TCW Direct Lending VII 10Q 2024 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, 2024

☐ 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, 2024, there was no established public market for the Registrant’s common units. The number of the Registrant’s common units outstanding at August 12, 2024 was 13,734,010.

Auditor Firm Id: 34 Auditor Name: Deloitte & Touche LLP Auditor Location: Los Angeles, CA, U.S.A.

TCW DIRECT LENDING VII LLC

FORM 10-Q FOR THE QUARTER ENDED June 30, 2024

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Schedule of Investments as of June 30, 2024 (unaudited) and December 31, 2023	3
	Consolidated Statements of Assets and Liabilities as of June 30, 2024 (unaudited) and December 31, 2023	13
	Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited)	14
	Consolidated Statements of Changes in Members’ Capital for the three and six months ended June 30, 2024 and 2023 (unaudited)	15
	Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	16
	Notes to Consolidated Financial Statements (unaudited)	17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
SIGNATURES		56

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited)

As of June 30, 2024


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	DEBT(1)
Aerospace & Defense
	Columbia Helicopters Inc.(9)	08/20/19	Last Out Term Loan - 15.85% inc PIK (SOFR + 10.25%, 1.50% Floor, 2.75% PIK)		2.5	%	$	15,639,607	08/20/24	$	15,631,643	$	14,935,825
	Heligear Acquisition Co.(9)	07/30/19	Term Loan - 13.08% (SOFR + 7.50%, 2.00% Floor)		7.9	%		46,292,410	12/31/24		46,277,402		46,292,410
	Karman Holdings LLC	12/21/20	Revolver - 11.74% (SOFR + 6.25%, 2.00% Floor)		1.1	%		6,390,992	12/21/25		6,390,992		6,390,992
	Karman Holdings LLC(9)	12/21/20	Term Loan - 11.74% (SOFR + 6.25%, 2.00% Floor)		10.0	%		58,637,976	12/21/25		58,254,740		58,931,166
	Navistar Defense, LLC (2)	07/27/23	Super Senior Revolver - 16.06% inc PIK (SOFR + 10.50%, 1.50% Floor, all PIK)		5.5	%		32,191,663	02/01/26		32,171,409		32,191,663
	Navistar Defense, LLC (2) (5)(9)	08/01/22	Term Loan - 13.98% inc PIK (SOFR + 8.50%, 1.50% Floor, all PIK)		2.1	%		44,521,106	02/01/26		33,357,512		12,643,994
					29.1	%		203,673,754			192,083,698		171,386,050
Capital Goods
	Carolina Atlantic Roofing Supply LLC(9)	05/28/21	Term Loan - 14.61% inc PIK (SOFR + 9.00%, 2.00% Floor, 0.75% PIK)		5.5	%		33,351,538	05/28/26		33,098,893		32,350,992
					5.5	%		33,351,538			33,098,893		32,350,992
Chemicals
	AGY Holdings Corp. (2)(9)	09/21/20	Term Loan - 15.59% inc PIK (SOFR + 10.00%, 1.50% Floor, 6.00% PIK)		5.5	%		35,396,646	09/21/27		35,396,646		32,140,154
	AGY Holdings Corp. (2)	05/27/22	Delayed Draw Term Loan - 15.60% inc PIK (SOFR + 10.00%, 1.50% Floor, 6.00% PIK)		5.7	%		36,725,711	09/21/27		36,725,695		33,346,945
					11.2	%		72,122,357			72,122,341		65,487,099
Commercial & Professional Services
	Rapid Displays, Inc.(9)	04/16/21	Term Loan - 12.45% (SOFR + 7.00%, 1.00% Floor)		1.5	%		12,390,541	04/13/26		12,334,540		8,561,864
	Rapid Displays, Inc.	04/16/21	Revolver - 12.43% (SOFR + 7.00%, 1.00% Floor)		0.1	%		786,667	04/13/26		786,667		543,587
	Rapid Displays, Inc.(9)	09/29/22	Incremental Term Loan - 12.45% (SOFR + 7.00%, 1.00% Floor)		0.0	%		219,347	04/13/26		216,861		151,569
					1.6	%		13,396,555			13,338,068		9,257,020
Commercial Services & Supplies
	Retail Services WIS Corporation(9)	05/20/21	Term Loan - 13.83% (SOFR + 8.35%, 1.00% Floor)		7.2	%		42,386,714	05/20/25		42,162,953		42,386,714
					7.2	%		42,386,714			42,162,953		42,386,714
Consumer Durables & Apparel
	Twin Star International, Inc.	06/12/23	Incremental Delayed Draw Term Loan - 12.95% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		951,834	06/18/26		951,834		951,834
	Twin Star International, Inc.(5)(9)	06/18/21	Term Loan - 12.95% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		1.6	%		49,041,789	06/18/26		44,197,185		9,563,149
	Twin Star International, Inc.	02/15/23	Delayed Draw Term Loan - 12.95% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		973,005	06/18/26		973,005		973,005
	Twin Star International, Inc.	06/12/23	Incremental Term Loan - 12.95% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		971,831	06/18/26		971,831		971,831
	Twin Star International, Inc.	10/19/23	7th Amendment Incremental Term Loan - 12.95% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.1	%		485,764	06/18/26		485,764		485,764
	Twin Star International, Inc.	10/19/23	7th Amendment Incremental Delayed Draw Term Loan - 12.95% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.5	%		2,770,104	06/18/26		2,751,651		2,770,104
	Twin Star International, Inc.	06/20/24	Protective Advance Term Loan - 13.00% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		971,490	06/18/26		971,490		971,490
					3.0	%		56,165,817			51,302,760		16,687,177

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2024


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	DEBT (continued)
Consumer Services
	Grand Circle Corporation(9)	02/26/21	Term Loan - 14.36% (SOFR + 8.75%, 1.25% Floor)		6.5	%	$	38,039,122	02/26/26	$	37,788,310	$	38,039,122
					6.5	%		38,039,122			37,788,310		38,039,122
Energy Equipment & Services
	WDE TorcSill Holdings LLC	10/22/19	Revolver - 18.71% inc PIK (SOFR + 13.25%, 1.75% Floor, 4.50% PIK)		1.7	%		10,119,317	10/22/24		10,119,317		9,987,766
	WDE TorcSill Holdings LLC(9)	10/22/19	Term Loan - 18.71% inc PIK (SOFR + 13.25%, 1.75% Floor, 4.50% PIK)		3.8	%		22,624,901	10/22/24		22,593,380		22,330,778
					5.5	%		32,744,218			32,712,697		32,318,544
Hotels, Restaurants & Leisure
	KBP Brands, LLC(9)	05/26/21	Term Loan - 11.11% (SOFR + 5.50%, 0.75% Floor)		4.0	%		24,087,863	05/26/27		23,933,543		23,606,106
	Red Lobster Management, LLC(9)	02/29/24	Incremental Term Loan - 18.96% inc PIK (SOFR + 13.50%, 3.00% Floor, all PIK)		0.0	%		2,172,068	01/22/26		2,172,068		43,441
	Red Lobster Management, LLC(9)	01/22/21	Term Loan - 19.10% inc PIK (SOFR + 13.50%, 3.00% Floor, all PIK)		0.1	%		22,905,945	01/22/26		22,779,212		458,119
	Red Lobster Management, LLC	05/22/24	Roll Up Term Loan - 16.11% (SOFR + 10.50%, 3.00% Floor)		5.2	%		30,643,450	09/16/24		30,460,234		30,643,450
	Red Lobster Management, LLC	05/22/24	Debtors-in-Possession Term Loan - 16.11% (SOFR + 10.50%, 3.00% Floor)		2.9	%		17,113,918	09/16/24		17,113,907		17,113,918
					12.2	%		96,923,244			96,458,964		71,865,034
Household Durables
	Slogic Holding Corp. (4)	08/25/23	Revolver - 11.35% (SOFR + 5.87%, 1.00% Floor)		0.5	%		3,101,828	04/30/25		3,101,828		3,101,828
	Slogic Holding Corp. (4)(9)	06/29/18	Last Out Term Loan - 11.37% (SOFR + 5.87%, 1.00% Floor)		4.1	%		26,681,925	10/29/26		26,681,925		24,413,961
	Greenfield World Trade, Inc.(9)	03/04/19	Last Out Term Loan - 18.79% inc PIK (SOFR + 13.33%, 1.50% Floor, all PIK)		13.6	%		86,977,969	03/31/25		85,790,574		80,106,709
					18.2	%		116,761,722			115,574,327		107,622,498
Media
	Encompass Digital Media, Inc.(4)	10/01/18	Revolver - 13.10% inc PIK (SOFR + 7.75%, 1.50% Floor, all PIK)		0.3	%		4,087,912	09/28/25		4,087,912		1,925,406
	Encompass Digital Media, Inc.(4)(9)	10/01/18	Term Loan - 13.10% inc PIK (SOFR + 7.75%, 1.50% Floor, all PIK)		2.8	%		35,235,837	09/28/25		35,235,837		16,596,079
					3.1	%		39,323,749			39,323,749		18,521,485
Publishing
	Bendon Inc.(9)	12/11/20	Term Loan - 13.23% (SOFR + 7.75%, 1.50% Floor)		6.7	%		40,025,135	12/11/25		39,762,154		39,304,682
					6.7	%		40,025,135			39,762,154		39,304,682
Software
	Mondee Holdings LLC(9)	12/20/19	Term Loan - 14.10% inc PIK (SOFR + 8.50%, 1.75% Floor, all PIK)		12.4	%		73,408,129	06/30/25		73,227,588		73,187,905
					12.4	%		73,408,129			73,227,588		73,187,905
Textiles, Apparel & Luxury Goods
	Centric Brands Inc. (3)(9)	02/06/24	Term Loan - 10.84% (SOFR + 5.50%, 1.00% Floor)		2.8	%		16,206,598	08/06/29		15,787,821		16,206,598
	Centric Brands Inc. (3)(9)	02/06/24	Term Loan A-1 - 13.34% inc PIK (SOFR + 8.00%, 1.00% Floor, all PIK)		2.9	%		17,281,176	02/06/31		16,841,716		17,281,176
	Centric Brands Inc. (3)(9)	02/06/24	Term Loan A-2 - 13.34% inc PIK (SOFR + 8.00%, 1.00% Floor, all PIK)		2.4	%		14,233,319	02/06/31		13,871,366		14,233,319
	Hollander Intermediate LLC(9)	09/19/22	Term Loan - 14.21% (SOFR + 8.75%, 3.00% Floor)		8.5	%		56,977,332	09/21/26		56,977,332		49,855,165
					16.6	%		104,698,425			103,478,235		97,576,258
	Total Debt Investments				138.8	%		963,020,479			942,434,737		815,990,580

