10-Q 1 a19-17620_110q.htm 10-Q

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended September 30, 2019

 

OR

 

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

 

Commission file number: 814-01175

 

BAIN CAPITAL SPECIALTY FINANCE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

81-2878769

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

200 Clarendon Street, 37th Floor
Boston, MA

(Address of principal executive offices)

 

02116
(Zip Code)

 

(617) 516-2000

(Registrant’s telephone number, including area code)

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

BCSF

 

New York Stock Exchange

 

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

 

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 o No o

 

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

 

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Smaller reporting companyo

 

Emerging growth company x

 

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

 

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

 

As of November 6, 2019, the registrant had 51,649,812.27 shares of common stock, $0.001 par value, outstanding.

 

 

 


Table of Contents

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

4

 

 

 

Item 1.

Consolidated Financial Statements

4

 

 

 

 

Consolidated Statements of Assets and Liabilities as of September 30, 2019 (unaudited) and December 31, 2018

4

 

 

 

 

Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 (unaudited)

5

 

 

 

 

Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2019 and 2018 (unaudited)

6

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)

7

 

 

 

 

Consolidated Schedules of Investments as of September 30, 2019 (unaudited) and December 31, 2018

8

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

17

 

 

 

Item 2.

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

51

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

79

 

 

 

Item 4.

Controls and Procedures

80

 

 

 

PART II

OTHER INFORMATION

81

 

 

 

Item 1.

Legal Proceedings

81

 

 

 

Item 1A.

Risk Factors

81

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

81

 

 

 

Item 3.

Defaults Upon Senior Securities

81

 

 

 

Item 4.

Mine Safety Disclosures

81

 

 

 

Item 5.

Other Information

81

 

 

 

Item 6.

Exhibits

82

 

 

 

Signatures

83

 

2


Table of Contents

 

FORWARD-LOOKING STATEMENTS

 

Statements contained in this Quarterly Report on Form 10-Q (the “Quarterly Report”) (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Company, BCSF Advisors, LP (the “Advisor”) and/or Bain Capital Credit, LP and its affiliated advisers (collectively, “Bain Capital Credit”). Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Quarterly Report constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors we identify in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2018 and in our filings with the Securities and Exchange Commission (the “SEC”).

 

Although we believe that the assumptions on which these forward-looking statements are based 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, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Quarterly Report because we are an investment company.

 

3


Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

Bain Capital Specialty Finance, Inc.

 

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

 

 

 

As of

 

As of

 

 

 

September 30, 2019

 

December 31, 2018

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

Non-controlled/non-affiliate investments (amortized cost of $2,456,038 and $1,449,749, respectively)

 

$

2,431,395

 

$

1,422,837

 

Non-controlled/affiliate investment (amortized cost of $6,720 and $6,720, respectively)

 

6,720

 

6,720

 

Controlled affiliate investment (amortized cost of $66,298 and $296,648, respectively)

 

68,619

 

298,249

 

Cash and cash equivalents

 

70,637

 

14,693

 

Foreign cash (cost of $1,066 and $589, respectively)

 

992

 

591

 

Restricted cash

 

86,402

 

17,987

 

Collateral on forward currency exchange contracts

 

64

 

4

 

Deferred financing costs

 

3,471

 

4,018

 

Interest receivable on investments

 

18,600

 

6,249

 

Prepaid insurance

 

 

1

 

Receivable for sales and paydowns of investments

 

28,070

 

1,634

 

Other assets

 

2,147

 

 

Unrealized appreciation on forward currency exchange contracts

 

9,308

 

9,322

 

Dividend receivable

 

1,037

 

8,709

 

Total Assets

 

$

2,727,462

 

$

1,791,014

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $4,685 and $2,040, respectively)

 

$

1,657,578

 

$

634,925

 

Offering costs payable

 

1,731

 

1,820

 

Interest payable

 

12,381

 

4,835

 

Payable for investments purchased

 

3,033

 

119,166

 

Base management fee payable

 

6,328

 

2,950

 

Incentive fee payable

 

3,567

 

3,300

 

Accounts payable and accrued expenses

 

3,443

 

1,281

 

Distributions payable

 

21,176

 

21,108

 

Total Liabilities

 

1,709,237

 

789,385

 

 

 

 

 

 

 

Commitments and Contingencies (See Note 10)

 

 

 

 

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

 

$

 

$

 

Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 51,649,812 and 51,482,137 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

 

52

 

51

 

Paid in capital in excess of par value

 

1,037,577

 

1,034,255

 

Total distributable earnings (loss)

 

(19,404

)

(32,677

)

Total Net Assets

 

1,018,225

 

1,001,629

 

Total Liabilities and Total Net assets

 

$

2,727,462

 

$

1,791,014

 

 

 

 

 

 

 

Net asset value per share

 

$

19.71

 

$

19.46

 

 

See Notes to Consolidated Financial Statements

 

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Table of Contents

 

Bain Capital Specialty Finance, Inc.

 

Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

 

 

 

For the Three
Months Ended
September 30,

 

For the Nine
Months Ended
September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Income

 

 

 

 

 

 

 

 

 

Investment income from non-controlled/non-affiliate investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

50,710

 

$

20,271

 

$

126,037

 

$

48,707

 

Dividend income

 

46

 

 

62

 

 

Other income

 

236

 

92

 

627

 

300

 

Total investment income from non-controlled/non-affiliate investments

 

50,992

 

20,363

 

126,726

 

49,007

 

Investment income from controlled affiliate investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

781

 

96

 

1,023

 

195

 

Dividend income

 

915

 

6,204

 

15,425

 

16,345

 

Other income

 

 

 

4

 

 

Total investment income from controlled affiliate investments

 

1,696

 

6,300

 

16,452

 

16,540

 

Total investment income

 

52,688

 

26,663

 

143,178

 

65,547

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Interest and debt financing expenses

 

19,427

 

6,524

 

46,592

 

16,138

 

Base management fee

 

8,910

 

4,639

 

23,644

 

11,643

 

Incentive fee

 

4,330

 

3,242

 

12,905

 

6,158

 

Professional fees

 

789

 

900

 

1,615

 

1,740

 

Directors fees

 

159

 

68

 

370

 

203

 

Other general and administrative expenses

 

1,243

 

330

 

3,672

 

954

 

Total expenses before fee waivers

 

34,858

 

15,703

 

88,798

 

36,836

 

Base management fee waiver

 

(2,582

)

(2,319

)

(6,450

)

(5,821

)

Incentive fee waiver

 

(763

)

(620

)

(2,745

)

(1,624

)

Total expenses, net of fee waivers

 

31,513

 

12,764

 

79,603

 

29,391

 

Net investment income

 

21,175

 

13,899

 

63,575

 

36,156

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses)

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on non-controlled/non-affiliate investments

 

27

 

(3,175

)

(1,394

)

(5,021

)

Net realized gain on controlled affiliate investments

 

 

 

265

 

 

Net realized gain (loss) on foreign currency transactions

 

122

 

(103

)

(190

)

(367

)

Net realized gain (loss) on forward currency exchange contracts

 

346

 

177

 

11,042

 

(2,696

)

Net change in unrealized appreciation (depreciation) on foreign currency translation

 

162

 

(17

)

461

 

(43

)

Net change in unrealized appreciation (depreciation) on forward currency exchange contracts

 

9,135

 

1,529

 

(14

)

9,123

 

Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliate investments

 

(12,373

)

7,124

 

2,269

 

(2,197

)

Net change in unrealized appreciation (depreciation) on controlled affiliate investments

 

(395

)

(443

)

720

 

1,562

 

Total net gains (losses)

 

(2,976

)

5,092

 

13,159

 

361

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

18,199

 

$

18,991

 

$

76,734

 

$

36,517

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Data

 

 

 

 

 

 

 

 

 

Basic and diluted net investment income per common share

 

$

0.41

 

$

0.33

 

$

1.23

 

$

1.02

 

Basic and diluted increase in net assets resulting from operations per common share

 

$

0.35

 

$

0.46

 

$

1.49

 

$

1.03

 

Basic and diluted weighted average common shares outstanding

 

51,649,812

 

41,733,013

 

51,587,779

 

35,461,497

 

 

See Notes to Consolidated Financial Statements

 

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Bain Capital Specialty Finance, Inc.

 

Consolidated Statements of Changes in Net Assets

(in thousands, except share and per share data)

(Unaudited)

 

 

 

For the Three
Months Ended
September 30,

 

For the Nine
Months Ended
September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Operations:

 

 

 

 

 

 

 

 

 

Net investment income

 

$

21,175

 

$

13,899

 

$

63,575

 

$

36,156

 

Net realized gain (loss)

 

495

 

(3,101

)

9,723

 

(8,084

)

Net change in unrealized appreciation (depreciation)

 

(3,471

)

8,193

 

3,436

 

8,445

 

Net increase in net assets resulting from operations

 

18,199

 

18,991

 

76,734

 

36,517

 

Stockholder distributions:

 

 

 

 

 

 

 

 

 

Distributions from distributable earnings

 

(21,176

)

(17,967

)

(63,460

)

(42,061

)

Net decrease in net assets resulting from stockholder distributions

 

(21,176

)

(17,967

)

(63,460

)

(42,061

)

Capital share transactions:

 

 

 

 

 

 

 

 

 

Issuance of common stock, net

 

 

125,973

 

 

376,948

 

Reinvestment of stockholder distributions

 

 

2,408

 

3,322

 

5,594

 

Net increase in net assets resulting from capital share transactions

 

 

128,381

 

3,322

 

382,542

 

 

 

 

 

 

 

 

 

 

 

Total increase (decrease) in net assets

 

(2,977

)

129,405

 

16,596

 

376,998

 

Net assets at beginning of period

 

1,021,202

 

754,556

 

1,001,629

 

506,963

 

Net assets at end of period

 

$

1,018,225

 

$

883,961

 

$

1,018,225

 

$

883,961

 

 

 

 

 

 

 

 

 

 

 

Net asset value per common share

 

$

19.71

 

$

20.17

 

$

19.71

 

$

20.17

 

Common stock outstanding at end of period

 

51,649,812

 

43,821,596

 

51,649,812

 

43,821,596

 

 

See Notes to Consolidated Financial Statements

 

6


Table of Contents

 

Bain Capital Specialty Finance, Inc.

 

Consolidated Statements of Cash Flows

(in thousands, except share and per share data)

(Unaudited)

 

 

 

For the Nine Months
Ended September 30,

 

 

 

2019

 

2018

 

Cash flows from operating activities

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

76,734

 

$

36,517

 

Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:

 

 

 

 

 

Purchases of investments

 

(1,068,880

)

(675,407

)

Proceeds from principal payments and sales of investments

 

730,260

 

195,036

 

Net realized loss from investments

 

1,129

 

5,021

 

Net realized loss on foreign currency transactions

 

190

 

367

 

Net change in unrealized (appreciation) depreciation on forward currency exchange contracts

 

14

 

(9,123

)

Net change in unrealized (appreciation) depreciation on investments

 

(2,989

)

635

 

Net change in unrealized (appreciation) depreciation on foreign currency translation

 

(461

)

43

 

Increase in investments due to PIK

 

(35

)

 

Accretion of discounts and amortization of premiums

 

(2,884

)

(1,256

)

Amortization of deferred financing costs and debt issuance costs

 

1,106

 

1,074

 

Changes in operating assets and liabilities:

 

 

 

 

 

Collateral on forward currency exchange contracts

 

(60

)

3,598

 

Interest receivable on investments

 

(12,351

)

(1,593

)

Prepaid insurance

 

1

 

135

 

Distribution receivable

 

 

(61

)

Dividend receivable

 

7,672

 

(6,084

)

Other assets

 

(2,147

)

 

Interest payable

 

7,546

 

(217

)

Base management fee payable

 

3,378

 

1,075

 

Incentive fee payable

 

267

 

1,913

 

Accounts payable and accrued expenses

 

2,162

 

909

 

Excise tax payable

 

 

(5

)

Net cash used in operating activities

 

(259,348

)

(447,423

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Borrowings on debt

 

1,149,248

 

635,700

 

Repayments on debt

 

(700,929

)

(487,361

)

Payments of financing costs

 

(409

)

 

Payments of offering costs

 

(89

)

 

Payments of debt issuance costs

 

(2,795

)

(1,683

)

Proceeds from issuance of common stock

 

 

376,948

 

Stockholder distributions paid

 

(60,070

)

(26,242

)

Net cash provided by financing activities

 

384,956

 

497,362

 

 

 

 

 

 

 

Net increase in cash, foreign cash, restricted cash and cash equivalents

 

125,608

 

49,939

 

Effect of foreign currency exchange rates

 

(848

)

(385

)

Cash, foreign cash, restricted cash and cash equivalents, beginning of period

 

33,271

 

140,918

 

Cash, foreign cash, restricted cash and cash equivalents, end of period

 

$

158,031

 

$

190,472

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash interest paid during the period

 

$

37,940

 

$

15,281

 

Cash paid for excise taxes during the period

 

$

 

$

5

 

Supplemental disclosure of non-cash information:

 

 

 

 

 

Reinvestment of stockholder distributions

 

$

3,322

 

$

5,594

 

Distribution to owner from ABCS JV

 

$

346,329

 

$

 

 

 

 

 

 

 

 

 

 

As of September 30,

 

 

 

2019

 

2018

 

Cash

 

$

70,637

 

$

151,070

 

Restricted cash

 

86,402

 

37,736

 

Foreign cash

 

992

 

1,666

 

Total cash, foreign cash, restricted cash, and cash equivalents shown in the consolidated statements of cash flows

 

$

158,031

 

$

190,472

 

 

See Notes to Consolidated Financial Statements

 

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Table of Contents

 

Bain Capital Specialty Finance, Inc.

Consolidated Schedule of Investments

As of September 30, 2019

(In thousands)

(Unaudited)

 

Control Type

 

Industry

 

Portfolio Company

 

Investment Type

 

Spread Above Index (1)

 

Interest Rate

 

Maturity Date

 

Principal/Shares (9)

 

Cost

 

Market Value

 

% of NAV (4)

 

Non-Controlled/Non-Affiliate Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

Forming & Machining Industries Inc. (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.25%

 

10.35

%

10/9/2026

 

$

6,540

 

6,479

 

6,278

 

 

 

 

 

 

 

Forming & Machining Industries Inc. (12) (18) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.10

%

10/9/2025

 

$

16,820

 

16,688

 

16,274

 

 

 

 

 

 

 

Kellstrom Aerospace Group, Inc (14) (19) (25)

 

Equity Interest

 

 

 

 

1

 

1,963

 

1,963

 

 

 

 

 

 

 

Kellstrom Commercial Aerospace, Inc. (2) (3) (5) (18) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

 

 

7/1/2025

 

$

 

(37

)

(38

)

 

 

 

 

 

 

Kellstrom Commercial Aerospace, Inc. (3) (18) (19) (26)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.00%

 

8.24

%

7/1/2025

 

$

2,964

 

2,840

 

2,836

 

 

 

 

 

 

 

Kellstrom Commercial Aerospace, Inc. (12) (18) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.32

%

7/1/2025

 

$

34,035

 

33,369

 

33,354

 

 

 

 

 

 

 

MRO Holdings, Inc. (6) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.10

%

6/4/2026

 

$

3,243

 

3,227

 

3,202

 

 

 

 

 

 

 

Novetta, LLC (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.05

%

10/17/2022

 

$

6,598

 

6,507

 

6,477

 

 

 

 

 

 

 

Salient CRGT, Inc. (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.05

%

2/28/2022

 

$

12,814

 

12,864

 

12,173

 

 

 

 

 

 

 

TCFI Aevex LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 6.25%

 

8.36

%

5/13/2025

 

$

2,488

 

2,430

 

2,440

 

 

 

 

 

 

 

TCFI Aevex LLC (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 6.25%

 

8.55

%

5/13/2025

 

$

38,612

 

37,931

 

37,936

 

 

 

 

 

 

 

TECT Power Holdings, LLC (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.50%

 

10.54

%

12/27/2021

 

$

14,758

 

14,596

 

14,758

 

 

 

 

 

 

 

WCI-HSG HOLDCO, LLC (14) (19) (25)

 

Preferred equity

 

 

 

 

675

 

675

 

756

 

 

 

 

 

 

 

WCI-HSG Purchaser, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

6.54

%

2/24/2025

 

$

672

 

636

 

652

 

 

 

 

 

 

 

WCI-HSG Purchaser, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

2/24/2025

 

$

17,824

 

17,586

 

17,690

 

 

 

 

 

 

 

WP CPP Holdings, LLC. (12) (15) (21) (29)

 

Second Lien Senior Secured Loan

 

L+ 7.75%

 

10.01

%

4/30/2026

 

$

11,724

 

11,618

 

11,675

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense Total

 

$

169,372

 

$

168,426

 

16.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

CST Buyer Company (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/1/2023

 

$

 

(8

)

 

 

 

 

 

 

 

CST Buyer Company (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.04

%

3/1/2023

 

$

9,162

 

9,072

 

9,162

 

 

 

 

 

 

 

JHCC Holdings, LLC (2) (3) (5) (18) (19) (28)

 

First Lien Senior Secured Loan - Delayed Draw

 

 

 

9/9/2025

 

$

 

(42

)

(85

)

 

 

 

 

 

 

JHCC Holdings, LLC (3) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.50%

 

7.54

%

9/9/2025

 

$

283

 

241

 

255

 

 

 

 

 

 

 

JHCC Holdings, LLC (7) (18) (19)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.60

%

9/9/2025

 

$

29,751

 

29,320

 

29,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive Total

 

