TCW Direct Lending VII 10Q 2021 Q1 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 March 31, 2021

☐	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

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 March 31, 2021, there was no established public market for the Registrant’s common units. The number of the Registrant’s common units outstanding at May 10, 2021 was 13,734,010.

TCW DIRECT LENDING VII LLC

FORM 10-Q FOR THE QUARTER ENDED March 31, 2021

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Schedule of Investments as of March 31, 2021 (unaudited) and December 31, 2020		2
	Consolidated Statements of Assets and Liabilities as of March 31, 2021 (unaudited) and December 31, 2020		15
	Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)		16
	Consolidated Statements of Changes in Members’ Capital for the three months ended March 31, 2021 and 2020 (unaudited)		17
	Consolidated Statement of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)		18
	Notes to Consolidated Financial Statements (unaudited)		19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		51
Item 4.	Controls and Procedures		51
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		52
Item 1A.	Risk Factors		52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 3.	Defaults Upon Senior Securities		52
Item 4.	Mine Safety Disclosures		52
Item 5.	Other Information		52
Item 6.	Exhibits		53
SIGNATURES			54

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited)

As of March 31, 2021


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Debt ⁽¹⁾
Aerospace & Defense
				Revolver
	Cassavant Holdings, LLC		01/02/20	9.50% (LIBOR + 8.00%, 1.50% Floor)		0.2%	$	1,567,896		01/02/25	$	1,567,896	$	1,492,637
				Term Loan
	Cassavant Holdings, LLC		01/02/20	9.50% (LIBOR + 8.00%, 1.50% Floor)		1.4%		14,103,093		01/02/25		13,924,464		13,426,144
				Last Out Term Loan
	Columbia Helicopters Inc.		08/20/19	9.00% (LIBOR + 7.50%, 1.50% Floor)		3.5%		33,706,398		08/20/24		33,241,054		33,470,453
				Term Loan
	Heligear Acquisition Co.		07/30/19	8.00% (LIBOR + 6.50%, 1.50% Floor)		6.0%		57,127,154		07/30/24		56,350,557		57,698,425
				Revolver
	Karman Holdings LLC		12/21/20	7.50% (LIBOR + 6.50%, 1.00% Floor)		0.2%		1,638,716		12/21/25		1,638,716		1,638,716
				Term Loan
	Karman Holdings LLC		12/21/20	7.50% (LIBOR + 6.50%, 1.00% Floor)		6.8%		65,138,957		12/21/25		63,773,953		65,204,096
				Term Loan
	Navistar Defense, LLC		12/31/18	7.75% (LIBOR + 6.25%, 1.50% Floor)		1.8%		17,108,408		12/31/23		16,841,067		17,108,408

						19.9%						187,337,707		190,038,879

Air Freight & Logistics
				Last Out Delayed Draw Term Loan
	Need It Now Delivers, LLC		12/23/19	10.25% (LIBOR + 8.50%, 1.75% Floor)		0.2%		1,460,235		12/23/24		1,460,235		1,442,712
				Last Out Term Loan
	Need It Now Delivers, LLC		12/23/19	10.25% (LIBOR + 8.50%, 1.75% Floor)		1.4%		13,880,748		12/23/24		13,626,367		13,714,179

						1.6%						15,086,602		15,156,891

Auto Components
				Last Out Term Loan
	Shipston Group U.S. Inc.		05/18/20	9.00% inc PIK (LIBOR + 7.75%, 1.25% Floor, 2.00% PIK)		0.2%		1,755,121		09/28/23		1,755,121		1,755,121
				Last Out Term Loan
	Shipston Group U.S. Inc.		09/28/18	9.00% inc PIK (LIBOR + 7.75%, 1.25% Floor, 2.00% PIK)		2.7%		26,263,361		09/28/23		26,056,191		26,263,361

						2.9%						27,811,312		28,018,482

Beverages
				Term Loan
	Caiman Merger Sub LLC		11/01/19	6.25% (LIBOR + 5.25%, 1.00% Floor)		1.5%		14,001,578		11/01/25		13,885,695		14,281,610
				Term Loan
	Westrock Coffee Company, LLC		02/28/20	10.50% inc PIK (LIBOR + 9.00%, 1.50% Floor, 0.75% PIK)		6.9%		65,516,171		02/28/25		64,624,405		65,843,751

						8.4%						78,510,100		80,125,361

Chemicals
				Delayed Draw Term Loan
	AGY Holdings Corp. ⁽²⁾		09/21/20	11.50% inc PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		1.5%		14,324,391		09/21/25		14,324,391		14,324,391
				Term Loan
	AGY Holdings Corp. ⁽²⁾		09/21/20	11.50% inc PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		2.5%		24,007,640		09/21/25		24,007,640		24,007,640
				Term Loan
	GEON Performance Solutions, LLC		10/25/19	7.88% (LIBOR + 6.25%, 1.63% Floor)		2.1%		20,112,821		10/25/24		20,050,821		20,515,078

						6.1%						58,382,852		58,847,109

Commercial Services & Supplies
	Clover Imaging Group, LLC		12/16/19	Term Loan
				9.00% (LIBOR + 7.50%, 1.50% Floor)		1.0%		9,513,632		12/16/24		9,371,895		9,589,741

						1.0%						9,371,895		9,589,741

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2021


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Debt (continued)
Construction & Engineering
				Delayed Draw Term Loan A
	UniTek Acquisition, Inc.		09/16/20	7.50% inc PIK (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.1%	$	1,571,343		08/20/23	$	947,670	$	1,362,355
				Delayed Draw Term Loan B
	UniTek Acquisition, Inc.		08/20/18	8.50% inc PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		0.3%		3,384,865		08/20/24		3,384,865		2,765,435
				Revolver
	UniTek Acquisition, Inc.		11/10/20	6.50% (LIBOR + 5.50%, 1.00% Floor)		0.0%		428,535		08/20/23		428,535		371,540
				Term Loan A
	UniTek Acquisition, Inc.		09/16/20	7.50% inc PIK (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.7%		7,856,716		08/20/23		4,733,111		6,811,773
				Term Loan B
	UniTek Acquisition, Inc.		08/20/18	8.50% inc PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		1.5%		16,925,280		08/20/24		16,695,140		13,827,954

						2.6%						26,189,321		25,139,057

Construction Materials
				Mezzanine Loan
	United Poly Systems Holding, Inc.		12/28/20	13.00% inc PIK (13.00% Fixed Coupon, all PIK)		0.7%		7,296,000		12/31/25		7,296,000		6,354,816

						0.7%						7,296,000		6,354,816

Consumer Durables & Apparel
				Term Loan
	Rocky Brands, Inc. ⁽⁴⁾		03/15/21	8.00% (LIBOR + 7.00%, 1.00% Floor)		6.2%		60,080,185		03/15/26		58,889,768		58,998,742

						6.2%						58,889,768		58,998,742

Consumer Services
				Term Loan
	Grand Circle Corporation		02/26/21	11.75% (LIBOR + 10.50%, 1.25% Floor)		4.2%		40,363,826		02/26/26		39,571,581		39,879,460

						4.2%						39,571,581		39,879,460

Electronic Equipment, Instruments & Components
				Term Loan A
	SMTC Corporation ⁽⁴⁾		11/08/18	10.50% (LIBOR + 8.75%, 1.75% Floor)		2.4%		22,145,697		11/08/23		21,550,218		22,588,611

						2.4%						21,550,218		22,588,611

Energy Equipment & Services
				Term Loan
	Profrac Services, LLC		09/07/18	9.75% (LIBOR + 8.50%, 1.25% Floor)		3.8%		38,214,420		09/07/23		36,751,744		36,800,486
				Revolver
	WDE TorSill Holdings LLC		10/22/19	11.00% inc PIK (LIBOR + 9.50%, 1.50% Floor, 2.75% PIK)		0.3%		3,269,195		10/22/24		3,269,195		3,285,541
				Term Loan
	WDE TorSill Holdings LLC		10/22/19	11.00% inc PIK (LIBOR + 9.50%, 1.50% Floor, 2.75% PIK)		2.8%		26,153,923		10/22/24		25,681,432		26,284,692

						6.9%						65,702,371		66,370,719

Food Products
				Term Loan
	Hometown Food Company		08/31/18	6.25% (LIBOR + 5.00%, 1.25% Floor)		3.0%		29,218,269		08/31/23		28,897,882		29,218,269

						3.0%						28,897,882		29,218,269

Health Care Technology
				Term Loan
	American Academy Holdings, LLC		08/14/19	10.00% inc PIK (LIBOR + 9.00%, 1.00% Floor, 3.75% PIK)		3.3%		31,121,176		06/15/23		30,701,790		31,432,388
				Term Loan
	PatientPoint Health Technologies, LLC		03/30/21	8.00% (LIBOR + 7.00%, 1.00% Floor)		1.7%		16,800,000		03/07/25		16,338,643		16,346,400

						5.0%						47,040,433		47,778,788

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2021


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost			Fair Value
	Debt (continued)
Hotels, Restaurants & Leisure
				Revolver
	FM Restaurants Holdco, LLC		11/25/19	9.75% (LIBOR + 8.00%, 1.75% Floor)		0.3%	$	2,413,636		11/22/24	$	2,413,636		$	2,367,777
				Term Loan
	FM Restaurants Holdco, LLC		11/25/19	9.75% (LIBOR + 8.00%, 1.75% Floor)		2.2%		21,451,193		11/22/24		21,062,593			21,043,621
				Delayed Draw Term Loan
	KBP Investments, LLC ⁽⁵⁾		09/18/20	6.00% (LIBOR + 5.00%, 1.00% Floor)		0.0%		-		05/14/23		(167,477	)		(167,477	)
				Term Loan
	Red Lobster Management, LLC		01/22/21	9.00% (LIBOR + 8.00%, 1.00% Floor)		6.0%		58,682,018		01/22/26		57,552,727			57,743,106

						8.5%						80,861,479			80,987,027

Household & Personal Products
				Revolver
	Obagi Cosmeceuticals LLC		03/16/21	8.50% (LIBOR + 7.50%, 1.00% Floor)		0.9%		9,046,400		03/16/26		9,046,400			8,910,704
				Term Loan
	Obagi Cosmeceuticals LLC		03/16/21	8.50% (LIBOR + 7.50%, 1.00% Floor)		5.1%		49,755,200		03/16/26		48,398,241			49,008,872

						6.0%						57,444,641			57,919,576

Household Durables
				Last Out Term Loan
	Hunter Fan Company		11/05/19	7.63% (LIBOR + 6.63%, 1.00% Floor)		3.6%		34,152,423		12/20/23		34,118,489			34,152,423
				Last Out Term Loan
	Slogic Holding Corp. ⁽⁶⁾		06/29/18	6.87% (LIBOR + 5.87%, 1.00% Floor)		2.8%		27,109,977		06/22/23		26,989,034			27,109,977

						6.4%						61,107,523			61,262,400

Household Products
				Last Out Term Loan
	Greenfield World Trade, Inc.		03/04/19	14.83% inc PIK (LIBOR + 13.33%, 1.50% Floor, 6.00% PIK)		4.5%		44,663,099		03/04/24		43,351,148			43,233,880