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2024


Industry	Issuer	Investment	% of Net Assets			Shares		Maturity Date	Amortized Cost		Fair Value
	EQUITY
Aerospace & Defense
	TCW ND Parent Holdings LLC. (2) (5) (6) (9)	Class A Units		0.0	%	$	4,399		$	43,990	$	—
				0.0	%		4,399			43,990		—
Chemicals
	AGY Equity LLC (2) (5) (6) (9)	Class A Preferred Units		0.0	%		7,752,414			—		—
	AGY Equity LLC (2) (5) (6) (9)	Class B Preferred Units		0.0	%		10,078,138			—		—
	AGY Equity LLC (2) (5) (6) (9)	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) (9)	Common Stock		0.0	%		1,254,034			—		—
	Greenfield World Trade, Inc. (5) (6) (9)	Class A-1 Warrant, expires 03/25/27		0.3	%		4,975			3,178,520		2,052,045
	Greenfield World Trade, Inc. (5) (6) (9)	Class A-2 Warrant, expires 03/25/27		0.1	%		1,730			1,189,508		381,593
	Greenfield World Trade, Inc. (5) (6) (9)	Class A-3 Warrant, expires 03/25/27		0.0	%		145			113,932		31,889
	Greenfield World Trade, Inc. (5) (6) (9)	Class A-4 Warrant, expires 03/25/27		0.1	%		2,401			—		529,874
				0.5	%		1,263,285			4,481,960		2,995,401
Media
	Encompass Digital Media, Inc.(4) (5)	Class A Units		0.0	%		722,097			—		—
				0.0	%		722,097			—		—
Software
	Mondee Holdings LLC (5) (6) (7)	Common Stock		0.2	%		570,627			764,071		1,369,505
				0.2	%		570,627			764,071		1,369,505
Textiles, Apparel & Luxury Goods
	Centric Brands GP LLC (3) (5) (6) (9)	Membership Interests		0.0	%		359,231			—		—
	Centric Brands L.P. (3) (5) (6) (9)	Class A LP Interests		1.5	%		359,231			95,579		8,700,958
				1.5	%		718,462			95,579		8,700,958
	Total Equity Investments			2.2	%		36,347,648			9,382,826		13,065,864
	Total Debt & Equity Investments (8)			141.0	%					951,817,563		829,056,444
	Cash Equivalents
	First American Government Obligation Fund, Yield 5.24%			3.9	%		22,985,890			22,985,890		22,985,890
	Total Cash Equivalents			3.9	%					22,985,890		22,985,890
	Short-term Investments
	U.S. Treasury Bill, Yield 5.47%			33.4	%		200,000,000			196,776,361		196,776,361
	Total Short-term Investments			33.4	%					196,776,361		196,776,361
	Total Investments (178.0%)								$	1,171,579,814	$	1,048,818,695
	Net unrealized depreciation on unfunded commitments (-0.1%)											(872,173	)
	Liabilities in Excess of Other Assets (-77.8%)											(458,664,352	)
	Net Assets (100.0%)										$	589,282,170

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2024

(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, 2023 and June 30, 2024 along with transactions during the six months ended June 30, 2024 in these controlled investments are as follows:


Name of Investment	Fair Value at December 31, 2023		Gross Addition (a)		Gross Reduction (b)		Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at June 30, 2024		Interest/Dividend/ Other income
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		—		—		—		—		—			—		—
AGY Holdings Corp. Delayed Draw Term Loan - 15.60% inc PIK		28,823,179		5,121,332		—		—		(597,566	)		33,346,945		2,658,096
AGY Holdings Corp. Term Loan - 15.59% inc PIK		27,765,285		4,952,255		—		—		(577,386	)		32,140,154		2,576,552
Navistar Defense, LLC Super Senior Revolver - 16.06% inc PIK		10,326,607		21,871,410		—		—		(6,354	)		32,191,663		2,043,055
Navistar Defense, LLC Term Loan - 13.98% inc PIK		33,940,881		248,218		—		—		(21,545,105	)		12,643,994		259,867
TCW ND Parent Holdings LLC Class A Units		—		—		—		—		—			—		—
Total Controlled Affiliated investments	$	100,855,952	$	32,193,215	$	—	$	—	$	(22,726,411	)	$	110,322,756	$	7,537,570

(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, 2024, $56,422,051 or 5.3% 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, 2023 and June 30, 2024 along with transactions during the six months ended June 30, 2024 in these affiliated investments are as follows:


Name of Investment	Fair Value at December 31, 2023		Gross Addition (a)		Gross Reduction (b)			Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at June 30, 2024		Interest/Dividend/ Other income
Encompass Digital Media Holdings, LLC Class A Units	$	—	$	—	$	—		$	—	$	—		$	—	$	—
Encompass Digital Media, Inc. Revolver - 13.10% inc PIK		2,515,804		264,502		—			—		(854,900	)		1,925,406		266,556
Encompass Digital Media, Inc. Term Loan - 13.10% inc PIK		21,696,936		2,261,770		—			—		(7,362,627	)		16,596,079		2,272,142
Shelterlogic Group Holdings, Inc Common Stock		—		—		—			—		—			—		—
Slogic Holding Corp. Last Out Term Loan - 11.37%		21,879,179		—		—			—		2,534,782			24,413,961		1,536,225
Slogic Holding Corp. Revolver - 11.35%		3,877,285		1,861,097		(2,636,554	)		—		—			3,101,828		166,138
Total Non-Controlled Affiliated Investments	$	49,969,204	$	4,387,369	$	(2,636,554	)	$	—	$	(5,682,745	)	$	46,037,274	$	4,241,061

(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, 2024, the aggregate fair value of these securities was $13,065,864, or 1.2% of the Company’s total assets.

(7)

Fair value of the Mondee Holdings, LLC common stock held by the Company is based on the market price of the issuer's stock as of June 30, 2024. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy.

(8)

Except for the Level 1 investment, 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.”

(9)

The investment is used as collateral for the PNC Credit Agreement. See Note 7.

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of June 30, 2024

SOFR - Secured Overnight Financing Rate, generally 1-Month, 3-Month, or 6-Month

PIK - Payments in Kind

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $95,341,040 and $51,307,860, respectively, for the six months ended June 30, 2024. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown of Portfolio
United States	100.0	%

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments

As of December 31, 2023


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 - 15.86% inc PIK (SOFR + 10.25%, 1.50% Floor, 2.75% PIK)		3.0	%	$	18,120,526	08/20/24	$	18,076,306	$	17,051,415
	Heligear Acquisition Co.	07/30/19	Term Loan - 13.10% (SOFR + 7.50%, 2.00% Floor)		8.3	%		47,762,011	07/30/24		47,649,347		47,570,963
	Karman Holdings LLC	12/21/20	Revolver - 12.50% (SOFR + 7.00%, 2.00% Floor)		1.2	%		6,554,864	12/21/25		6,554,864		6,554,864
	Karman Holdings LLC	12/21/20	Term Loan - 12.50% (SOFR + 7.00%, 2.00% Floor)		10.5	%		59,449,481	12/21/25		58,929,503		59,687,279
	Navistar Defense, LLC (2)	07/27/23	Super Senior Revolver - 16.21% inc PIK (SOFR + 10.50%, 1.50% Floor, all PIK)		1.8	%		10,326,607	02/01/26		10,299,999		10,326,607
	Navistar Defense, LLC (2) (5)	08/01/22	Term Loan - 14.22% inc PIK (SOFR + 8.50%, 1.50% Floor, all PIK)		6.0	%		40,991,402	02/01/26		33,109,294		33,940,881
					30.8	%		183,204,891			174,619,313		175,132,009
Capital Goods
	Carolina Atlantic Roofing Supply LLC	05/28/21	Term Loan - 14.65% inc PIK (SOFR + 9.00%, 2.00% Floor, 0.75% PIK)		5.7	%		33,678,160	05/28/26		33,355,097		32,634,137
					5.7	%		33,678,160			33,355,097		32,634,137
Chemicals
	AGY Holdings Corp. (2)	09/21/20	Delayed Draw Term Loan - 15.61% inc PIK (SOFR + 10.00%, 1.50% Floor, 6.00% PIK)		4.5	%		27,977,036	09/21/25		27,977,036		25,515,057
	AGY Holdings Corp. (2)	09/21/20	Term Loan - 15.64% inc PIK (SOFR + 10.00%, 1.50% Floor, 6.00% PIK)		4.9	%		30,444,391	09/21/25		30,444,391		27,765,285
	AGY Holdings Corp. (2)	05/27/22	Delayed Draw Term Loan - 15.61% inc PIK (SOFR + 10.00%, 1.50% Floor, 6.00% PIK)		0.6	%		3,627,327	09/21/25		3,627,327		3,308,122
					10.0	%		62,048,754			62,048,754		56,588,464
Commercial & Professional Services
	Rapid Displays, Inc.	04/16/21	Term Loan - 12.55% (SOFR + 7.00%, 1.00% Floor)		2.0	%		12,494,015	04/13/26		12,421,761		11,244,614
	Rapid Displays, Inc.	04/16/21	Revolver - 12.54% (SOFR + 7.00%, 1.00% Floor)		0.1	%		393,333	04/13/26		393,333		354,000
	Rapid Displays, Inc.	09/29/22	Incremental Term Loan - 12.54% (SOFR + 7.00%, 1.00% Floor)		0.0	%		221,169	04/13/26		217,961		199,053
					2.1	%		13,108,517			13,033,055		11,797,667
Commercial Services & Supplies
	Retail Services WIS Corporation	05/20/21	Term Loan - 13.85% (SOFR + 8.35%, 1.00% Floor)		7.7	%		43,595,738	05/20/25		43,235,918		44,031,696
					7.7	%		43,595,738			43,235,918		44,031,696
Consumer Durables & Apparel
	Rocky Brands, Inc. (3)	03/15/21	Term Loan - 13.20% (SOFR + 7.50%, 2.00% Floor)		5.0	%		29,867,493	03/15/26		29,604,476		28,374,118
	Twin Star International, Inc.	06/12/23	Incremental Delayed Draw Term Loan - 13.00% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		921,555	06/18/26		921,555		921,555
	Twin Star International, Inc.(5)	06/18/21	Term Loan - 13.00% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		3.4	%		47,314,794	06/18/26		44,197,185		19,351,751
	Twin Star International, Inc.	02/15/23	Delayed Draw Term Loan - 13.00% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		942,052	06/18/26		942,052		942,052
	Twin Star International, Inc.	06/12/23	Incremental Term Loan - 13.00% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.2	%		940,916	06/18/26		940,916		940,916
	Twin Star International, Inc.	10/19/23	7th Amendment Incremental Term Loan - 13.00% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.1	%		470,312	06/18/26		470,312		470,312
	Twin Star International, Inc.	10/19/23	7th Amendment Incremental Delayed Draw Term Loan - 13.02% inc PIK (SOFR + 7.50%, 1.50% Floor, all PIK)		0.1	%		681,027	06/18/26		681,027		681,027
					9.2	%		81,138,149			77,757,523		51,681,731

