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 September 30, 2022March 31, 2023

 

☐ 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 November 9, 2022,May 10, 2023, the registrant had 32,918,22339,013,826 shares of common stock, $0.001 par value per share, outstanding. As of November 9, 2022,issued and outstanding and 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 September 30, 2022March 31, 2023 (Unaudited) and December 31, 202120221
 Consolidated Statements of Operations for the three and nine months ended September 30,March 31, 2023 and 2022 and 2021 (Unaudited)2
 Consolidated Statement of Changes in Net Assets for the three and nine months ended September 30,March 31, 2023 and 2022 and 2021 (Unaudited)3
 Consolidated Statement of Cash Flows for the nine three months ended September 30,March 31, 2023 and 2022 and 2021 (Unaudited)4
 Consolidated Schedule of Investments as of September 30, 2022March 31, 2023 (Unaudited) and December 31, 202120225
 Notes to Consolidated Financial Statements (Unaudited)2118
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations4037
Item 3.Quantitative and Qualitative Disclosures About Market Risk5146
Item 4.Controls and Procedures5146
   
PART II.OTHER INFORMATION5247
Item 1.Legal Proceedings5247
Item 1A.Risk Factors5247
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds5348
Item 3.Defaults Upon Senior Securities5348
Item 4.Mine Safety Disclosures5348
Item 5.Other Information5348
Item 6.Exhibits5449
   
Signatures5550

 

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 Kayne Anderson BDC, Inc. (“the CompanyCompany”) 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;

 

●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 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, increased inflation, 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.10-Q, as well as in the Company’s annual report on Form 10-K for the year ended December 31, 2022.

 

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—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)

 

 September 30,
2022
(Unaudited)		 December 31,
2021		  March 31,
2023 (Unaudited)		  December 31,
2022		 
Assets:          
Investments, at fair value:          
Long-term investments (amortized cost of $949,079 and $566,616) $964,034  $578,445 
Short-term investments (amortized cost of $4,758 and $3,674)  4,758   3,674 
Long-term investments (amortized cost of $1,236,904 and $1,147,788) $1,254,359  $1,165,119 
Short-term investments (amortized cost of $15,192 and $9,847)  15,192   9,847 
Cash and cash equivalents  15,271   2,035   11,206   8,526 
Deferred offering costs  -   29 
Receivable for principal payments on investments  273   -   190   111 
Interest receivable  7,953   2,133   13,597   10,444 
Prepaid expenses and other assets  157   148   283   347 
Total Assets $992,446  $586,464  $1,294,827  $1,194,394 
                
Liabilities:                
Corporate Credit Facility (Note 6) $202,000  $-  $297,000  $269,000 
Unamortized Corporate Credit Facility issuance costs  (2,511)  -   (2,320)  (2,517)
Loan and Security Agreement (Note 6)  -   162,000 
Unamortized Loan and Security Agreement issuance costs  -   (247)
Revolving Funding Facility (Note 6)  200,000   -   275,000   200,000 
Unamortized Revolving Funding Facility issuance costs  (2,215)  -   (2,500)  (2,827)
Subscription Credit Agreement (Note 6)  62,000   105,000   92,000   108,000 
Unamortized Subscription Credit Facility issuance costs  (113)  (425)  (65)  (65)
Accrued organizational and offering costs  -   6 
Payable for investments purchased  -   956 
Capital payable (Note 11)  7,110   - 
Distributions payable  -   4,615   16,890   15,428 
Management fee payable  1,908   952   2,685   2,415 
Incentive fee payable  3,025   65   6,900   4,762 
Accrued expenses and other liabilities  4,625   2,529   6,614   7,201 
Total Liabilities $468,719  $274,495  $699,314  $602,353 
                
Commitments and contingencies (Note 8)                
                
Net Assets:                
Common Shares, $0.001 par value; 100,000,000 shares authorized; 31,304,965 and 19,227,902 as of September 30, 2022 and December 31, 2021, respectively, issued and outstanding $31  $19 
Common Shares, $0.001 par value; 100,000,000 shares authorized; 35,937,151 and 35,879,291 as of March 31, 2023 and December 31, 2022, respectively, issued and outstanding $36  $36 
Additional paid-in capital  497,851   300,726   575,495   574,540 
Total distributable earnings (deficit)  25,845   11,224   19,982   17,465 
Total Net Assets $523,727  $311,969  $595,513  $592,041 
Total Liabilities and Net Assets $992,446  $586,464  $1,294,827  $1,194,394 
Net Asset Value Per Common Share $16.73  $16.22  $16.57  $16.50 

 

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
September 30,		  For the
nine months ended
September 30,		  For the three months
ended March 31,		 
 2022  2021  2022  2021  2023  2022 
Income:              
Investment income from investments:              
Interest income $20,494  $4,976   45,386  $10,531  $36,366  $11,897 
Total Investment Income  20,494   4,976   45,386   10,531   36,366   11,897 
                        
Expenses:                        
Management fees  1,908   545   4,732   1,143   2,685   1,326 
Incentive fees  1,230   -   2,960   -   2,138   955 
Interest expense  5,504   948   11,325   2,337   11,523   2,808 
Professional fees  166   140   466   433   150   145 
Directors fees  107   81   321   226   139   107 
Offering costs  -   76   29   182   -   29 
Initial organization costs  -   -   -   175 
Other general and administrative expenses  345   201   961   465   449   314 
Total Expenses  9,260   1,991   20,794   4,961   17,084   5,684 
Net Investment Income (Loss)  11,234   2,985   24,592   5,570   19,282   6,213 
                        
Realized and unrealized gains (losses) on investments                        
Net realized gains (losses):                        
Investments  47   131   70   178   -   28 
Total net realized gains (losses)  47   131   70   178   -   28 
Net change in unrealized gains (losses):                        
Investments  3,317   989   3,127   5,010   125   (512)
Total net change in unrealized gains (losses)  3,317   989   3,127   5,010   125   (512)
Total realized and unrealized gains (losses)  3,364   1,120   3,197   5,188   125   (484)
                        
Net Increase (Decrease) in Net Assets Resulting from Operations $14,598  $4,105   27,789  $10,758  $19,407  $5,729 
                        
Per Common Share Data:                        
Basic and diluted net investment income per common share $0.38  $0.26   0.98  $0.63  $0.54  $0.28 
Basic and diluted net increase in net assets resulting from operations $0.49  $0.36   1.10  $1.21  $0.54  $0.26 
Weighted Average Common Shares Outstanding - Basic and Diluted  29,530,036   11,406,064   25,177,005   8,910,050   35,929,436   22,393,176 

 

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
September 30,		  For the
nine months ended
September 30,		  For the three months ended
March 31,		 
 2022  2021  2022  2021  2023  2022 
Increase (Decrease) in Net Assets Resulting from Operations:              
Net investment income (loss) $11,234  $2,985  $24,592  $5,570  $19,282  $6,213 
Net realized gains (losses) on investments  47   131   70   178   -   28 
Net change in unrealized gains (losses) on investments  3,317   989   3,127   5,010   125   (512)
Net Increase (Decrease) in Net Assets Resulting from Operations  14,598   4,105   27,789   10,758   19,407   5,729 
                        
Decrease in Net Assets Resulting from Stockholder Distributions                        
Dividends and distributions to stockholders  (7,065)  (2,024)  (13,168)  (2,874)  (16,890)  - 
Net Decrease in Net Assets Resulting from Stockholder Distributions  (7,065)  (2,024)  (13,168)  (2,874)  (16,890)  - 
                        
Increase in Net Assets Resulting from Capital Share Transactions                        
Issuance of common shares  125,000   45,000   193,582   185,000   -   68,582 
Reinvestment of distributions  1,431   585   3,555   606   955   902 
Net Increase in Net Assets Resulting from Capital Share Transactions  126,431   45,585   197,137   185,606   955   69,484 
Total Increase (Decrease) in Net Assets  133,964   47,666   211,758   193,490   3,472   75,213 
Net Assets, Beginning of Period  389,763   145,026   311,969   (798)  592,041   311,969 
Net Assets, End of Period $523,727  $192,692  $523,727  $192,692  $595,513  $387,182 

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Statements of Cash Flows

(amounts in 000’s)

(Unaudited)

 

 For the
nine months ended
September 30,		 
 2022 2021  For the three months ended
March 31,		 
      2023  2022 
Cash Flows from Operating Activities:          
Net increase (decrease) in net assets resulting from operations $27,789 $10,758  $19,407  $5,729 
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 (70) (178)  -   (28)
Net change in unrealized (gains)/losses on investments (3,127) (5,010)  (125)  512 
Net accretion of discount on investments (3,287) (733)  (2,115)  (750)
Purchases of short-term investments, net (1,084) (1,925)
Sales (purchases) of short-term investments, net  (5,345)  670 
Purchases of portfolio investments (468,799) (308,311)  (104,080)  (66,523)
Proceeds from sales of investments and principal repayments 89,694 53,655   17,245   28,167 
Paid-in-kind interest from portfolio investments - (144)  (165)  - 
Amortization of deferred financing cost 1,533 141   591   519 
Increase/(decrease) in operating assets and liabilities:             
(Increase)/decrease in receivable for sales of investments - (1,501)
(Increase)/decrease in interest and dividends receivable (5,820) (957)  (3,153)  (1,046)
(Increase)/decrease in deferred offering costs 29 126   -   29 
(Increase)/decrease in receivable for principal payments on investments (273) -   (79)  - 
(Increase)/decrease in prepaid expenses and other assets (9) 129   64   (38)
Increase/(decrease) in payable for investments purchased - 1,293   (956)  - 
Increase/(decrease) in management fees payable 956 545   270   185 
Increase/(decrease) in incentive fee payable 2,960 -   2,138   955 
Increase/(decrease) in payable to affiliate - (1,075)
Increase/(decrease) in accrued organizational and offering costs, net (6) (135)  -   (6)
Increase/(decrease) in accrued other general and administrative expenses  2,096  1,570   (587)  475 
Net cash used in operating activities  (357,418)  (251,752)  (76,890)  (31,150)
Cash Flows from Financing Activities:             
Borrowings on Corporate Credit Facility, net 202,000 -   28,000   78,000 
Borrowings on Revolving Funding Facility, net 200,000 -   75,000   150,000 
(Payments)/Borrowings on Loan and Security Agreement, net (162,000) 50,000 
(Payments)/Borrowings on Subscription and Credit Agreement, net (43,000) 21,000 
Borrowings/(payments) on Loan and Security Agreement, net  -   (162,000)
Borrowings/(payments) on Subscription and Credit Agreement, net  (16,000)  (91,000)
Payments of debt issuance costs (5,700) (747)  (67)  (4,937)
Deposits for issuance of common shares  7,110   - 
Distributions paid in cash (14,228) (2,268)  (14,473)  (3,713)
Proceeds from issuance of common shares  193,582  185,000   -   68,582 
Net cash provided by financing activities  370,654  252,985   79,570   34,932 
Net increase in cash and cash equivalents 13,236 1,233   2,680   3,782 
Cash and cash equivalents, beginning of period  2,035  10   8,526   2,035 
Cash and cash equivalents, end of period $15,271 $1,243  $11,206  $5,817 
             
Supplemental and Non-Cash Information:             
Interest paid during the period $8,168 $1,211  $11,213  $1,550 
Non-cash financing activities not included herein consisted of reinvestment of dividends $3,555 $606  $955  $902 

 

See accompanying notes to consolidated financial statements.

 


 

  

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30, 2022March 31, 2023

(amounts in 000’s)

(Unaudited)

 

      Maturity Principal /  Amortized  Fair  Percentage
of Net		 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  Assets 
Debt and Equity Investments                  
Private Credit Investments(4)                  
Aerospace & defense                  
Basel U.S. Acquisition Co., Inc. (IAC) (5) First lien senior secured revolving loan 11.58% (S + 6.50%) 12/5/2028 $-  $-  $-   0.0%
  First lien senior secured loan 11.58% (S + 6.50%) 12/5/2028  18,634   18,154   18,634   3.1%
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 12.05% (S + 7.00%) 4/1/2024  2,357   2,302   2,357   0.4%
  First lien senior secured loan 12.05% (S + 7.00%) 4/1/2024  20,649   20,370   20,649   3.5%
Precinmac (US) Holdings, Inc. First lien senior secured delayed draw loan 10.91% (S + 6.00%) 8/31/2027  1,110   1,093   1,094   0.2%
  First lien senior secured loan 11.05% (S + 6.00%) 8/31/2027  5,393   5,308   5,312   0.9%
         48,143   47,227   48,046   8.1%
Asset management & custody banks                      
Atria Wealth Solutions, Inc. First lien senior secured delayed draw loan 11.16% (S + 6.00%) 2/29/2024  232   208   232   0.0%
  First lien senior secured loan 11.16% (S + 6.00%) 2/29/2024  5,125   5,097   5,125   0.9%
         5,357   5,305   5,357   0.9%
Auto components                      
Speedstar Holding LLC First lien senior secured delayed draw loan 12.31% (S + 7.25%) 1/22/2027  274   266   274   0.0%
  First lien senior secured loan 12.29% (S + 7.25%) 1/22/2027  6,059   5,952   6,059   1.0%
Vehicle Accessories, Inc. First lien senior secured revolving loan 10.39% (S + 5.50%) 11/30/2026  1,170   1,148   1,170   0.2%
  First lien senior secured loan 10.66% (S + 5.50%) 11/30/2026  21,172   20,889   21,172   3.6%
         28,675   28,255   28,675   4.8%
Biotechnology                  
Alcami Corporation (Alcami) First lien senior secured delayed draw loan 11.91% (S + 7.00%) 6/30/2024  -   -   -   0.0%
  First lien senior secured revolving loan 11.91% (S + 7.00%) 12/21/2028  -   -   -   0.0%
  First lien senior secured loan 11.91% (S + 7.00%) 12/21/2028  11,706   11,229   11,706   2.0%
         11,706   11,229   11,706   2.0%
Building products                      
BCI Burke Holding Corp. First lien senior secured delayed draw loan 10.66% (L + 5.50%) 12/14/2023  637   620   637   0.1%
  First lien senior secured loan 10.66% (L + 5.50%) 12/14/2027  16,446   16,227   16,446   2.8%
  First lien senior secured revolving loan 10.66% (L + 5.50%) 6/14/2027  -   -   -   0.0%
Eastern Wholesale Fence First lien senior secured revolving loan 13.05% (S + 8.00%) 10/30/2025  1,332   1,310   1,325   0.2%
  First lien senior secured loan 13.05% (S + 8.00%) 10/30/2025  21,104   20,524   20,998   3.5%
         39,519   38,681   39,406   6.6%
Chemicals                      
Cyalume Technologies Holdings, Inc. First lien senior secured loan 10.16% (L + 5.00%) 8/30/2024  1,274   1,268   1,274   0.2%
Fralock Buyer LLC First lien senior secured revolving loan 10.66% (L + 5.50%) 4/17/2024  200   198   199   0.1%
  First lien senior secured loan 10.66% (L + 5.50%) 4/17/2024  11,673   11,580   11,615   1.9%
Shrieve Chemical Company, LLC First lien senior secured loan 11.05% (L + 6.38%) 12/2/2024  604   594   604   0.1%
  First lien senior secured loan 11.20% (L + 6.38%) 12/2/2024  3,546   3,514   3,546   0.6%
USALCO, LLC First lien senior secured revolving loan 10.84% (L + 6.00%) 10/19/2026  763   727   755   0.1%
  First lien senior secured loan 11.16% (L + 6.00%) 10/19/2027  19,133   18,765   18,941   3.2%
         37,193   36,646   36,934   6.2%

See accompanying notes to consolidated financial statements.

