TCW Direct Lending VII 10Q 2022 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2022

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

For the transition period from to

Commission file number 814-01246

TCW DIRECT LENDING VII LLC

(Exact Name of Registrant as Specified in Its Charter)



Delaware	82-2252672
(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 Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐	Accelerated filer	☐

Non-Accelerated filer	☒	Smaller reporting company	☐

Emerging growth company	☒

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

As of June 30, 2022, there was no established public market for the Registrant’s common units. The number of the Registrant’s common units outstanding at August 10, 2022 was 13,734,010.

TCW DIRECT LENDING VII LLC

FORM 10-Q FOR THE QUARTER ENDED June 30, 2022

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Schedule of Investments as of June 30, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Assets and Liabilities as of June 30, 2022 (unaudited) and December 31, 2021	16
	Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	17
	Consolidated Statements of Changes in Members’ Capital for the three and six months ended June 30, 2022 and 2021 (unaudited)	18
	Consolidated Statement of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)	19
	Notes to Consolidated Financial Statements (unaudited)	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
SIGNATURES		57

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited)

As of June 30, 2022


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	DEBT(1)
Aerospace & Defense
	Columbia Helicopters Inc.	08/20/19	Last Out Term Loan - 11.75% inc PIK (LIBOR + 10.25%, 1.50% Floor, 2.75% PIK)		2.8	%	$	24,770,099	08/20/24	$	24,556,890	$	23,432,514
	Heligear Acquisition Co.	07/30/19	Term Loan - 9.26% (LIBOR + 7.00%, 1.50% Floor)		6.2	%		52,170,812	07/30/24		51,727,549		52,014,299
	Karman Holdings LLC	12/21/20	Revolver - 9.26% (LIBOR + 7.00%, 1.00% Floor)		0.5	%		3,932,918	12/21/25		3,932,918		3,881,790
	Karman Holdings LLC	12/21/20	Term Loan - 9.26% (LIBOR + 7.00%, 1.00% Floor)		7.5	%		63,098,694	12/21/25		62,125,977		62,278,411
					8.0	%		67,031,612			66,058,895		66,160,201
	Navistar Defense, LLC (5)	11/30/21	Term Loan A - 9.75% inc PIK (LIBOR + 8.25%, 1.50% Floor, all PIK)		0.4	%		2,322,277	12/31/22		2,303,561		3,323,178
	Navistar Defense, LLC (5)	01/11/22	Term Loan C - 9.75% inc PIK (LIBOR + 8.25%, 1.50% Floor, all PIK)		0.8	%		9,335,279	12/31/22		9,244,656		7,029,465
	Navistar Defense, LLC (5)	12/31/18	Term Loan B - 9.75% inc PIK (LIBOR + 8.25%, 1.50% Floor, all PIK)		1.7	%		18,500,405	12/31/23		18,347,546		13,930,805
					2.9	%		30,157,961			29,895,763		24,283,448
					19.9	%		174,130,484			172,239,097		165,890,462
Air Freight & Logistics
	Need It Now Delivers, LLC	12/23/19	Last Out Delayed Draw Term Loan - 8.75% (LIBOR + 7.00%, 1.75% Floor)		0.2	%		1,364,745	12/23/24		1,364,745		1,364,745
	Need It Now Delivers, LLC	12/23/19	Last Out Term Loan - 8.75% (LIBOR + 7.00%, 1.75% Floor)		1.6	%		12,967,541	12/23/24		12,809,460		12,967,541
					1.8	%		14,332,286			14,174,205		14,332,286
Auto Components
	Shipston Group U.S. Inc.	05/18/20	Last Out Term Loan - 8.10% inc PIK (LIBOR + 6.50%, 1.00% Floor, 3.25% PIK)		0.2	%		1,825,578	09/28/24		1,825,578		1,621,113
	Shipston Group U.S. Inc.	01/20/22	Last Out Delayed Draw Term Loan - 8.10% inc PIK (LIBOR + 6.50%, 1.00% Floor, 3.25% PIK)		0.1	%		788,994	09/28/24		788,994		700,626
	Shipston Group U.S. Inc.	09/28/18	Last Out Term Loan - 8.78% inc PIK (LIBOR + 6.50%, 1.00% Floor, 3.25% PIK)		3.0	%		28,188,670	09/28/24		28,035,569		25,031,539
					3.3	%		30,803,242			30,650,141		27,353,278
Beverages
	Westrock Coffee Company, LLC	02/28/20	Term Loan - 10.00% inc PIK (LIBOR + 8.50%, 1.50% Floor, 0.25% PIK)		7.6	%		63,879,164	02/28/25		63,291,131		63,815,285
					7.6	%		63,879,164			63,291,131		63,815,285
Capital Goods
	Carolina Atlantic Roofing Suppy LLC	05/28/21	Term Loan - 8.25% (LIBOR + 7.25%, 1.00% Floor)		5.5	%		45,698,400	05/28/26		44,984,144		45,698,400
					5.5	%		45,698,400			44,984,144		45,698,400
Chemicals
	AGY Holdings Corp. (2)	09/21/20	Delayed Draw Term Loan - 12.26% inc PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		2.7	%		23,910,999	09/21/25		23,910,999		22,165,497
	AGY Holdings Corp. (2)	09/21/20	Term Loan - 11.50% inc PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		2.9	%		25,898,364	09/21/25		25,898,364		24,007,784
					5.6	%		49,809,363			49,809,363		46,173,281

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2022


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	Debt (continued)
Commercial & Professional Services
	Rapid Displays, Inc.	04/16/21	Term Loan - 7.67% (LIBOR + 6.63%, 1.00% Floor)		1.6	%	$	14,018,400	04/13/26	$	13,883,899	$	13,457,664
					1.6	%		14,018,400			13,883,899		13,457,664
Commercial Services & Supplies
	Clover Imaging Group, LLC	12/16/19	Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		0.8	%		6,518,036	12/16/24		6,453,608		6,511,518
	Retail Services WIS Corporation	05/20/21	Term Loan - 10.00% (LIBOR + 7.75%, 1.00% Floor)		5.7	%		47,222,813	05/20/25		46,373,333		47,978,378
					6.5	%		53,740,849			52,826,941		54,489,896
Construction & Engineering
	UniTek Acquisition, Inc.	09/16/20	Delayed Draw Term Loan A - 8.07% inc PIK (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.2	%		1,401,518	08/20/23		777,845		1,320,230
	UniTek Acquisition, Inc.	08/20/18	Delayed Draw Term Loan B - 9.07% inc PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		0.4	%		3,473,797	08/20/24		3,473,797		3,133,365
	UniTek Acquisition, Inc.	11/10/20	Revolver - 9.25% (Prime + 4.50%, 1.00% Floor)		0.3	%		2,572,820	08/20/23		2,572,820		2,423,596
	UniTek Acquisition, Inc.	09/16/20	Term Loan A - 8.07% inc PIK (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.8	%		7,007,593	08/20/23		3,888,685		6,601,152
	UniTek Acquisition, Inc.	08/20/18	Term Loan B - 9.07% inc PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		1.9	%		17,369,967	08/20/24		17,224,665		15,667,710
					3.6	%		31,825,695			27,937,812		29,146,053
Consumer Durables & Apparel
	Rocky Brands, Inc. (3)	03/15/21	Term Loan - 9.06% (LIBOR + 7.50%, 1.00% Floor)		5.6	%		48,265,636	03/15/26		47,550,375		46,914,199
	Twin Star International, Inc.	06/18/21	Term Loan - 9.76% (LIBOR + 7.50%, 1.00% Floor)		4.6	%		41,461,200	06/18/26		41,050,221		38,683,300
					10.2	%		89,726,836			88,600,596		85,597,499
Consumer Services
	Grand Circle Corporation	02/26/21	Term Loan - 12.17% (LIBOR + 10.50%, 1.25% Floor)		4.6	%		39,859,278	02/26/26		39,276,014		38,504,063
					4.6	%		39,859,278			39,276,014		38,504,063
Energy Equipment & Services
	Profrac Services II, LLC	03/04/22	Term Loan - 10.01% (SOFR + 8.50%, 1.00% Floor)		4.1	%		33,442,959	03/04/25		32,548,604		34,412,804
	WDE TorcSill Holdings LLC	10/22/19	Revolver - 12.17% inc PIK (LIBOR + 10.50%, 1.50% Floor, 3.75% PIK)		0.9	%		7,886,830	10/22/24		7,886,830		7,445,167
	WDE TorcSill Holdings LLC	10/22/19	Term Loan - 12.17% inc PIK (LIBOR + 10.50%, 1.50% Floor, 3.75% PIK)		2.6	%		23,011,439	10/22/24		22,755,645		21,722,798
					7.6	%		64,341,228			63,191,079		63,580,769
Food Products
	Hometown Food Company	08/31/18	Term Loan - 6.67% (LIBOR + 5.00%, 1.25% Floor)		2.4	%		20,218,178	08/31/23		20,111,099		20,177,741
					2.4	%		20,218,178			20,111,099		20,177,741

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2022


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	Debt (continued)
Health Care Technology
	PatientPoint Health Technologies, LLC	03/30/21	Term Loan - 8.67% (LIBOR + 7.00%, 1.00% Floor)		2.0	%	$	16,590,000	03/07/25	$	16,279,082	$	16,623,180
					2.0	%		16,590,000			16,279,082		16,623,180
Hotels, Restaurants & Leisure
	KBP Brands, LLC	05/26/21	Delayed Draw Term Loan - 7.21% (LIBOR + 5.25%, 0.75% Floor)		1.6	%		13,991,213	05/26/27		13,991,213		13,417,574
	KBP Brands, LLC	05/26/21	Term Loan - 6.70% (LIBOR + 5.25%, 0.75% Floor)		1.1	%		9,941,019	05/26/27		9,677,067		9,533,437
	Red Lobster Management, LLC	01/22/21	Term Loan - 9.18% (LIBOR + 8.00%, 1.00% Floor)		6.1	%		54,737,795	01/22/26		53,957,796		51,015,625
					8.8	%		78,670,027			77,626,076		73,966,636
Household & Personal Products
	Obagi Cosmeceuticals LLC	03/16/21	Revolver - 8.67% (LIBOR + 7.00%, 1.00% Floor)		1.1	%		9,498,720	03/16/26		9,498,720		9,498,720
	Obagi Cosmeceuticals LLC	03/16/21	Term Loan - 8.67% (LIBOR + 7.00%, 1.00% Floor)		6.0	%		48,760,096	03/16/26		47,707,127		49,930,338
					7.1	%		58,258,816			57,205,847		59,429,058
Household Durables
	Slogic Holding Corp. (4)	06/29/18	Last Out Term Loan - 7.00% (LIBOR + 6.00%, 1.00% Floor)		3.2	%		26,681,925	10/29/26		26,550,341		26,681,925
					3.2	%		26,681,925			26,550,341		26,681,925
Household Products
	Greenfield World Trade, Inc.	08/12/21	Last Out Delayed Draw Term Loan - 14.83% inc PIK (LIBOR + 13.33%, 1.50% Floor, 7.00% PIK)		1.2	%		10,073,456	12/31/22		9,182,792		10,305,146
	Greenfield World Trade, Inc.	03/04/19	Last Out Term Loan - 15.00% inc PIK (LIBOR + 13.33%, 1.50% Floor, 7.00% PIK)		6.5	%		52,943,205	03/31/25		50,919,889		53,938,537
					7.7	%		63,016,661			60,102,681		64,243,683
Information Technology Services
	Corcentric, Inc.	11/15/18	Delayed Draw Term Loan - 9.88% (LIBOR + 7.00%, 1.50% Floor)		1.5	%		12,268,560	11/15/23		12,268,560		12,268,560
	Corcentric, Inc.	11/15/18	Term Loan - 9.88% (LIBOR + 7.00%, 1.50% Floor)		3.7	%		31,199,080	11/15/23		30,981,410		31,199,080
					5.2	%		43,467,640			43,249,970		43,467,640
Internet & Direct Marketing Retail
	Altern Marketing LLC	09/30/20	First Out Term Loan - 8.26% (LIBOR + 6.00%, 2.00% Floor)		1.2	%		10,028,084	10/07/24		9,915,839		9,927,803
					1.2	%		10,028,084			9,915,839		9,927,803

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2022


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	Debt (continued)
Media
	Encompass Digital Media, Inc.	10/01/18	Revolver - 9.17% (LIBOR + 7.50%, 1.25% Floor)		0.2	%	$	1,733,182	09/28/23	$	1,733,182	$	1,727,982
	Encompass Digital Media, Inc.	10/01/18	Term Loan - 9.17% inc PIK (LIBOR + 7.50%, 1.25% Floor, 1.13% PIK)		3.6	%		29,887,015	09/28/23		29,790,306		29,797,354
					3.8	%		31,620,197			31,523,488		31,525,336
Packaging
	Hoover Group, Inc.	10/01/20	Term Loan - 9.75% (LIBOR + 8.50%, 1.25% Floor)		3.6	%		29,896,444	10/01/24		29,559,623		29,717,065
					3.6	%		29,896,444			29,559,623		29,717,065
Publishing
	Bendon Inc.	12/11/20	Term Loan - 9.76% (LIBOR + 7.50%, 1.00% Floor)		5.7	%		49,814,447	12/11/25		49,034,009		47,821,870
					5.7	%		49,814,447			49,034,009		47,821,870
Software
	Mondee Holdings LLC	12/20/19	Term Loan - 11.76% (LIBOR + 9.50%, 1.75% Floor)		10.7	%		92,239,500	12/23/24		90,899,689		90,117,992
					10.7	%		92,239,500			90,899,689		90,117,992
Textiles, Apparel & Luxury Goods
	Centric Brands Inc. (3)	10/09/20	Revolver - 9.25% (Prime + 4.50%, 1.00% Floor)		0.5	%		4,014,300	10/09/24		4,014,300		4,014,300
	Centric Brands Inc. (3)	10/09/20	Term Loan - 10.00% inc PIK (LIBOR + 9.00%, 1.00% Floor, all PIK)		4.6	%		40,816,069	10/09/25		38,264,162		39,509,955
	Keeco Holdings, LLC	09/19/18	Term Loan - 12.75% inc PIK (LIBOR + 11.00%, 1.75% Floor, 3.25% PIK)		6.5	%		57,141,408	03/15/24		56,790,451		54,855,752
					11.6	%		101,971,777			99,068,913		98,380,007
	Total Debt Investments				150.8	%		1,294,638,921			1,271,991,079		1,260,118,872

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2022


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Shares		Amortized Cost		Fair Value
	EQUITY
Aerospace & Defense
	TCW ND Parent Holdings LLC. (5) (6)		Class A Units		0.0	%		4,399	$	43,990	$	—
					0.0	%		4,399		43,990		—
Chemicals
	AGY Equity LLC (2) (5) (6)		Class A Preferred Units		0.0	%		7,752,414		—		—
	AGY Equity LLC (2) (5) (6)		Class B Preferred Units		0.0	%		10,078,138		—		—
	AGY Equity LLC (2) (5) (6)		Class C Common Units		0.0	%		11,241,000		—		—
	AGY Equity LLC (2) (5) (6)		Class D Preferred Units		0.0	%		3,997,226		3,997,226		—
					0.0	%		33,068,778		3,997,226		—
Household Durables
	Shelterlogic Group Holdings, Inc (4) (5) (6)		Common Stock		3.1	%		1,254,034		—		26,723,465
					3.1	%		1,254,034		—		26,723,465
Household Products
	Greenfield World Trade, Inc. (5) (6)		Class A-1 Warrant, expires 03/25/27		0.6	%		3,869		3,059,378		5,089,542
	Greenfield World Trade, Inc. (5) (6)		Class A-2 Warrant, expires 03/25/27		0.2	%		1,345		1,158,446		1,327,084
					0.8	%		5,214		4,217,824		6,416,626
Software
	Mondee Holdings LLC (5) (6)		Class G Preferred Stock		0.3	%		1,226,708		1,226,708		2,146,739
					0.3	%		1,226,708		1,226,708		2,146,739
Textiles, Apparel & Luxury Goods
	Centric Brands GP LLC (3) (5) (6)		Membership Interests		0.0	%		159,658		—		—
	Centric Brands L.P. (3) (5) (6)		Class A LP Interests		0.3	%		159,658		—		2,560,914
					0.3	%		319,316		—		2,560,914
	Total Equity Investments				4.5	%		35,878,449		9,485,748		37,847,744
	Total Debt & Equity Investments (7)				155.3	%				1,281,476,827		1,297,966,616
	Total Investments (155.3%)								$	1,281,476,827	$	1,297,966,616
	Net unrealized depreciation on unfunded commitments (-0.1%)											(958,197	)
	Liabilities in Excess of Other Assets (-55.2%)											(461,305,406	)
	Net Assets (100.0%)										$	835,703,013

(1)

Certain debt investments are subject to contractual restrictions on resale, such as approval of the agent or borrower.