$

38,583

 

$

38,785

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking

 

Green Street Parent, LLC (2) (3) (5) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

8/27/2025

 

$

 

(48

)

(48

)

 

 

 

 

 

 

Green Street Parent, LLC (12) (18) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.29

%

8/27/2026

 

$

14,516

 

14,229

 

14,226

 

 

 

 

 

 

 

Transaction Network Services, Inc. (12) (15) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.26

%

8/15/2022

 

$

18,365

 

18,152

 

18,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Total

 

$

32,333

 

$

32,350

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco

 

Hearthside Food Solutions, LLC

 

Corporate Bond

 

 

8.50

%

6/1/2026

 

$

10,000

 

9,809

 

7,525

 

 

 

 

 

 

 

NPC International, Inc. (12) (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

9.54

%

4/18/2025

 

$

9,159

 

9,189

 

2,828

 

 

 

 

 

 

 

NPC International, Inc. (15)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

5.54

%

4/19/2024

 

$

4,949

 

4,977

 

3,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco Total

 

$

23,975

 

$

13,494

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Equipment

 

Dorner Manufacturing Corp. (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/15/2022

 

$

 

(14

)

 

 

 

 

 

 

 

Dorner Manufacturing Corp. (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

7.79

%

3/15/2023

 

$

7,890

 

7,757

 

7,890

 

 

 

 

 

 

 

DXP Enterprises, Inc. (6) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

6.79

%

8/29/2023

 

$

5,139

 

5,100

 

5,162

 

 

 

 

 

 

 

East BCC Coinvest II,LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

1,419

 

1,419

 

1,419

 

 

 

 

 

 

 

Electronics For Imaging, Inc. (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 9.00%

 

11.10

%

7/23/2027

 

$

13,070

 

12,239

 

12,090

 

 

 

 

 

 

 

EXC Holdings III Corp. (12) (15) (21) (29)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

9.83

%

12/1/2025

 

$

8,241

 

8,252

 

8,269

 

 

 

 

 

 

 

FCG Acquisitions, Inc. (14) (19) (25)

 

Preferred equity

 

 

 

 

4

 

4,251

 

5,029

 

 

 

 

 

 

 

FFI Holdings I Corp (2) (3) (5) (15) (19) (28)

 

First Lien Senior Secured Loan - Delayed Draw

 

 

 

1/24/2025

 

$

 

(73

)

(43

)

 

 

 

 

 

 

FFI Holdings I Corp (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.75%

 

7.94

%

1/24/2025

 

$

1,876

 

1,804

 

1,835

 

 

 

 

 

 

 

FFI Holdings I Corp (7) (12) (15) (19) (30)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.18

%

1/24/2025

 

$

63,572

 

63,023

 

63,095

 

 

 

 

 

 

 

Tidel Engineering, L.P. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/1/2023

 

$

 

 

 

 

 

 

 

 

 

Tidel Engineering, L.P. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.25%

 

8.35

%

3/1/2024

 

$

38,302

 

38,302

 

38,302

 

 

 

 

 

 

 

Velvet Acquisition B.V. (6) (18) (19) (21)

 

Second Lien Senior Secured Loan

 

EURIBOR+ 8.00%

 

8.00

%

4/17/2026

 

6,013

 

7,322

 

6,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Equipment Total

 

$

149,382

 

$

149,604

 

14.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals, Plastics & Rubber

 

AP Plastics Group, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

8/2/2021

 

$

 

 

 

 

 

 

 

 

 

AP Plastics Group, LLC (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.35

%

8/1/2022

 

$

21,237

 

20,904

 

21,025

 

 

 

 

 

 

 

Niacet b.v. (6) (15) (19) (21)

 

First Lien Senior Secured Loan

 

EURIBOR+ 4.50%

 

5.50

%

2/1/2024

 

3,687

 

3,950

 

4,010

 

 

 

 

 

 

 

Niacet Corporation (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

2/1/2024

 

$

2,121

 

2,106

 

2,116

 

 

 

 

 

 

 

Plaskolite, Inc. (15) (29)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.31

%

12/15/2025

 

$

8,955

 

8,790

 

8,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals, Plastics & Rubber Total

 

$

35,750

 

$

35,658

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction & Building

 

Chase Industries, Inc. (3) (15) (19) (21)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 4.00%

 

6.10

%

5/12/2025

 

$

1,118

 

1,103

 

1,099

 

 

 

 

 

 

 

Chase Industries, Inc. (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.10

%

5/12/2025

 

$

11,831

 

11,781

 

11,772

 

 

 

 

 

 

 

Crown Subsea (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.10

%

11/3/2025

 

$

13,065

 

12,886

 

13,114

 

 

 

 

 

 

 

PP Ultimate Holdings B, LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

1

 

1,352

 

1,508

 

 

 

 

 

 

 

Profile Products LLC (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/20/2024

 

$

 

(67

)

(10

)

 

 

 

 

 

 

Profile Products LLC (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

7.85

%

12/20/2024

 

$

35,091

 

34,428

 

35,003

 

 

 

 

 

 

 

Regan Development Holdings Limited (6) (17) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 6.50%

 

7.00

%

4/18/2022

 

2,051

 

2,235

 

2,242

 

 

 

 

 

 

 

Regan Development Holdings Limited (6) (17) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 6.50%

 

7.00

%

4/18/2022

 

665

 

755

 

727

 

 

 

 

 

 

 

Regan Development Holdings Limited (6) (17) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 6.50%

 

7.00

%

4/18/2022

 

6,226

 

6,700

 

6,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction & Building Total

 

$

71,173

 

$

72,261

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Durable

 

New Milani Group LLC (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.35

%

6/6/2024

 

$

17,143

 

17,004

 

16,800

 

 

 

 

 

 

 

Stanton Carpet Corp. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

11/21/2022

 

$

 

 

 

 

 

 

 

 

 

Stanton Carpet Corp.(7) (15) (19) (23)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.63

%

11/21/2022

 

$

22,503

 

22,503

 

22,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Durable Total

 

$

39,507

 

$

39,303

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Non-Durable

 

FineLine Technologies, Inc. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

11/4/2022

 

$

 

(25

)

(13

)

 

 

 

 

 

 

FineLine Technologies, Inc. (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.35

%

11/4/2022

 

$

31,464

 

31,294

 

31,307

 

 

 

 

 

 

 

Kronos Acquisition Holdings Inc. (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 7.00%

 

9.26

%

5/15/2023

 

$

2,653

 

2,609

 

2,647

 

 

 

 

 

 

 

Kronos Acquisition Holdings Inc.

 

Corporate Bond

 

 

9.00

%

8/15/2023

 

$

10,000

 

9,441

 

8,850

 

 

 

 

 

 

 

Kronos Acquisition Holdings Inc. (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.26

%

5/15/2023

 

$

13,181

 

13,142

 

12,539

 

 

 

 

 

 

 

MND Holdings III Corp (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

5.60

%

6/19/2024

 

$

11,672

 

11,698

 

11,395

 

 

 

 

 

 

 

RoC Opco LLC (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

2/25/2025

 

$

 

(185

)

 

 

 

 

 

 

 

RoC Opco LLC (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 7.25%

 

9.35

%

2/25/2025

 

$

40,793

 

39,861

 

40,793

 

 

 

 

 

 

 

Solaray, LLC (7) (3) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 6.00%

 

7.95

%

9/11/2023

 

$

13,811

 

13,811

 

13,811

 

 

 

 

 

 

 

Solaray, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

6.73

%

9/9/2022

 

$

9,690

 

9,641

 

9,690

 

 

 

 

 

 

 

Solaray, LLC (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.12

%

9/11/2023

 

$

42,720

 

42,720

 

42,720

 

 

 

 

 

 

 

WU Holdco, Inc. (3) (7) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 5.50%

 

7.62

%

3/26/2026

 

$

834

 

778

 

834

 

 

 

 

 

 

 

WU Holdco, Inc. (3) (5) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/26/2025

 

$

 

(58

)

 

 

 

 

 

 

 

WU Holdco, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.60

%

3/26/2026

 

$

39,805

 

38,998

 

39,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Non-Durable Total

 

$

213,725

 

$

214,378

 

21.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Containers, Packaging, & Glass

 

Automate Intermediate Holdings II S.à r.l. (6) (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.75%

 

9.79

%

7/22/2027

 

$

11,870

 

11,634

 

11,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Containers, Packaging, & Glass Total

 

$

11,634

 

$

11,633

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Electricity

 

Infinite Electronics International Inc. (12) (18) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.04

%

7/2/2025

 

$

19,803

 

19,789

 

19,704

 

 

 

 

 

 

 

Infinite Electronics International Inc. (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.00%

 

10.04

%

7/2/2026

 

$

2,480

 

2,433

 

2,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Electricity Total

 

$

22,222

 

$

22,184

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Oil & Gas

 

Amspec Services, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 3.75%

 

8.62

%

7/2/2024

 

$

425

 

369

 

425

 

 

 

 

 

 

 

Amspec Services, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.25%

 

8.35

%

7/2/2024

 

$

44,211

 

43,695

 

44,211

 

 

 

 

 

 

 

Blackbrush Oil & Gas, L.P. (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 8.00%

 

10.46

%

2/9/2024

 

$

32,075

 

31,570

 

31,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Oil & Gas Total

 

$

75,634

 

$

76,390

 

7.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental Industries

 

Adler & Allan Group Limited (6) (17) (19) (21) (22)

 

First Lien Last Out

 

GBP LIBOR+ 8.25% (2% PIK)

 

8.96

%

9/30/2022

 

£

13,012

 

16,467

 

15,992

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental Industries Total

 

$

16,467

 

$

15,992

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Insurance

 

Ivy Finco Limited (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 5.00%

 

5.71

%

5/19/2025

 

£

7,217

 

8,940

 

8,626

 

 

 

 

 

 

 

Ivy Finco Limited (3)(6) (18) (19)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 5.00%

 

5.97

%

5/19/2025

 

£

1,822

 

2,038

 

2,000

 

 

 

 

 

 

 

Margaux Acquisition Inc. (7) (3) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 6.00%

 

8.32

%

12/19/2024

 

$

2,191

 

2,017

 

2,191

 

 

 

 

8


Table of Contents

 

 

 

 

 

Margaux Acquisition, Inc. (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/19/2024

 

$

 

(50

)

 

 

 

 

 

 

 

Margaux Acquisition Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.32

%

12/19/2024

 

$

28,989

 

28,436

 

28,989

 

 

 

 

 

 

 

Margaux UK Finance Limited (3) (5) (6) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/19/2024

 

£

 

(11

)

 

 

 

 

 

 

 

Margaux UK Finance Limited (6) (7) (15) (19)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 6.00%

 

7.00

%

12/19/2024

 

£

7,726

 

9,886

 

9,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Insurance Total

 

$

51,256

 

$

51,301

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Real Estate

 

Spectre (Carrisbrook House) Limited (6) (15) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 7.50%

 

8.50

%

8/9/2021

 

9,300

 

10,759

 

10,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Real Estate Total

 

$

10,759

 

$

10,140

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forest Products & Paper

 

Solenis International LLC (18) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.50%

 

10.62

%

6/26/2026

 

$

10,601

 

10,294

 

10,177

 

 

 

 

 

 

 

Solenis International LLC (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.12

%

6/26/2025

 

$

13,281

 

13,227

 

12,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forest Products & Paper Total

 

$

23,521

 

$

23,134

 

2.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare & Pharmaceuticals

 

CB Titan Holdings, Inc. (14) (19) (25)

 

Preferred equity

 

 

 

 

1,953

 

1,953

 

3,300

 

 

 

 

 

 

 

Clarkson Eyecare, LLC (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 6.25%

 

8.37

%

4/2/2021

 

$

23,176

 

22,731

 

22,828

 

 

 

 

 

 

 

Clarkson Eyecare, LLC (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 6.25%

 

8.39

%

4/2/2021

 

$

15,322

 

15,025

 

15,093

 

 

 

 

 

 

 

Clinical Innovations, LLC (3) (15) (19) (22)

 

First Lien Last Out - Revolver

 

L+ 5.50%

 

7.54

%

10/17/2022

 

$

432

 

416

 

426

 

 

 

 

 

 

 

Clinical Innovations, LLC (12) (15) (19) (22) (29)

 

First Lien Last Out

 

L+ 5.50%

 

7.54

%

10/17/2023

 

$

10,944

 

10,762

 

10,889

 

 

 

 

 

 

 

CPS Group Holdings, Inc. (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/3/2025

 

$

 

(67

)

 

 

 

 

 

 

 

CPS Group Holdings, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.57

%

3/3/2025

 

$

55,905

 

55,366

 

55,905

 

 

 

 

 

 

 

Datix Bidco Limited (2) (3) (5) (6) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

10/28/2024

 

£

 

(23

)

(9

)

 

 

 

 

 

 

Datix Bidco Limited (6) (18) (19) (21)

 

Second Lien Senior Secured Loan

 

GBP LIBOR+ 7.75%

 

8.69

%

4/27/2026

 

£

12,134

 

16,302

 

14,913

 

 

 

 

 

 

 

Datix Bidco Limited (6) (18)(19) (21)

 

First Lien Senior Secured Loan

 

BBSW+ 4.50%

 

6.11

%

4/28/2025

 

AUD

4,212

 

3,203

 

2,821

 

 

 

 

 

 

 

Golden State Buyer, Inc. (18) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

6.79

%

6/22/2026

 

$

15,268

 

15,119

 

15,115

 

 

 

 

 

 

 

Great Expressions Dental Centers PC (3) (13) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.75% (0.5% PIK)

 

6.79

%

9/28/2022

 

$

557

 

548

 

411

 

 

 

 

 

 

 

Great Expressions Dental Centers PC (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.45

%

9/28/2023

 

$

7,600

 

7,527

 

6,650

 

 

 

 

 

 

 

Island Medical Management Holdings, LLC (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 6.50%

 

8.54

%

9/1/2022

 

$

9,187

 

9,094

 

8,452

 

 

 

 

 

 

 

Medical Depot Holdings, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.60

%

1/3/2023

 

$

16,109

 

14,768

 

11,473

 

 

 

 

 

 

 

Mendel Bidco, Inc. (18) (19) (21)

 

First Lien Senior Secured Loan

 

EURIBOR+ 4.50%

 

4.50

%

6/17/2027

 

10,033

 

11,126

 

10,666

 

 

 

 

 

 

 

Mendel Bidco, Inc. (18) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.60

%

6/17/2027

 

$

19,966

 

19,479

 

19,467

 

 

 

 

 

 

 

Mertus 522. GmbH (2) (3) (5) (6) (18) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

 

 

5/15/2026

 

 

(388

)

(394

)

 

 

 

 

 

 

Mertus 522. GmbH (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

EURIBOR+ 5.75%

 

5.75

%

5/15/2026

 

22,468

 

24,435

 

23,823

 

 

 

 

 

 

 

TecoStar Holdings, Inc. (12) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.50%

 

10.53

%

11/1/2024

 

$

9,472

 

9,281

 

9,472

 

 

 

 

 

 

 

U.S. Anesthesia Partners, Inc. (12) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.25%

 

9.29

%

6/23/2025

 

$

16,520

 

16,325

 

16,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare & Pharmaceuticals Total

 

$

252,982

 

$

247,821

 

24.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Tech Industries

 

AMI US Holdings Inc. (3) (6) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.50%

 

7.57

%

4/1/2024

 

$

977

 

945

 

942

 

 

 

 

 

 

 

AMI US Holdings Inc. (6) (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.60

%

4/1/2025

 

$

13,190

 

12,943

 

12,927

 

 

 

 

 

 

 

Appriss Holdings, Inc. (3) (5) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

5/30/2025

 

$

 

(65

)

 

 

 

 

 

 

 

Appriss Holdings, Inc. (7) (18) (19)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.60

%

5/29/2026

 

$

48,998

 

48,372

 

48,998

 

 

 

 

 

 

 

CMI Marketing Inc (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

5/24/2023

 

$

 

(15

)

 

 

 

 

 

 

 

CMI Marketing Inc (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

5/24/2024

 

$

15,294

 

15,169

 

15,294

 

 

 

 

 

 

 

Drilling Info Holdings, Inc (12) (18) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.29

%

7/30/2025

 

$

22,666

 

22,586

 

22,572

 

 

 

 

 

 

 

Element Buyer, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.25%

 

7.30

%

7/19/2024

 

$

1,417

 

1,365

 

1,417

 

 

 

 

 

 

 

Element Buyer, Inc. (3) (7) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 5.25%

 

7.30

%

7/18/2025

 

$

3,375

 

3,480

 

3,488

 

 

 

 

 

 

 

Element Buyer, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.30

%

7/18/2025

 

$

37,868

 

38,218

 

38,247

 

 

 

 

 

 

 

Elo Touch Solutions, Inc. (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 6.50%

 

8.53

%

12/15/2025

 

$

17,969

 

17,140

 

17,902

 

 

 

 

 

 

 

 

Everest Bidco (6) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

GBP LIBOR+ 7.50%

 

8.26

%

7/3/2026

 

£

10,216

 

13,087

 

12,116

 

 

 

 

 

 

 

Impala Private Investments, LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

1,500

 

 

140

 

 

 

 

 

 

 

Lighthouse Network, LLC (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.76

%

12/2/2024

 

$

19,924

 

19,874

 

19,948

 

 

 

 

 

 

 

MeridianLink, Inc. (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.04

%

5/30/2025

 

$

1,830

 

1,808

 

1,809

 

 

 

 

 

 

 

Netsmart Technologies, Inc. (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