						4.5%						43,351,148			43,233,880

Information Technology Services
				Delayed Draw Term Loan
	Corcentric, Inc.		11/15/18	9.00% (LIBOR + 7.50%, 1.50% Floor)		1.3%		12,598,360		11/15/23		12,598,360			12,724,344
				Term Loan
	Corcentric, Inc.		11/15/18	9.00% (LIBOR + 7.50%, 1.50% Floor)		3.4%		32,023,580		11/15/23		31,597,378			32,343,816

						4.7%						44,195,738			45,068,160

Internet & Direct Marketing Retail
				First Out Term Loan
	Altern Marketing LLC		09/30/20	8.00% (LIBOR + 6.00%, 2.00% Floor)		1.6%		14,895,526		10/07/24		14,624,103			15,014,691

						1.6%						14,624,103			15,014,691

Media
				Term Loan
	Encompass Digital Media, Inc.		10/01/18	8.75% inc PIK (LIBOR + 7.50%, 1.25% Floor, 1.13% PIK)		3.1%		29,911,802		09/28/23		29,714,908			29,911,802
				Revolver
	Winsight, LLC		11/15/18	8.00% (LIBOR + 7.00%, 1.00% Floor)		0.2%		1,529,553		11/15/23		1,529,553			1,399,541
				Term Loan
	Winsight, LLC		11/15/18	8.00% (LIBOR + 7.00%, 1.00% Floor)		2.5%		26,263,333		11/15/23		25,900,765			24,030,950

						5.8%						57,145,226			55,342,293

Metals & Mining
				Term Loan
	DBM Global, Inc.		11/30/18	8.25% (LIBOR + 6.50%, 1.75% Floor)		4.6%		44,762,501		11/30/23		44,285,728			44,001,538

						4.6%						44,285,728			44,001,538

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2021


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Debt (continued)
Multiline Retail
				Term Loan
	Torrid LLC		06/14/19	7.75% (LIBOR + 6.75%, 1.00% Floor)		3.0%	$	28,817,277		12/16/24	$	28,380,614	$	29,105,450

						3.0%						28,380,614		29,105,450

Packaging
				Term Loan
	Hoover Group, Inc.		10/01/20	9.75% (LIBOR + 8.50%, 1.25% Floor)		3.2%		30,428,950		10/01/24		29,896,183		30,581,095

						3.2%						29,896,183		30,581,095

Personal Products
				Term Loan
	Voyant Beauty Holdings, Inc.		08/20/20	9.50% (LIBOR + 8.00%, 1.50% Floor)		6.2%		58,256,982		08/20/25		56,971,257		59,422,122

						6.2%						56,971,257		59,422,122

Publishing
				Term Loan
	Bendon Inc.		12/11/20	7.50% (LIBOR + 6.50%, 1.00% Floor)		5.5%		52,930,337		12/11/25		51,800,733		52,453,964

						5.5%						51,800,733		52,453,964

Software
				Term Loan
	Mondee Holdings LLC		12/20/19	12.25% inc PIK (LIBOR + 10.50%, 1.75% Floor, all PIK)		7.7%		86,180,362		12/23/24		84,066,101		73,598,029
				Term Loan
	Quicken Parent Corp.		12/21/20	9.25% (LIBOR + 8.25%, 1.00% Floor)		1.8%		17,469,816		04/01/23		17,268,933		17,469,816

						9.5%						101,335,034		91,067,845

Textiles, Apparel & Luxury Goods
				Revolver
	Centric Brands Inc. ⁽⁴⁾		10/09/20	6.50% (LIBOR + 5.50%, 1.00% Floor)		0.2%		2,236,562		10/09/24		2,236,562		2,236,562
				Term Loan
	Centric Brands Inc. ⁽⁴⁾		10/09/20	10.00% inc PIK (LIBOR + 9.00%, 1.00% Floor, all PIK)		3.5%		36,016,859		10/09/25		32,491,985		33,099,494
				Term Loan
	Keeco Holdings, LLC		09/19/18	10.00% inc PIK (LIBOR + 8.25%, 1.75% Floor, 0.50% PIK)		6.0%		57,562,955		03/15/24		56,914,002		57,044,888

						9.7%						91,642,549		92,380,944


	Total Debt Investments					150.1%						1,434,679,998		1,435,945,910


Equity							Shares				Amortized Cost		Fair Value

Chemicals
	AGY Equity LLC ^{(2) (3) (7)}			Class A Preferred Units		0.0%		7,752,414				-		-
	AGY Equity LLC ^{(2) (3) (7)}			Class B Preferred Units		0.0%		10,078,138				-		-
	AGY Equity LLC ^{(2) (3) (7)}			Class C Common Units		0.0%		11,241,000				-		-

						0.0%						-		-

Construction Materials
	United Poly Systems Holding, Inc. ^{(3) (7)}			Common Stock		0.0%		7,550				755,000		-

						0.0%						755,000		-

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2021


Industry	Issuer	Acquisition Date	Investment	% of Net Assets	Shares		Amortized Cost		Fair Value
	Equity (continued)
Electronic Equipment, Instruments & Components
	SMTC Corporation ^{(3) (4)}		Common Stock	0.0%		48,036	$	150,833	$	288,216
	SMTC Corporation ^{(3) (4)}		Warrant, expires 11/08/25	0.3%		484,326		1,938,457		2,905,956

				0.3%				2,089,290		3,194,172

Household Durables
	Shelterlogic Group Holdings, Inc ^{(3) (6) (7)}		Common Stock	1.5%		1,240,731		-		13,846,558

				1.5%				-		13,846,558

Household Products
	Greenfield World Trade, Inc. ^{(3) (7)}		Warrant, expires 03/25/27	0.6%		7,403		1,463,118		5,250,745

				0.6%				1,463,118		5,250,745

Software
	Mondee Holdings LLC ^{(3) (7)}		Class G Preferred Stock	0.1%		1,226,708		1,226,708		1,226,708

				0.1%				1,226,708		1,226,708

Textiles, Apparel & Luxury Goods
	Centric Brands GP LLC ^{(3) (4) (7)}		Membership Interests	0.0%		159,658		-		-
	Centric Brands L.P. ^{(3) (4) (7)}		Class A LP Interests	0.0%		159,658		-		-

				0.0%				-		-

	Total Equity Investments			2.5%				5,534,116		23,518,183

	Total Debt & Equity Investments ⁽⁸⁾			152.6%				1,440,214,114		1,459,464,093

	Cash Equivalents
	Fixed Income Clearing Corporation Repo, Yield 0.00%			11.3%		-		108,040,586		108,040,586

	Total Cash Equivalents			11.3%		-		108,040,586		108,040,586

	Total Investments (163.9%)						$	1,548,254,700	$	1,567,504,679

	Net unrealized depreciation on unfunded commitments (0.1%)									(578,797	)

	Liabilities in Excess of Other Assets (-63.8%)									(610,422,832	)

	Net Assets (100.0%)								$	956,503,050

⁽¹⁾	Certain debt investments are subject to contractual restrictions on resale, such as approval of the agent or borrower.

⁽²⁾

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


Name of Investment	Fair Value at 12/31/2020		Gross Addition ^(a)		Gross Reduction ^(b)		Realized Gains (Losses)		Net Change in Unrealized Appreciation/ Depreciation		Fair Value at March 31, 2021		Interest/Dividend/Other income
AGY Holdings Corp. Opco Term Loan - 11.50% inc. PIK	$	3,391,067	$	10,933,324	$	-	$	-	$	-		14,324,391		244,932
AGY Holdings Corp. PIK Holdco Term Loan - 11.50% inc. PIK		23,651,102		356,538		-		-		-		24,007,640		683,421
AGY Holdings Corp. Class A Preferred units		-		-		-		-		-		-		-
AGY Holdings Corp. Class B Preferred units		-		-		-		-		-		-		-
AGY Holdings Corp. Class C Common units		-		-		-		-		-		-		-

Total Controlled Affiliated investments	$	27,042,169	$	11,289,862	$	-	$	-	$	-	$	38,332,031	$	928,353

^(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.

TCW Direct Lending VII LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of March 31, 2021

⁽³⁾	Non-income producing.

⁽⁴⁾

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of March 31, 2021, $120,117,581 or 7.3% of the Company’s total assets were represented by “non-qualifying assets.”

⁽⁵⁾	Negative balance relates to an unfunded commitment that was acquired at a discount.

⁽⁶⁾

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


Name of Investment	Fair Value at 12/31/2020		Gross Addition ^(a)		Gross Reduction ^(b)			Realized Gains (Losses)		Net Change in Unrealized Appreciation/ Depreciation			Fair Value at March 31, 2021		Interest/ Dividend/Other income
Shelterlogic Group Holdings, Inc. Common Stock	$	9,578,443	$	-	$	-		$	-	$	4,268,115		$	13,846,558		-
Slogic Holding Corp. Last Out Term Loan - 6.87%		27,252,661		14,112		(142,684	)		-		(14,112	)		27,109,977		507,414

Total Non-Controlled Affiliated Investments	$	36,831,104	$	14,112	$	(142,684	)	$	-	$	4,254,003		$	40,956,535	$	507,414

^(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.

⁽⁷⁾

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 March 31, 2021, the aggregate fair value of these securities was $20,324,011, or 1.2% of the Company’s total assets.

⁽⁸⁾

The fair value of the SMTC Corporation common stock is based on the quoted market price of the issuer’s common stock as of March 31, 2021. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of the SMTC Corporation warrant is based on the quoted market price of the issuer’s stock as of March 31, 2021. Such warrants are considered to be Level 2 securities within the Fair Value Hierarchy. Otherwise, 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.”

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

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $318,050,464 and $282,112,653, respectively, for the period ended March 31, 2021. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Geographic Breakdown of Portfolio
United States	100	%

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments

As of December 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Debt(1)
Aerospace & Defense
	Cassavant Holdings, LLC		01/02/20	Revolver - 9.50% (LIBOR + 8.00%, 1.50% Floor)		0.2%	$	1,567,896		01/02/25	$	1,567,896	$	1,484,797
	Cassavant Holdings, LLC		01/02/20	Term Loan - 9.50% (LIBOR + 8.00%, 1.50% Floor)		1.6%		14,150,260		01/02/25		13,959,277		13,400,297

						1.8%		15,718,156				15,527,173		14,885,094

	Columbia Helicopters, Inc.		08/20/19	Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		4.2%		34,711,398		08/20/24		34,197,313		35,058,512
	Heligear Acquisition Co.		07/30/19	Term Loan - 8.50% (LIBOR + 7.00%, 1.50% Floor)		7.0%		57,878,827		07/30/24		57,033,777		58,168,221
	Navistar Defense, LLC		12/31/18	Term Loan B - 7.75% (LIBOR + 6.25%, 1.50% Floor)		2.1%		17,152,164		12/31/23		16,860,065		17,152,164
	Spaceco Holdings LLC		12/21/20	Revolver - 7.50% (LIBOR + 6.50%, 1.00% Floor)		0.4%		3,121,364		12/21/25		3,121,364		3,080,786
	Spaceco Holdings LLC		12/21/20	Term Loan - 7.50% (LIBOR + 6.50%, 1.00% Floor)		14.8%		124,854,545		12/21/25		122,107,745		123,231,436

						15.2%		127,975,909				125,229,109		126,312,222

	Sparton Corporation		03/04/19	First Lien Term Loan - 8.75% (LIBOR + 7.25%, 1.50% Floor)		1.6%		13,227,692		03/04/24		13,027,145		13,439,335

