UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2017

or

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

Commission file number 814-00998

Goldman Sachs BDC, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	46-2176593
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
200 West Street, New York, New York	10282
(Address of Principal Executive Office)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 902-0300

Not Applicable

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

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  X    NO  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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:	X	Non-accelerated filer:	☐	Smaller reporting company:	☐
				(Do not check if a smaller reporting company)
Emerging growth company	X

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.  X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  ☐    NO  X

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding at August 3, 2017 was 40,109,905.

GOLDMAN SACHS BDC, INC.

	INDEX	PAGE
PART I	FINANCIAL INFORMATION		4
ITEM 1.	Financial Statements		4
	Consolidated Statements of Assets and Liabilities as of June 30, 2017 (Unaudited) and December 31, 2016		4
	Consolidated Statements of Operations for the three and six months ended June 30, 2017 (Unaudited) and 2016 (Unaudited)		5
	Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2017 (Unaudited) and 2016 (Unaudited)		6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2017 (Unaudited) and 2016 (Unaudited)		7
	Consolidated Schedules of Investments as of June 30, 2017 (Unaudited) and December 31, 2016		8
	Notes to the Consolidated Financial Statements (Unaudited)		14
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		58
ITEM 4.	Controls and Procedures		59
PART II	OTHER INFORMATION		60
ITEM 1.	Legal Proceedings		60
ITEM 1A.	Risk Factors		60
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		60
ITEM 3.	Defaults Upon Senior Securities		60
ITEM 4.	Mine Safety Disclosures		60
ITEM 5.	Other Information		60
ITEM 6.	Exhibits		60
SIGNATURES			61

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “target,” “estimate,” “intend,” “continue” or “believe” or the negatives of, or other variations on, these terms or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. Our forward-looking statements include information in this report regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company (“BDC”) and the expected performance of, and the yield on, our portfolio companies. There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2016, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operations and financial position. Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the U.S. Securities and Exchange Commission, including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K. Under Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in periodic reports we file under the Exchange Act, such as this quarterly report on Form 10-Q.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

• our future operating results;

• changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets;

• uncertainty surrounding the financial and political stability of the United States, the European Union and China;

• our business prospects and the prospects of our portfolio companies;

• the impact of investments that we expect to make;

• the impact of increased competition;

• our contractual arrangements and relationships with third parties;

• the dependence of our future success on the general economy and its impact on the industries in which we invest;

• the ability of our prospective portfolio companies to achieve their objectives;

• the relative and absolute performance of our investment adviser;

• our expected financings and investments;

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

• our ability to make distributions;

• the adequacy of our cash resources and working capital;

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

• the impact of future acquisitions and divestitures;

• the effect of changes in tax laws and regulations and interpretations thereof;

• our ability to maintain our status as a BDC and a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended;

• actual and potential conflicts of interest with Goldman Sachs Asset Management, L.P. and its affiliates;

• general price and volume fluctuations in the stock market;

• the ability of our investment adviser to attract and retain highly talented professionals;

• the impact on our business from new or amended legislation or regulations; and

• the availability of credit and/or our ability to access the equity and capital markets.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Goldman Sachs BDC, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share amounts)

	June 30, 2017 (Unaudited)			December 31, 2016
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (cost of $951,462 and $1,055,203, respectively)	$	926,267		$	1,004,793
Non-controlled affiliated investments (cost of $105,884 and $89,715, respectively)		90,756			84,103
Controlled affiliated investments (cost of $94,342 and $77,592, respectively)		94,823			78,394
Investments in affiliated money market fund (cost of $2,123 and $1, respectively)		2,123			1
Total investments, at fair value (cost of $1,153,811 and $1,222,511, respectively)		1,113,969			1,167,291
Cash		37,493			4,565
Interest and dividends receivable from non-controlled/affiliated investments and non-controlled/non-affiliated investments		6,769			7,841
Dividend receivable from controlled affiliated investments		2,450			1,925
Other income receivable from controlled affiliated investments		746			2,212
Deferred financing costs		5,418			6,018
Deferred offering costs		–			605
Other assets		178			76
Total assets	$	1,167,023		$	1,190,533
Liabilities
Debt (net of debt issuance costs of $4,165 and $4,598, respectively)	$	408,085		$	498,152
Interest and other debt expenses payable		2,067			1,569
Management fees payable		4,351			4,406
Incentive fees payable		1,238			1,474
Distribution payable		18,041			16,349
Accrued offering costs		490			518
Directors’ fees payable		176			8
Accrued expenses and other liabilities		1,877			2,920
Total liabilities	$	436,325		$	525,396
Commitments and Contingencies (Note 7)
Net Assets
Preferred stock, par value $0.001 per share (1,000,000 shares authorized, no shares issued and outstanding)	$	–		$	–
Common stock, par value $0.001 per share (200,000,000 shares authorized, 40,091,488 and 36,331,662 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively)		40			36
Paid-in capital in excess of par		800,649			719,847
Accumulated net realized gain (loss)		(62,005	)		(23,729	)
Accumulated undistributed net investment income		33,277			25,624
Net unrealized appreciation (depreciation) on investments		(39,842	)		(55,220	)
Allocated income tax expense		(1,421	)		(1,421	)
TOTAL NET ASSETS	$	730,698		$	665,137
TOTAL LIABILITIES AND NET ASSETS	$	1,167,023		$	1,190,533
Net asset value per share	$	18.23		$	18.31

The accompanying notes are part of these unaudited consolidated financial statements.

4

Goldman Sachs BDC, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2017			2016			2017			2016
Investment Income:
From non-controlled/non-affiliated investments:
Interest income	$	30,213		$	26,489		$	57,179		$	55,620
Dividend income		–			630			–			1,257
Other income		300			204			835			397
Total investment income from non-controlled/non-affiliated investments		30,513			27,323			58,014			57,274
From non-controlled affiliated investments:
Interest income		2,282			–			4,494			–
Dividend income		20			11			43			22
Other income		6			–			12			–
Total investment income from non-controlled affiliated investments		2,308			11			4,549			22
From controlled affiliated investments:
Dividend income		2,450			1,550			4,900			2,825
Other income		746			437			746			544
Total investment income from controlled affiliated investments		3,196			1,987			5,646			3,369
Total investment income	$	36,017		$	29,321		$	68,209		$	60,665
Expenses:
Interest and other debt expenses	$	4,839		$	3,246		$	9,351		$	6,281
Management fees		4,351			4,188			8,812			8,314
Incentive fees		1,238			2,085			4,971			3,489
Professional fees		473			585			934			1,181
Administration, custodian and transfer agent fees		195			215			389			441
Directors’ fees		175			256			348			480
Other expenses		285			327			623			635
Total expenses	$	11,556		$	10,902		$	25,428		$	20,821
NET INVESTMENT INCOME (LOSS) BEFORE TAXES	$	24,461		$	18,419		$	42,781		$	39,844
Excise tax expense	$	368		$	221		$	733		$	434
NET INVESTMENT INCOME (LOSS) AFTER TAXES	$	24,093		$	18,198		$	42,048		$	39,410
Net realized and unrealized gains (losses) on investment transactions:
Net realized gain (loss) from:
Non-controlled/non-affiliated investments	$	(38,108	)	$	–		$	(38,276	)	$	–
Net change in unrealized appreciation (depreciation) from:
Non controlled/non-affiliated investments		26,002			(12,400	)		25,215			(27,715	)
Non controlled affiliated investments		(6,652	)		(94	)		(9,516	)		(489	)
Controlled affiliated investments		(750	)		1,296			(321	)		1,195
Net realized and unrealized gains (losses)	$	(19,508	)	$	(11,198	)	$	(22,898	)	$	(27,009	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	4,585		$	7,000		$	19,150		$	12,401
Net investment income (loss) per share (basic and diluted)	$	0.64		$	0.50		$	1.13		$	1.09
Earnings per share (basic and diluted)	$	0.12		$	0.19		$	0.52		$	0.34
Weighted average shares outstanding		37,902,018			36,311,582			37,125,726			36,309,232
Distributions declared per share	$	0.45		$	0.45		$	0.90		$	0.90

The accompanying notes are part of these unaudited consolidated financial statements.

5

Goldman Sachs BDC, Inc.

Consolidated Statements of Changes in Net Assets

(in thousands, except share and per share amounts)

(Unaudited)

	For the six months ended June 30, 2017			For the six months ended June 30, 2016
Increase (decrease) in net assets resulting from operations:
Net investment income	$	42,048		$	39,410
Net realized gain (loss) on investments		(38,276	)		–
Net change in unrealized appreciation (depreciation) on investments		15,378			(27,009	)
Net increase (decrease) in net assets resulting from operations	$	19,150		$	12,401
Distributions to stockholders from:
Net investment income	$	(34,395	)	$	(32,679	)
Total distributions to stockholders	$	(34,395	)	$	(32,679	)
Capital transactions:
Issuance of common stock (3,737,500 and 0 shares, respectively)	$	80,288		$	–
Reinvestment of stockholder distributions (22,326 and 5,555 shares, respectively)		518			110
Net increase (decrease) in net assets resulting from capital transactions	$	80,806		$	110
TOTAL INCREASE (DECREASE) IN NET ASSETS	$	65,561		$	(20,168	)
Net assets at beginning of period	$	665,137		$	688,650
Net assets at end of period	$	730,698		$	668,482
Accumulated undistributed net investment income	$	33,277		$	21,082

The accompanying notes are part of these unaudited consolidated financial statements.

6

Goldman Sachs BDC, Inc.

Consolidated Statements of Cash Flows

(in thousands, except share and per share amounts)

(Unaudited)

	For the six months ended June 30, 2017			For the six months ended June 30, 2016
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations:	$	19,150		$	12,401
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Purchases of investments		(236,190	)		(93,862	)
Payment-in-kind		(3,400	)		(209	)
Investments in affiliated money market fund, net		(2,122	)		(5,550	)
Proceeds from sales of investments and principal repayments		278,123			35,529
Net realized (gain) loss on investments		38,276			–
Net change in unrealized (appreciation) depreciation on investments		(15,378	)		27,009
Amortization of premium and accretion of discount, net		(5,987	)		(2,547	)
Amortization of deferred financing and debt issuance costs		984			604
Amortization of original issue discount on convertible notes		61			–
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in receivable for investments sold		–			138
(Increase) decrease in interest and dividends receivable		547			1,651
(Increase) decrease in other income receivable		1,466			137
(Increase) decrease in other assets		(102	)		(10	)
Increase (decrease) in interest and other debt expenses payable		506			(43	)
Increase (decrease) in management fees payable		(55	)		(50	)
Increase (decrease) in incentive fees payable		(236	)		1,725
Increase (decrease) in directors’ fees payable		168			207
Increase (decrease) in accrued expenses and other liabilities		(1,043	)		(1,312	)
Net cash provided by (used for) operating activities	$	74,768		$	(24,182	)
Cash flows from financing activities:
Proceeds from issuance of common stock (net of underwriting costs)	$	81,571		$	–
Offering costs paid		(706	)		(40	)
Distributions paid		(32,185	)		(32,566	)
Deferred financing and debt issuance costs paid		(20	)		(18	)
Borrowings on debt		176,750			110,500
Repayments of debt		(267,250	)		(60,950	)
Net cash provided by (used for) financing activities	$	(41,840	)	$	16,926
Net increase (decrease) in cash		32,928			(7,256	)
Cash, beginning of period		4,565			22,710
Cash, end of period	$	37,493		$	15,454
Supplemental and non-cash financing activities
Interest expense paid	$	7,334		$	5,475
Accrued but unpaid excise tax expense	$	696		$	428
Accrued but unpaid deferred financing and debt issuance costs	$	52		$	36
Accrued but unpaid offering costs	$	490		$	–
Accrued but unpaid distributions	$	18,041		$	16,341
Reinvestment of stockholder distributions	$	518		$	110

The accompanying notes are part of these unaudited consolidated financial statements.

7

Goldman Sachs BDC, Inc.

Consolidated Schedule of Investments as of June 30, 2017

(in thousands, except share and per share amounts)

(Unaudited)

Portfolio Company	Industry	Interest	Maturity		Par Amount		Cost			Fair Value
Investments at Fair Value – 152.16% #
Corporate Debt (1) – 135.59%
1st Lien/Senior Secured Debt – 49.78%
Artesyn Embedded Technologies, Inc.(2)	Electronic Equipment, Instruments & Components	9.75%		10/15/2020	$	20,000	$	20,000		$	19,350
Continuum Managed Services LLC(+++) (3)	IT Services	L + 8.75% (1.00% Floor)		06/08/2023		28,760		27,976			27,969
Continuum Managed Services LLC(3) (4) (5)	IT Services	L + 8.75% (1.00% Floor)		06/08/2023		2,392		(65	)		(66	)
Continuum Managed Services LLC(3) (4) (5)	IT Services	L + 8.75% (1.00% Floor)		06/08/2022		2,220		(60	)		(61	)
Elemica, Inc.(+)	Software	L + 8.00% (1.00% Floor)		07/07/2021		42,075		41,183			41,234
Elemica, Inc.(4) (5)	Software	L + 8.00% (1.00% Floor)		07/07/2021		6,000		(127	)		(120	)
Heligear Acquisition Co.(2)	Aerospace & Defense	10.25%		10/15/2019		17,500		17,332			17,850
Imperial Bag & Paper Co. LLC(+) (3)	Distributors	L + 7.50% (1.00% Floor)		06/10/2024		11,100		10,880			10,878
Infinity Sales Group(+++)	Media	L + 10.50% (1.00% Floor)		11/21/2018		30,309		30,092			28,490
Iracore International Holdings, Inc.^ (+)	Energy Equipment & Services	L + 9.00% (1.00% Floor)		04/12/2021		3,389		3,389			3,389
Kawa Solar Holdings Limited^ (6)	Construction & Engineering	F + 8.20% and 3.50% PIK		07/02/2018		10,537		10,504			10,537
Kawa Solar Holdings Limited^ (+++) (6) (7)	Construction & Engineering	L + 8.20%		07/02/2018		6,843		6,734			2,064
Legacy Buyer Corp.(+++)	Health Care Providers & Services	L + 8.00% (1.00% Floor)		10/24/2019		24,882		24,613			24,385
Legacy Buyer Corp.(4) (5)	Health Care Providers & Services	L + 8.00% (1.00% Floor)		10/24/2019		2,500		(27	)		(50	)
Madison-Kipp Corporation(+)	Machinery	L + 9.00% (1.00% Floor)		05/26/2020		33,644		33,207			33,476
Netvoyage Corporation(+) (3)	Software	L + 9.50% (1.00% Floor)		03/24/2022		7,849		7,698			7,692
Netvoyage Corporation(3) (4) (5)	Software	L + 9.50% (1.00% Floor)		03/24/2022		654		(12	)		(13	)
Perfect Commerce, LLC(+++)	Internet Software & Services	L + 8.50% (1.00% Floor)		06/30/2020		36,293		35,715			36,655
The Merit Distribution Group, LLC(+)	Distributors	L + 11.25% (0.50% Floor)		04/08/2021		24,625		24,121			24,625
US Med Acquisition, Inc.(+++)	Health Care Equipment & Supplies	L + 9.00% (1.00% Floor)		08/13/2021		30,419		29,961			29,810
Vexos, Inc.(+++)	Electronic Equipment, Instruments & Components	L + 9.50% (1.00% Floor)		10/09/2019		38,297		37,885			36,765
Yasso, Inc.(+++) (3)	Food Products	L + 7.75% (1.00% Floor)		03/23/2022		9,077		8,906			8,896
Total 1st Lien/Senior Secured Debt								369,905			363,755
1st Lien/Last-Out Unitranche – 41.94%
Associations, Inc.(+++) (8)	Real Estate Management & Development	L + 7.00% (1.00% Floor)		12/23/2019		57,838		57,202			57,405
Avenue Stores, LLC(+) (8)	Specialty Retail	L + 8.00% (1.00% Floor)		09/19/2019		30,000		29,620			30,000
Bolttech Mannings, Inc.(+++) (8)	Commercial Services & Supplies	L + 7.75% (1.00% Floor)		12/21/2018		36,346		36,055			16,356
Bolttech Mannings, Inc.(+++) (4) (8)	Commercial Services & Supplies	L + 7.75% (1.00% Floor)		12/21/2018		3,996		3,330			1,132
Mervin Manufacturing, Inc.(+++) (8)	Leisure Equipment & Products	L + 7.50% (1.00% Floor)		10/10/2019		11,165		11,045			10,327
myON, LLC(+) (3) (8)	Internet Software & Services	L + 8.50% (1.00% Floor)		02/17/2022		7,100		6,966			6,958
NTS Communications, Inc.^ (+++) (8)	Diversified Telecommunication Services	L + 9.00% (1.25% Floor) PIK		06/06/2019		55,515		52,171			48,020
Pro-Pet, LLC(+) (8)	Household Products	L + 7.25% (0.75% Floor)		11/21/2019		31,600		31,177			29,546
Smarsh, Inc.(+) (3) (8)	Software	L + 7.88% (1.00% Floor)		03/31/2021		17,800		17,489			17,488
The Service Companies Inc.(+++)	Professional Services	L + 10.25% (1.00% Floor)		03/26/2019		45,723		45,335			45,037
United Road Services, Inc.(+) (8)	Air Freight & Logistics	L + 7.50% (1.00% Floor)		01/15/2018		44,658		44,540			44,212
Total 1st Lien/Last-Out Unitranche								334,930			306,481
2nd Lien/Senior Secured Debt – 43.42%
American Dental Partners, Inc.(+++) (3)	Health Care Providers & Services	L + 8.50% (1.00% Floor)		09/25/2023		8,500		8,294			8,288
ASC Acquisition Holdings, LLC(+++)	Distributors	L + 13.00% (1.00% Floor)		12/15/2022		30,000		29,226			30,000
DiscoverOrg, LLC(+)	Software	L + 9.00% (1.00% Floor)		02/10/2022		39,500		38,850			39,006
DuBois Chemicals, Inc.(+) (3)	Chemicals	L + 8.00% (1.00% Floor)		03/15/2025		20,700		20,250			20,493

The accompanying notes are part of these unaudited consolidated financial statements.

8

Goldman Sachs BDC, Inc.

Consolidated Schedule of Investments as of June 30, 2017 (continued)

(in thousands, except share and per share amounts)

(Unaudited)

Portfolio Company	Industry	Interest	Maturity		Par Amount		Cost		Fair Value
Global Tel*Link Corporation(+++)	Diversified Telecommunication Services	L + 7.75% (1.25% Floor)		11/23/2020	$	28,000	$	27,692	$	27,878
IHS Intermediate Inc.(+++)	Health Care Providers & Services	L + 8.25% (1.00% Floor)		07/20/2022		10,000		9,842		9,525
Market Track, LLC(+) (3)	Internet Catalog & Retail	L + 7.75% (1.00% Floor)		06/05/2025		22,200		21,539		21,534
MedPlast Holdings, Inc.(++)	Health Care Equipment & Supplies	L + 8.75% (1.00% Floor)		06/06/2023		38,500		37,586		37,633
MPI Products LLC(+++)	Auto Components	L + 9.00% (1.00% Floor)		01/30/2020		20,000		19,833		19,850
National Spine and Pain Centers, LLC(+) (3)	Health Care Providers & Services	L + 8.25% (1.00% Floor)		12/02/2024		19,100		18,533		18,527
P2 Upstream Acquisition Co.(+++)	Software	L + 8.00% (1.00% Floor)		04/30/2021		5,000		4,970		4,788
PPC Industries Inc.(+++) (3)	Containers & Packaging	L + 8.00% (1.00% Floor)		05/08/2025		8,330		8,248		8,330
Reddy Ice Corporation(+++)	Food Products	L + 9.50% (1.25% Floor)		11/01/2019		13,500		13,215		12,690
Securus Technologies Holdings, Inc.(+)	Diversified Telecommunication Services	L + 7.75% (1.25% Floor)		04/30/2021		20,000		19,867		20,033
SW Holdings, LLC(+++)	Media	L + 8.75% (1.00% Floor)		12/30/2021		14,265		14,047		14,051
Worldwide Express Operations, LLC.(+++) (3)	Air Freight & Logistics	L + 8.75% (1.00% Floor)		02/03/2025		25,000		24,643		24,625
Total 2nd Lien/Senior Secured Debt								316,635		317,251
Unsecured Debt – 0.45%
CB-HDT Holdings, Inc.^	Aerospace & Defense	12.00% PIK		12/15/2019		3,300		3,300		3,300
Total Unsecured Debt								3,300		3,300
Total Corporate Debt								1,024,770		990,787
Portfolio Company	Industry	Coupon			Shares		Cost		Fair Value
Preferred Stock (1) – 1.54%
CB-HDT Holdings, Inc.^ (9)	Aerospace & Defense					1,108,333	$	10,185	$	11,238
Kawa Solar Holdings Limited^ (6) (7)	Construction & Engineering	8.00% PIK				51,861		778		–
NTS Communications, Inc.^ (9)	Diversified Telecommunication Services					263		187		–
Total Preferred Stock								11,150		11,238
Common Stock (1) – 2.05%
CB-HDT Holdings, Inc.^ (9)	Aerospace & Defense					453,383		2,393		4,597
Continuum Managed Services LLC – Class A(3) (9)	IT Services					733		733		733
Continuum Managed Services LLC – Class B(3) (9)	IT Services					496,698		7		7
Iracore International Holdings, Inc.^ (9)	Energy Equipment & Services					28,898		7,003		6,213
Kawa Solar Holdings Limited^ (6) (9)	Construction & Engineering					1,399,556		–		–
myON, LLC(3) (9)	Internet Software & Services					16,087		600		600
National Spine and Pain Centers, LLC(3) (9)	Health Care Providers & Services					600		600		600
NTS Communications, Inc.^ (9)	Diversified Telecommunication Services					595,215		3		–
Prairie Provident Resources, Inc.^^^ (6) (9)	Oil, Gas & Consumable Fuels					3,579,989		9,237		1,398
Yasso, Inc.(3) (9)	Food Products					850		850		850
Total Common Stock								21,426		14,998
Portfolio Company					LLC Interest		Cost		Fair Value
Investment Funds & Vehicles (1) – 12.98%
Senior Credit Fund, LLC^^ (6)					$	94,342	$	94,342	$	94,823
Total Investment Funds & Vehicles								94,342		94,823
		Yield			Shares		Cost		Fair Value
Investments in Affiliated Money Market Fund (1) – 0.29% #
Goldman Sachs Financial Square Government Fund		0.86%(10)				2,122,722	$	2,123	$	2,123
Total Investments in Affiliated Money Market Fund								2,123		2,123
TOTAL INVESTMENTS – 152.45%							$	1,153,811	$	1,113,969
LIABILITIES IN EXCESS OF OTHER ASSETS – (52.45%)									$	(383,271	)
NET ASSETS – 100.00%									$	730,698

The accompanying notes are part of these unaudited consolidated financial statements.

9

Goldman Sachs BDC, Inc.

Consolidated Schedule of Investments as of June 30, 2017 (continued)

(in thousands, except share and per share amounts)

(Unaudited)

^#  Percentages are based on net assets.

^{^}  The investment is deemed to be an “affiliated person” (as defined under the Investment Company Act of 1940) of the Company because the Company owns, either directly or indirectly, 5% or more of the portfolio company’s outstanding voting securities. See Note 3 “Significant Agreements and Related Party Transactions”.

^{^^}  The investment is deemed to be an “affiliated person” of the Company that is “controlled” by the Company (as such terms are defined in the Investment Company Act of 1940) because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. See Note 3 “Significant Agreements and Related Party Transactions”.

^^^ The investment is deemed to be an “affiliated person” of the Company because it falls under the definition of “affiliated person” in the Investment Company Act of 1940 with respect to the Company.

⁽⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2017 was 1.22%.

⁽⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 2 month LIBOR plus a base rate. The 2 month LIBOR as of June 30, 2017 was 1.25%.

⁽⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2017 was 1.30%.

⁽¹⁾  Assets are pledged as collateral for the Revolving Credit Facility. See Note 6 “Debt”.

⁽²⁾  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration. As of June 30, 2017, the aggregate fair value of these securities is $37,200 or 5.09% of the Company’s net assets.

⁽³⁾  Represent co-investments made with certain funds managed by the Investment Adviser in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission. See Note 3 “Significant Agreements and Related Party Transactions”.