    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)
Aerospace & defense                  
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 10.70% (S + 7.00%) 4/1/2024 $2,188  $2,174  $2,188   0.4%
  First lien senior secured delayed draw loan 10.18% (S + 7.00%) 4/1/2024  181   112   181   0.1%
  First lien senior secured loan 9.27% (S + 7.00%) 4/1/2024  20,753   20,333   20,753   4.0%
Precinmac (US) Holdings, Inc. First lien senior secured delayed draw loan 9.13% (S + 6.00%) 8/31/2027  1,116   1,096   1,116   0.2%
  First lien senior secured loan 9.13% (S + 6.00%) 8/31/2027  4,830   4,748   4,830   0.9%
  First lien senior secured loan 9.13% (S + 6.00%) 8/31/2027  591   577   591   0.1%
         29,659   29,040   29,659   5.7%
Asset management & custody banks                      
Atria Wealth Solutions, Inc. First lien senior secured delayed draw loan 8.82% (S + 6.00%) 2/29/2024  233   195   231   0.0%
  First lien senior secured loan 9.81% (S + 6.00%) 2/29/2024  5,152   5,138   5,100   1.0%
         5,385   5,333   5,331   1.0%
Auto components                      
Speedstar Holding LLC First lien senior secured loan 10.07% (L + 7.00%) 1/22/2027  4,920   4,836   4,970   0.9%
Vehicle Accessories, Inc. First lien senior secured revolving loan 11.00% (P + 4.75%) 11/30/2026  919   895   919   0.2%
  First lien senior secured loan 9.56% (S + 5.75%) 11/30/2026  21,279   20,956   21,279   4.1%
         27,118   26,687   27,168   5.2%
Building products                      
BCI Burke Holding Corp. First lien senior secured delayed draw loan 9.70% (L + 5.50%) 12/14/2023  666   635   666   0.1%
  First lien senior secured loan 9.17% (L + 5.50%) 12/14/2027  17,173   16,944   17,173   3.3%
  First lien senior secured revolving loan 10.75% (P + 4.50%) 6/14/2027  632   607   632   0.1%
Eastern Wholesale Fence First lien senior secured revolving loan 10.07% (L + 7.00%) 10/30/2025  1,502   1,476   1,502   0.3%
  First lien senior secured loan 10.07% (L + 7.00%) 10/30/2025  3,267   3,180   3,267   0.6%
  First lien senior secured loan 10.07% (L + 7.00%) 10/30/2025  18,108   17,695   18,108   3.5%
         41,348   40,537   41,348   7.9%

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31, 2023

(amounts in 000’s)

(Unaudited)

      Maturity Principal /  Amortized  Fair  Percentage
of Net		 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  Assets 
Private Credit Investments(4)                  
Commercial services & supplies                  
Advanced Environmental Monitoring (6) First lien senior secured loan 11.97% (S + 7.00%) 1/29/2026  10,158   9,936   10,057   1.7%
Allentown, LLC First lien senior secured delayed draw loan 10.91% (S + 6.00%) 10/22/2023  -   -   -   0.0%
  First lien senior secured revolving loan 13.00% (P + 5.00%) 4/22/2027  357   349   350   0.1%
  First lien senior secured loan 10.91% (S + 6.00%) 4/22/2027  7,643   7,575   7,491   1.3%
American Equipment Holdings LLC First lien senior secured delayed draw loan 10.88% (S + 6.00%) 11/5/2026  6,287   6,195   6,287   1.1%
  First lien senior secured revolving loan 10.45% (S + 6.00%) 11/5/2026  2,253   2,206   2,253   0.4%
  First lien senior secured delayed draw loan 10.42% (S + 6.00%) 11/5/2026  5,016   4,933   5,016   0.8%
  First lien senior secured loan 10.88% (S + 6.00%) 11/5/2026  18,097   17,832   18,097   3.0%
  First lien senior secured loan 10.51% (S + 6.00%) 11/5/2026  2,101   2,070   2,101   0.4%
Arborworks Acquisition LLC First lien senior secured revolving loan 11.83% (L + 7.00%) 11/9/2026  3,125   3,057   2,750   0.5%
  First lien senior secured loan 11.85% (L + 7.00%) 11/9/2026  19,703   19,409   17,339   2.9%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured revolving loan 11.09% (S + 6.25%) 2/1/2027  604   578   596   0.1%
  First lien senior secured loan 11.33% (S + 6.50%) 2/1/2027  6,160   6,021   6,083   1.0%
  First lien senior secured loan 11.08% (S + 6.25%) 2/1/2027  16,331   16,077   16,127   2.7%
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 11.87% (S + 7.00%) 5/7/2027  8,012   7,881   7,892   1.3%
  First lien senior secured revolving loan 11.78% (S + 7.00%) 5/7/2027  210   150   207   0.0%
  First lien senior secured loan 11.86% (S + 7.00%) 5/7/2027  4,783   4,704   4,711   0.8%
PMFC Holding, LLC First lien senior secured delayed draw loan 11.32% (L + 6.50%) 7/31/2023  2,811   2,807   2,811   0.5%
  First lien senior secured loan 11.32% (L + 6.50%) 7/31/2023  5,604   5,597   5,604   0.9%
  First lien senior secured revolving loan 11.38% (L + 6.50%) 7/31/2023  342   342   342   0.1%
Regiment Security Partners LLC First lien senior secured delayed draw loan 12.88% (S + 8.00%) 9/15/2023  2,628   2,602   2,602   0.4%
  First lien senior secured loan 12.88% (S + 8.00%) 9/15/2026  6,442   6,347   6,377   1.1%
  First lien senior secured revolving loan 12.88% (S + 8.00%) 9/15/2026  1,345   1,321   1,331   0.2%
The Kleinfelder Group, Inc. First lien senior secured loan 10.41% (L + 5.25%) 11/30/2024  12,728   12,658   12,665   2.1%
         142,740   140,647   139,089   23.4%
Containers & packaging                      
Drew Foam Companies, Inc. First lien senior secured loan 11.80% (S + 6.75%) 11/5/2025  7,357   7,278   7,302   1.2%
  First lien senior secured loan 11.55% (S + 6.75%) 11/5/2025  20,911   20,551   20,754   3.5%
FCA, LLC (FCA Packaging) First lien senior secured revolving loan 11.29% (S + 6.50%) 7/18/2028  -   -   -   0.0%
  First lien senior secured loan 11.29% (S + 6.50%) 7/18/2028  22,083   21,743   22,304   3.8%
         50,351   49,572   50,360   8.5%
Diversified telecommunication services                      
Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 9.80% (S + 4.75%) 11/30/2024  5,236   5,182   5,236   0.9%
Pavion Corp. (f/k/a Corbett Technology Solutions, Inc.) First lien senior secured revolving loan 10.55% (S + 5.75%) 10/29/2027  1,819   1,690   1,819   0.3%
  First lien senior secured delayed draw loan 11.02% (S + 5.75%) 10/29/2027  9,411   9,336   9,411   1.6%
  First lien senior secured loan 10.83% (S + 5.75%) 10/29/2027  1,738   1,724   1,738   0.3%
  First lien senior secured loan 10.58% (S + 5.75%) 10/29/2027  13,395   13,169   13,395   2.2%
         31,599   31,101   31,599   5.3%
Electronic equipment, instruments & components                      
Process Insights, Inc. First lien senior secured loan 11.18% (S + 6.00%) 10/30/2025  3,036   2,990   3,036   0.5%
         3,036   2,990   3,036   0.5%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30, 2022March 31, 2023

(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)
Chemicals                  
Cyalume Technologies Holdings, Inc. First lien senior secured loan 8.67% (L + 5.00%) 8/30/2024  1,329   1,320   1,329   0.3%
Fralock Buyer LLC First lien senior secured revolving loan 9.18% (L + 5.50%) 4/17/2024  -   -   -   0.0%
  First lien senior secured loan 9.18% (L + 5.50%) 4/17/2024  9,251   9,140   9,135   1.7%
  First lien senior secured loan 9.18% (L + 5.50%) 4/17/2024  2,434   2,407   2,404   0.5%
Schrieve Chemical Company, LLC First lien senior secured loan 8.94% (L + 6.00%) 12/2/2024  614   601   614   0.1%
USALCO, LLC First lien senior secured revolving loan 9.12% (L + 6.00%) 10/19/2026  1,144   1,103   1,133   0.2%
  First lien senior secured loan 9.67% (L + 6.00%) 10/19/2027  19,230   18,826   19,037   3.6%
         34,002   33,397   33,652   6.4%
Commercial services & supplies                      
Advanced Environmental Monitoring (5) First lien senior secured loan 10.65% (S + 7.00%) 1/29/2026  10,158   9,903   10,158   1.9%
Allentown, LLC First lien senior secured delayed draw loan 9.13% (S + 6.00%) 10/22/2023  -   -   -   0.0%
  First lien senior secured revolving loan 11.25% (P + 5.00%) 4/22/2027  357   348   347   0.1%
  First lien senior secured loan 9.13% (S + 6.00%) 4/22/2027  7,682   7,603   7,471   1.4%
American Equipment Holdings LLC First lien senior secured delayed draw loan 7.94% (S + 6.00%) 11/5/2026  6,319   6,157   6,319   1.2%
  First lien senior secured revolving loan 7.94% (S + 6.00%) 11/5/2026  -   -   -   0.0%
  First lien senior secured delayed draw loan 9.33% (S + 6.00%) 4/8/2024  2,571   2,501   2,571   0.5%
  First lien senior secured loan 7.94% (S + 6.00%) 11/5/2026  1,759   1,729   1,759   0.3%
  First lien senior secured loan 7.60% (S + 6.00%) 11/5/2026  2,112   2,074   2,112   0.4%
  First lien senior secured loan 7.94% (S + 6.00%) 11/5/2026  16,428   16,150   16,428   3.1%
Arborworks Acquisition LLC First lien senior secured revolving loan 9.87% (L + 7.00%) 11/9/2026  3,125   3,048   2,938   0.6%
  First lien senior secured loan 9.87% (L + 7.00%) 11/9/2026  19,855   19,520   18,664   3.6%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured revolving loan 8.93% (L + 6.25%) 2/1/2027  604   575   604   0.1%
  First lien senior secured loan 9.03% (L + 6.25%) 2/1/2027  16,414   16,126   16,414   3.1%
      Maturity Principal /  Amortized  Fair  Percentage
of Net		 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  Assets 
Private Credit Investments(4)                  
Food products                  
BC CS 2, L.P. (Cuisine Solutions) (5) First lien senior secured loan 12.18% (S + 8.00%) 7/8/2028  25,000   24,335   25,000   4.2%
BR PJK Produce, LLC (Keany) First lien senior secured loan 10.99% (S + 6.25%) 11/14/2027  29,788   29,065   29,788   5.0%
  First lien senior secured delayed draw loan 10.99% (S + 6.25%) 5/14/2024  -   -   -   0.0%
Gulf Pacific Holdings, LLC First lien senior secured delayed draw loan 11.11% (S + 6.00%) 9/30/2024  1,714   1,619   1,714   0.3%
  First lien senior secured revolving loan 10.98% (S + 6.00%) 9/30/2028  2,098   1,988   2,098   0.4%
  First lien senior secured loan 11.05% (S + 6.00%) 9/30/2028  20,333   19,958   20,333   3.4%
IF&P Foods, LLC (FreshEdge) (6) First lien senior secured delayed draw loan 10.14% (S + 5.25%) 10/3/2024  -   -   -   0.0%
  First lien senior secured revolving loan 10.07% (S + 5.25%) 10/3/2028  1,776   1,697   1,776   0.3%
  First lien senior secured loan 10.14% (S + 5.25%) 10/3/2028  27,451   26,726   27,451   4.6%
Siegel Egg Co., LLC First lien senior secured revolving loan 10.26% (L + 5.50%) 12/29/2026  1,476   1,429   1,468   0.2%
  First lien senior secured loan 10.26% (L + 5.50%) 12/29/2026  15,584   15,362   15,506   2.6%
Worldwide Produce Acquisition, LLC First lien senior secured revolving loan 10.88% (S + 6.25%) 1/18/2029  155   143   155   0.0%
  First lien senior secured delayed draw loan 11.15% (S + 6.25%) 1/18/2029  565   532   565   0.1%
  First lien senior secured delayed draw loan 10.88% (S + 6.25%) 4/18/2024  -   -   -   0.0%
  First lien senior secured delayed draw loan 11.15% (S + 6.25%) 4/18/2024  71   54   71   0.0%
  First lien senior secured loan 10.88% (S + 6.25%) 1/18/2029  2,882   2,799   2,882   0.5%
         128,893   125,707   128,807   21.6%
Health care providers & services                  
Brightview, LLC First lien senior secured delayed draw loan 10.59% (L + 5.75%) 12/14/2026  1,732   1,715   1,714   0.3%
  First lien senior secured revolving loan 10.59% (L + 5.75%) 12/14/2026  232   229   230   0.0%
  First lien senior secured loan 10.59% (L + 5.75%) 12/14/2026  12,969   12,913   12,839   2.1%
Guardian Dentistry Partners First lien senior secured delayed draw loan 11.42% (S + 6.50%) 8/20/2026  21,654   21,371   21,654   3.6%
  First lien senior secured loan 11.42% (S + 6.50%) 8/20/2026  8,119   7,954   8,119   1.4%
Light Wave Dental Management LLC First lien senior secured delayed draw loan 11.66% (S + 6.50%) 12/31/2023  9,535   9,446   9,535   1.6%
  First lien senior secured loan (7) 9/30/2023  6,254   6,254   6,254   1.0%
  First lien senior secured revolving loan 11.66% (S + 6.50%) 12/31/2023  558   556   558   0.1%
  First lien senior secured loan 11.66% (S + 6.50%) 12/31/2023  12,906   12,844   12,906   2.2%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 10.03% (L + 5.25%) 10/24/2025  17,528   17,254   17,528   3.0%
SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 10.39% (S + 5.50%) 12/30/2026  11,108   10,927   11,108   1.9%
  First lien senior secured loan 10.39% (S + 5.50%) 12/30/2026  11,918   11,711   11,918   2.0%
  First lien senior secured revolving loan 10.89% (S + 5.50%) 12/30/2026  -   -   -   0.0%
         114,513   113,174   114,363   19.2%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30, 2022March 31, 2023

(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) 
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 10.13% (S + 7.00%) 5/7/2027  6,294   6,181   6,294   1.2%
  First lien senior secured delayed draw loan 10.19% (S + 7.00%) 5/7/2027  1,759   1,725   1,759   0.3%
  First lien senior secured revolving loan 9.64% (S + 7.00%) 5/7/2027  735   669   735   0.2%
  First lien senior secured loan 9.86% (S + 7.00%) 5/7/2027  4,807   4,719   4,807   0.9%
PMFC Holding, LLC First lien senior secured delayed draw loan 9.31% (L + 6.50%) 7/31/2023  2,825   2,816   2,825   0.5%
  First lien senior secured loan 9.31% (L + 6.50%) 7/31/2023  5,633   5,613   5,633   1.1%
  First lien senior secured revolving loan 9.48% (L + 6.50%) 7/31/2023  342   342   342   0.1%
Regiment Security Partners LLC First lien senior secured delayed draw loan 11.59% (S + 8.00%) 9/15/2023  2,642   2,584   2,642   0.5%
  First lien senior secured loan 11.59% (S + 8.00%) 9/15/2026  6,481   6,370   6,481   1.3%
  First lien senior secured revolving loan 11.59% (S + 8.00%) 9/15/2026  1,345   1,319   1,345   0.3%
The Kleinfelder Group, Inc. First lien senior secured loan 8.92% (L + 5.25%) 11/15/2027  12,793   12,701   12,697   2.4%
         133,040   130,773   131,345   25.1%
Containers & packaging                      
Drew Foam Companies, Inc. First lien senior secured loan 9.67% (L + 6.00%) 11/5/2025  7,394   7,322   7,394   1.4%
FCA, LLC (FCA Packaging) First lien senior secured revolving loan 9.46% (S + 6.50%) 7/18/2028  -   -   -   0.0%
  First lien senior secured loan 9.46% (S + 6.50%) 7/18/2028  23,869   23,479   23,869   4.6%
         31,263   30,801   31,263   6.0%
Diversified telecommunication services                      
Corbett Technology Solutions, Inc. First lien senior secured revolving loan 7.62% (S + 5.00%) 10/29/2027  1,171   1,040   1,156   0.2%
  First lien senior secured delayed draw loan 8.33% (S + 5.00%) 10/29/2027  9,458   9,375   9,340   1.8%
  First lien senior secured loan 8.17% (S + 5.00%) 10/29/2027  1,747   1,731   1,725   0.3%
  First lien senior secured loan 7.73% (S + 5.00%) 10/29/2027  13,463   13,213   13,294   2.6%
Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 8.67% (L + 5.00%) 11/30/2024  5,262   5,192   5,210   1.0%
         31,101   30,551   30,725   5.9%
      Maturity Principal /  Amortized  Fair  Percentage
of Net		 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  Assets 
Private Credit Investments(4)                  
Healthcare equipment & supplies                  
LSL Industries, LLC (LSL Healthcare) First lien senior secured delayed draw loan 11.45% (S + 6.50%) 11/3/2024  -   -   -   0.0%
  First lien senior secured revolving loan 11.45% (S + 6.50%) 11/3/2027  -   -   -   0.0%
  First lien senior secured loan 11.45% (S + 6.50%) 11/3/2027  19,677   19,003   19,480   3.3%
         19,677   19,003   19,480   3.3%
Household durables                      
Curio Brands, LLC First lien senior secured delayed draw loan 10.20% (L + 5.25%) 12/21/2027  3,296   3,296   3,214   0.6%
  First lien senior secured revolving loan 10.41% (L + 5.25%) 12/21/2027  -   -   -   0.0%
  First lien senior secured loan 10.41% (L + 5.25%) 12/21/2027  17,963   17,573   17,514   2.9%
         21,259   20,869   20,728   3.5%
Household products                      
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured revolving loan 9.58% (L + 4.75%) 11/8/2026  -   -   -   0.0%
  First lien senior secured loan 9.58% (L + 4.75%) 11/8/2026  18,627   18,317   18,533   3.1%
         18,627   18,317   18,533   3.1%
Insurance                      
Allcat Claims Service, LLC First lien senior secured delayed draw loan 10.77% (S + 6.00%) 7/7/2027  21,768   21,364   21,768   3.7%
  First lien senior secured revolving loan 10.91% (S + 6.00%) 7/7/2027  -   -   -   0.0%
  First lien senior secured loan 10.91% (S + 6.00%) 7/7/2027  7,776   7,574   7,776   1.3%
         29,544   28,938   29,544   5.0%
IT services                      
Domain Information Services Inc. (Integris) First lien senior secured loan 10.99% (S + 6.25%) 9/30/2025  20,600   20,148   20,600   3.4%
Improving Acquisition LLC First lien senior secured revolving loan 10.45% (S + 6.00%) 7/26/2027  -   -   -   0.0%
  First lien senior secured loan 10.45% (S + 6.00%) 7/26/2027  31,890   31,272   31,890   5.4%
         52,490   51,420   52,490   8.8%
Leisure products                  
CTM Group, Inc. First lien senior secured loan 11.79% (S + 6.75%) 11/30/2026  4,454   4,344   4,454   0.8%
MacNeill Pride Group First lien senior secured delayed draw loan 11.66% (S + 6.50%) 4/22/2026  4,109   4,055   4,027   0.7%
  First lien senior secured loan 11.66% (S + 6.50%) 4/22/2026  8,597   8,519   8,425   1.4%
  First lien senior secured revolving loan 11.66% (S + 6.50%) 4/22/2026  539   516   529   0.1%
Trademark Global LLC First lien senior secured revolving loan 12.34% (L + 7.50%), 4.50% is PIK 7/30/2024  2,760   2,747   2,574   0.4%
  First lien senior secured revolving loan 12.34% (L + 7.50%), 4.50% is PIK 7/30/2024  61   53   57   0.0%
  First lien senior secured loan 12.34% (L + 7.50%), 4.50% is PIK 7/30/2024  11,619   11,568   10,834   1.8%
         32,139   31,802   30,900   5.2%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 11.16% (S + 6.00%) 3/6/2027  2,004   1,988   2,004   0.3%
PVI Holdings, Inc. First lien senior secured loan 10.57% (S + 5.94%) 7/18/2027  24,077   23,738   24,077   4.1%
Techniks Holdings, LLC / Eppinger Holdings Germany GMBH (5) First lien senior secured loan 11.78% (S + 6.75%) 2/4/2025  25,000   24,385   25,000   4.2%
  First lien senior secured revolving loan 11.78% (S + 6.75%) 2/4/2025  -   -   -   0.0%
         51,081   50,111   51,081   8.6%
Personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured revolving loan 10.59% (L + 5.75%) 11/1/2025  -   -   -   0.0%
  First lien senior secured loan 10.59% (L + 5.75%) 11/1/2025  11,346   11,275   11,120   1.9%
PH Beauty Holdings III, Inc. First lien senior secured loan 9.84% (L + 5.00%) 9/28/2025  9,517   9,281   9,089   1.5%
         20,863   20,556   20,209   3.4%
Pharmaceuticals                      
Foundation Consumer Brands First lien senior secured revolving loan 10.38% (L + 5.50%) 2/12/2027  -   -   -   0.0%
  First lien senior secured loan 10.38% (L + 5.50%) 2/12/2027  7,123   7,075   7,123   1.2%
         7,123   7,075   7,123   1.2%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30, 2022March 31, 2023