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2023


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	DEBT (continued)
Consumer Services
	Grand Circle Corporation	02/26/21	Term Loan - 14.22% (SOFR + 8.75%, 1.25% Floor)		6.8	%	$	38,543,670	02/26/26	$	38,213,079	$	38,543,670
					6.8	%		38,543,670			38,213,079		38,543,670
Energy Equipment & Services
	WDE TorcSill Holdings LLC	10/22/19	Revolver - 12.97% inc PIK (SOFR + 7.50%, 1.75% Floor, 0.75% PIK)		1.7	%		9,838,834	10/22/24		9,838,834		9,602,702
	WDE TorcSill Holdings LLC	10/22/19	Term Loan - 12.97% inc PIK (SOFR + 7.50%, 1.75% Floor, 0.75% PIK)		3.8	%		22,398,620	10/22/24		22,314,823		21,861,053
					5.5	%		32,237,454			32,153,657		31,463,755
Hotels, Restaurants & Leisure
	KBP Brands, LLC	05/26/21	Delayed Draw Term Loan - 12.17% inc PIK (SOFR + 6.50%, 0.75% Floor, 1.00% PIK)		3.1	%		18,478,536	05/26/27		18,400,117		17,591,566
	KBP Brands, LLC	05/26/21	Term Loan - 12.17% inc PIK (SOFR + 6.50%, 0.75% Floor, 1.00% PIK)		0.9	%		5,666,451	05/26/27		5,563,493		5,394,461
	Red Lobster Management, LLC	01/22/21	Term Loan - 16.61% (SOFR + 11.00%, 1.50% Floor)		7.7	%		47,866,465	01/22/26		47,472,497		43,702,082
					11.7	%		72,011,452			71,436,107		66,688,109
Household Durables
	Slogic Holding Corp. (4)	08/25/23	Revolver - 11.37% (SOFR + 5.87%, 1.00% Floor)		0.7	%		3,877,285	04/30/24		3,877,285		3,877,285
	Slogic Holding Corp. (4)	06/29/18	Last Out Term Loan - 11.40% (SOFR + 5.87%, 1.00% Floor)		3.8	%		26,681,925	10/29/26		26,681,925		21,879,179
	Greenfield World Trade, Inc.	03/04/19	Last Out Term Loan - 18.80% inc PIK (SOFR + 13.33%, 1.50% Floor, 7.00% PIK)		11.8	%		68,977,149	03/31/25		67,522,875		66,976,812
	Greenfield World Trade, Inc.	08/12/21	Last Out Delayed Draw Term Loan - 18.80% inc PIK (SOFR + 13.33%, 1.50% Floor, 7.00% PIK)		0.6	%		3,652,110	03/31/25		3,488,628		3,546,199
					16.9	%		103,188,469			101,570,713		96,279,475
Media
	Encompass Digital Media, Inc.(4)	10/01/18	Revolver - 13.13% inc PIK (SOFR + 7.75%, 1.50% Floor, all PIK)		0.4	%		3,823,410	09/28/25		3,823,410		2,515,804
	Encompass Digital Media, Inc.(4)	10/01/18	Term Loan - 13.13% inc PIK (SOFR + 7.75%, 1.50% Floor, all PIK)		3.8	%		32,974,066	09/28/25		32,974,066		21,696,936
					4.2	%		36,797,476			36,797,476		24,212,740
Publishing
	Bendon Inc.	12/11/20	Term Loan - 13.00% (SOFR + 7.50%, 1.50% Floor)		7.1	%		40,977,276	12/11/25		40,615,234		40,321,640
					7.1	%		40,977,276			40,615,234		40,321,640
Software
	Mondee Holdings LLC	12/20/19	Term Loan - 14.11% inc PIK (SOFR + 8.50%, 1.75% Floor, all PIK)		12.4	%		69,880,068	12/23/24		69,511,764		70,369,228
					12.4	%		69,880,068			69,511,764		70,369,228

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2023


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
	DEBT (continued)
Textiles, Apparel & Luxury Goods
	Centric Brands Inc. (3)	10/09/20	Term Loan - 14.37% inc PIK (SOFR + 9.00%, 1.00% Floor, 6.50% PIK)		7.9	%	$	46,070,354	10/09/25	$	44,679,173	$	44,826,454
	Hollander Intermediate LLC	09/19/22	Term Loan - 16.22% (SOFR + 10.75%, 3.00% Floor)		9.0	%		57,004,200	09/21/26		57,004,200		51,417,788
					16.9	%		103,074,554			101,683,373		96,244,242
	Total Debt Investments				147.0	%		913,484,628			896,031,063		835,988,563

	EQUITY						Shares
Aerospace & Defense
	TCW ND Parent Holdings LLC. (2) (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		0.0	%		1,254,034			—		—
	Greenfield World Trade, Inc. (5) (6)		Class A-1 Warrant, expires 03/25/27		0.6	%		3,959			3,178,520		3,641,653
	Greenfield World Trade, Inc. (5) (6)		Class A-2 Warrant, expires 03/25/27		0.1	%		1,376			1,189,508		817,631
	Greenfield World Trade, Inc. (5) (6)		Class A-3 Warrant, expires 03/25/27		0.0	%		116			113,932		68,566
					0.7	%		1,259,485			4,481,960		4,527,850
Media
	Encompass Digital Media, Inc.(4) (5)		Class A Units		0.0	%		722,097			—		—
					0.0	%		722,097			—		—
Software
	Mondee Holdings LLC (5) (6) (7)		Common Stock		0.3	%		570,627			764,071		1,574,931
					0.3	%		570,627			764,071		1,574,931
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		0.2	%		159,658			—		1,246,929
					0.2	%		319,316			—		1,246,929
	Total Equity Investments				1.2	%		35,944,702			9,287,247		7,349,710
	Total Debt & Equity Investments (8)				148.2	%					905,318,310		843,338,273
	Cash Equivalents
	First American Government Obligation Fund, Yield 5.30%				9.8	%		55,776,653			55,776,653		55,776,653
	Total Cash Equivalents				9.8	%					55,776,653		55,776,653
	Short-term Investments
	U.S. Treasury Bill, Yield 5.26%				13.8	%		80,000,000			78,714,489		78,714,489
	Total Short-term Investments				13.8	%					78,714,489		78,714,489
	Total Investments (171.6%)									$	1,039,809,452	$	977,829,415
	Net unrealized depreciation on unfunded commitments (-0.1%)												(745,514	)
	Liabilities in Excess of Other Assets (-71.5%)												(407,316,785	)
	Net Assets (100.0%)											$	569,767,116

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2023

(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, 2022 and December 31, 2023 along with transactions during the year ended December 31, 2023 in these controlled investments are as follows:


Name of Investment	Fair Value at December 31, 2022		Gross Addition(a)		Gross Reduction(b)		Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at December 31, 2023		Interest/Dividend/ Other income
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		—		—		—		—		—			—		—
AGY Holdings Corp. Delayed Draw Term Loan - 15.61% inc PIK		25,420,236		4,874,358		—		—		(1,471,415	)		28,823,179		4,816,598
AGY Holdings Corp. Term Loan - 15.64% inc PIK		26,315,189		2,773,320		—		—		(1,323,224	)		27,765,285		4,574,950
Navistar Defense, LLC Super Senior Revolver - 16.21% inc PIK		—		10,299,999		—		—		26,608			10,326,607		385,233
Navistar Defense, LLC Term Loan - 14.22% inc PIK		34,632,469		1		—		—		(691,589	)		33,940,881		18,127
TCW ND Parent Holdings LLC Class A Units		—		—		—		—		—			—		—
Total Controlled Affiliated investments	$	86,367,894	$	17,947,678	$	—	$	—	$	(3,459,620	)	$	100,855,952	$	9,794,908

(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, 2023, $74,447,501 or 7.4% 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, 2022 and December 31, 2023 along with transactions during the year ended December 31, 2023 in these affiliated investments are as follows:


Name of Investment	Fair Value at December 31, 2022		Gross Addition(a)		Gross Reduction(b)			Realized Gains (Losses)		Net Change in Unrealized Appreciation/ (Depreciation)			Fair Value at December 31, 2023		Interest/Dividend/ Other income
Encompass Digital Media Holdings, LLC Class A Units	$	—	$	—	$	—		$	—	$	—		$	—	$	—
Encompass Digital Media, Inc. Revolver - 13.13% inc PIK		1,560,195		2,056,485		—			—		(1,100,876	)		2,515,804		276,526
Encompass Digital Media, Inc. Term Loan - 13.13% inc PIK		26,892,285		4,381,065		(1,805,229	)		—		(7,771,185	)		21,696,936		4,445,399
Shelterlogic Group Holdings, Inc Common Stock		29,432,178		—		—			—		(29,432,178	)		—		—
Slogic Holding Corp. Last Out Term Loan - 11.40%		26,681,925		25,214		—			—		(4,827,960	)		21,879,179		3,036,611
Slogic Holding Corp. Revolver - 11.37%		—		3,877,285		—			—		—			3,877,285		233,530
Total Non-Controlled Affiliated Investments	$	84,566,583	$	10,340,049	$	(1,805,229	)	$	—	$	(43,132,199	)	$	49,969,204	$	7,992,066

(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, 2023, the aggregate fair value of these securities was $7,349,710, or 0.7% of the Company’s total assets.

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2023

(7)

Fair value of the Mondee Holdings, LLC common stock held by the Company is based on the market price of the issuer's stock as of December 31, 2023. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy.

(8)

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.”