						31.9%		266,664,146				261,874,582		265,015,548

Air Freight & Logistics
	Need It Now Delivers, LLC		12/23/19	Delayed Draw Term Loan - 10.25% (LIBOR + 8.50%, 1.75% Floor)		0.2%		1,479,333		12/23/24		1,479,332		1,429,036
	Need It Now Delivers, LLC		12/23/19	Last Out Term Loan - 10.25% (LIBOR + 8.50% , 1.75% Floor)		1.6%		14,063,389		12/23/24		13,788,631		13,585,234

						1.8%		15,542,722				15,267,963		15,014,270

Auto Components
	Shipston Group U.S. Inc.		05/18/20	Term Loan C - 9.00% inc. PIK (LIBOR + 7.75%, 1.25% Floor, 2.00% PIK)		0.2%		1,746,375		09/28/23		1,746,375		1,706,208
	Shipston Group U.S. Inc.		09/28/18	Term Loan - 9.00% inc. PIK (LIBOR + 7.75%, 1.25% Floor, 2.00% PIK)		3.1%		26,302,661		09/28/23		26,073,224		25,697,700

						3.3%		28,049,036				27,819,599		27,403,908

Beverages
	Caiman Merger Sub LLC		11/01/19	Term Loan - 6.75% (LIBOR + 5.75%, 1.00% Floor)		1.7%		14,037,026		11/01/25		13,914,606		14,177,396
	Westrock Coffee Company, LLC		02/28/20	Term Loan - 8.75% inc. PIK (LIBOR + 7.25%, 1.50% Floor, 1.00% PIK)		7.9%		65,531,880		02/28/25		64,581,557		65,204,221

						9.6%		79,568,906				78,496,163		79,381,617

Chemicals
	AGY Holdings Corp.(2)		09/21/20	Opco Term Loan - 11.50% inc. PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		0.4%		3,391,067		09/21/25		3,391,067		3,391,067
	AGY Holdings Corp.(2)		09/21/20	PIK Holdco Term Loan - 11.50% inc. PIK (LIBOR + 10.00%, 1.50% Floor, 6.00% PIK)		2.8%		23,651,102		09/21/25		23,651,102		23,651,102

						3.2%		27,042,169				27,042,169		27,042,169

	GEON Performance Solutions, LLC		10/25/19	Term Loan - 7.88% (LIBOR + 6.25%, 1.63% Floor)		2.5%		20,163,740		10/25/24		20,097,289		20,365,377
	Verdesian Life Sciences, LLC		07/22/19	2019 Term Loan - 9.50% (LIBOR + 7.75%, 1.75% Floor)		6.2%		50,708,730		06/27/24		49,985,774		51,672,196

						11.9%		97,914,639				97,125,232		99,079,742

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
Commercial Services & Supplies
	Clover Imaging Group, LLC		12/16/19	Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		1.3	%	$	10,774,250		12/16/24	$	10,603,070	$	10,688,056
	Production Resource Group, LLC		08/21/18	2020 Last Out Term Loan A - 9.75% inc. PIK (LIBOR + 9.50%, 0.25% Floor, 9.75% PIK)		1.1	%		9,394,554		08/21/24		9,394,554		9,394,554
	Production Resource Group, LLC		08/01/20	Bridge Delayed Draw Term Loan - 8.50% inc. PIK (LIBOR + 7.50%, 1.00% Floor, 2.50% PIK)		0.3	%		2,305,426		08/21/24		2,305,426		2,305,426

						1.4	%		11,699,980				11,699,980		11,699,980

						2.7	%		22,474,230				22,303,050		22,388,036

Construction & Engineering
	UniTek Acquisition, Inc.		09/16/20	Delayed Draw Term Loan - 7.50% (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.2	%		1,564,318		08/20/23		940,645		1,321,849
	UniTek Acquisition, Inc.		09/16/20	Term Loan A - 7.50% (LIBOR + 6.50%, 1.00% Floor, 2.00% PIK)		0.8	%		7,821,592		08/20/23		4,697,446		6,609,245

						1.0	%		9,385,910				5,638,091		7,931,094

	UniTek Acquisition, Inc.		11/10/20	Revolver - 6.50% (LIBOR + 5.50%, 1.00% Floor)		0.0	%		16,070		08/20/23		16,070		13,579
	UniTek Acquisition, Inc.		08/20/18	Delayed Draw Term Loan B - 8.50% inc. PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		0.3	%		3,369,896		08/20/24		3,369,896		2,719,506
	UniTek Acquisition, Inc.		08/20/18	Term Loan B - 8.50% inc. PIK (LIBOR + 7.50%, 1.00% Floor, 2.00% PIK)		1.6	%		16,850,431		08/20/24		16,603,547		13,598,298

						1.9	%		20,220,327				19,973,443		16,317,804

						2.9	%		29,622,307				25,627,604		24,262,477

Construction Materials
	United Poly Systems Holding, Inc.		12/28/20	Mezzanine Loan - 13.00% inc. PIK (13.00%, 13.00% PIK)		0.8	%		7,296,000		12/31/25		7,296,000		6,661,248

						0.8	%		7,296,000				7,296,000		6,661,248

Electronic Equipment, Instruments & Components
	SMTC Corporation(4)		11/08/18	Term Loan A - 10.50% (LIBOR + 8.75%, 1.75% Floor)		2.7	%		22,524,256		11/08/23		21,861,279		22,749,499

						2.7	%		22,524,256				21,861,279		22,749,499

Energy Equipment & Services
	Profrac Services, LLC		09/07/18	Term Loan B - 8.75% (LIBOR + 7.50%, 1.25% Floor)		4.4	%		39,213,639		09/07/23		37,592,108		36,821,607
	PSS Industrial Group Corp.		04/12/19	Term Loan - 9.50% (LIBOR + 8.00%, 1.50% Floor)		1.7	%		17,608,820		04/10/25		17,295,238		13,910,968
	WDE TorcSill Holdings LLC		10/22/19	Revolver - 9.00% inc. PIK (LIBOR + 7.50%, 1.50% Floor, 0.75% PIK)		0.4	%		3,048,419		10/22/24		3,048,419		2,953,918
	WDE TorcSill Holdings LLC		10/22/19	Term Loan - 9.00% inc. PIK (LIBOR + 7.50%, 1.50% Floor, 0.75% PIK)		3.3	%		28,160,536		10/22/24		27,611,823		27,287,559

						3.7	%		31,208,955				30,660,242		30,241,477

						9.8	%		88,031,414				85,547,588		80,974,052

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost			Fair Value
Food Products
	Hometown Food Company		08/31/18	Revolver - 6.25% (LIBOR + 5.00%, 1.25% Floor)		0.1	%	$	784,157		08/31/23	$	784,157		$	784,157
	Hometown Food Company		08/31/18	Term Loan - 6.25% (LIBOR + 5.00%, 1.25% Floor)		3.6	%		29,699,654		08/31/23		29,340,758			29,699,654

						3.7	%		30,483,811				30,124,915			30,483,811

Health Care Technology
	American Academy Holdings, LLC		08/14/19	Term Loan - 10.00% inc. PIK (LIBOR + 9.00%, 1.00% Floor, 3.75% PIK)		3.8	%		31,171,832		06/15/23		30,700,084			31,327,691

						3.8	%		31,171,832				30,700,084			31,327,691

Hotels, Restaurants & Leisure
	FM Restaurants Holdco, LLC		11/25/19	Revolver - 9.75% (LIBOR + 8.00%, 1.75% Floor)		0.3	%		2,413,636		11/22/24		2,413,636			2,343,641
	FM Restaurants Holdco, LLC		11/25/19	Term Loan - 9.75% (LIBOR + 8.00%, 1.75% Floor)		2.5	%		21,505,500		11/22/24		21,089,573			20,881,840
	KBP Investments, LLC(5)			Delayed Draw Term Loan		0.0	%		—		05/14/23		(176,718	)		(176,718	)

						2.8	%		23,919,136				23,326,491			23,048,763

Household Durables
	Hunter Fan Company		11/05/19	Additional Term Loan - 7.63% (LIBOR + 6.63%, 1.00% Floor)		4.1	%		34,346,515		12/20/23		34,151,512			34,346,515
	SLogic Holding Corp.(6)		06/29/18	2018 Term Loan B - 6.87% (LIBOR + 5.87%, 1.00% Floor)		3.3	%		27,252,661		06/22/23		27,117,606			27,252,661

						7.4	%		61,599,176				61,269,118			61,599,176

Household Products
	Greenfield World Trade, Inc.		03/04/19	Last Out Term Loan - 14.83% inc. PIK (LIBOR + 13.33%, 1.50% Floor, 6.00% PIK)		4.9	%		44,286,796		03/04/24		42,854,852			41,053,860

						4.9	%		44,286,796				42,854,852			41,053,860

Information Technology Services
	Corcentric, Inc.		11/15/18	Delayed Draw Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		1.5	%		12,664,320		11/15/23		12,664,320			12,638,992
	Corcentric, Inc.		11/15/18	Term Loan - 9.00% (LIBOR + 7.50%, 1.50% Floor)		3.9	%		32,188,480		11/15/23		31,719,873			32,124,103

						5.4	%		44,852,800				44,384,193			44,763,095

	Global Holdings, LLC		09/17/19	Term Loan - 7.00% (LIBOR + 6.00%, 1.00% Floor)		3.4	%		28,159,064		09/17/23		27,873,511			28,299,859

						8.8	%		73,011,864				72,257,704			73,062,954

Internet & Direct Marketing Retail
	Altern Marketing LLC		09/30/20	Revolver - 8.25% (PRIME + 5.00%, 3.25% Floor)		0.4	%		2,744,187		10/07/24		2,744,187			2,744,187
	Altern Marketing LLC		09/30/20	Term Loan A - 8.00% (LIBOR + 6.00%, 2.00% Floor)		1.9	%		15,893,813		10/07/24		15,593,510			15,957,388

						2.3	%		18,638,000				18,337,697			18,701,575

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date	Amortized Cost		Fair Value
Media
	Encompass Digital Media, Inc.		10/01/18	First Lien Term Loan - 8.75% inc. PIK (LIBOR + 7.50%, 1.25% Floor, 1.13% PIK)		3.5	%	$	29,917,841	09/28/23	$	29,700,804	$	29,409,237
	Encompass Digital Media, Inc.		10/01/18	Revolver - 8.75% (LIBOR + 7.50%, 1.25% Floor)		0.1	%		866,591	09/28/23		866,591		851,859

						3.6	%		30,784,432			30,567,395		30,261,096

	Winsight, LLC		11/15/18	Revolver - 8.00% (LIBOR + 7.00%, 1.00% Floor)		0.2	%		1,529,553	11/15/23		1,529,553		1,341,419
	Winsight, LLC		11/15/18	Term Loan - 8.00% (LIBOR + 7.00%, 1.00% Floor)		2.8	%		26,330,387	11/15/23		25,932,621		23,091,749

						3.0	%		27,859,940			27,462,174		24,433,168

						6.6	%		58,644,372			58,029,569		54,694,264

Metals & Mining
	DBM Global, Inc.		11/30/18	Term Loan - 7.60% (LIBOR + 5.85%, 1.75% Floor)		5.4	%		45,392,958	11/30/23		44,864,750		44,802,850

						5.4	%		45,392,958			44,864,750		44,802,850

Multiline Retail
	Torrid LLC		06/14/19	Term Loan - 7.75% (LIBOR + 6.75%, 1.00% Floor)		3.6	%		29,261,777	12/16/24		28,788,928		29,554,395