(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) 
Electronic equipment, instruments & components 
Process Insights, Inc. First lien senior secured loan 9.36% (S + 6.50%) 10/30/2025  3,052   2,996   3,052   0.6%
    ��    3,052   2,996   3,052   0.6%
Food products                      
BC CS 2, L.P. (Cuisine Solutions)(6) First lien senior secured loan 10.27% (S + 8.00%) 7/8/2028  25,000   24,266   25,000   4.8%
Gulf Pacific Holdings, LLC First lien senior secured delayed draw loan 9.70% (S + 6.00%) 9/30/2028  -   -   -   0.0%
  First lien senior secured revolving loan 9.70% (S + 6.00%) 9/30/2024  -   -   -   0.0%
  First lien senior secured loan 9.70% (S + 6.00%) 9/30/2028  20,435   19,821   20,435   3.9%
IF&P Foods, LLC (FreshEdge) First lien senior secured loan 6.75% (L + 5.25%) 8/15/2023  33,800   33,326   33,800   6.4%
Siegel Egg Co., LLC First lien senior secured revolving loan 7.78% (L + 5.50%) 12/29/2026  1,476   1,423   1,476   0.3%
  First lien senior secured loan 7.78% (L + 5.50%) 12/29/2026  15,663   15,410   15,663   3.0%
         96,374   94,246   96,374   18.4%
Health care providers & services                      
Brightview, LLC First lien senior secured delayed draw loan 9.39% (L + 5.75%) 12/14/2026  811   785   811   0.2%
  First lien senior secured revolving loan 8.63% (L + 5.75%) 12/14/2026  -   -   -   0.0%
  First lien senior secured loan 8.63% (L + 5.75%) 12/14/2026  13,034   12,944   13,034   2.5%
Guardian Dentistry Partners First lien senior secured delayed draw loan 9.19% (S + 6.00%) 8/20/2026  5,268   5,268   5,268   1.0%
  First lien senior secured delayed draw loan 9.15% (S + 6.00%) 8/20/2026  15,881   15,557   15,881   3.0%
  First lien senior secured loan 9.15% (S + 6.00%) 8/20/2026  8,160   8,048   8,160   1.6%
Light Wave Dental Management LLC First lien senior secured delayed draw loan 10.31% (S + 6.50%) 1/2/2024  1,501   1,418   1,490   0.3%
  First lien senior secured delayed draw loan 10.31% (S + 6.50%) 1/2/2024  4,106   4,071   4,075   0.8%
  First lien senior secured revolving loan 10.31% (S + 6.50%) 1/2/2024  -   -   -   0.0%
  First lien senior secured loan 10.31% (S + 6.50%) 1/2/2024  8,452   8,377   8,389   1.6%
  First lien senior secured delayed draw loan 10.31% (S + 6.50%) 1/2/2024  2,889   2,864   2,867   0.5%
  First lien senior secured loan 10.31% (S + 6.50%) 1/2/2024  4,522   4,484   4,488   0.9%
      Maturity Principal /  Amortized  Fair  Percentage
of Net		 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  Assets 
Private Credit Investments(4)                  
Professional services                  
4 Over International, LLC First lien senior secured loan 11.50% (S + 6.50%) 12/7/2023  24,190   23,970   24,007   4.0%
DISA Holdings Corp. (DISA) First lien senior secured delayed draw loan 10.16% (S + 5.50%) 9/9/2028  2,443   2,290   2,443   0.4%
  First lien senior secured revolving loan 10.16% (S + 5.50%) 9/9/2028  -   -   -   0.0%
  First lien senior secured loan 10.16% (S + 5.50%) 9/9/2028  22,345   21,665   22,345   3.8%
Universal Marine Medical Supply International, LLC (Unimed) First lien senior secured revolving loan 13.14% (S + 7.50%) 12/5/2027  509   449   509   0.1%
  First lien senior secured loan 12.58% (S + 7.50%) 12/5/2027  14,449   14,116   14,449   2.4%
         63,936   62,490   63,753   10.7%
Software                      
AIDC Intermediate Co 2, LLC (Peak Technologies) First lien senior secured loan 11.06% (S + 6.25%) 7/22/2027  34,912   33,807   34,651   5.8%
         34,912   33,807   34,651   5.8%
Specialty retail                      
Sundance Holdings Group, LLC (6) First lien senior secured loan 10.99% (L + 6.00%) 5/1/2024  8,681   8,523   8,594   1.4%
         8,681   8,523   8,594   1.4%
Textiles, apparel & luxury goods                      
American Soccer Company,
Incorporated (SCORE)		 First lien senior secured revolving loan 11.29% (S + 6.50%) 7/20/2027  2,365   2,273   2,365   0.4%
  First lien senior secured loan 11.55% (S + 6.50%) 7/20/2027  30,043   29,439   30,043   5.0%
BEL USA, LLC First lien senior secured loan 11.11% (S + 6.25%) 2/2/2025  113   112   112   0.0%
  First lien senior secured loan 11.11% (S + 6.25%) 2/2/2025  6,849   6,803   6,781   1.1%
YS Garments, LLC First lien senior secured loan 10.33% (L + 5.50%) 8/9/2026  7,649   7,423   7,649   1.3%
         47,019   46,050   46,950   7.8%
Trading companies & distributors                      
BCDI Meteor Acquisition, LLC (Meteor) First lien senior secured loan 11.91% (S + 7.00%) 6/29/2028  16,420   16,030   16,420   2.8%
Broder Bros., Co. First lien senior secured loan 11.16% (L + 6.00%) 12/4/2025  4,732   4,450   4,732   0.8%
CGI Automated Manufacturing, LLC First lien senior secured delayed draw loan 12.16% (S + 7.00%) 12/17/2026  3,686   3,552   3,686   0.6%
  First lien senior secured loan 12.16% (S + 7.00%) 12/17/2026  27,719   26,723   27,719   4.6%
  First lien senior secured revolving loan 12.15% (S + 7.00%) 12/17/2026  1,087   982   1,087   0.2%
EIS Legacy, LLC First lien senior secured delayed draw loan 9.95% (L + 5.00%) 5/1/2023  -   -   -   0.0%
  First lien senior secured revolving loan 9.95% (L + 5.00%) 11/1/2027  -   -   -   0.0%
  First lien senior secured loan 9.95% (L + 5.00%) 11/1/2027  18,231   17,861   18,231   3.1%
Engineered Fastener Company, LLC (EFC International) First lien senior secured loan 11.56% (S + 6.50%) 11/1/2027  23,782   23,197   23,782   4.0%
Genuine Cable Group, LLC First lien senior secured loan 10.41% (S + 5.50%) 11/1/2026  34,825   33,723   34,215   5.7%
I.D. Images Acquisition, LLC First lien senior secured loan 11.30% (S + 6.25%) 7/30/2026  15,375   15,210   15,375   2.6%
  First lien senior secured loan 11.16% (S + 6.25%) 7/30/2026  4,731   4,647   4,731   0.8%
  First lien senior secured delayed draw loan 11.30% (S + 6.25%) 7/30/2026  2,601   2,582   2,601   0.4%
  First lien senior secured revolving loan 11.16% (S + 6.25%) 7/30/2026  192   164   192   0.0%
Krayden Holdings, Inc. First lien senior secured delayed draw loan 11.00% (S + 6.00%) 3/1/2025  -   -   -   0.0%
  First lien senior secured delayed draw loan 11.00% (S + 6.00%) 3/1/2025  -   -   -   0.0%
  First lien senior secured revolving loan 11.00% (S + 6.00%) 3/1/2029  -   -   -   0.0%
  First lien senior secured loan 11.00% (S + 6.00%) 3/1/2029  9,563   9,117   9,563   1.6%
United Safety & Survivability Corporation (USSC) First lien senior secured delayed draw loan 11.63% (S + 6.75%) 9/30/2027  668   629   661   0.1%
  First lien senior secured revolving loan 11.66% (S + 6.75%) 9/30/2027  1,075   1,052   1,064   0.2%
  First lien senior secured loan 11.80% (S + 6.75%) 9/30/2027  12,531   12,315   12,406   2.1%
         177,218   172,234   176,465   29.6%
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured loan 11.04% (S + 6.00%) 8/10/2027  15,060   14,797   14,909   2.5%
  First lien senior secured loan 10.95% (S + 6.00%) 8/10/2027  1,028   1,000   1,018   0.2%
  First lien senior secured delayed draw loan 11.04% (S + 6.00%) 8/10/2027  7,098   6,988   7,027   1.2%
  First lien senior secured delayed draw loan 10.95% (S + 6.00%) 8/10/2027  6,249   6,140   6,187   1.0%
  First lien senior secured revolving loan 11.04% (S + 6.00%) 8/10/2027  -   -   -   0.0%
         29,435   28,925   29,141   4.9%
Total Private Credit Debt Investments        1,255,729   1,230,654   1,247,020   209.4%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30, 2022March 31, 2023

(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) 
OMH-HealthEdge Holdings, LLC First lien senior secured loan 10.03% (L + 5.25%) 10/24/2025  12,281   12,063   12,281   2.3%
  First lien senior secured loan 10.03% (L + 5.25%) 10/24/2025  5,336   5,233   5,336   1.0%
SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 8.37% (S + 6.00%) 12/30/2026  11,164   10,958   11,164   2.1%
  First lien senior secured loan 8.37% (S + 6.00%) 12/30/2026  11,978   11,742   11,978   2.3%
  First lien senior secured revolving loan 8.37% (S + 6.00%) 12/30/2026  -   -   -   0.0%
         105,383   103,812   105,222   20.1%
Household durables                      
Curio Brands, LLC First lien senior secured delayed draw loan 8.57% (L + 5.50%) 12/21/2023  3,296   3,296   3,230   0.6%
  First lien senior secured revolving loan 8.57% (L + 5.50%) 12/21/2027  -   -   -   0.0%
  First lien senior secured loan 9.17% (L + 5.50%) 12/21/2027  18,054   17,623   17,693   3.4%
         21,350   20,919   20,923   4.0%
Household products                      
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured revolving loan 7.56% (L + 4.75%) 11/8/2026  -   -   -   0.0%
  First lien senior secured loan 7.56% (L + 4.75%) 11/8/2026  20,253   19,876   20,253   3.9%
         20,253   19,876   20,253   3.9%
Insurance                      
Allcat Claims Service, LLC First lien senior secured delayed draw loan 8.61% (S + 6.00%) 7/7/2027  5,409   5,128   5,409   1.0%
  First lien senior secured revolving loan 8.75% (S + 6.00%) 7/7/2027  -   -   -   0.0%
  First lien senior secured loan 8.75% (S + 6.00%) 7/7/2027  7,815   7,591   7,815   1.5%
         13,224   12,719   13,224   2.5%
IT services                      
Improving Acquisition LLC First lien senior secured revolving loan 8.84% (L + 5.50%) 7/26/2024  -   -   -   0.0%
  First lien senior secured loan 8.84% (L + 5.50%) 7/26/2024  26,112   25,557   26,112   5.0%
         26,112   25,557   26,112   5.0%
Leisure products                      
MacNeill Pride Group First lien senior secured delayed draw loan 10.06% (S + 6.25%) 4/22/2026  1,946   1,926   1,946   0.4%
  First lien senior secured delayed draw loan 10.06% (S + 6.25%) 4/30/2024  2,184   2,141   2,184   0.4%
  First lien senior secured loan 10.06% (S + 6.25%) 4/22/2026  8,641   8,551   8,641   1.6%
  First lien senior secured revolving loan 10.06% (S + 6.25%) 4/22/2026  1,378   1,353   1,378   0.3%
  Number of
Units		  Cost  Fair Value  Percentage
of Net Assets		 
Equity Investments            
Auto components            
Vehicle Accessories, Inc. - Class A common (8)  128.250   -   75   0.0%
Vehicle Accessories, Inc. - preferred (8)  250.000   250   274   0.1%
   378.250   250   349   0.1%
Commercial services & supplies                
American Equipment Holdings LLC (9)  250.000   250   247   0.1%
BLP Buyer, Inc. (Bishop Lifting Products) - Class A common (10)  500.000   500   788   0.1%
   750.000   750   1,035   0.2%
Food products                
BC CS 2, L.P. (Cuisine Solutions) (5)  2,000.000   2,000   2,337   0.4%
Gulf Pacific Holdings, LLC - Class A common (9)  0.250   250   277   0.0%
Gulf Pacific Holdings, LLC - Class C common (9)  0.250   -   -   0.0%
IF&P Foods, LLC (FreshEdge) - Class A common (9)  0.750   750   742   0.1%
IF&P Foods, LLC (FreshEdge) - Class B common (9)  0.750   -   -   0.0%
Siegel Parent, LLC (11)  0.250   250   347   0.1%
   2,002.250   3,250   3,703   0.6%
Healthcare equipment & supplies                
LSL Industries, LLC (LSL Healthcare) (9)  7.500   750   742   0.1%
   7.500   750   742   0.1%
IT services                
Domain Information Services Inc. (Integris)  250.000   250   250   0.0%
   250.000   250   250   0.0%
Textiles, apparel & luxury goods                
American Soccer Company, Incorporated (SCORE) (11)  1,000.000   1,000   1,260   0.2%
   1,000.000   1,000   1,260   0.2%
Total Private Equity Investments  4,388.000   6,250   7,339   1.2%
                 
Total Private Investments      1,236,904   1,254,359   210.6%

  Number of
Shares		  Cost  Fair Value  Percentage
of Net Assets		 
Short-Term Investments            
First American Treasury Obligations Fund - Institutional Class Z, 4.66% (12)  15,192   15,192   15,192   2.6%
Total Short-Term Investments  15,192   15,192   15,192   2.6%
                 
Total Investments     $1,252,096  $1,269,551   213.2%
                 
Liabilities in Excess of Other Assets          (674,038)  (113.2)%
Net Assets         $595,513   100.0%

(1)As of March 31, 2023, 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.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of March 31, 2023

(amounts in 000’s)

(Unaudited)

(3)As of March 31, 2023, 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 or “P”).

(5)Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940.  The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of March 31, 2023, 5.5% of the Company’s total assets were in non-qualifying investments.

(6)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.

(7)On December 5, 2022, the Company funded a $6,254 first lien senior secured loan in Light Wave Dental Management LLC. The loan has a minimum of 1.3x MOIC (multiple on invested capital) if the loan is repaid prior to June 6, 2023 with further increases above 1.3x thereafter.  The interest and the repayment premium are payable to the Company upon a triggering event or maturity in September 2023.

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

(9)The Company owns 71% of a pass-through, taxable limited liability company, KSCF IV Equity Aggregator Blocker, LLC (the “Aggregator Blocker”), which holds the Company’s equity investments in American Equipment Holdings LLC, Gulf Pacific Holdings, LLC, IF&P Foods, LLC (FreshEdge) and LSL Industries, LLC (LSL Healthcare). Through the Company’s ownership of the Aggregator Blocker, the Company owns the respective units of each company listed above in the Schedule of Investments.

(10)The Company owns 0.53% of the common equity BLP Buyer, Inc. (Bishop Lifting Products).

(11)The Company owns 40% of a pass-through limited liability company, KSCF IV Equity Aggregator, LLC (the “Aggregator”), which holds the Company’s equity investments in Siegel Parent, LLC and American Soccer Company, Incorporated (SCORE).  The Aggregator’s ownership of Siegel Parent, LLC is 1.1442%.  Through the Company’s ownership of the Aggregator, the Company owns the respective units of each company listed above in the Schedule of Investments.

(12)The indicated rate is the yield as of March 31, 2023.

