10-K

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting common equity held by non-affiliates of the registrant, was $225.6 million based on the number of shares held by non-affiliates of the registrant as of June 30, 2022 (the last business day of the registrant’s most recently completed second fiscal quarter). Shares of the registrant’s common stock held by each executive officer, director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed affiliates. The calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose.

The number of shares of the Registrant’s common stock, $.001 par value per share, outstanding at February 22, 2023 was 30,887,360

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current or prospective portfolio investments, our industry, our beliefs, and our assumptions. We believe that it is important to communicate our future expectations to our investors. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “will,” “should,” “targets,” “projects,” and variations of these words and similar expressions identify forward-looking statements, although not all forward-looking statements include these words. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

The following factors and factors listed under “Risk Factors” in this report and other documents Crescent Capital BDC, Inc. has filed with the Securities and Exchange Commission, or SEC, 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 operation and financial position. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

Although we believe that the assumptions on which these forward-looking statements are based upon are reasonable, some of those assumptions may be based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. 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 SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this report because we are an investment company.

The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in “Item 1A. Risk Factors.” This summary should be read in conjunction with “Item 1A. Risk Factors” and should not be relied upon as an exhaustive summary of the material risks facing our business.

In this Annual Report, except where the context suggests otherwise, the terms “CCAP,” “we,” “us,” “our,” and “the Company” refer to Crescent Capital BDC, Inc. The term “Adviser” refers to Crescent Cap Advisors, LLC, a Delaware limited liability company. The term “Administrator” refers to CCAP Administration, LLC, a Delaware limited liability company. The term “Crescent” refers to Crescent Capital Group LP and its affiliates.

We are a specialty finance company focused on lending to middle-market companies. We were incorporated under the laws of the State of Delaware on February 5, 2015 and on January 30, 2020, we changed our state of incorporation from the State of Delaware to the State of Maryland. We were listed and began trading on the NASDAQ stock exchange on February 3, 2020 concurrently with the completion of the acquisition of Alcentra Capital Corporation in a cash and stock transaction (the “Alcentra Acquisition”). We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (“1940 Act”). In addition, we have elected to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and related equity investments. We invest primarily in secured debt (including first lien, unitranche first lien, and second-lien debt) and unsecured debt (including mezzanine and subordinated debt), as well as related equity securities of private U.S. middle-market companies. We may purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or private credit investments (i.e., private credit transactions), or (ii) primary or secondary market bank loan or high yield transactions in the broadly syndicated “over-the-counter” market (i.e., broadly syndicated loans and bonds). Although our focus is to invest in less liquid private credit transactions, we may from time to time invest in more liquid broadly syndicated loans to complement our private credit transactions.

Our investment philosophy emphasizes capital preservation through credit selection and risk mitigation. We expect our targeted portfolio to provide downside protection through conservative cash flow and asset coverage requirements, priority in the capital structure and information requirements.

As a BDC under the Act and a RIC under the Code, our portfolio is subject to diversification and other requirements. See “—Certain U.S. Federal Income Tax Consequences.”

We are managed by Crescent Cap Advisors, LLC (the “Adviser”), an investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940 (“Advisers Act”). CCAP Administration LLC (the “Administrator”) provides the administrative services necessary for us to operate. Our management consists of investment and administrative professionals from the Adviser and Administrator, along with the Company’s Board of Directors (the “Board”).

The Adviser directs and executes our investment operations and capital raising activities subject to oversight from the Board, which sets our broad policies. The Board has delegated investment management of our investment assets to the Adviser. The Board consists of six directors, five of whom are independent.

From time to time we may form wholly owned subsidiaries to facilitate the normal course of business if the Adviser determines that for legal, tax, regulatory, accounting or other similar reasons it is in our best interest to do so. We have formed a wholly owned subsidiary that is structured as a tax blocker, to hold equity or equity-like investments in portfolio companies organized as limited liability companies or other forms of pass-through entities. This corporate subsidiary is not consolidated for income tax purposes and may incur income tax expense as a result of its ownership of portfolio companies.

We may borrow money from time to time within the levels permitted by the 1940 Act (up to 150% of asset coverage requirement). In determining whether to borrow money, we analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. The use of borrowed funds or the proceeds of preferred stock offerings to make investments would have its own specific set of benefits and risks, and all of the costs of borrowing funds or issuing preferred stock would be borne by holders of our common stock. See “Item 1A. Risk Factors—Risks Relating to Our Business and Structure—Our strategy involves a high degree of leverage. We intend to continue to finance our investments with borrowed money, which will magnify the potential for gain or loss on amounts invested and increases the risk of investing in us. The risks of investment in a highly leveraged fund include volatility and possible distribution restrictions.”

On October 3, 2022, we entered into a definitive agreement (the “Merger Agreement”) with First Eagle Alternative Capital BDC, Inc., a Delaware corporation that has elected to be treated as a BDC under the 1940 Act (“FCRD”), Echelon Acquisition Sub, Inc., a Delaware corporation and our direct wholly-owned subsidiary (“Acquisition Sub”), Echelon Acquisition Sub LLC, a Delaware limited liability company and our direct wholly-owned subsidiary (“Acquisition Sub 2”), and the Adviser. The Merger Agreement provides that (i) Acquisition Sub will merge with and into FCRD (the “First Merger”), with FCRD continuing as the surviving company and as our wholly-owned subsidiary (the “Surviving Company”), and (ii) immediately after the effectiveness of the First Merger, the Surviving Company will merge with and into Acquisition Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Acquisition Sub 2 continuing as the surviving company and as a wholly-owned subsidiary of the Company. The boards of directors of both companies have each unanimously approved the FCRD Acquisition. A special meeting of stockholders of FCRD will be held on March 7, 2023 for the purpose of adopting the agreement and plan of merger.

The Adviser, a Delaware limited liability company and an affiliate of Crescent, acts as our investment adviser. The Adviser is a registered investment adviser under the Advisers Act. Our investment activities are managed by the Adviser, which is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. The Adviser has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Crescent, pursuant to which Crescent provides the Adviser with experienced investment professionals (including the members of the Adviser’s investment committee) and access to Crescent’s resources so as to enable the Adviser to fulfill its obligations under the Investment Advisory Agreement. Through the Resource Sharing Agreement, the Adviser capitalizes on the deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Crescent’s investment professionals.

Crescent Capital Corporation, a predecessor to the business of Crescent, was formed in 1991 by Mark Attanasio and Jean-Marc Chapus as an asset management firm specializing in below-investment grade debt securities. In 1995, Crescent Capital Corporation was acquired by The TCW Group, Inc. (“TCW”) and rebranded as TCW’s Leveraged Finance Group. On January 1, 2011, Messrs. Attanasio and Chapus, along with the entire investment team, spun out of TCW and formed Crescent, an employee-owned, registered investment adviser. Crescent is a global credit investment manager with over $40 billion of assets under management. With its headquarters in Los Angeles, Crescent has over 200 employees based in four offices in the U.S. and Europe. Messrs. Attanasio and Chapus head Crescent’s management committee, which oversees all of Crescent’s operations. On January 5, 2021, Sun Life Financial Inc. (together with its subsidiaries and joint ventures, “Sun Life”) acquired a majority interest in Crescent (the “Sun Life Transaction”). As a result of the Sun Life Transaction, Crescent became a part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. There were no changes to our investment objective, strategies and process or to the Crescent team responsible for the investment operations as a result of the Sun Life Transaction.

Our business and affairs are managed under the direction of our Board. Our Board consists of six members, five of whom are not “interested persons” of CCAP, the Adviser, the Administrator or their respective affiliates as defined in Section 2(a)(19) of the 1940 Act. We refer to these individuals as our “Independent Directors.” The Independent Directors compose a majority of our Board. Our Board elects our officers, who serve at the discretion of our Board. The responsibilities of our Board include oversight of our quarterly determinations of the fair value of our assets, corporate governance activities, oversight of our financing arrangements and oversight of our investment activities.

We follow Crescent’s approach to investing, which is based upon fundamental credit research and risk analysis. This approach reflects Crescent’s view that the cornerstone of successful investing is fundamental credit analysis.

Specifically, we pursue an investment strategy targeting companies primarily in the middle-market. We believe that the middle-market is attractive as a result of the lack of available lending sources to smaller companies. We believe many financing providers have chosen to focus on large corporate clients and managing capital markets transactions rather than lending to middle-market businesses. Further, many financial institutions and traditional lenders are faced with constrained balance sheets. We also believe hedge funds and collateralized debt obligation/collateralized loan obligation managers are less likely to pursue investment opportunities in our target market as a result of reduced liquidity for new investments. Specifically, Crescent’s sourcing platform should enable it, on our behalf and through our Adviser, to identify and invest in creditworthy borrowers. In addition, to take advantage of investment opportunities in middle-market companies that are identified for us by Crescent, we may invest alongside other pools of capital, including bank debt, high-yield and mezzanine funds managed by Crescent. See “Item 13. Certain Relationships and Related Transactions, and Director Independence” for a discussion of certain conflicts of interest of Crescent and certain limitations on our ability to co-invest with other accounts advised by Crescent.

We target investments in companies that exhibit one or more of the following characteristics:

We seek to create a diversified portfolio of investments across various industries as a method to manage risk and capitalize on specific sector trends, although our investments may be concentrated in a small number of industries.

Generally, we focus on investing in secured debt (including first lien, unitranche first lien and second-lien debt) and unsecured debt (including senior unsecured, mezzanine and subordinated debt), as well as related equity securities of private U.S. middle-market companies. By “middle-market companies,” we mean companies that have annual EBITDA, which we believe is a useful proxy for cash flow, of $10 million to $250 million. We may on occasion invest in larger or smaller companies.

“First lien” investments are senior loans on a lien basis to other liabilities in the issuer’s capital structure that have the benefit of a first-priority security interest in assets of the issuer. The security interest ranks above the security interest of any second-lien lenders in those assets.

“Unitranche first lien” investments are 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 among different lenders in the unitranche loan. In certain 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.

“Second lien” investments are loans with a second priority lien on all existing and future assets of the portfolio company. The security interest ranks below the security interests of any first lien and unitranche first lien lenders in those assets.

“Unsecured debt” investments are loans that generally rank senior to a borrower’s equity securities and junior in right of payment to such borrower’s other senior indebtedness.

We generally invest in securities that are rated below investment grade (e.g., junk bonds) by rating agencies or that would be rated below investment grade if they were rated. See “Item 1A. Risk Factors—Risks Relating to Our Investments— We may invest in high yield debt, or junk bonds, which has greater credit and liquidity risk than more highly rated debt obligations.” Our investments may include non-cash income features, including PIK interest and OID. See “Item 1A. Risk Factors—Risks Relating to Our Investments— Our investments in OID and PIK interest income may expose us to risks associated with such income being required to be included in accounting income and taxable income prior to receipt of cash.”

Our business model is focused on the direct origination of loans to middle-market companies. The companies in which we invest use our capital to support organic growth, acquisitions, market or product expansion and recapitalizations. We expect to generate revenues primarily in the form of interest income from debt investments, dividend income from direct equity investments, capital gains on the sales of debt and equity securities and various loan origination and other fees.

We may purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or private credit investments (i.e., private credit transactions), or (ii) primary or secondary market bank loan or high yield transactions in the broadly syndicated “over-the-counter” market (i.e., broadly syndicated loans and bonds). Although our focus is to invest in less liquid private credit transactions, we may from time to time invest in more liquid broadly syndicated loans and bonds to complement our private credit transactions. In addition, and because we often receive more attractive financing terms on broadly syndicated loans and bonds than we do on our less liquid assets, we are able to leverage the broadly syndicated portfolio in such a way that can maximize the levered return potential of our portfolio.

Through its affiliation with Crescent, the Adviser has access to origination capabilities and research resources, experienced investment professionals, internal information systems and a credit analysis framework and investment process. Over the years, Crescent has designed its investment process to seek investments which it believes have the most attractive risk/reward characteristics. The process involves multiple levels of review and is coordinated in an effort to identify risks in potential investments. Our Adviser applies Crescent’s expertise to screen our investment opportunities as described below. Depending on the type of investment and the borrower, the Adviser may apply all or some of these levels of review, in its discretion. Based upon a favorable outcome of the diligence process described below, our Adviser’s investment committee will make a final decision on such investment and such investment will only be funded after approval by the Adviser’s investment committee.

Private Credit Originations: New private credit investment opportunities are initially reviewed by a Crescent senior investment professional to determine whether additional consideration is warranted. Factors influencing this decision include fundamental business considerations, including borrower industry, borrower financial leverage and cash flows and quality of management as well as private equity sponsor involvement (if any). In the event of an initial positive review, potential investments are further reviewed with senior and junior investment professionals. If the team agrees on the fundamental attractiveness of the investment, the review phase proceeds with preliminary due diligence and financial analyses. At this point, Crescent utilizes its credit analysis methodology to outline credit and operating statistics and identify key business characteristics and risks through available diligence materials in addition to dialogue with company management and the proposed private equity sponsor (if any). Following this analysis, Crescent considers an initial structure and pricing proposal for the investment and preliminarily informs the broader investment team of such proposal.

After satisfactory preliminary analysis and review, further due diligence continues, including completion of credit analysis, on-site due diligence (if deemed necessary), visits and meetings with management, and could include consultation with third-party experts. The credit analysis is a detailed, bottom-up analysis on the proposed portfolio company that generally includes an assessment of its industry, market, competition, products, services, management and the equity sponsor or owner. Detailed financial analysis is also performed at this stage with a focus on historical financial results. Projected financial information developed by the proposed portfolio company is analyzed and sensitized based upon the portfolio company’s historical results and assessment of the portfolio company’s future prospects. The sensitivity analysis highlights the variability of revenues and earnings, “worst case” debt service coverage and available sources of liquidity. As part of the overall evaluation, comparisons are made to similar companies to help assess a portfolio company’s asset and enterprise value coverage of debt, interest servicing capacity and competitive strength within its industry and market. Additionally during this stage, Crescent typically works with the management of the proposed portfolio company and its other capital providers to develop the structure of an investment, including negotiating among these parties on how the investment is expected to perform relative to the other forms of capital in its capital structure.

Syndicated Investments: For syndicated investments, Crescent seeks to pursue an investment process based upon evaluation of the credit fundamentals of issuers. The foundation of this process is the “bottom-up” credit research process that Crescent employs across multiple strategies. In selecting investments, Crescent’s investment professionals perform comprehensive analysis of credit worthiness, including an assessment of the business, an evaluation of management, an analysis of business strategy and industry trends, an examination of financial results and projections and a review of the security’s proposed terms. Credit research is a critical component of the investment process. In selecting investments, Crescent’s respective portfolio management teams analyze opportunities with an emphasis on principal preservation (i.e., an issuer’s ability to service its debt and maintain cash flow).

Upon completion of the investment decision process described above, the investment team working on an investment delivers a memorandum to the Adviser’s investment committee. Once an investment has been approved by the investment committee, the Adviser moves through a series of steps with the respective investment team towards negotiation of final documentation.

The Adviser monitors our portfolio companies on an ongoing basis. The Adviser monitors the financial trends of each portfolio company to determine if it is meeting its business plans and to assess the appropriate course of action for each company. The Adviser has a number of methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

As part of the monitoring process, the Adviser regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each investment on a risk scale of 1 to 5. Risk assessment is not standardized in our industry and our risk assessment may not be comparable to ones used by our competitors. Our assessment is based on the following categories:

On June 2, 2015, we entered into an investment advisory agreement with the Adviser which was most recently amended and restated (the “Investment Advisory Agreement”) on January 5, 2021. Under the terms of the Investment Advisory Agreement, the Adviser provides investment advisory services to us and our portfolio investments. The Adviser’s services under the Investment Advisory Agreement are not exclusive, and the Adviser is free to furnish similar or other services to others so long as its services to us are not impaired. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base management fee and may also receive incentive fees, as discussed below.

The base management fee is calculated and payable quarterly in arrears at an annual rate of 1.25% of our gross assets, including assets acquired through the incurrence of debt but excluding any cash, cash equivalents and restricted cash. The base management fee is calculated based on the average value of gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. For purposes of the Investment Advisory Agreement, cash equivalents means U.S. government securities and commercial paper maturing within one year of purchase.

Adviser has also voluntarily waived its right to receive management fees on the Company’s investments in GACP II LP and WhiteHawk III Onshore Fund LP for any period in which these investments remain in the investment portfolio.

Under the Investment Advisory Agreement, the incentive fee consists of two parts:

The first part, the income incentive fee, is calculated and payable quarterly in arrears and (a) equals 100% of the excess of the pre-incentive fee net investment income for the immediately preceding calendar quarter, over a preferred return of 1.75% per quarter (7.0% annualized) (the “Hurdle”), and a catch-up feature until the Adviser has received 17.5% of the pre-incentive fee net investment income for the current quarter up to 2.1212% (the “Catch-up”), and (b) 17.5% of all remaining pre-incentive fee net investment income above the “Catch-up.”

The second part, the capital gains incentive fee, is determined and payable in arrears as of the end of each fiscal year at a rate of 17.5% of the realized capital gains, if any, on a cumulative basis from the inception through the end of the fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. In the event that the Investment Advisory Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a capital gains incentive fee.

Under the terms of the Investment Advisory Agreement, the Adviser agreed to waive the income based portion of the incentive fee from February 1, 2020 through July 31, 2021. Additionally, on February 22, 2021, the Adviser notified the Board of Directors of its intent to voluntarily waive income incentive fees to the extent net investment income, excluding the effect of the GAAP incentive fee, falls short of the regular declared dividend on a full dollar basis. The waiver became effective on July 31, 2021 and, pursuant to an extension of the waiver announced on October 4, 2022, will continue through December 31, 2023. The Adviser has also voluntarily waived its right to receive the income incentive fees attributable to the investment income accrued as a result of its investments in GACP II LP and WhiteHawk III Onshore Fund LP.

Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during each calendar quarter, minus operating expenses for such quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and distributions paid on any issued and outstanding debt or preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, original issue discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities), accrued income that has not yet been received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income will be compared to a “Hurdle Amount” equal to the product of (i) the Hurdle rate of 1.75% per quarter, or 7.0% annualized, and (ii) our net assets (defined as total assets less indebtedness, before taking into account any incentive fees payable during the period), at the end of the immediately preceding calendar quarter, subject to a “catch-up” provision incurred at the end of each calendar quarter.

See “Item 1A. Risk Factors—Risks Relating to Our Business and Structure—Our management and incentive fee structure may create incentives for the Adviser that are not fully aligned our stockholders' interest and may induce the Adviser to make speculative investments.”

We accrue, but do not pay, a portion of the incentive fee based on capital gains with respect to net unrealized appreciation. Under GAAP, we are 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, we consider 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 Advisory 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 we record a capital gains incentive fee equal to 17.5% 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.

Our Board monitors the mix and performance of our investments over time and will seek to satisfy itself that the Adviser is acting in our interests and that our fee structure appropriately incentivizes the Adviser to do so.

The Investment Advisory Agreement has been unanimously approved by the Board. Unless terminated earlier as described below, the Investment Advisory Agreement will remain in effect until January 5, 2024 and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of our independent directors. The Investment Advisory Agreement will automatically terminate in the event of its assignment (as defined in the 1940 Act). The Investment Advisory Agreement may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. See “Item 1A. Risk Factors—Risks Relating to our Business and Structure—We are dependent upon key personnel of Crescent and the Adviser.”

Under the Investment Advisory Agreement, the Adviser has not assumed any responsibility to us other than to render the services called for under that agreement. The Adviser will not be responsible for any action of the Board in following or declining to follow the Adviser’s advice or recommendations. Under the Investment Advisory Agreement, the Adviser, its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser, including, without limitation, the Administrator, and any person controlling or controlled by the Adviser will not be liable to us, any of our subsidiaries, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that the Adviser owes to us under the Investment Advisory Agreement. In addition, as part of the Investment Advisory Agreement, we have agreed to indemnify the Adviser and each of its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser, from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misfeasance, bad faith or reckless disregard of such person’s duties under the Investment Advisory Agreement. These protections may lead the Adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account. The Investment Advisory Agreement may be terminated by either party without penalty on 60 days’ written notice to the other party.

United States federal and state securities laws may impose liability under certain circumstances on persons who act in good faith. Nothing in the Investment Advisory Agreement constitutes a waiver or limitation of any rights that we may have under any applicable federal or state securities laws.

On June 2, 2015, we entered into the Administration Agreement with the Administrator, as amended and restated on February 1, 2020. Under the terms of the Administration Agreement, the Administrator provides administrative services. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Administrator under the terms of the Administration Agreement. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties. To the extent the Administrator outsources any of its functions, we will pay the fees associated with such functions on a direct basis, without incremental profit to the Administrator. The Administration Agreement may be terminated by either party without penalty on 60 days’ written notice to the other party.

No person who is an officer, director or employee of the Administrator or its affiliates and who serves as a director receives any compensation for his or her services as a director. However, we reimburse the Administrator (or its affiliates) for an allocable portion of the compensation paid by the Administrator or its affiliates to our compliance professionals, legal counsel, and other professionals who spend time on such related activities (based on the percentage of time those individuals devote, on an estimated basis, to our business and affairs). The allocable portion of the compensation for these officers and other professionals are included in the administration expenses paid to the Administrator. Directors who are not affiliated with the Administrator or its affiliates receive compensation for their services and reimbursement of expenses incurred to attend meetings.

The Administration Agreement has been approved by our Board. Unless earlier terminated as described below, the Administration Agreement will remain in effect for a period of two years from their effective date and will remain in effect from year to year thereafter if approved annually by (i) the vote of our Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of our independent directors. The Administration Agreement will automatically terminate in the event of assignment. The Administration Agreement may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. See “Item 1A. Risk Factors—Risks Relating to our Business and Structure—We are dependent upon key personnel of Crescent and the Adviser.”

We have entered into a license agreement with Crescent under which Crescent granted us a non-exclusive, royalty-free license to use the name “Crescent Capital”.

Our primary competitors in providing financing to middle-market companies include public and private funds, other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or to the distribution and other requirements we must satisfy to maintain our qualification as a RIC.

We expect to use the expertise of Crescent’s investment professionals to which we will have access to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we expect that the relationships of Crescent’s senior members will enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest. For additional information concerning the competitive risks we face, see “Item 1A. Risk Factors—Risks Relating to our Business and Structure — We operate in an increasingly competitive market for investment opportunities, which could make it difficult for us to identify and make investments that are consistent with our investment objectives.”

Our primary operating expenses include the payment of management fees and incentive fees to the Adviser under the Investment Advisory Agreement, as amended, our allocable portion of overhead expenses under the Administration Agreement, operating costs associated with our third party sub-administrator and other operating costs described below. The management and incentive fees compensate the Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:

We anticipate cash to be generated from future offerings of securities, future borrowings, and cash flows from operations, including investment sales and repayments as well as income earned on investments. Additionally, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. In connection with borrowings, our lenders may require us to pledge assets and to comply with positive or negative covenants that could have an effect on our operations.

For more information on our debt, see “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Financial Condition, Liquidity and Capital Resources.”

We adopted a dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our Board authorizes, and we declare, a cash dividend or other distribution then stockholders who are participating in the dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of common stock, rather than receiving cash dividends and distributions.

We do not currently have any employees. We depend on the diligence, skill and network of business contacts of the investment professionals of the Adviser to achieve our investment objective. The Adviser is an affiliate of Crescent and depends upon access to the investment professionals and other resources of Crescent and its affiliates to fulfill its obligations to us under the Investment Advisory Agreement. The Adviser also depends upon Crescent to obtain access to deal flow generated by Crescent’s investment professionals and its affiliates. Each of our officers will also be an employee of the Adviser, Crescent or its affiliates.

Pursuant to its Resource Sharing Agreement with Crescent, the Adviser will have access to the individuals who comprise our Adviser’s investment committee, and a team of additional experienced investment professionals who, collectively, comprise the Adviser’s investment team. The Adviser may hire additional investment professionals to provide services to us, based upon its needs.

We are regulated as a BDC under the 1940 Act. A BDC must be organized in the United States for the purpose of investing in or lending primarily to private companies and making significant managerial assistance available to them. A BDC may use capital provided by public stockholders and from other sources to make long-term, private investments in businesses. A publicly-traded BDC provides stockholders the ability to retain the liquidity of a publicly-traded stock while sharing in the possible benefits, if any, of investing in primarily privately owned companies. Prior to February 3, 2020, which is the date of our listing on NASDAQ in connection with the Alcentra Acquisition, our stock was privately held.

We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of a majority of our outstanding voting securities, as required by the 1940 Act. A majority of our outstanding voting securities is defined under the 1940 Act as the lesser of: (a) 67% or more of such company’s voting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of our business.

As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the BDC. Furthermore, as a BDC, we will be prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office. We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC through an exemptive relief order (other than in certain limited situations pursuant to current regulatory guidance).

Also, while we may borrow funds to make investments, our ability to use debt is limited in certain significant aspects. In accordance with applicable SEC staff guidance and interpretations, effective May 5, 2020 with shareholder approval, we, as a BDC, are permitted to borrow amounts such that our asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required. 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. The amount of leverage that we employ depends on our Adviser’s and our Board’s assessment of market conditions and other factors at the time of any proposed borrowing.

We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, except for registered money market funds, we generally cannot acquire more than 3% of the voting stock of any investment company, invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate, unless certain conditions are met. The portion of our portfolio invested in securities issued by investment companies ordinarily will subject our stockholders to additional expenses. Such investments will also generally be considered “non-qualifying assets” under the 1940 Act as discussed below. Our investment portfolio is also subject to diversification requirements by virtue of our intention to be a RIC for U.S. tax purposes.

We are subject to periodic examinations by the SEC for compliance with the 1940 Act.

As a BDC, we are subject to certain risks and uncertainties. See “Item 1A. Risk Factors.”

We may invest up to 30% of our portfolio opportunistically in “non-qualifying assets”. However, under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets,” unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets. The principal categories of qualifying assets relevant to our business are the following:

A BDC must be operated for the purpose of making investments in the types of securities described under “Qualifying Assets” above. However, in order to count portfolio securities as qualifying assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where the BDC purchases such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available

managerial assistance means, among other things, any arrangement whereby the BDC, through its directors or officers, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

In most cases, we will not have board influence over portfolio companies. In some instances, the Adviser’s investment professionals may obtain board representation or observation rights in conjunction with our investments. In conjunction with our Adviser’s investment committee and our Board, the Adviser will take an active approach in monitoring all investments, which includes reviews of financial performance on at least a quarterly basis and may include discussions with management and/or the equity sponsor. The monitoring process will begin with structuring terms and conditions which require the timely delivery and access to critical financial and business information regarding portfolio companies.

Pending investment in other types of “qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as “temporary investments,” so that 70% of our assets are qualifying assets. See “Item I. Certain U.S. Federal Income Tax Consequences—Election to be Taxed as a RIC.” Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our gross assets constitute repurchase agreements from a single counterparty, we would not meet the diversification tests in order to qualify as a RIC. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our Adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.

We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage.

The 1940 Act imposes limitations on a BDC’s issuance of preferred shares, which are considered “senior securities” and thus are subject to the 150% asset coverage requirement described above. In addition, (i) preferred shares must have the same voting rights as the common stockholders (one share, one vote); and (ii) preferred stockholders must have the right, as a class, to appoint directors to the board of directors.

As required by Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, we and the Adviser have adopted codes of ethics which apply to, among others, our and our Adviser’s executive officers, including our Chief Executive Officer and Chief Financial Officer, as well as our Adviser’s officers, directors and employees. Our codes of ethics generally will not permit investments by our and the Adviser’s personnel in securities that may be purchased or sold by us.

We hereby undertake to provide a copy of the codes to any person, without charge, upon request. Requests for a copy of the codes may be made in writing addressed to our Secretary, George Hawley, Crescent Capital BDC, Inc., 11100 Santa Monica Boulevard, Suite 2000, Los Angeles, California, 90025, Attention: CCAP Investor Relations, or by emailing us at investor.relations@crescentcap.com. Our code of ethics is available without charge on our website, at http://www.crescentbdc.com.

We and our Adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws and we are required to review these compliance policies and procedures annually for their

adequacy and the effectiveness of their implementation and designate a Chief Compliance Officer to be responsible for administering the policies and procedures.

The Sarbanes-Oxley Act imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. For example:

The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.

The Nasdaq Stock Market LLC has adopted various corporate governance requirements as part of its listing standards. We monitor our compliance with such listing standards to the extent applicable and will take actions necessary to ensure that we remain in compliance therewith.

We delegate our proxy voting responsibility to our Adviser. The Proxy Voting Policies and Procedures of the Adviser are set forth below. The guidelines are reviewed periodically by the Adviser and our non-interested directors, and, accordingly, are subject to change.

