TCW Direct Lending 10Q 2020 Q1 Quarterly report

TCW Direct Lending 10-Q2020 Q1 Quarterly report

Content analysis

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM10-Q

(Mark One)

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

For the quarterly period ended March 31, 2020

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

For the transition period from to

Commission file number814-01069

TCW DIRECT LENDING LLC

(Exact Name of Registrant as Specified in Its Charter)

Delaware

46-5327366

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)


200 Clarendon Street, Boston, MA		02116
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code:(617) 936-2275

Not applicable

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

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	Not applicable	Not applicable

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 RegulationS-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, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” inRule 12b-2 of the Exchange Act.

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 inRule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

The number of the Registrant’s common units outstanding at May 11, 2020 was 20,134,698.

TCW DIRECT LENDING LLC

FORM10-Q FOR THE QUARTER ENDED MARCH 31, 2020

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Schedules of Investments as of March 31, 2020 (unaudited) and December 31, 2019		2
	Consolidated Statements of Assets and Liabilities as of March 31, 2020 (unaudited) and December 31, 2019		12
	Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 (unaudited)		13
	Consolidated Statements of Changes in Members’ Capital for the three months ended March 31, 2020 and 2019 (unaudited)		14
	Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)		15
	Notes to Consolidated Financial Statements (unaudited)		16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		40
Item 4.	Controls and Procedures		40
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		41
Item 1A.	Risk Factors		41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3.	Defaults Upon Senior Securities		42
Item 4.	Mine Safety Disclosures		42
Item 5.	Other Information		42
Item 6.	Exhibits		43
	SIGNATURES		44

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited)

As of March 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments Debt

Auto Components
	Challenge Manufacturing Company LLC		04/20/17	Term Loan - 9.50% (LIBOR + 8.50%, 1.00% Floor)		6.3%	$	46,532,959		04/20/22	$	46,103,498	$	44,904,306

						6.3%		46,532,959				46,103,498		44,904,306

Commercial Services & Supplies
	School Specialty, Inc.		04/07/17	Delayed Draw Term Loan - 12.25% (PRIME + 9.00%, 1.00% Floor)		0.5%		3,996,117		11/22/20		3,996,117		3,520,579
	School Specialty, Inc.		04/07/17	Term Loan A - 12.25% (PRIME + 9.00%, 1.00% Floor)		3.7%		30,004,431		11/22/20		29,720,744		26,433,904

						4.2%		34,000,548				33,716,861		29,954,483

Construction & Engineering
	Intren, LLC		07/18/17	Term Loan - 8.34% (LIBOR + 6.75%, 1.25% Floor)		1.4%		10,457,536		07/18/23		10,342,751		9,683,678

						1.4%		10,457,536				10,342,751		9,683,678

Distributors
	ASC Acquisition Holdings, LLC		02/05/20	PIK Term Loan - 11.75% inc. PIK (LIBOR +7.50%, 1.50% Floor, 2.50% PIK)		0.4%		3,103,630		02/22/22		3,032,122		3,103,630
	ASC Acquisition Holdings, LLC		02/25/19	Term Loan - 11.78% inc. PIK (LIBOR + 7.50%, 1.50% Floor, 2.50% PIK)		2.7%		23,277,675		02/22/22		22,830,202		19,273,915

						3.1%		26,381,305				25,862,324		22,377,545

Diversified Financial Services
	Carrier & Technology Holdings, LLC(4)		07/02/18	Term Loan – 11.75% inc. PIK (11.75%, Fixed Coupon, all PIK)		0.0%		42,679,251		07/02/23		42,546,059		—
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(1)		07/02/18	Revolver - 8.86% (LIBOR + 7.25%, 1.50% Floor, all PIK)		1.2%		8,776,437		07/02/23		8,776,437		8,644,791
	Guardia LLC (fka Carrier & Technology Solutions, LLC)		07/02/18	Term Loan - 8.86% (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.4%		11,959,987		07/02/23		11,925,081		3,061,756

						1.6%		20,736,424				20,701,518		11,706,547

	Verus Analytics, LLC		04/11/16	First Lien Term Loan - 8.71% (LIBOR + 7.25%, 1.50% Floor)		2.2%		15,750,000		04/12/21		15,685,242		15,718,500

						3.8%		79,165,675				78,932,819		27,425,047

Food Products
	Harvest Hill Beverage Company		05/01/17	Term Loan A1 - 7.50% (LIBOR + 6.50%, 1.00% Floor)		7.9%		58,234,854		01/19/21		58,094,689		56,895,452
	Tonos 1 Operating Corp. (fka Connors Bros. Clover Leaf Seafoods Company) (Canada)(2)		01/30/20	Exit Term Loan B2 - 8.96% (LIBOR + 7.25%, 1.50% Floor)		0.9%		6,468,721		01/31/24		6,616,046		6,436,377
	Tonos US LLC (fka Bumble Bee Holdings, Inc.)		01/30/20	Exit Term Loan B1 - 8.96% (LIBOR + 7.25%, 1.50% Floor)		3.6%		25,874,882		01/31/24		26,464,182		25,745,508

						12.4%		90,578,457				91,174,917		89,077,337

Health Care Providers & Services
	Help at Home, LLC		08/03/15	Revolver - 7.88% (LIBOR + 6.63%, 1.25% Floor)		2.1%		14,864,865		08/03/20		14,864,865		14,864,865

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Health Care Providers & Services (con’t)
	Help at Home, LLC(3)		08/03/15	Term Loan B - 8.34% (LIBOR + 6.75%, 1.25% Floor)		6.2%	$	44,697,585		08/03/20	$	44,639,784	$	44,697,585

						8.3%		59,562,450				59,504,649		59,562,450

Hotels, Restaurants & Leisure
	KBP Investments, LLC (fka FQSR, LLC)(1)		05/14/18	Delayed Draw Term Loan - 6.54% (LIBOR + 5.50%, 1.00% Floor)		1.5%		11,223,996		05/14/23		11,223,996		10,988,292
	KBP Investments, LLC (fka FQSR, LLC)		05/14/18	Term Loan - 7.21% (LIBOR + 5.50%, 1.00% Floor)		3.3%		24,139,386		05/14/23		23,643,999		23,632,460

						4.8%		35,363,382				34,867,995		34,620,752

	OTG Management, LLC		06/30/16	Delayed Draw Term Loan - 8.41% (LIBOR + 7.00%, 1.00% Floor)		2.3%		18,546,807		08/26/21		18,498,336		16,135,722
	OTG Management, LLC		06/30/16	Term Loan - 8.84% (LIBOR + 7.00%, 1.00% Floor)		7.1%		58,502,243		08/26/21		58,174,169		50,896,951

						9.4%		77,049,050				76,672,505		67,032,673

	Ruby Tuesday, Inc.(1)		12/21/17	Term Loan - 11.45% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		1.9%		14,848,247		12/21/22		14,436,524		13,868,262

						16.1%		127,260,679				125,977,024		115,521,687

Household Durables
	Cedar Electronics Holdings, Corp.		01/30/19	Incremental Term Loan - 15.00% inc. PIK (15.00%, Fixed Coupon, all PIK)		0.4%		2,842,366		06/26/20		2,842,366		2,842,366
	Cedar Electronics Holdings, Corp.		05/19/15	Term Loan - 9.61% (LIBOR + 8.00%, 1.50% Floor)		2.8%		19,817,479		06/26/20		19,795,967		19,817,479

						3.2%		22,659,845				22,638,333		22,659,845

Industrial Conglomerates
	H-D Advanced Manufacturing Company(3)		06/30/15	First Lien Last Out Term Loan - 13.00% inc. PIK (LIBOR + 7.00%, 1.50% Floor, 4.50% PIK)		13.7%		106,209,853		12/31/21		105,887,120		98,456,534

						13.7%		106,209,853				105,887,120		98,456,534

Information Technology Services
	ENA Holding Corporation		05/06/16	First Lien Term Loan - 8.86% (LIBOR + 7.25%, 1.50% Floor)		5.7%		43,022,869		05/06/21		42,789,869		41,258,931
	ENA Holding Corporation		05/06/16	Revolver - 8.81% (LIBOR + 7.25%, 1.50% Floor)		1.1%		8,093,032		05/06/21		8,093,032		7,761,218

						6.8%		51,115,901				50,882,901		49,020,149

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC		08/28/17	First Lien Term Loan - 10.07% (LIBOR + 9.00%, 1.00% Floor)		1.7%		12,292,109		08/28/22		12,113,820		12,353,570

						1.7%		12,292,109				12,113,820		12,353,570

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Metals & Mining
	Pace Industries, Inc.(5)		06/30/15	First Lien Term Loan - 11.63% inc. PIK (LIBOR + 12.75%, 1.00% Floor, all PIK)		10.8%	$	96,834,141		06/30/20	$	96,162,915	$	77,660,981

						10.8%		96,834,141				96,162,915		77,660,981

Pharmaceuticals
	Noramco, LLC(3)		07/01/16	Senior Term Loan - 10.29% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 0.38% PIK)		5.5%		50,239,518		07/01/21		50,073,873		39,186,824

						5.5%		50,239,518				50,073,873		39,186,824

Software
	Quicken Parent Corp.		04/01/16	First Lien Term Loan - 10.61% inc. PIK (LIBOR + 9.00%, 1.00% Floor, 0.50% PIK)		2.5%		18,702,819		04/01/21		18,673,485		18,366,168
	Quicken Parent Corp.(1)		04/01/16	Revolver - 9.50% (LIBOR + 8.50%, 1.00% Floor)		0.1%		517,500		04/01/21		517,500		508,185

						2.6%		19,220,319				19,190,985		18,874,353

	Total Debt Investments					99.9%						828,564,790		716,718,789


	Equity						Shares
Distributors
	Animal Supply Holdings, LLC(4),(7)			Class A		0.0%		9,807				708,537		—

						0.0%		9,807				708,537		—

Diversified Financial Services
	Carrier & Technology Holdings, LLC(4),(6)			Common Stock		0.0%		2,143				—		—
	Verus Financial, LLC(8)			Common Stock		1.0%		8,750				7,640,647		7,306,732

						1.0%		10,893				7,640,647		7,306,732

Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.)(4)			Warrant, expires 12/21/27		0.0%		1,470,632				1,379,747		214,430

						0.0%		1,470,632				1,379,747		214,430

Household Durables
	Cedar Ultimate Parent LLC(4)			Common Stock		0.0%		300,000				—		—
	Cedar Ultimate Parent LLC(4)			Preferred Stock		0.2%		9,297,990				9,187,900		1,473,499
	Cedar Ultimate Parent LLC(4)			Preferred Stock		0.0%		2,900,000				—		—

						0.2%		12,497,990				9,187,900		1,473,499

Technologies Hardware, Storage and Peripherals
	Quantum Corporation(4)			Common Stock		1.1%		2,670,415				9,799,470		7,877,724

						1.1%		2,670,415				9,799,470		7,877,724

Commercial Services & Supplies
	School Specialty, Inc.(4)			Warrant, expires 12/27/22		0.0%		487,004				124,656		—

						0.0%		487,004				124,656		—

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2020


	Issuer		Investment		Shares		Amortized Cost		Fair Value
Metals & Mining
	KPI Holding LLC(4)		Warrant, expires 06/30/2020	0.0%		4,466	$	1,692,000	$	—

				0.0%		4,466		1,692,000		—
		��
	Total Equity Investments			2.3%				30,532,957		16,872,385

	TotalNon-Controlled/Non-Affiliated Investments*			102.2%			$	859,097,747	$	733,591,174


					Shares		Cost
	Controlled/Affiliated Investments
Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(2),(9)		Preferred membership interests	22.1%		172,800		172,800,000		158,718,041
	TCW Direct Lending Strategic Ventures LLC(2),(9)		Common membership interests	0.0%		800		—		—

	Total Controlled/Affiliated Investments			22.1%			$	172,800,000	$	158,718,041

	Cash Equivalents

	Blackrock Liquidity Funds, Yield 0.33%			21.5%		153,919,969		153,919,969		153,919,969

	Total Investments 145.8%						$	1,185,817,716	$	1,046,229,184

	Net unrealized depreciation on unfunded commitments (0.0%)								$	(149,590	)

	Liabilities in Excess of Other Assets (45.8%)								$	(328,739,181	)

	Net Assets 100.0%								$	717,340,413

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2020

The fair value of the Quantum Corporation Common Stock held by the Company is based on the quoted market price of the issuer’s stock as of March 31, 2020. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of eachnon-controlled/non-affiliated investment was determined using significant unobservable inputs and such investments are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

(1)

Excluded from the investment above, is an unfunded loan commitment for a delayed draw term loan or revolving credit. The Company earns an unused commitment fee on the unfunded commitment during the commitment period. The expiration date of the commitment period may be earlier than the maturity date of the investment stated above. See Note 5—Commitments and Contingencies.