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30,December 31, 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)
Trademark Global LLC First lien senior secured delayed draw loan 9.37% (L + 6.25%) 7/30/2023  -   -   -   0.0%
  First lien senior secured revolving loan 9.37% (L + 6.25%) 7/30/2024  2,880   2,862   2,686   0.5%
  First lien senior secured loan 9.37% (L + 6.25%) 7/30/2024  11,423   11,345   10,652   2.0%
         28,452   28,178   27,487   5.2%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 10.06% (S + 6.25%) 3/6/2025  2,014   1,995   2,014   0.4%
PVI Holdings, Inc First lien senior secured loan 10.12% (S + 6.38%) 7/18/2027  24,198   23,824   24,198   4.6%
         26,212   25,819   26,212   5.0%
Personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured revolving loan 8.87% (L + 5.75%) 11/1/2025  -   -   -   0.0%
  First lien senior secured loan 8.87% (L + 5.75%) 11/1/2025  11,775   11,685   11,539   2.2%
PH Beauty Holdings III, Inc. First lien senior secured loan 8.07% (L + 5.00%) 9/28/2025  9,567   9,278   9,280   1.8%
         21,342   20,963   20,819   4.0%
Pharmaceuticals                  
Foundation Consumer Brands First lien senior secured revolving loan 8.43% (L + 5.50%) 2/12/2027  -   -   -   0.0%
  First lien senior secured loan 8.43% (L + 5.50%) 2/12/2027  7,485   7,427   7,485   1.4%
         7,485   7,427   7,485   1.4%
Professional services                      
4 Over International, LLC First lien senior secured loan 9.67% (L + 6.00%) 12/7/2023  2,463   2,415   2,462   0.5%
  First lien senior secured loan 9.67% (L + 6.00%) 12/7/2023  22,001   21,649   22,001   4.2%
         24,464   24,064   24,463   4.7%
Software                      
AIDC Intermediate Co 2, LLC (Peak Technologies) First lien senior secured loan 8.91% (S + 6.40%) 7/22/2027  35,000   33,794   35,000   6.7%
         35,000   33,794   35,000   6.7%
Specialty retail                      
Sundance Holdings Group, LLC (5) First lien senior secured loan 8.11% (L + 6.00%) 5/1/2024  8,807   8,576   8,807   1.7%
         8,807   8,576   8,807   1.7%
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt and Equity Investments                      
Private Credit Investments(4)                      
Aerospace & defense                      
Basel U.S. Acquisition Co., Inc. (IAC) (5) First lien senior secured revolving loan 11.10% (S + 6.50%) 12/5/2028 $-  $-  $-   0.0%
  First lien senior secured loan 11.10% (S + 6.50%) 12/5/2028  18,681   18,180   18,681   3.1%
Fastener Distribution Holdings, LLC First lien senior secured delayed draw loan 11.73% (S + 7.00%) 4/1/2024  2,362   2,293   2,362   0.4%
  First lien senior secured loan 11.73% (S + 7.00%) 4/1/2024  20,701   20,347   20,701   3.5%
Precinmac (US) Holdings, Inc. First lien senior secured delayed draw loan 10.42% (S + 6.00%) 8/31/2027  1,113   1,094   1,096   0.2%
  First lien senior secured loan 10.42% (S + 6.00%) 8/31/2027  5,408   5,315   5,326   0.9%
         48,265   47,229   48,166   8.1%
Asset management & custody banks                      
Atria Wealth Solutions, Inc. First lien senior secured delayed draw loan 10.84% (S + 6.00%) 2/29/2024  232   202   228   0.0%
  First lien senior secured loan 10.84% (S + 6.00%) 2/29/2024  5,139   5,101   5,036   0.9%
         5,371   5,303   5,264   0.9%
Auto components                      
Speedstar Holding LLC First lien senior secured loan 11.73% (L + 7.00%) 1/22/2027  4,908   4,828   4,908   0.8%
Vehicle Accessories, Inc. First lien senior secured revolving loan 12.00% (P + 4.50%) 11/30/2026  -   -   -   0.0%
  First lien senior secured loan 10.34% (S + 5.50%) 11/30/2026  21,225   20,898   21,066   3.6%
         26,133   25,726   25,974   4.4%
Biotechnology                      
Alcami Corporation (Alcami) First lien senior secured delayed draw loan 11.42% (S + 7.00%) 6/30/2024  -   -   -   0.0%
  First lien senior secured revolving loan 11.42% (S + 7.00%) 12/21/2028  -   -   -   0.0%
  First lien senior secured loan 11.42% (S + 7.00%) 12/21/2028  11,735   11,237   11,618   2.0%
         11,735   11,237   11,618   2.0%
Building products                      
BCI Burke Holding Corp. First lien senior secured delayed draw loan 9.70% (L + 5.50%) 12/14/2023  639   615   642   0.1%
  First lien senior secured loan 10.23% (L + 5.50%) 12/14/2027  16,489   16,256   16,572   2.8%
  First lien senior secured revolving loan 10.23% (L + 5.50%) 6/14/2027  -   -   -   0.0%
Eastern Wholesale Fence First lien senior secured revolving loan 11.73% (L + 7.00%) 10/30/2025  1,275   1,252   1,275   0.2%
  First lien senior secured loan 11.73% (L + 7.00%) 10/30/2025  21,239   20,778   21,239   3.6%
         39,642   38,901   39,728   6.7%
Chemicals                      
Cyalume Technologies Holdings, Inc. First lien senior secured loan 9.73% (L + 5.00%) 8/30/2024  1,274   1,266   1,274   0.2%
Fralock Buyer LLC First lien senior secured revolving loan 10.23% (L + 5.50%) 4/17/2024  -   -   -   0.0%
  First lien senior secured loan 10.23% (L + 5.50%) 4/17/2024  11,679   11,560   11,621   2.0%
Schrieve Chemical Company, LLC First lien senior secured loan 10.33% (L + 6.00%) 12/2/2024  609   597   609   0.1%
USALCO, LLC First lien senior secured revolving loan 10.38% (L + 6.00%) 10/19/2026  1,081   1,042   1,070   0.2%
  First lien senior secured loan 10.73% (L + 6.00%) 10/19/2027  19,181   18,792   18,989   3.2%
         33,824   33,257   33,563   5.7%
Commercial services & supplies                      
Advanced Environmental Monitoring (6) First lien senior secured loan 11.68% (S + 7.00%) 1/29/2026  10,158   9,918   10,158   1.7%
Allentown, LLC First lien senior secured delayed draw loan 10.42% (S + 6.00%) 10/22/2023  -   -   -   0.0%
  First lien senior secured revolving loan 12.50% (P + 5.00%) 4/22/2027  357   348   347   0.1%
  First lien senior secured loan 10.42% (S + 6.00%) 4/22/2027  7,663   7,588   7,452   1.3%
American Equipment Holdings LLC First lien senior secured delayed draw loan 10.88% (S + 6.00%) 11/5/2026  6,303   6,202   6,303   1.1%
  First lien senior secured revolving loan 10.45% (S + 6.00%) 11/5/2026  1,610   1,559   1,610   0.3%
  First lien senior secured delayed draw loan 9.33% (S + 6.00%) 11/5/2026  3,670   3,594   3,670   0.6%
  First lien senior secured loan 10.51% (S + 6.00%) 11/5/2026  2,107   2,072   2,107   0.3%
  First lien senior secured loan 10.88% (S + 6.00%) 11/5/2026  18,142   17,853   18,142   3.1%
Arborworks Acquisition LLC First lien senior secured revolving loan 11.41% (L + 7.00%) 11/9/2026  3,125   3,053   2,750   0.5%
  First lien senior secured loan 11.56% (L + 7.00%) 11/9/2026  19,855   19,533   17,473   2.9%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured revolving loan 10.67% (S + 6.25%) 2/1/2027  604   577   596   0.1%
  First lien senior secured loan 10.21% (S + 6.50%) 2/1/2027  6,176   6,027   6,099   1.0%
  First lien senior secured loan 10.49% (S + 6.25%) 2/1/2027  16,372   16,097   16,168   2.7%
Gusmer Enterprises, Inc. First lien senior secured delayed draw loan 11.44% (S + 7.00%) 5/7/2027  8,032   7,891   8,032   1.4%
  First lien senior secured revolving loan 11.43% (S + 7.00%) 5/7/2027  -   -   -   0.0%
  First lien senior secured loan 11.43% (S + 7.00%) 5/7/2027  4,795   4,647   4,795   0.8%
PMFC Holding, LLC First lien senior secured delayed draw loan 10.88% (L + 6.50%) 7/31/2023  2,818   2,811   2,818   0.5%
  First lien senior secured loan 10.88% (L + 6.50%) 7/31/2023  5,619   5,604   5,619   0.9%
  First lien senior secured revolving loan 11.18% (L + 6.50%) 7/31/2023  342   342   342   0.1%
Regiment Security Partners LLC First lien senior secured delayed draw loan 12.66% (S + 8.00%) 9/15/2023  2,635   2,593   2,635   0.4%
  First lien senior secured loan 12.66% (S + 8.00%) 9/15/2026  6,461   6,358   6,461   1.1%
  First lien senior secured revolving loan 12.66% (S + 8.00%) 9/15/2026  1,345   1,320   1,345   0.2%
The Kleinfelder Group, Inc. First lien senior secured loan 9.98% (L + 5.25%) 11/30/2024  12,760   12,678   12,697   2.1%
         140,949   138,665   137,619   23.2%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30,December 31, 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) 
Textiles, apparel & luxury goods 
American Soccer Company, Incorporated (SCORE) First lien senior secured revolving loan 10.95% (S + 7.25%) 7/20/2027  709   607   709   0.1%
  First lien senior secured loan 10.95% (S + 7.25%) 7/20/2027  30,195   29,530   30,195   5.8%
BEL USA, LLC First lien senior secured loan 9.37% (S + 6.25%) 2/2/2025  114   113   112   0.0%
  First lien senior secured loan 9.37% (S + 6.25%) 2/2/2025  6,911   6,840   6,773   1.3%
YS Garments, LLC First lien senior secured loan 7.98% (L + 5.50%) 8/9/2024  7,764   7,652   7,764   1.5%
         45,693   44,742   45,553   8.7%
Trading companies & distributors                      
Broder Bros., Co. First lien senior secured loan 9.60% (L + 6.00%) 12/4/2025  4,793   4,737   4,793   0.9%
CGI Automated Manufacturing, LLC First lien senior secured delayed draw loan 10.31% (S + 6.50%) 12/17/2026  3,733   3,585   3,733   0.7%
  First lien senior secured loan 10.31% (S + 6.50%) 12/17/2026  3,273   3,145   3,273   0.6%
  First lien senior secured loan 10.31% (S + 6.50%) 12/17/2026  6,896   6,726   6,896   1.3%
  First lien senior secured revolving loan 10.31% (S + 6.50%) 12/17/2026  -   -   -   0.0%
  First lien senior secured loan 10.31% (S + 6.50%) 12/17/2026  17,904   17,084   17,904   3.4%
EIS Legacy, LLC First lien senior secured delayed draw loan 8.07% (L + 5.00%) 5/1/2023  -   -   -   0.0%
  First lien senior secured revolving loan 8.07% (L + 5.00%) 11/1/2027  -   -   -   0.0%
  First lien senior secured loan 8.07% (L + 5.00%) 11/1/2027  18,323   17,913   18,323   3.5%
Genuine Cable Group, LLC First lien senior secured loan 8.88% (S + 5.75%) 11/1/2026  29,425   28,411   29,425   5.6%
I.D. Images Acquisition, LLC First lien senior secured loan 9.67% (L + 6.00%) 7/30/2026  8,348   8,227   8,348   1.6%
  First lien senior secured loan 9.67% (L + 6.00%) 7/30/2026  1,097   1,081   1,097   0.2%
  First lien senior secured delayed draw loan 9.67% (L + 6.00%) 7/30/2026  2,614   2,593   2,614   0.5%
  First lien senior secured revolving loan 9.37% (L + 6.25%) 7/30/2026  848   820   848   0.2%
  First lien senior secured loan 9.67% (L + 6.00%) 7/30/2026  6,008   5,959   6,008   1.2%
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Containers & packaging                      
Drew Foam Companies, Inc. First lien senior secured loan 11.48% (S + 6.75%) 11/5/2025  7,375   7,288   7,375   1.2%
  First lien senior secured loan 10.89% (S + 6.75%) 11/5/2025  20,964   20,564   20,964   3.6%
FCA, LLC (FCA Packaging) First lien senior secured revolving loan 9.46% (S + 6.50%) 7/18/2028  -   -   -   0.0%
  First lien senior secured loan 9.46% (S + 6.50%) 7/18/2028  23,382   23,004   23,616   4.0%
         51,721   50,856   51,955   8.8%
Diversified telecommunication services                      
Network Connex (f/k/a NTI Connect, LLC) First lien senior secured loan 9.48% (S + 4.75%) 11/30/2024  5,249   5,187   5,249   0.9%
Pavion Corp., f/k/a Corbett Technology Solutions, Inc. First lien senior secured revolving loan 9.14% (S + 5.00%) 10/29/2027  572   442   563   0.1%
  First lien senior secured delayed draw loan 9.66% (S + 5.00%) 10/29/2027  9,434   9,354   9,293   1.6%
  First lien senior secured loan 9.58% (S + 5.00%) 10/29/2027  1,742   1,727   1,716   0.3%
  First lien senior secured loan 9.24% (S + 5.00%) 10/29/2027  13,429   13,188   13,227   2.2%
         30,426   29,898   30,048   5.1%
Electronic equipment, instruments & components                      
Process Insights, Inc. First lien senior secured loan 10.49% (S + 6.00%) 10/30/2025  3,044   2,993   3,021   0.5%
         3,044   2,993   3,021   0.5%
Food products                      
BC CS 2, L.P. (Cuisine Solutions) (5) First lien senior secured loan 12.18% (S + 8.00%) 7/8/2028  25,000   24,283   25,000   4.2%
BR PJK Produce, LLC (Keany) First lien senior secured loan 10.47% (S + 6.25%) 11/14/2027  29,863   29,095   29,863   5.0%
  First lien senior secured delayed draw loan 10.47% (S + 6.25%) 5/14/2024  -   -   -   0.0%
Gulf Pacific Holdings, LLC First lien senior secured delayed draw loan 10.73% (S + 6.00%) 9/30/2024  -   -   -   0.0%
  First lien senior secured revolving loan 10.42% (S + 6.00%) 9/30/2028  1,498   1,384   1,498   0.3%
  First lien senior secured loan 10.73% (S + 6.00%) 9/30/2028  20,384   19,905   20,384   3.5%
IF&P Foods, LLC (FreshEdge) (6) First lien senior secured delayed draw loan 8.91% (S + 5.25%) 10/3/2024  -   -   -   0.0%
  First lien senior secured revolving loan 8.91% (S + 5.25%) 10/3/2028  1,366   1,187   1,366   0.2%
  First lien senior secured loan 8.91% (S + 5.25%) 10/3/2028  27,520   26,853   27,520   4.7%
Siegel Egg Co., LLC First lien senior secured revolving loan 9.25% (L + 5.50%) 12/29/2026  1,923   1,873   1,913   0.3%
  First lien senior secured loan 9.25% (L + 5.50%) 12/29/2026  15,624   15,383   15,546   2.6%
         123,178   119,963   123,090   20.8%
Health care providers & services                      
Brightview, LLC First lien senior secured delayed draw loan 10.14% (L + 5.75%) 12/14/2026  1,736   1,714   1,719   0.3%
  First lien senior secured revolving loan 10.13% (L + 5.75%) 12/14/2026  -   -   -   0.0%
  First lien senior secured loan 10.13% (L + 5.75%) 12/14/2026  13,002   12,923   12,872   2.2%
Guardian Dentistry Partners First lien senior secured delayed draw loan 10.94% (S + 6.50%) 8/20/2026  21,708   21,402   21,708   3.7%
  First lien senior secured loan 10.94% (S + 6.50%) 8/20/2026  8,139   7,961   8,139   1.4%
Light Wave Dental Management LLC First lien senior secured delayed draw loan 11.32% (S + 6.50%) 12/31/2023  9,559   9,437   9,559   1.6%
  First lien senior secured loan (7) 30.00% 9/30/2023  6,254   6,254   6,254   1.0%
  First lien senior secured revolving loan 11.32% (S + 6.50%) 12/31/2023  558   555   558   0.1%
  First lien senior secured loan 11.32% (S + 6.50%) 12/31/2023  12,941   12,851   12,941   2.1%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 10.03% (L + 5.25%) 10/24/2025  17,572   17,271   17,572   3.0%
SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 9.93% (S + 6.00%) 12/30/2026  11,136   10,941   11,136   1.9%
  First lien senior secured loan 9.93% (S + 6.00%) 12/30/2026  11,948   11,725   11,948   2.0%
  First lien senior secured revolving loan 9.93% (S + 6.00%) 12/30/2026  -   -   -   0.0%
         114,553   113,034   114,406   19.3%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30,December 31, 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) 
Refrigeration Sales Corp. First lien senior secured loan 10.11% (L + 6.50%) 6/22/2026  6,893   6,800   6,893   1.3%
United Safety & Survivability Corporation (USSC) First lien senior secured delayed draw loan 9.17% (L + 6.25%) 9/30/2023  -   -   -   0.0%
  First lien senior secured revolving loan 9.17% (L + 6.25%) 9/30/2027  1,138   1,119   1,127   0.2%
  First lien senior secured loan 9.92% (L + 6.25%) 9/30/2027  12,595   12,380   12,469   2.4%
         123,888   120,580   123,751   23.6%
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured loan 9.12% (S + 6.00%) 8/10/2027  9,196   9,033   9,196   1.7%
  First lien senior secured delayed draw loan 9.12% (S + 6.00%) 8/10/2027  7,134   7,012   7,134   1.4%
  First lien senior secured delayed draw loan 9.12% (S + 6.00%) 8/10/2023  1,408   1,336   1,408   0.3%
  First lien senior secured revolving loan 9.12% (S + 6.00%) 8/10/2027  -   -   -   0.0%
  First lien senior secured loan 9.12% (S + 6.00%) 8/10/2027  5,940   5,811   5,940   1.1%
         23,678   23,192   23,678   4.5%
Total Private Credit Debt Investments        963,685   944,579   958,906   183.2%

  Number of
Units		  Cost  Fair
Value		  Percentage
of Net Assets		 
Equity Investments            
Auto components            
Vehicle Accessories, Inc. - Class A common (7)  128.250   -   -   0.0%
Vehicle Accessories, Inc. - preferred (7)  250.000   250   262   0.1%
   378.250   250   262   0.1%
Commercial services & supplies                
American Equipment Holdings LLC  250.000   250   248   0.0%
BLP Buyer, Inc. (Bishop Lifting Products) - Class A common (8)  500.000   500   625   0.1%
   750.000   750   873   0.1%
Food products                
BC CS 2, L.P. (Cuisine Solutions)(6)  2,000.000   2,000   2,260   0.4%
Gulf Pacific Holdings, LLC – Class A common  250.000   250   248   0.0%
Gulf Pacific Holdings, LLC. - Class C common  250.000   -   -   0.0%
                 
Siegel Parent, LLC (9)  0.250   250   495   0.1%
   2,500.250   2,500   3,003   0.5%
Textiles, apparel & luxury goods                
American Soccer Company, Incorporated (SCORE)  1,000.000   1,000   990   0.2%
   1,000.000   1,000   990   0.2%
Total Private Equity Investments  4,628.500   4,500   5,128   0.9%
                 