						3.6	%		29,261,777			28,788,928		29,554,395

Packaging
	Hoover Group, Inc.		10/01/20	Term Loan - 9.75% (LIBOR + 8.50%, 1.25% Floor)		4.0	%		33,153,118	10/01/24		32,531,809		33,517,802

						4.0	%		33,153,118			32,531,809		33,517,802

Personal Products
	Voyant Beauty Holdings, Inc.		08/20/20	Term Loan - 9.50% (LIBOR + 8.00%, 1.50% Floor)		7.2	%		58,403,726	08/03/25		57,044,994		59,630,204

						7.2	%		58,403,726			57,044,994		59,630,204

Publishing
	Bendon Inc.		12/11/20	Term Loan - 7.50% (LIBOR + 6.50%, 1.00% Floor)		7.2	%		60,526,400	12/11/25		59,166,965		59,557,977

						7.2	%		60,526,400			59,166,965		59,557,977

Software
	Mondee Holdings LLC		12/20/19	Term Loan - 12.25% inc. PIK (LIBOR + 10.50%, 1.75% Floor, 12.25% PIK)		8.5	%		83,619,514	12/23/24		81,365,545		71,160,207
	Quicken Parent Corp.		12/21/20	First Lien Term Loan - 9.25% (LIBOR + 8.25%, 1.00% Floor)		2.4	%		19,854,972	04/01/23		19,598,514		19,715,987

						10.9	%		103,474,486			100,964,059		90,876,194

Textiles, Apparel & Luxury Goods
	Centric Brands Inc.(4)		10/09/20	Exit Term Loan - 10.00% (LIBOR + 9.00%, 1.00% Floor)		3.9	%		35,100,350	10/09/25		31,383,442		32,678,426
	Centric Brands Inc.(4)		10/09/20	Exit First Out Revolver - 6.50% (LIBOR + 5.50%, 1.00% Floor)		0.2	%		1,775,345	10/09/24		1,775,345		1,775,345
	Keeco Holdings, LLC		09/19/18	Term Loan - 10.00% inc. PIK (LIBOR + 8.25%, 1.75% Floor, 0.50% PIK)		6.8	%		58,243,075	03/15/24		57,531,083		56,379,296

						10.9	%		95,118,770			90,689,870		90,833,067

	Total Debt Investments					166.9	%					1,394,170,865		1,385,674,980

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Investment	% of Net Assets			Shares		Amortized Cost		Fair Value
	Equity
Commercial Services & Supplies
	Production Resource Group, LLC(3),(7)	Class A units		0.2	%		33,738	$	—	$	1,831,299

				0.2	%		33,738		—		1,831,299

Chemicals
	AGY Equity LLC(2),(3),(7)	Class A Preferred units		0.0	%		7,752,414		—		—
	AGY Equity LLC(2),(3),(7)	Class B Preferred units		0.0	%		10,078,138		—		—
	AGY Equity LLC(2),(3),(7)	Class C Common units		0.0	%		11,241,000		—		—

				0.0	%		29,071,552		—		—

Construction Materials
	United Poly System Holding, Inc.(3),(7)	Common Stock		0.0	%		7,550		755,000		—

				0.0	%		7,550		755,000		—

Electronic Equipment, Instruments & Components
	SMTC Corporation(3),(4)	Common Stock		0.0	%		48,036		150,833		238,258
	SMTC Corporation(3),(4)	Warrant, expires 11/08/25		0.3	%		484,326		1,938,457		2,402,257

				0.3	%		532,362		2,089,290		2,640,515

Household Durables
	Shelterlogic Group Holdings, Inc(3),(6),(7)	Common Stock		1.2	%		1,240,731		—		9,578,443

				1.2	%		1,240,731		—		9,578,443

Household Products
	Greenfield World Trade, Inc.(3),(7)	Warrant, expires 03/25/27		0.4	%		7,403		1,463,118		3,306,924

				0.4	%		7,403		1,463,118		3,306,924

Textiles, Apparel & Luxury Goods
	Centric Brands Inc.(3),(4),(7)	Membership Interests		0.0	%		159,658		—		—

				0.0	%		159,658		—		—

Software
	Mondee Holdings LLC(3),(7)	Preferred Stock		0.1	%		1,226,708		1,226,708		1,165,373

				0.1	%		1,226,708		1,226,708		1,165,373

	Total Equity Investments			2.2	%				5,534,116		18,522,554

	Total Debt and Equity Investments(8)			169.1	%			$	1,399,704,981	$	1,404,197,534

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020


Industry	Issuer	Investment	% of Net Assets			Shares		Amortized Cost		Fair Value
	Cash Equivalents
	Blackrock Liquidity Funds, Yield 0.01%			14.9	%		123,627,374	$	123,627,374	$	123,627,374

	Total Investments 184.0%							$	1,523,332,355	$	1,527,824,908

	Net unrealized depreciation on unfunded commitments (0.1%)									$	(944,826	)

	Liabilities in Excess of Other Assets (83.9%)									$	(696,483,208	)

	Net Assets 100.0%									$	830,396,874

(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, 2019 and December 31, 2020 along with transactions during the year ended December 31, 2020 in these controlled investments are as follows:


Name of Investment	Fair Value at December 31, 2019		Gross Additions^(a)		Gross Reductions^(b)		Realized Gains (Losses)		Net Change in Unrealized Appreciation/ Depreciation		Fair Value at December 31, 2020		Interest/ Dividend/ Other Income
AGY Holdings Corp. Opco Term Loan - 11.50% inc. PIK	$	—	$	3,391,067	$	—	$	—	$	—	$	3,391,067	$	116,419
AGY Holdings Corp. PIK Holdco Term Loan - 11.50% inc. PIK		—		23,651,102		—		—		—		23,651,102		1,156,314
AGY Equity LLC Class A Preferred units		—		—		—		—		—		—		—
AGY Equity LLC Class B Preferred units		—		—		—		—		—		—		—
AGY Equity LLC Class C Common units		—		—		—		—		—		—		—

Total Controlled Affiliated Investments	$	—	$	14,121,479	$	12,920,690	$	—	$	—	$	27,042,169	$	1,272,733

(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)

Non-income producing.

(4)

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, 2020, $59,843,785 or 3.8% of the Company’s total assets were represented by “non-qualifying assets.”

(5)

Negative balance relates to an unfunded commitment that was acquired at a discount.

TCW DIRECT LENDING VII LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2020

(6)

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, 2019 and December 31, 2020 along with transactions during the year ended December 31, 2020 in these affiliated investments are as follows:


Name of Investment	Fair Value at December 31, 2019		Gross Additions^(a)		Gross Reductions^(b)			Realized Gains (Losses)		Net Change in Unrealized Appreciation/ Depreciation		Fair Value at December 31, 2020		Interest/ Dividend/ Other Income
Shelterlogic Group Holdings, Inc Common Stock	$	—	$	—	$	—		$	—	$	9,578,443	$	9,578,443	$	—
SLogic Holding Corp. 2018 Term Loan B - 7.50%		25,931,407		58,776		(570,736	)		—		1,833,214		27,252,661		2,603,353

Total Non-Controlled Affiliated Investments	$	25,931,407	$	58,776	$	(570,736	)	$	—	$	11,411,657	$	36,831,104	$	2,603,353

(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.

(7)

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, 2020, the aggregate fair value of these securities was $15,882,039, or 1.0% of the Company’s total assets.

(8)

The fair value of the SMTC Corporation common stock is based on the quoted market price of the issuer’s common stock as of December 31, 2020. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of the SMTC Corporation warrant is based on the quoted market price of the issuer’s stock as of December 31, 2020. Such warrants are considered to be Level 2 securities within the Fair Value Hierarchy. Otherwise, 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.”

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

PRIME - Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $691,614,825 and $639,529,403, respectively, for the year ended December 31, 2020. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown Portfolio
United States	100.0	%

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING VII LLC

Consolidated Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)


	As of March 31, 2021 (unaudited)			As of December 31, 2020
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $1,374,893 and $1,345,545, respectively)	$	1,380,175		$	1,340,325
Non-controlled affiliated investments (amortized cost of $26,989 and $27,118, respectively)		40,957			36,831
Controlled affiliated investments (amortized cost of $38,332 and $27,042, respectively)		38,332			27,042
Cash and cash equivalents		128,772			148,204
Receivable for investments sold		44,351			-
Interest receivable		7,556			5,292
Deferred financing costs		3,676			4,314
Due from Adviser		-			1,023
Prepaid and other assets		44			80

Total Assets	$	1,643,863		$	1,563,111


Liabilities
Revolving credit facilities payable	$	325,500		$	337,500
Term loan (net of $1,516 and $1,648 of deferred financing costs, respectively)		245,984			245,852
Payable for open trades		70,500			125,229
Incentive fee payable		36,376			15,278
Management fees payable		5,324			4,955
Interest and credit facilities expense payable		2,396			2,448
Unrealized depreciation on unfunded commitments		579			945
Directors’ fees payable		84			-
Other accrued expenses and other liabilities		617			507

Total Liabilities	$	687,360		$	732,714


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)		(331,401	)		(458,401	)
Common Unitholders’ return of capital		(53,683	)		(53,683	)
Common Unitholders’ offering costs		(633	)		(633	)
Accumulated Common Unitholders’ tax reclassification		(1,865	)		(1,865	)

Common Unitholders’ capital		985,819			858,819
Accumulated loss		(29,316	)		(28,422	)

Total Members’ Capital	$	956,503		$	830,397

Total Liabilities and Members’ Capital	$	1,643,863		$	1,563,111

Net Asset Value Per Unit (Note 10)	$	93.77		$	93.84

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Operations (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the Three Months Ended March 31,
	2021		2020
Investment Income
Non-controlled/non-affiliated investments:
Interest income	$	32,236	$	33,294
Interest income paid-in-kind		5,643		2,652
Other fee income		68		106
Non-controlled affiliated investments:
Interest income		507		-
Controlled affiliated investments:
Interest income		492		-
Interest income paid-in-kind		436		-

Total investment income		39,382		36,052

Expenses
Incentive fees		21,098		(12,148	)
Management fees		5,324		4,955
Interest and credit facilities expenses		4,504		7,240
Administrative fees		367		363
Professional fees		273		195
Directors’ fees		98		98
Other expenses		956		57

Total expenses		32,620		760

Net investment income	$	6,762	$	35,292


Net realized and unrealized gain (loss) on investments
Net realized gain:
Non-controlled/non-affiliated investments	$	1,221	$	1,943
Net change in unrealized appreciation/depreciation:
Non-controlled/non-affiliated investments		10,869		(66,230	)
Non-controlled affiliated investments		4,254		-

Net realized and unrealized gain (loss) on investments	$	16,344	$	(64,287	)

Net increase (decrease) in Members’ Capital from operations	$	23,106	$	(28,995	)


Basic and diluted:
Income (Loss) per unit	$	1.68	$	(2.11	)

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING VII LLC

Consolidated Statements of Changes in Members’ Capital (Unaudited)

(Dollar amounts in thousands, except unit data)


	Common Unitholders’ Capital		Accumulated Earnings (Loss)			Total
Members’ Capital at December 31, 2019	$	817,863	$	(1,633	)	$	816,230
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		-		35,292			35,292
Net realized gain on investments		-		1,943			1,943
Net change in unrealized appreciation/depreciation on investments		-		(66,230	)		(66,230	)