An investment adviser registered under the Advisers Act has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, the Adviser recognizes that it must vote portfolio securities in a timely manner free of conflicts of interest and in the best interests of its clients.

These policies and procedures for voting proxies are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

The Adviser votes all proxies based upon the guiding principle of seeking to maximize the ultimate long-term economic value of our stockholders’ holdings, and ultimately all votes are cast on a case-by-case basis, taking into consideration the contractual obligations under the relevant advisory agreements or comparable documents, and all other relevant facts and circumstances at the time of the vote. The Adviser reviews on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although the Adviser generally votes against proposals that may have a negative impact on our portfolio securities, the Adviser may vote for such a proposal if there exists compelling long-term reasons to do so.

The Adviser’s proxy voting decisions are made by our Adviser’s investment committee. To ensure that the vote is not the product of a conflict of interest, the Adviser will require that: (1) anyone involved in the decision making process disclose to our Adviser’s investment committee, and disinterested directors, any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (2) employees involved in the decision making process or vote

administration are prohibited from revealing how the Adviser intends to vote on a proposal in order to reduce any attempted influence from interested parties.

We furnish our stockholders with annual reports containing audited financial statements, quarterly reports, and such other periodic reports as we determine to be appropriate or as may be required by law. We are required to comply with all periodic reporting, proxy solicitation and other applicable requirements under the Exchange Act.

Stockholders and the public may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at (202) 551-8090. The SEC also maintains a website (www.sec.gov) that contains such information.

We have elected to be treated, and intend to operate in a manner so as to continuously qualify annually, as a RIC for U.S. federal income tax purposes under Subchapter M of the Code. As a RIC, we generally will not be required to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we timely distribute (or are deemed to distribute) to our stockholders as dividends. Instead, dividends we distribute (or are deemed to distributed) generally will be taxable to stockholders, and any net operating losses, foreign tax credits and most other tax attributes generally will not passthrough to stockholders. To continue to qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, to qualify for RIC tax treatment we must distribute to our stockholders, for each taxable year, at least 90% of the Company’s “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses, or the Annual Distribution Requirement.

then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) we distribute to stockholders. We are subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed distributed) to our stockholders.

We will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, and on which we paid no U.S. federal income tax, in preceding years.

In order to maintain our qualification as a RIC for U.S. federal income tax purposes, we must, among other things:

• at all times during each taxable year, have in effect an election to be treated as a Business Development Company under the 1940 Act;

• derive in each taxable year at least 90% of our gross income from (a) dividends, interest, payments with respect to certain securities (including loans), gains from the sale of stock or other securities or currencies, or other income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an interest in a “qualified publicly traded partnership” (the “90% Gross Income Test”); and

• diversify our holdings so that at the end of each quarter of the taxable year:

◦ (i) at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of its assets or more than 10% of the outstanding voting securities of the issuer; and

◦ (ii) no more than 25% of the value of our assets is invested in (a) the securities, other than U.S. government securities or securities of other RICs, of one issuer, (b) the securities of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (c) the securities of one or more “qualified publicly traded partnerships” ((i) and (ii) collectively, the “Diversification Tests”).

We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having OID (such as debt instruments with increasing interest rates or debt

instruments issued with warrants), we must include in income each year a portion of the OID that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any OID accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.

Because we use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act described above and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the Annual Distribution Requirement. If we are unable to obtain cash from other sources or are otherwise limited in our ability to make distributions, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.

Certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things: (a) disallow, suspend or otherwise limit the allowance of certain losses or deductions; (b) convert lower taxed long-term capital gain into higher taxed short-term capital gain or ordinary income; (c) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (d) cause us to recognize income or gain without a corresponding receipt of cash; (e) adversely affect the time as to when a purchase or sale of securities is deemed to occur; (f) adversely alter the characterization of certain complex financial transactions; or (g) produce income that will not be qualifying income for purposes of the 90% Gross Income Test described above. We will monitor our transactions and may make certain tax elections in order to mitigate the potential adverse effect of these provisions.

If, in any particular taxable year, we do not qualify as a RIC, all of our taxable income (including our net capital gains) will be subject to tax at regular corporate rates without any deduction for distributions to stockholders, and distributions will be taxable to the stockholders as ordinary dividends to the extent of our current and accumulated earnings and profits.

We file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. This information is available free of charge on our website at http://www.crescentbdc.com. Information contained on our website is not incorporated into this Annual Report and you should not consider such information to be part of this Annual Report. Such information is also available from the EDGAR database on the SEC’s web site at http://www.sec.gov.

Item 1A. Risk Factors

Investing in our common stock involves a number of significant risks. Before an investor invests in our common stock, the investor should be aware of various risks, including those described below. The investor should carefully consider these risk factors, together with all of the other information included in this Annual Report, before the investor decides whether to make an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair business, financial condition, and/or operating results. If any of the following events occur, our business, financial condition, and results of operations could be materially and adversely affected. In such case, the net asset value of our common stock and the trading price, if any, of our securities could decline, and an investor may lose all or part of his or her investment.

Risks Relating to Macroeconomic Factors

Market disruptions and other geopolitical or macroeconomic events could create market volatility that negatively impacts our business, financial condition and earnings.

General economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, supply chain disruptions, labor shortages, climate change, energy and other resource shortages, changes in laws, trade barriers, currency exchange controls and national and international political circumstances, may have long-term negative effects on the U.S. and worldwide financial markets and economy. These conditions have resulted in, and in many cases continue to result in, greater price volatility, less liquidity, widening credit spreads and a lack of price transparency, with many securities remaining illiquid and of uncertain value. Such market conditions may adversely affect the Company, including by making valuation of some of the Company’s securities uncertain and/or result in sudden and significant valuation increases or declines in the Company’s holdings. If there is a significant decline in the value of the Company’s portfolio, this may impact the asset coverage levels for the Company’s outstanding leverage.

Risks resulting from any future debt or other economic crisis could also have a detrimental impact on the global economy, the financial condition of financial institutions and our business, financial condition and results of operation. Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. To the extent uncertainty regarding the U.S. or global economy negatively impacts consumer confidence and consumer credit factors, our business, financial condition and results of operations could be significantly and adversely affected. Downgrades to the credit ratings of major banks could result in increased borrowing costs for such banks and negatively affect the broader economy. Moreover, Federal Reserve policy, including with respect to certain interest rates, may also adversely affect the value, volatility and liquidity of dividend- and interest-paying securities. Market volatility, rising interest rates and/or a return to unfavorable economic conditions could impair the Company’s ability to achieve its investment objective.

The occurrence of events similar to those in recent years, such as localized wars, instability, new and ongoing pandemics (such as COVID-19), epidemics or outbreaks of infectious diseases in certain parts of the world, negative effects of climate crisis and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics, terrorist attacks in the United States and around the world, social and political discord, debt crises sovereign debt downgrades, increasingly strained relations between the United States and a number of foreign countries, new and continued political unrest in various countries, the exit or potential exit of one or more countries from the EU or the EMU, continued changes in the balance of political power among and within the branches of the U.S. government, government shutdowns, among others, may result in market volatility, may have long term effects on the U.S. and worldwide financial markets, and may cause further economic uncertainties in the United States and worldwide.

In particular, the consequences of the Russian military invasion of Ukraine, the impact on inflation and increased disruption to supply chains and energy resources may impact our portfolio companies, result in an economic downturn or recession either globally or locally in the United States or other economies, reduce business activity, spawn additional conflicts (whether in the form of traditional military action, reignited "cold" wars or in the form of virtual warfare such as cyberattacks) with similar and perhaps wider ranging impacts and consequences and have an adverse impact on the Company's returns and net asset value. In response to the conflict between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions against Russia, Russian-backed separatist regions in Ukraine, and certain banks, companies, government officials and other individuals in Russia and Belarus. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline. We have no way to predict the duration or outcome of the situation, as the conflict and government reactions are rapidly developing and beyond our control. Prolonged unrest, military activities, or broad-based sanctions could have a material adverse effect on our portfolio companies. Such consequences also may increase our funding cost or limit our access to the capital markets.

The current political climate has intensified concerns about a potential trade war between China and the United States, as each country has imposed tariffs on the other country’s products. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and possible failure of individual companies and/or

large segments of China’s export industry, which could have a negative impact on our performance. U.S. companies that source material and goods from China and those that make large amounts of sales in China would be particularly vulnerable to an escalation of trade tensions. Uncertainty regarding the outcome of the trade tensions and the potential for a trade war could cause the U.S. dollar to decline against safe haven currencies, such as the Japanese yen and the euro. Events such as these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future. Any of these effects could have a material adverse effect on our business, financial condition and results of operations.

The effects described above on our portfolio companies could impact their ability to make payments on their loans on a timely basis and may impact their ability to continue making their loan payments on a timely basis or meeting their loan covenants. The inability of portfolio companies to make timely payments or meet loan covenants may in the future require us to undertake amendment actions with respect to our investments or to restructure our investments, which may include the need for us to make additional investments in our portfolio companies (including debt or equity investments) beyond any existing commitments, exchange debt for equity, or change the payment terms of our investments to permit a portfolio company to pay a portion of its interest through payment-in-kind, which would defer the cash collection of such interest and add it to the principal balance, which would generally be due upon repayment of the outstanding principal.

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore, our non-performing assets may increase and the value of our portfolio may decrease during these periods as we are required to record the values of our investments. Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were to go bankrupt, even though we or one of our affiliates may have structured our interest in such portfolio company as senior debt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding as equity and subordinate all or a portion of our claim to claims of other creditors.

Recently, central banks such as the Federal Reserve Bank have been increasing interest rates in an effort to slow the rate of inflation. There is a risk that increased interest rates may cause the economy to enter a recession. Any such recession would negatively impact the businesses in which we invest and our business. These impacts may include:

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severe declines in the market price of our securities or net asset value;

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inability of the Company to accurately or reliably value its portfolio;

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inability of the Company to comply with certain asset coverage ratios that would prevent the Company from paying dividends to our stockholders and that could result breaches of covenants or events of default under our credit agreement or debt indentures;

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inability of the Company to pay any dividends and distributions or service its debt;

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inability of the Company to maintain its status as a RIC under the Code;

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declines in the value of our investments;

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increased risk of default or bankruptcy by the companies in which we invest;

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increased risk of companies in which we invest being unable to weather an extended cessation of normal economic activity and thereby impairing their ability to continue functioning as a going concern;

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limited availability of new investment opportunities;

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inability for us to replace our existing leverage when it becomes due or replace it on terms as favorable as our existing leverage; and

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general threats to the Company’s ability to continue investment operations and to operate successfully as a BDC.

We are subject to risks related to inflation.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, inflation has increased to its highest level in decades, and the Federal Reserve has been raising the federal funds rate in response. Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and the Company’s investments may not keep pace with inflation, which may result in losses to shareholders. As inflation increases, the real value of our shares and dividends therefore may decline. In addition, during any periods of rising inflation, interest rates of any debt securities issued by the Company would likely increase, which would tend to further reduce returns to shareholders. Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and our investments may not keep pace with inflation, which may result in losses to our shareholders. This risk is greater for fixed-income instruments with longer maturities.

Risks Relating to our Business and Structure

We are dependent upon key personnel of Crescent and the Adviser.

We do not have any internal management capacity or employees. Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our investments and earnings. We depend on the investment expertise, skill and network of business contacts of the senior personnel of our Adviser. Our Adviser evaluates, negotiates, structures, executes, monitors and services our investments. Key personnel of our Adviser have departed in the past and current key personnel could depart at any time. Our Adviser’s capabilities in structuring the investment process, providing competent, attentive and efficient services to us, and facilitating access to financing on acceptable terms depend on the employment of investment professionals in adequate number and of adequate sophistication to match the corresponding flow of transactions. The departure of key personnel or of a significant number of the investment professionals or partners of our Adviser could have a material adverse effect on our ability to achieve our investment objective. Our Adviser may need to hire, train, supervise and manage new investment professionals to participate in our investment selection and monitoring process and may not be able to find investment professionals in a timely manner or at all.

In addition, our Adviser may resign on 60 days’ notice. If we are unable to quickly find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms, our operations are likely to experience a disruption and our ability to achieve our investment objective and pay distributions would likely be materially and adversely affected.

The Adviser is an affiliate of Crescent and will depend upon access to the investment professionals and Crescent’s other resources to fulfill its obligations to us under the Investment Advisory Agreement. The Adviser will also depend upon such investment professionals to obtain access to deal flow generated by Crescent. Under a Resource Sharing Agreement, Crescent has agreed to provide the Adviser with the experienced investment professionals necessary to fulfill its obligations under the Investment Advisory Agreement. The Resource Sharing Agreement provides that Crescent will make available to the Adviser experienced investment professionals and access to Crescent’s resources for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our investments and earnings. This will depend, in turn, on Crescent’s ability to identify, invest in and monitor portfolio companies that meet our investment criteria. Further, we depend upon Crescent to maintain its relationships with private equity sponsors, placement agents, investment banks, management groups and other financial institutions, and we expect to rely to a significant extent upon these relationships to provide us with potential investment opportunities. The achievement of our investment objectives on a cost-effective basis will depend upon Crescent’s execution of our investment process, its ability to provide competent, attentive and efficient services to us and, to a lesser extent, our access to financing on acceptable terms.

We may not replicate the historical results achieved by Crescent.

Our primary focus in making investments may differ from those of existing investment funds, accounts or other investment vehicles that are or have been managed by members of the Adviser’s investment committee or by Crescent. Past performance should not be relied upon as an indication of future results. There can be no guarantee that we will replicate our own historical performance, the historical success of Crescent or the historical performance of investment funds, accounts or other investment vehicles that are or have been managed by members of the Adviser’s investment committee or by Crescent or its employees, and we caution investors that our investment returns could be substantially lower than the returns achieved by them in prior periods.

The Adviser, the investment committee of the Adviser, Crescent and their affiliates, officers, directors and employees may face certain conflicts of interest.

As a result of our arrangements with Crescent, the Adviser and the Adviser’s investment committee, there may be times when the Adviser or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest.

The members of the Adviser’s investment committee serve, or may serve, as officers, directors, members, or principals of entities that operate in the same or a related line of business as we do, or of investment funds, accounts, or investment vehicles managed by Crescent and/or its affiliates. Similarly, Crescent and its affiliates may have other clients with similar, different or competing investment objectives.

In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of, or which may be adverse to the interests of, us or our stockholders. For example, Crescent has, and will continue to have management responsibilities for other investment funds, accounts and investment vehicles. There is a potential that we will compete with these funds, and other entities managed by Crescent and its affiliates, for capital and investment opportunities. As a result, members of the Adviser’s investment committee who are affiliated with Crescent will face conflicts in the allocation of investment opportunities among us, and other investment funds, accounts and investment vehicles managed by Crescent and its affiliates and may make certain investments that are appropriate for us but for which we receive a relatively small allocation or no allocation at all. Crescent intends to allocate investment opportunities among eligible investment funds, accounts and investment vehicles in a manner that is fair and equitable over time and consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time and we may not be given the opportunity to participate in investments made by investment funds managed by Crescent or its affiliates. We expect that Crescent and the Adviser will agree with our Board that, subject to applicable law, allocations among us and other investment funds, accounts and investment vehicles managed by Crescent will generally be made based on capital available for investment in the asset class being allocated and the respective governing documents of such investment funds, accounts and investment vehicles. We expect that available capital for our investments will be determined based on the amount of cash on-hand, existing commitments and reserves, if any, the targeted leverage level, targeted asset mix and diversification requirements and other investment policies and restrictions set by our Board or as imposed by applicable laws, rules, regulations or interpretations. However, there can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.

Further, to the extent permitted by applicable law, we and our affiliates may own investments at different levels of a portfolio company’s capital structure or otherwise own different classes of a portfolio company’s securities, which may give rise to conflicts of interest or perceived conflicts of interest. Conflicts may also arise because decisions regarding our portfolio may benefit our affiliates. Our affiliates may pursue or enforce rights with respect to one of its portfolio companies, and those activities may have an adverse effect on us.

Conflicts may arise related to other arrangements with Crescent and the Adviser and other affiliates.

We have entered into a license agreement with Crescent under which Crescent has agreed to grant us a non-exclusive, royalty-free license to use the name “Crescent Capital.” In addition, the Administration Agreement with the Administrator, an affiliate of Crescent, requires we pay to the Administrator our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, such as rent and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs. In addition, the Adviser has entered into a Resource Sharing Agreement with Crescent pursuant to which Crescent provides the Adviser with the resources necessary to fulfill its obligations under the Investment Advisory Agreement. These agreements create conflicts of interest that the independent members of our Board will monitor. For example, under the terms of the license agreement, we will be unable to preclude Crescent from licensing or transferring the ownership of the “Crescent Capital” name to third parties, some of whom may compete against us. Consequently, it will be unable to prevent any damage to goodwill that may occur as a result of the activities of Crescent or others. Furthermore, in the event the license agreement is terminated, we will be required to change our name and cease using “Crescent Capital” as part of our name. Any of these events could disrupt our recognition in the market place, damage any goodwill it may have generated and otherwise harm its business.

The Investment Advisory Agreement, and the Administration Agreement were negotiated between related parties. Consequently, their terms, including fees payable to the Adviser, may not be as favorable to us as if they had been negotiated exclusively with an unaffiliated third party. In addition, we may desire not to enforce, or to enforce less vigorously, its rights and remedies under these agreements because of our desire to maintain our ongoing relationship with the Adviser, the Administrator and their respective affiliates. Any such decision, however, could breach our fiduciary obligations to its stockholders.

Crescent’s principals and employees, the Adviser or their affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

Crescent’s executive officers and directors, principals and other employees, including members of the Adviser’s investment committee, may serve as directors of, or in a similar capacity with, portfolio companies in which we invest, the securities of which are purchased or

sold on our behalf and may come into possession of material non-public information with respect to issuers in which we may be considering making an investment. In the event that material non-public information is obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies, Crescent’s policies or as a result of applicable law or regulations, we could be prohibited for a period of time or indefinitely from purchasing or selling the securities of such companies, or we may be precluded from providing such information or other ideas to other funds affiliated with Crescent that might benefit from such information, and this prohibition may have an adverse effect on us.

Our management and incentive fee structure may create incentives for the Adviser that are not fully aligned with our stockholders’ interests and may induce the Adviser to make speculative investments.

In the course of our investing activities, we will pay management and incentive fees to the Adviser. We have entered into the Investment Advisory Agreement with the Adviser that provides that these fees are based on the value of our gross assets (which includes assets purchased with borrowed amounts or other forms of leverage but excludes cash and cash equivalents), instead of net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable). As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, including the costs of leverage, resulting in a lower rate of return than one might achieve if distributions were made on a gross basis. Because our management fees are based on the value of our gross assets, incurrence of debt or the use of leverage will increase the management fees due to the Adviser. As such, the Adviser may have an incentive to use leverage to make additional investments. In addition, as additional leverage would magnify positive returns, if any, on our portfolio, the incentive fee would become payable to the Adviser (i.e., exceed the Hurdle Amount (as defined herein under the heading “Incentive Fee”)) at a lower average return on our portfolio. Thus, if we incur additional leverage, the Adviser may receive additional incentive fees without any corresponding increase (and potentially with a decrease) in the performance of our portfolio.

Additionally, under the incentive fee structure, the Adviser may benefit when capital gains are recognized and, because the Adviser will determine when to sell a holding, the Adviser will control the timing of the recognition of such capital gains. As a result of these arrangements, there may be times when the management team of the Adviser has interests that differ from those of our stockholders, giving rise to a conflict. Furthermore, there is a risk the Adviser will make more speculative investments in an effort to receive this payment. PIK interest and OID would increase our pre-incentive fee net investment income by increasing the size of the loan balance of underlying loans and increasing our assets under management and would make it easier for the Adviser to surpass the Hurdle Amount and increase the amount of incentive fees payable to the Adviser.

The part of the incentive fee payable to the Adviser relating to our net investment income is computed and paid on income that may include interest income that has been accrued but not yet received in cash. This fee structure may give rise to a conflict of interest for the Adviser to the extent that it encourages the Adviser to favor debt financings that provide for deferred interest, rather than current cash payments of interest. The Adviser may have an incentive to invest in deferred interest securities in circumstances where it would not have done so but for the opportunity to continue to earn the incentive fee even when the issuers of the deferred interest securities would not be able to make actual cash payments to us on such securities. This risk could be increased because, under the Investment Advisory Agreement, the Adviser is not obligated to reimburse us for incentive fees it receives even if we subsequently incur losses or never receives in cash the deferred income that was previously accrued.

Our Board is charged with protecting our interests by monitoring how the Adviser addresses these and other conflicts of interest associated with its services and compensation. While our Board is not expected to review or approve each investment decision or incurrence of leverage, our independent directors will periodically review the Adviser’s services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors will consider whether the Adviser’s fees and expenses (including those related to leverage) remain appropriate.

We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent it so invests, bear its ratable share of any such investment company’s expenses, including management and performance fees. We also remain obligated to pay management and incentive fees to the Adviser with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of our stockholders bears his or her share of the management and incentive fees of the Adviser as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.

The Adviser has limited liability and is entitled to indemnification under the Investment Advisory Agreement.

subsidiaries, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that the Adviser owes to us under the Investment Advisory Agreement. In addition, as part of the Investment Advisory Agreement, we have agreed to indemnify the Adviser and each of its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser, including, without limitation, its general partner and the Administrator, and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by such party in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of us or our security holders) arising out of or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Investment Advisory Agreement or otherwise as an investment adviser of us, except in respect of any liability to us or our security holders to which such party would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Adviser’s duties or by reason of the reckless disregard of the Adviser’s duties and obligations under the Investment Advisory Agreement. These protections may lead the Adviser to act in a riskier manner when acting on our behalf than the Adviser would when acting for its own account.

Our ability to enter into transactions with our affiliates is restricted.

We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our independent directors and, in some cases, the SEC. We consider the Adviser and its affiliates, including Crescent, to be our affiliates for such purposes. In addition, any person that owns, directly or indirectly, 5% or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security from or to such affiliate without the prior approval of our independent directors. We consider the Adviser and its affiliates, including Crescent, to be our affiliates for such purposes. The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include investments in the same portfolio company, without prior approval of our independent directors and, in some cases, of the SEC. We are prohibited from buying or selling any security from or to any person who owns more than 25% of our voting securities or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.

We may, however, invest alongside Crescent’s investment funds, accounts and investment vehicles in certain circumstances where doing so is consistent with our investment strategy as well as applicable law and SEC staff interpretations or exemptive orders. For example, we may invest alongside such investment funds, accounts and investment vehicles consistent with guidance promulgated by the SEC staff to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that Crescent, acting on our behalf and on behalf of such investment funds, accounts and investment vehicles, negotiates no term other than price. We may also invest alongside Crescent’s investment funds, accounts and investment vehicles as otherwise permissible under regulatory guidance, applicable regulations or exemptive orders and Crescent’s allocation policy. If the Company is prohibited by applicable law from investing alongside Crescent’s investment funds, accounts and investment vehicles with respect to an investment opportunity, we may not be able to participate in such investment opportunity. This allocation policy provides that allocations among us and investment funds, accounts and investment vehicles managed by Crescent and its affiliates will generally be made pro rata based on capital available for investment, as determined, in our case, by our Board as well as the terms of our governing documents and those of such investment funds, accounts and investment vehicles. It is our policy to base our determinations on such factors as: the amount of cash on-hand, existing commitments and reserves, if any, our targeted leverage level, our targeted asset mix and diversification requirements and other investment policies and restrictions set by our Board or imposed by applicable laws, rules, regulations or interpretations. We expect that these determinations will be made similarly for investment funds, accounts and investment vehicles managed by Crescent. However, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time.

In situations where co-investment with investment funds, accounts and investment vehicles managed by Crescent is not permitted or appropriate, such as when there is an opportunity to invest in different securities of the same issuer or where the different investments could be expected to result in a conflict between our interests and those of Crescent’s clients, subject to the limitations described in the preceding paragraph, Crescent will need to decide which client will proceed with the investment. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. These restrictions will limit the scope of investment opportunities that would otherwise be available to us.

We, the Adviser and Crescent have been granted exemptive relief from the SEC which permits greater flexibility to negotiate the terms of co-investments if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed by Crescent in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. We believe that co-investment by us and investment funds, accounts and investment vehicles managed by Crescent may afford us additional investment opportunities and an ability to achieve a more varied portfolio. Accordingly, our exemptive order permits us to invest with investment funds, accounts and investment vehicles managed by Crescent in the same portfolio companies under circumstances in which such investments would otherwise not be permitted

by the 1940 Act. The exemptive relief permitting co-investment transactions generally applies only if our independent directors and directors who have no financial interest in such transaction review and approve in advance each co-investment transaction.

Our ability to sell or otherwise exit investments also invested in by other Crescent investment vehicles is restricted.

We may be considered affiliates with respect to certain of our portfolio companies because our affiliates, which may include certain investment funds, accounts or investment vehicles managed by Crescent, also hold interests in these portfolio companies and as such these interests may be considered a joint enterprise under the 1940 Act. To the extent that our interests in these portfolio companies may need to be restructured in the future or to the extent that we choose to exit certain of these transactions, our ability to do so will be limited. We intend to seek exemptive relief in relation to certain joint transactions; however, there is no assurance that we will obtain relief that would permit us to negotiate future restructurings or other transactions that may be considered a joint enterprise.

We operate in an increasingly competitive market for investment opportunities, which could make it difficult for us to identify and make investments that are consistent with our investment objectives.

A number of entities compete with us to make the types of investments that we make and plan to make. We compete with public and private funds, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some of our competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the source-of-income, asset diversification and distribution requirements we must satisfy to maintain our RIC qualification. The competitive pressures we face may have a material adverse effect on our business, financial condition, results of operations and cash flows. As a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our investment objectives.

With respect to the investments we make, we will not seek to compete based primarily on the interest rates we will offer, and we believe that some of our competitors may make loans with interest rates that will be lower than the rates we offer. In the secondary market for acquiring existing loans, we expect to compete generally on the basis of pricing terms. With respect to all investments, we may lose some investment opportunities if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income, lower yields and increased risk of credit loss. We may also compete for investment opportunities with investment funds, accounts and investment vehicles managed by Crescent. Although Crescent will allocate opportunities in accordance with its policies and procedures, allocations to such investment funds, accounts and investment vehicles will reduce the amount and frequency of opportunities available to us and may not be in the best interests of us and our stockholders. Moreover, the performance of investments will not be known at the time of allocation. See —“The Adviser, the investment committee of the Adviser, Crescent and their affiliates, officers, directors and employees may face certain conflicts of interest.”

We will be subject to corporate level income tax if we are unable to qualify as a RIC.

To qualify as a RIC under the Code, we must meet certain source-of-income, asset diversification and distribution requirements. The distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis. We will be subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter and source-of-income requirements on an annual basis. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of our qualifications as a RIC. Because most of our investments will be in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. If we fail to qualify as a RIC for any reason and become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distributions to our stockholders and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and our stockholders.

We may need to raise additional capital.

We intend to access the capital markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain additional capital to fund new investments and grow our portfolio of investments. Unfavorable economic conditions could

increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. A reduction in the availability of new capital could limit our ability to grow. In addition, we will be required to distribute in respect of each taxable year at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, for such taxable year to our stockholders to maintain our qualification as a RIC. Amounts so distributed will not be available to fund new investments or repay maturing debt. An inability on our part to access the capital markets successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which would have an adverse effect on the value of our securities.

Further, we may pursue growth through acquisitions or strategic investments in new businesses. Completion and timing of any such acquisitions or strategic investments may be subject to a number of contingencies and risks. There can be no assurance that the integration of an acquired business will be successful or that an acquired business will prove to be profitable or sustainable.

Regulations governing our operation as a BDC affect our ability to, and the way in which we may, raise additional capital.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted as a BDC to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, as amended, equals at least 150% of our gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments at a time when such sales may be disadvantageous to us in order to repay a portion of its indebtedness. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.

Furthermore, equity capital may be difficult to raise because, subject to some limited exceptions we are not generally able to issue and sell our common stock at a price below NAV per share. We may, however, sell our common stock, or warrants, options or rights to acquire shares of our common stock, at a price below the then-current NAV per share of our common stock if our Board determines that such sale is in our best interests, and if our stockholders, including a majority of those stockholders that are not affiliated with us, approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value of such securities (less any distributing commission or discount). We do not currently have authorization from our stockholders to issue our common stock at a price below the then-current NAV per share.

Stockholders may be required to pay tax in excess of the cash they receive.

