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Delayed Draw Loan Industry Diversified Financials Spread Above Index SOFR + 6.00% (1.50% floor) Interest Rate 11.47 Maturity Date 2/24/20272023-12-310001987221First Lien Senior Secured Firebirds Buyer, LLC - Revolving Credit Line Industry Consumer Services Spread Above Index SOFR + 6.25% (2.00% floor) Interest Rate 11.20% Maturity Date 3/22/20282024-09-300001987221ck0001987221:AllbridgeMemberck0001987221:DelayeddrawloanMember2024-09-300001987221us-gaap:FairValueInputsLevel2Memberus-gaap:EquityFundsMember2024-09-300001987221ck0001987221:RevolvingCreditLineMemberck0001987221:SpartanFitnessMember2024-09-300001987221First Lien Senior Secured OL Texas Restaurants, LLC - Revolving Credit Line Industry Consumer Services Spread Above Index SOFR + 5.75% (1.00% floor) Interest Rate 11.07% Maturity Date 8/29/20292024-09-300001987221First Lien Senior Secured KCK Ltd - Revolving Credit Line Industry Financial Services Spread Above Index SOFR + 5.40% (0.00% floor) Interest Rate 10.40% Maturity Date 9/27/20272024-09-300001987221First Lien Senior Secured Drive Assurance Corporation - Delayed Draw Term Loan Industry Insurance Spread Above Index SOFR 7.00% (2.00% floor) Interest Rate 11.85% Maturity Date 7/10/20302024-09-300001987221ck0001987221:CapitalDrawdownsMemberck0001987221:DrawDownDateTwentyEightMarch2024Member2024-01-012024-09-300001987221ck0001987221:AdministrationAgreementMember2024-01-012024-09-300001987221us-gaap:CommonStockMember2024-01-012024-09-300001987221ck0001987221:DelayeddrawloanMemberck0001987221:ProFoodSolutionsMember2024-09-300001987221ck0001987221:SecuredLoanFacilityMemberck0001987221:AmgComvestSeniorLendingFundLliSpvLlcMember2024-01-012024-09-300001987221us-gaap:CommonStockMember2024-07-012024-09-300001987221First Lien Senior Secured Kemper Sports Management - Delayed Draw Loan Industry Consumer Services Spread Above Index SOFR + 6.50% (1.00% floor) Interest Rate 11.98 Maturity Date 1/12/20282023-12-310001987221First Lien Senior Secured Hasa - Term Loan Industry Capital Goods Spread Above Index SOFR + 5.75% (1.00% floor) Interest Rate 11.23 Maturity Date 1/10/20292023-12-310001987221ck0001987221:SoftwareAndServicesMemberck0001987221:InvestmentsAndCashEquivalentsMember2024-09-300001987221Net Assets2023-12-310001987221First Lien Senior Secured Hasa - Revolving Credit Line Industry Capital Goods Spread Above Index SOFR + 5.75% (1.00% floor) Interest Rate 11.23 Maturity Date 1/10/20292023-12-310001987221us-gaap:RetainedEarningsMember2024-06-300001987221ck0001987221:RevolvingCreditLineMemberck0001987221:KemperSportsManagementMember2024-09-300001987221us-gaap:FairValueInputsLevel3Member2024-01-012024-09-300001987221First Lien Senior Secured Drive Assurance Corporation - Term Loan Industry Insurance Spread Above Index SOFR 7.00% (2.00% floor) Interest Rate 11.85% Maturity Date 7/10/20302024-09-300001987221ck0001987221:FinancialServicesMemberck0001987221:InvestmentsAndCashEquivalentsMember2024-09-300001987221us-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMemberus-gaap:MarketApproachValuationTechniqueMemberus-gaap:EquityFundsMemberus-gaap:MeasurementInputEbitdaMultipleMember2024-09-300001987221First Lien Senior Secured National Debt Relief, LLC - Revolving Credit Line Industry Financial Services Spread Above Index SOFR + 6.50% (2.50% floor) Interest Rate 11.46% Maturity Date 2/7/20282024-09-300001987221First Lien Senior Secured XDimensional Technologies, Inc. - Revolving Credit Line Industry Software & Services Spread Above Index SOFR + 5.00% (2.00% floor) + 3.00% PIK Interest Rate 12.95% Maturity Date 12/24/20252024-09-300001987221ck0001987221:O2024Q2DividendsMember2024-06-270001987221First Lien Senior Secured Hasa Acquisition, LLC - Revolving Credit Line Industry Capital Goods Spread Above Index SOFR + 5.00% (1.00% floor) Interest Rate 10.28% Maturity Date 1/10/2029 2024-09-300001987221ck0001987221:ComvestGroupHoldingsSpvIiLlcMember2023-12-310001987221ck0001987221:BatteriesPlusHoldingCorporationMemberck0001987221:RevolvingCreditLineMember2024-09-300001987221us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001987221us-gaap:ValuationTechniqueDiscountedCashFlowMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMemberus-gaap:MeasurementInputDiscountRateMemberck0001987221:FirstLienSeniorSecuredMember2023-12-310001987221us-gaap:CommonStockMember2024-06-300001987221ck0001987221:RevolvingCreditLineMemberck0001987221:CheckedupMember2023-12-310001987221ck0001987221:OjosLocosMemberck0001987221:DelayeddrawloanMember2024-09-300001987221ck0001987221:InvestmentAdvisoryAgreementMember2024-01-012024-09-300001987221us-gaap:FairValueInputsLevel3Memberus-gaap:ValuationTechniqueDiscountedCashFlowMembersrt:MinimumMemberus-gaap:MeasurementInputDiscountRateMemberck0001987221:FirstLienSeniorSecuredMember2023-12-310001987221ck0001987221:DrawDownDateTwentyEightJune2024Member2024-01-012024-09-300001987221ck0001987221:InvestmentsAndCashEquivalentsMemberck0001987221:CommercialAndProfessionalServicesMember2024-09-300001987221First Lien Senior Secured Batteries Plus Holding Corporation - Revolving Credit Line Industry Consumer Services Spread Above Index SOFR + 6.75% (1.00% floor) Interest Rate 12.21 Maturity Date 6/27/20282023-12-310001987221First Lien Senior Secured Batteries Plus Holding Corporation - Term Loan A Industry Consumer Services Spread Above Index SOFR + 6.75% (1.00% floor) Interest Rate 12.21 Maturity Date 6/27/20282023-12-310001987221ck0001987221:SoftwareAndServicesMemberus-gaap:InvestmentsMember2023-12-310001987221ck0001987221:SplashCarWashMemberck0001987221:DelayeddrawloanMember2023-12-310001987221ck0001987221:ThreeMonthSofrMember2024-09-300001987221Debt Investments2024-09-300001987221ck0001987221:FirstLienSeniorSecuredMember2024-09-300001987221ck0001987221:InvestmentsAndCashEquivalentsMemberck0001987221:HealthCareEquipmentAndServicesMember2024-09-300001987221us-gaap:FairValueInputsLevel3Member2024-09-300001987221us-gaap:InvestmentUnaffiliatedIssuerMember2024-07-012024-09-300001987221ck0001987221:SplashCarWashMemberck0001987221:DelayeddrawloanMember2024-09-300001987221First Lien Senior Secured PDDS Holdco, Inc. - Delayed Draw Term Loan Industry Software & Services Spread Above Index SOFR + 7.50% (0.75% floor) Interest Rate 12.25% Maturity Date 7/18/20282024-09-300001987221First Lien Senior Secured Bradford Health Services - Term Loan Industry Health Care Providers & Services Spread Above Index SOFR + 6.00% (1.00% floor) Interest Rate 11.48 Maturity Date 10/27/20282023-12-310001987221Debt Investments2023-12-310001987221First Lien Senior Secured BKH - Delayed Draw Term Loan Industry Consumer Services Spread Above Index SOFR + 6.50% (1.00% floor) Interest Rate 11.97 Maturity Date 2/25/20282023-12-310001987221us-gaap:DelayedDrawTermLoanMember2023-12-310001987221First Lien Senior Secured Military Retail Solutions, LLC - Delayed Draw Term Loan Industry Consumer Staples Distribution & Retail Spread Above Index SOFR + 5.25% (1.00% floor) Interest Rate 10.10% Maturity Date 6/28/20292024-09-300001987221First Lien Senior Secured Senior Support Holdings (Franchise) Acquisition, Inc. - Delayed Draw Loan Industry Health Care Equipment & Services Spread Above Index SOFR + 5.25% (1.00% floor) Interest Rate 10.06% Maturity Date 3/20/20302024-09-300001987221First Lien Senior Secured OpCo Borrower, LLC - Term Loan Industry Health Care Equipment & Services Spread Above Index SOFR + 6.00% (1.00% floor) Interest Rate 11.28% Maturity Date 4/26/20292024-09-300001987221ck0001987221:HasaMemberck0001987221:RevolvingCreditLineMember2024-09-300001987221Cash Equivalents2024-09-300001987221ck0001987221:O2024Q3DividendsMember2024-09-260001987221First Lien Senior Secured Baker Hill - Term Loan A Industry Software & Services Spread Above Index SOFR + 7.00% (1.00% floor) Interest Rate 12.35 Maturity Date 7/19/20282023-12-310001987221ck0001987221:PlanetDdsMemberck0001987221:DelayeddrawloanMember2024-09-300001987221ck0001987221:CapitalDrawdownsMemberck0001987221:DrawDownDateThirtySeptember2024Member2024-01-012024-09-300001987221First Lien Senior Secured Hornblower Sub LLC - Term Loan Industry Transportation Spread Above Index SOFR + 5.50% (1.00% floor) Interest Rate 10.82% Maturity Date 7/3/20292024-09-300001987221us-gaap:AdditionalPaidInCapitalMember2024-09-300001987221First Lien Senior Secured Cardiovascular Logistics - Delayed Draw Term Loan A Industry Health Care Providers & Services Spread Above Index SOFR + 6.25% (1.00% floor) Interest Rate 11.73 Maturity Date 1/31/20292023-12-310001987221ck0001987221:ConsumerServicesMemberus-gaap:InvestmentsMember2023-12-310001987221ck0001987221:TelecommunicationServicesMemberck0001987221:InvestmentsAndCashEquivalentsMember2024-09-300001987221ck0001987221:RevolvingCreditLineMember2023-12-310001987221ck0001987221:ComvestGroupHoldingsSpvIiLlcMember2024-09-300001987221us-gaap:RetainedEarningsMember2024-01-012024-09-300001987221Equity Investments2024-09-300001987221First Lien Senior Secured Baker Hill - Revolving Credit Line Industry Software & Services Spread Above Index SOFR + 7.00% (1.00% floor) Interest Rate 12.35 Maturity Date 7/19/20282023-12-310001987221ck0001987221:InsuranceMemberck0001987221:InvestmentsAndCashEquivalentsMember2024-09-300001987221ck0001987221:FireBirdsMemberck0001987221:RevolvingCreditLineMember2023-12-310001987221ck0001987221:InvestmentAdvisoryAgreementMember2024-07-012024-09-300001987221First Lien Senior Secured Salt US Holdco, LLC - Term Loan Industry Transportation Spread Above Index SOFR + 5.73% (1.00% floor) Interest Rate 10.34% Maturity Date 7/31/20292024-09-300001987221ck0001987221:DelayeddrawloanMemberck0001987221:SpartanFitnessMember2024-09-300001987221First Lien Senior Secured Restaurant Holding Company, LLC - Delayed Draw Term Loan Industry Consumer Services Spread Above Index SOFR + 6.25% (1.00% floor) Interest Rate 11.21% Maturity Date 2/25/20282024-09-300001987221First Lien Senior Secured National Debt Relief - Term Loan Industry Diversified Financials Spread Above Index SOFR + 6.00% (1.50% floor) Interest Rate 11.47 Maturity Date 2/24/20272023-12-310001987221First Lien Senior Secured BHP Management Holdings, LLC - Term Loan Industry Health Care Equipment & Services Spread Above Index SOFR + 5.00% (1.00% floor) Interest Rate 9.75% Maturity Date 10/27/20282024-09-300001987221First Lien Senior Secured PDDS Holdco, Inc. - Term Loan Industry Software & Services Spread Above Index SOFR + 7.50% (0.75% floor) Interest Rate 12.25% Maturity Date 7/18/20282024-09-300001987221ck0001987221:SecuredLoanFacilityMemberck0001987221:AmgComvestSeniorLendingFundLliSpvLlcMemberus-gaap:FederalFundsEffectiveSwapRateMember2024-07-162024-07-160001987221First Lien Senior Secured Splash Car Wash, Inc - Delayed Draw Term Loan Industry Consumer Discretionary Distribution & Retail Spread Above Index SOFR + 6.50% (1.00% floor) + 1.00% PIK Interest Rate 12.71% Maturity Date 6/30/20262024-09-300001987221First Lien Senior Secured DMA Holding Company - Term Loan Industry Software & Services Spread Above Index SOFR + 7.00% (1.00% floor) Interest Rate 11.95% Maturity Date 7/19/20282024-09-300001987221us-gaap:FairValueInputsLevel3Memberus-gaap:CashEquivalentsMember2024-09-300001987221ck0001987221:FirstLienSeniorSecuredMember2023-12-310001987221ck0001987221:TechnologyHardwareEquipmentMemberck0001987221:InvestmentsAndCashEquivalentsMember2024-09-300001987221First Lien Senior Secured Firebirds Buyer, LLC - Term Loan Industry Consumer Services Spread Above Index SOFR + 6.25% (2.00% floor) Interest Rate 11.20% Maturity Date 3/22/20282024-09-300001987221ck0001987221:SecuredLoanFacilityMemberck0001987221:AmgComvestSeniorLendingFundLliSpvLlcMember2024-07-012024-09-300001987221\ First Lien Senior Secured KCK Ltd - Term Loan Industry Financial Services Spread Above Index SOFR + 5.40% (0.00% floor) Interest Rate 10.40% Maturity Date 9/27/20272024-09-300001987221ck0001987221:FireBirdsMemberck0001987221:DelayeddrawloanMember2024-09-300001987221First Lien Senior Secured Cardiology Management Holdings, LLC - Term Loan B Industry Health Care Equipment & Services Spread Above Index SOFR + 6.25% (1.00% floor) Interest Rate 11.00% Maturity Date 1/31/20292024-09-300001987221First Lien Senior Secured Military Retail Solutions, LLC - Term Loan Industry Consumer Staples Distribution & Retail Spread Above Index SOFR + 5.25% (1.00% floor) Interest Rate 10.10% Maturity Date 6/28/20292024-09-300001987221us-gaap:AdditionalPaidInCapitalMember2023-12-310001987221First Lien Senior Secured Kemper Sports Management - Term Loan Industry Consumer Services Spread Above Index SOFR + 6.50% (1.00% floor) Interest Rate 11.98 Maturity Date 1/12/20282023-12-310001987221Private Companies Senior Support Holdings, LP - Class A-1 Units Industry Health Care Equipment & Services2024-09-300001987221ck0001987221:DiversifiedFinancialsMemberus-gaap:InvestmentsMember2023-12-310001987221ck0001987221:TransportationMemberck0001987221:InvestmentsAndCashEquivalentsMember2024-09-300001987221First Lien Senior Secured XDimensional Technologies - Revolving Credit Line Industry Software & Services Spread Above Index SOFR + 4.00% (2.00% floor) + 4.00% PIK Interest Rate 9.46 Maturity Date 12/24/20252023-12-310001987221First Lien Senior Secured WildBrain Ltd. - Revolving Credit Line Industry Media & Entertainment Spread Above Index SOFR + 6.00% (1.00% floor) Interest Rate 11.26% Maturity Date 7/23/20292024-09-300001987221First Lien Senior Secured Allbridge, LLC - Delayed Draw Term Loan Industry Telecommunication Services Spread Above Index SOFR + 5.75% (1.00% floor) Interest Rate 10.35% Maturity Date 6/5/20302024-09-300001987221ck0001987221:RevolvingCreditLineMemberck0001987221:ProFoodSolutionsMember2024-09-300001987221ck0001987221:InvestmentsAndCashEquivalentsMemberck0001987221:MediaAndEntertainmentMember2024-09-300001987221First Lien Senior Secured Firebirds Buyer, LLC - Delayed Draw Term Loan Industry Consumer Services Spread Above Index SOFR + 6.25% (2.00% floor) Interest Rate 11.20% Maturity Date 3/22/20282024-09-300001987221us-gaap:FairValueInputsLevel3Memberus-gaap:EquityFundsMember2023-12-310001987221ck0001987221:RevolvingCreditLineMemberck0001987221:CheckedupMember2024-09-300001987221First Lien Senior Secured Splash Car Wash - Revolving Credit Line Industry Consumer Services Spread Above Index SOFR + 6.50% (1.00% floor) + 1.00% PIK Interest Rate 12.83 Maturity Date 6/30/20262023-12-310001987221ck0001987221:SecuredLoanFacilityMemberck0001987221:UndrawnCommitmentLessThanOrEqualToFiftyPercentageOfAggregateCommitmentMemberck0001987221:AmgComvestSeniorLendingFundLliSpvLlcMember2024-07-162024-07-160001987221ck0001987221:AmendedAndRestatedExpenseLimitationAndReimbursementAgreementMember2024-09-300001987221Private Companies Senior Support Holdings, LP - Class B Units Industry Health Care Equipment & Services2024-09-300001987221First Lien Senior Secured Military Retail Solutions, LLC - Revolving Credit Line Industry Consumer Staples Distribution & Retail Spread Above Index SOFR + 5.25% (1.00% floor) Interest Rate 10.10% Maturity Date 6/28/20292024-09-300001987221us-gaap:FairValueInputsLevel3Memberus-gaap:EquityFundsMemberus-gaap:MarketApproachValuationTechniqueMembersrt:MinimumMemberus-gaap:MeasurementInputEbitdaMultipleMember2024-09-300001987221ck0001987221:WildbrainMemberck0001987221:RevolvingCreditLineMember2024-09-300001987221ck0001987221:PlanetDdsMemberck0001987221:DelayeddrawloanMember2023-12-310001987221Cash Equivalents First American Government Obligations Fund - 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

 

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

 

For the quarterly period ended September 30, 2024

OR

 

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

 

Commission File Number: 814-01669

 

AMG Comvest Senior Lending Fund

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware

93-4109571

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

360 S Rosemary Avenue, Suite 1700,

 

West Palm Beach, FL

33401

(Address of Principal Executive Offices)

(Zip Code)

 

(561) 727-2001

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading

Symbol(s)

Name of Each Exchange

on Which Registered

None

None

None

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

There were 4,015,003 issued and outstanding shares of the issuer’s common shares of beneficial interest, $0.001 par value per share, on November 13, 2024.