⁽⁴⁾  Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated. See Note 7 “Commitments and Contingencies”.

⁽⁵⁾  The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

⁽⁶⁾  The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of June 30, 2017 the aggregate fair value of these securities is $108,822 or 9.32% of the Company’s total assets.

⁽⁷⁾  The investment is on non-accrual status as of June 30, 2017.

⁽⁸⁾  In addition to the interest earned based on the stated rate of this loan, the Company may be entitled to receive additional interest as a result of its arrangement with other lenders in a syndication.

⁽⁹⁾  Non-income producing security.

⁽¹⁰⁾  The rate shown is the annualized seven-day yield as of June 30, 2017.

F – Federal Funds Rate (which as of June 30, 2017 was 1.06%)

L – LIBOR

PIK – Payment-In-Kind

The accompanying notes are part of these unaudited consolidated financial statements.

10

Goldman Sachs BDC, Inc.

Consolidated Schedule of Investments as of December 31, 2016

(in thousands, except share and per share amounts)

Portfolio Company	Industry	Interest	Maturity		Par Amount		Cost			Fair Value
Investments at Fair Value – 175.50%#
Corporate Debt (1) – 160.95%
1st Lien/Senior Secured Debt – 63.30%
Artesyn Embedded Technologies, Inc.(2)	Electronic Equipment, Instruments & Components	9.75%		10/15/2020	$	20,000	$	20,000		$	18,325
Data Driven Delivery Systems, LLC(++)	Health Care Technology	L + 7.00% (1.00% Floor)		05/30/2019		69,619		67,609			69,619
Dispensing Dynamics International(2)	Building Products	12.50%		01/01/2018		24,000		24,359			23,520
Elemica, Inc.(+)	Software	L + 8.00% (1.00% Floor)		07/07/2021		42,288		41,308			41,336
Elemica, Inc.(3) (4)	Software	L + 8.00% (1.00% Floor)		07/07/2021		6,000		(139	)		(135	)
Heligear Acquisition Co.(2)	Aerospace & Defense	10.25%		10/15/2019		17,500		17,289			17,894
Infinity Sales Group(+)	Media	L + 10.50% (1.00% Floor)		11/21/2018		30,803		30,518			28,724
Iracore International Holdings, Inc.(2) (5) (6)	Energy Equipment & Services	9.50%		06/01/2018		24,250		21,321			6,911
Kawa Solar Holdings Limited^ (7)	Construction & Engineering	F + 8.20% and 3.50% PIK		07/02/2018		12,767		12,727			12,767
Kawa Solar Holdings Limited^ (++) (7)	Construction & Engineering	L + 8.20%		07/02/2018		2,400		2,392			2,400
Legacy Buyer Corp.(++)	Health Care Providers & Services	L + 8.00% (1.00% Floor)		10/24/2019		27,470		27,120			26,508
Legacy Buyer Corp.(++) (3)	Health Care Providers & Services	L + 8.00% (1.00% Floor)		10/24/2019		2,500		1,668			1,612
Madison-Kipp Corporation(+)	Machinery	L + 9.00% (1.00% Floor)		05/26/2020		36,696		36,153			36,420
Perfect Commerce, LLC(++)	Internet Software & Services	L + 8.50% (1.00% Floor)		06/30/2020		37,418		36,740			37,605
The Merit Distribution Group, LLC(++)	Distributors	L + 11.25% (0.50% Floor)		04/08/2021		30,000		29,329			29,775
US Med Acquisition, Inc.(+)	Health Care Equipment & Supplies	L + 9.00% (1.00% Floor)		08/13/2021		30,574		30,069			30,574
Vexos, Inc.(++)	Electronic Equipment, Instruments & Components	L + 9.50% (1.00% Floor)		10/09/2019		38,922		38,433			37,171
Total 1st Lien/Senior Secured Debt								436,896			421,026
1st Lien/Last-Out Unitranche (8) – 46.64%
Associations, Inc.(++)	Real Estate Management & Development	L + 7.00% (1.00% Floor)		12/23/2019		58,136		57,324			57,700
Avenue Stores, LLC(+)	Specialty Retail	L + 8.00% (1.00% Floor)		09/19/2019		30,000		29,546			30,000
Bolttech Mannings, Inc.(++)	Commercial Services & Supplies	L + 7.75% (1.00% Floor)		12/21/2018		36,346		35,967			20,081
Integrated Practice Solutions, Inc.(++)	Software	L + 9.10% (1.00% Floor)		08/03/2020		25,781		25,240			25,781
Mervin Manufacturing, Inc.(++)	Leisure Equipment & Products	L + 7.50% (1.00% Floor)		10/10/2019		11,165		11,024			9,936
NTS Communications, Inc.^ (++)	Diversified Telecommunication Services	L + 9.00% (1.25% Floor) PIK		06/06/2019		52,776		48,725			47,498
Pro-Pet, LLC(+)	Household Products	L + 7.25% (0.75% Floor)		11/21/2019		31,600		31,104			29,388
The Service Companies Inc.(+)	Professional Services	L + 10.25% (1.00% Floor)		03/26/2019		46,580		46,087			45,881
United Road Services, Inc.(+)	Air Freight & Logistics	L + 7.50% (1.00% Floor)		12/14/2017		44,658		44,438			43,989
Total 1st Lien/Last-Out Unitranche								329,455			310,254
2nd Lien/Senior Secured Debt – 50.54%
ASC Acquisition Holdings, LLC(++)	Distributors	L + 13.00% (1.00% Floor)		12/15/2022		30,000		29,181			30,000
DiscoverOrg, LLC(++)	Software	L + 9.00% (1.00% Floor)		02/10/2022		39,500		38,798			38,809
DiversiTech Corporation(++)	Building Products	L + 8.00% (1.00% Floor)		11/18/2022		51,350		50,331			50,708
Global Tel*Link Corporation(++)	Diversified Telecommunication Services	L + 7.75% (1.25% Floor)		11/23/2020		28,000		27,656			27,125
Highwinds Capital, Inc.(+)	Internet Software & Services	L + 12.25% (1.25% Floor)		01/29/2019		59,050		58,591			59,641
Hutchinson Technology, Inc.	Computers & Peripherals	10.88%		01/15/2017		12,200		12,189			12,200
IHS Intermediate Inc.(++)	Health Care Providers & Services	L + 8.25% (1.00% Floor)		07/20/2022		10,000		9,830			9,500
MedPlast Holdings, Inc.	Health Care Equipment & Supplies	P + 7.75% (2.00% Floor)		06/06/2023		25,000		24,380			24,375
MPI Products LLC(++)	Auto Components	L + 9.00% (1.00% Floor)		01/30/2020		20,000		19,808			19,850
P2 Upstream Acquisition Co.(+++)	Software	L + 8.00% (1.00% Floor)		04/30/2021		10,000		9,933			9,075

The accompanying notes are part of these unaudited consolidated financial statements.

11

Goldman Sachs BDC, Inc.

Consolidated Schedule of Investments as of December 31, 2016 (continued)

(in thousands, except share and per share amounts)

Portfolio Company	Industry	Interest	Maturity		Par Amount		Cost		Fair Value
Reddy Ice Corporation(++)	Food Products	L + 9.50% (1.25% Floor)		11/01/2019	$	13,500	$	13,168	$	11,610
Securus Technologies Holdings, Inc.(++)	Diversified Telecommunication Services	L + 7.75% (1.25% Floor)		04/30/2021		20,000		19,853		19,350
SW Holdings, LLC(++)	Media	L + 8.75% (1.00% Floor)		12/30/2021		14,265		14,029		14,015
Washington Inventory Service(5) (6)	Professional Services	P + 8.00%		06/20/2019		24,800		24,949		9,920
Total 2nd Lien/Senior Secured Debt								352,696		336,178
Unsecured Debt – 0.47%
CB-HDT Holdings, Inc.^	Aerospace & Defense	12.00% PIK		12/15/2019		3,115		3,115		3,115
Total Unsecured Debt								3,115		3,115
Total Corporate Debt								1,122,162		1,070,573
Portfolio Company	Industry	Coupon			Shares		Cost		Fair Value
Preferred Stock(1) – 1.78%
CB-HDT Holdings, Inc.^ (5)	Aerospace & Defense					1,108,333	$	10,186	$	11,083
Kawa Solar Holdings Limited^ (7)	Construction & Engineering	8.00% PIK				50,000		750		750
NTS Communications, Inc.^ (5)	Diversified Telecommunication Services					263		187		–
Total Preferred Stock								11,123		11,833
Common Stock(1) – 0.98%
CB-HDT Holdings, Inc.^ (5)	Aerospace & Defense					453,383		2,393		4,312
Kawa Solar Holdings Limited^ (5) (7)	Construction & Engineering					1,399,556		–		–
NTS Communications, Inc.^ (5)	Diversified Telecommunication Services					595,215		3		–
Prairie Provident Resources, Inc.^ (5) (7)	Oil, Gas & Consumable Fuels					3,579,989		9,237		2,178
Total Common Stock								11,633		6,490
Portfolio Company					LLC Interest		Cost		Fair Value
Investment Funds & Vehicles(1) – 11.79%
Senior Credit Fund, LLC^^ (7)					$	77,592	$	77,592	$	78,394
Total Investment Funds & Vehicles								77,592		78,394
		Yield			Shares		Cost		Fair Value
Investments in Affiliated Money Market Fund(1) – 0.00%#
Goldman Sachs Financial Square Government Fund		0.45%(9)				1,179	$	1	$	1
Total Investments in Affiliated Money Market Fund								1		1
TOTAL INVESTMENTS – 175.50%							$	1,222,511	$	1,167,291
LIABILITIES IN EXCESS OF OTHER ASSETS – (75.50%)									$	(502,154	)
NET ASSETS – 100.00%									$	665,137

^#  Percentages are based on net assets.

^{^}  As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, 5% or more of the portfolio company’s outstanding voting securities. See Note 3 “Significant Agreements and Related Party Transactions”.

^{^^}  As defined in the Investment Company Act of 1940, the investment is deemed to be a “controlled affiliated person” of the Company because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. See Note 3 “Significant Agreements and Related Party Transactions”.

⁽⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of December 31, 2016 was 0.77%.

⁽⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of December 31, 2016 was 1.00%.

⁽⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 6 month LIBOR plus a base rate. The 6 month LIBOR as of December 31, 2016 was 1.32%.

⁽¹⁾  Assets are pledged as collateral for the Revolving Credit Facility. See Note 6 “Debt”.

The accompanying notes are part of these unaudited consolidated financial statements.

12

Goldman Sachs BDC, Inc.

Consolidated Schedule of Investments as of December 31, 2016 (continued)

(in thousands, except share and per share amounts)

⁽²⁾  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration. As of December 31, 2016, the aggregate fair value of these securities is $66,650 or 10.02% of the Company’s net assets.

⁽³⁾  Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated. See Note 7 “Commitments and Contingencies”.

⁽⁴⁾  The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

⁽⁵⁾  Non-income producing security.

⁽⁶⁾  The investment is on non-accrual status as of December 31, 2016. See Note 2 “Significant Accounting Policies”.

⁽⁷⁾  The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets.

⁽⁸⁾  In addition to the interest earned based on the stated rate of this loan, the Company may be entitled to receive additional interest as a result of its arrangement with other lenders in a syndication.

⁽⁹⁾  The rate shown is the annualized seven-day yield as of December 31, 2016.

F – Federal Funds Rate (which as of December 31, 2016 was 0.55%)

L – LIBOR

P – U.S. Prime Rate (which as of December 31, 2016 was 3.75%)

PIK – Payment-In-Kind

The accompanying notes are part of these unaudited consolidated financial statements.

13

Goldman Sachs BDC, Inc.

Notes to the Consolidated Financial Statements

(in thousands, except share and per share amounts)

(Unaudited)

1. ORGANIZATION

Goldman Sachs BDC, Inc. (the “Company,” which term refers to either Goldman Sachs BDC, Inc. or Goldman Sachs BDC, Inc. together with its consolidated subsidiaries, as the context may require) was initially established as Goldman Sachs Liberty Harbor Capital, LLC, a single member Delaware limited liability company (“SMLLC”), on September 26, 2012 and commenced operations on November 15, 2012 with The Goldman Sachs Group, Inc. (“Group Inc.”) as its sole member. On March 29, 2013, the Company elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Effective April 1, 2013, the Company converted from a SMLLC to a Delaware corporation. In addition, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2013.

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Goldman Sachs Asset Management, L.P. (“GSAM”), a Delaware limited partnership and an affiliate of Goldman Sachs & Co. LLC (including its predecessors, “GS & Co.”), is the investment adviser (the “Investment Adviser”) of the Company. The term “Goldman Sachs” refers to Group Inc., together with GS & Co., GSAM and its other subsidiaries.

On March 23, 2015, the Company completed its initial public offering (“IPO”) and the Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “GSBD”.

The Company has formed wholly owned subsidiaries, which are structured as Delaware limited liability companies, to hold certain equity or equity-like investments in portfolio companies.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s functional currency is U.S. dollars and these consolidated financial statements have been prepared in that currency. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation S-X. This requires the Company to make certain estimates and assumptions that may affect the amounts reported in the consolidated financial statements and accompanying notes. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the results for the periods presented. Actual results may differ from the estimates and assumptions included in the consolidated financial statements.

Certain financial information that is included in annual consolidated financial statements, including certain financial statement disclosures, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2017. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full fiscal year, any other interim period or any future year or period.

As an investment company, the Company applies the accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies (“ASC 946”) issued by the Financial Accounting Standards Board (“FASB”).

14

Basis of Consolidation

As provided under ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the financial position and results of operations of its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

The Company does not consolidate its equity interest in Senior Credit Fund, LLC (the “Senior Credit Fund”). For further description of the Company’s investment in the Senior Credit Fund, see Note 4 “Investments”.

Revenue Recognition

The Company records its investment transactions on a trade date basis. Realized gains and losses are based on the specific identification method.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums to par value on investments purchased are accreted and amortized, respectively, into interest income over the 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 or straight-line method, as applicable. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income. For the three and six months ended June 30, 2017, the Company earned $481 and $1,812, respectively, in prepayment premiums and $3,381 and $3,668, respectively, in accelerated accretion of upfront loan origination fees and unamortized discounts. For the three and six months ended June 30, 2016, the Company earned $10 and $270, respectively, in prepayment premiums and $74 and $560, respectively, in accelerated accretion of upfront loan origination fees and unamortized discounts.

Fees received from portfolio companies (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) are paid to the Company, unless, to the extent required by applicable law or exemptive relief, if any, therefrom, the Company only receives its allocable portion of such fees when invested in the same portfolio company as another account managed by Goldman Sachs.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Interest and dividend income are presented net of withholding tax, if any.

Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the principal amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon the investment being called by the issuer. PIK is recorded as interest or dividend income, as applicable. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, respectively. For the three and six months ended June 30, 2017, the Company earned $1,730 and $3,402 in PIK, respectively. For the three and six months ended June 30, 2016, the Company earned $105 and $209 in PIK, respectively.

Certain structuring fees, amendment fees and syndication fees are recorded as other income when earned. Administrative agent fees received by the Company are recorded as other income when the services are rendered.

Non-Accrual Investments

Loans or debt securities are placed on non-accrual status when it is probable that principal or interest will not be collected according to the contractual terms. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest are paid and, in management’s judgment, principal and interest payments are likely to remain current. The Company may make exceptions to this treatment if a loan or debt security has sufficient collateral value and is in the process of collection. As of June 30, 2017, the Company had two investments on non-accrual status, which represented 0.7% and 0.2% of the total investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $2,123) at amortized cost and at fair value, respectively. As of December 31, 2016, the Company had two investments on non-accrual status, which represented 3.8% and 1.4% of the total investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $1) at amortized cost and at fair value, respectively.

Investments

The Company carries its investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), issued by the FASB, which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations or alternative price sources. In the absence of quoted market prices, broker or dealer quotations or alternative price sources, investments are measured at fair value as determined by the board of directors (the “Board of Directors”) within the meaning of the Investment Company Act.

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Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. See Note 5 “Fair Value Measurement.”

The Company generally invests in illiquid securities, including debt and equity investments, of middle-market companies. The Board of Directors has delegated to the Investment Adviser day-to-day responsibility for implementing and maintaining internal controls and procedures related to the valuation of the Company’s portfolio investments. Under valuation procedures adopted by the Board of Directors, market quotations are generally used to assess the value of the investments for which market quotations are readily available. The Investment Adviser obtains these market quotations from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available; otherwise from a principal market maker or a primary market dealer. To assess the continuing appropriateness of pricing sources and methodologies, the Investment Adviser regularly performs price verification procedures and issues challenges as necessary to independent pricing services or brokers, and any differences are reviewed in accordance with the valuation procedures. If the Board of Directors or Investment Adviser has a bona fide reason to believe any such market quotation does not reflect the fair value of an investment, it may independently value such investment in accordance with valuation procedures for investments for which market quotations are not readily available.

With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, the valuation procedures adopted by the Board of Directors contemplate a multi-step valuation process each quarter, as described below:

(1) The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

(2) The Board of Directors also engages independent valuation firms (the “Independent Valuation Advisors”) to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Advisors independently value such investments using quantitative and qualitative information provided by the investment professionals of the Investment Adviser as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Advisors also provide analyses to support their valuation methodology and calculations. The Independent Valuation Advisors provide an opinion on a final range of values on such investments to the Board of Directors or the Audit Committee. The Independent Valuation Advisors define fair value in accordance with ASC 820 and utilize valuation approaches including the market approach, the income approach or both. A portion of the portfolio is reviewed on a quarterly basis, and all investments in the portfolio for which market quotations are not readily available, or are readily available, but deemed not reflective of the fair value of an investment, are reviewed at least annually by an Independent Valuation Advisor;

(3) The Independent Valuation Advisors’ preliminary valuations are reviewed by the Investment Adviser and the Valuation Oversight Group (“VOG”), a team that is part of the Controllers Department within the Finance Division of Goldman Sachs. The Independent Valuation Advisors’ valuation ranges are compared to the Investment Adviser’s valuations to ensure the Investment Adviser’s valuations are reasonable. VOG presents the valuations to the Private Investment Sub-Committee of the Investment Management Division Valuation Committee, which is comprised of representatives from GSAM who are independent of the investment decision making process;

(4) The Investment Management Division Valuation Committee ratifies fair valuations and makes recommendations to the Audit Committee of the Board of Directors;

(5) The Audit Committee of the Board of Directors reviews valuation information provided by the Investment Management Division Valuation Committee, the Investment Adviser and the Independent Valuation Advisors. The Audit Committee then assesses such valuation recommendations; and

(6) The Board of Directors discusses the valuations and, within the meaning of the Investment Company Act, determines the fair value of the investments in good faith, based on the inputs of the Investment Adviser, the Independent Valuation Advisors and the Audit Committee.

Money Market Funds

Investments in money market funds are valued at net asset value (“NAV”) per share. See Note 3 “Significant Agreements and Related Party Transactions.”

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Cash

Cash consists of deposits held at a custodian bank. As of June 30, 2017 and December 31, 2016, the Company held $37,493 and $4,565, respectively, in cash.

Foreign Currency Translation

Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates effective on the date of valuation; and (ii) purchases and sales of investments and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates prevailing on the transaction dates.

The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included within the net realized and unrealized gains or losses on investment transactions.

Income Taxes

The Company recognizes tax positions in its consolidated financial statements only when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized upon settlement. The Company reports any interest expense related to income tax matters in income tax expense, and any income tax penalties under expenses in the Consolidated Statements of Operations.

The Company’s tax positions have been reviewed based on applicable statutes of limitation for tax assessments, which may vary by jurisdiction, and based on such review, the Company has concluded that no additional provision for income tax is required in the Company’s consolidated financial statements. The Company is subject to potential examination by certain taxing authorities in various jurisdictions. The Company’s tax positions are subject to ongoing interpretation of laws and regulations by taxing authorities.

The Company has elected to be treated as a RIC commencing with its taxable year ended December 31, 2013. So long as the Company maintains its status as a RIC, it will generally not be subject to corporate-level U.S. federal income tax on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. As a result, any U.S. federal income tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.

To maintain its status as a RIC, the Company must meet specified source-of-income and asset diversification requirements and timely distribute to its stockholders for each taxable year at least 90% of its investment company taxable income (generally, its net ordinary income plus the excess of its realized net short-term capital gains over realized net long-term capital losses, determined without regard to the dividends paid deduction). In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders. The Company will accrue excise tax on estimated undistributed taxable income as required. For the three and six months ended June 30, 2017, the Company accrued excise taxes of $368 and $733, respectively. As of June 30, 2017, $696 of accrued excise taxes remained payable. For the three and six months ended June 30, 2016, the Company accrued excise taxes of $221 and $434, respectively.

Distributions

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with GAAP. The Company may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the stockholder’s tax basis in its shares. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent they are charged or credited to paid-in capital in excess of par, accumulated undistributed net investment income or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Company’s annual RIC tax return. Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a distribution is determined by the Board of Directors each quarter and is generally based upon the earnings estimated by the Investment Adviser. The Company may pay distributions to its stockholders in a year in excess of its net ordinary income and capital gains for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and, depending upon the level of the Company’s taxable income earned in a year, the Company may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax. The specific tax characteristics of the Company’s distributions will be reported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.

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The Company has adopted a dividend reinvestment plan that provides for reinvestment of all cash distributions declared by the Board of Directors unless a stockholder elects to “opt out” of the plan. As a result, if the Board of Directors declares a cash distribution, then the stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash distribution. Stockholders who receive distributions in the form of shares of common stock will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions and, for this purpose, stockholders receiving distributions in the form of stock will generally be treated as receiving distributions equal to the fair market value of the stock received through the plan; however, since their cash distributions will be reinvested, those stockholders will not receive cash with which to pay any applicable taxes. Due to regulatory considerations, Group Inc. has opted out of the dividend reinvestment plan, and GS & Co. has opted out of the dividend reinvestment plan in respect of shares of the Company’s common stock acquired through its 10b5-1 plan. See Note 3 “Significant Agreements and Related Party Transactions”.

Deferred Financing and Debt Issuance Costs

Deferred financing and debt issuance costs consist of fees and expenses paid in connection with the closing of and amendments to the Company’s senior secured revolving credit agreement (as amended, the “Revolving Credit Facility”) with SunTrust Bank, as administrative agent, and Bank of America, N.A., as syndication agent, and the offering of the Company’s 4.50% Convertible Notes due 2022 (the “Convertible Notes”). These costs are amortized using the straight-line method over the respective term of the Revolving Credit Facility and Convertible Notes. Deferred financing costs related to the Revolving Credit Facility are presented separately as an asset on the Company’s Consolidated Statements of Assets and Liabilities. Deferred debt issuance costs related to the Convertible Notes are presented net against the outstanding debt balance on the Consolidated Statements of Assets and Liabilities.

Deferred Offering Costs

The Company records expenses related to registration statement filings and applicable offering costs as deferred offering costs. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of capital upon each such offering.

3. SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS

Investment Management Agreement

The Company has entered into an investment management agreement (as amended and restated as of January 1, 2015, the “Investment Management Agreement”) with the Investment Adviser, pursuant to which the Investment Adviser manages the Company’s investment program and related activities.

Management Fee

The Company pays the Investment Adviser a management fee (the “Management Fee”), accrued and payable quarterly in arrears. The Management Fee is calculated at an annual rate of 1.50% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash or cash equivalents (such as investments in money market funds), but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters (and, in the case of our first quarter, our gross assets as of such quarter-end). The Management Fee for any partial quarter will be appropriately prorated.

For the three and six months ended June 30, 2017, Management Fees amounted to $4,351 and $8,812, respectively. As of June 30, 2017, $4,351 remained payable. For the three and six months ended June 30, 2016, Management Fees amounted to $4,188 and $8,314, respectively.

Incentive Fee

The incentive fee (the “Incentive Fee”) consists of two components that are determined independent of each other, with the result that one component may be payable even if the other is not. Effective as of January 1, 2015, the Incentive Fee is calculated as follows:

A portion of the Incentive Fee is based on income and a portion is based on capital gains, each as described below. The Investment Adviser is entitled to receive the Incentive Fee based on income if Ordinary Income (as defined below) exceeds a quarterly “hurdle rate” of 1.75%. For this purpose, the hurdle is computed by reference to the Company’s net asset value (“NAV”) and does not take into account changes in the market price of the Company’s common stock.