Under our dividend reinvestment plan, if a stockholder owns shares of our common stock, the stockholder will have all cash distributions automatically reinvested in additional shares of our common stock unless such stockholder, or his, her or its nominee on such stockholder’s behalf, specifically “opts out” of the dividend reinvestment plan by delivering a written notice to the plan administrator prior to the record date of the next distribution. If a stockholder does not “opt out” of the dividend reinvestment plan, that stockholder will be deemed to have received, and for U.S. federal income tax purposes will be taxed on, the amount reinvested in our common stock to the extent the amount reinvested was not a tax-free return of capital. As a result, a stockholder may have to use funds from other sources to pay U.S. federal income tax liability on the value of the common stock received. Even if a stockholder chooses to “opt out” of the dividend reinvestment plan, we will have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash in order to satisfy the Annual Distribution Requirement (as defined herein under the heading “Item 1(c). Description of Business—Regulation as a Business Development Company—Election to Be Taxed as a RIC”). As long as a sufficient portion of this dividend is available to be paid in cash (generally 20%) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder generally will be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend was paid in shares of common stock.

We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.

For U.S. federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as the accretion of OID. This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such OID, which could be significant relative to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.

Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term

capital losses, if any, to maintain our qualification as a RIC. In such a case, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain such cash from other sources, we may fail to qualify as a RIC and thus be subject to corporate-level income tax.

We may be subject to withholding of U. S. Federal income tax on distributions to non-U.S. stockholders.

Distributions by a RIC generally are treated as dividends for U.S. tax purposes, and will be subject to U.S. income or withholding tax unless the stockholder receiving the dividend qualifies for an exemption from U.S. tax, or the distribution is subject to one of the special look-through rules described below. Distributions paid out of net capital gains can qualify for a reduced rate of taxation in the hands of an individual U.S. stockholder, and an exemption from U.S. tax in the hands of a non-U.S. stockholder.

Properly reported dividend distributions by RICs paid out of certain interest income (such distributions, “interest-related dividends”) are generally exempt from U.S. withholding tax for non-U.S. stockholders. Under such exemption, a non-U.S. stockholder generally may receive interest-related dividends free of U.S. withholding tax if the stockholder would not have been subject to U.S. withholding tax if it had received the underlying interest income directly. A similar exemption applies to property reported dividend distributions paid out of short-term capital gains. No assurance can be given as to whether any of our distributions will be eligible for this exemption from U.S. withholding tax or, if eligible, will be designated as such by us. In particular, the exemption does apply to distributions paid in respect of a RIC’s non-U.S. source interest income, its dividend income or its foreign currency gains. In the case shares of our common stock held through an intermediary, the intermediary may withhold U.S. federal income tax even if we designate the payment as a dividend eligible for the exemption. Also, because our common stock will be subject to significant transfer restrictions, and an investment in our common stock will generally be illiquid, non-U.S. stockholders whose distributions on our common stock are subject to U.S. withholding tax may not be able to transfer their shares of our common stock easily or quickly or at all.

We may retain income and capital gains in excess of what is permissible for excise tax purposes and such amounts will be subject to 4% U.S. federal excise tax, reducing the amount available for distribution to stockholders.

We may retain some income and capital gains in the future, including for purposes of providing additional liquidity, which amounts would be subject to a 4% U.S. federal excise tax to the extent we do not distribute during the calendar year the amount of distributions required to avoid the excise tax.. In that event, we will be liable for the tax on the amount by which it does not meet the foregoing distribution requirement. See Item 1(c). Description of Business—Regulation as a Business Development Company—Taxation as a RIC.”

Our business may be adversely affected if we fail to maintain our qualification as a RIC.

To maintain RIC tax treatment under the Code, we must meet the Annual Distribution Requirement, 90% Income Test and Diversification Tests described below and defined and further described in “Item 1(c). Description of Business—Regulation as a Business Development Company—Election to Be Taxed as a RIC.” The Annual Distribution Requirement will be satisfied if we distribute dividends to our stockholders in respect of each taxable year of an amount generally at least equal to 90% of its investment company taxable income, determined without regard to any deduction for distributions paid. In this regard, a RIC may, in certain cases, satisfy the Annual Distribution Requirement by distributing dividends relating to a taxable year after the close of such taxable year under the “spillback dividend” provisions of Subchapter M of the Code. We will be subject to tax, at regular corporate rates, on any retained income and/or gains, including any short-term capital gains or long-term capital gains. We must also satisfy the Excise Tax Avoidance Requirement, which is an additional distribution requirement with respect to each calendar year in order to avoid the imposition of a 4% excise tax on the amount of any under-distribution. Because we use debt financing, we are subject to (i) an asset coverage ratio requirement under the 1940 Act and are subject to (ii) certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirements. If we are unable to obtain cash from other sources, or choose or are required to retain a portion of our taxable income or gains, we could (i) be required to pay excise tax and (ii) fail to qualify for RIC tax treatment, and thus become subject to corporate-level income tax on its taxable income (including gains).

The 90% Income Test will be satisfied if we earn at least 90% of our gross income each taxable year from distributions, interest, gains from the sale of stock or securities, or other income derived from the business of investing in stock or securities. The Diversification Tests will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy the Diversification Tests, at least 50% of the value of our assets at the close of each quarter of each taxable year must consist of cash, cash equivalents (including receivables), U.S. government securities, securities of other RICs, and other acceptable securities, and no more than 25% of the value of its assets can be invested in the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or of certain “qualified publicly traded partnerships.” Failure to meet these requirements may

result in us having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses.

We may invest in certain debt and equity investments through taxable subsidiaries and the net taxable income of these taxable subsidiaries will be subject to federal and state corporate income taxes. We also may invest in certain foreign debt and equity investments that could be subject to foreign taxes (such as income tax, withholding, and value added taxes). If we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, and the amount of our distributions.

Certain investors are limited in their ability to make significant investments in us.

Private funds that are excluded from the definition of “investment company” either pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act are restricted from acquiring directly or through a controlled entity more than 3% of our total outstanding voting stock (measured at the time of the acquisition). Investment companies registered under the 1940 Act and BDCs, such as us, are also currently subject to this restriction as well as other limitations under the 1940 Act that would restrict the amount that they are able to invest in our securities. As a result, certain investors will be limited in their ability to make significant investments in us at a time that they might desire to do so. The SEC has adopted Rule 12d1-4 under the 1940 Act. Subject to certain conditions, Rule 12d1-4 provides an exemption to permit acquiring funds to invest in the securities of other registered investment companies and BDCs in excess of the limits prescribed by the 1940 Act.

Our business could be adversely affected in the event we default under our existing credit facilities or any future credit or other borrowing facility.

We have entered into, and additionally may enter into, one or more credit facilities. The closing of any additional credit facilities is contingent on a number of conditions including, without limitation, the negotiation and execution of definitive documents relating to such credit facility. If we obtain any additional credit facilities, we intend to use borrowings under such credit facilities to make additional investments and for other general corporate purposes. However, there can be no assurance that we will be able to close such additional credit facilities or obtain other financing.

In the event we default under one of our credit facilities or any other future borrowing facility, our business could be adversely affected as we may be forced to sell a portion of our investments quickly and prematurely at what may be disadvantageous prices to us in order to meet our outstanding payment obligations and/or support working capital requirements under the relevant credit facility or such future borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, following any such default, the agent for the lenders under any future borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, ability to pay dividends, financial condition, results of operations and cash flows. If we were unable to obtain a waiver of a default from the lenders or holders of that indebtedness, as applicable, those lenders or holders could accelerate repayment under that indebtedness, which might result in cross-acceleration of other indebtedness. An acceleration could have a material adverse impact on our business, financial condition and results of operations.

In addition, following any such default, the agent for the lenders under the relevant credit facility or such future credit or other borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Lastly, as a result of any such default, we may be unable to obtain additional leverage, which could, in turn, affect our return on capital.

We are and may be subject to restrictions under our credit facilities and any future credit or other borrowing facility that could adversely impact our business.

Our credit facilities, and any future borrowing facility, may be backed by all or a portion of our loans and securities on which the lenders may have a security interest. We currently pledge and may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instrument we enter into with lenders. Like with its current credit facilities, we expect that any future security interests we grant will be set forth in a pledge and security agreement and evidenced by the filing of financing statements by the agent for the lenders, and we expect that the custodian for our securities serving as collateral for such loan would include in the custodian’s electronic systems notices indicating the existence of such security interests and, following notice of occurrence of an event of default, if any, and during its continuance, will only accept transfer instructions with respect to any such securities from the lender or its designee. Under our current credit facilities, we are subject to customary events of default. If we were to default under the terms of

our current credit facilities and any future borrowing facility, the agent for the applicable lenders would be able to assume control of the timing of disposition of the assets pledged under the facility, which could include any or all of our assets securing such debt. Such remedial action would have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, the security interests as well as negative covenants under its credit facilities, or any other future borrowing facility, may limit our ability to create liens on assets to secure additional debt and may make it difficult for us to restructure or refinance indebtedness at or prior to maturity or obtain additional debt or equity financing. In addition, if our borrowing base under our credit facilities or any other borrowing facility were to decrease, we would be required to secure additional assets in an amount equal to any borrowing base deficiency. In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the relevant credit facility or any other borrowing facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to pay dividends.

In addition, under our credit facilities, or any other future borrowing facility, we may be limited as to how borrowed funds may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage which may affect the amount of funding that may be obtained.

There may also be certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, a violation of which could limit further advances and, in some cases, result in an event of default. An event of default under our credit facilities or any other borrowing facility could result in an accelerated maturity date for all amounts outstanding thereunder, which could have a material adverse effect on our business and financial condition. This could reduce our revenues and, by delaying any cash payment allowed to us under the relevant credit facility or any other borrowing facility until the lenders have been paid in full, reduce our liquidity and cash flow and impair its ability to grow its business and maintain its qualification as a RIC.

Our strategy involves a high degree of leverage. We intend to continue to finance our investments with borrowed money, which will magnify the potential for gain or loss on amounts invested and increases the risk of investing in us. The risks of investment in a highly leveraged fund include volatility and possible distribution restrictions.

The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. However, we have borrowed from, and may in the future issue debt securities to, banks, insurance companies and other lenders. Lenders of these funds have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instruments we may enter into with lenders. In addition, under the terms of our credit facilities and any borrowing facility or other debt instrument we may enter into, we are likely to be required to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses or eliminating our stake in a leveraged investment. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make dividend payments on our common stock or preferred stock. Our ability to service any debt will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the base management fee payable to the Adviser.

There can be no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our credit facilities or otherwise in an amount sufficient to enable us to repay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before it matures. There can be no assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets or seeking additional equity. There can be no assurance that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would not be disadvantageous to stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

As a BDC, we are generally required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 150%. If this ratio declines below 150%, we will not be able to incur additional debt and could be required to sell a portion of our investments to repay some debt when we are otherwise disadvantageous for us to do so. This could have a material adverse effect on our operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on the Adviser’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure stockholders that we will be able to obtain credit at all or on terms acceptable to it.

Rising interest rates or changes in interest rates may adversely affect the value of our portfolio investments which could have an adverse effect on our business, financial condition and results of operations.

Our debt investments are generally based on floating rates, such as London Interbank Offer Rate (“LIBOR”), EURIBOR, Secured Overnight Financing Rate (“SOFR”), the Federal Funds Rate or the Prime Rate. General interest rate fluctuations may have a substantial negative impact on our investments, the value of our common stock and our rate of return on invested capital. An increase in interest rates generally will increase the cost of borrowing for the companies in which we invest and may make them less profitable, which generally would decrease the value of our investments in them. In addition, although we generally expect to invest a limited percentage of our assets in instruments with a fixed interest rate, including subordinated loans, senior and junior secured and unsecured debt securities and loans in high yield bonds, an increase in interest rates could decrease the value of those fixed rate investments. Rising interest rates may also increase the cost of debt for our underlying portfolio companies, which could adversely impact their financial performance and ability to meet ongoing obligations to the Company. Also, an increase in interest rates available to investors could make investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the value of our common stock.

Because we have borrowed money, and may issue preferred stock to finance investments, our net investment income depends, in part, upon the difference between the rate at which we borrow funds or pay dividends on preferred stock and the rate that our investments yield. 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. In this period of rising interest rates, our cost of funds may increase except to the extent we have issued fixed rate debt or preferred stock, which could reduce our net investment income.

You should also be aware that a change in the general level of interest rates can be expected to lead to a change in the interest rate we receive on many of our debt investments. Accordingly, a change in the interest rate could make it easier for us to meet or exceed the performance threshold and may result in a substantial increase in the amount of Incentive Fees payable to our Advisor with respect to the portion of the Incentive Fee based on income.

Interest rates have risen in recent months, and the risk that they may continue to do so is pronounced.

Changes relating to the LIBOR calculation process, the phase-out of LIBOR and the use of replacement rates for LIBOR may adversely affect the value of our portfolio securities.

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021. The announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Since December 31, 2021, all sterling, euro, Swiss franc and Japanese yen LIBOR settings and the 1-week and 2-month U.S. dollar LIBOR settings have ceased to be published or are no longer representative, and after June 30, 2023, the overnight, 1-month, 3-month, 6-month and 12-month U.S. dollar LIBOR settings will cease to be published or will no longer be representative. Various financial industry groups have begun planning for the transition away from LIBOR, but there are challenges to converting certain securities and transactions to a new reference rate.

As an alternative to LIBOR, the Financial Reporting Council, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions recommended replacing U.S. dollar LIBOR with SOFR, a new index calculated by reference to short-term repurchase agreements, backed by Treasury securities. Abandonment of, or modifications to, LIBOR could have adverse impacts on newly issued financial instruments and any of our existing financial instruments which reference LIBOR. Given the inherent differences between LIBOR and SOFR, or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR, including, but not limited to, the need to amend all contracts with LIBOR as the referenced rate and how this will impact the cost of variable rate debt and certain derivative financial instruments. In addition, SOFR or other replacement rates may fail to gain market acceptance. Any failure of SOFR or alternative reference rates to gain market acceptance could adversely affect the return on, value of and market for securities linked to such rates.

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of, new hedges placed against, instruments whose terms currently include LIBOR. While some existing LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, there may be significant uncertainty regarding the effectiveness of any such alternative methodologies to replicate LIBOR. Not all existing LIBOR-based instruments may have alternative rate-setting provisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. Moreover, these alternative rate-setting provisions may not be designed for regular use in an environment where LIBOR ceases to be published and may be an ineffective fallback following the discontinuation of LIBOR. On March 15, 2022, President Biden signed into law the Consolidated Appropriations Act of 2022, which among other things, provides for the use of interest

rates based on SOFR in certain contracts currently based on LIBOR and a safe harbor from liability for utilizing SOFR-based interest rates as a replacement for LIBOR. The elimination of LIBOR could have an adverse impact on the market value of and/or transferability of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations.

We may be the target of litigation.

We may be the target of securities litigation in the future, particularly if the value of shares of our common stock fluctuates significantly. We could also generally be subject to litigation, including derivative actions by stockholders. In addition, our investment activities subject it to litigation relating to the bankruptcy process and the normal risks of becoming involved in litigation by third parties. This risk is somewhat greater where we exercise control or significant influence over a portfolio company’s direction. Any litigation could result in substantial costs and divert management’s attention and resources from our business and cause a material adverse effect on our business, financial condition and results of operations.

There is a risk that investors in our common stock may not receive dividends or that our dividends may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled.

We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. If we declare a dividend and if more stockholders opt to receive cash distributions rather than participate in its reinvestment plan, we may be forced to sell some of its investments in order to make cash dividend payments.

In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions. Certain of our credit facilities may also limit our ability to declare dividends if we default under certain provisions. Further, if we invest a greater amount of assets in equity securities that do not pay current dividends, it could reduce the amount available for distribution.

The above-referenced restrictions on distributions may also inhibit our ability to make required interest payments to holders of our debt, which may cause a default under the terms of its debt agreements. Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties under the terms of its debt agreements.

If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC or be precluded from investing according to our current business strategy.

To maintain its status as a BDC, we are not permitted to acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Subject to certain exceptions for follow-on investments and distressed companies, an investment in an issuer that has outstanding securities listed on a national securities exchange may be treated as a qualifying asset only if such issuer has a common equity market capitalization that is less than $250 million at the time of such investment. Subject to certain exceptions for follow-on investments and investments in distressed companies, an investment in an issuer that has outstanding securities listed on a national securities exchange may be treated as qualifying assets only if such issuer has a common equity market capitalization that is less than $250 million at the time of such investment.

We may be precluded from investing in what we believe are attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inappropriate times in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such outcomes would have a material adverse effect on our business, financial condition, results of operations and cash flows.

The majority of our portfolio investments are recorded at fair value as determined in good faith by Adviser as Valuation Designee with approval from our Board and, as a result, there may be uncertainty as to the value of our portfolio investments.

Many of our portfolio investments are in the form of loans and securities that are not publicly traded. The fair value of loans, securities and other investments that are not publicly traded may not be readily determinable, and we will value these investments at fair value as determined by the Adviser as Valuation Designee in good faith in accordance with Rule 2a-5 and with the approval of our Board, including to reflect significant events affecting the value of our investments. Most, if not all, of our investments (other than cash and cash equivalents) will be classified as Level 3 under the FASB Accounting Standards Codification, Fair Value Measurements and

Disclosures (ASC Topic 820). This means that our portfolio valuations will be based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. We expect that inputs into the determination of fair value of our portfolio investments will require significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We retain the services of one or more independent service providers to review the valuation of these loans and securities. However, the ultimate determination of fair value will be made by the Adviser as Valuation Designee with approval by our Board and not by such third-party valuation firm. The types of factors that the Valuation Designee may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly-traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made in the future, comparisons to publicly traded companies, relevant credit market indices and other relevant factors.

Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these loans and securities existed. Also, since these valuations are, to a large extent, based on estimates, comparisons and qualitative evaluations of private information, our fair valuation process could make it more difficult for investors to accurately value our investments and could lead to undervaluation or overvaluation of our securities. In addition, the valuation of these types of securities may result in substantial write-downs and earnings volatility. Also, privately held companies frequently have less diverse product lines and smaller market presence than larger public competitors.

Our NAV could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such loans and securities. Further, our NAV as of a particular date may be materially greater than or less than the value that would be realized if our assets were to be liquidated as of such date. For example, if we were required to sell a certain asset or all or a substantial portion of our assets on a particular date, the actual price that we would realize upon the disposition of such asset or assets could be materially less than the value of such asset or assets as reflected in our NAV. Volatile market conditions could also cause reduced liquidity in the market for certain assets, which could result in liquidation values that are materially less than the values of such assets as reflected in the NAV.

We will adjust quarterly the valuation of our portfolio to reflect the fair value of each investment in our portfolio. Any changes in fair value are recorded in our statement of operations as net change in unrealized appreciation or depreciation.

In addition, the participation of the Adviser in the valuation process could result in a conflict of interest as the management fee payable is based on our gross assets and the incentive fees earned by the Adviser will be based, in part, on unrealized gains and losses.

We may experience fluctuations in our quarterly operating results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the loans and debt securities we acquire, the default rate on such loans and securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

New or modified laws or regulations governing our operations may adversely affect our business.

We and our portfolio companies are subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, may change from time to time, including as the result of interpretive guidance or other directives from the U.S. President and others in the executive branch, and new laws, regulations and interpretations may also come into effect. Any such new or changed laws or regulations could have a material adverse effect on our business. In addition, if we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of its business and may be subject to civil fines and criminal penalties.

Additionally, changes to the laws and regulations governing our operations, including those associated with RICs, may cause us to alter our investment strategy in order to avail our self of new or different opportunities or result in the imposition of corporate-level taxes on us. Such changes could result in material differences to the strategies and plans set forth therein and may shift our investment focus from the areas of Crescent’s expertise to other types of investments in which Crescent may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of an investor’s investment. If we

invest in commodity interests in the future, the Adviser may determine not to use investment strategies that trigger additional regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) or may determine to operate subject to CFTC regulation, if applicable. If we or the Adviser were to operate subject to CFTC regulation, we may incur additional expenses and would be subject to additional regulation.

Further, there has been increasing commentary amongst regulators and intergovernmental institutions, including the Financial Stability Board and International Monetary Fund, on the topic of so called “shadow banking” (a term generally taken to refer to credit intermediation involving entities and activities outside the regulated banking system). We are an entity outside the regulated banking system and certain of our activities may be argued to fall within this definition and, in consequence, may be subject to regulatory developments. As a result, we and the Adviser could be subject to increased levels of oversight and regulation. This could increase costs and limit operations. In an extreme eventuality, it is possible that such regulations could render our continued operation unviable and lead to our premature termination or restructuring.

The United Kingdom referendum decision to leave the European Union may create significant risks and uncertainty for global markets and our investments.

On January 31, 2020, the United Kingdom (“UK”) officially withdrew from the European Union (“EU”), commonly referred to as “Brexit”. Following a transition period, the UK and the EU signed a Trade and Cooperation Agreement (“UK/EU Trade Agreement”), which came into full force on May 1, 2021 and set out the foundation of the economic and legal framework for trade between the UK and the EU. As the UK/EU Trade Agreement is a new legal framework, the implementation of the UK/EU Trade Agreement may result in uncertainty in its application and periods of volatility in both the UK and wider European markets. The UK’s exit from the EU is expected to result in additional trade costs and disruptions in this trading relationship. Furthermore, there is the possibility that either party may impose tariffs on trade in the future in the event that regulatory standards between the EU and the UK diverge. The terms of the future relationship may cause continued uncertainty in the global financial markets, and adversely affect our ability, and the ability of our portfolio companies, to execute our respective strategies and to receive attractive returns.

Our Board may change our investment objectives, operating policies and strategies without prior notice or stockholder approval.

Our Board has the authority, except as otherwise provided in the 1940 Act, to modify or waive certain of our investment objectives, operating policies and strategies without prior notice and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC. Under Maryland law, we also cannot be dissolved without prior stockholder approval. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and the market price of its common stock. Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions to our stockholders.

We are highly dependent on Crescent’s information systems, and systems failures or cyber-attacks could significantly disrupt its business, which may, in turn, negatively affect the value of shares of our common stock and our ability to pay distributions.

Our business is highly dependent on Crescent’s communications and information systems, to which we have access through the Administrator. In addition, certain of these systems are provided to Crescent by third-party service providers. Any failure or interruption of such systems, including as a result of the termination of an agreement with any such third-party service provider, could cause delays or other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and its ability to pay dividends to its stockholders.

Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of its confidential information and/or damage to its business relationships.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen information, misappropriation of assets, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships. This could result in significant losses, reputational damage, litigation, regulatory fines or penalties, or otherwise adversely affect our business, financial condition or results of operations. In addition, we may be required to expend significant additional resources to modify its protective measures and to investigate and remediate vulnerabilities or other exposures arising from operational and security risks. We face risks posed to our information systems, both internal and those provided to it by third-party service providers. We, the Adviser and its affiliates have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, may be

ineffective and do not guarantee that a cyber-incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident.

Third parties with which we do business (including those that provide services to us) may also be sources or targets of cybersecurity or other technological risks. We outsource certain functions and these relationships allow for the storage and processing of our information and assets, as well as certain investor, counterparty, employee and borrower information. Privacy and information security laws and regulation changes, and compliance with those changes, may also result in cost increases due to system changes and the development of new administrative processes.

We and the Adviser are subject to regulations and SEC oversight. If we or the Adviser fail to comply with applicable requirements, it may adversely impact our results relative to companies that are not subject to such regulations.

As a BDC, we are subject to a portion of the 1940 Act. In addition, we have elected to be treated, and intend to operate in a manner so as to continuously qualify, as a RIC in accordance with the requirements of Subchapter M of the Code. The 1940 Act and the Code impose various restrictions on the management of a BDC, including related to portfolio construction, asset selection, and tax. These restrictions may reduce the chances that we will achieve the same results as other vehicles managed by Crescent and/or the Adviser.

However, if we do not maintain our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act. As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act which would significantly decrease our operating flexibility. In addition to these and other requirements applicable to us, the Adviser is subject to regulatory oversight by the SEC. To the extent the SEC raises concerns or has negative findings concerning the manner in which we or the Adviser operates, it could adversely affect our business.

We are subject to risks related to corporate social responsibility.

Our business (including that of our portfolio companies) faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity, equity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and considering ESG factors in our investment processes. Adverse incidents with respect to ESG activities could impact the value of our brand, our relationship with existing and future portfolio companies, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations.

Additionally, new regulatory initiatives related to ESG that are applicable to us and our portfolio companies could adversely affect our business. There is a risk that a significant reorientation in the market following the implementation of these and further measures could be adverse to our portfolio companies if they are perceived to be less valuable as a consequence of, e.g., their carbon footprint or “greenwashing” (i.e., the holding out of a product as having green or sustainable characteristics where this is not, in fact, the case). We and our portfolio companies are subject to the risk that similar measures might be introduced in other jurisdictions in the future.

Additionally, compliance with any new laws or regulations increases our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we or our portfolio companies conduct our businesses and adversely affect our profitability.

Risks Relating to Our Investments

Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity, and rising interests rates may make it more difficult for portfolio companies to make periodic payments on their loans.

Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity. This risk and the risk of default is increased to the extent that the loan documents do not require the portfolio companies to pay down the outstanding principal of such debt prior to maturity. In addition, as general interest rates rise, there is a risk that our portfolio companies will be unable to pay escalating interest amounts, which could result in a default under their loan documents with us. Any failure of one or more portfolio companies to repay or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments following an increase in contractual interest rates could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may hold the debt securities of leveraged companies.

Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold. Such developments may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees

that it may have obtained in connection with its investment. Smaller leveraged companies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their expansion or maintain their competitive position.

Leveraged companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the control of the creditors. A bankruptcy filing by a portfolio company may adversely and permanently affect the portfolio company. If the proceeding is converted to a liquidation, the value of the portfolio company may not equal the liquidation value that was believed to exist at the time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective.

The administrative costs in connection with a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations that we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial.

We typically invest in middle-market companies, which involves higher risk than investments in large companies.

Investment in private and middle-market companies involves a number of significant risks. Generally, limited public information exists about these companies, and we will rely on the ability of Crescent’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision and may lose money on its investments. Middle-market companies may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees that it may have obtained in connection with its investment. In addition, such companies typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns. Additionally, middle-market companies are more likely to depend on the management talents and efforts of a small group of persons. Therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on one or more of the portfolio companies we invest in and, in turn, on us. Middle-market companies also may be parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and the Adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies.

In addition, investment in middle-market companies involves a number of other significant risks, including:

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they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;

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they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;

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changes in laws and regulations, as well as their interpretations, may adversely affect their business, financial structure or prospects; and

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they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.

The due diligence process that the Adviser undertakes in connection with our investments may not reveal all the facts that may be relevant in connection with an investment.

The Adviser’s due diligence may not reveal all of a company’s liabilities and may not reveal other weaknesses in its business. There can be no assurance that our due diligence process will uncover all relevant facts that would be material to an investment decision. Before making an investment in, or a loan to, a company, the Adviser will assess the strength and skills of the company’s management team and other factors that it believes are material to the performance of the investment. In making the assessment and otherwise conducting customary due diligence, the Adviser will rely on the resources available to it and, in some cases, an investigation by third parties. This process is particularly important and highly subjective with respect to newly organized entities because there may be little or no information publicly available about the entities. We may make investments in, or loans to, companies, including middle market

companies, which are not subject to public company reporting requirements, including requirements regarding preparation of financial statements, and will, therefore, depend upon the compliance by investment companies with their contractual reporting obligations and the ability of the Adviser’ investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we and the Adviser are unable to uncover all material information about these companies, we may not make a fully informed investment decision and may lose money on its investments. As a result, the evaluation of potential investments and the ability to perform due diligence on and effective monitoring of investments may be impeded, and we may not realize the returns that it expects on any particular investment. In the event of fraud by any company in which we invest or with respect to which we make a loan, we may suffer a partial or total loss of the amounts invested in that company.

The lack of liquidity in our investments may adversely affect our business.

All of our assets may be invested in illiquid loans and securities, and a substantial portion of our investments in leveraged companies will be subject to legal and other restrictions on resale or will otherwise be less liquid than more broadly traded public securities. The illiquidity of these investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of its portfolio quickly, we may realize significantly less than the value at which it has previously recorded its investments. Some of our debt investments may contain interest rate reset provisions that may make it more difficult for the borrowers to make periodic interest payments to us. In addition, some of our debt investments may not pay down principal until the end of their lifetimes, which could result in a substantial loss to us if the portfolio companies are unable to refinance or repay their debts at maturity.

We may invest in high yield debt, or junk bonds, which has greater credit and liquidity risk than more highly rated debt obligations.

We may also invest in debt securities which will not be rated by any rating agency and, if they were rated, would be rated as below investment grade quality. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be illiquid and difficult to value.

Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing NAV through increased net unrealized depreciation.

