ROC
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, 2024
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 814-01642
First Eagle Private Credit Fund
(Exact Name of Registrant as Specified in its Charter)
Delaware | 87-6975595 |
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer |
1345 Avenue of the Americas New York, NY | 10105 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 698-3300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
N/A |
| N/A |
| N/A |
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 Exchange Act). Yes ☐ No ☒
As of May 13, 2024, the registrant had 12,425,338 common shares of beneficial interest, $0.001 par value per share, outstanding.
Table of Contents
|
| Page |
|
|
|
PART I. | ||
|
|
|
Item 1. | 3 | |
| 3 | |
| Consolidated Statements of Operations for the three months ended March 31, 2024 (Unaudited) | 4 |
| 5 | |
| Consolidated Statement of Cash Flows for the three months ended March 31, 2024 (Unaudited) | 6 |
| Consolidated Schedule of Investments as of March 31, 2024 (Unaudited) and December 31, 2023 | 7 |
| 16 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 34 |
Item 3. | 43 | |
Item 4. | 44 | |
|
|
|
PART II. | 45 | |
|
|
|
Item 1. | 45 | |
Item 1A. | 45 | |
Item 2. | 45 | |
Item 3. | 45 | |
Item 4. | 45 | |
Item 5. | 45 | |
Item 6. | 47 | |
48 |
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements include these words.
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 difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In addition to factors previously identified in the Item 1A. Risk Factors section of our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 29, 2024, as well as the risk factors set forth in “Risk Factors” of our Pre-Effective Registration Statement on Form N-2 filed on April 24, 2024, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:
1
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in our most recent Annual Report on Form 10-K, as well as our Pre-Effective Registration Statement on Form N-2 filed with the SEC on March 29, 2024 and April 24, 2024, respectively. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus or any prospectus supplement or other information incorporated herein by reference, as applicable. Moreover, we assume no duty and do not undertake to update the forward-looking statements and projections contained in this Quarterly Report, except as required by applicable law.
Because we are an investment company, the forward-looking statements and projections contained in this Quarterly Report are excluded from the safe harbor protection provided by Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
First Eagle Private Credit Fund
Consolidated Statement of Assets and Liabilities (unaudited)
(in thousands, except share and per share amounts)
|
|
|
|
|
| ||
| March 31, 2024 |
|
| December 31, 2023 |
| ||
| (Unaudited) |
|
|
|
| ||
ASSETS |
|
|
|
|
| ||
Non-controlled/non-affiliated investments, at fair value (amortized cost of: $198,264 and $70,684, respectively) | $ | 198,509 |
|
| $ | 70,883 |
|
Cash and cash equivalents |
| 142,113 |
|
|
| 183,395 |
|
Interest and dividends receivable |
| 2,186 |
|
|
| 1,654 |
|
Deferred financing costs |
| 2,744 |
|
|
| 2,897 |
|
Deferred offering costs |
| 1,135 |
|
|
| 978 |
|
Prepaid expenses and other assets |
| 131 |
|
|
| 71 |
|
Total assets | $ | 346,818 |
|
| $ | 259,878 |
|
|
|
|
|
|
| ||
LIABILITIES |
|
|
|
|
| ||
Credit facility |
| 5,000 |
|
|
| — |
|
Payable for investments purchased |
| 36,717 |
|
|
| 4,750 |
|
Distributions payable |
| 1,491 |
|
|
| — |
|
Offering costs payable |
| 579 |
|
|
| 275 |
|
Trustees' fees payable |
| 7 |
|
|
| — |
|
Financing costs payable |
| — |
|
|
| 1,313 |
|
Accrued professional fees |
| 427 |
|
|
| 444 |
|
Accrued administration expense |
| 439 |
|
|
| 547 |
|
Accrued expenses and other liabilities |
| 870 |
|
|
| 881 |
|
Total liabilities | $ | 45,530 |
|
| $ | 8,210 |
|
Commitments and contingencies (Note 7) |
|
|
|
|
| ||
NET ASSETS |
|
|
|
|
| ||
Common shares, par value $0.001 (unlimited shares authorized, 12,425,318 and 10,366,818 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively) |
| 12 |
|
| $ | 10 |
|
Paid-in capital in excess of par value |
| 302,108 |
|
|
| 252,307 |
|
Distributable earnings (accumulated losses) |
| (832 | ) |
|
| (649 | ) |
Total net assets | $ | 301,288 |
|
| $ | 251,668 |
|
Net asset value per share | $ | 24.25 |
|
| $ | 24.28 |
|
The accompanying notes are an integral part of these consolidated financial statements.
3
First Eagle Private Credit Fund
Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share amounts)
|
| For the Three Months Ended March 31, 2024 |
| |
Investment income: |
|
|
| |
From non-controlled/non-affiliated investments: |
|
|
| |
Interest income |
| $ | 3,251 |
|
Dividend income |
|
| 2,013 |
|
Other income |
|
| 279 |
|
Total investment income |
|
| 5,543 |
|
Expenses: |
|
|
| |
Interest expense |
|
| 820 |
|
Administration expense |
|
| 422 |
|
Base management fees |
|
| 785 |
|
Amortization of continuous offering costs |
|
| 198 |
|
Trustees’ fees |
|
| 98 |
|
Professional fees |
|
| 281 |
|
Other general and administrative expenses |
|
| 172 |
|
Income-based incentive fee |
|
| 198 |
|
Capital gains incentive fee |
|
| 6 |
|
Total expenses |
|
| 2,980 |
|
Management fees waiver |
|
| (785 | ) |
Incentive fees waiver |
|
| (204 | ) |
Net expenses |
|
| 1,991 |
|
|
|
|
| |
Net investment income (loss) |
|
| 3,552 |
|
|
|
|
| |
Realized and unrealized gain (loss): |
|
|
| |
Net realized gains (losses): |
|
|
| |
Non-controlled/non-affiliated investments |
|
| — |
|
Net realized gain (loss) |
|
| — |
|
Net change in unrealized appreciation (depreciation): |
|
|
| |
Non-controlled/non-affiliated investments |
|
| 46 |
|
Net change in unrealized appreciation (depreciation) |
|
| 46 |
|
Net realized and unrealized gain (loss) |
|
| 46 |
|
Net increase (decrease) in net assets resulting from operations |
| $ | 3,598 |
|
|
|
|
| |
Per share information - basic and diluted: |
|
|
| |
Net investment income (loss) per share (basic and diluted) |
| $ | 0.32 |
|
Net increase (decrease) in net assets resulting from operations per share (basic and diluted) |
| $ | 0.33 |
|
Distributions declared per share |
| $ | 0.36 |
|
Weighted average shares outstanding (basic and diluted) |
|
| 11,060,438 |
|
The accompanying notes are an integral part of these consolidated financial statements.
4
First Eagle Private Credit Fund
Consolidated Statements of Changes in Net Assets (unaudited)
(in thousands, except shares)
|
|
|
|
|
|
|
|
|
| Accumulated Earnings |
|
|
|
| |||||
| Common Shares |
|
| Paid-in-Capital in |
|
| (Loss), Net of |
|
| Total |
| ||||||||
| Shares |
|
| Par Value |
|
| Excess of Par Value |
|
| Distributions |
|
| Net Assets |
| |||||
Balance, December 31, 2023 |
| 10,366,818 |
|
| $ | 10 |
|
| $ | 252,307 |
|
| $ | (649 | ) |
| $ | 251,668 |
|
Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net investment income |
| — |
|
|
| — |
|
|
| — |
|
|
| 3,552 |
|
|
| 3,552 |
|
Net realized gain (loss) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net change in unrealized appreciation (depreciation) |
| — |
|
|
| — |
|
|
| — |
|
|
| 46 |
|
|
| 46 |
|
Net increase (decrease) in net assets resulting from operations |
| — |
|
|
| — |
|
|
| — |
|
|
| 3,598 |
|
|
| 3,598 |
|
Shareholder distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Distributions to shareholders |
| — |
|
|
| — |
|
|
| — |
|
|
| (3,979 | ) |
|
| (3,979 | ) |
Net increase (decrease) in net assets resulting from shareholder distributions |
| — |
|
|
| — |
|
|
| — |
|
|
| (3,979 | ) |
|
| (3,979 | ) |
Capital Share Transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common Shares issued from reinvestment of distributions (1) |
| 40 |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Issuance of shares |
| 2,058,460 |
|
|
| 2 |
|
|
| 49,998 |
|
|
| — |
|
|
| 50,000 |
|
Tax reclassification of shareholders' equity in accordance with generally accepted accounting principles |
| — |
|
|
| — |
|
|
| (198 | ) |
|
| 198 |
|
|
| — |
|
Net increase (decrease) in net assets resulting from capital share transactions |
| 2,058,500 |
|
|
| 2 |
|
|
| 49,801 |
|
|
| 198 |
|
|
| 50,001 |
|
Net increase (decrease) for the period |
| 2,058,500 |
|
|
| 2 |
|
|
| 49,801 |
|
|
| (183 | ) |
|
| 49,620 |
|
Balance, March 31, 2024 |
| 12,425,318 |
|
| $ | 12 |
|
| $ | 302,108 |
|
| $ | (832 | ) |
| $ | 301,288 |
|
The accompanying notes are an integral part of these consolidated financial statements.
5
First Eagle Private Credit Fund
Consolidated Statement of Cash Flows (unaudited)
(in thousands, except shares)
|
| For the Three Months Ended March 31, 2024 |
| |
Cash flow from operating activities |
|
|
| |
Net increase (decrease) in net assets resulting from operations |
| $ | 3,598 |
|
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities: |
|
|
| |
Net accretion of discount and amortization of premium |
|
| (159 | ) |
Proceeds from sale of investments and principal repayments |
|
| 212 |
|
Purchases of investments |
|
| (95,666 | ) |
Net realized (gains) losses on investments |
|
| — |
|
Net change in unrealized (appreciation) depreciation on investments |
|
| (46 | ) |
Amortization of deferred financing costs |
|
| 153 |
|
Amortization of continuous offering costs |
|
| 198 |
|
Changes in operating assets and liabilities: |
|
|
| |
Interest and dividends receivable |
|
| (532 | ) |
Prepaid expenses and other assets |
|
| (60 | ) |
Trustees' fees payable |
|
| 7 |
|
Accrued administration expense |
|
| (108 | ) |
Accrued professional fees |
|
| (17 | ) |
Accrued expenses and other liabilities |
|
| (11 | ) |
Net cash provided by (used in) operating activities |
|
| (92,431 | ) |
Cash flow from financing activities |
|
|
| |
Proceeds from issuance of shares |
|
| 50,000 |
|
Borrowings under credit facility |
|
| 5,000 |
|
Distributions paid |
|
| (2,488 | ) |
Deferred financing costs paid |
|
| (1,313 | ) |
Deferred offering costs paid |
|
| (50 | ) |
Net cash provided by (used in) financing activities |
|
| 51,149 |
|
Net decrease in cash and cash equivalents |
|
| (41,282 | ) |
Cash and cash equivalents, beginning of period |
|
| 183,395 |
|
Cash and cash equivalents, end of period |
| $ | 142,113 |
|
Supplemental disclosure of cash flow information and non-cash financing activities |
|
|
| |
Distributions payable |
| $ | 1,491 |
|
Accrued but unpaid offering costs |
| $ | 579 |
|
The accompanying notes are an integral part of these consolidated financial statements.
6
First Eagle Private Credit Fund
Consolidated Schedule of Investments (unaudited)
March 31, 2024
(in thousands, except shares)
Investments (1)(2)(3) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (4) |
| Acquisition Date |
| Maturity Date |
| Principal (5) |
|
| Amortized Cost (6) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Investments - non-controlled/non-affiliated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
First Lien Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Aerospace & Defense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Chromalloy | (7)(11) |
| United States |
| S + 3.75% |
| 0.00% |
| n/a |
| 3/22/2024 |
| 3/21/2031 |
|
| 3,000 |
|
| $ | 2,970 |
|
| $ | 2,995 |
|
|
| 0.99 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,970 |
|
|
| 2,995 |
|
|
| 0.99 |
| |
Building Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
MI Windows and Doors, LLC | (7)(11) |
| United States |
| S + 3.50% |
| 0.00% |
| n/a |
| 3/21/2024 |
| 3/20/2031 |
|
| 4,000 |
|
|
| 3,980 |
|
|
| 4,024 |
|
|
| 1.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,980 |
|
|
| 4,024 |
|
|
| 1.34 |
| |
Chemicals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Project Cloud Holdings, LLC | (7)(8) |
| United States |
| P + 6.25% |
| 0.00% |
| 14.75% |
| 3/27/2024 |
| 3/31/2029 |
|
| 10,576 |
|
|
| 10,306 |
|
|
| 10,364 |
|
|
| 3.44 |
|
Project Cloud Holdings, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 0.00% |
| 11.68% |
| 3/27/2024 |
| 3/31/2029 |
|
| 712 |
|
|
| 712 |
|
|
| 684 |
|
|
| 0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11,018 |
|
|
| 11,048 |
|
|
| 3.67 |
| |
Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
LRS Holdings LLC | (7)(8)(11) |
| United States |
| S + 4.25% |
| 0.00% |
| n/a |
| 3/1/2024 |
| 8/31/2028 |
|
| 1,995 |
|
|
| 1,995 |
|
|
| 1,995 |
|
|
| 0.66 |
|
Prime Security Services Borrower, LLC | (12)(13) |
| United States |
| S + 2.50% |
| 0.00% |
| 7.83% |
| 10/11/2023 |
| 10/13/2030 |
|
| 1,995 |
|
|
| 1,975 |
|
|
| 1,999 |
|
|
| 0.66 |
|
Waste Resource Management Inc. | (8)(12) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.08% |
| 12/28/2023 |
| 12/28/2029 |
|
| 5,628 |
|
|
| 5,547 |
|
|
| 5,543 |
|
|
| 1.84 |
|
Waste Resource Management Inc. (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 5.75% |
| 1.00% |
| n/a |
| 12/28/2023 |
| 12/28/2029 |
|
| — |
|
|
| (10 | ) |
|
| (31 | ) |
|
| (0.01 | ) |
Waste Resource Management Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.08% |
| 12/28/2023 |
| 12/28/2029 |
|
| 124 |
|
|
| 112 |
|
|
| 112 |
|
|
| 0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,619 |
|
|
| 9,618 |
|
|
| 3.19 |
| |
Construction & Engineering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
RL James, Inc. | (8)(12) |
| United States |
| S + 6.00% |
| 1.00% |
| 11.43% |
| 12/15/2023 |
| 12/15/2028 |
|
| 2,296 |
|
|
| 2,255 |
|
|
| 2,253 |
|
|
| 0.75 |
|
RL James, Inc. (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 6.00% |
| 1.00% |
| n/a |
| 12/15/2023 |
| 12/15/2028 |
|
| — |
|
|
| (38 | ) |
|
| (41 | ) |
|
| (0.01 | ) |
RL James, Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.00% |
| 1.00% |
| n/a |
| 12/15/2023 |
| 12/15/2028 |
|
| — |
|
|
| (19 | ) |
|
| (20 | ) |
|
| (0.01 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,198 |
|
|
| 2,192 |
|
|
| 0.73 |
| |
Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
| ||||
Canister International Group Inc. | (7)(11) |
| United States |
| S + 4.00% |
| 0.00% |
| n/a |
| 3/13/2024 |
| 3/13/2029 |
|
| 5,000 |
|
|
| 4,975 |
|
|
| 5,014 |
|
|
| 1.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,975 |
|
|
| 5,014 |
|
|
| 1.66 |
| |
Diversified Consumer Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
AMCP Clean Acquisition Co LLC | (8)(12) |
| United States |
| S + 7.50% |
| 0.50% |
| 12.96% |
| 2/27/2024 |
| 6/10/2028 |
|
| 6,944 |
|
|
| 6,842 |
|
|
| 6,910 |
|
|
| 2.29 |
|
LaserAway | (8)(12) |
| United States |
| S + 5.75% |
| 0.75% |
| 11.07% |
| 9/22/2023 |
| 10/14/2027 |
|
| 1,518 |
|
|
| 1,501 |
|
|
| 1,518 |
|
|
| 0.50 |
|
Mammoth Holdings, LLC | (8)(12) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.05% |
| 11/15/2023 |
| 11/15/2030 |
|
| 3,627 |
|
|