5.79

%

4/19/2023

 

$

10,762

 

10,782

 

10,681

 

 

 

 

 

 

 

Netsmart Technologies, Inc. (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

9.54

%

10/19/2023

 

$

2,749

 

2,749

 

2,735

 

 

 

 

 

 

 

nThrive, Inc. (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 9.75%

 

11.79

%

4/20/2023

 

$

8,000

 

7,987

 

7,600

 

 

 

 

 

 

 

Park Place Technologies (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.00%

 

10.04

%

3/30/2026

 

$

6,733

 

6,685

 

6,682

 

 

 

 

 

 

 

Park Place Technologies (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.04

%

3/31/2025

 

$

10,572

 

10,539

 

10,541

 

 

 

 

 

 

 

Symplr Software, Inc. (3) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 6.00%

 

8.10

%

11/30/2023

 

$

4,036

 

3,980

 

4,011

 

 

 

 

 

 

 

Symplr Software, Inc. (7) (18) (19)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.10

%

11/28/2025

 

$

61,214

 

60,337

 

60,908

 

 

 

 

 

 

 

Utimaco, Inc. (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.62

%

8/9/2027

 

$

14,849

 

14,482

 

14,478

 

 

 

 

 

 

 

Ventiv Topco, Inc. (14) (19) (25)

 

Equity Interest

 

 

 

 

28

 

2,833

 

2,833

 

 

 

 

 

 

 

Ventiv Holdco, Inc. (2) (3) (5) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

9/3/2025

 

$

 

(50

)

(34

)

 

 

 

 

 

 

Ventiv Holdco, Inc. (7) (18) (19)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.63

%

9/3/2025

 

$

24,360

 

23,999

 

24,117

 

 

 

 

 

 

 

VPARK BIDCO AB (6) (19) (21)

 

First Lien Senior Secured Loan

 

CIBOR+ 4.00%

 

4.75

%

3/10/2025

 

DKK

56,999

 

9,152

 

8,324

 

 

 

 

 

 

 

VPARK BIDCO AB (6) (16) (19) (21)

 

First Lien Senior Secured Loan

 

NIBOR+ 4.00%

 

5.77

%

3/10/2025

 

NOK

74,020

 

9,189

 

8,145

 

 

 

 

 

 

 

Zywave, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.00%

 

7.27

%

11/17/2022

 

$

429

 

418

 

416

 

 

 

 

 

 

 

Zywave, Inc. (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.26

%

11/17/2022

 

$

17,415

 

17,331

 

17,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Tech Industries Total

 

$

375,320

 

$

374,478

 

36.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel, Gaming & Leisure

 

Aimbridge Acquisition Co., Inc. (12) (18) (19)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

9.60

%

2/1/2027

 

$

13,068

 

12,801

 

12,839

 

 

 

 

 

 

 

Captain D’s LLC (3) (15) (19) (24)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

7.48

%

12/15/2023

 

$

1,037

 

1,024

 

1,023

 

 

 

 

 

 

 

Captain D’s LLC (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

12/15/2023

 

$

13,071

 

12,969

 

12,973

 

 

 

 

 

 

 

K-Mac Holdings Corp. (12) (18)

 

Second Lien Senior Secured Loan

 

L+ 6.75%

 

8.79

%

3/16/2026

 

$

1,200

 

1,197

 

1,193

 

 

 

 

 

 

 

Quidditch Acquisition, Inc. (12) (15) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 7.00%

 

9.04

%

3/21/2025

 

$

19,072

 

19,053

 

19,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel, Gaming & Leisure Total

 

$

47,044

 

$

47,386

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Advertising, Printing & Publishing

 

A-L Parent LLC (12) (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.25%

 

9.30

%

12/2/2024

 

$

4,050

 

4,019

 

4,030

 

 

 

 

 

 

 

Ansira Holdings, Inc. (3) (7) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 5.75%

 

7.79

%

12/20/2022

 

$

2,944

 

2,933

 

2,688

 

 

 

 

 

 

 

Ansira Holdings, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 4.00%

 

9.00

%

12/20/2022

 

$

1,643

 

1,643

 

1,643

 

 

 

 

 

 

 

Ansira Holdings, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

7.79

%

12/20/2022

 

$

35,968

 

35,880

 

33,900

 

 

 

 

 

 

 

Cambium Learning Group, Inc. (12) (18) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

12/18/2025

 

$

12,233

 

11,672

 

11,988

 

 

 

 

 

 

 

Cruz Bay Publishing, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

P+ 5.00%

 

10.00

%

2/28/2020

 

$

880

 

853

 

880

 

 

 

 

 

 

 

Cruz Bay Publishing (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 3.00%

 

8.00

%

2/28/2020

 

$

2,267

 

2,267

 

2,267

 

 

 

 

 

 

 

Cruz Bay Publishing, Inc. (7) (15) (19) (27)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.01

%

2/28/2020

 

$

4,895

 

4,895

 

4,895

 

 

 

 

 

 

 

Cruz Bay Publishing, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.75%

 

8.86

%

2/28/2020

 

$

1,635

 

1,635

 

1,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Advertising, Printing & Publishing Total

 

$

65,797

 

$

63,926

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Broadcasting & Subscription

 

Vital Holdco Limited (6) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.80

%

5/29/2026

 

$

35,357

 

34,519

 

34,473

 

 

 

 

 

 

 

Vital Holdco Limited (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

EURIBOR+ 5.25%

 

5.25

%

5/29/2026

 

7,917

 

8,606

 

8,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Broadcasting & Subscription Total

 

$

43,125

 

$

42,889

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Diversified & Production

 

Efficient Collaborative Retail Marketing Company, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

6/15/2022

 

$

 

 

 

 

 

 

 

 

 

Efficient Collaborative Retail Marketing Company, LLC (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.75%

 

8.85

%

6/15/2022

 

$

15,095

 

15,194

 

15,208

 

 

 

 

 

 

 

Efficient Collaborative Retail Marketing Company, LLC (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.75%

 

8.85

%

6/15/2022

 

$

9,891

 

9,956

 

9,965

 

 

 

 

 

 

 

Getty Images, Inc. (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.56

%

2/19/2026

 

$

21,957

 

21,760

 

21,920

 

 

 

 

 

 

 

International Entertainment Investments Limited (6) (18) (21) (19)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 4.75%

 

5.66

%

5/31/2023

 

£

8,686

 

10,630

 

10,675

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Diversified & Production Total

 

$

57,540

 

$

57,768

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Batteries Plus Holding Corporation (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

7/6/2022

 

$

 

 

 

 

 

 

 

 

 

Batteries Plus Holding Corporation (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.75%

 

8.79

%

7/6/2022

 

$

29,330

 

29,330

 

29,330

 

 

 

 

 

 

 

Calceus Acquisition, Inc. (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.54

%

2/12/2025

 

$

9,055

 

8,987

 

9,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Total

 

$

38,317

 

$

38,393

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Business

 

Advantage Sales & Marketing Inc. (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.29

%

7/23/2021

 

$

11,641

 

11,476

 

10,900

 

 

 

 

 

 

 

AMCP Clean Acquisition Company, LLC (12) (18) (21)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 4.25%

 

6.34

%

6/16/2025

 

$

3,904

 

3,892

 

3,865

 

 

 

 

 

 

 

AMCP Clean Acquisition Company, LLC (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.34

%

6/16/2025

 

$

16,134

 

16,089

 

15,973

 

 

 

 

 

 

 

Comet Bidco Limited (6) (18) (21)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 5.00%

 

5.71

%

9/30/2024

 

£

10,261

 

13,113

 

12,421

 

 

 

 

 

 

 

Hightower Holding, LLC (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

 

 

1/31/2025

 

$

 

(10

)

(11

)

 

 

 

 

 

 

Hightower Holding, LLC (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.04

%

1/31/2025

 

$

26,261

 

26,142

 

26,195

 

 

 

 

 

 

 

LegalZoom.com, Inc. (18) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

11/21/2024

 

$

7,860

 

7,788

 

7,902

 

 

 

 

 

 

 

New Insight Holdings, Inc. (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

7.75

%

12/20/2024

 

$

20,374

 

19,934

 

20,472

 

 

 

 

 

 

 

SumUp Holdings Luxembourg S.à.r.l. (6) (15) (19) (21)

 

First Lien Senior Secured Loan

 

EURIBOR+ 8.00%

 

9.00

%

8/1/2024

 

15,957

 

17,646

 

17,006

 

 

 

 

 

 

 

SumUp Holdings Luxembourg S.à.r.l. (2) (3) (5)(6) (15) (19)

 

First Lien Senior Secured Loan

 

 

 

8/1/2024

 

 

(411

)

(416

)

 

 

 

9


Table of Contents

 

 

 

 

 

TEI Holdings Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 5.00%

 

10.00

%

12/20/2022

 

$

992

 

992

 

992

 

 

 

 

 

 

 

TEI Holdings Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.10

%

12/20/2023

 

$

62,279

 

62,017

 

62,279

 

 

 

 

 

 

 

Valet Waste Holdings, Inc (12) (18) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.04

%

9/29/2025

 

$

26,437

 

26,377

 

26,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Business Total

 

$

205,045

 

$

203,882

 

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Consumer

 

GI Chill Acquisition LLC (18) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.10

%

8/6/2025

 

$

11,865

 

11,827

 

11,836

 

 

 

 

 

 

 

Pearl Intermediate Parent LLC (18) (29)

 

Second Lien Senior Secured Loan

 

L+ 6.25%

 

8.29

%

2/13/2026

 

$

2,571

 

2,587

 

2,519

 

 

 

 

 

 

 

Surrey Bidco Limited (6) (17) (19) (21)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 6.00%

 

6.78

%

5/11/2026

 

£

5,000

 

6,131

 

5,961

 

 

 

 

 

 

 

The Knot Worldwide Inc. (18) (19) (21) (29)

 

Second Lien Senior Secured Loan

 

L+ 8.25%

 

10.29

%

12/21/2026

 

$

6,187

 

6,130

 

6,125

 

 

 

 

 

 

 

The Knot Worldwide Inc. (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.54

%

12/19/2025

 

$

12,358

 

12,377

 

12,373

 

 

 

 

 

 

 

Trafalgar Bidco Limited (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 5.00%

 

5.72

%

9/11/2024

 

£

6,011

 

7,718

 

7,166

 

 

 

 

 

 

 

Zeppelin BidCo Pty Limited (6) (18)(19) (21)

 

First Lien Senior Secured Loan

 

AUD LIBOR+ 6.00%

 

7.18

%

6/28/2024

 

AUD

20,621

 

13,932

 

13,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Consumer Total

 

$

60,702

 

$

59,478

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunications

 

Conterra Ultra Broadband Holdings, Inc. (18) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.55

%

4/30/2026

 

$

6,467

 

6,436

 

6,491

 

 

 

 

 

 

 

Horizon Telcom, Inc. (3) (12) (15) (19) (29)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 4.50%

 

6.60

%

6/15/2023

 

$

250

 

233

 

233

 

 

 

 

 

 

 

Horizon Telcom, Inc. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

6/15/2023

 

$

 

(3

)

(1

)

 

 

 

 

 

 

Horizon Telcom, Inc. (12) (15) (19) (29)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.60

%

6/15/2023

 

$

13,764

 

13,602

 

13,627

 

 

 

 

 

 

 

Masergy Holdings, Inc. (15) (29)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

9.60

%

12/16/2024

 

$

857

 

863

 

843

 

 

 

 

 

 

 

Masergy Holdings, Inc. (15) (29)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.35

%

12/15/2023

 

$

681

 

679

 

671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunications Total

 

$

21,810

 

$

21,864

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Cargo

 

A&R Logistics, Inc. (3) (15) (19) (31)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.75%

 

8.70

%

5/5/2025

 

$

748

 

630

 

672

 

 

 

 

 

 

 

A&R Logistics, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.07

%

5/5/2025

 

$

44,086

 

43,214

 

43,535

 

 

 

 

 

 

 

A&R Logistics, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

7.85

%

5/5/2025

 

$

2,479

 

2,429

 

2,448

 

 

 

 

 

 

 

ARL Holdings, LLC. (14) (19) (25)

 

Equity Interest

 

 

 

 

 

397

 

377

 

 

 

 

 

 

 

ARL Holdings, LLC. (14) (19) (25)

 

Equity Interest

 

 

 

 

8

 

8

 

6

 

 

 

 

 

 

 

ENC Holding Corporation (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.10

%

5/30/2025

 

$

10,296

 

10,283

 

10,176

 

 

 

 

 

 

 

Grammer Investment Holdings LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

1,011

 

1,011

 

1,082

 

 

 

 

 

 

 

Grammer Investment Holdings LLC (19) (25)

 

Preferred Equity

 

10% PIK

 

10.00

%

 

6

 

646

 

663

 

 

 

 

 

 

 

Grammer Investment Holdings LLC (14) (19) (25)

 

Warrants

 

 

 

 

122

 

 

129

 

 

 

 

 

 

 

Grammer Purchaser, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

6.60

%

9/30/2024

 

$

105

 

108

 

100

 

 

 

 

 

 

 

Grammer Purchaser, Inc. (12) (15) (19) (29)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

6.70

%

9/30/2024

 

$

10,232

 

10,068

 

10,181

 

 

 

 

 

 

 

Omni Logistics, LLC (15) (19)

 

Subordinated Debt

 

L+ 11.50%

 

13.54

%

1/19/2024

 

$

15,000

 

14,744

 

14,963

 

 

 

 

 

 

 

PS HoldCo, LLC (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

6.79

%

3/13/2025

 

$

23,336

 

23,324

 

22,679

 

 

 

 

 

 

 

Toro Private Investments II, L.P. (6) (14) (19) (25)

 

Equity Interest

 

 

 

 

3,090

 

3,090

 

3,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Cargo Total

 

$

109,952

 

$

110,101

 

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Consumer

 

Direct Travel, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/1/2021

 

$

 

 

 

 

 

 

 

 

 

Direct Travel, Inc. (3) (7) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

L+ 6.50%

 

9.62

%

12/1/2021

 

$

1,351

 

1,351

 

1,351

 

 

 

 

 

 

 

Direct Travel, Inc. (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw

 

 

 

12/1/2021

 

$

 

(122

)

 

 

 

 

 

 

 

Direct Travel, Inc. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.50%

 

8.65

%

12/1/2021

 

$

49,794

 

49,794

 

49,794

 

 

 

 

 

 

 

Toro Private Holdings III, Ltd (6) (12) (18) (29)

 

Second Lien Senior Secured Loan

 

L+ 9.00%

 

11.04

%

5/28/2027

 

$

8,998

 

8,496

 

7,874

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Consumer Total

 

$

59,519

 

$

59,019

 

5.8

%

 

10


Table of Contents

 

 

 

Utilities: Electric

 

CSVC Acquisition Corp

 

Corporate Bond

 

 

7.75

%

6/15/2025

 

$

13,478

 

12,568

 

9,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utilities: Electric Total

 

$

12,568

 

$

9,637

 

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

Abracon Group Holding, LLC. (14) (19) (25)

 

Equity Interest

 

 

 

 

2

 

1,800

 

1,488

 

 

 

 

 

 

 

Abracon Group Holding, LLC. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

7/18/2024

 

$

 

(34

)

(35

)

 

 

 

 

 

 

Abracon Group Holding, LLC. (7) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.08

%

7/18/2024

 

$

36,185

 

36,013

 

35,733

 

 

 

 

 

 

 

Aramsco, Inc. (3) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.25%

 

7.29

%

8/28/2024

 

$

1,468

 

1,424

 

1,400

 

 

 

 

 

 

 

Aramsco, Inc. (7) (18) (19)

 

First Lien Senior Secured Loan

 

L+ 5.25%

 

7.29

%

8/28/2024

 

$

24,349

 

23,949

 

23,862

 

 

 

 

 

 

 

Armor Group, LP (14) (19) (25)

 

Equity Interest

 

 

 

 

10

 

1,012

 

1,058

 

 

 

 

 

 

 

PetroChoice Holdings, Inc. (12) (15) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.26

%

8/19/2022

 

$

10,574

 

10,465

 

10,257

 

 

 

 

 

 

 

PetroChoice Holdings, Inc. (15) (29)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.26

%

8/19/2022

 

$

3,601

 

3,574

 

3,493

 

 

 

 

 

 

 

PT Holdings, LLC (12) (15) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.04

%

12/9/2024

 

$

21,507

 

21,472

 

21,005

 

 

 

 

 

 

 

Specialty Building Products Holdings, LLC (12) (18) (29)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

7.79

%

10/1/2025

 

$

16,859

 

16,766

 

16,902

 

 

 

 

 

 

 

SRS Distribution Inc. (18) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.29

%

5/23/2025

 

$

4,665

 

4,583

 

4,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale Total

 

$

121,024

 

$

119,720

 

11.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Non-Affiliate Investments Total

 

$

2,456,038

 

$

2,431,395

 

238.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Affiliate Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco

 

ADT Pizza, LLC (10) (14) (19) (25)

 

Equity Interest

 

 

 

 

6,720

 

6,720

 

6,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco Total

 

$

6,720

 

$

6,720

 

0.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Affiliate Investments Total

 

$

6,720

 

$

6,720

 

0.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled Affiliate Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

ACC Holdco, LLC (10) (11) (19) (25)

 

Preferred equity

 

 

16.00

%

 

11,706

 

11,702

 

11,706

 

 

 

 

 

 

 

Air Comm Corporation LLC (10) (11) (12) (18) (19) (21) (29)

 

First Lien Senior Secured Loan

 

L+ 6.50%

 