As a BDC, we are required to carry its investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by the our Board, as described above in “ —Risks Relating to our Business and Structure—The majority of our portfolio investments are recorded at fair value as determined in good faith by Adviser as Valuation Designee with approval from our Board and, as a result, there may be uncertainty as to the value of our portfolio investments.”

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of its valuation process that its investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital markets can also adversely affect our investment valuations. We record decreases in the market values or fair values of our investments as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio. The effect of all of these factors on our portfolio may reduce our NAV by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in seeking to:

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increase or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;

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exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or

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preserve or enhance the value of our investment.

We have discretion to make follow-on investments, subject to the availability of capital resources. Failure on our part to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation.

Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase its level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC.

Additionally, certain loans that we may make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans. The holders of obligations secured by first priority liens on the collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.

We may also make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in collateral of such companies. Liens on such portfolio companies’ collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any. Additionally, we invest in unitranche loans (loans that combine both senior and mezzanine debt, generally in a first lien position), which may provide for a waterfall of cash flow priority between different lenders in the unitranche loan. In certain 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 repayment of principal, interest and any other amounts due thereunder over the “last out” portion of the loan that we would continue to hold.

The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of such senior debt. Under a typical intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens:

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the ability to cause the commencement of enforcement proceedings against the collateral;

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the ability to control the conduct of such proceedings;

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the approval of amendments to collateral documents;

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releases of liens on the collateral; and

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waivers of past defaults under collateral documents.

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We may not have the ability to control or direct such actions, even if its rights are adversely affected.

Our subordinated investments may be subject to greater risk than investments that are not similarly subordinated.

We may make subordinated investments that rank below other obligations of the borrower in right of payment. Subordinated investments are subject to greater risk of default than senior obligations as a result of adverse changes in the financial condition of the borrower or in general economic conditions. If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged, and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to service all of its debt obligations.

The disposition of our investments may result in contingent liabilities.

We currently expect that substantially all of our investments will involve loans and private securities. In connection with the disposition of an investment in loans and private securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the

purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through its return of distributions previously made to us.

We will be subject to the risk that the debt investments we make in our portfolio companies may be repaid prior to maturity.

We expect that our investments will generally allow for repayment at any time subject to certain penalties. When such prepayment occurs, we intend to generally reinvest these proceeds in temporary investments, pending their future investment in accordance with our investment strategy. These temporary investments will typically have substantially lower yields than the debt being prepaid, and we could experience significant delays in reinvesting these amounts. Any future investment may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elects to prepay amounts owed to us. Additionally, prepayments could negatively impact our ability to pay, or the amount of, dividends on our common stock, which could result in a decline in the market price of our shares.

We may be subject to risks under hedging transactions and may become subject to risk if it invests in non-U.S. securities.

The 1940 Act generally requires that 70% of our investments be in issuers each of whom is organized under the laws of, and has its principal place of business in, any state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands or any other possession of the United States. However, our portfolio may include debt securities of non-U.S. companies, including emerging market issuers, to the limited extent such transactions and investments would not cause us to violate the 1940 Act. We expect that these investments would focus on the same secured debt, unsecured debt and related equity security investments that we make in U.S. middle-market companies and, accordingly, would be complementary to our overall strategy and enhance the diversity of our holdings. Investing in loans and securities of emerging market issuers involves many risks including economic, social, political, financial, tax and security conditions in the emerging market, potential inflationary economic environments, regulation by foreign governments, different accounting standards and political uncertainties. Economic, social, political, financial, tax and security conditions also could negatively affect the value of emerging market companies. These factors could include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations or judgments or foreclosing on collateral, lack of uniform accounting and auditing standards and greater price volatility.

Engaging in either hedging transactions or investing in foreign loans and securities would entail additional risks to our stockholders. We could, for example, use instruments such as interest rate swaps, caps, collars and floors and, if we were to invest in foreign loans and securities, we could use instruments such as forward contracts or currency options and borrow under a credit facility in currencies selected to minimize our foreign currency exposure. In each such case, we generally would seek to hedge against fluctuations of the relative values of our portfolio positions from changes in market interest rates or currency exchange rates. Hedging against a decline in the values of our portfolio positions would not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of the positions declined. However, such hedging could establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions could also limit the opportunity for gain if the values of the underlying portfolio positions increased. Moreover, it might not be possible to hedge against an exchange rate or interest rate fluctuation that was so generally anticipated that we would not be able to enter into a hedging transaction at an acceptable price.

While we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates could result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged could vary. Moreover, for a variety of reasons, we might not seek to establish a perfect correlation between the hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation could prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it might not be possible for us to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those loans and securities would likely fluctuate as a result of factors not related to currency fluctuations.

We may not realize anticipated gains on the equity interests in which it invests.

When we invest in loans and debt securities, it may acquire warrants or other equity securities of portfolio companies as well. We may also invest in equity securities directly. To the extent we hold equity investments, we will attempt to dispose of them and realize gains upon such disposition. However, the equity interests we receive may not appreciate in value and, may decline in value. As a result, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses it experiences.

Our investments in OID and PIK interest income may expose us to risks associated with such income being required to be included in accounting income and taxable income prior to receipt of cash.

Our investments may include OID and PIK instruments. To the extent OID and PIK interest income constitute a portion of our income, we will be exposed to risks associated with such income being required to be included in an accounting income and taxable income prior to receipt of cash, including the following:

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OID instruments and PIK securities may have unreliable valuations because the accretion of OID as interest income and the continuing accruals of PIK securities require judgments about their collectability and the collectability of deferred payments and the value of any associated collateral;

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OID income may also create uncertainty about the source of our cash dividends;

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OID instruments may create heightened credit risks because the inducement to the borrower to accept higher interest rates in exchange for the deferral of cash payments typically represents, to some extent, speculation on the part of the borrower;

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for accounting purposes, cash distributions to stockholders that include a component of accreted OID income do not come from paid-in capital, although they may be paid from the offering proceeds. Thus, although a distribution of accreted OID income may come from the cash invested by the stockholders, the 1940 Act does not require that shareholders be given notice of this fact;

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generally, we must recognize income for income tax purposes no later than when it recognizes such income for accounting purposes;

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the higher interest rates on PIK securities reflects the payment deferral and increased credit risk associated with such instruments and PIK securities generally represent a significantly higher credit risk than coupon loans;

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the presence of accreted OID income and PIK interest income create the risk of non-refundable cash payments to the Adviser in the form of incentive fees on income based on non-cash accreted OID income and PIK interest income accruals that may never be realized;

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even if accounting conditions are met, borrowers on such securities could still default when our actual collection is expected to occur at the maturity of the obligation;

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OID and PIK create the risk that incentive fees will be paid to the Adviser based on

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non-cash accruals that ultimately may not be realized, which the Adviser will be under no obligation to reimburse us or these fees; and

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PIK interest has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK interest also reduces the loan-to-value ratio at a compounding rate.

You may receive dividends in the form of common stock instead of cash, which could result in adverse tax consequences to you.

In order to satisfy the Annual Distribution Requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a sufficient portion of such dividend is available to be paid in cash (generally 20%) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder would be taxed on 100% of the dividend in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.

Changes in healthcare laws and other regulations applicable to some of our portfolio companies businesses may constrain their ability to offer their products and services.

Changes in healthcare or other laws and regulations applicable to the businesses of some of our portfolio companies may occur that could increase their compliance and other costs of doing business, require significant systems enhancements, or render their products or services less profitable or obsolete, any of which could have a material adverse effect on their results of operations. There has also been an increased political and regulatory focus on healthcare laws in recent years, and new legislation could have a material effect on the business and operations of some of our portfolio companies.

Our investments in the consumer products and services sector are subject to various risks including cyclical risks associated with the overall economy.

General risks of companies in the consumer products and services sector include cyclicality of revenues and earnings, economic recession, currency fluctuations, changing consumer tastes, extensive competition, product liability litigation and increased government regulation. Generally, spending on consumer products and services is affected by the health of consumers. Companies in the consumer products and services sectors are subject to government regulation affecting the permissibility of using various food additives and production methods, which regulations could affect company profitability. A weak economy and its effect on consumer spending would adversely affect companies in the consumer products and services sector.

Our investments in the financial services sector are subject to various risks including volatility and extensive government regulation.

These risks include the effects of changes in interest rates on the profitability of financial services companies, the rate of corporate and consumer debt defaults, price competition, governmental limitations on a company’s loans, other financial commitments, product lines and other operations and recent ongoing changes in the financial services industry (including consolidations, development of new products and changes to the industry’s regulatory framework). There is continued instability and volatility in the financial markets. Insurance companies have additional risks, such as heavy price competition, claims activity and marketing competition, and can be particularly sensitive to specific events such as man-made and natural disasters (including weather catastrophes), climate change, terrorism, mortality risks and morbidity rates.

Our investments in technology companies are subject to many risks, including volatility, intense competition, shortened product life cycles, litigation risk and periodic downturn.

We have invested and will continue investing in technology companies, many of which may have narrow product lines and small market shares, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as to general economic downturns. The revenues, income (or losses), and valuations of technology-related companies can and often do fluctuate suddenly and dramatically. In addition, technology related markets are generally characterized by abrupt business cycles and intense competition, where the leading companies in any particular category may hold a highly concentrated percentage of the overall market share.

Therefore, our portfolio companies may face considerably more risk of loss than do companies in other industry sectors.

Risks Relating to Our Common Stock

An investment in our common stock presents an above average degree of risk.

The investments we make in accordance with our investment objective may result in a higher amount of risk than associated with alternative investment options, and higher volatility or loss of principal. Our investments in portfolio companies may be speculative and, therefore, an investment in our common stock may not be suitable for someone with lower risk tolerance.

Our shares of common stock have traded at a discount from net asset value and may do so again, which could limit our ability to raise additional equity capital.

Shares of closed-end investment companies frequently trade at a market price that is less than the net asset value that is attributable to those shares. This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per share may decline. It is not possible to accurately predict whether any shares of our common stock will trade at, above, or below net asset value. In the recent past, the stocks of BDCs as an industry, including at times shares of our common stock, have traded below net asset value. See “Item 1a. Risk Factors-Risks Relating to Macroeconomic Factors: Market disruptions and other geopolitical or macroeconomic events could create market volatility that negatively impacts our business, financial condition and earnings.” When our common stock is trading below its net asset value per share, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining approval for such issuance from our stockholders and our independent directors.

The market price of our common stock may fluctuate significantly.

The market price and liquidity of the market for our common stock may be significantly affected by numerous factors, some of which may be beyond our control and may not be directly related to our operating performance. These factors include:

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significant volatility in the market price and trading volume of securities of publicly traded RICs, BDCs or other companies in our sector, which are not necessarily related to the operating performance of these companies;

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price and volume fluctuations in the overall stock market from time to time;

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the inclusion or exclusion of our common stock from certain indices;

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changes in law, regulatory policies or tax guidelines, or interpretations thereof, particularly with respect to RICs or BDCs;

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loss of RIC status;

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changes in earnings or variations in operating results;

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changes in the value of our portfolio of investments;

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announcements with respect to significant transactions;

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any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

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departure of key personnel of ours or the Adviser;

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operating performance of companies comparable to us;

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short-selling pressure with respect to shares of our common stock or BDCs generally;

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general economic trends and other external factors; and

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loss of a major funding source.

In the past, securities class action litigation has been brought against numerous public companies resulting from volatility in the market price of their securities. Because of the potential volatility in the price of our common stock, we may become the target of securities litigation in the future. If we were to become involved in securities litigation, it could result in substantial costs, divert management’s attention and resources from the business and adversely affect the business.

Our stockholders will experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan.

We have adopted a dividend reinvestment plan, pursuant to which we will reinvest all cash distributions authorized by the Board on behalf of stockholders who do not elect to receive their distributions in cash. As a result, if the Board authorizes and we declare a cash distribution, then 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. See “Item 1—Business—Dividend

Reinvestment Plan” for a description of the dividend reinvestment plan. The number of shares to be issued to a plan participant will be determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of our common stock at the close of regular trading on NASDAQ on the date of such distribution. The market price per share of our common stock on a particular date will be the closing price for such shares on NASDAQ on such date, or, if no sale is reported for such date, at the average of their reported bid and asked prices. However, if the market price per share exceeds the most recently computed net asset value per share, we will issue shares at the greater of (i) the most recently computed net asset value per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeds the most recently computed net asset value per share). Accordingly, participants in the dividend reinvestment plan may receive a greater number shares of our common stock than the number of shares associated with the market price of our common stock, resulting in dilution for other stockholders. Stockholders that opt out of the dividend reinvestment plan will experience dilution in their ownership percentage of our common stock over time.

Provisions of the Maryland General Corporation Law and of the Charter and the Bylaws could deter takeover attempts and have an adverse effect on the price of our common stock.

Certain provisions of the Maryland General Corporation Law (the “MGCL”) may discourage, delay or make more difficult a change in control of the Company, including (i) the Maryland Business Combination Act (the “Business Combination Act”), which, subject to any applicable requirements of the 1940 Act and certain other limitations, will prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding shares of voting stock or an affiliate or associate of us who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding shares of stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter will impose special appraisal rights and supermajority voting requirements on these combinations and (ii) the Maryland Control Share Acquisition Act (the “Control Share Acquisition Act”), which, subject to any applicable requirements of the 1940 Act, will provide that our “control shares” (defined as shares which, when aggregated with other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. The Board has adopted a resolution exempting from the Business Combination Act any business combination between us and any other person, provided that the business combination is first approved by the Board, including a majority of the independent directors, and the Bylaws exempt from the Control Share Acquisition Act acquisitions of our stock by any person. However, if the resolution exempting business combinations is repealed or the Board or independent directors do not approve a business combination or we amend the Bylaws to repeal the exemption from the Control Share Acquisition Act, subject to any applicable requirements of the 1940 Act, the Business Combination Act or Control Share Acquisition Act, as the case may be, may discourage third parties from trying to acquire control of us and may increase the difficulty of consummating such an offer.

We are also subject to other measures that may make it difficult for a third party to obtain control of us, including provisions of the Charter that (i) classify the Board into three classes serving staggered three-year terms and require that any vacancies be filled by a majority of directors remaining in office, (ii) require a two-thirds vote and cause for director removal, (iii) authorize the Board to classify any unissued shares of stock and reclassify any previously classified but unissued shares of stock into other classes or series of stock, including preferred stock, and to cause the issuance of additional shares of our common stock and (iv) authorize the Board to amend the Charter, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have the authority to issue. These provisions, as well as other provisions in the Charter and the Bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.

Our Charter designates the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any Internal Corporate Claim, as such term is defined in Section 1-101(p) of the MGCL, including, without limitation, (a) any action asserting a claim of breach of any duty owed by any of our directors or officers or other employees to us or to our stockholders or (b) any action asserting a claim against us or any of our directors or officers or other employees arising pursuant to any provision of the MGCL or the Charter or the Bylaws; or (iii) any action asserting a claim against us or any of our directors or officers or other employees that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our common stock will be deemed to have notice of and to have consented and waived any objection to this exclusive forum provision of the Charter, as the same

may be amended from time to time. The Charter includes this provision so that we can respond to litigation more efficiently, reduce the costs associated with our responses to such litigation, particularly litigation that might otherwise be brought in multiple forums, and make it less likely that plaintiffs’ attorneys will be able to employ such litigation to coerce us into otherwise unjustified settlements. However, this exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that such stockholder believes is favorable for disputes with us or our directors, officers or other employees, if any, and may discourage lawsuits against us and our directors, officers or other employees, if any. We believe the risk of a court declining to enforce this exclusive forum provision is remote, as the General Assembly of Maryland has specifically amended the MGCL to authorize the adoption of such provision. However, if a court were to find such provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings notwithstanding that the MGCL expressly provides that the charter or bylaws of a Maryland corporation may require that any Internal Corporate Claim be brought only in courts sitting in one or more specified jurisdictions, we may incur additional costs that it does not currently anticipate associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations.

We will incur significant costs as a result of being a publicly traded company.

As a publicly-traded company, we incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act, and other rules implemented by the SEC and the listing standards of the Nasdaq Global Select Market.

As long as we remain an emerging growth company, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will remain an emerging growth company for up to five years following an IPO or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues equal or exceeds $1.07 billion, (ii) December 31 of the fiscal year that we become a "large accelerated filer” as defined in Rule 12b-2 under the 1934 Act which would occur if the market value of our shares that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months and have filed an annual report on Form 10-K, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the preceding three-year period or (iv) December 31 of the fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement under the 1933 Act.

Risks Relating to the Mergers

Sales of shares of our common stock after the completion of the Mergers may cause the market price of our common stock to decline.

Based on the number of outstanding shares of our common stock as of October 3, 2022 and the net asset values of each of us and FCRD as of September 30, 2022, we would issue up to approximately 6.2 million shares of our common stock pursuant to the Merger Agreement to FCRD stockholders. Many FCRD stockholders may decide not to hold the shares of our common stock they will receive pursuant to the Merger Agreement. In addition, our existing stockholders may decide not to hold their shares of our common Stock after completion of the Mergers. In each case, such sales of our common stock could have the effect of depressing the market price for our common stock and may take place promptly following the completion of the Mergers.

We and FCRD may fail to consummate the Mergers. If the Mergers do not close, we will not benefit from the expenses incurred in their pursuit.

While there can be no assurances as to the exact timing, or that the Mergers will be completed at all, we and FCRD are working to complete the Mergers late in the first quarter of 2023. The consummation of the Mergers is subject to certain conditions, including, among others, the FCRD Stockholder Approval, required regulatory approvals and other customary closing conditions. We and FCRD intend to consummate the Mergers as soon as possible; however, there can be no assurance that the conditions required to consummate the Mergers will be satisfied or waived on the anticipated schedule, or at all. If the Mergers are not completed, we will have incurred substantial expenses for which no ultimate benefit will have been received.

Consummation of the Mergers will cause immediate dilution to our stockholders’ voting interests and may cause immediate dilution to the net asset value per share of the combined company’s common stock.

Our stockholders will experience a substantial reduction in their respective percentage ownership interests and effective voting power in respect of the combined company relative to their respective ownership interests in us prior to the Mergers. Consequently, our stockholders should expect to exercise less influence over the management and policies of the combined company following the Mergers than they currently exercise over our management and policies.

If the Mergers are consummated, based on the number of shares of our common stock issued and outstanding as of September 30, 2022 and the net asset values of each of us and FCRD on September 30, 2022, it is expected that our current stockholders will own approximately 83% of our outstanding common stock and former FCRD Stockholders will own approximately 17% of our outstanding common stock immediately following consummation of the Mergers. In addition, both prior to and after completion of the Mergers, subject to certain restrictions in the Merger Agreement, we may issue additional shares of our common stock (including, subject to certain restrictions under the 1940 Act, at prices below our common stock’s then current NAV per share), all of which would further reduce the percentage ownership of the combined company held by former FCRD Stockholders and our current stockholders. In addition, the issuance or sale of shares of our common stock at a discount to our net asset value per share poses a risk of economic dilution to stockholders.

The combined company may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings and synergies, or it may take longer than anticipated to achieve such benefits.

The realization of certain benefits anticipated as a result of the Mergers will depend in part on the integration of FCRD’s investment portfolio with our investment portfolio and the integration of FCRD’s business with our business. There can be no assurance that FCRD’s and our businesses can be operated profitably or integrated successfully into our operations in a timely fashion, or at all. The dedication of management resources to such integration may detract attention from our day-to-day business and, following completion of the Mergers, of the day-to-day business of the combined company, and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects as a result of these integration efforts. Such effects, including incurring unexpected costs or delays in connection with such integration and failure of FCRD’s investment portfolio to perform as expected, could have a material adverse effect on financial results of the combined company.

We also expect to achieve certain cost savings and synergies from the Mergers when the two companies have fully integrated their portfolios. It is possible that our estimates of the potential cost savings and synergies could turn out to be incorrect. If the estimates turn out to be incorrect or the combined company cannot integrate their investment portfolios and businesses, the anticipated cost savings and synergies may not be fully realized, or realized at all, or may take longer to realize than expected.

The Mergers may trigger certain “change of control” provisions and other restrictions in certain of our and FCRD’s contracts and the failure to obtain any required consents or waivers could adversely impact the combined company.

Certain agreements of us and FCRD or our respective controlled affiliates will or may require the consent of one or more counterparties in connection with the Mergers. The failure to obtain any such consent may permit such counterparties to terminate, or otherwise increase their rights or our or FCRD’s obligations under, any such agreement because the Mergers may violate an anti-assignment, change of control or similar provision. If this happens, we or FCRD may have to seek to replace that agreement with a new agreement or seek a waiver or amendment to such agreement. We cannot assure you that we or FCRD will be able to replace, amend or obtain a waiver under any such agreement on comparable terms or at all.

If any such agreement is material, the failure to obtain consents, amendments or waivers under, or to replace on similar terms or at all, any of these agreements could adversely affect the financial performance or results of operations of the combined company following the Mergers, including preventing us from operating a material part of FCRD’s business.

In addition, the consummation of the Mergers may violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under our or FCRD’s agreements. Any such violation, conflict, breach, loss, default or other effect could, either individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following completion of the Mergers.

Litigation which may be filed against us or FCRD in connection with the Mergers, regardless of its merits, could result in substantial costs and could delay or prevent the Mergers from being completed.

From time to time, we and FCRD may be subject to legal actions, including securities class action lawsuits and derivative lawsuits, as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas in connection with the Mergers. These or any similar securities class action lawsuits and derivative lawsuits, regardless of their merits, may result in substantial costs and divert management time and resources. An adverse judgment in such cases could have a negative impact on our liquidity and financial condition or could prevent the Mergers from being completed.

Termination of the Merger Agreement could negatively impact us.

If the Merger Agreement is terminated, there may be various consequences, including:

•

our businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers;

•

the market price of our common stock might decline to the extent that the market price prior to termination reflects a market assumption that the Mergers will be completed; and

•

the payment of any termination fee, if required under the circumstances, could adversely affect our financial condition and liquidity.

Under certain circumstances, we may be obligated to pay a termination fee upon termination of the Merger Agreement.

No assurance can be given that the Mergers will be completed. The Merger Agreement provides for the payment by us to FCRD of a termination fee under certain circumstances.

The Mergers are subject to closing conditions, including the FCRD Stockholder Approval, that, if not satisfied or waived, will result in the Mergers not being completed, which may result in material adverse consequences to our business and operations.

The Mergers are subject to closing conditions, including the FCRD Stockholder Approval, that, if not satisfied, will prevent the Mergers from being completed. The closing condition that FCRD Stockholders approve the First Merger may not be waived under applicable law and must be satisfied for the Mergers to be completed. FCRD currently expects that all directors and executive officers of FCRD will vote their shares of FCRD Common Stock in favor of the proposals presented at the FCRD Special Meeting required to complete the Mergers. In addition, First Eagle Investment Management LLC (“FEIM”) has entered into a voting agreement pursuant to which it has agreed to vote the shares of FCRD Common Stock held by FEIM in favor of the proposals presented at the FCRD Special Meeting required to complete the Mergers. If FCRD stockholders do not approve the First Merger and the Mergers are not completed, the resulting failure of the Mergers could have a material adverse impact on our businesses and operations.

In addition to the FCRD Stockholder Approval, the Mergers are subject to a number of other conditions beyond our control that may prevent, delay or otherwise materially adversely affect its completion. We cannot predict with certainty whether and when these other conditions will be satisfied.

We may waive one or more conditions to the Mergers.

Certain conditions to our obligations to complete the Mergers may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement with FCRD. In the event that any such waiver does not require resolicitation of FCRD’s stockholders, the parties to the Merger Agreement will have the discretion to complete the Mergers without seeking further stockholder approval. The conditions requiring the approval of FCRD’s stockholders, however, cannot be waived.

We will be subject to operational uncertainties and contractual restrictions while the Mergers are pending.

Uncertainty about the effect of the Mergers may have an adverse effect on us and, consequently, on the combined company following completion of the Mergers. These uncertainties may cause those that deal with us to seek to change their existing business relationships. In addition, the Mergers agreement restricts us from taking actions that they might otherwise consider to be in our best interests. These restrictions may prevent us from pursuing certain business opportunities that may arise prior to the completion of the Mergers.

The market price of our common stock after the Mergers may be affected by factors different from those affecting our common stock currently.

Our businesses and FCRD’s business differ in some respects and, accordingly, the results of operations of the combined company and the market price of our common stock after the Mergers may be affected by factors different from those currently affecting the independent results of operations of each of us and FCRD. These factors include:

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a larger stockholder base;

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a different portfolio composition; and

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a different capital structure.

Accordingly, our historical trading prices and financial results may not be indicative of these matters for the combined company following the Mergers.

We maintain our principal executive office at 11100 Santa Monica Boulevard, Suite 2000, Los Angeles, California 90025. We do not own any real estate.

We are party to certain lawsuits in the normal course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. Furthermore, third parties may try to seek to impose liability on us in connection with our activities or the activities of our portfolio companies. While the outcome of any such legal proceedings cannot at this time be predicted with certainty, we do not expect that these legal proceedings will materially affect our business, financial condition or results of operations.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on NASDAQ under the symbol “CCAP.” Prior to the listing of the common stock on NASDAQ on February 3, 2020, our common stock was offered and sold in transactions exempt from registration under the Securities Act under Section 4(a)(2) and Regulation D, as well as under Regulation S under the Securities Act.

The following table sets forth, for each fiscal quarter during the last two most recently completed fiscal years, the range of high and low sales prices of the common stock as reported on NASDAQ, the premium (discount) of sales price to our net asset value, or NAV, and the distributions declared by us for each fiscal quarter.

The last reported price for our common stock on February 21, 2023 was $14.49 per share, which represented a (26.9)% discount to our NAV as of December 31, 2022.

This graph compares the stockholder return on our common stock from February 3, 2020 (the date our common stock commenced trading on NASDAQ) to December 31, 2022 with that of the Standard & Poor’s 500 Stock Index, Standard & Poor’s BDC Index and Russell 2000 Financial Services Index. This graph assumes that on February 3, 2020, $100 was invested in our common stock, Standard & Poor’s 500 Stock Index, Standard & Poor’s BDC Index and Russell 2000 Financial Services Index. The graph also assumes the reinvestment of all cash dividends prior to any tax effect.

The graph and other information furnished under this Part II Item 5 of this Annual Report on Form 10-K shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of, the Exchange Act. The stock price performance included in the below graph is not necessarily indicative of future stock performance.

As of December 31, 2022, there were 32 holders of record of our common stock (excluding Cede & Co).

To the extent that we have taxable income available, we distribute quarterly dividends to our stockholders. The amount of our dividends, if any, are determined by our Board of Directors. Dividends and distributions are recorded on the record date. The amount to be paid out as a dividend is determined by the Board each quarter and is generally based upon the earnings estimated by management. Distributions will generally be paid from net investment income. Net realized capital gains, if any, are distributed at least annually, although we may decide to retain such capital gains for investment. If we do not generate sufficient net investment income during a year, all or part of a distribution may constitute a return of capital. The specific tax characteristics of our dividends and other distributions will be reported to stockholders after the end of each calendar year. Any dividends to our stockholders will be declared out of assets legally available for distribution.

We have elected to be treated as a BDC under the 1940 Act. We have also elected to be treated as a RIC under the Internal Revenue Code. So long as we maintain our status as a RIC, we will generally not pay corporate-level U.S. federal income or excise taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. As a result, any tax liability

related to income earned and distributed by us represents obligations of our stockholders and will not be reflected in our consolidated financial statements.

In order for us not to be subject to federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our ordinary income (taking into account certain deferrals and elections), (ii) 98.2% of our net capital gains from the current year and (iii) any undistributed ordinary income and net capital gains from preceding years. At our discretion, we may carry forward taxable income in excess of calendar year dividends and pay a 4% excise tax on this income. If we choose to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders. We will accrue excise tax on estimated undistributed taxable income as required.

We intend to make distributions in cash unless a stockholder elects to receive dividends and/or long-term capital gains distributions in additional shares of common stock. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

The following tables summarize our dividends declared and payable for the years ended December 31, 2022, 2021, and 2020:

We have adopted a dividend reinvestment plan that will provide for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our Board authorizes, and we declare, a cash dividend or other distribution, then stockholders who are participating in the dividend reinvestment plan, will have their cash dividends and distributions automatically reinvested in additional shares of common stock, rather than receiving cash dividends and distributions.

Except as previously reported by us on our Current Reports on Form 8-K, we did not sell any securities during the period covered by this Form 10-K that were not registered under the Securities Act.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 1 of this Quarterly Report on Form 10-Q. In this report, “we,” “us,” “our” and “Company” refer to Crescent Capital BDC, Inc. and its consolidated subsidiaries.

