

 

Dividend record date Dividend
payment date		 DRIP shares issued  DRIP value 
December 29, 2021 January 18, 2022  55,590  $902 

There were no amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan for the three months ended March 31, 2021.

  Dividend  DRIP    
  payment  shares  DRIP 
Dividend record date  date  issued  value 
April 20, 2021   May 14, 2021   1,361  $21 
        1,361  $21 

 

Note 8. Commitments and Contingencies

 

The Company had an aggregate of $81,840$91,509 and $97,810, respectively, of unfunded commitments to provide debt financing to its portfolio companies as of March 31,June 30, 2022 and December 31, 2021. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and certain operational metrics; involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities,liabilities; and are not reflected in the Company’s consolidated statements of assets and liabilities. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

A summary of the composition of the unfunded commitments as of June 30, 2022 and December 31, 2021 is shown in the table below:

  As of  As of 
  June 30,
2022		  December 31,
2021		 
Allentown, LLC $2,142  $- 
American Equipment Holdings LLC  8,241   1,698 
Arborworks Acquisition LLC  2,813   3,219 
Atria Wealth Solutions, Inc.  3,229   - 
BCI Burke Holding Corp.  5,254   4,935 
Blade (US) Holdings, Inc.  -   1,121 
BLP Buyer, Inc. (Bishop Lifting Products)  1,047   - 
Brightview, LLC  4,647   4,647 
Centerline Communications, LLC  6,661   2,040 
CGI Automated Manufacturing, LLC  2,717   6,522 
Corbett Technology Solutions, Inc.  381   1,525 
Curio Brands, LLC  1,432   6,018 
DRS Holdings III, Inc. (Dr. Scholl's)  310   310 
EIS Legacy, LLC  6,538   6,538 
Eastern Wholesale Fence  -   666 
Foundation Consumer Brands  577   577 
Fralock Buyer LLC  749   749 
Guardian Dentistry Partners  11,230   15,898 
Gusmer Enterprises, Inc.  3,676   4,220 
Home Brands Group Holdings, Inc. (ReBath)  2,099   2,099 
I.D. Images Acquisition, LLC  869   1,570 
Light Wave Dental Management LLC  9,012   - 
MacNeill Pride Group  2,499   357 
PMFC Holding, LLC  342   684 
Regiment Security Partners LLC  3,621   7,200 
SGA Dental Partners Holdings, LLC  2,681   12,931 
Siegel Egg Co., LLC  1,655   2,102 
Speedstar Holding LLC  694   694 
Trademark Global LLC  582   1,182 
United Safety & Survivability Corporation (USSC)  3,883   4,285 
USALCO, LLC  1,335   2,352 
Vehicle Accessories, Inc.  593   1,671 
Total unfunded commitments $91,509  $97,810 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

A summary of the composition of the unfunded commitments as of March 31, 2022 and December 31, 2021 is shown in the table below:

  As of  As of 
  March 31,
2022		  December 31,
2021		 
American Equipment Holdings LLC $1,082  $1,698 
Arborworks Acquisition LLC  4,688   3,219 
BCI Burke Holding Corp.  4,895   4,935 
Blade (US) Holdings, Inc.  1,121   1,121 
BLP Buyer, Inc. (Bishop Lifting Products)  1,047   - 
Brightview, LLC  4,647   4,647 
Centerline Communications, LLC  1,800   2,040 
CGI Automated Manufacturing, LLC  2,717   6,522 
Corbett Technology Solutions, Inc.  1,016   1,525 
Curio Brands, LLC  6,018   6,018 
DRS Holdings III, Inc. (Dr. Scholl's)  310   310 
Eastern Wholesale Fence  -   666 
EIS Legacy, LLC  6,539   6,538 
Foundation Consumer Brands  577   577 
Fralock Buyer LLC  749   749 
Guardian Dentistry Partners  13,795   15,898 
Gusmer Enterprises, Inc.  840   4,220 
Home Brands Group Holdings, Inc. (ReBath)  2,099   2,099 
I.D. Images Acquisition, LLC  822   1,570 
MacNeill Pride Group  4,829   357 
PMFC Holding, LLC  240   684 
Regiment Security Partners LLC  6,269   7,200 
SGA Dental Partners Holdings, LLC  6,198   12,931 
Siegel Egg Co., LLC  760   2,102 
Speedstar Holding LLC  694   694 
Trademark Global LLC  582   1,182 
United Safety & Survivability Corporation (USSC)  4,285   4,285 
USALCO, LLC  1,717   2,352 
Vehicle Accessories, Inc.  1,504   1,671 
Total unfunded commitments $81,840  $97,810 

 

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of March 31,June 30, 2022 and December 31, 2021, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

 

Note 9. Earnings Per Share

 

In accordance with the provisions of ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of March 31,June 30, 2022 and 2021, there were no dilutive shares.