 


 

 

AMG Comvest Senior Lending Fund

 

Quarterly Report on Form 10-Q

 

TABLE OF CONTENTS

Page

PART I.

FINANCIAL INFORMATION

1

 

Item 1.

Financial Statements

1

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

PART II.

OTHER INFORMATION

38

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

Item 3.

Defaults Upon Senior Securities

38

Item 4.

Mine Safety Disclosures

38

Item 5.

Other Information

38

Item 6.

Exhibits

39

SIGNATURES

40

 

 

 

 

 

 


 

PART I. FINANCIAL INFORMATION.

 

ITEM 1. FINANCIAL STATEMENTS.

 

AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(amounts in thousands, except share and per share data)

 

 

 

September 30, 2024
(Unaudited)

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Non-controlled, non-affiliated investments, at fair value (amortized cost of $126,078 and $18,298 as of September 30, 2024 and December 31, 2023, respectively)

 

$

126,534

 

 

$

18,281

 

Cash and cash equivalents

 

 

40,474

 

 

 

8,511

 

Restricted cash

 

 

725

 

 

 

 

Receivables:

 

 

 

 

 

 

Receivable for paydowns of investments

 

 

154

 

 

 

4

 

Interest receivable

 

 

1,310

 

 

 

248

 

Due from affiliates (Note 4)

 

 

592

 

 

 

682

 

Prepaid expenses and other assets

 

 

985

 

 

 

384

 

Total Assets

 

$

170,774

 

 

$

28,110

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Credit facility (net of deferred financing costs of $374 and $0 as of September 30, 2024 and December 31, 2023, respectively)

 

$

45,626

 

 

$

 

Secured borrowing

 

 

22,271

 

 

 

 

Payables:

 

 

 

 

 

 

Management fee payable, net (Note 4)

 

 

265

 

 

 

 

Deferred tax liability

 

 

15

 

 

 

 

Interest payable

 

 

420

 

 

 

 

Incentive fee payable

 

 

158

 

 

 

 

Accrued professional fees

 

 

1,033

 

 

 

264

 

Accrued organizational and offering costs

 

 

 

 

 

235

 

Accrued expenses

 

 

278

 

 

 

98

 

Total Liabilities

 

$

70,066

 

 

$

597

 

 

 

 

 

 

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

Common Shares, $0.001 par value; unlimited shares authorized; 4,015,003 and 1,100,409 as of September 30, 2024 and December 31, 2023, respectively, issued and outstanding

 

$

4

 

 

$

1

 

Additional paid-in capital

 

 

100,566

 

 

 

27,529

 

Total distributable earnings (accumulated deficit)

 

 

138

 

 

 

(17

)

Total Net Assets

 

$

100,708

 

 

$

27,513

 

Total Liabilities and Net Assets

 

$

170,774

 

 

$

28,110

 

Net Asset Value Per Common Share

 

$

25.08

 

 

$

25.00

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

1


 

AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per share data)

(Unaudited)

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

2024

 

 

2024

 

Income:

 

 

 

 

 

Investment income from non-controlled, non-affiliated investments:

 

 

 

 

 

Interest income

$

2,974

 

 

$

5,045

 

Fee income

 

70

 

 

 

118

 

Total Investment Income

 

3,044

 

 

 

5,163

 

Expenses:

 

 

 

 

 

Management fees

 

265

 

 

 

511

 

Incentive fees

 

151

 

 

 

239

 

Administrative expenses

 

54

 

 

 

103

 

Interest expense

 

687

 

 

 

687

 

Professional fees

 

287

 

 

 

2,167

 

Trustees’ fees

 

52

 

 

 

146

 

Organizational and offering expenses

 

346

 

 

 

627

 

Other general expenses

 

195

 

 

 

377

 

Total Expenses

 

2,037

 

 

 

4,857

 

Less: Fee waivers (Note 4)

 

 

 

 

(237

)

Less: Expense reimbursement (Note 4)

 

(592

)

 

 

(2,770

)

Net expenses

 

1,445

 

 

 

1,850

 

Net Investment Income (Loss)

 

1,599

 

 

 

3,313

 

 

 

 

 

 

 

Realized and unrealized gains (losses) on investments and foreign currency transactions

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

 

7

 

Total net realized gains (losses)

 

 

 

 

7

 

Net change in unrealized gains (losses):

 

 

 

 

 

Non-controlled, non-affiliated investments

 

410

 

 

 

473

 

Net change in deferred tax liability

 

(6

)

 

 

(15

)

Total net change in unrealized gains (losses)

 

404

 

 

 

458

 

Total realized and unrealized gains (losses)

 

404

 

 

 

465

 

Net Increase (Decrease) in Net Assets Resulting from Operations

$

2,003

 

 

$

3,778

 

 

 

 

 

 

 

Per Common Share Data:

 

 

 

 

 

Basic and diluted net investment income/(loss) per common share

$

0.48

 

 

$

1.52

 

Basic and diluted net increase/(decrease) in net assets resulting from operations per common share

$

0.60

 

 

$

1.73

 

Weighted Average Common Shares Outstanding - Basic and Diluted

 

3,362,681

 

 

 

2,180,293

 

 

The accompanying notes are an integral part of these consolidated financial statements.

2


 

AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(amounts in thousands, except share and per share data)

(Unaudited)

 

 

 

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

 

 

 

2024

 

 

2024

 

Increase (Decrease) in Net Assets Resulting from Operations:

 

 

 

 

 

 

Net investment income (loss)

 

$

1,599

 

 

$

3,313

 

Net realized gains (losses) on investments

 

 

 

 

 

7

 

Net change in unrealized gains (losses) on investments

 

 

404

 

 

 

458

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

2,003

 

 

 

3,778

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Shareholder Distributions

 

 

(2,001

)

 

 

(3,623

)

 

 

 

 

 

 

 

Proceeds from issuance of common shares

 

 

16,540

 

 

 

73,040

 

 

 

 

 

 

 

 

Total Increase (Decrease) in Net Assets

 

 

16,542

 

 

 

73,195

 

Net Assets, Beginning of Period

 

 

84,166

 

 

 

27,513

 

Net Assets, End of Period

 

$

100,708

 

 

$

100,708

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2024

 

Cash Flows from Operating Activities:

 

 

 

Net increase (decrease) in net assets resulting from operations

 

$

3,778

 

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:

 

 

 

Net realized (gains) losses on investments

 

 

(7

)

Net change in unrealized gains (losses) (net of deferred taxes)

 

 

(458

)

Net accretion of discount and payment in-kind interest on investments

 

 

(135

)

Purchases of portfolio investments

 

 

(108,788

)

Sales or repayments of portfolio investments

 

 

1,000

 

Increase (decrease) in operating assets and liabilities:

 

 

 

Increase in interest receivable

 

 

(1,062

)

Decrease in due from affiliates

 

 

90

 

Increase in prepaid expenses and other assets

 

 

(601

)

Increase in management fees payable

 

 

265

 

Increase in interest payable

 

 

420

 

Increase in incentive fee payable, net

 

 

158

 

Increase in accrued professional fees

 

 

769

 

Decrease in accrued organizational and offering costs

 

 

(235

)

Increase in accrued expenses

 

 

180

 

Net cash provided by (used in) operating activities

 

 

(104,626

)

Cash Flows provided by (used in) Financing Activities:

 

 

 

Borrowings on credit facility

 

 

46,000

 

Proceeds from secured borrowing

 

 

22,271

 

Deferred financing costs paid

 

 

(374

)

Distributions paid in cash

 

 

(3,623

)

Proceeds from issuance of common shares

 

 

73,040

 

Net cash provided by (used in) financing activities

 

 

137,314

 

Net increase (decrease) in cash and cash equivalents

 

 

32,688

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

8,511

 

Cash and cash equivalents and restricted cash, end of period

 

$

41,199

 

 

 

 

 

Supplemental and Non-Cash Information:

 

 

 

Interest paid during the period

 

$

267

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED SCHEDULE OF INVESTMENTS

(amounts in thousands, except per share data)

September 30, 2024

(Unaudited)

 

 

 

Portfolio Company (1)(3)(6)(8)(9)

Industry

Spread Above Index

Interest Rate

Maturity Date

Principal / Shares

 

Amortized Cost

 

Fair Value

 

Percentage of Net Assets (2)

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Lien Senior Secured (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allbridge, LLC - Delayed Draw Term Loan (4)

 

Telecommunication Services

 

SOFR + 5.75% (1.00% floor)

 

10.35%

 

6/5/2030

 

$

-

 

 

$

(1

)

 

$

(1

)

 

 

0.0

%

Allbridge, LLC - Revolving Credit Line (4)

 

Telecommunication Services

 

SOFR + 5.75% (1.00% floor)

 

10.35%

 

6/5/2030

 

 

-

 

 

 

(2

)

 

 

(1

)

 

 

0.0

%

Allbridge, LLC - Term Loan (8)(11)

 

Telecommunication Services

 

SOFR + 5.75% (1.00% floor)

 

10.35%

 

6/5/2030

 

 

1,786

 

 

 

1,764

 

 

 

1,771

 

 

 

1.8

%

Batteries Plus Holding Corporation - Revolving Credit Line (4)(7)

 

Technology Hardware & Equipment

 

SOFR + 6.75% (1.00% floor)

 

11.70%

 

6/27/2028

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

0.0

%

Batteries Plus Holding Corporation - Term Loan (7)(8)(11)

 

Technology Hardware & Equipment

 

SOFR + 6.75% (1.00% floor)

 

11.70%

 

6/27/2028

 

 

477

 

 

 

473

 

 

 

477

 

 

 

0.5

%

BHP Management Holdings, LLC - Delayed Draw Term Loan (7)(11)

 

Health Care Equipment & Services

 

SOFR + 5.00% (1.00% floor)

 

9.75%

 

10/27/2028

 

 

729

 

 

 

724

 

 

 

729

 

 

 

0.7

%

BHP Management Holdings, LLC - Term Loan (7)(8)(11)

 

Health Care Equipment & Services

 

SOFR + 5.00% (1.00% floor)

 

9.75%

 

10/27/2028

 

 

1,262

 

 

 

1,255

 

 

 

1,262

 

 

 

1.3

%

Billhighway, LLC - Delayed Draw Term Loan (4)(7)

 

Software & Services

 

SOFR + 6.75% (1.00% floor)

 

11.70%

 

2/8/2029

 

 

43

 

 

 

41

 

 

 

43

 

 

 

0.0

%

Billhighway, LLC - Revolving Credit Line (4)(7)

 

Software & Services

 

SOFR + 6.75% (1.00% floor)

 

11.70%

 

2/8/2029

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

0.0

%

Billhighway, LLC - Term Loan (7)

 

Software & Services

 

SOFR + 6.75% (1.00% floor)

 

11.70%

 

2/8/2029

 

 

960

 

 

 

947

 

 

 

960

 

 

 

1.0

%

Cardiology Management Holdings, LLC - Delayed Draw Term Loan A (7)(8)(11)

 

Health Care Equipment & Services

 

SOFR + 6.25% (1.00% floor)

 

11.00%

 

1/31/2029

 

 

491

 

 

 

482

 

 

 

490

 

 

 

0.5

%

Cardiology Management Holdings, LLC - Delayed Draw Term Loan B (4)(7)(11)

 

Health Care Equipment & Services

 

SOFR + 6.25% (1.00% floor)

 

11.00%

 

1/31/2029

 

 

16

 

 

 

8

 

 

 

16

 

 

 

0.0

%

Cardiology Management Holdings, LLC - Term Loan (7)(8)(11)

 

Health Care Equipment & Services

 

SOFR + 6.25% (1.00% floor)

 

11.00%

 

1/31/2029

 

 

695

 

 

 

683

 

 

 

695

 

 

 

0.7

%

CheckedUp, Inc - Delayed Draw Term Loan (4)(7)(11)

 

Media & Entertainment

 

SOFR + 5.25% (1.00% floor)

 

10.20%

 

10/20/2027

 

 

246

 

 

 

244

 

 

 

246

 

 

 

0.2

%

CheckedUp, Inc - Revolving Credit Line (4)(7)

 

Media & Entertainment

 

SOFR + 5.25% (1.00% floor)

 

10.35%

 

10/20/2027

 

 

46

 

 

 

45

 

 

 

46

 

 

 

0.0

%

CheckedUp, Inc - Term Loan (7)(8)(11)

 

Media & Entertainment

 

SOFR + 5.25% (1.00% floor)

 

10.20%

 

10/20/2027

 

 

877

 

 

 

874

 

 

 

877

 

 

 

0.9

%

Discovery SL Management, LLC - Delayed Draw Term Loan A (8)(11)

 

Health Care Equipment & Services

 

SOFR + 5.75% (1.00% floor)

 

10.76%

 

3/18/2030

 

 

359

 

 

 

357

 

 

 

357

 

 

 

0.4

%

Discovery SL Management, LLC - Delayed Draw Term Loan B (4)

 

Health Care Equipment & Services

 

SOFR + 5.75% (1.00% floor)

 

10.76%

 

3/18/2030

 

 

-

 

 

 

(8

)

 

 

(10

)

 

 

0.0

%

Discovery SL Management, LLC - Revolving Credit Line (4)

 

Health Care Equipment & Services

 

SOFR + 5.75% (1.00% floor)

 

10.76%

 

3/18/2030

 

 

-

 

 

 

(3

)

 

 

(2

)

 

 

0.0

%

Discovery SL Management, LLC - Term Loan (8)(11)

 

Health Care Equipment & Services

 

SOFR + 5.75% (1.00% floor)

 

10.76%

 

3/18/2030

 

 

2,148

 

 

 

2,124

 

 

 

2,133

 

 

 

2.1

%

DMA Holding Company - Revolving Credit Line (4)

 

Software & Services

 

SOFR + 7.00% (1.00% floor)

 

11.95%

 

7/19/2028

 

 

-

 

 

 

(2

)

 

 

(4

)

 

 

0.0

%

DMA Holding Company - Term Loan

 

Software & Services

 

SOFR + 7.00% (1.00% floor)

 

11.95%

 

7/19/2028

 

 

1,055

 

 

 

1,032

 

 

 

1,019

 

 

 