We are a specialty finance company focused on lending to middle-market companies. We were incorporated under the laws of the State of Delaware on February 5, 2015 and on January 30, 2020, we changed our state of incorporation from the State of Delaware to the State of Maryland. We were listed and began trading on the NASDAQ stock exchange on February 3, 2020. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (“1940 Act”). In addition, we have elected to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

We are managed by Crescent Cap Advisors, LLC (the “Adviser”), an investment adviser that is registered with the SEC under the 1940 Act. CCAP Administration, LLC (the “Administrator”), provides the administrative services necessary for us to operate. Our management consists of investment and administrative professionals from the Adviser and Administrator along with our Board. The Adviser directs and executes our investment operations and capital raising activities subject to oversight from the Board, which sets our broad policies. The Board has delegated investment management of our investment assets to the Adviser. The Board consists of six directors, five of whom are independent.

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and related equity investments. We invest primarily in secured debt (including first lien, unitranche first lien and second-lien debt) and unsecured debt (including mezzanine and subordinated debt), as well as related equity securities of private U.S. middle-market companies. We may purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or private credit investments (i.e., private credit transactions), or (ii) primary or secondary market bank loan or high yield transactions in the broadly syndicated “over-the-counter” market (i.e., broadly syndicated loans and bonds). Although our focus is to invest in less liquid private credit transactions, we may from time to time invest in more liquid broadly syndicated loans to complement our private credit transactions.

“Unsecured debt” investments are loans that generally rank senior to a borrower’s equity securities and junior in right of payment to such borrower’s other senior indebtedness.

In addition, in connection with the Merger Agreement, Sun Life, which owns a majority interest in the Adviser, has committed to provide secondary-market support and will purchase $20.0 million of the combined company’s common stock via a share purchase program over time following the consummation of the Merger Agreement.

At the date and time when the First Merger becomes effective (the “Effective Time”), each share of common stock, par value $0.001 per share, of FCRD (“FCRD Common Stock”) issued and outstanding as of two days prior to the closing (the “Determination Date”) (excluding shares held by subsidiaries of FCRD or held, directly or indirectly, by us or Acquisition Sub (“Cancelled Shares”) and Dissenting Shares (as defined in Exhibit 2.4)) shall be converted into the right to receive (i) a portion of the CCAP Aggregate Merger Consideration (as defined below) pursuant to the election and proration procedures described below and in Exhibit 2.4 and (ii) from our Adviser, an amount equal to (a) $35.0 million divided by (b) the number of shares of FCRD Common Stock issued and outstanding as of the Determination Date (excluding any Cancelled Shares) (the “CCAP Advisor Cash Consideration”). The “CCAP Aggregate Merger Consideration” means the sum of (A) a number of shares of our common stock equal to the number of shares of FCRD Common Stock issued and outstanding as of the Determination Date, multiplied by the Exchange Ratio (as defined below); provided, that in no event will the aggregate number of shares of our common stock to be issued pursuant to the Merger Agreement (the “Total CCAP Stock Consideration”) exceed 19.99% of the number of shares of our common stock issued and outstanding as of October 3, 2022, and (B) if the Total CCAP Stock Consideration is less than the FCRD Closing Net Asset Value (as defined below), an amount in cash, without interest, to be paid by us equal to (a) the FCRD Closing Net Asset Value (as defined below) minus the Aggregate Share Consideration Value (as defined below) (such cash amount, the “CCAP Aggregate Cash Consideration”).

On the Determination Date, each of us and FCRD shall deliver to the other party a calculation of its estimated net asset value, as adjusted pursuant to the terms of the Merger Agreement, as of 5:00 p.m. New York City time on the Determination Date, calculated in good faith (our total net asset value as of the Determination Date, the “CCAP Closing Net Asset Value” and the total net asset value of FCRD as of the Determination Date, the “FCRD Closing Net Asset Value”); provided, that each party shall update and redeliver such calculation in certain circumstances described in the Merger Agreement. Based on such calculations, the parties will calculate the “CCAP Per Share NAV”, which will equal the CCAP Closing Net Asset Value divided by the number of shares of our common stock issued and outstanding as of the Determination Date, and the “FCRD per Share NAV”, which will equal the FCRD Closing Net Asset Value divided by the number of shares of FCRD Common Stock issued and outstanding as of the Determination Date (excluding any Cancelled Shares). The “Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the FCRD Per Share NAV divided by (ii) the CCAP Per Share NAV. The “Aggregate Share Consideration Value” shall refer to (a) the Total CCAP Stock Consideration multiplied by (b) the CCAP Per Share NAV.

The Merger Agreement contains customary representations and warranties of FCRD, us and our Adviser. Additionally, the Merger Agreement contains customary pre-closing covenants, including covenants requiring FCRD and us (i) to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (ii) to use reasonable best efforts conduct its business in the ordinary course and (iii) to refrain from taking certain actions prior to the consummation of the Mergers without the other party’s consent (which consent shall not be unreasonably withheld, delayed or conditioned).

The Merger Agreement contains “no-shop” provisions that restrict FCRD’s ability to solicit or initiate discussions or negotiations with third parties regarding other proposals to acquire FCRD, and FCRD is restricted in its ability to respond to such proposals. In addition, FCRD must (i) call and hold a meeting of the holders of FCRD stockholders solely for the purpose of seeking the adoption of the Merger Agreement by the holders of at least a majority of the outstanding shares of FCRD Common Stock entitled to vote thereon (such approval, the “FCRD Stockholder Approval” and such meeting, the “FCRD Stockholders Meeting”), (ii) include, in the Proxy Statement, the recommendation of the board of directors of FCRD that the stockholders of FCRD adopt the Merger Agreement and approve the transactions contemplated thereby (the “FCRD Recommendation”) and (iii) not withhold or withdraw, or modify or qualify in a manner adverse to us or Acquisition Sub, the FCRD Recommendation.

The consummation of the Mergers is subject to the satisfaction or (to the extent permitted by law) waiver of certain customary closing conditions, including obtaining the FCRD Stockholder Approval. The obligation of each party to consummate the Mergers is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement.

The Merger Agreement contains customary termination rights. In particular, at any time prior to receipt of the FCRD Stockholder Approval, FCRD may terminate the Merger Agreement in order to substantially concurrently enter into a binding definitive agreement providing for the consummation of a superior proposal, subject to FCRD’s compliance with notice and other specified conditions contained in the non-solicitation covenants, including giving us the opportunity to propose revisions to the terms of the transactions contemplated by the Merger Agreement during a period following notice, and provided that FCRD has not otherwise materially breached any provision of the non-solicitation covenants.

If the Merger Agreement is terminated by FCRD as provided in the foregoing paragraph or is terminated under certain other circumstances, upon notice by us, FCRD must pay us a termination fee equal to $5,555,550 (“FCRD Termination Fee”), minus any amounts that FCRD previously paid to us in the form of expense reimbursement. Similarly, if the Merger Agreement is terminated under certain other circumstances by us, upon notice by FCRD, we must pay FCRD a termination fee equal to $7,142,850.

Concurrently with us entering into the Merger Agreement, we also entered into a letter agreement (the “Voting Agreement”) with First Eagle Investment Management LLC (“FEIM”), with respect to 5,004,000 shares FCRD Common Stock (the “Voting Agreement Shares”). Pursuant to the Voting Agreement, FEIM has agreed to (i) grant an irrevocable proxy to us and vote (or direct the Voting Agreement Shares to vote) in favor of the Mergers, and any other matter contemplated as necessary or advisable to the consummation of the Mergers at the FCRD Stockholders Meeting, (ii) not to vote in favor of any competing proposal, alternative acquisition agreements, or any proposal, transaction, agreement or action that would, or could reasonably be expected to, prevent, impede, frustrate, interfere with, delay, postpone or adversely affect the Mergers or any of the other transactions contemplated by the Merger Agreement, in contravention of the terms and conditions set forth in the Merger Agreement or change in any manner the voting rights of any class of shares of FCRD, and (iii) not, directly or indirectly, transfer, sell, offer, exchange, assign, pledge, convey any legal or beneficial ownership interest in or otherwise dispose of, or encumber any of the Voting Agreement Shares or enter into any contract, option, or other agreement with respect to, or consent to, a transfer of, any of the Voting Agreement Shares or their voting or economic interest therein other than pursuant to the Merger Agreement and in connection with the Merger during the period commencing on the date of the Voting Agreement and ending on the earlier of (a) the closing date, or (b) the termination of the Merger Agreement.

As of December 31, 2022, we incurred $3.8 million of costs related to the acquisition, which were recorded as Other assets on the Consolidated Statements of Assets and Liabilities.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these 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. The critical accounting policies should be read in connection with our risk factors as disclosed herein.

For a description of our critical accounting policies, see Note 2 “Significant Accounting Policies” to our consolidated financial statements included in this report. We consider the most significant accounting policies to be those related to our Valuation of Portfolio Investments, Revenue Recognition, Non-Accrual Investments, Distribution Policy, and Income Taxes.

We expect our investment activity to vary substantially from period to period depending on many factors, the general economic environment, the amount of capital we have available to us, the level of merger and acquisition activity for middle-market companies, including the amount of debt and equity capital available to such companies and the competitive environment for the type of investments we make. In addition, as part of our risk strategy on investments, we may reduce certain levels of investments through partial sales or syndication to additional investors.

We may not invest in any assets other than “qualifying assets” specified in the 1940 Act, unless, at the time the investments are 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 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.

Our investment activities are managed by the Adviser, which is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. The Adviser has entered into a resource sharing agreement with Crescent Capital Group LP (“Crescent”), pursuant to which Crescent provides the Adviser with experienced investment professionals (including the members of the Adviser’s investment committee) and access to Crescent’s resources so as to enable the Adviser to fulfill its obligations under the Investment Advisory Agreement. Through the resource sharing agreement, the Adviser intends to capitalize on the deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Crescent’s investment professionals. On January 5, 2021, Sun Life Financial Inc. (together with its subsidiaries and joint ventures, “Sun Life”) acquired a majority interest in Crescent (the “Sun Life Transaction”). There were no changes to our investment objective, strategies and process or to the Crescent team responsible for the investment operations as a result of the Sun Life Transaction.

We generate revenue primarily in the form of interest income on debt investments, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Certain investments may have contractual PIK interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal 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 being called by the issuer. PIK is recorded as interest or dividend income, as applicable. We also generate revenue in the form of commitment or origination fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts into income over the life of the loan using the effective yield method.

Dividend income from common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies. Dividend income from preferred equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected.

We may receive other income, which may include income such as consent, waiver, amendment, underwriting, and arranger fees associated with our investment activities as well as any fees for managerial assistance services rendered to the portfolio companies. Such fees are recognized as income when earned or the services are rendered.

Our primary operating expenses include the payment of management fees and incentive fees to the Adviser under the Investment Advisory Agreement, as amended, our allocable portion of overhead expenses under the administration agreement with our Administrator (the “Administration Agreement”), operating costs associated with our sub-administration agreement and other operating costs described below. The management and incentive fees compensate the Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:

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.

Our financing facilities allow us to borrow money and lever our investment portfolio, subject to the limitations of the 1940 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.

In accordance with applicable SEC staff guidance and interpretations, effective May 5, 2020 with shareholder approval, we, as a BDC, are permitted to borrow amounts such that our asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required. 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. The amount of leverage that we employ depends on our Adviser’s and our Board’s assessment of market conditions and other factors at the time of any proposed borrowing.

We seek to create a broad and diversified portfolio that generally includes senior secured first lien, unitranche, senior secured second lien, unsecured loans and minority equity securities of U.S. middle market companies. The size of our individual investments varies proportionately with the size of our capital base. We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities have speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity.

The following table presents certain selected information regarding our investment portfolio:

The following table shows the amortized cost and fair value of our performing and non-accrual debt and income producing debt securities.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

As of December 31, 2022, we had six investments across four portfolio companies on non-accrual status, which represented 2.0% and 1.2% of the total debt investments at cost and fair value, respectively. As of December 31, 2021, we had five investments across three portfolio companies on non-accrual status, which represented 1.6% and 1.2% of the total debt investments at cost and fair value, respectively. The remaining debt investments were performing and current on their interest payments as of December 31, 2022 and 2021.

The following table shows the composition of our portfolio on the 1 to 5 investment performance rating scale. Investment performance ratings are accurate only as of those dates and may change due to subsequent developments relating to a portfolio company’s business or financial condition, market conditions or developments, and other factors.

Interest income, which includes amortization of upfront fees, increased from $85.7 million, for the year ended December 31, 2021, to $108.5 million for the year ended December 31, 2022, due to a rise in benchmark rates. Included in interest from investments for the years ended December 31, 2022 and 2021 are $2.4 million and $8.0 million of accelerated accretion of OID related to paydown activity, respectively.

Dividend income increased from $7.5 million for the year ended December 31, 2021 to $7.7 million for the year ended December 31, 2022 due to higher dividend distributions from the portfolio companies. Other income which includes consent, waiver, amendment, agency, underwriting and arranger fees associated with our investment activities decreased from $0.8 million for the year ended December 31, 2021 to $0.5 million for the year ended December 31, 2022, due to lower amendment fees received.

Interest and other debt financing costs include interest, amortization of deferred financing costs including upfront commitment fees and unused fees on our credit facilities. For the years ended December 31, 2022 and 2021 interest and other debt financing costs were $31.9 million and $19.8 million, respectively. The increase was due to a higher weighted average debt outstanding and higher weighted average cost of debt related to a rise in benchmark rates.

For the years ended December 31, 2022 and 2021, we incurred management fees of $16.3 million and $14.1 million, respectively, of which $0.2 million and $3.3 million, respectively, were waived. The increase in net management fees was driven by growing assets under management and the expiration of the management fee waiver on July 31, 2021.

For the years ended December 31, 2022 and 2021, we incurred income based incentive fees of $11.2 million and $9.8 million, of which $0.5 million and $7.5 million, respectively, were waived. The increase in net incentive fees was driven by growing investment income and the expiration of the full income based incentive fee waiver on July 31, 2021.

For the years ended December 31, 2022 and 2021 we (reversed) accrued $(6.3) million and $6.3 million, respectively, of capital gains based incentive fees. As of December 31, 2022 and 2021, $0 and $6.3 million, respectively, was accrued and unpaid. The fluctuation in accumulated incentive fees on cumulative unrealized capital appreciation was attributable to the inception to date performance of the investment portfolio.

Professional fees generally include expenses from independent auditors, tax advisors, legal counsel and third party valuation agents. Other general and administrative expenses generally include overhead and staffing costs allocated from the Administrator, insurance premiums, sub-administration expenses and miscellaneous administrative costs associated with our operations and investment activity.

For the years ended December 31, 2022 and 2021, professional fees were $1.3 million and $1.8 million, respectively. The decrease in the comparative periods' professional fees was attributable to lower legal expense during the current year.

For the years ended December 31, 2022 and 2021, other general and administrative expenses were $2.6 million and $2.6 million, respectively.

Income and Excise Taxes

For the years ended December 31, 2022 and 2021, we expensed income and excise taxes of $0.2 million and $2.3 million, respectively. The decrease in the comparative periods' income and excise tax was attributable to a true-up as a result of the filing of the 2021 tax returns and a true-up of estimated blocker level taxes made throughout the year.

Net Investment Income

For the years ended December 31, 2022 and 2021, GAAP net investment income was $59.7 million or $1.93 per share and $47.6 million or $1.67 per share, respectively. The increase in the per share net investment income was due to a reversal of previously recorded capital gains incentive fees.

For the years ended December 31, 2022 and 2021, net investment income excluding capital gains incentive fees (“Adjusted Net Investment Income”) was $53.4 million or $1.73 per share and $53.9 million or $1.89 per share, respectively. The decrease in the per share Adjusted Net Investment Income was due to the expiration of management fee and income based incentive fee waivers on July 31, 2021.

The following table provides a reconciliation of net investment income (the most comparable U.S. GAAP measure) to Adjusted Net Investment Income for the periods presented:

On a supplemental basis, we are disclosing Adjusted Net Investment Income and per share Adjusted Net Investment Income, each of which is a financial measure that is calculated and presented on a basis of methodology other than in accordance with U.S. GAAP (“non-GAAP”). Adjusted Net Investment Income represents net investment income, excluding capital gains incentive fees. We use this non-GAAP financial measure internally to analyze and evaluate financial results and performance and believe that this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends without giving effect to capital gains incentive fees. The Investment Advisory Agreement provides that a capital gains-based incentive fee is determined and paid annually with respect to realized capital gains (but not unrealized capital appreciation) to the extent such realized capital gains exceed realized capital losses and unrealized capital depreciation on a cumulative basis. We believe that Adjusted Net Investment Income is a useful performance measure because it reflects the net investment income produced on the Company’s investments during a period without giving effect to any changes in the value of such investments and any related capital gains incentive fees between periods. The presentation of Adjusted Net Investment Income is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.

We value our portfolio investments quarterly and any changes in fair value are recorded as unrealized appreciation (depreciation) on investments. Net realized gains (losses) and net unrealized appreciation (depreciation) on our investment portfolio were comprised of the following:

We may, but are not required to, enter into interest rate, foreign exchange or other derivative agreements to hedge interest rate, currency, credit or other risks. Generally, we do not intend to enter into any such derivative agreements for speculative purposes. Any derivative agreements entered into for speculative purposes are not expected to be material to our business or results of operations. These hedging activities, which are in compliance with applicable legal and regulatory requirements, may include the use of various instruments, including futures, options and forward contracts. We bear the costs incurred in connection with entering into, administering and settling any such derivative contracts. There can be no assurance any hedging strategy we employ will be successful.

During the years ended December 31, 2022 and 2021, our average U.S. Dollar notional exposure to foreign currency forward contracts were $94.4 million and $61.5 million, respectively.

The primary uses of our cash and cash equivalents are for (1) investments in portfolio companies and other investments; (2) the cost of operations (including paying the Adviser); (3) debt service, repayment, and other financing costs; and (4) cash distributions to the holders of our common stock. We expect to generate additional liquidity from (1) future offerings of securities, (2) future borrowings and (3) cash flows from operations, including investment sales and repayments as well as income earned on investments.

As of December 31, 2022, we had $17.1 million in cash and cash equivalents and restricted cash and cash equivalents and $225.2 million of undrawn capacity on our senior revolving credit and special purpose vehicle asset facilities, subject to borrowing base and other limitations. As of December 31, 2022, the undrawn capacity under our facilities and cash and cash equivalents were in excess of our unfunded commitments.

As of December 31, 2022, we were in compliance with our asset coverage requirements under the 1940 Act. In addition, we were in compliance with all the financial covenant requirements of our credit facilities as of December 31, 2022. However, any increase in realized losses or unrealized depreciation of our investment portfolio or significant reductions in our net asset value as a result of the effects of the COVID-19 pandemic, the rising rate environment and the potential for a recession increase the risk of breaching the relevant covenants requirements. Any breach of these requirements may adversely affect the access to sufficient debt and equity capital.

There were no equity issuances of our common stock during the year ended December 31, 2022. During the year ended December 31, 2021, we issued 2,720,000 shares of our common stock for total proceeds of $58.0 million in connection with the equity offering on November 18, 2021.

The combined weighted average interest rate of the aggregate borrowings outstanding for the years ended December 31, 2022 and 2021 was 4.73% and 3.72%, respectively. The combined weighted average debt of the aggregate borrowings outstanding for the years ended December 31, 2022 and 2021 was $673.5 million and $530.7 million, respectively. As of December 31, 2022 and 2021, the weighted average cost of debt was 6.23% and 3.15%, respectively.

On March 28, 2016, Crescent Capital BDC Funding, LLC (“CCAP SPV”), a wholly owned subsidiary of CCAP, entered into a loan and security agreement, as amended from time to time (the “SPV Asset Facility”), with us as the collateral manager, seller and equity holder, CCAP SPV as the borrower, the banks and other financial institutions from time to time party thereto as lenders, and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, collateral agent, and lender. We consolidate CCAP SPV in our consolidated financial statements and no gain or loss is recognized from the transfer of assets to and from CCAP SPV.

The maximum commitment amount under the SPV Asset Facility is $350.0 million, and may be increased with the consent of Wells Fargo or reduced upon our request. Proceeds of the advances under the SPV Asset Facility may be used to acquire portfolio investments, to make distributions to us in accordance with the SPV Asset Facility, and to pay related expenses. The maturity date is the earlier of (a) the date the borrower voluntarily reduces the commitments to zero, (b) June 22, 2026 and (c) the date upon which Wells Fargo declares the obligations due and payable after the occurrence of an Event of Default. Borrowings under the SPV Asset Facility bear interest at LIBOR plus a margin with no LIBOR floor. The margin is between 1.65% and 2.10% as determined by the proportion of liquid and illiquid loans pledged to the SPV Asset Facility. We pay unused facility fees of 0.50% per annum on committed but undrawn amounts under the SPV Asset Facility. The unused facility fee rate may vary based on the utilization. The SPV Asset Facility includes customary covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.

The facility size is subject to availability under the borrowing base, which is based on the amount of CCAP SPV’s assets from time to time, and satisfaction of certain conditions, including an asset coverage test and certain concentration limits.

On October 27, 2021, we entered into a senior secured revolving credit agreement, as amended from time to time, with Sumitomo Mitsui Banking Corporation, as administrative agent, collateral agent and lender (the “SMBC Corporate Revolving Facility”). The maximum principal amount of the SMBC Corporate Revolving Facility is $350.0 million, subject to availability under the borrowing base. Borrowings under the SMBC Corporate Revolving Facility bear interest at adjusted SOFR plus 1.875% or 2.000%, subject to certain provisions in the SMBC Corporate Revolving Facility agreement, with no benchmark rate floor. We pay unused facility fees of 0.375% per annum on committed but undrawn amounts under the SMBC Corporate Revolving Facility. Any amounts borrowed under the SMBC Corporate Revolving Facility, and all accrued and unpaid interest, will be due and payable, on October 27, 2026.

Ally Corporate Revolving Facility

On August 20, 2019, the Company entered into a senior secured revolving credit facility with Ally Bank, as Administrative Agent and Arranger (the “Ally Corporate Revolving Facility”). The maximum principal amount of the Ally Corporate Revolving Facility was $200.0 million, subject to availability under the borrowing base. Borrowings under the Ally Corporate Revolving Facility bore interest at LIBOR plus a 2.35% margin with no LIBOR floor.

We terminated the Ally Corporate Revolving Facility concurrent with the closing of the SMBC Corporate Revolving Facility, on October 27, 2021.

On January 31, 2020, in connection with the Alcentra Acquisition, we assumed direct unsecured fixed interest rate obligations or “InterNotes®”. The InterNotes® bore interest at fixed interest rates ranging between 6.25% and 6.75% and offered a variety of maturities ranging between February 15, 2021 and April 15, 2022. We redeemed or paid down the remaining $16.4 million of InterNotes® during the first quarter of 2021.

The summary of costs incurred in connection with the SPV Asset Facility, SMBC Corporate Revolving Facility, Ally Corporate Revolving Facility, 2023 Unsecured Notes, 2026 Unsecured Notes and InterNotes® is presented below:

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 opportunities, or if our Board otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into new debt financing opportunities in addition to our existing debt. The pricing and other terms of any such opportunities would depend upon market conditions and the performance of our business, among other factors.

As of December 31, 2022 and 2021, our asset coverage ratio was 192% and 201%, respectively. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions. See Note 6. Debt to our consolidated financial statements for more detail on the debt facilities.

Our investment portfolio may contain investments that are in the form of lines of credit or unfunded commitments which require us to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. Unfunded commitments to provide funds to portfolio companies are not reflected on our Consolidated Statements of Assets and Liabilities. These commitments are subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we hold. Since these commitments may expire without being drawn, the total commitment amount does not necessarily represent future cash requirements. As of December 31, 2022 and 2021, we had aggregate unfunded commitments totaling $158.9 million and $195.6 million, respectively.

On January 13, 2023, we entered into an amendment to the SMBC Corporate Revolving Facility. The amendment, among other things, increased the size of the SMBC Corporate Revolving Facility from $350.0 million to $385.0 million.

On February 16, 2023, our Board of Directors declared a regular cash dividend of $0.41 per share, which will be paid on April 17, 2023 to stockholders of record as of March 31, 2023.

We have audited the accompanying consolidated statements of assets and liabilities of Crescent Capital BDC, Inc. (the Company), including the consolidated schedules of investments, as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 2022 and 2021, by correspondence with the custodian, syndication agents and underlying investee companies; when replies were not received from the syndication agents and the underlying investee companies, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**The total par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments. Par amount is denominated in U.S. Dollars ("$") unless otherwise noted.
*** Percentage is based on net assets of $612,541 as of December 31, 2022

Note 3. Agreements and Related Party Transactions

Administration Agreement

On June 2, 2015, the Company entered into the administration agreement with the Administrator, as amended and restated on February 1, 2020 (the “Administration Agreement”). Under the terms of the Administration Agreement, the Administrator provides administrative services to the Company. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Administrator under the terms of the Administration Agreement. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit to the Administrator. The Administration Agreement may be terminated by either party without penalty on 60 days’ written notice to the other party.

For the years ended December 31, 2022, 2021 and 2020, the Company incurred administrative services expenses of $1,316, $1,028 and $819, respectively, which are included in other general and administrative expenses on the Consolidated Statements of Operations. As of December 31, 2022 and December 31, 2021, $511 and $354, respectively, was payable to the Administrator. In addition to administrative services expenses, the payable balances may include other operating expenses paid by the Administrator on behalf of the Company.

No person who is an officer, director or employee of the Administrator or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Administrator (or its affiliates) for an allocable portion of the compensation paid by the Administrator or its affiliates to the Company’s accounting professionals, legal counsel, and compliance professionals who spend time on such related activities (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). The allocable portion of the compensation for these officers and other professionals are included in the administration expenses paid to the Administrator. Directors who are not affiliated with the Administrator or its affiliates receive compensation for their services and reimbursement of expenses incurred to attend meetings, which are included as directors’ fees on the Consolidated Statements of Operations.

Investment Advisory Agreement

On June 2, 2015, the Company entered into an investment advisory agreement with the Adviser which was most recently amended and restated on January 5, 2021 (the “Investment Advisory Agreement”). Under the terms of the Investment Advisory Agreement, the Adviser provides investment advisory services to the Company and its portfolio investments. The Adviser’s services under the Investment Advisory Agreement are not exclusive, and the Adviser is free to furnish similar or other services to others so long as its services to the Company are not impaired. Under the terms of the Investment Advisory Agreement, the Adviser is entitled to receive a base management fee and may also receive incentive fees, as discussed below.

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Base Management Fee

The base management fee is calculated and payable quarterly in arrears at an annual rate of 1.25% of the Company’s gross assets, including assets acquired through the incurrence of debt but excluding any cash, cash equivalents and restricted cash. The base management fee is calculated based on the average value of gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. For purposes of the Investment Advisory Agreement, cash equivalents means U.S. government securities and commercial paper maturing within one year of purchase.

Under the terms of the Investment Advisory Agreement, the Adviser agreed to waive a portion of the management fee from February 1, 2020 through July 31, 2021 after the closing of the Alcentra Acquisition so that only 0.75% was charged for such time period. The Adviser has also voluntarily waived its right to receive management fees on the Company’s investments in GACP II LP and WhiteHawk III Onshore Fund LP for any period in which these investments remain in the investment portfolio.

Prior to February 1, 2020, the base management fee was calculated and payable quarterly in arrears at an annual rate of 1.50% of the Company’s gross assets, including assets acquired through the incurrence of debt but excluding any cash and cash equivalents. The Adviser agreed to waive its right to receive management fees in excess of the sum of (i) 0.25% of the aggregate committed but undrawn capital and (ii) 0.75% of the aggregate gross assets excluding cash and cash equivalents during the period prior to February 3, 2020, the date of the Company’s qualified initial public offering.

For the years ended December 31, 2022, 2021 and 2020, the Company incurred management fees of $16,344, $14,118 and $11,438, of which $229, $3,302 and $4,672, respectively, were waived. As of December 31, 2022 and 2021, management fees of $4,056 and $3,830, respectively, were unpaid.

Incentive Fee per Investment Advisory Agreement

Under the Investment Advisory Agreement, the incentive fee consists of two parts:

The first part, the income incentive fee, is calculated and payable quarterly in arrears and (a) equals 100% of the excess of the pre-incentive fee net investment income for the immediately preceding calendar quarter, over a preferred return of 1.75% (1.50% prior to February 1, 2020) per quarter (7.0% annualized or 6.0% annualized prior to February 1, 2020) (the “Hurdle”), and a catch-up feature until the Adviser has received 17.5% (15.0% prior to February 1, 2020) of the pre-incentive fee net investment income for the current quarter up to 2.1212% (1.7647% prior to February 1, 2020) (the “Catch-up”), and (b) 17.5% (15.0% prior to February 1, 2020) of all remaining pre-incentive fee net investment income above the “Catch-up.”