Total Private Investments      949,079   964,034   184.1%
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Healthcare equipment & supplies                  
LSL Industries, LLC (LSL Healthcare) First lien senior secured delayed draw loan 10.90% (S + 6.50%) 11/3/2024  -   -   -   0.0%
  First lien senior secured revolving loan 10.90% (S + 6.50%) 11/3/2027  -   -   -   0.0%
  First lien senior secured loan 10.90% (S + 6.50%) 11/3/2027  19,727   19,001   19,727   3.3%
         19,727   19,001   19,727   3.3%
Household durables                      
Curio Brands, LLC First lien senior secured delayed draw loan 10.23% (L + 5.50%) 12/21/2027  3,296   3,296   3,230   0.5%
  First lien senior secured revolving loan 10.23% (L + 5.50%) 12/21/2027  -   -   -   0.0%
  First lien senior secured loan 10.23% (L + 5.50%) 12/21/2027  18,009   17,596   17,648   3.0%
         21,305   20,892   20,878   3.5%
Household products                      
Home Brands Group Holdings, Inc. (ReBath) First lien senior secured revolving loan 9.16% (L + 4.75%) 11/8/2026  -   -   -   0.0%
  First lien senior secured loan 9.16% (L + 4.75%) 11/8/2026  19,046   18,706   18,951   3.2%
         19,046   18,706   18,951   3.2%
Insurance                      
Allcat Claims Service, LLC First lien senior secured delayed draw loan 10.24% (S + 6.00%) 7/7/2027  5,396   5,127   5,396   0.9%
  First lien senior secured revolving loan 10.33% (S + 6.00%) 7/7/2027  1,651   1,591   1,651   0.3%
  First lien senior secured loan 10.41% (S + 6.00%) 7/7/2027  7,795   7,641   7,795   1.3%
         14,842   14,359   14,842   2.5%
IT services                      
Domain Information Services Inc. (Integris) First lien senior secured loan 10.63% (S + 6.25%) 9/30/2025  20,632   20,133   20,632   3.5%
Improving Acquisition LLC First lien senior secured revolving loan 10.24% (S + 6.00%) 7/26/2027  -   -   -   0.0%
  First lien senior secured loan 10.24% (S + 6.00%) 7/26/2027  24,260   23,754   24,260   4.1%
         44,892   43,887   44,892   7.6%
Leisure products                      
MacNeill Pride Group First lien senior secured delayed draw loan 11.09% (S + 6.25%) 4/22/2026  4,119   4,061   4,017   0.7%
  First lien senior secured loan 11.09% (S + 6.25%) 4/22/2026  8,619   8,533   8,403   1.4%
  First lien senior secured revolving loan 11.09% (S + 6.25%) 4/22/2026  899   874   877   0.1%
Trademark Global LLC First lien senior secured revolving loan 11.88% (L + 7.50%), 4.50% is PIK 7/30/2024  2,760   2,744   2,574   0.4%
  First lien senior secured revolving loan 11.88% (L + 7.50%), 4.50% is PIK 7/30/2024  29   21   27   0.1%
  First lien senior secured loan 11.88% (L + 7.50%), 4.50% is PIK 7/30/2024  11,516   11,451   10,739   1.8%
         27,942   27,684   26,637   4.5%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 11.09% (S + 6.25%) 3/6/2027  2,009   1,991   2,009   0.3%
PVI Holdings, Inc First lien senior secured loan 10.12% (S + 6.38%) 7/18/2027  24,124   23,763   24,124   4.1%
         26,133   25,754   26,133   4.4%
Personal products                      
DRS Holdings III, Inc. (Dr. Scholl’s) First lien senior secured revolving loan 10.48% (L + 5.75%) 11/1/2025  -   -   -   0.0%
  First lien senior secured loan 10.48% (L + 5.75%) 11/1/2025  11,377   11,295   11,149   1.9%
PH Beauty Holdings III, Inc. First lien senior secured loan 9.73% (L + 5.00%) 9/28/2025  9,542   9,277   9,113   1.5%
         20,919   20,572   20,262   3.4%
Pharmaceuticals                      
Foundation Consumer Brands First lien senior secured revolving loan 10.15% (L + 5.50%) 2/12/2027  -   -   -   0.0%
  First lien senior secured loan 10.15% (L + 5.50%) 2/12/2027  7,331   7,276   7,331   1.2%
         7,331   7,276   7,331   1.2%

 

See accompanying notes to consolidated financial statements.

 


 

 

Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of September 30,December 31, 2022

(amounts in 000’s)

(Unaudited)

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Professional services                      
4 Over International, LLC First lien senior secured loan 10.73% (L + 6.00%) 12/7/2023  24,326   24,013   24,205   4.1%
DISA Holdings Corp. (DISA) First lien senior secured delayed draw loan 9.73% (S + 5.50%) 9/9/2028  2,443   2,283   2,430   0.4%
  First lien senior secured revolving loan 9.82% (S + 5.50%) 9/9/2028  56   1   56   0.0%
  First lien senior secured loan 9.72% (S + 5.50%) 9/9/2028  22,401   21,741   22,289   3.8%
Universal Marine Medical Supply International, LLC (Unimed) First lien senior secured revolving loan 12.14% (S + 7.50%) 12/5/2027  509   446   509   0.1%
  First lien senior secured loan 12.10% (S + 7.50%) 12/5/2027  14,756   14,395   14,756   2.5%
         64,491   62,879   64,245   10.9%
Software                      
AIDC Intermediate Co 2, LLC (Peak Technologies) First lien senior secured loan 10.44% (S + 6.25%) 7/22/2027  35,000   33,835   35,000   5.9%
         35,000   33,835   35,000   5.9%
Specialty retail                      
Sundance Holdings Group, LLC (6) First lien senior secured loan 10.73% (L + 6.00%) 5/1/2024  8,743   8,548   8,656   1.5%
         8,743   8,548   8,656   1.5%
Textiles, apparel & luxury goods                      
American Soccer Company, Incorporated (SCORE) First lien senior secured revolving loan 11.91% (S + 7.25%) 7/20/2027  1,892   1,795   1,892   0.3%
  First lien senior secured loan 11.98% (S + 7.25%) 7/20/2027  30,119   29,478   30,119   5.1%
 BEL USA, LLC First lien senior secured loan 10.43% (S + 6.00%) 2/2/2025  7,006   6,937   6,936   1.2%
YS Garments, LLC First lien senior secured loan 9.51% (L + 5.50%) 8/9/2024  7,706   7,608   7,706   1.3%
         46,723   45,818   46,653   7.9%
Trading companies & distributors                      
BCDI Meteor Acquisition, LLC (Meteor) First lien senior secured loan 11.66% (S + 7.00%) 6/29/2028  16,420   16,010   16,420   2.8%
Broder Bros., Co. First lien senior secured loan 10.73% (L + 6.00%) 12/4/2025  4,763   4,456   4,763   0.8%
CGI Automated Manufacturing, LLC First lien senior secured delayed draw loan 11.34% (S + 6.50%) 12/17/2026  3,710   3,566   3,710   0.6%
  First lien senior secured loan 11.34% (S + 6.50%) 12/17/2026  27,896   26,809   27,896   4.7%
  First lien senior secured revolving loan 11.34% (S + 6.50%) 12/17/2026  -   -   -   0.0%
EIS Legacy, LLC First lien senior secured delayed draw loan 9.73% (L + 5.00%) 5/1/2023  -   -   -   0.0%
  First lien senior secured revolving loan 9.73% (L + 5.00%) 11/1/2027  -   -   -   0.0%
  First lien senior secured loan 9.73% (L + 5.00%) 11/1/2027  18,277   17,885   18,140   3.1%
Genuine Cable Group, LLC First lien senior secured loan 10.17% (S + 5.75%) 11/1/2026  34,912   33,732   34,476   5.8%
I.D. Images Acquisition, LLC First lien senior secured loan 10.98% (S + 6.25%) 7/30/2026  15,415   15,236   15,415   2.6%
  First lien senior secured loan 10.67% (S + 6.25%) 7/30/2026  4,743   4,651   4,743   0.8%
  First lien senior secured delayed draw loan 10.98% (S + 6.25%) 7/30/2026  2,608   2,587   2,608   0.4%
  First lien senior secured revolving loan 10.67% (S + 6.25%) 7/30/2026  596   567   596   0.1%
Refrigeration Sales Corp. First lien senior secured loan 11.26% (L + 6.50%) 6/22/2026  6,876   6,789   6,876   1.2%
United Safety & Survivability Corporation (USSC) First lien senior secured delayed draw loan 11.41% (S + 6.75%) 9/30/2027  670   628   670   0.1%
  First lien senior secured revolving loan 10.88% (S + 6.25%) 9/30/2027  1,075   1,051   1,075   0.2%
  First lien senior secured loan 11.48% (S + 6.75%) 9/30/2027  12,563   12,332   12,563   2.1%
         150,524   146,299   149,951   25.3%
Wireless telecommunication services                      
 Centerline Communications, LLC First lien senior secured loan 9.93% (S + 5.50%) 8/10/2027  1,031   1,000   1,026   0.2%
  First lien senior secured delayed draw loan 10.06% (S + 5.50%) 8/10/2027  7,116   6,999   7,080   1.2%
  First lien senior secured delayed draw loan 9.93% (S + 5.50%) 8/10/2027  6,265   6,148   6,233   1.1%
  First lien senior secured revolving loan 10.06% (S + 5.50%) 8/10/2027  -   -   -   0.0%
  First lien senior secured loan 10.06% (S + 5.50%) 8/10/2027  15,098   14,819   15,022   2.5%
         29,510   28,966   29,361   5.0%
Total Private Credit Debt Investments        1,165,969   1,141,538   1,157,971   195.6%

See accompanying notes to consolidated financial statements.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

  Number of     Fair  Percentage 
  Units  Cost  Value  of Net Assets 
Equity Investments            
Auto components            
Vehicle Accessories, Inc. - Class A common (8)  128.250   -   80   0.0%
Vehicle Accessories, Inc. - preferred (8)  250.000   250   268   0.1%
   378.250   250   348   0.1%
Commercial services & supplies                
American Equipment Holdings LLC (9)  250.000   250   248   0.0%
BLP Buyer, Inc. (Bishop Lifting Products) - Class A common (10)  500.000   500   560   0.1%
   750.000   750   808   0.1%
Food products                
BC CS 2, L.P. (Cuisine Solutions) (5)  2,000.000   2,000   2,220   0.4%
IF&P Foods, LLC (FreshEdge) – Class A common (9)  0.750   750   745   0.1%
IF&P Foods, LLC (FreshEdge) – Class B common (9)  0.750   -   -   0.0%
Gulf Pacific Holdings, LLC - Class A common (9)  0.250   250   278   0.0%
Gulf Pacific Holdings, LLC - Class C common (9)  0.250   -   -   0.0%
Siegel Parent, LLC (11)  0.250   250   496   0.1%
   2,002.250   3,250   3,739   0.6%
Healthcare equipment & supplies                
LSL Industries, LLC (LSL Healthcare) (9)  7.500   750   745   0.1%
   7.500   750   745   0.1%
IT services                
Domain Information Services Inc. (Integris)  250.000   250   250   0.0%
   250.000   250   250   0.0%
Textiles, apparel & luxury goods                
American Soccer Company, Incorporated (SCORE) (11)  1,000.000   1,000   1,258   0.2%
   1,000.000   1,000   1,258   0.2%
Total Private Equity Investments  4,388.000   6,250   7,148   1.1%
                 
Total Private Investments      1,147,788   1,165,119   196.7%

 

 Number of     Fair Percentage  Number of     Fair Percentage 
 Shares Cost Value of Net Assets  Shares Cost Value of Net Assets 
Short-Term Investments                  
First American Treasury Obligations Fund - Institutional Class Z, 2.83% (10)  4,758   4,758   4,758   0.9%
First American Treasury Obligations Fund - Institutional Class Z, 4.16% (12)  9,847   9,847   9,847   1.7%
Total Short-Term Investments  4,758   4,758   4,758   0.9%  9,847   9,847   9,847   1.7%
                                
Total Investments     $953,837  $968,792   185.0%     $1,157,635  $1,174,966   198.4%
                                
Liabilities in Excess of Other Assets          (445,065)  (85.0)%          (582,925)  (98.4)%
Net Assets         $523,727   100.0%         $592,041   100.0%

 

(1)As of September 30,December 31, 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.


Kayne Anderson BDC, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

(3)

As of September 30,December 31, 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 or “P”).
(5)Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2022, 3.8% of the Company’s total assets were in non-qualifying investments.
(6)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-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940.  The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets.  As of September 30, 2022, 2.7% of the Company’s total assets were in non-qualifying investments.
(7)On December 5, 2022, the Company funded a $6,254 first lien senior secured loan in Light Wave Dental Management LLC. The loan has an annual interest rate of 30% with a minimum of 1.3x MOIC (multiple on invested capital) if the loan is repaid prior to June 6, 2023 with further increases above 1.3x thereafter. The interest and the prepayment premium are payable to the Company upon a triggering event or maturity in September 2023.
(8)The Company owns 0.19% of the common equity and 0.43% of the preferred equity of Vehicle Accessories, Inc.
(8)(9)The Company owns 71% of a pass-through, taxable limited liability company, KSCF IV Equity Aggregator Blocker, LLC (the “Aggregator Blocker”), which holds the Company’s equity investments in American Equipment Holdings LLC, Gulf Pacific Holdings, LLC, IF&P Foods, LLC (FreshEdge) and LSL Industries, LLC (LSL Healthcare). Through the Company’s ownership of the Aggregator Blocker, the Company owns the respective units of each company listed above in the Schedule of Investments.
(10)The Company owns 0.53% of the common equity BLP Buyer, Inc. (Bishop Lifting Products).
(9)(11)The Company owns 50%40% of a pass-through LLC,limited liability company, KSCF IV Equity Aggregator, LLC (the “Aggregator”), which holds 500 Class A units of Siegel Parent, LLC. The Aggregator’s ownership ofthe Company’s equity investments in Siegel Parent, LLC is 1.14%. Through the Company’s ownership of the Aggregator, theand American Soccer Company, owns 250 Class A units of Siegel Parent, LLC.
(10)The indicated rate is the yield as of September 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%

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)
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%
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%

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)
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%
                       
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%

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)
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.


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%

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)
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.


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)Incorporated (SCORE).

(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 Athe respective units of Siegel Parent, LLC.each company listed above in the Schedule of Investments.

(7)
(12)The indicated rate is the yield as of December 31, 2021.2022.

See accompanying notes to consolidated financial statements.

 


 

 

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 continue to be treated as and 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 companycorporation 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 September 30, 2022,March 31, 2023, the Company has entered into subscription agreements with investors for an aggregate capital commitment of $808,212$832,342 to purchase shares of the Company’s common stock. 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 AdvisersAdvisory Act of 1940, as amended. 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, determining the value of the investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of sixseven directors, four of whom are independent (including the Board’s chairperson). See Note 11 – Subsequent Events.independent.

 

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. As of March 31, 2023, KABDC Corp, LLC held no investments.

 

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”).

 

In December 2020, the SEC adoptedPursuant to Rule 2a-5 under the 1940 Act, establishing requirements to determine fair value in good faith for purposes of the 1940 Act. Pursuant to Rule 2a-5 and effective September 1, 2022, the Board of Directors has designated the Advisor as the “valuation designee” to perform fair value determinations of the Company’s portfolio holdings, subject to oversight by and periodic reporting to the Board. The valuation designee will performperforms fair valuation of the Company’s portfolio holdings in accordance with the Company’s Valuation Program, as adoptedapproved by the Board. The Advisor’s internal valuation process did not materially change as a result of Rule 2a-5.

 

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 Advisor’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 Advisor, the following valuation process is used for the Company’s Level 3 investments:

 

 ●Valuation Designee. The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time such investment was made. The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio company or investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs to determine a preliminary value. The Advisor will specify the titles of the persons responsible for determining the fair value of Company investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments.

 

 ●Valuation Firm. Quarterly, a third-party valuation firm engaged by the Advisor reviews the valuation methodologies and calculations employed for each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25% of the Company’s remaining investments. The third-party valuation firm will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The quarterly report issued by the third-party valuation firm will provide positive assurance on the fair values of the investments reviewed.

 

 ●Oversight. The Board has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to review the fair value determinations, processes and written reports of the Advisor as part of the Board’s oversight responsibilities.

 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to ourthe Company’s financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on ourthe Company’s 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. As of March 31, 2023 and December 31, 2022, the Company did not have any investments in portfolio companies on non-accrual status.

 

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.

 


 

 

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 of such year, payable to stockholders of record on a date during such months and paid by the Company no later than 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 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. The 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. At this time, it is not possible to predict fully the ultimate outcome of 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. On March 7, 2023, the Board approved a one-year renewal of the Administration Agreement through March 15, 2024.

 

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 On March 7, 2023, the Advisor and its affiliates for the third-party costs incurred on its behalf in connection with the formation and the offering of sharesBoard approved a one-year renewal 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.Investment Advisory Agreement through March 15, 2024.

 

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 September 30,March 31, 2023 and 2022, and 2021, the Company incurred base management fees of $1,908$2,685 and $545, respectively.

For the nine months ended September 30, 2022 and 2021, the Company incurred base management fees of $4,732 and $1,143,$1,326, 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 (subject to the limitations described in “Payment of Incentive Fees” below). The Company’s quarterly pre-incentive fee net investment income must exceed a preferred return of 1.50% of the Company’s net 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 September 30,March 31, 2023, the Company incurred incentive fees on income of $2,138 and no incentive fees on capital gains. For the three months ended March 31, 2022, the Company incurred incentive fees on income of $1,230$953 and no incentive fees on capital gains.

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

For the nine months ended September 30, 2022, the Company incurred incentive fees on incomerealized gains of $2,960 and no incentive fees on capital gains.