| 3,558 |
|
|
| 3,555 |
|
|
| 1.18 |
|
Mammoth Holdings, LLC (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 5.75% |
| 1.00% |
| n/a |
| 11/22/2023 |
| 11/15/2030 |
|
| — |
|
|
| (9 | ) |
|
| (18 | ) |
|
| (0.01 | ) |
Mammoth Holdings, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.06% |
| 11/22/2023 |
| 11/15/2029 |
|
| 227 |
|
|
| 219 |
|
|
| 218 |
|
|
| 0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,111 |
|
|
| 12,183 |
|
|
| 4.03 |
| |
Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
StubHub | (7) |
| United States |
| S + 4.75% |
| 0.00% |
| 10.08% |
| 3/12/2024 |
| 3/12/2030 |
|
| 5,000 |
|
|
| 4,950 |
|
|
| 5,014 |
|
|
| 1.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,950 |
|
|
| 5,014 |
|
|
| 1.66 |
|
7
First Eagle Private Credit Fund
Consolidated Schedule of Investments (Continued)
March 31, 2024
(in thousands, except shares)
Investments (1)(2)(3) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (4) |
| Acquisition Date |
| Maturity Date |
| Principal (5) |
|
| Amortized Cost (6) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Ahead DB Holdings, LLC | (7) |
| United States |
| S + 4.25% |
| 0.75% |
| 9.56% |
| 1/24/2024 |
| 1/24/2031 |
|
| 3,000 |
|
|
| 2,971 |
|
|
| 3,014 |
|
|
| 1.00 |
|
Apella Capital LLC | (8)(12) |
| United States |
| P + 5.50% |
| 1.00% |
| 14.00% |
| 3/1/2024 |
| 3/1/2029 |
|
| 1,270 |
|
|
| 1,247 |
|
|
| 1,246 |
|
|
| 0.41 |
|
Apella Capital LLC (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| P + 5.50% |
| 1.00% |
| n/a |
| 3/1/2024 |
| 3/1/2029 |
|
| — |
|
|
| (2 | ) |
|
| (5 | ) |
|
| — |
|
Apella Capital LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| P + 5.50% |
| 1.00% |
| 14.00% |
| 3/1/2024 |
| 3/1/2029 |
|
| 200 |
|
|
| 195 |
|
|
| 195 |
|
|
| 0.06 |
|
Auxey Bidco Ltd. | (7)(11)(13) |
| Europe |
| S + 6.00% |
| 0.00% |
| n/a |
| 3/29/2024 |
| 6/29/2027 |
|
| 2,993 |
|
|
| 2,933 |
|
|
| 2,929 |
|
|
| 0.97 |
|
Evertec Group, LLC | (8)(12)(13) |
| United States |
| S + 3.50% |
| 0.00% |
| 8.83% |
| 10/12/2023 |
| 10/30/2030 |
|
| 1,800 |
|
|
| 1,774 |
|
|
| 1,807 |
|
|
| 0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,118 |
|
|
| 9,186 |
|
|
| 3.04 |
| |
Health Care Facilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Greenway Health, LLC | (7)(8) |
| United States |
| S + 6.75% |
| 0.00% |
| 11.93% |
| 12/20/2023 |
| 3/31/2029 |
|
| 9,758 |
|
|
| 9,481 |
|
|
| 9,465 |
|
|
| 3.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,481 |
|
|
| 9,465 |
|
|
| 3.14 |
| |
Health Care Providers & Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Aspen Dental Management Inc. | (11)(12) |
| United States |
| S + 5.75% |
| 0.00% |
| 11.08% |
| 12/21/2023 |
| 12/23/2027 |
|
| 4,988 |
|
|
| 4,752 |
|
|
| 4,998 |
|
|
| 1.66 |
|
Elevate HD Parent, Inc. | (8)(12) |
| United States |
| S + 6.00% |
| 1.00% |
| 11.43% |
| 8/18/2023 |
| 8/20/2029 |
|
| 995 |
|
|
| 978 |
|
|
| 983 |
|
|
| 0.33 |
|
Elevate HD Parent, Inc. (Delayed Draw) | (7)(8) |
| United States |
| S + 6.00% |
| 1.00% |
| 11.43% |
| 8/18/2023 |
| 8/20/2029 |
|
| 23 |
|
|
| 23 |
|
|
| 23 |
|
|
| 0.01 |
|
Elevate HD Parent, Inc. (Delayed Draw) | (7)(8)(10) |
| United States |
| S + 6.00% |
| 1.00% |
| n/a |
| 8/18/2023 |
| 8/20/2029 |
|
| — |
|
|
| (3 | ) |
|
| (7 | ) |
|
| — |
|
Elevate HD Parent, Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.00% |
| 1.00% |
| n/a |
| 8/18/2023 |
| 8/20/2029 |
|
| — |
|
|
| (3 | ) |
|
| (3 | ) |
|
| — |
|
First Steps Recovery Acquisition, LLC | (8)(12) |
| United States |
| S + 6.25% |
| 0.00% |
| 11.58% |
| 3/29/2024 |
| 3/29/2030 |
|
| 4,824 |
|
|
| 4,752 |
|
|
| 4,752 |
|
|
| 1.58 |
|
First Steps Recovery Acquisition, LLC (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 0.00% |
| 11.58% |
| 3/29/2024 |
| 3/29/2030 |
|
| — |
|
|
| (6 | ) |
|
| (17 | ) |
|
| (0.01 | ) |
First Steps Recovery Acquisition, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 0.00% |
| 11.58% |
| 3/29/2024 |
| 3/29/2030 |
|
| — |
|
|
| (17 | ) |
|
| (17 | ) |
|
| (0.01 | ) |
Houseworks Holdings | (8)(12) |
| United States |
| S + 6.50% |
| 1.00% |
| 11.99% |
| 9/1/2023 |
| 12/15/2028 |
|
| 701 |
|
|
| 683 |
|
|
| 680 |
|
|
| 0.23 |
|
Houseworks Holdings (Delayed Draw) | (7)(8)(10) |
| United States |
| S + 6.50% |
| 1.00% |
| n/a |
| 9/1/2023 |
| 12/15/2028 |
|
| — |
|
|
| (10 | ) |
|
| (15 | ) |
|
| — |
|
Houseworks Holdings (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.50% |
| 1.00% |
| 11.98% |
| 9/1/2023 |
| 12/15/2028 |
|
| 67 |
|
|
| 62 |
|
|
| 61 |
|
|
| 0.02 |
|
In Vitro Sciences, LLC | (8)(12) |
| United States |
| S + 6.00% |
| 1.00% |
| 11.44% |
| 2/29/2024 |
| 2/28/2029 |
|
| 8,809 |
|
|
| 8,679 |
|
|
| 8,676 |
|
|
| 2.88 |
|
In Vitro Sciences, LLC (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 6.00% |
| 1.00% |
| 11.44% |
| 2/29/2024 |
| 2/28/2029 |
|
| 2,250 |
|
|
| 2,239 |
|
|
| 2,216 |
|
|
| 0.74 |
|
In Vitro Sciences, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.00% |
| 1.00% |
| n/a |
| 2/29/2024 |
| 2/28/2029 |
|
| — |
|
|
| (8 | ) |
|
| (9 | ) |
|
| — |
|
Medrina, LLC | (8)(12) |
| United States |
| S + 6.25% |
| 1.00% |
| 11.74% |
| 10/20/2023 |
| 10/20/2029 |
|
| 7,340 |
|
|
| 7,213 |
|
|
| 7,202 |
|
|
| 2.39 |
|
Medrina, LLC (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 1.00% |
| n/a |
| 10/20/2023 |
| 10/20/2029 |
|
| — |
|
|
| (9 | ) |
|
| (29 | ) |
|
| (0.01 | ) |
Medrina, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 1.00% |
| n/a |
| 10/20/2023 |
| 10/20/2029 |
|
| — |
|
|
| (19 | ) |
|
| (21 | ) |
|
| (0.01 | ) |
Physician Partners, LLC | (8)(12) |
| United States |
| S + 5.50% |
| 0.00% |
| 10.81% |
| 10/11/2023 |
| 10/23/2028 |
|
| 1,995 |
|
|
| 1,903 |
|
|
| 1,796 |
|
|
| 0.60 |
|
RMBUS Holdco Inc. | (8)(12) |
| United States |
| S + 6.50% |
| 1.00% |
| n/a |
| 1/8/2024 |
| 1/8/2029 |
|
| 5,645 |
|
|
| 5,554 |
|
|
| 5,550 |
|
|
| 1.84 |
|
RMBUS Holdco Inc. (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 6.50% |
| 1.00% |
| 11.68% |
| 1/8/2024 |
| 1/8/2029 |
|
| — |
|
|
| (17 | ) |
|
| (35 | ) |
|
| (0.01 | ) |
RMBUS Holdco Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.50% |
| 1.00% |
| n/a |
| 1/8/2024 |
| 1/8/2029 |
|
| — |
|
|
| (17 | ) |
|
| (17 | ) |
|
| (0.01 | ) |
Visante Acquisition, LLC | (8)(12) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.06% |
| 1/31/2024 |
| 1/31/2030 |
|
| 8,462 |
|
|
| 8,338 |
|
|
| 8,334 |
|
|
| 2.77 |
|
Visante Acquisition, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.06% |
| 1/31/2024 |
| 1/31/2030 |
|
| 130 |
|
|
| 116 |
|
|
| 116 |
|
|
| 0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 45,183 |
|
|
| 45,217 |
|
|
| 15.03 |
|
8
First Eagle Private Credit Fund
Consolidated Schedule of Investments (Continued)
March 31, 2024
(in thousands, except shares)
Investments (1)(2)(3) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (4) |
| Acquisition Date |
| Maturity Date |
| Principal (5) |
|
| Amortized Cost (6) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Household Durables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Air Conditioning Specialist, Inc. | (8)(12) |
| United States |
| S + 7.25% |
| 0.00% |
| 12.84% |
| 8/16/2023 |
| 11/9/2026 |
|
| 897 |
|
|
| 886 |
|
|
| 890 |
|
|
| 0.30 |
|
Air Conditioning Specialist, Inc. (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 7.25% |
| 0.00% |
| n/a |
| 12/15/2023 |
| 11/9/2026 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Air Conditioning Specialist, Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 7.25% |
| 0.00% |
| n/a |
| 8/16/2023 |
| 11/9/2026 |
|
| 30 |
|
|
| 30 |
|
|
| 30 |
|
|
| 0.01 |
|
Dorel Industries Inc. | (8)(12)(13) |
| Canada |
| S + 8.30% |
| 2.00% |
| 13.64% |
| 12/8/2023 |
| 12/8/2026 |
|
| 5,978 |
|
|
| 5,891 |
|
|
| 5,881 |
|
|
| 1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,807 |
|
|
| 6,801 |
|
|
| 2.26 |
| |
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Community Based Care Acquisition, Inc. (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 5.50% |
| 1.00% |
| n/a |
| 3/19/2024 |
| 9/16/2027 |
|
| — |
|
|
| (37 | ) |
|
| — |
|
|
| — |
|
The Mutual Group, LLC | (8)(12) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.06% |
| 1/31/2024 |
| 1/31/2030 |
|
| 9,740 |
|
|
| 9,598 |
|
|
| 9,594 |
|
|
| 3.18 |
|
The Mutual Group, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 5.75% |
| 1.00% |
| n/a |
| 1/31/2024 |
| 1/31/2030 |
|
| — |
|
|
| (19 | ) |
|
| (19 | ) |
|
| (0.01 | ) |
Truist Insurance Holdings LLC | (7)(11) |
| United States |
| S + 3.25% |
| 0.00% |
| n/a |
| 3/22/2024 |
| 3/22/2031 |
|
| 3,000 |
|
|
| 2,992 |
|
|
| 2,999 |
|
|
| 1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,534 |
|
|
| 12,574 |
|
|
| 4.17 |
| |
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acumera, Inc. | (8)(12) |
| United States |
| S + 7.00% |
| 1.00% |
| 12.43% |
| 9/29/2023 |
| 6/7/2028 |
|
| 963 |
|
|
| 950 |
|
|
| 963 |
|
|
| 0.32 |
|
Acumera, Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 7.00% |
| 1.00% |
| n/a |
| 9/29/2023 |
| 6/7/2028 |
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
Asurion, LLC | (7) |
| United States |
| S + 4.00% |
| 0.00% |
| 9.43% |
| 3/1/2024 |
| 8/19/2028 |
|
| 4,987 |
|
|
| 4,975 |
|
|
| 4,816 |
|
|
| 1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,924 |
|
|
| 5,779 |
|
|
| 1.92 |
| |
Machinery |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Vertical Midco | (7)(11)(13) |
| Europe |
| S + 3.50% |
| 0.00% |
| n/a |
| 3/11/2024 |
| 4/11/2030 |
|
| 3,990 |
|
|
| 3,980 |
|
|
| 4,008 |
|
|
| 1.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,980 |
|
|
| 4,008 |
|
|
| 1.33 |
| |
Media |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cengage Learning Acquisitions, Inc. | (7)(13) |
| United States |
| S + 4.25% |
| 0.00% |
| 9.58% |
| 3/18/2024 |
| 3/15/2031 |
|
| 3,000 |
|
|
| 2,970 |
|
|
| 3,001 |
|
|
| 1.00 |
|
MH Sub I, LLC | (7)(11) |
| United States |
| S + 4.25% |
| 0.00% |
| n/a |
| 3/1/2024 |
| 5/3/2028 |
|
| 4,987 |
|
|
| 4,935 |
|
|
| 4,964 |
|
|
| 1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,905 |
|
|
| 7,965 |
|
|
| 2.65 |
| |
Oil, Gas & Consumable Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Essar Oil (UK) Limited | (7)(8)(13) |
| Europe |
| S + 6.25% |
| 3.00% |
| 11.71% |
| 10/31/2023 |
| 10/29/2024 |
|
| 7,609 |
|
|
| 7,563 |
|
|
| 7,533 |
|
|
| 2.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,563 |
|
|
| 7,533 |
|
|
| 2.51 |
| |
Passenger Airlines |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
American Airlines, Inc. | (7)(13) |
| United States |
| S + 3.50% |
| 0.00% |
| 8.77% |
| 11/17/2023 |
| 6/4/2029 |
|
| 3,000 |
|
|
| 2,972 |
|
|
| 3,013 |
|
|
| 1.00 |
|
United Airlines, Inc. | (12)(13) |
| United States |
| S + 2.75% |
| 0.00% |
| 8.08% |
| 2/15/2024 |
| 2/15/2031 |
|
| 4,000 |
|
|
| 3,980 |
|
|
| 4,011 |
|
|
| 1.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,952 |
|
|
| 7,024 |
|
|
| 2.33 |
|
9
First Eagle Private Credit Fund
Consolidated Schedule of Investments (Continued)
March 31, 2024
(in thousands, except shares)
Investments (1)(2)(3) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (4) |
| Acquisition Date |
| Maturity Date |
| Principal (5) |
|
| Amortized Cost (6) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Pharmaceuticals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Alvogen Pharma US, Inc. | (7) |
| United States |
| S + 5.00% |
| 1.00% |
| 10.33% |
| 1/9/2024 |
| 6/30/2025 |
|
| 5,138 |
|
|
| 4,939 |
|
|
| 4,637 |
|
|
| 1.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,939 |
|
|
| 4,637 |
|
|
| 1.54 |
| |
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
SR Landscaping, LLC | (8)(12) |
| United States |
| S + 6.25% |
| 1.00% |
| 11.68% |
| 10/30/2023 |
| 10/30/2029 |
|
| 5,391 |
|
|
| 5,315 |
|
|
| 5,310 |
|
|
| 1.76 |
|
SR Landscaping, LLC (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 1.00% |
| n/a |
| 10/30/2023 |
| 10/30/2029 |
|
| — |
|
|
| (8 | ) |
|
| (27 | ) |
|
| (0.01 | ) |
SR Landscaping, LLC (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 6.25% |
| 1.00% |
| 11.68% |
| 10/30/2023 |
| 10/30/2029 |
|
| 89 |
|
|
| 77 |
|
|
| 76 |
|
|
| 0.03 |
|
Teneo Holdings LLC | (7)(11) |
| United States |
| S + 4.75% |
| 1.00% |
| n/a |
| 3/8/2024 |
| 3/8/2031 |
|
| 3,000 |
|
|
| 2,970 |
|
|
| 3,013 |
|
|
| 1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,354 |
|
|
| 8,372 |
|
|
| 2.78 |
| |
Software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
AppLovin Corp. | (7) |
| United States |
| S + 2.50% |
| 0.50% |
| n/a |
| 3/11/2024 |
| 8/16/2030 |
|
| 5,000 |
|
|
| 4,987 |
|
|
| 5,003 |
|
|
| 1.66 |
|
Enverus Holdings, Inc. | (7)(8)(12) |
| United States |
| S + 5.50% |
| 0.75% |
| 10.83% |
| 12/28/2023 |
| 12/24/2029 |
|
| 3,848 |
|
|
| 3,793 |
|
|
| 3,858 |
|
|
| 1.28 |
|
Enverus Holdings, Inc. (Delayed Draw) | (7)(8)(9)(10) |
| United States |
| S + 5.50% |
| 0.75% |
| n/a |
| 12/28/2023 |
| 12/24/2029 |
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
Enverus Holdings, Inc. (Revolver) | (7)(8)(9)(10) |
| United States |
| S + 5.50% |
| 0.75% |
| n/a |
| 12/28/2023 |
| 12/24/2029 |
|
| — |
|
|
| (4 | ) |
|
| 1 |
|
|
| — |
|
QuickBase Inc. | (7) |
| United States |
| S + 4.00% |
| 0.00% |
| n/a |
| 3/13/2024 |
| 10/2/2028 |
|
| 4,987 |
|
|
| 4,962 |
|
|
| 4,984 |
|
|
| 1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 13,737 |
|
|
| 13,846 |
|
|
| 4.59 |
| |
Specialty Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sweetwater Borrower LLC | (7)(8) |
| United States |
| S + 4.25% |
| 0.75% |
| 9.69% |
| 2/29/2024 |
| 8/7/2028 |
|
| 2,250 |
|
|
| 2,234 |
|
|
| 2,258 |
|
|
| 0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,234 |
|
|
| 2,258 |
|
|
| 0.75 |
| |
Textiles, Apparel, & Luxury Goods |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Rachel Zoe, Inc. | (8)(12) |
| United States |
| S + 7.66% |
| 3.00% |
| 12.97% |
| 10/11/2023 |
| 10/9/2026 |
|
| 466 |
|
|
| 460 |
|
|
| 458 |
|
|
| 0.15 |
|
TR Apparel, LLC | (8)(12) |
| United States |
| S + 8.00% |
| 2.00% |
| 13.33% |
| 8/9/2023 |
| 6/20/2027 |
|
| 1,296 |
|
|
| 1,272 |
|
|
| 1,296 |
|
|
| 0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,732 |
|
| $ | 1,754 |
|
|
| 0.58 |
| |
Total First Lien Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 198,264 |
|
| $ | 198,507 |
|
|
| 65.89 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Warrant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acumera, Inc. | (8) |
| United States |
|
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Investments - non-controlled/non-affiliated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 198,264 |
|
| $ | 198,509 |
|
|
| 65.89 | % |
10
The accompanying notes are an integral part of these consolidated financial statements.