1.0

%

Drive Assurance Corporation - Delayed Draw Term Loan (4)

 

Insurance

 

SOFR + 7.00% (2.00% floor)

 

11.85%

 

7/10/2030

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

0.0

%

Drive Assurance Corporation - Term Loan (8)(11)

 

Insurance

 

SOFR + 7.00% (2.00% floor)

 

11.85%

 

7/10/2030

 

 

4,593

 

 

 

4,548

 

 

 

4,593

 

 

 

4.6

%

Firebirds Buyer, LLC - Delayed Draw Term Loan (4)(7)

 

Consumer Services

 

SOFR + 6.25% (2.00% floor)

 

11.20%

 

3/22/2028

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.0

%

Firebirds Buyer, LLC - Revolving Credit Line (4)(7)

 

Consumer Services

 

SOFR + 6.25% (2.00% floor)

 

11.20%

 

3/22/2028

 

 

22

 

 

 

22

 

 

 

22

 

 

 

0.0

%

Firebirds Buyer, LLC - Term Loan (7)(8)(11)

 

Consumer Services

 

SOFR + 6.25% (2.00% floor)

 

11.20%

 

3/22/2028

 

 

618

 

 

 

613

 

 

 

618

 

 

 

0.6

%

Hasa Acquisition, LLC - Delayed Draw Term Loan (4)(7)

 

Capital Goods

 

SOFR + 5.00% (1.00% floor)

 

10.28%

 

1/10/2029

 

 

-

 

 

 

(3

)

 

 

-

 

 

 

0.0

%

Hasa Acquisition, LLC - Revolving Credit Line (4)(7)

 

Capital Goods

 

SOFR + 5.00% (1.00% floor)

 

10.28%

 

1/10/2029

 

 

-

 

 

 

(3

)

 

 

-

 

 

 

0.0

%

Hasa Acquisition, LLC - Term Loan (7)(11)

 

Capital Goods

 

SOFR + 5.00% (1.00% floor)

 

10.28%

 

1/10/2029

 

 

1,404

 

 

 

1,376

 

 

 

1,404

 

 

 

1.4

%

Hornblower Sub LLC - Revolving Credit Line (4)

 

Transportation

 

SOFR + 5.50% (1.00% floor)

 

10.82%

 

7/3/2029

 

 

-

 

 

 

(4

)

 

 

(1

)

 

 

0.0

%

5


AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

(amounts in thousands, except per share data)

September 30, 2024

(Unaudited)

 

Portfolio Company (1)(3)(6)(8)(9)

Industry

Spread Above Index

Interest Rate

Maturity Date

Principal / Shares

 

Amortized Cost

 

Fair Value

 

Percentage of Net Assets (2)

 

Hornblower Sub LLC - Term Loan (11)

 

Transportation

 

SOFR + 5.50% (1.00% floor)

 

10.82%

 

7/3/2029

 

 

2,892

 

 

 

2,864

 

 

 

2,883

 

 

 

2.9

%

KCK Ltd - Revolving Credit Line (1)(4)

 

Financial Services

 

SOFR + 5.40% (0.00% floor)

 

10.40%

 

9/27/2027

 

 

1,976

 

 

 

1,930

 

 

 

1,929

 

 

 

1.9

%

KCK Ltd - Term Loan (1)(12)

 

Financial Services

 

SOFR + 5.40% (0.00% floor)

 

10.40%

 

9/27/2027

 

 

11,753

 

 

 

11,695

 

 

 

11,694

 

 

 

11.6

%

Kemper Sports Management, LLC - Delayed Draw Term Loan (7)(8)(11)

 

Consumer Services

 

SOFR + 6.25% (1.00% floor)

 

11.20%

 

1/12/2028

 

 

441

 

 

 

438

 

 

 

441

 

 

 

0.4

%

Kemper Sports Management, LLC - Revolving Credit Line (4)(7)

 

Consumer Services

 

SOFR + 6.25% (1.00% floor)

 

11.69%

 

1/12/2028

 

 

38

 

 

 

37

 

 

 

38

 

 

 

0.0

%

Kemper Sports Management, LLC - Term Loan (7)(8)(11)

 

Consumer Services

 

SOFR + 6.25% (1.00% floor)

 

11.20%

 

1/12/2028

 

 

1,818

 

 

 

1,806

 

 

 

1,818

 

 

 

1.8

%

M2S Group Intermediate Holdings Inc - Term Loan (11)

 

Capital Goods

 

SOFR + 4.75% (0.50% floor)

 

9.85%

 

8/25/2031

 

 

10,840

 

 

 

10,087

 

 

 

10,125

 

 

 

10.1

%

Military Retail Solutions, LLC - Delayed Draw Term Loan (4)(7)

 

Consumer Staples Distribution & Retail

 

SOFR + 5.25% (1.00% floor)

 

10.10%

 

6/28/2029

 

 

-

 

 

 

(14

)

 

 

(26

)

 

 

0.0

%

Military Retail Solutions, LLC - Revolving Credit Line (4)(7)

 

Consumer Staples Distribution & Retail

 

SOFR + 5.25% (1.00% floor)

 

10.10%

 

6/28/2029

 

 

101

 

 

 

87

 

 

 

87

 

 

 

0.1

%

Military Retail Solutions, LLC - Term Loan (7)(12)

 

Consumer Staples Distribution & Retail

 

SOFR + 5.25% (1.00% floor)

 

10.10%

 

6/28/2029

 

 

13,146

 

 

 

12,891

 

 

 

12,922

 

 

 

12.8

%

National Debt Relief, LLC - Delayed Draw Term Loan (7)(11)

 

Financial Services

 

SOFR + 6.50% (2.50% floor)

 

11.46%

 

2/7/2028

 

 

598

 

 

 

593

 

 

 

593

 

 

 

0.6

%

National Debt Relief, LLC - Revolving Credit Line (7)

 

Financial Services

 

SOFR + 6.50% (2.50% floor)

 

11.46%

 

2/7/2028

 

 

120

 

 

 

119

 

 

 

119

 

 

 

0.1

%

National Debt Relief, LLC - Term Loan (7)(8)(11)

 

Financial Services

 

SOFR + 6.50% (2.50% floor)

 

11.46%

 

2/7/2028

 

 

718

 

 

 

712

 

 

 

712

 

 

 

0.7

%

OL Texas Restaurants, LLC - Delayed Draw Term Loan (4)(7)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

11.07%

 

8/29/2029

 

 

-

 

 

 

(2

)

 

 

-

 

 

 

0.0

%

OL Texas Restaurants, LLC - Revolving Credit Line (4)(7)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

11.07%

 

8/29/2029

 

 

-

 

 

 

(2

)

 

 

-

 

 

 

0.0

%

OL Texas Restaurants, LLC - Term Loan (8)(11)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

11.07%

 

8/29/2029

 

 

1,435

 

 

 

1,428

 

 

 

1,435

 

 

 

1.4

%

OpCo Borrower, LLC - Term Loan (8)(11)

 

Health Care Equipment & Services

 

SOFR + 6.00% (1.00% floor)

 

11.28%

 

4/26/2029

 

 

7,522

 

 

 

7,382

 

 

 

7,417

 

 

 

7.4

%

Pansophic Learning US, LLC - Delayed Draw Term Loan (4)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

11.03%

 

5/15/2029

 

 

995

 

 

 

968

 

 

 

974

 

 

 

1.0

%

Pansophic Learning US, LLC - Revolving Credit Line (4)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

10.68%

 

5/15/2029

 

 

499

 

 

 

478

 

 

 

485

 

 

 

0.5

%

Pansophic Learning US, LLC - Term Loan (8)(11)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

10.70%

 

5/15/2029

 

 

11,965

 

 

 

11,709

 

 

 

11,798

 

 

 

11.7

%

PDDS Holdco, Inc. - Delayed Draw Term Loan (4)

 

Software & Services

 

SOFR + 7.50% (0.75% floor)

 

12.25%

 

7/18/2028

 

 

31

 

 

 

30

 

 

 

30

 

 

 

0.0

%

PDDS Holdco, Inc. - Term Loan

 

Software & Services

 

SOFR + 7.50% (0.75% floor)

 

12.25%

 

7/18/2028

 

 

229

 

 

 

224

 

 

 

224

 

 

 

0.2

%

Priority Holdings, LLC - Term Loan (8)(11)

 

Financial Services

 

SOFR + 4.75% (0.50% floor)

 

9.81%

 

5/16/2031

 

 

2,895

 

 

 

2,881

 

 

 

2,895

 

 

 

2.9

%

Restaurant Holding Company, LLC - Delayed Draw Term Loan (4)(7)

 

Consumer Services

 

SOFR + 6.25% (1.00% floor)

 

11.21%

 

2/25/2028

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

0.0

%

Restaurant Holding Company, LLC - Term Loan (7)(8)(11)

 

Consumer Services

 

SOFR + 6.25% (1.00% floor)

 

11.21%

 

2/25/2028

 

 

2,046

 

 

 

2,038

 

 

 

2,046

 

 

 

2.0

%

Salt US Holdco, LLC - Delayed Draw Term Loan (4)(8)

 

Transportation

 

SOFR + 5.73% (1.00% floor)

 

10.34%

 

7/31/2029

 

 

27

 

 

 

25

 

 

 

20

 

 

 

0.0

%

Salt US Holdco, LLC - Term Loan (11)

 

Transportation

 

SOFR + 5.73% (1.00% floor)

 

10.34%

 

7/31/2029

 

 

2,004

 

 

 

1,984

 

 

 

1,984

 

 

 

2.0

%

Select Rehabilitation, LLC - Term Loan (8)(11)

 

Health Care Equipment & Services

 

SOFR + 8.50% (1.00% floor)

 

13.45%

 

10/19/2027

 

 

1,923

 

 

 

1,922

 

 

 

1,613

 

 

 

1.6

%

Senior Support Holdings (Franchise) Acquisition, Inc. - Delayed Draw Loan (4)

 

Health Care Equipment & Services

 

SOFR + 5.25% (1.00% floor)

 

10.06%

 

3/20/2030

 

 

-

 

 

 

(14

)

 

 

-

 

 

 

0.0

%

Senior Support Holdings (Franchise) Acquisition, Inc. - Term Loan (8)(11)

 

Health Care Equipment & Services

 

SOFR + 5.25% (1.00% floor)

 

10.06%

 

3/20/2030

 

 

3,528

 

 

 

3,462

 

 

 

3,528

 

 

 

3.5

%

Spartan CP, LLC - Delayed Draw Term Loan (4)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

10.60%

 

6/28/2029

 

 

475

 

 

 

452

 

 

 

475

 

 

 

0.5

%

Spartan CP, LLC - Revolving Credit Line (4)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

10.60%

 

6/28/2029

 

 

331

 

 

 

323

 

 

 

331

 

 

 

0.3

%

Spartan CP, LLC - Term Loan (8)(11)

 

Consumer Services

 

SOFR + 5.75% (1.00% floor)

 

10.60%

 

6/28/2029

 

 

4,543

 

 

 

4,455

 

 

 

4,543

 

 

 

4.5

%

6


AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

(amounts in thousands, except per share data)

September 30, 2024

(Unaudited)

 

Portfolio Company (1)(3)(6)(8)(9)

Industry

Spread Above Index

Interest Rate

Maturity Date

Principal / Shares

 

Amortized Cost

 

Fair Value

 

Percentage of Net Assets (2)

 

Splash Car Wash, Inc - Delayed Draw Term Loan (4)(7)

 

Consumer Discretionary Distribution & Retail

 

SOFR + 6.50% (1.00% floor) + 1.00% PIK

 

12.71%

 

6/30/2026

 

 

4

 

 

 

4

 

 

 

4

 

 

 

0.0

%

Splash Car Wash, Inc - Revolving Credit Line (7)

 

Consumer Discretionary Distribution & Retail

 

SOFR + 6.50% (1.00% floor) + 1.00% PIK

 

12.49%

 

6/30/2026

 

 

14

 

 

 

14

 

 

 

14

 

 

 

0.0

%

Splash Car Wash, Inc - Term Loan (7)(8)(11)

 

Consumer Discretionary Distribution & Retail

 

SOFR + 6.50% (1.00% floor) + 1.00% PIK

 

12.37%

 

6/30/2026

 

 

328

 

 

 

324

 

 

 

328

 

 

 

0.3

%

Total Fleet Buyer, LLC - Revolving Credit Line (4)

 

Commercial & Professional Services

 

SOFR + 4.50% (1.00% floor)

 

9.80%

 

7/15/2030

 

 

-

 

 

 

(19

)

 

 

(14

)

 

 

0.0

%

Total Fleet Buyer, LLC - Term Loan (11)

 

Commercial & Professional Services

 

SOFR + 4.50% (1.00% floor)

 

9.80%

 

7/15/2030

 

 

5,662

 

 

 

5,565

 

 

 

5,594

 

 

 

5.6

%

WildBrain Ltd. - Revolving Credit Line (1)(4)

 

Media & Entertainment

 

SOFR + 6.00% (1.00% floor)

 

11.26%

 

7/23/2029

 

 

999

 

 

 

962

 

 

 

970

 

 

 

1.0

%

WildBrain Ltd. - Term Loan (1)(11)

 

Media & Entertainment

 

SOFR + 6.00% (1.00% floor)

 

11.28%

 

7/23/2029

 

 

17,794

 

 

 

17,447

 

 

 

17,527

 

 

 

17.4

%

XDimensional Technologies, Inc. - Delayed Draw Term Loan (7)

 

Software & Services

 

SOFR + 5.00% (2.00% floor) + 3.00% PIK

 

12.95%

 

12/24/2025

 

 

12

 

 

 

12

 

 

 

12

 

 

 

0.0

%

XDimensional Technologies, Inc. - Revolving Credit Line (4)(7)

 

Software & Services

 

SOFR + 5.00% (2.00% floor) + 3.00% PIK

 

12.95%

 

12/24/2025

 

 

-

 

 

 

(1

)

 

 

(3

)

 

 

0.0

%

XDimensional Technologies, Inc. - Term Loan (7)

 

Software & Services

 

SOFR + 5.00% (2.00% floor) + 3.00% PIK

 

12.95%

 

12/24/2025

 

 

873

 

 

 

862

 

 

 

833

 

 

 

0.8

%

Total First Lien Senior Secured

 

 

 

 

 

 

 

 

 

 

128,402

 

 

 

125,740

 

 

 

126,137

 

 

 

125.3

%

Total Debt Investments

 

 

 

 

 

 

 

 

 

$

128,402

 

 

$

125,740

 

 

$

126,137

 

 

 

125.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior Support Holdings, LP - Class A-1 Units (8)(10)

 

Health Care Equipment & Services

 

NA

 

 

 

 

 

 

338

 

 

$

338

 

 

$

359

 

 

 

0.4

%

Senior Support Holdings, LP - Class B Units (8)(10)

 

Health Care Equipment & Services

 

NA

 

 

 

 

 

 

338

 

 

 

-

 

 

 

38

 

 

 

0.0

%

Total Private Companies

 

 

 

 

 

 

 

 

 

 

 

 

 

338

 

 

 

397

 

 

 

0.4

%

Total Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

338

 

 

 

397

 

 

 

0.4

%

Total Investments

 

 

 

 

 

 

 

 

 

 

 

 

$

126,078

 

 

$

126,534

 

 

 

125.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First American Government Obligations Fund - X Class (13)

 

Cash Equivalents

 

NA

 

5.05%

 

 

 

 

40,471

 

 

$

40,471

 

 

$

40,471

 

 

 

40.2

%

Cash Equivalents Total

 

 

 

 

 

 

 

 

 

 

 

 

 

40,471

 

 

 

40,471

 

 

 

40.2

%

Investments and Cash Equivalents Total

 

 

 

 

 

 

 

 

 

 

 

 

$

166,549

 

 

$

167,005

 

 

 

165.9

%

Other Assets in Excess of Liabilities (14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(66,297

)

 

 

(65.9

)%

Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

100,708

 

 

 

100.0

%

(1)
All investments in AMG Comvest Senior Lending Fund (the “Fund”) are considered qualifying assets, under Section 55(a) of the Investment Company Act of 1940. The Fund may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Fund’s total assets. As of September 30, 2024, 18.81% of the Fund's total assets are represented by investments at fair value that are considered non-qualifying assets.
(2)
Percentages are based on net assets as of September 30, 2024.
(3)
The fair value of investments with respect to securities for which market quotations are not readily available are valued using significant unobservable inputs (See Note 3 - Fair Value of Financial Instruments).