8.60

%

6/30/2025

 

$

27,366

 

26,560

 

26,546

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (Off I), LLC (6) (10) (11) (19) (20) (25)

 

Equity Interest

 

 

 

 

11,863

 

11,863

 

13,294

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20) (25)

 

Equity Interest

 

 

 

 

1,116

 

1,116

 

2,016

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20)

 

First Lien Senior Secured Loan

 

 

10.00

%

6/2/2022

 

$

6,349

 

6,349

 

6,349

 

 

 

 

 

 

 

Gale Aviation (Offshore) Co (6) (10) (11) (19) (25)

 

Equity Interest

 

 

 

 

8,708

 

8,708

 

8,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense Total

 

$

66,298

 

$

68,619

 

6.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled Affiliate Investments Total

 

$

66,298

 

$

68,619

 

6.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments Total

 

$

2,529,056

 

$

2,506,734

 

246.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

Goldman Sachs Financial Square Government Fund Institutional Share Class

 

Cash Equivalents

 

 

2.03

%

 

$

53,341

 

53,341

 

53,341

 

 

 

 

 

 

 

Goldman Sachs US Treasury Liquid Reserves Fund

 

Cash Equivalents

 

 

2.03

%

 

$

101,740

 

101,740

 

101,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents Total

 

$

155,081

 

$

155,081

 

15.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments and Cash Equivalents Total

 

$

2,684,137

 

$

2,661,815

 

261.4%

 

 

11


Table of Contents

 

Forward Foreign Currency Exchange Contracts

 

Currency Purchased

 

Currency Sold

 

Counterparty

 

Settlement Date

 

Unrealized
Appreciation
(Depreciation) (8)

 

US DOLLARS 8,720

 

POUND STERLING 6,400

 

Bank of New York Mellon

 

9/21/2020

 

$

745

 

POUND STERLING 6,220

 

US DOLLARS 8,192

 

Bank of New York Mellon

 

9/21/2020

 

(441

)

US DOLLARS 12,177

 

EURO 10,370

 

Bank of New York Mellon

 

1/10/2020

 

774

 

US DOLLARS 11,874

 

EURO 10,300

 

Bank of New York Mellon

 

6/15/2020

 

432

 

US DOLLARS 412

 

POUND STERLING 310

 

Citibank

 

9/21/2020

 

26

 

US DOLLARS 16,897

 

AUSTRALIAN DOLLARS 24,180

 

Goldman Sachs

 

6/15/2020

 

479

 

US DOLLARS 8,885

 

DANISH KRONE 57,000

 

Goldman Sachs

 

6/15/2020

 

390

 

US DOLLARS 75,768

 

EURO 65,260

 

Goldman Sachs

 

6/15/2020

 

3,272

 

US DOLLARS 68,701

 

POUND STERLING 53,430

 

Goldman Sachs

 

6/15/2020

 

2,297

 

US DOLLARS 8,255

 

NORWEGIAN KRONE 74,020

 

Goldman Sachs

 

12/20/2019

 

92

 

US DOLLARS 25,257

 

POUND STERLING 19,410

 

Goldman Sachs

 

1/10/2020

 

1,242

 

 

 

 

 

 

 

 

 

$

9,308

 

 


(1) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Australian Dollar Interbank Offered Rate (“AUD LIBOR”), the Euro Interbank Offered Rate (“EURIBOR” or “E”), British Pound Sterling LIBOR Rate (“GBP LIBOR”), the Norwegian Interbank Offered Rate (“NIBOR” or “N”), the Copenhagen Interbank Offered Rate (“CIBOR” or “C”), the Bank Bill Swap Rate (“BBSW”), or the Prime Rate (“Prime” or “P”) and which reset daily, monthly, quarterly or semiannually. Investments or a portion thereof may bear Payment-in-Kind (“PIK”). For each, the Company has provided the PIK or the spread over LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, or Prime and the current weighted average interest rate in effect at September 30, 2019. Certain investments are subject to a LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, or Prime interest rate floor.

(2) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.

(3) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The investment may be subject to an unused/letter of credit facility fee.

(4) Percentages are based on the Company’s net assets of $1,018,225 as of September 30, 2019.

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

(6) The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2019, non-qualifying assets totaled 11.5% of the Company’s total assets.

(7) Assets or a portion thereof are pledged as collateral for the BCSF Complete Financing Solution LLC. See Note 6  “Debt”.

(8) Unrealized appreciation/(depreciation) on forward currency exchange contracts.

(9) The principal amount (par amount) for all debt securities is denominated in U.S. dollars, unless otherwise noted. £ represents Pound Sterling, € represents Euro, NOK represents Norwegian krone, AUD represents Australian and DKK represents Kroner.

(10) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Investment” of the Company as the Company owns 5% or more of the portfolio company’s securities.

(11) As defined in the 1940 Act, the Company is deemed to “Control” this portfolio company as the Company either owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company.

(12) Assets or a portion thereof are pledged as collateral for the 2018-1 Issuer. See Note 6  “Debt”.

(13) $323 of the total par amount for this security is at P+ 3.75%.

(14) Non-Income Producing.

(15) Loan includes interest rate floor of 1.00%.

(16) Loan includes interest rate floor of 0.75%.

(17) Loan includes interest rate floor of 0.50%.

(18) Loan includes interest rate floor of 0.00%.

(19) Security valued using unobservable inputs (Level 3).

(20) The Company holds non-controlling, affiliate interest in an aircraft-owning special purpose vehicle through this investment.

(21) Assets or a portion thereof are pledged as collateral for the BCSF Revolving Credit Facility. See Note 6  “Debt”.

(22) The Company generally earns a higher interest rate on the “last out” tranche of debt, to the extent the debt has been allocated to “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(23) $987 of the total par amount for this security is at P+ 4.50%.

(24) $497 of the total par amount for this security is at P+ 3.50%.

(25) Security exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of September 30, 2019, the aggregate fair value of these securities is $67,285 or 6.61% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

 

Investment 

 

Acquisition Date

 

BCC Jetstream Holdings Aviation (On II), LLC - Equity Interest

 

6/1/2017

 

BCC Jetstream Holdings Aviation (Off I), LLC - Equity Interest

 

6/1/2017

 

CB Titan Holdings, Inc. - Preferred Equity

 

11/14/2017

 

Impala Private Investments, LLC - Equity Interest

 

11/10/2017

 

Abracon Group Holding, LLC. - Equity Interest

 

7/18/2018

 

Armor Group, LP - Equity Interest

 

8/28/2018

 

Grammer Investment Holdings LLC - Warrants

 

10/1/2018

 

Grammer Investment Holdings LLC - Equity Interest

 

10/1/2018

 

Grammer Investment Holdings LLC - Preferred Equity

 

10/1/2018

 

ADT Pizza, LLC - Equity Interest

 

10/29/2018

 

PP Ultimate Holdings B, LLC - Equity Interest

 

12/20/2018

 

FCG Acquisitions, Inc. - Preferred equity

 

1/24/2019

 

WCI-HSG HOLDCO, LLC - Preferred equity

 

2/22/2019

 

Toro Private Investments II, L.P. - Equity Interest

 

3/19/2019

 

ARL Holdings, LLC. - Equity Interest

 

5/3/2019

 

ARL Holdings, LLC. - Equity Interest

 

5/3/2019

 

ACC Holdco, LLC. - Equity Interest

 

6/28/2019

 

Kellstrom Aerospace Group, Inc - Equity Interest

 

7/1/2019

 

East BCC Coinvest II,LLC - Equity Interest

 

7/23/2019

 

Gale Aviation (Offshore) Co - Equity Interest

 

8/2/2019

 

Ventiv Topco, Inc. - Equity Interest

 

9/3/2019

 

 


(26) $1,813 of the total par amount for this security is at P+ 4.00%.

(27) $71 of the total par amount for this security is at P+ 5.75%.

(28) Assets or a portion thereof are pledged as collateral for the BCSF Complete Financing Solution Holdco LLC. See Note 6  “Debt”.

(29) Assets or a portion thereof are pledged as collateral for the 2019-1 Issuer. See Note 6  “Debt”.

(30) $5,045 of the total par amount for this security is at P+ 4.75%.

(31) $280 of the total par amount for this security is at P+ 4.75%.

 

See Notes to Consolidated Financial Statements

 

12


Table of Contents

 

Bain Capital Specialty Finance, Inc.

 

Consolidated Schedule of Investments

As of December 31, 2018

(In thousands)

 

Control Type

 

Industry

 

Portfolio Company

 

Investment Type

 

Spread Above Index (1)

 

Interest Rate

 

Maturity Date

 

Principal/Shares (9)

 

Cost

 

Market Value

 

% of NAV (4)

 

Non-Controlled/Non-Affiliate Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

API Technologies Corp. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

4/22/2024

 

$

 

(46

)

(11

)

 

 

 

 

 

 

Forming & Machining Industries Inc. (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.25%

 

10.85

%

10/9/2026

 

$

6,540

 

6,475

 

6,475

 

 

 

 

 

 

 

Forming & Machining Industries Inc. (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.85

%

10/9/2025

 

$

14,937

 

14,863

 

14,713

 

 

 

 

 

 

 

Jazz Acquisition, Inc. (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 6.75%

 

9.55

%

6/20/2022

 

$

15,000

 

14,396

 

14,136

 

 

 

 

 

 

 

Novetta, LLC (12) (15)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.53

%

10/17/2022

 

$

3,815

 

3,750

 

3,738

 

 

 

 

 

 

 

Salient CRGT, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.27

%

2/28/2022

 

$

13,086

 

13,155

 

12,890

 

 

 

 

 

 

 

StandardAero Aviation Holdings, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.27

%

7/7/2022

 

$

19,771

 

19,870

 

19,583

 

 

 

 

 

 

 

TECT Power Holdings, LLC (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.50%

 

11.02

%

12/27/2021

 

$

14,758

 

14,538

 

14,906

 

 

 

 

 

 

 

WP CPP Holdings, LLC. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.28

%

4/30/2025

 

$

4,715

 

4,704

 

4,562

 

 

 

 

 

 

 

WP CPP Holdings, LLC. (12) (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.75%

 

10.28

%

4/30/2026

 

$

11,724

 

11,608

 

11,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense Total

 

$

103,313

 

$

102,525

 

10.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

CST Buyer Company (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/1/2023

 

$

 

(9

)

 

 

 

 

 

 

 

CST Buyer Company (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.52

%

3/1/2023

 

$

9,310

 

9,208

 

9,310

 

 

 

 

 

 

 

OEConnection LLC (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.53

%

11/22/2024

 

$

14,079

 

14,009

 

13,762

 

 

 

 

 

 

 

OEConnection LLC (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.00%

 

10.53

%

11/24/2025

 

$

6,313

 

6,274

 

6,265

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive Total

 

$

29,482

 

$

29,337

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking

 

Transaction Network Services, Inc. (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.71

%

8/14/2022

 

$

13,394

 

13,260

 

13,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking Total

 

$

13,260

 

$

13,235

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco

 

GOBP Holdings, Inc. (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.55

%

10/22/2025

 

$

16,632

 

16,621

 

16,217

 

 

 

 

 

 

 

Hearthside Food Solutions, LLC

 

Corporate Bond

 

 

8.50

%

6/1/2026

 

$

10,000

 

9,793

 

8,000

 

 

 

 

 

 

 

NPC International, Inc. (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

6.02

%

4/19/2024

 

$

4,987

 

5,020

 

4,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco Total

 

$

31,434

 

$

28,893

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Equipment

 

Dorner Manufacturing Corp. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 4.75%

 

10.00

%

3/15/2022

 

$

55

 

37

 

55

 

 

 

 

 

 

 

Dorner Manufacturing Corp. (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.55

%

3/15/2023

 

$

7,986

 

7,878

 

7,986

 

 

 

 

 

 

 

DXP Enterprises, Inc. (6) (12) (15)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

7.27

%

8/29/2023

 

$

5,178

 

5,134

 

5,158

 

 

 

 

 

 

 

EXC Holdings III Corp. (12) (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

9.85

%

12/1/2025

 

$

8,240

 

8,254

 

7,870

 

 

 

 

 

 

 

Tidel Engineering, L.P. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/1/2023

 

$

 

 

 

 

 

 

 

 

 

Velvet Acquisition B.V. (6) (18) (19) (21)

 

Second Lien Senior Secured Loan

 

EURIBOR+ 8.00%

 

8.00

%

4/17/2026

 

6,013

 

7,313

 

6,949

 

 

 

 

 

 

 

Wilsonart LLC (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

6.06

%

12/19/2023

 

$

15,393

 

15,438

 

14,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Equipment Total

 

$

44,054

 

$

42,796

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals, Plastics & Rubber

 

AP Plastics Group, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

8/1/2021

 

$

 

 

 

 

 

 

 

 

 

ASP Chromaflo Intermediate Holdings, Inc. (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

6.02

%

11/20/2023

 

$

505

 

503

 

493

 

 

 

 

 

 

 

 

ASP Chromaflo Intermediate Holdings, Inc. (6) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

6.02

%

11/20/2023

 

$

656

 

654

 

642

 

 

 

 

 

 

 

Niacet b.v. (6) (15) (19) (21)

 

First Lien Senior Secured Loan

 

EURIBOR+ 4.50%

 

5.50

%

2/1/2024

 

3,777

 

4,044

 

4,304

 

 

 

 

 

 

 

Niacet Corporation (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

7.02

%

2/1/2024

 

$

2,173

 

2,156

 

2,162

 

 

 

 

 

 

 

Plaskolite, Inc. (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.69

%

12/15/2025

 

$

12,030

 

11,790

 

11,910

 

 

 

 

 

 

 

PRCC Holdings, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

2/1/2021

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals, Plastics & Rubber Total

 

$

19,147

 

$

19,511

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction & Building

 

Bolt Infrastructure Merger Sub, Inc. (12) (15)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

6.02

%

6/21/2024

 

$

2,670

 

2,662

 

2,617

 

 

 

 

 

 

 

Chase Industries, Inc. (3) (15) (21)

 

First Lien Senior Secured Loan - Delayed Draw Term Loan

 

L+ 4.00%

 

6.82

%

5/12/2025

 

$

199

 

182

 

169

 

 

 

 

 

 

 

Chase Industries, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.61

%

5/11/2025

 

$

11,921

 

11,863

 

11,826

 

 

 

 

 

 

 

Crown Subsea (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.35

%

11/2/2025

 

$

13,400

 

13,201

 

12,931

 

 

 

 

 

 

 

PP Ultimate Holdings B, LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

$

1

 

1,352

 

1,352

 

 

 

 

 

 

 

Profile Products LLC (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/20/2024

 

$

 

(76

)

(77

)

 

 

 

 

 

 

Regan Development Holdings Limited (6) (17) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 7.00%

 

7.50

%

4/18/2022

 

2,557

 

2,785

 

2,928

 

 

 

 

 

 

 

Regan Development Holdings Limited (6) (17) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 7.00%

 

7.50

%

4/18/2022

 

829

 

941

 

949

 

 

 

 

 

 

 

Regan Development Holdings Limited (6) (17) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 7.00%

 

7.50

%

4/18/2022

 

7,760

 

8,330

 

8,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction & Building Total

 

$

41,240

 

$

41,582

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Durable

 

Home Franchise Concepts, Inc. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

7/9/2024

 

$

 

(16

)

(25

)

 

 

 

 

 

 

New Milani Group LLC (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.77

%

6/6/2024

 

$

17,273

 

17,114

 

17,273

 

 

 

 

 

 

 

Stanton Carpet Corp. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

11/21/2022

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Durable Total

 

$

17,098

 

$

17,248

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Non-Durable

 

FineLine Technologies, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.25%

 

6.79

%

11/2/2021

 

$

459

 

425

 

445

 

 

 

 

 

 

 

FineLine Technologies, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

7.06

%

11/2/2022

 

$

31,703

 

31,466

 

31,545

 

 

 

 

 

 

 

Kronos Acquisition Holdings Inc.