11
First Eagle Private Credit Fund
Consolidated Schedule of Investments
December 31, 2023
(in thousands, except shares)
Investments (1)(2)(3) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (5) |
| Acquisition Date |
| Maturity Date |
| Principal (6) |
|
| Amortized Cost (7) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Investments - non-controlled/non-affiliated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
First Lien Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Prime Security Services Borrower, LLC | (4) |
| United States |
| S + 2.50% |
| 0.00% |
| 7.84% |
| 10/11/2023 |
| 10/13/2030 |
|
| 2,000 |
|
| $ | 1,979 |
|
| $ | 2,008 |
|
|
| 0.80 | % |
Waste Resource Management Inc. | (4)(8) |
| United States |
| S + 5.75% |
| 1.00% |
| 11.11% |
| 12/28/2023 |
| 12/28/2029 |
|
| 5,628 |
|
|
| 5,543 |
|
|
| 5,543 |
|
|
| 2.20 |
|
Waste Resource Management Inc. (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 5.75% |
| 1.00% |
| n/a |
| 12/28/2023 |
| 12/28/2029 |
|
| — |
|
|
| (10 | ) |
|
| (31 | ) |
|
| (0.01 | ) |
Waste Resource Management Inc. (Revolver) | (8)(9)(11) |
| United States |
| S + 5.75% |
| 1.00% |
| n/a |
| 12/28/2023 |
| 12/28/2029 |
|
| — |
|
|
| (12 | ) |
|
| (12 | ) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,500 |
|
|
| 7,508 |
|
|
| 2.99 |
| |
Construction & Engineering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
RL James, Inc. | (4)(8) |
| United States |
| S + 6.00% |
| 0.00% |
| 11.46% |
| 12/15/2023 |
| 12/15/2028 |
|
| 2,301 |
|
|
| 2,259 |
|
|
| 2,258 |
|
|
| 0.90 |
|
RL James, Inc. (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 6.00% |
| 0.00% |
| n/a |
| 12/15/2023 |
| 12/15/2028 |
|
| — |
|
|
| (40 | ) |
|
| (41 | ) |
|
| (0.02 | ) |
RL James, Inc. (Revolver) | (8)(9)(11) |
| United States |
| S + 6.00% |
| 0.00% |
| n/a |
| 12/15/2023 |
| 12/15/2028 |
|
| — |
|
|
| (20 | ) |
|
| (20 | ) |
|
| (0.01 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,199 |
|
|
| 2,197 |
|
|
| 0.87 |
| |
Diversified Consumer Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
LaserAway | (4)(8) |
| United States |
| S + 5.75% |
| 0.75% |
| 11.41% |
| 9/22/2023 |
| 10/14/2027 |
|
| 1,522 |
|
|
| 1,504 |
|
|
| 1,522 |
|
|
| 0.60 |
|
Mammoth Holdings, LLC | (4)(8) |
| United States |
| S + 5.75% |
| 0.00% |
| 11.10% |
| 11/15/2023 |
| 11/15/2030 |
|
| 3,636 |
|
|
| 3,565 |
|
|
| 3,564 |
|
|
| 1.42 |
|
Mammoth Holdings, LLC (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 5.75% |
| 0.00% |
| n/a |
| 11/22/2023 |
| 11/15/2030 |
|
| — |
|
|
| (9 | ) |
|
| (18 | ) |
|
| (0.01 | ) |
Mammoth Holdings, LLC (Revolver) | (8)(9)(11) |
| United States |
| S + 5.75% |
| 0.00% |
| n/a |
| 11/22/2023 |
| 11/15/2029 |
|
| — |
|
|
| (9 | ) |
|
| (9 | ) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,051 |
|
|
| 5,059 |
|
|
| 2.01 |
| |
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Evertec Group, LLC | (4)(8)(10) |
| United States |
| S + 3.50% |
| 0.75% |
| 8.96% |
| 10/12/2023 |
| 10/30/2030 |
|
| 1,800 |
|
|
| 1,774 |
|
|
| 1,807 |
|
|
| 0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,774 |
|
|
| 1,807 |
|
|
| 0.72 |
| |
Health Care Facilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Greenway Health, LLC | (8) |
| United States |
| S + 6.75% |
| 0.00% |
| 11.93% |
| 12/20/2023 |
| 3/31/2029 |
|
| 9,758 |
|
|
| 9,467 |
|
|
| 9,465 |
|
|
| 3.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,467 |
|
|
| 9,465 |
|
|
| 3.76 |
|
12
First Eagle Private Credit Fund
Consolidated Schedule of Investments (Continued)
December 31, 2023
(in thousands, except shares)
Investments (1)(2)(3) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (5) |
| Acquisition Date |
| Maturity Date |
| Principal (6) |
|
| Amortized Cost (7) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Health Care Providers & Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Aspen Dental Management Inc. | (4)(8)(13) |
| United States |
| S + 5.75% |
| 0.00% |
| n/a |
| 12/21/2023 |
| 12/23/2027 |
|
| 5,000 |
|
|
| 4,750 |
|
|
| 4,937 |
|
|
| 1.96 |
|
Elevate HD Parent, Inc. | (4)(8) |
| United States |
| S + 6.00% |
| 0.00% |
| 11.46% |
| 8/18/2023 |
| 8/20/2029 |
|
| 998 |
|
|
| 980 |
|
|
| 979 |
|
|
| 0.39 |
|
Elevate HD Parent, Inc. (Delayed Draw) | (8)(9)(12) |
| United States |
| S + 6.00% |
| 0.00% |
| 11.46% |
| 8/18/2023 |
| 8/20/2029 |
|
| 23 |
|
|
| 22 |
|
|
| 21 |
|
|
| 0.01 |
|
Elevate HD Parent, Inc. (Delayed Draw) | (8)(9)(12) |
| United States |
| S + 6.00% |
| 0.00% |
| n/a |
| 8/18/2023 |
| 8/20/2029 |
|
| — |
|
|
| (3 | ) |
|
| (10 | ) |
|
| — |
|
Elevate HD Parent, Inc. (Revolver) | (8)(9)(11) |
| United States |
| S + 6.00% |
| 0.00% |
| n/a |
| 8/18/2023 |
| 8/20/2029 |
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
|
| — |
|
Houseworks Holdings | (4)(8) |
| United States |
| S + 6.50% |
| 0.00% |
| 12.04% |
| 9/1/2023 |
| 12/15/2028 |
|
| 703 |
|
|
| 683 |
|
|
| 682 |
|
|
| 0.27 |
|
Houseworks Holdings (Delayed Draw) | (8)(9)(12) |
| United States |
| S + 6.50% |
| 0.00% |
| n/a |
| 9/1/2023 |
| 12/15/2028 |
|
| — |
|
|
| (11 | ) |
|
| (15 | ) |
|
| (0.01 | ) |
Houseworks Holdings (Revolver) | (8)(9)(11) |
| United States |
| S + 6.50% |
| 0.00% |
| n/a |
| 9/1/2023 |
| 12/15/2028 |
|
| — |
|
|
| (5 | ) |
|
| (5 | ) |
|
| — |
|
Medrina, LLC | (4)(8) |
| United States |
| S + 6.25% |
| 0.00% |
| 11.74% |
| 10/20/2023 |
| 10/20/2029 |
|
| 7,358 |
|
|
| 7,225 |
|
|
| 7,220 |
|
|
| 2.87 |
|
Medrina, LLC (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 6.25% |
| 0.00% |
| n/a |
| 10/20/2023 |
| 10/20/2029 |
|
| — |
|
|
| (9 | ) |
|
| (29 | ) |
|
| (0.01 | ) |
Medrina, LLC (Revolver) | (8)(9)(11) |
| United States |
| S + 6.25% |
| 0.00% |
| n/a |
| 10/20/2023 |
| 10/20/2029 |
|
| — |
|
|
| (20 | ) |
|
| (21 | ) |
|
| (0.01 | ) |
Physician Partners, LLC | (4)(8) |
| United States |
| S + 5.50% |
| 0.00% |
| 10.88% |
| 10/11/2023 |
| 12/23/2028 |
|
| 2,000 |
|
|
| 1,903 |
|
|
| 1,910 |
|
|
| 0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 15,511 |
|
|
| 15,665 |
|
|
| 6.22 |
| |
Household Durables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Air Conditioning Specialist, Inc. | (4)(8) |
| United States |
| S + 7.25% |
| 0.00% |
| 12.90% |
| 8/16/2023 |
| 11/9/2026 |
|
| 900 |
|
|
| 887 |
|
|
| 886 |
|
|
| 0.35 |
|
Air Conditioning Specialist, Inc. (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 7.25% |
| 0.00% |
| n/a |
| 12/15/2023 |
| 11/9/2026 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Air Conditioning Specialist, Inc. (Revolver) | (8)(9)(11) |
| United States |
| S + 7.25% |
| 0.00% |
| 12.91% |
| 8/16/2023 |
| 11/9/2026 |
|
| 30 |
|
|
| 30 |
|
|
| 29 |
|
|
| 0.01 |
|
Dorel Industries Inc. | (4)(8)(10) |
| Canada |
| S + 8.30% |
| 2.00% |
| 13.68% |
| 12/8/2023 |
| 12/8/2026 |
|
| 5,978 |
|
|
| 5,883 |
|
|
| 5,881 |
|
|
| 2.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,800 |
|
|
| 6,796 |
|
|
| 2.70 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acumera, Inc. | (4)(8) |
| United States |
| S + 7.50% |
| 1.00% |
| 12.48% |
| 9/29/2023 |
| 6/7/2028 |
|
| 969 |
|
|
| 955 |
|
|
| 954 |
|
|
| 0.38 |
|
Acumera, Inc. (Revolver) | (8)(9)(11) |
| United States |
| S + 7.50% |
| 1.00% |
| n/a |
| 9/29/2023 |
| 6/7/2028 |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 954 |
|
|
| 953 |
|
|
| 0.38 |
| |
Oil, Gas & Consumable Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Essar Oil (UK) Limited | (8)(10) |
| Europe |
| S + 6.25% |
| 3.00% |
| 11.74% |
| 10/31/2023 |
| 10/29/2024 |
|
| 7,609 |
|
|
| 7,544 |
|
|
| 7,533 |
|
|
| 2.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,544 |
|
|
| 7,533 |
|
|
| 2.99 |
| |
Passenger Airlines |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
American Airlines, Inc. | (9)(10) |
| United States |
| S + 3.50% |
| 0.00% |
| 8.87% |
| 11/17/2023 |
| 6/4/2029 |
|
| 3,000 |
|
|
| 2,970 |
|
|
| 3,010 |
|
|
| 1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,970 |
|
|
| 3,010 |
|
|
| 1.20 |
|
13
First Eagle Private Credit Fund
Consolidated Schedule of Investments (Continued)
December 31, 2023
(in thousands, except shares)
Investments (1)(2)(3)(4) | Footnotes |
| Region |
| Reference Rate and Spread |
| Interest Rate Floor |
| Interest Rate (5) |
| Acquisition Date |
| Maturity Date |
| Principal (6) |
|
| Amortized Cost (7) |
|
| Fair Value |
|
| Percentage of Net Assets |
| ||||
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
SR Landscaping, LLC | (4)(8) |
| United States |
| S + 6.25% |
| 1.00% |
| 11.70% |
| 10/30/2023 |
| 10/30/2029 |
|
| 5,404 |
|
|
| 5,325 |
|
|
| 5,323 |
|
|
| 2.11 |
|
SR Landscaping, LLC (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 6.25% |
| 1.00% |
| n/a |
| 10/30/2023 |
| 10/30/2029 |
|
| — |
|
|
| (9 | ) |
|
| (27 | ) |
|
| (0.01 | ) |
SR Landscaping, LLC (Revolver) | (8)(9)(11) |
| United States |
| S + 6.25% |
| 1.00% |
| 11.70% |
| 10/30/2023 |
| 10/30/2029 |
|
| 89 |
|
|
| 76 |
|
|
| 76 |
|
|
| 0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,392 |
|
|
| 5,372 |
|
|
| 2.13 |
| |
Software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Enverus Holdings, Inc. | (4)(8)(9) |
| United States |
| S + 5.50% |
| 0.75% |
| 10.86% |
| 12/28/2023 |
| 12/24/2029 |
|
| 3,848 |
|
|
| 3,791 |
|
|
| 3,790 |
|
|
| 1.50 |
|
Enverus Holdings, Inc. (Delayed Draw) | (8)(9)(11) |
| United States |
| S + 5.50% |
| 0.75% |
| n/a |
| 12/28/2023 |
| 12/24/2029 |
|
| — |
|
|
| (1 | ) |
|
| (3 | ) |
|
| — |
|
Enverus Holdings, Inc. (Revolver) | (8)(9)(11) |
| United States |
| S + 5.50% |
| 0.75% |
| n/a |
| 12/28/2023 |
| 12/24/2029 |
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,786 |
|
|
| 3,783 |
|
|
| 1.50 |
| |
Textiles, Apparel, & Luxury Goods |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Rachel Zoe, Inc. | (4)(8) |
| United States |
| S + 7.66% |
| 3.00% |
| 13.01% |
| 10/11/2023 |
| 10/9/2026 |
|
| 470 |
|
|
| 462 |
|
|
| 462 |
|
|
| 0.18 |
|
TR Apparel, LLC | (4)(8) |
| United States |
| S + 8.00% |
| 2.00% |
| 13.32% |
| 8/9/2023 |
| 6/20/2027 |
|
| 1,300 |
|
|
| 1,274 |
|
|
| 1,271 |
|
|
| 0.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,736 |
|
| $ | 1,733 |
|
|
| 0.69 |
| |
Total First Lien Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 70,684 |
|
| $ | 70,881 |
|
|
| 28.16 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Warrant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Acumera, Inc. | (8) |
| United States |
|
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
| — |
|
|
| 2 |
|
|
| 0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Investments - non-controlled/non-affiliated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 70,684 |
|
| $ | 70,883 |
|
|
| 28.17 | % |
14
The accompanying notes are an integral part of these consolidated financial statements.
15
First Eagle Private Credit Fund
Notes to Consolidated Financial Statements (unaudited)
(in thousands, except share/per share data, percentages and as otherwise noted)
Note 1. Organization
First Eagle Private Credit Fund (together with its subsidiaries, the “Company”), is a Delaware statutory trust formed on October 20, 2021 to act as a non-diversified, closed-end management investment company. On May 31, 2023, the Company elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, the Company expects to elect to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and expects to qualify as a RIC annually thereafter.
The Company is externally managed by First Eagle Investment Management, LLC (“FEIM” or the “Adviser”). The Adviser oversees the management of the Company’s activities and supervises the activities of First Eagle Alternative Credit, LLC (“FEAC” or the “Subadviser”, and together with the Adviser, the “Advisers”). FEAC, an alternative credit adviser that is a wholly-owned subsidiary of FEIM, serves as the Company’s investment subadviser and administrator (the “Administrator”).
The Company has two wholly owned subsidiaries - First Eagle Private Credit Fund SPV, LLC, which is a financing subsidiary of the Company, and FEPC Fund Servicer, LLC, which is the servicer of the Company’s Credit Facility.
The Company’s investment objectives are to generate returns in the form of current income and, to a lesser extent, long-term capital appreciation of investments. Under normal circumstances, the Company expects that the majority of its total assets will be in private credit investments to U.S. private companies through (i) directly originated first lien senior secured cash flow loans, (ii) directly originated asset-based loans, (iii) club deals (directly originated first lien senior secured or asset-based loans in which the Company co-invests with a small number of third party private debt providers), (iv) second lien loans, and (v) broadly syndicated loans, Rule 144A high yield bonds and other debt securities (the investments described in this sentence, collectively, “Private Credit”). Under normal circumstances, the Company will invest at least 80% of its total assets (net assets plus borrowings for investment purposes) in private credit investments (loans and other credit instruments that are issued in private offerings or issued by private U.S. or non-U.S. companies). This policy may be changed by the Board, and with at least 60 days’ prior notice to shareholders, upon the completion of the Fund's next repurchase offer (so long as such repurchase offer is not oversubscribed). To a lesser extent, the Company will also invest in broadly syndicated loans of publicly traded issuers, publicly traded high yield bonds and equity securities. The Company expects that investments in broadly syndicated loans and high yield bonds will generally be more liquid than other Private Credit assets and will likely be used to initially deploy capital upon receipt of subscriptions and may also be used for the purposes of maintaining and managing liquidity for its share repurchase program and cash management, while also presenting an opportunity for attractive investment returns.
The Company is offering and selling its common shares of beneficial interest, par value $0.001 per share (the “Common Shares”) in a continuous private placement (the “Private Offering”) in the United States under the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder. The Company commenced its loan origination process and investment activities contemporaneously with the initial closing (excluding the initial seed capital investment made by the Adviser) (the “Initial Closing”) of the Private Offering on June 12, 2023 and commenced operations following its first capital call on July 10, 2023 (“Commencement of Operations”). Prior to the Initial Closing, on April 28, 2023, the Adviser purchased 4,000 Common Shares at $25.00 per share.
Note 2. Significant Accounting Policies
Basis of Presentation
The Company is an investment company following the accounting and reporting guidance under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies. The Company’s first fiscal year ended on December 31, 2023.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, the unaudited financial results included herein contain all adjustments, consisting solely of normal accruals, considered necessary for the fair statement of financial statements for the interim period included herein. The
16
current period’s results of operations are not necessarily indicative of the operating results to be expected for the year ending December 31, 2024.