The second part, the capital gains incentive fee, is determined and payable in arrears as of the end of each fiscal year at a rate of 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from the Company’s inception through the end of the fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. In the event that the Investment Advisory Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a capital gains incentive fee.

Under the terms of the Investment Advisory Agreement, the Adviser agreed to waive the income based portion of the incentive fee from February 1, 2020 through July 31, 2021. The income and capital gains incentive fees were previously waived from April 1, 2018 through February 1, 2020. Additionally, on February 22, 2021, the Adviser notified the Board of Directors of its intent to voluntarily waive income incentive fees to the extent net investment income, excluding the effect of the GAAP incentive fee, falls short of the regular declared dividend on a full dollar basis. The waiver became effective on July 31, 2021 and, pursuant to an extension of the waiver announced on October 4, 2022, will continue through December 31, 2023. The Adviser has also voluntarily waived its right to receive the income incentive fees attributable to the investment income accrued by the Company as a result of its investments in GACP II LP and WhiteHawk III Onshore Fund LP.

130

Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during each calendar quarter, minus operating expenses for such quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and distributions paid on any issued and outstanding debt or preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, original issue discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income will be compared to a “Hurdle Amount” equal to the product of (i) the Hurdle rate of 1.75% per quarter, or 7.0% annualized (1.50% per quarter and 6.0% annualized prior to February 1, 2020), and (ii) our net assets (defined as total assets less indebtedness, before taking into account any incentive fees payable during the period), at the end of the immediately preceding calendar quarter, subject to a “catch-up” provision incurred at the end of each calendar quarter.

For the years ended December 31, 2022, 2021 and 2020, the Company incurred income incentive fees of $11,214, $9,849 and $8,639, of which $538, $7,517 and $8,639, respectively, were waived. As of December 31, 2022 and 2021, income incentive fees of $3,112 and $600, respectively, were unpaid.

GAAP Incentive Fee on Cumulative Unrealized Capital Appreciation

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 Advisory 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 17.5% (15% prior to February 1, 2020) 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.

For the years ended December 31, 2022, 2021 and 2020, the Company recorded a (reversal) accrual of capital gains incentive fees on unrealized capital appreciation of $(6,324), $6,324 and $0, respectively. As of December 31, 2022 and 2021, capital gains incentive fees of $0 and $6,324, respectively, were accrued and unpaid.

Other Related Party Transactions

From time to time, the Administrator may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Administrator for such amounts paid on its behalf. Amounts payable to the Administrator are settled in the normal course of business without formal payment terms.

A portion of the outstanding shares of the Company’s common stock is owned by Crescent, its employees and certain officers and directors of the Company. As of December 31, 2022 and 2021, Crescent, its employees and certain officers and directors of the Company owned 3.10% and 2.95%, respectively, of the Company’s outstanding common stock. Crescent is also the majority member of the Adviser and sole member of the Administrator. The Company has entered into a license agreement with Crescent under which Crescent granted the Company a non-exclusive, royalty-free license to use the name “Crescent Capital”. The Adviser has entered into a resource sharing agreement with Crescent. Crescent will provide the Adviser with the resources necessary for the Adviser to fulfill its obligations under the Investment Advisory Agreement.

On January 5, 2021, Sun Life acquired a majority interest in Crescent. Consummation of the Sun Life Transaction resulted in a change of control of Crescent. There were no changes to the Company’s investment objective, strategies and process or to the Crescent team responsible for the investment operations of the Company as a result of the Sun Life Transaction. As of December 31 2022 and 2021, Sun Life owned 3.49% and 2.15%, respectively, of the Company’s outstanding common stock. Sun Life is the sole lender of the Company’s 2023 Unsecured Notes and a $10,000 participating lender in the Company’s 2026 Unsecured Notes, both described further in Note 6.

131

In connection with the November 18, 2021 common equity offering totaling $58,018, the Adviser provided transaction support of $5,386, which is reflective of the difference between the actual public offering price and the net proceeds per share received by the Company in this offering and represents payments to the underwriters. In addition, the Adviser paid the sales load payable to the underwriters totaling $2,105. The Company is not obligated to repay the transaction support and sales load paid by the Adviser.

Investments in and affiliated and controlled companies

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the Consolidated Schedule of Investments and the summary tables below.

The Company’s investments in non-controlled affiliates for the year ended December 31, 2022 were as follows (in thousands):


	Fair Value as of December 31, 2021		Gross Additions (2)		Gross Reductions (3)			Net Realized Gains/ (Losses)		Change in Unrealized Gains/ (Losses)			Fair Value as of December 31, 2022		Dividend, Interest, PIK and Other Income
Non-Controlled Affiliates
AX VI INV2 Holding AB	$	—	$	11,436	$	—		$	—	$	681		$	12,117	$	321
ASP MCS Acquisition		1,616		263		(3	)		—		(1,050	)		826		28
Battery Solutions, Inc.		7,031		2,129		(14,712	)		7,098		(1,546	)		—		2,113
GACP II, LP		12,619		—		(7,804	)		—		74			4,889		1,593
Slickdeals Holdings, LLC		15,847		93		(148	)		—		(359	)		15,433		1,268
Southern Technical Institute, Inc.		7,686		—		—			—		(7,686	)		—		2,932
Vivid Seats Ltd.		922		—		—			—		22			944		—
WhiteHawk III Onshore Fund L.P.		5,980		4,710		(2,265	)		—		446			8,871		645
Total Non-Controlled Affiliates	$	51,701	$	18,631	$	(24,932	)	$	7,098	$	(9,418	)	$	43,080	$	8,900

The Company’s investments in non-controlled affiliates for the year ended December 31, 2021 were as follows (in thousands):


	Fair Value as of December 31, 2020		Gross Additions (2)		Gross Reductions (3)			Net Realized Gains/ (Losses)		Change in Unrealized Gains/ (Losses)			Fair Value as of December 31, 2021		Dividend, Interest, PIK and Other Income
Non-Controlled Affiliates
ASP MCS Acquisition	$	1,793	$	3	$	(3	)		—	$	(177	)	$	1,616	$	25
Battery Solutions, Inc.		3,565		567		—			—		2,899			7,031		230
Conisus, LLC		22,865		1,026		(38,628	)		27,440		(12,703	)		—		1,026
GACP II, LP(1)		16,154		—		(3,332	)		—		(203	)		12,619		1,373
Slickdeals Holdings, LLC		16,010		88		(381	)		72		58			15,847		1,127
Southern Technical Institute, Inc.		7,253		—		—			—		433			7,686		1,041
Vivid Seats Ltd.		3,714		—		(3,190	)		1,298		(900	)		922		—
WhiteHawk III Onshore Fund L.P.		—		5,851		—			—		129			5,980		—
Total Non-Controlled Affiliates	$	71,354	$	7,535	$	(45,534	)	$	28,810	$	(10,464	)	$	51,701	$	4,822

132

(1)

Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the presentation of the current period financial statements. The Company’s investment in GACP II, LP and the related income generated by it were reclassified from non-controlled non-affiliated to non-controlled affiliated investment for the prior periods presented in the consolidated financial statements.

(2)

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.

(3)

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.

The Company’s investments in controlled affiliates for the year ended December 31, 2022 were as follows (in thousands):


	Fair Value as of December 31, 2021		Gross Additions (2)		Gross Reductions (3)			Net Realized Gains/ (Losses)			Change in Unrealized Gains/ (Losses)			Fair Value as of December 31, 2022		Dividend, Interest, PIK and Other Income
Controlled Affiliates
CBDC Senior Loan Fund LLC(1)	$	39,360	$	—	$	(36,699	)		(3,301	)	$	640		$	—	$	2,358
Envocore LLC		13,408		1,999		(1,793	)		—			(2,239	)		11,375		1,477
Total Controlled Affiliates	$	52,768	$	1,999	$	(38,492	)	$	(3,301	)	$	(1,600	)	$	11,375	$	3,835

The Company’s investments in controlled affiliates for the year ended December 31, 2021 were as follows (in thousands):


	Fair Value as of December 31, 2020		Gross Additions (2)		Gross Reductions (3)		Net Realized Gains/ (Losses)		Change in Unrealized Gains/ (Losses)			Fair Value as of December 31, 2021		Dividend, Interest, PIK and Other Income
Controlled Affiliates
CBDC Senior Loan Fund LLC(1)	$	38,735	$	—	$	—	$	—	$	625		$	39,360	$	3,200
Envocore LLC		-		13,431		—		—		(23	)		13,408		2
Total Controlled Affiliates	$	38,735	$	13,431	$	—	$	—	$	602		$	52,768	$	3,202

(1)

Prior to the Senior Loan Fund's dissolution during the fourth quarter of 2022, the Company owned more than 25% of the voting securities of the Senior Loan Fund, but the Company did not have control over the Senior Loan Fund (other than for purposes of the 1940 Act) given the shared power/voting rights with its investing partner. Additionally, the Company’s investment strategy focuses on middle market lending in senior secured first lien, second lien and equity investments, while the Senior Loan Fund focused on senior secured broadly syndicated loans.

(2)

(3)

Note 4. Investments

The information in the following tables is presented on an aggregate portfolio basis, without regard to whether they are non-controlled, non-affiliated, non-controlled, affiliated or controlled affiliated, investments.

133

Investments at fair value consisted of the following (in thousands):


	As of December 31, 2022							As of December 31, 2021
Investment Type	Cost		Fair Value		Unrealized Appreciation/ (Depreciation)			Cost		Fair Value		Unrealized Appreciation/ (Depreciation)
Senior Secured First Lien	$	312,345	$	301,001		(11,344	)	$	335,207	$	329,795		(5,412	)
Unitranche First Lien		842,867		824,107		(18,760	)		719,594		731,017		11,423
Unitranche First Lien - Last Out		14,879		13,827		(1,052	)		15,698		13,723		(1,975	)
Senior Secured Second Lien		67,001		60,877		(6,124	)		72,413		72,723		310
Unsecured Debt		4,984		4,533		(451	)		5,577		5,620		43
Equity & Other		35,993		44,851		8,858			37,611		59,528		21,917
LLC/LP Equity Interests		13,387		13,760		373			58,746		57,960		(786	)
Total investments	$	1,291,456	$	1,262,956	$	(28,500	)	$	1,244,846	$	1,270,366	$	25,520

The industry composition of investments at fair value is as follows (in thousands):


Industry	Fair Value as of December 31, 2022		Percentage of Fair Value			Fair Value as of December 31, 2021		Percentage of Fair Value
Health Care Equipment & Services	$	361,940		28.7	%	$	380,046		29.9	%
Software & Services		268,305		21.3			246,352		19.4
Commercial & Professional Services		201,213		15.9			202,311		15.9
Consumer Services		118,898		9.4			94,292		7.4
Insurance		58,032		4.6			54,439		4.3
Pharmaceuticals, Biotechnology & Life Sciences		55,020		4.4			53,005		4.2
Retailing		54,832		4.3			34,275		2.7
Capital Goods		40,838		3.2			37,328		2.9
Automobiles & Components		38,004		3.0			37,835		3.0
Diversified Financials		28,975		2.3			57,960		4.6
Consumer Durables & Apparel		19,244		1.5			18,522		1.5
Food, Beverage & Tobacco		8,491		0.7			9,838		0.8
Telecommunication Services		4,061		0.3			4,480		0.4
Energy		2,185		0.2			15,155		1.2
Food & Staples Retailing		1,664		0.1			4,209		0.3
Transportation		1,254		0.1			9,297		0.7
Materials		-		-			6,912		0.5
Household & Personal Products		-		-			4,110		0.3
Total investments	$	1,262,956		100.0	%	$	1,270,366		100.0	%

The geographic composition of investments at fair value is as follows (in thousands):


Geographic Region	Fair Value as of December 31, 2022		Percentage of Fair Value			Fair Value as of December 31, 2021		Percentage of Fair Value
United States	$	1,111,350		88.1	%	$	1,159,851		91.3	%
United Kingdom		58,591		4.6			51,416		4.0
Canada		31,890		2.5			34,114		2.7
Australia		19,490		1.5			-		-
Netherlands		15,352		1.2			9,987		0.8
Belgium		14,166		1.1			14,998		1.2
Sweden		12,117		1.0			-		-
Total investments	$	1,262,956		100.0	%	$	1,270,366		100.0	%

Note 5. Fair Value of Financial Instruments

Investments

The following table presents fair value measurements of investments as of December 31, 2022 (in thousands):


Fair Value Hierarchy
	Level 1		Level 2			Level 3		Total
Senior Secured First Lien	$	—	$	23,214		$	277,786	$	301,000
Unitranche First Lien		—		52,760			771,348		824,108
Unitranche First Lien – Last Out		—		—			13,827		13,827
Senior Secured Second Lien		—		4,291			56,586		60,877
Unsecured Debt		—		—			4,533		4,533
Equity & Other		—		944			43,907		44,851
Subtotal	$	—	$	81,209		$	1,167,987	$	1,249,196
Investments Measured at NAV (1)									13,760
Total Investments								$	1,262,956

Foreign Currency Forward Contracts - Assets		—		8,154			—		8,154
Foreign Currency Forward Contracts - Liabilities		—		(157	)		—		(157	)

The following table presents fair value measurements of investments as of December 31, 2021 (in thousands):


Fair Value Hierarchy
	Level 1		Level 2			Level 3		Total
Senior Secured First Lien	$	—	$	60,944		$	268,851	$	329,795
Unitranche First Lien		—		19,721			711,296		731,017
Unitranche First Lien – Last Out		—		—			13,723		13,723
Senior Secured Second Lien		—		25,139			47,584		72,723
Unsecured Debt		—		—			5,620		5,620
Equity & Other		—		922			58,606		59,528
Subtotal	$	—	$	106,726		$	1,105,680	$	1,212,406
Investments Measured at NAV (1)									57,960
Total Investments								$	1,270,366

Foreign Currency Forward Contracts - Assets		—		2,115			—		2,115
Foreign Currency Forward Contracts - Liabilities		—		(631	)		—		(631	)

(1)

In accordance with ASC 820-10, certain investments that are measured using the net asset value per shares (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. These investments are generally not redeemable. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the year ended December 31, 2022, based off of the fair value hierarchy as of December 31, 2022 (in thousands):


	Senior Secured First Lien			Unitranche First Lien			Unitranche First - Last Out			Senior Secured Second Lien			Unsecured Debt			Equity & Other			Total
Balance as of January 1, 2022	$	268,851		$	711,296		$	13,723		$	47,584		$	5,620		$	58,606		$	1,105,680
Amortized discounts/premiums		1,281			4,818			30			347			85			—			6,561
Paid in-kind interest		707			56			334			785			575			1,998			4,455
Net realized gain (loss)		(304	)		(30	)		—			—			—			8,558			8,224
Net change in unrealized appreciation (depreciation)		(2,092	)		(28,701	)		924			(5,946	)		(496	)		(13,083	)		(49,394	)
Purchases		70,925			215,410			3,964			2,703			681			4,532			298,215
Sales/return of capital/principal repayments/paydowns		(81,880	)		(101,591	)		(5,148	)		(4,307	)		(1,932	)		(16,704	)		(211,562	)
Transfers in		20,298			—			—			15,709			—			—			36,007
Transfers out		—			(29,910	)		—			(289	)		—			—			(30,199	)
Balance as of December 31, 2022	$	277,786		$	771,348		$	13,827		$	56,586		$	4,533		$	43,907		$	1,167,987
Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2022	$	(2,815	)	$	(27,063	)	$	924		$	(5,894	)	$	(535	)	$	(11,509	)	$	(46,892	)

135

During the year ended December 31, 2022, the Company recorded $30,199 in transfers from Level 3 to Level 2 due to an increase in observable inputs in market data and $36,007 in transfers from Level 2 to Level 3 due to a decrease in observable inputs in market data.

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the year ended December 31, 2021, based off of the fair value hierarchy as of December 31, 2021 (in thousands):


	Senior Secured First Lien			Unitranche First Lien			Unitranche First - Last Out			Senior Secured Second Lien			Unsecured Debt			Equity & Other			Total
Balance as of January 1, 2021	$	339,898		$	413,543		$	14,917		$	104,656		$	3,032		$	67,831		$	943,877
Amortized discounts/premiums		6,176			3,632			31			1,131			16			3			10,989
Paid in-kind interest		1,533			—			—			—			589			1,026			3,148
Net realized gain (loss)		(3,674	)		299			—			1			(104	)		36,572			33,094
Net change in unrealized appreciation (depreciation)		(346	)		6,052			(1,225	)		(594	)		123			(5,566	)		(1,556	)
Purchases		136,438			419,097			—			10,274			2,307			13,390			581,506
Sales/return of capital/principal repayments/paydowns		(187,416	)		(113,180	)		—			(55,987	)		(343	)		(55,351	)		(412,277	)
Transfers in		—			—			—			—			—			1,501			1,501
Transfers out		(23,758	)		(18,147	)		—			(11,897	)		—			(800	)		(54,602	)
Balance as of December 31, 2021	$	268,851		$	711,296		$	13,723		$	47,584		$	5,620		$	58,606		$	1,105,680
Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2021	$	829		$	6,735		$	(1,226	)	$	(490	)	$	125		$	10,963		$	16,937

During the year ended December 31, 2021, the Company recorded $54,602 in transfers from Level 3 to Level 2 due to an increase in observable inputs in market data and $1,501 in transfers from Level 2 to Level 3 due to a decrease in observable inputs in market data.

The following tables present the fair value of Level 3 investments and the ranges of significant unobservable inputs used to value the Company’s Level 3 investments as of December 31, 2022 and 2021. These ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. For example, the highest market yield presented in the table for senior secured first lien investments is appropriate for valuing a specific investment but may not be appropriate for valuing any other investment. Accordingly,

136

the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 investments.


Security Type	Fair Value as of December 31, 2022 (in thousands)		Valuation Technique	Unobservable Input	Range (Weighted Avg)
Senior Secured First Lien	$	201,043	Discounted Cash Flows	Discount Rate	9.4%	-	19.4%	(10.9%)
		13,593	Enterprise Value	Comparable EBITDA Multiple	8.3x	-	14.8x	(9.1x)
		63,150	Broker Quoted	Broker Quote			N/A
	$	277,786

Unitranche First Lien	$	620,221	Discounted Cash Flows	Discount Rate	6.8%	-	15.7%	(10.8%)
		15,576	Enterprise Value	Comparable EBITDA Multiple	13.1x	-	6.8x	(11.5x)
		135,551	Broker Quoted	Broker Quote			N/A
	$	771,348

Unitranche First Lien - Last Out	$	11,642	Discounted Cash Flows	Discount Rate	8.4%	-	16.5%	(10.9%)
		2,185	Collateral Analysis	Recovery Rate			42.9%
	$	13,827

Senior Secured Second Lien	$	29,749	Discounted Cash Flows	Discount Rate	11.5%	-	26.0%	(15.6%)
		7,397	Enterprise Value	Comparable EBITDA Multiple	8.3x	-	14.8x	(10.8x)
		19,440	Broker Quoted	Broker Quote			N/A
	$	56,586

Unsecured Debt	$	4,533	Discounted Cash Flows	Discount Rate	15.2%	-	17.3%	(16.1%)

Equity & Other	$	200	Discounted Cash Flows	Discount Rate	22.1%	-	22.1%	(22.1%)
		43,311	Enterprise Value	Comparable EBITDA Multiple	10.9x	-	27.8x	(15.7x)
		396	Broker Quoted	Broker Quote			N/A
	$	43,907

Total	$	1,167,987


Security Type	Fair Value as of December 31, 2021 (in thousands)		Valuation Technique	Unobservable Input	Range (Weighted Avg)
Senior Secured First Lien	$	227,225	Discounted Cash Flows	Discount Rate	5.5%	-	23.0%	(8.0%)
		5,509	Enterprise Value	Comparable EBITDA Multiple	10.3x	-	10.3x	(10.3x)
		36,117	Broker Quoted	Broker Quote			N/A
	$	268,851

Unitranche First Lien	$	665,759	Discounted Cash Flows	Discount Rate	5.1%	-	10.4%	(7.1%)
		277	Collateral Analysis	Recovery Rate			100.0%
		45,260	Broker Quoted	Broker Quote			N/A
	$	711,296

Unitranche First Lien - Last Out	$	7,862	Discounted Cash Flows	Discount Rate	6.5%	-	6.5%	(6.5%)
		5,861	Collateral Analysis	Recovery Rate			72.6%
	$	13,723

Senior Secured Second Lien	$	47,295	Discounted Cash Flows	Discount Rate	8.0%	-	21.7%	(10.5%)
		289	Broker Quoted	Broker Quote			N/A
	$	47,584

Unsecured Debt	$	5,620	Discounted Cash Flows	Discount Rate	11.5%	-	16.0%	(13.4%)

Equity & Other	$	57,279	Enterprise Value	Comparable EBITDA Multiple	6.3x	-	32.4x	(9.8x)
		1,327	Broker Quoted	Broker Quote			N/A
	$	58,606

Total	$	1,105,680

137

As noted above, the discounted cash flows and market multiple approaches were used in the determination of fair value of certain Level 3 assets as of December 31, 2022 and 2021. The significant unobservable inputs used in the discounted cash flow approach is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases and decreases in the discount rate would result in a decrease and increase in the fair value, respectively. 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 multiple approach are the multiples of similar companies’ earnings before income taxes, depreciation and amortization (“EBITDA”) and comparable market transactions. Increases and decreases in market EBITDA multiples would result in an increase or decrease in the fair value, respectively. The recovery rate represents the extent to which proceeds can be recovered. An increase/decrease in the recovery rate would result in an increase/decrease, respectively, in the fair value. The transaction precedent represents an observable transaction or a pending event for the investment.

Note 8. Commitments, Contingencies and Indemnifications

The Company’s investment portfolio may contain investments that are in the form of lines of credit or unfunded commitments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. Unfunded commitments to provide funds to portfolio companies are not reflected on the Company’s Consolidated Statements of Assets and Liabilities. These commitments are subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that the Company holds. Since these commitments may expire without being drawn, the total commitment amount does not necessarily represent future cash requirements. As of December 31, 2022 and 2021, the Company had aggregated unfunded commitments totaling $158,905 and $195,622 including foreign denominated commitments converted to USD at the balance sheet date, respectively, under loan and financing agreements.

The Company has the following unfunded commitments to portfolio companies (in thousands):


		As of December 31, 2022				As of December 31,2021
Company	Investment Type	Commitment Expiration Date (1)		Unfunded Commitment (2)		Commitment Expiration Date (1)		Unfunded Commitment (2)
ABACUS Holdings I LLC (7)	Delayed Draw Term Loan	6/24/2024		$	2,800		—		—
ABACUS Holdings I LLC (5)	Revolver	6/24/2028			720		—		—
ACI Group Holdings, Inc. (7)	Delayed Draw Term Loan	8/2/2023			1,688	8/2/2023		$	2,564
ACI Group Holdings, Inc. (5)	Revolver	8/2/2027			657	8/2/2027			738
Advanced Diabetes Supply (5)	Revolver	12/30/2027			88		—		—
Affinitiv, Inc. (5)	Revolver	8/26/2024			567	8/26/2024			567
Alera Group Inc. (7)	Delayed Draw Term Loan	3/2/2024			4,401		—		—
Ameda, Inc.	Revolver		—		—	9/29/2022			113
Ansira Partners, Inc. (12)	Delayed Draw Term Loan	12/20/2024			254		—		—
Apps Associates LLC (7)	Delayed Draw Term Loan	7/2/2023			900	7/2/2023			1,800
Apps Associates LLC (5)	Revolver	7/2/2027			800	7/2/2027			800
Arrow Management Acquisition, LLC	Delayed Draw Term Loan		—		—	10/14/2023			2,028
Arrow Management Acquisition, LLC (5)	Revolver	10/14/2027			700	10/14/2027			700
Auto-Vehicle Parts, LLC	Revolver		—		—	1/3/2023			600
Auveco Holdings (7)	Delayed Draw Term Loan	5/5/2024			850		—		—
Auveco Holdings (5)	Revolver	5/5/2028			450		—		—
AX VI INV2 Holding AB (Voff) (8)	Revolver	8/31/2029			398		—		—
AX VI INV2 Holding AB (Voff) (9)	Delayed Draw Term Loan	8/31/2029			1,593		—		—
Banker's Toolbox, Inc. (7)	Delayed Draw Term Loan	7/27/2023			4,184	7/27/2023			6,711
Banker's Toolbox, Inc. (5)	Revolver	7/27/2027			2,406	7/27/2027			2,406
Belay Inc. (5)	Revolver	11/15/2025			650	11/15/2025			650
Benesys Inc. (5)	Revolver	10/5/2024			66	10/5/2024			150
BioAgilytix (7)	Delayed Draw Term Loan	12/21/2023			1,865	12/21/2023			2,543
C-4 Analytics, LLC (5)	Revolver	8/22/2023			600	8/22/2023			600
CAT Buyer, LLC	Revolver		—		—	4/11/2024			550
Centria Subsidiary Holdings, LLC (5)	Revolver	12/9/2025			1,974	12/9/2025			1,974
Claritas, LLC	Revolver		—		—	12/21/2023			278
Claritas, LLC (5)	Delayed Draw Term Loan	9/30/2023			2,450		—		—
Claritas, LLC (5)	Revolver	3/31/2026			1,950		—		—
Consolidated Label Co., LLC (5)	Revolver	7/15/2026			650	7/15/2026			650
CRA MSO, LLC (5)	Revolver	12/17/2023			92	12/17/2023			140
Crusoe Bidco Limited	Delayed Draw Term Loan		—		—	12/10/2022			532

142

As of December 31, 2022

As of December 31,2021

Company

Investment Type

Commitment 
Expiration Date (1)

Unfunded 
Commitment (2)

Commitment 
Expiration Date (1)

Unfunded 
Commitment (2)

Crusoe Bidco Limited

Delayed Draw Term Loan

—

—

12/10/2022

167

Eagle Midco B.V. (Avania) (9)

Delayed Draw Term Loan

7/5/2029

3,545

—

—

Eagle Midco B.V. (Avania) (9)

Revolver

1/5/2029

788

—

—

Effective School Solutions LLC (5)

Revolver

11/30/2027

1,276

11/30/2027

1,450

Effective School Solutions LLC (7)

Delayed Draw Term Loan

11/30/2023

2,200

11/30/2023

2,200

EMS Buyer, Inc. (5)

Revolver

11/23/2027

550

11/23/2027

550

Envocore Holding, LLC (5)

Revolver

12/31/2025

2,778

12/31/2025

2,169

Eshipping (7)

Delayed Draw Term Loan

11/5/2023

1,850

11/5/2023

1,850

Eshipping (5)