 

The following table sets forth the computation of basic and diluted earnings per share of common stock for the three and six months ended March 31,June 30, 2022 and 2021:

 

 

For the three months

ended
March 31,

  For the three months ended For the six months ended 
 2022  2021  June 30,
2022		 June 30,
2021		 June 30,
2022		 June 30,
2021		 
Net increase (decrease) in net assets resulting from operations $5,729  $3,445  $7,462  $3,208  $13,191  $6,653 
Weighted average shares of common stock outstanding - basic and diluted  22,393,176   5,667,333   23,529,376   8,346,491   22,964,415   7,337,219 
Earnings (loss) per share of common stock - basic and diluted $0.26  $0.61  $0.32  $0.38  $0.57  $0.91 

 

Note 10. Financial Highlights

 

The following per share of common stock data has been derived from information provided in the unaudited financial statements. The following is a schedule of financial highlights for the threesix months ended March 31,June 30, 2022 and 2021:

 

 For the three months ended
March 31,		 
 2022
(amounts in
thousands,
except
share and
per share
amounts)		 2021
(amounts in
thousands,
except
share and
per share
amounts)		  For the six months ended
June 30,		 
Per Common Share Operating Performance (1)      2022 (amounts in thousands, except share and per share amounts) 2021 (amounts in thousands, except share and per share amounts) 
Net Asset Value, Beginning of Period(2) $16.22 $ 14.86  $16.22 $14.86 
        
Results of Operations:             
Net Investment Income 0.28 0.11   0.58   0.35 
Net Realized and Unrealized Gain (Loss) on Investments(3)  (0.01)  0.50   0.01  0.70 
Net Increase (Decrease) in Net Assets Resulting from Operations  0.27  0.61   0.59   1.05 
        
Distributions to Common Stockholders        
Distributions  (0.26)  (0.15)
Net Decrease in Net Assets Resulting from Distributions  (0.26)  (0.15)
        
Net Asset Value, End of Period $16.49 $15.47  $16.55 $15.76 
        
Shares Outstanding, End of Period 23,474,784 5,667,333   23,550,054   9,201,129 
        
Ratio/Supplemental Data        
Net assets, end of period $389,763 $145,026 
Weighted-average shares outstanding  22,964,415   7,337,219 
Total Return(4)  3.6%  6.1%
Portfolio turnover  6.9%  6.3%
Ratio of operating expenses to average net assets(5)  6.4%  6.8%
Ratio of net investment income (loss) to average net assets(5)  7.4%  6.4%

 

(1)The per common share data was derived by using weighted average shares outstanding.
(2)On February 5, 2021, the initial offering price of $15.00 per share less $0.14 per share of organizational costs.

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

(amounts in 000’s, except share and per share amounts)

(Unaudited)

Ratio/Supplemental Data      
Net assets, end of period $387,182  $87,647 
Weighted-average shares outstanding  22,393,176   5,667,333 
Total Return(4)  1.7%  3.1%
Portfolio turnover  4.7%  3.8%
Ratio of operating expenses to average net assets(5)  6.6%  7.5%
Ratio of net investment income (loss) to average net assets(5)  7.2%  5.9%

(1)The per common share data was derived by using weighted average shares outstanding.

(2)On February 5, 2021, the initial offering price was $15.00 per share less $0.14 per share of organizational costs.

 

(3)Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statement of Operations due to share transactions during the period.

(4)Total return is calculated as the change in net asset value (“NAV”("NAV") per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. The calculation also assumes reinvestment of dividends at actual prices pursuant to the Company’s dividend reinvestment plan. Total return is not annualized.

(5)The ratios reflect an annualized amount, except in the case of non-recurring expenses (e.g. initial organizational expense of $175 for the period February 5, 2021 (commencement of operations) through March 31,June 30, 2021).

 

Note 11. Subsequent Events

 

The Company’s management has evaluated subsequent events through the date of issuance of the financial statements included herein. There have been no subsequent events that require recognition or disclosure in these financial statements except for the following: as described below.

 

On April 18,July 1, 2022, the Company completeddecreased its sixth capital close totaling $80,244. Following this capital close,commitment under the Subscription Credit Facility from $175,000 to $150,000. All other terms of the Subscription Credit Facility remain substantially the same.

On July 19, 2022, the Company increased its Corporate Credit Facility commitment amount from $275,000 to $350,000. All other terms of the Corporate Credit Facility remain substantially the same.

On July 22, 2022, the Company sold 7,666,830 shares of its common stock at a price of $16.30 per share for an aggregate offering amount of $125,000. As of the same date, the Company has subscription agreements with investors for an aggregate capital commitment of $761,694$777,652 (including a $13,250$7,900 capital commitment that is contingent on the Company meeting certain conditions) to purchase shares of common stock ($393,611284,569 of the commitments are undrawn).

 

On April 26,July 27, 2022, the Company paid a distribution of $0.26$0.30 per share to each common stockholder of record as of AprilJuly 20, 2022. The total distribution was $6,103$7,065 and $1,222$1,431 was reinvested into the Company through the purchase of 74,08488,081 shares of common stock.

 


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company” refer to Kayne Anderson BDC, Inc.

 

Overview and Investment Framework

 

Kayne Anderson BDC, LLC was formed as a Delaware limited liability company to make investments in middle-market companies and commenced operations on February 5, 2021. On this same date, prior to our election to be regulated as a BDC under the 1940 Act, we completed a conversion from a Delaware limited liability company into a Delaware corporation and Kayne Anderson BDC, Inc. succeeded to the business of Kayne Anderson BDC, LLC. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act. In addition, for U.S. federal income tax purposes, we intend to qualify, annually, as a RIC under Subchapter M of the Code.

  

We are managed by KA Credit Advisors, LLC (the “Advisor”) which is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P. (“KACALP” or “Kayne Anderson”). The Advisor is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under the Investment Advisory Act of 1940. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of five directors, three of whom are independent.

 

Our investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies. We define “middle-market companies” as U.S.-based companies that, in general, generate between $10 million and $150 million of annual earnings before interest, taxes, depreciation and amortization, or EBITDA. We refer to companies that generate between $10 million and $50 million of annual EBITDA as “core middle-market companies” and companies that generate between $50 million and $150 million of annual EBITDA as “upper middle-market companies.”