7


AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

(amounts in thousands, except per share data)

September 30, 2024

(Unaudited)

 

(4)
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative fair value until it is called and funded. Please refer to Note 5 - Commitments and Contingencies for details of these unfunded commitments.
(5)
The majority of the investments bear interest at a rate that may be determined by reference to Secured Overnight Financing Rate (“SOFR) and which reset monthly, quarterly, semiannually, or annually. For each, the Fund has provided the spread over the reference rate and the current interest rate in effect at the reporting date. As of September 30, 2024, the reference rates for the Fund's variable rate loans were the 1 month SOFR at 4.85%, the 3 month SOFR at 4.59%, and the 6 month SOFR at 4.25%. Certain investments are subject to an interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.
(6)
All investments domiciled in the United States unless otherwise noted.
(7)
Positions that have a SOFR reference rate, from time to time have an additional spread adjustment. This spread adjustment ranges from 0.00% - 0.26% depending on the contractual arrangement. These spread adjustments have been included in the all-in rate shown.
(8)
Investment is held by AMG Comvest Senior Lending Blocker MF SPV, LLC, a wholly-owned subsidiary of AMG Comvest Senior Lending Fund.
(9)
The Fund updated certain descriptions of its portfolio companies presented in the consolidated financial statements as of September 30, 2024 to align with the legal issuer name, where applicable. These updates had no impact on the Consolidated Statements of Assets and Liabilities as of September 30, 2024.
(10)
This security is restricted and not available to resale. The Fund purchased the security on March 20, 2024. Additionally on March 20, 2024, the Fund purchased Senior Support Holdings (Franchise) Acquisition, Inc. - Delayed Draw Loan and Senior Support Holdings (Franchise) Acquisition, Inc. – Term Loan. These investments are offered by the same issuer and are not restricted to resale.
(11)
Investment held in AMG Comvest Senior Lending Fund LLI SPV, LLC as collateral for "the Secured Loan Facility".
(12)
Investment subject to "the Participation Agreement".
(13)
A copy of the security's annual report to shareholders may be obtained without charge on the SEC's website (http://www.sec.gov).
(14)
Included in the total is an amount of $725 held for collateral to meet requirements associated with the credit facility.

 

PIK - Payment-in-kind

 

8


AMG COMVEST SENIOR LENDING FUND

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

(amounts in thousands, except per share data)

September 30, 2024

(Unaudited)

 

The following table shows the portfolio composition by industry grouping based on fair value at September 30, 2024:

 

Industry(1)

 

Investments and
Cash Equivalents
at Fair Value

 

 

Percentage of
Fair Value

 

Cash Equivalents

 

$

40,471

 

 

 

24.2

%

Consumer Services

 

 

25,024

 

 

 

15.0

%

Media & Entertainment

 

 

19,666

 

 

 

11.8

%

Health Care Equipment & Services

 

 

18,625

 

 

 

11.2

%

Financial Services

 

 

17,942

 

 

 

10.7

%

Consumer Staples Distribution & Retail

 

 

12,983

 

 

 

7.8

%

Capital Goods

 

 

11,529

 

 

 

6.9

%

Commercial & Professional Services

 

 

5,580

 

 

 

3.3

%

Transportation

 

 

4,886

 

 

 

2.9

%

Insurance

 

 

4,593

 

 

 

2.7

%

Software & Services

 

 

3,114

 

 

 

1.9

%

Telecommunication Services

 

 

1,769

 

 

 

1.1

%

Technology Hardware & Equipment

 

 

477

 

 

 

0.3

%

Consumer Discretionary Distribution & Retail

 

 

346

 

 

 

0.2

%

 

 

$

167,005

 

 

 

100.0

%

 

(1) The Fund reclassified certain industry groupings of its portfolio companies presented in the consolidated financial statements as of September 30, 2024, to align with Global Industry Classification Standards (“GICS”), where applicable. These reclassifications had no impact on the Consolidated Statements of Assets and Liabilities as of September 30, 2024.

 

The accompanying notes are an integral part of these consolidated financial statements.

9


AMG COMVEST SENIOR LENDING FUND

SCHEDULE OF INVESTMENTS

(amounts in thousands, except per share data)

December 31, 2023

 

Portfolio Company(1)(3)(6)(8)

 

Industry

 

Spread Above Index

 

Interest
Rate

 

 

Maturity
Date

 

Principal
/ Shares

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Percentage
of Net
Assets
(2)

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Lien Senior Secured(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker Hill - Revolving Credit Line (4)

 

 Software & Services

 

SOFR + 7.00% (1.00% floor)

 

 

12.35

%

 

7/19/2028

$

 

 

$

 

(3

)

$

 

(3

)

 

 

%

Baker Hill - Term Loan A

 

 Software & Services

 

SOFR + 7.00% (1.00% floor)

 

 

12.35

%

 

7/19/2028

 

 

1,063

 

 

 

1,037

 

 

 

1,037

 

 

 

3.8

%

Batteries Plus Holding Corporation - Revolving Credit Line (4)(7)

 

 Consumer Services

 

SOFR + 6.75% (1.00% floor)

 

 

12.21

%

 

6/27/2028

 

 

 

 

 

(1

)

 

 

 

 

 

%

Batteries Plus Holding Corporation - Term Loan A (7)

 

 Consumer Services

 

SOFR + 6.75% (1.00% floor)

 

 

12.21

%

 

6/27/2028

 

 

481

 

 

 

476

 

 

 

479

 

 

 

1.7

%

BKH - Delayed Draw Term Loan (4)(7)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor)

 

 

11.97

%

 

2/25/2028

 

 

 

 

 

(1

)

 

 

 

 

 

%

BKH - Term Loan (7)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor)

 

 

11.97

%

 

2/25/2028

 

 

2,096

 

 

 

2,086

 

 

 

2,093

 

 

 

7.6

%

Bradford Health Services - Delayed Draw Loan (7)

 

 Health Care Providers & Services

 

SOFR + 6.00% (1.00% floor)

 

 

11.48

%

 

10/27/2028

 

 

734

 

 

 

730

 

 

 

734

 

 

 

2.7

%

Bradford Health Services - Term Loan (7)

 

 Health Care Providers & Services

 

SOFR + 6.00% (1.00% floor)

 

 

11.48

%

 

10/27/2028

 

 

1,272

 

 

 

1,263

 

 

 

1,272

 

 

 

4.6

%

Cardiovascular Logistics - Delayed Draw Term Loan A (7)

 

 Health Care Providers & Services

 

SOFR + 6.25% (1.00% floor)

 

 

11.73

%

 

1/31/2029

 

 

495

 

 

 

484

 

 

 

487

 

 

 

1.8

%

Cardiovascular Logistics - Delayed Draw Term Loan B (4)(7)

 

 Health Care Providers & Services

 

SOFR + 6.25% (1.00% floor)

 

 

11.73

%

 

1/31/2029

 

 

16

 

 

 

7

 

 

 

9

 

 

 

%

Cardiovascular Logistics - Term Loan (7)

 

 Health Care Providers & Services

 

SOFR + 6.25% (1.00% floor)

 

 

11.73

%

 

1/31/2029

 

 

701

 

 

 

686

 

 

 

690

 

 

 

2.5

%

CheckedUp - Delayed Draw Term Loan (4)(7)

 

 Technology Hardware & Equipment

 

SOFR + 5.25% (1.00% floor)

 

 

10.71

%

 

10/20/2027

 

 

127

 

 

 

125

 

 

 

127

 

 

 

0.5

%

CheckedUp - Revolving Credit Line (4)(7)

 

 Technology Hardware & Equipment

 

SOFR + 5.25% (1.00% floor)

 

 

10.71

%

 

10/20/2027

 

 

158

 

 

 

157

 

 

 

158

 

 

 

0.6

%

CheckedUp - Term Loan (7)

 

 Technology Hardware & Equipment

 

SOFR + 5.25% (1.00% floor)

 

 

10.71

%

 

10/20/2027

 

 

884

 

 

 

879

 

 

 

884

 

 

 

3.2

%

Firebirds - Delayed Draw Term Loan (4)(7)

 

 Consumer Services

 

SOFR + 6.25% (2.00% floor)

 

 

11.73

%

 

3/22/2028

 

 

 

 

 

 

 

 

 

 

 

%

Firebirds - Revolving Credit Line (4)(7)

 

 Consumer Services

 

SOFR + 6.25% (2.00% floor)

 

 

11.73

%

 

3/22/2028

 

 

19

 

 

 

19

 

 

 

19

 

 

 

0.1

%

Firebirds - Term Loan (7)

 

 Consumer Services

 

SOFR + 6.25% (2.00% floor)

 

 

11.73

%

 

3/22/2028

 

 

623

 

 

 

617

 

 

 

617

 

 

 

2.2

%

Hasa - Delayed Draw Loan (4)(7)

 

 Capital Goods

 

SOFR + 5.75% (1.00% floor)

 

 

11.23

%

 

1/10/2029

 

 

 

 

 

(3

)

 

 

(2

)

 

 

%

Hasa - Revolving Credit Line (4)(7)

 

 Capital Goods

 

SOFR + 5.75% (1.00% floor)

 

 

11.23

%

 

1/10/2029

 

 

18

 

 

 

15

 

 

 

16

 

 

 

0.1

%

Hasa - Term Loan (7)

 

 Capital Goods

 

SOFR + 5.75% (1.00% floor)

 

 

11.23

%

 

1/10/2029

 

 

1,414

 

 

 

1,383

 

 

 

1,397

 

 

 

5.1

%

Kemper Sports Management - Delayed Draw Loan (4)(7)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor)

 

 

11.98

%

 

1/12/2028

 

 

444

 

 

 

440

 

 

 

441

 

 

 

1.6

%

Kemper Sports Management - Revolving Credit Line (4)(7)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor)

 

 

11.98

%

 

1/12/2028

 

 

 

 

 

(1

)

 

 

(1

)

 

 

%

Kemper Sports Management - Term Loan (7)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor)

 

 

11.98

%

 

1/12/2028

 

 

1,832

 

 

 

1,817

 

 

 

1,819

 

 

 

6.6

%

National Debt Relief - Delayed Draw Loan (7)

 

 Diversified Financials

 

SOFR + 6.00% (1.50% floor)

 

 

11.47

%

 

2/24/2027

 

 

598

 

 

 

592

 

 

 

590

 

 

 

2.1

%

National Debt Relief - Revolving Credit Line (4)(7)

 

 Diversified Financials

 

SOFR + 6.00% (1.50% floor)

 

 

11.47

%

 

2/24/2027

 

 

 

 

 

(1

)

 

 

(2

)

 

 

%

National Debt Relief - Term Loan (7)

 

 Diversified Financials

 

SOFR + 6.00% (1.50% floor)

 

 

11.47

%

 

2/24/2027

 

 

718

 

 

 

711

 

 

 

708

 

 

 

2.6

%

Ojos Locos 3 - Delayed Draw Loan

 

 Consumer Services

 

SOFR + 6.00% (1.00% floor)

 

 

11.59

%

 

8/31/2026

 

 

333

 

 

 

326

 

 

 

330

 

 

 

1.2

%

Ojos Locos 3 - Revolving Credit Line (4)(7)

 

 Consumer Services

 

SOFR + 6.00% (1.00% floor)

 

 

11.59

%

 

8/31/2026

 

 

 

 

 

(2

)

 

 

(1

)

 

 

%

Ojos Locos 3 - Term Loan (4)(7)

 

 Consumer Services

 

SOFR + 6.00% (1.00% floor)

 

 

11.42

%

 

8/31/2026

 

 

1,135

 

 

 

1,127

 

 

 

1,131

 

 

 

4.1

%

Planet DDS - Delayed Draw Loan (4)(7)

 

 Health Care Technology

 

SOFR + 7.50% (0.75% floor)

 

 

12.91

%

 

7/18/2028

 

 

24

 

 

 

23

 

 

 

23

 

 

 

0.1

%

Planet DDS - Term Loan (7)

 

 Health Care Technology

 

SOFR + 7.50% (0.75% floor)

 

 

12.91

%

 

7/18/2028

 

 

229

 

 

 

223

 

 

 

224

 

 

 

0.8

%

Select Rehabilitation - Term Loan (7)

 

 Health Care Providers & Services

 

SOFR + 8.50% (1.00% floor)

 

 

13.85

%

 

10/19/2027

 

 

1,938

 

 

 

1,936

 

 

 

1,853

 

 

 

6.7

%

Splash Car Wash - Delayed Draw Term Loan A (4)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor) + 1.00% PIK

 

 

12.83

%

 

6/30/2026

 

 

 

 

 

(1

)

 

 

(1

)

 

 

%

Splash Car Wash - Term Loan A

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor) + 1.00% PIK

 

 

12.83

%

 

6/30/2026

 

 

327

 

 

 

322

 

 

 

321

 

 

 

1.2

%

10


AMG COMVEST SENIOR LENDING FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

(amounts in thousands, except per share data)

December 31, 2023

 

Portfolio Company(1)(3)(6)(8)

 

Industry

 

Spread Above Index

 

Interest
Rate

 

 

Maturity
Date

 

Principal
/ Shares

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Percentage
of Net
Assets
(2)

 

Splash Car Wash - Revolving Credit Line (4)

 

 Consumer Services

 

SOFR + 6.50% (1.00% floor) + 1.00% PIK

 

 

12.83

%

 

6/30/2026

 

 

 

 

 

 

 

 

 

 

 

%

XDimensional Technologies - Delayed Draw Term Loan A (4)(7)

 

 Software & Services

 

SOFR + 4.00% (2.00% floor) + 4.00% PIK

 

 

9.46

%

 

12/24/2025

 

 

 

 

 

(2

)

 

 

(2

)

 

 

%

XDimensional Technologies - Revolving Credit Line (4)(7)

 

 Software & Services

 

SOFR + 4.00% (2.00% floor) + 4.00% PIK

 

 

9.46

%

 

12/24/2025

 

 

 

 

 

(1

)

 

 

(1

)

 

 

%

XDimensional Technologies - Term Loan A

 

 Software & Services

 

SOFR + 4.00% (2.00% floor) + 4.00% PIK

 

 

9.46

%

 

12/24/2025

 

 

849

 

 

 

833

 

 

 

835

 

 

 

3.0

%

Total First Lien Senior Secured

 

 

 

 

 

 

 

 

 

 

 

18,528

 

 

 

18,298

 

 

 

18,281

 

 

 

66.5

%

Total Debt Investments

 

 

 

 

 

 

 

 

 

 

 

18,528

 

 

 

18,298

 

 

 

18,281

 

 

 

66.5

%

Total Investments

 

 

 

 

 

 

 

 

 

 

 

 

$

 

18,298

 

 

 

18,281

 

 

 

66.5

%

Other Assets in Excess of Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,232

 

 

 

33.5

%

Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

27,513

 

 

 

100.0

%

 

(1)
All investments in the Fund are considered qualifying assets, under Section 55(a) of the Investment Company Act of 1940. The Fund may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Fund’s total assets. As of December 31, 2023, there were no investments held by the Fund that are considered non-qualifying assets.
(2)
Percentages are based on net assets as of December 31, 2023.
(3)
The fair value of investments with respect to securities for which market quotations are not readily available are valued using significant unobservable inputs (See Note 3 - Fair Value of Financial Instruments).
(4)
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative fair value until it is called and funded. Please refer to Note 5 - Commitments and Contingencies for details of these unfunded commitments.
(5)
The majority of the investments bear interest at a rate that may be determined by reference to Secured Overnight Financing Rate (“SOFR) and which reset monthly, quarterly, semiannually, or annually. For each, the Fund has provided the spread over the reference rate and the current interest rate in effect at the reporting date. Certain investments are subject to an interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.
(6)
All investments domiciled in the United States unless otherwise noted.
(7)
Positions that have a SOFR reference rate, from time to time have an additional spread adjustment. This spread adjustment ranges from 0% - 0.26% depending on the contractual arrangement. These spread adjustments have been included in the all-in rate shown.