 

Corporate Bond

 

 

9.00

%

8/15/2023

 

$

10,000

 

9,356

 

7,700

 

 

 

 

 

 

 

Kronos Acquisition Holdings Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.52

%

5/15/2023

 

$

13,181

 

13,142

 

12,522

 

 

 

 

 

 

 

MND Holdings III Corp (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

6.30

%

6/19/2024

 

$

13,767

 

13,815

 

13,560

 

 

 

 

 

 

 

Solaray, LLC (3) (15) (19) (23)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

7.69

%

9/9/2022

 

$

5,667

 

5,605

 

5,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Goods: Non-Durable Total

 

$

73,809

 

$

71,439

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Containers, Packaging & Glass

 

BWAY Holding Company

 

Corporate Bond

 

 

7.25

%

4/15/2025

 

$

10,000

 

9,755

 

9,012

 

 

 

 

 

 

 

BWAY Holding Company (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.66

%

4/3/2024

 

$

12,812

 

12,836

 

12,100

 

 

 

 

 

 

 

Technimark LLC (12) (18)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.27

%

8/8/2025

 

$

2,826

 

2,823

 

2,784

 

 

 

 

 

 

 

Terminator Bidco AS (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.80

%

5/22/2022

 

$

15,100

 

14,798

 

14,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Containers, Packaging & Glass Total

 

$

40,212

 

$

38,694

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Electricity

 

Infinite Electronics International Inc. (12) (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.52

%

7/2/2025

 

$

19,953

 

19,938

 

19,853

 

 

 

 

 

 

 

Infinite Electronics International Inc. (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.00%

 

10.52

%

7/2/2026

 

$

2,480

 

2,430

 

2,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Electricity Total

 

$

22,368

 

$

22,283

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Oil & Gas

 

Amspec Services, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 3.75%

 

9.25

%

7/2/2024

 

$

931

 

866

 

931

 

 

 

 

 

 

 

Blackbrush Oil & Gas, L.P. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 8.00%

 

10.89

%

2/9/2024

 

$

31,200

 

30,675

 

30,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy: Oil & Gas Total

 

$

31,541

 

$

31,195

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental Industries

 

Adler & Allan Group Limited (6) (17) (19) (21) (22)

 

First Lien Last Out

 

GBP LIBOR+ 8.25% (2% PIK)

 

9.14

%

9/30/2022

 

£

13,062

 

16,489

 

16,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental Industries Total

 

$

16,489

 

$

16,482

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Finance

 

Badger Merger Sub, Inc. (12) (18)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.54

%

9/12/2025

 

$

3,642

 

3,624

 

3,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Finance Total

 

$

3,624

 

$

3,560

 

0.4

%

 

13


Table of Contents

 

 

 

FIRE: Insurance

 

Alliant Holdings Intermediate, LLC (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 2.75%

 

5.21

%

5/9/2025

 

$

16,598

 

16,650

 

15,735

 

 

 

 

 

 

 

Margaux Acquisition, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 5.00%

 

10.50

%

12/19/2024

 

$

616

 

558

 

558

 

 

 

 

 

 

 

Margaux UK Finance Limited (2) (3) (5) (6) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/19/2024

 

£

 

(13

)

(13

)

 

 

 

 

 

 

Wink Holdco, Inc. (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 6.75%

 

9.28

%

12/1/2025

 

$

13,638

 

13,578

 

12,887

 

 

 

 

 

 

 

Wink Holdco, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.00%

 

5.52

%

12/2/2024

 

$

12,568

 

12,514

 

11,939

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Insurance Total

 

$

43,287

 

$

41,106

 

4.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Real Estate

 

Spectre (Carrisbrook House) Limited (6) (15) (19)

 

First Lien Senior Secured Loan

 

EURIBOR+ 7.50%

 

8.50

%

8/9/2021

 

9,300

 

10,714

 

10,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRE: Real Estate Total

 

$

10,714

 

$

10,650

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forest Products & Paper

 

Solenis International LLC (18) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.50%

 

11.21

%

6/26/2026

 

$

15,601

 

15,235

 

14,821

 

 

 

 

 

 

 

Solenis International LLC (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.80

%

6/26/2025

 

$

7,335

 

7,280

 

7,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forest Products & Paper Total

 

$

22,515

 

$

21,903

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare & Pharmaceuticals

 

Clinical Innovations, LLC (3) (15) (19) (22)

 

First Lien Last Out - Revolver

 

L+ 5.50%

 

7.93

%

10/17/2022

 

$

38

 

19

 

33

 

 

 

 

 

 

 

Clinical Innovations, LLC (12) (15) (19) (21) (22)

 

First Lien Last Out

 

L+ 5.50%

 

8.02

%

10/17/2023

 

$

11,028

 

10,817

 

10,973

 

 

 

 

 

 

 

CB Titan Holdings, Inc. (14) (19) (25)

 

Preferred equity

 

 

 

 

$

1,953

 

1,953

 

2,207

 

 

 

 

 

 

 

Concentra Inc. (12) (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 6.50%

 

8.88

%

6/1/2023

 

$

14,105

 

13,861

 

14,052

 

 

 

 

 

 

 

Datix Bidco Limited (2) (3) (5) (6) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

10/28/2024

 

£

 

(25

)

(19

)

 

 

 

 

 

 

Datix Bidco Limited (6) (18) (19) (21)

 

Second Lien Senior Secured Loan

 

GBP LIBOR+ 7.75%

 

8.68

%

4/27/2026

 

£

12,134

 

16,272

 

15,311

 

 

 

 

 

 

 

Datix Bidco Limited (6) (19) (21)

 

First Lien Senior Secured Loan

 

BBSW+ 4.50%

 

6.57

%

4/28/2025

 

AUD

4,212

 

3,197

 

2,922

 

 

 

 

 

 

 

Drive DeVilbiss (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

8.30

%

1/3/2023

 

$

8,529

 

7,867

 

7,399

 

 

 

 

 

 

 

Genesis Supply Acquisition Co. (19)

 

Subordinated Debt

 

 

9.50

%

4/23/2021

 

$

25,000

 

25,000

 

25,000

 

 

 

 

 

 

 

Great Expressions Dental Centers PC (3) (13) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.75%

 

8.70

%

9/28/2022

 

$

954

 

943

 

936

 

 

 

 

 

 

 

Great Expressions Dental Centers PC (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

7.63

%

9/28/2023

 

$

7,982

 

7,894

 

7,862

 

 

 

 

 

 

 

Island Medical Management Holdings, LLC (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 6.50%

 

9.02

%

9/1/2022

 

$

9,268

 

9,158

 

8,619

 

 

 

 

 

 

 

TecoStar Holdings, Inc. (12) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.50%

 

10.89

%

11/1/2024

 

$

9,472

 

9,263

 

9,472

 

 

 

 

 

 

 

U.S. Anesthesia Partners, Inc. (12) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.25%

 

9.77

%

6/23/2025

 

$

16,520

 

16,313

 

16,520

 

 

 

 

 

 

 

U.S. Anesthesia Partners, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.00%

 

5.52

%

6/24/2024

 

$

4,641

 

4,573

 

4,458

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare & Pharmaceuticals Total

 

$

127,105

 

$

125,745

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Tech Industries

 

Caliper Software, Inc. (3) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.50%

 

8.04

%

11/30/2023

 

$

124

 

88

 

87

 

 

 

 

 

 

 

CMI Marketing Inc (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

5/24/2023

 

$

 

(19

)

 

 

 

 

 

 

 

CMI Marketing Inc (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

7.27

%

5/24/2024

 

$

15,411

 

15,271

 

15,411

 

 

 

 

 

 

 

Drilling Info Holdings, Inc (2) (3) (5) (12) (18) (21)

 

First Lien Senior Secured Loan - Delayed Draw Term Loan

 

 

 

7/30/2025

 

$

 

(7

)

(13

)

 

 

 

 

 

 

Drilling Info Holdings, Inc (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

6.77

%

7/30/2025

 

$

20,178

 

20,094

 

20,102

 

 

 

 

 

 

 

Element Buyer, Inc. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

7/19/2024

 

$

 

(59

)

(32

)

 

 

 

 

 

 

Elo Touch Solutions, Inc. (18) (21)

 

First Lien Senior Secured Loan

 

L+ 6.50%

 

9.28

%

12/7/2025

 

$

18,943

 

17,996

 

18,256

 

 

 

 

 

 

 

Everest Bidco (6) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

GBP LIBOR+ 7.50%

 

8.50

%

7/3/2026

 

£

10,216

 

13,060

 

12,631

 

 

 

 

 

 

 

Impala Private Investments, LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

$

1,500

 

 

126

 

 

 

 

 

 

 

Lighthouse Network, LLC (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

7.03

%

12/2/2024

 

$

16,088

 

16,024

 

16,008

 

 

 

 

 

 

 

Netsmart Technologies, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.27

%

4/19/2023

 

$

21,623

 

21,657

 

21,352

 

 

 

 

 

 

 

Netsmart Technologies, Inc. (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

10.03

%

10/19/2023

 

$

2,749

 

2,749

 

2,735

 

 

 

 

 

 

 

Park Place Technologies (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.00%

 

10.52

%

3/30/2026

 

$

6,733

 

6,684

 

6,598

 

 

 

 

 

 

 

 

Park Place Technologies (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.52

%

3/31/2025

 

$

10,324

 

10,293

 

10,118

 

 

 

 

 

 

 

nThrive, Inc. (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 9.75%

 

12.27

%

4/20/2023

 

$

8,000

 

7,982

 

7,760

 

 

 

 

 

 

 

Qlik Technologies (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

5.94

%

4/26/2024

 

$

22,725

 

22,666

 

22,015

 

 

 

 

 

 

 

SolarWinds Holdings, Inc. (18) (21)

 

First Lien Senior Secured Loan

 

L+ 2.75%

 

5.27

%

2/5/2024

 

$

14,763

 

14,845

 

14,228

 

 

 

 

 

 

 

VPARK BIDCO AB (6) (16) (19) (21)

 

First Lien Senior Secured Loan

 

CIBOR+ 5.00%

 

5.75

%

3/8/2025

 

DKK

56,999

 

9,134

 

8,743

 

 

 

 

 

 

 

VPARK BIDCO AB (6) (16) (19) (21)

 

First Lien Senior Secured Loan

 

NIBOR+ 5.00%

 

6.28

%

3/8/2025

 

NOK

74,020

 

9,174

 

8,558

 

 

 

 

 

 

 

Zywave, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.00%

 

7.52

%

11/17/2022

 

$

767

 

755

 

767

 

 

 

 

 

 

 

Zywave, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.52

%

11/17/2022

 

$

17,549

 

17,458

 

17,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High Tech Industries Total

 

$

205,845

 

$

202,999

 

20.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel, Gaming & Leisure

 

Aimbridge Hospitality LP (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.52

%

6/22/2022

 

$

4,264

 

4,206

 

4,264

 

 

 

 

 

 

 

Aimbridge Hospitality LP (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

6/22/2022

 

$

 

(15

)

 

 

 

 

 

 

 

Aimbridge Hospitality LP (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.52

%

6/22/2022

 

$

25,584

 

25,251

 

25,584

 

 

 

 

 

 

 

Captain D’s LLC (3) (15) (19) (24)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.50%

 

8.15

%

12/15/2023

 

$

788

 

773

 

756

 

 

 

 

 

 

 

Captain D’s LLC (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

7.30

%

12/15/2023

 

$

13,389

 

13,269

 

13,154

 

 

 

 

 

 

 

K-Mac Holdings Corp. (12) (18)

 

Second Lien Senior Secured Loan

 

L+ 6.75%

 

9.25

%

3/16/2026

 

$

3,200

 

3,193

 

3,024

 

 

 

 

 

 

 

NPC International, Inc. (12) (15) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

10.02

%

4/18/2025

 

$

9,159

 

9,194

 

8,655

 

 

 

 

 

 

 

Quidditch Acquisition, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 7.00%

 

9.47

%

3/21/2025

 

$

15,903

 

15,859

 

15,824

 

 

 

 

 

 

 

Tacala Investment Corp. (18) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.00%

 

9.52

%

1/30/2026

 

$

6,323

 

6,306

 

6,039

 

 

 

 

 

 

 

Tacala Investment Corp. (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.77

%

1/31/2025

 

$

3,504

 

3,451

 

3,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel, Gaming & Leisure Total

 

$

81,487

 

$

80,683

 

8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Advertising, Printing & Publishing

 

Ansira Holdings, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 4.00%

 

9.50

%

12/20/2022

 

$

1,643

 

1,643

 

1,643

 

 

 

 

 

 

 

Cambium Learning Group, Inc. (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

7.02

%

12/18/2025

 

$

12,325

 

11,709

 

11,771

 

 

 

 

 

 

 

Cruz Bay Publishing (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 3.00%

 

8.50

%

6/6/2019

 

$

2,267

 

2,267

 

2,267

 

 

 

 

 

 

 

Learfield Communications LLC (12) (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 7.25%

 

9.78

%

12/2/2024

 

$

4,050

 

4,016

 

4,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Advertising, Printing & Publishing Total

 

$

19,635

 

$

19,731

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Broadcasting & Subscription

 

Micro Holding Corp. (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 3.75%

 

6.25

%

9/13/2024

 

$

21,931

 

21,868

 

20,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Broadcasting & Subscription Total

 

$

21,868

 

$

20,945

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Diversified & Production

 

Efficient Collaborative Retail Marketing Company, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

6/15/2022

 

$

 

 

 

 

 

 

 

 

 

Getty Images, Inc. (21) (26)

 

First Lien Senior Secured Loan

 

L+ 3.50%

 

6.02

%

10/18/2019

 

$

19,947

 

19,744

 

19,420

 

 

 

 

 

 

 

International Entertainment Investments Limited (6) (18) (19) (21)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 4.75%

 

5.65

%

5/31/2023

 

£

8,686

 

10,620

 

11,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media: Diversified & Production Total

 

$

30,364

 

$

30,491

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

Batteries Plus Holding Corporation (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

7/6/2022

 

$

 

 

 

 

 

 

 

 

 

CH Hold Corp. (12) (15)

 

First Lien Senior Secured Loan

 

L+ 3.00%

 

5.52

%

2/1/2024

 

$

1,498

 

1,495

 

1,485

 

 

 

 

 

 

 

CH Hold Corp. (12) (15)

 

Second Lien Senior Secured Loan

 

L+ 7.25%

 

9.77

%

2/3/2025

 

$

1,215

 

1,211

 

1,209

 

 

 

 

 

 

 

CVS Holdings I, LP (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 2.75%

 

5.28

%

2/6/2025

 

$

14,912

 

14,893

 

14,167

 

 

 

 

 

 

 

CVS Holdings I, LP (15) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 6.75%

 

9.28

%

2/6/2026

 

$

14,110

 

14,120

 

13,334

 

 

 

 

 

 

 

Eyemart Express LLC (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.00%

 

5.46

%

8/5/2024

 

$

11,506

 

11,544

 

11,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Total

 

$

43,263

 

$

41,384

 

4.1

%

 

14


Table of Contents

 

 

 

Services: Business

 

Advantage Sales & Marketing Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.77

%

7/23/2021

 

$

15,743

 

15,500

 

13,972

 

 

 

 

 

 

 

AMCP Clean Acquisition Company, LLC (3) (12) (18) (21)

 

First Lien Senior Secured Loan - Delayed Draw Term Loan

 

L+ 4.25%

 

6.93

%

6/16/2025

 

$

1,489

 

1,483

 

1,432

 

 

 

 

 

 

 

AMCP Clean Acquisition Company, LLC (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.25%

 

7.05

%

6/16/2025

 

$

15,773

 

15,725

 

15,537

 

 

 

 

 

 

 

Comet Bidco Limited (6) (18) (21)

 

First Lien Senior Secured Loan

 

GBP LIBOR+ 5.25%

 

5.98

%

9/30/2024

 

£

10,261

 

13,081

 

12,719

 

 

 

 

 

 

 

Lakeland Tours, LLC (12) (15)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.79

%

12/16/2024

 

$

2,887

 

2,878

 

2,820

 

 

 

 

 

 

 

LegalZoom.com, Inc. (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

7.00

%

11/21/2024

 

$

15,839

 

15,735

 

15,601

 

 

 

 

 

 

 

New Insight Holdings, Inc. (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 5.50%

 

8.02

%

12/20/2024

 

$

20,529

 

20,041

 

20,349

 

 

 

 

 

 

 

Sovos Compliance, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Delayed Draw Term Loan

 

L+ 6.00%

 

8.52

%

3/1/2022

 

$

3,958

 

3,958

 

3,910

 

 

 

 

 

 

 

Sovos Compliance, LLC (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

3/1/2022

 

$

 

(10

)

(15

)

 

 

 

 

 

 

Sovos Compliance, LLC (12) (15) (19)

 

First Lien Senior Secured Loan

 

L+ 6.00%

 

8.52

%

3/1/2022

 

$

8,601

 

8,541

 

8,515

 

 

 

 

 

 

 

TEI Holdings Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 5.00%

 

10.50

%

12/20/2022

 

$

708

 

708

 

666

 

 

 

 

 

 

 

Valet Waste Holdings, Inc (12) (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.52

%

9/29/2025

 

$

28,761

 

28,686

 

28,402

 

 

 

 

 

 

 

XO Management Holding Inc. (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.49

%

12/4/2021

 

$

12,355

 

11,490

 

11,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Business Total

 

$

137,816

 

$

135,398

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Consumer

 

GI Chill Acquisition LLC (12) (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.80

%

8/6/2025

 

$

11,464

 

11,441

 

11,464

 

 

 

 

 

 

 

McKissock, LLC (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

P+ 2.25%

 

7.68

%

8/5/2021

 

$

992

 

992

 

992

 

 

 

 

 

 

 

Pearl Intermediate Parent LLC (18) (21)

 

Second Lien Senior Secured Loan

 

L+ 6.25%

 

8.75

%

2/13/2026

 

$

2,571

 

2,590

 

2,544

 

 

 

 

 

 

 

Trident LS Merger Sub Corp (12) (18)

 

First Lien Senior Secured Loan

 

L+ 3.00%

 

5.52

%

5/1/2025

 

$

4,186

 

4,177

 

4,102

 

 

 

 

 

 

 

Trident LS Merger Sub Corp (12) (18)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

10.02

%

5/1/2026

 

$

2,246

 

2,225

 

2,221

 

 

 

 

 

 

 

Travel Leaders Group, LLC (12) (18)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.46

%

1/25/2024

 

$

528

 

527

 

524

 

 

 

 

 

 

 

WeddingWire, Inc. (18) (21)

 

Second Lien Senior Secured Loan

 

L+ 8.25%

 

11.04

%

12/21/2026

 

$

6,187

 

6,125

 

6,156

 

 

 

 

 

 

 

WeddingWire, Inc. (18) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

7.29

%

12/19/2025

 

$

13,218

 

13,251

 

13,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services: Consumer Total

 

$

41,328

 

$

41,023

 

4.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunications

 

Horizon Telcom, Inc. (2) (3) (5) (12) (15) (19) (21)

 

First Lien Senior Secured Loan - Delayed Draw Term Loan

 

 

 