The Company commenced operations on July 10, 2023. As a result, comparative consolidated statements of operations, consolidated statements of changes in net assets and consolidated statements of cash flows are not presented.
As an emerging growth company, the Company intends to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
Consolidation
As provided under ASC Topic 946, Financial Services—Investment Companies, the Company generally will not consolidate its investment in a company other than substantially owned investment company subsidiaries or a controlled operating company whose business consists of providing services to the Company.
Use of Estimates
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates and such differences could be material.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits and highly liquid investments, such as money market funds, with original maturities of three months or less. Cash and cash equivalents are carried at cost, which approximates fair value. The Company’s cash and cash equivalents are held with a financial institution and, at times, may exceed the Federal Deposit Insurance Corporation insured limit.
Investments
Investment transactions are recorded on a trade date basis.
Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries, and is recorded within net realized gain (loss) on the Consolidated Statement of Operations.
The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period, and is recorded within net unrealized appreciation (depreciation) on the Consolidated Statement of Operations.
Fair Value of Financial Instruments
The Company applies fair value to its portfolio investments in accordance with ASC Topic 820—Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. ASC Topic 820 also requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. Refer to Note 5—“Fair Value Measurements” for further discussion regarding fair value measurements and hierarchy.
Revenue Recognition
Interest Income
Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that the Company expects to collect such amounts. Discounts from and premiums to par value on debt investments, loan origination fees and upfront fees received that are deemed to be an adjustment to yield are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including loan origination fees and upfront fees, adjusted for the accretion of discounts and amortization of premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.
The Company will recognize any earned exit or back-end fees into income when it believes the amounts will ultimately become collected by using either the beneficial interest model or other appropriate income recognition frameworks.
The Company had $3,251 of interest income during the three months ended March 31, 2024.
PIK Income
17
The Company may have investments in its portfolio which contain a contractual PIK, interest provision. PIK interest is computed at the contractual rate specified in each investment agreement, is added to the principal balance of the investment, and is recorded as income. The Company will cease accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect amounts to be collectible and will generally only begin to recognize PIK income again when all principal and interest have been paid or upon the restructuring of the investment where the interest is deemed collectible. To maintain the Company’s status as a RIC, PIK interest income, which is considered investment company taxable income, may be required to be paid out to shareholders in the form of dividends even though the Company has not yet collected the cash. Amounts necessary to pay these dividends may come from available cash. The Company did not have any PIK investments during the three months ended March 31, 2024.
Dividend Income
Dividend income from cash equivalents is recorded on the record date. Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Distributions received from a limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. The Company had $2,013 of dividend income during the three months ended March 31, 2024.
Other Income
The Company may also generate revenue in the form of structuring, arranger or due diligence fees, amendment or consent fees, portfolio company administration fees, fees for providing significant managerial assistance and consulting fees. Such fees are recognized as income when earned or the services are rendered. The Company had $279 of other income during the three months ended March 31, 2024.
Non-Accrual
Loans are placed on non-accrual status when there is reasonable doubt whether principal or interest payments will be collected in full. The Company records the reversal of any previously accrued income against the same income category reflected in the Consolidated Statement of Operations. Additionally, any original issue discount (“OID”) and market discount are no longer accreted to interest income as of the date the 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 current and, in management’s judgment, are likely to remain current. However, the Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2024 and December 31, 2023, the Company had no loans on non-accrual status.
Organization and Offering Expenses
Costs associated with the organization of the Company are expensed as incurred. These expenses consist primarily of legal fees and other costs of organizing the Company.
Costs associated with the offering of Common Shares of the Company are capitalized as deferred offering costs on the Consolidated Statement of Assets and Liabilities and amortized over a twelve-month period from the later of the Commencement of Operations or the date of incurrence. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s continuous private offering.
Deferred Financing Costs
Deferred financing costs consist of fees and expenses paid in connection with the closing and amendments of the Credit Facility (as defined in Note 6 hereto), including legal, accounting, and other related expenses. These costs are capitalized at the time of payment and are amortized using the straight line method over the term of the Credit Facility.
Under the Credit Facility, if the borrowing capacity of a new arrangement is lower than the borrowing capacity of the old arrangement, evaluated on a lender by lender basis, then any unamortized deferred financing costs would be expensed during the period in proportion to the decrease in the old arrangement for that lender. Any remaining unamortized deferred financing costs relating to the old arrangement would be deferred and amortized over the term of the new arrangement along with any costs associated with the new arrangement.
Capitalized deferred financing costs related to the Credit Facility are presented separately on the Company’s Consolidated Statement of Assets and Liabilities. Refer to Note 6—“Borrowings” for additional information.
U.S. Federal Income Taxes, Including Excise Tax
The Company has elected to be regulated as a BDC under the 1940 Act. In addition, the Company intends to elect to be treated as a RIC under Subchapter M of the Code, and expects to qualify as a RIC annually thereafter. So long as the Company
18
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 shareholders as dividends. Rather, any tax liability related to income earned and distributed by the Company would represent obligations of the Company’s investors and would not be reflected in the financial statement of the Company.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statement to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analyses of tax laws, regulations and interpretations thereof.
To qualify for and maintain qualification as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its shareholders, for each taxable year, at least 90% of the sum of (i) its investment company taxable income, as defined by the Code but determined without regard to the deduction for dividends paid, and (ii) its net tax-exempt income for such taxable year.
In addition, based on the excise tax distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed earnings unless the Company distributes in a timely manner in each calendar year an amount at least equal to the sum of (1) 98% of its ordinary income for the calendar year, (2) 98.2% of its capital gain net income (both long-term and short-term, and adjusted for certain ordinary losses) for the one-year period generally ending October 31 of that calendar year and (3) any income realized, but not distributed, in prior years. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed. Although the Company currently intends to make the required distributions to avoid the application of the 4% U.S. federal excise tax, the Company may also decide to retain taxable income in excess of current year dividend distributions and to pay any applicable excise tax on such undistributed income.
Distributions
The Company intends to make monthly distributions to its shareholders. Distributions to shareholders are recorded on the record date. All distributions will be paid at the discretion of the Company’s board of trustees (the “Board”), considering factors such as the Company’s earnings, cash flows, capital and liquidity needs and general financial condition and the requirements of Delaware law.
Note 3. Agreements and Related Party Transactions
Investment Advisory Agreement
On March 29, 2023, the Company’s Board unanimously approved an investment advisory agreement (the “Advisory Agreement”) and a subadvisory agreement (the “Subadvisory Agreement”), each of which became effective on March 30, 2023. Under the terms of the Advisory Agreement, the Company will pay the Adviser a fee for its services consisting of two components: a management fee and an incentive fee. The cost of both the management fee and the incentive fee will ultimately be borne by the shareholders. The subadvisory fee payable to FEAC will be paid by FEIM out of its investment advisory fee rather than paid separately by the Company. Base management fees and incentive fees began to accrue upon the Commencement of Operations.
Base Management Fee
The management fee is calculated at an annual rate of 1.25% of the value of the Company’s net assets as of the beginning of the first business day of the applicable month. For services rendered under the Advisory Agreement, the management fee is payable monthly in arrears. Management fees that are payable under the Advisory Agreement for any partial period will be appropriately prorated.
19
For these purposes, “net assets” means the Company’s total assets less liabilities determined on a consolidated basis in accordance with GAAP. For the first calendar month in which the Company had operations, net assets were measured as the beginning net assets as of the Initial Closing.
For the three months ended March 31, 2024, the Company accrued $785 in base management fees which were fully waived (see “Fee Waiver” below). As of March 31, 2024 and December 31, 2023, there were no amounts payable to the Adviser relating to management fees.
Incentive Fees
The incentive fee consists of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on a percentage of income and a portion is based on a percentage of capital gains, each as described below:
The portion based on our income is based on Pre-Incentive Fee Net Investment Income Returns.
“Pre-Incentive Fee Net Investment Income Returns” means, as the context requires, either the dollar value of, or percentage rate of return on the value of our net assets at the end of the immediately preceding quarter from, interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses accrued for the quarter (including the management fee, expenses payable under the Administration Agreement entered into between us and the Administrator, and any interest expense or fees on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred shares, but excluding the incentive fee and any shareholder servicing and/or distribution fees).
Pre-Incentive Fee Net Investment Income Returns include, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income Returns do not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The impact of expense support payments and recoupments are also excluded from Pre-Incentive Fee Net Investment Income Returns.
Pre-Incentive Fee Net Investment Income Returns, expressed as a rate of return on the value of our net assets at the end of the immediately preceding quarter, is compared to a “hurdle rate” of return of 1.25% per quarter (5.0% annualized). Pre-Incentive Fee Net Investment Income Returns are calculated on a quarterly basis with no look-back period.
The Company will pay the Adviser an incentive fee quarterly in arrears with respect to our Pre-Incentive Fee Net Investment Income Returns in each calendar quarter as follows:
20
These calculations are appropriately prorated for any period less than three months and adjusted for any share issuances or repurchases during the current quarter.
For the three months ended March 31, 2024, the Company accrued $198 in income-based incentive fees which were fully waived (see “Fee Waiver” below). As of March 31, 2024 and December 31, 2023, there were no amounts payable to the Adviser relating to income-based incentive fees.
The second component of the incentive fee, the capital gains incentive fee, is payable at the end of each calendar year in arrears. The amount payable equals 12.5% of cumulative realized capital gains from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fee on capital gains as calculated in accordance with GAAP.
Under GAAP, the Company includes unrealized gains in the calculation of capital gains incentive fee expense. This accrual reflects the incentive fees that would be payable to the Adviser if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though the Adviser is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.
For the three months ended March 31, 2024, the Company accrued $6 in capital gains incentive fees which were fully waived (see “Fee Waiver” below). As of March 31, 2024 and December 31, 2023, there were no amounts payable to the Adviser relating to capital gain incentive fees.
Fee Waiver
For the twelve months following the Commencement of Operations, the Advisers have agreed to waive all management fees (including incentive fees) and subadvisory fees payable to them under the Advisory Agreement and Subadvisory Agreement (the “Advisory Fee Waiver”). The Advisory Fee Waiver is not revocable during its term and amounts waived pursuant to the Advisory Fee Waiver will not be subject to any right of future recoupment in favor of FEIM and FEAC.
21
Administration Agreement
The Company has also entered into an Administration Agreement with FEAC as the Administrator. Under the Administration Agreement, the Administrator performs, or oversees the performance of, administrative services necessary for the operation of the Company, which include, among other things, being responsible for the financial records which the Company is required to maintain and preparing reports to the Company’s shareholders and reports filed with the U.S. Securities and Exchange Commission (“SEC”). In addition, the Administrator assists in determining and publishing the Company’s net asset value (“NAV”), oversees the preparation and filing of the Company’s tax returns, oversees the printing and dissemination of reports to the Company’s shareholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. The Company will reimburse the Administrator for its allocable portion of the costs and expenses incurred by the Administrator for overhead in performance by the Administrator of its duties under the Administration Agreement and the Subadvisory Agreement, including facilities, office equipment, technology costs and the Company’s allocable portion of cost of compensation and related expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which may include personnel at FEIM or FEAC, as well as any costs and expenses incurred by the Administrator relating to any administrative or operating services provided by the Administrator to the Company. The Company’s Board reviews the allocation methodologies with respect to such expenses. Under the Administration Agreement, non-investment professionals of the Administrator may provide, on behalf of the Company, managerial assistance to those portfolio companies to which the Company is required to provide such assistance. To the extent that the Company’s Administrator outsources any of its functions, the Company pays the fees associated with such functions on a direct basis without profit to the Administrator. Administrative costs and expenses under the Administration Agreement began to accrue upon the Commencement of Operations.
For the three months ended March 31, 2024, the Company incurred administrator expenses of $422. As of March 31, 2024 and December 31, 2023, $439 and $547, respectively, of administrator expenses were due to the Administrator, which were included in accrued administrator expenses on the Consolidated Statement of Assets and Liabilities.
Note 4. Investments
The following is a summary of the composition of the Company’s investment portfolio at cost and fair value as of March 31, 2024 and December 31, 2023:
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||||||||||
|
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
| ||||||
First lien loan |
| $ | 198,264 |
|
| $ | 198,507 |
|
|
| 100.00 | % |
| $ | 70,684 |
|
| $ | 70,881 |
|
|
| 100.00 | % |
Warrant |
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
Total investments |
| $ | 198,264 |
|
| $ | 198,509 |
|
|
| 100.00 | % |
| $ | 70,684 |
|
| $ | 70,883 |
|
|
| 100.00 | % |
22
The following is a summary of the industry classifications in which the Company invests as of March 31, 2024 and December 31, 2023:
March 31, 2024 |
| ||||||||||||||
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Fair Value as % of Net Assets |
| ||||
Aerospace & Defense | $ | 2,970 |
|
| $ | 2,995 |
|
|
| 1.51 | % |
|
| 0.99 | % |
Building Products |
| 3,980 |
|
|
| 4,024 |
|
|
| 2.03 |
|
|
| 1.34 |
|
Chemicals |
| 11,018 |
|
|
| 11,048 |
|
|
| 5.57 |
|
|
| 3.67 |
|
Commercial Services & Supplies |
| 9,619 |
|
|
| 9,618 |
|
|
| 4.84 |
|
|
| 3.19 |
|
Construction & Engineering |
| 2,198 |
|
|
| 2,192 |
|
|
| 1.10 |
|
|
| 0.73 |
|
Containers & Packaging |
| 4,975 |
|
|
| 5,014 |
|
|
| 2.53 |
|
|
| 1.66 |
|
Diversified Consumer Services |
| 12,111 |
|
|
| 12,183 |
|
|
| 6.14 |
|
|
| 4.03 |
|
Entertainment |
| 4,950 |
|
|
| 5,014 |
|
|
| 2.53 |
|
|
| 1.66 |
|
Financial Services |
| 9,118 |
|
|
| 9,186 |
|
|
| 4.63 |
|
|
| 3.04 |
|
Health Care Facilities |
| 9,481 |
|
|
| 9,465 |
|
|
| 4.77 |
|
|
| 3.14 |
|
Health Care Providers & Services |
| 45,183 |
|
|
| 45,217 |
|
|
| 22.77 |
|
|
| 15.03 |
|
Household Durables |
| 6,807 |
|
|
| 6,801 |
|
|
| 3.43 |
|
|
| 2.26 |
|
Insurance |
| 12,534 |
|
|
| 12,574 |
|
|
| 6.33 |
|
|
| 4.17 |
|
IT Services |
| 5,924 |
|
|
| 5,781 |
|
|
| 2.91 |
|
|
| 1.92 |
|
Machinery |
| 3,980 |
|
|
| 4,008 |
|
|
| 2.02 |
|
|
| 1.33 |
|
Media |
| 7,905 |
|
|
| 7,965 |
|
|
| 4.01 |
|
|
| 2.65 |
|
Oil, Gas & Consumable Fuels |
| 7,563 |
|
|
| 7,533 |
|
|
| 3.79 |
|
|
| 2.51 |
|
Passenger Airlines |
| 6,952 |
|
|
| 7,024 |
|
|
| 3.54 |
|
|
| 2.33 |
|
Pharmaceuticals |
| 4,939 |
|
|
| 4,637 |
|
|
| 2.34 |
|
|
| 1.54 |
|
Professional Services |
| 8,354 |
|
|
| 8,372 |
|
|
| 4.22 |
|
|
| 2.78 |
|
Software |
| 13,737 |
|
|
| 13,846 |
|
|
| 6.97 |
|
|
| 4.59 |
|
Specialty Retail |
| 2,234 |
|
|
| 2,258 |
|
|
| 1.14 |
|
|
| 0.75 |
|
Textiles, Apparel, & Luxury Goods |
| 1,732 |
|
|
| 1,754 |
|
|
| 0.88 |
|
|
| 0.58 |
|
| $ | 198,264 |
|
| $ | 198,509 |
|
|
| 100.00 | % |
|
| 65.89 | % |
December 31, 2023 |
| ||||||||||||||
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Fair Value as % of Net Assets |
| ||||
Commercial Services & Supplies | $ | 7,500 |
|
| $ | 7,508 |
|
|
| 10.59 | % |
|
| 2.99 | % |
Construction & Engineering |
| 2,199 |
|
|
| 2,197 |
|
|
| 3.10 |
|
|
| 0.87 |
|
Diversified Consumer Services |
| 5,051 |
|
|
| 5,059 |
|
|
| 7.14 |
|
|
| 2.01 |
|
Financial Services |
| 1,774 |
|
|
| 1,807 |
|
|
| 2.55 |
|
|
| 0.72 |
|
Health Care Facilities |
| 9,467 |
|
|
| 9,465 |
|
|
| 13.35 |
|
|
| 3.76 |
|
Health Care Providers & Services |
| 15,511 |
|
|
| 15,665 |
|
|
| 22.10 |
|
|
| 6.22 |
|
Household Durables |
| 6,800 |
|
|
| 6,796 |
|
|
| 9.59 |
|
|
| 2.70 |
|
IT Services |
| 954 |
|
|
| 955 |
|
|
| 1.35 |
|
|
| 0.39 |
|
Oil, Gas & Consumable Fuels |
| 7,544 |
|
|
| 7,533 |
|
|
| 10.63 |
|
|
| 2.99 |
|
Passenger Airlines |
| 2,970 |
|
|
| 3,010 |
|
|
| 4.25 |
|
|
| 1.20 |
|
Professional Services |
| 5,392 |
|
|
| 5,372 |
|
|
| 7.58 |
|
|
| 2.13 |
|
Software |
| 3,786 |
|
|
| 3,783 |
|
|
| 5.34 |
|
|
| 1.50 |
|
Textiles, Apparel, & Luxury Goods |
| 1,736 |
|
|
| 1,733 |
|
|
| 2.43 |
|
|
| 0.69 |
|
Total | $ | 70,684 |
|
| $ | 70,883 |
|
|
| 100.00 | % |
|
| 28.17 | % |
23
The following is a summary of the geographical concentration of the Company’s investment portfolio as of March 31, 2024 and December 31, 2023:
|
| March 31, 2024 |
| |||||||||||||
|
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Fair Value as % of Net Assets |
| ||||
United States |
| $ | 177,897 |
|
| $ | 178,158 |
|
|
| 89.75 | % |
|
| 59.13 | % |
Canada |
|
| 5,891 |
|
|
| 5,881 |
|
|
| 2.96 |
|
|
| 1.95 |
|
Europe |
|
| 14,476 |
|
|
| 14,470 |
|
|
| 7.29 |
|
|
| 4.81 |
|
Total |
| $ | 198,264 |
|
| $ | 198,509 |
|
|
| 100.00 | % |
|
| 65.89 | % |
| December 31, 2023 |
| ||||||||||||||
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Fair Value as % of Net Assets |
| |||||
United States |
| $ | 57,257 |
|
| $ | 57,469 |
|
|
| 81.07 | % |
|
| 22.84 | % |
Canada |
|
| 5,883 |
|
|
| 5,881 |
|
|
| 8.30 |
|
|
| 2.34 |
|
Europe |
|
| 7,544 |
|
|
| 7,533 |
|
|
| 10.63 |
|
|
| 2.99 |
|
Total |
| $ | 70,684 |
|
| $ | 70,883 |
|
|
| 100.00 | % |
|
| 28.17 | % |
As of March 31, 2024 and December 31, 2023, there were no loans on non-accrual status.