(2)

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of March 31, 2020, $165,154,418 or 15.4% of the Company’s total assets were represented by“non-qualifying assets.”

(3)	In addition to the interest earned based on the stated interest rate of this loan, the Company is entitled to receive an additional interest amount on the “first out” tranche of the portfolio company’s first lien senior secured loans.

(4)	Non-income producing.

(5)	Default interest rate of 2% onnon-accrual.

(6)	Holdings of Carrier & Technology Holdings, LLC common stock are held through TCW DL CTH LLC, a special purpose vehicle.

(7)	Holding of Animal Supply Holdings, LLC Class A units are held through TCW DL ASH LLC, a special purpose vehicle.

(8)	Holdings of Verus Financial, LLC common stock are held through TCW DL VF Holdings, Inc., a special purpose vehicle.

(9)

As defined in the Investment Company Act of 1940, the investment is deemed to be a “controlled affiliated person” of the Company because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company.

LIBOR - London Interbank Offered Rate, generally1-Month or3-Month

Prime - Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $24,094,575 and $68,847,970, respectively, for the year ended March 31, 2020. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments

As of December 31, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments Debt
Auto Components
	Challenge Manufacturing Company LLC		04/20/17	Term Loan - 8.80% (LIBOR + 7.00%, 1.00% Floor)		5.3%	$	47,217,268		04/20/22	$	46,728,546	$	46,414,574

						5.3%		47,217,268				46,728,546		46,414,574

Commercial Services & Supplies
	School Specialty, Inc.		04/07/17	Delayed Draw Term Loan - 16.75% inc. PIK (PRIME + 9.00%, 1.00% Floor, 3.00% PIK)		0.4%		3,996,117		11/22/20		3,996,117		3,768,338
	School Specialty, Inc.		04/07/17	Term Loan A - 16.75% inc. PIK (PRIME + 9.00%, 1.00% Floor, 3.00% PIK)		3.3%		30,004,431		11/22/20		29,703,130		28,294,179

						3.7%		34,000,548				33,699,247		32,062,517

Construction & Engineering
	Intren, LLC		07/18/17	Term Loan - 8.45% (LIBOR + 6.75%, 1.25% Floor)		1.0%		10,537,755		07/18/23		10,413,341		8,851,715

						1.0%		10,537,755				10,413,341		8,851,715

Distributors
	ASC Acquisition Holdings, LLC		02/25/19	Term Loan - 11.80% inc. PIK (LIBOR + 7.50%, 1.00% Floor, 2.50% PIK)		1.9%		23,187,573		02/22/22		22,679,993		16,973,303

						1.9%		23,187,573				22,679,993		16,973,303

Diversified Financial Services
	Carrier & Technology Holdings, LLC		07/02/18	Term Loan - 11.75% (11.75%, Fixed Coupon, all PIK)		0.0%		42,679,251		07/02/23		42,546,059		—
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(1)		07/02/18	Revolver - 9.02% (LIBOR + 7.25%, 1.50% Floor, all PIK)		1.0%		8,494,311		07/02/23		8,494,311		8,494,311
	Guardia LLC (fka Carrier & Technology Solutions, LLC)		07/02/18	Term Loan - 8.96% (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.9%		11,692,763		07/02/23		11,655,180		7,740,609

						1.9%		20,187,074				20,149,491		16,234,920

	Verus Analytics, LLC		04/11/16	First Lien Term Loan - 9.20% (LIBOR + 7.25%, 0.75% Floor)		1.8%		15,859,375		04/12/21		15,778,386		15,859,375

						3.7%		78,725,700				78,473,936		32,094,295

Food Products
	Bumble Bee Foods, LLC		11/01/19	DIP Term Loan - 12.29% (LIBOR + 10.50%, 1.00% Floor)		0.3%		2,632,205		05/26/20		2,510,487		2,632,205
	Bumble Bee Foods, LLC		11/01/19	Delayed Draw Term Loan - 12.29% (LIBOR + 10.50%, 1.00% Floor)		0.3%		2,632,205		05/26/20		2,632,205		2,632,205
	Bumble Bee Holdings, Inc.		08/15/17	Term Loan B1 - 13.75% inc. PIK (PRIME + 7.50%, 2.00% Floor, 1.50% PIK)		3.9%		33,416,751		08/15/23		33,020,954		33,851,168
	Connors Bros. Clover Leaf Seafoods Company (Canada) (an affiliate of Bumble Bee Holdings, Inc.)(2)		08/15/17	Term Loan B2 - 13.75% inc. PIK (PRIME + 7.50%, 2.00% Floor, 1.50% PIK)		1.1%		9,467,529		08/15/23		9,355,394		9,590,608
	Harvest Hill Beverage Company		01/20/16	Term Loan A1 - 8.30% (LIBOR + 6.50%, 1.00% Floor)		7.0%		61,188,810		01/19/21		60,995,793		61,188,810

						12.6%		109,337,500				108,514,833		109,894,996

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019


Industry	Issuer	Acquisition Date	Investment	% of Net Assets		Par Amount		Maturity Date	Amortized Cost		Fair Value
Health Care Providers & Services
	Help at Home, LLC(1)	08/03/15	Revolver - 8.43% (LIBOR + 6.63%, 1.25% Floor)		0.5%	$	4,324,324	08/03/20	$	4,324,324	$	4,324,324
	Help at Home, LLC(3)	08/03/15	Term Loan B - 8.45% (LIBOR + 6.75%, 1.25% Floor)		5.1%		44,900,288	08/03/20		44,799,753		44,900,288

					5.6%		49,224,612			49,124,077		49,224,612

Hotels, Restaurants & Leisure
	KBP Investments, LLC (fka FQSR, LLC)(1)	05/14/18	Delayed Draw Term Loan - 7.42% (LIBOR + 5.50%, 1.00% Floor)		1.2%		10,797,116	05/14/23		10,797,116		10,797,116
	KBP Investments, LLC (fka FQSR, LLC)	05/14/18	Term Loan - 7.41% (LIBOR + 5.50%, 1.00% Floor)		2.8%		24,200,810	05/14/23		23,664,447		24,200,810

					4.0%		34,997,926			34,461,563		34,997,926

	OTG Management, LLC	06/30/16	Delayed Draw Term Loan - 8.90% (LIBOR + 7.00%, 1.00% Floor)		2.1%		18,546,807	08/26/21		18,489,721		18,639,541
	OTG Management, LLC	06/30/16	Term Loan - 9.00% (LIBOR + 7.00%, 1.00% Floor)		6.7%		58,502,243	08/26/21		58,115,859		58,794,754

					8.8%		77,049,050			76,605,580		77,434,295

	Ruby Tuesday, Inc.(1)	12/21/17	Term Loan - 11.94% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		1.9%		17,034,239	12/21/22		16,510,648		16,540,246

					14.7%		129,081,215			127,577,791		128,972,467

Household Durables
	Cedar Electronics Holdings, Corp.	01/30/19	Incremental Term Loan - 15.00% inc. PIK (15.00% , Fixed Coupon, all PIK)		0.3%		2,738,388	06/26/20		2,738,388		2,738,388
	Cedar Electronics Holdings, Corp.	05/19/15	Term Loan - 9.70% (LIBOR + 8.00%, 1.50% Floor)		2.3%		19,817,479	06/26/20		19,773,204		19,817,479

					2.6%		22,555,867			22,511,592		22,555,867

Industrial Conglomerates
	H-D Advanced Manufacturing Company(3)	06/30/15	First Lien Last Out Term Loan - 10.44% inc. PIK (LIBOR + 7.00%, 1.00% Floor, 1.50% PIK)		11.5%		105,574,504	12/31/21		105,205,810		100,190,204

					11.5%		105,574,504			105,205,810		100,190,204

Information Technology Services
	ENA Holding Corporation	05/06/16	First Lien Term Loan - 9.16% inc. PIK (LIBOR + 7.25%, 1.00% Floor, 2.50% PIK)		4.8%		43,605,802	05/06/21		43,317,091		41,730,752
	ENA Holding Corporation	05/06/16	Revolver - 9.17% (LIBOR + 7.25%, 1.00% Floor, 2.50% PIK)		0.9%		8,092,133	05/06/21		8,092,133		7,744,172

					5.7%		51,697,935			51,409,224		49,474,924

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC	08/28/17	First Lien Term Loan -10.80% (LIBOR + 9.00%, 1.00% Floor)		1.4%		12,292,109	08/28/22		12,095,363		12,316,693

					1.4%		12,292,109			12,095,363		12,316,693

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Metals & Mining
	Pace Industries, Inc.		06/30/15	First Lien Term Loan - 12.70% inc. PIK (LIBOR + 8.25%, 1.00% Floor, 2.50% PIK)		10.0%	$	93,224,671		06/30/20	$	91,874,763	$	87,910,865

						10.0%		93,224,671				91,874,763		87,910,865

Pharmaceuticals
	Noramco, LLC(3)		07/01/16	Senior Term Loan - 10.48% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 0.38% PIK)		4.1%		50,914,830		07/01/21		50,713,260		35,589,466

						4.1%		50,914,830				50,713,260		35,589,466

Software
	Quicken Parent Corp.(1)		04/01/16	First Lien Term Loan - 10.71% inc. PIK (LIBOR + 8.50%, 1.00% Floor, 0.50% PIK)		2.2%		20,324,881		04/01/21		20,284,943		19,715,135

						2.2%		20,324,881				20,284,943		19,715,135

	Total Debt Investments					86.0%						831,306,719		752,241,633


	Equity						Shares
Distributors
	Animal Supply Holdings, LLC(4),(6)			Class A		0.0%		9,807				708,537		—

						0.0%		9,807				708,537		—

Diversified Financial Services
	Carrier & Technology Holdings, LLC(4),(5)			Common Stock		0.0%		2,143				—		—
	Verus Financial, LLC(7)			Common Stock		0.9%		8,750				7,640,647		8,049,137

						0.9%		10,893				7,640,647		8,049,137

Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.)(4)			Warrant, expires 12/21/27		0.1%		1,470,632				1,379,747		1,007,408

						0.1%		1,470,632				1,379,747		1,007,408

Household Durables
	Cedar Ultimate Parent LLC(4)			Common Stock		0.0%		300,000				—		—
	Cedar Ultimate Parent LLC(4)			Preferred Stock		0.2%		9,297,990				9,187,900		1,640,937
	Cedar Ultimate Parent LLC(4)			Preferred Stock		0.0%		2,900,000				—		—