 

PIK - Payment-in-kind

 

11


AMG COMVEST SENIOR LENDING FUND

SCHEDULE OF INVESTMENTS (CONTINUED)

(amounts in thousands, except per share data)

December 31, 2023

 

The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2023:

 

 

 

At December 31, 2023

 

 

 

Investments at

 

 

Percentage of

 

Industry

 

Fair Value

 

 

Total Portfolio

 

Consumer Services

 

$

7,247

 

 

 

39.6

%

Health Care Providers & Services

 

 

5,045

 

 

 

27.6

 

Software & Services

 

 

1,866

 

 

 

10.2

 

Capital Goods

 

 

1,411

 

 

 

7.7

 

Diversified Financials

 

 

1,296

 

 

 

7.1

 

Technology Hardware & Equipment

 

 

1,169

 

 

 

6.4

 

Health Care Technology

 

 

247

 

 

 

1.4

 

 

 

$

18,281

 

 

 

100.0

%

 

The accompanying notes are an integral part of these financial statements.

12


 

AMG COMVEST SENIOR LENDING FUND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share amounts, percentages, and as otherwise indicated)

September 30, 2024

(Unaudited)

Note 1— Organization

Organization

AMG Comvest Senior Lending Fund (the “Fund”) is a Delaware statutory trust. The Fund was formed as a limited partnership on June 28, 2023, under the laws of the State of Delaware. The Fund was initially formed with the name Comvest Credit Partners BDC Fund, L.P., which changed to AMG Comvest Senior Lending Fund on October 23, 2023. The Fund is a diversified, closed-end management investment company that, on October 24, 2023, elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually thereafter, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Prior to October 25, 2023, the Fund was treated as a partnership for tax purposes.

The Fund is managed by Comvest Credit Managers, LLC (the “Investment Adviser”), a Delaware limited liability company. The Investment Adviser is an affiliate of Comvest Capital Advisors LLC and Comvest Credit Advisors LLC (collectively, “Comvest Partners”) and Affiliated Managers Group (“AMG”). The Investment Adviser is registered as an investment adviser with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended.

The Fund commenced operations on September 29, 2023 (“Inception Date”), and commenced investment operations on October 18, 2023.

On March 11, 2024, the Fund established AMG Comvest Senior Lending Blocker MF SPV, LLC (“Subsidiary I”), a wholly-owned subsidiary and Delaware limited liability company to hold equity securities of portfolio companies organized as a pass-through entity while continuing to satisfy the requirements of a RIC under the Code.

On April 15, 2024, the Fund established AMG Comvest Senior Lending Fund LLI SPV, LLC (“Subsidiary II”), a wholly-owned financing subsidiary and Delaware limited liability company, for the purpose of holding pledged investments as collateral under a Secured Loan Facility (as defined below). Subsidiary II is a disregarded tax entity for tax purposes.

On May 30, 2024, the Fund established AMG Comvest SLF California, LLC (“Subsidiary III”, collectively with Subsidiary I and Subsidiary II, the “Subsidiaries”), a wholly-owned subsidiary and Delaware limited liability company, which has been established to acquire investments in the State of California, as required by California law. Subsidiary III is a disregarded tax entity for tax purposes.

 

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The Fund’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Subsidiaries. The Fund is an investment company and accordingly applies specific accounting and financial reporting requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services – Investments Companies.

The Fund’s consolidated interim financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 6 of Regulation S-X. Accordingly, the Fund’s consolidated interim financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications consisting solely of normal accruals that are necessary for the fair presentation of financial results as of and for the periods presented. The consolidated interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto in the Fund’s Form 10-K for the period from September 29, 2023, (“Inception Date”) to December 31, 2023, as filed with the SEC.

All intercompany balances and transactions between the Fund and the Subsidiaries have been eliminated.

 

13


 

The Fund reclassified certain industry groupings of its portfolio companies presented in the accompanying consolidated financial statements as of September 30, 2024, to align with the recently updated Global Industry Classification Standards ("GICS"), where applicable. These reclassifications had no impact on the Consolidated Statements of Assets and Liabilities as of September 30, 2024.

The Fund updated certain descriptions of its portfolio companies presented in the consolidated financial statements as of September 30, 2024, to align with the legal issuer name, where applicable. These updates had no impact on the Consolidated Statements of Assets and Liabilities as of September 30, 2024.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these consolidated financial statements. Actual results could differ from those estimates.

Valuation of Portfolio Investments

The Investment Adviser applies fair value accounting in accordance with GAAP and valuation policies and procedures (“Valuation Policy”) adopted by the Fund’s Board of Trustees (the “Board”). Fair value is the amount 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. Investments are reflected on the Fund’s Consolidated Statements of Assets and Liabilities at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Fund’s Consolidated Statements of Operations as “Net change in unrealized gains (losses) of investments”.

The Investment Adviser values the Fund’s portfolio investments in accordance with the Valuation Policy and the 1940 Act. For purposes of the 1940 Act, the Board has designated the Investment Adviser as the Fund’s Valuation Designee under Rule 2a-5 under the 1940 Act (the “Valuation Designee”). The Board provides oversight of the Investment Adviser’s fair value determinations of the Fund’s portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded and those whose market prices are not readily available.

One or more independent valuation firms (each a “Valuation Agent”) are engaged to independently value our investments, in consultation with the Investment Adviser. Our valuation procedures, which are the procedures that are followed by such Valuation Agent are set forth in more detail below:

1) Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.

2) Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.

a) Bond quotes are obtained through independent pricing services. Internal reviews are performed by the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and if so, the quote is used. In the event the Investment Adviser, with the assistance of the Valuation Agent, determines that the bonds quotes are not readily available or otherwise not determinable pursuant to the Fund’s valuation procedures, or not reliable, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and

b) For investments other than bonds, the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser, look at the number of quotes readily available and perform the following:

i) Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. If quotes from pricing services differ by +/- five points or if the spread between the bid and ask for a quote is greater than 10 points, the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, will use one or more of the methodologies outlined below to determine fair value;

ii) Investments for which one quote is received from a pricing service are validated by the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser. The personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment

14


 

Adviser, analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. For assets where a supporting analysis is prepared, the Valuation Agent will document the selection and appropriateness of the indices selected for yield comparison and a conclusion documenting how the yield comparison analysis supports the proposed mark. The quarterly portfolio company monitoring reports which detail the qualitative and quantitative performance of the portfolio company will also be included. If the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser, are unable to sufficiently validate the quote internally and if the investment’s par value exceeds a certain materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).

3) Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:

a) Each portfolio company or investment is initially valued by the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser;

b) The Valuation Agent undertakes a comprehensive valuation analysis, which includes an enterprise and/or collateral valuation, and subsequently a fundamental credit analysis and valuation with respect to both credit quality and market factors, for each of the portfolio companies or investments and provides a range of values on such investments to the Investment Adviser. The Valuation Agent also provides analyses to support its valuation methodology and calculations;

c) The Investment Adviser then reviews each valuation recommendation to confirm they have been calculated in accordance with the Valuation Policy;

d) The Investment Adviser determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser’s valuation team and, where applicable, the Valuation Agent or other external service providers; and

e) The Board provides oversight of the valuation process in accordance with Rule 2a-5, which includes a review of the quarterly reports prepared by the Investment Adviser or the Valuation Agent and the fair valuation determinations made by the Investment Adviser.

For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative fair value until it is called and funded.

The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. 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 the Fund’s investments may fluctuate from period to period and the fluctuations could be material.

Investment Classification

The Fund classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control” is defined as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. In addition, in accordance with Section 2(a)(9) of the 1940 Act, any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25% of the voting securities of any company shall be presumed not to control such company. Any person who does not so own more than 25% of the voting securities of any company and/or does not have the power to exercise control over the management or policies of such portfolio company shall be presumed not to control such company. Consistent with the 1940 Act, “Affiliated Investments” are defined as those investments in companies in which the Fund owns 5% or more of the voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments. As of September 30, 2024 and as of December 31, 2023, the Fund did not “control” and was not an “affiliated person” of any of its portfolio companies, each as defined in the 1940 Act.

Security Transactions

Security transactions are accounted for on a trade date basis.

Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and short-term, liquid investments in a money market deposit account. Such cash and cash equivalents, at times, may exceed federally insured limits. Cash and cash equivalents are carried at cost which

15


 

approximates fair value. Certain cash amounts are held in a segregated account to collateralize outstanding borrowings under the credit facility agreement, and are subject to restrictions of use.

The Fund considers all highly liquid investments that can be converted to cash, or having a maturity date, within three months, when acquired, to be cash equivalents. As of September 30, 2024 and December 31, 2023, the Fund held cash and cash equivalents in the form of money market fund shares held in First American Government Obligations Fund Class X and other cash and cash equivalents with a fair value of $40,474 and $8,511, respectively, representing 40.2% and 30.9%, respectively, of the Fund’s net assets. Cash equivalents in the form of money market fund shares are valued at their reported net asset value (generally $1 per share) on the measurement date, and are categorized within Level 1 of the fair value hierarchy under ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”), as inputs in the valuation are observable.

 

Organizational Expenses and Offering Costs

The Fund bore the organizational expenses and offering costs incurred in connection with its formation of and the offering of its common shares of beneficial interest, including the out-of-pocket expenses of the Investment Adviser and its agents and affiliates. Additionally, the Fund bore the organizational expenses and offering costs incurred in connection with the formation of AMG Comvest Senior Lending Feeder Fund LLC (“Feeder Fund I”) and AMG Comvest Senior Lending Feeder Fund II LLC (“Feeder Fund II”).

Organizational expenses are expensed as incurred, while offering costs are capitalized as a deferred charge and amortized to expense on a straight-line basis over 12 months from the commencement of investment operations. As of September 30, 2024 and December 31, 2023, unamortized offering costs of $785 and $384, respectively, were deferred and are reflected in the Statements of Assets and Liabilities as part of prepaid expenses and other assets. For the three and nine months ended September 30, 2024, the Fund expensed organizational and offering costs in the amount of $346 and $627, respectively.

Deferred Financing Costs

Financing costs incurred in connection with the Fund's credit facilities are capitalized and amortized into expense using the straight-line method, which approximates the effective yield method over the life of the respective facility. See Note 6—Borrowings.

Revenue Recognition

Interest Income

Interest income, including amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. Loan origination fees, original issue discount (“OID”) and market discounts or premiums are capitalized and amortized into interest income 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. The Fund may have loans in its portfolio that contain a payment-in-kind (“PIK”) interest provision. PIK interest is accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest is added to the principal balance on the capitalization date and is generally due at maturity or when deemed by the issuer.

Fee Income

Fee income, such as structuring fees, loan monitoring, amendment, syndication, commitment, termination, and other loan fees are recognized as income when earned, either upon receipt or amortized into fee income. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan fees are recorded as fee income.

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

Gain or loss on the sale of investments is calculated using the specific identification method. Net change in unrealized gain or loss will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when a gain or loss is realized.

Income Taxes

The Fund has elected to be treated for federal income tax purposes, and intends to qualify annually, as a RIC Subchapter M of under the Code and intends to operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify and be subject to tax as a RIC, among other things, the Fund is required to meet certain source of income and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its shareholders of an amount generally at least equal to 90% of its

16


 

investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. The Fund intends to make the requisite distributions to its shareholders, which will generally relieve the Fund from U.S. federal income taxes with respect to all income distributed to its shareholders. The Fund evaluated tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are 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.

Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our shareholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

Subsidiary I filed an election with the Internal Revenue Service to be treated as a corporation for tax purposes and is subject to U.S. federal and state income taxes. The consolidated financial statements include Subsidiary I, for which a provision for corporate income taxes has been recorded. For the nine months ended September 30, 2024, Subsidiary I recorded $15 as a deferred tax expense and deferred tax liability.

Deferred income tax is computed by applying the federal statutory income tax rate of 21% and estimated applicable state tax statutory rates (net of federal tax benefit) to unrealized gains/(losses) on investments before taxes for the nine months ended September 30, 2024.

Recent Accounting Standards Update

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Fund does not expect this guidance to materially impact its consolidated financial statements.

Note 3—Fair Value of Financial Instruments

Fair value is the amount 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. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. The hierarchy classifies the inputs used in measuring fair value into three levels as follows:

Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3—Unobservable inputs that reflect the Fund’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Fund evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

Determination of fair values involves subjective judgments and estimates. Accordingly, the notes to the consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements.

17


 

The following table presents fair value measurements of investments and cash equivalents, by major class, as of September 30, 2024, according to the fair value hierarchy:

 

 

 

Fair Value Measurements

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Totals

 

First Lien Senior Secured

 

$

 

 

$

 

 

$

126,137

 

 

$

126,137

 

Equity

 

 

 

 

 

 

 

 

397

 

 

 

397

 

Cash Equivalents

 

 

40,471

 

 

 

 

 

 

 

 

 

40,471

 

Total

 

$

40,471

 

 

$

 

 

$

126,534

 

 

$

167,005

 

The following table presents fair value measurements of investments, by major class, as of December 31, 2023, according to the fair value hierarchy:

 

 

 

Fair Value Measurements

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Totals

 

First Lien Senior Secured

 

$

 

 

$

 

 

$

18,281

 

 

$

18,281

 

Total

 

$

 

 

$

 

 

$

18,281

 

 

$

18,281

 

 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2024:

 

 

First Lien
Senior Secured

 

Equity

 

Total

Balance as of December 31, 2023

 

$18,281

 

$

 

$18,281

Purchases and other adjustments to cost

 

108,475

 

338

 

108,813

Sales and repayments

 

(1,150)

 

 

(1,150)

Net realized gains (losses)

 

7

 

 

7

Net change in unrealized gains (losses) on investments

 

414

 

59

 

473

Net accretion of discount on investments

 

110

 

 

110

Balance as of September 30, 2024

 

$126,137

 

$397

 

$126,534

Net change in unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Fund at the end of the period:

 

$414

 

$59

 

$473

For the nine months ended September 30, 2024, there were no transfers between levels of the fair value hierarchy.

Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used to value Level 3 investments as of September 30, 2024. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

 

As of September 30, 2024

 

 

 

 

 

 

 

 

Selected Input Range

 

 

Impact to Valuation from

Asset Category

 

Fair Value

 

Primary Valuation Technique

 

Unobservable Inputs

 

Minimum

 

Maximum

 

Weighted Average (a)

 

an Increase in Input (b)

First Lien Senior Secured

 

$126,137

 

Discounted Cash Flow

 

Discount Rate

 

7.5%

 

24.0%

 

9.8%

 

Decrease

Equity

 

397

 

Market Comparables

 

EBITDA Multiple

 

15.0x

 

16.0x

 

15.5x

 

Increase

Total

 

$126,534

 

 

 

 

 

 

 

 

 

 

 

 

(a)
Weighted averages are calculated based on fair value of investments.
(b)
Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding inputs as of a period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at the period end.

18


 

The following table summarizes the significant unobservable inputs used to value Level 3 investments as of December 31, 2023. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

 

As of December 31, 2023

 

 

 

 

 

 

 

 

Selected Input Range

 

 

 

Impact to Valuation from

Asset Category

 

Fair Value

 

Primary Valuation Technique

 

Unobservable Inputs

 

Minimum

 

Maximum

 

Weighted Average (a)

 

an Increase in Input (b)

First Lien Senior Secured

 

$18,281

 

Discounted Cash Flow

 

Discount Rate

 

9.2%

 

16.4%

 

11.9%

 

Decrease

Total

 

$18,281

 

 

 

 

 

 

 

 

 

 

 

 

(a)
Weighted averages are calculated based on fair value of investments.
(b)
Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding inputs as of a period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at the period end.

There were no significant changes in valuation approach or technique as of September 30, 2024 and December 31, 2023.

Level 3 inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities where the fair value is based on unobservable inputs.

The income and market approaches were used in the determination of fair value of certain Level 3 assets. The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments and any other end of term fees, as applicable. Included in the consideration and selection of discount rates are factors such as risk of default, interest rate risk, and changes in credit quality. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies.

For discussion of the fair value measurement of the Fund's borrowings, refer to Note 6—Borrowings.

Note 4—Related Party Transactions

Investment Management Agreement

The Fund entered into an investment advisory agreement (the “Investment Management Agreement”) with the Investment Adviser in which the Investment Adviser, subject to the overall supervision of the Board, manages the day-to-day operations of, and provides investment advisory and management services to the Fund. Under the terms of the Investment Management Agreement, the Fund will pay the Investment Adviser an annual base management fee (“Management Fee”) and incentive management fee (the “Incentive Fee”).

Management Fee

The Management Fee will be calculated and payable quarterly in arrears at an annual rate of 1.25% of net assets as of the beginning of the first calendar day of the applicable quarter. The Management Fee will be appropriately adjusted for any share issuances or repurchases during the applicable quarter.