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

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $69,936,152 and $268,468,240, respectively, for the year ended December 31, 2023. 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)

June 30, 2024


	As of June 30,
	2024			As of December 31,
	(unaudited)			2023
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $741,018 and $728,462, respectively)	$	672,696		$	692,514
Non-controlled affiliated investments (amortized cost of $69,108 and $67,357, respectively)		46,037			49,969
Controlled affiliated investments (amortized cost of $141,692 and $109,499, respectively)		110,323			100,856
Cash and cash equivalents		27,389			65,036
Short-term investments		196,776			78,714
Interest income receivable		9,855			16,331
Receivable for investments sold		59			813
Deferred financing costs		358			331
Due from Adviser		—			46
Prepaid and other assets		—			48
Total Assets	$	1,063,493		$	1,004,658

Liabilities
Payable for short-term investments purchased	$	196,776		$	78,714
Term loan (net of $372 and $806 of deferred financing costs, respectively)		159,628			264,194
Revolving credit facilities payable		63,000			—
Incentive fee payable		46,377			82,742
Management fees payable		3,507			3,478
Interest and credit facilities expense payable		3,397			4,403
Unrealized depreciation on unfunded commitments		872			746
Other accrued expenses and other liabilities		654			614
Total Liabilities		474,211			434,891

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		(484,419	)		(484,419	)
Common Unitholders’ offering costs		(633	)		(633	)
Accumulated Common Unitholders’ tax reclassification		(1,865	)		(1,865	)
Common Unitholders’ capital		721,083			721,083
Accumulated overdistributed earnings		(131,801	)		(151,316	)
Total Members’ Capital		589,282			569,767
Total Liabilities and Members’ Capital	$	1,063,493		$	1,004,658
Net Asset Value Per Unit (accrual base) (Note 10)(1)	$	54.95		$	53.53

(1)

Net Asset Value Per Unit (accrual base) equates to the aggregate of the Total Members' Capital and Common Unitholders' undrawn commitment divided by total Common units outstanding.

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Operations (Unaudited)

(Dollar amounts in thousands, except unit data)

June 30, 2024


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Investment Income
Non-controlled/non-affiliated investments:
Interest income	$	16,650		$	26,156		$	37,378		$	52,787
Interest income paid-in-kind		11,797			6,579			20,515			15,477
Other fee income		174			(2	)		174			83
Non-controlled affiliated investments:
Interest income		826			762			1,715			1,470
Interest income paid-in-kind		1,287			—			2,526			—
Controlled affiliated investments:
Interest income		735			2,304			2,295			4,535
Interest income paid-in-kind		3,193			904			5,231			3,731
Other fee income		12			6			12			7
Total investment income		34,674			36,709			69,846			78,090

Expenses
Incentive fees		(33,616	)		1,045			(36,365	)		3,114
Interest and credit facilities expenses		6,056			6,998			12,430			13,275
Management fees		3,507			3,843			6,978			7,898
Interest expense on repurchase transactions		339			—			617			—
Administrative fees		264			273			525			592
Professional fees		292			241			513			567
Directors’ fees		98			98			198			198
Other expenses		41			64			75			135
Total expenses		(23,019	)		12,562			(15,029	)		25,779
Net investment income		57,693			24,147			84,875			52,311
Net realized and unrealized gain (loss) on investments
Net realized gain:
Non-controlled/non-affiliated investments		—			2,802			—			2,821
Net change in unrealized appreciation/(depreciation):
Non-controlled/non-affiliated investments		(27,431	)		(12,766	)		(32,499	)		(23,035	)
Non-controlled affiliated investments		(3,116	)		(9,493	)		(5,683	)		(18,271	)
Controlled affiliated investments		(14,911	)		(510	)		(22,726	)		(1,371	)
Net realized gain on short-term investments		291			—			548			—
Net realized and unrealized loss on investments		(45,167	)		(19,967	)		(60,360	)		(39,856	)
Net increase in Members’ Capital from operations	$	12,526		$	4,180		$	24,515		$	12,455
Basic and diluted:
Income per unit	$	0.91		$	0.30		$	1.78		$	0.91
Units outstanding		13,734,010			13,734,010			13,734,010			13,734,010

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)

June 30, 2024


	Common Unitholders’ Capital		Accumulated Undistributed (Overdistributed) Earnings			Total
Members’ Capital at January 1, 2024	$	721,083	$	(151,316	)	$	569,767
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—		27,182			27,182
Net realized gain on investments		—		257			257
Net change in unrealized appreciation/(depreciation) on investments		—		(15,450	)		(15,450	)
Distributions to Members from:							—
Distributable earnings		—		(5,000	)		(5,000	)
Total Increase in Members’ Capital for the three months ended March 31, 2024		—		6,989			6,989
Members’ Capital at March 31, 2024		721,083		(144,327	)		576,756
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—		57,693			57,693
Net realized gain on investments		—		291			291
Net change in unrealized appreciation/(depreciation) on investments		—		(45,458	)		(45,458	)
Total Increase in Members’ Capital for the three months ended June 30, 2024		—		12,526			12,526
Members’ Capital at June 30, 2024	$	721,083	$	(131,801	)	$	589,282


	Common Unitholders’ Capital			Accumulated Undistributed (Overdistributed) Earnings			Total
Members’ Capital at January 1, 2023	$	818,068		$	(76,403	)	$	741,665
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			28,164			28,164
Net realized gain on investments		—			19			19
Net change in unrealized appreciation/(depreciation) on investments		—			(19,908	)		(19,908	)
Total Increase in Members’ Capital for the three months ended March 31, 2023		—			8,275			8,275
Members’ Capital at March 31, 2023		818,068			(68,128	)		749,940
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			24,147			24,147
Net realized gain on investments		—			2,802			2,802
Net change in unrealized appreciation/(depreciation) on investments		—			(22,769	)		(22,769	)
Distributions to Members from:
Distributable earnings		—			(49,000	)		(49,000	)
Return of capital		(55,000	)		—			(55,000	)
Increase in Members’ Capital Resulting from Capital Activity:
Contributions		—			—			—
Total Decrease in Members’ Capital for the three months ended June 30, 2023		(55,000	)		(44,820	)		(99,820	)
Members’ Capital at June 30, 2023	$	763,068		$	(112,948	)	$	650,120

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands, except unit data)

June 30, 2024


	For the Six Months Ended June 30,
	2024			2023
Cash Flows from Operating Activities
Net increase in net assets resulting from operations	$	24,515		$	12,455
Adjustments to reconcile the net increase in net assets resulting from operations to net cash provided by operating activities:
Purchases of investments		(67,069	)		(15,024	)
Purchases of short-term investments		(196,776	)		—
Interest income paid-in-kind		(28,272	)		(19,208	)
Proceeds from sales and paydowns of investments		52,062			137,715
Proceeds from sales of short-term investments (net of $548 and $0 realized gain on short term investments, respectively)		78,714			—
Net realized gain on investments		—			(2,821	)
Net change in unrealized (appreciation)/depreciation on investments		60,908			42,677
Amortization of premium and accretion of discount, net		(2,466	)		(6,219	)
Amortization of deferred financing costs		930			1,105
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest income receivable		6,476			544
(Increase) decrease in due from Adviser		46			157
(Increase) decrease in prepaid and other assets		48			103
Increase (decrease) in payable for short-term investments purchased		118,062			—
Increase (decrease) in incentive fees payable		(36,365	)		3,114
Increase (decrease) in management fees payable		29			(334	)
Increase (decrease) in interest and credit facilities expense payable		(1,006	)		(137	)
Increase (decrease) in directors’ fees payable		—			167
Increase (decrease) in other accrued expenses and liabilities		20			(176	)
Net cash provided by operating activities		9,856			154,118
Cash Flows from Financing Activities
Distributions to Members from distributable earnings		(4,980	)		(48,995	)
Return of capital		—			(55,000	)
Deferred financing costs paid		(523	)		(851	)
Proceeds from credit facilities		63,000			—
Repayments of credit facilities		(105,000	)		(47,000	)
Net cash used in financing activities		(47,503	)		(151,846	)
Net (decrease) increase in cash and cash equivalents		(37,647	)		2,272
Cash and cash equivalents, beginning of period		65,036			47,657
Cash and cash equivalents, end of period	$	27,389		$	49,929
Supplemental and non-cash operating and financing activities
Interest expense paid	$	9,658		$	11,154
Non-cash purchases of investments due to reorganization	$	(75,317	)	$	(1,227	)
Non-cash sales of investments due to reorganization	$	75,317		$	1,227
Distributions payable	$	20		$	5

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)

As of June 30, 2024

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.

As of June 30, 2024, the Company has five wholly-owned subsidiaries, each of which is a single member Delaware limited liability company.

The consolidated financial statements in this quarterly report on Form 10-Q 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 in interest of the holders of the Units. On December 20, 2023, the Company’s Board of Directors (the “Board”) approved a one year extension of the Company’s term from April 13, 2024 to April 13, 2025.

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)

As of June 30, 2024

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, 2024, 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, 2024 was $484,419.

2. Significant Accounting Policies

Basis of Presentation: The Company’s unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 6 and Article 10 of Regulation S-X. 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. The unaudited consolidated financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition for the periods presented. The unaudited consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission ("SEC") on April 1, 2024.

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

2. Significant Accounting Policies (Continued)

Income Recognition: Interest income and interest income paid-in-kind are 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.

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. As of June 30, 2024, cash and cash equivalents is comprised of demand deposits and highly liquid investments with maturities of three months or less. Cash equivalents are valued at the net asset vlue of the mutual fund which approximates fair value and are classified as Level 1 in the GAAP valuation hierarchy.

Short-term investments: The Company considers all investments with original maturities beyond three months at the date of purchase and one year or less from the balance sheet date to be short-term investments. As of June 30, 2024, short-term investments is comprised of U.S. Treasury bills, all of which are carried at fair value and are classified as Level 1 in the GAAP valuation hierarchy.

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

2. Significant Accounting Policies (Continued)

Recent Accounting Pronouncements: In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 (1) clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and (2) requires specific disclosures related to such an equity security. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023 and interim periods within that fiscal year, with early adoption permitted. On January 1, 2024, the Company adopted ASU 2022-03 and the adoption did not 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 according to procedures approved by the Board based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Adviser as the "valuation designee" with respect to the fair valuation of the Company's portfolio securities, subject to oversight by and periodic reporting to the Board.

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

3. Investment Valuations and Fair Value Measurements (Continued)

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. An income method approach incorporating a weighted average cost of capital and discount rate or a market method approach using prices and other relevant information generated by market transactions involving identical or comparable assets are generally used to determine fair value, though some cases use an enterprise value waterfall method. Valuation may also include a shadow rating method. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt, credit, industry, and market risk and events.