For the nine months ended September 30, 2021, the Company did not incur any incentive fee on income or capital gains.$2 (total of $955).

  

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 Warehousing 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 September 30, 2022March 31, 2023 and December 31, 2021:2022.

 

 September 30, 2022  December 31, 2021  March 31, 2023  December 31, 2022 
 Amortized Fair Amortized Fair  Amortized Fair Amortized Fair 
 Cost  Value  Cost  Value  Cost  Value  Cost  Value 
First-lien senior secured debt investments $944,579  $958,906  $566,366  $578,195  $1,230,654  $1,247,020  $1,141,538  $1,157,971 
Equity investments  4,500   5,128   250   250   6,250   7,339   6,250   7,148 
Short-term investments  4,758   4,758   3,674   3,674   15,192   15,192   9,847   9,847 
Total Investments $953,837  $968,792  $570,290  $582,119  $1,252,096  $1,269,551  $1,157,635  $1,174,966 

 

As of September 30,March 31, 2023 and December 31, 2022, $27,260$70,971 and $45,901, respectively, of the Company’s total assets were non-qualifying assets, as defined by Section 55(a) of the 1940 Act. As of 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, theThe 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 September 30, 2022March 31, 2023 and December 31, 20212022 was as follows:

 

September 30,
2022
Commercial services & supplies13.7%
Trading companies & distributors12.8%
Health care providers & services10.9%
Food products10.3%
Textiles, apparel & luxury goods4.8%
Building products4.3%
Software3.6%
Chemicals3.5%
Containers & packaging3.2%
Diversified telecommunication services3.2%
Aerospace & defense3.1%
Leisure products2.9%
Auto components2.8%
Machinery2.7%
IT services2.7%
Professional services2.5%
Wireless telecommunication services2.5%
Household durables2.2%
Personal products2.2%
Household products2.1%
Insurance1.4%
Specialty retail0.9%
Pharmaceuticals0.8%
Asset management & custody banks0.6%
Electronic equipment, instruments & components0.3%
Total100.0%
  March 31, 2023  December 31, 2022 
       
Trading companies & distributors  14.1%  12.9%
Commercial services & supplies  11.2%  11.9%
Food products  10.6%  10.9%
Health care providers & services  9.1%  9.8%
Professional services  5.1%  5.5%
IT services  4.2%  3.9%
Machinery  4.1%  2.2%
Containers & packaging  4.0%  4.5%
Textiles, apparel & luxury goods  3.8%  4.1%
Aerospace & defense  3.8%  4.1%
Building products  3.1%  3.4%
Chemicals  2.9%  2.9%
Software  2.8%  3.0%
Diversified telecommunication services  2.5%  2.6%
Leisure products  2.5%  2.3%
Insurance  2.4%  1.3%
Wireless telecommunication services  2.3%  2.5%
Auto components  2.3%  2.3%
Household durables  1.7%  1.8%
Healthcare equipment & supplies  1.6%  1.8%
Personal products  1.6%  1.7%
Household products  1.5%  1.6%
Biotechnology  0.9%  1.0%
Specialty retail  0.7%  0.7%
Pharmaceuticals  0.6%  0.6%
Asset management & custody banks  0.4%  0.4%
Electronic equipment, instruments & components  0.2%  0.3%
Total  100.0%  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 services19.6%
Capital goods19.5%
Consumer durables & apparel15.8%
Telecommunication services8.8%
Health care equipment & services8.5%
Household & personal products7.4%
Materials7.0%
Automobiles & components4.1%
Food & beverage2.9%
Software & services2.4%
Retailing1.6%
Pharmaceuticals, biotech & life sciences1.5%
Diversified financials0.9%
Total100.0%

 

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.

 

 Level 1 — 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.

 

 Level 2 — 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.

 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

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 presentspresent the fair value hierarchy of investments as of September 30, 2022March 31, 2023 and December 31, 2021.2022. 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 September 30, 2022  Fair Value Hierarchy as of March 31, 2023 
Investments: Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
First-lien senior secured debt investments $-  $ -  $958,906  $958,906  $-  $    -  $1,247,020  $1,247,020 
Equity investments  -   -   5,128   5,128   -   -   7,339   7,339 
Short-term investments  4,758   -   -   4,758   15,192   -   -   15,192 
Total Investments $4,758  $-  $964,034  $968,792  $15,192  $-  $1,254,359  $1,269,551 

 

 Fair Value Hierarchy as of December 31, 2021  Fair Value Hierarchy as of December 31, 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  $-  $    -  $1,157,971  $1,157,971 
Private equity investments  -   -   250   250 
Equity investments  -   -   7,148   7,148 
Short-term investments  3,674   -   -   3,674   9,847   -   -   9,847 
Total Investments $3,674  $-  $578,445  $582,119  $9,847  $-  $1,165,119  $1,174,966 

 

The following tables 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 nine months ended September 30, 2022March 31, 2023 and 2021:2022.

 

 First-lien senior
secured debt
investments		 Private
Equity
investments		 Total  First-lien Private    
For the three months ended September 30, 2022       
 senior secured equity    
 debt investments  investments  Total 
For the three months ended March 31, 2023       
Fair value, beginning of period $716,581 $1,383 $717,964  $1,157,971  $7,148  $1,165,119 
Purchases of investments 284,098 3,250 287,348   104,245   -   104,245 
Proceeds from sales of investments and principal repayments (45,917) - (45,917)  (17,245)  -   (17,245)
Net change in unrealized gain (loss) 2,822 495 3,317   (66)  191   125 
Net realized gain (loss) 47 - 47   -   -   - 
Net accretion of discount on investments 1,275 - 1,275   2,115   -   2,115 
Transfers into (out of) Level 3  -  -  -   -   -   - 
Fair value, end of period $958,906 $5,128 $964,034  $1,247,020  $7,339  $1,254,359 

 

  First-lien  Private    
  senior secured  equity    
  debt investments  investments  Total 
For the three months ended March 31, 2022         
Fair value, beginning of period $578,195  $250  $578,445 
Purchases of investments  65,773   750   66,523 
Proceeds from sales of investments and principal repayments  (28,167)  -   (28,167)
Net change in unrealized gain (loss)  (512)  -   (512)
Net realized gain (loss)  28   -   28 
Net accretion of discount on investments  750   -   750 
Transfers into (out of) Level 3  -   -   - 
Fair value, end of period $616,067  $1,000  $617,067 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

  First-lien
senior
secured debt
investments		  Private
Equity
investments		  Total 
For the three months ended September 30, 2021         
Fair value, beginning of period $205,159  $      -  $205,159 
Purchases of investments  83,194   -   83,194 
Proceeds from sales of investments and principal repayments  (29,002)  -   (29,002)
Net change in unrealized gain (loss)  1,102   -   1,102 
Net realized gain (loss)  -   -   - 
Net accretion of discount on investments  267   -   267 
Transfers into (out of) Level 3  -   -   - 
Fair value, end of period $260,720  $-  $260,720 

  First-lien
senior
secured debt
investments		  Private
Equity
investments		  Total 
For the nine months ended September 30, 2022         
Fair value, beginning of period $578,195  $250  $578,445 
Purchases of investments  464,549   4,250   468,799 
Proceeds from sales of investments and principal repayments  (89,694)  -   (89,694)
Net change in unrealized gain (loss)  2,499   628   3,127 
Net realized gain (loss)  70   -   70 
Net accretion of discount on investments  3,287   -   3,287 
Transfers into (out of) Level 3  -   -   - 
Fair value, end of period $958,906  $5,128  $964,034 

  First-lien
senior
secured debt
investments		  Private
Equity
investments		  Total 
For the nine months ended September 30, 2021         
Fair value, beginning of period $-  $       -  $- 
Purchases of investments  287,627   -   287,627 
Proceeds from sales of investments and principal repayments  (32,650)  -   (32,650)
Net change in unrealized gain (loss)  5,010   -   5,010 
Net realized gain (loss)  -   -   - 
Net accretion of discount on investments  733   -   733 
Transfers into (out of) Level 3      -   - 
Fair value, end of period $260,720  $-  $260,720 

For the three and nine months ended September 30,March 31, 2023 and 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 considered to be credit impaired, the CompanyAdvisor uses a market yield analysis to determine fair value. If the debt investment is considered to be credit impaired (which is determined by performing an enterprise value analysis), the CompanyAdvisor will use the enterprise value analysis or a liquidation basis analysis to determine fair value. As of September 30, 2022, none of the Company’s non-traded debt investments were considered to be credit impaired, and the Company used

To determine fair value using a market yield analysis, to determine fair value on these investments.

the Advisor discounts the contractual cash flows of each investment at an appropriate discount rate (the market yield). To determine the estimated market yield for ourits debt investments, the CompanyAdvisor 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 spreaddiscount rate for such debt investment. In this context, the discount rate and 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 CompanyAdvisor 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 CompanyAdvisor estimates the enterprise value of the business and compares such estimate to the outstanding indebtedness of such business. The CompanyAdvisor 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 comparable 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 comparable analysis, (ii) precedent transaction analysis and (iii) DCF analysis.

 

Under all of these valuation techniques, the Advisor estimates operating results of the companies in which it invests, 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 tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of September 30, 2022March 31, 2023 and December 31, 2021.2022. The table istables are not intended to be all-inclusive but instead capturescapture the significant unobservable inputs relevant to the Company’sAdvisor’s determination of fair value.

 

 As of September 30, 2022  As of March 31, 2023 
   Valuation Unobservable Weighted     Valuation Unobservable    Weighted 
 Fair Value Technique Input Range Average  Fair Value  Technique Input Range  Average 
First-lien senior secured debt investments $958,906 Market Approach - Yield Analysis Credit Spreads 5.00% - 8.00% 6.11% $1,247,020       
     Discounted cash flow analysis Discount rate  8.2% - 15.0%    9.9%
Equity investments Precedent Transaction Analysis Original Cost  $7,339  Precedent Transaction Analysis Original Cost  1.0   1.0 
 $5,128   EV / EBITDA Multiples 6.7 – 17.2 12.5      Comparable Multiples EV/ EBITDA  6.1 - 17.2   12.7 
 $964,034      $1,254,359           

 

 As of December 31, 2021  As of December 31, 2022 
    Valuation Unobservable  Weighted     Valuation Unobservable    Weighted 
 Fair Value  Technique Input Range  Average  Fair Value  Technique Input Range  Average 
First-lien senior secured debt investments $578,195  Market Approach - Yield Analysis Credit Spreads 5.00% - 8.50%   6.00% $1,157,971  Discounted cash flow analysis Discount rate  8.4% - 15.0%   10.1%
Private Equity investments $250   Precedent Transaction Analysis Transaction Price 1.0   1.0 
 $578,445                    
Equity investments $1,988  Precedent Transaction Analysis Original Cost  1.0   1.0 
  5,160  Comparable Multiples EV/ EBITDA  6.6 - 17.2   12.7 
 $1,165,119         


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

Note 6. Debt

 

Subscription Credit Agreement 

 

As of September 30, 2022,March 31, 2023, the Company had a $150,000$125,000 credit agreement (the “Subscription Credit Agreement”) with certain lenders party thereto. The Subscription Credit Agreement permits the Company to elect the commitment amount each quarter to borrow up to $150,000,$125,000, 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 the Secured Overnight Funding Rate (“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 Company also pays an extension fee of 0.05% per quarter on the elected commitment amount on the first day of each calendar quarter. The Subscription Credit Agreement will expire on December 31, 2022. See Note 11 – Subsequent Events.2023.

 

For the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, the average amount of borrowings outstanding under the Subscription Credit Agreement was $53,333were $89,311 and $13,794,$52,567, respectively, with a weighted average interest rate of 3.02%6.52% and 2.26%2.25%, respectively. As of September 30, 2022,March 31, 2023, the Company had $62,000$92,000 outstanding under the Subscription Credit Agreement at a weighted average interest rate of 5.04%6.77%.

 

Corporate Credit Facility

As of September 30, 2022,March 31, 2023, the Company had a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $350,000.$400,000. The Company entered into the Corporate Credit Facility on February 18, 2022. 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 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.

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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 Kayne Anderson BDC Financing LLC (“KABDCF”) under the Revolving Funding Facility (as defined below).

 

For the ninethree months ended September 30,March 31, 2023 and 2022, the average amount of borrowings outstanding under the Corporate Credit Facility was $101,617$289,711 and $36,400, respectively, with a weighted average interest rate of 3.61%.6.81% and 2.48%, respectively. As of September 30, 2022,March 31, 2023, the Company had $202,000$297,000 outstanding under the Corporate Credit Facility at a weighted average interest rate of 5.09%7.15%. See Note 11 – Subsequent Events.

 

Revolving Funding Facility

 

On February 18, 2022,As of March 31, 2023, the Company and KABDCF entered intohad a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $250,000.$350,000. The Company and KABDCF entered into the Revolving Funding Facility on February 18, 2022. 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%2.75% 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.

 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

For the ninethree months ended September 30,March 31, 2023 and 2022, the average amount of borrowings outstanding under the Revolving Funding Facility was $130,220$235,833 and $70,000, respectively, with a weighted average interest rate of 3.44%.7.20% and 2.45%, respectively. As of September 30, 2022,March 31, 2023, the Company had $200,000$275,000 outstanding under the Revolving Funding Facility at a weighted average interest rate of 5.34%7.55%.

 

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 inon February 5, 2021. Advances under the LSA had an interest rate of LIBOR plus 4.25% (subject to a 1.00% LIBOR floor).

 

For the ninethree months ended March 31, 2022, the average amount of borrowings outstanding under the LSA were $27,253$82,667 with a weighted average interest rate of 5.25%.

 

Debt obligations consisted of the following as of September 30, 2022March 31, 2023 and December 31, 2021:2022.

 

 September 30, 2022  March 31, 2023 
 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 $350,000 $202,000 $148,000 $199,489  $400,000  $297,000  $103,000  $294,680 
Revolving Funding Facility 250,000 200,000 22,819 197,785   350,000   275,000   19,815   272,500 
Subscription Credit Agreement  150,000  62,000  88,000  61,887   125,000   92,000   33,000   91,935 
Total debt $750,000 $464,000 $258,819 $459,161  $875,000  $664,000  $155,815  $659,115 

 

(1)The amount available reflects any limitations related to the Credit Facility’s borrowing base as of March 31, 2023.

(2)The carrying value of the Corporate Credit Facility, Revolving Funding Facility, and Subscription Credit Agreement are presented net of deferred financing costs totaling $4,885.

  December 31, 2022 
  Aggregate
Principal
Committed		  Outstanding
Principal		  Amount
Available(1)		  Net
Carrying
Value(2)		 
Corporate Credit Facility $400,000  $269,000  $131,000  $266,483 
Revolving Funding Facility  350,000   200,000   21,793   197,173 
Subscription Credit Agreement  125,000   108,000   17,000   107,935 
Total debt $875,000  $577,000  $169,793  $571,591 

(1)The amount available reflects any limitations related to the Credit Facility’s borrowing base as of September 30,December 31, 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 $4,839.$5,409.

 

For the three months ended March 31, 2023 and 2022, the components of interest expense were as follows:

  For the three months ended 
  March 31,
2023		  March 31,
2022		 
Interest expense $10,932  $2,289 
Amortization of debt issuance costs  591   519 
Total interest expense $11,523  $2,808 
Average interest rate  7.6%  4.7%
Average borrowings $614,856  $241,633 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

  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 nine months ended September 30, 2022 and 2021, the components of interest expense were as follows:

  For the three months ended 
  September 30,
2022		  September 30,
2021		 
Interest expense $4,976  $893 
Amortization of debt issuance costs  528   55 
Total interest expense $5,504  $948 
Average interest rate  5.3%  6.2%
Average borrowings $410,146  $60,435 

  For the nine months ended 
  September 30,
2022		  September 30,
2021		 
Interest expense $9,792  $2,196 
Amortization of debt issuance costs  1,533   141 
Total interest expense $11,325  $2,337 
Average interest rate  4.8%  5.9%
Average borrowings $312,423  $61,064 

 

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 ninethree months ended September 30, 2022 and 2021.March 31, 2022. There were no common stock shares issued during the three months ended March 31, 2023 related to the Company’s subscription agreements with investors. See Note 11 – Subsequent Events.

 

For the nine months ended September 30, 2022
  Offering     Aggregate 
  price per  Common stock  offering 
Common stock issue date share  shares issued  amount 
January 24, 2022 $16.36   4,191,292  $68,582 
July 22, 2022 $16.30   7,666,830   125,000 
Total common stock issued      11,858,122  $193,582 


Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

For the nine months ended September 30, 2021
  Offering     Aggregate 
  price per  Common stock  offering 
Common stock issue date share  shares issued  amount 
February 5, 2021 $15.00   5,666,667  $85,000 
April 23, 2021 $15.57   3,532,434   55,000 
July 23, 2021 $15.72   2,862,595   45,000 
Total common stock issued      12,061,696  $185,000 
  Offering     Aggregate 
  price per  Common stock  offering 
Common stock issue date share  shares issued  amount 
January 24, 2022 $16.36   4,191,292  $68,582 
       4,191,292  $68,582 

 

As of September 30, 2022,March 31, 2023, the Company had subscription agreements with investors for an aggregate capital commitment of $808,212$832,342 to purchase shares of common stock. Of this amount, the Company had $315,129$264,612 of undrawn commitments at September 30, 2022.as of March 31, 2023. See Note 11 – Subsequent Events.

 

Dividends and Dividend Reinvestment

 

The following table summarizes the dividends declared and payable by the Company for the ninethree months ended September 30, 2022.March 31, 2023. For the three months ended March 31, 2022, no dividends were declared and payable by the Company. See Note 11 – Subsequent Events.