6/15/2023

 

$

 

(19

)

(26

)

 

 

 

 

 

 

Horizon Telcom, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.50%

 

6.85

%

6/15/2023

 

$

13,869

 

13,712

 

13,661

 

 

 

 

 

 

 

Horizon Telcom, Inc. (2) (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

6/15/2023

 

$

 

 

(17

)

 

 

 

 

 

 

Masergy Holdings, Inc. (15)

 

Second Lien Senior Secured Loan

 

L+ 7.50%

 

10.31

%

12/16/2024

 

$

857

 

863

 

840

 

 

 

 

 

 

 

Masergy Holdings, Inc. (15) (21)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

6.05

%

12/15/2023

 

$

686

 

684

 

664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunications Total

 

$

15,240

 

$

15,122

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Cargo

 

Direct ChassisLink, Inc. (12) (18) (19) (21)

 

Second Lien Senior Secured Loan

 

L+ 6.00%

 

8.53

%

6/15/2023

 

$

27,685

 

27,631

 

26,716

 

 

 

 

 

 

 

ENC Holding Corporation (2) (3) (5) (18)

 

First Lien Senior Secured Loan - Delayed Draw Term Loan

 

 

 

5/30/2025

 

$

 

(1

)

(9

)

 

 

 

 

 

 

ENC Holding Corporation (12) (18) (27)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.80

%

5/30/2025

 

$

9,775

 

9,761

 

9,628

 

 

 

 

 

 

 

Grammer Investment Holdings LLC (14) (19) (25)

 

Equity Interest

 

 

 

 

$

600

 

600

 

600

 

 

 

 

 

 

 

Grammer Investment Holdings LLC (14) (19) (25)

 

Preferred Equity

 

10% PIK

 

10.00

%

 

$

6

 

600

 

600

 

 

 

 

 

 

 

Grammer Investment Holdings LLC (14) (19) (25)

 

Warrants

 

 

 

 

$

122

 

 

 

 

 

 

 

 

 

Grammer Purchaser, Inc. (3) (15) (18) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 4.75%

 

7.27

%

9/30/2024

 

$

105

 

106

 

89

 

 

 

 

 

 

 

Grammer Purchaser, Inc. (12) (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

7.27

%

9/30/2024

 

$

10,500

 

10,332

 

10,342

 

 

 

 

 

 

 

Omni Logistics, LLC (15) (19) (21)

 

Subordinated Debt

 

L+ 11.50%

 

14.02

%

1/19/2024

 

$

15,000

 

14,711

 

14,625

 

 

 

 

 

 

 

PS HoldCo, LLC (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.75%

 

7.28

%

3/13/2025

 

$

21,459

 

21,458

 

20,922

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Cargo Total

 

$

85,198

 

$

83,513

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Consumer

 

Direct Travel, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

12/1/2021

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation: Consumer Total

 

$

 

$

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utilities: Electric

 

CSVC Acquisition Corp

 

Corporate Bond

 

 

7.75

%

6/15/2025

 

$

13,478

 

12,483

 

10,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utilities: Electric Total

 

$

12,483

 

$

10,311

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale

 

Abracon Group Holding, LLC. (14) (19) (25)

 

Equity Interest

 

 

 

 

$

2

 

1,800

 

1,992

 

 

 

 

 

 

 

Abracon Group Holding, LLC. (2) (3) (5) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

 

 

7/18/2024

 

$

 

(39

)

(28

)

 

 

 

 

 

 

Aramsco, Inc. (3) (15) (19)

 

First Lien Senior Secured Loan - Revolver

 

L+ 5.25%

 

7.77

%

8/28/2024

 

$

226

 

177

 

133

 

 

 

 

 

 

 

Armor Group, LP (14) (19) (25)

 

Equity Interest

 

 

 

 

$

10

 

1,012

 

1,009

 

 

 

 

 

 

 

PetroChoice Holdings, Inc. (15) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.00%

 

7.53

%

8/22/2022

 

$

3,638

 

3,603

 

3,602

 

 

 

 

 

 

 

PT Holdings, LLC (12) (15) (21)

 

First Lien Senior Secured Loan

 

L+ 4.00%

 

6.80

%

12/9/2024

 

$

21,671

 

21,631

 

21,184

 

 

 

 

 

 

 

Specialty Building Products Holdings, LLC (12) (18) (19) (21)

 

First Lien Senior Secured Loan

 

L+ 5.75%

 

8.27

%

10/1/2025

 

$

16,944

 

16,841

 

16,436

 

 

 

 

 

 

 

SRS Distribution Inc. (18) (21)

 

First Lien Senior Secured Loan

 

L+ 3.25%

 

5.77

%

5/23/2025

 

$

20,000

 

19,505

 

18,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale Total

 

$

64,530

 

$

63,053

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Non-Affiliate Investments Total

 

$

1,449,749

 

$

1,422,837

 

142.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Affiliate Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco

 

ADT Pizza, LLC (10) (14) (19) (25)

 

Equity Interest

 

 

 

 

$

6,720

 

6,720

 

6,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food & Tobacco Total

 

$

6,720

 

$

6,720

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Affiliate Investments Total

 

$

6,720

 

$

6,720

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled Affiliate Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

BCC Jetstream Holdings Aviation (Off I), LLC (6) (10) (11) (19) (20) (25)

 

Equity Interest

 

 

 

 

$

11,863

 

11,863

 

13,480

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20) (25)

 

Equity Interest

 

 

 

 

$

731

 

731

 

1,243

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC (10) (11) (19) (20)

 

First Lien Senior Secured Loan

 

 

10.00

%

6/2/2022

 

$

4,163

 

4,163

 

4,163

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC (7) (10) (11) (14) (19) (20)

 

First Lien Senior Secured Loan - Unfunded Commitment

 

 

 

6/2/2022

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense Total

 

$

16,757

 

$

18,886

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Vehicles

 

Antares Bain Capital Complete Financing Solution LLC (6) (10) (11) (19) (25)

 

Investment Vehicle

 

 

 

 

$

279,891

 

279,891

 

279,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Vehicles Total

 

$

279,891

 

$

279,363

 

27.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled Affiliate Investments Total

 

$

296,648

 

$

298,249

 

29.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments Total

 

$

1,753,117

 

$

1,727,806

 

172.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

Goldman Sachs Financial Square Government Fund Institutional Share Class

 

Cash Equivalents

 

 

2.52

%

 

$

877

 

877

 

877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents Total

 

$

877

 

$

877

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments and Cash Equivalents Total

 

$

1,753,994

 

$

1,728,683

 

172.6

%

 

Forward Foreign Currency Exchange Contracts

 

Currency Purchased

 

Currency Sold

 

Counterparty

 

Settlement Date

 

Unrealized
Appreciation
(Depreciation) 
(8)

 

U.S. DOLLARS 8,720

 

POUND STERLING 6,400

 

Bank of New York Mellon

 

9/21/2020

 

$

355

 

U.S. DOLLARS 27,914

 

EURO 22,118

 

Bank of New York Mellon

 

1/18/2019

 

2,185

 

U.S. DOLLARS 11,541

 

POUND STERLING 8,262

 

Bank of New York Mellon

 

1/18/2019

 

445

 

U.S. DOLLARS 12,042

 

EURO 10,080

 

Bank of New York Mellon

 

6/21/2019

 

344

 

U.S. DOLLARS 10,065

 

DANISH KRONE 59,805

 

Citibank

 

1/18/2019

 

568

 

U.S. DOLLARS 9,957

 

NORWEGIAN KRONE 77,560

 

Citibank

 

1/18/2019

 

335

 

U.S. DOLLARS 3,169

 

AUSTRALIAN DOLLARS 4,127

 

Citibank

 

4/11/2019

 

82

 

U.S. DOLLARS 13,192

 

POUND STERLING 9,260

 

Citibank

 

4/11/2019

 

699

 

U.S. DOLLARS 412

 

POUND STERLING 310

 

Citibank

 

9/21/2020

 

(7

)

U.S. DOLLARS 3,578

 

POUND STERLING 2,630

 

Goldman Sachs

 

4/11/2019

 

214

 

U.S. DOLLARS 3,091

 

AUD 4,130

 

Goldman Sachs

 

6/14/2019

 

176

 

U.S. DOLLARS 8,938

 

DANISH KRONE 55,570

 

Goldman Sachs

 

6/14/2019

 

291

 

U.S. DOLLARS 11,719

 

EURO 9,790

 

Goldman Sachs

 

6/14/2019

 

365

 

U.S. DOLLARS 60,094

 

POUND STERLING 44,750

 

Goldman Sachs

 

6/14/2019

 

2,679

 

U.S. DOLLARS 8,994

 

NORWEGIAN KRONE 72,170

 

Goldman Sachs

 

6/14/2019

 

591

 

 

 

 

 

 

 

 

 

$

9,322

 

 

15


Table of Contents

 


(1) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Euro Interbank Offered Rate (“EURIBOR” or “E”),British Pound Sterling LIBOR Rate (“GBP LIBOR”), the Norwegian Interbank Offered Rate (“NIBOR” or “N”), the Copenhagen Interbank Offered Rate (“CIBOR” or “C”), the Bank Bill Swap Rate (“BBSW”), or the Prime Rate (“Prime” or “P”) and which reset daily, monthly, quarterly or semiannually. Investments or a portion thereof may bear Payment-in-Kind (“PIK”). For each, the Company has provided the PIK or the spread over LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, or Prime and the current weighted average interest rate in effect at December 31, 2018. Certain investments are subject to a LIBOR, EURIBOR, GBP LIBOR, NIBOR, CIBOR, BBSW, or Prime interest rate floor.

(2) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.

(3) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The investment may be subject to an unused/letter of credit facility fee.

(4) Percentages are based on the Company’s net assets of $1,001,629 as of December 31, 2018.

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

(6) The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2018, non-qualifying assets totaled 24.4% of the Company’s total assets.

(7) The assets to be issued will be determined at the time the funds are called.

(8) Unrealized appreciation/(depreciation) on forward currency exchange contracts.

(9) The principal amount (par amount) for all debt securities is denominated in U.S. dollars, unless otherwise noted. £ represents Pound Sterling, € represents Euro, NOK represents Norwegian krone, AUD represents Australian and DKK represents Kroner.

(10) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Investment” of the Company as the Company owns five percent or more of the portfolio company’s securities.

(11) As defined in the 1940 Act, the Company is deemed to “Control” this portfolio company as the Company either owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company.

(12) Assets or a portion thereof are pledged as collateral for the 2018-1 Issuer. See Note 6  “Debt”.

(13) $690 of the total par amount for this security is at P+ 3.75%.

(14) Non-Income Producing.

(15) Loan includes interest rate floor of 1.00%.

(16) Loan includes interest rate floor of 0.75%.

(17) Loan includes interest rate floor of 0.50%.

(18) Loan includes interest rate floor of 0.00%.

(19) Security valued using unobservable inputs (Level 3).

(20) The Company holds non-controlling, affiliate interest in an aircraft-owning special purpose vehicle through this investment.

(21) Assets or a portion thereof are pledged as collateral for the BCSF Revolving Credit Facility. See Note 6  “Debt”.

(22) The Company generally earns a higher interest rate on the “last out” tranche of debt, to the extent the debt has been allocated to “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(23) $2,267 of the total par amount for this security is at P+ 3.50%.

(24) $472 of the total par amount for this security is at P+ 3.50%.

(25) Security exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2018, the aggregate fair value of these securities is $308,692 or 30.8% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

 

Investment

 

Acquisition Date

 

BCC Jetstream Holdings Aviation (On II), LLC - Equity Interest

 

6/1/2017

 

BCC Jetstream Holdings Aviation (Off I), LLC - Equity Interest

 

6/1/2017

 

Antares Bain Capital Complete Financing Solution LLC - Investment Vehicle

 

11/29/2017

 

CB Titan Holdings, Inc. - Equity Interest

 

11/14/2017

 

Impala Private Investments, LLC - Equity Interest

 

11/10/2017

 

Abracon Group Holding, LLC. - Equity Interest

 

7/18/2018

 

Armor Group, LP - Equity Interest

 

8/28/2018

 

Grammer Investment Holdings LLC - Warrants

 

10/1/2018

 

Grammer Investment Holdings LLC - Equity Interest

 

10/1/2018

 

Grammer Investment Holdings LLC - Preferred Equity

 

10/1/2018

 

ADT Pizza, LLC - Equity Interest

 

10/29/2018

 

PP Ultimate Holdings B, LLC - Equity Interest

 

12/20/2018

 

 

(26) Loan includes interest rate floor of 1.25%.

 

See Notes to Consolidated Financial Statements

 

16


Table of Contents

 

BAIN CAPITAL SPECIALTY FINANCE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except share and per share data)

 

Note 1. Organization

 

Bain Capital Specialty Finance, Inc. (the “Company”) was formed on October 5, 2015 and commenced investment operations on October 13, 2016. The Company has elected to be treated and is regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes the Company has elected to be treated and intends to operate in a manner so as to continuously qualify as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing concurrently with its election to be treated as a BDC. The Company is externally managed by BCSF Advisors, LP (the “Advisor” or “BCSF Advisors”), our investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisor also provides the administrative services necessary for the Company to operate (in such capacity, the “Administrator” or “BCSF Advisors”).

 

On November 19, 2018, the Company closed its initial public offering (the “IPO”), which was a Qualified IPO, issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018.

 

The Company’s primary focus is capitalizing on opportunities within its Advisor’s Senior Direct Lending Strategy, which seeks to provide risk-adjusted returns and current income to its stockholders by investing primarily in middle-market companies with between $10.0 million and $150.0 million in EBITDA. The Company focuses on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. The Company generally seeks to retain voting control in respect of the loans or particular classes of securities in which the Company invests through maintaining affirmative voting positions or negotiating consent rights that allow the Company to retain a blocking position. The Company may also invest in mezzanine debt and other junior securities and in secondary purchases of assets or portfolios, as described below. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. The Company may also invest, from time to time, in equity securities, distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.

 

Our operations comprise only a single reportable segment.

 

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The Company’s consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein and are not necessarily indicative of the full fiscal year. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies. The functional currency of the Company is U.S. dollars and these consolidated financial statements have been prepared in that currency. Prior period information has been reclassified to conform to the current period presentation and this had no effect on the Company’s consolidated financial position or the consolidated results of operations as previously reported.

 

The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

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Basis of Consolidation

 

The Company will generally consolidate any wholly, or substantially, owned subsidiary when the design and purpose of the subsidiary is to act as an extension of the Company’s investment operations and to facilitate the execution of the Company’s investment strategy. Accordingly, the Company consolidated the results of its subsidiaries BCSF I, LLC, BCSF II-C, LLC, BCSF CFSH, LLC, BCSF CFS, LLC, BCC Middle Market CLO 2018-1, LLC, and BCC Middle Market CLO 2019-1, LLC in its consolidated financial statements. All intercompany transactions and balances have been eliminated in consolidation. Since the Company is an investment company, portfolio investments held by the Company are not consolidated into the consolidated financial statements. The portfolio investments held by the Company (including its investments held by consolidated subsidiaries) are included on the consolidated statements of assets and liabilities as investments at fair value.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.

 

Valuation of Portfolio Investments

 

Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers. Generally, investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the Board of Directors of the Company (the “Board”), based on, among other things, the input of the Advisor, the Company’s audit committee of the Board (the “Audit Committee) and one or more independent third party valuation firms engaged by the Board.

 

With respect to unquoted portfolio investments, the Company will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 

With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below:

 

·                  The Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Advisor responsible for the portfolio investment or by an independent valuation firm;

 

·                  Preliminary valuation conclusions are then documented and discussed with the Company’s senior management and the Advisor. Agreed upon valuation recommendations are presented to the Audit Committee;

 

·                  The Audit Committee of the Board reviews the valuations presented and recommends values for each of the investments to the Board; and

 

·                  The Board will discuss valuations and determine the fair value of each investment in good faith based upon, among other things, the input of the Advisor, independent valuation firms, where applicable, and the Audit Committee.

 

In following this approach, the types of factors that are taken into account in the fair value pricing of investments include, as relevant, but are not limited to: comparison to publicly traded securities, including factors such 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 flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion.

 

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Table of Contents

 

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value in accordance with US GAAP and required disclosures of fair value measurements. The fair value of a financial instrument is the amount that would be received in an orderly transaction between market participants at the measurement date. The Company determines the fair value of investments consistent with its valuation policy. The Company discloses the fair value of its investments in a hierarchy which prioritizes and ranks the level of market observability used in the determination of fair value. In accordance with ASC 820, these levels are summarized below:

 

·                  Level 1 — Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

 

·                  Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

·                  Level 3 — Valuations based on inputs that are unobservable and significant to the fair value measurement.

 

A financial instrument’s level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuations of Level 2 investments are generally based on quotations received from pricing services, dealers or brokers. Consideration is given to the source and nature of the quotations and the relationship of recent market activity to the quotations provided.

 

Transfers between levels, if any, are recognized at the beginning of the reporting period in which the transfers occur. The Company evaluates the source of inputs used in the determination of fair value, including any markets in which the investments, or similar investments, are trading. When the fair value of an investment is determined using inputs from a pricing service (or principal market makers), the Company considers various criteria in determining whether the investment should be classified as a Level 2 or Level 3 investment. Criteria considered includes the pricing methodologies of the pricing services (or principal market makers) to determine if the inputs to the valuation are observable or unobservable, as well as the number of prices obtained and an assessment of the quality of the prices obtained. The level of an investment within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment.