Beginning with the calendar quarter that commenced on January 1, 2015, the Incentive Fee based on income is determined and paid quarterly in arrears at the end of each calendar quarter by reference to the Company’s aggregate net investment income, as adjusted as described below, from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2015) (such period the “Trailing Twelve Quarters”). The Incentive Fee based on capital gains is determined and paid annually in arrears at the end of each calendar year by reference to an “Annual Period,” which means the period beginning on January 1 of each calendar year and ending on December 31 of such calendar year or, in the case of the first and last year, the appropriate portion thereof.

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The hurdle amount for the Incentive Fee based on income is determined on a quarterly basis and is equal to 1.75% multiplied by the Company’s NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The hurdle amount is calculated after making appropriate adjustments for subscriptions (which includes all of the Company’s issuances of shares of its common stock, including issuances pursuant to its dividend reinvestment plan) and distributions that occurred during the relevant Trailing Twelve Quarters. The Incentive Fee for any partial period will be appropriately prorated.

i. Quarterly Incentive Fee Based on Income

For the portion of the Incentive Fee based on income, the Company pays the Investment Adviser a quarterly Incentive Fee based on the amount by which (A) aggregate net investment income (“Ordinary Income”) in respect of the relevant Trailing Twelve Quarters exceeds (B) the hurdle amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount”. Ordinary Income is net of all fees and expenses, including the Management Fee but excluding any Incentive Fee.

The Incentive Fee based on income for each quarter is determined as follows:

• No Incentive Fee based on income is payable to the Investment Adviser for any calendar quarter for which there is no Excess Income Amount;

• 100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, referred to as the “Catch-up Amount,” determined as the sum of 2.1875% multiplied by the Company’s NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters is included in the calculation of the Incentive Fee based on income; and

• 20% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the Incentive Fee based on income.

The amount of the Incentive Fee based on income that is paid to the Investment Adviser for a particular quarter equals the excess of the Incentive Fee so calculated minus the aggregate Incentive Fees based on income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters but not in excess of the Incentive Fee Cap (as described below).

The Incentive Fee based on income that is paid to the Investment Adviser for a particular quarter is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap for any quarter is an amount equal to (a) 20% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters minus (b) the aggregate Incentive Fees based on income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters.

“Cumulative Net Return” means (x) the Ordinary Income in respect of the relevant Trailing Twelve Quarters minus (y) any Net Capital Loss, if any, in respect of the relevant Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, the Company pays no Incentive Fee based on income to the Investment Adviser for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter is a positive value but is less than the Incentive Fee based on income that is payable to the Investment Adviser for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company pays an Incentive Fee based on income to the Investment Adviser equal to the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the Incentive Fee based on income that is payable to the Investment Adviser for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company pays an Incentive Fee based on income to the Investment Adviser equal to the Incentive Fee calculated as described above for such quarter without regard to the Incentive Fee Cap.

“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.

ii. Annual Incentive Fee Based on Capital Gains.

The portion of the Incentive Fee based on capital gains is calculated on an annual basis. For each Annual Period, the Company pays the Investment Adviser an amount equal to (A) 20% of the difference, if positive, of the sum of the Company’s aggregate realized capital gains, if any, computed net of the Company’s aggregate realized capital losses, if any, and the Company’s aggregate unrealized capital depreciation, in each case from April 1, 2013 until the end of such Annual Period minus (B) the cumulative amount of Incentive Fees based on capital gains previously paid to the Investment Adviser from April 1, 2013. For the avoidance of doubt, unrealized capital appreciation is excluded from the calculation in clause (A) above.

The Company accrues, but does not pay, a portion of the Incentive Fee based on capital gains with respect to net unrealized appreciation. Under GAAP, the Company is required to accrue an Incentive Fee based on capital gains that includes net realized capital gains and losses and net unrealized capital appreciation and depreciation on investments held at the end of each period. In calculating the accrual for the Incentive Fee based on capital gains, the Company considers the cumulative aggregate unrealized capital appreciation in the calculation, since an Incentive Fee based on capital gains would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee payable under the Investment Management Agreement. This accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital appreciation or depreciation. If such amount is positive at the end of a period, then the Company records a capital gains incentive fee equal to 20% of such amount, minus the aggregate amount of actual Incentive Fees based on capital gains paid in all prior periods. If such amount is negative, then there is no accrual for such period. There can be no assurance that such unrealized capital appreciation will be realized in the future.

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For the three and six months ended June 30, 2017, the Company incurred Incentive Fees based on income of $1,238 and $4,971, respectively. As of June 30, 2017, $1,238 remained payable. For the three and six months ended June 30, 2016, the Company incurred Incentive Fees based on income of $2,085 and $3,489, respectively. For the three and six months ended June 30, 2017 and 2016, the Company did not accrue any Incentive Fees based on capital gains.

Administration and Custodian Fees

The Company has entered into an administration agreement with State Street Bank and Trust Company (the “Administrator”) under which the Administrator provides various accounting and administrative services to the Company. The Company pays the Administrator fees for its services as it determines to be commercially reasonable in its sole discretion. The Company also reimburses the Administrator for all reasonable expenses. To the extent that the Administrator outsources any of its functions, the Administrator pays any compensation associated with such functions. The Administrator also serves as the Company’s custodian (the “Custodian”).

For the three and six months ended June 30, 2017, the Company incurred expenses for services provided by the Administrator and the Custodian of $191 and $381, respectively. As of June 30, 2017, $256 remained payable. For the three and six months ended June 30, 2016, the Company incurred expenses for services provided by the Administrator and the Custodian of $211 and $421, respectively.

Transfer Agent Fees

Effective May 2, 2016, the Company entered into a transfer agency and services agreement pursuant to which Computershare Trust Company, N.A. serves as the Company’s transfer agent (the “Transfer Agent”), dividend agent and registrar. From the IPO to May 1, 2016, State Street Bank and Trust Company served as the Transfer Agent and dividend agent. Prior to the IPO, GS & Co. was the Transfer Agent. For the three and six months ended June 30, 2017, the Company incurred expenses for services provided by the Transfer Agent of $4 and $8, respectively. As of June 30, 2017, $2 remained payable. For the three and six months ended June 30, 2016, the Company incurred expenses for services provided by the Transfer Agent of $4 and $20, respectively.

10b5-1 Plan

GS & Co. adopted a 10b5-1 plan (the “GS 10b5-1 Plan”) in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which provided for the purchase by GS & Co. in the open market up to the lesser of (i) $25,000 in the aggregate of the Company’s common stock and (ii) such amount that would not bring its collective ownership (with Group Inc.) of the Company’s common stock over 19.9%. The GS 10b5-1 Plan expired on March 18, 2016. The GS 10b5-1 Plan required GS & Co. to purchase shares of the Company’s common stock when the market price per share was below the Company’s most recently reported NAV per share (including any updates, corrections or adjustments publicly announced by the Company to any previously announced NAV per share). The purchase of shares by GS & Co. pursuant to the GS 10b5-1 Plan was intended to satisfy the conditions of Rules 10b5-1 and 10b-18 under the Exchange Act, and was otherwise subject to applicable law, including Regulation M. Under the GS 10b5-1 Plan, GS & Co. increased the volume of purchases made anytime the market price per share of the Company’s common stock declined below the most recently reported NAV per share, subject to volume restrictions. Purchases of the Company’s common stock by GS & Co. under the GS 10b5-1 Plan may have resulted in the price of the Company’s common stock being higher than the price that otherwise might have existed in the open market. For the period January 1, 2016 through March 18, 2016, GS & Co. purchased 432,638 shares of the Company’s common stock pursuant to the GS 10b5-1 Plan.

Common Stock Repurchase Plan

In February 2015, the Board of Directors approved a common stock repurchase plan (the “Company Repurchase Plan”), which authorized the Company’s purchase of up to $35,000 of its common stock in the open market during open trading periods. No repurchases were made pursuant to the Company Repurchase Plan which expired on March 18, 2016.

In February 2016, the Board of Directors authorized the Company to repurchase up to $25,000 of the Company’s common stock if the stock trades below the most recently announced NAV per share (including any updates, corrections or adjustments publicly announced by the Company to any previously announced NAV per share), from March 18, 2016 to March 18, 2017, subject to certain limitations. In February 2017, the Company’s Board of Directors renewed its authorization of the stock repurchase plan to extend the expiration to March 18, 2018.

In connection with this authorization, the Company entered into a 10b5-1 plan (the “Company 10b5-1 Plan”). The Company 10b5-1 Plan provides that purchases will be conducted on the open market on a programmatic basis in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances. No purchases will be effected pursuant to the Company 10b5-1 Plan if such purchase would (i) cause the aggregate ownership of the Company’s outstanding common stock by Group Inc. and GS & Co. to equal or exceed 25.0% (due to the reduction in outstanding shares of stock as a result of such purchase) or (ii) cause the Company’s debt/equity ratio to exceed 0.75. The Company 10b5-1 Plan initially took effect on March 18, 2016 (with any purchases to commence after the opening of NYSE trading on March 21, 2016), was subsequently renewed and is scheduled to expire on March 18, 2018. Further, no purchases will be effected during the applicable restricted period under Regulation M as a result of an offering of securities by the Company or for a period of 60 days after the expiration of any overallotment option included in any common equity offering.

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The Company’s repurchase of its common stock under the Company 10b5-1 Plan or otherwise may result in the price of the Company’s common stock being higher than the price that otherwise might exist in the open market. For the three and six months ended June 30, 2017, the Company did not repurchase any of its common stock pursuant to the Company 10b5-1 Plan or otherwise.

Co-investment Activity

In certain circumstances, negotiated co-investments by the Company and other funds managed by the Investment Adviser may be made only pursuant to an order from the SEC permitting the Company to do so. On January 4, 2017, the SEC granted GSAM, Goldman Sachs Private Middle Market Credit LLC (“GS PMMC”), Goldman Sachs Middle Market Lending Corp. (“GS MMLC”) and the Company exemptive relief (“Exemptive Relief”) that permits the Company to co-invest with GS PMMC, GS MMLC and certain other funds that may be managed by GSAM, including the GSAM Credit Alternatives Team, in the future, subject to certain terms and conditions in the Exemptive Relief. The GSAM Credit Alternatives Team is comprised of investment professionals dedicated to the Company’s investment strategy and other funds that share a similar investment strategy with the Company, who are responsible for identifying investment opportunities, conducting research and due diligence on prospective investments, negotiating and structuring the Company’s investments and monitoring and servicing the Company’s investments, together with investment professionals who are primarily focused on investment strategies in syndicated, liquid credit. Under the terms of the Exemptive Relief, a “required majority” (as defined in Section 57(o) of the Investment Company Act) of the Company’s independent directors must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to the Company and the Company’s stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the then-current investment objectives and strategies of the Company. As a result of the Exemptive Relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolios of GS PMMC, GS MMLC and/or other funds established by the GSAM Credit Alternatives Team that could avail themselves of the Exemptive Relief.

Affiliates

At June 30, 2017 and December 31, 2016, Group Inc. owned 16.17% and 17.85%, respectively, of the outstanding shares of the Company’s common stock.

The Company’s investments in affiliates for the six months ended June 30, 2017, were as follows:

	Fair Value as of December 31, 2016		Gross Additions(3)		Gross Reductions(4)			Change in Unrealized Gains (Losses)			Fair Value as of June 30, 2017		Dividend and Interest Income		Other Income
Controlled Affiliates
Senior Credit Fund, LLC(1)	$	78,394	$	16,750	$	–		$	(321	)	$	94,823	$	4,900	$	746
Total Controlled Affiliates	$	78,394	$	16,750	$	–		$	(321	)	$	94,823	$	4,900	$	746
Non-Controlled Affiliates
Goldman Sachs Financial Square Government Fund(2)	$	1	$	160,438	$	(158,316	)	$	–		$	2,123	$	13	$	–
CB-HDT Holdings, Inc.		18,510		184		–			441			19,135		184		–
Iracore International Holdings, Inc.		–		10,392		–			(790	)		9,602		75		–
Kawa Solar Holdings Limited		15,917		2,147		–			(5,463	)		12,601		817		–
Prairie Provident Resources, Inc.		2,178		–		–			(780	)		1,398		–		–
NTS Communications, Inc.		47,498		3,446		–			(2,924	)		48,020		3,448		12
Total Non-Controlled Affiliates	$	84,104	$	176,607	$	(158,316	)	$	(9,516	)	$	92,879	$	4,537	$	12
Total Affiliates	$	162,498	$	193,357	$	(158,316	)	$	(9,837	)	$	187,702	$	9,437	$	758

⁽¹⁾ Together with The Regents of the University of California (“Cal Regents”, and collectively with the Company, the “Members”), the Company invests through the Senior Credit Fund. Although the Company owns more than 25% of the voting securities of the Senior Credit Fund, the Company does not believe that it has control over the Senior Credit Fund (other than for purposes of the Investment Company Act). See Note 4 “Investments”.

⁽²⁾ Fund advised by an affiliate of Goldman Sachs.

⁽³⁾  Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

⁽⁴⁾  Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

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The Company’s investments in affiliates for the year ended December 31, 2016, were as follows:

	Fair Value as of December 31, 2015		Gross Additions(4)		Gross Reductions(5)			Change in Unrealized Gains (Losses)			Fair Value as of December 31, 2016		Dividend and Interest Income		Other Income
Controlled Affiliates
Senior Credit Fund, LLC(1)	$	44,897	$	31,425	$	–		$	2,072		$	78,394	$	6,575	$	2,212
Total Controlled Affiliates	$	44,897	$	31,425	$	–		$	2,072		$	78,394	$	6,575	$	2,212
Non-Controlled Affiliates
Goldman Sachs Financial Square Government Fund(2)	$	10,117	$	381,895	$	(392,011	)	$	–		$	1	$	37	$	–
CB-HDT Holdings, Inc.		–		15,694		–			2,816			18,510		18		–
Kawa Solar Holdings Limited		–		15,931		–			(14	)		15,917		851		–
Prairie Provident Resources, Inc.(3)		4,048		–		–			(1,870	)		2,178		–		–
NTS Communications, Inc.		–		42,929		–			4,569			47,498		1,669		13
Total Non-Controlled Affiliates	$	14,165	$	456,449	$	(392,011	)	$	5,501		$	84,104	$	2,575	$	13
Total Affiliates	$	59,062	$	487,874	$	(392,011	)	$	7,573		$	162,498	$	9,150	$	2,225

⁽¹⁾  Together with Cal Regents, the Company invests through the Senior Credit Fund. Although the Company owns more than 25% of the voting securities of the Senior Credit Fund, the Company does not believe that it has control over the Senior Credit Fund (other than for purposes of the Investment Company Act). See Note 4 “Investments”.

⁽²⁾  Fund advised by an affiliate of Goldman Sachs.

⁽³⁾  Formerly known as Lone Pine Resources CDA, Ltd.

⁽⁴⁾  Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

⁽⁵⁾  Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

4. INVESTMENTS

As of the dates indicated, the Company’s investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $2,123 and $1, respectively) consisted of the following:

	June 30, 2017				December 31, 2016
Investment Type	Cost		Fair Value		Cost		Fair Value
1st Lien/Senior Secured Debt	$	369,905	$	363,755	$	436,896	$	421,026
1st Lien/Last-Out Unitranche		334,930		306,481		329,455		310,254
2nd Lien/Senior Secured Debt		316,635		317,251		352,696		336,178
Unsecured Debt		3,300		3,300		3,115		3,115
Preferred Stock		11,150		11,238		11,123		11,833
Common Stock		21,426		14,998		11,633		6,490
Investment Funds & Vehicles(1)		94,342		94,823		77,592		78,394
Total Investments	$	1,151,688	$	1,111,846	$	1,222,510	$	1,167,290

⁽¹⁾  Includes equity investments in the Senior Credit Fund.

As of the dates indicated, the industry composition of the Company’s portfolio at fair value was as follows:

Industry	June 30, 2017			December 31, 2016
Software		9.9	%		9.8	%
Diversified Telecommunication Services		8.6			8.0
Investment Funds & Vehicles		8.5			6.7
Air Freight & Logistics		6.2			3.8
Health Care Equipment & Supplies		6.1			4.7
Distributors		5.9			5.1
Health Care Providers & Services		5.5			3.2
Real Estate Management & Development		5.2			4.9
Electronic Equipment, Instruments & Components		5.1			4.8
Professional Services		4.1			4.8
Internet Software & Services		4.0			8.3
Media		3.8			3.7
Aerospace & Defense		3.3			3.1
Machinery		3.0			3.1
Specialty Retail		2.7			2.6
Household Products		2.7			2.5
IT Services		2.6			0.0
Food Products		2.0			1.0
Internet Catalog & Retail		1.9			–
Chemicals		1.8			–
Auto Components		1.8			1.7
Commercial Services & Supplies		1.6			1.7
Construction & Engineering		1.1			1.4
Leisure Equipment & Products		0.9			0.9
Energy Equipment & Services		0.9			0.6
Containers & Packaging		0.7			–
Oil, Gas & Consumable Fuels		0.1			0.2
Health Care Technology		–			6.0
Building Products		–			6.4
Computers & Peripherals		–			1.0
Total		100.0	%		100.0	%

22

As of the dates indicated, the geographic composition of the Company’s portfolio at fair value was as follows:

Geographic	June 30, 2017			December 31, 2016
United States		98.8	%		98.5	%
Germany		1.1			1.3
Canada		0.1			0.2
Total		100.0	%		100.0	%

Senior Credit Fund, LLC

The Senior Credit Fund, an unconsolidated Delaware limited liability company, was formed on May 7, 2014 and commenced operations on October 1, 2014. The Company invests together with Cal Regents through the Senior Credit Fund. The Senior Credit Fund’s principal purpose is to make investments, either directly or indirectly through its wholly owned subsidiary, Senior Credit Fund SPV I, LLC (“SPV I”), primarily in senior secured loans to middle-market companies. Each of the Company and Cal Regents has a 50% economic ownership in the Senior Credit Fund and each has subscribed to fund $100,000. Except under certain circumstances, contributions to the Senior Credit Fund cannot be redeemed. The Senior Credit Fund is managed by a six member board of managers, on which the Company and Cal Regents have equal representation. Investment decisions generally must be unanimously approved by a quorum of the board of managers.

On December 19, 2016, SPV I entered into an amended and restated credit facility (as amended, the “Asset Based Facility”), which, consists of a revolving credit facility (the “SPV I Revolving Credit Facility”), a term loan facility (the “SPV I Term Loan Facility”) and a Class B loan facility (the “SPV I Class B Facility”), with various lenders. For the Asset Based Facility, Natixis, New York Branch (“Natixis”) serves as the facility agent, and State Street Bank and Trust Company serves as the collateral agent. The Asset Based Facility includes a maximum borrowing capacity of $400,000. The SPV I Revolving Credit Facility provided for borrowings in an aggregate amount up to $120,000 on a committed basis as of June 30, 2017. As of June 30, 2017, the SPV I Term Loan Facility consisted of a $240,000 fully drawn term loan and the SPV I Class B Facility consisted of a $40,000 fully drawn Class B loan. As of June 30, 2017 and December 31, 2016, the SPV I’s outstanding borrowings under the Asset Based Facility were $339,242 and $303,250, respectively.

The Senior Credit Fund had entered into a revolving credit facility (the “Subscription Facility”) with Versailles Assets LLC, as lender, and Natixis, as the facility agent. The Subscription Facility provided for borrowings in an aggregate amount up to $50,000 on a committed basis. The Senior Credit Fund’s obligations to Natixis and the lenders were secured by the unfunded subscriptions of the Company and Cal Regents, proceeds of such subscriptions and certain other assets. On September 30, 2016, the Senior Credit Fund paid in full all loans outstanding and the Subscription Facility was terminated. In connection thereof, the related documents governing the Subscription Facility were also terminated.

As of June 30, 2017 and December 31, 2016, the Company and Cal Regents had subscribed to fund and contributed the following to the Senior Credit Fund:

	June 30, 2017				December 31, 2016
Member	Subscribed to fund		Contributed		Subscribed to fund		Contributed
Company	$	100,000	$	94,342	$	100,000	$	77,592
Cal Regents		100,000		94,342		100,000		77,592
Total	$	200,000	$	188,684	$	200,000	$	155,184

23

As of June 30, 2017 and December 31, 2016, the Senior Credit Fund had total investments in senior secured debt at fair value of $502,428 and $479,526, respectively. As of June 30, 2017 and December 31, 2016, the Senior Credit Fund had no investments on non-accrual status. As of June 30, 2017 and December 31, 2016, the Senior Credit Fund had an investment in a money market fund managed by an affiliate of Group Inc. with a total fair value of $17,433 and $1,942, respectively. In addition, as of June 30, 2017, the Senior Credit Fund had six unfunded commitments totaling $12,548 and as of December 31, 2016, the Senior Credit Fund had three unfunded commitments totaling $6,296.

Below is a summary of the Senior Credit Fund’s portfolio, excluding an investment in a money market fund managed by an affiliate of Group Inc., followed by a listing of the individual loans in the Senior Credit Fund’s portfolio as of June 30, 2017 and December 31, 2016:

	As of
	June 30, 2017		December 31, 2016
Total senior secured debt(1)	$	520,804	$	489,657
Weighted average current interest rate on senior secured debt(2)		7.0%		6.6%
Number of borrowers in the Senior Credit Fund		35		37
Largest loan to a single borrower(1)	$	24,949	$	24,618

⁽¹⁾  At par amount.

⁽²⁾ Computed as the (a) annual stated interest rate on accruing senior secured debt, divided by (b) total senior secured debt at par amount.