 

We intend to achieve our investment objective by investing primarily in first lien senior secured, unitranche and split-lien loans (collectively, “secured middle market loans”) to privately held middle-market companies. Similar to first lien senior secured loans, unitranche loans typically have a first lien on all assets of the borrower, but provide leverage at levels similar to a combination of first lien and second lien and/or subordinated loans. Split-lien loans are loans that otherwise satisfy the criteria of a first lien loan but which have been structured with a credit facility that is senior in right of payment with respect to working capital assets of the borrower and a term loan that is collateralized by all other assets of the borrower. Depending on market conditions, we expect that at least 90% of our portfolio (including investments purchased with proceeds from borrowings) will be invested in secured middle market loans. It is anticipated that most of these investments will be in core middle market companies, with the remainder in upper middle market companies. The remaining 10% of our portfolio may be invested in higher-returning investments, including, but not limited to, equity securities purchased in conjunction with secured middle market loans and other opportunistic investments (collectively “Opportunistic Investments”), including junior debt, real estate debt and infrastructure credit investments. We expect that the secured middle market loans we invest in will generally have stated maturities of no more than six years.

 

We intend to implement our investment objective by (1) accessing the established loan sourcing channels developed by Kayne Anderson’s middle market private credit team, which includes an extensive network of private equity firms, other middle-market lenders, financial advisors and intermediaries, and management teams, (2) selecting investments within our middle-market company focus, (3) implementing Kayne Anderson’s middle market private credit team’s proven underwriting process, and (4) drawing upon the experience and resources of our Advisor’s investment team and the broader Kayne Anderson network.

 

We believe our Advisor’s disciplined approach to origination, credit analysis, portfolio construction and risk management should allow us to achieve attractive risk-adjusted returns while preserving investor capital. We anticipate the portfolio will be comprised of a broad mix of loans, with diversity among investment size, industry focus and geography. The Advisor’s team of professionals will conduct in-depth due diligence on prospective investments during the underwriting process and will be heavily involved in structuring the credit terms of each investment. Once an investment has been made, our Advisor will closely monitor portfolio investments and take a proactive approach identifying and addressing sector or company specific risks. The Advisor maintains a regular dialogue with portfolio company management teams (as well as their financial sponsors, where applicable), reviews detailed operating and financial results on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio management activities.

 


Recent Developments 

 

On July 1, 2022, we decreased our commitment under our Subscription Credit Facility from $175 million to $150 million, and on July 19, 2022, we increased our commitment under our Corporate Credit Facility from $275 million to $350 million.

On April 18,July 22, 2022, we completed our sixth capital close totaling $80.2sold 7.7 million shares of common stock at a price of $16.30 per share for an aggregate offering amount of $125.0 million. Following this capital close,As of the same date, we have subscription agreements with investors for an aggregate capital commitment of $761.7$777.7 million (including a $13.2$7.9 million capital commitment that is contingent on us meeting certain conditions) to purchase shares of common stock ($393.6284.6 million of the commitments are undrawn).

 

On April 26,July 27, 2022, we paid a distribution of $0.26$0.30 per share to each common stockholder of record as of AprilJuly 20, 2022. The total distribution was $6.1$7.1 million and $1.2$1.4 million was reinvested into the Company through the purchase of 74,08488,081 shares of common stock.

 


Portfolio and Investment Activity

 

As of March 31,June 30, 2022, we had 104128 debt investments and 45 equity investments in 5052 portfolio companies with an aggregate fair value of approximately $617.1$718.0 million and an amortized cost of $605.8$706.3 million consisting of first lien senior secured debt ($616.1716.6 million fair value) and equity ($1.01.4 million fair value) investments.

 

As of March 31,June 30, 2022, our weighted average total yield to maturity of debt and income producing securities at fair value was 7.4%8.4%, and our weighted average total yield to maturity of debt and income producing securities at amortized cost was 7.6%8.5%.

 

Our investment activity for the three months ended March 31,June 30, 2022 and 2021 is presented below (information presented herein is at par value unless otherwise indicated).

 

 For the three months ended
March 31,		 
 2022
($ in
millions)		  2021
($ in
millions)		  For the three months ended
June 30,		 
      2022
($ in millions)		  2021
($ in millions)		 
New investments:          
Gross investments $40.0  $164.8 
Less: sold investments  (28.5)  (5.0)
Total new investments  11.5   159.8 
Gross new investment commitments $118.3  $86.8 
Less: investment commitments sold down, exited or repaid (1)  (6.9)  (5.1)
Net investment commitments  111.4   81.7 
                
Principal amount of investments funded:                
Private credit investments $66.9  $153.0  $116.9  $56.2 
Liquid credit investments  -   8.7   -   12.2 
Preferred equity investments(1)  0.3   - 
Common equity investments(1)  0.5   - 
Preferred equity investments (2)  -   - 
Common equity investments (2)  0.3   - 
Total principal amount of investments funded  67.7   161.7   117.2   68.4 
                
Principal amount of investments sold:                
Private credit investments  (28.5)  (0.4)  (15.3)  (3.3)
Liquid credit investments  -   (4.6)  -   (1.8)
Total principal amount of investments sold or repaid  (28.5)  (5.0)  (15.3)  (5.1)
                
Number of new investment commitments  11   48   25   47 
Average new investment commitment amount $3.6   3.3  $4.7  $1.8 
        
Weighted average maturity for new investment commitments(3)  4.7 years   3.5 years   2.4 years   4.8 years 
Percentage of new debt investment commitments at floating rates  100.0%  99.5%  100.0%  98.0%
Percentage of new debt investment commitments at fixed rates  0.0%  0.5%  0.0%  2.0%
Weighted average interest rate of new investment commitments  7.0%  7.3%  7.7%  6.6%
Weighted average spread over LIBOR of new floating rate investment commitments  6.0%  6.3%
Weighted average spread over benchmark rate of new floating rate investment commitments  6.1%  5.6%
Weighted average interest rate on investment sold or paid down  7.3%  4.4%  7.7%  6.1%

 

 

(1)(1)Does not include repayments on revolving loans, which may be redrawn.