						0.2%		12,497,990				9,187,900		1,640,937

Technologies Hardware, Storage and Peripherals
	Quantum Corporation(4)			Common Stock		2.3%		2,670,415				9,799,470		19,814,479

						2.3%		2,670,415				9,799,470		19,814,479

Commercial Services & Supplies
	School Specialty, Inc.(4)			Warrant, expires 12/27/22		0.0%		487,004				124,655		124,508

						0.0%		487,004				124,655		124,508

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019


	Issuer	Investment		Shares			Amortized Cost		Fair Value
Metals & Mining
	KPI Holding LLC(4)	Warrant, expires 06/30/2020	0.0%		4,466		$	1,692,000	$	—

			0.0%		4,466			1,692,000		—

	Total Equity Investments		3.5%					30,532,956		30,636,469

	TotalNon-Controlled/Non-Affiliated Investments*		89.5%				$	861,839,675	$	782,878,102


				Shares			Cost
	Controlled/Affiliated Investments
Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(2),(8)	Preferred membership interests	22.4%		211,200			211,200,000		195,726,195
	TCW Direct Lending Strategic Ventures LLC(2),(8)	Common membership interests	0.0%		800			—		—

	Total Controlled/Affiliated Investments		22.4%				$	211,200,000	$	195,726,195

	Cash Equivalents
	Blackrock Liquidity Funds, Yield 1.52%		8.0%		69,842,068			69,842,068		69,842,068

	Total Investments 119.9%						$	1,142,881,743	$	1,048,446,365

	Net unrealized depreciation on unfunded commitments (0.0%)					��			$	(25,875	)

	Liabilities in Excess of Other Assets (19.9%)								$	(174,192,368	)

	Net Assets 100.0%								$	874,228,122

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2019

The fair value of the Quantum Corporation Common Stock held by the Company is based on the quoted market price of the issuer’s stock as of December 31, 2019. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of eachnon-controlled/non-affiliated investment was determined using significant unobservable inputs and such investments are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

(1)

Excluded from the investment above is an unfunded loan commitment for a delayed draw term loan or revolving credit. The Company earns an unused commitment fee on the unfunded commitment during the commitment period. The expiration date of the commitment period may be earlier than the maturity date of the investment stated above. See Note 5—Commitments and Contingencies.

(2)

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2019, $205,316,803 or 16.5% of the Company’s total assets were represented by“non-qualifying assets.”

(3)	In addition to the interest earned based on the stated interest rate of this loan, the Company is entitled to receive an additional interest amount on the “first out” tranche of the portfolio company’s first lien senior secured loans.

(4)	Non-income producing.

(5)	Holdings of Carrier & Technology Holdings, LLC common stock are held through TCW DL CTH LLC, a special purpose vehicle.

(6)	Holdings of Animal Supply Holdings, LLC Class A units are held through TCW DL ASH LLC, a special purpose vehicle.

(7)	Holdings of Verus Financial, LLC common stock are held through TCW DL VF Holdings, Inc., a special purpose vehicle.

(8)

LIBOR - London Interbank Offered Rate, generally1-Month or3-Month

Prime - Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $71,865,047 and $162,495,879, respectively, for the year ended December 31, 2019. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)


	As of March 31, 2020 (unaudited)			As of December 31, 2019
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $859,098 and $861,840, respectively)	$	733,591		$	782,878
Controlled affiliated investments (cost of $172,800 and $211,200, respectively)		158,718			195,726
Cash and cash equivalents		169,629			254,474
Interest receivable		9,244			7,427
Deferred financing costs		78			710
Prepaid and other assets		188			81

Total Assets	$	1,071,448		$	1,241,296

Liabilities
Credit facility payable	$	350,000		$	364,065
Management fees payable		2,012			2,094
Interest and credit facility expense payable		852			111
Unrealized depreciation on unfunded commitments		149			26
Directors’ fees payable		68			—
Other accrued expenses and other liabilities		1,027			772

Total Liabilities	$	354,108		$	367,068

Commitments and Contingencies (Note 5)
Members’ Capital
Common Unitholders’ commitment: (20,134,698 units issued and outstanding)	$	2,013,470		$	2,013,470
Common Unitholders’ undrawn commitment: (20,134,698 units issued and outstanding)		(409,125	)		(409,125	)
Common Unitholders’ return of capital		(680,250	)		(618,250	)
Common Unitholders’ offering costs		(853	)		(853	)
Accumulated Common Unitholders’ tax reclassification		(13,595	)		(13,595	)

Common Unitholders’ capital		909,647			971,647
Accumulated loss		(192,307	)		(97,419	)

Total Members’ Capital	$	717,340		$	874,228

Total Liabilities and Members’ Capital	$	1,071,448		$	1,241,296

Net Asset Value Per Unit (accrual base) (Note 9)	$	55.95		$	63.74

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Operations (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the three months ended March 31,
	2020			2019
Investment Income:
Interest income fromnon-controlled/non-affiliated investments	$	18,403		$	24,626
Interest income fromnon-controlled/non-affiliated investmentspaid-in-kind		5,185			2,850
Dividend income fromnon-controlled/non-affiliated investments		195			69
Dividend income from controlled affiliated investments		—			20,800
Other fee income fromnon-controlled/non-affiliated investments		58			550

Total investment income		23,841			48,895

Expenses:
Interest and credit facility expenses		3,434			4,894
Management fees		2,012			2,195
Administrative fees		249			265
Professional fees		117			163
Directors’ fees		78			79
Other expenses		71			56

Total expenses		5,961			7,652

Net investment income	$	17,880		$	41,243

Net realized and unrealized gain (loss) on investments
Net realized gain (loss) onnon-controlled/non- affiliated investments	$	2,158		$	(580	)
Net change in unrealized appreciation/depreciation onnon-controlled/non-affiliated investments		(46,668	)		(10,844	)
Net change in unrealized appreciation/depreciation on controlled affiliated investments		1,392			(8,377	)

Net realized and unrealized loss on investments	$	(43,118	)	$	(19,801	)

Net (decrease) increase in Members’ Capital from operations	$	(25,238	)	$	21,442

Basic and diluted:
(Loss) Income per unit	$	(1.25	)	$	1.06

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Changes in Members’ Capital (Unaudited)

(Dollar amounts in thousands, except unit data)


	Common Unitholders’ Capital			Accumulated Loss			Total
Members’ Capital at December 31, 2018	$	979,882		$	(66,339	)	$	913,543
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			41,243			41,243
Net realized loss on investments		—			(580	)		(580	)
Net change in unrealized appreciation/depreciation on investments		—			(19,221	)		(19,221	)
Distributions to Members from:
Distributable earnings		—			(15,000	)		(15,000	)
Return of capital		(82,000	)		—			(82,000	)

Total (Decrease) Increase in Members’ Capital for the three months ended March 31, 2019		(82,000	)		6,442			(75,558	)

Members’ Capital at March 31, 2019	$	897,882		$	(59,897	)	$	837,985

Members’ Capital at December 31, 2019	$	971,647		$	(97,419	)	$	874,228
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			17,880			17,880
Net realized gain on investments		—			2,158			2,158
Net change in unrealized appreciation/depreciation on investments		—			(45,276	)		(45,276	)
Distributions to Members from:
Distributable earnings		—			(69,650	)		(69,650	)
Return of capital		(62,000	)		—			(62,000	)

Total Decrease in Members’ Capital for the three months ended March 31, 2020		(62,000	)		(94,888	)		(156,888	)

Members’ Capital at March 31, 2020	$	909,647		$	(192,307	)	$	717,340

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the three months ended March 31,
	2020			2019
Cash Flows from Operating Activities
Net (decrease) increase in net assets resulting from operations	$	(25,238	)	$	21,442
Adjustments to reconcile the net (decrease) increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(18,909	)		(13,164	)
Interest income paidin-kind		(5,185	)		(2,850	)
Proceeds from sales and paydowns of investments		68,848			32,960
Net realized (gain) loss on investments		(2,158	)		580
Change in net unrealized appreciation/depreciation on investments		45,276			19,221
Amortization of premium and accretion of discount, net		(1,454	)		(1,255	)
Amortization of deferred financing costs		683			629
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		(1,817	)		(2,495	)
(Increase) decrease in receivable from Investment Adviser		—			(1	)
(Increase) decrease in prepaid and other assets		(107	)		31
Increase (decrease) in interest and credit facility expense payable		741			120
Increase (decrease) in management fees payable		(82	)		(2,007	)
Increase (decrease) in directors’ fees payable		68			68
Increase (decrease) in other accrued expenses and liabilities		255			121

Net cash provided by operating activities	$	60,921		$	53,400

Cash Flows from Financing Activities
Return of capital	$	(62,000	)	$	(82,000	)
Distributions to Members		(69,650	)		(15,000	)
Deferred financing costs paid		(51	)		—
Proceeds from credit facility		197,000			40,000
Repayments of credit facility		(211,065	)		(30,000	)

Net cash used in financing activities	$	(145,766	)	$	(87,000	)

Net decrease in cash and cash equivalents	$	(84,845	)	$	(33,600	)
Cash and cash equivalents, beginning of period	$	254,474		$	145,912

Cash and cash equivalents, end of period	$	169,629		$	112,312

Supplemental andnon-cash financing activities
Interest expense paid	$	1,924		$	4,027

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amount in thousands, except for unit data)

March 31, 2020

1. Organization and Basis of Presentation

Organization:TCW Direct Lending LLC (“Company”) was formed as a Delaware corporation on March 20, 2014 and converted to a Delaware limited liability company on April 1, 2014. The Company conducted a private offering of its limited liability company units (the “Common Units”) to investors in reliance on exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”). In addition, the Company may issue preferred units, though it currently has no intention to do so. The Company has engaged TCW Asset Management Company LLC (“TAMCO”), an affiliate of The TCW Group, Inc. (“TCW”) to be its adviser (the “Adviser”). On May 13, 2014 (“Inception Date”), the Company sold and issued 10 Common Units at an aggregate purchase price of $1 to TAMCO.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company has also elected to be treated for U.S. federal income tax purposes as a Regulated Investment Company (a “RIC”) under Subchapter M of the U.S Internal Revenue Code of 1986, as amended (the “Code”) for the taxable year ending December 31, 2015 and subsequent years. The Company is required to meet the minimum distribution and other requirements for RIC qualification and as a BDC and a RIC, the Company is required to comply with certain regulatory requirements.

In 2019, the Company established two wholly-owned subsidiaries, TCW DL CTH LLC and TCW DL ASH LLC, each a Delaware limited liability company and each designed to hold an equity investment of the Company.

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Term: The term of the Company will continue until the sixth anniversary of the Initial Closing Date (as defined below), September 14, 2020 unless extended or sooner dissolved as provided in the limited liability agreement or by operation of law. The Company may extend the term for two additionalone-year periods upon written notice to the holders of the Common Units and holders of preferred units, if any, (collectively the “Unitholders” or “Members”) at least 90 days prior to the expiration of the term or the end of the firstone-year period. Thereafter, the term may be extended for successiveone-year periods, with the vote or consent of a supermajority in interest of the holders of the Common Units.

Commitment Period: The Commitment Period commenced on September 19, 2014 (the “Initial Closing Date”) and ended on September 19, 2017, the third anniversary of the Initial Closing Date. In accordance with the Company’s Limited Liability Company Agreement, the Company may complete investment transactions that were significantly in process as of the end of the Commitment Period and which the Company reasonably expects to be consummated prior to 90 days subsequent to the expiration date of the Commitment Period. The Company may also effectfollow-on investments up to an aggregate maximum of 10% of Capital Commitments (as defined below), provided that any suchfollow-on investment to be made after the third anniversary of the expiration of the Commitment Period shall require the prior consent of a majority in interest of the Common Unitholders.