Equity, (Level 3), includes common 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, 2024:


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	815,991	$	815,991
Equity		1,370		—		11,696		13,066
Cash equivalents		22,986		—		—		22,986
Short-term investments		196,776		—		—		196,776
Total Assets	$	221,132	$	—	$	827,687	$	1,048,819

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, 2023:


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	835,989	$	835,989
Equity		1,575		—		5,775		7,350
Cash equivalents		55,777		—		—		55,777
Short- term investments		78,714		—		—		78,714
Total Assets	$	136,066	$	—	$	841,764	$	977,830

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, 2024:


	Debt			Equity		Total
Balance, April 1, 2024	$	850,492		$	8,353	$	858,845
Purchases, including payments received in-kind		84,696			—		84,696
Sales and paydowns of investments		(71,828	)		—		(71,828	)
Amortization of premium and accretion of discount, net		1,391			—		1,391
Net change in unrealized appreciation/(depreciation)		(48,760	)		3,343		(45,417	)
Balance, June 30, 2024	$	815,991		$	11,696	$	827,687
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2024	$	(48,993	)	$	3,343	$	(45,650	)

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

3. Investment Valuations and Fair Value Measurements (Continued)


	Debt			Equity		Total
Balance, January 1, 2024	$	835,989		$	5,775	$	841,764
Purchases, including payments received in-kind		170,563			96		170,659
Sales and paydowns of investments		(126,625	)		—		(126,625	)
Amortization of premium and accretion of discount, net		2,466			—		2,466
Net change in unrealized appreciation/(depreciation)		(66,402	)		5,825		(60,577	)
Balance, June 30, 2024	$	815,991		$	11,696	$	827,687
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2024	$	(67,485	)	$	5,825	$	(61,660	)

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, 2023:


	Debt			Equity			Total
Balance, April 1, 2023	$	1,006,788		$	27,679		$	1,034,467
Purchases, including payments received in-kind		9,340			—			9,340
Sales and paydowns of investments		(67,568	)		—			(67,568	)
Amortization of premium and accretion of discount, net		1,595			—			1,595
Net change in unrealized appreciation/(depreciation)		(8,239	)		(9,806	)		(18,045	)
Balance, June 30, 2023	$	941,916		$	17,873		$	959,789
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2023	$	(8,137	)	$	(9,806	)	$	(17,943	)


	Debt			Equity			Total
Balance, January 1, 2023	$	1,054,945		$	47,591		$	1,102,536
Purchases, including payments received in-kind		34,232			—			34,232
Sales and paydowns of investments		(135,283	)		(1,227	)		(136,510	)
Amortization of premium and accretion of discount, net		6,219			—			6,219
Net realized gains		19			—			19
Net change in unrealized appreciation/(depreciation)		(18,216	)		(28,491	)		(46,707	)
Balance, June 30, 2023	$	941,916		$	17,873		$	959,789
Net change in unrealized appreciation/(depreciation) in investments held as of June 30, 2023	$	(16,372	)	$	(20,498	)	$	(36,870	)

The Company did not have any transfers between levels during the three and six months ended June 30, 2024 and 2023.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

3. Investment Valuations and Fair Value Measurements (Continued)

Level 3 Valuation and Quantitative Information: The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of June 30, 2024:

Investment Type

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted
Average*

Impact to
Valuation from an
Increase in Input

Debt

407,745

Income Method

Discount Rate

10.7% to 25.6%

14.7%

Decrease

Debt

107,371

Income Method

EBITDA Multiple

4.8x to 6.5x

N/A

Increase

Income Method

Revenue Multiple

0.1x to 0.6x

N/A

Increase

Debt

173,865

Market Method

EBITDA Multiple

5.8x to 9.0x

N/A

Increase

Debt

127,010

Market Method

Revenue Multiple

0.7x to 1.1x

N/A

Increase

Equity

8,701

Market Method

EBITDA Multiple

5.8x to 7.5x

N/A

Increase

Equity

—

Market Method

Revenue Multiple

0.7x to 1.1x

N/A

Increase

Equity

2,995

Market Method

EBITDA Multiple

8.0x to 9.0x

N/A

Increase

Income Method

Implied Volatility

40.0% to 50.0%

N/A

Increase

Expected Term (in years)

0.5 to 1.0

N/A

Increase

* Weighted based on fair value

The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2023:

Investment Type

Fair Value

Valuation
Technique

Unobservable Input

Range

Weighted
Average*

Impact to
Valuation from an
Increase in Input

Debt

650,058

Income Method

Discount Rate

10.9% to 27.0%

16.6%

Decrease

Debt

11,798

Market Method

EBITDA Multiple

6.0x to 7.0x

N/A

Increase

Market Method

Revenue Multiple

0.5x to 0.7x

N/A

Increase

Debt

49,969

Market Method

EBITDA Multiple

6.3x to 9.1x

N/A

Increase

Debt

124,164

Market Method

Revenue Multiple

0.8x to 1.1x

N/A

Increase

Equity

1,247

Market Method

EBITDA Multiple

6.3x to 9.1x

N/A

Increase

Equity

—

Market Method

Revenue Multiple

0.8x to 1.1x

N/A

Increase

Equity

4,528

Market Method

EBITDA Multiple

7.8x to 8.8x

N/A

Increase

Income Method

Implied Volatility

60.0% to 60.0%

N/A

Increase

Expected Term (in years)

1.8 to 1.8

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

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 was most recently renewed by the Company's Board on August 9, 2023 for an additional one-year term until September 15, 2024. 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).

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

•

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, 2024, Management Fees incurred were $3,507 and $6,978, of which $3,507 remained payable as of June 30, 2024. For the three and six months ended June 30, 2023, Management Fees incurred amounted to $3,843 and $7,898, of which $3,843 remained payable at June 30, 2023.

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”);

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

4. Agreements and Related Party Transactions (Continued)

(c)

Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to 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 the three and six months ended June 30, 2024, Incentive Fees incurred were ($33,616) and ($36,365). For the three and six months ended June 30, 2023, Incentive Fees incurred were $1,045 and $3,114. The Company has not made any incentive fee payments to the Adviser, and as of June 30, 2024 and December 31, 2023, the Company's incentive fee payable to the Advisor was $46,377 and $82,742, respectively.

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.

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

4. Agreements and Related Party Transactions (Continued)

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. On August 9, 2023, the Company's Board renewed the Administrative Agreement for an additional one-year term until September 15, 2024.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

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)

As of June 30, 2024

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)

As of June 30, 2024

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized depreciation by investment as of June 30, 2024 and December 31, 2023:


		June 30, 2024				December 31, 2023
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
AGY Holdings Corp.	June 2025	$	2,067	$	189	$	2,067	$	182
Bendon Inc.	December 2025		5,811		105		7,263		116
Centric Brands Inc.	October 2024		—				5,295		—
Encompass Digital Media, Inc.	September 2025		508		269		508		174
Greenfield World Trade, Inc.	September 2024		62		5		4,685		136
Karman Holdings LLC	December 2025		164		—		—		—
Rapid Displays, Inc.	April 2026		983		304		1,377		138
Red Lobster Management, LLC	September 2024		4,278		—		—		—
Twin Star International, Inc.	September 2024		—		—		2,023		—
Slogic Holding Corp.	April 2025		775		—		—		—
WDE TorcSill Holdings LLC	October 2024		8		—		8		—
Total		$	14,656	$	872	$	23,226	$	746

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, 2024, 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)

As of June 30, 2024

6. Members' Capital

The Company’s Unit activity for the three and six months ended June 30, 2024 and 2023, was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
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, 2024 and 2023.

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 is 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, 2019, the Natixis Maximum Commitment was $400,000. The Natixis Maximum Commitment was reduced to $340,000 on April 21, 2020 and was further reduced to $280,000 on July 1, 2020. On March 10, 2021, the Natixis Maximum Commitment was reduced to $250,000.

On January 10, 2023, the Company entered into the Sixth Amendment to the Revolving Credit Agreement with Natixis (the “Sixth Amended Revolving Credit Agreement”). The Sixth Amended Revolving Credit Agreement replaces the Eurocurrency Rate with a Daily Simple SOFR Rate, Term SOFR Rate and Adjusted Term SOFR Rate (each as defined in the Sixth Amended Revolving Credit Agreement) for purposes of calculating interest on the loan. Each Term SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted Term SOFR Rate for such Interest Period plus the interest rate spread or "Applicable Margin." Each Daily SOFR Loan will bear interest on the outstanding principal amount thereof at a rate per annum equal to Daily Simple SOFR plus the Applicable Margin. The Term SOFR Loan and Daily SOFR Loan have an Applicable Margin of 1.75%.

On May 9, 2023, the Company entered into the Seventh Amendment to the Revolving Credit Agreement with Natixis (the “Seventh Amended Revolving Credit Agreement”). The Seventh Amended Revolving Credit Agreement (1) removed the Adjusted Term SOFR Rate for purposes of calculating interest on the loan but kept the Daily Simple SOFR and Term SOFR rates as is; (2) updated the Applicable Margin from 0.75% to 1.15% for Base Rate Loans and from 1.75% to 2.15% for all other loan types; (3) added a minimum usage fee whereby the Company is charged 2.15% on undrawn amounts that are less than 50% of the Maximum Commitment; (4) modified the unused fees such that if usage is between 0% and 30%, the Company is charged 0.75%, 0.55% if usage is between 30% and 50%, and 0.40% if usage is greater than 50%; and (5) extended the maturity date of the Natixis Revolving Credit Facility 364 days to May 9, 2024.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

7. Credit Facilities (Continued)

On May 9, 2024, the Company entered into the Eighth Amendment to the Revolving Credit Agreement with Natixis (the “Eighth Amended Revolving Credit Agreement”). The Eighth Amended Revolving Credit Agreement: (1) updated the Applicable Margin from 1.15% to 1.50% for Base Rate Loans and from 2.15% to 2.50% for all other loan types; (2) extended the Stated Maturity Date (previously defined as May 9, 2024) of the Natixis Revolving Credit Facility 183 days to November 8, 2024; (3) updated the definition of Maturity Date to be the earlier of the Stated Maturity Date or 45 days after a Maturity Event, which is defined as one or more of the following occurring: (a) Special Member (NLGI US Private Debt Fund I) elects to "opt-out" and have its membership interest redeemed during the next scheduled redemption date; (b) Rated Included Investors (as defined in the Natixis Credit Agreement) representing 8% or more of Unfunded Commitments elect to "opt-out"and have their membership interest redeemed during the next scheduled redemption date; or (c) Included Investors (as defined in the Natixis Credit Agreement) representing 8% or more of Unfunded Commitments elect to "opt-out"and have their membership interest redeemed during the next scheduled redemption date; and (4) allowed the Company to extend the Stated Maturity Date up to 3 months after the then effective Stated Maturity Date no more than 2 times.

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, 2024, the Company was in compliance with such covenants.

As of June 30, 2024 and December 31, 2023, the Natixis Borrowing Base assets were more than the Natixis Maximum Commitment. A summary of amounts outstanding and available under the Natixis Revolving Credit Facility as of June 30, 2024 and December 31, 2023 was as follows:


Natixis Revolving Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2024	$	250,000	$	63,000	$	187,000
As of December 31, 2023	$	250,000	$	—	$	250,000

(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.