(2)As of March 31,June 30, 2022, preferred equity investments and common equity investments were reported in aggregate as equity investments.

(3)For undrawn delayed draw term loans, the maturity date used is that of the associated term loan.

 

Beginning with the three months ended March 31, 2022, we use Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of its portfolio companies. As of December 31, 2021, we used GICS, Level 2 – Industry Group.

 


The tables below describe long-term investments by industry composition based on fair value as of March 31,June 30, 2022 and December 31, 2021:

 

  March 31,June 30,
2022		 
    
Commercial services & supplies  18.017.9%
Trading companies & distributors  14.312.2%
Health care providers & services  10.212.1%
Food products7.2%
Building products  6.75.6%
Chemicals  5.44.7%
Diversified telecommunication services  5.04.4%
Software4.0%
Leisure products3.9%
Auto components  4.4%
Leisure products4.23.9%
Professional services  4.03.4%
Wireless telecommunication services  3.6%
Personal products3.53.3%
Household productsdurables  3.33.2%
FoodPersonal products  3.0%
Household durablesproducts  2.92.8%
Textiles, apparel & luxury goods  2.4%
Software2.2%
Specialty retail1.52.1%
Aerospace & defense  1.5%
Specialty retail1.2%
Pharmaceuticals  1.41.1%
Containers & packaging  1.21.0%
Asset management & custody banks  0.90.7%
Electronic equipment, instruments & components0.4%
Machinery  0.3%
IT services  0.1%
Total  100.0%

 

  December 31,
2021		 
    
Commercial & professional services  19.6%
Capital goods  19.5%
Consumer durables & apparel  15.8%
Telecommunication services  8.8%
Health care equipment & services  8.5%
Household & personal products  7.4%
Materials  7.0%
Automobiles & components  4.1%
Food & beverage  2.9%
Software & services  2.4%
Retailing  1.6%
Pharmaceuticals, biotech & life sciences  1.5%
Diversified financials  0.9%
Total  100.0%

 

Results of Operations

 

For the three and six months ended March 31,June 30, 2022 and 2021, our total investment income was derived from our portfolio of investments. All debt investments were income producing, and there were no loans on non-accrual status as of March 31,June 30, 2022 or 2021.


The following table represents the operating results for the three and six months ended March 31,June 30, 2022 and 2021:

 

  For the three months ended
March 31,		 
  2022  2021 
  ($ in
millions)		  ($ in
millions)		 
Total investment income $11.9  $1.7 
Less: Net expenses  5.7   1.1 
Net investment income  6.2   0.6 
Net realized gains (losses) on investments  0.0   0.1 
Net change in unrealized gains (losses) on investments  (0.5)  2.8 
Net increase (decrease) in net assets resulting from operations $5.7  $3.5 

  For the three months ended
June 30,		  For the six months ended  
June 30,		 
  2022  2021  2022  2021 
  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Total investment income $13.0  $3.8  $24.9  $5.6 
Less: Net expenses  (5.9)  (1.8)  (11.5)  (3.0)
Net investment income  7.1   2.0   13.4   2.6 
Net realized gains (losses) on investments  -   0.0   0.0   0.0 
Net change in unrealized gains (losses) on investments  0.3   1.2   (0.2)  4.0 
Net increase (decrease) in net assets resulting from operations $7.4  $3.2  $13.2  $6.6 

 

Investment Income

 

Investment income for the three and six months ended March 31,June 30, 2022 totaled $13.0 million and $24.9 million respectively, and consisted primarily of interest income on our debt investments. Investment income for the three and six months ended June 30, 2021 totaled $11.9$3.8 million and $1.7$5.6 million, respectively, and consisted primarily of interest income on our debt investments.

 

Expenses

 

Operating expenses for the three and six months ended March 31,June 30, 2022 and 2021 were as follows:

 For the three months ended
March 31,		  For the three months ended 
June 30,		  For the six months ended 
June 30,		 
 2022 2021  2022 2021 2022 2021 
 ($ in
millions)		  ($ in
millions)		  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Interest and debt financing expenses $2.8  $0.4  $3.0  $0.9  $5.8  $1.4 
Management fees  1.3   0.2   1.5   0.4   2.8   0.6 
Incentive fees  1.0   -   0.8   -   1.7   - 
Directors fees  0.1   0.1   0.1   0.1   0.2   0.1 
Initial organization  -   0.2   -   -   -   0.2 
Deferred offering costs  -   -   -   0.1   -   0.1 
Other operating expenses  0.5   0.2   0.5   0.3   1.0   0.6 
Total expenses $5.7  $1.1  $5.9  $1.8  $11.5  $3.0 

 

Total expenses for the three and six months ended March 31,June 30, 2022 included zero and $0.03 million of deferred offering costs. Total expenses for the three and six months ended June 30, 2021 included $0.03zero and $0.2 million of initial organization expenses and $0.07 million and $0.04$0.1 million of deferred offering costs, respectively.