 

 Dividend  Dividend  Dividend 
 record  payment  per 
Dividend declaration date date  date  share 
April 19, 2022  April 20, 2022   April 26, 2022  $0.26 
July 19, 2022  July 20, 2022   July 27, 2022   0.30 
          $0.56 
  Dividend Dividend Dividend 
  record payment per 
Dividend declaration date date date share 
March 7, 2023 March 31, 2023 April 14, 2023 $0.47 
     $0.47 

 

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

 Dividend  Dividend  Dividend 
 record  payment  per 
Dividend declaration date date  date  share 
April 23, 2021  April 20, 2021   May 14, 2021  $0.15 
July 19, 2021  July 20, 2021   July 27, 2021   0.22 
          $0.37 

The following table summarizestables summarize the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan (“DRIP”) for the ninethree months ended September 30,March 31, 2023 and 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 
July 20, 2022  July 27, 2022   88,081   1,431 
       218,941  $3,555 
 Dividend DRIP    
 payment shares  DRIP 
Dividend record date date issued  value 
December 29, 2022 January 13, 2023  57,860  $955 
     57,860  $955 

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

 

The followingFor the dividend declared on March 7, 2023 and paid on April 14, 2023, there were 65,733 shares issued with a DRIP value of $1,089. These shares are excluded from the table summarizesabove, as the amounts received andDRIP shares of common stockwere issued to shareholders pursuant to the Company’s dividend reinvestment plan for the nine months ended September 30, 2021after March 31, 2023.

 Dividend  DRIP    
 payment  shares  DRIP 
Dividend record date date  issued  value 
April 20, 2021  May 14, 2021   1,361  $21 
July 20, 2021  July 27, 2021   37,460   585 
       38,821  $606 

 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

Note 8. Commitments and Contingencies

 

The Company had an aggregate of $125,185$135,707 and $97,810,$149,338, respectively, of unfunded commitments to provide debt financing to its portfolio companies as of September 30, 2022March 31, 2023 and December 31, 2021.2022. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and certain operational metrics. The commitment period for these amounts may be shorter than the maturity date if drawn or funded. These commitments are not reflected in the Company’s consolidated statement of assets and liabilities. Consequently, such commitments result in an element of credit risk in excess of the amount recognized in the Company’s consolidated statement of assets and liabilities.

 

A summary of the composition of the unfunded commitments as of September 30, 2022March 31, 2023 and December 31, 20212022 is shown in the table below:below.

 

 As of
September 30,
2022		  As of
December 31,
2021		  As of As of 
 March 31,
2023		  December 31,
2022		 
Alcami Corporation (Alcami) $2,543  $2,543 
Allcat Claims Service, LLC $21,756  $-   5,370   20,106 
Allentown, LLC  2,040   -   2,040   2,040 
American Equipment Holdings LLC  5,670   1,698   966   2,956 
American Soccer Company, Incorporated (SCORE)  4,020   -   2,365   2,838 
Arborworks Acquisition LLC  1,563   3,219   1,563   1,563 
Atria Wealth Solutions, Inc.  2,996   -   2,996   2,996 
Basel U.S. Acquisition Co., Inc. (IAC)  1,622   1,622 
BCI Burke Holding Corp.  4,026   4,935   4,659   4,659 
Blade (US) Holdings, Inc.  -   1,121 
BLP Buyer, Inc. (Bishop Lifting Products)  1,047   -   1,047   1,047 
BR PJK Produce, LLC (Keany)  1,429   1,429 
Brightview, LLC  3,834   4,647   2,672   2,904 
Centerline Communications, LLC  6,661   2,040   1,800   1,800 
CGI Automated Manufacturing, LLC  2,717   6,522   1,630   2,717 
Corbett Technology Solutions, Inc.  735   1,525 
Curio Brands, LLC  2,722   6,018   2,722   2,722 
DISA Holdings Corp. (DISA)  7,825   7,769 
DRS Holdings III, Inc. (Dr. Scholl’s)  310   310   310   310 
Eastern Wholesale Fence  198   666   368   425 
EIS Legacy, LLC  6,538   6,538   6,538   6,539 
Fastener Distribution Holdings, LLC  6,810   -   6,810   6,810 
FCA, LLC (FCA Packaging)  2,670   -   2,670   2,670 
Foundation Consumer Brands  577   577   577   577 
Fralock Buyer LLC  749   749   549   749 
Guardian Dentistry Partners  613   15,898 
Gulf Pacific Holdings, LLC  14,565   -   10,753   13,066 
Gusmer Enterprises, Inc.  2,941   4,220   3,466   3,676 
Home Brands Group Holdings, Inc. (ReBath)  2,099   2,099   2,099   2,099 
I.D. Images Acquisition, LLC  1,172   1,570   1,828   1,424 
IF&P Foods, LLC (FreshEdge)  5,704   6,114 
Improving Acquisition LLC  2,028   -   1,672   2,028 
Krayden Holdings, Inc.  5,437   - 
Light Wave Dental Management LLC  8,420   -   6,774   6,774 
LSL Industries, LLC (LSL Healthcare)  15,224   15,224 
MacNeill Pride Group  2,499   357   3,338   2,978 
Pavion Corp., f/k/a Corbett Technology Solutions, Inc.  87   1,334 
PMFC Holding, LLC  342   684   342   342 
Regiment Security Partners LLC  3,207   7,200   3,207   3,207 
SGA Dental Partners Holdings, LLC  1,724   12,931   1,724   1,724 
Siegel Egg Co., LLC  1,655   2,102   1,655   1,207 
Speedstar Holding LLC  -   694 
Techniks Holdings, LLC / Eppinger Holdings Germany GMBH  2,500   - 
Trademark Global LLC  581   1,182   240   240 
United Safety & Survivability Corporation (USSC)  3,549   4,285   2,942   2,942 
Universal Marine Medical Supply International, LLC (Unimed)  2,035   2,035 
USALCO, LLC  1,399   2,352   1,780   1,462 
Vehicle Accessories, Inc.  752   1,671   501   1,671 
Worldwide Produce Acquisition, LLC  1,328   - 
Total unfunded commitments $125,185  $97,810  $135,707  $149,338 

 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of September 30, 2022March 31, 2023 and December 31, 2021,2022, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

 

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 September 30,March 31, 2023 and 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 nine months ended September 30, 2022March 31, 2023 and 2021:2022.

 

 For the three months ended  For the nine months ended 
 September 30,
2022		  September 30,
2021		  September 30,
2022		  September 30,
2021		  For the three months ended 
          

March 31,

2023

  March 31,
2022		 
Net increase (decrease) in net assets resulting from operations $14,598  $4,105  $27,789  $10,758  $19,407  $5,729 
Weighted average shares of common stock outstanding - basic and diluted  29,530,036   11,406,064   25,177,005   8,910,050   35,929,436   22,393,176 
Earnings (loss) per share of common stock - basic and diluted $0.49  $0.36  $1.10  $1.21  $0.54  $0.26 

 


 

 

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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 ninethree months ended September 30, 2022March 31, 2023 and 2021:2022.

  For the nine months ended
September 30,		 
  2022
(amounts in
thousands, except
share and per
share amounts)		  2021
(amounts in
thousands, except
share and per
share amounts)		 
Per Common Share Operating Performance (1)      
Net Asset Value, Beginning of Period(2) $16.22  $14.86 
         
Results of Operations:        
Net Investment Income  0.98   0.63 
Net Realized and Unrealized Gain (Loss) on Investments(3)  0.09   0.80 
Net Increase (Decrease) in Net Assets Resulting from Operations  1.07   1.43 
         
Distributions to Common Stockholders        
Distributions  (0.56)  (0.37)
Net Decrease in Net Assets Resulting from Distributions  (0.56)  (0.37)
         
Net Asset Value, End of Period $16.73  $15.92 
         
Shares Outstanding, End of Period  31,304,965   12,101,184 
         
Ratio/Supplemental Data        
Net assets, end of period $523,727  $192,692 
Weighted-average shares outstanding  25,177,005   8,910,050 
Total Return(4)  6.7%  8.7%
Portfolio turnover  12.5%  29.0%
Ratio of operating expenses to average net assets(5)  6.9%  5.9%
Ratio of net investment income (loss) to average net assets(5)  8.2%  6.8%

  For the three months ended
March 31,		 
  2023
(amounts in
thousands, except
share and per
share amounts)		  2022
(amounts in
thousands, except
share and per
share amounts)		 
Per Common Share Operating Performance (1)      
Net Asset Value, Beginning of Period(2) $16.50  $16.22 
         
Results of Operations:        
Net Investment Income  0.54   0.28 
Net Realized and Unrealized Gain (Loss) on Investments(3)  -   (0.01)
Net Increase (Decrease) in Net Assets Resulting from Operations  0.54   0.27 
         
Distributions to Common Stockholders        
Distributions  (0.47)  - 
Net Decrease in Net Assets Resulting from Distributions  (0.47)  - 
         
Net Asset Value, End of Period $16.57  $16.49 
         
Shares Outstanding, End of Period  35,937,151   23,474,784 
         
Ratio/Supplemental Data        
Net assets, end of period $595,513  $387,182 
Weighted-average shares outstanding  35,929,436   22,393,176 
Total Return(4)  3.3%  1.7%
Portfolio turnover  1.4%  4.7%
Ratio of operating expenses to average net assets  11.7%  6.6%
Ratio of net investment income (loss) to average net assets  13.2%  7.2%

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

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

(3)(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.  For the nine months ended September 30, 2022 and 2021, such share transactions include the effect of share issuances of $0.03 and $0.15 per share, respectively.  During the period, shares were issued at prices that reflect the aggregate amount of the Company’s initial organizational and offering expenses.  As a result, investors subscribing after the initial capital call are allocated organizational expenses consistently with all stockholders.

During the three months ended March 31, 2023 and 2022, there were no such share transactions including the effect of share issuances. In periods where shares are issued, shares are issued at prices that reflect the aggregate amount of the Company’s initial organizational and offering expenses. As a result, investors subscribing after the initial capital call are allocated organizational expenses consistently with all stockholders.

(4)Total return is calculated as the change in net asset value (“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 September 30, 2021).

Kayne Anderson BDC, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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 as described below.

 

On October 25, 2022, the Company paid a distribution of $0.35 per share to each common stockholder of record as of October 13, 2022. The total distribution was $10,957 and $2,087 was reinvested into the Company through the purchase of 127,414 shares of common stock.

On October 31, 2022,April 4, 2023, the Company sold 1,485,8443,010,942 shares of its common stock for a total aggregate offering price of $24,636.$50,000. As of the same date, the Company has subscription agreements with investors for an aggregate capital commitment of $808,212$832,342 to purchase shares of common stock ($290,492214,612 is undrawn).

On November 8, 2022, The capital payable of $7,110 on the BoardCompany’s Consolidated Statement of Directors (the “Board”)Assets and Liabilities as of March 31, 2023 represents cash received early from investors as of March 31, 2023, which was prior to the capital call funding date and issuance of the Company elected Rhonda Smith as a member of the Board. Ms. Smith will serve as an independent director of the Company until she stands for re-election at the 2024 Annual Meeting of Stockholders of the Company.shares on April 4, 2023.

On November 10, 2022,April 14, 2023, the Company increased its Corporate Credit Facilitypaid a distribution of $0.47 per share to each common stockholder of record as of March 31, 2023. The total distribution was $16,890 and $1,089 was reinvested into the Company through the purchase of 65,733 shares of common stock. 

As of May 10, 2023, the Company has subscription agreements with investors for an aggregate capital commitment amount from $350,000of $852,617 to $400,000. All other termspurchase shares of common stock ($234,887 of the Corporate Credit Facility remain substantiallycommitments are undrawn).

On May 10, 2023, the same.Board declared a distribution of $0.53 per share to each common stockholder of record as of June 30, 2023. The distribution will be paid on July 14, 2023.


 

 

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, LLCInc. was formed as a Delaware limited liability companycorporation 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 AdvisersAdvisory Act of 1940, as amended.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, determining the value of the investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of sixseven directors, four 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 execute on 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 October 25, 2022, we paid a distribution of $0.35 per share to each common stockholder of record as of October 13, 2022. The total distribution was $11.0 million and $2.1 million was reinvested into the Company through the purchase of 127,414 shares of common stock.

On October 31, 2022,April 4, 2023, we sold 1,485,8443,010,942 shares of common stock for a total aggregate offering price of $24.6$50.0 million. We

On April 14, 2023, we paid a distribution of $0.47 per share to each common stockholder of record as of March 31, 2023. The total distribution was $16.9 million and $1.1 million was reinvested into the Company through the purchase of 65,733 shares of common stock. 

As of May 10, 2023, we have subscription agreements with investors for an aggregate capital commitment of $808.2$852.6 million to purchase shares of common stock ($290.5234.9 million is undrawn).

 

On November 8, 2022, ourMay 10, 2023, the Board declared a distribution of Directors (the “Board”) elected Rhonda Smith$0.53 per share to each common stockholder of record as a member of the Board. Ms. SmithJune 30, 2023. The distribution will serve as an independent director for us until she stands for re-election at our 2024 Annual Meeting of Stockholders.

On November 10, 2022, we increased our Corporate Credit Facility commitment amount from $350 million to $400 million. All other terms of the Corporate Credit Facility remain substantially the same.be paid on July 14, 2023.

 

Portfolio and Investment Activity

 

As of September 30, 2022,March 31, 2023, we had 140180 debt investments and 913 equity investments in 5971 portfolio companies with an aggregate fair value of approximately $964.0$1,254 million and an amortized cost of $949.1$1,237 million consisting of first lien senior secured debt ($958.91,247.0 million fair value) and equity ($5.17.3 million fair value) investments.

 

As of September 30, 2022,March 31, 2023, our weighted average total yield to maturity of debt and income producing securities at fair value was 9.8%11.9%, and our weighted average total yield to maturity of debt and income producing securities at amortized cost was 9.9%12.0%.

 

Our investment activity for the three months ended September 30,March 31, 2023 and 2022 and 2021 is presented below (information presented herein is at par value unless otherwise indicated).

 

 For the three months ended
September 30,		  For the three months ended
March 31,		 
 2022
($ in millions)		  2021
($ in millions)		  2023
($ in millions)		  2022
($ in millions)		 
          
New investments:          
Gross new investment commitments $331.8  $105.6 
Gross new investments commitments $88.5  $40.0 
Less: investment commitments sold down, exited or repaid(1)  (49.5)  (44.0)  (12.4)  (28.5)
Net investment commitments  282.3   61.6   76.1   11.5 
                
Principal amount of investments funded:                
Private credit investments $292.6  $84.5  $105.0  $66.9 
Liquid credit investments  -   -   -   - 
Preferred equity investments(2)  -   -   -   0.3 
Common equity investments(2)  3.3   -   -   0.5 
Total principal amount of investments funded  295.9   84.5   105.0   67.7 
                
Principal amount of investments sold:                
Private credit investments  (47.3)  (29.5)  (15.2)  (28.5)
Liquid credit investments  -   (14.5)  -   - 
Total principal amount of investments sold or repaid  (47.3)  (44.0)  (15.2)  (28.5)
                
Number of new investment commitments  20   24   19   11 
Average new investment commitment amount $16.6  $4.4   4.7  $3.6 
Weighted average maturity for new investment commitments(3)  4.3 years   4.1 years   3.6 years    4.7 years 
Percentage of new debt investment commitments at floating rates  100.0%  100.0%  100.0%  100.0%
Percentage of new debt investment commitments at fixed rates  0.0%  0.0%  0.0%  0.0%
Weighted average interest rate of new investment commitments(4)  9.7%  7.3%  11.4%  7.0%
Weighted average spread over benchmark rate of new floating rate investment commitments(4)  6.6%  6.3%  6.5%  6.0%
Weighted average interest rate on investment sold or paid down(5)  9.6%  5.9%  11.1%  7.3%

 

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

(2)(2)As of September 30, 2022,March 31, 2023, preferred equity investments and common equity investments were reported in aggregate as equity investments.
(3)(3)For undrawn delayed draw term loans, the maturity date used is that of the associated term loan.
(4)Based on the rate in effect at March 31, 2023 per our Consolidated Schedule of Investments for new commitments entered into during the quarter.
(5)Based on the underlying rate if still held at March 31, 2023.  For those investments sold or paid down in full during the year, based on the rate in effect at the time of sale or paid down.

 

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

 


 

 

The tablestable below describedescribes long-term investments by industry composition based on fair value as of September 30, 2022March 31, 2023 and December 31, 2021:2022.

 

September 30,
2022
Commercial services & supplies13.7%
Trading companies & distributors12.8%
Health care providers & services10.9%
Food products10.3%
Textiles, apparel & luxury goods4.8%
Building products4.3%
Software3.6%
Chemicals3.5%
Containers & packaging3.2%
Diversified telecommunication services3.2%
Aerospace & defense3.1%
Leisure products2.9%
Auto components2.8%
Machinery2.7%
IT services2.7%
Professional services2.5%
Wireless telecommunication services2.5%
Household durables2.2%
Personal products2.2%
Household products2.1%
Insurance1.4%
Specialty retail0.9%
Pharmaceuticals0.8%
Asset management & custody banks0.6%
Electronic equipment, instruments & components0.3%
Total100.0%
  March 31,
2023		  December 31,
2022		 
       
Trading companies & distributors  14.1%  12.9%
Commercial services & supplies  11.2%  11.9%
Food products  10.6%  10.9%
Health care providers & services  9.1%  9.8%
Professional services  5.1%  5.5%
IT services  4.2%  3.9%
Machinery  4.1%  2.2%
Containers & packaging  4.0%  4.5%
Textiles, apparel & luxury goods  3.8%  4.1%
Aerospace & defense  3.8%  4.1%
Building products  3.1%  3.4%
Chemicals  2.9%  2.9%
Software  2.8%  3.0%
Diversified telecommunication services  2.5%  2.6%
Leisure products  2.5%  2.3%
Insurance  2.4%  1.3%
Wireless telecommunication services  2.3%  2.5%
Auto components  2.3%  2.3%
Household durables  1.7%  1.8%
Healthcare equipment & supplies  1.6%  1.8%
Personal products  1.6%  1.7%
Household products  1.5%  1.6%
Biotechnology  0.9%  1.0%
Specialty retail  0.7%  0.7%
Pharmaceuticals  0.6%  0.6%
Asset management & custody banks  0.4%  0.4%
Electronic equipment, instruments & components  0.2%  0.3%
Total  100.0%  100.0%

 

December 31,
2021
Commercial & professional services19.6%
Capital goods19.5%
Consumer durables & apparel15.8%
Telecommunication services8.8%
Health care equipment & services8.5%
Household & personal products7.4%
Materials7.0%
Automobiles & components4.1%
Food & beverage2.9%
Software & services2.4%
Retailing1.6%
Pharmaceuticals, biotech & life sciences1.5%
Diversified financials0.9%
Total100.0%


 

Results of Operations

 

For the three and nine months ended September 30,March 31, 2023 and 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 September 30, 2022March 31, 2023 or 2021.2022.