24

Senior Credit Fund Portfolio as of June 30, 2017

Portfolio Company	Industry	Interest	Maturity	Par Amount		Cost			Fair Value
						(in millions)
1st Lien/Senior Secured Debt
3SI Security Systems, Inc.(++)	Commercial Services & Supplies	L + 6.25% (1.00% Floor)	06/16/2023	$	15,000	$	14,776		$	14,775
Ansira Partners, Inc.(+++)	Media	L + 6.50% (1.00% Floor)	12/20/2022		8,684		8,602			8,597
Ansira Partners, Inc.(1) (2)	Media	L + 6.50% (1.00% Floor)	12/20/2022		1,273		(12	)		(13	)
ASC Acquisition Holdings, LLC(+) (3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		10,969		10,869			10,859
ASC Acquisition Holdings, LLC(1) (3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		3,750		–			–
ATX Networks Corp.(+++)	Communications Equipment	L + 6.00% (1.00% Floor)	06/11/2021		16,640		16,496			16,390
Badger Sportswear, Inc.(+++)	Textiles, Apparel & Luxury Goods	L + 4.50% (1.00% Floor)	09/11/2023		14,888		14,752			14,813
Crowne Group, LLC(+++)	Auto Components	L + 9.25% (1.00% Floor)	05/26/2021		16,618		16,478			16,784
CST Buyer Company(++++)	Diversified Consumer Services	L + 6.25% (1.00% Floor)	03/01/2023		20,648		20,105			20,080
CST Buyer Company(1) (2)	Diversified Consumer Services	L + 6.25% (1.00% Floor)	03/01/2023		1,800		(47	)		(50	)
DBRS Limited(+++)	Capital Markets	L + 5.25% (1.00% Floor)	03/04/2022		11,730		11,651			11,437
DiscoverOrg, LLC(+) (3)	Software	L + 4.25% (1.00% Floor)	06/02/2020		6,947		6,925			6,929
Explorer Holdings, Inc.(+++)	Health Care Technology	L + 5.00% (1.00% Floor)	05/02/2023		9,900		9,812			9,974
GK Holdings, Inc.(+++)	IT Services	L + 6.00% (1.00% Floor)	01/20/2021		17,550		17,473			16,848
HC Group Holdings III, Inc.(+)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	04/07/2022		8,843		8,812			8,776
Help/Systems, LLC(+++)	Software	L + 4.50% (1.00% Floor)	10/08/2021		17,811		17,337			17,834
Hygiena Borrower LLC(+++)	Life Sciences Tools & Services	L + 4.75% (1.00% Floor)	08/26/2022		15,960		15,808			15,641
Hygiena Borrower LLC(1) (2)	Life Sciences Tools & Services	L + 4.75% (1.00% Floor)	08/26/2022		1,667		(24	)		(47	)
Jill Acquisition LLC(+++)	Textiles, Apparel & Luxury Goods	L + 5.00% (1.00% Floor)	05/08/2022		14,074		13,983			13,722
KMG Chemicals Inc.(+)	Chemicals	L + 4.25% (1.00% Floor)	06/15/2024		7,000		6,965			7,064
Lattice Semiconductor Corporation(+)	Semiconductors & Semiconductor Equipment	L + 4.25% (1.00% Floor)	03/10/2021		10,806		10,653			10,752
Liquidnet Holdings, Inc.(+) (4)	Capital Markets	L + 6.75% (1.00% Floor)	05/22/2019		23,915		23,694			23,855
Loar Group, Inc.(+)	Aerospace & Defense	L + 4.75% (1.00% Floor)	01/12/2022		9,644		9,429			9,596
MB Aerospace Holdings Inc.(+++)	Aerospace & Defense	L + 5.50% (1.00% Floor)	12/15/2022		15,769		15,642			15,808
Netsmart Technologies, Inc.(+++)	Health Care Technology	L + 4.50% (1.00% Floor)	04/19/2023		18,842		18,787			18,936
Playcore Wisconsin, Inc.(+++)	Leisure Equipment & Products	L + 4.25% (1.00% Floor)	05/29/2020		17,910		17,755			17,776
Pomeroy Group LLC(+++++)	IT Services	L + 6.00% (1.00% Floor)	11/30/2021		15,839		15,431			14,968
Professional Physical Therapy(+++)	Health Care Providers & Services	L + 6.00% (1.00% Floor)	12/16/2022		10,448		10,351			10,343
RealD, Inc.(+)	Media	L + 7.50% (1.00% Floor)	03/22/2021		16,766		16,628			16,641
Research Now Group, Inc.(+++)	Professional Services	L + 4.50% (1.00% Floor)	03/18/2021		9,435		9,333			9,412
SciQuest, Inc.(+++++)	Internet Software & Services	L + 4.75% (1.00% Floor)	07/28/2023		19,617		19,527			19,519
Smarte Carte, Inc.(+++)	Air Freight & Logistics	L + 5.50% (1.00% Floor)	08/30/2021		10,846		10,753			10,764
SMS Systems Maintenance Services, Inc.(+)	IT Services	L + 5.00% (1.00% Floor)	10/30/2023		14,925		14,854			14,860
Stackpath, LLC(++++)	Internet Software & Services	L + 5.00% (1.00% Floor)	02/03/2023		16,958		16,795			16,788
Tronair Parent Inc.(+)	Air Freight & Logistics	L + 4.75% (1.00% Floor)	09/08/2023		13,895		13,770			13,756
U.S. Acute Care Solutions, LLC(+++)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	05/14/2021		12,935		12,816			12,806
VRC Companies, LLC(++++)	Commercial Services & Supplies	L + 6.50% (1.00% Floor)	03/31/2023		20,006		19,570			19,556
VRC Companies, LLC(++++) (1)	Commercial Services & Supplies	L + 6.50% (1.00% Floor)	03/31/2023		3,531		700			697
VRC Companies, LLC(++++) (1)	Commercial Services & Supplies	L + 6.50% (1.00% Floor)	03/31/2022		1,412		40			39
Zep Inc.(+)	Chemicals	L + 4.00% (1.00% Floor)	06/27/2022		11,841		11,820			11,855
Total 1st Lien/Senior Secured Debt							479,109			479,140
1st Lien/First-Out Unitranche
Infogix, Inc.(+++)	Software	L + 4.75% (1.00% Floor)	12/31/2021		9,712		9,635			9,688
Total 1st Lien/First-Out Unitranche							9,635			9,688
2nd Lien/Senior Secured Debt
DiscoverOrg, LLC(+)(3)	Software	L + 9.00% (1.00% Floor)	02/10/2022		8,000		7,868			7,900
GK Holdings, Inc.(+++)	IT Services	L + 10.25% (1.00% Floor)	01/20/2022		6,000		5,911			5,700
Total 2nd Lien/Senior Secured Debt							13,779			13,600
Total Corporate Debt						$	502,523		$	502,428
		Yield		Shares		Cost			Fair Value
Investments in Affiliated Money Market Fund
Goldman Sachs Financial Square Government Fund		0.86%(5)			17,432,583	$	17,433		$	17,433
Total Investments in Affiliated Money Market Fund							17,433			17,433
TOTAL INVESTMENTS						$	519,956		$	519,861

25

⁽⁺⁾  The interest rate on these loans is subject to the greater of a London Interbank Offered Rate (“LIBOR”) floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2017 was 1.22%.

⁽⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 2 month LIBOR plus a base rate. The 2 month LIBOR as of June 30, 2017 was 1.25%.

⁽⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2017 was 1.30%.

⁽⁺⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 6 month LIBOR plus a base rate. The 6 month LIBOR as of June 30, 2017 was 1.45%.

^(+++++)  The interest rate on these loans is subject to the greater of a LIBOR floor or 12 month LIBOR plus a base rate. The 12 month LIBOR as of June 30, 2017 was 1.74%.

⁽¹⁾  Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated.

⁽²⁾  The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

⁽³⁾  The Company also holds a portion of the 2nd lien/senior secured debt in this portfolio company.

⁽⁴⁾  Initial investment was purchased at fair value from the Company in October 2014.

⁽⁵⁾  The rate shown is the annualized seven-day yield as of June 30, 2017.

L – LIBOR

26

Senior Credit Fund Portfolio as of December 31, 2016

Portfolio Company	Industry	Interest	Maturity	Par Amount		Cost		Fair Value
1st Lien/Senior Secured Debt
Affordable Care Holding Corp.(+++)	Health Care Providers & Services	L + 4.75% (1.00% Floor)	10/22/2022	$	4,950	$	4,864	$	4,950
Ansira Partners, Inc.(1)	Media	L + 6.50% (1.00% Floor)	12/20/2022		8,727		8,640		8,640
Ansira Partners, Inc.(1)(2)	Media	L + 6.50% (1.00% Floor)	12/20/2022		1,273		–		–
ASC Acquisition Holdings, LLC(+++)(3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		11,250		11,138		11,137
ASC Acquisition Holdings, LLC(+++)(2)(3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		3,750		–		–
ATX Networks Corp.(+++)	Communications Equipment	L + 6.00% (1.00% Floor)	06/11/2021		16,767		16,607		16,348
Badger Sportswear, Inc.(+++)	Textiles, Apparel & Luxury Goods	L + 4.50% (1.00% Floor)	09/11/2023		14,963		14,861		14,850
ConvergeOne Holdings Corporation(+++)(4)	Communications Equipment	L + 5.38% (1.00% Floor)	06/17/2020		17,401		17,261		17,314
Crowne Group, LLC(+++)	Auto Components	L + 9.25% (1.00% Floor)	05/26/2021		16,873		16,717		17,041
DBRS Limited(+++)	Capital Markets	L + 5.25% (1.00% Floor)	03/04/2022		11,790		11,697		10,729
DiscoverOrg, LLC(+)(3)	Software	L + 4.25% (1.00% Floor)	06/02/2020		7,147		7,121		7,075
Edgewood Partners Insurance Center(+)	Insurance	L + 6.00% (1.00% Floor)	03/16/2023		15,880		15,589		15,920
Explorer Holdings, Inc.(+++)	Health Care Technology	L + 5.00% (1.00% Floor)	05/02/2023		9,950		9,855		10,025
GK Holdings, Inc.(+++)	IT Services	L + 5.50% (1.00% Floor)	01/20/2021		17,640		17,555		17,464
HC Group Holdings III, Inc.(+++)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	04/07/2022		8,888		8,852		8,510
Help/Systems, LLC(+++)	Software	L + 5.25% (1.00% Floor)	10/08/2021		17,955		17,407		17,910
Imagine! Print Solutions, Inc.(+++)	Commercial Services & Supplies	L + 6.00% (1.00% Floor)	03/30/2022		4,965		4,909		5,039
Jill Acquisition LLC(+++)	Textiles, Apparel & Luxury Goods	L + 5.00% (1.00% Floor)	05/08/2022		15,805		15,700		15,746
Lattice Semiconductor Corporation(+++)	Semiconductors & Semiconductor Equipment	L + 4.25% (1.00% Floor)	03/10/2021		11,986		11,803		11,956
Liquidnet Holdings, Inc.(+)(4)	Capital Markets	L + 6.75% (1.00% Floor)	05/22/2019		24,618		24,340		24,433
Loar Group, Inc.(++)	Aerospace & Defense	L + 4.75% (1.00% Floor)	01/12/2022		9,925		9,684		9,875
MB Aerospace Holdings Inc.(+++)	Aerospace & Defense	L + 5.50% (1.00% Floor)	12/15/2022		15,849		15,708		15,769
Mister Car Wash, Inc.(1)	Automobiles	L + 4.25% (1.00% Floor)	08/20/2021		6,650		6,600		6,658
Mister Car Wash, Inc.(1)(2)	Automobiles	L + 4.25% (1.00% Floor)	08/20/2021		1,333		–		12
Netsmart Technologies, Inc.(+++)	Health Care Technology	L + 4.50% (1.00% Floor)	04/19/2023		18,937		18,878		18,997
Oasis Outsourcing Holdings, Inc.(+)	Diversified Financial Services	L + 4.75% (1.00% Floor)	12/27/2021		3,979		3,970		3,989
PGX Holdings, Inc.(+++)(4)	Professional Services	L + 5.25% (1.00% Floor)	09/29/2020		13,578		13,510		13,552
Playcore Wisconsin, Inc.(+++)	Leisure Equipment & Products	L + 4.25% (1.00% Floor)	05/29/2020		18,000		17,820		17,820
Pomeroy Group LLC(++++)	IT Services	L + 6.00% (1.00% Floor)	11/30/2021		15,920		15,472		15,760
Precyse Acquisition Corp.(+)	Health Care Technology	L + 5.50% (1.00% Floor)	10/20/2022		7,469		7,369		7,553
Professional Physical Therapy(+++)	Health Care Providers & Services	L + 6.00% (1.00% Floor)	12/16/2022		10,500		10,395		10,395
RealD, Inc.(++)	Media	L + 7.50% (1.00% Floor)	03/22/2021		16,873		16,719		16,704
Research Now Group, Inc.(+++)	Professional Services	L + 4.50% (1.00% Floor)	03/18/2021		9,592		9,476		9,448
SciQuest, Inc.(++++)	Internet Software & Services	L + 4.75% (1.00% Floor)	07/28/2023		13,930		13,863		13,860
Smarte Carte, Inc.(+++)	Air Freight & Logistics	L + 5.50% (1.00% Floor)	08/30/2021		11,213		11,107		11,100
Tronair Parent Inc.(+++)	Air Freight & Logistics	L + 4.75% (1.00% Floor)	09/08/2023		13,860		13,762		13,721
U.S. Acute Care Solutions, LLC(1)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	05/14/2021		13,000		12,870		12,870
Veresen Midstream Limited Partnership(+++)	Energy Equipment & Services	L + 4.25% (1.00% Floor)	03/31/2022		10,808		10,614		10,871
Zep Inc.(+++)	Chemicals	L + 4.00% (1.00% Floor)	06/27/2022		11,901		11,879		11,961
Total 1st Lien/Senior Secured Debt							454,612		456,002
1st Lien/First-Out Unitranche
Infogix, Inc.(+++)	Software	L + 4.75% (1.00% Floor)	12/31/2021		9,762		9,676		9,664
Total 1st Lien/First-Out Unitranche							9,676		9,664

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Portfolio Company	Industry	Interest	Maturity	Par Amount		Cost		Fair Value
2nd Lien/Senior Secured Debt
DiscoverOrg, LLC(+++)(3)	Software	L + 9.00% (1.00% Floor)	02/10/2022	$	8,000	$	7,858	$	7,860
GK Holdings, Inc.(+++)	IT Services	L + 9.50% (1.00% Floor)	01/20/2022		6,000		5,904		6,000
Total 2nd Lien/Senior Secured Debt							13,762		13,860
Total Corporate Debt							478,050		479,526
		Yield		Shares		Cost		Fair Value
Investments in Affiliated Money Market Fund
Goldman Sachs Financial Square Government Fund		0.45%(5)			1,941,599	$	1,942	$	1,942
Total Investments in Affiliated Money Market Fund							1,942		1,942
TOTAL INVESTMENTS						$	479,992	$	481,468

⁽⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of December 31, 2016 was 0.77%.

⁽⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 2 month LIBOR plus a base rate. The 2 month LIBOR as of December 31, 2016 was 0.82%.

⁽⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of December 31, 2016 was 1.00%.

⁽⁺⁺⁺⁺⁾ The interest rate on these loans is subject to the greater of a LIBOR floor or 12 month LIBOR plus a base rate. The 12 month LIBOR as of December 31, 2016 was 1.69%.

⁽¹⁾  Position or portion thereof unsettled as of December 31, 2016.

⁽²⁾  Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated.

⁽³⁾  The Company also holds a portion of the 2nd lien/senior secured debt in this portfolio company.

⁽⁴⁾  Initial investment was purchased at fair value from the Company in October 2014.

⁽⁵⁾  The rate shown is the annualized seven-day yield as of December 31, 2016.

L – LIBOR

Below is selected balance sheet information for the Senior Credit Fund as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
Selected Balance Sheet Information
Total investments, at fair value	$	519,861	$	481,468
Cash and other assets		15,212		10,930
Total assets	$	535,073	$	492,398
Debt (1)	$	336,599	$	300,574
Other liabilities		8,828		35,036
Total liabilities	$	345,427	$	335,610
Members’ equity		189,646		156,788
Total liabilities and members’ equity	$	535,073	$	492,398

⁽¹⁾  Net of deferred financing costs for the SPV I Term Loan Facility, which were in the amount of $2,643 and $2,676 as of June 30, 2017 and December 31, 2016, respectively.

Below is selected statements of operations information for the Senior Credit Fund for the three and six months ended June 30, 2017 and 2016:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017			2016		2017			2016
Selected Statements of Operations Information:
Total investment income	$	10,179		$	6,315	$	18,605		$	11,315
Expenses
Interest and other debt expenses		3,551			2,169		6,650			4,274
Excess loan origination and structuring fees		746			477		746			603
Professional fees		130			100		309			207
Administration and custodian fees		101			80		196			159
Other expenses		19			14		52			26
Total expenses		4,547			2,840		7,953			5,269
Total net income		5,632			3,475		10,652			6,046
Net realized gain (loss) on investments		–			–		77			–
Net change in unrealized appreciation (depreciation) on investments		(2,232	)		2,217		(1,571	)		1,994
Net increase (decrease) in members’ equity	$	3,400		$	5,692	$	9,158		$	8,040

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Loan Origination and Structuring Fees

If the loan origination and structuring fees earned by the Senior Credit Fund (including directly or indirectly through SPV I or another vehicle) during a period exceed the Senior Credit Fund’s expenses (excluding interest and other debt expenses), such excess is paid as a fee to the Member(s) responsible for the origination of the loans pro rata in accordance with the total loan origination and structuring fees earned by the Senior Credit Fund with respect to the loans originated by such Member. The loan origination and structuring fee is accrued quarterly and included in other income from controlled affiliated investments on the Consolidated Statements of Operations and paid annually. For the three and six months ended June 30, 2017, the Company accrued income based on loan origination and structuring fees of $746 and $746, respectively. For the three and six months ended June 30, 2016, the Company accrued income based on loan origination and structuring fees of $437 and $544, respectively.

5. FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

The fair value hierarchy under ASC 820 prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as follows:

Basis of Fair Value Measurement

Level 1 – Inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2 – Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities and certain over-the-counter derivatives where the fair value is based on observable inputs.

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 and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 2 “Significant Accounting Policies” should be read in conjunction with the information outlined below.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 2 Instruments.

Level 2 Instruments

Valuation Techniques and Significant Inputs

Equity and Fixed Income

The types of instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency include commercial paper, most government agency obligations, most corporate debt securities, certain mortgage-backed securities, certain bank loans, less liquid publicly listed equities, certain state and municipal obligations, certain money market instruments and certain loan commitments. Valuations of Level 2 Equity and Fixed Income instruments can be verified to quoted prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g. indicative or firm) and the relationship of recent market activity to the prices provided from alternative pricing sources.

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The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 3 Instruments.

Level 3 Instruments	Valuation Techniques and Significant Inputs
Bank Loans, Corporate Debt, and Other Debt Obligations	Valuations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on relative value analyses, which incorporate comparisons both to credit default swaps that reference the same underlying credit risk and to other debt instruments for the same issuer for which observable prices or broker quotes are available. Other valuation methodologies are used as appropriate including market comparables, transactions in similar instruments and recovery/liquidation analysis.
Equity	Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available: •    Transactions in similar instruments; •    Discounted cash flow techniques; •    Third party appraisals; and •    Industry multiples and public comparables. Evidence includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including: •    Current financial performance as compared to projected performance; •    Capitalization rates and multiples; and •    Market yields implied by transactions of similar or related assets.

The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets and liabilities as of June 30, 2017 and December 31, 2016. These ranges represent the significant unobservable inputs that were used in the valuation of each type of instrument, but they do not represent a range of values for any one instrument. For example, the lowest yield in 1st Lien/Senior Secured is appropriate for valuing that specific debt investment, but may not be appropriate for valuing any other debt investments in this asset class. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets and liabilities.

Level 3 Instruments	Level 3 Assets as of June 30, 20171	Significant Unobservable Inputs by Valuation Techniques2	Range3 of Significant Unobservable Inputs (Weighted Average4) as of June 30, 2017
Bank Loans, Corporate Debt, and Other Debt Obligations	1st Lien/Senior Secured	Discounted cash flows:
	$305,685	•    Discount Rate	9.3% – 16.9% (11.9%)
		Collateral analysis:
		•    Recovery Rate	30.2% – 100.0% (72.5%)
	1st Lien/Last-Out Unitranche	Discounted cash flows:
	$288,993	•    Discount Rate	10.2% – 18.6% (13.4%)
		Comparable multiples:
		•    EV/Revenue	0.2x – 1.0x (0.6x)
		Comparable multiples:
		•    EV/EBITDA5	8.1x – 12.5x (7.8x)
	2nd Lien/Senior Secured	Discounted cash flows:
	$203,471	•    Discount Rate	10.5% – 15.1% (11.9%)
	Unsecured Debt	Discounted cash flows:
	$3,300	•    Discount Rate	5.1% – 5.9% (12.0%)
Equity	Preferred Stock	Comparable multiples:
	$11,238	•    EV/EBITDA5	7.3x – 14.6x (6.8x)
	Common Stock	Discounted cash flows:
	$12,260	•    Discount Rate	11.1% – 20% (18.8%)
		Comparable multiples:
		•    EV/Revenue	2.2x – 7.7x (2.7x)
		Comparable multiples:
		•    EV/EBITDA5	6.8x – 17.5x (7.0x)

⁽¹⁾  Included within Level 3 Assets of $930,886 is an amount of $105,939 in which the Investment Adviser did not develop the unobservable inputs (examples include single source broker quotations, third party pricing, and prior transactions).

⁽²⁾  The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the level 3 balance encompasses both of these techniques.

⁽³⁾  The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

⁽⁴⁾  Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

⁽⁵⁾  Enterprise value of portfolio company as a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”).

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Level 3 Instruments	Level 3 Assets as of December 31, 2016(1)	Significant Unobservable Inputs by Valuation Techniques(2)	Range(3) of Significant Unobservable Inputs (Weighted Average(4)) as of December 31, 2016
Bank Loans, Corporate Debt, and Other Debt Obligations	1st Lien/Senior Secured Debt	Discounted cash flows:
	$379,181	•    Discount Rate	9.1% – 20% (11.6%)
		Comparable multiples:
		•    EV/EBITDA(5)	2.9x – 19.5x (5.0x)
	1st Lien/Last-Out Unitranche	Discounted cash flows:
	$310,254	•    Discount Rate	10.8% – 15.6% (12.9%)
		Comparable multiples:
		•    EV/EBITDA(5)	7.7x – 13.2x (7.9x)
	2nd Lien/Senior Secured Debt	Discounted cash flows:
	$214,643	•    Discount Rate	10.7% – 48.1% (12.6%)
		Comparable multiples:
		•    EV/EBITDA(5)	6.5x – 9.1x (6.8x)
Equity	Preferred Stock	Comparable multiples:
	$11,083	•    EV/EBITDA(5)	5.6x – 12.3x (6.3x)
	Common Stock	Comparable multiples:
	$4,312	•    EV/EBITDA(5)	5.6x – 12.3x (6.3x)

⁽¹⁾  Included within Level 3 Assets of $977,713 is an amount of $58,240 in which the Investment Adviser did not develop the unobservable inputs (examples include single source broker quotations, third party pricing, and prior transactions).

⁽²⁾  The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the Level 3 balance encompasses both of these techniques.

⁽³⁾  The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

⁽⁴⁾  Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

⁽⁵⁾  Enterprise value of portfolio company as a multiple of EBITDA.

As noted above, the income and market approaches were used in the determination of fair value of certain Level 3 assets as of June 30, 2017 and December 31, 2016. 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. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market multiples would result in an increase or decrease, respectively, in the fair value.

The following is a summary of the Company’s assets categorized within the fair value hierarchy as of June 30, 2017:

Assets	Level 1		Level 2		Level 3		Total
1st Lien/Senior Secured Debt	$	–	$	19,350	$	344,405	$	363,755
1st Lien/Last-Out Unitranche		–		–		306,481		306,481
2nd Lien/Senior Secured Debt		–		65,389		251,862		317,251
Unsecured Debt		–		–		3,300		3,300
Preferred Stock		–		–		11,238		11,238
Common Stock		–		1,398		13,600		14,998
Affiliated Money Market Fund		2,123		–		–		2,123
Subtotal	$	2,123	$	86,137	$	930,886	$	1,019,146
Investments measured at NAV(1)								94,823
Total assets							$	1,113,969

⁽¹⁾  Includes equity investments in the Senior Credit Fund.

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The following is a summary of the Company’s assets categorized within the fair value hierarchy as of December 31, 2016:

Assets	Level 1		Level 2		Level 3		Total
1st Lien/Senior Secured Debt	$	–	$	41,845	$	379,181	$	421,026
1st Lien/Last-Out Unitranche		–		–		310,254		310,254
2nd Lien/Senior Secured Debt		–		67,160		269,018		336,178
Unsecured Debt		–		–		3,115		3,115
Preferred Stock		–		–		11,833		11,833
Common Stock		–		2,178		4,312		6,490
Affiliated Money Market Fund		1		–		–		1
Subtotal	$	1	$	111,183	$	977,713	$	1,088,897
Investments measured at NAV(1)								78,394
Total assets							$	1,167,291

⁽¹⁾  Includes equity investments in the Senior Credit Fund.

The following is a reconciliation of Level 3 assets for the six months ended June 30, 2017:

Level 3	Beginning Balance as of January 1, 2017		Purchases(1)		Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)(2)			Sales and Settlements(1)			Net Amortization of Premium/ Discount		Transfers In		Transfers Out		Ending Balance as of June 30, 2017
1st Lien/Senior Secured Debt	$	379,181	$	67,468	$	(14,400	)	$	7,856		$	(98,547	)	$	2,847	$	–	$	–	$	344,405
1st Lien/Last-Out Unitranche		310,254		30,749		–			(9,248	)		(26,936	)		1,662		–		–		306,481
2nd Lien/Senior Secured Debt		269,018		114,617		(23,709	)		14,039			(123,840	)		1,737		–		–		251,862
Unsecured Debt		3,115		185		–			–			–			–		–		–		3,300
Preferred Stock		11,833		27		–			(622	)		–			–		–		–		11,238
Common Stock		4,312		9,793		–			(505	)		–			–		–		–		13,600
Total assets	$	977,713	$	222,839	$	(38,109	)	$	11,520		$	(249,323	)	$	6,246	$	–	$	–	$	930,886

⁽¹⁾  Purchases may include securities received in corporate actions and PIK. Sales and Settlements may include securities delivered in corporate actions.

⁽²⁾  Change in unrealized appreciation (depreciation) relating to assets still held at June 30, 2017 totaled $(13,930) consisting of the following: 1st Lien/Senior Secured Debt $(4,544), 1st Lien/Last-Out Unitranche $(8,707), 2nd Lien/Senior Secured Debt $448, Unsecured Debt $0, Preferred Stock $(622), and Common Stock $(505).