Capital Commitments:On September 19, 2014 (“the Initial Closing Date”), the Company began accepting subscription agreements from investors for the private sale of its Common Units. On March 19, 2015, the Company completed its final private placement of its Common Units. Subscription agreements with commitments (“Commitments”) from investors (each a “Common Unitholder”) totaling $2,013,470 for the purchase of Common Units were accepted. Each Common Unitholder is obligated to contribute capital equal to their Commitment and each Unit’s Commitment obligation is $100.00 per unit. The amount of capital that remains to be drawn down and contributed is referred to as an “Undrawn Commitment”.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

1. Organization and Basis of Presentation (continued)

The commitment amount funded does not include amounts contributed in anticipation of a potential investment that the Company did not consummate and therefore returned to the Members’ as unused capital. As of March 31, 2020, aggregate Commitments, Undrawn Commitments, the percentage of Commitments funded and the number of subscribed for Units of the Company were as follows:


	Commitments		Undrawn Commitments		% of Commitments Funded			Units
Common Unitholder	$	2,013,470	$	409,125		79.7	%		20,134,698

Recallable Amount: A Common Unitholder may be required tore-contribute amounts distributed equal to 75% of the principal amount or the cost portion of any Portfolio Investment that is fully repaid to or otherwise fully recouped by the Company within one year of the Company’s investment. The Recallable Amount is excluded from the calculation of the accrual based net asset value.

The Recallable Amount as of March 31, 2020 was $100,875.

2. Significant Accounting Policies

Basis of Presentation:The consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies (“ASC 946”). The Company has consolidated the results of its wholly owned subsidiary in its consolidated financial statements in accordance with ASC 946.

Use of Estimates:The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the reported amounts of income and expenses during the years presented and (iii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates, and such differences could be material.

Investments: The Company measures the value of its investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity.

Transactions: The Company records investment transactions on the trade date. The Company considers trade date for investments not traded on a recognizable exchange, or traded in theover-the-counter markets, to be the date on which the Company receives legal or contractual title to the asset and bears the risk of loss.

Income Recognition: Interest income is recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. The Company typically receives a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, using the effective-interest method assuming there are no questions as to collectability, and reflected in the amortized cost basis of the investment. Discounts associated with a revolver as well as fees associated with a delayed draw that remains unfunded are treated as a discount to the issuers’ term loan. Ongoing facility, commitment or other additional fees including, prepayment fees, consent fees and forbearance fees are recognized immediately when earned as income.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

2. Significant Accounting Policies (continued)

Loans are generally placed onnon-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 onnon-accrual status. Interest payments received onnon-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection.

Deferred Financing Costs: Deferred financing costs incurred by the Company in connection with the revolving credit facility, including arrangement fees, upfront fees and legal fees, are amortized on a straight-line basis over the term of the revolving credit facility.

Organization and Offering Costs: Costs incurred to organize the Company totaling $665 were expensed as incurred. Offering costs totaling $853 were accumulated and charged directly to Members’ Capital on March 19, 2015, the end of the period during which Common Units were offered (the “Closing Period”). The Company did not bear more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses.

Cash and Cash Equivalents:The Company considers all investments with a maturity of three months or less at the time of acquisition to be cash equivalents. As of March 31, 2020, cash and cash equivalents is comprised of demand deposits and highly liquid investments with maturities of three months or less. Cash equivalents are carried at amortized costs which approximates fair value, and are classified as Level 1 in the GAAP valuation hierarchy

Income Taxes:So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. Federal income taxes on any ordinary income or capital gains that it distributes at least annually to its Members as dividends. Rather, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s Members and will not be reflected in the consolidated financial statements of the Company.

Recent Accounting Pronouncements:On August 28, 2018, the FASB issued ASU2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance modifies the disclosure requirements on fair value measurements by (1) removing certain disclosure requirements including policies related to valuation processes and the timing of transfers between levels of the fair value hierarchy, (2) amending disclosure requirements related to measurement uncertainty from the use of significant unobservable inputs, and (3) adding certain new disclosure requirements including changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods therein, with early adoption permitted. As permitted by the ASU, the Company early adopted the following applicable provisions of the ASU:

•

removed the Company’s disclosure of policy for timing of transfers between levels;

•

removed the disclosure describing the Company’s valuation process for Level 3 fair value measurements;

•

for investments measured using net asset values, disclosed (1) the timing of liquidation of an investee’s assets and (2) the date when redemption restrictions will lapse, to the extent that such information has been publicly announced by the investee; and

•

disclosed information about the uncertainty of Level 3 fair value measurements as of the reporting date, rather than at a point in the future.

During the fourth quarter of 2019, the Company adopted the remaining provisions of the ASU which included disclosing the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

3. Investment Valuations and Fair Value Measurements

Investments at Fair Value:Investments held by the Company are valued at fair value. Fair value is generally determined on the basis of last reported sales prices or official closing prices on the primary exchange in which each security trades, or if no sales are reported, based on the midpoint of the valuation range obtained for debt investments from a quotation reporting system, established market makers or pricing service.

Investments for which market quotes are not readily available or are not considered reliable are valued at fair value and approved by the Board of Directors (the “Board”) based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy:Assets and liabilities are classified into three levels by the Company based on valuation inputs used to determine fair value:

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect the Company’s determination of assumptions that market participants might reasonably use in valuing the assets.

Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation levels are not necessarily an indication of the risk associated with investing in those securities.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Equity, (Level 1), includes common stock valued at the closing price on the primary exchange in which the security trades.

Level 3 Assets (Investments):The following valuation techniques and significant inputs are used to determine the fair value of investments in private debt and equity for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Debt, (Level 3), include investments in privately originated senior secured debt. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A discounted cash flow approach incorporating a weighted average cost of capital is generally used to determine fair value or, in some cases, an enterprise value waterfall method. Valuation may also include a shadow rating method. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt, credit, industry, and market risk and events.

Equity, (Level 3), includes common and preferred stocks, as well as warrants. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health and relevant business developments of the issuer; EBITDA; market multiples of comparable companies; comparable market transactions and recent trades or transactions; issuer, industry and market events; and contractual or legal restrictions on the sale of the security. When a Black-Scholes pricing model is used it follows the income approach. The pricing model takes into account the contract terms as well as multiple inputs, including: time value, implied volatility, equity prices and interest rates. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Pricing inputs and weightings applied to determine value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized from sales or other dispositions of investments.

Net Asset Value (“NAV”) (Investment Funds and Vehicles): Equity investments in affiliated investment fund (Strategic Ventures) are valued based on the NAV reported by the investment fund. Investments held by the affiliated fund include debt investments in privately originated senior secured debt. Such investments held by the affiliated fund are valued using the same methods, approach and standards applied above to debt investments held by the Company. The Company’s ability to withdraw from the fund is subject to restrictions. The term of the fund will continue until June 5, 2021 unless dissolved earlier or extended for two additionalone-year periods by the Company, in its full discretion. The Company can further extend the term of the fund for additionalone-year periods, upon notice to and consent from the fund’s management committee. The Company is entitled to income and principal distributed by the fund.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

3. Investment Valuations and Fair Value Measurements (continued)

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of March 31, 2020:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	716,719	$	—	$	716,719
Equity		7,878		—		8,994		—		16,872
Investment Funds & Vehicles⁽¹⁾		—		—		—		158,718		158,718
Cash equivalents		153,920		—		—		—		153,920

Total Assets	$	161,798	$	—	$	725,713	$	158,718	$	1,046,229

⁽¹⁾

Includes equity investments in Strategic Ventures. In accordance with ASC Topic820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of December 31, 2019:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	752,242	$	—	$	752,242
Equity		19,814		—		10,822		—		30,636
Investment Funds & Vehicles⁽¹⁾		—		—		—		195,726		195,726
Cash equivalents		69,842		—		—		—		69,842

Total Assets	$	89,656	$	—	$	763,064	$	195,726	$	1,048,446

⁽¹⁾

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

3. Investment Valuations and Fair Value Measurements (continued)

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three months ended March 31, 2020:


	Debt			Equity			Total
Balance, January 1, 2020	$	752,242		$	10,822		$	763,064
Purchases*		24,094			—			24,094
Sales and paydowns of investments		(28,312	)		—			(28,312	)
Amortization of premium and accretion of discount, net		(682	)		—			(682	)
Net realized gains		2,158			—			2,158
Net change in unrealized appreciation/depreciation		(32,781	)		(1,828	)		(34,609	)

Balance, March 31, 2020	$	716,719		$	8,994		$	725,713

Change in net unrealized appreciation/depreciation in investments held as of March 31, 2020	$	(31,717	)	$	(1,703	)	$	(33,420	)

*	Includes payments receivedin-kind

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three months ended March 31, 2019:


	Debt			Equity			Total
Balance, January 1, 2019	$	854,564		$	10,608		$	865,172
Purchases*		16,014			692			16,706
Sales and paydowns of investments		(33,652	)		—			(33,652	)
Amortization of premium and accretion of discount, net		1,255			—			1,255
Net realized gains (losses)		16			(596	)		(580	)
Net change in unrealized appreciation/depreciation		(11,354	)		513			(10,841	)

Balance, March 31, 2019	$	826,843		$	11,217		$	838,060

Change in net unrealized appreciation/depreciation in investments held as of March 31, 2019	$	(7,108	)	$	513		$	(6,595	)

*	Includes payments receivedin-kind

During the three months ended March 31, 2020 and 2019, the Company did not have any transfers between levels.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

3. Investment Valuations and Fair Value Measurements (continued)

Level 3 Valuation and Quantitative Information:The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of March 31, 2020.

Investment Type

Fair Value

Valuation
Technique

Unobservable Input

Range

Weighted
Average*

Impact to
Valuation if
Input Increases

Debt

546,231

Income Method

Discount Rate

7.1% to 21.6%

13.4

Decrease

Debt

151,214

Market Method

EBITDA Multiple

4.5x to 7.5x

N/A

Increase

Revenue Multiple

0.1x to 2.1x

N/A

Increase

Debt

19,274

Income Method

Discount Rate

11.1% to 12.9%

16.8

Decrease

Market Method

EBITDA Multiple

6.5x to 7.5x

N/A

Increase

Revenue Multiple

0.13x to 0.18x

N/A

Increase

Equity

8,994

Market Method

EBITDA Multiple

3.5x to 11.0x

N/A

Increase

Revenue Multiple

0.1x to 2.1x

N/A

Increase

Equity

—

Income Method

Discount Rate

14.8% to 16.8%

N/A

Decrease

*	Weighted based on fair value

The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2019.