As of March 31, 2024 and December 31, 2023, on a fair value basis, 100% of the Company’s performing debt investments bore interest at a floating rate.
Note 5. Fair Value Measurements
Investments
The Company values all investments in accordance with ASC Topic 820, which requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC Topic 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. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity.
ASC Topic 820 establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The guidance establishes three levels of the fair value hierarchy as follows:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are observable, either directly or indirectly; and
Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management.
Pursuant to Rule 2a-5 under the 1940 Act (“Rule 2a-5”), the Board has designated FEIM as the Company's valuation designee, as the term is defined in Rule 2a-5 (the “Valuation Designee”). FEIM, as the Valuation Designee, performs fair value determinations of the Company’s assets by implementing valuation policies and procedures approved by the Board, subject to the oversight of the Board and the Board’s Audit Committee, and in compliance with the requirements of Rule 2a-5. In calculating the
24
value of the Company’s total assets, investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or one or more broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are determined to be unreliable are valued at fair value as determined in good faith by the Valuation Designee.
With respect to the investments for which market quotations are not readily available, the Company undertakes a multi-step valuation process each quarter, as described below:
When we determine our net asset value (“NAV”) as of the last day of a month that is not also the last day of a calendar quarter, we intend to update the value of securities with reliable market quotations to the most recent market quotation. For securities without reliable market quotations, FEIM’s valuation team will generally value such assets at the most recent quarterly valuation unless FEAC determines that a significant observable change has occurred since the most recent quarter end with respect to the investment (which determination may be as a result of a material event at a portfolio company, material change in market spreads, secondary market transaction in the securities of an investment or otherwise). If FEAC determines such a change has occurred with respect to one or more investments, the relevant portfolio management team shall determine whether to recommend a change to the FEIM valuation committee and whether the applicable pricing professional will determine whether to engage an independent valuation firm for assistance. FEIM will then discuss and determine the fair value of such investment(s) in the Company’s portfolio in good faith based on the input of any applicable respective independent valuation firms.
The types of factors that the Valuation Designee may take into account in fair value pricing the Company’s investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors.
For cash flow debt investments, the Valuation Designee generally determines the fair value primarily using an income, or yield, approach that analyzes the discounted cash flows of interest and principal for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of each portfolio investment. The Valuation Designee’s estimate of the expected repayment date is generally the legal maturity date of the instrument. The yield analysis considers changes in leverage levels, credit quality, portfolio company performance and other factors. The enterprise value, a market approach, is used to determine the value of debt investments that are credit impaired, close to maturity or where the Company also holds a controlling equity interest. The method for determining enterprise value uses a multiple analysis, whereby appropriate multiples are applied to the portfolio company’s revenues or net income before net interest expense, income tax expense, depreciation and amortization, or EBITDA.
For asset-based loans, the Valuation Designee generally determines the fair value using the liquidation approach that analyzes the underlying collateral of the loan, as set forth in the associated loan agreements and the borrowing base certificates. Liquidation valuations may be determined using a net orderly liquidation value, a forced liquidation value, or other methodology. Such liquidation values may be further reduced by certain reserves that may reduce the value of the collateral available to support the outstanding debt in a wind down scenario (the net realized value of the collateral).
For equity investments, an income and/or market approach is generally used to value equity investments for which there is no established public or private market. The market approach values an investment by examining observable market values for similar investments. The resulting valuation, although stated as a precise number, is necessarily within a range of values that vary depending upon the significance attributed to the various factors being considered. Some of these factors may include current market
25
trading and/or transaction multiples, the portfolio company’s relative financial performance relative to public and private peer companies and leverage levels.
In addition, for certain debt investments, the Valuation Designee may base its valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Valuation Designee generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.
The Company has adopted the authoritative guidance under GAAP for estimating the fair value of investments in investment companies that have calculated NAV per share in accordance with the specialized accounting guidance for investment companies. Accordingly, in circumstances in which NAV per share of an investment is determinative of fair value, the Company estimates the fair value of an investment in an investment company using the NAV per share of the investment (or its equivalent) without further adjustment if the NAV per share of the investment is determined in accordance with the specialized accounting guidance for investment companies as of the reporting entity’s measurement date.
As of March 31, 2024, the Valuation Designee determined, in good faith, the fair value of the Company’s portfolio investments in accordance with GAAP and the Company’s valuations procedures based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time.
Fair Value Disclosures
The following is a summary of the composition of the Company’s investment portfolio at cost and fair value as of March 31, 2024 and December 31, 2023:
|
| March 31, 2024 |
|
| ||||||||||||||||
|
| Level 1 |
|
|
| Level 2 |
|
|
| Level 3 |
|
|
| Total |
|
| ||||
First Lien Loan |
| $ | — |
|
|
| $ | 74,436 |
|
|
| $ | 124,071 |
|
|
| $ | 198,507 |
|
|
Warrant |
| $ | — |
|
|
| $ | — |
|
|
| $ | 2 |
|
|
| $ | 2 |
|
|
Total Investments |
| $ | — |
|
|
| $ | 74,436 |
|
|
| $ | 124,073 |
|
|
| $ | 198,509 |
|
|
Percentage of Total |
|
| 0.00 |
| % |
|
| 37.50 |
| % |
|
| 62.50 |
| % |
|
| 100.00 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
|
| ||||||||||||||||
|
| Level 1 |
|
|
| Level 2 |
|
|
| Level 3 |
|
|
| Total |
|
| ||||
First Lien Loan |
| $ | — |
|
|
| $ | 5,018 |
|
|
| $ | 65,863 |
|
|
| $ | 70,881 |
|
|
Warrant |
| $ | — |
|
|
| $ | — |
|
|
| $ | 2 |
|
|
| $ | 2 |
|
|
Total Investments |
| $ | — |
|
|
| $ | 5,018 |
|
|
| $ | 65,865 |
|
|
| $ | 70,883 |
|
|
Percentage of Total |
|
| 0.00 |
| % |
|
| 7.08 |
| % |
|
| 92.92 |
| % |
|
| 100.00 |
| % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three months ended March 31, 2024:
| Three Months Ended March 31, 2024 |
| |||||||||
| First Lien Debt |
|
| Warrant |
|
| Total Investments |
| |||
Fair value, beginning of period | $ | 65,862 |
|
| $ | 2 |
|
| $ | 65,864 |
|
Purchase of investments (including PIK) |
| 63,082 |
|
|
| — |
|
|
| 63,082 |
|
Proceeds from principal repayments and sales of investments |
| (76 | ) |
|
| — |
|
|
| (76 | ) |
Amortization of premium/accretion of discount, net |
| 105 |
|
|
| — |
|
|
| 105 |
|
Net realized gain (loss) on investments |
| — |
|
|
| — |
|
|
| — |
|
Net change in unrealized appreciation (depreciation) on investments |
| 36 |
|
|
| — |
|
|
| 36 |
|
Transfers out of Level 3 |
| (4,938 | ) |
|
| — |
|
|
| (4,938 | ) |
Fair value, end of period | $ | 124,071 |
|
| $ | 2 |
|
| $ | 124,073 |
|
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated company investments still held at March 31, 2024 | $ | 36 |
|
| $ | — |
|
| $ | 36 |
|
26
Investments were transferred out of Level 3 during the period ended March 31, 2024 due to improvements in the quantity and quality of information, specifically the number of vendor quotes available to support the valuation of each investment, as assessed by the Valuation Designee.
Significant Unobservable Inputs
The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 financial instruments as of March 31, 2024 and December 31, 2023. These tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Company’s determination of fair value.
| March 31, 2024 |
| ||||||||||||||||||
|
|
|
|
|
|
|
| Range |
|
|
|
| ||||||||
| Fair Value |
|
| Valuation Technique |
| Unobservable Input |
| Low |
|
| High |
|
| Weighted Average (1) |
| |||||
First lien debt (2) |
| $ | 90,279 |
|
| Discounted cash flows (income approach) |
| Comparative Yield |
|
| 9.20 | % |
|
| 14.09 | % |
|
| 10.96 | % |
|
|
| 15,168 |
|
| Recoverability |
| Collateral Value |
| $19.6mm |
|
| $352.6mm |
|
| $197.7mm |
| |||
|
|
| 105,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Warrant |
|
| 2 |
|
| Market comparable companies (market approach) |
| EBITDA Multiple |
|
| 35.00 | % |
|
| 45.00 | % |
|
| 40.00 | % |
|
|
|
|
|
|
| Conversion Term (years) |
| 3.0 yrs |
|
| 4.0 yrs |
|
| 3.5 yrs |
| ||||
Total |
| $ | 105,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2023 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
| Range |
|
|
|
|
|
|
| ||||
| Fair Value |
|
| Valuation Technique |
| Unobservable Input |
| Low |
|
| High |
|
| Weighted Average (1) |
| |||||
First lien debt (2) |
| $ | 46,999 |
|
| Discounted cash flows (income approach) |
| Comparative Yield |
|
| 9.38 | % |
|
| 14.90 | % |
|
| 11.27 | % |
|
|
| 15,146 |
|
| Recoverability |
| Collateral Value |
| $19.6mm |
|
| $345.7mm |
|
| $196.1mm |
| |||
|
|
| 62,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Warrant |
|
| 2 |
|
| Market comparable companies (market approach) |
| EBITDA Multiple |
| 14.4x |
|
| 14.9x |
|
| 14.7x |
| |||
Total |
| $ | 62,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The significant unobservable input used in the fair value measurement of the Company’s debt securities, excluding investments in asset-backed loans, is the comparative yield which is used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. In determining the comparative yield for the income approach, the Company considers current market yields and multiples, weighted average cost of capital, portfolio company performance, leverage levels, credit quality, among other factors, including U.S. federal tax rates, in its analysis. Significant increases (decreases) in the comparative yield in isolation would result in a significantly lower (higher) fair value measurement.
The primary significant unobservable input used in the fair value measurement of the Company’s investment in asset-backed loans is the net realizable value of the underlying collateral of the loan. The Company considers information provided by the borrower in its compliance certificates and information from third party appraisals, among other factors, in its analysis. Significant increases (decreases) in the net realizable value of the underlying collateral would result in a significantly higher (lower) fair value measurement.
Other Financial Assets and Liabilities
27
As of March 31, 2024, the carrying amounts of the Company’s other financial instruments, such as cash and cash equivalents, receivables and payables, approximate the fair value of such items due to the short maturity of such instruments. As of March 31, 2024, the carrying amount of the Company’s outstanding Credit Facility approximates fair value. The fair value of the Credit Facility is estimated based upon market interest rates and entities with similar credit risk.
As of March 31, 2024, within the fair value hierarchy, the Company’s cash equivalents would be categorized as Level 1 and the Company's outstanding Credit Facility would be categorized as Level 3.
Note 6. Borrowings
In connection with the Company’s organization, the Board and the Company’s initial shareholder, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act to the Company. As a result of this approval, the Company is permitted to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2024, the Company’s asset coverage ratio was 6125.8%.
SPV Financing Facility
On September 22, 2023, First Eagle Private Credit Fund SPV, LLC (the “SPV”), a wholly-owned financing subsidiary of the Company, entered into a $350,000 senior secured revolving credit facility (the “Credit Facility”) with Morgan Stanley Bank, N.A., as initial lender, certain other lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, U.S. Bank Trust Company, National Association, as collateral agent, U.S. Bank National Association, as account bank and collateral custodian, and FEPC Fund Servicer, LLC, a wholly-owned subsidiary of the Company, as servicer under the Credit Facility.
The Company’s ability to borrow under the Credit Facility is subject to certain financial and restrictive covenants, as well as availability under the borrowing base, which permits the Company to borrow up to 75% of the principal balance of its eligible portfolio company investments depending on the type of investment, subject to a maximum advance rate on the portfolio of 65%. Under the terms of the Credit Facility, the SPV is permitted to reinvest available cash and make new borrowings under the Credit Facility through September 22, 2026. The Credit Facility has a minimum utilization requirement of 65% of the facility amount following a nine-month ramp-up period through the end of the revolving period. Distributions from the SPV to the Company are limited by the terms of the Credit Facility, which generally allows for the distribution of net interest income quarterly pursuant to a waterfall during the reinvestment period. The SPV’s obligations under the Credit Facility are secured by a first priority security interest in substantially all of the assets of the SPV, including its portfolio of investments, and the Company’s equity interest in the SPV. As of March 31, 2024, the Company held 25 investments with a total fair market value of $96,205 in the SPV as collateral for the Credit Facility. As of March 31, 2024, the Company had $5,000 in borrowings outstanding under the Credit Facility. As of December 31, 2023, the Company held 17 investments with a total fair market value of $50,997 in the SPV as collateral for the Credit Facility. As of December 31, 2023, the Company had no outstanding borrowings under the Credit Facility.
The Credit Facility has a scheduled maturity date of September 22, 2028, or earlier in accordance with the terms of the Credit Facility. Borrowings under the Credit Facility bear interest initially at the annual rate of three month term SOFR plus spread. The initial spread is 3.05% per annum for term SOFR advances during the revolving period and 3.55% per annum during the amortization period. Additionally, the SPV pays a fee of 0.15% per annum on the notional loan amount of $350,000 and an unused fee of 0.60% per annum on any unused portion of the Credit Facility.
Components of Interest Expense
The components of the Company’s interest expense were as follows:
| For the Three Months Ended March 31, 2024 |
| |
Borrowing interest expense | $ | 3 |
|
Borrowing administration fees |
| 133 |
|
Facility unused fees |
| 531 |
|
Amortization of financing costs |
| 153 |
|
Total interest expense | $ | 820 |
|
Average Debt Outstanding (1) |
| 5,000 |
|
Average Stated Interest Rate (1) |
| 8.35 | % |
Note 7. Commitments and Contingencies
Unfunded Commitments
Unfunded commitments to provide funds to portfolio companies are not reflected on the Company’s Consolidated Statement of Assets and Liabilities. The Company’s unfunded commitments may be significant from time to time. These
28
commitments will be subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that the Company holds. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company intends to use cash flow from normal and early principal repayments and proceeds from borrowings to fund these commitments.