The following is a reconciliation of Level 3 assets for the six months ended June 30, 2016:

Level 3	Beginning Balance as of January 1, 2016		Purchases(1)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)(2)			Sales and Settlements(1)			Net Amortization of Premium/ Discount		Transfers In		Transfers Out			Ending Balance as of June 30, 2016
1st Lien/Senior Secured Debt	$	362,331	$	31,375	$	–	$	(4,763	)	$	(5,972	)	$	655	$	–	$	–		$	383,626
1st Lien/Last-Out Unitranche		305,727		6,308		–		(3,498	)		(4,557	)		677		–		–			304,657
2nd Lien/Senior Secured Debt		257,701		39,390		–		(27,789	)		(25,000	)		745		8,200		(16,800	)		236,447
Preferred Stock		24,872		209		–		(490	)		–			–		–		–			24,591
Common Stock		–		–		–		–			–			–		–		–			–
Total assets	$	950,631	$	77,282	$	–	$	(36,540	)	$	(35,529	)	$	2,077	$	8,200	$	(16,800	)	$	949,321

⁽¹⁾  Purchases may include securities received in corporate actions and PIK. Sales and Settlements may include securities delivered in corporate actions.

⁽²⁾  Change in unrealized appreciation (depreciation) relating to assets still held at June 30, 2016 totaled $(36,136), consisting of the following: 1st Lien/Senior Secured Debt $(4,763), 1st Lien/Last-Out Unitranche $(3,498), 2nd Lien/Senior Secured Debt $(27,385), Preferred Stock $(490), and Common Stock $0.

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. For the six months ended June 30, 2016, transfers from Level 3 to Level 2 were primarily due to increased price transparency while transfers from Level 2 to Level 3 were primarily due to decreased price transparency.

Debt Not Carried at Fair Value

The fair value of the Revolving Credit Facility, which would be categorized as Level 3 within the fair value hierarchy as of June 30, 2017 and December 31, 2016, approximates its carrying value. The fair value of the Company’s Convertible Notes, which would be categorized as Level 2 within the fair value hierarchy, as of June 30, 2017 and December 31, 2016, was $117,084 and $116,006, respectively, based on broker quotes received by the Company.

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6. DEBT

In accordance with the Investment Company Act, with certain exceptions, the Company is only allowed to borrow amounts such that its asset coverage ratio, as defined in the Investment Company Act, is at least 2 to 1 after such borrowing. As of June 30, 2017 and December 31, 2016, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 2.77 to 1 and 2.32 to 1, respectively.

The Company’s outstanding debt as of June 30, 2017 and December 31, 2016 was as follows:

	As of
	June 30, 2017								December 31, 2016
	Aggregate Borrowing Amount Committed		Outstanding Borrowing		Amount Available		Carrying Value		Aggregate Borrowing Amount Committed		Outstanding Borrowing		Amount Available		Carrying Value
Revolving Credit Facility(1)	$	605,000	$	297,250	$	307,750	$	297,250	$	605,000	$	387,750	$	217,250	$	387,750
Convertible Notes(2)		115,000		115,000		–		110,835		115,000		115,000		–		110,402
Total Debt	$	720,000	$	412,250	$	307,750	$	408,085	$	720,000	$	502,750	$	217,250	$	498,152

⁽¹⁾  Provides, under certain circumstances, a total borrowing capacity of $1,000,000.

⁽²⁾  The carrying value of the Company’s Convertible Notes is presented net of unamortized debt issuance costs of $3,512 and OID net of accretion of $653 as of June 30, 2017, and net of unamortized debt issuance costs of $3,884 and OID net of accretion of $714 as of December 31, 2016.

The combined weighted average interest rates of the aggregate borrowings outstanding for the six months ended June 30, 2017 and the year ended December 31, 2016 were 3.33% and 2.65%, respectively.

Revolving Credit Facility

On September 19, 2013, the Company entered into a Revolving Credit Facility with various lenders. SunTrust Bank serves as administrative agent and Bank of America N.A. serves as syndication agent under the Revolving Credit Facility.

On October 3, 2014, the Company amended and restated the Revolving Credit Facility to, among other things: increase the aggregate borrowing amount on a committed basis, increase the total borrowing capacity, extend the maturity date, and reduce the applicable margin of borrowings.

On January 16, 2015, the Company exercised the right under the accordion feature and increased the size of the Revolving Credit Facility to $535,000, on a committed basis.

On March 27, 2015, the Company exercised the right under the accordion feature and increased the size of the Revolving Credit Facility to $560,000, on a committed basis.

On November 3, 2015, the Company amended the Revolving Credit Facility to, among other things:

• increase the aggregate borrowing amount to $570,000 on a committed basis;

• increase the total borrowing capacity to a maximum of $1,000,000;

• extend the final maturity date to November 4, 2020; and

• reduce the applicable margin of borrowings with respect to (i) any loan bearing interest at a rate determined by reference to the alternate base rate from 1.25% to 0.75% or 1.00%, subject to borrowing base conditions and (ii) any loan bearing interest at a rate determined by reference to the adjusted LIBOR rate from 2.25% to 1.75% or 2.00%, subject to borrowing base conditions.

On December 16, 2016, the Company further amended the Revolving Credit Facility to, among other things:

• increase aggregate borrowing amount to $605,000 on a committed basis; and

• extend the final maturity date to December 16, 2021.

33

Borrowings under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest (at the Company’s election) of either LIBOR plus an applicable margin or an applicable margin plus the higher of the Prime Rate, Federal Funds Rate plus 0.5% or overnight LIBOR plus 1.0%. Interest is payable quarterly in arrears. The Company pays a fee of 0.375% per annum on committed but undrawn amounts under the Revolving Credit Facility, payable quarterly in arrears. Any amounts borrowed under the Revolving Credit Facility will mature, and all accrued and unpaid interest will be due and payable, on December 16, 2021.

The Revolving Credit Facility may be guaranteed by certain of the Company’s domestic subsidiaries that are formed or acquired by the Company in the future (collectively, the “Guarantors”). The Senior Credit Fund is not a Guarantor of the Revolving Credit Facility. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.

The Company’s obligations to the lenders under the Revolving Credit Facility are secured by a first priority security interest in substantially all of the Company’s portfolio of investments and cash, with certain exceptions. The Revolving Credit Facility contains certain covenants, including: (i) maintaining a minimum stockholder’s equity of $530,650, subject to increase pending certain equity sales, (ii) maintaining an asset coverage ratio of at least 2 to 1, (iii) maintaining a minimum liquidity test of at least 10% of the covered debt amount during any period when the adjusted covered debt balance is greater than 90% of the adjusted borrowing base, as defined in the Revolving Credit Facility, and (iv) complying with restrictions on industry concentrations in the Company’s investment portfolio. The Company is in compliance with these covenants.

Costs of $9,716 were incurred in connection with obtaining and amending the Revolving Credit Facility, which have been recorded as deferred financing costs on the Consolidated Statements of Assets and Liabilities and are being amortized over the life of the Revolving Credit Facility using the straight-line method. As of June 30, 2017 and December 31, 2016, deferred financing costs were $5,418 and $6,018, respectively.

The summary information of the Revolving Credit Facility for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended June 30, 2017		Three Months Ended June 30, 2016		Six Months Ended June 30, 2017		Six Months Ended June 30, 2016
Borrowing interest expense	$	2,793	$	2,839	$	5,251	$	5,426
Facility fees		226		105		467		251
Amortization of financing costs	$	308	$	302	$	612	$	604
Total	$	3,327	$	3,246	$	6,330	$	6,281
Weighted average interest rate		3.06%		2.49%		2.95%		2.48%
Average outstanding balance	$	366,310	$	458,957	$	359,119	$	440,451

Convertible Notes

On October 3, 2016, the Company closed an offering of $115,000 aggregate principal amount of unsecured Convertible Notes, which includes $15,000 aggregate principal amount issued pursuant to the initial purchasers’ exercise in full of an over-allotment option. The Convertible Notes bear interest at a rate of 4.50% per year, payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2017. The Convertible Notes will mature on April 1, 2022, unless repurchased or converted in accordance with their terms prior to such date. In certain circumstances, the Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, based on an initial conversion rate of 40.8397 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $24.49 per share of common stock, subject to customary anti-dilution adjustments and the other terms of the indenture governing the Convertible Notes. The conversion price is approximately 10.0% above the $22.26 per share closing price of the Company’s common stock on September 27, 2016. The Company will not have the right to redeem the Convertible Notes prior to maturity. The sale of the Convertible Notes generated net proceeds of approximately $110,900. The Company used the net proceeds of the offering to pay down debt under the Revolving Credit Facility.

Holders may convert their notes at their option at any time prior to the close of business on the business day immediately preceding October 1, 2021 only under the following circumstances: (1) during any calendar quarter commencing after December 31, 2016, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after October 1, 2021, until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the occurrence or nonoccurrence of any of the foregoing circumstances.

The Convertible Notes are accounted for in accordance with ASC Topic 470-20, Debt with Conversion and Other Options. Upon conversion of any of the Convertible Notes, the Company intends to pay the outstanding principal amount in cash and, to the extent that the conversion value exceeds the principal amount, has the option to pay the excess amount in cash or shares of the Company’s common stock (or a combination of cash and shares), subject to the requirements of the respective indenture. The Company has determined that the embedded conversion options in the Convertible Notes are not required to be separately accounted for as derivatives under ASC 815, Derivatives and Hedging. At the time of issuance the values of the debt and equity components of the Convertible Notes were approximately 99.4% and 0.6%, respectively.

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The OID equal to the equity component of the Convertible Notes was recorded in “paid-in capital in excess of par” in the accompanying Consolidated Statements of Assets and Liabilities. The Company records interest expense comprised of both stated interest and amortization of the OID. At the time of issuance, the equity component of the Convertible Notes was $743. Additionally, the issuance costs associated with the Convertible Notes were allocated to the debt and equity components in proportion to the allocation of the values at the time of issuance and accounted for as debt issuance costs and equity issuance costs, respectively.

As of June 30, 2017 and December 31, 2016, the components of the carrying value of the Convertible Notes were as follows:

	June 30, 2017		December 31, 2016
Principal amount of debt	$	115,000	$	115,000
OID, net of accretion		653		714
Unamortized debt issuance costs		3,512		3,884
Carrying value	$	110,835	$	110,402
Stated interest rate		4.50%		4.50%
Effective interest rate (stated interest rate plus accretion of OID)		4.61%		4.60%

For the three and six months ended June 30, 2017 and 2016, the components of interest and other debt expenses related to the Convertible Notes were as follows:

	Three Months Ended June 30, 2017		Three Months Ended June 30, 2016		Six Months Ended June 30, 2017		Six Months Ended June 30, 2016
Borrowing interest expense	$	1,294		N/A	$	2,588		N/A
Accretion of OID		31		N/A		61		N/A
Amortization of debt issuance costs		187		N/A		372		N/A
Total	$	1,512		N/A	$	3,021		N/A

7. COMMITMENTS AND CONTINGENCIES

Commitments

The Company may enter into commitments to fund investments. As of June 30, 2017, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. The Company had the following unfunded commitments by investment types as of the dates indicated:

	June 30, 2017							December 31, 2016
	Commitment Expiration Date(1)		Unfunded Commitment(2)		Fair Value(3)			Commitment Expiration Date(1)		Unfunded Commitment(2)		Fair Value(3)
1st Lien/Senior Secured Debt
Continuum Managed Services LLC		06/08/2019	$	2,392	$	(66	)		–	$	–	$	–
Legacy Buyer Corp.		10/24/2019		2,500		(50	)		10/24/2019		800		(28	)
Elemica, Inc.		07/07/2021		6,000		(120	)		07/07/2021		6,000		(135	)
Netvoyage Corporation		03/24/2022		654		(13	)		–		–		–
Continuum Managed Services LLC		06/08/2022		2,220		(61	)		–		–		–
Total 1st Lien/Senior Secured Debt				13,766		(310	)				6,800		(163	)
1st Lien/Last-Out Unitranche
Bolttech Mannings, Inc.		10/04/2017		666		(366	)		–		–		–
Total 1st Lien/Last-Out Unitranche				666		(366	)
Total			$	14,432	$	(676	)			$	6,800	$	(163	)

⁽¹⁾  Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

⁽²⁾  Net of capitalized fees, expenses and OID.

⁽³⁾  A negative fair value was reflected as investments, at fair value in the Consolidated Statements of Assets and Liabilities. The negative fair value is the result of the capitalized discount on the loan.

Contingencies

In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

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8. NET ASSETS

Equity Issuances

On May 24, 2017, the Company completed a follow-on offering under its shelf registration statement, issuing 3,250,000 shares of its common stock at a public offering price of $22.50 per share. Net of offering and underwriting costs, the Company received cash proceeds of $69,648.

On May 26, 2017, the Company sold an additional 487,500 shares of its common stock pursuant to the underwriters’ exercise of the option to purchase additional shares the Company granted in connection with the aforementioned offering. Net of underwriting costs, the Company received additional cash proceeds of $10,640.

Distributions

The following table reflects the distributions declared on shares of the Company’s common stock during the six months ended June 30, 2017:

Date Declared	Record Date	Payment Date	Amount Per Share
February 22, 2017	March 31, 2017	April 17, 2017	$0.45
May 1, 2017	June 30, 2017	July 17, 2017	$0.45

The following table reflects the distributions declared on shares of the Company’s common stock during the six months ended June 30, 2016:

Date Declared	Record Date	Payment Date	Amount Per Share
February 25, 2016	March 31, 2016	April 15, 2016	$0.45
May 3, 2016	June 30, 2016	July 15, 2016	$0.45

Dividend Reinvestment Plan

Concurrent with the IPO, the Company adopted a dividend reinvestment plan that provides for reinvestment of all cash distributions declared by the Board of Directors, unless a stockholder elects to “opt out” of the plan. As a result, if the Board of Directors declares a cash distribution, then the stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash distribution.

The following table summarizes shares distributed pursuant to the dividend reinvestment plan during the six months ended June 30, 2017 to stockholders who had not opted out of the dividend reinvestment plan:

Date Declared	Record Date	Payment Date	Shares
November 1, 2016	December 31, 2016	January 17, 2017	11,124
February 22, 2017	March 31, 2017	April 17, 2017	11,202

The following table summarizes shares distributed pursuant to the dividend reinvestment plan during the six months ended June 30, 2016 to stockholders who had not opted out of the dividend reinvestment plan:

Date Declared	Record Date	Payment Date	Shares
November 3, 2015	December 31, 2015	January 28, 2016	8,206
February 25, 2016	March 31, 2016	April 15, 2016	5,555

9. EARNINGS PER SHARE

The following information sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30, 2017		Three Months Ended June 30, 2016		Six Months Ended June 30, 2017		Six Months Ended June 30, 2016
Numerator for basic and diluted earnings per share - increase in net assets resulting from operations	$	4,585	$	7,000	$	19,150	$	12,401
Denominator for basic and diluted earnings per share - weighted average shares outstanding		37,902,018		36,311,582		37,125,726		36,309,232
Basic and diluted earnings per share	$	0.12	$	0.19	$	0.52	$	0.34

For the purpose of calculating diluted earnings per common share, the average closing price of the Company’s common stock for the three and six months ended June 30, 2017 was less than the conversion price for the Convertible Notes outstanding as of June 30, 2017. Therefore, for the three and six months ended June 30, 2017, diluted earnings per share equals basic earnings per share because the underlying shares for the intrinsic value of the embedded options in the Convertible Notes were not dilutive. For the three and six months ended June 30, 2016, diluted earnings per share equals basic earnings per share because there were no common stock equivalents outstanding.

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10. FINANCIAL HIGHLIGHTS

Below is the schedule of financial highlights of the Company for the six months ended June 30, 2017 and 2016:

	For the Six Months Ended June 30, 2017			For the Six Months Ended June 30, 2016
Per Share Data:(1)
NAV, beginning of period	$	18.31		$	18.97
Net investment income (loss)		1.13			1.09
Net realized and unrealized gains (losses)		(0.63	)		(0.75	)
Net increase (decrease) in net assets resulting from operations		0.50			0.34
Issuance of common stock, net of underwriting and offering costs		0.32			–
Distributions declared from net investment income(2)		(0.90	)		(0.90	)
Total increase (decrease) in net assets		(0.08	)		(0.56	)
NAV, end of period	$	18.23		$	18.41
Market price, end of period	$	22.52		$	19.99
Shares outstanding, end of period		40,091,488			36,312,437
Weighted average shares outstanding		37,125,726			36,309,232
Total return based on NAV(3)		3.56%			1.70%
Total return based on market value(4)		(0.41)%			10.26%
Ratio/Supplemental Data (all amounts in thousands except ratios):
Net assets, end of period	$	730,698		$	668,482
Ratio of net expenses to average net assets(5)		7.74%			6.20%
Ratio of expenses (without incentive fees and interest and other debt expenses) to average net assets(5)		3.48%			3.31%
Ratio of interest and other debt expenses to average net assets(6)		2.78%			1.86%
Ratio of incentive fees to average net assets(6)		1.48%			1.03%
Ratio of total expenses to average net assets(5)		7.74%			6.20%
Ratio of net investment income to average net assets(5)(7)		12.45%			11.70%
Average debt outstanding		474,119			440,451
Average debt per share(8)		12.77			12.13
Portfolio turnover		21%			3%

⁽¹⁾  The per share data was derived by using the weighted average shares outstanding during the applicable period.

⁽²⁾  The per share data for distributions declared reflects the actual amount of distributions declared per share for the applicable period.

⁽³⁾  Total return based on NAV is calculated as the change in NAV per share during the respective periods, assuming dividends and distributions, if any, are reinvested in accordance with the Company’s dividend reinvestment plan.

⁽⁴⁾  Total return based on market value is calculated as the change in market value per share during the respective periods, assuming dividends and distributions, if any, are reinvested in accordance with the Company’s dividend reinvestment plan.

⁽⁵⁾  Annualized except for certain operating expenses.

⁽⁶⁾  Annualized.

⁽⁷⁾  For the six months ended June 30, 2017 and 2016, annualized except for certain components of other income.

⁽⁸⁾  Average debt per share is calculated as average debt outstanding divided by the weighted average shares outstanding during the applicable period.

11. SUBSEQUENT EVENTS

Subsequent events after the Consolidated Statements of Assets and Liabilities date have been evaluated through the date the unaudited consolidated financial statements were issued. Other than the items discussed below, the Company has concluded that there is no impact requiring adjustment or disclosure in the consolidated financial statements.

As of June 30, 2017, the Company held two tranches of loans to Kawa Solar Holdings Limited (“Kawa”) comprised of $6,843 par value of revolving first lien debt and $10,537 of a first lien guarantee facility that was collateralized by cash. In July 2017, Kawa completed a capital restructuring whereby $4,700 of the first lien revolver debt was exchanged into common equity of Conergy Asia Holdings Limited, a UK limited company that was formed to purchase and own the shares of Conergy Asia & ME Pte. Ltd., a subsidiary of Kawa. The remaining revolver was exchanged into a non-interest bearing first lien loan and the Company funded its pro rata share of $400 of new first lien revolver. As a result of the exchange of the first lien revolver into non-interest bearing debt and non-income producing equity in connection with this restructuring, the investment was taken off of non-accrual status. The $10,537 of first lien guarantee facility debt in Kawa was amended to convert the coupon to PIK.

On July 31, 2017, the Company and Cal Regents, as members of the Senior Credit Fund, entered into an amendment to the amended and restated limited liability company agreement of the Senior Credit Fund to extend the investment period for the Senior Credit Fund from August 1, 2017 to November 1, 2017.

On August 1, 2017, the Board of Directors declared a quarterly distribution of $0.45 per share payable on October 16, 2017 to holders of record as of September 29, 2017.

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

The following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. References to “we,” “us,” “our,” and the “Company,” mean Goldman Sachs BDC, Inc. or Goldman Sachs BDC, Inc. together with its consolidated subsidiaries, as the context may require. The terms “GSAM,” our “Adviser” or our “Investment Adviser” refer to Goldman Sachs Asset Management, L.P., a Delaware limited partnership. The term “Group Inc.” refers to The Goldman Sachs Group, Inc. “GS & Co.” refers to Goldman Sachs & Co. LLC and its predecessors. The term “Goldman Sachs” refers to Group Inc., together with GS & Co., GSAM and its other subsidiaries and affiliates. The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. Please see “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with this discussion and analysis. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this report.

OVERVIEW

We are a specialty finance company focused on lending to middle-market companies. We are a closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2013. From our formation in 2012 through June 30, 2017, we originated more than $2.17 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

“Unitranche” loans are first lien loans that may extend deeper in a company’s capital structure than traditional first lien debt and may provide for a waterfall of cash flow priority between different lenders in the unitranche loan. In a number of instances, we may find another lender to provide the “first out” portion of such loan and retain the “last out” portion of such loan, in which case, the “first out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last out” portion that we would continue to hold. In exchange for the greater risk of loss, the “last out” portion earns a higher interest rate. We use the term “mezzanine” to refer to debt that ranks senior only to a borrower’s equity securities and ranks junior in right of payment to all of such borrower’s other indebtedness. We may make multiple investments in the same portfolio company.

We invest primarily in U.S. middle-market companies, which we believe are underserved by traditional providers of capital such as banks and the public debt markets. In this report, we generally use the term “middle market companies” to refer to companies with earnings before interest, taxes, depreciation and amortization (“EBITDA”) of between $5 million and $75 million annually. However, we may from time to time invest in larger or smaller companies. We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we may generate income from various loan origination and other fees, dividends on direct equity investments and capital gains on the sales of investments. Fees received from portfolio companies (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) are paid to us, unless, to the extent required by applicable law or exemptive relief therefrom, we only receive our allocable portion of such fees when invested in the same portfolio company as another account managed by Goldman Sachs. The companies in which we invest use our capital for a variety of purposes, including to support organic growth, fund acquisitions, make capital investments or refinance indebtedness.

Our origination strategy focuses on leading the negotiation and structuring of the loans or securities in which we invest and holding the investments in our portfolio to maturity. In many cases, we are the sole investor in the loan or security in our portfolio. Where there are multiple investors, we generally seek to control or obtain significant influence over the rights of investors in the loan or security. We generally seek to make investments that have maturities between three and ten years and range in size between $10 million and $75 million, although we may make larger or smaller investments on occasion. In addition, part of our strategy involves a joint venture with the Regents of the University of California (“Cal Regents”) through the Senior Credit Fund, LLC (the “Senior Credit Fund”). The Senior Credit Fund’s principal purpose is to make investments, either directly or indirectly through its wholly owned subsidiary, Senior Credit Fund SPV I, LLC (“SPV I”), primarily in senior secured loans to middle-market companies.

For a discussion of the competitive landscape we face, please see “Risk Factors—We operate in a highly competitive market for investment opportunities” and “Business—Competitive Advantages” in our annual report on Form 10-K for the year ended December 31, 2016.

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KEY COMPONENTS OF OPERATIONS

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make.

As a BDC, we may not acquire any assets other than “qualifying assets” specified in the Investment Company Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

Revenues

We generate revenues in the form of interest income on debt investments and, to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind (“PIK”) income. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date.

We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we may generate revenue in the form of commitment, origination, structuring, syndication or diligence fees, fees for providing managerial assistance and consulting fees. Portfolio company fees (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) will be paid to us, unless, to the extent required by applicable law or exemptive relief, if any, therefrom, we receive our allocable portion of such fees when invested in the same portfolio company as other Accounts, which other Accounts could receive their allocable portion of such fee. We do not expect to receive material fees as it is not our principal investment strategy. We record contractual prepayment premiums on loans and debt securities as interest income.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Interest and dividend income are presented net of withholding tax, if any.