For the three and nine months ended September 30, 2024, the Fund incurred $265 and $511, respectively, in Management Fees under the Investment Management Agreement. The Investment Adviser has chosen to voluntarily waive $0 and $130, respectively, of Management Fees earned in accordance with the Investment Management Agreement for the three and nine months ended September 30, 2024, which is reflected in the Consolidated Statements of Operations as a part of Fee Waivers. Any fees waived under the Investment Management Agreement are not subject to future reimbursement to the Investment Adviser pursuant to the Expense Limitation and Reimbursement Agreement.

Incentive Fee

The Incentive Fee consists of two components that are independent of each other. A portion of the Incentive Fee is based on a percentage of the Fund’s income and a portion is based on a percentage of the Fund’s capital gains, each as described below:

19


 

The first part is calculated and payable quarterly in arrears on the Fund’s Pre-Incentive Fee Net Investment Income Returns. For this purpose, Pre-Incentive Fee Net Investment Income Returns means dividends, cash interest or other distributions or other cash income and any third-party fees received from portfolio companies (such as upfront fees, commitment fees, origination fee, amendment fees, ticking fees and break-up fees, as well as prepayments premiums, but excluding fees for providing managerial assistance and fees earned by Investment Adviser or an affiliate in its capacity as an administrative agent, syndication agent, collateral agent, loan servicer or other similar capacity), accrued during the month, minus the Fund’s operating expenses for the month (including the Management Fee, taxes, any expenses payable under the Investment Management Agreement and Administration Agreement, any expense of securitizations, and interest expense or other financing fees and any dividends paid on preferred shares, but excluding the incentive fee and shareholder servicing and /or distribution fees). Pre-Incentive Fee Net Investment Income Returns includes, 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 Fund 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 percentage of the value of the Fund’s net assets at the end of the immediately preceding quarter, is compared to a hurdle. The Fund will pay the Investment Adviser an incentive fee with respect to Pre-Incentive Fee Net Investment Income Returns in each calendar quarter as follows:

No incentive fee in any calendar quarter in which Pre-Incentive Fee Net Investment Income Returns does not exceed the hurdle rate of 1.25% per quarter (5.00% annualized);
100% of Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than a rate of return of 1.43% (5.72% annualized). This portion of the Pre-Incentive Fee Net Investment Income Returns (which exceeds the hurdle rate but is less than 1.43%) is referred to as the “catch-up.” The “catch-up” is meant to provide the Investment Adviser with approximately 12.5% of the Fund’s Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 1.43% in any calendar quarter; and
12.5% of the amount of Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds 1.43% (5.72% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 12.5% of all Pre-Incentive Fee Net Investment Income Returns thereafter are paid to the Investment Adviser.

These calculations are pro-rated for any period of less than three months and adjusted for any Share issuances or repurchases during the applicable quarter.

The second part of the Incentive Fee, the capital gains incentive fee, will be payable in arrears as of the end of each calendar year and will equal 12.5% of the Fund’s cumulative realized capital gains, if any, from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation, less the aggregate amount of any previously paid incentive fees on fees on capital gains as calculated in accordance with GAAP.

Each year, the fee paid for the capital gains incentive fee is net of the aggregate amount of any previously paid capital gains incentive fee for all prior periods. The Fund will accrue, but will not pay, a capital gains incentive fee with respect to unrealized appreciation because a capital gains incentive fee would be owed to the Investment Adviser if the Fund were to sell the relevant investment and realize a capital gain. For purposes of computing the Fund’s Incentive Fee on capital gains, the calculation methodology looks through derivative financial instruments or swaps, if owned, as if the Fund owned the reference assets directly.

The fees that are payable under the Investment Management Agreement for any partial period will be appropriately prorated.

For the three and nine months ended September 30, 2024, the Fund incurred $151 and $239, respectively, in Incentive Fees under the Investment Management Agreement. The Investment Adviser has chosen to voluntarily waive $0 and $81, respectively, of incentive fees earned in accordance with the Investment Management Agreement for the three and nine months ended September 30, 2024, which is reflected in the Consolidated Statements of Operations as a part of Fee Waivers. Any fees waived under the Investment Management Agreement are not subject to future reimbursement to the Investment Adviser pursuant to the Expense Limitation and Reimbursement Agreement.

Administration Agreement

The Fund entered into an administration agreement (the “Administration Agreement”) with AMG Funds LLC, a Delaware limited liability company and wholly-owned subsidiary of AMG (the “Administrator”), under which the Administrator will perform or oversees the performance of certain administrative services for the Fund. The Fund will pay the Administrator a fee (the “Administration Fee”) at the rate of 0.25% per annum of the Fund’s net assets as of the beginning of the first calendar day of the applicable quarter, adjusted

20


 

for any Share issuances or repurchases during the applicable quarter. The Administration Fee will be calculated and payable quarterly in arrears.

For the three and nine months ended September 30, 2024, the Fund incurred $54 and $103, respectively, in Administration Fees under the Administration Agreement. The Administrator has chosen to voluntarily waive $0 and $26, respectively, of administration fees earned in accordance with the Administration Agreement for the three and nine months ended September 30, 2024, which is reflected in the Consolidated Statements of Operations as a part of Fee Waivers. Any fees waived under the Administration Agreement are not subject to future reimbursement to the Administrator pursuant to the Expense Limitation and Reimbursement Agreement.

Amended and Restated Expense Limitation and Reimbursement Agreement

Effective December 26, 2023, the Investment Adviser and the Administrator entered into an Amended and Restated Expense Limitation and Reimbursement Agreement with the Fund for a two year term beginning on the effective date of the Investment Management Agreement and ending on October 23, 2005 thereof (the “Limitation Period”) to pay, absorb, or reimburse the Fund’s aggregate Operating Expenses (as defined below) on the Fund’s behalf (x) above 1.25% of the value of the Fund’s quarterly net assets as of the beginning of the first calendar day of the applicable quarter adjusted for any share issuances or repurchases during the applicable quarter for the period of time that the Fund operates as a privately offered, non-traded BDC and (y) above 1.25% of the value of the Fund’s monthly net assets as of the beginning of the first calendar day of the applicable month adjusted for any share issuances or repurchases for the applicable month during the period of time that the Fund operates as a publicly- offered, non- traded BDC (each such payment, absorption or reimbursement, a “Required Expense Payment”).

Operating Expenses mean all of the Fund’s operating costs and expenses incurred, including but not limited to, organization and offering costs and legal, administration, accounting, printing, mailing, subscription processing and filings fees and expenses, as determined in accordance with GAAP. Operating Expenses shall not include any fees payable to the Investment Adviser by the Fund under the Investment Management Agreement, interest expenses and other financing costs, portfolio transaction and other investment-related costs, shareholder servicing and/or distribution fees, taxes, and any other extraordinary expenses not incurred in the ordinary course of the Fund’s business (including, without limitation, litigation expenses).

The Investment Adviser and the Administrator may elect to pay certain additional expenses of the Fund on the Fund’s behalf (each such payment, a “Voluntary Expense Payment” and together with a Required Expense Payment, the “Expense Payments”). In making a Voluntary Expense Payment, the Investment Adviser and the Administrator will designate, as they deem necessary or advisable, what type of expense is being paid (including, whether it is an Operating Expense); provided that no portion of a Voluntary Expense Payment will be used to pay any interest expense or distribution and/or shareholder servicing fees of the Fund.

The Fund agrees to carry forward the amount of any Expense Payment for a period not to exceed three years from the end of the month in which such Expense Payment was paid or reimbursed by the Investment Adviser and the Administrator, and to reimburse the Investment Adviser and the Administrator on a 50/50 basis in the amount of such Expense Payment as promptly as possible, on a monthly basis, even if such reimbursement occurs after the termination of the Limitation Period (each such payment, a “Reimbursement Payment”), provided that the Fund’s operating expense ratio (“Operating Expense Ratio”) (expressed as a percentage of the Fund’s net assets and including the amount of the reimbursed payment) at the time of the reimbursement payment is less than the Fund’s expense ratio (expressed as a percentage of the Fund’s net assets) at the time the Required Expense Payment was made. In respect of a Voluntary Expense Payment, no Reimbursement Payment for any quarter shall be made if and to the extent that: (1) the Effective Rate of Distributions Per Share (expressed as the annualized rate of regular cash distributions per share exclusive of returns of capital and declared special dividends or special distributions, if any) declared by the Fund at the time of such Reimbursement Payment is less than the Effective Rate of Distributions Per Share at the time the Voluntary Payment was made to which such Reimbursement Payment relates or (2) the Fund’s Operating Expense Ratio at the time of such Reimbursement Payment (including the amount of the Reimbursement Payment) is greater than the Operating Expense Ratio at the time of the Voluntary Payment was made.

The contractual expense limitation may be terminated by the Fund’s Board upon thirty (30) days written notice to the Investment Adviser and the Administrator. The Amended and Restated Expense Limitation and Reimbursement Agreement may be renewed by the mutual agreement of the Investment Adviser, the Administrator and the Fund for successive terms of one year. Unless so renewed, the Amended and Restated Expense Limitation and Reimbursement Agreement will terminate automatically at the end of the Limitation Period. The Amended and Restated Expense Limitation and Reimbursement Agreement will also terminate automatically upon the termination of the Investment Management Agreement, unless a new investment advisory agreement with the Investment Adviser (or with an affiliate under common control with the Investment Adviser) becomes effective upon such termination.

For the three and nine months ended September 30, 2024, the Fund was reimbursed $592 and $2,770, respectively, by the Investment Adviser and the Administrator. The cumulative reimbursement of $3,938 will expire between September 30, 2026 through August 31, 2027 if not recouped. As of September 30, 2024, the Investment Adviser and the Administrator owed the Fund $592 in expense reimbursement, which is reflected in the Statements of Assets and Liabilities under Due from affiliates.

21


 

Co-Investment Relief

The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. On August 2, 2021, the SEC granted Commonwealth Credit Partners BDC I, Inc., an affiliate of Comvest Partners, an exemptive relief order (the “Order”) that allows it and the Fund to enter into certain negotiated co-investment transactions alongside other funds managed by the Investment Adviser or its affiliates in a manner consistent with its investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with conditions. Pursuant to the Order, the Fund is permitted to co-invest with its affiliates if, among other things, a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Fund’s independent trustees make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Fund and the Fund’s shareholders and do not involve overreaching in respect of the Fund or the Fund’s shareholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Fund’s shareholders and is consistent with the Fund’s investment objective and strategies.

Note 5—Commitments and Contingencies

Commitments

In the ordinary course of business, the Fund may enter into future funding commitments. As of September 30, 2024, the Fund had unfunded commitments on delayed draw term loans and revolving credit lines of $9,359 and $12,616, respectively. As of December 31, 2023, the Fund had unfunded commitments on delayed draw term loans and revolving credit lines of $1,900 and $946, respectively.

As of September 30, 2024, the Fund’s unfunded commitments consisted of the following:

Portfolio Company Name

 

Investment Type

 

Commitment Type

 

Unfunded Commitments

 

Allbridge

 

First Lien Senior Secured

 

Delayed Draw Loan

 

$

166

 

Allbridge

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

166

 

Baker Hill

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

115

 

Batteries Plus Holding Corporation

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

63

 

Billhighway

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

117

 

Billhighway

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

80

 

BKH

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

208

 

Cardiovascular Logistics

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

461

 

CheckedUp

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

49

 

CheckedUp

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

138

 

Discovery SL Management

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

1,499

 

Discovery SL Management

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

300

 

Firebirds

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

38

 

Firebirds

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

16

 

Global School Management

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

499

 

Global School Management

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

499

 

GoAuto

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

270

 

HASA

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

157

 

HASA

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

151

 

Hornblower

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

453

 

InXpress

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

641

 

KCK NAV

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

7,426

 

Kemper Sports Management

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

125

 

Ojos Locos

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

583

 

Ojos Locos

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

233

 

Planet DDS

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

5

 

Pro Food Solutions

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

1,515

 

Pro Food Solutions

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

656

 

Senior Support Holdings

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

1,519

 

Spartan Fitness

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

1,594

 

Spartan Fitness

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

83

 

Splash Car Wash

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

38

 

Total Fleet Solutions

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

1,148

 

WildBrain

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

904

 

XDimensional Technologies

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

60

 

Total

 

 

 

 

 

$

21,975

 

 

22


 

As of December 31, 2023, the Fund’s unfunded commitments consisted of the following:

 

Portfolio Company Name

 

Investment Type

 

Commitment Type

 

Unfunded
Commitments

 

Baker Hill

 

First Lien Senior Secured

 

Revolving Credit Line

 

$

115

 

Batteries Plus Holding Corporation

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

63

 

BKH

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

208

 

Cardiovascular Logistics

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

461

 

CheckedUp

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

171

 

CheckedUp

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

26

 

Firebirds

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

38

 

Firebirds

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

19

 

Hasa

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

157

 

Hasa

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

133

 

Kemper Sports Management

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

96

 

Kemper Sports Management

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

163

 

National Debt Relief

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

120

 

Ojos Locos 3

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

595

 

Ojos Locos 3

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

233

 

Planet DDS

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

12

 

Splash Car Wash

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

42

 

Splash Car Wash

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

14

 

XDimensional Technologies

 

First Lien Senior Secured

 

Delayed Draw Loan

 

 

121

 

XDimensional Technologies

 

First Lien Senior Secured

 

Revolving Credit Line

 

 

60

 

Total

 

 

 

 

 

$

2,846

 

 

The unrealized appreciation or depreciation associated with unfunded portfolio company commitments is recorded in the consolidated financial statements and reflected as an adjustment to the valuation of the related security in the Consolidated Schedule of Investments as of September 30, 2024 and the Schedule of Investments as of December 31, 2023. The par amount of the unfunded portfolio company commitments is not recognized by the Fund until the commitment is funded.

Unfunded portfolio company commitments may expire without being drawn upon, and therefore, do not necessarily represent future cash requirements or future earning assets for the Fund. The Fund believes that it maintains sufficient liquidity in the form of cash, financing capacity and unfunded capital commitments (“Capital Commitments”) from its investors to cover any outstanding unfunded portfolio company commitments that the Fund may be required to fund.

Litigation and Regulatory Matters

In the ordinary course of its business, the Fund may become subject to litigation, claims, and regulatory matters. The Fund has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Fund at this time.

Indemnifications

In the ordinary course of its business, the Fund may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Fund. Management feels that the likelihood of such an event is remote.

Note 6—Borrowings

Secured Loan Facility

 

On July 16, 2024, Subsidiary II entered into a Loan and Servicing Agreement (the “Secured Loan Facility”), with Sumitomo Mitsui Banking Corporation, as administrative agent and the collateral agent and Western Alliance Trust Company, N.A., as account bank, collateral custodian and collateral administrator. The Secured Loan Facility provides for borrowings in U.S. dollars up to a maximum principal amount of $300 million. Proceeds from the borrowings under the Secured Loan Facility will be used primarily to finance the purchase or origination of loans. Unless otherwise terminated, the Secured Loan Facility will mature on July 16, 2029. The interest rate on outstanding loans will be calculated by taking the highest of the Prime Rate, the Federal Funds Rate plus 0.50%, the 1-month SOFR rate plus 1.0% or zero, plus a spread of 2.60%. Subsidiary II will pay an upfront fee totaling $3 million, to be paid in installments until March 31, 2025, and an administrative fee of $5 on each payment date and a non-usage fee of 0.50% per annum is charged on the Secured Loan Facility’s undrawn commitment for the first nine (9) months following the closing date. Thereafter, on

23


 

any date when the undrawn commitment is less than or equal to 50% of the aggregate commitment, the non-usage fee will be 0.50% per annum. On any date when the undrawn commitment is greater than 50% of the aggregate commitment, the non-usage fee will be 1.00% per annum.

The weighted average annualized interest cost (excluding amortization of deferred financing costs and other fees) for all borrowings for the three and nine months ended September 30, 2024 was 7.82%. The average daily debt outstanding for the three and nine months ended September 30, 2024 was $15,380 and $5,164 respectively. The maximum debt outstanding for the three and nine months ended September 30, 2024 was $46,000.