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2022

(2)

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. Fair value as of December 31, 2021 and June 30, 2022 along with transactions during the period ended June 30, 2022 in these controlled investments are as follows:


Name of Investment	Fair Value at December 31, 2021		Gross Addition (a)		Gross Reduction (b)			Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at June 30, 2022		Interest/Dividend/ Other income
AGY Holdings Corp. Delayed Draw Term Loan - 12.26% inc PIK	$	19,425,938	$	1,022,075	$	3,365,369		$	—	$	(1,647,885	)	$	22,165,497	$	2,405,932
AGY Holdings Corp. Term Loan - 11.50% inc PIK		25,005,013		767,698		—			—		(1,764,927	)		24,007,784		1,467,350
AGY Equity LLC Class A Preferred Units		—		—		—			—		—			—		—
AGY Equity LLC Class B Preferred Units		—		—		—			—		—			—		—
AGY Equity LLC Class C Common Units		—		—		—			—		—			—		—
AGY Equity LLC Class D Preferred Units		—		3,997,226		—			—		(3,997,226	)		—		—
Navistar Defense, LLC Term Loan A - 9.75% inc PIK		3,244,352		104,001		—			—		(25,175	)		3,323,178		195,425
Navistar Defense, LLC Term Loan B - 9.75% inc PIK		13,671,013		922,895		(234	)		396		(663,265	)		13,930,805		1,376,059
Navistar Defense, LLC Term Loan C - 9.75% inc PIK		—		9,244,656		—			—		(2,215,191	)		7,029,465		893,353
TCW ND Parent Holdings LLC Class A Units		—		43,990		—			—		(43,990	)		—		—
Total Controlled Affiliated investments	$	61,346,316	$	16,102,541	$	3,365,135		$	396	$	(10,357,659	)	$	70,456,729	$	6,338,119

(a)

Gross additions include new purchases, payment-in-kind (“PIK”) income and amortization of original issue and market discounts.

(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(3)

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 June 30, 2022, $92,999,368 or 6.8% of the Company’s total assets were represented by “non-qualifying assets.”

(4)

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, between 5% and 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2021 and June 30, 2022 along with transactions during the period ended June 30, 2022 in these affiliated investments are as follows:


Name of Investment	Fair Value at December 31, 2021		Gross Addition (a)		Gross Reduction (b)		Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at June 30, 2022		Interest/Dividend/ Other income
Shelterlogic Group Holdings, Inc. Common Stock	$	30,761,454	$	—	$	—	$	—	$	(4,037,989	)	$	26,723,465	$	—
Slogic Holding Corp. Last Out Term Loan - 7.00%		26,681,925		15,064		—		—		(15,064	)		26,681,925		954,300
Total Non-Controlled Affiliated Investments	$	57,443,379	$	15,064	$	—	$	—	$	(4,053,053	)	$	53,405,390	$	954,300

(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(5)

Non-income producing.

(6)

All or a portion of such security was acquired in a transaction exempt from registration under the Securities Act of 1933, and may be deemed “restricted securities” under the Securities Act. As of June 30, 2022, the aggregate fair value of these securities was $37,847,744, or 2.8% of the Company’s total assets.

(7)

The fair value of each debt and equity 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.”

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2022

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

PRIME - Prime Rate

SOFR - Secured Overnight Financing Rate, generally 1-Month or 3-Month

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $99,577,219 and $224,385,382, respectively, for the period ended June 30, 2022. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown Portfolio
United States	100.0	%

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments

As of December 31, 2021


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	DEBT(1)
Aerospace & Defense
	Columbia Helicopters Inc.	08/20/19	Last Out Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		3.1	%	$	29,284,398	08/20/24	$	28,969,983	$	27,937,315
	Heligear Acquisition Co.	07/30/19	Term Loan - 8.50% (LIBOR + 7.00%, 1.50% Floor)		6.0	%		54,030,614	07/30/24		53,462,220		54,570,919
	Karman Holdings LLC	12/21/20	Revolver - 7.75% (LIBOR + 6.75%, 1.00% Floor)		0.6	%		5,243,891	12/21/25		5,243,891		5,207,184
	Karman Holdings LLC	12/21/20	Term Loan - 7.75% (LIBOR + 6.75%, 1.00% Floor)		7.0	%		63,913,986	12/21/25		62,788,168		63,466,587
	Navistar Defense, LLC	11/30/21	Term Loan A - 9.75% inc PIK (LIBOR + 8.25%, 1.50% Floor, all PIK)		0.4	%		2,199,560	12/31/22		2,199,560		3,244,352
	Navistar Defense, LLC	12/31/18	Term Loan B - 9.75% inc PIK (LIBOR + 8.25%, 1.50% Floor, all PIK)		1.5	%		17,617,285	12/31/23		17,424,489		13,671,013
					18.6	%		172,289,734			170,088,311		168,097,370
Air Freight & Logistics
	Need It Now Delivers, LLC	12/23/19	Last Out Delayed Draw Term Loan - 8.75% (LIBOR + 7.00%, 1.75% Floor)		0.1	%		1,402,941	12/23/24		1,402,941		1,402,941
	Need It Now Delivers, LLC	12/23/19	Last Out Term Loan - 8.75% (LIBOR + 7.00%, 1.75% Floor)		1.5	%		13,332,824	12/23/24		13,137,818		13,332,824
					1.6	%		14,735,765			14,540,759		14,735,765
Auto Components
	Shipston Group U.S. Inc.	05/18/20	Last Out Term Loan - 9.00% inc PIK (LIBOR + 7.75%, 1.25% Floor, 2.00% PIK)		0.2	%		1,799,916	09/28/23		1,799,916		1,600,126
	Shipston Group U.S. Inc.	09/28/18	Last Out Term Loan - 9.00% inc PIK (LIBOR + 7.75%, 1.25% Floor, 2.00% PIK)		2.6	%		26,947,372	09/28/23		26,803,392		23,956,214
					2.8	%		28,747,288			28,603,308		25,556,340
Beverages
	Westrock Coffee Company, LLC	02/28/20	Term Loan - 10.00% inc PIK (LIBOR + 8.50%, 1.50% Floor, 0.25% PIK)		7.1	%		64,620,783	02/28/25		63,914,270		63,845,333
					7.1	%		64,620,783			63,914,270		63,845,333
Capital Goods
	Carolina Atlantic Roofing Supply LLC	05/28/21	Term Loan - 8.25% (LIBOR + 7.25%, 1.00% Floor)		5.2	%		45,929,200	05/28/26		45,120,283		46,526,280
					5.2	%		45,929,200			45,120,283		46,526,280
Chemicals
	AGY Holdings Corp.(2)	09/21/20	Delayed Draw Term Loan - 11.50% inc PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		2.1	%		19,523,556	09/21/25		19,523,556		19,425,938
	AGY Holdings Corp.(2)	09/21/20	Term Loan - 11.50% inc PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		2.8	%		25,130,666	09/21/25		25,130,666		25,005,013
					4.9	%		44,654,222			44,654,222		44,430,951
Commercial & Professional Services
	Rapid Displays, Inc.	04/16/21	Term Loan - 7.63% (LIBOR + 6.63%, 1.00% Floor)		1.6	%		14,089,200	04/13/26		13,936,315		14,230,092
					1.6	%		14,089,200			13,936,315		14,230,092
Commercial Services & Supplies
	Clover Imaging Group, LLC	12/16/19	Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		0.8	%		7,352,661	12/16/24		7,265,351		7,293,840
	Retail Services WIS Corporation	05/20/21	Term Loan - 8.75% (LIBOR + 7.75%, 1.00% Floor)		6.7	%		58,621,697	05/20/25		57,420,831		60,380,347
					7.5	%		65,974,358			64,686,182		67,674,187

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2021


Industry	Issuer	Acquisition Date	Investment	% of Net Assets				Par Amount		Maturity Date	Amortized Cost		Fair Value
	Debt (continued)
Construction & Engineering
	UniTek Acquisition, Inc.	09/16/20	Delayed Draw Term Loan A - 7.50% inc PIK (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.1	%		$	1,472,938	08/20/23	$	849,265	$	1,352,157
	UniTek Acquisition, Inc.	08/20/18	Delayed Draw Term Loan B - 8.50% inc PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		0.3	%			3,438,938	08/20/24		3,438,938		3,009,071
	UniTek Acquisition, Inc.	11/10/20	Revolver - 7.75% (Prime + 4.50%, 1.00% Floor)		0.1	%			1,501,481	08/20/23		1,501,481		1,378,360
	UniTek Acquisition, Inc.	09/16/20	Term Loan A - 7.50% inc PIK (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.7	%			7,364,691	08/20/23		4,244,394		6,760,787
	UniTek Acquisition, Inc.	08/20/18	Term Loan B - 8.50% inc PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		1.7	%			17,195,660	08/20/24		17,016,683		15,046,203
					2.9	%			30,973,708			27,050,761		27,546,578
Construction Materials
	United Poly Systems Holding, Inc.	12/28/20	Mezzanine Loan - 13.00% inc PIK (13.00% Fixed Coupon, all PIK)		0.8	%			8,039,430	12/31/25		8,039,430		7,589,222
					0.8	%			8,039,430			8,039,430		7,589,222
Consumer Durables & Apparel
	Rocky Brands, Inc.(3)	03/15/21	Term Loan - 8.00% (LIBOR + 7.00%, 1.00% Floor)		5.4	%			48,888,419	03/15/26		48,067,008		48,888,419
	Twin Star International, Inc.	06/18/21	Term Loan - 8.50% (LIBOR + 7.50%, 1.00% Floor)		4.4	%			41,670,600	06/18/26		41,205,914		39,378,717
					9.8	%			90,559,019			89,272,922		88,267,136
Consumer Services
	Grand Circle Corporation	02/26/21	Term Loan - 11.75% (LIBOR + 10.50%, 1.25% Floor)		4.5	%			40,363,826	02/26/26		39,693,159		40,363,826
					4.5	%			40,363,826			39,693,159		40,363,826
Energy Equipment & Services							��
	Profrac Services, LLC	09/07/18	Term Loan - 9.75% (LIBOR + 8.50%, 1.25% Floor)		5.6	%			51,155,454	09/07/23		50,111,882		50,797,366
	WDE TorcSill Holdings LLC	10/22/19	Revolver - 11.00% inc PIK (LIBOR + 9.50%, 1.50% Floor, 2.75% PIK)		0.8	%			7,576,182	10/22/24		7,576,182		7,212,526
	WDE TorcSill Holdings LLC	10/22/19	Term Loan - 11.00% inc PIK (LIBOR + 9.50%, 1.50% Floor, 2.75% PIK)		2.7	%			25,675,963	10/22/24		25,320,833		24,443,517
					9.1	%			84,407,599			83,008,897		82,453,409
Food Products
	Hometown Food Company	08/31/18	Term Loan - 6.25% (LIBOR + 5.00%, 1.25% Floor)		2.4	%			22,143,719	08/31/23		21,976,613		22,143,719
					2.4	%			22,143,719			21,976,613		22,143,719
Health Care Technology
	PatientPoint Health Technologies, LLC	03/30/21	Term Loan - 8.00% (LIBOR + 7.00%, 1.00% Floor)		1.9	%			16,674,000	03/07/25		16,303,792		16,774,044
					1.9	%			16,674,000			16,303,792		16,774,044
Hotels, Restaurants & Leisure
	FM Restaurants Holdco, LLC	11/25/19	Term Loan - 9.75% (LIBOR + 8.00%, 1.75% Floor)		2.3	%			20,961,949	11/22/23		20,714,706		20,961,949
	KBP Brands, LLC	05/26/21	Delayed Draw Term Loan - 5.75% (LIBOR + 5.00%, 0.75% Floor)		1.5	%			13,744,248	05/26/27		13,744,248		13,716,759
	KBP Brands, LLC	05/26/21	Term Loan - 5.75% (LIBOR + 5.00%, 0.75% Floor)		1.1	%			9,970,509	05/26/27		9,679,005		9,950,568
	Red Lobster Management, LLC	01/22/21	Term Loan - 8.50% (LIBOR + 7.50%, 1.00% Floor)		6.1	%			55,031,940	01/22/26		54,138,651		54,976,908
					11.0	%			99,708,646			98,276,610		99,606,184

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2021


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	Debt (continued)
Household & Personal Products
	Obagi Cosmeceuticals LLC	03/16/21	Revolver - 8.50% (LIBOR + 7.50%, 1.00% Floor)		0.8	%	$	6,784,800	03/16/26	$	6,784,800	$	6,784,800
	Obagi Cosmeceuticals LLC	03/16/21	Term Loan - 8.50% (LIBOR + 7.50%, 1.00% Floor)		5.6	%		49,382,036	03/16/26		48,173,082		50,715,351
					6.4	%		56,166,836			54,957,882		57,500,151
Household Durables
	Slogic Holding Corp.(4)	06/29/18	Last Out Term Loan - 7.00% (LIBOR + 6.00%, 1.00% Floor)		3.0	%		26,681,925	10/29/26		26,535,277		26,681,925
					3.0	%		26,681,925			26,535,277		26,681,925
Household Products
	Greenfield World Trade, Inc.	08/12/21	Last Out Delayed Draw Term Loan - 14.83% inc PIK (LIBOR + 13.33%, 1.50% Floor, 7.00% PIK)		1.1	%		10,073,456	12/31/22		8,919,377		10,385,734
	Greenfield World Trade, Inc.	03/04/19	Last Out Term Loan - 14.83% inc PIK (LIBOR + 13.33%, 1.50% Floor, 7.00% PIK)		5.8	%		51,136,809	03/31/25		48,505,930		52,108,408
					6.9	%		61,210,265			57,425,307		62,494,142
Information Technology Services
	Corcentric, Inc.	11/15/18	Delayed Draw Term Loan - 8.50% (LIBOR + 7.00%, 1.50% Floor)		1.4	%		12,400,480	11/15/23		12,400,480		12,400,480
	Corcentric, Inc.	11/15/18	Term Loan - 8.50% (LIBOR + 7.00%, 1.50% Floor)		3.5	%		31,528,880	11/15/23		31,229,645		31,528,880
					4.9	%		43,929,360			43,630,125		43,929,360
Internet & Direct Marketing Retail
	Altern Marketing LLC	09/30/20	First Out Term Loan - 8.00% (LIBOR + 6.00%, 2.00% Floor)		1.2	%		11,033,313	10/07/24		10,883,200		11,165,713
					1.2	%		11,033,313			10,883,200		11,165,713
Media
	Encompass Digital Media, Inc.	10/01/18	Revolver - 8.75% (LIBOR + 7.50%, 1.25% Floor)		0.1	%		866,591	09/28/23		866,591		866,591
	Encompass Digital Media, Inc.	10/01/18	Term Loan - 8.75% inc PIK (LIBOR + 7.50%, 1.25% Floor, 1.13% PIK)		3.3	%		29,959,514	09/28/23		29,822,972		29,959,514
	Winsight, LLC	11/15/18	Revolver - 12.00% inc PIK (LIBOR + 11.00%, 1.00% Floor, 4.00% PIK)		0.2	%		1,566,816	04/01/24		1,566,816		1,479,074
	Winsight, LLC	11/15/18	Term Loan - 12.00% inc PIK (LIBOR + 11.00%, 1.00% Floor, 4.00% PIK)		2.2	%		20,992,166	04/01/24		20,776,633		19,816,605
					5.8	%		53,385,087			53,033,012		52,121,784
Packaging
	Hoover Group, Inc.	10/01/20	Term Loan - 9.75% (LIBOR + 8.50%, 1.25% Floor)		3.2	%		30,200,733	10/01/24		29,785,654		28,751,098
					3.2	%		30,200,733			29,785,654		28,751,098
Personal Products
	Voyant Beauty Holdings, Inc.	08/20/20	Term Loan - 10.50% inc PIK (LIBOR + 9.00%, 1.50% Floor, 0.50% PIK)		5.5	%		51,444,798	08/20/25		50,378,380		49,747,120
					5.5	%		51,444,798			50,378,380		49,747,120
Publishing
	Bendon Inc.	12/11/20	Term Loan - 8.00% (LIBOR + 7.00%, 1.00% Floor)		5.5	%		51,931,651	12/11/25		51,001,075		49,802,454
					5.5	%		51,931,651			51,001,075		49,802,454