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

7. Credit Facilities (Continued)

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 November 15, 2021, the Second Amended PNC Maximum Commitment was decreased from $825,000 to $700,000.

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.

On October 27, 2022, the Borrower amended and restated the Amended PNC Credit Agreement (as further amended the “Third Amended PNC Credit Agreement”). The Third Amended PNC Credit Agreement, among other things, removed reference to LIBOR rates and the related definitions and added reference to SOFR rates and the related definitions in which the Borrower may now elect a fluctuating rate of interest that is based on SOFR rather than LIBOR. 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) SOFR rate plus the sum of the facility margin of 2.30% and SOFR adjustment per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum.

On December 6, 2023, the Borrower entered into Amendment No. 1 to the Third Amended and Restated Credit and Security Agreement with PNC (“Amendment No.1 to Third Amended PNC Credit Agreement”). The Amendment No.1 to Third Amended PNC Credit Agreement (1) updated the Facility Margin Level from 2.30% to 2.75% and removed the SOFR adjustment from the calculation of interest on borrowings; (2) extended the Final Maturity Date 366 days from January 29, 2024 to January 29, 2025; (3) changed the total commitments under the PNC Term Loan to $265,000 (the total outstanding balance as of the date of the amendment).

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, 2024, 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)

As of June 30, 2024

7. Credit Facilities (Continued)

As of June 30, 2024 and December 31, 2023, the PNC Borrowing Base assets were more 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, 2024 and December 31, 2023 is as follows:


PNC Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2024	$	160,000	$	160,000	N/A
As of December 31, 2023	$	265,000	$	265,000	N/A

(1)

No available amount as of June 30, 2024 and December 31, 2023 as the Borrower's ability to make additional borrowings under the PNC Revolving Credit Facility expired on January 31, 2022.

Borrowings under the PNC Credit Facility as of June 30, 2024 and December 31, 2023 of $160,000 and $265,000, respectively, consisted entirely of Term Loan borrowings.

Costs associated with the Revolving Credit Facilities are recorded as deferred financing costs on the Company's Consolidated Statements of Assets and Liabilities and the costs are being amortized over the respective lives of the Natixis Revolving Credit Facility and PNC Revolving Credit Facility. 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, 2024 and December 31, 2023, $358 and $331, respectively, of deferred financing costs from the Revolving Credit Facility had yet to be amortized. As of June 30, 2024 and December 31, 2023, $372 and $806, respectively, of deferred financing costs from the PNC Term Loan 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, 2024			As of December 31, 2023
Principal amount outstanding on PNC Term Loan	$	160,000		$	265,000
Deferred financing costs		(372	)		(806	)
PNC Term Loan (as presented on the Consolidated Statements of Assets and Liabilities)	$	159,628		$	264,194

The carrying amounts of the Credit Facilities, which are categorized as Level 2 within the fair value hierarchy as of June 30, 2024 and 2023, approximates their respective fair values. Valuation techniques and significant inputs used to determine fair value include Company performance; 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.

The summary information regarding the Credit Facilities for the three and six months ended June 30, 2024 and 2023 was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Credit Facilities interest expense	$	4,620		$	5,620		$	9,292		$	11,175
Unused commitment fees		963			739			2,108			895
Administrative fees		50			50			100			100
Amortization of deferred financing costs		423			589			930			1,105
Total	$	6,056		$	6,998		$	12,430		$	13,275
Weighted average interest rate		8.04	%		7.50	%		8.04	%		7.26	%
Average outstanding balance	$	227,363		$	296,593		$	228,516		$	306,260

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

8. Repurchase Transactions

The Company may, from time to time, enter into repurchase agreements with Barclays Bank PLC (“Barclays”), whereby the Company sells to Barclays its short-term investments and concurrently enters into an agreement to repurchase the same investments at an agreed-upon price at a future date, generally within 30-days (each, a “Repurchase Transaction”).

In accordance with ASC 860, Transfers and Servicing, these Repurchase Transactions meet the criteria for secured borrowings. Accordingly, the short-term investments remain 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 Barclays (the “Repurchase Obligation”). The Repurchase Obligation is secured by the short-term investments that are the subject of the repurchase agreement.

During the six months ended June 30, 2024, the Company entered into Repurchase Transactions with Barclays on January 2, 2024 and April 1, 2024 which settled on January 25, 2024 and April 25, 2024, respectively. During the six months ended June 30, 2023, the Company did not enter into any Repurchase Transactions.

The Company had no outstanding Repurchase Obligations as of June 30, 2024 and December 31, 2023. Interest expense incurred under these Repurchase Transactions was $339 and $0 for the three months ended June 30, 2024 and 2023, respectively. Interest expense incurred under these Repurchase Transactions was $617 and $0 for the six months ended June 30, 2024 and 2023, respectively.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

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.

As of June 30, 2024 and December 31, 2023, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes were as follows:


	As of June 30, 2024			As of December 31, 2023
Cost of investments for federal income tax purposes	$	1,171,580		$	1,045,225
Unrealized appreciation	$	12,349		$	6,469
Unrealized depreciation	$	(135,110	)	$	(73,865	)
Net unrealized depreciation on investments	$	(122,761	)	$	(67,396	)

The Company did not have any unrecognized tax benefits as of December 31, 2023, 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 authorities for returns filed for the prior three years and by state tax authorities for returns filed for the prior four years.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

10. Financial Highlights

Selected data for a unit outstanding throughout the six months ended June 30, 2024 and 2023 is presented below.


	For the Six Months Ended June 30,
	2024(1)			2023(1)
Net Asset Value Per Unit (accrual base), Beginning of Period	$	53.53		$	66.04
Income from Investment Operations:
Net investment income		6.18			3.81
Net realized and unrealized loss		(4.40	)		(2.90	)
Total income from investment operations		1.78			0.91
Less Distributions:
From distributable earnings		(0.36	)		(3.57	)
From return of capital		—			(4.00	)
Total distributions		(0.36	)		(7.57	)
Net Asset Value Per Unit (accrual base), End of Period	$	54.95		$	59.38
Unitholder Total Return(2)(3)		3.39	%		1.55	%
Unitholder IRR before incentive fees(4)		9.94	%		11.26	%
Unitholder IRR after all fees and expenses(4)		9.00	%		9.33	%
Ratios and Supplemental Data:
Members’ Capital, end of period	$	589,282		$	650,120
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)		(5.22	)%		7.22	%
Ratio of financing cost to average net assets(3)		2.15	%		1.84	%
Ratio of net investment income to average net assets(5)		29.46	%		14.65	%
Ratio of incentive fees to average net assets(5)		(12.62	)%		0.87	%
Credit facilities payable	$	222,628		$	289,149
Asset coverage ratio		3.65			3.24
Portfolio turnover rate(3)		6.04	%		1.43	%

(1)

Per unit data was calculated using the number of Common Units issued and outstanding as of June 30, 2024 and 2023, respectively.

(2)

The Total Return for the six months ended June 30, 2024 and 2023 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 9.94%. The IRR since inception for the Common Unitholders, after management fees, financing costs, operating expenses and Advisor incentive fees is 9.00%. 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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

As of June 30, 2024

11. Subsequent Events

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

On July 1, 2024, the Company entered into a Repurchase Transaction with Barclays which settled on July 25, 2024 in the amount of $196,750.

On August 12, 2024, the Company's Board renewed the Advisory and Administrative Agreements for an additional one-year term through September 15, 2025.

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:

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

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

•

a decline in interest rates could adversely impact our results as all of our investments bear interest based on floating rates;

•

our future operating results;

•

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;

•

the increasing concentration of our investment portfolio as we continue to wind down may heighten the risk that an adverse change in one issuer or industry could have a material adverse impact on our performance;

•

pandemics or other serious public health events;

•

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”, also the “Administrator”);

•

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, including our ability to generate sufficient cash to pay our operating expenses;

•

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

•

uncertainty surrounding global political and financial stability, including the liquidity of the banking industry;

•

the loss of key personnel of the Adviser;

•

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

•

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

•

the ability of the TCW Group, Inc. 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 April 1, 2024.

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. On March 31, 2023, we formed our fifth wholly-owned subsidiary, TCW DL EDM 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, a number of our current investments do contain PIK due to certain circumstances involving debt restructurings or work-outs. The high concentration of PIK in our current portfolio is primarily a result of the continued wind down of our portfolio.

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 according to procedures approved by the Board of Directors (the “Board”) based on similar instruments, internal assumptions and the weighting of the best available pricing inputs. Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Adviser as the "valuation designee" with respect to the fair valuation of the Company's portfolio securities, subject to oversight by and periodic reporting to the Board.

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, 2024, our portfolio consisted of 39 debt investments and 14 equity investments. Based on fair values as of June 30, 2024, our portfolio was 98.4% invested in debt investments which were mostly senior secured term loans and revolving loans. The remaining 1.6% represented our equity investments, which were comprised of common stock, preferred stock, membership interests and warrants. Debt investments in two portfolio companies were on non-accrual status as of June 30, 2024, representing 2.7% and 8.1% of our portfolio's fair value and cost, respectively.

As of December 31, 2023, our portfolio consisted of 37 debt investments and 13 equity investments. Based on fair values as of December 31, 2023, our portfolio was 99.1% invested in debt investments which were mostly senior secured term loans. The remaining 0.9% represented our equity investments, which were comprised of common stock, preferred stock and warrants. Debt investments in two portfolio companies were on non-accrual status as of December 31, 2023, representing 6.3% and 8.5% of our portfolio's fair value and cost, respectively.

Our total investment portfolio increased to 53 total investments as of June 30, 2024 from 50 total investments as of December 31, 2023 due to follow-on investments in Twin Star International, Inc., Red Lobster Management, LLC, and Greenfield World Trade, Inc.

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, 2024:


Industry	Percent of Total Investments
Aerospace & Defense		20	%
Household Durables		13	%
Textiles, Apparel & Luxury Goods		13	%
Software		9	%
Hotels, Restaurants & Leisure		9	%
Chemicals		8	%
Commercial Services & Supplies		5	%
Publishing		5	%
Consumer Services		5	%
Capital Goods		4	%
Energy Equipment & Services		4	%
Media		2	%
Consumer Durables & Apparel		2	%
Commercial & Professional Services		1	%
Total		100	%

Interest income, including interest income paid-in-kind, was $34.5 million and $36.7 million for the three months ended June 30, 2024 and 2023, respectively. Interest income for the three months ended June 30, 2024 and 2023 included $16.3 million and $7.5 million, respectively, of interest income paid-in-kind.We also earned $0.2 million and $4.0 thousand in other fee income during the three months ended June 30, 2024 and 2023, respectively.