 

Net Unrealized Gains (Losses) on Investments

 

We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the three and six months ended March 31,June 30, 2022 and 2021, net unrealized gains (losses) on our investment portfolio were comprised of the following:

 

 For the three months ended
March 31,		  For the three months ended
June 30,		  For the six months ended  
June 30,		 
 2022 2021  2022 2021 2022 2021 
�� ($ in
millions)		  ($ in
millions)		 
 ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Unrealized gains on investments $1.1  $2.8  $2.0  $1.5  $2.8  $4.0 
Unrealized (losses) on investments  (1.6)  -   (1.7)  (0.3)  (3.0)  - 
Net change in unrealized gains (losses) on investments $(0.5) $2.8  $0.3  $1.2  $(0.2) $4.0 

 


The change in unrealized appreciation for the three months ended March 31,June 30, 2022 and 2021 totaled $1.1$2.0 million and $2.8$1.5 million, which primarily related to our investments in the following tables:

  For the
three months
ended		 
  June 30,
2022		 
  ($ in millions) 
Portfolio Company   
IF&P Foods, LLC (FreshEdge)  0.6 
Peak Technologies  0.3 
Light Wave Dental Management LLC  0.3 
Siegel Parent, LLC  0.1 
Gusmer Enterprises, Inc.  0.1 
Allentown, LLC  0.1 
American Equipment Holdings LLC  0.1 
Regiment Security Partners LLC  0.1 
Advanced Environmental Monitoring  0.1 
Process Insights, Inc.  0.1 
Other portfolio companies  0.1 
Total Unrealized Appreciation $2.0 

 

  For the three
months ended		 
  March 31,
2022		 
  ($ in millions) 
Portfolio Company   
BLP Buyer, Inc. (Bishop Lifting Products)        0.4 
CGI Automated Manufacturing, LLC  0.2 
OMH-HealthEdge Holdings, LLC  0.1 
BEL USA, LLC  0.1 
Other portfolio companies  0.3 
Total Unrealized Appreciation $1.1 

  For the
three months
ended		 
  June 30,
2021		 
  ($ in millions) 
Portfolio Company   
Gusmer Enterprises, Inc. $0.2 
MacNeill Pride Group  0.2 
Broder Bros., Co.  0.2 
DRS Holdings III, Inc. (Dr. Scholl's)  0.1 
Refrigeration Sales Corp.  0.1 
Fralock Buyer LLC  0.1 
Pretzels, LLC  0.1 
Network Connex (f/k/a NTI Connect, LLC)  0.1 
Eastern Wholesale Fence  0.1 
Other portfolio companies  0.3 
Total Unrealized Appreciation $1.5 

 


The change in unrealized depreciation for the three months ended March 31,June 30, 2022 totaled $1.6$1.7 million and related to our investments in the following table:table. The change in unrealized depreciation for the three months ended June 30, 2021 totaled $0.3 million, which was primarily attributable to accretion of discounts on investments.

 

 For the three
months ended		  For the three months
ended		 
 March 31,
2022		  June 30,
2022		 
 ($ in millions)  ($ in millions) 
Portfolio Company      
Arborworks Acquisition LLC  (0.5)  (0.3)
Trademark Global LLC  (0.3)  (0.2)
Other portfolio accretion  (0.8)
United Safety & Survivability Corporation (USSC)  (0.2)
PH Beauty Holdings III, Inc.  (0.1)
The Kleinfelder Group, Inc.  (0.1)
Other portfolio companies  (0.8)
Total Unrealized Depreciation $(1.6) $(1.7)

 


The change in unrealized appreciation for the threesix months ended March 31,June 30, 2022 and 2021 totaled $2.8 and $4.0 million, which primarily related to our investments in the following table:tables:

  For the
six months
ended		 
  June 30,
2022		 
  ($ in millions) 
Portfolio Company   
IF&P Foods, LLC (FreshEdge) $0.6 
BLP Buyer, Inc. (Bishop Lifting Products)  0.3 
Peak Technologies  0.3 
Light Wave Dental Management LLC  0.3 
CGI Automated Manufacturing, LLC  0.3 
Siegel Parent, LLC  0.1 
OMH-HealthEdge Holdings, LLC  0.1 
Gusmer Enterprises, Inc.  0.1 
American Equipment Holdings LLC  0.1 
Allentown, LLC  0.1 
Other portfolio companies  0.5 
Total Unrealized Appreciation $2.8 

 

 For the three
months ended		  For the
six months
ended		 
 March 31,
2021		  June 30,
2021		 
 ($ in millions)  ($ in millions) 
Portfolio Company      
Broder Bros., Co. $0.4 
Sundance Holdings Group, LLC $        0.3   0.3 
OMH-HealthEdge Holdings, LLC  0.3   0.3 
Broder Bros., Co.  0.3 
Fralock Buyer LLC  0.2 
New Era Cap Company, Inc.  0.2   0.2 
Advanced Environmental Monitoring  0.2   0.2 
Gusmer Enterprises, Inc.  0.2 
YS Garments, LLC  0.2 
WhiteBridge Pet Brands, LLC  0.2   0.2 
YS Garments, LLC  0.2 
Fralock Buyer LLC  0.1 
Speedstar Holding LLC  0.1 
Foundation Consumer Brands  0.1 
Meridian Adhesives Group, Inc.  0.2 
Other portfolio companies  0.8   1.6 
Total Unrealized Appreciation $2.8  $4.0 

 

The change in unrealized depreciation for the six months ended June 30, 2022 totaled $3.0 million, which primarily related to our investments in the following table. There was no change in unrealized depreciation for the six months ended June 30, 2021.