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2021


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	Debt (continued)
Software
	Mondee Holdings LLC	12/20/19	Term Loan - 12.25% inc PIK (LIBOR + 10.50%, 1.75% Floor, all PIK)		9.7	%	$	91,567,657	12/23/24	$	89,880,283	$	87,538,679
					9.7	%		91,567,657			89,880,283		87,538,679
Textiles, Apparel & Luxury Goods
	Centric Brands Inc.(3)	10/09/20	Revolver - 6.50% (LIBOR + 5.50%, 1.00% Floor)		0.2	%		1,382,456	10/09/24		1,382,456		1,382,456
	Centric Brands Inc.(3)	10/09/20	Term Loan - 10.00% inc PIK (LIBOR + 9.00%, 1.00% Floor, all PIK)		4.1	%		38,828,277	10/09/25		35,890,170		36,809,207
	Keeco Holdings, LLC	09/19/18	Term Loan - 10.75% inc PIK (LIBOR + 9.00%, 1.75% Floor, 1.25% PIK)		6.2	%		57,478,402	03/15/24		57,013,228		55,811,528
					10.5	%		97,689,135			94,285,854		94,003,191
	Total Debt Investments				154.3	%					1,390,961,883		1,393,576,053

	EQUITY
							Shares			Amortized Cost		Fair Value
Chemicals
	AGY Equity LLC(2)(5)(6)		Class A Preferred Units		0.0	%		7,752,414		$	—	$	—
	AGY Equity LLC(2)(5)(6)		Class B Preferred Units		0.0	%		10,078,138			—		—
	AGY Equity LLC(2)(5)(6)		Class C Common Units		0.0	%		11,241,000			—		—
					0.0	%		29,071,552			—		—
Construction Materials
	United Poly Systems Holding, Inc.(5)(6)		Common Stock		0.0	%		7,550			755,000		—
					0.0	%		7,550			755,000		—
Household Durables
	Shelterlogic Group Holdings, Inc(4)(5)(6)		Common Stock		3.4	%		1,254,034			—		30,761,454
					3.4	%		1,254,034			—		30,761,454
Household Products
	Greenfield World Trade, Inc.(5)(6)		Class A-1 Warrant, expires 03/25/27		0.6	%		3,869			3,059,379		5,506,150
	Greenfield World Trade, Inc.(5)(6)		Class A-2 Warrant, expires 03/25/27		0.2	%		1,345			1,158,446		1,445,527
					0.8	%		5,214			4,217,824		6,951,677
Software
	Mondee Holdings LLC(5)(6)		Class G Preferred Stock		0.2	%		1,226,708			1,226,708		2,122,205
					0.2	%		1,226,708			1,226,708		2,122,205
Textiles, Apparel & Luxury Goods
	Centric Brands L.P.(3)(5)(6)		Membership Interests		0.0	%		159,658			—		—
	Centric Brands L.P.(3)(5)(6)		Class A LP Interests		0.0	%		159,658			—		—
					0.0	%		319,316			—		—
	Total Equity Investments				4.4	%					6,199,532		39,835,336
	Total Debt & Equity Investments(7)				158.7	%					1,397,161,415		1,433,411,389
	Total Investments (158.7%)									$	1,397,161,415	$	1,433,411,389
	Net unrealized depreciation on unfunded commitments (-0.1%)												(716,390	)
	Liabilities in Excess of Other Assets (-58.6%)												(529,399,496	)
	Net Assets (100.0%)											$	903,295,503

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2021

(1)

Certain debt investments are subject to contractual restrictions on resale, such as approval of the agent or borrower.

(2)

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. Fair value as of December 31, 2020 and December 31, 2021 along with transactions during the year ended December 31, 2021 in these controlled investments are as follows:


Name of Investment	Fair Value at December 31, 2020		Gross Addition(a)		Gross Reduction(b)		Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at December 31, 2021		Interest/Dividend/ Other income
AGY Holdings Corp. Opco Term Loan - 11.50% inc. PIK	$	3,391,067	$	16,132,489	$	—	$	—	$	(97,618	)	$	19,425,938	$	3,094,020
AGY Holdings Corp. PIK Holdco Term Loan - 11.50% inc. PIK		23,651,102		1,479,564		—		—		(125,653	)		25,005,013		2,946,431
AGY Holdings Corp. Class A Preferred units		—		—		—		—		—			—		—
AGY Holdings Corp. Class B Preferred units		—		—		—		—		—			—		—
AGY Holdings Corp. Class C Common units		—		—		—		—		—			—		—
Total Controlled Affiliated investments	$	27,042,169	$	17,612,053	$	—	$	—	$	(223,271	)	$	44,430,951	$	6,040,451

(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(3)

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, 2021, $87,080,082 or 5.5% of the Company’s total assets were represented by “non-qualifying assets.”

(4)

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, between 5% and 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2020 and December 31, 2021 along with transactions during the year ended December 31, 2021 in these affiliated investments are as follows:


Name of Investment	Fair Value at December 31, 2020		Gross Addition(a)			Gross Reduction(b)			Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)		Fair Value at December 31, 2021		Interest/Dividend/ Other income
Shelterlogic Group Holdings, Inc. Common Stock	$	9,578,443	$	—		$	—		$	—	$	21,183,011	$	30,761,454	$	—
Slogic Holding Corp. Last Out Term Loan - 6.87%		27,252,661		(11,592	)		(570,736	)		—		11,592		26,681,925		1,971,455
Total Non-Controlled Affiliated Investments	$	36,831,104	$	(11,592	)	$	(570,736	)	$	—	$	21,194,603	$	57,443,379	$	1,971,455

(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(5)

Non-income producing.

(6)

All or a portion of such security was acquired in a transaction exempt from registration under the Securities Act of 1933 and may be deemed “restricted securities” under the Securities Act. As of December 31, 2021, the aggregate fair value of these securities was $39,835,336, or 2.5% of the Company’s total assets.

(7)

The fair value of each debt and equity 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.”

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2021

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

PRIME - Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $604,501,688 and $621,092,362, respectively, for the year ended December 31, 2021. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown Portfolio
United States	100.0	%

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING VII LLC

Consolidated Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)


	As of June 30,
	2022			As of December 31,
	(unaudited)			2021
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $1,171,181 and $1,325,972, respectively)	$	1,174,105		$	1,331,537
Non-controlled affiliated investments (amortized cost of $26,550 and $26,535, respectively)		53,405			57,443
Controlled affiliated investments (amortized cost of $83,746 and $44,654, respectively)		70,457			44,431
Cash and cash equivalents		55,152			113,687
Interest receivable		13,892			6,939
Deferred financing costs		536			2,817
Due from Adviser		—			467
Prepaid and other assets		—			104
Total Assets	$	1,367,547		$	1,557,425

Liabilities
Term loan (net of $2,138 and $1,147 of deferred financing costs, respectively)	$	455,862		$	246,387
Revolving credit facilities payable		—			340,500
Incentive fee payable		66,401			58,549
Management fees payable		4,954			5,247
Interest and credit facilities expense payable		3,228			2,520
Unrealized depreciation on unfunded commitments		958			716
Directors’ fees payable		168			—
Other accrued expenses and other liabilities		273			210
Total Liabilities		531,844			654,129

Commitments and Contingencies (Note 5)

Members’ Capital
Common Unitholders’ commitment (13,734,010 units issued and outstanding)	$	1,373,401		$	1,373,401
Common Unitholders’ undrawn commitment (13,734,010 units issued and outstanding)		(165,401	)		(165,401	)
Common Unitholders’ return of capital		(337,342	)		(271,342	)
Common Unitholders’ offering costs		(633	)		(633	)
Accumulated Common Unitholders’ tax reclassification		(1,865	)		(1,865	)
Common Unitholders’ capital		868,160			934,160
Accumulated loss		(32,457	)		(30,864	)
Total Members’ Capital	$	835,703		$	903,296
Total Liabilities and Members’ Capital	$	1,367,547		$	1,557,425
Net Asset Value Per Unit (Note 10)	$	72.89		$	77.81

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Operations (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2022			2021		2022			2021
Investment Income
Non-controlled/non-affiliated investments:
Interest income	$	31,694		$	33,754	$	60,143		$	65,990
Interest income paid-in-kind		3,590			5,728		11,029			11,371
Other fee income		262			74		475			142
Non-controlled affiliated investments:
Interest income		480			511		954			1,018
Controlled affiliated investments:
Interest income		1,979			864		3,133			1,356
Interest income paid-in-kind		2,442			585		3,205			1,021
Total investment income		40,447			41,516		78,939			80,898

Expenses
Management fees	$	4,954		$	5,401	$	10,190		$	10,725
Interest and credit facilities expenses		4,918			4,445		10,007			8,949
Incentive fees		3,962			7,417		7,852			28,515
Administrative fees		346			368		705			735
Professional fees		361			486		595			759
Directors’ fees		98			105		198			203
Other expenses		54			328		133			1,284
Total expenses		14,693			18,550		29,680			51,170
Net investment income	$	25,754		$	22,966	$	49,259		$	29,728
Net realized and unrealized (loss) gain on investments
Net realized gain:
Non-controlled/non-affiliated investments	$	2,150		$	705	$	2,150		$	1,926
Net change in unrealized appreciation/(depreciation):
Non-controlled/non-affiliated investments		(2,423	)		2,924		(5,591	)		13,793
Non-controlled affiliated investments		(635	)		3,075		(4,053	)		7,329
Controlled affiliated investments		(8,997	)		—		(10,358	)		—
Net realized and unrealized (loss) gain on investments	$	(9,905	)	$	6,704	$	(17,852	)	$	23,048
Net increase in Members’ Capital from operations	$	15,849		$	29,670	$	31,407		$	52,776
Basic and diluted:
Income per unit	$	1.15		$	2.16	$	2.29		$	3.84

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Changes in Members’ Capital (Unaudited)

(Dollar amounts in thousands, except unit data)


	Common Unitholders’ Capital			Accumulated Earnings (Loss)			Total
Members’ Capital at January 1, 2021	$	858,819		$	(28,422	)	$	830,397
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			6,762			6,762
Net realized gain on investments		—			1,221			1,221
Net change in unrealized appreciation/(depreciation) on investments		—			15,123			15,123
Distributions to Members from:
Distributable earnings		—			(24,000	)		(24,000	)
Increase in Members’ Capital Resulting from Capital Activity:
Contributions		127,000			—			127,000
Total Increase (Decrease) in Members’ Capital for the three months ended March 31, 2021		127,000			(894	)		126,106
Members’ Capital at March 31, 2021	$	985,819		$	(29,316	)	$	956,503
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			22,966			22,966
Net realized gain on investments		—			705			705
Net change in unrealized appreciation/(depreciation) on investments		—			5,999			5,999
Distributions to Members from:
Distributable earnings		—			(36,000	)		(36,000	)
Increase in Members’ Capital Resulting from Capital Activity:
Contributions		166,000			—			166,000
Total Increase (Decrease) in Members’ Capital for the three months ended June 30, 2021		166,000			(6,330	)		159,670
Members’ Capital at June 30, 2021	$	1,151,819		$	(35,646	)	$	1,116,173

Members’ Capital at January 1, 2022	$	934,160		$	(30,864	)	$	903,296
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			23,505			23,505
Net change in unrealized appreciation/(depreciation) on investments		—			(7,947	)		(7,947	)
Total Increase in Members’ Capital for the three months ended March 31, 2022		—			15,558			15,558
Members’ Capital at March 31, 2022	$	934,160		$	(15,306	)	$	918,854
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			25,754			25,754
Net realized gain on investments		—			2,150			2,150
Net change in unrealized appreciation/(depreciation) on investments		—			(12,055	)		(12,055	)
Distributions to Members from:
Distributable earnings		—			(33,000	)		(33,000	)
Return of capital		(66,000	)		—			(66,000	)
Increase in Members’ Capital Resulting from Capital Activity:
Contributions		—			—			—
Total Decrease in Members’ Capital for the three months ended June 30, 2022		(66,000	)		(17,151	)		(83,151	)
Members’ Capital at June 30, 2022	$	868,160		$	(32,457	)	$	835,703

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the Six Months Ended June 30,
	2022			2021
Cash Flows from Operating Activities
Net increase in net assets resulting from operations	$	31,407		$	52,776
Adjustments to reconcile the net increase in net assets resulting from operations to net cash provided by (used in) provided by operating activities:
Purchases of investments		(85,343	)		(517,576	)
Interest income paid-in-kind		(14,234	)		(12,392	)
Proceeds from sales and paydowns of investments		224,385			481,345
Net realized gain on investments		(2,150	)		(1,926	)
Net change in unrealized (appreciation)/depreciation on investments		20,002			(21,122	)
Amortization of premium and accretion of discount, net		(6,973	)		(7,382	)
Amortization of deferred financing costs		1,884			1,447
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		(6,953	)		(4,076	)
(Increase) decrease in due from Adviser		467			1,023
(Increase) decrease in prepaid and other assets		104			71
Increase (decrease) in payable for open trades		—			(125,229	)
Increase (decrease) in incentive fees payable		7,852			28,515
Increase (decrease) in management fees payable		(293	)		446
Increase (decrease) in interest and credit facilities expense payable		708			(227	)
Increase (decrease) in directors’ fees payable		168			158
Increase (decrease) in other accrued expenses and liabilities		62			74
Net cash provided by (used in) operating activities	$	171,093		$	(124,075	)
Cash Flows from Financing Activities
Contributions	$	—		$	293,000
Distributions to Members from distributable earnings		(32,999	)		(60,000	)
Return of capital		(66,000	)		—
Deferred financing costs paid		(629	)		(629	)
Proceeds from credit facilities		—			128,000
Repayments of credit facilities		(130,000	)		(300,000	)
Net cash (used in) provided by financing activities	$	(229,628	)	$	60,371
Net increase (decrease) in cash and cash equivalents	$	(58,535	)	$	(63,704	)
Cash and cash equivalents, beginning of period	$	113,687		$	148,204
Cash and cash equivalents, end of period	$	55,152		$	84,500
Supplemental and non-cash financing activities
Interest expense paid	$	6,780		$	8,009
Distributions payable	$	1		$	—

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

1. Organization and Basis of Presentation

Organization: TCW Direct Lending VII LLC (the “Company”) was formed as a Delaware limited liability company on May 23, 2017. The Company engaged in a private offering of its common limited liability company units (the “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 (“Preferred Units”), though it currently has no intention to do so. On August 18, 2017, the Company sold and issued 10 Units at an aggregate purchase price of $1 to TCW Asset Management Company LLC (the “Adviser”), an affiliate of the TCW Group, Inc. The Company commenced operations during the second quarter of fiscal year 2018.

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”), beginning fiscal year 2018. The Company is required to meet the minimum distribution and other requirements for RIC qualification. As a BDC and a RIC, the Company is required to comply with certain regulatory requirements.

During 2018, the Company formed two Delaware limited liability companies which each have a single member interest owned by the Company. On February 12, 2020, the Company formed its third wholly-owned subsidiary, TCW DLG Funding VII 2020-1 LLC, a single member Delaware limited liability company. On March 21, 2022, the Company formed its fourth wholly-owned subsidiary, TCW DL NAV LLC, also a single member Delaware limited liability 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), April 13, 2024, unless extended or sooner dissolved as provided in the Company’s amended and restated limited liability agreement (the “LLC Agreement”) or by operation of law. The Company may extend the term for two additional one-year periods upon written notice to the holders of the Units (the “Unitholders) and holders of preferred units, if any, (together with the Unitholders, the “Members”) at least 90 days prior to the expiration of the term or the end of the first one-year period. Thereafter, the term may be extended for successive one-year periods, with the vote or consent of a supermajority representing more than 66 2/3% in interest of the holders of the Units.