Expenses

Our primary operating expenses include the payment of the Management Fee and the Incentive Fee to the Investment Adviser, legal and professional fees, interest and other debt expenses and other operating and overhead related expenses. The Management Fee and Incentive Fee compensate our Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions in accordance with our investment management agreement (as amended and restated as of January 1, 2015, the “Investment Management Agreement”) and administration agreement (“Administration Agreement”), including those relating to:

• our operational and organizational expenses;

• fees and expenses, including travel expenses, incurred by our Investment Adviser or payable to third parties related to our investments, including, among others, professional fees (including the fees and expenses of consultants and experts) and fees and expenses from evaluating, monitoring, researching and performing due diligence on investments and prospective investments;

• interest payable on debt, if any, incurred to finance our investments;

• fees and expenses incurred by us in connection with membership in investment company organizations;

• brokers’ commissions;

• the expenses of and fees for registering or qualifying our shares for sale and of maintaining our registration and registering us as a broker or a dealer

• fees and expenses associated with calculating our net asset value (“NAV”) (including the costs and expenses of any independent valuation firm);

• legal, auditing or accounting expenses;

• taxes or governmental fees;

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• the fees and expenses of our administrator, transfer agent or sub-transfer agent;

• the cost of preparing stock certificates or any other expenses, including clerical expenses of issue, redemption or repurchase of our shares;

• the fees and expenses of our directors who are not affiliated with our Investment Adviser;

• the cost of preparing and distributing reports, proxy statements and notices to our stockholders, the SEC and other regulatory authorities;

• costs of holding stockholder meetings;

• listing fees;

• the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by our certificate of incorporation or bylaws insofar as they govern agreements with any such custodian;

• insurance premiums; and

• costs incurred in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with our business and the amount of any judgment or settlement paid in connection therewith, or the enforcement of our rights against any person and indemnification or contribution expenses payable by us to any person and other extraordinary expenses not incurred in the ordinary course of our business.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines. Costs relating to future offerings of securities would be incremental.

Leverage

Our senior secured revolving credit agreement (as amended, the “Revolving Credit Facility”) with SunTrust Bank, as administrative agent, and Bank of America, N.A., as syndication agent, and our 4.50% Convertible Notes due 2022 (the “Convertible Notes”) allow us to borrow money and lever our investment portfolio, subject to the limitations of the Investment Company Act, with the objective of increasing our yield. This is known as “leverage” and could increase or decrease returns to our stockholders. The use of leverage involves significant risks. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, equals at least 2 to 1 after such borrowing. Certain trading practices and investments, such as reverse repurchase agreements, may be considered borrowings or involve leverage and thus may be subject to Investment Company Act restrictions. In accordance with applicable SEC staff guidance and interpretations, when we engage in such transactions, instead of maintaining an asset coverage ratio of at least 2 to 1, we may segregate or earmark liquid assets, or enter into an offsetting position, in an amount at least equal to our exposure, on a mark-to-market basis, to such transactions (as calculated pursuant to requirements of the SEC). Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will not be considered borrowings for these purposes. Practices and investments that may involve leverage but are not considered borrowings are not subject to the Investment Company Act’s asset coverage requirement and we will not otherwise segregate or earmark liquid assets or enter into offsetting positions for such transactions. The amount of leverage that we employ will depend on our Investment Adviser’s and our Board of Directors’ assessment of market conditions and other factors at the time of any proposed borrowing.

PORTFOLIO AND INVESTMENT ACTIVITY

As of June 30, 2017 and December 31, 2016, our portfolio (excluding our investment in a money market fund managed by an affiliate of Group, Inc. of $2.12 million and $0.00 million, respectively) consisted of the following:

	As of
	June 30, 2017							December 31, 2016
	Amortized Cost		Fair Value		Percentage of Total Portfolio at Fair Value			Amortized Cost		Fair Value		Percentage of Total Portfolio at Fair Value
	(in millions)							(in millions)
First Lien/Senior Secured Debt	$	369.90	$	363.76		32.7	%	$	436.90	$	421.03		36.1	%
First Lien/Last-Out Unitranche		334.93		306.48		27.6			329.45		310.25		26.6
Second Lien/Senior Secured Debt		316.64		317.25		28.5			352.70		336.18		28.8
Unsecured Debt		3.30		3.30		0.3			3.12		3.12		0.3
Preferred Stock		11.15		11.24		1.0			11.12		11.83		1.0
Common Stock		21.43		15.00		1.4			11.63		6.49		0.5
Investment Funds & Vehicles		94.34		94.82		8.5			77.59		78.39		6.7
Total Investments	$	1,151.69	$	1,111.85		100.0	%	$	1,222.51	$	1,167.29		100.0	%

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As of June 30, 2017 and December 31, 2016, the weighted average yield by asset type on our portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc.), at cost and fair value, were as follows:

	As of
	June 30, 2017				December 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Weighted Average Yield(1)
First Lien/Senior Secured Debt(2)		10.7%		11.1%		10.0%		10.6%
First Lien/Last-Out Unitranche(2)		11.3%		16.5%		11.3%		14.2%
Second Lien/Senior Secured Debt(2)		10.6%		10.6%		10.5%		11.0%
Unsecured Debt(2)		12.0%		12.0%		12.0%		12.0%
Preferred Stock(3)		–%		–%		0.5%		0.5%
Common Stock(3)		–%		–%		–%		–%
Investment Funds & Vehicles(4)		14.2%		14.0%		14.5%		14.5%
Total Portfolio		10.8%		12.5%		10.6%		11.8%

⁽¹⁾  The weighted average yield of our portfolio does not represent the total return to our stockholders.

⁽²⁾  Computed based on the (a) annual stated interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments, divided by (b) the total investments (including investments on non-accrual and non-income producing investments) at amortized cost or fair value, respectively. For investments that are subject to a LIBOR floor, the yield calculation assumes the greater of the applicable LIBOR floor or 3 month LIBOR as of the respective period end date. The actual interest rate may vary.

⁽³⁾  Computed based on the (a) stated coupon rate, if any, for each income-producing investment, divided by (b) the total investments (including investments on non-accrual and non-income producing investments) at amortized cost or fair value, respectively.

⁽⁴⁾  Computed based on the net investment income earned from the Senior Credit Fund for the respective trailing twelve months ended on the measurement date, which may include dividend income and loan origination and structuring fees, divided by our average member’s equity at cost and fair value, adjusted for equity contributions.

The following table presents certain selected information regarding our investment portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc.) as of June 30, 2017 and December 31, 2016:

	As of
	June 30, 2017		December 31, 2016
Number of portfolio companies(1)		45		40
Percentage of performing debt bearing a floating rate(2)		95.9%		92.8%
Percentage of performing debt bearing a fixed rate(2)(3)		4.1%		7.2%
Weighted average leverage (net debt/EBITDA)(4)		5.0x		4.8x
Weighted average interest coverage(4)		2.6x		2.7x
Median EBITDA(4)	$	26.56 million	$	25.02 million

⁽¹⁾  Includes the Senior Credit Fund as a single portfolio company. For details on the portfolio companies held within the Senior Credit Fund, refer to Senior Credit Fund, LLC – Selected Financial Data.

⁽²⁾  Measured on a fair value basis. Excludes investments, if any, placed on non-accrual.

⁽³⁾  Includes income producing preferred stock investments.

⁽⁴⁾  For a particular portfolio company, EBITDA typically represents net income before net interest expense, income tax expense, depreciation and amortization. The net debt to EBITDA represents the ratio of a portfolio company’s total debt (net of cash) and excluding debt subordinated to the Company’s investment in a portfolio company, to a portfolio company’s EBITDA. The interest coverage ratio represents the ratio of a portfolio company’s EBITDA as a multiple of a portfolio company’s interest expense. Weighted average net debt to EBITDA is weighted based on the fair value of the Company’s debt investments, including the Company’s exposure to underlying debt investments in the SCF and excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue. Weighted average interest coverage is weighted based on the fair value of the Company’s performing debt investments, including the Company’s exposure to underlying debt investments in the SCF and excluding investments where EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue. Median EBITDA is based on the Company’s debt investments, including the Company’s exposure to underlying debt investments in the SCF and excluding investments where EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue. As of June 30, 2017 and December 31, 2016, investments where EBITDA may not be the appropriate measure of credit risk represented 6.7% and 1.3%, respectively, of total debt investments, including the Company’s investment in the SCF, at fair value. Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the respective reported end date. Portfolio company statistics have not been independently verified by us and may reflect a normalized or adjusted amount.

Floating rates are primarily London Interbank Offered Rate (“LIBOR”) plus a spread.

Our Investment Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company. Our Investment Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

• assessment of success in adhering to the portfolio company’s business plan and compliance with covenants;

• periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments;

• comparisons to our other portfolio companies in the industry, if any;

• attendance at and participation in board meetings or presentations by portfolio companies; and

• review of monthly and quarterly financial statements and financial projections of portfolio companies.

As part of the monitoring process, our Investment Adviser also 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 investments on a scale of 1 to 4. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (e.g., at the time of origination or acquisition), although it may also take into account the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grading system is as follows:

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• investments with a grade of 1 involve the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit;

• investments graded 2 involve a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 2;

• investments graded 3 indicate that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due; and

• an investment grade of 4 indicates that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 4, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 4, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

Our Investment Adviser grades the investments in our portfolio at least quarterly and it is possible that the grade of a portfolio investment may be reduced or increased over time. For investments graded 3 or 4, our Investment Adviser enhances its level of scrutiny over the monitoring of such portfolio company. The following table shows the composition of our portfolio (excluding our investment in a money market fund managed by an affiliate of Group Inc.) on the 1 to 4 grading scale as of June 30, 2017 and December 31, 2016:

	As of
	June 30, 2017					December 31, 2016
Investment Performance Rating	Fair Value		Percentage of Total Portfolio at Fair Value			Fair Value		Percentage of Total Portfolio at Fair Value
	(in millions)					(in millions)
Grade 1	$	95.70		8.6	%	$	164.98		14.1	%
Grade 2		864.81		77.8			817.88		70.1
Grade 3		149.28		13.4			167.60		14.4
Grade 4		2.06		0.2			16.83		1.4
Total Investments	$	1,111.85		100.0	%	$	1,167.29		100.0	%

The following table shows the amortized cost of our performing and non-accrual investments as of June 30, 2017 and December 31, 2016:

	As of
	June 30, 2017					December 31, 2016
	Amortized Cost		Percentage of Total Portfolio at Amortized Cost			Amortized Cost		Percentage of Total Portfolio at Amortized Cost
	(in millions)					(in millions)
Performing	$	1,144.18		99.3	%	$	1,176.24		96.2	%
Non-accrual		7.51		0.7			46.27		3.8
Total Investments	$	1,151.69		100.0	%	$	1,222.51		100.0	%

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Loans or debt securities are placed on non-accrual status when it is probable that principal or interest will not be collected according to the contractual terms. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, principal and interest payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

The following table shows our investment activity for the three months ended June 30, 2017 and 2016 by investment type:

	For the Three Months Ended
	June 30, 2017			June 30, 2016
	(in millions)
New investment commitments at cost:
Gross originations	$	123.98		$	41.55
Less: Syndications(1)		–			–
Net amount of new investments committed at cost:	$	123.98		$	41.55
Amount of investments committed at cost(2):
First Lien/Senior Secured Debt	$	53.49		$	29.25
First Lien/Last-Out Unitranche		17.49			2.94
Second Lien/Senior Secured Debt		48.31			0.75
Unsecured Debt		–			–
Preferred Stock		–			–
Common Stock		1.34			–
Investment Funds & Vehicles		3.35			8.61
Total	$	123.98		$	41.55
Proceeds from investments sold or repaid:
First Lien/Senior Secured Debt	$	81.62		$	3.24
First Lien/Last-Out Unitranche		26.22			1.35
Second Lien/Senior Secured Debt		52.59			–
Unsecured Debt		–			–
Preferred Stock		–			–
Common Stock		–			–
Investment Funds & Vehicles		–			–
Total	$	160.43		$	4.59
Net increase (decrease) in portfolio	$	(36.45	)	$	36.96
Number of new investment commitments in new portfolio companies(3)		6			1
Total new investment commitment amount in new portfolio companies(3)	$	118.35		$	29.25
Average new investment commitment amount in new portfolio companies(3)	$	19.73		$	29.25
Weighted average remaining term for new investment commitments in new portfolio companies (in years)(3)(4)		6.4			4.8
Number of new investment commitments in existing portfolio companies(3)		3			3
Total new investment commitment amount in existing portfolio companies(3)	$	5.63		$	12.30
Percentage of new debt investment commitments in new portfolio companies at floating interest rates(3)		100.0%			100.0%
Percentage of new debt investment commitments in new portfolio companies at fixed interest rates(3)(5)		–%			–%
Weighted average stated interest rate of new investment commitments in new portfolio companies(3)(6)		9.5%			11.8%
Weighted average spread over base rate of new floating rate investment commitments in new portfolio companies(3)		8.2%			11.3%
Weighted average stated interest rate on investments sold or paid down(7)		9.0%			9.7%

⁽¹⁾  Only includes syndications that occurred at the initial close of the investment.

⁽²⁾  Net of capitalized fees, expenses and original issue discount (“OID”).

⁽³⁾  May include positions originated during the period but not held at the reporting date.

⁽⁴⁾  Calculated as of the end of the relevant period and the maturity date of the individual investments.

⁽⁵⁾  May include preferred stock investments.

⁽⁶⁾  For investments that are subject to a LIBOR floor, the calculation assumes the greater of the applicable LIBOR floor or 3 month LIBOR as of the respective period end date. The actual interest rate may vary.

⁽⁷⁾  Computed based on the (a) annual stated interest rate on the performing debt and other income producing investments, divided by (b) the total investments (including investments on non-accrual and non-income producing investments) sold or paid down. For investments that are subject to a LIBOR floor, the yield calculation assumes the greater of the applicable LIBOR floor or 3 month LIBOR as of the respective period end date. The actual interest rate may vary.

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RESULTS OF OPERATIONS

Our operating results for the three and six months ended June 30, 2017 and 2016 were as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
	($ in millions)
Total investment income	$	36.02		$	29.32		$	68.21		$	60.66
Net expenses		(11.56	)		(10.90	)		(25.43	)		(20.82	)
Net investment income (loss) before taxes		24.46			18.42			42.78			39.84
Excise tax expense		(0.37	)		(0.22	)		(0.73	)		(0.43	)
Net investment income (loss) after taxes		24.09			18.20			42.05			39.41
Net realized gain (loss) on investments		(38.11	)		–			(38.28	)		–
Net unrealized appreciation (depreciation) on investments		18.60			(11.20	)		15.38			(27.01	)
Net increase in net assets resulting from operations	$	4.58		$	7.00		$	19.15		$	12.40

Net increase in net assets resulting from operations can vary from period to period as a result of various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. As a result, comparisons may not be meaningful.

Investment Income

	For the Three Months Ended				For the Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	($ in millions)
Interest	$	32.50	$	26.49	$	61.67	$	55.62
Dividend income		2.47		2.19		4.95		4.10
Other income		1.05		0.64		1.59		0.94
Total investment income	$	36.02	$	29.32	$	68.21	$	60.66

Interest

Interest from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, increased to $32.50 million for the three months ended June 30, 2017 as compared to $26.49 million for the three months ended June 30, 2016. Included in interest for the three months ended June 30, 2017 and 2016 is $0.48 million and $0.01 million, respectively, in prepayment premiums, $3.38 million and $0.07 million, respectively, in accelerated accretion of upfront loan origination fees and unamortized discounts, and $1.71 million and $0.00 million, respectively, in PIK interest.

Interest from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, increased to $61.67 million for the six months ended June 30, 2017 as compared to $55.62 million for the six months ended June 30, 2016. Included in interest for the six months ended June 30, 2017 and 2016 is $1.81 million and $0.27 million, respectively, in prepayment premiums, $3.67 million and $0.56 million, respectively, in accelerated accretion of upfront loan origination fees and unamortized discounts, and $3.37 million and $0.00 million, respectively, in PIK interest.

Dividend income

Dividend income increased from $2.19 million for the three months ended June 30, 2016 to $2.47 million for the three months ended June 30, 2017 primarily as a result of increased distributions from the Senior Credit Fund during the three months ended June 30, 2017. The dividend income from Senior Credit Fund increased from $1.55 million for the three months ended June 30, 2016 to $2.45 million for the three months ended June 30, 2017.

Dividend income increased from $4.10 million for the six months ended June 30, 2016 to $4.95 million for the six months ended June 30, 2017 primarily as a result of increased distributions from the Senior Credit Fund during the six months ended June 30, 2017. The dividend income from Senior Credit Fund increased from $2.83 million for the six months ended June 30, 2016 to $4.90 million for the six months ended June 30, 2017. See “Senior Credit Fund, LLC” below for further detail.

Other income

Other income increased from $0.64 million for the three months ended June 30, 2016 to $1.05 million for the three months ended June 30, 2017 primarily as a result of the increase in loan origination fee income earned from the Senior Credit Fund.

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Other income increased from $0.94 million for the six months ended June 30, 2016 to $1.59 million for the six months ended June 30, 2017 primarily as a result of higher non-recurring amendment fees and an increase in loan origination fee income earned from the Senior Credit Fund.

Expenses

	For the Three Months Ended				For the Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	($ in millions)
Interest and other debt expenses	$	4.84	$	3.24	$	9.35	$	6.28
Management fees		4.35		4.19		8.81		8.31
Incentive fees		1.24		2.08		4.97		3.49
Professional fees		0.47		0.58		0.93		1.18
Administration, custodian and transfer agent fees		0.20		0.22		0.39		0.44
Directors’ fees		0.17		0.26		0.35		0.48
Other expenses		0.29		0.33		0.63		0.64
Total Expenses	$	11.56	$	10.90	$	25.43	$	20.82

Interest and other debt expenses

Interest and other debt expenses increased from $3.24 million for the three months ended June 30, 2016 to $4.84 million for the three months ended June 30, 2017 primarily due to our issuance of Convertible Notes on October 3, 2016. Included in interest and other debt expenses for the three months ended June 30, 2017 is $1.51 million in interest expense, accretion of OID and amortization of debt issuance costs related to the Convertible Notes that were issued on October 3, 2016.

Interest and other debt expenses increased from $6.28 million for the six months ended June 30, 2016 to $9.35 million for the six months ended June 30, 2017 primarily due to our issuance of Convertible Notes on October 3, 2016. Included in interest and other debt expenses for the six months ended June 30, 2017 is $3.02 million in interest expense, accretion of OID and amortization of debt issuance costs related to the Convertible Notes that were issued on October 3, 2016.

Management Fees and Incentive Fees

Management Fees increased from $4.19 million for the three months ended June 30, 2016 to $4.35 million for the three months ended June 30, 2017 as a result of an increase in gross assets, excluding cash and investments in a money market fund managed by an affiliate of Group Inc. Incentive Fees decreased from $2.08 million for the three months ended June 30, 2016 to $1.24 million for the three months ended June 30, 2017 as a result of a decrease in the cap on Incentive Fees for the period which is primarily due to an increase in net capital losses on our investments.

Management Fees increased from $8.31 million for the six months ended June 30, 2016 to $8.81 million for the six months ended June 30, 2017 as a result of an increase in gross assets, excluding cash and investments in a money market fund managed by an affiliate of Group Inc. Incentive Fees increased from $3.49 million for the six months ended June 30, 2016 to $4.97 million for the six months ended June 30, 2017 as a result of an increase in the cap on Incentive Fees for the period which is primarily due to an decrease in net capital losses on our investments.

Professional fees and other general and administrative expenses

Professional fees and other general and administrative expenses for the three and six months ended June 30, 2016 remained relatively consistent as compared to the three and six months ended June 30, 2017.

Net Realized Gains (Losses)

The realized gains and losses on fully exited and partially exited portfolio companies during the three and six months ended June 30, 2017 and 2016 consisted of the following:

	For the Three Months Ended					For the Six Months Ended
	June 30, 2017			June 30, 2016		June 30, 2017			June 30, 2016
	($ in millions)
Iracore International Holdings, Inc.(1)	$	(14.40	)	$	–	$	(14.40	)	$	–
Washington Inventory Service(2)		(23.71	)		–		(23.71	)		–
Other, net		–			–		(0.17	)		–
Net realized gain (loss)	$	(38.11	)	$	–	$	(38.28	)	$	–

⁽¹⁾  Effective April 13, 2017, we entered into an exchange agreement with Iracore International Holdings, Inc. whereby the first lien debt held by us was exchanged for non-income producing common equity. As a result, we realized a loss during the period, a portion of which had previously been recognized in unrealized loss.

⁽²⁾  On June 6, 2017, we entered into an assignment agreement with Washington Inventory Service which resulted in a realized loss during the period on the second lien debt held by us, a portion of which had previously been recognized in unrealized loss.

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Net Change in Unrealized Appreciation (Depreciation) on Investments

Any changes in fair value are recorded as a change in unrealized appreciation (depreciation) on investments. For further details on the valuation process, refer to “Critical Accounting Policies—Valuation of Portfolio Investments.” Net change in unrealized appreciation (depreciation) on investments for the three and six months ended June 30, 2017 and 2016 were as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
	($ in millions)
Change in unrealized appreciation	$	33.63		$	11.02		$	36.09		$	17.30
Change in unrealized depreciation		(15.03	)		(22.22	)		(20.71	)		(44.31	)
Net change in unrealized appreciation (depreciation) on investments	$	18.60		$	(11.20	)	$	15.38		$	(27.01	)

The change in unrealized appreciation (depreciation) on investments for the three and six months ended June 30, 2017 and 2016 consisted of the following:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
	($ in millions)
Portfolio Company:
Artesyn Embedded Technologies, Inc.	$	(0.15	)	$	0.70		$	1.03		$	(1.10	)
Bolttech Mannings, Inc.		(4.18	)		(1.49	)		(6.01	)		(3.17	)
Data Driven Delivery Systems, LLC		(1.93	)		(0.07	)		(2.01	)		(0.13	)
Dispensing Dynamics International		–			1.42			0.84			(0.35	)
Global Tel*Link Corporation		0.07			1.94			0.72			6.03
Highwinds Capital, Inc.		–			(0.04	)		(1.05	)		(0.08	)
Hunter Defense Technologies, Inc.		–			(7.94	)		–			(21.57	)
Iracore International Holdings, Inc.(1)		13.61			(3.19	)		13.62			(3.94	)
Kawa Solar Holdings Limited		(4.69	)		(0.01	)		(5.46	)		0.06
NTS Communications, Inc.		(0.55	)		(4.06	)		(2.92	)		(4.54	)
P2 Upstream Acquisition Co.		–			2.13			0.68			0.30
Prairie Provident Resources, Inc.		(0.26	)		(0.10	)		(0.78	)		(0.49	)
Reddy Ice Corporation		0.61			0.58			1.03			0.66
Securus Technologies Holdings, Inc.		0.13			1.34			0.67			7.03
Senior Credit Fund, LLC		(0.75	)		1.30			(0.32	)		1.20
Washington Inventory Service(2)		18.01			(3.46	)		15.03			(4.69	)
Other, net(3)		(1.32	)		(0.25	)		0.31			(2.23	)
Total	$	18.60		$	(11.20	)	$	15.38		$	(27.01	)

⁽¹⁾  Unrealized appreciation on Iracore International Holdings, Inc. is the result of the reversal of unrealized depreciation upon the exchange of first lien debt into non-income producing common equity.

⁽²⁾  Unrealized appreciation on Washington Inventory Service is the result of the reversal of unrealized depreciation upon the assignment of our second lien debt.

⁽³⁾  For the three and six months ended June 30, 2017, other, net includes gross unrealized appreciation of $1.20 million and $2.47 million, respectively, and gross unrealized depreciation of $(2.52) million and $(2.16) million, respectively. For the three and six months ended June 30, 2016, other, net includes gross unrealized appreciation of $1.61 million and $2.02 million, respectively, and gross unrealized depreciation of $(1.86) million and $(4.25) million, respectively.

SENIOR CREDIT FUND, LLC

Overview

The Senior Credit Fund, an unconsolidated Delaware limited liability company, was formed on May 7, 2014 and commenced operations on October 1, 2014. We invest together with Cal Regents through the Senior Credit Fund. The Senior Credit Fund’s principal purpose is to make investments, either directly or indirectly through SPV I, primarily in senior secured loans to middle-market companies. Each of us and Cal Regents has a 50% economic ownership in the Senior Credit Fund and each has subscribed to fund $100.00 million. Except under certain circumstances, contributions to the Senior Credit Fund cannot be redeemed. The Senior Credit Fund is managed by a six member board of managers, on which we and Cal Regents have equal representation. Investment decisions generally must be unanimously approved by a quorum of the board of managers. Establishing a quorum for the Senior Credit Fund’s board of managers requires at least four members to be present at a meeting, including at least two of our representatives and two of Cal Regents’ representatives. If there are five members present at a meeting, all three representatives of Cal Regents must be present to constitute a quorum.