Total Decrease in Members’ Capital for the three months ended March 31, 2020		-		(28,995	)		(28,995	)

Members’ Capital at March 31, 2020	$	817,863	$	(30,628	)	$	787,235


Members’ Capital at December 31, 2020	$	858,819	$	(28,422	)	$	830,397
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		-		6,762			6,762
Net realized gain on investments		-		1,221			1,221
Net change in unrealized appreciation/depreciation on investments		-		15,123			15,123
Distributions to Members from:
Distributable earnings		-		(24,000	)		(24,000	)
Increase in Members’ Capital Resulting from Capital Activity:
Contributions		127,000		-			127,000

Total Increase (Decrease) in Members’ Capital for the three months ended March 31, 2021		127,000		(894	)		126,106

Members’ Capital at March 31, 2021	$	985,819	$	(29,316	)	$	956,503

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING VII LLC

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the Three Months Ended March 31,
	2021			2020
Cash Flows from Operating Activities
Net increase (decrease) in net assets resulting from operations	$	23,106		$	(28,995	)
Adjustments to reconcile the net increase (decrease) in net assets resulting from operations to net cash (used in) provided by operating activities:
Purchases of investments		(311,971	)		(208,953	)
Interest income paid-in-kind		(6,079	)		(2,652	)
Proceeds from sales and paydowns of investments		282,113			260,844
Net realized gain on investments		(1,221	)		(1,943	)
Net change in unrealized appreciation/depreciation on investments		(15,123	)		66,230
Amortization of premium and accretion of discount, net		(3,351	)		(2,483	)
Amortization of deferred financing costs		772			717
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in receivable for investments sold		(44,351	)		-
(Increase) decrease in interest receivable		(2,264	)		(3,317	)
(Increase) decrease in due from Adviser		1,023			-
(Increase) decrease in prepaid and other assets		36			33
Increase (decrease) in payable for open trades		(54,729	)		-
Increase (decrease) in incentive fees payable		21,098			(12,148	)
Increase (decrease) in management fees payable		369			1,102
Increase (decrease) in interest and credit facilities expense payable		(52	)		263
Increase (decrease) in directors’ fees payable		84			84
Increase (decrease) in other accrued expenses and liabilities		110			311

Net cash (used in) provided by operating activities	$	(110,430	)	$	69,093


Cash Flows from Financing Activities
Contributions	$	127,000		$	-
Distributions		(24,000	)		-
Deferred financing costs paid		(2	)		(1,624	)
Proceeds from credit facilities		15,000			-
Repayments of credit facilities		(27,000	)		(100,000	)
Proceeds from repurchase obligation		125,229			-
Repayments of repurchase obligation		(125,229	)		-

Net cash provided by (used in) financing activities	$	90,998		$	(101,624	)

Net decrease in cash and cash equivalents	$	(19,432	)	$	(32,531	)

Cash and cash equivalents, beginning of period	$	148,204		$	220,074

Cash and cash equivalents, end of period	$	128,772		$	187,543

Supplemental and non-cash financing activities
Interest expense paid	$	4,236		$	5,913

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)

March 31, 2021

1. Organization and Basis of Presentation

Organization: TCW Direct Lending VII LLC (the “Company”) was formed as a Delaware limited liability company on May 23, 2017. The Company engaged in a private offering of its common limited liability company units (the “Units”) to investors in reliance on exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”). In addition, the Company may issue preferred units (“Preferred Units”), though it currently has no intention to do so. On August 18, 2017, the Company sold and issued 10 Units at an aggregate purchase price of $1 to TCW Asset Management Company LLC (the “Adviser”), an affiliate of the TCW Group, Inc. The Company commenced operations during the second quarter of fiscal year 2018.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company has also elected to be treated for U.S. federal income tax purposes as a Regulated Investment Company (a “RIC”) under Subchapter M of the U.S Internal Revenue Code of 1986, as amended (the “Code”), beginning fiscal year 2018. The Company is required to meet the minimum distribution and other requirements for RIC qualification. As a BDC and a RIC, the Company is required to comply with certain regulatory requirements.

During 2018, the Company formed two Delaware limited liability companies which each have a single member interest owned by the Company. On February 12, 2020, the Company formed its third wholly-owned subsidiary, TCW DLG Funding VII 2020-1 LLC, a single member Delaware limited liability company.

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant

intercompany transactions and balances have been eliminated in consolidation.

Term: The term of the Company will continue until the sixth anniversary of the Initial Closing Date (as defined below), April 13, 2024, unless extended or sooner dissolved as provided in the Company’s amended and restated limited liability agreement (the “LLC Agreement”) or by operation of law. The Company may extend the term for two additional one-year periods upon written notice to the holders of the Units (the “Unitholders) and holders of preferred units, if any, (together with the Unitholders, the “Members”) at least 90 days prior to the expiration of the term or the end of the first one-year period. Thereafter, the term may be extended for successive one-year periods, with the vote or consent of a supermajority in interest of the holders of the Units.

Commitment Period: The Commitment Period commenced on April 13, 2018 (the “Initial Closing Date”), the day on which the Company completed the first closing of the sale of its Units to persons not affiliated with the Adviser and will end 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.

The Commitment Period is subject to termination upon the occurrence of a Key Person Event defined as follows: A “Key Person Event” will occur if, during the Commitment Period, (i) Richard T. Miller and one or more of Suzanne Grosso, Mark Gertzof or James S. Bold (each of such four persons, a “Key Person”) fail to devote substantially all of their business time to the investment activities of the Company, the prior funds, any successor funds and any fund(s) managed by the Adviser or an affiliate of the Adviser that co-invest or potentially co-invest with the Company, on a combined basis (together, the “Related Entities”); or (ii) Ms. Grosso, Mr. Gertzof and Mr. Bold all fail to devote substantially all of their business time to the investment activities of the Company and the Related Entities, in each case other than as a result of a temporary disability; provided, that, if a replacement has been approved as described in the paragraphs below, such replacement shall be specifically designated to take the place of one of the above-named individuals and the definition of “Key Person Event” will be amended to take into account such successor. Upon the occurrence of a Key Person Event, and in the event that the Adviser fails to replace the above-referenced individuals in the manner contemplated in this paragraph, the Commitment Period shall be automatically terminated upon such Key Person Event. The Commitment Period will be re-instated upon the vote or written consent of 66 2/3% in interest of the Unitholders. The Adviser is permitted at any time to replace any person designated above with a senior professional (including a Key Person) selected by the Adviser, provided that such replacement has been approved by a majority of the Unitholders (in which case, the approved substitute will be a Key Person in lieu of the person replaced). If such replacement(s) end the occurrence of a Key Person Event, the Commitment Period will automatically be reinstated.

If, during the Commitment Period, any Key Person shall fail to devote substantially all of his or her business time to the investment activities of the Company and the Related Entities other than as a result of a temporary disability (the occurrence of such event, a “Key Person Departure”), the Company shall provide written notice to Unitholders of such Key Person Departure within 30 days of the date of such Key Person Departure.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

1. Organization and Basis of Presentation (Continued)

If a Key Person Departure occurs during the Commitment Period and the Adviser determines to replace such Key Person, the Company shall obtain the approval of such replacement by a majority in interest of the Unitholders no later than the date of the Company’s next annual meeting; provided that the Company may, in its discretion, determine to obtain the approval of such replacement no later than 90 days after the date that the Adviser informs the Company of its proposed replacement of the Key Person.

If the Company fails to obtain approval of a replacement of a Key Person following a Key Person Departure as provided in the paragraph above, then the Key Person Departure shall be permanent and the Adviser shall not be permitted to replace such Key Person.

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 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”.

The commitment amount funded does not include amounts contributed in anticipation of a potential investment that the Company did not consummate and therefore returned to the Members as unused capital. As of March 31, 2021, 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	$	331,401		75.9	%		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 March 31, 2021 was $53,683.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

2. Significant Accounting Policies

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

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

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

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

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

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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

2. Significant Accounting Policies (Continued)

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 considers all investments with a maturity of three months or less at the time of acquisition to be cash equivalents. As of March 31, 2021, cash and cash equivalents are comprised of demand deposits and highly liquid investments with maturities of three months or less. Cash equivalents are carried at amortized costs which approximates fair value and are classified as Level 1 in the GAAP valuation hierarchy.

Income Taxes: The Company has elected to be regulated as a BDC under the 1940 Act. The Company also elected to be treated as a RIC under the Code beginning with the taxable year ending December 31, 2018. So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its Unitholders as dividends. Rather, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.

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

3. Investment Valuations and Fair Value Measurements

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

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

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

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

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

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

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

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

3. Investment Valuations and Fair Value Measurements (Continued)

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

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

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

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

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

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

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 March 31, 2021:


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	1,435,946	$	1,435,946
Equity		288		2,906		20,324		23,518
Cash equivalents		108,041		—		—		108,041

Total Assets	$	108,329	$	2,906	$	1,456,270	$	1,567,505

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, 2020:


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	1,385,675	$	1,385,675
Equity		238		2,402		15,883		18,523
Cash equivalents		123,627		—		—		123,627

Total Assets	$	123,865	$	2,402	$	1,401,558	$	1,527,825

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

3. Investment Valuations and Fair Value Measurements (Continued)

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three months ended March 31, 2021:


	Debt			Equity			Total
Balance, January 1, 2021	$	1,385,675		$	15,883		$	1,401,558
Purchases*		318,050			—			318,050
Sales and paydowns of investments		(278,996	)		(3,117	)		(282,113	)
Amortization of premium and accretion of discount, net		3,351			—			3,351
Net realized (losses) gains		(1,896	)		3,117			1,221
Net change in unrealized appreciation/depreciation		9,762			4,441			14,203

Balance, March 31, 2021	$	1,435,946		$	20,324		$	1,456,270

Net change in unrealized appreciation/depreciation in investments held as of March 31, 2021	$	8,902		$	6,273		$	15,175

*	Includes payments received in-kind

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


	Debt			Equity		Total
Balance, January 1, 2020	$	1,360,505		$	608	$	1,361,113
Purchases*		210,355			1,250		211,605
Sales and paydowns of investments		(260,844	)		—		(260,844	)
Amortization of premium and accretion of discount, net		2,483			—		2,483
Net realized gains		1,943			—		1,943
Net change in unrealized appreciation/depreciation		(63,066	)		1,076		(61,990	)

Balance, March 31, 2020	$	1,251,376		$	2,934	$	1,254,310

Net change in unrealized appreciation/depreciation in investments held as of March 31, 2020	$	(61,810	)	$	1,076	$	(60,734	)

*	Includes payments received in-kind

The Company did not have any transfers between levels during the three months ended March 31, 2021 and 2020.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

3. Investment Valuations and Fair Value Measurements (Continued)

Level 3 Valuation and Quantitative Information: The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of March 31, 2021:

Investment Type

Fair Value

Valuation
Technique

Unobservable

Input

Range

Weighted
Average*

Impact to
Valuation from an
Increase in Input

Debt

1,333,634

Income Method

Discount Rate

5.3% to 19.0%

10.4%

Decrease

Debt

27,110

Market Method

EBITDA Multiple

6.5x to 7.5x

N/A

Increase

Debt

38,332

Market Method

Revenue Multiple

0.6x to 0.8x

N/A

Increase

Debt

36,870

Income Method

Discount Rate

5.6% to 9.1%

7.2%

Decrease

Debt

Income Method

Take Out Indication

102.0% to 102.0%

N/A

Increase

Equity

13,846

Market Method

EBITDA Multiple

5.8x to 7.5x

N/A

Increase

Equity

—

Market Method

Revenue Multiple

0.6x to 0.8x

N/A

Increase

Equity

—

Market Method

EBITDA Multiple

5.0x to 6.0x

N/A

Increase

Revenue Multiple

0.5x to 0.7x

N/A

Increase

Equity

5,251

Market Method

EBITDA Multiple

9.3x to 10.3x

N/A

Increase

Income Method

Implied Volatility

25.0% to 35.0%

N/A

Increase

Expected Term

(in years)

1.0 to 6.0

N/A

Increase

Equity

1, 227

Market Method

Revenue Multiple

1.8x to 2.8x

N/A

Increase

Income Method

Implied Volatility

35.0% to 45.0%

N/A

Increase

Expected Term

(in years)

0.8 to 1.3

N/A

Increase

*	Weighted based on fair value

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

3. Investment Valuations and Fair Value Measurements (Continued)

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

Investment Type

Fair Value

Valuation
Technique

Unobservable

Input

Range

Weighted
Average*

Impact to
Valuation from an
Increase in Input

Debt

1,240,657

Income Method

Discount Rate

5.0% to 20.8%

10.1%

Decrease

Debt

13,911

Market Method

EBITDA Multiple

8.9x to 9.9x

N/A

Increase

Debt

27,253

Market Method

EBITDA Multiple

7.3x to 8.3x

N/A

Increase

Revenue Multiple

0.8x to 1.0x

N/A

Increase

Debt

38,742

Market Method

Revenue Multiple

0.6x to 2.3x

N/A

Increase

Debt

65,112

Income Method

Discount Rate

6.9% to 10.1%

9.0%

Decrease

Market Method

Indicative Bid

101.6% to 102.0%

N/A

Increase

Equity

—

Market Method

EBITDA Multiple

7.5x to 8.5x

N/A

Increase

Equity

1,831

Market Method

Revenue Multiple

0.6x to 2.3x

N/A

Increase

Equity

9,578

Market Method

EBITDA Multiple

5.0x to 8.3x

N/A

Increase

Revenue Multiple

0.5x to 1.0x

N/A

Increase

Equity

3, 308

Market Method

EBITDA Multiple

10.3x to 11.3x

N/A

Increase

Income Method

Implied Volatility

25.0% to 35.0%

N/A

Increase

Expected Term

(in years)

1.3 to 6.3

N/A

Increase

Equity

1, 166

Market Method

EBITDA Multiple

3.5x to 5.5x

N/A

Increase

Market Method

Revenue Multiple

1.5x to 2.5x

N/A

Increase

Income Method

Implied Volatility

32.5% to 42.5%

N/A

Increase

Expected Term

(in years)

1.0 to 1.5

N/A

Increase

*	Weighted based on fair value

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

4. Agreements and Related Party Transactions

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

The Advisory Agreement may be terminated by either party, by vote of the Company’s Board, or by a vote of the majority of the Company’s outstanding voting units, without penalty upon not less than 60 days’ prior written notice to the applicable party. If the Advisory Agreement is terminated according to this paragraph, the Company will pay the Adviser a pro-rated portion of the Management Fee and Incentive Fee (each as defined below). The Advisory Agreement was reapproved by the Company’s Board on August 10, 2020.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

4. Agreements and Related Party Transactions (Continued)

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.

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

(a)

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

(b)

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

(c)

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

(d)

Thereafter, the Adviser will be entitled to an Incentive Fee equal to 20% of additional amounts otherwise distributable to Unitholders in respect of all Units, with the remaining 80% distributed to the Unitholders.

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

For purposes of calculating the Incentive Fee, aggregate contributions shall not include Earnings Balancing Contributions or Late-Closer Contributions, and the distributions to Unitholders shall not include distributions attributable to Late-Closer Contributions. Earnings Balancing Contributions 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 TCW Direct Lending VII LLC Agreement (the “LLC Agreement”), the amounts so withheld shall be treated for such purposes as having been distributed to such Defaulting Member. The amount of any distribution of securities made in kind shall be equal to the fair market value of those securities at the time of distribution determined pursuant to 13.4 of the LLC Agreement.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

4. Agreements and Related Party Transactions (Continued)

If the Advisory Agreement terminates early for any reason other than (i) the Adviser voluntarily terminating the agreement or (ii) the Company terminating the agreement for cause (as set out in the Advisory Agreement), the Company will be required to pay the Adviser a final incentive fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Advisory Agreement is so terminated and will equal the amount of Incentive Fee that would be payable to the Adviser if (A) all of the Company’s investments were liquidated for their current value (but without taking into account any unrealized appreciation of any portfolio investment), and any unamortized deferred portfolio investment-related fees were deemed accelerated, (B) the proceeds from such liquidation were used to pay all of the Company’s outstanding liabilities, and (C) the remainder were distributed to Unitholders and paid as Incentive Fee in accordance with the “waterfall” (i.e., clauses (a) through (d)) described above for determining the amount of the Incentive Fee. The Company will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated.

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

Administration Agreement: On September 25, 2018, the Company entered into an Amended and Restated Administration Agreement (the “Administration Agreement”) with TCW Asset Management Company LLC (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 of directors, 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.

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;

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

4. Agreements and Related Party Transactions (Continued)

(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 (as defined in the LLC Agreement) or the Extension Fund (as defined in the LLC Agreement), 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 (as defined in the LLC Agreement) and the Extension Fund (as defined in the LLC Agreement) (and indirectly only by Unitholders that elect to become investors in the Public Company (as defined in the LLC Agreement) or the Extension Fund (as defined in the LLC Agreement)), as the case may be, and no others will directly or indirectly bear such fees, costs or expenses.

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 six 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; 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 (as defined in the LLC Agreement) 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.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

4. Agreements and Related Party Transactions (Continued)

“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 will, as set forth above, will be borne by the Adviser or its affiliates.

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized depreciation by investment as of March 31, 2021 and December 31, 2020:


		March 31, 2021				December 31, 2020
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
AGY Holdings Corp.	September 2022	$	—	$	—	$	10,854	$	—
Altern Marketing LLC	October 2024		5,217		—		2,473		—
Bendon Inc.	December 2025		7,263		73		8,254		149
Caiman Merger Sub LLC	November 2024		1,032		—		1,031		—
Centric Brands Inc.	October 2024		2,461		—		2,922		—
Encompass Digital Media, Inc.	September 2023		2,528		—		1,661		28
GEON Performance Solutions, LLC	October 2024		2,351		—		2,350		—
Hometown Food Company	August 2023		5,881		—		5,097		—
Karman Holdings LLC (fka Spaceco Holdings LLC)	December 2025		4,916		—		9,364		122
KBP Investments LLC	September 2022		15,000		—		15,000		—
Mondee Holdings LLC	December 2024		8,613		—		8,613		—
Obagi Cosmeceuticals LLC	March 2026		9,046		136		-		—
Production Resource Group LLC	October 2021		—		—		1,443		—
Quicken Parent Corp.	April 2023		948		—		948		7
UniTek Acquisition, Inc.	August 2023		2,785		370		3,214		498
WDE TorcSill Holdings LLC	October 2024		4,359		—		4,564		141

Total		$	72,400	$	579	$	77,788	$	945

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of March 31, 2021, 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)

March 31, 2021

6. Members’ Capital

The Company’s Unit activity for the three months ended March 31, 2021 and 2020, was as follows:


	Three Months Ended March 31,		Three Months Ended March 31,
	2021		2020
Units at beginning of period		13,734,010		13,734,010

Units issued and committed at end of period		13,734,010		13,734,010

No deemed distributions and contributions were processed during the three months ended March 31, 2021 and 2020.

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, unless such date is extended at the Company’s option no more than two times for a term of up to 364 days after the maturity date per such extension. Borrowings under the Natixis Credit Agreement bear interest at a rate equal to either (a) a base rate calculated in a customary manner plus 0.55% or (b) an adjusted eurodollar rate calculated in a customary manner plus 1.55%. As of December 31, 2020, the Natixis Maximum Commitment was $280,000. On March 10, 2021, the Natixis Maximum Commitment was reduced to $250,000.

The Natixis Revolving Credit Facility is secured by a first priority security interest, subject to customary exceptions, in (i) all of the capital commitments of the investors in the Company, (ii) the Company’s right to make capital calls, receive payment of capital contributions from the investors and enforce payment of the capital commitments and capital contributions under the Company’s operating agreement and (iii) a cash collateral account into which the capital contributions from the investors are made. The Natixis Revolving Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Company fail to satisfy certain covenants. As of March 31, 2021, the Company was in compliance with such covenants.

As of March 31, 2021 and December 31, 2020, the Natixis Borrowing Base assets were less than the Natixis Maximum Commitment. A summary of amounts outstanding and available under the Natixis Revolving Credit Facility as of March 31, 2021 and December 31, 2020 was as follows:


Natixis Revolving Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
As of March 31, 2021	$	250,000	$	160,000	$	25,378
As of December 31, 2020	$	280,000	$	172,000	$	85,230

(1)

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

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

7. Credit Facilities (Continued)

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.

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. The PNC Credit Facility will mature on January 29, 2024. Loans under the PNC Credit Facility will bear interest at a fluctuating rate of interest per annum equal to, at the Borrower’s option, either (i) three-month LIBOR plus the facility margin of 2.30% per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum. On June 19, 2020, the Second Amended PNC Maximum Commitment was increased from $795,000 to $825,000.

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 March 31, 2021, the Borrower was in compliance with such covenants.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

7. Credit Facilities (Continued)

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.

As of March 31, 2021 and December 31, 2020, the PNC Borrowing Base assets were less than the Second Amended and Amended PNC Maximum Commitment. A summary of amounts outstanding and available under the PNC Credit Facility as of March 31, 2021 and December 31, 2020 is as follows:


PNC Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
As of March 31, 2021	$	825,000	$	413,000	$	304,495
As of December 31, 2020	$	825,000	$	413,000	$	334,734

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

Borrowings under the PNC Credit Facility as of March 31, 2021 and December 31, 2020 consisted of $165,500 from the PNC Revolving Credit Facility (i.e., revolving line of credit) and $247,500 of PNC Term Loan.

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

Costs associated with the Revolving Credit Facilities were primarily recorded by the Company as deferred financing costs on its Consolidated Statements of Assets and Liabilities and the costs are being amortized over the respective lives of the Natixis Revolving Credit Facility and PNC Revolving Credit Facility. As of March 31, 2021 and December 31, 2020, $3,676 and $4,314, respectively, of such deferred financing costs had yet to be amortized. Costs associated with the PNC Term Loan are deferred and amortized over the term of the PNC Term Loan. Such deferred financing costs are netted against the carrying value of the PNC Term Loan on the Company’s Consolidated Statements of Assets and Liabilities. As of March 31, 2021 and December 31, 2020, $1,516 and $1,648 million, respectively, of such deferred financing costs have yet to be amortized.