  For the
six months
ended		 
  June 30,
2022		 
  ($ in millions) 
Portfolio Company   
Arborworks Acquisition LLC $(0.8)
Trademark Global LLC  (0.5)
United Safety & Survivability Corporation (USSC)  (0.2)
PH Beauty Holdings III, Inc.  (0.2)
Fralock Buyer LLC  (0.1)
The Kleinfelder Group, Inc.  (0.1)
Other portfolio companies(1)  (1.1)
Total Unrealized Depreciation $(3.0)

(1)Primarily attributable to accretion of discounts on investments.


Financial Condition, Liquidity and Capital Resources

 

Our liquidity and capital resources are generated primarily from the net proceeds of any offering of our Shares, proceeds from borrowing on our credit facilities and from cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. Our primary use of cash will be investments in portfolio companies, payments of our expenses, repayments of borrowed amounts and payment of cash distributions to our stockholders.

 

In accordance with the 1940 Act, we are required to meet a coverage ratio of total assets (less total liabilities other than indebtedness) to total borrowings and other senior securities (and any preferred stock that we may issue in the future) of at least 150%. If this ratio declines below 150%, we cannot incur additional leverage and could be required to sell a portion of our investments to repay some leverage when it is disadvantageous to do so. As of March 31,June 30, 2022 and December 31, 2021, our asset coverage ratios were 260%214% and 217%. We currently intend to target asset coverage of 200% to 180% (which equates to a debt-to-equity ratio of 1.0x to 1.25x) but may alter this target based on market conditions.

 

Over the next twelve months, we expect that cash and cash equivalents, taken together with our undrawn capital commitments and available capacity under our credit facilities, will be sufficient for our investing activities to conduct our operations. In the long term beyondanticipated investment activities. Beyond twelve months, we expect that our cash and liquidity needs will continue to be met by cash generated from our ongoing operations as well as financing activities.

 

As of March 31,June 30, 2022, we had $242.0$342.0 million borrowed under our credit facilities and cash and cash equivalents of $8.8$11.8 million (including short-term investments). As of MayAugust 11, 2022, we had $296$394 million borrowed under our credit facilities and cash and cash equivalents of $3.8$3.9 million (including short-term investments).

  

Capital Contributions

 

During the threesix months ended March 31,June 30, 2022 and 2021, we issued and sold 4,191,292 and 5,666,6679,199,767 shares of our common stock, respectively, related to capital called at an aggregate purchase price of $68.6 million and $85.0$140 million, respectively. As of MayAugust 11, 2022, we had aggregate capital commitments of $761.7$777.7 million (including a $13.2$7.9 million capital commitment that is contingent on us meeting certain conditions) and undrawn capital commitments from investors of $393.6$284.6 million ($368.1493.1 million or 48.3% funded)64.1% funded, exclusive of the contingent commitment of $7.9 million).

 

Credit Facilities

 

From February 5, 2021 to February 17, 2022, Kayne Anderson BDC Financing, LLC, (“KABDCF”), our wholly owned, special purpose financing subsidiary, had a senior secured credit facility (the “Loan and Security Agreement” or “LSA”) with a maximum commitment amount of up to $200 million. On February 18, 2022, we and KABDCF refinanced the LSA with two new credit facilities described below (the Corporate Credit Facility and the Revolving Funding Facility).

 

Corporate Credit Facility: We are party to a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $275$350 million. The facility’s commitment termination date and the final maturity date are February 18, 2026 and February 18, 2027, respectively. The Corporate Credit Facility also provides for a feature that allows us, under certain circumstances, to increase the overall size of the Corporate Credit Facility to a maximum of $550 million. The interest rate on the Corporate Credit Facility is equal to Term SOFR (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.35% per annum (which includes a SOFR adjustment spread of 0.10%) or an “alternate base rate” (as defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.25%. We are also required to pay a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility.

 


Revolving Funding Facility: We and our wholly owned, special purpose financing subsidiary, KABDCF, are party to a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $250 million. The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, KABDCF. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are February 18, 2025 and February 18, 2027, respectively. The interest rate on the Revolving Funding Facility is equal to daily SOFR plus 2.35% per annum. KABDCF is also required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility.

 

Subscription Credit Agreement: We are party to a senior secured revolving credit agreement that includes a capital call facility (the “Subscription Credit Agreement”). The Subscription Credit Agreement permits us to borrow up to $175$150 million, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The Subscription Credit Agreement has a maximum commitment of $175$150 million and the interest rate under the facility is equal to Term SOFR plus 1.975% (subject to a 0.275% floor). We are also required to pay a commitment fee of 0.25% per annum on the unused portion of the Subscription Credit Agreement. The Subscription Credit Agreement will expire on December 31, 2022.