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Selected Financial Data

As of June 30, 2017 and December 31, 2016, we and Cal Regents had subscribed to fund and contributed the following in the Senior Credit Fund:

	June 30, 2017				December 31, 2016
	Subscribed to fund		Contributed		Subscribed to fund		Contributed
	( in millions)				( in millions)
Company	$	100.00	$	94.34	$	100.00	$	77.59
Cal Regents		100.00		94.34		100.00		77.59
Total	$	200.00	$	188.68	$	200.00	$	155.18

As of June 30, 2017 and December 31, 2016, the Senior Credit Fund had total investments in senior secured debt at fair value of $502.43 million and $479.53 million, respectively. As of June 30, 2017 and December 31, 2016, the Senior Credit Fund had no investments on non-accrual status. As of June 30, 2017 and December 31, 2016, the Senior Credit Fund had an investment in a money market fund managed by an affiliate of Group Inc. with a total fair value of $17.43 million and $1.94 million, respectively. In addition, the Senior Credit Fund had six unfunded commitments totaling $12.55 million as of June 30, 2017 and three unfunded commitments totaling $6.30 million as of December 31, 2016.

Below is a summary of the Senior Credit Fund’s portfolio (excluding an investment in a money market fund managed by an affiliate of Group Inc.) followed by a listing of the individual loans in the Senior Credit Fund’s portfolio as of June 30, 2017 and December 31, 2016:

	As of
	June 30, 2017		December 31, 2016
Number of portfolio companies		35		37
Total senior secured debt(1)	$	520.80 million	$	489.66 million
Largest loan to a single borrower(1)	$	24.95 million	$	24.62 million
Weighted average current interest rate on senior secured debt(2)		7.0%		6.6%
Percentage of performing debt bearing a floating rate(3)		100%		100.0%
Percentage of performing debt bearing a fixed rate(3)		–%		–%
Weighted average leverage (net debt/EBITDA)(4)		4.1x		3.8x
Weighted average interest coverage(4)		3.1x		3.2x
Median EBITDA(4)	$	43.96 million	$	68.70 million

⁽¹⁾  At par amount.

⁽²⁾  Computed as the (a) annual stated interest rate on accruing senior secured debt divided by (b) total senior secured debt at par amount.

⁽³⁾  Measured on a fair value basis.

⁽⁴⁾  For a particular portfolio company of the SCF, EBITDA typically represents net income before net interest expense, income tax expense, depreciation and amortization. The net debt to EBITDA represents the ratio of a portfolio company’s total debt (net of cash) and excluding debt subordinated to the SCF’s investment in a portfolio company, to a portfolio company’s EBITDA. The interest coverage ratio represents the ratio of a portfolio company’s EBITDA as a multiple of interest expense. Weighted average net debt to EBITDA is weighted based on the fair value of the SCF’s debt investments. Weighted average interest coverage is weighted based on the fair value of the SCF’s performing debt investments. Median EBITDA is based on the SCF’s debt investments. Portfolio company statistics are derived from the most recently available financial statements of each portfolio company of the SCF as of the respective reported end date. Statistics of the SCF’s portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount.

47

Senior Credit Fund Portfolio as of June 30, 2017

Portfolio Company	Industry	Interest	Maturity	Par Amount		Cost			Fair Value
				(in millions)
1st Lien/Senior Secured Debt
3SI Security Systems, Inc.(++)	Commercial Services & Supplies	L + 6.25% (1.00% Floor)	06/16/2023	$	15.00	$	14.78		$	14.77
Ansira Partners, Inc.(+++)	Media	L + 6.50% (1.00% Floor)	12/20/2022		8.68		8.60			8.60
Ansira Partners, Inc.(1) (2)	Media	L + 6.50% (1.00% Floor)	12/20/2022		1.27		(0.01	)		(0.01	)
ASC Acquisition Holdings, LLC(+) (3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		10.97		10.87			10.86
ASC Acquisition Holdings, LLC(1) (3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		3.75		—			—
ATX Networks Corp.(+++)	Communications Equipment	L + 6.00% (1.00% Floor)	06/11/2021		16.64		16.50			16.39
Badger Sportswear, Inc.(+++)	Textiles, Apparel & Luxury Goods	L + 4.50% (1.00% Floor)	09/11/2023		14.89		14.75			14.81
Crowne Group, LLC(+++)	Auto Components	L + 9.25% (1.00% Floor)	05/26/2021		16.62		16.48			16.78
CST Buyer Company(++++)	Diversified Consumer Services	L + 6.25% (1.00% Floor)	03/01/2023		20.65		20.10			20.08
CST Buyer Company(1) (2)	Diversified Consumer Services	L + 6.25% (1.00% Floor)	03/01/2023		1.80		(0.05	)		(0.05	)
DBRS Limited(+++)	Capital Markets	L + 5.25% (1.00% Floor)	03/04/2022		11.73		11.65			11.44
DiscoverOrg, LLC(+) (3)	Software	L + 4.25% (1.00% Floor)	06/02/2020		6.95		6.92			6.93
Explorer Holdings, Inc.(+++)	Health Care Technology	L + 5.00% (1.00% Floor)	05/02/2023		9.90		9.81			9.97
GK Holdings, Inc.(+++)	IT Services	L + 6.00% (1.00% Floor)	01/20/2021		17.55		17.47			16.85
HC Group Holdings III, Inc.(+)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	04/07/2022		8.84		8.81			8.78
Help/Systems, LLC(+++)	Software	L + 4.50% (1.00% Floor)	10/08/2021		17.81		17.34			17.83
Hygiena Borrower LLC(+++)	Life Sciences Tools & Services	L + 4.75% (1.00% Floor)	08/26/2022		15.96		15.81			15.64
Hygiena Borrower LLC(1) (2)	Life Sciences Tools & Services	L + 4.75% (1.00% Floor)	08/26/2022		1.67		(0.02	)		(0.05	)
Jill Acquisition LLC(+++)	Textiles, Apparel & Luxury Goods	L + 5.00% (1.00% Floor)	05/08/2022		14.07		13.98			13.72
KMG Chemicals Inc.(+)	Chemicals	L + 4.25% (1.00% Floor)	06/15/2024		7.00		6.97			7.06
Lattice Semiconductor Corporation(+)	Semiconductors & Semiconductor Equipment	L + 4.25% (1.00% Floor)	03/10/2021		10.81		10.65			10.75
Liquidnet Holdings, Inc.(+) (4)	Capital Markets	L + 6.75% (1.00% Floor)	05/22/2019		23.91		23.69			23.85
Loar Group, Inc.(+)	Aerospace & Defense	L + 4.75% (1.00% Floor)	01/12/2022		9.64		9.43			9.60
MB Aerospace Holdings Inc.(+++)	Aerospace & Defense	L + 5.50% (1.00% Floor)	12/15/2022		15.77		15.64			15.81
Netsmart Technologies, Inc.(+++)	Health Care Technology	L + 4.50% (1.00% Floor)	04/19/2023		18.84		18.79			18.94
Playcore Wisconsin, Inc.(+++)	Leisure Equipment & Products	L + 4.25% (1.00% Floor)	05/29/2020		17.91		17.76			17.78
Pomeroy Group LLC(+++++)	IT Services	L + 6.00% (1.00% Floor)	11/30/2021		15.84		15.43			14.97
Professional Physical Therapy(+++)	Health Care Providers & Services	L + 6.00% (1.00% Floor)	12/16/2022		10.45		10.35			10.34
RealD, Inc.(+)	Media	L + 7.50% (1.00% Floor)	03/22/2021		16.77		16.63			16.64
Research Now Group, Inc.(+++)	Professional Services	L + 4.50% (1.00% Floor)	03/18/2021		9.44		9.33			9.41
SciQuest, Inc.(+++++)	Internet Software & Services	L + 4.75% (1.00% Floor)	07/28/2023		19.62		19.53			19.52
Smarte Carte, Inc.(+++)	Air Freight & Logistics	L + 5.50% (1.00% Floor)	08/30/2021		10.85		10.75			10.76
SMS Systems Maintenance Services, Inc.(+)	IT Services	L + 5.00% (1.00% Floor)	10/30/2023		14.92		14.85			14.86
Stackpath, LLC(++++)	Internet Software & Services	L + 5.00% (1.00% Floor)	02/03/2023		16.96		16.80			16.79
Tronair Parent Inc.(+)	Air Freight & Logistics	L + 4.75% (1.00% Floor)	09/08/2023		13.89		13.77			13.76
U.S. Acute Care Solutions, LLC(+++)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	05/14/2021		12.93		12.82			12.81
VRC Companies, LLC(++++)	Commercial Services & Supplies	L + 6.50% (1.00% Floor)	03/31/2023		20.01		19.57			19.56
VRC Companies, LLC(++++) (1)	Commercial Services & Supplies	L + 6.50% (1.00% Floor)	03/31/2023		3.53		0.70			0.70
VRC Companies, LLC(++++) (1)	Commercial Services & Supplies	L + 6.50% (1.00% Floor)	03/31/2022		1.41		0.04			0.04
Zep Inc.(+)	Chemicals	L + 4.00% (1.00% Floor)	06/27/2022		11.84		11.82			11.85
Total 1st Lien/Senior Secured Debt							479.11			479.14
1st Lien/First-Out Unitranche
Infogix, Inc.(+++)	Software	L + 4.75% (1.00% Floor)	12/31/2021		9.71		9.64			9.69
Total 1st Lien/First-Out Unitranche							9.64			9.69
2nd Lien/Senior Secured Debt
DiscoverOrg, LLC(+)(3)	Software	L + 9.00% (1.00% Floor)	02/10/2022		8.00		7.87			7.90
GK Holdings, Inc.(+++)	IT Services	L + 10.25% (1.00% Floor)	01/20/2022		6.00		5.91			5.70
Total 2nd Lien/Senior Secured Debt							13.78			13.60
Total Corporate Debt						$	502.53		$	502.43

⁽⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2017 was 1.22%.

⁽⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 2 month LIBOR plus a base rate. The 2 month LIBOR as of June 30, 2017 was 1.25%.

⁽⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2017 was 1.30%.

⁽⁺⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 6 month LIBOR plus a base rate. The 6 month LIBOR as of June 30, 2017 was 1.45%.

^(+++++)  The interest rate on these loans is subject to the greater of a LIBOR floor or 12 month LIBOR plus a base rate. The 12 month LIBOR as of June 30, 2017 was 1.74%.

⁽¹⁾  Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated.

⁽²⁾  The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

⁽³⁾  The Company also holds a portion of the 2nd lien/senior secured debt in this portfolio company.

⁽⁴⁾  Initial investment was purchased at fair value from the Company in October 2014.

L – LIBOR

48

Senior Credit Fund Portfolio as of December 31, 2016

Portfolio Company	Industry	Interest	Maturity	Par Amount		Cost		Fair Value
				(in millions)
1st Lien/Senior Secured Debt
Affordable Care Holding Corp.(+++)	Health Care Providers & Services	L + 4.75% (1.00% Floor)	10/22/2022	$	4.95	$	4.86	$	4.95
Ansira Partners, Inc.(1)	Media	L + 6.50% (1.00% Floor)	12/20/2022		8.73		8.64		8.64
Ansira Partners, Inc.(1)(2)	Media	L + 6.50% (1.00% Floor)	12/20/2022		1.27		–		–
ASC Acquisition Holdings, LLC(+++)(3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		11.25		11.14		11.14
ASC Acquisition Holdings, LLC(+++)(2)(3)	Distributors	L + 7.50% (1.00% Floor)	12/15/2021		3.75		–		–
ATX Networks Corp.(+++)	Communications Equipment	L + 6.00% (1.00% Floor)	06/11/2021		16.77		16.60		16.35
Badger Sportswear, Inc.(+++)	Textiles, Apparel & Luxury Goods	L + 4.50% (1.00% Floor)	09/11/2023		14.96		14.86		14.85
ConvergeOne Holdings Corporation(+++)(4)	Communications Equipment	L + 5.38% (1.00% Floor)	06/17/2020		17.40		17.26		17.31
Crowne Group, LLC(+++)	Auto Components	L + 9.25% (1.00% Floor)	05/26/2021		16.87		16.72		17.04
DBRS Limited(+++)	Capital Markets	L + 5.25% (1.00% Floor)	03/04/2022		11.79		11.70		10.73
DiscoverOrg, LLC(+)(3)	Software	L + 4.25% (1.00% Floor)	06/02/2020		7.15		7.12		7.08
Edgewood Partners Insurance Center(+)	Insurance	L + 6.00% (1.00% Floor)	03/16/2023		15.88		15.59		15.92
Explorer Holdings, Inc.(+++)	Health Care Technology	L + 5.00% (1.00% Floor)	05/02/2023		9.95		9.85		10.02
GK Holdings, Inc.(+++)	IT Services	L + 5.50% (1.00% Floor)	01/20/2021		17.64		17.56		17.46
HC Group Holdings III, Inc.(+++)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	04/07/2022		8.89		8.85		8.51
Help/Systems, LLC(+++)	Software	L + 5.25% (1.00% Floor)	10/08/2021		17.95		17.41		17.91
Imagine! Print Solutions, Inc.(+++)	Commercial Services & Supplies	L + 6.00% (1.00% Floor)	03/30/2022		4.96		4.91		5.04
Jill Acquisition LLC(+++)	Textiles, Apparel & Luxury Goods	L + 5.00% (1.00% Floor)	05/08/2022		15.81		15.70		15.75
Lattice Semiconductor Corporation(+++)	Semiconductors & Semiconductor Equipment	L + 4.25% (1.00% Floor)	03/10/2021		11.99		11.80		11.96
Liquidnet Holdings, Inc.(+)(4)	Capital Markets	L + 6.75% (1.00% Floor)	05/22/2019		24.62		24.34		24.43
Loar Group, Inc.(++)	Aerospace & Defense	L + 4.75% (1.00% Floor)	01/12/2022		9.93		9.68		9.88
MB Aerospace Holdings Inc.(+++)	Aerospace & Defense	L + 5.50% (1.00% Floor)	12/15/2022		15.85		15.71		15.77
Mister Car Wash, Inc.(1)	Automobiles	L + 4.25% (1.00% Floor)	08/20/2021		6.65		6.60		6.66
Mister Car Wash, Inc.(1)(2)	Automobiles	L + 4.25% (1.00% Floor)	08/20/2021		1.33		–		0.01
Netsmart Technologies, Inc.(+++)	Health Care Technology	L + 4.50% (1.00% Floor)	04/19/2023		18.94		18.88		19.00
Oasis Outsourcing Holdings, Inc.(+)	Diversified Financial Services	L + 4.75% (1.00% Floor)	12/27/2021		3.98		3.97		3.99
PGX Holdings, Inc.(+++)(4)	Professional Services	L + 5.25% (1.00% Floor)	09/29/2020		13.58		13.51		13.55
Playcore Wisconsin, Inc.(+++)	Leisure Equipment & Products	L + 4.25% (1.00% Floor)	05/29/2020		18.00		17.82		17.82
Pomeroy Group LLC(++++)	IT Services	L + 6.00% (1.00% Floor)	11/30/2021		15.92		15.47		15.76
Precyse Acquisition Corp.(+)	Health Care Technology	L + 5.50% (1.00% Floor)	10/20/2022		7.47		7.37		7.55
Professional Physical Therapy(+++)	Health Care Providers & Services	L + 6.00% (1.00% Floor)	12/16/2022		10.50		10.40		10.40
RealD, Inc.(++)	Media	L + 7.50% (1.00% Floor)	03/22/2021		16.87		16.72		16.70
Research Now Group, Inc.(+++)	Professional Services	L + 4.50% (1.00% Floor)	03/18/2021		9.59		9.48		9.45
SciQuest, Inc.(++++)	Internet Software & Services	L + 4.75% (1.00% Floor)	07/28/2023		13.93		13.86		13.86
Smarte Carte, Inc.(+++)	Air Freight & Logistics	L + 5.50% (1.00% Floor)	08/30/2021		11.21		11.11		11.10
Tronair Parent Inc.(+++)	Air Freight & Logistics	L + 4.75% (1.00% Floor)	09/08/2023		13.86		13.76		13.72
U.S. Acute Care Solutions, LLC(1)	Health Care Providers & Services	L + 5.00% (1.00% Floor)	05/14/2021		13.00		12.87		12.87
Veresen Midstream Limited Partnership(+++)	Energy Equipment & Services	L + 4.25% (1.00% Floor)	03/31/2022		10.81		10.61		10.87
Zep Inc.(+++)	Chemicals	L + 4.00% (1.00% Floor)	06/27/2022		11.90		11.88		11.96
Total 1st Lien/Senior Secured Debt							454.61		456.01
1st Lien/First-Out Unitranche
Infogix, Inc.(+++)	Software	L + 4.75% (1.00% Floor)	12/31/2021		9.76		9.68		9.66
Total 1st Lien/First-Out Unitranche							9.68		9.66
2nd Lien/Senior Secured Debt
DiscoverOrg, LLC(+++)(3)	Software	L + 9.00% (1.00% Floor)	02/10/2022		8.00		7.86		7.86
GK Holdings, Inc.(+++)	IT Services	L + 9.50% (1.00% Floor)	01/20/2022		6.00		5.90		6.00
Total 2nd Lien/Senior Secured Debt							13.76		13.86
Total Corporate Debt						$	478.05	$	479.53

⁽⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of December 31, 2016 was 0.77%.

⁽⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 2 month LIBOR plus a base rate. The 2 month LIBOR as of December 31, 2016 was 0.82%.

⁽⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of December 31, 2016 was 1.00%.

⁽⁺⁺⁺⁺⁾  The interest rate on these loans is subject to the greater of a LIBOR floor or 12 month LIBOR plus a base rate. The 12 month LIBOR as of December 31, 2016 was 1.69%.

⁽¹⁾  Position or portion thereof unsettled as of December 31, 2016.

⁽²⁾  Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated.

⁽³⁾  We also hold a portion of the 2nd lien/senior secured debt in this portfolio company.

⁽⁴⁾  Initial investment was purchased at fair value from us in October 2014.

L – LIBOR

49

Below is certain summarized balance sheet information for the Senior Credit Fund as of June 30, 2017 and December 31, 2016:

	As of
	June 30, 2017		December 31, 2016
	(in millions)
Selected Balance Sheet Information
Total investments, at fair value	$	519.86	$	481.47
Cash and other assets		15.21		10.93
Total assets	$	535.07	$	492.40
Debt(1)	$	336.60	$	300.57
Other liabilities		8.82		35.04
Total liabilities	$	345.42	$	335.61
Members’ equity	$	189.65	$	156.79
Total liabilities and members’ equity	$	535.07	$	492.40

⁽¹⁾  Net of deferred financing costs for the SPV I Term Loan Facility (as defined below) as of June 30, 2017 and December 31, 2016, which were in the amount of $2.64 million and $2.68 million, respectively.

Below is certain summarized Statement of Operations information for the Senior Credit Fund for the three and six months ended June 30, 2017 and 2016:

	For the Three Months Ended					For the Six Months Ended
	June 30, 2017			June 30, 2016		June 30, 2017			June 30, 2016
	(in millions)
Selected Statement of Operations Information:
Total investment income	$	10.18		$	6.32	$	18.61		$	11.32
Expenses
Interest and other debt expenses		3.55			2.17		6.65			4.27
Excess loan origination and structuring fees		0.75			0.48		0.75			0.60
Professional fees		0.13			0.10		0.31			0.21
Administration and custodian fees		0.10			0.08		0.20			0.16
Other expenses		0.02			0.01		0.05			0.03
Total expenses		4.55			2.84		7.96			5.27
Net investment income (loss)		5.63			3.48		10.65			6.05
Net realized gain (loss) on investments		–			–		0.08			–
Net change in unrealized appreciation (depreciation) on investments		(2.23	)		2.21		(1.57	)		1.99
Net increase (decrease) in members’ equity	$	3.40		$	5.69	$	9.16		$	8.04

Debt

On December 19, 2016, SPV I entered into an amended and restated credit facility (as amended, the “Asset Based Facility”), which, consists of a revolving credit facility (the “SPV I Revolving Credit Facility”), a term loan facility (the “SPV I Term Loan Facility”) and a Class B loan facility (the “SPV I Class B Facility”), with various lenders. For the Asset Based Facility, Natixis, New York Branch (“Natixis”) serves as the facility agent, and State Street Bank and Trust Company serves as the collateral agent. The Asset Based Facility includes a maximum borrowing capacity of $400.00 million. The SPV I Revolving Credit Facility provided for borrowings in an aggregate amount up to $120.00 million on a committed basis as of June 30, 2017. As of June 30, 2017, the SPV I Term Loan Facility consisted of a $240.00 million fully drawn term loan and the SPV I Class B Facility consisted of a $40.00 million fully drawn Class B loan.

As of June 30, 2017 and December 31, 2016, the SPV I’s outstanding borrowings under the Asset Based Facility were $339.24 million, and $303.25 million, respectively. The summary information of the Asset Based Facility for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	($ in millions)
Borrowing interest expense	$	3.22	$	1.63	$	5.96	$	2.86
Facility fees		0.14		0.20		0.31		0.45
Amortization of financing costs		0.19		0.13		0.38		0.46
Total	$	3.55	$	1.96	$	6.65	$	3.77
Weighted average interest rate		3.6%		3.1%		3.6%		3.1%
Average outstanding balance	$	355.79	$	209.86	$	338.99	$	184.83

50

The Senior Credit Fund had entered into a revolving credit facility (the “Subscription Facility”) with Versailles Assets LLC as lender, and with Natixis as the facility agent. The Subscription Facility provided for borrowings in an aggregate amount up to $50.00 million on a committed basis. The Senior Credit Fund’s obligations to Natixis and the lenders were secured by the unfunded subscriptions of us and Cal Regents, proceeds of such subscriptions and certain other assets. On September 30, 2016, the Senior Credit Fund paid in full all loans outstanding and the Subscription Facility was terminated. In connection thereof, the related documents governing the Subscription Facility were also terminated. The summary information of the Subscription Facility for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	($ in millions)
Borrowing interest expense		N/A	$	0.17		N/A	$	0.42
Facility fees		N/A		0.01		N/A		0.02
Amortization of financing costs		N/A		0.03		N/A		0.06
Total		N/A	$	0.21		N/A	$	0.50
Weighted average interest rate		N/A		2.5%		N/A		2.4%
Average outstanding balance		N/A	$	27.74		N/A	$	35.03

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The primary use of existing funds and any funds raised in the future is expected to be for our investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

We expect to generate cash primarily from the net proceeds of any future offerings of securities, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into credit facilities in addition to our Revolving Credit Facility as discussed below, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 2 to 1 after such borrowing. As of June 30, 2017 and December 31, 2016, our asset coverage ratio was 2.77 to 1 and 2.32 to 1, respectively. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

As of June 30, 2017, we had cash of approximately $37.49 million, an increase of $32.93 million from December 31, 2016. Cash provided by operating activities for the six months ended June 30, 2017 was approximately $74.77 million, primarily driven by an increase in net assets resulting from operations of $19.15 million, proceeds from sales and principal repayments of $278.12 million and proceeds from other operating activities of $15.81 million, offset by net purchases of investments in the affiliated money market fund of $2.12 million, and purchases of investments of $236.19 million. Cash used by financing activities for the six months ended June 30, 2017 was approximately $41.84 million, primarily driven by repayments on debt of $267.25 million, distributions paid of $32.19 million, and other financing activities of $0.72 million, partially offset by proceeds from the issuance of common stock (net of underwriting and offering costs) of $81.57 and borrowings on debt of $176.75 million.

As of June 30, 2016, we had cash of approximately $15.45 million, a decrease of $7.26 million from December 31, 2015. In addition, as of June 30, 2016, we had an investment in a money market fund managed by an affiliate of Group Inc. of $15.67 million, an increase of $5.55 million from December 31, 2015. Cash used by operating activities for the six months ended June 30, 2016 was approximately $24.18 million, primarily driven by purchases of investments of $93.86 million and net purchase of investments in the affiliated money market fund of $5.55 million, partially offset by an increase in net assets resulting from operations of $12.40 million, proceeds from sales and principal repayments of $35.53 million, and proceeds from other operating activities of $27.30 million. Cash used by financing activities for the six months ended June 30, 2016 was approximately $16.92 million, which was the result of proceeds from the borrowings on debt of $110.50 million, partially offset by repayments on debt of $60.95 million, distributions paid of $32.57 million, and other financing activities of $0.06 million.