As of March 31, 2024 and December 31, 2023, the Company has the following unfunded commitments to portfolio companies:
March 31, 2024 |
| |||||||||||
Investments—non-controlled/non-affiliated |
| Commitment Type |
| Commitment |
| Unfunded |
|
| Fair |
| ||
Delayed Draw |
|
|
|
|
|
|
|
|
|
| ||
Air Conditioning Specialist, Inc. |
| Delayed Draw |
| 9/30/2024 |
| $ | 28 |
|
| $ | — |
|
Apella Capital LLC |
| Delayed Draw |
| 3/1/2026 |
| $ | 250 |
|
| $ | (5 | ) |
Community Based Care Acquisition, Inc. |
| Delayed Draw |
| 3/19/2026 |
| $ | 3,750 |
|
| $ | — |
|
RMBUS Holdco Inc. |
| Delayed Draw |
| 1/8/2026 |
| $ | 2,070 |
|
| $ | (35 | ) |
First Steps Recovery Acquisition, LLC |
| Delayed Draw |
| 9/29/2025 |
| $ | 1,149 |
|
| $ | (17 | ) |
In Vitro Sciences, LLC |
| Delayed Draw |
| 7/31/2024 |
| $ | 23 |
|
| $ | — |
|
Elevate HD Parent, Inc. |
| Delayed Draw |
| 2/18/2025 |
| $ | 533 |
|
| $ | (7 | ) |
Enverus Holdings, Inc. |
| Delayed Draw |
| 12/12/2026 |
| $ | 192 |
|
| $ | — |
|
Housework Holdings |
| Delayed Draw |
| 3/1/2025 |
| $ | 502 |
|
| $ | (15 | ) |
Mammoth Holdings, LLC |
| Delayed Draw |
| 11/15/2025 |
| $ | 909 |
|
| $ | (18 | ) |
Medrina, LLC |
| Delayed Draw |
| 4/20/2025 |
| $ | 1,550 |
|
| $ | (29 | ) |
RL James, Inc. |
| Delayed Draw |
| 12/15/2025 |
| $ | 2,162 |
|
| $ | (41 | ) |
SR Landscaping, LLC |
| Delayed Draw |
| 10/24/2027 |
| $ | 1,784 |
|
| $ | (27 | ) |
Waste Resource Management Inc. |
| Delayed Draw |
| 12/28/2029 |
| $ | 2,069 |
|
| $ | (31 | ) |
Revolver |
|
|
|
|
|
|
|
|
|
| ||
Acumera, Inc. |
| Revolver |
| 6/7/2028 |
| $ | 62 |
|
| $ | — |
|
Air Conditioning Specialist, Inc. |
| Revolver |
| 11/9/2026 |
| $ | 62 |
|
| $ | — |
|
Apella Capital LLC |
| Revolver |
| 3/1/2029 |
| $ | 50 |
|
| $ | (1 | ) |
RMBUS Holdco Inc. |
| Revolver |
| 1/8/2029 |
| $ | 1,035 |
|
| $ | (17 | ) |
First Steps Recovery Acquisition, LLC |
| Revolver |
| 3/29/2030 |
| $ | 1,149 |
|
| $ | (17 | ) |
Housework Holdings |
| Revolver |
| 12/15/2028 |
| $ | 111 |
|
| $ | (3 | ) |
In Vitro Sciences, LLC |
| Revolver |
| 2/28/2029 |
| $ | 568 |
|
| $ | (9 | ) |
Project Cloud Holdings, LLC |
| Revolver |
| 3/31/2029 |
| $ | 712 |
|
| $ | (14 | ) |
The Mutual Group, LLC |
| Revolver |
| 1/31/2030 |
| $ | 1,299 |
|
| $ | (19 | ) |
Visante Acquisition, LLC |
| Revolver |
| 1/31/2030 |
| $ | 846 |
|
| $ | (13 | ) |
Elevate HD Parent, Inc. |
| Revolver |
| 8/20/2029 |
| $ | 200 |
|
| $ | (3 | ) |
Enverus Holdings, Inc. |
| Revolver |
| 12/24/2029 |
| $ | 293 |
|
| $ | 1 |
|
Mammoth Holdings, LLC |
| Revolver |
| 11/15/2029 |
| $ | 227 |
|
| $ | (5 | ) |
Medrina, LLC |
| Revolver |
| 10/20/2029 |
| $ | 1,107 |
|
| $ | (21 | ) |
RL James, Inc. |
| Revolver |
| 12/15/2028 |
| $ | 1,081 |
|
| $ | (20 | ) |
SR Landscaping, LLC |
| Revolver |
| 10/30/2029 |
| $ | 801 |
|
| $ | (12 | ) |
Waste Resource Management Inc. |
| Revolver |
| 12/28/2029 |
| $ | 703 |
|
| $ | (11 | ) |
Total Unfunded Commitments |
|
|
|
|
| $ | 27,277 |
|
| $ | (389 | ) |
December 31, 2023 |
| |||||||||||
Investments—non-controlled/non-affiliated |
| Commitment Type |
| Commitment |
| Unfunded |
|
| Fair |
| ||
Delayed Draw |
|
|
|
|
|
|
|
|
|
| ||
Air Conditioning Specialist, Inc. |
| Delayed Draw |
| 9/30/2024 |
| $ | 28 |
|
| $ | — |
|
Elevate HD Parent, Inc. |
| Delayed Draw |
| 2/18/2024 |
| $ | 110 |
|
| $ | (2 | ) |
Elevate HD Parent, Inc. |
| Delayed Draw |
| 2/18/2025 |
| $ | 533 |
|
| $ | (10 | ) |
Enverus Holdings, Inc. |
| Delayed Draw |
| 12/12/2026 |
| $ | 192 |
|
| $ | (3 | ) |
Housework Holdings |
| Delayed Draw |
| 12/15/2028 |
| $ | 502 |
|
| $ | (15 | ) |
Mammoth Holdings, LLC |
| Delayed Draw |
| 11/15/2025 |
| $ | 909 |
|
| $ | (18 | ) |
Medrina, LLC |
| Delayed Draw |
| 4/20/2025 |
| $ | 1,550 |
|
| $ | (29 | ) |
RL James, Inc. |
| Delayed Draw |
| 12/15/2025 |
| $ | 2,162 |
|
| $ | (41 | ) |
SR Landscaping, LLC |
| Delayed Draw |
| 4/30/2025 |
| $ | 1,784 |
|
| $ | (27 | ) |
Waste Resource Management Inc. |
| Delayed Draw |
| 12/28/2025 |
| $ | 2,069 |
|
| $ | (31 | ) |
Revolver |
|
|
|
|
|
|
|
|
|
| ||
Acumera, Inc. |
| Revolver |
| 6/7/2025 |
| $ | 62 |
|
| $ | (1 | ) |
Air Conditioning Specialist, Inc. |
| Revolver |
| 11/9/2026 |
| $ | 62 |
|
| $ | (1 | ) |
Elevate HD Parent, Inc. |
| Revolver |
| 8/20/2029 |
| $ | 200 |
|
| $ | (4 | ) |
Enverus Holdings, Inc. |
| Revolver |
| 12/24/2029 |
| $ | 293 |
|
| $ | (4 | ) |
Housework Holdings |
| Revolver |
| 12/15/2028 |
| $ | 178 |
|
| $ | (5 | ) |
Mammoth Holdings, LLC |
| Revolver |
| 11/15/2029 |
| $ | 455 |
|
| $ | (9 | ) |
Medrina, LLC |
| Revolver |
| 10/20/2029 |
| $ | 1,107 |
|
| $ | (21 | ) |
RL James, Inc. |
| Revolver |
| 12/15/2028 |
| $ | 1,081 |
|
| $ | (20 | ) |
SR Landscaping, LLC |
| Revolver |
| 10/30/2029 |
| $ | 801 |
|
| $ | (12 | ) |
Waste Resource Management Inc. |
| Revolver |
| 12/28/2029 |
| $ | 828 |
|
| $ | (12 | ) |
Total Unfunded Commitments |
|
|
|
|
| $ | 14,906 |
|
| $ | (265 | ) |
29
Legal Proceedings
From time to time, the Company, or the Advisers, may become party to legal proceedings in the ordinary course of business, including proceedings related to the enforcement of the Company’s rights under contracts with its portfolio companies. Neither the Company, nor the Advisers, is currently subject to any material legal proceedings.
Note 8. Net Assets
Share Issuances
In connection with its formation, the Company has the authority to issue an unlimited number of Common Shares.
The following table summarizes the issuance of shares during the three months ended March 31, 2024:
Share Issuance Date |
| Number of |
|
| Aggregate |
| ||
March 1, 2024 |
|
| 2,058,460 |
|
| $ | 50,000 |
|
Total |
|
| 2,058,460 |
|
| $ | 50,000 |
|
During the three months ended March 31, 2024, the Company also issued 40 shares for an aggregate value of $1 under the DRIP (as defined below).
The sales of Common Shares were made pursuant to subscription agreements entered into by the Company and its investors. Under the terms of the subscription agreements, investors are required to fund drawdowns to purchase Common Shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of ten calendar days prior notice to the funding date.
As of March 31, 2024, the Company has received capital commitments totaling $302,700, which was fully called as of March 31, 2024.
Distributions
The following table presents distributions that were declared and payable during the three months ended March 31, 2024:
Date Declared |
| Record Date |
| Payment Date |
| Distribution Per Share |
|
| Distribution Amount |
| ||
February 5, 2024 |
| February 6, 2024 |
| February 27, 2024 |
| $ | 0.12 |
|
| $ | 1,244 |
|
February 29, 2024 |
| February 29, 2024 |
| March 26, 2024 |
| $ | 0.12 |
|
| $ | 1,244 |
|
March 28, 2024 |
| March 28, 2024 |
| April 26, 2024 |
| $ | 0.12 |
|
| $ | 1,491 |
|
|
|
|
|
|
|
|
|
| $ | 3,979 |
|
Character of Distributions
The Company may fund its cash distributions to shareholders from any source of funds available to the Company, including but not limited to offering proceeds, net investment income from operations, and capital gains proceeds from the sale of assets.
Sources of distributions, other than net investment income and realized gains on a GAAP basis, include required adjustments to GAAP net investment income in the current period to determine taxable income available for distributions. The following table presents the sources of cash distributions on a GAAP basis that the Company has declared on its Common Shares during the three months-ended March 31, 2024:
| March 31, 2024 |
| ||
Ordinary income (including net short-term capital gains) |
| $ | 3,979 |
|
Capital gains |
|
| — |
|
Return of capital |
|
| — |
|
Total taxable distributions |
| $ | 3,979 |
|
Distribution Reinvestment
The Company has adopted a dividend reinvestment plan (“DRP”), pursuant to which it reinvests all cash dividends declared by the Board on behalf of its shareholders who elected not to receive their dividends in cash. Shareholders who have opted into the Company’s DRP will have their cash distributions automatically reinvested in additional shares as described below, rather than receiving the cash dividend or other distribution. A participating shareholder will receive an amount of shares equal to the amount of the distribution on that participant’s shares divided by the most recent NAV per share that is available on the date such distribution was paid. Shareholders who receive distributions in the form of shares will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, since their cash distributions will be reinvested, those shareholders will not receive cash with which to pay any applicable taxes. The Company intends to use newly issued shares to implement the plan. Common Shares issued under the dividend reinvestment plan will not reduce outstanding Capital Commitments.
30
Share Repurchase Program
Beginning no later than the first full calendar quarter after the first anniversary of the Initial Closing, and at the discretion of the Board, the Company intends to commence a share repurchase program in which it intends to offer to repurchase, in each quarter, up to 5% of its Common Shares outstanding (either by number of shares or aggregate NAV) as of the close of the last calendar day of the applicable quarter. The Board may amend or suspend the share repurchase program at any time if in its reasonable judgment it deems such action to be in the Company’s best interest and the best interest of its shareholders. As a result, share repurchases may not be available each quarter, such as when a repurchase offer would place an undue burden on the Company’s liquidity, adversely affect its operations or risk having an adverse impact on the Company that would outweigh the benefit of the repurchase offer. Following any such suspension, the Board intends to reinstate the share repurchase program when appropriate and subject to our Board’s duties to the Company. The Company intends to conduct such repurchase offers in accordance with the requirements of Rule 13e-4 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the 1940 Act. All Common Shares purchased by us pursuant to the terms of each tender offer will be retired and thereafter will be authorized and unissued Common Shares.
Under the Company’s share repurchase program, to the extent the Company offers to repurchase Common Shares in any particular quarter, the Company expects to repurchase Common Shares pursuant to quarterly tender offers (such date of the offer, the “Repurchase Date”) using a purchase price equal to the NAV per share as of the close of the last calendar day of the applicable quarter, except that Common Shares that have not been outstanding for at least one year will be repurchased at 98% of such NAV (an “Early Repurchase Deduction”). The one-year holding period is measured as of the subscription closing date immediately following the prospective repurchase date. The Early Repurchase Deduction will be retained by the Company for the benefit of remaining shareholders.
We may, from time to time, waive the Early Repurchase Deduction in respect of repurchase of Common Shares resulting from the death, qualifying disability (as such term is defined in Section 72(m)(7) of the Code) or divorce of a shareholder who is a natural person.
31
Note 9. Financial Highlights and Senior Securities
The following is a schedule of financial highlights for the three months ended March 31, 2024:
|
| For the Three Months Ended March 31, 2024 |
| ||
Per Share Data: |
|
|
|
| |
Net assets, beginning of period |
| $ |
| 24.28 |
|
Net investment income (loss) (1) |
|
|
| 0.32 |
|
Net realized gain (loss) |
|
|
| — |
|
Net change in unrealized appreciation (depreciation) |
|
|
| 0.01 |
|
Net increase (decrease) in net assets resulting from operations (1) |
|
|
| 0.33 |
|
Distributions declared from net investment income |
|
|
| (0.36 | ) |
Issuance of shares |
|
|
| — |
|
Other (2) |
|
|
| — |
|
Total increase (decrease) in net assets |
|
|
| (0.03 | ) |
Net assets, end of period |
| $ |
| 24.25 |
|
Shares outstanding, end of period |
|
|
| 12,425,318 |
|
Total return based on NAV (3) |
|
|
| (0.12 | )% |
Ratios: |
|
|
|
| |
Net expenses to average net assets (4) |
|
|
| 3.97 | % |
Net investment income to average net assets (4) |
|
|
| 3.79 | % |
Portfolio turnover rate (5) |
|
|
| 0.16 | % |
Supplemental Data: |
|
|
|
| |
Net assets, end of period |
| $ |
| 301,288 |
|
Total capital commitments, end of period |
| $ |
| 302,700 |
|
Ratios of total contributed capital to total committed capital, end of period |
|
|
| 100.00 | % |
Average debt outstanding |
| $ |
| 165 |
|
Asset coverage ratio |
|
|
| 6125.8 | % |
The following is information about the Company’s senior securities as of March 31, 2024 and December 31, 2023:
Class and Period |
| Total Amount Outstanding Exclusive of Treasury Securities (1) |
|
| Asset Coverage per Unit (2) |
|
| Involuntary Liquidating Preference per Unit (3) |
| Average Market Value per Unit (4) | ||
Credit Facility |
|
|
|
|
|
|
|
|
|
| ||
March 31, 2024 |
| $ | 5,000 |
|
| $ | 62,258 |
|
| N/A |
| N/A |
Class and Period |
| Total Amount Outstanding Exclusive of Treasury Securities (1) |
|
| Asset Coverage per Unit (2) |
|
| Involuntary Liquidating Preference per Unit (3) |
|
| Average Market Value per Unit (4) | |||
Credit Facility |
|
|
|
|
|
|
|
|
|
|
| |||
December 31, 2023 (5) |
| $ | — |
|
| $ | — |
|
|
| — |
|
| N/A |
32
(1) Total amount of each class of senior securities outstanding at the end of the period presented, in thousands.
(2) Asset coverage per unit is the ratio of the carrying value of our total assets, less all liabilities excluding indebtedness represented by senior securities in this table, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness and is calculated on a consolidated basis.
(3) The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it. The “-” in this column indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.
(4) Not applicable because the senior securities are not registered for public trading.
(5) As of December 31, 2023, the Company had no debt outstanding under its Credit Facility.
Note 10. Subsequent Events
There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, the financial statements as of March 31, 2024 except as discussed below.
On April 30, 2024, the Company's Board declared a distribution of $0.12 per Common Share, which is payable on May 29, 2024 to shareholders of record as of April 30, 2024.
33
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Except as otherwise specified, references to “we,” “us” and “our” refer to First Eagle Private Credit Fund and its consolidated subsidiaries; “FEIM” and “Adviser” refer to First Eagle Investment Management, LLC, our investment adviser; and “FEAC,” “Subadviser,” and “Administrator” refer to First Eagle Alternative Credit, LLC, our investment sub-adviser (and, together with the Adviser, the “Advisers”) and administrator.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q (the “Quarterly Report”).
Overview
The Company is a Delaware statutory trust formed on October 20, 2021 to act as a non-diversified, closed-end management investment company. On May 31, 2023, the Company elected to be regulated as a BDC under the 1940 Act. In addition, the Company expects to elect to be treated as a RIC under Subchapter M of the Code and expects to qualify as a RIC annually thereafter. The Company commenced its loan origination process and investment activities contemporaneously with the initial closing (excluding the initial seed capital investment made by the Adviser) (the “Initial Closing”) of the continuous private placement (the “Private Offering”) of its shares of beneficial interest, par value $0.001 per share (the “Common Shares”) on June 12, 2023 and commenced operations following its first capital call on July 10, 2023 (“Commencement of Operations”). The Company intends to offer and sell its Common Shares in the Private Offering to (i) accredited investors (as defined in Regulation D under the Securities Act) and (ii) in the case of shares sold outside the United States, to persons that are not “U.S. person” (as defined in Regulation S under the Securities Act) in reliance on exemptions from the registration requirements of the Securities Act.
The Company is externally managed by the Adviser. The Adviser oversees the management of the Company’s activities and supervises the activities of the Subadviser. FEAC, an alternative credit adviser that is a wholly-owned subsidiary of FEIM, serves as the Company’s investment subadviser and administrator.
The Company’s investment objectives are to generate returns in the form of current income and, to a lesser extent, long-term capital appreciation of investments. Under normal circumstances, the Company expects that the majority of its total assets will be in private credit investments to U.S. private companies through (i) directly originated first lien senior secured cash flow loans, (ii) directly originated asset-based loans, (iii) club deals (directly originated first lien senior secured loans or asset-based loans in which the Company co-invests with a small number of third party private debt providers), (iv) second lien loans, and (v) broadly syndicated loans, Rule 144A high yield bonds and other debt securities (the investments described in this sentence, collectively, “Private Credit”). Under normal circumstances, the Company will invest at least 80% of its total assets (net assets plus borrowings for investment purposes) in private credit investments (loans and other credit instruments that are issued in private offerings or issued by private U.S. or non-U.S. companies). To a lesser extent, the Company will also invest in broadly syndicated loans of publicly traded issuers, publicly traded high yield bonds and equity securities. The Company expects that investments in broadly syndicated loans and high yield bonds will generally be more liquid than other Private Credit assets and will likely be used to initially deploy capital upon receipt of subscriptions and may also be used for the purposes of maintaining and managing liquidity for its share repurchase program and cash management, while also presenting an opportunity for attractive investment returns.