Commitment Period: The Commitment Period commenced on April 13, 2018 (the “Initial Closing Date”), the day on which the Company completed the first closing of the sale of its Units to persons not affiliated with the Adviser and ended on May 16, 2021, which is the later of (a) April 13, 2021, three years from the Initial Closing Date and (b) May 16, 2021, three years from the date in which the Company first completed an investment. In accordance with the Company’s LLC 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 effect follow-on investments in existing portfolio companies up to an aggregate maximum of 10% of Capital Commitments (as defined below).

Capital Commitments: On the Initial Closing Date, the Company began accepting subscription agreements from investors for the private sale of its Units. On January 14, 2019, the Company completed its fourth and final closing sale of Units. The Company sold 13,734,010 Units for an aggregate offering price of $1,373,401. Each Unitholder is obligated to contribute capital equal to its respective capital commitment to the Company (the “Commitment”) and each Unit’s Commitment obligation is $100.00 per unit. The sale of the Units was made pursuant to subscription agreements entered into by the Company and each investor. Under the terms of the subscription agreements, the Company may draw down all or any portion of the undrawn commitment with respect to each Unit generally upon at least ten business days’ prior written notice to the unitholders. The amount of capital that remains to be drawn down and contributed is referred to as an “Undrawn Commitment”.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

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 June 30, 2022, aggregate Commitments, Undrawn Commitments, percentage of Commitments funded and the number of subscribed for Units of the Company were as follows:


	Commitments		Undrawn Commitments		% of Commitments Funded			Units
Unitholder	$	1,373,401	$	165,401		88.0	%		13,734,010

Recallable Amount: A Unitholder may be required to re-contribute amounts distributed equal to (a) such Unitholder’s share of all portfolio investments that are repaid to the Company, or otherwise recouped by the Company, and distributed to the Unitholder, in whole or in part, during or after the Commitment period, reduced by (b) all re-contributions made by such Unitholder. This amount, (the “Recallable Amount”) is excluded from the calculation of the accrual based net asset value.

The Recallable Amount as of June 30, 2022 was $337,342.

2. Significant Accounting Policies

Basis of Presentation: The Company’s consolidated financial statements 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 also consolidated the results of its wholly-owned subsidiaries 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 consolidated 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 fair 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 the principal market of its investments to be the market in which the investment trades with the greatest volume and level of activity.

Transactions: The Company records investment transactions on the trade date. The Company considers the trade date for investments not traded on a recognizable exchange, or traded in the over-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. Ongoing facility, commitment or other additional fees including prepayment fees, consent fees and forbearance fees are recognized as interest income in the period in which the fees were earned. Income received in exchange for the provision of services such as administration and managerial services is recognized as other fee income in the period in which it was earned.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

2. Significant Accounting Policies (Continued)

The Company has entered into certain intercreditor agreements that entitle the Company to the “last out” tranche of first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. In certain cases, the Company may receive a higher interest rate than the contractual stated interest rate as disclosed on the Company’s Consolidated Schedule of Investments.

Certain investments have 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.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon 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 Credit Facilities (as defined in Note 7 to the Consolidated Financial Statements), including arrangement fees, upfront fees and legal fees, are amortized on a straight-line basis over the term of the respective credit facility.

Organization and Offering Costs: The Company expensed organization costs totaling $740 (net of $380 in Adviser reimbursement) since its inception through December 31, 2018. Offering costs totaling $633 (net of $324 in Adviser reimbursement) were charged directly to Members’ Capital on December 31, 2018. No additional organization and offering costs were incurred subsequent to December 31, 2018. The Company did not bear more than an amount equal to 10 basis points of the aggregate capital commitments for organization and offering expenses.

Cash and Cash Equivalents: The Company generally considers investments with a maturity of three months or less at the time of acquisition to be cash equivalents. The Company had no cash equivalents as of June 30, 2022.

Income Taxes: The Company has elected to be regulated as a BDC under the 1940 Act. The Company also elected to be treated as a RIC under the Code beginning with the taxable year ending December 31, 2018. 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 Unitholders as dividends. Rather, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.

Recent Accounting Pronouncements: In January 2021, the FASB issued Accounting Standards Update (“ASU”) No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). ASU 2021-01 is an update of ASU 2020-04 (defined below), which is in response to concerns about structural risks of interbank offered rates, and particularly the risk of cessation of London Interbank Offered Rate (“LIBOR”); regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU 2021-01 update clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in this update are effective immediately through December 31, 2022, for all entities. Management is currently evaluating the implications, if any, of the additional requirements and their impact on the Company’s consolidated financial statements.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

2. Significant Accounting Policies (Continued)

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank offered reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. The Company does not expect the adoption of this ASU to have a material impact on the consolidated financial statements.

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, generally 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 by the Company 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 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), generally includes common stock valued at the closing price on the primary exchange in which the security trades.

Level 2 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Equity, (Level 2), generally includes warrants valued using quotes for comparable investments.

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), includes 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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

3. Investment Valuations and Fair Value Measurements (Continued)

Equity, (Level 3), includes common stock, preferred stock and 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.

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 June 30, 2022:


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	1,260,119	$	1,260,119
Equity		—		—		37,848		37,848
Total Assets	$	—	$	—	$	1,297,967	$	1,297,967

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, 2021:


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	1,393,576	$	1,393,576
Equity		—		—		39,835		39,835
Total Assets	$	—	$	—	$	1,433,411	$	1,433,411

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

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 and six months ended June 30, 2022:


	Debt			Equity			Total
Balance, April 1, 2022	$	1,369,554		$	39,163		$	1,408,717
Purchases, including payments received in-kind		21,055			4,041			25,096
Sales and paydowns of investments		(126,029	)		(2,944	)		(128,973	)
Amortization of premium and accretion of discount, net		3,618			—			3,618
Net realized (losses) gains		(39	)		2,189			2,150
Net change in unrealized appreciation/(depreciation)		(8,040	)		(4,601	)		(12,641	)
Balance, June 30, 2022	$	1,260,119		$	37,848		$	1,297,967
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2022	$	(9,997	)	$	(5,026	)	$	(15,023	)


	Debt			Equity			Total
Balance, January 1, 2022	$	1,393,576		$	39,835		$	1,433,411
Purchases, including payments received in-kind		95,580			4,041			99,621
Sales and paydowns of investments		(221,485	)		(2,944	)		(224,429	)
Amortization of premium and accretion of discount, net		6,973			—			6,973
Net realized (losses) gains		(39	)		2,189			2,150
Net change in unrealized appreciation/(depreciation)		(14,486	)		(5,273	)		(19,759	)
Balance, June 30, 2022	$	1,260,119		$	37,848		$	1,297,967
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2022	$	(15,683	)	$	(6,029	)	$	(21,712	)

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

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 and six months ended June 30, 2021:


	Debt			Equity			Total
Balance, April 1, 2021	$	1,435,946		$	20,324		$	1,456,270
Purchases, including payments received in-kind		209,817			2,101			211,918
Sales and paydowns of investments		(196,019	)		—			(196,019	)
Amortization of premium and accretion of discount, net		4,031			—			4,031
Net realized (losses) gains		87			(505	)		(418	)
Net change in unrealized appreciation/(depreciation)		4,772			3,039			7,811
Balance, June 30, 2021	$	1,458,634		$	24,959		$	1,483,593
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2021	$	6,681		$	3,039		$	9,720


	Debt			Equity			Total
Balance, January 1, 2021	$	1,385,675		$	15,883		$	1,401,558
Purchases, including payments received in-kind		527,867			2,101			529,968
Sales and paydowns of investments		(475,015	)		(3,117	)		(478,132	)
Amortization of premium and accretion of discount, net		7,382			—			7,382
Net realized gains		(1,809	)		2,612			803
Net change in unrealized appreciation/(depreciation)		14,534			7,480			22,014
Balance, June 30, 2021	$	1,458,634		$	24,959		$	1,483,593
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2021	$	15,724		$	9,312		$	25,036

The Company did not have any transfers between levels during the three and six months ended June 30, 2022 and 2021.

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 June 30, 2022:

Investment Type

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted
Average*

Impact to
Valuation from an
Increase in Input

Debt

888,250

Income Method

Discount Rate

8.4% to 21.3%

13.1%

Decrease

Debt

90,118

Market Method

EBITDA Multiple

9.8x to 10.8x

N/A

Increase

Income Method

Take Out Indication

103.0% to 103.0%

N/A

Increase

Debt

26,682

Market Method

EBITDA Multiple

5.0x to 6.0x

N/A

Increase

Debt

70,457

Market Method

Revenue Multiple

0.5x to 0.9x

N/A

Increase

Debt

184,612

Income Method

Discount Rate

9.2% to 22.0%

13.7%

Decrease

Income Method

Take Out Indication

100.0% to 103.0%

N/A

Increase

Equity

29,284

Market Method

EBITDA Multiple

5.1x to 6.3x

N/A

Increase

Equity

—

Market Method

Revenue Multiple

0.5x to 0.9x

N/A

Increase

Equity

6,417

Market Method

EBITDA Multiple

7.5x to 8.5x

N/A

Increase

Income Method

Implied Volatility

60.0% to 60.0%

N/A

Increase

Expected Term (in years)

2.5 to 2.5

N/A

Increase

Equity

2,147

Market Method

EBITDA Multiple

9.8x to 10.8x

N/A

Increase

Income Method

Take Out Indication

$3.50 to $3.50

N/A

Increase

* Weighted based on fair value

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

3. Investment Valuations and Fair Value Measurements (Continued)

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, 2021:

Investment Type

Fair Value

Valuation
Technique

Unobservable Input

Range

Weighted
Average*

Impact to
Valuation from an
Increase in Input

Debt

1,109,712

Income Method

Discount Rate

5.8% to 17.1%

10.5%

Decrease

Debt

26,682

Market Method

EBITDA Multiple

6.0x to 7.0x

N/A

Increase

Debt

61,346

Market Method

Revenue Multiple

0.6x to 1.1x

N/A

Increase

Debt

195,836

Income Method

Discount Rate

6.5% to 19.2%

12.7%

Decrease

Income Method

Take Out Indication

100.0% to 106.0%

N/A

Increase

Equity

30,761

Market Method

EBITDA Multiple

6.0x to 7.5x

N/A

Increase

Equity

—

Market Method

Revenue Multiple

0.6x to 0.8x

N/A

Increase

Equity

6,952

Market Method

EBITDA Multiple

7.3x to 8.3x

N/A

Increase

Income Method

Implied Volatility

60.0% to 60.0%

N/A

Increase

Expected Term (in years)

2.5 to 2.5

N/A

Increase

Equity

2,122

Market Method

EBITDA Multiple

6.8x to 7.8x

N/A

Increase

Income Method

Take Out Indication

$3.45 to $3.45

N/A

Increase

* Weighted based on fair value

The Company generally utilizes the midpoint of a valuation range provided by an external, independent valuation firm in determining fair value.

4. Agreements and Related Party Transactions

Advisory Agreement: On December 29, 2017, the Company entered into the Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Adviser, a registered investment adviser under the Investment Advisers Act of 1940, as amended. The Advisory Agreement became effective upon its execution. 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 the Company’s outstanding voting securities and (ii) the vote of a majority of the Board who are not “interested persons” (as defined in Section 2(a)(19) of the 1940 Act) of the Company, the Adviser or any of their respective affiliates (the “Independent Directors”). The Advisory Agreement will automatically terminate in the event of an assignment by the Adviser.

The Advisory Agreement may be terminated by either party, by vote of the Company’s Board, or by a vote of the majority of the Company’s outstanding voting units, without penalty upon not less than 60 days’ prior written notice to the applicable party. If the Advisory Agreement is terminated according to this paragraph, the Company will pay the Adviser a pro-rated portion of the Management Fee and Incentive Fee (each as defined below). The Advisory Agreement was reapproved by the Company’s Board on August 9, 2021.

Pursuant to the Advisory Agreement, the Adviser will:

•

determine the composition of the Company’s portfolio, the nature and timing of the changes to the Company’s portfolio and the manner of implementing such changes;

•

identify, evaluate and negotiate the structure of the investments the Company makes (including performing due diligence on the Company’s prospective portfolio companies);

•

determine the assets the Company will originate, purchase, retain or sell;

•

close, monitor and administer the investments the Company makes, including the exercise of any rights in the Company’s capacity as a lender; and

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

4. Agreements and Related Party Transactions (Continued)

•

provide the Company such other investment advice, research and related services as the Company may, from time to time, require.

The Company pays to the Adviser, quarterly in arrears, a management fee in cash (the “Management Fee”) calculated as follows: 0.375% (i.e., 1.50% per annum) of the average gross assets of the Company on a consolidated basis, with the average determined based on the gross assets of the Company as of the end of the three most recently completed calendar months. “Gross assets” means the amortized cost of portfolio investments of the Company (including portfolio investments purchased with borrowed funds and other forms of leverage, such as Preferred Units, public and private debt issuances, derivative instruments, repurchase agreements and other similar instruments or arrangements) 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), and excluding cash and cash equivalents. The Management Fee payable for any partial month or quarter will be appropriately pro-rated. The Adviser may defer its right to receive current payment of such fee until the Company is notified otherwise.

For the three and six months ended June 30, 2022, Management Fees incurred were $4,954 and $10,190, respectively, of which $4,954 remained payable as of June 30, 2022. For the three and six months ended June 30, 2021, Management Fees incurred amounted to $5,401 and $10,725, respectively, of which $5,401 remained payable at June 30, 2021.

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

(a)

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

(b)

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

(c)

Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to Unitholders until such time as the 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 Unitholders in respect of all 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 in respect of all Units, with the remaining 80% distributed to the Unitholders.

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

For purposes of calculating the Incentive Fee, aggregate contributions shall not include Earnings Balancing Contributions or Late-Closer Contributions, and the distributions to Unitholders shall not include distributions attributable to Late-Closer Contributions. Earnings Balancing Contributions (as such terms are defined in the Company’s LLC Agreement) received by the Company will not be treated as amounts distributed to Unitholders for purposes of calculating the Incentive Fee. In addition, if distributions to which a Defaulting Member otherwise would have been entitled have been withheld pursuant to 6.2.4 of the LLC Agreement, the amounts so withheld shall be treated for such purposes as having been distributed to such Defaulting Member (as that term is defined in the LLC Agreement). The amount of any distribution of securities made in kind shall be equal to the fair market value of those securities at the time of distribution determined pursuant to 13.4 of the LLC Agreement.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

4. Agreements and Related Party Transactions (Continued)

If the Advisory Agreement terminates early for any reason other than (i) the Adviser voluntarily terminating the agreement or (ii) the Company terminating the agreement for cause (as set out in the Advisory Agreement), the Company 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 of the Company’s 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 were deemed accelerated, (B) the proceeds from such liquidation were used to pay all of the Company’s 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. The Company will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated.

Adviser Return Obligation: After the Company has made its final distribution of assets in connection with its dissolution, if the Adviser has received aggregate payments of Incentive Fees in excess of the amount the Adviser was entitled to receive pursuant to “Incentive Fee” above, then the Adviser will return to the Company, on or before 90 days after such final distribution of assets, an amount equal to such excess (the “Adviser Return Obligation”). Notwithstanding the preceding sentence, in no event will the Adviser be required to return to the Company an amount greater than the aggregate Incentive Fees paid to the Adviser, reduced by the excess of (a) the aggregate federal, state and local income tax liability the Adviser incurred in connection with the payment of such Incentive Fees, over (b) an amount equal to the U.S. federal and state tax benefits available to the Adviser by virtue of the payment made by the Adviser pursuant to its Adviser Return Obligation.