Interest income, including interest income paid-in-kind, was $69.7 million and $78.0 million for the six months ended June 30, 2024 and 2023, respectively. Interest income for the six months ended June 30, 2024 and 2023 included $28.3 million and $19.2 million, respectively, of interest income paid-in-kind.We also earned $0.2 million and $0.1 million in other fee income during the six months ended June 30, 2024 and 2023, respectively.

Results of Operations

Our operating results for the three and six months ended June 30, 2024 and 2023 were as follows (dollar amounts in thousands):


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023

Total investment income	$	34,674		$	36,709		$	69,846		$	78,090
Total expenses		(23,019	)		12,562			(15,029	)		25,779
Net investment income		57,693			24,147			84,875			52,311
Net realized gain on investments		—			2,802			—			2,821
Net change in unrealized appreciation/(depreciation) on investments		(45,458	)		(22,769	)		(60,908	)		(42,677	)
Net realized gain on short-term investments		291			—			548			—
Net increase in Members’ Capital from operations	$	12,526		$	4,180		$	24,515		$	12,455

Total investment income

Total investment income for the three months ended June 30, 2024 and 2023 was $34.7 million and $36.7 million, respectively. Total investment income for the six months ended June 30, 2024 and 2023 was $69.8 million and $78.1 million, respectively. The decrease in total investment income during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 was due to a decrease in the par value of debt investments in our portfolio, which decreased to $963.0 million as of June 30, 2024, as compared to $1.0 billion as of June 30, 2023. This decrease in the par value of our investments was partially offset

by an increase in interest rates during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

Net investment income

Net investment income for the three months ended June 30, 2024 and 2023 was $57.7 million and $24.1 million, respectively. Net investment income for the six months ended June 30, 2024 and 2023 was $84.9 million and $52.3 million, respectively. Our net investment income increased during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, due to a decrease in total expenses during the three and six months ended June 30, 2024, which was partially offset by the decrease in total investment income described above. The decrease in total expenses was primarily attributable to the decrease in incentive fees, management fees and interest and credit facilities expenses during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

Expenses for the three and six months ended June 30, 2024 and 2023 were as follows (dollar amounts in thousands):


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2024			2023		2024			2023
Expenses
Incentive fees	$	(33,616	)	$	1,045	$	(36,365	)	$	3,114
Interest and credit facilities expenses		6,056			6,998		12,430			13,275
Management fees		3,507			3,843		6,978			7,898
Interest expense on repurchase transactions		339			—		617			—
Administrative fees		264			273		525			592
Professional fees		292			241		513			567
Directors’ fees		98			98		198			198
Other expenses		41			64		75			135
Total expenses	$	(23,019	)	$	12,562	$	(15,029	)	$	25,779

Our total expenses were ($23.0) million and $12.6 million for the three months ended June 30, 2024 and 2023, respectively. Our total expenses included management fees attributed to the Adviser of $3.5 million and $3.8 million; and incentive fees of ($33.6) million and $1.0 million, for the three months ended June 30, 2024 and 2023, respectively.

Our total expenses were $(15.0) million and $25.8 million for the six months ended June 30, 2024 and 2023, respectively. Our total expenses included management fees attributed to the Adviser of $7.0 million and $7.9 million; and incentive fees of $(36.4) million and $3.1 million, for the six months ended June 30, 2024 and 2023, respectively.

The decrease in total expenses during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 was primarily due to the decrease in incentive fees during the current period combined with a decrease in management fees caused by the decrease in the investment cost basis for which management fees are based. Incentive fees decreased during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 due to the reversal of previously accrued incentive fees. As a consequence of the Fund currently being in an incentive fee “catch-up,” the Fund’s realized and unrealized losses during the three and six months ended June 30, 2024 resulted in an overall reduction of incentive fee payable to the Adviser as of June 30, 2024 thereby causing the need to a record a reversal previously accrued incentive fees during the current period. The decreases in incentive fees and management fees were coupled with a decrease in interest and credit facilities expenses due to a lower average outstanding balance (partially offset by a higher weighted average interest rate) during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

Net realized gain on investments

Our net realized gain on investments for the three months ended June 30, 2024 and 2023 was $0 and $2.8 million, respectively. Our net realized gain on investments for the six months ended June 30, 2024 and 2023 was $0 and $2.8 million, respectively. We did not have a realized gain during the three and six months ended June 30, 2024 as none of our investments were disposed of during the period. Our net realized gain during the three and six months ended June 30, 2023 is was is fully attributable to our partial sale of the Mondee Holdings, LLC common stock.

Net change in unrealized appreciation/(depreciation) on investments

Our net change in unrealized appreciation/(depreciation) investments for the three months ended June 30, 2024 and 2023 was ($45.5) million and ($22.8) million, respectively. Our net change in unrealized appreciation/(depreciation) for the three months ended June 30, 2024 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Red Lobster Management, LLC	Term Loan	$	(15,403	)
Navistar Defense, LLC	Term Loan		(13,501	)
Twin Star International, Inc.	Term Loan		(6,326	)
Encompass Digital Media, Inc.	Term Loan		(4,155	)
Greenfield World Trade, Inc.	Last Out Term Loan		(3,854	)
Red Lobster Management, LLC	Incremental Term Loan		(1,494	)
Greenfield World Trade, Inc.	Last Out Delayed Draw Term Loan		(1,293	)
Mondee Holdings LLC	Term Loan		(1,040	)
Slogic Holding Corp.	Last Out Term Loan		1,521
Centric Brands L.P.	Class A LP Interests		2,759
All others	Various		(2,672	)
Net change in unrealized appreciation/(depreciation)		$	(45,458	)

Our net change in unrealized appreciation/(depreciation) for the three months ended June 30, 2023 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Shelterlogic Group Holdings, Inc	Common Stock	$	(9,480	)
Twin Star International, Inc.	Term Loan		(4,937	)
Encompass Digital Media, Inc.	Term Loan		(4,899	)
Mondee Holdings Inc.	Common Stock		(4,609	)	*
Centric Brands Inc.	Term Loan		(1,609	)
Hollander Intermediate LLC	Term Loan		(552	)
Karman Holdings LLC	Term Loan		543
Columbia Helicopters Inc.	Last Out Term Loan		871
Grand Circle Corporation	Term Loan		942
Red Lobster Management, LLC	Term Loan		3,369
All others	Various		(2,408	)
Net change in unrealized appreciation/(depreciation)		$	(22,769	)

*Includes reversal of previously recognized unrealized (depreciation)/appreciation. Recognized during the three months ended June 30, 2023 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, 2024 and 2023 was $(60.9) million and $(42.7) million, respectively. Our net change in unrealized appreciation/(depreciation) for the six months ended June 30, 2024 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Navistar Defense, LLC	Term Loan	$	(21,545	)
Red Lobster Management, LLC	Term Loan		(18,551	)
Twin Star International, Inc.	Term Loan		(9,789	)
Encompass Digital Media, Inc.	Term Loan		(7,363	)
Greenfield World Trade, Inc.	Last Out Term Loan		(4,033	)
Rapid Displays, Inc.	Term Loan		(2,596	)
Red Lobster Management, LLC	Incremental Term Loan		(2,129	)
Greenfield World Trade, Inc.	Class A-1 Warrant, expires 03/25/27		(1,590	)
Hollander Intermediate LLC	Term Loan		(1,536	)
Greenfield World Trade, Inc.	Last Out Delayed Draw Term Loan		(1,162	)
Rocky Brands, Inc.	Term Loan		1,230
Slogic Holding Corp.	Last Out Term Loan		2,535
Centric Brands L.P.	Class A LP Interests		7,358
All others	Various		(1,737	)
Net change in unrealized appreciation/(depreciation)		$	(60,908	)

Our net change in unrealized appreciation/(depreciation) for the six months ended June 30, 2023 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment	Change in Unrealized Appreciation/ (Depreciation)
Shelterlogic Group Holdings, Inc	Common Stock	$	(18,246	)
Mondee Holdings Inc.	Preferred Stock		(7,993	)	**
Encompass Digital Media, Inc.	Term Loan		(5,508	)
Twin Star International, Inc.	Term Loan		(3,660	)
Shipston Group U.S. Inc.	Last Out Term Loan		(2,876	)
UniTek Acquisition, Inc.	Term Loan		(2,325	)	*
Centric Brands Inc.	Term Loan		(2,312	)
Greenfield World Trade, Inc.	Class A-1 Warrant, expires 03/25/27		(1,640	)
Hollander Intermediate LLC	Term Loan		(1,583	)
Greenfield World Trade, Inc.	Last Out Term Loan		(1,462	)
AGY Holdings Corp.	Term Loan		(771	)
Carolina Atlantic Roofing Supply LLC	Term Loan		(738	)
Rapid Displays, Inc.	Term Loan		(711	)
AGY Holdings Corp.	Delayed Draw Term Loan		(707	)
Greenfield World Trade, Inc.	Class A-2 Warrant, expires 03/25/27		(564	)
Columbia Helicopters Inc.	Last Out Term Loan		675
UniTek Acquisition, Inc.	Delayed Draw Term Loan		800		*
Grand Circle Corporation	Term Loan		987
Red Lobster Management, LLC	Term Loan		3,817
Mondee Holdings Inc.	Common Stock		4,132		**
All others	Various		(1,992	)
Net change in unrealized appreciation/(depreciation)		$	(42,677	)

*Includes reversal of previously recognized unrealized (depreciation)/appreciation. Recognized during the six months ended June 30, 2023 as realized gains/(losses) and/or accelerated original issue discount.

**Our investment in Mondee Holdings, Inc. preferred stock converted into an investment in Mondee Holdings, Inc. common stock during the six months ended June 30, 2023. Additionally, a portion of the common stock was sold during the six months ended June 30, 2023 and the unrealized (depreciation)/appreciation on the common stock sold was recognized as a realized gain during the six months ended June 30, 2023.

Net realized gain on short-term investments

During the three months ended June 30, 2024 and 2023 we incurred $0.3 million and $0, respectively, in realized gains from our short-term investments in government treasuries.

During the six months ended June 30, 2024 and 2023 we incurred $0.5 million and $0, respectively, in realized gains from our short-term investments in government treasuries.

Net increase in Members’ Capital from operations

Our Net increase in Members’ Capital from operations during the three months ended June 30, 2024 and 2023 was $12.5 million and $4.2 million, respectively. The relative increase in Net increase in Members’ Capital from operations during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to higher net investment income, as described above, which was partially offset by net realized and unrealized losses during the current quarter of $45.2 million, compared to net realized and unrealized losses of $20.0 million during the three months ended June 30, 2023.