Revolver

11/5/2027

1,150

11/5/2027

953

143


		As of December 31, 2022				As of December 31,2021
Company	Investment Type	Commitment Expiration Date (1)		Unfunded Commitment (2)		Commitment Expiration Date (1)		Unfunded Commitment (2)
Everlast Parent Inc. (5)	Revolver	10/30/2026			1,151	10/30/2026			1,611
Evolution BuyerCo, Inc.	Revolver	4/30/2027			729	4/30/2027			729
Evolution BuyerCo, Inc.	Delayed Draw Term Loan		—		—	4/30/2023			1,072
Evolution BuyerCo, Inc. (7)	Delayed Draw Term Loan	12/23/2023			31		—		—
Explorer Investor, Inc. (7)	Delayed Draw Term Loan	6/28/2024			2,400		—		—
FS Whitewater Borrower, LLC	Delayed Draw Term Loan		—		—	12/21/2022			1,724
FS Whitewater Borrower, LLC	Delayed Draw Term Loan		—		—	12/21/2023			435
FS Whitewater Borrower, LLC (3)	Revolver	12/21/2027			448	12/21/2027			690
FS Whitewater Borrower, LLC (7)	Delayed Draw Term Loan	7/1/2024			1,662		—		—
Galway Borrower, LLC (5)	Delayed Draw Term Loan	9/30/2023			134	9/30/2023			1,945
Galway Borrower, LLC (5)	Revolver	9/30/2027			926	9/30/2027			926
GrapeTree Medical Staffing, LLC (5)	Revolver	5/29/2024			600	5/29/2024			600
GrapeTree Medical Staffing, LLC	Delayed Draw Term Loan		—		—	3/31/2022			2,750
GH Parent Holdings Inc. (5)	Revolver	5/4/2027			1,542	5/4/2027			1,875
GH Parent Holdings Inc.	Delayed Draw Term Loan		—		—	5/4/2023			5,542
Granicus, Inc. (5)	Revolver	1/29/2027			535	1/29/2027			805
Granicus, Inc.	Delayed Draw Term Loan		—		—	4/23/2023			3,135
Great Lakes Dental Partners, LLC	Delayed Draw Term Loan		—		—	6/23/2023			850
Great Lakes Dental Partners, LLC (5)	Revolver	6/23/2026			100	6/23/2026			190
HCOS Group Intermediate III LLC (5)	Revolver	9/30/2026			1,150	9/30/2026			1,150
Hepaco, LLC (5)	Revolver	8/18/2024			135	8/18/2024			152
Hercules Borrower LLC (5)	Revolver	12/15/2026			1,985	12/15/2026			2,222
Hercules Borrower LLC (7)	Delayed Draw Term Loan	9/10/2023			1,092	9/10/2023			2,252
HGH Purchaser, Inc.	Delayed Draw Term Loan		—		—	2/10/2023			557
HGH Purchaser, Inc. (5)	Revolver	11/3/2025			610	11/3/2025			733
Homecare Partners Management, LLC (5)	Revolver	5/25/2023			953	5/25/2027			807
Hospice Care Buyer, Inc. (5)	Revolver	12/9/2026			508	12/9/2026			624
Hsid Acquisition, LLC (5)	Revolver	1/31/2026			750	1/31/2026			750
HS Spa Holdings Inc. (Hand & Stone) (5)	Revolver	6/2/2028			1,511		—		—
Infobase (7)	Delayed Draw Term Loan	6/14/2024			1,850		—		—
Infobase (5)	Revolver	6/14/2028			1,450		—		—
Integrity Marketing Acquisition, LLC (5)	Revolver	8/27/2025			1,409	8/27/2025			1,409
ISS Compressors Industries, Inc.	Revolver		—		—	2/5/2026			833
IvyRehab Intermediate II, LLC	Revolver		—		—	12/4/2024			370
IvyRehab Intermediate II, LLC	Delayed Draw Term Loan		—		—	9/13/2023			1,351
Jordan Bidco, Ltd. (9)	Delayed Draw Term Loan	8/31/2024			3,692	8/31/2024			4,132
Jordan Bidco, Ltd.	Revolver		—		—	2/28/2028			964
JTM Foods LLC (5)	Revolver	5/14/2027			347	5/14/2027			480
JTM Foods LLC (5)	Delayed Draw Term Loan	5/14/2027			250	11/14/2022			750
Kestrel Parent, LLC	Revolver		—		—	11/13/2023			871
King Mid LLC (7)	Delayed Draw Term Loan	6/17/2024			2,356		—		—
King Mid LLC (5)	Revolver	12/15/2027			300		—		—
Learn-It Systems, LLC (5)	Revolver	3/18/2025			283	3/18/2025			270
Learn-It Systems, LLC	Delayed Draw Term Loan		—		—	3/18/2022			42
Learn-It Systems, LLC (6)	Delayed Draw Term Loan	5/4/2023			1,451	5/4/2023			1,924
Lexipol (Ranger Buyer, Inc.) (5)	Revolver	11/18/2027			1,105	11/18/2027			884
Lightspeed Buyer, Inc. (5)	Revolver	2/3/2026			595	2/3/2026			770
Lightspeed Buyer, Inc. (7)	Delayed Draw Term Loan	2/28/2023			5,101	2/28/2023			5,100
Lion Cashmere Bidco Limited	Revolver		—		—	2/23/2026			1,989
Lion Cashmere Bidco Limited (9)	Delayed Draw Term Loan	9/23/2024			2,952	9/23/2024			3,137
List Partners, Inc. (5)	Revolver	1/5/2023			450	1/5/2023			450
Mario Purchaser, LLC (7)	Delayed Draw Term Loan	4/26/2024			3,690		—		—
Mario Purchaser, LLC (5)	Revolver	4/26/2028			1,044		—		—
MHS Acquisition Holdings, LLC	Delayed Draw Term Loan		—		—	7/21/2023			95
MHS Acquisition Holdings, LLC (5)	Revolver	7/21/2027			129	7/21/2027			150
MRI Software LLC (5)	Revolver	2/10/2026			1,266	2/10/2026			1,266
MWD Management LLC (United Derm) (5)	Revolver	6/15/2027			560		—		—

144


		As of December 31, 2022				As of December 31,2021
Company	Investment Type	Commitment Expiration Date (1)		Unfunded Commitment (2)		Commitment Expiration Date (1)		Unfunded Commitment (2)
New Era Technology, Inc. (5)	Revolver	10/31/2026			265	10/31/2026			152
New Era Technology, Inc.	Delayed Draw Term Loan		—		—	10/31/2022			673
New Era Technology, Inc. (7)	Delayed Draw Term Loan	10/31/2026			504		—		—
Nexant Volt MergerSub, Inc. (5)	Revolver	5/11/2027			500	5/11/2027			100
Nurture Landscapes (10)	Delayed Draw Term Loan	6/2/2028			465	6/2/2028			11,411
Odessa Technologies, Inc. (7)	Delayed Draw Term Loan	10/19/2023			1,786	10/19/2023			1,786
Odessa Technologies, Inc. (5)	Revolver	10/19/2027			2,500	10/19/2027			2,500
Oliver Packaging LLC (5)	Revolver	7/6/2028			500		—		—
Omni Ophthalmic Management Consultants, LLC (7)	Delayed Draw Term Loan	3/7/2024			1,500		—		—
Omni Ophthalmic Management Consultants, LLC (5)	Revolver	5/31/2023			113	5/31/2023			510
Ontario Systems, LLC (5)	Revolver	8/30/2025			256	8/30/2025			500
Ontario Systems, LLC	Delayed Draw Term Loan		—		—	8/19/2023			213
Painters Supply & Equipment Company (7)	Delayed Draw Term Loan	8/10/2023			724	8/10/2023			900
Painters Supply & Equipment Company (5)	Revolver	8/10/2027			299	8/10/2027			408
Patriot Acquisition Topco S.A.R.L (5)	Revolver	1/29/2026			1,390	1/29/2026			1,770
Patriot Growth Insurance Services, LLC (5)	Revolver	10/14/2028			660	10/14/2028			660
Patriot Growth Insurance Services, LLC	Delayed Draw Term Loan		—		—	10/14/2023			2,594
Patriot Growth Insurance Services, LLC (6)	Delayed Draw Term Loan	7/8/2024			2,626		—		—
PharComp Parent B.V. (11)	Delayed Draw Term Loan	2/18/2023			1,432		—		—
PharComp Parent B.V. (11)	Delayed Draw Term Loan	2/18/2023			2,873		—		—
Pharmalogics Recruiting, LLC	Delayed Draw Term Loan		—		—	9/27/2023			4,644
Pilot Air Freight, LLC	Revolver		—		—	7/25/2024			100
Pinnacle Treatment Centers, Inc.	Delayed Draw Term Loan		—		—	1/17/2022			457
Pinnacle Treatment Centers, Inc.	Revolver		—		—	12/31/2022			571
Plasma Buyer LLC (PathGroup) (7)	Delayed Draw Term Loan	5/12/2024			1,892		—		—
Plasma Buyer LLC (PathGroup) (5)	Revolver	5/12/2029			811		—		—
Potter Electric Signal Company (5)	Revolver	12/19/2024			550	12/19/2024			462
PPV Intermediate Holdings LLC (Vetcor) (7)	Delayed Draw Term Loan	2/29/2024			415		—		—
PPV Intermediate Holdings LLC (Vetcor) (5)	Revolver	8/31/2029			166		—		—
PPV Intermediate Holdings LLC (Vetcor) (7)	Delayed Draw Term Loan	2/29/2024			234		—		—
Professional Physical Therapy (5)	Revolver	2/28/2023			188		—		—
Premier Dental Care Management, LLC (7)	Delayed Draw Term Loan	8/5/2023			793	8/5/2023			3,784
Premier Dental Care Management, LLC (5)	Revolver	8/5/2027			1,030	8/5/2027			1,266
Prism Bidco, Inc.	Revolver		—		—	6/25/2026			833
PromptCare Intermediate, LP (7)	Delayed Draw Term Loan	9/1/2023			2,778	9/1/2023			3,486
PT Network, LLC	Revolver		—		—	11/30/2023			280
Pye-Barker Fire & Safety, LLC	Delayed Draw Term Loan		—		—	11/26/2023			1,401
Pye-Barker Fire & Safety, LLC (5)	Revolver	11/26/2027			816	11/26/2027			1,531
Pye-Barker Fire & Safety, LLC (7)	Delayed Draw Term Loan	6/15/2024			1,200		—		—
Pye-Barker Fire & Safety, LLC (5)	Revolver	10/1/2024			75		—		—
Receivable Solutions, Inc. (5)	Revolver	10/1/2024			258	10/1/2024			300
Ruffalo Noel Levitz, LLC (5)	Revolver	5/29/2024			75	5/29/2022			300
Safco Dental Supply, LLC (5)	Revolver	6/14/2025			480	6/14/2025			600
Saturn Borrower Inc	Revolver		—		—	9/30/2026			605
Seko Global Logistics Network, LLC (5)	Revolver	12/20/2026			650	12/20/2026			1,300
Seniorlink Incorporated (5)	Revolver	7/17/2026			1,038	7/17/2026			1,038
Service Logic Acquisition, Inc.	Delayed Draw Term Loan		—		—	10/30/2022			389
Slickdeals Holdings, LLC (4)	Revolver	6/12/2023			727	6/12/2023			727
Smartronix, LLC (5)	Revolver	11/23/2027			3,290	11/23/2027			3,290
Smile Doctors LLC	Delayed Draw Term Loan		—		—	12/23/2023			1,654
Smile Doctors LLC (5)	Revolver	12/23/2027			646	12/23/2027			1,201
Smile Doctors LLC (7)	Delayed Draw Term Loan	12/23/2028			2,010		—		—
SQAD Holdco, Inc. (7)	Delayed Draw Term Loan	4/25/2024			2,425		—		—
SQAD Holdco, Inc. (5)	Revolver	4/25/2028			840		—		—
Spear Education	Delayed Draw Term Loan		—		—	2/26/2022			3,125

145

As of December 31, 2022

As of December 31,2021

Company

Investment Type

Commitment 
Expiration Date (1)

Unfunded 
Commitment (2)

Commitment 
Expiration Date (1)

Unfunded 
Commitment (2)

Stepping Stones Healthcare Services, LLC (7)

Delayed Draw Term Loan

12/30/2023

2,226

12/30/2023

3,774

Stepping Stones Healthcare Services, LLC (7)

Revolver

12/30/2026

528

12/30/2026

1,887

Summit 7 Systems, LLC (5)

Revolver

5/23/2028

650

—

—

Sun Acquirer Corp. (7)

Delayed Draw Term Loan

9/8/2027

491

9/8/2023

4,466

Sun Acquirer Corp. (5)

Revolver

9/8/2027

1,812

9/8/2027

1,812

Sydney US Buyer Corp. (3B Scientific) (9)

Delayed Draw Term Loan

7/8/2029

1,961

—

—

Sydney US Buyer Corp. (3B Scientific) (9)

Revolver

7/8/2029

654

—

—

Teal Acquisition Co., Inc (5)

Revolver

9/22/2026

259

9/22/2026

967

Teal Acquisition Co., Inc

Delayed Draw Term Loan

—

—

9/22/2026

1,642

The Hilb Group, LLC (5)

Revolver

12/2/2025

340

12/2/2025

340

The Hilb Group, LLC (5)

Revolver

12/2/2025

143

12/2/2025

143

The Hilb Group, LLC (5)

Delayed Draw Term Loan

12/10/2023

1,880

12/10/2023

4,413

The Hilb Group, LLC (5)

Revolver

12/2/2025

113

12/2/2025

113

Transportation Insight, LLC (5)

Revolver

12/3/2024

750

12/3/2024

750

Tranzonic

Revolver

—

—

3/27/2023

356

Unifeye Vision Partners (5)

Revolver

9/13/2025

793

9/13/2025

1,700

Unifeye Vision Partners (6)

Delayed Draw Term Loan

9/7/2023

1,199

9/7/2023

4,286

United Flow Technologies (7)

Delayed Draw Term Loan

10/29/2023

82

10/29/2023

3,750

United Flow Technologies (5)

Revolver

10/29/2027

1,600

10/29/2027

1,600

UP Acquisition Corp. (5)

Revolver

5/23/2024

807

5/23/2024

807

VetStrategy

Delayed Draw Term Loan

—

—

1/31/2022

419

Vital Care Buyer, LLC (5)

Revolver

10/19/2025

1,852

10/19/2025

2,222

WhiteHawk III Onshore Fund L.P.

Partnership Interest

7/5/2024

1,700

7/5/2024

4,208

Winxnet Holdings LLC (5)

Revolver

6/29/2023

163

6/29/2023

400

Winxnet Holdings LLC

Revolver

—

—

6/29/2023

250

Total

158,905

195,622

(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)

Unfunded commitments denominated in currencies other than USD have been converted to USD using the applicable foreign currency exchange rate as of December 31, 2022 and 2021.

(3)

Investment pays 0.38% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(4)

Investment pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(5)

Investment pays 0.75% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(6)

Investment pays 1.00% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(7)

Investment pays 1.25% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(8)

Investment pays 1.80% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(9)

Investment pays 1.95% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(10)

Investment pays 2.25% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(11)

Investment pays 4.25% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

(12)

Investment pays 5.00% unfunded commitment fee on delayed draw term loan and/or revolving credit facilities.

Other Commitments and Contingencies

In the normal course of business, the Company enters into contracts which provide a variety of representations and warranties, and that provide general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

Note 12. Financial Highlights

Below is the schedule of the Company’s financial highlights (in thousands, except share and per share data):



	For the years ended,
	2022			2021			2020			2019			2018
Per Share Data:(1)
Net asset value, beginning of period	$	21.12		$	19.88		$	19.50		$	19.43		$	20.10
Net investment income after tax		1.93			1.67			1.80			1.83			1.65
Net realized and unrealized gains (losses) on investments, asset acquisition and forward contracts, net of taxes		(1.43	)		1.27			0.18			(0.14	)		(0.89	)
Net increase (decrease) in net assets resulting from operations		0.50			2.94			1.98			1.69			0.76
Effect of equity issuances, net of share repurchases and rounding		—			0.01			0.04			0.03			0.06
Distributions declared from net investment income(2)		(1.79	)		(1.69	)		(1.64	)		(1.64	)		(1.47	)
Offering Costs		—			(0.02	)		—			(0.01	)		(0.02	)
Total increase (decrease) in net assets		(1.29	)		1.24			0.38			0.07			(0.67	)
Net asset value, end of period	$	19.83		$	21.12		$	19.88		$	19.50		$	19.43
Shares outstanding, end of period		30,887,360			30,887,360			20,862,314			13,358,289			8,597,116
Market value, end of period	$	12.78			17.60			14.57			—		—
Weighted average shares outstanding		30,887,360			28,477,771			27,681,757			17,344,640			10,719,485
Total return based on market value (3)		-18.45	%		32.46	%		1.47	%	—			—
Total return based on net asset value (4)		2.37	%		14.74	%		10.36	%		8.81	%		4.06	%
Ratio/Supplemental Data:
Net assets, end of period	$	612,541		$	652,285		$	560,000		$	406,917		$	259,579
Ratio of total net expenses to average net assets(5)		8.96	%		7.81	%		5.34	%		6.54	%		7.33	%
Ratio of net expenses (without incentive fees and interest and other debt expenses) to average net assets		3.26	%		3.02	%		2.24	%		2.50	%		3.06	%
Ratio of net investment income before taxes to average net assets		9.41	%		8.40	%		10.10	%		9.61	%		8.48	%
Ratio of interest and credit facility expenses to average net assets		5.01	%		3.33	%		3.10	%		4.03	%		4.01	%
Ratio of net incentive fees to average net assets		0.68	%		1.46	%		—			—			0.26	%
Portfolio turnover		21.52	%		41.64	%		28.01	%		23.97	%		27.89	%
Asset coverage ratio		192	%		201	%		217	%		225	%		209	%

(1)

Based on actual number of shares outstanding at the end of the corresponding period or the weighted average shares outstanding for the period, unless otherwise noted, as appropriate.

(2)

The per share data for distributions per share reflects the actual amount of distributions declared per share for the applicable periods.

(3)

Total return based on market value is calculated as the change in market value per share during the period, taking into account dividends, if any, reinvested in accordance with the Company’s dividend reinvestment plan.

(4)

Total return based on net asset value is calculated as the change in net asset value per share during the period plus declared dividends per share during the period, divided by the beginning net asset value per share, and not annualized.

(5)

The ratio of total expenses to average net assets in the table above reflects the Adviser’s voluntary waivers of its right to receive a portion of the management fees and income incentive fees with respect to the Company’s ownership in GACP II LP and WhiteHawk III Onshore Fund LP and a voluntary waiver of income incentive fees to the extent net investment income, excluding the effect of the GAAP incentive fee, falls short of the regular declared dividend on a full dollar basis. Excluding the effects of the voluntary waivers, the ratio of total expenses to average net assets would have been 9.04%, 7.83%, 5.37%, 6.58% and 7.36% for the years ended December 31, 2022, 2021, 2020, 2019 and 2018, respectively.

Senior Securities

Information about our senior securities (including debt securities and other indebtedness) is shown in the following table as of the fiscal years ended December 31 for the years indicated below. We had no senior securities outstanding as of December 31 of any fiscal years prior to those indicated below.


Class and Year	Total Amount Outstanding Exclusive of Treasury Securities(1)		Asset Coverage Per Unit(2)		Involuntary Liquidating Preference Per Unit(3)		Average Market Value Per Unit(4)
SPV Asset Facility
Fiscal 2022	$	233,000	$	1,917		-	N/A
Fiscal 2021	$	249,500	$	2,014		-	N/A
Fiscal 2020	$	260,210	$	2,166		-	N/A
Fiscal 2019	$	220,687	$	2,250		-	N/A
Fiscal 2018	$	159,629	$	2,085		-	N/A
Fiscal 2017	$	86,629	$	2,135		-	N/A
Fiscal 2016	$	47,629	$	2,347		-	N/A
Fiscal 2015	$	-	$	-		-	N/A
Revolving Credit Facility(5)
Fiscal 2022	$	-	$	-		-	N/A
Fiscal 2021	$	-	$	-		-	N/A
Fiscal 2020	$	-	$	-		-	N/A
Fiscal 2019	$	-	$	-		-	N/A
Fiscal 2018	$	-	$	-		-	N/A
Fiscal 2017	$	-	$	-		-	N/A
Fiscal 2016	$	47,810	$	2,347		-	N/A
Fiscal 2015	$	54,810	$	2,415		-	N/A
Revolving Credit Facility II(6)
Fiscal 2022	$	-	$	-		-	N/A
Fiscal 2021	$	-	$	-		-	N/A
Fiscal 2020	$	-	$	-		-	N/A
Fiscal 2019	$	-	$	-		-	N/A
Fiscal 2018	$	78,310	$	2,085		-	N/A
Fiscal 2017	$	65,310	$	2,135		-	N/A
Fiscal 2016	$	-	$	-		-	N/A
Fiscal 2015	$	-	$	-		-	N/A
Ally Corporate Revolving Facility(8)
Fiscal 2022	$	-	$	-		-	N/A
Fiscal 2021	$	-	$	-		-	N/A
Fiscal 2020	$	149,904	$	2,166		-	N/A
Fiscal 2019	$	104,754	$	2,250		-	N/A
Fiscal 2018	$	-	$	-		-	N/A
Fiscal 2017	$	-	$	-		-	N/A
Fiscal 2016	$	-	$	-		-	N/A
Fiscal 2015	$	-	$	-		-	N/A
SMBC Corporate Revolving Facility
Fiscal 2022	$	241,836	$	1,917		-	N/A
Fiscal 2021	$	203,437	$	2,014		-	N/A
Fiscal 2020	$	-	$	-		-	N/A
Fiscal 2019	$	-	$	-		-	N/A
Fiscal 2018	$	-	$	-		-	N/A
Fiscal 2017	$	-	$	-		-	N/A
Fiscal 2016	$	-	$	-		-	N/A
Fiscal 2015	$	-	$	-		-	N/A

151


Class and Year	Total Amount Outstanding Exclusive of Treasury Securities(1)		Asset Coverage Per Unit(2)		Involuntary Liquidating Preference Per Unit(3)		Average Market Value Per Unit(4)
2023 Unsecured Notes
Fiscal 2022	$	50,000	$	1,917		-	N/A
Fiscal 2021	$	50,000	$	2,014		-	N/A
Fiscal 2020	$	50,000	$	2,166		-	N/A
Fiscal 2019	$	-	$	-		-	N/A
Fiscal 2018	$	-	$	-		-	N/A
Fiscal 2017	$	-	$	-		-	N/A
Fiscal 2016	$	-	$	-		-	N/A
Fiscal 2015	$	-	$	-		-	N/A
2026 Unsecured Notes
Fiscal 2022	$	135,000	$	1,917		-	N/A
Fiscal 2021	$	135,000	$	2,014		-	N/A
Fiscal 2020	$	-	$	-		-	N/A
Fiscal 2019	$	-	$	-		-	N/A
Fiscal 2018	$	-	$	-		-	N/A
Fiscal 2017	$	-	$	-		-	N/A
Fiscal 2016	$	-	$	-		-	N/A
Fiscal 2015	$	-	$	-		-	N/A
InterNotes®(7)
Fiscal 2022	$	-	$	-		-	N/A
Fiscal 2021	$	-	$	-		-	N/A
Fiscal 2020	$	16,418	$	2,166		-	N/A
Fiscal 2019	$	-	$	-		-	N/A
Fiscal 2018	$	-	$	-		-	N/A
Fiscal 2017	$	-	$	-		-	N/A
Fiscal 2016	$	-	$	-		-	N/A
Fiscal 2015	$	-	$	-		-	N/A

(1)

Total amount of each class of senior securities outstanding at principal value at the end of the period presented.

(2)

The asset coverage ratio for a class of senior securities representing indebtedness is calculated as (i) the sum of (A) total assets at end of period and (B) other liabilities excluding total debt outstanding and accrued borrowing expenses at end of period, divided by (ii) the sum of total debt outstanding and accrued borrowing expenses at the end of the period. This asset coverage ratio is multiplied by $1,000 to determine the “Asset Coverage Per Unit”.

(3)

The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it.

(4)

Not applicable.

(5)

Our $50 million revolving credit facility with Natixis, New York Branch, as administrative agent and certain of its affiliates as lenders, dated as of June 29, 2015, which has been paid down in full and was terminated on June 29, 2017.

(6)

Our $75 million revolving credit facility with Capital One, National Association, as Administrative Agent, Lead Arranger, Managing Agent and Committed Lender, dated as of June 29, 2017, which has been paid down in full and was terminated on August 20, 2019.

(7)

We redeemed or paid down the remaining $16.4 million of InterNotes® during the first quarter of 2021.

(8)

Our $200 million revolving credit facility with Ally Bank, as Administrative Agent and Arranger, dated as of August 20, 2019, which has been paid down in full and was terminated on October 27, 2021.

ITEM 9. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of December 31, 2022, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our consolidated financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our consolidated financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a material misstatement of our consolidated financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2022, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

We will file a definitive Proxy Statement for our 2023 Annual Meeting of Stockholders with the Securities and Exchange Commission pursuant to Regulation 14A, no later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of our definitive Proxy Statement that specifically address the items set forth herein are incorporated by reference.

The information required by this item will be contained in the Company’s definitive Proxy Statement for its 2023 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2022, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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.

Each person whose signature appears below constitutes and appoints Jason A Breaux, Gerhard Lombard, George P. Hawley, Erik Barrios, and each of them, such person’s true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for such person and in such person’s name, place and stead, in any and all capacities, to sign one or more Annual Reports on Form 10-K for the fiscal year ended December 31, 2022, and any and all amendments thereto, and to file same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and each of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 22, 2023.


Maryland	47-3162282
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

11100 Santa Monica Blvd., Suite 2000, Los Angeles, CA	90025
(Address of Principal Executive Offices)	(Zip Code)


		Page
PART I
Item 1.	Business	6
Item 1A.	Risk Factors	20
Item 1B.	Unresolved Staff Comments	47
Item 2.	Properties	47
Item 3.	Legal Proceedings	47
Item 4.	Mine Safety Disclosures	47

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	48
Item 6.	Selected Financial Data	50
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 8.	Consolidated Financial Statements and Supplementary Data	67
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	157
Item 9A.	Controls and Procedures	157
Item 9B.	Other Information	157
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	157

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	158
Item 11.	Executive Compensation	158
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	158
Item 13.	Certain Relationships and Related Transactions, and Director Independence	158
Item 14.	Principal Accounting Fees and Services	158

PART IV
Item 15.	Exhibits, Financial Statement Schedules	159
Item 16.	Form 10-K Summary	161
	Signatures	162


	Net Asset		Price Range				High Sales Price Premium (Discount) to Net			Low Sales Price Premium (Discount) to Net			Cash Dividend
Period	Value (1)		High		Low		Asset Value (2)			Asset Value (2)			Per Share (3)
Year ended December 31, 2021
First Quarter	$	20.24	$	18.17	$	14.72		(10.2	)%		(27.3	)%	$	0.41
Second Quarter	$	20.98	$	19.95	$	17.05		(4.9	)%		(18.7	)%	$	0.41
Third Quarter	$	21.16	$	19.33	$	18.40		(8.6	)%		(13.0	)%	$	0.41
Fourth Quarter	$	21.12	$	20.90	$	17.60		(1.0	)%		(16.7	)%	$	0.61	(4)
Year ended December 31, 2022
First Quarter	$	21.18	$	18.47	$	17.16		(12.8	)%		(19.0	)%	$	0.41
Second Quarter	$	20.69	$	18.05	$	15.28		(12.8	)%		(26.1	)%	$	0.41
Third Quarter	$	20.16	$	18.10	$	15.02		(10.2	)%		(25.5	)%	$	0.41
Fourth Quarter	$	19.83	$	14.92	$	12.77		(24.8	)%		(35.6	)%	$	0.41


Date Declared	Record Date	Payment Date (1)	Per Share Amount		Total Amount
November 4, 2022	December 31, 2022	January 17, 2023	$	0.41	$	12.6
August 5, 2022	September 30, 2022	October 17, 2022	$	0.41	$	12.6
May 3, 2022	June 30, 2022	July 15, 2022	$	0.41	$	12.6
February 18, 2022	March 31, 2022	April 15, 2022	$	0.41	$	12.6
November 5, 2021	September 2, 2022	September 15, 2022	$	0.05	$	1.5
November 5, 2021	June 3, 2022	June 15, 2022	$	0.05	$	1.5
November 5, 2021	March 4, 2022	March 15, 2022	$	0.05	$	1.5
November 5, 2021	December 31, 2021	January 17, 2022	$	0.41	$	12.6
November 5, 2021	December 3, 2022	December 15, 2021	$	0.05	$	1.5
August 6, 2021	September 30, 2021	October 15, 2021	$	0.41	$	11.5
May 10, 2021	June 30, 2021	July 15, 2021	$	0.41	$	11.5
February 22, 2021	March 31, 2021	April 15, 2021	$	0.41	$	11.5
November 3, 2020	December 31, 2020	January 15, 2021	$	0.41	$	11.5
August 7, 2020	September 30, 2020	October 15, 2020	$	0.41	$	11.5
May 11, 2020	June 30, 2020	July 15, 2020	$	0.41	$	11.5
March 3, 2020	March 31, 2020	April 15, 2020	$	0.41	$	10.6


($ in millions)	As of December 31, 2022										As of December 31, 2021
	Cost		% of Cost			Fair Value		% of Fair Value			Cost		% of Cost			Fair Value		% of Fair Value
Performing	$	1,216.9		98.0	%	$	1,190.0		98.8	%	$	1,129.6		98.4	%	$	1,138.7		98.8	%
Non-Accrual		25.1		2.0	%		14.3		1.2	%		18.9		1.6	%		14.1		1.2	%
Total	$	1,242.0		100.0	%	$	1,204.3		100.0	%	$	1,148.5		100.0	%	$	1,152.8		100.0	%


Large accelerated filer	☐	Accelerated filer	☐

Non-Accelerated filer	☒	Smaller reporting company	☐

Emerging growth company	☒


($ in millions)	For the years ended
	December 31, 2022		December 31, 2021
New investments at cost:
Senior Secured First Lien	$	70.9	$	179.9
Unitranche First Lien		220.5		421.9
Unitranche First Lien - Last Out		4.0		—
Senior Secured Second Lien		2.7		24.0
Unsecured Debt		0.7		2.3
Equity & Other		4.5		13.4
LLC/LP Equity Interests		4.7		5.9
Total	$	308.0	$	647.4
Proceeds from investments sold or repaid:
Senior Secured First Lien	$	95.5	$	229.9
Unitranche First Lien		102.3		114.5
Unitranche First Lien - Last Out		5.1		—
Senior Secured Second Lien		9.3		57.8
Unsecured Debt		1.9		0.3
Equity & Other		16.7		55.5
LLC/LP Equity Interests		46.8		3.3
Total	$	277.6	$	461.3
Net increase (decrease) in portfolio	$	30.4	$	186.1