 

Contractual Obligations

 

A summary of our significant contractual principal payment obligations related to the repayment of our outstanding indebtedness at March 31,June 30, 2022 is as follows:

 

 Payments Due by Period ($ in millions)  Payments Due by Period ($ in millions) 
 Total  Less than 1
year		  1-3 years  3-5 years  After 5
years		  Total  Less than
1 year		  1-3 years  3-5 years  After 5 years 
Corporate Credit Facility $78.0  $-  $    -      $78.0  $    -  $78.0  $-  $-  $78.0  $- 
Revolving Funding Facility  150.0   -   -       150.0   -   150.0   -   -   150.0   - 
Subscription Credit Agreement  14.0   14.0   -   -   -   -   114.0   114.0   -   -   - 
Total contractual obligations $242.0  $14.0  $-      $228.0  $-  $342.0  $114.0  $-  $228.0  $- 

 

Off-Balance Sheet Arrangements

 

As of March 31,June 30, 2022 and December 31, 2021, we had an aggregate $81.8$91.5 million and $97.8 million, respectively, of unfunded commitments to provide debt financing to our portfolio companies. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in our financial statements. Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any other off-balance sheet financings or liabilities.

 

Critical Accounting Estimates

 

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in conjunction with our risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in this Quarterly Report. See Note 2 to our consolidated financial statements for the threesix months ended March 31,June 30, 2022, for more information on our critical accounting policies.


Investment Valuation

 

Traded Investments (Level 1 or Level 2)

 

Investments for which market quotations are readily available will typically be valued at those market quotations. Traded investments such as corporate bonds, preferred stock, bank notes, loans or loan participations are valued by using the bid price provided by an independent pricing service, by an independent broker, the agent bank, syndicate bank or principal market maker. When price quotes for investments are not available, or such prices are stale or do not represent fair value in the judgment of our Advisor, fair market value will be determined using our valuation process for investments that are privately issued or otherwise restricted as to resale.

 

We may also invest, to a lesser extent, in equity securities purchased in conjunction with debt investments. While we anticipate these equity securities to be issued by privately held companies, we may hold equity securities that are publicly traded. Equity securities listed on any exchange other than the NASDAQ Stock Market, Inc. (“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask prices on such day. Securities admitted to trade on the NASDAQ are valued at the NASDAQ official closing price. Equity securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. Equity securities traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the closing bid prices.

 

Non-Traded Investments (Level 3)

 

Investments that are privately issued or otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment of our Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of our Advisor is stale or does not represent fair value, shall each be valued in a manner that most fairly reflects fair value of the security on the valuation date. We expect that a significant majority of our investments will be Level 3 investments. Unless otherwise determined by the Board, the following valuation process is used for our Level 3 investments:

 

●Investment Team Valuation. The applicable investments are valued by senior professionals of Kayne Anderson who are responsible for the portfolio investments. The value of each portfolio company or investment will be initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments), a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs will be used to determine a preliminary value. The investments will be valued no less frequently than quarterly, with new investments valued at the time such investment was made.

 

●Investment Team Valuation Documentation. Preliminary valuation conclusions will be determined by our executive officers. Such valuation and supporting documentation is submitted to the Audit Committee (a committee of our Board) and our Board on a quarterly basis.

 

●Audit Committee. The Audit Committee meets to consider the valuations submitted by our executive officers at the end of each quarter. Between meetings of the Audit Committee, our executive officers are authorized to make valuation determinations. All valuation determinations of the Audit Committee are subject to ratification by our Board at its next regular meeting.

 

●Valuation Firm. Quarterly, third-party valuation firms engaged by our Board review the valuation methodologies and calculations employed for each of our investments that we have placed on the “watch list” and approximately 25% of our remaining investments. These third-party valuation firms will review all of the Level 3 investments at least once per year, on a rolling twelve-month basis. We expect the quarterly report issued by these third-party valuation firms will assist the Board in determining the fair values of the investments reviewed.

 

●Board Determination. Our Board meets quarterly to consider the valuations provided by our executive officers and the Audit Committee and ratify valuations for the applicable investments. Our Board considers the report provided by the third-party valuation firms in reviewing and determining in good faith the fair value of the applicable portfolio investments.

 

The Board of Directors is ultimately responsible for the determination, in good faith, of the fair value of our portfolio investments.

 

Refer to Note 5 – Fair Value – for more information on the Company’s valuation process.


Revenue Recognition

 

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, which represents contractual interest accrued and added to the principal balance, we generally will not accrue PIK interest for accounting purposes if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities for accounting purposes if we have reason to doubt our ability to collect such interest. OIDs, market discounts or premiums are accreted or amortized using the effective interest method as interest income. We record prepayment premiums on loans and debt securities as interest income.

 

Related Party Transactions

 

Investment Advisory Agreement. On February 5, 2021, we entered into the Investment Advisory Agreement with our Advisor. Our Advisor will agree to serve as our investment advisor in accordance with the terms of our Investment Advisory Agreement. Payments under our Investment Advisory Agreement in each reporting period will consist of the base management fee equal to a percentage of the fair market value of investments, including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase as well as an incentive fee based on our performance.

 

For services rendered under the Investment Advisory Agreement, we will pay a base management fee quarterly in arrears to our Advisor based on the of the fair market value of our investments including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase. We will also pay an incentive fee on income and an incentive fee on capital gains to our Advisor.

 

Prior to an Exchange Listing, any incentive fees earned by the Advisor shall accrue as earned but only become payable in cash to the Advisor upon consummation of an Exchange Listing. To the extent the Company does not complete an Exchange Listing, the incentive fees will be payable to the Advisor (a) upon consummation of a sale of the Company or (b) once substantially all proceeds from a Company Liquidation payable to the Company’s common stockholders have been distributed to such stockholders.