 

The following table represents borrowings as of September 30, 2024:

 

 

Total Aggregate Borrowing Capacity

 

 

Total Principal Outstanding

 

 

Less Deferred Financing Costs

 

 

Amount per Statements of Assets and Liabilities

 

Secured Loan Facility

 

$

300,000

 

 

$

46,000

 

 

$

374

 

 

$

45,626

 

  Total

 

$

300,000

 

 

$

46,000

 

 

$

374

 

 

$

45,626

 

 

The following table represents interest and debt fees for the three and nine months ended September 30, 2024:

 

 

Interest Rate(1)

 

Interest Expense

 

 

Deferred Financing Costs (2)

 

 

Other Fees (2)

 

Secured Loan Facility

 

SOFR + 2.60%

 

$

343

 

 

$

 

 

$

126

 

  Total

 

 

 

$

343

 

 

$

 

 

$

126

 

(1)
As of September 30, 2024, the 1-month SOFR rate was 4.85%.
(2)
Amortization of deferred financing costs and other fees are included in interest expense on the Consolidated Statements of Operations.

 

At September 30, 2024, the carrying amount of the Fund's secured borrowings approximated their fair value in accordance with ASC 820. As of September 30, 2024, the Fund's borrowings would be deemed to be Level 3, as defined in Note 3—Fair Value of Financial Instruments.

 

Secured Borrowing Agreement

 

On July 22, 2024, the Fund entered into a participation agreement (the “Participation Agreement”) with Macquarie Bank Limited ("Macquarie"). Pursuant to the Participation Agreement, the Fund transferred investments to Macquarie with a total principal balance of $24.9million for proceeds of $22.3million and repurchased the same investment on a forward settlement basis. The repurchase transaction will have a settlement date of up to 90 days. The repurchase transaction under the Participation Agreement is a type of secured borrowing, in which the Fund will retain the economics of the investment and will pay an interest charge. The amount outstanding under the Participation Agreement as of September 30, 2024 was $22.3 million, which is reflected as Secured Borrowing on the Statements of Assets and Liabilities. The amount of interest paid under the Participation Agreement for the three and nine months ended September 30, 2024, was $217.7, which equated to an effective interest rate of 8.52%. Interest expense incurred under the Participation Agreement is reflected on the Consolidated Statements of Operation as Interest Expense.

Note 7—Capital

Investor Commitments

As of September 30, 2024, the Fund had $200,010 in Capital Commitments, of which $99,460 were unfunded. As of December 31, 2023, the Fund had $27,500 in Capital Commitments, of which $0 were unfunded.

Capital Drawdowns

The following table summarizes the total shares issued and net proceeds related to capital drawdowns for the nine months ended September 30, 2024:

 

Share Issue Date

 

Shares Issued

 

 

Net Proceeds Received

 

March 28, 2024

 

 

561,122

 

 

$

14,000

 

April 30, 2024

 

 

497,810

 

 

 

12,500

 

June 28, 2024

 

 

1,196,172

 

 

 

30,000

 

September 30, 2024

 

 

659,490

 

 

 

16,540

 

Total Shares Issued

 

 

2,914,594

 

 

$

73,040

 

 

There were no shares issued through the Dividend Reinvestment Plan for the three and nine months ended September 30, 2024.

24


 

As of September 30, 2024 and December 31, 2023, Comvest Group Holdings SPV II LLC, a wholly owned subsidiary of an affiliate of Comvest Partners, owned 409 and 409, respectively, of the Fund's common shares, Feeder Fund I owned 2,856,699 and 1,100,000, respectively, of the Fund's common shares, and Feeder Fund II owned 1,157,895 and 0, respectively, of the Fund's common shares.

Distributions and Dividends

Distributions paid during the three and nine months ended September 30, 2024, totaled $2,001 and $3,623, respectively.

The following table reflects distributions declared, per share that have been declared by the Board for the nine months ended September 30, 2024:

 

Date Declared

 

Record Date

 

Payment Date

 

Per Share Amount

 

March 27, 2024

 

March 27, 2024

 

March 28, 2024

 

$

0.54

 

June 27, 2024

 

June 27, 2024

 

June 28, 2024

 

$

0.48

 

September 27, 2024

 

September 27, 2024

 

September 30, 2024

 

$

0.60

 

 

Distributions to the Fund’s shareholders are recorded on the record date as set by the Fund’s Board. The Fund intends to make distributions to its shareholders that will be sufficient to enable the Fund to qualify and maintain its status as a RIC. The Fund intends to distribute approximately all of its net investment income no less frequently than quarterly and substantially all of its taxable income on an annual basis, except that the Fund may retain certain net capital gains for reinvestment.

The Fund has adopted a Dividend Reinvestment Plan that provides for reinvestment of any distributions declared on behalf of its shareholders, unless a shareholder elects to receive cash.

Note 8—Net Assets

The Fund commenced investment operations on October 18, 2023. The Fund did not have significant net asset activity prior to this date.

The following table reflects the net assets activity for the three months ended September 30, 2024:

 

 

 

Common shares

 

 

Common shares - par

 

 

Additional paid in capital

 

 

Total distributable earnings (accumulated deficit)

 

 

Total net assets

 

Balance as of June 30, 2024

 

 

3,355,513

 

 

$

3

 

 

$

84,027

 

 

$

136

 

 

$

84,166

 

Issuance of common shares, net of issuance costs

 

 

659,490

 

 

 

1

 

 

 

16,539

 

 

 

 

 

 

16,540

 

Distributions to shareholders

 

 

 

 

 

 

 

 

 

 

 

(2,001

)

 

 

(2,001

)

Net investment income (loss)

 

 

 

 

 

 

 

 

 

 

 

1,599

 

 

 

1,599

 

Net realized gain (loss) from investment transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gain (loss) on investments

 

 

 

 

 

 

 

 

 

 

 

404

 

 

 

404

 

Balance as of September 30, 2024

 

 

4,015,003

 

 

$

4

 

 

$

100,566

 

 

$

138

 

 

$

100,708

 

The following table reflects the net assets activity for the nine months ended September 30, 2024:

 

 

Common shares

 

 

Common shares - par

 

 

Additional paid in capital

 

 

Total distributable earnings (accumulated deficit)

 

 

Total net assets

 

Balance as of December 31, 2023

 

 

1,100,409

 

 

$

1

 

 

$

27,529

 

 

$

(17

)

 

$

27,513

 

Issuance of common shares, net of issuance costs

 

 

2,914,594

 

 

 

3

 

 

 

73,037

 

 

 

 

 

 

73,040

 

Distributions to shareholders

 

 

 

 

 

 

 

 

 

 

 

(3,623

)

 

 

(3,623

)

Net investment income (loss)

 

 

 

 

 

 

 

 

 

 

 

3,313

 

 

 

3,313

 

Net realized gain (loss) from investment transactions

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

7

 

Net change in unrealized gain (loss) on investments

 

 

 

 

 

 

 

 

 

 

 

458

 

 

 

458

 

Balance as of September 30, 2024

 

 

4,015,003

 

 

$

4

 

 

$

100,566

 

 

$

138

 

 

$

100,708

 

 

25


 

 

Note 9—Earnings Per Share

Basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of September 30, 2024, there are no dilutive securities. The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share resulting from operations for the three and nine months ended September 30, 2024.

 

 

 

For the Three Months Ended September 30, 2024

 

 

For the Nine Months Ended September 30, 2024

 

Net increase (decrease) in net assets resulting from operations

 

$

2,003

 

 

$

3,778

 

Weighted average shares of common shares outstanding - basic and diluted

 

 

3,362,681

 

 

 

2,180,293

 

Earnings (loss) per share of common shares - basic and diluted

 

$

0.60

 

 

$

1.73

 

 

 

Note 10—Financial Highlights

The following is a schedule of financial highlights for the nine months ended September 30, 2024:

 

 

 

For the Nine Months Ended

 

 

 

September 30, 2024

 

Per Common Share Operating Performance

 

 

 

Net Asset Value, Beginning of Period:

 

$

25.00

 

Results of Operations:

 

 

 

Net Investment Income (Loss) (1)

 

 

1.52

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

0.18

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

1.70

 

Distributions to Common Shareholders

 

 

 

Distributions from Net Investment Income

 

 

(1.62

)

Net Decrease in Net Assets Resulting from Distributions

 

 

(1.62

)

Net Asset Value, End of Period

 

$

25.08

 

Shares Outstanding, End of Period

 

 

4,015,003

 

Total return(2)(3)

 

 

6.93

%

Net assets, end of period

 

$

100,708

 

Ratio/Supplemental Data

 

 

 

Weighted average shares outstanding

 

 

2,180,293

 

Ratio of net investment income (loss) to average net assets without waivers(4)

 

 

0.77

%

Ratio of net investment income (loss) to average net assets with waivers(4)

 

 

8.12

%

Ratio of total expenses to average net assets without waivers(4)

 

 

11.87

%

Ratio of total expenses to average net assets with waivers(4)

 

 

4.52

%

Asset coverage ratio

 

 

248

%

Portfolio turnover rate (3)

 

 

1.94

%

 

(1)
The per common share data was derived by using weighted average shares outstanding.
(2)
Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the period reported.
(3)
Not Annualized.
(4)
Annualized.

 

 

Note 11—Subsequent Events

The Fund has evaluated subsequent events through the filing of this Form 10-Q and has determined that no material events or transactions occurred through the issuance date of the Fund's consolidated financial statements which require additional disclosure in or

26


 

adjustment of the Fund's consolidated financial statements, except on October 17, 2024 and November 13, 2024, the Fund called capital for $50 million and $49.5 million, respectively.

27


 

ITEM 2. MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in management’s discussion and analysis of financial conditions and results of operations relates to AMG Comvest Senior Lending Fund (collectively, “we”, “us”, “our”, or the “Fund”).

Forward-Looking Statements

The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q (the “Report”). Some of the statements in this Report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:

future changes in laws or regulations and conditions in the Fund’s operating areas;
the general economy, including the impact of interest and inflation rates, on the industries in which we invest;
our future operating results, our business prospects, the adequacy of our cash resources and working capital, and the impact of inflation and rising interest rates;
the ability of our portfolio companies to achieve their objectives;
our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of those investments;
the ability of Comvest Credit Managers, LLC (the “Investment Adviser”) and its affiliates to retain talented professionals;
interest rate volatility; and
the risk factors set forth in Part IItem 1A.—Risk Factors, contained in our annual report on Form 10-K for the period from September 29, 2023 (“Inception Date”) to December 31, 2023 and in this Report.

Forward-looking statements are identified by their use of such terms and phrases such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “project”, “seek”, “should”, “target”, “will”, “would” or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Part IItem 1A.—Risk Factors contained in our annual report on Form 10-K for the period from the Inception Date to December 31, 2023 and in this Report.

We have based the forward-looking statements included in this Report on information available to us on the date of this Report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview

The Fund is an externally managed, diversified, closed-end management investment company that has elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually thereafter, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Fund was formed as Comvest Credit Partners BDC Fund, L.P. on June 28, 2023 as a limited partnership under the laws of the State of Delaware. The Fund changed its name to AMG Comvest Senior Lending Fund on October 23, 2023 and converted to a Delaware statutory trust by operation of law on October 24, 2023. The Fund commenced operations on September 29, 2023 (“Inception Date”) and commenced investment operations on October 18, 2023.

The Fund is managed by the Investment Adviser, a Delaware limited liability company and an affiliate of Comvest Capital Advisors LLC and Comvest Credit Advisors LLC (collectively, “Comvest Partners”). The Investment Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The Investment Adviser oversees the management of the Fund’s activities and is responsible for making investment decisions with respect to the Fund’s portfolio.

28


 

Our investment objective is to generate current income and capital appreciation. Our primary focus is to provide risk-adjusted returns and current income to investors by investing primarily in middle-market companies with EBITDA generally between $10 million and $100 million within a wide range of industries, although the Fund intends to focus on industries in which the Investment Adviser and its affiliates have investing experience and access to operating resources, including but not limited to healthcare, financial services, business & technology services, industrials, consumer products, and franchisors/retail.

Portfolio and Investment Activity

During the nine months ended September 30, 2024, we made $108,813 of investments in new or existing portfolio companies and had $1,000 in aggregate amount of sales and repayments, resulting in net investments of $107,813 for the period. The total portfolio of debt investments at fair value consisted of 100% bearing variable interest rates and 0% bearing fixed interest rates.

Our portfolio composition, based on fair value at September 30, 2024 was as follows:

 

 

Percentage of Total Portfolio

 

 

Weighted Average Current Yield for Total Portfolio

 

First Lien Senior Secured

 

 

75.6

%

 

 

10.7

%

Equity

 

 

0.2

%

 

 

 

Cash Equivalents

 

 

24.2

%

 

 

 

Total

 

 

100.0

%

 

 

10.7

%

 

Our portfolio composition, based on fair value at December 31, 2023 was as follows:

 

 

Percentage of Total
Portfolio

 

 

Weighted Average
Current Yield for Total
Portfolio

 

First Lien Senior Secured

 

 

100

%

 

 

11.8

%

Total

 

 

100

%

 

 

11.8

%

Portfolio Asset Quality

Our Investment Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Investment Adviser grades the credit risk of all debt investments on a scale of 1 to 6 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors.

 

Loan

Rating

 

Summary Description

1

 

Investments that are performing at or above expectations. No issues or foreseen issues on performance, covenants, liquidity, etc. The credit is expected to be repaid at or prior to maturity through available cash flow or to be refinanced.

 

 

 

2

 

Investments that are performing substantially within our expectations, with the risks remaining neutral or favorable. All new loans are initially rated 2. The credit is expected to be repaid at or prior to maturity through available cash flow or to be refinanced by a third party.

 

 

 

3

 

Investments that are performing below our expectations and that require closer monitoring, but where we expect no loss of investment return or principal.

 

 

 

4

 

Investments that are performing below our expectations and for which risk has increased since the original investment. Although the loan is underperforming, there is not a high likelihood of any loss of principal or interest but there may be a possibility for equity returns, one-time fees or capitalized interest (if applicable) to be implied.

 

 

 

5

 

Investments that are performing substantially below our expectations and whose risks have increased substantially since the original investment. Typically, the borrower will be in default, or the loan will have been modified to address a default or the loan may be past due.

 

 

 

6

 

Investments that are performing poorly; it is unlikely that the enterprise or asset values currently exceed the debt and/or material reduction in enterprise value is reasonably foreseen.

 

29


 

The Investment Adviser focuses on downside protection by leveraging existing rights available under the credit documents; however, for investments that are significantly underperforming, which may need to be restructured, the Investment Adviser’s workout team partners with the investment team and all material amendments, waivers and restructurings require the approval of a majority of the Investment Committee.

 

The weighted average risk rating of our investments based on fair value was 2.0 as of September 30, 2024. As of September 30, 2024, the Fund had no portfolio companies on non-accrual status. Refer to Note 2—Summary of Significant Accounting Policies—for additional details regarding the Fund’s non-accrual policy.

 

 

 

As of September 30, 2024

 

Internal
 Performance
 Rating

 

Investments
at Fair Value
(in thousands)

 

 

Percentage of
Total
Investments

 

1

 

$

 

 

 

%

2

 

 

124,921

 

 

 

98.7

 

3

 

 

 

 

 

 

4

 

 

1,613

 

 

 

1.3

 

5

 

 

 

 

 

 

6

 

 

 

 

 

 

Total

 

$

126,534

 

 

 

100.0

%

 

 

The weighted average risk rating of our investments based on fair value was 2.1 as of December 31, 2023. As of December 31, 2023, the Fund had no portfolio companies on non-accrual status. Refer to Note 2—Summary of Significant Accounting Policies—for additional details regarding the Fund’s non-accrual policy.

 

 

 

As of December 31, 2023

 

Internal
 Performance
 Rating

 

Investments
at Fair Value
(in thousands)

 

 

Percentage of
Total
Investments

 

1

 

$

 

 

 

%

2

 

 

16,428

 

 

 

89.9

 

3

 

 

1,853

 

 

 

10.1

 

4

 

 

 

 

 

 

5

 

 

 

 

 

 

6

 

 

 

 

 

 

Total

 

$

18,281

 

 

 

100.0

%

The following table shows the weighted average rate, spread over the reference rate of floating rate and fees of investments originated during the three months ended September 30, 2024.