	As of December 31, 2022			As of December 31, 2021
Weighted average yield on income producing securities (at cost) (1)		10.8	%		7.5	%
Percentage of debt bearing a floating rate (at fair value)		98.8	%		98.5	%
Percentage of debt bearing a fixed rate (at fair value)		1.2	%		1.5	%
Number of portfolio companies	129			134


(in $ millions)	For the years ended,
	2022			2021
Total investment income	$	116.7		$	94.0
Total net expenses		57.0			46.4
Net investment income	$	59.7		$	47.6
Net realized gain (loss) on investments and forward contracts		4.9			32.6
Net unrealized appreciation (depreciation) on investments, forward contracts and foreign transactions		(48.3	)		4.8
Net realized and unrealized gains (losses)	$	(43.4	)	$	37.4
Benefit (provision) for taxes on realized and unrealized appreciation (depreciation) on investments		(0.8	)		(1.4	)
Net increase (decrease) in net assets resulting from operations	$	15.5		$	83.6


($ in millions)	For the years ended December 31,
	2022			2021
Realized losses on non-controlled and non-affiliated investments	$	(1.8	)	$	(4.4	)
Realized gains on non-controlled and non-affiliated investments		2.9			8.1
Realized losses on non-controlled and affiliated investments		—			—
Realized gains on non-controlled and affiliated investments		7.1			28.8
Realized losses on controlled investments		—			—
Realized gains on controlled investments		(3.3	)		—
Realized losses on foreign currency forwards		—			(0.2	)
Realized gains on foreign currency forwards		—			—
Realized losses on foreign currency transactions		(0.2	)		(0.2	)
Realized gains on foreign currency transactions		0.2			0.5
Net realized gains (losses) on investments	$	4.9		$	32.6
Change in unrealized depreciation on non-controlled and non-affiliated investments		(55.1	)		(19.8	)
Change in unrealized appreciation on non-controlled and non-affiliated investments		12.1			32.4
Change in unrealized depreciation on foreign currency translation		(0.8	)		—
Change in unrealized appreciation on foreign currency translation		—			—
Change in unrealized depreciation on non-controlled and affiliated investments		(10.7	)		(14.2	)
Change in unrealized appreciation on non-controlled and affiliated investments		1.3			3.7
Change in unrealized depreciation on controlled and affiliated investments		(2.3	)		—
Change in unrealized appreciation on controlled and affiliated investments		0.7			0.6
Change in unrealized depreciation on foreign currency forwards		—			—
Change in unrealized appreciation on foreign currency forwards		6.5			2.1
Net unrealized appreciation (depreciation) on investments		(48.3	)		4.8
Net realized and unrealized gains (losses) on investments and asset acquisition		(43.4	)		37.4


($ in millions)	For the years ended December 31,
	2022		2021
Borrowing interest expense	$	28.9	$	16.2
Unused facility fees		1.2		1.0
Amortization of financing costs		1.8		2.6
Total interest and credit facility expenses	$	31.9	$	19.8
Weighted average outstanding balance	$	673.5	$	530.7


Basis Point Change	Interest Income			Interest Expense			Net Interest Income (1)
Up 200 basis points		24.9			9.5			15.4
Up 100 basis points		12.4			4.7			7.7
Up 75 basis points		9.3			3.6			5.7
Up 50 basis points		6.2			2.4			3.8
Down 50 basis points		(6.2	)		(2.4	)		(3.8	)
Down 75 basis points		(9.3	)		(3.6	)		(5.7	)
Down 100 basis points		(12.4	)		(4.7	)		(7.7	)
Down 200 basis points		(24.9	)		(9.5	)		(15.4	)


Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)	68
Consolidated Statements of Assets and Liabilities as of December 31, 2022 and 2021	69
Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020	70
Consolidated Statements of Changes in Net Assets for the years ended December 31, 2022, 2021, and 2020	72
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020	75
Consolidated Schedules of Investments as of December 31, 2022 and 2021	77
Notes to Consolidated Financial Statements	124


	As of December 31, 2022			As of December 31, 2021
Assets
Investments, at fair value
Non-controlled non-affiliated (cost of $1,235,778 and $1,150,173, respectively)	$	1,208,501		$	1,165,897
Non-controlled affiliated (cost of $42,040 and $41,242, respectively)		43,080			51,701
Controlled (cost of $13,638 and $53,431, respectively)		11,375			52,768
Cash and cash equivalents		6,397			10,069
Restricted cash and cash equivalents		10,670			13,457
Interest and dividend receivable		9,945			6,763
Unrealized appreciation on foreign currency forward contracts		8,154			2,115
Deferred tax assets		91			42
Receivable for investments sold		5			14,871
Other assets		4,660			126

Total assets	$	1,302,878		$	1,317,809

Liabilities
Debt (net of deferred financing costs of $5,380 and $6,897)	$	654,456		$	631,040
Distributions payable		12,664			12,664
Interest and other debt financing costs payable		8,471			5,513
Management fees payable		4,056			3,830
Incentive fees payable		3,112			6,924
Deferred tax liabilities		899			956
Payable for investment purchased		514			-
Directors’ fees payable		151			114
Unrealized depreciation on foreign currency forward contracts		157			631
Accrued expenses and other liabilities		5,857			3,852
Total liabilities	$	690,337		$	665,524

Commitments and Contingencies (Note 8)

Net assets
Preferred stock, par value $0.001 per share (10,000 shares authorized, zero outstanding, respectively)	$	-		$	-
Common stock, par value $0.001 per share (200,000,000 shares authorized, 30,887,360 shares issued and outstanding, respectively)		31			31
Paid-in capital in excess of par value		675,008			666,162
Accumulated earnings (loss)		(62,498	)		(13,908	)
Total net assets	$	612,541		$	652,285
Total liabilities and net assets	$	1,302,878		$	1,317,809
Net asset value per share	$	19.83		$	21.12


Controlled investments		(1,600	)		602			(1,707	)
Foreign currency forward contracts		6,513			2,116			(1,324	)
Net realized and unrealized gains (losses) on investments		(43,379	)		37,404			8,806
Realized loss on asset acquisition		-			-			(3,825	)
Net realized and unrealized gains (losses) on investments and asset acquisition		(43,379	)		37,404			4,981
Benefit (provision) for taxes on realized gain on investments		(911	)		(1,177	)		46
Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments		105			(220	)		(235	)
Net increase (decrease) in net assets resulting from operations	$	15,544		$	83,633		$	54,672

Per common share data:
Net increase (decrease) in net assets resulting from operations per share (basic and diluted):	$	0.50		$	2.94		$	1.98
Net investment income per share (basic and diluted):	$	1.93		$	1.67		$	1.80
Weighted average shares outstanding (basic and diluted):		30,887,360			28,477,771			27,681,757


($ in millions)	December 31, 2022								December 31, 2021
	Aggregate Principal Amount Committed		Drawn Amount		Amount Available (1)		Carrying Value(2)		Aggregate Principal Amount Committed		Drawn Amount		Amount Available (1)		Carrying Value(2)(3)
SPV Asset Facility	$	350.0	$	233.0	$	117.0	$	233.0	$	350.0	$	249.5	$	100.5	$	249.5
SMBC Corporate Revolving Facility		350.0		241.8		108.2		241.8		300.0		203.4		96.6		203.4
2023 Unsecured Notes		50.0		50.0		—		50.0		50.0		50.0		—		50.0
2026 Unsecured Notes		135.0		135.0		—		135.0		135.0		135.0		—		135.0
Total Debt	$	885.0	$	659.8	$	225.2	$	659.8	$	835.0	$	637.9	$	197.1	$	637.9



	Common Stock
	Shares		Par Amount		Paid in Capital in Excess of Par Value		Accumulated Earnings (Loss)			Total Net Assets
Balance at December 31, 2021		30,887,360	$	31	$	666,162	$	(13,908	)	$	652,285
Net increase (decrease) in net assets resulting from operations:
Net investment income		—		—		—		59,729			59,729
Net realized gain (loss) on investments, foreign currency transactions and foreign currency forwards		—		—		—		4,945			4,945
Net change in unrealized appreciation (depreciation) on investments, foreign currency forward contracts and foreign currency translation		—		—		—		(48,324	)		(48,324	)
Benefit (provision) for taxes on realized gain on investments		—		—		—		(911	)		(911	)
Benefit (provision) for taxes on unrealized appreciation/(depreciation) on investments		—		—		—		105			105
Distributions from distributable earnings		—		—		—		(55,288	)		(55,288	)
Total increase (decrease) for the year ended December 31, 2022		30,887,360	$	31	$	666,162	$	(53,652	)	$	612,541
Tax reclassification of stockholders’ equity in accordance with GAAP (Note 11)		—	$	—	$	8,846	$	(8,846	)		-
Balance at December 31, 2022		30,887,360	$	31	$	675,008	$	(62,498	)	$	612,541


Cash flows from financing activities:
Issuance of common stock		—			52,632			44,297
Deemed contribution from the Advisor (Note 3)		—			5,386			—
Repurchase of common stock		—			—			(2,208	)
Deferred financing and debt issuance costs paid		(221	)		(4,851	)		(2,498	)
Distributions paid		(55,288	)		(47,728	)		(42,632	)
Equity offering cost		—			(523	)		—
Borrowings on credit facilities		339,215			654,974			352,342
Repayments on credit facilities		(318,111	)		(612,151	)		(302,227	)
Issuance of unsecured debt		—			135,000			50,000
Repayments on InterNotes ®		—			(16,418	)		(33,853	)
Net cash provided by (used for) financing activities		(34,405	)		166,321			63,221
Effect of exchange rate changes on cash denominated in foreign currency		(5	)		10			—
Net increase (decrease) in cash, cash equivalents, restricted cash and foreign currency		(6,459	)		8,677			1,422
Cash, cash equivalents, restricted cash and foreign currency, beginning of period		23,526			14,849			13,427
Cash, cash equivalents, restricted cash and foreign currency, end of period(1)	$	17,067		$	23,526		$	14,849

Supplemental and non-cash financing activities:
Cash paid during the period for interest	$	26,903		$	15,474		$	14,489
Cash paid during the period for taxes	$	1,974		$	2,176		$	692
Issuance of common stock pursuant to dividend reinvestment plan		—			—		$	589
Accrued but unpaid distributions	$	12,664		$	12,664		$	11,549
Issuance of shares in connection with asset acquisition (Note 14)		—			—		$	101,949


CRESCENT CAPITAL BDC, INC. Consolidated Schedule of Investments December 31, 2022 (in thousands, except share and per share data)
Company/Security/Country	Investment Type	Interest Term *	Interest Rate	Maturity/ Dissolution Date	Principal Amount, Par Value or Shares **		Cost			Percentage of Net Assets ***			Fair Value
Investments (1)(2)(3)
United States
Debt Investments
Automobiles & Components
Auveco Holdings (4)(5)	Unitranche First Lien Delayed Draw Term Loan			05/2028		—		(8	)		(0.0	)		(13	)
Auveco Holdings (5)	Unitranche First Lien Revolver	S + 550 (100 Floor)	9.83%	05/2028		150		145			0.0			141
Auveco Holdings	Unitranche First Lien Term Loan	S + 550 (100 Floor)	9.83%	05/2028		4,030		3,954			0.6			3,967
Continental Battery Company	Unitranche First Lien Term Loan	L + 675 (100 Floor)	11.48%	01/2027		7,193		7,087			1.1			6,586
Continental Battery Company	Unitranche First Lien Delayed Draw Term Loan	L + 675 (100 Floor)	11.48%	01/2027		2,652		2,631			0.4			2,428
Sun Acquirer Corp. (5)	Unitranche First Lien Delayed Draw Term Loan	L + 575 (75 Floor)	10.13%	09/2028		9,044		8,924			1.5			8,974
Sun Acquirer Corp. (4)(5)	Unitranche First Lien Revolver			09/2027		—		(30	)		(0.0	)		(13	)
Sun Acquirer Corp.	Unitranche First Lien Term Loan	L + 575 (75 Floor)	10.13%	09/2028		12,913		12,696			2.1			12,819
Sun Acquirer Corp.	Unitranche First Lien Term Loan	L + 575 (75 Floor)	10.13%	09/2028		2,475		2,431			0.4			2,457
						38,457		37,830			6.1			37,346

Capital Goods
Envocore Holding, LLC (7)(8)	Senior Secured First Lien Term Loan	750	7.50%	12/2025		6,875		6,816			1.1			6,875
Envocore Holding, LLC (7)(8)	Senior Secured Second Lien Term Loan	1000 PIK	10.00%	12/2026		7,674		6,827			0.7			4,500
Envocore Holding, LLC (4)(5)(7)(8)	Senior Secured First Lien Revolver	750		12/2025		—		(5	)		—			—
Eshipping	Senior Secured First Lien Term Loan	L + 500 (100 Floor)	9.38%	11/2027		6,867		6,751			1.1			6,867
Eshipping (4)(5)	Senior Secured First Lien Delayed Draw Term Loan			11/2027		—		(15	)		—			—
Eshipping (4)(5)	Senior Secured First Lien Revolver			11/2027		—		(19	)		—			—
Oliver Packaging LLC	Senior Secured First Lien Term Loan	S + 500 (100 Floor)	9.73%	07/2028		3,392		3,334			0.5			3,348
Oliver Packaging LLC (4)(5)	Senior Secured First Lien Revolver			07/2028		—		(8	)		(0.0	)		(6	)
Painters Supply & Equipment Company (5)	Unitranche First Lien Delayed Draw Term Loan	L + 550 (100 Floor)	10.23%	08/2027		176		169			0.0			151
Painters Supply & Equipment Company (5)	Unitranche First Lien Revolver	L + 550 (100 Floor)	10.23%	08/2027		201		194			0.0			184
Painters Supply & Equipment Company	Unitranche First Lien Term Loan	L + 550 (100 Floor)	10.23%	08/2027		2,024		1,991			0.3			1,954
Potter Electric Signal Company	Senior Secured First Lien Delayed Draw Term Loan	L + 475 (100 Floor)	9.94%	12/2025		1,108		1,098			0.2			1,078
Potter Electric Signal Company (4)(5)	Senior Secured First Lien Revolver			12/2024		—		(2	)		(0.0	)		(15	)


Hercules Borrower LLC	Unitranche First Lien Term Loan	L + 650 (100 Floor)	10.67%	12/2026	18,790	18,447	2.9	18,038
Hercules Borrower LLC (5)	Unitranche First Lien Revolver	L + 650 (100 Floor)	10.67%	12/2026	237	200	0.0	181
Hercules Borrower LLC (5)	Unitranche First Lien Delayed Draw Term Loan	L + 550 (100 Floor)	9.67%	12/2026	1,151	1,129	0.2	1,067


Claritas, LLC (4)(5)	Unitranche First Lien Revolver			03/2026		—				(16	)			(0.0	)			(6	)


Park Place Technologies, LLC (8)	Unsecured Debt	1250 PIK	12.50%	05/2029		885				885				0.1				727


Winxnet Holdings LLC	Unitranche First Lien Term Loan	S + 650 (100 Floor)	10.92%	12/2025		1,910				1,904				0.3				1,901


	Tenor
Reference Rate	Overnight	1 month	3 month	6 Month	12 Month
LIBOR (“L”)	4.32%	4.39%	4.77%	5.14%	5.48%
Prime (“P”)	7.50%	-	-	-	-
SOFR (“S”)	-	4.36%	4.59%	4.78%	4.87%
CDOR (“C”)	-	4.74%	4.82%	4.94%	-
EURIBOR (“E”)	-	1.87%	2.13%	2.69%	3.29%
SONIA (“SN”)	3.43%	-	-	-	-
BBSY ("B")	-	-	3.31%	-	-


Counterparty	Currency Purchased	Currency Sold	Settlement	Unrealized Appreciation (Depreciation)
Wells Fargo Bank, N.A.	USD 395	GBP 294	12/1/2023	$	37
Wells Fargo Bank, N.A.	USD 7,975	GBP 5,885	12/1/2023		809
Wells Fargo Bank, N.A.	USD 209	EUR 187	2/20/2024		5
Wells Fargo Bank, N.A.	USD 308	EUR 249	2/20/2024		35
Wells Fargo Bank, N.A.	USD 8,603	EUR 6,703	2/20/2024		1,236
Wells Fargo Bank, N.A.	USD 992	EUR 809	2/20/2024		105
Wells Fargo Bank, N.A.	USD 11,682	EUR 9,222	4/10/2024		1,529
Wells Fargo Bank, N.A.	USD 1,049	CAD 1,348	7/15/2025		42
Wells Fargo Bank, N.A.	USD 612	CAD 801	7/31/2025		15
Wells Fargo Bank, N.A.	USD 17	CAD 22	7/31/2025		1
Wells Fargo Bank, N.A.	USD 576	CAD 738	7/31/2025		24
Wells Fargo Bank, N.A.	USD 1,033	CAD 1,274	7/31/2025		77
Wells Fargo Bank, N.A.	USD 933	CAD 1,192	7/31/2025		42
Wells Fargo Bank, N.A.	USD 1,035	CAD 1,336	7/31/2025		38
Wells Fargo Bank, N.A.	USD 2,214	CAD 2,792	7/31/2025		125
Wells Fargo Bank, N.A.	USD 7,089	CAD 9,712	7/31/2025		(117	)
Wells Fargo Bank, N.A.	USD 775	CAD 994	7/31/2025		33
Wells Fargo Bank, N.A.	USD 193	CAD 244	7/31/2025		10
Wells Fargo Bank, N.A.	USD 789	CAD 1,005	7/31/2025		37
Wells Fargo Bank, N.A.	USD 325	CAD 422	7/31/2025		10
Wells Fargo Bank, N.A.	USD 635	CAD 864	7/31/2025		(7	)
Wells Fargo Bank, N.A.	USD 1,306	CAD 1,703	7/31/2025		36
Wells Fargo Bank, N.A.	USD 1,914	CAD 2,432	7/31/2025		95
Wells Fargo Bank, N.A.	USD 622	CAD 839	7/31/2025		(1	)
Wells Fargo Bank, N.A.	USD 493	CAD 632	7/31/2025		21
Wells Fargo Bank, N.A.	USD 768	EUR 623	2/20/2026		71
Wells Fargo Bank, N.A.	USD 1,944	GBP 1,362	6/3/2026		272
Wells Fargo Bank, N.A.	USD 170	GBP 121	6/3/2026		22
Wells Fargo Bank, N.A.	USD 3,074	GBP 2,237	6/3/2026		342
Wells Fargo Bank, N.A.	USD 371	GBP 272	6/3/2026		39
Wells Fargo Bank, N.A.	USD 17,790	GBP 12,870	8/24/2026		2,048
Wells Fargo Bank, N.A.	USD 1,107	SEK 11,583	8/20/2027		(32	)
Wells Fargo Bank, N.A.	USD 20,607	AUD 29,250	3/22/2028		987
Wells Fargo Bank, N.A.	USD 1,795	CAD 2,370	2/28/2031		11
Total Foreign Currency Exchange Contracts				$	7,997

AUD Australian Dollar ("A$") CAD Canadian Dollar ("C$") EUR Euro ("€") GBP Great British Pound ("£") PIK Payment In-Kind SEK Swedish Krona USD United States Dollar ("$")


Hercules Borrower LLC (4)(5)	Unitranche First Lien Revolver			12/2026	-	(46	)	-	44
Hercules Borrower LLC (4)(5)	Unitranche First Lien Delayed Draw Term Loan			12/2026	-	(21	)	-	20
Hercules Borrower LLC	Unitranche First Lien Term Loan	L + 550 (100 Floor)	6.50%	12/2026	247	242		0.0	249


Unifeye Vision Partners	Senior Secured First Lien Delayed Draw Term Loan	L + 500 (100 Floor)	6.00%	09/2025	3,038	2,991		0.5	3,038
Unifeye Vision Partners (4)(5)	Senior Secured First Lien Revolver			09/2025	-	(21	)	-	-
Unifeye Vision Partners	Senior Secured First Lien Term Loan	L + 500 (100 Floor)	6.00%	09/2025	5,292	5,223		0.8	5,292


Apps Associates LLC (4)(5)	Unitranche First Lien Delayed Draw Term Loan	07/2027	-	(8	)	-	-
Apps Associates LLC (4)(5)	Unitranche First Lien Revolver	07/2027	-	(15	)	-	-


Reporting Date	Counterparty	Gross Amount of Assets on the Consolidated Statements of Assets and Liabilities		Gross Amount of (Liabilities) on the Consolidated Statements of Assets and Liabilities			Net Amount of Assets or (Liabilities)		Collateral (Received) Pledged (1)		Net Amounts (2)
December 31, 2022	Wells Fargo Bank, N.A.	$	8,154	$	(157	)	$	7,997	$	—	$	7,997
December 31, 2021	Wells Fargo Bank, N.A.	$	2,115	$	(631	)	$	1,484	$	210	$	1,694


Date Declared	Record Date	Payment Date	Amount Per Share
November 4, 2022	December 30, 2022	January 17, 2023	$	0.41
August 5, 2022	September 30, 2022	October 17, 2022	$	0.41
May 3, 2022	June 30, 2022	July 15, 2022	$	0.41
February 18, 2022	March 31, 2022	April 15, 2022	$	0.41
November 5, 2021	September 2, 2022	September 15, 2022	$	0.05
November 5, 2021	June 3, 2022	June 15, 2022	$	0.05
November 5, 2021	March 4, 2022	March 15, 2022	$	0.05
November 5, 2021	December 3, 2021	December 15, 2021	$	0.05
November 5, 2021	December 31, 2021	January 17, 2022	$	0.41
August 6, 2021	September 30, 2021	October 15, 2021	$	0.41
May 10, 2021	June 30, 2021	July 15, 2021	$	0.41
February 22, 2021	March 31, 2021	April 15, 2021	$	0.41
November 3, 2020	December 31, 2020	January 15, 2021	$	0.41
August 7, 2020	September 30, 2020	October 15, 2020	$	0.41
May 11, 2020	June 30, 2020	July 15, 2020	$	0.41
March 3, 2020	March 31, 2020	April 15, 2020	$	0.41


		As of December 31, 2022			As of December 31, 2021
Tax Cost		$	1,295,847		$	1,260,862
Gross Unrealized Appreciation		$	9,274		$	34,877
Gross Unrealized Depreciation			(42,164	)		(25,373	)
	Net Unrealized Investment Appreciation (Depreciation)	$	(32,890	)	$	9,504


Consideration Paid by the Company
Common stock issued by the Company(1)	$	101,963
Cash Consideration paid by the Company		9,043
Transaction costs		7,250
Total Purchase Price	$	118,256
Assets (Liabilities) Acquired
Investment portfolio (2)	$	195,682
Cash		3,409
Portfolio receivables		1,003
Other receivable		395
InterNotes®		(50,271)
Secured credit facility		(34,558)
Borrowing expense payable		(834)
Other payables		(395)
Net Assets Acquired	$	114,431
Realized loss on asset acquisition	$	3,825


1.	Financial Statements—Financial statements are included in Item 1. See the Index to the Consolidated Financial Statements on page F-1 of this annual report on Form 10-K.

2	Financial Statement Schedules—None. We have omitted financial statements schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements included in this annual report on Form 10-K.

3.	Exhibits—The following is a list of all exhibits filed as a part of this annual report on Form 10-K, including those incorporated by reference.

2.1	Agreement and Plan of Merger, dated August 12, 2019, by and among the Company, Atlantis Acquisition Sub, Inc., Alcentra Capital Corporation and Crescent Cap Advisors, LLC (formerly CBDC Advisors, LLC) (incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-K filed on August 13, 2019).

2.2	Amendment No. 1, dated September 27, 2019, to Agreement and Plan of Merger by and among the Company, Atlantis Acquisition Sub, Inc., Alcentra Capital Corporation and Crescent Cap Advisors, LLC (incorporated by reference to Annex B to the Company’s Preliminary Proxy Statement filed on October 3, 2019.

2.3	Agreement and Plan of Merger, dated September 27, 2019, by and between the Company and Crescent Reincorporation Sub, Inc. (incorporated by reference to Exhibit 2.3 to the Company’s quarterly report on Form 10-Q filed on November 7, 2019).

2.4	Agreement and Plan of Merger, dated as of October 3, 2022, by and among the Company, Echelon Acquisition Sub, Inc., Echelon Acquisition Sub LLC, First Eagle Alternative Capital BDC, Inc. and Crescent Cap Advisors, LLC (incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-K filed on October 4,2022).

3.1	Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on January 30, 2020).

3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on January 30, 2020).

4.1	Amended and Restated Dividend Reinvestment Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K filed on March 4, 2020).

4.2	Description of Securities (filed herewith).

10.1	Investment Advisory Agreement by and between Crescent Capital BDC, Inc. and Crescent Cap Advisors, LLC, dated as of January 5, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 6, 2021).

10.2	Amended and Restated Administration Agreement by and between the Company and CCAP Administration LLC (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on February 3, 2020).

10.3	Trademark License Agreement, dated April 30, 2015, by and between the Company and Crescent (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.4	Form of Indemnification Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on January 31, 2020).

10.5	Form of Advisory Fee Waiver Agreement by and between the Company and the Adviser (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.6	Amended and Restated Advisory Fee Waiver Agreement, dated August 7, 2018, by and between the Company and the Adviser (incorporated by reference to Exhibit 10.11 to the Company’s current report on Form 10-Q filed on August 10, 2018).

10.7	Form of Subscription Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.8	Custodial Agreement, dated as of May 21, 2021, by and between the Company and U.S. Bank National Association (incorporated by reference to Exhibit 10.9 to the Company’s current report on Form 10-Q filed on August 11, 2021).



10.9	Transaction Support Agreement, dated August 12, 2019, between Crescent Capital BDC, Inc. and Crescent Cap Advisors, LLC (f/k/a CBDC Advisors, LLC) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 814-01132), filed on August 13, 2019).

10.10	Conformed Loan and Security Agreement (conformed through Amendment No. 4) (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 17, 2020).

10.11	Fifth Amendment to Loan and Security Agreement, dated June 21, 2021, among Crescent Capital BDC, Inc., as the collateral manager, seller and equityholder, Crescent Capital BDC Funding, LLC, as the borrower, the banks and other financial institutions from time to time party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent, collateral agent, and lender (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on June 25, 2021).

10.12	Master Note Purchase Agreement, dated July 30, 2020, by and among Crescent Capital BDC, Inc. and the Purchasers signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 30, 2020).

10.13	Form of 5.95% Series 2020A Senior Notes due July 30, 2023 (included in Exhibit 10.12).

10.14	First Supplement and Amendment to Note Purchase Agreement, dated February 17, 2021, by and among Crescent Capital BDC, Inc. and the Purchasers signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 17, 2021).

10.15	Form of 4.00% SERIES 2021A Senior Note Due February 17, 2026 (included in Exhibit 10.14).

10.16	Senior Secured Revolving Credit Agreement dated October 27, 2021, by and among Crescent Capital BDC, Inc. as the Borrower, certain lenders party thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, arranger, and lender (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 29, 2021).

10.17	First Amendment to Senior Secured Revolving Credit Agreement dated March 4, 2022, by and among Crescent Capital BDC, Inc. as the Borrower, certain lenders party thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, arranger, and lender (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 7, 2022).

10.18	First Omnibus Amendment to the Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement dated January 13, 2023, by and among Crescent Capital BDC, Inc. as the Borrower, certain lenders party thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, arranger, and lender (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 18, 2023).

14.1	Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Form 10-K filed on March 4, 2020).

21.1	Subsidiaries of Crescent Capital BDC Inc. (filed herewith).

23.1	Consent of Independent Registered Public Accounting Firm (filed herewith).

31.1	Certification of Chief Executive Officer, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2	Certification of Chief Financial Officer, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32	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 (filed herewith).
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	Crescent Capital BDC, Inc.

Date: February 22, 2023	By:	/s/ Jason A. Breaux
		Jason A. Breaux
		Chief Executive Officer

Date: February 22, 2023	By:	/s/ Gerhard Lombard
		Gerhard Lombard
		Chief Financial Officer


Signature	Title


/s/ Jason A. Breaux	Chief Executive Officer
Jason A. Breaux


/s/ Gerhard Lombard	Chief Financial Officer
Gerhard Lombard

/s/ George G. Strong, Jr.	Director and Chairman of the Audit Committee
George G. Strong, Jr.

/s/ Steven F. Strandberg	Director
Steven F. Strandberg

/s/ Michael S. Segal	Director
Michael S. Segal

/s/ Kathleen Briscoe	Director
Kathleen Briscoe

/s/ Susan Yun Lee	Director
Susan Yun Lee