 

The following table represents the operating results for the three and nine months ended September 30, 2022March 31, 2023 and 2021:2022.

 

 For the three months ended
September 30,		 For the nine months ended
September 30,		  For the three months ended
March 31,		 
 2022 2021 2022 2021  2023 2022 
 ($ in millions) ($ in millions) ($ in millions) ($ in millions)  ($ in millions)  ($ in millions) 
Total investment income $20.5 $5.0 $45.4 $10.5  $36.4  $11.9 
Less: Net expenses  (9.2)  (2.0)  (20.8)  (4.9)  (17.1)  (5.7)
Net investment income 11.3 3.0 24.6 5.6   19.3   6.2 
Net realized gains (losses) on investments 0.0 0.1 0.1 0.2   -   0.0 
Net change in unrealized gains (losses) on investments  3.3  1.0  3.1  5.0   0.1   (0.5)
Net increase (decrease) in net assets resulting from operations $14.6 $4.1 $27.8 $10.8  $19.4  $5.7 

 

Investment Income

 

Investment income for the three and nine months ended September 30,March 31, 2023 and 2022 totaled $20.5$36.4 million and $45.4 million respectively, and consisted primarily of interest income on our debt investments. Investment income for the three and nine months ended September 30, 2021 totaled $5.0 million and $10.5$11.9 million, respectively, and consisted primarily of interest income on our debt investments.

Expenses

 

Operating expenses for the three and nine months ended September 30,March 31, 2023 and 2022 and 2021 were as follows:

 

  For the three months ended
September 30,		  For the nine months ended
September 30,		 
  2022  2021  2022  2021 
  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Interest and debt financing expenses $5.5  $0.9  $11.3  $2.3 
Management fees  1.9   0.5   4.7   1.1 
Incentive fees  1.2   -   3.0   - 
Directors fees  0.1   0.1   0.3   0.2 
Initial organization  -   -   -   0.2 
Deferred offering costs  -   0.1   -   0.2 
Other operating expenses  0.5   0.4   1.5   0.9 
Total expenses $9.2  $2.0  $20.8  $4.9 

Total expenses for the three and nine months ended September 30, 2022 included zero and $0.03 million of deferred offering costs. Total expenses for the three and nine months ended September 30, 2021 included zero and $0.2 million of initial organization expenses and $0.1 million and $0.2 million of deferred offering costs, respectively.

  For the three months ended
March 31,		 
  2023  2022 
  ($ in millions)  ($ in millions) 
Interest and debt financing expenses $11.5  $  2.8 
Management fees  2.7   1.3 
Incentive fees  2.1   1.0 
Directors fees  0.2   0.1 
Other operating expenses  0.6   0.5 
Total expenses $17.1  $5.7 

 

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 nine months ended September 30,March 31, 2023 and 2022, and 2021, net unrealized gains (losses) on our investment portfolio were comprised of the following:

 

  For the three months ended
September 30,		  For the nine months ended
September 30,		 
  2022  2021  2022  2021 
  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Unrealized gains on investments $7.3  $1.7  $9.4  $5.0 
Unrealized (losses) on investments  (4.0)  (0.7)  (6.3)  - 
Net change in unrealized gains (losses) on investments $3.3  $1.0  $3.1  $5.0 


The change in unrealized appreciation for the three months ended September 30, 2022 and 2021 totaled $7.3 million and $1.7 million, which primarily related to our investments in the following tables:

  For the
three months
ended		 
  September 30,
2022		 
  ($ in millions) 
Portfolio Company   
Genuine Cable Group, LLC  1.0 
BC CS 2, L.P. (Cuisine Solutions)  1.0 
AIDC Intermediate Co 2, LLC (Peak Technologies)  0.8 
American Soccer Company, Incorporated (SCORE)  0.8 
Gulf Pacific Holdings, LLC  0.6 
Improving Acquisition LLC  0.6 
CGI Automated Manufacturing, LLC  0.5 
Allcat Claims Service, LLC  0.5 
Fastener Distribution Holdings, LLC  0.5 
FCA, LLC (FCA Packaging)  0.4 
Other portfolio companies  0.6 
Total Unrealized Appreciation $7.3 

  For the
three months
ended		 
  September 30,
2021		 
  ($ in millions) 
Portfolio Company   
United Safety & Survivability Corporation (USSC) $0.3 
Centerline Communications, LLC  0.2 
New Era Cap Company, Inc.  0.2 
Regiment Security Partners LLC  0.2 
Trademark Global LLC  0.1 
Peak Technologies  0.1 
PH Beauty Holdings III, Inc.  0.1 
Blade (US) Holdings, Inc.  0.1 
I.D. Images Acquisition, LLC  0.1 
Sundance Holdings Group, LLC  0.1 
Other portfolio companies  0.2 
Total Unrealized Appreciation $1.7 


The change in unrealized depreciation for the three months ended September 30, 2022 totaled $4.0 million and related to our investments in the following table. The change in unrealized depreciation for the three months ended September 30, 2021 totaled $0.7 million, which was primarily attributable to accretion of discounts on investments.

  For the
three months
ended		 
  September 30,
2022		 
  ($ in millions) 
Portfolio Company   
Arborworks Acquisition LLC  (0.6)
Trademark Global LLC  (0.5)
Curio Brands, LLC  (0.4)
Corbett Technology Solutions, Inc.  (0.3)
DRS Holdings III, Inc. (Dr. Scholl’s)  (0.2)
Allentown, LLC  (0.2)
USALCO, LLC  (0.2)
Light Wave Dental Management LLC  (0.2)
PH Beauty Holdings III, Inc.  (0.2)
Other portfolio companies  (1.2)
Total Unrealized Depreciation $(4.0)
  For the three months ended
March 31,		 
  2023  2022 
  ($ in millions)  ($ in millions) 
Unrealized gains on investments $3.6  $1.1 
Unrealized (losses) on investments  (3.5)  (1.6)
Net change in unrealized gains (losses) on investments $0.1  $(0.5)

 


 

 

The change in unrealized appreciation for the ninethree months ended September 30,March 31, 2023 and 2022 totaled $3.6 million and 2021 totaled $9.4 and $5.0$1.1 million, which primarily related to our investments in the following tables:tables.

 

  For the
nine months
ended		 
  September 30,
2022		 
  ($ in millions) 
Portfolio Company   
AIDC Intermediate Co 2, LLC (Peak Technologies) $1.1 
Genuine Cable Group, LLC  1.0 
BC CS 2, L.P. (Cuisine Solutions)  1.0 
CGI Automated Manufacturing, LLC  0.8 
American Soccer Company, Incorporated (SCORE)  0.8 
Gulf Pacific Holdings, LLC  0.6 
Improving Acquisition LLC  0.5 
Allcat Claims Service, LLC  0.5 
Fastener Distribution Holdings, LLC  0.5 
IF&P Foods, LLC (FreshEdge)  0.5 
Other portfolio companies  2.1 
Total Unrealized Appreciation $9.4 
  For the three
months ended		 
  March 31,
2023		 
  ($ in millions) 
Portfolio Company   
Techniks Holdings, LLC / Eppinger Holdings Germany GMBH $0.6 
Engineered Fastener Company, LLC (EFC International)  0.6 
Krayden Holdings, Inc.  0.5 
Pavion Corp.(f/k/a Corbett Technology Solutions, Inc.)  0.4 
BLP Buyer, Inc. (Bishop Lifting Products)  0.2 
Worldwide Produce Acquisition, LLC  0.1 
Vehicle Accessories, Inc.  0.1 
YS Garments, LLC  0.1 
Allcat Claims Service, LLC  0.1 
EIS Legacy, LLC  0.1 
Other portfolio companies  0.8 
Total Unrealized Appreciation $3.6 

 

  For the
nine months
ended		 
  September 30,
2021		 
  ($ in millions) 
Portfolio Company   
New Era Cap Company, Inc. $0.5 
Sundance Holdings Group, LLC  0.4 
Broder Bros., Co.  0.3 
United Safety & Survivability Corporation (USSC)  0.3 
OMH-HealthEdge Holdings, LLC  0.3 
Centerline Communications, LLC  0.2 
Advanced Environmental Monitoring  0.2 
Fralock Buyer LLC  0.2 
Gusmer Enterprises, Inc.  0.2 
PH Beauty Holdings III, Inc.  0.2 
Other portfolio companies  2.2 
Total Unrealized Appreciation $5.0 
   For the three
months ended		 
   March 31,
2022		 
   ($ 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 

 

The change in unrealized depreciation for the ninethree months ended September 30,March 31, 2023 and 2022 totaled $6.3$3.5 million and $1.6 million, respectively, which was primarily related to our investments in the following table. There was no change in unrealized depreciation for the nine months ended September 30, 2021.

 

  For the
nine months
ended		 
  September 30,
2022		 
  ($ in millions) 
Portfolio Company   
Arborworks Acquisition LLC $(1.5)
Trademark Global LLC  (1.0)
Curio Brands, LLC  (0.5)
PH Beauty Holdings III, Inc.  (0.4)
Corbett Technology Solutions, Inc.  (0.3)
Broder Bros., Co.  (0.3)
USALCO, LLC  (0.3)
DRS Holdings III, Inc. (Dr. Scholl’s)  (0.3)
Fralock Buyer LLC  (0.2)
Other portfolio companies  (1.5)
Total Unrealized Depreciation $(6.3)
  For the three
months ended		 
  March 31,
2023		 
  ($ in millions) 
Portfolio Company   
AIDC Intermediate Co 2, LLC (Peak Technologies) $(0.3)
Drew Foam Companies, Inc.  (0.3)
Genuine Cable Group, LLC  (0.3)
LSL Industries, LLC (LSL Healthcare)  (0.3)
Gusmer Enterprises, Inc.  (0.2)
Centerline Communications, LLC  (0.2)
United Safety & Survivability Corporation (USSC)  (0.2)
4 Over International, LLC  (0.2)
Siegel Parent, LLC  (0.1)
Regiment Security Partners LLC  (0.1)
Other portfolio companies  (1.3)
Total Unrealized Depreciation $(3.5)

 


 

  For the three
months ended		 
  March 31,
2022		 
  ($ in millions) 
Portfolio Company   
Arborworks Acquisition LLC $(0.5)
Trademark Global LLC  (0.3)
Other portfolio companies  (0.8)
Total Unrealized Depreciation $(1.6)

 

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 September 30, 2022March 31, 2023 and December 31, 2021,2022, our asset coverage ratios were 213%190% and 217%203%. 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 to conduct anticipated 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 September 30, 2022,March 31, 2023, we had $464$664 million borrowed under our credit facilities and cash and cash equivalents of $20.0$26.4 million (including short-term investments)., of which $7.1 million is cash received early from investors relating to the April 4, 2023 issuance of common stock. As of November 9, 2022,May 10, 2023, we had $508$652 million borrowed under our credit facilities and cash and cash equivalents of $7.2$7.7 million (including short-term investments).

 

Capital Contributions

 

During the ninethree months ended September 30, 2022 and 2021,March 31, 2023, we issued and sold 11,858,122 and 12,062,363did not issue any shares of our common stock respectively,related to capital called. During the three months ended March 31, 2022, we issued 4,191,292 shares of our common stock related to capital called at an aggregate purchase price of $193.6 million and $185.0 million, respectively.$68.6 million. As of November 9, 2022,May 10, 2023, we had aggregate capital commitments of $808.2 million and$852.6 million. As of May 10, 2023, we had undrawn capital commitments of $234.9 million from investors of $290.5 million ($517.7617.7 million or 64.1%72.4% funded).

 

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: WeAs of March 31, 2023, we are party to a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $400 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 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: WeAs of March 31, 2023, we and our wholly owned, special purpose financing subsidiary, KABDCF,Kayne Anderson BDC Financing, LLC (“KABDCF”), are party to a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $250$350 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%2.75% 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: WeAs of March 31, 2023, 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 elect the commitment amount each quarter to borrow up to $150$125 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 $150$125 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. We also pay an extension fee of 0.05% per quarter on the elected commitment amount on the first day of each calendar quarter. The Subscription Credit Agreement will expire on December 31, 2022. We expect to renew this facility for a term of one year upon its maturity.2023.

Contractual Obligations

 

A summary of our significant contractual principal payment obligations related to the repayment of our outstanding indebtedness at September 30, 2022March 31, 2023 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 $202.0  $-  $          -  $202.0  $        -  $297.0  $   -  $   -  $297.0  $   - 
Revolving Funding Facility  200.0   -   -   200.0   -   275.0   -   -   275.0   - 
Subscription Credit Agreement  62.0   62.0   -   -   -   92.0   92.0   -   -   - 
Total contractual obligations $464.0  $62.0  $-  $402.0  $-  $664.0  $92.0  $-  $572.0  $- 

 

Off-Balance Sheet Arrangements

 

As of September 30, 2022March 31, 2023 and December 31, 2021,2022, we had an aggregate $125.2$135.7 million and $97.8$149.3 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, 20212022 and in this Quarterly Report. See Note 2 to our consolidated financial statements for the ninethree months ended September 30, 2022,March 31, 2023, 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 Advisor’s 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 Advisor, the following valuation process is used for our Level 3 investments:

 

 ●Valuation Designee. The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time such investment was made. The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio company or investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs to determine a preliminary value. The Advisor will specify the titles of the persons responsible for determining the fair value of Company investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments.

 

 ●Valuation Firm. Quarterly, a third-party valuation firm engaged by the Advisor reviews the valuation methodologies and calculations employed for each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25% of the Company’s remaining investments. The third-party valuation firm will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The quarterly report issued by the third-party valuation firm will provide positive assurance on the fair values of the investments reviewed.

 

 ●Oversight. The Board has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to review the fair value determinations, processes and written reports of the Advisor as part of the Board’s oversight responsibilities.

 

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. On March 7, 2023, the Board approved a one-year renewal of the Investment Advisory Agreement through March 15, 2024. 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. On March 7, 2023, the Board approved a one-year renewal of the Administration Agreement through March 15, 2024. 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. On March 28, 2023, the Administrator engaged Ultimus Fund Solutions, LLC under a sub-administration agreement to assist the Administrator in performing certain of its administrative duties effective in the second quarter of 2023. 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 September 30, 2022March 31, 2023 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 $(2.4) $(1.2) $(1.2)
Up 75 basis points $7.2  $3.5  $3.7 
Down 200 basis points $(25.0) $(13.3) $(11.7)
Down 100 basis points $(12.5) $(6.6) $(5.9)
Up 100 basis points $9.6  $4.6  $5.0  $12.5  $6.6  $5.9 
Up 200 basis points $19.3  $9.3  $10.0  $25.0  $13.3  $11.7 
Up 300 basis points $28.9  $13.9  $15.0 

 

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 September 30, 2022March 31, 2023 (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 RuleRules 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 (the “SEC”) filings is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’sSEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

 

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,2022, 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, 20212022 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, politicalOur business is dependent on bank relationships and market conditions, including uncertaintyrecent strain on the banking system may adversely impact us.

The financial markets recently have encountered volatility associated with concerns about the balance sheets of banks, especially small and regional banks, which may have significant losses associated with investments that make it difficult to fund demands to withdraw deposits and other liquidity needs. Although the federal government has announced measures to assist these banks and protect depositors, some banks have already been impacted and others may be materially and adversely impacted. Our business is dependent on bank relationships and we are proactively monitoring the financial stabilityhealth of such bank relationships. Continued strain on the United States, could have a significant adverse effect onbanking system may adversely impact 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 continuing 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 nine months ended September 30, 2022, we issued and sold 11,858,122 shares of common stock at an aggregate offering amount of approximately $193.6 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.None.

  Offering     Aggregate 
  price per  Common stock  offering 
Common stock issue date share  shares issued  amount 
January 24, 2022 $16.36   4,191,292  $68,582 
July 22, 2022 $16.30   7,666,830   125,000 
Total common stock issued      11,858,122  $193,582 

 

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)
3.5 Amended and Restated Bylaws (5)
4.1 Description of Securities (3)
10.1 Investment Advisory Agreement (1)
10.2 

AdministrationAmendment to Investment Advisory Agreement (1)(3)

10.3 LicenseAdministration Agreement (1)
10.4 IndemnificationLicense Agreement (1)
10.5 CustodyIndemnification Agreement (1)
10.6 SubscriptionCustody Agreement (1)
10.7Subscription Agreement (1)
10.8 Loan 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)
10.810.9 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)
10.910.10 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 (5)
10.1010.11 Senior Secured Revolving Credit Agreement (4)
10.1110.12 Loan and Security Agreement (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 ExecutiveFinancial 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)
101.INS* Inline XBRL Instance Document
101.SCH101.SCH** Inline XBRL Taxonomy Extension Schema Document
101.CAL101.CAL** Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF101.DEF** Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB101.LAB** Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE101.PRE** Inline XBRL Taxonomy Extension Presentation Linkbase Document
104104** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

  

(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.March 10, 2023.
  
(4)Incorporated by reference from the Company’s Form 8-K, as filed with the Securities and Exchange Commission on February 25, 2022.
  
(5)Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on August 15, 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: November 14, 2022May 15, 2023 
  /s/ James C. Baker, Jr.
 Name: James C. Baker, Jr.
 Title:Chief Executive Officer
  (Principal Executive Officer)
Date: November 14, 2022May 15, 2023 
  /s/ Terry A. Hart
 Name:Terry A. Hart
 Title:Chief Financial Officer and Treasurer
  (Principal Financial and Accounting Officer)

 

 

5550

 

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