Investment Type

Fair Value

Valuation
Technique

Unobservable Input

Range

Weighted
Average*

Impact to
Valuation if
Input Increases

Debt

483,357

Income Method

Discount Rate

5.8% to 17.4%

10.1

Decrease

Debt

210,997

Market Method

EBITDA Multiple

5.5x to 8.5x

N/A

Increase

Revenue Multiple

2.2x to 2.4x

N/A

Increase

Debt

32,062

Income Method

Take-Out Indication

100.0% to 100.0%

100.0

Increase

Discount Rate

18.6% to 23.2%

20.4

Decrease

Debt

16,973

Income Method

Take-Out Indication

100.0% to 100.0%

100.0

Increase

Market Method

EBITDA Multiple

7.5x to 8.5x

N/A

Increase

Revenue Multiple

0.2x to 0.2x

N/A

Increase

Debt

8,853

Income Method

Discount Rate

14.2% to 17.9%

16.8

Decrease

Market Method

EBITDA Multiple

3.8x to 4.8x

N/A

Increase

Equity

10,822

Market Method

EBITDA Multiple

4.8x to 12x

N/A

Increase

Revenue Multiple

0.2x to 2.4x

N/A

Increase

*	Weighted based on fair value

Unless noted, the Company is utilizing the midpoint of a valuation range provided by an external, independent valuation firm.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

4. Agreements and Related Party Transactions

Advisory Agreement:On September 15, 2014, the Company entered into an Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Adviser, its registered investment adviser under the Investment Advisers Act of 1940, as amended. The Advisory Agreement was approved by the Board at anin-person meeting. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of two years and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board. On August 12, 2019, the Company’s Board reapproved the Advisory Agreement.

Management Fee: Pursuant to the Advisory Agreement, and subject to the overall supervision of the Board, the Adviser will manage the Company’sday-to-day operations and provide investment advisory services to the Company. The Company will pay to the Adviser, quarterly in advance, a management fee (the “Management Fee”) calculated as follows: (i) for the period starting on the initial closing date and ending on the earlier of (A) the last day of the calendar quarter during which the Commitment Period (as defined below) ends or (B) the last day of the calendar quarter during which the Adviser or an affiliate thereof begins to accrue a management fee with respect to a successor fund, 0.375% (i.e., 1.50% per annum) of the aggregate commitments determined as of the end of the Closing Period, and (ii) for each calendar quarter thereafter during the term of the Company (but not beyond the tenth anniversary of the initial closing date), 0.1875% (i.e., 0.75% per annum) of the aggregate cost basis (whether acquired by the Company with contributions from members, other Company funds or borrowings) of all portfolio investments that have not been sold, distributed to the members, or written off for tax purposes (but reduced by any portion of such cost basis that has been written down to reflect a permanent impairment of value of any portfolio investment), determined in each case as of the first day of such calendar quarter. The Management Fee in respect of the Closing Period will be calculated as if all capital commitments of the Company were made on the initial closing date, regardless of when Common Units were actually funded. The actual payment of the Management Fee with respect to the Closing Period will not be made prior to the first day of the first full calendar quarter following the end of the Closing Period. The “Commitment Period” of the Company will begin on the initial closing date and end on the earlier of (a) three years from the initial closing date and (b) the date on which the undrawn Commitment of each Common Unit has been reduced to zero. While the Management Fee will accrue from the initial closing date, the Adviser intends to defer payment of such fees to the extent that such fees cannot be paid from interest and fee income generated by the Company’s investments.

For the three months ended March 31, 2020 and 2019, Management Fees incurred amounted to $2,012 and $2,195, respectively, of which $2,012 and $497 remained payable at March 31, 2020 and 2019, respectively.

Transaction and Other Fees:Any (i) transaction, advisory, consulting, management, monitoring, directors’ or similar fees, (ii) closing, investment banking, finders’, transaction or similar fees, (iii) commitment, breakup or topping fees or litigation proceeds and (iv) other fee or payment of services performed or to be performed with respect to an investment or proposed investment received from or with respect to Portfolio Companies or prospective Portfolio Companies in connection with the Company’s activities will be will be the property of the Company.

Since inception, the Company received $2,615 in such fees, of which $0 and $1,698 were paid during the three months ended March 31, 2020 and 2019, respectively.

Incentive Fee:In addition, the Adviser will receive an incentive fee (the “Incentive Fee”) as follows:

(a) First, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions pursuant to this clause (a) equal to their aggregate capital contributions in respect of all Common Units;

(b) Second, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions equal to a 9% internal rate of return on their aggregate capital contributions in respect of all Common Units (the “Hurdle”);

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

4. Agreements and Related Party Transactions (continued)

(c) Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to Common Unitholders until such time as the cumulative Incentive Fee paid to the Adviser is equal to 20% of the sum of (i) the amount by which the Hurdle exceeds the aggregate capital contributions of the Common Unitholders in respect of all Common Units and (ii) the amount of Incentive Fee being paid to the Adviser pursuant to this clause (c); and

(d) Thereafter, the Adviser will be entitled to an Incentive Fee equal to 20% of additional amounts otherwise distributable to Unitholders, with the remaining 80% distributed to the Unitholders.

The Incentive Fee will be calculated on a cumulative basis and the amount of the Incentive Fee payable in connection with any distribution (or deemed distribution) will be determined and, if applicable, paid in accordance with the foregoing formula each time amounts are to be distributed to the Unitholders.

If the Advisory Agreement terminates early for any reason other than (i) the Adviser voluntarily terminating the agreement or (ii) our terminating the agreement for cause (as set out in the Advisory Agreement), we will be required to pay the Adviser a final incentive fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Advisory Agreement is so terminated and will equal the amount of Incentive Fee that would be payable to the Adviser if (A) all our investments were liquidated for their current value (but without taking into account any unrealized appreciation of any portfolio investment), and any unamortized deferred portfolio investment-related fees would be deemed accelerated, (B) the proceeds from such liquidation were used to pay all our outstanding liabilities, and (C) the remainder were distributed to Unitholders and paid as Incentive Fee in accordance with the “waterfall” (i.e., clauses (a) through (d)) described above for determining the amount of the Incentive Fee. We will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated. The Adviser Return Obligation (defined below) will not apply in connection with a Final Incentive Fee Payment.

For the three months ended March 31, 2020 and 2019, no Incentive Fees were incurred.

Administration Agreement:On September 15, 2014, the Company entered into the Administration Agreement with the Adviser under which the Adviser (or one or more delegated service providers) will oversee the maintenance of our financial records and otherwise assist on the Company’s compliance with regulations applicable to a BDC under the 1940 Act, and a RIC under the Code, to prepare reports to our Members, monitor the payment of our expenses and the performance of other administrative or professional service providers, and generally provide us with administrative and back office support. The Company will reimburse the Administrator for expenses incurred by it on behalf of the Company in performing its obligations under the Administration Agreement. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

The Company, and indirectly the Unitholders, will bear (including by reimbursing the Adviser or Administrator) all other costs and expenses of its operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of the Company’s counsel and accounting fees. However, the Company will not bear (a) more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments of the Company per annum(pro-rated for partial years) for its costs and expenses other than ordinary operating expenses (“Company Expenses”), including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser. All expenses that the Company will not bear will be borne by the Adviser or its affiliates. Notwithstanding the foregoing, the cap on Company Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts payable in connection with the Company’s borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to the liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments).

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

4. Agreements and Related Party Transactions (continued)

TCW Direct Lending Strategic Ventures LLC:On June 5, 2015, the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P., entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Direct Lending Strategic Ventures LLC (“Strategic Ventures”). Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The Agreement was effective June 5, 2015. The Company’s investment in Strategic Ventures is restricted from redemption until the termination of Strategic Ventures.

The Company’s capital commitment is $481,600, representing approximately 80% of the preferred and common equity ownership of Strategic Ventures, with the third-party investors representing the remaining capital commitments and preferred and common equity ownership. A portion of the Company’s capital commitment was satisfied by the contribution of two loans to Strategic Ventures. Strategic Ventures also entered into a revolving credit facility to finance a portion of certain eligible investments on June 5, 2015.

The Company’s investments in controlled affiliated investments as of and transactions during the three months ended March 31, 2020 were as follows:


	Fair Value as of January 1, 2020		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of March 31, 2020		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	195,726	$	—	$	(38,400	)	$	1,392	$	158,718	$	—	$	—

Total Controlled Affiliates	$	195,726	$	—	$	(38,400	)	$	1,392	$	158,718	$	—	$	—

The Company’s investments in controlled affiliated investments as of and transactions during the year ended December 31, 2019 were as follows:


	Fair Value as of January 1, 2019		Purchases		Sales			Change in Unrealized Gains and (Losses)			Fair Value as of December 31, 2019		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	260,252	$	—	$	(24,000	)	$	(40,526	)	$	195,726	$	68,127	$	4,833

Total Controlled Affiliates	$	260,252	$	—	$	(24,000	)	$	(40,526	)	$	195,726	$	68,127	$	4,833

For the three months ended March 31, 2020 and year ended December 31, 2019, the Company did not recognize any realized gains (losses) on controlled affiliated investments. During the three months ended March 31, 2020 and year ended December 31, 2019, the Company recognized $0 and $4,833, respectively, of net realized gain distributions from TCW Strategic Ventures.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized depreciation by investment as of March 31, 2020 and December 31, 2019:


	Maturity/ Expiration	March 31, 2020				December 31, 2019
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
Guardia LLC (fka Carrier & Technology Solutions, LLC)	July 2023	$	2,038	$	30	$	2,124	$	—
KBP Investments, LLC (fka FQSR, LLC)	September 2021		5,372		113		5,798		—
Help At Home, LLC	August 2020		—		—		10,541		—
Quicken Parent Corp.	April 2021		345		6		863		26
Ruby Tuesday, Inc.	December 2022		4,575		—		4,575		—

Total		$	12,330	$	149	$	23,901	$	26

The Company’s total capital commitment to its underlying investment in Strategic Ventures is $481,600. As of March 31, 2020, the Company’s unfunded commitment to Strategic Ventures is $219,646.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of March 31, 2020, management is not aware of any pending or threatened litigation.

In the normal course of business, the Company enters into contracts which provide a variety of representations and warranties, and that provide general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

6. Members’ Capital

During the three months ended March 31, 2020 and 2019, the Company did not sell or issue any Common Units. The activity for the three months ended March 31, 2020 and 2019 was as follows:


	Three Months Ended March 31,
	2020		2019
Units at beginning of year		20,134,698		20,134,698

Units issued and committed at end of year		20,134,698		20,134,698

The Company did not process any deemed distributions andre-contributions during the three months ended March 31, 2020 and 2019.

7. Credit Facility

The Company has a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750,000 (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

7. Credit Facility (continued)

On April 10, 2017, the Company and Natixis entered into a Third Amended and Restated Revolving Credit Agreement. Under the Third Amended and Restated Revolving Credit Agreement borrowings bear interest at a rate equal to either the (a) adjusted eurodollar rate calculated in a customary manner plus 2.35%, (b) commercial paper rate plus 2.35%, or (c) a base rate calculated in a customary manner (using the higher of the Federal Funds Rate plus 0.50%, the Prime Rate and the Floating LIBOR Rate plus 1.00%) plus 1.35%. Moreover, the Credit Agreement’s stated maturity date was extended from November 10, 2017 to April 10, 2020. The Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Company fail to satisfy certain covenants. As of March 31, 2020, the Company was in compliance with such covenants.

As of March 31, 2020 and December 31, 2019, the Available Commitment under the Third Amended and Restated Revolving Credit Agreement was $375,000 and $387,065, respectively.