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To the extent permissible under the risk retention rules and applicable provisions of the 1940 Act, we may raise capital by securitizing certain of our investments, including through the formation of one or more CLOs or asset based facilities, while retaining all or most of the exposure to the performance of these investments. This would involve contributing a pool of assets to a special purpose entity, and selling debt interests in such entity on a non-recourse or limited-recourse basis to purchasers. We may also pursue other forms of debt financing, including potentially from the Small Business Administration through a future small business investment company subsidiary (subject to regulatory approvals).

Equity Issuances

On May 24, 2017, we completed a follow-on offering under our shelf registration statement, issuing 3,250,000 shares of our common stock at a public offering price of $22.50 per share. Net of offering and underwriting costs, we received cash proceeds of $69.65 million.

On May 26, 2017, we sold an additional 487,500 shares of our common stock pursuant to the underwriters’ exercise of the option to purchase additional shares we granted in connection with the aforementioned offering. Net of underwriting costs, we received additional cash proceeds of $10.64 million.

10b5-1 Plan

GS & Co. adopted a 10b5-1 plan (the “GS 10b5-1 Plan”) in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act, which provided for the purchase by GS & Co. in the open market of up to the lesser of (i) $25.00 million in the aggregate of our common stock and (ii) such amount that would not bring its collective ownership (with Group Inc.) of our common stock over 19.9%. The GS 10b5-1 Plan expired on March 18, 2016. The GS 10b5-1 Plan required GS & Co. to purchase shares of our common stock when the market price per share was below our most recently reported NAV per share (including any updates, corrections or adjustments publicly announced by us to any previously announced NAV per share). The purchase of shares by GS & Co. pursuant to the GS 10b5-1 Plan was intended to satisfy the conditions of Rules 10b5-1 and 10b-18 under the Exchange Act, and was otherwise subject to applicable law. Under the GS 10b5-1 Plan, GS & Co. increased the volume of purchases made anytime the market price per share of our common stock declined below the most recently reported NAV per share, subject to volume restrictions. Purchases of our common stock by GS & Co. under the GS 10b5-1 Plan may have resulted in the price of our common stock being higher than the price that otherwise might have existed in the open market. For the period January 1, 2016 through March 18, 2016, GS & Co. purchased 432,638 shares of our common stock pursuant to the GS 10b5-1 Plan.

Common Stock Repurchase Plan

In February 2015, our Board of Directors approved a common stock repurchase plan (the “Company Repurchase Plan”), which authorized our purchase of up to $35.00 million of our common stock in the open market during open trading periods. No repurchases were made pursuant to the Company Repurchase Plan which expired on March 18, 2016.

In February 2016, our Board of Directors authorized us to repurchase up to $25.00 million of our common stock if the stock trades below the most recently announced NAV per share (including any updates, corrections or adjustments publicly announced by us to any previously announced NAV per share), from March 18, 2016 to March 18, 2017, subject to certain limitations. In February 2017, the Company’s Board of Directors renewed its authorization of the stock repurchase plan to extend the expiration to March 18, 2018.

In connection with this authorization, we entered into a 10b5-1 plan (the “Company 10b5-1 Plan”). The Company 10b5-1 Plan provides that purchases will be conducted on the open market on a programmatic basis in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances. No purchases will be effected pursuant to the Company 10b5-1 Plan if such purchase would (i) cause the aggregate ownership of our outstanding stock by Group Inc. and GS & Co. to equal or exceed 25.0% (due to the reduction in outstanding shares of stock as a result of purchase) or (ii) cause our debt/equity ratio to exceed 0.75. The Company 10b5-1 Plan initially took effect on March 18, 2016 (with any purchases to commence after the opening of NYSE trading on March 21, 2016), was subsequently renewed and is scheduled to expire on March 18, 2018. Further, no purchases will be effected during the applicable restricted period under Regulation M as a result of an offering of securities by us or for a period of 60 days after the expiration of any overallotment option included in any common equity offering.

Repurchases of our common stock under the Company 10b5-1 Plan or otherwise may result in the price of our common stock being higher than the price that otherwise might exist in the open market. For the three and six months ended June 30, 2017, we did not repurchase any of our common stock pursuant to the Company 10b5-1 Plan or otherwise.

Dividend Reinvestment Plan

Concurrent with the IPO, we adopted a dividend reinvestment plan that provides for reinvestment of all cash distributions declared by the Board of Directors unless a stockholder elects to “opt out” of the plan. As a result, if the Board of Directors declares a cash distribution, then the stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash distribution. Due to regulatory considerations, Group Inc. has opted out of the dividend reinvestment plan, and GS & Co. has opted out of the dividend reinvestment plan in respect of any shares of our common stock acquired through the GS 10b5-1 Plan.

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The following table summarizes shares distributed pursuant to the dividend reinvestment plan during the six months ended June 30, 2017 to stockholders who had not opted out of the dividend reinvestment plan.

Date Declared	Record Date	Payment Date	Shares
November 1, 2016	December 31, 2016	January 17, 2017		11,124
February 22, 2017	March 31, 2017	April 17, 2017		11,202

The following table summarizes shares distributed pursuant to the dividend reinvestment plan during the six months ended June 30, 2016 to stockholders who had not opted out of the dividend reinvestment plan.

Date Declared	Record Date	Payment Date	Shares
November 3, 2015	December 31, 2015	January 28, 2016		8,206
February 25, 2016	March 31, 2016	April 15, 2016		5,555

Contractual Obligations

We have entered into certain contracts under which we have future commitments. Payments under the Investment Management Agreement, pursuant to which GSAM has agreed to serve as our Investment Adviser, are equal to (1) a percentage of value of our average gross assets and (2) a two-part Incentive Fee. Under the Administration Agreement, pursuant to which State Street Bank and Trust Company has agreed to furnish us with the administrative services necessary to conduct our day-to-day operations, we pay our administrator such fees as may be agreed between us and our administrator that we determine are commercially reasonable in our sole discretion. Either party or the stockholders, by a vote of a majority of our outstanding voting securities, may terminate the Investment Management Agreement without penalty on at least 60 days’ written notice to the other party. Either party may terminate the Administration Agreement without penalty upon at least 30 days’ written notice to the other party.

The following table shows our contractual obligations as of June 30, 2017:

	Payments Due by Period (Millions)
	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More Than 5 Years
Revolving Credit Facility	$	297.25	$	–	$	–	$	297.25	$	–
Convertible Notes	$	115.00	$	–	$	–	$	115.00	$	–

Revolving Credit Facility

On September 19, 2013, we entered into the Revolving Credit Facility with various lenders. SunTrust Bank serves as administrative agent and Bank of America N.A. serves as syndication agent.

On October 3, 2014, we amended and restated the Revolving Credit Facility to, among other things: increase the aggregate borrowing amount on a committed basis, increase the total borrowing capacity, extend the maturity date, and reduce the applicable margin of borrowings.

On January 16, 2015, we exercised the right under the accordion feature and increased the size of the Revolving Credit Facility to $535.00 million, on a committed basis.

On March 27, 2015, we exercised the right under the accordion feature and increased the size of the Revolving Credit Facility to $560.00 million, on a committed basis.

On November 3, 2015, we amended the Revolving Credit Facility to, among other things:

• increase the aggregate borrowing amount to $570.00 million on a committed basis;

• increase the total borrowing capacity to a maximum of $1,000.00 million;

• extend the final maturity date to November 4, 2020; and

• reduce the applicable margin of borrowings with respect to (i) any loan bearing interest at a rate determined by reference to the alternate base rate from 1.25% to 0.75% or 1.00%, subject to borrowing base conditions and (ii) any loan bearing interest at a rate determined by reference to the adjusted LIBOR rate from 2.25% to 1.75% or 2.00%, subject to borrowing base conditions.

On December 16, 2016, we further amended the Revolving Credit Facility to, among other things:

• increase aggregate borrowing amount to $605.00 million on a committed basis; and

• extend the final maturity date to December 16, 2021.

Borrowings under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest (at the Company’s election) of either LIBOR plus an applicable margin or applicable margin plus the higher of the Prime Rate, Federal Funds Rate plus 0.5% or overnight LIBOR plus 1.0%. Interest is payable quarterly in arrears. We pay a fee of 0.375% per annum on committed but undrawn amounts under the Revolving Credit Facility, payable quarterly in arrears. Any amounts borrowed under the Revolving Credit Facility will mature, and all accrued and unpaid interest will be due and payable, on December 16, 2021.

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The Revolving Credit Facility may be guaranteed by certain of our domestic subsidiaries that are formed or acquired by us in the future (collectively, the “Guarantors”). The Senior Credit Fund is not a Guarantor of the Revolving Credit Facility. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.

Our obligations to the lenders under the Revolving Credit Facility are secured by a first priority security interest in substantially all of our portfolio of investments and cash, with certain exceptions. The Revolving Credit Facility contains certain customary covenants, including: (i) maintaining a minimum shareholder’s equity of $530.65 million, subject to increase from certain equity sales, (ii) maintaining an asset coverage ratio of at least 2 to 1, (iii) maintaining a minimum liquidity test of at least 10% of the “covered debt amount” during any period when the “adjusted covered debt balance” is greater than 90% of the “adjusted borrowing base,” as such quoted terms are defined in the Revolving Credit Facility and (iv) restrictions on industry concentrations in our investment portfolio. We are in compliance with these covenants.

The Revolving Credit Facility also includes customary representations and warranties, conditions precedent to funding of draws and events of default.

Convertible Notes

On October 3, 2016, we closed an offering of $115.00 million aggregate principal amount of unsecured Convertible Notes, which includes $15.00 million aggregate principal amount issued pursuant to the initial purchasers’ exercise in full of an over-allotment option. The Convertible Notes bear interest at a rate of 4.50% per year, payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2017. The Convertible Notes will mature on April 1, 2022, unless repurchased or converted in accordance with their terms prior to such date. In certain circumstances, the Convertible Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, based on an initial conversion rate of 40.8397 shares of our common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $24.49 per share of common stock, subject to customary anti-dilution adjustments and the other terms of the indenture governing the Convertible Notes. The conversion price is approximately 10.0% above the $22.26 per share closing price of our common stock on September 27, 2016. We will not have the right to redeem the Convertible Notes prior to maturity. The sale of the Convertible Notes generated net proceeds of approximately $110.90 million. We used the net proceeds of the offering to pay down debt under the Revolving Credit Facility.

Holders may convert their notes at their option at any time prior to the close of business on the business day immediately preceding October 1, 2021 only under the following circumstances: (1) during any calendar quarter commencing after December 31, 2016, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after October 1, 2021, until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the occurrence or nonoccurrence of any of the foregoing circumstances.

The Convertible Notes are accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options. Upon conversion of any of the Convertible Notes, we intend to pay the outstanding principal amount in cash and, to the extent that the conversion value exceeds the principal amount, we have the option to pay the excess amount in cash or shares of our common stock (or a combination of cash and shares), subject to the requirements of the respective indenture. We have determined that the embedded conversion options in the Convertible Notes are not required to be separately accounted for as derivatives under ASC 815, Derivatives and Hedging. At the time of issuance the values of the debt and equity components of the Convertible Notes were approximately 99.4% and 0.6%, respectively.

The OID equal to the equity component of the Convertible Notes was recorded in “paid-in capital in excess of par” in the accompanying Consolidated Statements of Assets and Liabilities. We record interest expense comprised of both stated interest and amortization of the OID. At the time of issuance, the equity component of the Convertible Notes was $0.74 million. Additionally, the issuance costs associated with the Convertible Notes were allocated to the debt and equity components in proportion to the allocation of the values at the time of issuance and accounted for as debt issuance costs and equity issuance costs, respectively.

HEDGING

Subject to applicable provisions of the Investment Company Act and applicable Commodity Futures Trading Commission (“CFTC”) regulations, we may enter into hedging transactions in a manner consistent with SEC guidance. To the extent that any of our loans is denominated in a currency other than U.S. dollars, we may enter into currency hedging contracts to reduce our exposure to fluctuations in currency exchange rates. We may also enter into interest rate hedging agreements. Such hedging activities, which will be subject to compliance with applicable legal requirements, may include the use of futures, options, swaps and forward contracts. Costs incurred in entering into such contracts or in settling them, if any, will be borne by us. The Investment Adviser has claimed no-action relief from CFTC registration and regulation as a commodity pool operator pursuant to a CFTC staff no-action letter (the “BDC CFTC No-Action Letter”) with respect to our operations, with the result that we will be limited in our ability to use futures contracts or options on futures contracts or engage in swap transactions. Specifically, the BDC CFTC No-Action Letter imposes strict limitations on using such derivatives other than for hedging purposes, whereby the use of derivatives not used solely for hedging purposes is generally limited to situations where (i) the aggregate initial margin and premiums required to establish such positions does not exceed five percent of the liquidation value of our portfolio, after taking into account unrealized profits and unrealized losses on any such contracts it has entered into; or (ii) the aggregate net notional value of such derivatives does not exceed 100% of the liquidation value of our portfolio. Moreover, we anticipate entering into transactions involving such derivatives to a very limited extent solely for hedging purposes or otherwise within the limitations of the BDC CFTC No-Action Letter. As of June 30, 2017, no hedging arrangements were used.

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OFF-BALANCE SHEET ARRANGEMENTS

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of June 30, 2017, we believed that we had adequate financial resources to satisfy our unfunded commitments. As of June 30, 2017 and December 31, 2016, our unfunded commitments to provide funds to portfolio companies were as follows:

	As of
	June 30, 2017		December 31, 2016
	(in millions)
Unfunded Commitments
First Lien/Senior Secured Debt	$	13.76	$	6.80
First Lien/Last-Out Unitranche		0.67		–
Total	$	14.43	$	6.80

RECENT DEVELOPMENTS

As of June 30, 2017, we held two tranches of loans to Kawa Solar Holdings Limited (“Kawa”) comprised of $6.84 million par value of revolving first lien debt and $10.54 million of a first lien guarantee facility that was collateralized by cash. In July 2017, Kawa completed a capital restructuring whereby $4.70 million of the first lien revolver debt was exchanged into common equity of Conergy Asia Holdings Limited, a UK limited company that was formed to purchase and own the shares of Conergy Asia & ME Pte. Ltd., a subsidiary of Kawa. The remaining revolver was exchanged into a non-interest bearing first lien loan and we funded our pro rata share of $0.40 million of new first lien revolver. As a result of the exchange of the first lien revolver into non-interest bearing debt and non-income producing equity in connection with this restructuring, the investment was taken off of non-accrual status. The $10.54 million of first lien guarantee facility debt in Kawa was amended to convert the coupon to PIK.

On July 31, 2017, we and Cal Regents, as members of the Senior Credit Fund, entered into an amendment to the amended and restated limited liability company agreement of the Senior Credit Fund to extend the investment period for the Senior Credit Fund from August 1, 2017 to November 1, 2017.

On August 1, 2017, our Board of Directors declared a quarterly distribution of $0.45 per share payable on October 16, 2017 to holders of record as of September 29, 2017.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ materially. In addition to the discussion below, our critical accounting policies are further described in the notes to the consolidated financial statements.

Valuation of Portfolio Investments

As a BDC, we conduct the valuation of our assets, pursuant to which our NAV is determined, at all times consistent with GAAP and the Investment Company Act. Our Board of Directors, with the assistance of our Audit Committee, determines the fair value of our assets within the meaning of the Investment Company Act, on at least a quarterly basis, in accordance with the terms of Financial Accounting Standards Board ASC Topic 820, Fair Value Measurement and Disclosures (“ASC 820”). Our valuation procedures are described in more detail below.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value. The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities.

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The three-level hierarchy for fair value measurement is defined as follows:

Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2—inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The type of financial instruments in this category includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

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 and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the financial instrument.

Currently, the majority of our investments fall within Level 3 of the fair value hierarchy. We do not expect that there will be readily available market values for most of the investments which are in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our Board of Directors using a documented valuation policy, described below, and a consistently applied valuation process. The factors that may be taken into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, and the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. Available current market data are considered such as applicable market yields and multiples of publicly traded securities, comparison of financial ratios of peer companies, and changes in the interest rate environment and the credit markets that may affect the price at which similar investments would trade in their principal market, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation.

With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, the valuation procedures adopted by our Board of Directors contemplates a multi-step valuation process each quarter, as described below:

(1) Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Investment Adviser responsible for the portfolio investment;

(2) Our Board of Directors also engages independent valuation firms (the “Independent Valuation Advisors”) to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Advisors independently value such investments using quantitative and qualitative information provided by the investment professionals of the Investment Adviser as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Advisors also provide analyses to support their valuation methodology and calculations. The Independent Valuation Advisors provide an opinion on a final range of values on such investments to our Board of Directors or the Audit Committee. The Independent Valuation Advisors define fair value in accordance with ASC 820 and utilize valuation approaches including the market approach, the income approach or both. A portion of the portfolio is reviewed on a quarterly basis, and all investments in the portfolio for which market quotations are not readily available, or are readily available, but deemed not reflective of the fair value of an investment, are reviewed at least annually by an Independent Valuation Advisor;

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(3) The Independent Valuation Advisors’ preliminary valuations are reviewed by our Investment Adviser and the Valuation Oversight Group (“VOG”), a team that is part of the Controllers Department within the Finance Division of Goldman Sachs. The Independent Valuation Advisors’ ranges are compared to our Investment Adviser’s valuations to ensure our Investment Adviser’s valuations are reasonable. VOG presents the valuations to the Private Investment Sub-Committee of the Investment Management Division Valuation Committee, which is comprised of representatives from GSAM who are independent of the investment making decision process;

(4) The Investment Management Division Valuation Committee ratifies fair valuations and makes recommendations to the Audit Committee of the Board of Directors;

(5) The Audit Committee of our Board of Directors reviews valuation information provided by the Investment Management Division Valuation Committee, our Investment Adviser and the Independent Valuation Advisors. The Audit Committee then assesses such valuation recommendations; and

(6) Our Board of Directors discusses the valuations and, within the meaning of the Investment Company Act, determines the fair value of our investments in good faith, based on the input of our Investment Adviser, the Independent Valuation Advisors and the Audit Committee.

Investment Transactions and Related Investment Income

We record our investment transactions on a trade date basis. Realized gains and losses are based on the specific identification method. Dividend income on common equity investments are recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Interest income and dividend income are presented net of withholding tax, if any. Accretion of discounts and amortization of premiums, which are included in interest income and expense, are recorded over the life of the underlying instrument using the effective interest method.

Fair value generally is based on quoted market prices, broker or dealer quotations, or alternative price sources. In the absence of quoted market prices, broker or dealer quotations, or alternative price sources, investments in securities are measured at fair value as determined by our Investment Adviser and/or by one or more independent third parties.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. For additional information, see Note 2 “Significant Accounting Policies” to our consolidated financial statements included in this report.

Non-Accrual Status

Loans or debt securities are placed on non-accrual status when it is probable that principal or interest will not be collected according to the contractual terms. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, principal and interest payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection. As of June 30, 2017, we had two investments on non-accrual status, which represented 0.7% and 0.2% of the total investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $2.12 million) at amortized cost and at fair value, respectively. As of December 31, 2016, we had two investments on non-accrual status, which represented 3.8% and 1.4% of the total investments (excluding an investment in a money market fund managed by an affiliate of Group Inc. of $0.00 million) at amortized cost and at fair value, respectively.

Distribution Policy

We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. Future quarterly distributions, if any, will be determined by our Board of Directors. All distributions will be subject to lawfully available funds therefor, and no assurance can be given that we will be able to declare distributions in future periods.

We have elected to be treated, and expect to qualify annually, as a RIC under Subchapter M of the Code, commencing with our taxable year ended December 31, 2013. To obtain and maintain RIC status, we must, among other things, timely distribute to our stockholders at least 90% of our investment company taxable income for each taxable year. We intend to timely distribute to our stockholders substantially all of our annual taxable income for each year, except that we may retain certain net capital gains for reinvestment and, depending upon the level of taxable income earned in a year, we may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax. The distributions we pay to our stockholders in a year may exceed our net ordinary income and capital gains for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The specific tax characteristics of our distributions will be reported to stockholders after the end of the calendar year. Stockholders should read carefully any written disclosure regarding a distribution from us and should not assume that the source of any distribution is our net ordinary income or capital gains.

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We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if our Board of Directors declares a cash distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have its distribution automatically reinvested in additional shares of our common stock rather than receiving the cash distribution. Stockholders who receive distributions in the form of shares of common stock will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, since their cash distributions will be reinvested, those stockholders will not receive cash with which to pay any applicable taxes. Due to regulatory considerations, Group Inc. has opted out of the dividend reinvestment plan, and GS & Co. has opted out of the dividend reinvestment plan in respect of any shares of our common stock acquired through the GS 10b5-1 Plan.

Federal Income Taxes

As a RIC, we generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that we timely distribute to our stockholders as dividends. To maintain our RIC status, we must meet specified source-of-income and asset diversification requirements and timely distribute to our stockholders at least 90% of our investment company taxable income for each year. Depending upon the level of taxable income earned in a year, we may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax. We generally will be required to pay such U.S. federal excise tax if our distributions during a calendar year do not exceed the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years.

Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, most significantly changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we expect to fund a portion of our investments with borrowings, our net investment income is expected to be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

As of June 30, 2017 and December 31, 2016, on a fair value basis, approximately 4.1% and 7.2%, respectively, of our performing debt investments bore interest at a fixed rate (including income producing preferred stock investments), and approximately 95.9% and 92.8%, respectively, of our performing debt investments bore interest at a floating rate. Our borrowings under the Revolving Credit Facility bear interest at a floating rate and the Convertible Notes bear interest at a fixed rate.

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.

Based on our June 30, 2017 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

As of June 30, 2017 Basis Point Change	Interest Income			Interest Expense			Net Income
(in millions)
Up 300 basis points	$	25.93		$	(8.32	)	$	17.61
Up 200 basis points		17.29			(5.55	)		11.74
Up 100 basis points		8.64			(2.77	)		5.87
Up 75 basis points		6.48			(2.08	)		4.40
Up 50 basis points		4.32			(1.39	)		2.93
Up 25 basis points		2.15			(0.70	)		1.45
Down 25 basis points		(1.89	)		0.69			(1.20	)
Down 50 basis points		(2.30	)		1.39			(0.91	)
Down 75 basis points		(2.40	)		2.08			(0.32	)
Down 100 basis points		(2.45	)		2.77			0.32
Down 200 basis points		(2.49	)		3.40			0.91
Down 300 basis points		(2.49	)		3.40			0.91

We may, in the future, hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the Investment Company Act, applicable CFTC regulations and in a manner consistent with SEC guidance. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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. We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Item 1A. Risk Factors.

An investment in our securities involves a high degree of risk. There have been no material changes to the risk factors previously reported under Item 1A: “Risk Factors” of our Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 28, 2017. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial may materially affect its business, financial condition and/or operating results.

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

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On July 31, 2017, we and Cal Regents, as members of the Senior Credit Fund, entered into an amendment to the amended and restated limited liability company agreement of the Senior Credit Fund to extend the investment period for the Senior Credit Fund from August 1, 2017 to November 1, 2017. See Exhibit 10.2 to this Quarterly Report on Form 10-Q.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Index to Exhibits, which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements 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.

	GOLDMAN SACHS BDC, INC.
Date: August 3, 2017	/s/ Brendan McGovern
	Brendan McGovern Chief Executive Officer and President (Principal Executive Officer)
Date: August 3, 2017	/s/ Jonathan Lamm
	Jonathan Lamm Chief Financial Officer (Principal Financial Officer)

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INDEX TO EXHIBITS

Exhibit No	Description of Exhibits
3.1	Certificate of Incorporation (incorporated by reference to Exhibit (a) to pre-effective Amendment No. 7 to the Company’s Registration Statement on Form N-2 (file no. 333-187642), filed on March 3, 2015).
3.2	Bylaws (incorporated by reference to Exhibit (a) to pre-effective Amendment No. 7 to the Company’s Registration Statement on Form N-2 (file no. 333-187642), filed on March 3, 2015).
10.1	Dividend Reinvestment Plan, amended as of August 1, 2017.
10.2	Second Amendment to Senior Credit Fund, LLC Limited Liability Company Agreement, dated as of July 31, 2017, between Goldman Sachs BDC, Inc. and Regents of the University of California.
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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