Key Components of Our Results of Operations
Revenues
We generate revenue in the form of interest income on debt investments, capital gains, and dividend income from our equity investments in our portfolio companies. Our debt investments will generally bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or payment-in-kind (“PIK”) interest. The principal amount of the debt securities and any accrued but unpaid PIK interest generally will become due at the maturity date. In addition, we may generate revenue in the form of commitment and other fees in connection with transactions. OIDs and market discounts or premiums will be capitalized, and we will accrete or amortize such amounts as interest income. We will record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.
Expenses
Except as specifically provided below, all investment professionals and staff of the Advisers, when and to the extent engaged in providing investment advisory services to the Company, and the base compensation, bonuses and benefits of such personnel and the routine overhead expenses (including rent, office equipment and utilities) allocable to such services, will be provided and paid for by the Advisers.
The Company will bear all other costs and expenses of the Company’s operations, administration and transactions. Our primary operating expenses include the payment of base management fees and incentive fees to the Adviser pursuant to the Advisory Agreement, the payment of fees to the Administrator for the Company’s allocable portion of compensation, overhead and other
34
expenses incurred by the Administrator in performing its administrative obligations under the Administration Agreement, interest expense on borrowing, and other operating costs. Refer to Note 3—“Agreements and Related Party Transactions” in the Notes to the Consolidated Financial Statements for additional information on our Advisory Agreement and Administration Agreement.
Hedging
The Company may, but is not required to, enter into interest rate, foreign exchange or other derivative agreements to hedge interest rate, currency, credit or other risks, but the Company does not generally intend to enter into any such derivative agreements for speculative purposes. Any derivative agreements entered into for speculative purposes are not expected to be material to the Company’s business or results of operations. Hedging activities, which will be in compliance with applicable legal and regulatory requirements, may include the use of futures, options and forward contracts. The Company will bear the costs incurred in connection with entering into, administering and settling any such derivative contracts. There can be no assurance any hedging strategy the Company employs will be successful.
The Company intends to qualify as a “limited derivatives user” under SEC Rule 18f-4 under the 1940 Act, which will require the Company to limit its derivatives exposure to 10% of its net assets at any time, excluding certain currency and interest rate hedging transactions.
Portfolio and Investment Activity
For the three months ended March 31, 2024, the Company made new investments in 27 new portfolio companies for an aggregate principal amount of $141.9 million (including $12.8 million of unfunded commitments), all of which was first lien debt.
The following summarizes our investment activity (information presented is at cost unless otherwise indicated):
| As of and For the Three Months Ended March 31, 2024 |
| |
Investments: |
|
| |
New portfolio investments | $ | 124,078 |
|
Follow-on investments |
| — |
|
Delayed draw and revolver fundings |
| 3,555 |
|
Amount of investments funded at principal: |
|
| |
First lien debt | $ | 201,538 |
|
Warrant |
| 1 |
|
Total portfolio investments | $ | 201,539 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Number of portfolio companies |
| 48 |
|
|
| 21 |
|
Weighted average yield on debt and income producing investments, at cost (1) |
| 11.21 | % |
|
| 11.22 | % |
Weighted average yield on debt and income producing investments, at fair value (1) |
| 11.21 | % |
|
| 11.20 | % |
Average loan to value (LTV) (2) |
| 38.61 | % |
|
| 32.54 | % |
Percentage of debt investments bearing a floating rate, at fair value |
| 100.00 | % |
|
| 100.00 | % |
Percentage of debt investments bearing a fixed rate, at fair value |
| 0.00 | % |
|
| 0.00 | % |
Percentage of assets on non-accrual |
| 0.00 | % |
|
| 0.00 | % |
(1) Computed as (a) the annual stated interest rate or yield plus the annual accretion of discounts or less the annual amortization of premiums, as applicable, on accruing debt included in such securities, divided by (b) total debt investments (at fair value or cost, as applicable) included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.
(2) Includes all debt private debt investments for which fair value is determined by our Valuation Designee and excludes quoted assets and asset-backed loans. Average loan-to-value represents the net ratio of loan-to-value for each portfolio company, weighted based on the fair value of total applicable private debt investments. Loan-to-value is calculated as the current total net debt through each respective loan tranche divided by the estimated enterprise value of the portfolio company as of the most recent quarter end.
As of March 31, 2024 and December 31, 2023, our portfolio companies had a weighted average annual adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of approximately $39.0 million and $48.3 million, respectively. Amounts are weighted based on fair value of each respective investment. These calculations include all private debt investments for which fair value is determined by the Valuation Designee and excludes quoted assets. Amounts were derived from the most recently available portfolio company financial statements, have not been independently estimated by us, and may reflect a normalized or adjusted amount. Accordingly, we make no representation or warranty in respect of this information.
35
The following is a summary of the industry classifications in which we invested as of March 31, 2024 and December 31, 2023:
March 31, 2024 |
| ||||||||||||||
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Fair Value as % of Net Assets |
| ||||
Aerospace & Defense | $ | 2,970 |
|
| $ | 2,995 |
|
|
| 1.51 | % |
|
| 0.99 | % |
Building Products |
| 3,980 |
|
|
| 4,024 |
|
|
| 2.03 |
|
|
| 1.34 |
|
Chemicals |
| 11,018 |
|
|
| 11,048 |
|
|
| 5.57 |
|
|
| 3.67 |
|
Commercial Services & Supplies |
| 9,619 |
|
|
| 9,618 |
|
|
| 4.84 |
|
|
| 3.19 |
|
Construction & Engineering |
| 2,198 |
|
|
| 2,192 |
|
|
| 1.10 |
|
|
| 0.73 |
|
Containers & Packaging |
| 4,975 |
|
|
| 5,014 |
|
|
| 2.53 |
|
|
| 1.66 |
|
Diversified Consumer Services |
| 12,111 |
|
|
| 12,183 |
|
|
| 6.14 |
|
|
| 4.03 |
|
Entertainment |
| 4,950 |
|
|
| 5,014 |
|
|
| 2.53 |
|
|
| 1.66 |
|
Financial Services |
| 9,118 |
|
|
| 9,186 |
|
|
| 4.63 |
|
|
| 3.04 |
|
Health Care Facilities |
| 9,481 |
|
|
| 9,465 |
|
|
| 4.77 |
|
|
| 3.14 |
|
Health Care Providers & Services |
| 45,183 |
|
|
| 45,217 |
|
|
| 22.77 |
|
|
| 15.03 |
|
Household Durables |
| 6,807 |
|
|
| 6,801 |
|
|
| 3.43 |
|
|
| 2.26 |
|
Insurance |
| 12,534 |
|
|
| 12,574 |
|
|
| 6.33 |
|
|
| 4.17 |
|
IT Services |
| 5,924 |
|
|
| 5,781 |
|
|
| 2.91 |
|
|
| 1.92 |
|
Machinery |
| 3,980 |
|
|
| 4,008 |
|
|
| 2.02 |
|
|
| 1.33 |
|
Media |
| 7,905 |
|
|
| 7,965 |
|
|
| 4.01 |
|
|
| 2.65 |
|
Oil, Gas & Consumable Fuels |
| 7,563 |
|
|
| 7,533 |
|
|
| 3.79 |
|
|
| 2.51 |
|
Passenger Airlines |
| 6,952 |
|
|
| 7,024 |
|
|
| 3.54 |
|
|
| 2.33 |
|
Pharmaceuticals |
| 4,939 |
|
|
| 4,637 |
|
|
| 2.34 |
|
|
| 1.54 |
|
Professional Services |
| 8,354 |
|
|
| 8,372 |
|
|
| 4.22 |
|
|
| 2.78 |
|
Software |
| 13,737 |
|
|
| 13,846 |
|
|
| 6.97 |
|
|
| 4.59 |
|
Specialty Retail |
| 2,234 |
|
|
| 2,258 |
|
|
| 1.14 |
|
|
| 0.75 |
|
Textiles, Apparel, & Luxury Goods |
| 1,732 |
|
|
| 1,754 |
|
|
| 0.88 |
|
|
| 0.58 |
|
| $ | 198,264 |
|
| $ | 198,509 |
|
|
| 100.00 | % |
|
| 65.89 | % |
December 31, 2023 |
| ||||||||||||||
| Amortized Cost |
|
| Fair Value |
|
| % of Total Investments at Fair Value |
|
| Fair Value as % of Net Assets |
| ||||
Commercial Services & Supplies | $ | 7,500 |
|
| $ | 7,508 |
|
|
| 10.59 | % |
|
| 2.99 | % |
Construction & Engineering |
| 2,199 |
|
|
| 2,197 |
|
|
| 3.10 |
|
|
| 0.87 |
|
Diversified Consumer Services |
| 5,051 |
|
|
| 5,059 |
|
|
| 7.14 |
|
|
| 2.01 |
|
Financial Services |
| 1,774 |
|
|
| 1,807 |
|
|
| 2.55 |
|
|
| 0.72 |
|
Health Care Facilities |
| 9,467 |
|
|
| 9,465 |
|
|
| 13.35 |
|
|
| 3.76 |
|
Health Care Providers & Services |
| 15,511 |
|
|
| 15,665 |
|
|
| 22.10 |
|
|
| 6.22 |
|
Household Durables |
| 6,800 |
|
|
| 6,796 |
|
|
| 9.59 |
|
|
| 2.70 |
|
IT Services |
| 954 |
|
|
| 955 |
|
|
| 1.35 |
|
|
| 0.39 |
|
Oil, Gas & Consumable Fuels |
| 7,544 |
|
|
| 7,533 |
|
|
| 10.63 |
|
|
| 2.99 |
|
Passenger Airlines |
| 2,970 |
|
|
| 3,010 |
|
|
| 4.25 |
|
|
| 1.20 |
|
Professional Services |
| 5,392 |
|
|
| 5,372 |
|
|
| 7.58 |
|
|
| 2.13 |
|
Software |
| 3,786 |
|
|
| 3,783 |
|
|
| 5.34 |
|
|
| 1.50 |
|
Textiles, Apparel, & Luxury Goods |
| 1,736 |
|
|
| 1,733 |
|
|
| 2.43 |
|
|
| 0.69 |
|
Total | $ | 70,684 |
|
| $ | 70,883 |
|
|
| 100.00 | % |
|
| 28.17 | % |
Portfolio Asset Quality
We employ the use of board observation and information rights, regular dialogue with company management and sponsors, and detailed internally generated monitoring reports to actively monitor performance. Additionally, FEAC has developed a monitoring template that promotes compliance with these standards and that is used as a tool to assess investment performance relative to plan.
As part of the monitoring process, FEAC assesses the risk profile of each of our investments and assigns each portfolio investment a score of a 1, 2, 3, 4, or 5.
36
The investment performance scores are as follows:
1 - The portfolio investment is performing above our underwriting expectations.
2 - The portfolio investment is performing as expected at the time of underwriting. All new investments are initially scored a 2.
3 - The portfolio investment is operating below our underwriting expectations and requires closer monitoring. The company may be out of compliance with financial covenants, however, principal or interest payments are generally not past due.
4 - The portfolio investment is performing materially below our underwriting expectations and returns on our investment are likely to be impaired. Principal or interest payments may be past due, however, full recovery of principal and interest payments are expected.
5 - The portfolio investment is performing substantially below expectations and the risk of the investment has increased substantially. The company is in payment default and the principal and interest payments are not expected to be repaid in full.
For purposes of clarity, underwriting as referenced herein may be redetermined after the initial investment as a result of a transformative credit event or other material event whereby such initial underwriting is deemed by FEAC to be no longer appropriate for the purpose of assessing investment performance relative to plan. For any investment receiving a score of a 3 or lower, FEAC will increase their level of focus and prepare regular updates for the investment committee summarizing current operating results, material impending events and recommended actions.
FEAC monitors and, when appropriate, changes the investment scores assigned to each investment in our portfolio. In connection with our investment valuation process, the Adviser, the Subadviser and the Board review these investment scores on a quarterly basis. Our average portfolio company investment score was 1.94 and 1.96 at March 31, 2024 and December 31, 2023, respectively. The following is a distribution of the investment scores of our portfolio companies at March 31, 2024 and December 31, 2023 (dollar amounts in thousands):
| As of March 31, 2024 |
|
|
| As of December 31, 2023 |
| |||||||||||||||||||||||||||
Risk Rating |
| Fair Value |
|
| % of Portfolio |
|
| Amortized Cost |
|
| % of Portfolio |
|
|
| Fair Value |
|
| % of Portfolio |
|
| Amortized Cost |
|
| % of Portfolio |
| ||||||||
1 |
| $ | 12,230 |
|
|
| 6.16 | % |
| $ | 12,201 |
|
|
| 6.15 | % |
|
| $ | 2,793 |
|
|
| 3.94 | % |
| $ | 2,778 |
|
|
| 3.93 | % |
2 |
|
| 186,279 |
|
|
| 93.84 |
|
|
| 186,063 |
|
|
| 93.85 |
|
|
|
| 68,090 |
|
|
| 96.06 |
|
|
| 67,906 |
|
|
| 96.07 |
|
3 |
|
| — |
|
|
| 0.00 |
|
|
| — |
|
|
| 0.00 |
|
|
|
| — |
|
|
| 0.00 |
|
|
| — |
|
|
| 0.00 |
|
4 |
|
| — |
|
|
| 0.00 |
|
|
| — |
|
|
| 0.00 |
|
|
|
| — |
|
|
| 0.00 |
|
|
| — |
|
|
| 0.00 |
|
5 |
|
| — |
|
|
| 0.00 |
|
|
| — |
|
|
| 0.00 |
|
|
|
| — |
|
|
| 0.00 |
|
|
| — |
|
|
| 0.00 |
|
| $ | 198,509 |
|
|
| 100.00 | % |
| $ | 198,264 |
|
|
| 100.00 | % |
|
| $ | 70,883 |
|
|
| 100.00 | % |
| $ | 70,684 |
|
|
| 100.00 | % |
Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or when it is no longer probable that principal or interest will be collected. However, we may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2024 and December 31, 2023, we had no loans on non-accrual status.
Results of Operations
We are a newly-formed entity that commenced our loan origination and investment activities on July 10, 2023. We therefore have no corresponding prior-year periods with which to compare our operating results.
The following table represents our operating results (in thousands):
| For the Three Months Ended March 31, 2024 |
| |
Operating Results |
|
| |
Total investment income | $ | 5,543 |
|
Net expenses |
| 1,991 |
|
Net unrealized appreciation (depreciation) |
| 46 |
|
Net realized gain (loss) |
| — |
|
Net increase (decrease) in net assets resulting from operations | $ | 3,598 |
|
Investment Income
The composition of our investment income was as follows (in thousands):
37
| For the Three Months Ended March 31, 2024 |
| |
Investment Income |
|
| |
Interest income |
| 3,251 |
|
Dividend income |
| 2,013 |
|
Other income |
| 279 |
|
Total investment income | $ | 5,543 |
|
For the three months ended March 31, 2024, total investment income was $5.5 million driven by our deployment of capital, as well as dividend income earned on our cash equivalents. The size of our investment portfolio at fair value was $198.5 million as of March 31, 2024, with a weighted average yield of 11.2%.
Operating Expenses
The composition of our operating expenses was as follows:
| For the Three Months Ended March 31, 2024 |
| |
Operating Expenses |
|
| |
Interest expense | $ | 820 |
|
Base management fees |
| 785 |
|
Administrator expense |
| 422 |
|
Amortization of continuous offering costs |
| 198 |
|
Other Expenses |
| 551 |
|
Income based incentive fee |
| 198 |
|
Capital gains incentive fee |
| 6 |
|
Total operating expenses |
| 2,980 |
|
Management fees waiver |
| (785 | ) |
Incentive fee waiver |
| (204 | ) |
Total expenses, net of fee waivers | $ | 1,991 |
|
For the three months ended March 31, 2024, total expenses, net of fee waivers, were $1,991. The major expenses incurred by the Company include costs of our Credit Facility, fees due to the Adviser under the Advisory Agreement for base management fees and incentive fees, fees due to the Administrator under the Administration Agreement, expenses incurred in the organization of the Company, and the amortization of capitalized costs related to the continuous offering of our Common Shares. In addition, other expenses include professional fees (legal, audit and tax services), accounting and sub-administration fees, custodian fees, and printing fees.
For the twelve months following the Commencement of Operations, the Advisers have agreed to waive all management fees (including incentive fees) and subadvisory fees payable to them under the Advisory Agreement and Subadvisory Agreement. The Advisory Fee Waiver is not revocable during its term and amounts waived pursuant to the Advisory Fee Waiver will not be subject to any right of future recoupment in favor of FEIM and FEAC.
Net Realized Gains and Losses Investments
During the three months ended March 31, 2024, the Company had no full or partial exits of investment and recognized no realized gains or losses on investment activity.
Net Change in Unrealized Appreciation (Depreciation) of Investments
Net change in unrealized appreciation (depreciation) primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized, if any.
For the three months ended March 31, 2024, we had net unrealized appreciation on investments of $46 thousand.
Net Increase (Decrease) in Net Assets Resulting from Operations
Net increase (decrease) in net assets resulting from operations totaled $3.6 million, or $0.33 per common share based on a weighted average of 11,060,438 Common Shares outstanding for the three months ended March 31, 2024.
Financial Condition, Liquidity and Capital Resources
We generate our liquidity and capital resources primarily from (i) net proceeds from private offerings of our equity, (ii) cash flows from our operations (including interest and fees earned from our investments and principal repayments and proceeds from
38
sales of our investments), and (iii) borrowings under our existing leverage facilities and any financing arrangements we may enter into in the future. These financings may come in the form of borrowings from banks and issuances of senior securities. Any such incurrences or issuances would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. Our primary uses of cash include (i) investments in portfolio companies in accordance with our investment strategy, (ii) general corporate operations (including payments to the Adviser and Subadviser), (iii) debt service of any borrowings, (iv) share repurchases under our share repurchase program, and (v) cash distributions to our shareholders. We believe our current cash position, available capacity on our Credit Facility and net cash provided by operating activities will provide us with sufficient resources to meet our obligations and continue to support our investment objectives, including reserving for the capital needs which may arise at our portfolio companies.