As of March 31, 2020 and December 31, 2019, the amounts outstanding under the Credit Facility were $350,000 and $364,065, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of March 31, 2020 and December 31, 2019, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details; credit, market and liquidity risk and events; financial health of the Company; place in the capital structure; interest rate; and terms and conditions of the Credit Facility. The Company incurred financing costs of $10,123 in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. The Company recorded these costs as deferred financing costs on its Consolidated Statements of Asset and Liabilities and the costs are being amortized over the life of the Credit Facility. As of March 31, 2020 and December 31, 2019, $78 and $710, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the three month ended March 31, 2020 and 2019 was as follows:


	Three Months Ended March 31,
	2020			2019
Credit facility interest expense	$	1,915		$	4,129
Undrawn commitment fees		820			120
Administrative fees		16			16
Amortization of deferred financing costs		683			629

Total	$	3,434		$	4,894

Weighted average interest rate		3.84	%		4.88	%
Average outstanding balance	$	200,381		$	383,333

On December 31, 2019, the Company’s ratio of aggregate fair value of all eligible portfolio assets (as defined in the Credit Agreement) to the principal amount outstanding (“Ratio of Eligible Portfolio Assets”) fell below 150%, which triggered a mandatory prepayment provision in the Credit Agreement requiring the Company to utilize all cash receipts attributable to the eligible portfolio assets as a prepayment to the outstanding principal obligation, within five days of collecting such cash receipts, until such a time when the Ratio of Eligible Portfolio Assets exceeds 150%. The Company’s Ratio of Eligible Portfolio Assets exceeded 150% on January 10, 2020 through March 26, 2020. On March 27, 2020, the Company’s Ratio of Eligible Portfolio Assets fell below 150%. However, in connection with the First Amendment to the Third Amended and Restated Revolving Credit Agreement executed on April April 6, 2020 (see Note 11), the mandatory repayment was waived by Natixis.

8. Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act and has elected to be treated as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. Federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its common unitholders as dividends. The Company elected to be taxed as a RIC in 2015. 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 reversed 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.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

8. Income Taxes (continued)

Federal Income Taxes: It is the policy of the Company to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of its net taxable income and any net realized gains on investments to its shareholders. Therefore, no federal income tax provision is required.

As of March 31, 2020 and December 31, 2019, the Company’s aggregate investment unrealized appreciation and depreciation on investments, for federal income tax purposes, was as follows:


	March 31, 2020			December 31, 2019
Cost of investments for federal income tax purposes	$	1,185,967		$	1,136,131
Unrealized appreciation	$	424		$	78
Unrealized depreciation	$	140,162		$	87,789
Net unrealized appreciation (depreciation) on investments	$	(139,738	)	$	(87,711	)

The Company did not have any unrecognized tax benefits at December 31, 2019, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; and therefore no interest or penalties were accrued. The Company is subject to examination by U.S. federal and state tax authorities regarding returns filed for the prior three and four years, respectively.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

9. Financial Highlights

Selected data for a unit outstanding throughout the three months ended March 31, 2020 and 2019 is presented below. The accrual base Net Asset Value is calculated by subtracting the per unit loss from investment operations from the beginning Net Asset Value per unit and reflects all units issued and outstanding.


	For the Three Months Ended March 31,
	2020			2019
Net Asset Value Per Unit (accrual base), Beginning of Period	$	63.74		$	65.69
Income from Investment Operations:
Net investment income⁽¹⁾		0.89			2.05
Net realized and unrealized loss		(2.14	)		(0.99	)

Total from investment operations		(1.25	)		1.06
Less Distributions:
From net investment income		(3.46	)		(0.74	)
Return of capital		(3.08	)		(4.07	)

Total distributions⁽²⁾		(6.54	)		(4.81	)

Net Asset Value Per Unit (accrual base), End of Period	$	55.95		$	61.94

Common Unitholder Total Return⁽³⁾⁽⁴⁾		(3.1	)%		2.6	%

Common Unitholder IRR⁽⁵⁾		7.3	%		7.7	%

Ratios and Supplemental Data
Members’ Capital, end of period	$	717,340		$	837,985
Units outstanding, end of period		20,134,698			20,134,698
Ratios based on average net assets of Members’ Capital:
Ratio of total expenses to average net assets⁽⁶⁾		2.85	%		3.59	%
Ratio of net expenses to average net assets⁽⁶⁾		2.85	%		3.59	%
Ratio of financing cost to average net assets⁽⁴⁾		0.41	%		0.57	%
Ratio of net investment income to average net assets⁽⁶⁾		8.54	%		19.35	%
Credit facility payable	$	350,000		$	375,000
Asset coverage ratio		3.0			3.2
Portfolio turnover rate⁽⁴⁾		2.2	%		1.0	%

⁽¹⁾	Per unit data was calculated using the number of Common Units issued and outstanding as of March 31, 2020 and 2019.

⁽²⁾	Includes distributions which have an offsetting capitalre-contribution (“deemed distributions”). Excludes return of unused capital.

⁽³⁾	The Total Return for the three months ended March 31, 2020 and 2019 was calculated by taking the net investment income of the Company for the period divided by the weighted average capital contributions from the Members during the period. The return is net of management fees and expenses.

⁽⁴⁾	Not annualized.

⁽⁵⁾

The Internal Rate of Return (IRR) since inception for the Common Unitholders, after management fees, financing costs and operating expenses is 7.3% through March 31, 2020. The IRR is computed based on cash flow due dates contained in notices to Members (contributions from and distributions to the Common Unitholders) and the net assets (residual value) of the Members’ Capital account at period end. The IRR is calculated based on the fair value of investments using principles and methods in accordance with GAAP and does not necessarily represent the amounts that may be realized from sales or other dispositions. Accordingly, the return may vary significantly upon realization.

⁽⁶⁾	Annualized.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

March 31, 2020

11. Subsequent Events

The Company has evaluated subsequent events through the date of issuance of the consolidated financial statements. There have been no subsequent events that require recognition or disclosure in these consolidated financial statements other than those described below.

On April 6, 2020, the Company entered into a First Amendment to the Third Amended and Restated Revolving Credit Agreement (the “Amendment”), by and among the Company, as borrower, and Natixis, New York Branch, as administrative agent and the lenders party thereto, which amends that certain Revolving Credit Agreement, dated as of November 12, 2014, that was subsequently amended by an Amended and Restated Revolving Credit Agreement, dated as of December 22, 2014, a Second Amended and Restated Revolving Credit Agreement, dated as of July 1, 2015, and a Third Amended and Restated Revolving Credit Agreement dated as of April 10, 2017 (as so amended and restated, the “Credit Agreement”). Certain terms of the Credit Agreement are described below, and reference is made to the Credit Agreement for complete terms and conditions.

The Credit Agreement provides for a revolving credit line of up to $375,000 (with an option for the Company to increase this amount to $450,000 subject to consent of the lenders and satisfaction of certain other conditions), subject to the available borrowing base, which is generally the sum of (a) a percentage of certain eligible investments, (b) a percentage of remaining unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the unfunded commitments (together with the recallable amounts) of the Company’s investors, portfolio investments and substantially all other assets of the Company. The stated maturity date of the Credit Agreement is April 9, 2021, which date (subject to the satisfaction of certain conditions) may be extended by the Borrower for up to an additional 364 days. Borrowings under the Credit Agreement bear interest at a rate equal to either (a) adjusted eurodollar rate calculated in a customary manner plus 2.50%, (b) commercial paper rate plus 2.50%, or (c) a base rate calculated in a customary manner (which will never be less than the adjusted eurodollar rate plus 1.00%) plus 1.50%, provided however in each case the CP Rate and the Eurocurrency Rate shall have a floor of 1.00%.

The recent global outbreak ofCOVID-19 has disrupted economic markets and its corresponding impact on the financial results of the Company depend on highly uncertain and unpredictable future developments such as the duration and spread of the outbreak and related advisories and restrictions. If the financial markets and/or the overall economy are impacted for an extended period, the future financial results of the Company may be materially affected. For additional information regarding the impact of theCOVID-19 pandemic on the Company see “Risk Factors” in Part II, Item 1A of this Form10-Q.

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

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report on Form10-Q. Some of the statements in this report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or future performance or financial condition of TCW Direct Lending LLC. For simplicity, this report uses the terms “Company,” “we,” “us,” and “our” to include TCW Direct Lending LLC and where appropriate in the context, its wholly-owned subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward- looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “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 our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation:

•

our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our objectives as a result of the currentCOVID-19 pandemic;

•

an economic downturn, including as a result of the currentCOVID-19 pandemic, could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

a contraction of available credit, including as a result of the currentCOVID-19 pandemic, could impair our lending and investment activities;

•

interest rate volatility could affect our results, particularly when we are using leverage as part of our investment strategy;

•

our future operating results;

•

our contractual arrangements and relationships with third parties;

•

the ability of our portfolio companies to achieve their financial and other business objectives;

•

competition with other entities and our affiliates for investment opportunities;

•

uncertainty surrounding the impact of the current COVID-19 pandemic on the financial stability of the global economy;

•

the social, geopolitical, financial, trade and legal implications of Brexit, as well as the impact of COVID-19 on ongoing negotiations between the United Kingdom and various countries in the European Union;

•

pandemics or other serious public health events, such as the recent global outbreak ofCOVID-19;

•

an inability to replicate the historical success of any previously launched fund managed by the direct lending team of our investment adviser, TCW Asset Management Company LLC (the “Adviser”);

•

the speculative and illiquid nature of our investments;

•

the use of borrowed money to finance a portion of our investments;

•

the adequacy of our financing sources and working capital;

•

the costs associated with being an entity registered with the Securities Exchange Commission (“SEC”);

•

the loss of key personnel;

•

the timing of cash flows, if any, from the operations of our portfolio companies;

•

the ability of the Adviser to monitor and administer our investments;

•

the ability of The TCW Group, Inc. and its subsidiaries to attract and retain highly talented professionals that can provide services to the Adviser in its capacity as our investment adviser and administrator;

•

our ability to qualify and maintain our qualification as a regulated investment company, or “RIC,” under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, or the “Code,” and as a business development company (“BDC”) under the Investment Company Act of 1940 and the related tax implications particularly as the number of our investments decrease during the later stages of the fund’s life;

•

the effect of legal, tax and regulatory changes; and

•

the other risks, uncertainties and other factors we identify under “Part I—Item 1A. Risk Factors” in the Form10-K that we filed with the SEC on March 16, 2020 and elsewhere in this report.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the 1934 Act, which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this report because we are an investment company.

Overview

We were formed on April 1, 2014 as a limited liability company under the laws of the State of Delaware. We have filed an election to be regulated as a BDC under the 1940 Act. We have also elected to be treated for U.S. federal income tax purposes as a RIC under the Code for the taxable year ending December 31, 2015 and subsequent years. We are required to continue to meet the minimum distribution and other requirements for RIC qualification. As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income andtax-exempt interest.

Each investor was required to enter into a subscription agreement in connection with its Commitment (a “Subscription Agreement”). Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Common Unitholders. Investors have entered into subscription agreements for 20,134,698 Common Units of the Company issued and outstanding representing a total of $2.013 billion of committed capital.

In January 2019, we established a wholly-owned subsidiary, TCW DL CTH LLC, a Delaware limited liability company, designed to hold one of our equity investments.

Revenues

We generate revenues in the form of interest income and capital appreciation by providing private capital to middle market companies operating in a broad range of industries primarily in the United States. As our investment period has ended, we will not originate new loans, but may increase credit facilities to existing borrowers or affiliates. In general, we do not expect the Direct Lending Team to originate a significant amount of investments for us withpayment-in-kind (“PIK”) interest features, although we may have investments with PIK interest features in limited circumstances. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, historically, our investment bias has been towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

We are primarily focused on investing in senior secured debt obligations, although there may be occasions where the investment may be unsecured. We also consider an equity investment as the primary security, in combination with a debt obligation, or as a part of total return strategy. Our investments are in corporations, partnerships or other business entities. Additionally, in certain circumstances, we mayco-invest with other investors and/or strategic partners through indirect investments in portfolio companies through a joint venture vehicle, partnership or other special purpose vehicle (each, an “Investment Vehicle”). While we invest primarily in U.S. companies, there are certain instances where we invested in companies domiciled elsewhere.