Administration Agreement: On September 25, 2018, the Company entered into an Amended and Restated Administration Agreement (the “Administration Agreement”) with TCW Asset Management Company LLC (in such capacity, the “Administrator”), which amended and restated the Administration Agreement between the Company and the Administrator entered into on April 16, 2018. Under the Administration Agreement, the Administrator (or one or more delegated service providers) will oversee the maintenance of the Company’s financial records and otherwise assist with the Company’s compliance with regulations applicable to a business development company under the Investment Company Act of 1940, as amended, and a regulated investment company under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended; monitor the payment of the Company’s expenses; oversee the performance of administrative and professional services rendered to the Company by others; be responsible for the financial and other records that the Company is required to maintain; prepare and disseminate reports to Unitholders and reports and other materials to be filed with the SEC or other regulators; assist the Company in determining and publishing (as necessary or appropriate) its net asset value; oversee the preparation and filing of tax returns; generally oversee the payment of expenses; and provide such other services as the Administrator, subject to review of the Company’s Board, shall from time to time determine to be necessary or useful to perform its obligations under the Administration Agreement. Payments under the Administration Agreement will be equal to an amount that reimburses the Administrator for the costs and expenses incurred by the Administrator in performing its obligations and providing personnel and facilities under the Administration Agreement. The Administrator shall seek such reimbursement from the Company no more than once during any calendar year and shall only seek such reimbursement when all Company Expenses (as defined below) for such calendar year have been paid or accrued. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

4. Agreements and Related Party Transactions (Continued)

The Company, and indirectly the Unitholders, will bear all costs, expenses and liabilities, other than Adviser Operating Expenses (as defined below) (which shall be borne by the Adviser), in connection with the organization, operations, administration and transactions of the Company (“Company Expenses”). Company Expenses shall include, without limitation: (a) organizational expenses and expenses associated with the issuance of the Units; (b) expenses of calculating the Company’s net asset value (including the cost and expenses of any independent valuation firm); (c) fees payable to third parties, including agents, consultants, attorneys or other advisors, relating to, or associated with, evaluating and making investments; (d) expenses incurred by the Adviser or the Administrator payable to third parties, including agents, consultants, attorneys or other advisors, relating to or associated with monitoring the financial and legal affairs for the Company, providing administrative services, monitoring or administering the Company’s investments and performing due diligence reviews of prospective investments and the corresponding portfolio companies; (e) costs associated with the Company’s reporting and compliance obligations under the Investment Company Act of 1940, the Securities Exchange Act of 1934, as amended, and other applicable federal or state securities laws; (f) fees and expenses incurred in connection with debt incurred to finance the Company’s investments or operations, and payment of interest and repayment of principal on such debt; (g) expenses related to sales and purchases of Units and other securities; (h) Management Fees and Incentive Fees; (i) administrator fees, if any, payable under the Administration Agreement; (j) transfer agent, sub-administrator and custodial fees; (k) expenses relating to the issue, repurchase and transfer of Units to the extent not borne by the relevant transferring Unitholders and/or assignees; (l) federal and state registration fees; (m) federal, state and local taxes and other governmental charges assessed against the Company; (n) independent directors’ fees and expenses and the costs associated with convening a meeting of the Company’s board of directors or any committee thereof; (o) fees and expenses and the costs associated with convening a meeting of the Unitholders or holders of any Preferred Units of the Company, as well as the compensation of an investor relations professional responsible for the coordination and administration of the foregoing; (p) costs of any reports, proxy statements or other notices to Unitholders, including printing and mailing costs; (q) costs and expenses related to the preparation of the Company’s consolidated financial statements and tax returns; (r) the Company’s allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; (s) direct costs and expenses of administration, including printing, mailing, long distance telephone, and copying; (t) independent auditors and outside legal costs, including legal costs associated with any requests for exemptive relief, “no-action” positions or other guidance sought from a regulator, pertaining to the Company; (u) compensation of other third party professionals to the extent they are devoted to preparing the Company’s consolidated financial statements or tax returns or providing similar “back office” financial services to the Company; (v) Adviser costs and expenses (excluding travel) in connection with identifying and investigating investment opportunities for the Company, monitoring the investments of the Company and disposing of any such investments; (w) portfolio risk management costs; (x) commissions or brokerage fees or similar charges incurred in connection with the purchase or sale of securities (including merger fees); (y) costs and expenses attributable to normal and extraordinary investment banking, commercial banking, accounting, auditing, appraisal, valuation, administrative agent activities, custodial and registration services provided to the Company, including in each case services with respect to the proposed purchase or sale of securities by the Company that are not reimbursed by the issuer of such securities or others (whether or not such purchase or sale is consummated); (z) costs of amending, restating or modifying the LLC Agreement or Advisory Agreement or related documents of the Company or related entities; (aa) fees, costs, and expenses incurred in connection with the termination, liquidation or dissolution of the Company or related entities and (bb) all other properly and reasonably chargeable expenses incurred by the Company or the Administrator in connection with administering the Company’s business. Notwithstanding the foregoing, in the event of a Reorganization (as defined in the LLC Agreement) that results in a Public Company (as defined in the LLC Agreement) or an Extension Fund (as defined in the LLC Agreement), including a Reorganization (as defined in the LLC Agreement) pursuant to which the Company becomes the Public Company or the Extension Fund, the fees, costs and expenses associated with any such restructuring, initial public offering, listing of equity securities or reorganization will be borne appropriately by the Public Company and the Extension Fund (and indirectly only by Unitholders that elect to become investors in the Public Company or the Extension Fund), as the case may be, and no others will directly or indirectly bear such fees, costs or expenses.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

4. Agreements and Related Party Transactions (Continued)

However, the Company will not bear (a) more than an amount equal to 10 basis points of investors’ aggregate Commitments for organizational expenses and offering expenses in connection with the offering of Units through the date that is nine months after the Initial Closing Date, as it may be extended by the Adviser, and (b) more than an amount equal to 12.5 basis points of aggregate Commitments computed annually for Company Expenses (the “Expense Cap”); provided, that, any amount by which actual annual expenses in (b) exceed the 12.5 basis point limit shall be carried over to the next year, without limitation, as additional expense until the earlier of the Reorganization (as defined in the LLC Agreement) or the dissolution of the Company, with any partial year assessed on a pro rata basis; and provided, further, that in determining the Company Expenses subject to the 12.5 basis point limit in (b), the following expenses shall be excluded and shall be borne by the Company as incurred without regard to the 12.5 basis point limit in (b): the Management Fee, the Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts incurred in connection with the Company’s borrowings (including interest, bank fees, legal fees and other transactional expenses arising out of or related to any borrowing or borrowing facility and similar costs), transfer agent fees, federal, state and local taxes and other governmental charges assessed against the Company, out-of-pocket expenses of calculating the Company’s net asset value (including the cost and expenses of any independent valuation firm engaged for that purpose and the costs and expenses of the valuation of the Company’s portfolio investments performed by the Company’s independent auditors in order to comply with applicable Public Company Accounting Oversight Board standards), out-of-pocket costs and expenses incurred in connection with arranging or structuring investments and their ongoing operations (including expenses and liabilities related to the formation and ongoing operations of any special purpose entity or entities in connection with an investment), out-of-pocket legal costs associated with any requests for exemptive relief, “no-action” positions or other guidance sought from a regulator pertaining to the Company, out-of-pocket costs and expenses relating to any Reorganization or liquidation of the Company, and any extraordinary expenses (such as litigation expenses and indemnification payments). Notwithstanding the foregoing, in no event will the Company carryforward to future periods the amount by which actual annual Company Expenses for a year exceed the 12.5 basis point limit for more than three years from the date on which such expenses were reimbursed.

“Adviser Operating Expenses” means overhead and operating and administrative expenses incurred by or on behalf of the Adviser or any of its affiliates, including the Company, in connection with maintaining and operating the Adviser’s office, including salaries and other compensation (including compensation due to its officers), rent, routine office equipment expense and liability and insurance premiums (other than those incurred in maintaining fidelity bonds and indemnitee insurance policies), in furtherance of providing supervisory investment management services for the Company. Adviser Operating Expenses also include any expenses incurred by the Adviser or its Affiliates in connection with the Adviser’s registration as an investment adviser under the Investment Advisers Act of 1940, as amended, or with its compliance as a registered investment adviser thereunder.

All Adviser Operating Expenses and all expenses of the Company that the Company will not bear, as set forth above, will be borne by the Adviser or its affiliates.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized depreciation by investment as of June 30, 2022 and December 31, 2021:


		June 30, 2022				December 31, 2021
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
AGY Holdings Corp.	September 2025	$	5,149	$	376	$	3,618	$	18
Altern Marketing LLC	October 2024		5,217		52		5,217		—
Bendon Inc.	December 2025		7,263		291		7,263		298
Centric Brands Inc.	October 2024		683		—		3,315		—
Encompass Digital Media, Inc.	September 2023		794		2		1,661		0
FM Restaurants Holdco, LLC	November 2023		—		—		2,414		—
Greenfield World Trade, Inc.	December 2022		8,059		—		8,059		—
Hometown Food Company	August 2023		5,881		12		5,881		—
Karman Holdings LLC (fka Spaceco Holdings LLC)	December 2025		2,622		34		1,311		9
KBP Brands, LLC (fka KBP Investments LLC)	May 2023		2,009		82		2,256		5
Mondee Holdings LLC	December 2024		8,613		—		8,613		—
Navistar Defense, LLC	December 2022		2		0		—		—
Obagi Cosmeceuticals LLC	March 2026		8,594		—		11,308		—
Rapid Displays, Inc.	April 2026		1,770		71		1,770		—
UniTek Acquisition, Inc.	August 2023		643		37		1,714		140
WDE TorcSill Holdings LLC	October 2024		8		0		191		9
Winsight, LLC	March 2024		—		—		4,234		237
Total		$	57,308	$	958	$	68,825	$	716

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of June 30, 2022, the Company 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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

6. Members' Capital

The Company’s Unit activity for the three and six months ended June 30, 2022 and 2021, was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Units at beginning of period		13,734,010		13,734,010		13,734,010		13,734,010
Units issued and committed at end of period		13,734,010		13,734,010		13,734,010		13,734,010

No deemed distributions and contributions were processed during the three and six months ended June 30, 2022 and 2021.

7. Credit Facilities

On May 10, 2018, the Company entered into a Revolving Credit Agreement (the “Natixis Credit Agreement”) among the Company, as borrower, and Natixis, New York Branch (“Natixis”), as administrative agent and the committed lenders, conduit lenders and funding agents. The Natixis Credit Agreement provided for a revolving credit line (the “Natixis Revolving Credit Facility”) of up to $150,000 (the “Natixis Maximum Commitment”), subject to the lesser of the “Natixis Borrowing Base” assets or the Natixis Maximum Commitment. The Natixis Borrowing Base assets equal the sum of a percentage of unfunded commitments from certain classes of eligible investors in the Company (the “Natixis Available Commitment”).

The Natixis Maximum Commitment may be periodically increased in amounts designated by the Company, up to an aggregate amount of $1 billion. The maturity date of the Natixis Credit Agreement was May 10, 2021. On May 10, 2021, the Company exercised its option to extend the maturity date of the Natixis Credit Agreement to May 9, 2022. On March 15, 2022, the Company exercised its last available option to extend the Natixis Credit Agreement maturity date from May 9, 2022 to May 9, 2023. Borrowings under the Natixis Credit Agreement bear interest at a rate equal to either (a) a base rate calculated in a customary manner plus 0.75% or (b) an adjusted eurodollar rate calculated in a customary manner plus 1.75%. As of December 31, 2020, the Natixis Maximum Commitment was $280,000. On March 10, 2021, the Natixis Maximum Commitment was reduced to $250,000.

The Natixis Revolving Credit Facility is secured by a first priority security interest, subject to customary exceptions, in (i) all of the capital commitments of the investors in the Company, (ii) the Company’s right to make capital calls, receive payment of capital contributions from the investors and enforce payment of the capital commitments and capital contributions under the Company’s operating agreement and (iii) a cash collateral account into which the capital contributions from the investors are made. The Natixis Revolving 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 June 30, 2022, the Company was in compliance with such covenants.

As of June 30, 2022 and December 31, 2021, the Natixis Borrowing Base assets were less than the Natixis Maximum Commitment. A summary of amounts outstanding and available under the Natixis Revolving Credit Facility as of June 30, 2022 and December 31, 2021 was as follows:


Natixis Revolving Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2022	$	250,000	$	—	$	241,969
As of December 31, 2021	$	250,000	$	45,000	$	163,967

(1)

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

On January 29, 2019, TCW DL VII Financing LLC (the “Borrower” or “TCW DL VII Financing”), a newly-formed, wholly-owned, special purpose financing subsidiary of the Company, entered into a senior secured credit facility (the “PNC Credit Facility” and together with the Natixis Revolving Credit Facility, the “Credit Facilities”) pursuant to a credit and security agreement (the “PNC Credit Agreement”) with PNC Bank, National Association (“PNC”), as facility agent, the lenders from time to time party thereto, and State Street Bank and Trust Company, as collateral agent.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

7. Credit Facilities (Continued)

Under the PNC Credit Facility, the lenders have agreed to extend credit to the Borrower in an aggregate principal amount of up to $400,000 of revolving and term loans (the “PNC Maximum Commitment”), subject to compliance with a borrowing base (the “PNC Borrowing Base”). The PNC Maximum Commitment may be periodically increased in amounts designated by the Borrower up to an aggregate principal amount of $900,000, subject to lender consent and obtaining commitments for the increase. The Borrower may make borrowings of (i) a revolving loan (the “PNC Revolving Credit Facility” and together with the Natixis Revolving Credit Facility, the “Revolving Credit Facilities”) under the PNC Credit Facility during the period commencing January 29, 2019 and ending on January 29, 2022 and (ii) a term loan (the “PNC Term Loan”) under the PNC Credit Facility during the period which commenced on January 29, 2019 and ended on January 29, 2020, unless, there is an earlier termination of the PNC Credit Facility or event of default thereunder. The PNC Credit Facility will mature on January 29, 2024. Loans under the PNC Credit Facility bear interest at a fluctuating rate of interest per annum equal to, at the Borrower’s option, either (i) three-month LIBOR plus the facility margin of 2.30% per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum.

On April 11, 2019, the Borrower amended and restated the PNC Credit Agreement (as amended, the “Amended PNC Credit Agreement”) for the PNC Credit Facility. The Amended PNC Credit Agreement, among other things, (a) increased the total commitments under the PNC Credit Facility from $400,000 to $600,000 (the “Amended PNC Maximum Commitment”) and (b) made certain modifications to the calculation of the borrowing base under the prior facility, including the eligibility requirements of collateral obligations pledged under the PNC Credit Facility and loan portfolio concentration limits.

On March 17, 2020, the Borrower amended and restated the Amended PNC Credit Agreement (as further amended the “Second Amended PNC Credit Agreement”). The Second Amended PNC Credit Agreement, among other things, increased the total commitments under the PNC Credit Facility from $600,000 to $795,000 (the “Second Amended PNC Maximum Commitment”). The Second Amended PNC Maximum Commitment may be periodically increased in amounts designated by the Borrower up to an aggregate principal amount of $900,000, subject to lender consent and obtaining commitments for the increase. The Borrower may make borrowings of (i) revolving loans under the PNC Credit Facility during the period commencing January 29, 2019 and ending on January 29, 2022 and (ii) term loans under the PNC Credit Facility during the period commencing January 29, 2019 and ending on March 17, 2020, unless, in the case of (i) and (ii), there is an earlier termination of the PNC Credit Facility or event of default thereunder. On June 19, 2020, the Second Amended PNC Maximum Commitment was increased from $795,000 to $825,000.

On January 31, 2022 (the first business day after January 29, 2022), the Borrower's ability to make borrowings under the PNC Revolving Credit Facility expired and the then outstanding PNC Revolving Credit Facility borrowings of $295,500 converted into outstanding borrowings under the PNC Term Loan. In connection with such conversion, repayments on outstanding borrowings under the PNC Term Loan will correspondingly reduce the PNC Maximum Commitment. The PNC Credit Facility will mature on January 29, 2024. Loans under the PNC Credit Facility will bear interest at a fluctuating rate of interest per annum equal to, at the Borrower’s option, either (i) three-month LIBOR plus the facility margin of 2.30% per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum.

The Borrower’s obligations under the PNC Credit Facility are secured by a first priority security interest in all of the assets of the Borrower, including its portfolio of loans that has been contributed by the Company to the Borrower in exchange for 100% of the membership interests of the Borrower and any payments received in respect of such loans. The Company may contribute or sell to the Borrower additional loans from time to time after the closing date, which shall be pledged in favor of the lenders under the PNC Credit Facility.

Under the PNC Credit Facility, the Borrower has made customary representations and warranties and is required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities. The PNC Credit Facility also includes events of default that are customary for similar credit facilities. As of June 30, 2022, the Borrower was in compliance with such covenants.