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


	As of March 31, 2021			As of December 31, 2020
Principal amount outstanding on PNC Term Loan	$	247,500		$	247,500
Deferred financing costs		(1,516	)		(1,648	)

PNC Term Loan (as presented on the Consolidated Statements of Assets and Liabilities)	$	245,984		$	245,852

The carrying amounts of the Credit Facilities, which are categorized as Level 2 within the fair value hierarchy as of March 31, 2021 and 2020, approximates their respective fair values. Valuation techniques and significant inputs used to determine fair value include Company details; credit, market and liquidity risk and events; financial health of the Company; place in the capital structure; interest rate; and the Credit Facilities’ terms and conditions.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

7. Credit Facilities (Continued)

The summary information regarding the Credit Facilities for the three months ended March 31, 2021 and 2020 was as follows:


	Three Months Ended March 31,
	2021			2020
Credit Facilities interest expense	$	3,307		$	6,270
Unused commitment fees		425			253
Amortization of deferred financing costs		772			717

Total	$	4,504		$	7,240

Weighted average interest rate		2.27	%		3.72	%
Average outstanding balance	$	581,733		$	666,890

8. Repurchase Obligation

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

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

During the three months ended March 31, 2021, the Company entered into and settled a repurchase agreement for which the Company incurred interest expense of $892.

The Company had no outstanding Repurchase Obligations as of March 31, 2021 and December 31, 2020.

9. Income Taxes

The Company has elected to be regulated as a BDC under the 1940 Act and has elected to be treated as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. Federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its Unitholders as dividends. The Company elected to be taxed as a RIC in 2018. The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

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

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

9. Income Taxes (Continued)

As of March 31, 2021 and December 31, 2020, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes were as follows:


	As of March 31, 2021			As of December 31, 2020
Cost of investments for federal income tax purposes	$	1,548,255		$	1,532,332
Unrealized appreciation	$	38,151		$	32,386
Unrealized depreciation	$	(18,901	)	$	(27,893	)
Net unrealized appreciation on investments	$	19,250		$	4,493

The Company did not have any unrecognized tax benefits as of December 31, 2020, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; therefore, no interest or penalties were accrued. The Company is subject to examination by the U.S federal and state tax authorities for returns filed for the prior two years.

TCW DIRECT LENDING VII LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

March 31, 2021

10. Financial Highlights

Selected data for a unit outstanding throughout the three months ended March 31, 2021 and 2020 is presented below.


	For the Three Months Ended March 31,
	2021⁽¹⁾			2020⁽¹⁾
Net Asset Value Per Unit (accrual base), Beginning of Period	$	93.84		$	99.36

Net Decrease in Common Unitholder NAV from Prior Period		—			—

Income (Loss) from Investment Operations:
Net investment income		0.49			2.57
Net realized and unrealized gain (loss)		1.19			(4.68	)

Total from investment operations		1.68			(2.11	)
Less Distributions:
From distributable earnings		(1.75	)		—

Total distributions		(1.75	)		—

Net Asset Value Per Unit (accrual base), End of Period	$	93.77		$	97.25

Unitholder Total Return⁽²⁾⁽³⁾		2.66	%		(3.53	)%

Unitholder IRR before incentive fees⁽⁴⁾		11.51	%		3.05	%

Unitholder IRR after all fees and expenses⁽⁴⁾		9.33	%		3.05	%

Ratios and Supplemental Data
Members’ Capital, end of period	$	956,503		$	787,235
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⁾		15.38	%		0.38	%
Ratio of financing cost to average net assets⁽³⁾		0.52	%		0.89	%
Ratio of net investment income to average net assets⁽⁵⁾		3.19	%		17.45	%
Ratio of incentive fees to average net assets⁽⁵⁾		9.95	%		(6.01	)%
Credit facilities payable		571,484			655,015
Asset coverage ratio		2.67			2.20
Portfolio turnover rate⁽³⁾		19.85	%		15.78	%

⁽¹⁾	Per unit data was calculated using the number of Common Units issued and outstanding as of March 31, 2021 and 2020, respectively.

⁽²⁾

The Total Return for the three months ended March 31, 2021 and 2020 was calculated by taking the net investment income of the Company for the period divided by the weighted average capital contributions from the Members during the period. The return does not reflect sales load and is net of management fees and expenses.

⁽³⁾	Not annualized.

⁽⁴⁾

The IRR since inception for the Common Unitholders, after management fees, financing costs and operating expenses, but before incentive fees is 11.51%. The IRR since inception for the Common Unitholders, after management fees, financing costs, operating expenses and Advisor incentive fees is 9.32%. 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 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)

March 31, 2021

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 May 10, 2021, the Company amended the Natixis Credit Agreement to among other things, extend the maturity date of the Natixis Revolving Credit Facility to May 9, 2022.

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 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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation:

•

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

•

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

•

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

•

interest rate volatility could affect our results, particularly in light of our use of leverage as part of our investment strategy;

•

our future operating results;

•

our contractual arrangements and relationships with third parties;

•

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

•

competition with other entities and our affiliates for investment opportunities;

•

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

•

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

•

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

•

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

•

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

•

the speculative and illiquid nature of our investments;

•

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

•

the adequacy of our financing sources and working capital;

•

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

•

the loss of key personnel;

•

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

•

the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

•

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

•

our ability to qualify and maintain our qualification as a regulated investment company, or “RIC,” under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, or the “Code,” and as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”) and the related tax implications;

•

the effect of legal, tax and regulatory changes; and

•

the other risks, uncertainties and other factors we identify under “Part I—Item 1A. Risk Factors” in our Form 10-K filed with the SEC on March 22, 2021.

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 TCW Asset Management Company LLC (“TAMCO”), 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.

On February 12, 2020, we formed our third wholly-owned subsidiary, TCW DLG Funding VII 2020-1 LLC, a single member Delaware limited liability company.

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. The historical 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 we do not currently expect the Private Credit Team to originate a significant amount of investments for us with PIK interest features, from time to time we may make, and currently have, investments that contain such features. We may have investments with PIK interest features in certain circumstances involving debt restructurings or work-outs of current investments. 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, our investment bias will be towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

We are primarily focused on investing in senior secured debt obligations, although there may be occasions where the investment may be unsecured. We may 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 will mostly be 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 intend to invest primarily in U.S. companies, there may be certain instances where we will invest 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 Fund (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 Fund (as defined in the LLC Agreement) or the Extension Fund (as defined in the LLC Agreement), 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 Fund (as defined in the LLC Agreement) and the Extension Fund (as defined in the LLC Agreement) (and indirectly only by Unitholders that elect to become investors in the Public Fund (as defined in the LLC Agreement) or the Extension Fund (as defined in the LLC Agreement)), 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; 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 (as defined in the LLC Agreement) 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) was charged directly to Members’ Capital on December 31, 2018. No additional organization and offering costs were incurred subsequent to December 31, 2018. We did not bear more than an amount equal to 10 basis points of the aggregate capital commitments for organization and offering expenses.

Critical Accounting Policies and Estimates

Investments at Fair Value

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

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

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

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

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

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

Equity, (Level 1), 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), includes warrants valued using quotes for comparable investments.

Investment Activity

As of March 31, 2021, our portfolio consisted of 57 debt investments and 11 equity investments. Based on fair values as of March 31, 2021, our portfolio was 98.4% invested in debt investments which were mostly senior secured term loans. The remaining 1.6% represented our equity investments, which were comprised of common stock, preferred stock and warrants.

As of December 31, 2020, our portfolio consisted of 60 debt investments and 11 equity investments. Based on fair values as of December 31, 2020, our portfolio was 98.7% invested in debt investments which were mostly senior secured term loans. The remaining 1.3% represented our equity investments, which were comprised of common stock, preferred stock and warrants.

We had no debt investments on non-accrual status as of March 31, 2021 and December 31, 2020.

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 March 31, 2021:


Industry	Percent of Total Investments

Aerospace & Defense		13	%
Textiles, Apparel & Luxury Goods		6	%
Software		6	%
Hotels, Restaurants & Leisure		6	%
Beverages		5	%
Household Durables		5	%
Energy Equipment and Services		5	%
Personal Products		4	%
Consumer Durables & Apparel		4	%
Chemicals		4	%
Household & Personal Products		4	%
Media		4	%
Publishing		4	%
Household Products		3	%
Health Care Technology		3	%
Information Technology Services		3	%
Metals & Mining		3	%
Consumer Services		3	%
Packaging		2	%
Food Products		2	%
Multiline Retail		2	%
Auto Components		2	%
Construction and Engineering		2	%
Electronic Equipment, Instrument & Components		2	%
Air Freight & Logistics		1	%
Internet & Direct Marketing Retail		1	%
Commercial Services and Supplies		1	%
Construction Materials		0	%

Total		100	%

Interest income, including interest income paid-in-kind, was $39.3 million and $35.9 million for the three months ended March 31, 2021 and 2020, respectively. We also earned $0.1 million in other fee income during the three months ended March 31, 2021 and 2020.

Results of Operations

Our operating results for the three months ended March 31, 2021 and 2020 were as follows (dollar amounts in thousands):


	For the Three Months Ended March 31,
	2021		2020

Total investment income	$	39,382	$	36,052
Net expenses		32,620		760

Net investment income		6,762		35,292

Net realized gain on investments		1,221		1,943
Net change in unrealized appreciation/depreciation on investments		15,123		(66,230	)

Net increase (decrease) in Members’ Capital from operations	$	23,106	$	(28,995	)

Total investment income

Total investment income for the three months ended March 31, 2021 and 2020 was $39.4 million and $36.1 million, respectively. The increase in total investment income during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 was primarily due to the increase in our portfolio of debt investments, which included to 57 debt investments as of March 31, 2021, compared to 51 as of March 31, 2020.

Net investment income

Net investment income for the three months ended March 31, 2021 and 2020 was $6.8 million and $35.3 million, respectively. The decrease in our net investment income during the three months ended March 31, 2021 compared to our net investment income during the three months ended March 31, 2020 was primarily due to $21.1 million of incentive fees accrued during the current quarter, compared to the $12.1 million reversal of previously accrued incentive fees during the three months ended March 31, 2020. The incentive fee accrual during the current quarter is commensurate with our internal rate return exceeding the hurdle rate stipulated in our Advisory Agreement (the “hurdle rate”). The reversal of previously accrued incentive fees during the three months ended March 31, 2020 was a result of our internal rate of return (“IRR”) falling below the hurdle rate.

Expenses for the three months ended March 31, 2021 and 2020 were as follows (dollar amounts in thousands):


	For the Three Months Ended March 31,
	2021		2020
Expenses
Incentive fees	$	21,098	$	(12,148	)
Management fees		5,324		4,955
Interest and credit facilities expenses		4,504		7,240
Administrative fees		367		363
Professional fees		273		195
Directors’ fees		98		98
Other expenses		956		57

Total expenses	$	32,620	$	760

Our total expenses were $32.6 million and $0.8 million for the three months ended March 31, 2021 and 2020, respectively. Our expenses included management fees attributed to the Adviser of $5.3 million and $5.0 million; and incentive fees attributed to the Adviser of $21.1 million and ($12.1) million, for the three months ended March 31, 2021 and 2020, respectively.

The increase in total expenses during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 is primarily due incentive fees that were accrued during the current quarter, commensurate with our IRR exceeding the hurdle rate. In contrast, total expenses during the three months ended March 31, 2020 included a $12.1 million reversal of previously accrued incentive fees, in conjunction with our IRR failing below the hurdle rate during the quarter ended March 31, 2020. This increase was

partially offset by lower interest and credit facilities expenses during the current quarter compared to the three months ended March 31, 2020, due to lower interest rates on our credit facilities.