Our Net increase in Members’ Capital from operations during the six months ended June 30, 2024 and 2023 was $24.5 million and $12.5 million, respectively. The relative increase in Net increase in Members’ Capital from operations during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due higher net investment income, as described

above, which was partially offset by net realized and unrealized losses during the current period of $60.4 million, compared to net realized and unrealized losses of of $39.9 million during the six months ended June 30, 2023.

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, 2024, 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, 2024
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 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.

On January 10, 2023, we entered into a Sixth Amendment to the Revolving Credit Agreement with Natixis (the "Sixth Amended Revolving Credit Agreement"). The Sixth Amended Revolving Credit Agreement replaces the Eurocurrency Rate with a Daily Simple SOFR Rate, Term SOFR Rate and Adjusted Term SOFR Rate (each as defined in the Sixth Amended Revolving Credit Agreement) for purposes of calculating interest on the loan. Each Term SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted Term SOFR Rate for such Interest Period plus the interest rate spread or "Applicable Margin." Each Daily SOFR Loan will bear interest on the outstanding principal amount thereof at a rate per annum equal to Daily Simple SOFR plus the Applicable Margin. The Term SOFR Loan and Daily SOFR Loan have an Applicable Margin of 1.75%.

On May 9, 2023, we entered into the Seventh Amendment to the Revolving Credit Agreement with Natixis (the "Seventh Amended Revolving Credit Agreement"). The Seventh Amended Revolving Credit Agreement (1) removed the Adjusted Term SOFR Rate for purposes of calculating interest on the loan but kept the Daily Simple SOFR and Term SOFR rates as is; (2) updated the Applicable Margin from 0.75% to 1.15% for Base Rate Loans and from 1.75% to 2.15% for all other loan types; (3) added a minimum usage fee whereby the Company is charged 2.15% on undrawn amounts that are less than 50% of the Maximum Commitment; (4) modified the unused fees such that if usage is between 0% and 30%, the Company is charged 0.75%, 0.55% if usage is between 30% and 50%, and 0.40% if usage is greater than 50%; and (5) extended the maturity date of the Natixis Revolving Credit Facility 364 days to May 9, 2024.

On May 9, 2024, we entered into the Eighth Amendment to the Revolving Credit Agreement with Natixis (the “Eighth Amended Revolving Credit Agreement”). The Eighth Amended Revolving Credit Agreement: (1) updated the Applicable Margin from 1.15% to 1.50% for Base Rate Loans and from 2.15% to 2.50% for all other loan types; (2) extended the Stated Maturity Date (previously defined as May 9, 2024) of the Natixis Revolving Credit Facility 183 days to November 8, 2024; (3) updated the definition of Maturity Date to be the earlier of the Stated Maturity Date or 45 days after a Maturity Event which is defined as one or more of the following occurring: (a) Special Member (NLGI US Private Debt Fund I) elects to "opt-out" and have its membership interest redeemed during the next scheduled redemption date; (b) Rated Included Investors (as defined in the Natixis Credit Agreement) representing 8% or more of Unfunded Commitments elect to "opt-out"and have their membership interest redeemed during the next scheduled redemption date; or (c) Included Investors (as defined in the Natixis Credit Agreement) representing 8% or more of Unfunded Commitments elect to "opt-out"and have their membership interest redeemed during the next scheduled redemption date; and (4) allowed us to extend the Stated Maturity Date up to 3 months after the then effective Stated Maturity Date no more than 2 times.

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, 2024, we were in compliance with such covenants.


Natixis Revolving Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2024	$	250,000	$	63,000	$	187,000
As of December 31, 2023	$	250,000	$	—	$	250,000

(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 November 15, 2021, the Second Amended PNC Maximum Commitment was decreased from $825.0 million to $700.0 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.

On October 27, 2022, the Borrower amended and restated the Amended PNC Credit Agreement (as further amended the “Third Amended PNC Credit Agreement”). The Third Amended PNC Credit Agreement, among other things, removed reference to LIBOR rates and the related definitions and added reference to SOFR rates and the related definitions in which the Borrower may now elect a fluctuating rate of interest that is based on SOFR rather than LIBOR. 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) SOFR rate plus the sum of the facility margin of 2.3% and SOFR adjustment per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum.

On December 6, 2023, the Borrower entered into Amendment No. 1 to the Third Amended and Restated Credit and Security Agreement with PNC (“Amendment No.1 to Third Amended PNC Credit Agreement”). The Amendment No.1 to Third Amended PNC Credit Agreement (1) updated the Facility Margin Level from 2.30% to 2.75% and removed the SOFR adjustment from the calculation of interest on borrowings; (2) extended the Final Maturity Date 366 days from January 29, 2024 to January 29, 2025; (3) changed the total commitments under the PNC Term Loan to $265.0 million (the total outstanding balance as of the date of the amendment).

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.

As of June 30, 2024 and December 31, 2023 the PNC Borrowing Base assets were more 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, 2024 and December 31, 2023 (dollar amounts in thousands):


PNC Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount(1)
As of June 30, 2024	$	160,000	$	160,000	N/A
As of December 31, 2023	$	265,000	$	265,000	N/A

(1)

No available amount as of June 30, 2024 and December 31, 2023 as the Borrower's ability to make additional borrowings under the PNC Revolving Credit Facility expired on January 31, 2022.

Borrowings under the PNC Credit Facility as of June 30, 2024 and December 31, 2023 of $160.0 million and $265.0 million, respectively, consisted entirely of Term Loan borrowings.

Costs associated with the Revolving Credit Facilities are recorded as deferred financing costs on our Consolidated Statements of Assets and Liabilities and the costs are being amortized over the respective lives of the Natixis Revolving Credit Facility and PNC Revolving Credit Facility. 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, 2024 and December 31, 2023, $0.4 million and $0.3 million, respectively, of deferred financing costs from the Revolving Credit Facilities had yet to be amortized. As of June 30, 2024 and December 31, 2023, $0.4 million and $0.8 million, respectively, of deferred financing costs from the PNC Term Loan have yet to be amortized.

The summary information regarding the Credit Facilities for the three and six months ended June 30, 2024 and 2023 was as follows (dollar amounts in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Credit Facilities interest expense	$	4,620		$	5,620		$	9,292		$	11,175
Unused commitment fees		963			739			2,108			895
Administrative fees		50			50			100			100
Amortization of deferred financing costs		423			589			930			1,105
Total	$	6,056		$	6,998		$	12,430		$	13,275
Weighted average interest rate		8.04	%		7.50	%		8.04	%		7.26	%
Average outstanding balance	$	227,363		$	296,593		$	228,516		$	306,260

We had the following unfunded commitments and unrealized depreciation by investment as of June 30, 2024 and December 31, 2023 (dollar amounts in thousands):


		June 30, 2024				December 31, 2023
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
AGY Holdings Corp.	June 2025	$	2,067	$	189	$	2,067	$	182
Bendon Inc.	December 2025		5,811		105		7,263		116
Centric Brands Inc.	October 2024		—				5,295		—
Encompass Digital Media, Inc.	September 2025		508		269		508		174
Greenfield World Trade, Inc.	September 2024		62		5		4,685		136
Karman Holdings LLC	December 2025		164		—		—		—
Rapid Displays, Inc.	April 2026		983		304		1,377		138
Red Lobster Management, LLC	September 2024		4,278		—		—		—
Twin Star International, Inc.	September 2024		—		—		2,023		—
Slogic Holding Corp.	April 2025		775		—		—		—
WDE TorcSill Holdings LLC	October 2024		8		—		8		—
Total		$	14,656	$	872	$	23,226	$	746

We may, from time to time, enter into repurchase agreements with Barclays Bank PLC (“Barclays”), whereby the we sell to Barclays our short-term investments and concurrently enter into an agreement to repurchase the same investments at an agreed-upon price at a future date, generally within 30-days (each, a “Repurchase Transaction”).

These Repurchase Transactions meet the criteria for secured borrowings. Accordingly, the short-term investments remain on our Consolidated Statements of Assets and Liabilities as an asset, and we record a liability to reflect our repurchase obligation to Barclays (the “Repurchase Obligation”). The Repurchase Obligation is secured by the short-term investments that are the subject of the repurchase agreement.

During the six months ended June 30, 2024, we entered into Repurchase Transactions with Barclays on January 2, 2024 and April 1, 2024 which settled on January 25, 2024 and April 25, 2024, respectively. During the six months ended June 30, 2023, we did not enter into any Repurchase Transactions.

We had no outstanding Repurchase Obligations as of June 30, 2024 and December 31, 2023. Interest expense incurred under these Repurchase Transactions was $0.3 million and $0 for the three months ended June 30, 2024 and 2023, respectively. Interest expense incurred under these Repurchase Transactions was $0.6 million and $0 for the six months ended June 30, 2024 and 2023, respectively.

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, 2024, 100% of our debt investments bore interest based on floating rates, such as SOFR. The interest rates on such investments generally reset by reference to the current market index after one to three months. As of June 30, 2024, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 0.0%. 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, 2024 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 (Loss)
Up 300 basis points	$	29,292		$	4,869		$	24,423
Up 200 basis points		19,528			3,246			16,282
Up 100 basis points		9,764			1,623			8,141
Down 100 basis points		(9,764	)		(1,623	)		(8,141	)
Down 200 basis points		(19,528	)		(3,246	)		(16,282	)
Down 300 basis points		(28,682	)		(4,869	)		(23,814	)

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 amended Annual Report on Form 10-K, which filed with the SEC on April 29, 2024.

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)

10.10	Sixth Amendment to Revolving Credit Agreement, dated as of January 10, 2023, among TCW Direct Lending VII LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and Committed Lender (incorporated by reference to Exhibit 10.10 to the Quarterly Report on Form 10-Q filed on May 10, 2023).

10.11	Seventh Amendment to Revolving Credit Agreement, dated as of May 9, 2023, among TCW Direct Lending VII LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and Committed Lender (incorporated by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q filed on August 9, 2023).
10.12	Amendment No. 1 to Third Amended and Restated Credit and Security Agreement, dated as of December 6, 2023 among TCW DL VII Financing LLC, as borrower, PNC Bank, National Association, as facility agent, and Alter Domus (US) LLC, as collateral agent (incorporated by reference to Exhibit 10.12 the the Annual Report on Form 10-K filed on April 1, 2024).


10.13*	Eighth Amendment to Revolving Credit Agreement, dated as of May 9, 2024, among TCW Direct Lending VII LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and the Lenders.

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)

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* 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 12, 2024	TCW DIRECT LENDING VII LLC
	By:	/s/ Richard T. Miller
		Richard T. Miller
		President



Date: August 12, 2024
	By:	/s/ Andrew J. Kim
		Andrew J. Kim
		Chief Financial Officer

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. junior Avg

TCW Direct Lending VII 10-Q2024 Q2 Quarterly report

Content analysis