Borrowings of the Borrower are non-recourse to the Company but are consolidated in the Company’s consolidated financial statements and considered borrowings of the Company for purposes of complying with the asset coverage requirements under the Investment Company Act of 1940, as amended.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

7. Credit Facilities (Continued)

As of December 31, 2021, the PNC Borrowing Base assets were less than the Second Amended and Amended PNC Maximum Commitment. A summary of amounts outstanding and available under the PNC Credit Facility as of June 30, 2022 and December 31, 2021 is as follows:


PNC Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2022	$	458,000	$	458,000	N/A
As of December 31, 2021	$	700,000	$	543,000	$	149,756

(1)

The amount available considers any limitations related to the facility borrowing. No available amount as of June 30, 2022 due to the expiration of the PNC Revolving Credit Facility.

Borrowings under the PNC Credit Facility as of June 30, 2022 and December 31, 2021 consisted of $0 and $295,500, respectively, from the PNC Revolving Credit Facility (i.e., revolving line of credit) and $458,000 and $247,500, respectively, of PNC Term Loan.

The Company incurred financing costs of $3,463 and $4,433, in connection with the Natixis Credit Agreement and the PNC Credit Agreement, respectively. In addition, the Company incurred an additional $2,070 and $1,531 in financing costs in connection with the Amended and Second Amended PNC Credit Agreement, respectively. Lastly, the Company incurred $255 in financing costs associated with the June 19, 2020 upsize of the PNC Credit Facility.

The Company incurred $629 in fees associated with the May 10, 2021 extension of the Natixis Credit Agreement. Costs associated with the Revolving Credit Facilities were primarily recorded by the Company as deferred financing costs on its Consolidated Statements of Assets and Liabilities and the costs are being amortized over the respective term of the Natixis Revolving Credit Facility and PNC Revolving Credit Facility. As of June 30, 2022 and December 31, 2021, $536 and $2,817, respectively, of such deferred financing costs had yet to be amortized. Costs associated with the PNC Term Loan are deferred and amortized over the term of the PNC Term Loan. Such deferred financing costs are netted against the carrying value of the PNC Term Loan on the Company’s Consolidated Statements of Assets and Liabilities. As of June 30, 2022 and December 31, 2021, $2,138 and $1,113, respectively, of such deferred financing costs have yet to be amortized.

A reconciliation of amounts presented on the Company’s Consolidated Statements of Assets and Liabilities versus amounts outstanding on the PNC Term Loan is as follows:


	As of June 30, 2022			As of December 31, 2021
Principal amount outstanding on PNC Term Loan	$	458,000		$	247,500
Deferred financing costs		(2,138	)		(1,113	)
PNC Term Loan (as presented on the Consolidated Statements of Assets and Liabilities)	$	455,862		$	246,387

The carrying amounts of the Credit Facilities, which are categorized as Level 2 within the fair value hierarchy as of June 30, 2022 and 2021, approximates their respective fair values. 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 the Credit Facilities’ terms and conditions.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

7. Credit Facilities (Continued)

The summary information regarding the Credit Facilities for the three and six months ended June 30, 2022 and 2021 was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Credit Facilities interest expense	$	4,165		$	3,233		$	7,651		$	6,540
Unused commitment fees		157			437			372			862
Administrative fees		100			100			100			100
Amortization of deferred financing costs		496			675			1,884			1,447
Total	$	4,918		$	4,445		$	10,007		$	8,949
Weighted average interest rate		3.23	%		2.34	%		2.87	%		2.31	%
Average outstanding balance	$	510,308		$	545,604		$	529,547		$	563,569

8. Repurchase Obligation

In order to finance certain investment transactions, the Company may, from time to time, enter into repurchase agreements with Macquarie US Trading LLC (“Macquarie”), whereby the Company sells to Macquarie an investment that it holds and concurrently enters into an agreement to repurchase the same investment at an agreed-upon price at a future date, not to exceed 90-days from the date it was sold (the “Macquarie Transaction”).

In accordance with ASC 860, Transfers and Servicing, these Macquarie Transactions meet the criteria for secured borrowings. Accordingly, the investment financed by the Macquarie Transaction remains on the Company’s Consolidated Statements of Assets and Liabilities as an asset, and the Company records a liability to reflect its repurchase obligation to Macquarie (the “Repurchase Obligation”). The Repurchase Obligation is secured by the respective investment that is the subject of the repurchase agreement. Interest expense associated with the Repurchase Obligation is reported on the Company’s Consolidated Statements of Operations within Other expenses.

No repurchase agreements were entered into or settled during the three and six months ended June 30, 2022. During the three months ended March 31, 2021, the Company entered into and settled a repurchase agreement for which the Company incurred interest expense of $892.

The Company had no outstanding Repurchase Obligations as of June 30, 2022 and December 31, 2021.

9. Income Taxes

The Company has elected to be regulated 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 Unitholders as dividends. The Company elected to be taxed as a RIC in 2018. The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes 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.

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

9. Income Taxes (Continued)

As of June 30, 2022 and December 31, 2021, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes were as follows:


	As of June 30, 2022			As of December 31, 2021
Cost of investments for federal income tax purposes	$	1,281,477		$	1,402,577
Unrealized appreciation	$	50,587		$	53,276
Unrealized depreciation	$	(34,097	)	$	(22,442	)
Net unrealized appreciation on investments	$	16,490		$	30,834

The Company did not have any unrecognized tax benefits as of December 31, 2021, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; therefore, no interest or penalties were accrued. The Company is subject to examination by the U.S federal and state tax authorities for returns filed for the prior two years.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

June 30, 2022

10. Financial Highlights

Selected data for a unit outstanding throughout the six months ended June 30, 2022 and 2021 is presented below.


	For the Six Months Ended June 30,
	2022(1)			2021(1)
Net Asset Value Per Unit (accrual base), Beginning of Period	$	77.81		$	93.84
Income from Investment Operations:
Net investment income		3.59			2.16
Net realized and unrealized gain (loss)		(1.30	)		1.68
Total income from investment operations		2.29			3.84
Less Distributions:
From distributable earnings		(2.40	)		(4.37	)
From return of capital		(4.81	)		—
Total distributions		(7.21	)		(4.37	)
Net Asset Value Per Unit (accrual base), End of Period	$	72.89		$	93.31
Unitholder Total Return(2)(3)		3.40	%		5.67	%
Unitholder IRR before incentive fees(4)		11.96	%		12.03	%
Unitholder IRR after all fees and expenses(4)		9.81	%		9.77	%
Ratios and Supplemental Data
Members’ Capital, end of period	$	835,703		$	1,116,173
Units outstanding, end of period		13,734,010			13,734,010
Ratios based on average net assets of Members’ Capital:
Ratio of total expenses to average net assets(5)		6.69	%		11.19	%
Ratio of net expenses to average net assets(5)		6.69	%		11.19	%
Ratio of financing cost to average net assets(3)		1.12	%		0.97	%
Ratio of net investment income to average net assets(5)		11.10	%		6.50	%
Ratio of incentive fees to average net assets(5)		1.77	%		6.23	%
Credit facilities payable		455,862			411,618
Asset coverage ratio		2.82			3.70
Portfolio turnover rate(3)		6.12	%		33.47	%

(1)

Per unit data was calculated using the number of Common Units issued and outstanding as of June 30, 2022 and 2021, respectively.

(2)

The Total Return for the six months ended June 30, 2022 and 2021 was calculated by taking total income from investment operations for the period divided by the weighted average capital contributions from the Members during the period. The return does not reflect sales load and is net of management fees and expenses.

(3)

Not annualized.

(4)

The Internal Rate of Return (“IRR”) since inception for the Common Unitholders, after management fees, financing costs and operating expenses, but before incentive fees is 11.96%. The IRR since inception for the Common Unitholders, after management fees, financing costs, operating expenses and Advisor incentive fees is 9.81%. The IRR is computed based on cash flow due dates contained in notices to Members (contributions from and distributions to the 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 actual return may vary significantly upon realization.

(5)

Annualized.

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.

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 Form 10-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 VII LLC. For simplicity, this report uses the terms “Company,” “we,” “us,” and “our” to refer to TCW Direct Lending VII 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:

•

the impact of the novel strain of coronavirus known as “COVID-19” and variants of COVID-19, on the global economy, our industry, our business and our targeted investments;

•

an economic downturn, including as a result of the current COVID-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;

•

an economic downturn, such as the downturn associated with the COVID-19 pandemic, could disproportionately impact the companies which we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;

•

a contraction of available credit could impair our ability to obtain leverage;

•

interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

•

our future operating results;

•

our business prospects and the prospects of our portfolio companies

•

our contractual arrangements and relationships with third parties;

•

the ability of our portfolio companies to achieve their financial and other business objectives and the impact of the COVID-19 pandemic thereon;

•

competition with other entities and our affiliates for investment opportunities;

•

the impact of changing market conditions and lending standards on our ability to compete with other industry participants, including other business development companies, private and public funds, individual and institutional investors, and financial institutions for investment opportunities;

•

uncertainty surrounding the impact of the current COVID-19 pandemic on the financial stability of the United States and global economies;

•

the social, geopolitical, financial, trade and legal implications of the trade and cooperation agreement arising from Brexit, as well as future agreements between the United Kingdom and various countries in the European Union;

•

pandemics or other serious public health events, such as the ongoing global outbreak of COVID-19;

•

an inability to replicate the historical success of any previously launched fund managed by the private credit 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 and Exchange Commission (“SEC”);

•

uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union, Russia, Ukraine and China, including the effect of the current COVID-19 pandemic;

•

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 locate suitable investments for us and to monitor and administer our investments;

•

the ability of the TCW Group, Inc. to attract and retain highly talented professionals that can provide services to the 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 (the “Code”) and as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”) and the related tax implications;

•

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 our Form 10-K filed with the SEC on March 28, 2022.

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 Securities Exchange Act of 1934, as amended 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 May 23, 2017 as a limited liability company under the laws of the State of Delaware. We conducted a private offering of our common limited liability company units (the “Units”) to investors in reliance on exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”).

On August 18, 2017 (“Inception Date”), we sold and issued 10 Units at an aggregate purchase price of $1,000 to our investment adviser, TCW Asset Management Company LLC, an affiliate of the TCW Group, Inc.

On December 29, 2017, we filed an election to be regulated as a BDC under the 1940 Act. We elected, and intend to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. As a BDC and a RIC, we are required to comply with certain regulatory requirements.

On April 13, 2018 (the “Initial Closing Date”), we began accepting subscription agreements from investors for the private sale of our Units and on January 14, 2019, we completed our fourth and final closing sale of our Units. We have sold 13,734,010 Units for an aggregate offering price of approximately $1.4 billion. Each Unitholder is obligated to contribute capital equal to their Commitment and each Unit’s Commitment obligation is $100.00 per Unit. The sale of the Units was made pursuant to subscription agreements entered into by us and each investor. Under the terms of the subscription agreements, we may draw down all or any portion of the undrawn commitment with respect to each Unit generally upon at least ten business days’ prior written notice to the unitholders. The amount of capital that remains to be drawn down and contributed is referred to as an “Undrawn Commitment.”

We commenced operations during the second quarter of fiscal year 2018.

We have several wholly-owned subsidiaries, each a single member Delaware limited liability company. On March 21, 2022, we formed our fourth wholly-owned subsidiary, TCW DL NAV LLC, also a single member Delaware limited liability company.

Our commitment period commenced on the Initial Closing Date and ended on May 16, 2021, which is the later of (a) April 13, 2021, three years from the Initial Closing Date and (b) May 16, 2021, three years from the date in which we first completed an investment. We may complete investment transactions that were significantly in process as of the end of the commitment period and which we reasonably expect to be consummated prior to 90 days subsequent to the expiration date of the commitment period. We may also effect follow-on investments up to an aggregate maximum of 10% of Commitments.

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. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, notes and other non-convertible debt 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. The investment philosophy, strategy and approach of the private credit team of the Adviser (the “Private Credit Team” fka the “Direct Lending Team”) has generally not involved the use of payment-in-kind (“PIK”) interest, which represents contractual interest accrued and added to the loan balance that generally becomes due at maturity, or similar arrangements. Although the Private Credit Team generally did not originate a significant amount of investments for us with PIK interest features, from time to time we made, and currently have, investments that contain such features, usually due to certain circumstances involving debt restructurings or work-outs of current 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 mostly in corporations, partnerships or other business entities. Additionally, in certain circumstances, we may co-invest with other investors and/or strategic partners indirectly in a company through a joint venture partnership or other special purpose 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 Amended and Restated Administration Agreement, dated as of September 25, 2018 (the “Administration Agreement”) and the Investment Advisory Agreement, dated as of December 29, 2017, (the “Advisory Agreement”).

We, and indirectly our Unitholders, will bear all costs, expenses and liabilities, other than Adviser Operating Expenses (which shall be borne by the Adviser), in connection with our organization, operations, administration and transactions (“Company Expenses”). Company Expenses shall include, without limitation: (a) organizational expenses and expenses associated with the issuance of the Units; (b) expenses of calculating our net asset value (including the cost and expenses of any independent valuation firm); (c) fees payable to third parties, including agents, consultants, attorneys or other advisors, relating to, or associated with, evaluating and making investments; (d) expenses incurred by the Adviser or the Administrator payable to third parties, including agents, consultants, attorneys or other advisors, relating to or associated with monitoring our financial and legal affairs, providing administrative services, monitoring or administering our investments and performing due diligence reviews of prospective investments and the corresponding portfolio companies; (e) costs associated with our reporting and compliance obligations under the 1940 Act, the 1934 Act and other applicable federal or state securities laws; (f) fees and expenses incurred in connection with debt incurred to finance our investments or operations, and payment of interest and repayment of principal on such debt; (g) expenses related to sales and purchases of Units and other securities; (h) Management Fees and Incentive Fees; (i) administrator fees, if any, payable under the Administration Agreement; (j) transfer agent, sub-administrator and custodial fees; (k) expenses relating to the issue, repurchase and transfer of Units to the extent not borne by the relevant transferring Unitholders and/or assignees; (l) federal and state registration fees; (m) federal, state and local taxes and other governmental charges assessed against us; (n) independent directors’ fees and expenses and the costs associated with convening a meeting of our board of directors or any committee thereof; (o) fees and expenses and the costs associated with convening a meeting of the Unitholders or holders of any Preferred Units, as well as the compensation of an investor relations professional responsible for the coordination and administration of the foregoing; (p) costs of any reports, proxy statements or other notices to Unitholders, including printing and mailing costs; (q) costs and expenses related to the preparation of our consolidated financial statements and tax returns; (r) our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; (s) direct costs and expenses of administration, including printing, mailing, long distance telephone, and copying; (t) independent auditors and outside legal costs, including legal costs associated with any requests for exemptive relief, “no-action” positions or other guidance sought from a regulator, pertaining to us; (u) compensation of other personnel (including employees and secretarial and other staff of the Administrator) to the extent they are devoted to preparing our consolidated financial statements or tax returns or providing similar “back office” financial services to us; (v) Adviser costs and expenses (excluding travel) in connection with identifying and investigating investment opportunities for us, monitoring our investments and disposing of any such investments; (w) portfolio risk management costs; (x) commissions or brokerage fees or similar charges incurred in connection with the purchase or sale of securities (including merger fees); (y) costs and expenses attributable to normal and extraordinary investment banking, commercial banking, accounting, auditing, appraisal, valuation, administrative agent activities, custodial and registration services provided to us, including in each case services with respect to the proposed purchase or sale of securities by us that are not reimbursed by the issuer of such securities or others (whether or not such purchase or sale is consummated); (z) costs of amending, restating or modifying the LLC Agreement or Advisory Agreement or related documents of us or related entities; (aa) fees, costs, and expenses incurred in connection with the termination, liquidation or dissolution of the Company or related entities; and (bb) all other properly and reasonably chargeable expenses incurred by the Company or the Administrator in connection with administering our business. However, in the event of a Reorganization (as defined in the LLC Agreement) that results in a Public Company (as defined in the LLC Agreement) or an Extension Fund (as defined in the LLC Agreement), including a Reorganization pursuant to which the Company becomes the Public Company or the Extension Fund, the fees, costs and expenses associated with any such restructuring, initial public offering, listing of equity securities or reorganization will be borne appropriately by the Public Company and the Extension Fund (and indirectly only by Unitholders that elect to become investors in the Public Company or the Extension Fund), as the case may be, and no others will directly or indirectly bear such fees, costs or expenses.