As of March 31, 2024 and December 31, 2023, we had $142.1 million and $183.4 million, respectively, in cash and cash equivalents. Additionally, as of March 31, 2024 we had $5.0 million of borrowings outstanding and $345.0 million available for additional borrowings under the Credit Facility, subject to borrowing base availability. As of December 31, 2023 we had no borrowings outstanding and $350.0 million available for additional borrowings under the Credit Facility, subject to borrowing base availability. See “Debt” below for additional information.
We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of March 31, 2024, our asset coverage ratio was 6125.8%.
Cash Flows
For the three months ended March 31, 2024, our operating activities used cash of $92.4 million, primarily in connection with the purchase of portfolio investments and payment of Company expenses.
For the three months ended March 31, 2024, our financing activities included proceeds of $50.0 million from the issuance of Common Shares and $5.0 million from borrowings under our Credit Facility. Additionally our financing activities included the payment of $0.1 million for offering costs and $1.3 million for deferred financing costs.
Share Issuances and Share Repurchases
Share Issuances:
Pursuant to a capital drawdown notice to its investors, the Company issued and sold 2,058,460 Common Shares on March 1, 2024 for an aggregate offering price of $50.0 million. After the capital drawdown, the Company had no unfunded commitments.
The following table summarizes the issuance of shares pursuant to subscription agreements as of March 31, 2024:
Share Issuance Date |
| Number of |
|
| Aggregate |
| ||
March 1, 2024 |
|
| 2,058,460 |
|
| $ | 50,000 |
|
Total |
|
| 2,058,460 |
|
| $ | 50,000 |
|
The sales of Common Shares were made pursuant to subscription agreements entered into by the Company and its investors. Under the terms of the subscription agreements, investors are required to fund drawdowns to purchase shares of Common Shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of ten calendar days prior notice to the funding date.
Share Repurchases:
Beginning no later than the first full calendar quarter after the first anniversary of the Initial Closing, and at the discretion of the Board, the Company intends to commence a share repurchase program in which it intends to offer to repurchase, in each quarter, up to 5% of its Common Shares outstanding (either by number of shares or aggregate NAV) as of the close of the previous calendar quarter.
As of March 31, 2024, the Company had not commenced its share repurchase program.
Distributions and Distribution Reinvestment
The following table presents distributions that were declared and payable during the three months ended March 31, 2024:
Date Declared |
| Record Date |
| Payment Date |
| Distribution Per Share |
|
| Distribution Amount |
| ||
February 5, 2024 |
| February 6, 2024 |
| February 27, 2024 |
| $ | 0.12 |
|
| $ | 1,244 |
|
February 29, 2024 |
| February 29, 2024 |
| March 26, 2024 |
| $ | 0.12 |
|
| $ | 1,244 |
|
March 28, 2024 |
| March 28, 2024 |
| April 26, 2024 |
| $ | 0.12 |
|
| $ | 1,491 |
|
|
|
|
|
|
|
|
|
| $ | 3,979 |
|
39
With respect to distributions, we have adopted an “opt out” distribution reinvestment plan for shareholders. As a result, in the event of a declared cash distribution or other distribution, each shareholder that has not “opted out” of the distribution reinvestment plan will have their dividends or distributions automatically reinvested in additional shares rather than receiving cash distributions. Shareholders who receive distributions in the form of shares will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.
Debt
On September 22, 2023, the SPV, a wholly-owned financing subsidiary of the Company, the Company, as transferor, and FEPC Fund Servicer, LLC, as servicer, an affiliate of the Company, entered into a $350 million senior secured revolving credit facility (the “Credit Facility”) with Morgan Stanley Bank N.A., as initial lender, certain other lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, U.S. Bank Trust Company, National Association, as collateral agent, U.S. Bank National Association, as account bank and collateral custodian, and FEPC Fund Servicer, LLC, a wholly-owned subsidiary of the Company, as servicer under the Credit Facility.
The Company’s ability to borrow under the Credit Facility is subject to certain financial and restrictive covenants, as well as availability under the borrowing base, which permits the Company to borrow up to 75% of the principal balance of its eligible portfolio company investments depending on the type of investment, subject to a maximum advance rate on the portfolio of 65%. Under the terms of the Credit Facility, the SPV is permitted to reinvest available cash and make new borrowings under the Credit Facility through September 22, 2026. The Credit Facility has a minimum utilization requirement of 65% of the facility amount following a nine-month ramp-up period through the end of the revolving period. Distributions from the SPV to the Company are limited by the terms of the Credit Facility, which generally allows for the distribution of net interest income quarterly pursuant to a waterfall during the reinvestment period. The SPV’s obligations under the Credit Facility are secured by a first priority security interest in substantially all of the assets of the SPV, including its portfolio of investments and the Company’s equity interest in the SPV. As of March 31, 2024, the Company held 25 positions in the SPV’s account for collateral under the Credit Facility. As of March 31, 2024, the Company had $5.0 million of borrowings outstanding under the Credit Facility. As of December 31, 2023, the Company held 17 positions in the SPV’s account for collateral under the Credit Facility. As of December 31, 2023, the Company had no outstanding borrowings under the Credit Facility.
The Credit Facility has a scheduled maturity date of September 22, 2028, or earlier in accordance with the terms of the Credit Facility. Borrowings under the Credit Facility bear interest initially at the annual rate of three month SOFR plus a spread. The initial spread is 3.05% per annum for term SOFR advances during the revolving period and 3.55% per annum during the amortization period. Additionally, the SPV pays a fee of 0.15% per annum on the notional loan amount of $350 million and an unused fee of 0.60% per annum on any unused portion of the Credit Facility.
The components of interest expense were as follows (in thousands):
| For the Three Months Ended March 31, 2024 |
| |
Borrowing interest expense | $ | 3 |
|
Borrowing administration fees |
| 133 |
|
Facility unused fees |
| 531 |
|
Amortization of financing costs |
| 153 |
|
Total interest expense | $ | 820 |
|
Average Debt Outstanding (1) |
| 5,000 |
|
Average Stated Interest Rate (1) |
| 8.35 | % |
(1) Average for the period of March 29, 2024 (initial draw down on the Credit Facility) through March 31, 2024.
Commitments and Contingencies and Off-Balance Sheet Arrangements
As of March 31, 2024 and December 31, 2023, we had outstanding commitments to fund revolving lines of credit or delayed draw investments with an aggregate principal amount of $27.3 million and $14.9 million, respectively.
Related Party Transactions
Refer to Note 3—“Agreements and Related Party Transactions” in the Notes to the Consolidated Financial Statements.
Critical Accounting Policies and Estimates
The preparation of the Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies and estimates should be read in connection with our risk factors described in our Annual Report on Form 10-K and our Pre-Effective Registration Statement on Form N-2.
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Revenue Recognition
Interest Income
Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that the Company expects to collect such amounts. Discounts from and premiums to par value on debt investments, loan origination fees and upfront fees received that are deemed to be an adjustment to yield are accreted/amortized into interest income over the life of the respective security using the effective interest method. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.
The Company will recognize any earned exit or back-end fees into income when it believes the amounts will ultimately become collected by using either the beneficial interest model or other appropriate income recognition frameworks.
PIK Income
PIK interest is computed at the contractual rate specified in each investment agreement, is added to the principal balance of the investment, and is recorded as income.
Dividend Income
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.
Other Income
The Company may also generate revenue in the form of structuring, arranger or due diligence fees, amendment or consent fees, portfolio company administration fees, fees for providing significant managerial assistance and consulting fees. Such fees are recognized as income when earned or the services are rendered.
Valuation of Portfolio Investments
The Board designated FEIM as the Valuation Designee as that term is defined in Rule 2a-5. As the Valuation Designee, the Board designated FEIM to perform fair value determinations of the Company’s assets by implementing valuation policies and procedures approved by the Board, subject to the oversight of the Board and the Audit Committee, and in compliance with the requirements of Rule 2a-5.
In calculating the value of our total assets, investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or one or more broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are determined to be unreliable are valued at fair value as determined in good faith by the Valuation Designee.
With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:
| 1. | the Company’s valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for managing portfolio investments; concurrently therewith, on at least an annual basis, independent valuation firms are used to conduct independent appraisals of all investments for which market quotations are either not readily available or are determined to be unreliable unless the amount of an investment is immaterial; |
| 2. | the preliminary valuation recommendation of the investment professionals and the applicable input of the independent valuation firms (the “Preliminary Valuation Data”) are then documented and reviewed with FEAC’s pricing professionals; |
| 3. | the Preliminary Valuation Data are then discussed with, and approved by, the pricing committee of FEAC; |
| 4. | FEIM’s valuation committee independently discusses the Preliminary Valuation Data and determines the fair value of each investment in good faith based on the Preliminary Valuation Data; and |
| 5. | on a quarterly basis, a designee of FEIM’s valuation committee discusses the fair value determinations of each investment with the Audit Committee. |
The types of factors that FEIM may take into account in fair value pricing the Company’s investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted
41
cash flows, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors.
Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation
We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
U.S. Federal Income Taxes, Including Excise Tax
The Company intends to elect to be treated as a RIC under Subchapter M of the Code, and intends to operate in a manner so as to continue to qualify each year as a RIC under the Code. So long as the Company maintains its tax treatment as a RIC, it will not be subject to corporate-level federal income tax on the portion of its ordinary income and capital gains distributed to shareholders as dividends.
In order to qualify for favorable tax treatment as a RIC, the Company is required to, among other things, distribute annually to its shareholders at least 90% of the sum of (i) its investment company taxable income, as defined by the Code but determined without regard to the deduction for dividends paid, and (ii) its net tax-exempt income for such taxable year.
Recent Developments
On April 30, 2024, the Company's Board declared a distribution of $0.12 per Common Share, which is payable on May 29, 2024 to shareholders of record as of April 30, 2024.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to financial market risks, including valuation risk, and interest rate risk.
Valuation Risk
We have invested, and plan to continue to invest in directly originated debt and equity securities of middle market companies. Because we expect that there will not be a readily available market value for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by the Valuation Designee in accordance with a documented valuation policy and GAAP and that has been reviewed and approved by our Board. The Valuation Designee will provide the Board and the Audit Committee with periodic reports, no less than quarterly, that discuss the functioning of the valuation process, if applicable to that period, and that identify issues and valuation problems that have arisen, if any. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
Interest Rate Risk
The majority of the loans in our portfolio have floating interest rates and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating SOFR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly or quarterly basis. The majority of the loans in our current portfolio have interest rate floors that will effectively convert the loans to fixed rate loans in the event interest rates decrease. In addition, our Credit Facility and Term Loan have a floating interest rate provision. We expect that other credit facilities into which we may enter in the future may also have floating interest rate provisions.
Assuming that the consolidated statement of assets and liabilities as of March 31, 2024 was to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:
Change in Interest Rates |
| Interest |
|
| Interest |
|
| Net |
| |||
Up 300 basis points |
| $ | 10,099 |
|
| $ | (150 | ) |
| $ | 9,949 |
|
Up 200 basis points |
|
| 8,083 |
|
|
| (100 | ) |
|
| 7,983 |
|
Up 100 basis points |
|
| 6,068 |
|
|
| (50 | ) |
|
| 6,018 |
|
Down 100 basis points |
|
| 2,037 |
|
|
| 50 |
|
|
| 2,087 |
|
Down 200 basis points |
|
| 22 |
|
|
| 100 |
|
|
| 122 |
|
Market prices tend to fluctuate more for fixed-rate securities that have longer maturities. Although we have no policy governing the maturities of our investments, under current market conditions we expect that we will invest in a portfolio of debt generally having maturities of up to 10 years. Market prices for debt that pays a fixed rate of return tend to decline as interest rates rise. This means that we are subject to greater risk (other things being equal) than a fund invested solely in shorter-term, fixed-rate securities. Market prices for floating rate investments may also fluctuate in rising rate environments with prices tending to decline when credit spreads widen. A decline in the prices of the debt we own could adversely affect our net assets resulting from operations and the NAV of our Common Shares.
Inflation Risk
Economic activity has continued to accelerate across sectors and regions. Nevertheless, due to global supply chain disruptions, a rise in energy prices, strong consumer demand as economies continue to reopen and other factors, inflation has accelerated in the U.S. and globally. We expect that certain of our portfolio companies will be in industries that have been impacted by inflation. Recent inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and our portfolio companies’ operations. If such portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal on our loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations.
Additionally, the Federal Reserve has raised, and may continue raising, certain benchmark interest rates in an effort to combat inflation. As such, we believe inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy may tighten in response. Persistent inflationary pressures and supply chain issues could affect our portfolio companies’ profit margins. In addition, the inflation-adjusted value of the principal on our loan investments could decrease.
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Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report on Form 10-Q.
(b) Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a defendant in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies.
Item 1A. Risk Factors.
For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Item 1A. Risk Factors of our annual report on Form 10-K, as well as those under the caption “Risk Factors” in our Registration Statement on Form N-2 filed with the SEC on March 29, 2024 and April 24, 2024, respectively. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The Company is offering and selling its Common Shares in a continuous private placement in the United States under the exemption provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.
Beginning no later than the first full calendar quarter after the first anniversary of the Initial Closing, and at the discretion of the Board, the Company intends to commence a share repurchase program in which it intends to offer to repurchase, in each quarter, up to 5% of its Common Shares outstanding (either by number of shares or aggregate NAV) as of the close of the last calendar day of the applicable quarter. The Board may amend or suspend the share repurchase program at any time if in its reasonable judgment it deems such action to be in the Company’s best interest and the best interest of its shareholders. As a result, share repurchases may not be available each quarter, such as when a repurchase offer would place an undue burden on the Company’s liquidity, adversely affect its operations or risk having an adverse impact on the Company that would outweigh the benefit of the repurchase offer. Following any such suspension, the Board intends to reinstate the share repurchase program when appropriate and subject to our Board’s duties to the Company. The Company intends to conduct such repurchase offers in accordance with the requirements of Rule 13e-4, promulgated under the Exchange Act, and the 1940 Act. All Common Shares purchased by us pursuant to the terms of each tender offer will be retired and thereafter will be authorized and unissued Common Shares.
During the quarter ended March 31, 2024, there were no repurchases of Common Shares under the Company’s share repurchase program.
As of March 31, 2024, the Company had received capital commitments totaling $302.7 million. On February 16, 2024, the Company provided the investors with a capital drawdown notice relating to the sale of 2,058,460 of the Company’s Common Shares on March 1, 2024 with an aggregate offering price of $50.0 million. After the capital drawdowns, the Company had no uncalled capital commitments.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the period ended March 31, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement”, as each such term is defined in Item 408(c) of Regulation S-K.
Departure of Certain Officers; Appointment of Certain Officers
As disclosed in the Company’s current report on Form 8-K filed on February 6, 2024, Christopher J. Flynn previously notified the Board of his intention to resign as President, Chief Executive Officer and Trustee of the Company. On May 9, 2024, Mr. Flynn notified the Board that the effective date of his resignation as President, Chief Executive Officer and Trustee of the Company will
45
be as of the close of business on May 31, 2024. Mr. Flynn’s resignation was not a result of any disagreement with the Company, the Advisers or their affiliates regarding their operations, policies, practices or otherwise.
In connection with Mr. Flynn’s resignation, the Board has appointed David O’Connor to serve as President and Chief Executive Officer of the Company, effective as of the close of business on May 31, 2024. Mr. O’Connor will also continue to serve as a Trustee and will no longer serve as the Company’s Head of Legal & Compliance, a role that no longer exists with the Company. Mr. O’Connor is General Counsel and Head of Legal and Compliance at FEIM. Prior to joining First Eagle in January 2017, he served as executive vice president and General Counsel for Delaware Investments and the Delaware Investments Family of Funds. He was also responsible for strategic investment relationships and initiatives and served as chairman of Delaware’s Dublin-based UCITs fund group. Mr. O’Connor served on the firm’s Board of Directors, as well as a variety of committees. Prior to joining Delaware, he was an associate in the business and finance department of the Philadelphia office of Ballard Spahr, where he focused on mergers and acquisitions, contract negotiations and investment company work. Mr. O’Connor is a member of the Board of Directors and Executive Committee of Philadelphia Futures, a nonprofit organization providing urban high school and college students with resources necessary to obtain a college degree. He earned a bachelor's degree with a double major in sociology and biblical studies from Gordon College and a J.D. with honors from Villanova University School of Law.
Mr. O’Connor (i) was not appointed as the Company’s President and Chief Executive Officer pursuant to any arrangement or understanding with any other person; (ii) does not have a family relationship with any of the Company’s Trustees or other executive officers; (iii) has not engaged, since the beginning of the Company’s last fiscal year, nor proposes to engage, in any transaction in which the Company was or is a participant; and (iv) has not entered into, nor expects to enter into, any material plan, contract, arrangement, grant or award in connection with his appointment as the Company’s President and Chief Executive Officer.
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Item 6. Exhibits.
Exhibit Number | Description | |
3.1 |
| |
3.2 |
| |
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS |
| Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
First Eagle Private Credit Fund | |||
Date: May 13, 2024 | By: | /s/ Christopher J. Flynn | |
Christopher J. Flynn | |||
Chief Executive Officer | |||
| |||
Date: May 13, 2024 | By: | /s/ Jennifer M. Wilson | |
| Jennifer M. Wilson | ||
| Chief Financial Officer and Treasurer |
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