Expenses

We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided through the Administration Agreement and the Advisory Agreement.

We will bear (including by reimbursing the Adviser or Administrator) all costs and expenses of our operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of our counsel and accounting fees. However, we will not bear (a) more than an amount equal to 10 basis points of the aggregate Commitments for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments per annum(pro-rated for partial years) for our Operating Expenses, including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser and its affiliates. Notwithstanding the foregoing, the cap on Operating Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap described above), amounts payable in connection with our borrowings (including interest, bank fees, legal fees and

other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to our liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Adviser or the Administrator). All expenses that we will not bear will be borne by the Adviser or its affiliates.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management 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.

In addition to the discussion below, our critical accounting policies are further described in Note 2 to the consolidated financial statements. We consider these accounting policies to be critical because they involve management judgments and assumptions, require estimates about matters that are inherently uncertain and are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The critical accounting policies should be read in connection with our risk factors as disclosed in “Item 1A. Risk Factors.” Investments at Fair Value

Investments which we hold for which market quotes are not readily available or are not considered reliable are valued at fair value and approved by our Board of Directors based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified by us into three levels based on valuation inputs used to determine fair value.

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect our determination of assumptions that market participants might reasonably use in valuing the assets.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Equity, (Level 1), includes common stock valued at the closing price on the primary exchange in which the security trades.

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine the fair value of investments in private debt for which reliable market quotations are not available. Some of the inputs are independently observable; however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Equity, (Level 3), includes common and preferred stocks as well as warrants. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health and relevant business developments of the issuer; EBITDA; market multiples of comparable companies; comparable market transactions and recent trades or transactions; issuer, industry and market events; and contractual or legal restrictions on the sale of the security. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Net Asset Value (“NAV”) (Investment Funds and Vehicles): Equity investments in affiliated investment fund (TCW Strategic Ventures) are valued based on the net asset value reported by the investment fund. Investments held by the affiliated fund include debt investments in privately originated senior secured debt. Such investments held by the affiliated fund are valued using the same methods, approach and standards applied above to debt investments held by the Company. The Company’s ability to withdraw from the fund is subject to restrictions. The term of the fund will continue until June 5, 2021 unless dissolved earlier or extended for two additionalone-year periods by the Company, in its full discretion. The Company can further extend the term of the fund for additionalone-year periods, upon notice to and consent from the funds management committee. The Company is entitled to income and principal distributed by the fund.

Investment Activity

Based on fair values as of March 31, 2020, ournon-controlled/non-affiliated portfolio consisted of 19 debt investments and eight equity investments. Of these investments, 97.7% were debt investments, which were primarily senior secured, first lien term loans and 2.3%, were equity comprised of common and preferred stocks as well as warrants.

Based on fair values as of December 31, 2019, ournon-controlled/non-affiliated portfolio consisted of 19 debt investments and eight equity investments. Of these investments, 96.1% were debt investments, which were primarily senior secured, first lien term loans and 3.9% were equity comprised of common and preferred stocks as well as warrants.

The table below describes ournon-controlled/non-affiliated investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in industries as of March 31, 2020:


Industry	Percent of Total Investments
Hotels, Restaurants & Leisure		16	%
Industrial Conglomerates		13	%
Food Products		12	%
Metals & Mining		11	%
Health Care Providers & Services		8	%
Information Technology Services		7	%
Auto Components		6	%
Pharmaceuticals		5	%
Diversified Financial Services		5	%
Commercial Services & Supplies		4	%
Household Durables		3	%
Distributors		3	%
Software		3	%
Internet & Direct Marketing Retail		2	%
Construction & Engineering		1	%
Technologies Hardware, Storage and Peripherals		1	%

Total		100	%

Interest income fromnon-controlled/non-affiliated investments, including interest incomepaid-in-kind, was $23.6 million and $27.5 million, for the three months ended March 31, 2020 and 2019, respectively.

Results of Operations

Our operating results for the three months ended March 31, 2020 and 2019 were as follows (dollar amounts in thousands):


	Three Months Ended March 31,
	2020			2019
Total investment income	$	23,841		$	48,895
Expenses		5,961			7,652

Net investment income		17,880			41,243
Net realized gain (loss) onnon-controlled/non-affiliated investments		2,158			(580	)
Net change in unrealized appreciation/depreciation onnon-controlled/non-affiliated investments		(46,668	)		(10,844	)
Net change in unrealized appreciation/depreciation on controlled affiliated investments		1,392			(8,377	)

Net (decrease) increase in Members’ Capital from operations	$	(25,238	)	$	21,442

Total investment income

Total investment income for the three months ended March 31, 2020 and 2019 was $23.8 million and $48.9 million, respectively, and included interest income (including interest incomepaid-in-kind) fromnon-controlled/non-affiliated investments of $23.6��million and $27.5 million, respectively, as well as dividend income of $0 and $20.8 million, respectively, from TCW Strategic Ventures, a controlled affiliated investment which commenced operations in 2015. Total investment income for the three months ended March 31, 2020 and 2019 included dividend income fromnon-controlled/non-affiliated investments of $0.2 million and $0.1 million, respectively, as well as other fee income of $0.1 million and $0.6 million, respectively.

The decrease in total investment income during the three months ended March 31, 2020 compared to the three months ended March 31, 2019, is primarily due to the decrease in dividend income from TCW Strategic Ventures. TCW Strategic Ventures did not make a dividend distribution to us during the current quarter compared to the three months ended March 31, 2019 during which we received $20.8 million. TCW Strategic Ventures opted not make a dividend distribution during the current quarter in anticipation of future cash needs and available sources of cash.

Net investment income

Net investment income for the three months ended March 31, 2020 and 2019 was $17.9 million and $41.2 million, respectively. The decrease in net investment income during the three months ended March 31, 2020 compared to the three months ended March 31, 2019 is primarily attributable to the decrease in our total investment income.

Operating expenses for the three months ended March 31, 2020 and 2019 were as follows (dollar amounts in thousands):


	Three Months Ended March 31,
	2020		2019
Expenses
Interest and credit facility expenses	$	3,434	$	4,894
Management fees		2,012		2,195
Administrative fees		249		265
Professional fees		117		163
Directors’ fees		78		79
Other expenses		71		56

Total expenses	$	5,961	$	7,652

Our total operating expenses for the three months ended March 31, 2020 and 2019 were $6.0 million and $7.7 million, respectively. Our operating expenses include management fees attributed to the Adviser of $2.0 million and $2.2 million for the three months ended March 31, 2020 and 2019, respectively. The decrease in operating expenses during the three months ended March 31, 2020 compared to the three months ended March 31, 2019 is primarily due to lower interest and credit facility expenses driven lower average outstanding debt balance during the current quarter, partially offset by higher undrawn commitment fees.

Net realized gain (loss) onnon-controlled/non-affiliated investments

Our net realized gain (loss) onnon-controlled/non-affiliated investments for the three months ended March 31, 2020 and 2019 was $2.2 million and ($0.6) million, respectively. Our net realized gain onnon-controlled/non-affiliated investments during the quarter was primarily attributable to the disposition of our term loans to Bumble Bee Holdings, Inc., which resulted in a realized gain of $2.1 million. Our net realized loss onnon-controlled/non-affiliated investments during the three months ended March 31, 2019 was primarily due to our warrants for Quantum Corporation, which the portfolio company repurchased during the quarter.

Net change in unrealized appreciation/depreciation onnon-controlled/non-affiliated investments

Our net change in unrealized appreciation/depreciation onnon-controlled/non-affiliated investments for the three months ended March 31, 2020 and 2019 was ($46.7) million and ($10.8) million, respectively. Our net change in unrealized appreciation/depreciation for the three months ended March 31, 2020 was primarily attributable to the following investments (dollar amounts in thousands):


Issuer	Investment		Change in Unrealized Appreciation/ Depreciation
Pace Industries, Inc.		Term Loan	$	(14,538	)
Quantum Corporation		Common Stock		(11,937	)
OTG Management, LLC		Term Loan		(10,469	)
Guardia LLC (fka Carrier & Technology Solutions, LLC)		Term Loan		(4,949	)
H-D Advanced Manufacturing Company		Term Loan		(2,414	)
School Specialty. Inc.		Term Loan		(1,878	)
Harvest Hill		Term Loan		(1,392	)
Noramco, LLC		Term Loan		4,237
ASC Acquisition Holdings, LLC		Term Loan		2,150
All others		Various		(5,478	)

Net change in unrealized appreciation/depreciation			$	(46,668	)

Our net change in unrealized appreciation/depreciation during the three months ended March 31, 2020 was affected by the widening of credit spreads as well as other consequences of the uncertainty and economic volatility caused byCOVID-19; in addition to other business conditions unique to our respective issuers.

Our net change in unrealized appreciation/depreciation for the three months ended March 31, 2019 was primarily due to our term loans to Carrier & Technology Holdings, LLC; Guardia LLC (formerly known as Carrier & Technology Solutions, LLC); Frontier Spinning Mills Inc.; and Bumble Bee Holdings, Inc., which collectively recorded $12.1 million in net change in unrealized depreciation during the quarter. These were partially offset by our Quantum Corporation warrants, which recorded an aggregate $1.8 million in unrealized appreciation during the quarter.

Net change in unrealized appreciation/depreciation on controlled/affiliated investments

Our net change in unrealized appreciation/depreciation on controlled/affiliated investments for the three months ended March 31, 2020 and 2019 was $1.4 million and ($8.4) million, respectively. The net change in unrealized appreciation/depreciation on controlled/affiliated investments during the three months ended March 31, 2020 was primarily attributable to TCW Strategic Ventures, which, during the current quarter, generated more interest income than its unrealized losses, leading to a slight increase in its ending net asset value.

The net change in unrealized appreciation/depreciation on controlled/affiliated investments during the three months ended March 31, 2019 was primarily attributable to TCW Strategic Ventures, which, during the three months ended March 31, 2019, recognized a net depreciation on its investments.

Net (decrease) increase in members’ capital from operations

Our net (decrease) increase in members’ capital from operations during the three months ended March 31, 2020 and 2019 was ($25.2) million and $21.4 million, respectively. The relative decrease during the three months ended March 31, 2020 compared to the increase during the three months ended March 31, 2019 is primarily due to higher net realized and unrealized loss on investments, coupled with lower net investment income during the current quarter versus the comparative quarter in the prior year.

Direct Lending Strategic Ventures LLC

On June 5, 2015, the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P., entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Strategic Ventures. TCW Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The Agreement was effective June 5, 2015. The Company’s capital commitment is $481.6 million, representing approximately 80% of the preferred and common equity ownership of TCW Strategic Ventures, with the third-party investors representing the remaining capital commitments and preferred and common equity ownership. A portion of the Company’s capital commitment was satisfied by the contribution of two loans to TCW Strategic Ventures. TCW Strategic Ventures also entered into a revolving credit facility to finance a portion of certain eligible investments on June 5, 2015. The revolving credit facility is for up to $600 million. TCW Strategic Ventures is managed by a management committee comprised of two members, one appointed by the Company and one appointed by Oak Hill Advisors, L.P. All decisions of the management committee require unanimous approval of its members. Neither the Company, nor the Adviser will receive management fees from this entity. Although the Company owns more than 25% of the voting securities of TCW Strategic Ventures, the Company does not believe that it has control over TCW Strategic Ventures (other than for purposes of the 1940 Act). The Company’s ability to withdraw from the fund is subject to restrictions.