 

Administration Agreement. On February 5, 2021, we entered into an Administration Agreement with our Advisor, which serves as our Administrator pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. The Administrator will be reimbursed for administrative expenses it incurs on our behalf in performing its obligations. Such reimbursement may be made for our allocable portion (subject to the review and approval of our independent directors) of office facilities, overhead, and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and their respective staff who provide services to us. As we reimburse the Administrator for its expenses, we will indirectly bear such cost. The Administrator engaged U.S. Bank Global Fund Services under a sub-administration agreement to assist the Administrator in performing certain of its administrative duties. The Administrator may enter into additional sub-administration agreements with third-parties to perform other administrative and professional services on behalf of the Administrator.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We are subject to financial market risks, including changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income will be 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.

 

Assuming that the consolidated statement of assets and liabilities as of March 31,June 30, 2022 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact ($ in millions) of hypothetical base rate changes in interest rate (considering interest rate floors for floating rate instruments).

 

Change in Interest Rates Increase
(Decrease) in
Interest
Income		  Increase
(Decrease) in
Interest
Expense		  Net Increase
(Decrease) in
Net
Investment
Income		  Increase (Decrease) in Interest Income  Increase (Decrease) in Interest Expense  Net Increase (Decrease) in Net Investment Income 
Down 25 basis points $-  $(0.6) $0.6  $(1.8) $(0.9) $(0.9)
Up 75 basis points $4.4  $1.8  $2.6  $5.4  $2.6  $2.8 
Up 100 basis points $6.0  $2.4  $3.6  $7.2  $3.4  $3.8 
Up 200 basis points $12.1  $4.8  $7.3  $14.4  $6.8  $7.6 
Up 300 basis points $18.3  $7.3  $11.0  $21.5  $10.3  $11.2 

 

The data in the table is based on the Company’s current statement of assets and liabilities.

 

We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of March 31,June 30, 2022 (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) and 15d-15(e) of the Exchange Act). 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 Commission filings is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’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.

 

Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Neither we nor our Advisor is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Advisor.

 

From time to time, we, or our Advisor, may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to 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 financial condition or results of operations.

 

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

 

Item 1A. Risk Factors.

 

In addition to the other information set forth in this report, you should carefully consider the risk factors described below and in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including risk factors related to the ongoing COVID-19 pandemic, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 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.

 

Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.
 

The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.

 

For example, the COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets.

 

In addition, the risingcontinuing conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial condition, cash flows and results of operations. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict. In addition, sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting private companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

As set forth in the table below (dollars in thousands, except per share and share amounts), during the threesix months ended March 31,June 30, 2022, we issued and sold 4,191,292 shares of common stock at an aggregate offering amount of approximately $68.6 million. The issuance of the shares of common stock was exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof and previously reported by us on our current reports on Form 8-K. The Company relied, in part, upon representations from the investors in the subscription agreements that each investor was an accredited investor as defined in Regulation D under the Securities Act. We did not engage in general solicitation or advertising, and did not offer securities to the public, in connection with such issuances and sales.

 

Common stock issue date Offering
price per
share		  Common stock
shares issued		  Aggregate
offering
amount		 
January 24, 2022 $16.36   4,191,292  $68,582 

 

Item 3. Default Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 


Item 6. Exhibits.

 

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this Report.

  

Exhibit Index  
   
3.1 Certificate of Formation (3)
3.2 Initial Limited Liability Company Agreement (1)
3.3 Certificate of Conversion (2)
3.4 Certificate of Incorporation (2)
3.53.5* Amended and Restated Bylaws (2)
4.1 Description of Securities (3)
10.1 Investment Advisory Agreement (1)
10.2 Administration Agreement (1)
10.3 License Agreement (1)
10.4 Indemnification Agreement (1)
10.5 Custody Agreement (1)
10.6 Subscription Agreement (1)
10.7Loan and Security Agreement, dated as of February  5, 2021, by and between KA Credit Advisors, LLC, as collateral manager, Kayne Anderson BDC Financing, LLC, as borrower, certain lenders thereto, administrative agent for the lenders, and collateral agent for the lenders (2)
10.8 Credit Agreement, dated February  5, 2021, by and between Kayne Anderson BDC, Inc., as borrower, lenders signatories thereto, and agent and the lead arranger (2)
10.910.9*Second Amendment to Credit Agreement, dated December 3, 2021, by and between Kayne Anderson BDC, Inc., as borrower, lender signatories thereto, and agent and lead arranger
10.10 Senior Secured Revolving Credit Agreement dated February 18, 2022 (4)
10.1010.11 Loan and Security Agreement dated February 18, 2022 (4)
21.1 Subsidiaries of Kayne Anderson BDC, Inc. (3)
31.1* Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Code of Ethics (1)

  

(1)Incorporated by reference from the Company’s Amendment No. 2 to Form 10, as filed with the Securities and Exchange Commission on November 9, 2020.
(2)Incorporated by reference from the Company’s Form 8-K, as filed with the Securities and Exchange Commission on February 9, 2021.
(3)Incorporated by reference from the Company’s Form 10-K, as filed with the Securities and Exchange Commission on February 26, 2021.
(4)Incorporated by reference from the Company’s Form 8-K, as filed with the Securities and Exchange Commission on February 25, 2022.

 

*Filed herewith.


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 Kayne Anderson BDC, Inc.

Date: May 16,August 15, 2022

 
  

/s/ James C. Baker, Jr.

 Name: 

James C. Baker, Jr.

 Title:Chief Executive Officer
  (Principal Executive Officer)

Date: May 16,August 15, 2022

 
  

/s/ Terry A. Hart

 Name:Terry A. Hart
 Title:Chief Financial Officer and Treasurer
  (Principal Financial and Accounting Officer)

 

 

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