 

The fair value assigned to these investments is based upon available information and may fluctuate from period to period. In addition, it does not necessarily represent the amount that might ultimately be realized upon sale. Due to inherent uncertainty of valuation, the estimated fair value of investments may differ from the value that would have been used had a ready market for the security existed, and the difference could be material.

 

Securities Transactions, Revenue Recognition and Expenses

 

The Company records its investment transactions on a trade date basis. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specified identification method. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Commitment fees are recorded on an accrual basis and recognized as interest income. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized against or accreted into interest income using the effective interest method or straight-line method, as applicable. For the Company’s investments in revolving bank loans, the cost basis of the investment purchased is adjusted for the cash received for the discount on the total balance committed. The fair value is also adjusted for price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative value until it is offset by the future amounts called and funded. Upon prepayment of a loan or debt security, any prepayment premium, unamortized upfront loan origination fees and unamortized discount are recorded as interest income.

 

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Distributions received from an equity interest, limited liability company or a limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

 

Certain investments may have contractual payment-in-kind (“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. If at any point the Company believes PIK is not expected to be realized, the investment generating

 

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Table of Contents

 

PIK will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.

 

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

 

Expenses are recorded on an accrual basis.

 

Non-Accrual Loans

 

Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest are paid and, in management’s judgment, principal and interest payments are likely to remain current. The Company may make exceptions to this treatment if a loan has sufficient collateral value and is in the process of collection. As of September 30, 2019 and December 31, 2018, no loans or debt securities had been placed on non-accrual status.

 

Distributions

 

Distributions to common stockholders are recorded on the record date. The amount to be distributed, if any, is determined by the Board each quarter, and is generally based upon the earnings estimated by the Advisor. Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with US GAAP. The Company may pay distributions to its stockholders in a year in excess of its investment company taxable income and net capital gain for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. This excess generally would be a tax-free return of capital in the period and generally would reduce the stockholder’s tax basis in its shares. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent; they are charged or credited to paid-in capital in excess of par, accumulated undistributed net investment income or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses.

 

The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and, depending upon the level of the Company’s taxable income earned in a year, the Company may choose to carry forward taxable income for distribution in the following year and incur applicable U.S. federal excise tax. The specific tax characteristics of the Company’s distributions will be reported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.

 

The Company distributes net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, the Company may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to stockholders.

 

Dividend Reinvestment Plan

 

The Company has adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends and distributions. Prior to the IPO, stockholders who elected to “opt in” to the Company’s dividend reinvestment plan had their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.

 

Subsequent to the IPO, stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.

 

Offering Costs

 

Offering costs consist primarily of fees and expenses incurred in connection with the offering of shares, legal, printing and other costs associated with the preparation and filing of applicable registration statements. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of paid-in-capital upon each such offering.

 

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Table of Contents

 

Cash, Restricted Cash, and Cash Equivalents

 

Cash and cash equivalents consist of deposits held at custodian banks and highly liquid investments, such as money market funds, with original maturities of three months or less. Cash and cash equivalents are carried at cost or amortized cost, which approximates fair value. The Company may deposit its cash and cash equivalents in financial institutions and, at certain times, such balances may exceed the Federal Deposit Insurance Corporation insurance limits. Cash equivalents are presented separately on the consolidated schedules of investments. Restricted cash is collected and held by the trustee who has been appointed as custodian of the assets securing certain of the Company’s financing transactions.

 

Foreign Currency Translation

 

The accounting records of the Company are maintained in U.S. dollars. The fair values of foreign securities, foreign cash and other assets and liabilities denominated in foreign currency are translated to U.S. dollars based on the current exchange rates at the end of each business day. Income and expenses denominated in foreign currencies are translated at current exchange rates when accrued or incurred. Unrealized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates are included in the net change in unrealized appreciation (depreciation) on foreign currency translation on the consolidated statements of operations. Net realized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to changes in foreign currency exchange rates are included in net realized gain (loss) on foreign currency transactions on the consolidated statements of operations. The portion of both realized and unrealized gains and losses on investments that result from changes in foreign currency exchange rates is not separately disclosed, but is included in net realized gain (loss) on investments and net change in unrealized appreciation (depreciation) on investments, respectively, on the consolidated statements of operations.

 

Forward Currency Exchange Contracts

 

The Company may enter into forward currency exchange contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies. A forward currency exchange contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The Company does not utilize hedge accounting and as such the Company recognizes the value of its derivatives at fair value on the consolidated statements of assets and liabilities with changes in the net unrealized appreciation (depreciation) on forward currency exchange contracts recorded on the consolidated statements of operations. Forward currency exchange contracts are valued using the prevailing forward currency exchange rate of the underlying currencies. Unrealized appreciation (depreciation) on forward currency exchange contracts are recorded on the consolidated statements of assets and liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Cash collateral maintained in accounts held by counterparties is included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities. Notional amounts and the gross fair value of forward currency exchange contracts assets and liabilities are presented separately on the consolidated schedules of investments.

 

Changes in net unrealized appreciation (depreciation) are recorded on the consolidated statements of operations in net change in unrealized appreciation (depreciation) on forward currency exchange contracts. Net realized gains and losses are recorded on the consolidated statements of operations in net realized gain (loss) on forward currency exchange contracts. Realized gains and losses on forward currency exchange contracts are determined using the difference between the fair market value of the forward currency exchange contract at the time it was opened and the fair market value at the time it was closed or covered. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms.

 

Deferred Financing Costs and Debt Issuance Costs

 

The Company records costs related to issuance of revolving debt obligations as deferred financing costs on the consolidated statements of assets and liabilities. These costs are deferred and amortized using the straight-line method over the stated maturity life of the obligation. The Company records costs related to the issuance of term debt obligations as debt issuance costs. These costs are deferred and amortized using the effective interest method and these costs are presented as a reduction to the outstanding principal amount of the term debt obligations on the consolidated statements of assets and liabilities.

 

Income Taxes

 

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

 

The Company intends to comply with the applicable provisions of the Code pertaining to RICs and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is

 

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required in the consolidated financial statements. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders through September 30, 2019 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until the Company files the tax return for the tax year ending December 31, 2019. The character of income and gains that the Company will distribute is determined in accordance with income tax regulations that may differ from GAAP. BCSF I, LLC; BCSF II-C, LLC; BCSF CFSH, LLC; BCSF CFS, LLC, BCC Middle Market CLO 2018-1, LLC; and BCC Middle Market CLO 2019-1, LLC are disregarded entities for tax purposes and are consolidated with the tax return of the Company.

 

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes, if any, are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Management has analyzed the Company’s tax positions and has concluded that no liability for unrecognized tax benefits related to uncertain tax positions on returns to be filed by the Company for all open tax years should be recorded. The Company identifies its major tax jurisdiction as the United States, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. As of September 30, 2019, the tax years that remain subject to examination are from 2015 forward.

 

Recent Accounting Pronouncements

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 is part of the disclosure framework project and eliminates certain disclosure requirements for fair value measurements, requires entities to disclose new information, and modifies existing disclosure requirements. The new guidance is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company does not believe this change will have a material effect on its consolidated financial statements and disclosures.

 

Note 3. Investments

 

The following table shows the composition of the investment portfolio, at amortized cost and fair value as of September 30, 2019 (with corresponding percentage of total portfolio investments):

 

 

 

As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

First Lien Senior Secured Loans

 

$

2,189,765

 

86.6

%

$

2,178,962

 

86.9

%

First Lien Last Out Loans

 

27,645

 

1.1

 

27,307

 

1.1

 

Second Lien Senior Secured Loans

 

202,565

 

8.0

 

192,205

 

7.7

 

Subordinated Debt

 

14,744

 

0.5

 

14,963

 

0.6

 

Corporate Bonds

 

31,818

 

1.3

 

26,012

 

1.0

 

Equity Interests

 

43,292

 

1.7

 

45,702

 

1.8

 

Preferred Equity

 

19,227

 

0.8

 

21,454

 

0.9

 

Warrants

 

 

0.0

 

129

 

0.0

 

Total

 

$

2,529,056

 

100.0

%

$

2,506,734

 

100.0

%

 

The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 2018 (with corresponding percentage of total portfolio investments):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

First Lien Senior Secured Loans

 

$

1,074,413

 

61.3

%

$

1,058,839

 

61.3

%

First Lien Last Out Loans

 

27,325

 

1.5

 

27,488

 

1.6

 

Second Lien Senior Secured Loans

 

263,759

 

15.0

 

258,139

 

14.9

 

Subordinated Debt

 

39,711

 

2.3

 

39,625

 

2.3

 

Corporate Bonds

 

41,387

 

2.4

 

35,023

 

2.0

 

Investment Vehicles (1)

 

279,891

 

16.0

 

279,363

 

16.2

 

Equity Interests

 

24,078

 

1.4

 

26,522

 

1.5

 

Preferred Equity

 

2,553

 

0.1

 

2,807

 

0.2

 

Warrants

 

 

0.0

 

 

0.0

 

Total

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

 

22


Table of Contents

 


(1)                                      Represents equity investment in ABCS.

 

The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of September 30, 2019 (with corresponding percentage of total portfolio investments):

 

 

 

As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

United States

 

$

2,244,336

 

88.7

%

$

2,232,986

 

89.1

%

United Kingdom

 

126,541

 

5.0

 

122,324

 

5.0

 

Luxembourg

 

37,365

 

1.5

 

36,097

 

1.4

 

Germany

 

24,047

 

1.0

 

23,429

 

0.9

 

Ireland

 

20,449

 

0.8

 

19,915

 

0.8

 

Sweden

 

18,341

 

0.7

 

16,469

 

0.7

 

Australia

 

13,932

 

0.6

 

13,498

 

0.5

 

France

 

13,087

 

0.6

 

12,116

 

0.5

 

Jersey

 

10,978

 

0.4

 

10,626

 

0.4

 

Netherlands

 

11,272

 

0.4

 

10,566

 

0.4

 

Cayman Islands

 

8,708

 

0.3

 

8,708

 

0.3

 

Total

 

$

2,529,056

 

100.0

%

$

2,506,734

 

100.0

%

 

The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of December 31, 2018 (with corresponding percentage of total portfolio investments):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

United States (1)

 

$

1,613,203

 

92.0

%

$

1,589,936

 

92.0

%

United Kingdom

 

59,621

 

3.4

 

58,473

 

3.4

 

Ireland

 

22,770

 

1.3

 

23,414

 

1.4

 

Sweden

 

18,308

 

1.0

 

17,301

 

1.0

 

Norway

 

14,798

 

0.9

 

14,798

 

0.9

 

France

 

13,060

 

0.7

 

12,631

 

0.7

 

Netherlands

 

11,357

 

0.7

 

11,253

 

0.6

 

Total

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

 


(1)                                     Includes equity investment in ABCS.

 

23


Table of Contents

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of September 30, 2019 (with corresponding percentage of total portfolio investments):

 

 

 

As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

High Tech Industries

 

$

375,320

 

14.8

%

$

374,478

 

14.9

%

Healthcare & Pharmaceuticals

 

252,982

 

10.0

 

247,821

 

9.9

 

Aerospace & Defense

 

235,670

 

9.3

 

237,045

 

9.5

 

Consumer Goods: Non-Durable

 

213,725

 

8.5

 

214,378

 

8.6

 

Services: Business

 

205,045

 

8.1

 

203,882

 

8.1

 

Capital Equipment

 

149,382

 

5.9

 

149,604

 

6.0

 

Wholesale

 

121,024

 

4.8

 

119,720

 

4.8

 

Transportation: Cargo

 

109,952

 

4.3

 

110,101

 

4.4

 

Energy: Oil & Gas

 

75,634

 

3.0

 

76,390

 

3.0

 

Construction & Building

 

71,173

 

2.8

 

72,261

 

2.9

 

Media: Advertising, Printing & Publishing

 

65,797

 

2.6

 

63,926

 

2.5

 

Services: Consumer

 

60,702

 

2.4

 

59,478

 

2.4

 

Transportation: Consumer

 

59,519

 

2.4

 

59,019

 

2.4

 

Media: Diversified & Production

 

57,540

 

2.3

 

57,768

 

2.3

 

FIRE: Insurance (1)

 

51,256

 

2.0

 

51,301

 

2.0

 

Hotel, Gaming & Leisure

 

47,044

 

1.9

 

47,386

 

1.9

 

Media: Broadcasting & Subscription

 

43,125

 

1.7

 

42,889

 

1.7

 

Consumer Goods: Durable

 

39,507

 

1.5

 

39,303

 

1.6

 

Automotive

 

38,583

 

1.5

 

38,785

 

1.5

 

Retail

 

38,317

 

1.5

 

38,393

 

1.5

 

Chemicals, Plastics & Rubber

 

35,750

 

1.4

 

35,658

 

1.4

 

Banking

 

32,333

 

1.3

 

32,350

 

1.3

 

Forest Products & Paper

 

23,521

 

0.9

 

23,134

 

0.9

 

Energy: Electricity

 

22,222

 

0.9

 

22,184

 

0.9

 

Telecommunications

 

21,810

 

0.9

 

21,864

 

0.9

 

Beverage, Food & Tobacco

 

30,695

 

1.2

 

20,214

 

0.8

 

Environmental Industries

 

16,467

 

0.7

 

15,992

 

0.6

 

Containers, Packaging, & Glass

 

11,634

 

0.5

 

11,633

 

0.5

 

FIRE: Real Estate (1)

 

10,759

 

0.4

 

10,140

 

0.4

 

Utilities: Electric

 

12,568

 

0.5

 

9,637

 

0.4

 

Total

 

$

2,529,056

 

100.0

%

$

2,506,734

 

100.0

%

 


(1)             Finance, Insurance, and Real Estate (“FIRE”).

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2018 (with corresponding percentage of total portfolio investments):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

Investment Vehicles (1)

 

$

279,891

 

16.0

%

$

279,363

 

16.2

%

High Tech Industries

 

205,845

 

11.7

 

202,999

 

11.7

 

Services: Business

 

137,816

 

7.9

 

135,398

 

7.8

 

Healthcare & Pharmaceuticals

 

127,105

 

7.3

 

125,745

 

7.3

 

Aerospace & Defense

 

120,070

 

6.8

 

121,411

 

7.0

 

Transportation: Cargo

 

85,198

 

4.9

 

83,513

 

4.8

 

Hotel, Gaming & Leisure

 

81,487

 

4.6

 

80,683

 

4.7

 

Consumer Goods: Non-Durable

 

73,809

 

4.2

 

71,439

 

4.1

 

Wholesale

 

64,530

 

3.7

 

63,053

 

3.6

 

Capital Equipment

 

44,054

 

2.5

 

42,796

 

2.5

 

Construction & Building

 

41,240

 

2.4

 

41,582

 

2.4

 

Retail

 

43,263

 

2.5

 

41,384

 

2.4

 

FIRE: Insurance (2)

 

43,287

 

2.5

 

41,106

 

2.4

 

Services: Consumer

 

41,328

 

2.4

 

41,023

 

2.4

 

Containers, Packaging & Glass

 

40,212

 

2.3

 

38,694

 

2.2

 

Beverage, Food & Tobacco

 

38,154

 

2.2

 

35,613

 

2.1

 

Energy: Oil & Gas

 

31,541

 

1.8

 

31,195

 

1.8

 

Media: Diversified & Production

 

30,364

 

1.7

 

30,491

 

1.8

 

Automotive

 

29,482

 

1.7

 

29,337

 

1.7

 

Energy: Electricity

 

22,368

 

1.3

 

22,283

 

1.3

 

Forest Products & Paper

 

22,515

 

1.3

 

21,903

 

1.3

 

Media: Broadcasting & Subscription

 

21,868

 

1.2

 

20,945

 

1.2

 

Media: Advertising, Printing & Publishing

 

19,635

 

1.1

 

19,731

 

1.1

 

Chemicals, Plastics & Rubber

 

19,147

 

1.1

 

19,511

 

1.1

 

Consumer Goods: Durable

 

17,098

 

0.9

 

17,248

 

1.0

 

Environmental Industries

 

16,489

 

0.9

 

16,482

 

1.0

 

Telecommunications

 

15,240

 

0.9

 

15,122

 

0.9

 

Banking

 

13,260

 

0.7

 

13,235

 

0.8

 

FIRE: Real Estate (2)

 

10,714

 

0.6

 

10,650

 

0.6

 

Utilities: Electric

 

12,483

 

0.7

 

10,311

 

0.6

 

FIRE: Finance (2)

 

3,624

 

0.2

 

3,560

 

0.2

 

Total

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

 

24


Table of Contents

 


(1)             Represents equity investment in ABCS.

(2)             Finance, Insurance, and Real Estate (“FIRE”).

 

Antares Bain Capital Complete Financing Solution

 

Prior to April 30, 2019, the Company was party to a limited liability company agreement with Antares Midco Inc. (“Antares”) pursuant to which it invested in ABC Complete Financing Solution LLC, which made investments through its subsidiary, Antares Bain Capital Complete Financing Solution LLC (together with ABC Complete Financing Solution LLC, “ABCS”). ABCS, an unconsolidated Delaware limited liability company, was formed on September 27, 2017 and commenced operations on November 29, 2017. ABCS’ principal purpose was to make investments, primarily in senior secured unitranche loans. The Company recorded its investment in ABCS at fair value. Distributions of income received from ABCS, if any, were recorded as dividend income from controlled affiliate investments in the consolidated statements of operations. Distributions received from ABCS in excess of income earned at ABCS, if any, were recorded as a return of capital and reduced the amortized cost of controlled affiliate investments.