However, we will not bear (a) more than an amount equal to 10 basis points of our aggregate Commitments for organizational expenses and offering expenses in connection with the offering of Units through January 14, 2019 and (b) more than an amount equal to 12.5 basis points of our aggregate Commitments computed annually for Company Expenses (the “Expense Cap”); provided, that, any amount by which actual annual expenses in (b) exceed the 12.5 basis point limit shall be carried over to the next year, without limitation, as additional expense until the earlier of the Reorganization (as defined in the LLC Agreement) or the dissolution of the Company, with any partial year assessed on a pro rata basis; and provided, further, that in determining the Company Expenses subject to the 12.5 basis point limit in (b), the following expenses shall be excluded and shall be borne by us as incurred without regard to the 12.5 basis point limit in (b): the Management Fee, the Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts incurred in connection with our borrowings (including interest, bank fees, legal fees and other transactional expenses arising out of or related to any borrowing or borrowing facility and similar costs), transfer agent fees, federal, state and local taxes and other governmental charges assessed against us, expenses of calculating our net asset value (including the cost and expenses of any independent valuation firm engaged for that purpose and the costs and expenses of the valuation of our portfolio investments performed by our independent auditors in order to comply with applicable Public Company Accounting Oversight Board standards), costs and expenses incurred in connection with arranging or structuring investments and their ongoing operations (including expenses and liabilities related to the formation and ongoing operations of any special purpose entity or entities in connection with an investment), legal costs associated with any requests for exemptive relief, “no-action” positions or other guidance sought from a regulator pertaining to us, costs and expenses relating to any Reorganization or liquidation of the Company and any extraordinary expenses (such as litigation expenses and indemnification payments). Notwithstanding the foregoing, in no event will the Company carryforward to future periods the amount by which actual annual Company Expenses for a year exceed the 12.5 basis point limit for more than three years from the date on which such expenses were reimbursed.

“Adviser Operating Expenses” means overhead and operating and administrative expenses incurred by or on behalf of the Adviser or any of its affiliates, including us, in connection with maintaining and operating the Adviser’s office, including salaries and other compensation (including compensation due to its officers), rent, routine office equipment expense and liability and insurance premiums (other than those incurred in maintaining fidelity bonds and Indemnitee insurance policies), in furtherance of providing supervisory investment management services for us. Adviser Operating Expenses include any expenses incurred by the Adviser or its affiliates in connection with the Adviser’s registration as an investment adviser under the Investment Advisers Act of 1940, as amended, or with its compliance as a registered investment adviser thereunder.

All Adviser Operating Expenses and all our expenses that we will not bear, as set forth above, will be borne by the Adviser or its affiliates.

In connection with borrowings, our lenders require us to pledge assets, Commitments and/or the right to draw down on Commitments. In this regard, the subscription agreement entered into with each of our investors contractually obligates each investor to fund its respective Commitments in order to pay amounts that may become due under any borrowings or other financings or similar obligations.

We expensed organization costs totaling $0.7 million (net of $0.4 million in Adviser reimbursement) since our inception through December 31, 2018. Offering costs totaling $0.6 million (net of $0.3 million in Adviser reimbursement) were charged directly to Members’ Capital on December 31, 2018. No additional organization and offering costs were incurred subsequent to December 31, 2018. We did not bear more than an amount equal to 10 basis points of the aggregate capital commitments for organization and offering expenses.

Critical Accounting Policies and Estimates

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 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 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), generally includes common stock valued at the closing price on the primary exchange in which the security trades.

Level 2 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Equity, (Level 2), generally includes warrants valued using quotes for comparable investments.

Investment Activity

As of June 30, 2022, our portfolio consisted of 51 debt investments and 11 equity investments. Based on fair values as of June 30, 2022, our portfolio was 97.1% invested in debt investments which were mostly senior secured term loans. The remaining 2.9% represented our equity investments, which were comprised of common stock, preferred stock, membership interests and warrants. We had three debt investments that were on non-accrual status as of June 30, 2022, representing 1.9% and 2.4% of our portfolio's fair value and cost, respectively.

As of December 31, 2021, our portfolio consisted of 54 debt investments and ten equity investments. Based on fair values as of December 31, 2021, our portfolio was 97.2% invested in debt investments which were mostly senior secured term loans. The remaining 2.8% represented our equity investments, which were comprised of common stock, preferred stock and warrants. We had no debt investments on non-accrual status as of December 31, 2021.

The table below describes our debt and equity investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets by industry as of June 30, 2022:


Industry	Percent of Total Investments
Aerospace & Defense		13	%
Textiles, Apparel & Luxury Goods		8	%
Software		6	%
Consumer Durables & Apparel		7	%
Hotels, Restaurants & Leisure		6	%
Household Products		5	%
Beverages		5	%
Energy Equipment & Services		5	%
Household & Personal Products		5	%
Commercial Services & Supplies		4	%
Household Durables		4	%
Publishing		4	%
Chemicals		4	%
Capital Goods		4	%
Information Technology Services		3	%
Consumer Services		3	%
Media		2	%
Packaging		2	%
Construction & Engineering		2	%
Auto Components		2	%
Food Products		2	%
Health Care Technology		1	%
Air Freight & Logistics		1	%
Commercial & Professional Services		1	%
Internet & Direct Marketing Retail		1	%
Total		100	%

Interest income, including interest income paid-in-kind, was $40.2 million and $41.4 million for the three months ended June 30, 2022 and 2021, respectively. We also earned $0.3 million and $0.1 in other fee income during the three months ended June 30, 2022 and 2021, respectively.

Interest income, including interest income paid-in-kind, was $78.5 million and $80.8 million for the six months ended June 30, 2022 and 2021, respectively. We also earned $0.5 million and $0.1 million in other fee income during the six months ended June 30, 2022 and 2021, respectively.

Results of Operations

Our operating results for the three and six months ended June 30, 2022 and 2021 were as follows (dollar amounts in thousands):


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2022			2021		2022			2021

Total investment income	$	40,447		$	41,516	$	78,939		$	80,898
Total expenses		14,693			18,550		29,680			51,170
Net investment income		25,754			22,966		49,259			29,728
Net realized gain on investments		2,150			705		2,150			1,926
Net change in unrealized appreciation/(depreciation) on investments		(12,055	)		5,999		(20,002	)		21,122
Net increase in Members’ Capital from operations	$	15,849		$	29,670	$	31,407		$	52,776

Total investment income

Total investment income for the three months ended June 30, 2022 and 2021 was $40.4 million and $41.5 million, respectively. Total investment income for the six months ended June 30, 2022 and 2021 was $78.9 million and $80.9 million, respectively. The slight decrease in total investment income during the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 was due to the decrease in the number of debt investments in our portfolio, which decreased to 51 as of June 30, 2022, as compared to 56 as of June 30, 2021, partially offset by the increase in interest rates during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Net investment income

Net investment income for the three months ended June 30, 2022 and 2021 was $25.8 million and $23.0 million, respectively. The increase in our net investment income during the three months ended June 30, 2022 compared the three months ended June 30, 2021 was primarily due to the decrease in total expenses during the three months ended June 30, 2022, partially offset by the decrease in total investment income. The decrease in total expenses was primarily attributable to the decrease in incentive fees during the three months ended June 30, 2022 compared to the three months ended June 30, 2021. Incentive fees decreased during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 due to $9.9 million of net realized and unrealized losses recognized during the three months ended June 30, 2022 versus $6.7 million of net realized and unrealized gains recognized during the three months ended June 30, 2021.

Net investment income for the six months ended June 30, 2022 and 2021 was $49.3 million and $29.7 million, respectively. The increase in our net investment income during the six months ended June 30, 2022 compared to our net investment income during the six months ended June 30, 2021 was primarily due to the decrease in incentive fees during the six months ended June 30, 2022 compared to the six months ended June 30, 2021. During the three months ended March 31, 2021, the Fund was in an incentive fee "catch-up" period whereby the Adviser was entitled to an incentive fee of 100% of additional amounts otherwise distributable to our Unitholders which was the primary driver for the higher incentive fee for the six months ended June 30, 2021. During the six months ended June 30, 2022, we have fully caught up on incentive fees and therefore, the incentive fee due to the Adviser dropped down to 20% of additional amounts otherwise distributable to our Unitholders. Further, the amount of incentive fees accrued during the six months ended June 30, 2022 decreased compared to the amount accrued during the six months ended June 30, 2021, due to $17.9 million of net realized and unrealized losses recognized during the six months ended June 30, 2022 versus $23.0 million of net realized and unrealized gains recognized during the six months ended June 30, 2021. The decrease in incentive fees during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was partially offset by an increase in interest and credit facilities expenses due to a higher weighted average interest rate during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Expenses for the three and six months ended June 30, 2022 and 2021 were as follows (dollar amounts in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Expenses
Management fees	$	4,954	$	5,401	$	10,190	$	10,725
Interest and credit facilities expenses		4,918		4,445		10,007		8,949
Incentive fees		3,962		7,417		7,852		28,515
Administrative fees		346		368		705		735
Professional fees		361		486		595		759
Directors’ fees		98		105		198		203
Other expenses		54		328		133		1,284
Total expenses	$	14,693	$	18,550	$	29,680	$	51,170

Our total expenses were $14.7 million and $18.6 million for the three months ended June 30, 2022 and 2021, respectively. Our total expenses included management fees attributed to the Adviser of $5.0 million and $5.4 million; and incentive fees of $4.0 million and $7.4, for the three months ended June 30, 2022 and 2021, respectively.

The decrease in total expenses during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to the decrease in incentive fees during the current quarter as explained above, partially offset by the increase in interest and credit facilities expenses due to a higher weighted average interest rate during the current quarter compared to the three months ended June 30, 2021.

Our total expenses were $29.7 million and $51.2 million for the six months ended June 30, 2022 and 2021, respectively. Our total expenses included management fees attributed to the Adviser of $10.2 million and $10.7 million; and incentive fees of $7.9 million and $28.5 million, for the six months ended June 30, 2022 and 2021, respectively.

Similar to the three months ended June 30, 2021, the decrease in total expenses during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to the decrease in incentive fees during the current year-to-date period as explained above, partially offset by the increase in interest and credit facilities expenses due to a higher weighted average interest rate during the current year-to-date period compared to the six months ended June 30, 2021.

Net realized gain on investments

Our net realized gain on investments for the three months ended June 30, 2022 and 2021 was $2.2 and $0.7 million, respectively. Our net realized gain during the three months ended June 30, 2022 was primarily attributable to our full disposition of United Poly Systems Holding, Inc. common stock which resulted in a gain of $2.2 million.

Our net realized gain during the three months ended June 30, 2021 was primarily attributable to our partial or full dispositions of the following investments (dollar amounts in thousands):


Issuer	Investment	Realized Gain (Loss)
SMTC Corporation	Warrants	$	984
SMTC Corporation	Common Stock		139
Greenfield World Trade, Inc.	Warrants		(505	)
All others	Various		87
Net realized gain		$	705

Our net realized gain on investments for the six months ended June 30, 2022 and 2021 was $2.2 million and $1.9 million, respectively. Our net realized gain during the six months ended June 30, 2022 was primarily attributable to our full disposition of United Poly Systems Holding, Inc. common stock which resulted in a gain of $2.2 million.

Our net realized gain during the six months ended June 30, 2021 was primarily attributable to our partial or full dispositions of the following investments (dollar amounts in thousands):


Issuer	Investment	Realized Gain (Loss)
Production Resources Group, LLC	Class A Units	$	3,117
SMTC Corporation	Warrants		984
Greenfield World Trade, Inc.	Warrants		(505	)
PSS Industrial Group Corp.	Term Loan		(2,428	)
All others	Various		758
Net realized gain		$	1,926

Net change in unrealized appreciation/(depreciation) on investments

Our net change in unrealized appreciation/(depreciation) investments for the three months ended June 30, 2022 and 2021 was ($12.1) million and $6.0 million, respectively. Our net change in unrealized appreciation/(depreciation) for the three months ended June 30, 2022 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
AGY Equity LLC	Class D Preferred Units	$	(3,997	)
Red Lobster Management, LLC	Term Loan		(3,340	)
AGY Holdings Corp.	Delayed Draw Term Loan		(1,345	)
Retail Services WIS Corporation	Term Loan		(1,268	)	*
Karman Holdings LLC	Term Loan		(1,151	)
AGY Holdings Corp.	Term Loan		(1,049	)
Rocky Brands, Inc.	Term Loan		(1,016	)
Grand Circle Corporation	Term Loan		(797	)
Heligear Acquisition Co.	Term Loan		(753	)
Keeco Holdings, LLC	Term Loan		(692	)
KBP Brands, LLC	Delayed Draw Term Loan		(640	)
Profrac Holdings II, LLC	Term Loan		1,274
Voyant Beauty Holdings, Inc.	Term Loan		1,317		*
Mondee Holdings LLC	Term Loan		2,213
All others	Various		(811	)
Net change in unrealized appreciation/(depreciation)		$	(12,055	)

*Includes reversals of previously recognized unrealized (depreciation)/appreciation. Recognized during the three months ended June 30, 2022 as realized gains/(losses) and/or accelerated original issue discount.

Our net change in unrealized appreciation/(depreciation) for the three months ended June 30, 2021 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Greenfield World Trade, Inc.	Term Loan	$	3,368
Shelterlogic Group Holdings, Inc.	Common Stock		3,089
Obagi Cosmeceuticals, LLC	Term Loan		2,189
Red Lobster Management, LLC	Term Loan		1,522
Navistar Defense, LLC	Term Loan		(1,397	)
Hoover Group, Inc.	Term Loan		(1,527	)
WDE TorcSill Holdings, LLC	Term Loan		(1,262	)
SMTC Corporation	Term Loan		(1,038	)	*
SMTC Corporation	Warrants		(967	)	*
All others	Various		2,022
Net change in unrealized appreciation/(depreciation)		$	5,999

*Includes reversals of previously recognized unrealized (depreciation)/appreciation. Recognized during the three months ended June 30, 2021 as realized gains/(losses) and/or accelerated original issue discount.

Our net change in unrealized appreciation/(depreciation) investments for the six months ended June 30, 2022 and 2021 was $(20.0) million and $21.1 million, respectively. Our net change in unrealized appreciation/(depreciation) for the six months ended June 30, 2022 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Shelterlogic Group Holdings, Inc	Common Stock	$	(4,038	)
AGY Equity LLC	Class D Preferred Units		(3,997	)
Red Lobster Management, LLC	Term Loan		(3,780	)
Navistar Defense, LLC	Term Loan C		(2,216	)
AGY Holdings Corp.	Delayed Draw Term Loan		(2,006	)
AGY Holdings Corp.	Term Loan		(1,765	)
Rocky Brands, Inc.	Term Loan		(1,458	)
Grand Circle Corporation	Term Loan		(1,443	)
Retail Services WIS Corporation	Term Loan		(1,354	)	*
Heligear Acquisition Co.	Term Loan		(822	)
Keeco Holdings, LLC	Term Loan		(733	)
Rapid Displays, Inc.	Term Loan		(720	)
Hoover Group, Inc.	Term Loan		1,192
Mondee Holdings LLC	Term Loan		1,560
Profrac Holdings II, LLC	Term Loan		1,864
Centric Brands L.P.	Class A LP Interests		2,561
All others	Various		(2,847	)
Net change in unrealized appreciation/(depreciation)		$	(20,002	)

*Includes reversals of previously recognized unrealized (depreciation)/appreciation. Recognized during the six months ended June 30, 2022 as realized gains/(losses) and/or accelerated original issue discount.

Our net change in unrealized appreciation/(depreciation) for the six months ended June 30, 2021 was due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Shelterlogic Group Holdings, Inc.	Common Stock	$	7,358
Greenfield World Trade, Inc.	Term Loan		5,051
Greenfield World Trade, Inc.	Warrants		1,992
PSS Industrial Group Corp.	Term Loan		3,384		*
Obagi Cosmeceuticals, LLC	Term Loan		2,800
Keeco Holdings, LLC	Term Loan		1,738
Red Lobster Management, LLC	Term Loan		1,712
Winsight, LLC	Term Loan		1,333
Navistar Defense, LLC	Term Loan		(1,421	)
Columbia Helicopters, Inc.	Term Loan		(1,501	)
Verdesian Life Sciences, LLC	Term Loan		(1,686	)	*
Hoover Group, Inc.	Term Loan		(1,828	)
Production Resource Group, LLC	Class A Units		(1,831	)	*
All others	Various		4,021
Net change in unrealized appreciation/(depreciation)		$	21,122

*Includes reversal of previously recognized unrealized (depreciation)/appreciation. Recognized during the six months ended June 30, 2021 as realized gains/(losses) and/or accelerated original issue discount.