The Company’s investments in controlled affiliated investments as of and transactions during the three months ended March 31, 2020 were as follows (dollar amounts in thousands):


	Fair Value as of January 1, 2020		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of March 31, 2020		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	195,726	$	—	$	(38,400	)	$	1,392	$	158,718	$	—	$	—

Total Controlled Affiliates	$	195,726	$	—	$	(38,400	)	$	1,392	$	158,718	$	—	$	—

The Company’s investments in controlled affiliated investments for the years ended December 31, 2019 were as follows (dollar amounts in thousands):


	Fair Value as of January 1, 2019		Purchases		Sales			Change in Unrealized Gains and (Losses)			Fair Value as of December 31, 2019		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	260,252	$	—	$	(24,000	)	$	(40,526	)	$	195,726	$	68,127	$	4,833

Total Controlled Affiliates	$	260,252	$	—	$	(24,000	)	$	(40,526	)	$	195,726	$	68,127	$	4,833

For the three months ended March 31, 2020 and year ended December 31, 2019, we did not recognize any realized gains (losses) on controlled affiliated investments. During the three months ended March 31, 2020 and year ended December 31, 2019, we recognized $0 and $4,833, respectively, of net realized gain distributions from TCW Strategic Ventures.

Financial Condition, Liquidity and Capital Resources

On March 19, 2015 we completed the final private placement of Common Units. We generate cash from (1) drawing down capital in respect of Common Units, (2) cash flows from investments and operations and (3) borrowings from banks or other lenders.

Our primary use of cash is for (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including expenses, management fees, incentive fees, and any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to the Common Unitholders.

As of March 31, 2020 and December 31, 2019, aggregate Commitments, Undrawn Commitments and subscribed for Units of the Company are as follows (dollar amounts in thousands):


	March 31, 2020			December 31, 2019
Commitments	$	2,013,470		$	2,013,470
Undrawn commitments	$	409,125		$	409,125
Percentage of commitments funded		79.7	%		79.7	%
Units		20,134,698			20,134,698

Natixis Credit Agreement

We have a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750 million (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

On April 10, 2017, the Company and Natixis entered into a Third Amended and Restated Revolving Credit Agreement. Under the April 10, 2017 Credit Agreement borrowings bear interest at a rate equal to either the (a) adjusted eurodollar rate calculated in a customary manner plus 2.35%, (b) commercial paper rate plus 2.35%, or (c) a base rate calculated in a customary manner (using the higher of the Federal Funds Rate plus 0.50%, the Prime Rate and the Floating LIBOR Rate plus 1.00%) plus 1.35%. Moreover, the Credit Agreement’s stated maturity date was extended from November 10, 2017 to April 10, 2020. The Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Company fail to satisfy certain covenants. As of March 31, 2020, we were in compliance with such covenants.

As of March 31, 2020 and December 31, 2019, the Available Commitment under the Third Amended and Restated Revolving Credit Agreement is $375.0 million and $387.1 million, respectively.

As of March 31, 2020 and December 31, 2019, the amounts outstanding under the Credit Facility were $350.0 million and $364.1 million, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of March 31, 2020 and December 31, 2019, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and conditions of the Credit Facility. The Company incurred financing costs of $10.1 million in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. The Company recorded these costs as deferred financing costs on its Consolidated Statements of Asset and Liabilities and the costs are being amortized over the life of the Credit Facility. As of March 31, 2020 and December 31, 2019, $0.1 million and $0.7 million, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the three months ended March 31, 2020 and 2019 were as follows (dollar amounts in thousands):


	Three Months Ended March 31,
	2020			2019
Credit facility interest expense	$	1,915		$	4,129
Undrawn commitment fees		820			120
Administrative fees		16			16
Amortization of deferred financing costs		683			629

Total	$	3,434		$	4,894

Weighted average interest rate		3.84	%		4.88	%
Average outstanding balance	$	200,381		$	383,333

A summary of our contractual payment obligations as of March 31, 2020 and December 31, 2019 is as follows (dollar amounts in thousands):


Revolving Credit Agreement	Total Facility Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
Total Debt Obligations – March 31, 2020	$	750,000	$	350,000	$	25,000
Total Debt Obligations – December 31, 2019	$	750,000	$	364,065	$	23,000

(1)	The amount available considers any limitations related to the debt facility borrowing.

On December 31, 2019, our ratio of aggregate fair value of all eligible portfolio assets (as defined in the Credit Agreement) to the principal amount outstanding (“Ratio of Eligible Portfolio Assets”) fell below 150%, which triggered a mandatory prepayment provision in the Credit Agreement requiring us to utilize all cash receipts attributable to the eligible portfolio assets as a prepayment to the outstanding principal obligation, within five days of collecting such cash receipts, until such a time when the Ratio of Eligible Portfolio Assets exceeds 150%. Our Ratio of Eligible Portfolio Assets exceeded 150% on January 10, 2020. through March 26, 2020. On March 27, 2020, our Ratio of Eligible Portfolio Assets fell below 150%. However, in connection with the First Amendment to the Third Amended and Restated Revolving Credit Agreement executed on April April 6, 2020 (see Note 11 to the Consolidated Financial Statements), the mandatory repayment was waived by Natixis.

We had the following unfunded commitments and unrealized losses by investment as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands):


	Maturity/ Expiration	March 31, 2020				December 31, 2019
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
Guardia LLC (fka Carrier & Technology Solutions, LLC)	July 2023	$	2,038	$	30	$	2,124	$	—
KBP Investments, LLC (fka FQSR, LLC)	September 2021		5,372		113		5,798		—
Help At Home, LLC	August 2020		—		—		10,541		—
Quicken Parent Corp.	April 2021		345		6		863		26
Ruby Tuesday, Inc.	December 2022		4,575		—		4,575		—

Total		$	12,330	$	149	$	23,901	$	26

The Company’s total capital commitment to its underlying investment in Strategic Ventures is $481,600. As of March 31, 2020 and December 31, 2019, the Company’s unfunded commitment to Strategic Ventures was $219,646.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. At March 31, 2020, 99.6% of our debt investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. At March 31, 2020, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 30.6%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Interest rate sensitivity refers to the change in 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 is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We assess our portfolio companies periodically to determine whether such companies will be able to continue making interest payments in the event that interest rates increase. There can be no assurances that the portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.

Based on our March 31, 2020 consolidated balance sheet, the following table shows the annual impact on net investment income (excluding the related incentive compensation impact) of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure (dollar amounts in thousands):


Basis Point Change	Interest Income			Interest Expense			Net Investment Income
Up 300 basis points	$	33,408		$	10,646		$	22,762
Up 200 basis points		22,319			7,097			15,222
Up 100 basis points		11,230			3,549			7,681
Down 100 basis points		(1,046	)		(3,638	)		2,592
Down 200 basis points		(1,585	)		(3,638	)		2,053
Down 300 basis points		(565	)		(3,638	)		3,073

Item 4.

CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule13a-15 under the Securities Exchange Act of 1934). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

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

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.

Item 1A.

Risk Factors

In addition to the other information set forth within the Form10-Q, consideration should be given to the risk factors previously disclosed in our Annual Report on Form10-K that we filed with the SEC on March 16, 2020, as amended by Form10-K/A filed April 29, 2020, and the following risk factor regarding the impact of theCOVID-19 pandemic.

TheCOVID-19 pandemic has materially and adversely affected certain of our portfolio companies, and could materially and adversely affect our business, financial condition, results of operations and cash flows.

In late 2019 and early 2020, a novel coronavirus(SARS-CoV-2) and related respiratory disease(“COVID-19”) was first reported in China and spread rapidly to across the world, including to the United States. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the United States credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following (among other things): (i) government imposition of various forms of “stay at home” orders and the closing of“non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as inlay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which may not adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on our portfolio companies and on the markets and the economy in general, and that impact could be material. For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the jurisdictions, including the United States, affected by theCOVID-19 pandemic were to continue for an extended period of time it could result in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our Unitholders.

Further, from an operational perspective, many of our Adviser’s investment professionals are currently working remotely. An extended period of remote work arrangements could increase operational risks, including but not limited to cybersecurity risks and risks related to business continuity capacity, which may impair our ability to manage our business. In addition, we are highly dependent on third party services providers for certain communication and information systems. As a result, we rely upon the successful implementation and execution of the business continuity planning of such providers in the current environment. If one or more of these third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread ofCOVID-19, or claim that they cannot perform due to a force majeure, it may have a material adverse effect on our business, and its financial condition, results of operations, liquidity and cash flows.

In addition, the United States capital markets have experienced extreme volatility and disruption following the spread ofCOVID-19 in the United States. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity may have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions may also increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, and limit our ability to grow and could have a material negative impact on our operating results and the fair values of our debt and equity investments.

To the extent theCOVID-19 outbreak has an adverse impact on our business, financial position, results of operations, liquidity and capital resources, or overall business operations, it may also have the effect of heightening many of the other risks disclosed in Item 1A “Risk Factors” in our Annual Report on Form10-K for the year ended December 31, 2019, as amended by Form10-K/A filed April 29, 2020, any of our subsequent Quarterly Reports on Form10-Q and other filings we make with the SEC.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Sales of unregistered securities

On September 19, 2014, the Company began accepting subscription agreements from investors for the private sale of its Common Units. The Company continued to enter into subscription agreements through the final closing date of March 19, 2015. Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Unitholders. The issuance of the Common Units pursuant to these subscription agreements and any draw by the Company under the related Commitments is expected to be exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, and Rule 506(c) of Regulation D thereunder.

Issuer purchases of equity securities

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None.

Item 6.

Exhibits.

(a) Exhibits


Exhibits

3.1		Certificate of Formation (incorporated by reference to Exhibit 3.1 to a registration on Form 10 filed on April 18, 2014)

3.4		Second Amended and Restated Limited Liability Company Agreement, dated September 19, 2014 (incorporated by reference to Exhibit 3.4 to a filing on Form10-Q filed on November 7, 2014)

10.1		Investment Advisory and Management Agreement (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form8-K filed on September 25, 2014).

10.2		Administration Agreement dated September 15, 2014, by and between TCW Direct Lending LLC and TCW Asset Management Company (incorporated by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form10-Q filed on November 7, 2014).

10.6		Final form of the TCW Direct Lending Strategic Ventures LLC Amended and Restated Limited Liability Company Agreement, dated June 5, 2015 (incorporated by reference to Exhibit 10.1 to the Current Report on Form8-K filed on June 10, 2015).

10.8		Third Amended and Restated Revolving Credit Agreement, dated April 10, 2017, by and among TCW Direct Lending LLC, as borrower, Natixis, New York Branch, as administrative agent, sole lead arranger and sole book manager, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form8-K filed on April 14, 2017).

10.10		First Amendment to the Third Amended and Restated Revolving Credit Agreement, dated April 6, 2020, by and among TCW Direct Lending LLC, as borrower, Natixis, New York Branch, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form8-K filed on April 13, 2020).

31.1*		Certification of President Pursuant to Rule13a-14(a) under the Securities Exchange Act of 1934

31.2*		Certification of Chief Financial Officer Pursuant to Rule13a-14(a) under the Securities Exchange Act of 1934

32.1*		Certification of President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

32.2*		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

99.1*		Financial Statements of TCW Direct Lending Strategic Ventures LLC for the three months ended March 31, 2020

*	Filed herewith

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


	TCW DIRECT LENDING LLC

Date: May 11, 2020	By:	/s/Richard T. Miller
		Richard T. Miller
		President

Date: May 11, 2020	By:	/s/James G. Krause
		James G. Krause
		Chief Financial Officer

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Smaller reporting company

Emerging growth company