Net realized gain on investments

Our net realized gain on investments for the three months ended March 31, 2021 and 2020 was $1.2 million and $1.9 million, respectively. Our net realized gain during the three months ended March 31, 2021 was primarily attributable to our partial or full dispositions of the following investments (dollar amounts in thousands):


Issuer	Investment		Realized Gain (Loss)

Production Resources Group, LLC		Term Loan	$	3,117
PSS Industrial Group Corp.		Term Loan		(2,523)
All others		Various		627

Net realized gain			$	1,221

Our realized gain during the three months ended March 31, 2020 was primarily attributable to our partial or full dispositions of the following investments (dollar amounts in thousands):


Issuer	Investment		Realized Gain

Powerhouse Intermediate, LLC		Term Loan	$	346
AVI-SPL, Inc.		Term Loan		331
Westrock Coffee Company, LLC		Term Loan		306
Gold Star Foods Inc.		Term Loan		270
AMCP Staffing Intermediate Holdings III, LLC		Term Loan		344
Dura-Supreme Holdings, Inc.		Term Loan		170
Hunter Fan Company		Term Loan		78
Geon Performance Solutions, LLC		Term Loan		53
Mondee Holdings, LLC		Term Loan		45


Total realized gain			$	1,943

Net change in unrealized appreciation/depreciation on investments

Our net change in unrealized appreciation/depreciation investments for the three months ended March 31, 2021 and 2020 was $15.1 million and ($66.2) million, respectively. Our net change in unrealized appreciation/depreciation for the three months ended March 31, 2021 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment		Change in Unrealized Appreciation/Depreciation

Shelterlogic Group Holdings, Inc.		Common Stock	$	4,268
PSS Industrial Group Corp.		Term Loan		3,384
Greenfield World Trade, Inc.		Warrants		1,943
Greenfield World Trade, Inc.		Term Loan		1,684
Keeco Holdings, LLC		Term Loan		1,283
Winsight, LLC		Term Loan		971
WDE TorcSill Holdings LLC		Term Loan		928
Profrac Services, LLC		Term Loan		819
Obagi Cosmeceuticals LLC		Term Loan		611
Westrock Coffee Company, LLC		Term Loan		597
Shipston Group U.S. Inc.		Term Loan		583
SMTC Corporation		Warrants		504
Verdesian Life Sciences, LLC		Term Loan		(1,686	)
Production Resource Group, LLC		Class A Units		(1,831	)
All others		Various		1,065


Net change in unrealized appreciation/depreciation			$	15,123

Our net change in unrealized appreciation/depreciation for the three months ended March 31, 2020 was primarily due to the following investments (dollar amounts in thousands):


Issuer	Investment		Change in Unrealized Appreciation/Depreciation

Production Resource Group, LLC		Term Loan	$	(9,634	)
Mondee Holdings, LLC		Term Loan		(7,403	)
Slogic Holdings Corp.		Term Loan		(5,348	)
Centric Brands Inc.		Term Loan		(4,931	)
Keeco Holdings, LLC		Term Loan		(3,111	)
UniTek Acquisition, Inc.		Term Loan		(2,664	)
Greenfield World Trade, Inc.		Term Loan		(2,557	)
Akumin, Inc.		Term Loan		(2,488	)
Innerworkings, Inc.,		Warrants		(2,302	)
Innerworkings, Inc.,		Term Loan		(1,971	)
Verdesian Life Sciences, LLC		Term Loan		(1,683	)
FM Restaurants Holdco, LLC		Term Loan		(1,610	)
United Poly Systems Holding, Inc.		Term Loan		(1,433	)
PSS Industrial Group Corp.		Term Loan		(1,354	)
Sparton Corporation		Term Loan		(1,057	)
Shipston Group U.S. Inc.		Term Loan		(1,011	)
Greenfield World Trade, Inc.		Warrants		1,481
All others		Various		(17,154	)


Net change in unrealized appreciation/depreciation			$	(66,230	)

Our net change in unrealized appreciation/depreciation during the three months ended March 31, 2020 was affected by significant business disruptions and various other consequences experienced by our portfolio companies due to the uncertainty and economic volatility caused by COVID-19, in addition to other business conditions unique to our respective portfolio companies.

Net increase (decrease) in Members’ Capital from operations

Our net increase (decrease) in members’ capital from operations during the three months ended March 31, 2021 and 2020 was $23.1 million and ($29.0) million, respectively. The increase in members’ capital during the during the three months ended March 31, 2021 compared to the decrease during three months ended March 31, 2020 is primarily due to our net change in unrealized appreciation/depreciation during the current quarter which, as previously described, was a net appreciation of $15.1 million, compared to a net depreciation of ($66.2) million during the three months ended March 31, 2020. This was partially offset by the increase in our total expenses during the current quarter compared to the three months ended March 31, 2020.

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 March 31, 2021, 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):


	March 31, 2021
Commitments	$	1,373,401
Undrawn commitments	$	331,401
Percentage of commitments funded		75.9	%
Units		13,734,010

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

The Natixis Maximum Commitment may be periodically increased in amounts designated by us, up to an aggregate amount of $1 billion. The maturity date of the Natixis Credit Agreement is May 10, 2021, unless such date is extended at our option, no more than two times for a term of up to 364 days after the maturity date per such extension. Borrowings under the Natixis Credit Agreement bear interest at a rate equal to either (a) a base rate calculated in a customary manner plus 0.55% or (b) an adjusted eurodollar rate calculated in a customary manner plus 1.55%. As of December 31, 2020, the Natixis Maximum Commitment was $280.0 million. On March 10, 2021, we further reduced the Natixis Maximum Commitment to $250.0 million.

The Natixis Revolving Credit Facility is secured by a first priority security interest, subject to customary exceptions, in (i) all of the capital commitments of the investors in the Company, (ii) our right to make capital calls, receive payment of capital contributions from the investors and enforce payment of the capital commitments and capital contributions under our operating agreement and (iii) a cash collateral account into which the capital contributions from the investors are made. The Natixis Revolving Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should we fail to satisfy certain covenants. As of March 31, 2021, we were in compliance with such covenants.


Natixis Revolving Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount⁽¹⁾

As of March 31, 2021	$	250,000	$	160,000	$	25,378
As of December 31, 2020	$	280,000	$	172,000	$	85,230

(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. The PNC Credit Facility will mature on January 29, 2024. Loans under the PNC Credit Facility will bear interest at a fluctuating rate of interest per annum equal to, at the Borrower’s option, either (i) three-month LIBOR plus the facility margin of 2.30% per annum or (ii) the Base Rate plus the facility margin of 2.30% per annum. On June 19, 2020, the Second Amended PNC Maximum Commitment was increased from $795.0 million to $825.0 million.

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 March 31, 2021 and December 31 2020, the PNC Borrowing Base assets were less than the Second Amended and Amended PNC Maximum Commitment. A summary of amounts outstanding and available under the PNC Credit Facility as of March 31, 2021 and December 31, 2020 is as follows (dollar amounts in thousands):


PNC Credit Facility	Maximum Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
As of March 31, 2021	$	825,000	$	413,000	$	304,495
As of December 31, 2020	$	825,000	$	413,000	$	334,734

(1)

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

Borrowings under the PNC Credit Facility as of March 31, 2021 and December 31, 2020 consisted of $165.5 million from the PNC Revolving Credit Facility (i.e., revolving line of credit) and $247.5 million of PNC Term Loan.

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

We recorded most of the costs associated with the Revolving Credit Facilities as deferred financing costs on our Consolidated Statements of Assets and Liabilities and the costs are being amortized over the respective lives of the Natixis Revolving Credit Facility and PNC Revolving Credit Facility. As of March 31, 2021 and December 31, 2020, $3.7 million and $4.3 million, respectively, of such deferred financing costs had yet to be amortized. Costs associated with the PNC Term Loan are deferred and amortized over the term of the PNC Term Loan. Such deferred financing costs are netted against the carrying value of the PNC Term Loan on our Consolidated Statements of Assets and Liabilities. As of March 31, 2021 and December 31, 2020, $1.5 million and $1.6 million, respectively, of such deferred financing costs have yet to be amortized.

The summary information regarding the Credit Facilities for the three months ended March 31, 2021 and 2020 was as follows (dollar amounts in thousands):


	Three Months Ended March 31,
	2021			2020
Credit Facilities interest expense	$	3,307		$	6,270
Unused commitment fees		425			253
Amortization of deferred financing costs		772			717

Total	$	4,504		$	7,240

Weighted average interest rate		2.27	%		3.72	%
Average outstanding balance	$	581,733		$	666,890

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

During the three months ended March 31, 2021, we entered into and settled a repurchase agreement for which we incurred interest expense of $0.9 million.

We had no outstanding Repurchase Obligations as March 31, 2021 and December 31, 2020.

On May 10, 2021, we amended the Natixis Credit Agreement to among other things, extend the maturity date of the Natixis Revolving Credit Facility to May 9, 2022.

We had the following unfunded commitments and unrealized depreciation by investment as of March 31, 2021 and December 31, 2020 (dollar amounts in thousands):


		March 31, 2021				December 31, 2020
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
AGY Holdings Corp.	September 2022	$	-	$	-	$	10,854	$	-
Altern Marketing LLC	October 2024		5,217		-		2,473		-
Bendon Inc.	December 2025		7,263		73		8,254		149
Caiman Merger Sub LLC	November 2024		1,032		-		1,031		-
Centric Brands Inc.	October 2024		2,461		-		2,922		-
Encompass Digital Media, Inc.	September 2023		2,528		-		1,661		28
GEON Performance Solutions, LLC	October 2024		2,351		-		2,350		-
Hometown Food Company	August 2023		5,881		-		5,097		-
Karman Holdings LLC (fka Spaceco Holdings LLC)	December 2025		4,916		-		9,364		122
KBP Investments LLC	September 2022		15,000		-		15,000		-
Mondee Holdings LLC	December 2024		8,613		-		8,613		-
Obagi Cosmeceuticals LLC	March 2026		9,046		136		-		-
Production Resource Group LLC	October 2021		-		-		1,443		-
Quicken Parent Corp.	April 2023		948		-		948		7
UniTek Acquisition, Inc.	August 2023		2,785		370		3,214		498
WDE TorcSill Holdings LLC	October 2024		4,359		-		4,564		141

Total		$	72,400	$	579	$	77,788	$	945

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. As of March 31, 2021, 99.6% of our debt investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. As of March 31, 2021, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 99.6%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

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

Based on our March 31, 2021 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	$	30,713	$	17,429		$	13,284
Up 200 basis points		14,851		11,619			3,232
Up 100 basis points		2,076		5,810			(3,734	)
Down 100 basis points		-		(994	)		994

ITEM 4.

CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

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

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A.

Risk Factors

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

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Sales of unregistered securities

None.

Issuer purchases of equity securities

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None.

Item 6.

Exhibits.

(a) Exhibits


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

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

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

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

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

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

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

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

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

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

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

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

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

31.2^*		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

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

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

^*	Filed herewith

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


	TCW DIRECT LENDING VII LLC
Date: May 10, 2021	By:	/s/ Richard T. Miller
		Richard T. Miller
		President

Date: May 10, 2021	By:	/s/ James G. Krause
		James G. Krause
		Chief Financial Officer

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TCW Direct Lending VII 10-Q2021 Q1 Quarterly report

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