Net increase in Members’ Capital from operations

Our net increase in Members’ Capital from operations during the three months ended June 30, 2022 and 2021 was $15.8 million and $29.7 million, respectively. The lower net increase in Members’ Capital from operations during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to net unrealized depreciation during the current quarter which, as previously described, was a net depreciation of ($12.1) million, compared to a net appreciation of $6.0 million during the three months ended June 30, 2021, partially offset by higher net investment income during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Our net increase in Members’ Capital from operations during the six months ended June 30, 2022 and 2021 was $31.4 million and $52.8 million, respectively. The lower net increase in Members’ Capital from operations during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to net unrealized depreciation during the year-to-date period which, as previously described, was a net depreciation of $(20.0) million, compared to a net appreciation of $21.1 million during the six months ended June 30, 2021, partially offset by higher net investment income during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Financial Condition, Liquidity and Capital Resources

On April 13, 2018, we completed the first closing of the sale of our Units to persons not affiliated with the Adviser. We also commenced operations during the second quarter of fiscal year 2018. On January 14, 2019, we completed our fourth and final closing sale of our Units. We generate cash from (1) drawing down capital in respect of 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, the Management Fee, the Incentive Fee, and any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to the Unitholders.

As of June 30, 2022, aggregate Commitments, Undrawn Commitments, percentage of Commitments funded and the number of subscribed for Units of the Company were as follows (dollar amounts in thousands):


	June 30, 2022
Commitments	$	1,373,401
Undrawn commitments	$	165,401
Percentage of commitments funded		88.0	%
Units		13,734,010

On May 10, 2018, we entered into a Revolving Credit Agreement (the “Natixis Credit Agreement”) among the Company, as borrower, and Natixis, New York Branch (“Natixis”), as administrative agent and the committed lenders, conduit lenders and funding agents. The Natixis Credit Agreement provided for a revolving credit line (the “Natixis Revolving Credit Facility”) of up to $150.0 million (the “Natixis Maximum Commitment”), subject to the lesser of the “Natixis Borrowing Base” assets or the Natixis Maximum Commitment. The Natixis Borrowing Base assets equal the sum of a percentage of unfunded commitments from certain classes of eligible investors in the Company (the “Natixis Available Commitment”). The Natixis Revolving Credit Facility is generally secured by the Natixis Borrowing Base assets.

The Natixis Maximum Commitment may be periodically increased in amounts designated by the Company, up to an aggregate amount of $1 billion. The maturity date of the Natixis Credit Agreement was May 10, 2021. On May 10, 2021, the Company exercised its option to extend the maturity date of the Natixis Credit Agreement to May 9, 2022. On March 15, 2022, the Company exercised its last available option to extend the Natixis Credit Agreement maturity date from May 9, 2022 to May 9, 2023. Borrowings under the Natixis Credit Agreement bear interest at a rate equal to either (a) a base rate calculated in a customary manner plus 0.75% or (b) an adjusted eurodollar rate calculated in a customary manner plus 1.75%. As of December 31, 2020, the Natixis Maximum Commitment was $280.0 million. On March 10, 2021, we further reduced the Natixis Maximum Commitment to $250.0 million.

The Natixis Revolving Credit Facility is secured by a first priority security interest, subject to customary exceptions, in (i) all of the capital commitments of the investors in the Company, (ii) our right to make capital calls, receive payment of capital contributions from the investors and enforce payment of the capital commitments and capital contributions under our operating agreement and (iii) a cash collateral account into which the capital contributions from the investors are made. The Natixis Revolving Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should we fail to satisfy certain covenants. As of June 30, 2022, we were in compliance with such covenants.


Natixis Revolving Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2022	$	250,000	$	—	$	241,969
As of December 31, 2021	$	250,000	$	45,000	$	163,967

(1)

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

On January 29, 2019, TCW DL VII Financing LLC (the “Borrower” or “TCW DL VII Financing”), a newly-formed, wholly-owned, special purpose financing subsidiary of ours, entered into a senior secured credit facility (the “PNC Credit Facility” and together with the Natixis Revolving Credit Facility, the “Credit Facilities”) pursuant to a credit and security agreement (the “PNC Credit Agreement”) with PNC Bank, National Association (“PNC”), as facility agent, the lenders from time to time party thereto, and State Street Bank and Trust Company, as collateral agent.

Under the PNC Credit Facility, the lenders have agreed to extend credit to the Borrower in an aggregate principal amount of up to $400.0 million of revolving and term loans (the “PNC Maximum Commitment”), subject to compliance with a borrowing base (the “PNC Borrowing Base”). The PNC Maximum Commitment may be periodically increased in amounts designated by the Borrower up to an aggregate principal amount of $900.0 million, subject to lender consent and obtaining commitments for the increase. The Borrower may make borrowings of (i) a revolving loan (the “PNC Revolving Credit Facility” and together with the Natixis Revolving Credit Facility, the “Revolving Credit Facilities”) under the PNC Credit Facility during the period commencing January 29, 2019 and ending on January 29, 2022 and (ii) a term loan (the “PNC Term Loan”) under the PNC Credit Facility during the period which commenced on January 29, 2019 and ended on January 29, 2020, unless, in the case of (i) and (ii), there is an earlier termination of the PNC Credit Facility or event of default thereunder. The PNC Credit Facility will mature on January 29, 2024. Loans under the PNC Credit Facility bear interest at a fluctuating rate of interest per annum equal to, at the Borrower’s option, either (i) three-month LIBOR plus the facility margin of 2.30% per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum.

On April 11, 2019, the Borrower amended and restated the PNC Credit Agreement (as amended, the “Amended PNC Credit Agreement”) for the PNC Credit Facility. The Amended PNC Credit Agreement, among other things, (a) increased the total commitments under the PNC Credit Facility from $400.0 million to $600.0 million (the “Amended PNC Maximum Commitment”) and (b) made certain modifications to the calculation of the borrowing base under the prior facility, including the eligibility requirements of collateral obligations pledged under the PNC Credit Facility and loan portfolio concentration limits.

On March 17, 2020, the Borrower further amended and restated the Amended PNC Credit Agreement (as further amended the “Second Amended PNC Credit Agreement”). The Second Amended PNC Credit Agreement, among other things, increased the total commitments under the PNC Credit Facility from $600.0 million to $795.0 million (the “Second Amended PNC Maximum Commitment”). The Second Amended PNC Maximum Commitment may be periodically increased in amounts designated by the Borrower up to an aggregate principal amount of $900.0 million, subject to lender consent and obtaining commitments for the increase. The Borrower may make borrowings of (i) revolving loans under the PNC Credit Facility during the period commencing January 29, 2019 and ending on January 29, 2022 and (ii) term loans under the PNC Credit Facility during the period commencing January 29, 2019 and ended on March 17, 2020, unless, there is an earlier termination of the PNC Credit Facility or event of default thereunder. On June 19, 2020, the Second Amended PNC Maximum Commitment was increased from $795.0 million to $825.0 million.

On January 31, 2022 (the first business day after January 29, 2022), the Borrower's ability to make borrowings under the PNC Revolving Credit Facility expired and the then outstanding PNC Revolving Credit Facility borrowings of $295.5 million converted into outstanding borrowings under the PNC Term Loan. In connection with such conversion, repayments on outstanding borrowings under the PNC Term Loan will correspondingly reduce the PNC Maximum Commitment. The PNC Credit Facility will mature on January 29, 2024. Loans under the PNC Credit Facility will bear interest at a fluctuating rate of interest per annum equal to, at the Borrower’s option, either (i) three-month LIBOR plus the facility margin of 2.30% per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum.

Borrowings of the Borrower are non-recourse to us but are consolidated in our consolidated financial statements and considered our borrowings for purposes of complying with the asset coverage requirements under the Investment Company Act of 1940, as amended.


PNC Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2022	$	458,000	$	458,000	N/A
As of December 31, 2021	$	700,000	$	543,000	$	149,756

(1)

The amount available considers any limitations related to the debt facility borrowing. No available amount as of June 30, 2022 due to the expiration of the PNC Revolving Credit Facility.

Borrowings under the PNC Credit Facility as of June 30, 2022 and December 31, 2021 consisted of $0 and $295.5 million, respectively, from the PNC Revolving Credit Facility (i.e., revolving line of credit) and $458.0 million and $247.5 million, respectively, of PNC Term Loan.

We incurred financing costs of $3.4 million and $4.4 million, in connection with the Natixis Credit Agreement and the PNC Credit Agreement, respectively. In addition, we incurred an additional $2.1 million and $1.5 million in financing costs in connection with the Amended and Second Amended PNC Credit Agreement, respectively. Lastly, we incurred $0.3 million in financing costs associated with the June 19, 2020 upsize of the PNC Credit Facility.

We incurred $0.6 million in fees associated with the May 10, 2021 extension of the Natixis Credit Agreement. We recorded most of the costs associated with the Revolving Credit Facilities as deferred financing costs on our Consolidated Statements of Assets and Liabilities and the costs are being amortized over the respective term of the Natixis Revolving Credit Facility and PNC Revolving Credit Facility. As of June 30, 2022 and December 31, 2021, $0.5 million and $2.8 million, respectively, of such deferred financing costs had yet to be amortized. Costs associated with the PNC Term Loan are deferred and amortized over the term of the PNC Term Loan. Such deferred financing costs are netted against the carrying value of the PNC Term Loan on our Consolidated Statements of Assets and Liabilities. As of June 30, 2022 and December 31, 2021, $2.1 million and $1.1 million, respectively, of such deferred financing costs have yet to be amortized.

The summary information regarding the Credit Facilities for the three and six months ended June 30, 2022 and 2021 was as follows (dollar amounts in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Credit Facilities interest expense	$	4,165		$	3,233		$	7,651		$	6,540
Unused commitment fees		157			437			372			862
Administrative fees		100			100			100			100
Amortization of deferred financing costs		496			675			1,884			1,447
Total	$	4,918		$	4,445		$	10,007		$	8,949
Weighted average interest rate		3.23	%		2.34	%		2.87	%		2.31	%
Average outstanding balance	$	510,308		$	545,604		$	529,547		$	563,569

In order to finance certain investment transactions, we may, from time to time, enter into repurchase agreements with Macquarie US Trading LLC (“Macquarie”), whereby we sell to Macquarie an investment that we hold and concurrently enter into an agreement to repurchase the same investment at an agreed-upon price at a future date, not to exceed 90-days from the date it was sold (the “Macquarie Transaction”). These Macquarie Transactions are accounted for as secured borrowings. Accordingly, the investment financed by the Macquarie Transaction remains on our Consolidated Statements of Assets and Liabilities as an asset, and we record a liability to reflect our repurchase obligation to Macquarie (the “Repurchase Obligation”). The Repurchase Obligation is secured by the respective investment that is the subject of the repurchase agreement.

No repurchase agreements were entered into or settled during the three and six months ended June 30, 2022. During the three months ended March 31, 2021, we entered into and settled a repurchase agreement for which the Company incurred interest expense of $0.9 million. The Company had no outstanding Repurchase Obligations as of June 30, 2022 and December 31, 2021.

We had the following unfunded commitments and unrealized depreciation by investment as of June 30, 2022 and December 31, 2021 (dollar amounts in thousands):


		June 30, 2022				December 31, 2021
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
AGY Holdings Corp.	September 2025	$	5,149	$	376	$	3,618	$	18
Altern Marketing LLC	October 2024		5,217		52		5,217		—
Bendon Inc.	December 2025		7,263		291		7,263		298
Centric Brands Inc.	October 2024		683		—		3,315		—
Encompass Digital Media, Inc.	September 2023		794		2		1,661		0
FM Restaurants Holdco, LLC	November 2023		—		—		2,414		—
Greenfield World Trade, Inc.	December 2022		8,059		—		8,059		—
Hometown Food Company	August 2023		5,881		12		5,881		—
Karman Holdings LLC (fka Spaceco Holdings LLC)	December 2025		2,622		34		1,311		9
KBP Brands, LLC (fka KBP Investments LLC)	May 2023		2,009		82		2,256		5
Mondee Holdings LLC	December 2024		8,613		—		8,613		—
Navistar Defense, LLC	December 2022		2		0		—		—
Obagi Cosmeceuticals LLC	March 2026		8,594		—		11,308		—
Rapid Displays, Inc.	April 2026		1,770		71		1,770		—
UniTek Acquisition, Inc.	August 2023		643		37		1,714		140
WDE TorcSill Holdings LLC	October 2024		8		0		191		9
Winsight, LLC	March 2024		—		—		4,234		237
Total		$	57,308	$	958	$	68,825	$	716

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. As of June 30, 2022, 100% of our debt investments bore interest based on floating rates, such as LIBOR, SOFR or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to three months. As of June 30, 2022, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 28.8%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to three 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 June 30, 2022 consolidated statement of assets and liabilities, 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):


	Interest Income			Interest Expense			Net Investment Income
Up 300 basis points	$	38,461		$	13,931		$	24,530
Up 200 basis points		25,641			9,287			16,354
Up 100 basis points		12,820			4,644			8,176
Down 100 basis points		(5,960	)		(4,872	)		(1,088	)
Down 200 basis points		(6,842	)		(9,452	)		2,610
Down 300 basis points		(6,908	)		(10,611	)		3,703

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 Rule 13a-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. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

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

Sales of unregistered securities

None.

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


3.1	Certificate of Formation (incorporated by reference to Exhibit 3.1 to a registration on Form 10 filed on September 1, 2017)

3.2	Limited Liability Company Agreement, dated June 29, 2017 (incorporated by reference to Exhibit 3.2 to a registration on Form 10 filed on September 1, 2017)

3.3	Amended and Restated Limited Liability Company Agreement, dated October 2, 2017 (incorporated by reference to Exhibit 3.3 to a registration on Form 10 filed on October 16, 2017)

3.4	Third Amended and Restated Limited Liability Company Agreement, dated as of September 10, 2018 (incorporated by reference to Exhibit 3.6 to the registrant’s Quarterly Report on Form 10-Q filed November 6, 2018).

3.5	Fourth Amended and Restated Limited Liability Company Agreement, dated as of January 14, 2019 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on January 18, 2019).

10.1	Investment Advisory and Management Agreement dated December 29, 2017 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on January 3, 2018).

10.2	Administration Agreement dated December 29, 2017, by and between TCW Direct Lending VII LLC and TCW Asset Management Company LLC (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on January 3, 2018).

10.3	Amended and Restated Administration Agreement, dated as of September 25, 2018, between TCW Direct Lending VII LLC and TCW Asset Management Company LLC (incorporated by reference to Exhibit 3.7 to the registrant’s Quarterly Report on Form 10-Q filed November 6, 2018).

10.4	Revolving Credit Agreement, dated as of May 10, 2018, among TCW Direct Lending VII LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and Committed Lender (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed on May 14, 2018).

10.5	Credit and Security Agreement, dated as of January 29, 2019, among TCW DL VII Financing LLC, as borrower, PNC Bank, National Association, as facility agent, and State Street Bank and Trust Company, as collateral agent (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on February 4, 2019).

10.6	First Amended and Restated Credit and Security Agreement, dated as of April 11, 2019, among TCW DL VII Financing LLC, as borrower, PNC Bank, National Association, as facility agent, the lenders from time to time party thereto, and State Street Bank and Trust Company, as collateral agent (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on April 16, 2019).

10.7	Second Amended and Restated Credit and Security Agreement, dated as of March 17, 2020, among TCW DL VII Financing LLC, as borrower, PNC Bank, National Association, as facility agent, the lenders from time to time party thereto, and State Street Bank and Trust Company, as collateral agent (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on March 20, 2020).

10.8	Fourth Amendment to Revolving Credit Agreement, dated as of May 10, 2021, among TCW Direct Lending VII LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and Committed Lender (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 10, 2021).

10.9	Fifth Amendment to Revolving Credit Agreement, dated as of May 13, 2021, among TCW Direct Lending VII LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and Committed Lender (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on May 10, 2021)

31.1*	Certification of President Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-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)

* 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.


Date: August 10, 2022	TCW DIRECT LENDING VII LLC
	By:	/s/ Richard T. Miller
		Richard T. Miller
		President



Date: August 10, 2022
	By:	/s/ Andrew J. Kim
		Andrew J. Kim
		Chief Financial Officer

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TCW Direct Lending VII 10-Q2022 Q2 Quarterly report

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