 

Weighted average rate of new investment fundings

 

 

10.65

%

Weighted average spread over the reference rate of new floating rate investment fundings

 

 

5.53

%

Weighted average OID fees of new investment fundings

 

 

0.30

%

RESULTS OF OPERATIONS

Our operating results for the three and nine months ended September 30, 2024 was as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30, 2024

 

 

For the Nine Months Ended September 30, 2024

 

Total investment income

 

$

3,044

 

 

$

5,163

 

Less: Net expenses

 

 

1,445

 

 

 

1,850

 

  Net investment income

 

 

1,599

 

 

 

3,313

 

Net realized gains (loss) on investments

 

 

 

 

 

7

 

Net change in unrealized income (losses) on investments

 

 

404

 

 

 

458

 

  Net increase (decrease) in net assets resulting from operations

 

$

2,003

 

 

$

3,778

 

 

30


 

Investment Income

Investment income for the three and nine months ended September 30, 2024, was driven by deployment of capital and interest income from our investments. The composition of our investment income was as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30, 2024

 

 

For the Nine Months Ended September 30, 2024

 

Interest from investments

 

$

2,974

 

 

$

5,045

 

Fee income

 

 

70

 

 

 

118

 

  Total investment income

 

$

3,044

 

 

$

5,163

 

Operating Expenses

The composition of our operating expenses for the three and nine months ended September 30, 2024 was as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30, 2024

 

 

For the Nine Months Ended September 30, 2024

 

Management fees

 

$

265

 

 

$

511

 

Incentive fees

 

 

151

 

 

 

239

 

Administrative expenses

 

 

54

 

 

 

103

 

Interest expense

 

 

687

 

 

 

687

 

Professional fees

 

 

287

 

 

 

2,167

 

Trustees' fees

 

 

52

 

 

 

146

 

Organizational and offering expenses

 

 

346

 

 

 

627

 

Other general expenses

 

 

195

 

 

 

377

 

Fee waivers

 

 

 

 

 

(237

)

Expense reimbursement

 

 

(592

)

 

 

(2,770

)

  Net expenses

 

$

1,445

 

 

$

1,850

 

Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses) on Investments

Net realized gains (losses) and net change in unrealized gains (losses) on investments for the three and nine months ended September 30, 2024 were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30, 2024

 

 

For the Nine Months Ended September 30, 2024

 

Net realized gains (losses)

 

 

 

 

 

 

Non-controlled, Non-affiliate investments

 

$

 

 

$

7

 

Total net realized gains (losses)

 

 

 

 

 

7

 

Net change in unrealized gains (losses) on investments

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

410

 

 

 

473

 

Net change in deferred tax liability

 

 

(6

)

 

 

(15

)

Total net change in unrealized gains (losses) on investments

 

 

404

 

 

 

458

 

Total net realized and unrealized gains (losses)

 

$

404

 

 

$

465

 

Liquidity and Capital Resources

We generate cash from (1) drawing down capital in respect of Shares, (2) cash flows from investments and operations and (3) borrowings from banks or other lenders.

As of September 30, 2024, we are party to the Secured Loan Facility, as described in more detail in Note 6—Borrowings.

Our primary use of cash is to originate (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including expenses, the Management Fee and, to the extent permitted under

31


 

ERISA, if applicable, and the 1940 Act, any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to our shareholders.

Operating liquidity is our ability to meet our short-term liquidity needs. The following table presents our operating liquidity position as of September 30, 2024 and December 31, 2023 (dollars in thousands):

 

 

 

As of

 

 

 

September 30, 2024

 

 

December 31, 2023

 

Cash and cash equivalents

 

$

40,474

 

 

$

8,511

 

Unfunded portfolio company commitments

 

 

(21,975

)

 

 

(2,846

)

Undrawn capital commitments

 

 

99,460

 

 

 

-

 

Total operational liquidity

 

$

117,959

 

 

$

5,665

 

Taxation as a RIC

We have elected to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any income that we distribute as dividends for U.S. federal income tax purposes to our shareholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our shareholders, for each tax year, an amount equal to at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss and determined without regard to any deduction for dividends paid. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our shareholders. If we fail to qualify as a RIC, we will be subject to U.S. federal income tax at the regular corporate rates on our income and capital gains.

Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our shareholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

Related Party Transactions and Agreements

Investment Management Agreement

We entered into an Investment Management Agreement, dated as of October 20, 2023, which was approved by our Board for an initial two year term, under which the Investment Adviser, subject to the overall supervision of our Board manages the day-to-day operations of, and provides investment advisory services to us. Affiliates of the Investment Adviser also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Investment Adviser has adopted policies designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities among multiple funds. In addition, any affiliated fund currently formed or formed in the future and managed by the Investment Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Investment Adviser or its affiliates.

Administration Agreement

On October 20, 2023, we entered into an Administration Agreement with AMG Funds LLC, a Delaware limited liability company and wholly owned subsidiary of AMG (the “Administrator”). Under the terms of the Administration Agreement, the Administrator provides, or oversees the performance of, administrative and compliance services necessary for the operation of the Fund, including, but not limited to, maintaining financial records, overseeing the calculation of NAV, compliance monitoring (including diligence and oversight of the Fund’s other service providers), preparing reports to shareholders and reports filed with the SEC and other regulators, preparing materials and coordinating meetings of the Fund’s Board, managing the payment of expenses, the payment and receipt of funds for investments and the performance of administrative and professional services rendered by others and providing office space, equipment and office services. The Administrator may also provide on our behalf managerial assistance to our portfolio companies.

The Administrator has retained the Sub-Administrator to perform some of its obligations under the Administration Agreement. The Sub-Administrator receives compensation for its sub-administrative services under the Sub-Administration Agreement. In addition, we have entered into the Fund Accounting Servicing Agreement, pursuant to which the Sub-Administrator provides us with accounting

32


 

services. We will reimburse the Sub-Administrator for all reasonable costs and expenses incurred by the Sub-Administrator in providing these services under the Fund Accounting Servicing Agreement.

Distributions and Dividends

Distributions declared for the three and nine months ended September 30, 2024, totaled $2,001 and $3,623, respectively.

The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our Board as of September 30, 2024 and as of our most recent fiscal period ended December 31, 2023:

 

Date Declared

 

Record Date

 

Payment Date

 

Per Share Amount

 

March 27, 2024

 

March 27, 2024

 

March 28, 2024

 

$

0.54

 

June 27, 2024

 

June 27, 2024

 

June 28, 2024

 

$

0.48

 

September 27, 2024

 

September 27, 2024

 

September 30, 2024

 

$

0.60

 

 

Date Declared

 

Record Date

 

Payment Date

 

Per Share Amount

 

December 28, 2023

 

December 28, 2023

 

December 29, 2023

 

$

0.55

 

We intend to pay quarterly distributions to our shareholders in amounts sufficient to qualify as and maintain our status as a RIC. We intend to distribute approximately all of our net investment income no less frequently than quarterly and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.

Borrowings

We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 150% after such borrowing, with certain limited exceptions. As a result, in addition to the foregoing 1940 Act restriction on leverage, we do not currently expect to borrow in excess of the lesser of 20% of our Aggregate Committed Capital and $300 million. We may in the future, though, determine to utilize a greater amount of leverage, including for investment purposes. As of September 30, 2024, we had $67,897 par value of outstanding borrowings and our asset coverage ratio of total assets to total borrowings was 248%, compliant with the minimum asset coverage level of 150% generally required by a BDC by the 1940 Act.

Secured Loan Facility

On July 16, 2024, Subsidiary II entered into a Loan and Servicing Agreement (the “Secured Loan Facility”), with Sumitomo Mitsui Banking Corporation, as administrative agent and the collateral agent and Western Alliance Trust Company, N.A., as account bank, collateral custodian and collateral administrator. The Secured Loan Facility provides for borrowings in U.S. dollars up to a maximum principal amount of $300 million. Proceeds from the borrowings under the Secured Loan Facility will be used primarily to finance the purchase or origination of loans. Unless otherwise terminated, the Secured Loan Facility will mature on July 16, 2029. The interest rate on outstanding loans will be calculated by taking the highest of the Prime Rate, the Federal Funds Rate plus 0.50%, the 1-month SOFR rate plus 1.0% or zero, plus a spread of 2.60%.

 

Contractual Obligations

As of September 30, 2024, we have entered into an Investment Management Agreement with the Investment Adviser pursuant to the 1940 Act to provide us with investment advisory services and the Administration Agreement with the Administrator to provide us with administrative services. Payments for investment advisory services under the Advisory Agreement are described under Item 1. Financial Statements – Notes to Consolidated Financial Statements – Note 4. Related Party Transactions. Payments for administration services under the Administration Agreement are described under Item 1. Financial Statements –Notes to Consolidated Financial Statements – Note 4. Related Party Transactions.

Off-Balance Sheet Arrangements

As of September 30, 2024, we have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Commitments

In the ordinary course of business, we may enter into future funding commitments. As of September 30, 2024, we had unfunded commitments on revolving credit lines and delayed draw term loans of $21,975. We maintain sufficient financial resources to satisfy

33


 

unfunded commitments, including cash on hand and undrawn Capital Commitments from our investors. Please refer to Note 5—Commitments and Contingencies in the notes to our consolidated financial statements for further detail of these unfunded commitments.

Significant Accounting Estimates and Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we will evaluate our estimates, including those related to the matters described below. Actual results could differ from those estimates.

While our significant accounting policies are also described in Note 2 - Summary of Significant Accounting Policies of the notes to our consolidated financial statements appearing elsewhere in this report, we believe the following accounting policy, Valuation of Portfolio Investments, requires the most significant judgment in the preparation of our consolidated financial statements because it involves judgments and assumptions about highly complex and inherently uncertain matters. In addition, the impact of reasonably different estimates and assumptions could have a greater impact on our consolidated financial statements.

Valuation of Portfolio Investments

The Investment Adviser applies fair value accounting in accordance with GAAP and the Valuation Policy. Fair value is the amount 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. Investments are reflected on the Fund’s Consolidated Statements of Assets and Liabilities at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Fund’s Consolidated Statements of Operations as “Net change in unrealized gains (losses) of investments”.

The Investment Adviser values the Fund’s portfolio investments in accordance with the Valuation Policy and the 1940 Act. For purposes of the 1940 Act, the Board has designated the Investment Adviser as the Fund’s Valuation Designee. The Board provides oversight of the Investment Adviser’s fair value determinations of the Fund’s portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded and those whose market prices are not readily available.

One or more independent valuation firms (each a “Valuation Agent”) are engaged to independently value our investments, in consultation with the Investment Adviser. Our valuation procedures, which are the procedures that are followed by such Valuation Agent are set forth in more detail below:

1) Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.

2) Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.

a) Bond quotes are obtained through independent pricing services. Internal reviews are performed by the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and if so, the quote is used. In the event the Investment Adviser, with the assistance of the Valuation Agent, determines that the bonds quotes are not readily available or otherwise not determinable pursuant to the Fund’s valuation procedures, or not reliable, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and

b) For investments other than bonds, the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser, look at the number of quotes readily available and perform the following:

i) Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. If quotes from pricing services differ by +/- five points or if the spread between the bid and ask for a quote is greater than 10 points, the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, will use one or more of the methodologies outlined below to determine fair value;

ii) Investments for which one quote is received from a pricing service are validated by the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser. The personnel of the

34


 

Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser, analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. For assets where a supporting analysis is prepared, the Valuation Agent will document the selection and appropriateness of the indices selected for yield comparison and a conclusion documenting how the yield comparison analysis supports the proposed mark. The quarterly portfolio company monitoring reports which detail the qualitative and quantitative performance of the portfolio company will also be included. If the Valuation Agent, in consultation with the investment professionals of the Investment Adviser, and/or the Investment Adviser, are unable to sufficiently validate the quote internally and if the investment’s par value exceeds a certain materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).

3) Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:

a) Each portfolio company or investment is initially valued by the personnel of the Valuation Agent, in consultation with the investment professionals of the Investment Adviser;

b) The Valuation Agent undertakes a comprehensive valuation analysis, which includes an enterprise and/or collateral valuation, and subsequently a fundamental credit analysis and valuation with respect to both credit quality and market factors, for each of the portfolio companies or investments and provides a range of values on such investments to the Investment Adviser. The Valuation Agent also provides analyses to support its valuation methodology and calculations;

c) The Investment Adviser then reviews each valuation recommendation to confirm they have been calculated in accordance with the Valuation Policy;

d) The Investment Adviser determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser’s valuation team and, where applicable, the Valuation Agent or other external service providers; and

e) The Board provides oversight of the valuation process in accordance with Rule 2a-5, which includes a review of the quarterly reports prepared by the Investment Adviser or the Valuation Agent and the fair valuation determinations made by the Investment Adviser.

For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative fair value until it is called and funded.

The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. 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 the Fund’s investments may fluctuate from period to period and the fluctuations could be material.

Revenue Recognition

Interest Income

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective interest method. Loan origination fees, original issue discount (“OID”) and market discounts or premiums are capitalized and amortized into interest income 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. The Fund may have loans in its portfolio that contain a payment-in-kind (“PIK”) interest provision. PIK interest is accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest is added to the principal balance on the capitalization date and is generally due at maturity or when deemed by the issuer.

Fee Income

Fee income, such as structuring fees, loan monitoring, amendment, syndication, commitment, termination, and other loan fees are recognized as income when earned, either upon receipt or amortized into fee income. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan fees are recorded as fee income.

35


 

Non-accrual

Investments may be placed on non-accrual status when principal or interest payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

Investment transactions are accounted for on the trade date. Gain or loss on the sale of investments is calculated using the specific identification method. Net change in unrealized gain or loss will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when a gain or loss is realized.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are subject to certain financial market risks, such as interest rate fluctuations. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. Key base interest rates, such as Secured Overnight Financing Rate (“SOFR”), may fluctuate over time. As of September 30, 2024, 99% of investments at fair value represent floating-rate investments with a reference rate floor and none of our debt investments at fair value represent fixed-rate investments.

Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Generally, we believe higher yielding assets such as those in our investment portfolio do not necessarily follow a linear interest rate relationship and are less sensitive in price to interest rate changes than many other debt investments. Consequently, our net interest income (interest income less interest expense) is exposed to risks related to interest rate fluctuations.

Assuming that the interim and unaudited Statements of Assets and Liabilities as of September 30, 2024, was to remain constant and that we took no actions to alter our interest rate sensitivity as of such date, the following table shows the annualized impact of hypothetical base rate changes in interest rates. Actual results could differ significantly from those estimated in the table.

 

Change in Interest Rates

 

Net Increase
(Decrease) in
Interest Income
(in thousands)

 

 

Net Increase
(Decrease) in
Interest Expense
(in thousands)

 

 

Net Increase
(Decrease) in Net
Investment Income
(in thousands)

 

Down 100 basis points

 

$

(1,284

)

 

$

(683

)

 

$

(601

)

Down 200 basis points

 

 

(2,568

)

 

 

(1,365

)

 

 

(1,203

)

Up 100 basis points

 

 

1,284

 

 

 

683

 

 

 

601

 

Up 200 basis points

 

 

2,568

 

 

 

1,365

 

 

 

1,203

 

Up 300 basis points

 

 

3,852

 

 

 

2,048

 

 

 

1,804

 

 

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of September 30, 2024. Based on the foregoing evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level that we would meet our disclosure obligations.

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Changes in Internal Control Over Financial Reporting

Management has not identified any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) 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.

 

37


 

PART II. OTHER INFORMATION

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

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this Report, you should carefully consider the factors previously disclosed in our Annual Report on Form 10-K for the period from the Inception Date to December 31, 2023, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially affect our business, our structure, our financial condition, our investments and/or operating results. During the nine months ended September 30, 2024, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the period from the Inception Date to December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The Fund did not make any sales of unregistered securities during the fiscal quarter ended September 30, 2024 that were not previously disclosed in a current report on Form 8-K.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Rule 10b5-1 Trading Plans

During the fiscal quarter ended September 30, 2024, none of our trustees or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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ITEM 6. EXHIBITS.

The following exhibits are filed as part of this Report, or hereby incorporated by reference to exhibits previously filed with the United States Securities and Exchange Commission:

 

Exhibit Number

Description of Document

 

 

3.1

Declaration of Trust*

3.2

Bylaws*

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended**

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended**

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***

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 With Embedded Linkbase Documents

104

Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).**

 

* Previously filed as an exhibit to the Fund’s Registration Statement on Form 10 (File No. 000-56588), filed on October 23, 2023 and incorporated herein by reference.

** Filed herewith.

*** Furnished 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.

 

AMG Comvest Senior Lending Fund

Date: November 13, 2024

By:

/s/ Robert O’Sullivan

Name:

Title:

Robert O’Sullivan

Chief Executive Officer

Date: November 13, 2024

By:

/s/ Cecilio M. Rodriguez

Name:

Title:

Cecilio M. Rodriguez

Chief Financial Officer

 

 

 

 

 

40