 

The Company and Antares, as members of ABCS, agreed to contribute capital up to (subject to the terms of their agreement) $950.0 million in aggregate to purchase equity interests in ABCS, with the Company and Antares contributing up to $425.0 million and $525.0 million, respectively. Funding of such commitments generally required the consent of both Antares Credit Opportunities Manager LLC and the Advisor on behalf of Antares and the Company, respectively. ABCS was capitalized with capital contributions from its members on a pro-rata basis based on their maximum capital contributions as transactions were funded after they had been approved.

 

Investment decisions of ABCS required the consent of both the Advisor and Antares Credit Opportunities Manager LLC, as representatives of the Company and Antares, respectively. Each of the Advisor and Antares sourced investments for ABCS.

 

On April 30, 2019, the Company formed BCSF Complete Financing Solution Holdco, LLC (“BCSF CFSH, LLC”) and BCSF Complete Financing Solution, LLC (“BCSF Unitranche” or “BCSF CFS, LLC”), wholly-owned, newly-formed, subsidiaries. The Company received its proportionate share of all assets which represented 44.737% of ABCS. The portfolio of investments that was distributed comprised of 25 senior secured unitranche loans with a fair value of $919.0 million and cash of $3.2 million. The Company also assumed the obligation to fund outstanding unfunded commitments of $31.4 million. In connection with the distribution, the Company recognized a realized gain of $0.3 million. The Company is no longer a member of ABCS. The distribution of assets received by the Company have been included in the Company’s consolidated financial statements and notes thereto.

 

In conjunction with the distribution from ABCS, on April 30, 2019, BCSF CFS, LLC entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. On the date of the ABCS distribution, the Company had $577.5 million outstanding on the JPM Credit Facility. See Note 6 for additional information on the JPM Credit Facility.

 

Below is selected balance sheet information for ABCS as of December 31, 2018:

 

Selected Balance Sheet Information

 

 

 

As of December 31, 2018

 

Loans, net of allowance of $17,616 (1)

 

$

1,616,795

 

Cash, restricted cash and other assets

 

52,240

 

Total assets

 

$

1,669,035

 

Debt (2)

 

$

1,027,615

 

Other liabilities

 

30,762

 

Total liabilities

 

$

1,058,377

 

Members’ equity

 

610,658

 

Total liabilities and members’ equity

 

$

1,669,035

 

 

25


Table of Contents

 


(1)                                     ABCS is not considered an investment company and does not follow the accounting and reporting guidelines in ASC 946. ABCS applies an allowance for loan loss methodology prescribed by FASB ASC 310, Receivables, and FASB ASC 450 Contingencies. The allowance for loan loss as of December 31, 2018 is a general allowance, there was no specific allowance for loan losses during the period. The Company estimates a fair value for each loan in the ABCS portfolio, which is presented in the Antares Bain Capital Complete Financing Solution schedule of investments below, which is an input to the Company’s valuation of ABCS as a whole.

 

(2)                                     Net of $3.6 million deferred financing costs for the ABCS Facility, December 31, 2018.

 

Below is selected statements of operations information for the three and nine months ended September 30, 2019 and 2018:

 

Selected Statements of Operations Information

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30,
2019 
(1)

 

September 30,
2018

 

September 30,
2019 
(1)

 

September 30,
2018

 

Interest Income

 

$

 

$

29,224

 

$

53,494

 

$

72,352

 

Fee income

 

 

89

 

217

 

1,036

 

Total revenues

 

 

29,313

 

53,711

 

73,388

 

Credit facility expenses

 

 

12,564

 

22,008

 

32,284

 

Other fees and expenses

 

 

13,848

 

6,661

 

16,326

 

Total expenses

 

 

26,412

 

28,669

 

48,610

 

Net investment income

 

 

2,901

 

25,042

 

24,778

 

Net increase in members’ capital from operations

 

$

 

$

2,901

 

$

25,042

 

$

24,778

 

 


(1)            The ABCS distribution was effective April 30, 2019.

 

Antares Bain Capital Complete Financing Solution

 

Schedule of Investments

As of December 31, 2018

(In Thousands)

 

Portfolio Company

 

Spread Above
Index 
(1)

 

Interest
Rate

 

Maturity Date

 

Principal/
Par Amount

 

Carrying Value

 

Fair Value (2)

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

Delayed Draw Term Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

 

 

 

 

PRCC Holdings, Inc.

 

L+ 6.50%

 

9.02

%

2/1/2021

 

$

11,878

 

$

11,878

 

$

11,878

 

Total Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

11,878

 

11,878

 

Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

 

 

 

 

Solaray, LLC

 

L+ 5.75%

 

8.49

%

9/9/2023

 

$

26,680

 

26,389

 

26,547

 

Solaray, LLC (3)

 

 

 

9/9/2023

 

$

 

 

(33

)

Total Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

26,389

 

26,514

 

FIRE: Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

Margaux Acquisition Inc. (3)

 

 

 

12/19/2024

 

$

 

 

(417

)

Total FIRE: Insurance

 

 

 

 

 

 

 

 

 

 

(417

)

High Tech Industries

 

 

 

 

 

 

 

 

 

 

 

 

 

Element Buyer, Inc. (3)

 

 

 

7/19/2025

 

$

 

 

(133

)

Element Buyer, Inc.

 

L+ 5.25%

 

7.76

%

7/19/2025

 

$

7,600

 

7,473

 

7,543

 

Total High Tech Industries

 

 

 

 

 

 

 

 

 

7,473

 

7,410

 

Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

 

 

 

 

Ansira Holdings, Inc.

 

L+ 5.75%

 

8.27

%

12/20/2022

 

$

2,478

 

2,472

 

2,459

 

Ansira Holdings, Inc. (3)

 

 

 

12/20/2022

 

$

 

 

(56

)

Total Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

2,472

 

2,403

 

Services: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

McKissock, LLC

 

L+ 5.75%

 

8.55

%

8/5/2021

 

$

2,605

 

2,583

 

2,605

 

Total Services: Consumer

 

 

 

 

 

 

 

 

 

2,583

 

2,605

 

Transportation: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Travel, Inc.

 

L+ 6.50%

 

9.12

%

12/1/2021

 

$

1,672

 

1,669

 

1,672

 

Direct Travel, Inc.

 

 

 

12/1/2021

 

$

 

 

 

Total Transportation: Consumer

 

 

 

 

 

 

 

 

 

1,669

 

1,672

 

Total Delayed Draw Term Loan

 

 

 

 

 

 

 

 

 

$

52,464

 

$

52,065

 

 

26


Table of Contents

 

First lien senior secured loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

 

 

 

 

 

 

 

 

 

 

 

API Technologies Corp.

 

L+ 5.75%

 

8.27

%

4/20/2024

 

$

117,861

 

116,559

 

117,566

 

Total Aerospace & Defense

 

 

 

 

 

 

 

 

 

116,559

 

117,566

 

Capital Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

Tidel Engineering, L.P.

 

L+ 6.25%

 

9.05

%

3/1/2024

 

$

86,442

 

86,415

 

86,442

 

Total Capital Equipment

 

 

 

 

 

 

 

 

 

86,415

 

86,442

 

Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

 

 

 

 

AP Plastics Group, LLC

 

L+ 5.25%

 

7.60

%

8/1/2022

 

$

48,398

 

48,348

 

47,914

 

PRCC Holdings, Inc.

 

L+ 6.50%

 

9.02

%

2/1/2021

 

$

73,813

 

73,813

 

73,813

 

Total Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

122,161

 

121,727

 

Construction & Building

 

 

 

 

 

 

 

 

 

 

 

 

 

Profile Products LLC

 

L+ 5.75%

 

8.54

%

12/20/2024

 

$

78,832

 

77,614

 

77,256

 

Total Construction & Building

 

 

 

 

 

 

 

 

 

77,614

 

77,256

 

Consumer Goods: Durable

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Franchise Concepts, Inc.

 

L+ 5.00%

 

7.43

%

7/9/2024

 

$

69,091

 

68,773

 

68,400

 

Stanton Carpet Corp. (7)

 

L+ 5.50%

 

8.04

%

11/21/2022

 

$

60,231

 

60,179

 

59,629

 

Total Consumer Goods: Durable

 

 

 

 

 

 

 

 

 

128,952

 

128,029

 

Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

 

 

 

 

Solaray, LLC

 

L+ 5.75%

 

8.49

%

9/9/2023

 

$

96,230

 

95,175

 

95,749

 

Total Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

95,175

 

95,749

 

Energy: Oil & Gas

 

 

 

 

 

 

 

 

 

 

 

 

 

Amspec Services, Inc.

 

L+ 5.75%

 

8.55

%

7/2/2024

 

$

90,025

 

88,986

 

86,874

 

Total Energy: Oil & Gas

 

 

 

 

 

 

 

 

 

88,986

 

86,874

 

FIRE: Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

Margaux Acquisition Inc.

 

L+ 6.00%

 

8.80

%

12/19/2024

 

$

65,125

 

63,766

 

63,822

 

Margaux UK Finance Limited

 

GBP LIBOR+ 6.00%

 

7.00

%

12/19/2024

 

£

17,356

 

21,651

 

21,665

 

Total FIRE: Insurance

 

 

 

 

 

 

 

 

 

85,417

 

85,487

 

High Tech Industries

 

 

 

 

 

 

 

 

 

 

 

 

 

Caliper Software, Inc.

 

L+ 5.50%

 

8.02

%

11/28/2025

 

$

68,182

 

67,509

 

67,159

 

Element Buyer, Inc.

 

L+ 5.25%

 

7.78

%

7/19/2025

 

$

85,287

 

83,863

 

84,647

 

Total High Tech Industries

 

 

 

 

 

 

 

 

 

151,372

 

151,806

 

Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

 

 

 

 

Ansira Holdings, Inc.

 

L+ 5.75%

 

8.27

%

12/20/2022

 

$

81,011

 

80,874

 

80,404

 

Cruz Bay Publishing, Inc. (5)

 

L+ 5.75%

 

8.30

%

6/6/2019

 

$

11,418

 

11,418

 

11,418

 

Cruz Bay Publishing, Inc. (6)

 

L+ 6.75%

 

9.57

%

6/6/2019

 

$

3,813

 

3,813

 

3,813

 

Total Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

96,105

 

95,635

 

Media: Diversified & Production

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficient Collaborative Retail Marketing Company, LLC

 

L+ 6.75%

 

9.55

%

6/15/2022

 

$

22,800

 

22,722

 

22,572

 

Efficient Collaborative Retail Marketing Company, LLC

 

L+ 6.75%

 

9.56

%

6/15/2022

 

$

33,741

 

33,241

 

33,404

 

Total Media: Diversified & Production

 

 

 

 

 

 

 

 

 

55,963

 

55,976

 

Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

Batteries Plus Holding Corporation

 

L+ 6.75%

 

9.27

%

7/6/2022

 

$

68,156

 

68,156

 

68,156

 

Total Retail

 

 

 

 

 

 

 

 

 

68,156

 

68,156

 

Services: Business

 

 

 

 

 

 

 

 

 

 

 

 

 

TEI Holdings Inc.

 

L+ 6.00%

 

8.80

%

12/20/2023

 

$

118,589

 

117,726

 

117,403

 

Total Services: Business

 

 

 

 

 

 

 

 

 

117,726

 

117,403

 

Services: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

McKissock, LLC

 

L+ 5.75%

 

8.55

%

8/5/2021

 

$

8,071

 

8,004

 

8,071

 

McKissock, LLC

 

L+ 5.75%

 

8.55

%

8/5/2021

 

$

42,144

 

41,792

 

42,460

 

Total Services: Consumer

 

 

 

 

 

 

 

 

 

49,796

 

50,531

 

Transportation: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Travel, Inc.

 

L+ 6.50%

 

9.30

%

12/1/2021

 

$

112,153

 

111,789

 

112,153

 

Total Transportation: Consumer

 

 

 

 

 

 

 

 

 

111,789

 

112,153

 

Wholesale

 

 

 

 

 

 

 

 

 

 

 

 

 

Abracon Group Holding, LLC. (4)

 

L+ 5.75%

 

8.56

%

7/18/2024

 

$

81,497

 

80,367

 

80,682

 

Aramsco, Inc.

 

L+ 5.25%

 

7.77

%

8/28/2024

 

$

50,343

 

49,394

 

48,958

 

Total Wholesale

 

 

 

 

 

 

 

 

 

129,761

 

129,640

 

Total First Lien Senior Secured

 

 

 

 

 

 

 

 

 

$

1,581,947

 

$

1,580,430

 

Total Corporate Debt

 

 

 

 

 

 

 

 

 

$

1,634,411

 

$

1,632,495

 

Total Investments

 

 

 

 

 

 

 

 

 

$

1,634,411

 

$

1,632,495

 

 


(1) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) which reset daily, monthly, quarterly or semiannually. For each, the Company has provided the spread over LIBOR and the current weighted average interest rate in effect at December 31, 2018. Certain investments are subject to a LIBOR interest rate floor.

(2) Fair Value determined by the Advisor.

(3) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.

(4) $204 of the total par amount for this security is at P + 4.75%.

(5) $158 of the total par amount for this security is at P + 4.75%.

(6) $53 of the total par amount for this security is at P + 5.75%.

(7) $391 of the total par amount for this security is at P + 4.50%.

 

27


Table of Contents

 

Note 4. Fair Value Measurements

 

Fair Value Disclosures

 

The following table presents fair value measurements of investments by major class, cash equivalents and derivatives as of September 30, 2019, according to the fair value hierarchy:

 

 

 

Fair Value Measurements

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Investments:

 

 

 

 

 

 

 

 

 

First Lien Senior Secured Loans

 

$

 

$

413,812

 

$

1,765,150

 

$

2,178,962

 

First Lien Last Out Loans

 

 

 

27,307

 

27,307

 

Second Lien Senior Secured Loans

 

 

56,090

 

136,115

 

192,205

 

Subordinated Debt

 

 

 

14,963

 

14,963

 

Corporate Bonds

 

 

26,012

 

 

26,012

 

Equity Interests

 

 

 

45,702

 

45,702

 

Preferred Equity

 

 

 

21,454

 

21,454

 

Warrants

 

 

 

129

 

129

 

Total Investments

 

$

 

$

495,914

 

$

2,010,820

 

$

2,506,734

 

Cash equivalents

 

$

155,081

 

$

 

$

 

$

155,081

 

Forward currency exchange contracts (asset)

 

$

 

$

9,308

 

$

 

$

9,308

 

 

The following table presents fair value measurements of investments by major class, cash equivalents and derivatives as of December 31, 2018, according to the fair value hierarchy:

 

 

 

Fair Value Measurements

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Investments:

 

 

 

 

 

 

 

 

 

First Lien Senior Secured Loans

 

$

 

$

619,352

 

$

439,487

 

$

1,058,839

 

First Lien Last Out Loans

 

 

 

27,487

 

27,487

 

Second Lien Senior Secured Loans

 

 

112,586

 

145,555

 

258,141

 

Subordinated Debt

 

 

 

39,625

 

39,625

 

Corporate Bonds

 

 

35,023

 

 

35,023

 

Investment Vehicles (1)

 

 

 

279,363

 

279,363

 

Equity Interests

 

 

 

26,521

 

26,521

 

Preferred Equity

 

 

 

2,807

 

2,807

 

Warrants

 

 

 

 

 

Total Investments

 

$

 

$

766,961

 

$

960,845

 

$

1,727,806

 

Cash equivalents

 

$

877

 

$

 

$

 

$

877

 

Forward currency exchange contracts (asset)

 

$

 

$

9,322

 

$

 

$

9,322

 

 


(1)                                     Represents equity investment in ABCS.

 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2019:

 

 

 

First Lien
Senior Secured
Loans

 

First Lien
Last Out
Loans

 

Second Lien
Senior Secured
Loans

 

Subordinated
Debt

 

Investment
Vehicles

 

Equity
Interest

 

Preferred
Equity

 

Warrants

 

Total
Investments

 

Balance as of January 1, 2019

 

$

439,487

 

$

27,487

 

$

145,555

 

$

39,625

 

$

279,363

 

$

26,521

 

$

2,807

 

$

 

$

960,845

 

Purchases of investments and other adjustments to cost

 

691,236

 

422

 

43,955

 

 

64,741

 

19,833

 

16,659

 

 

836,846

 

Distribution to Company from ABCS

 

918,870

 

 

 

 

(346,329

)

 

 

 

572,541

 

Paid-in-kind interest

 

19

 

 

 

 

 

 

15

 

 

34

 

Net accretion of discounts (amortization of premiums)

 

1,618

 

71

 

205

 

33

 

 

 

 

 

1,927

 

Proceeds from principal repayments and sales of investments

 

(328,263

)

(172

)

(41,490

)

(25,000

)

1,432

 

(779

)

 

 

(394,272

)

Net change in unrealized appreciation (depreciation) on investments

 

(1,841

)

(500

)

(1,152

)

305

 

528

 

(33

)

1,973

 

129

 

(591

)

Net realized gains (losses) on investments

 

4

 

(1

)

270

 

 

265

 

160

 

 

 

698

 

Transfers out of Level 3

 

(59,955

)

 

(17,384

)

 

 

 

 

 

(77,339

)

Transfers to Level 3

 

103,975

 

 

6,156

 

 

 

 

 

 

110,131

 

Balance as of September 30, 2019

 

$

1,765,150

 

$

27,307

 

$

136,115

 

$

14,963

 

$

 

$

45,702

 

$

21,454

 

$

129

 

$

2,010,820

 

Change in unrealized appreciation (depreciation) attributable to investments still held at September 30, 2019

 

$

(2,506

)

$

(500

)

$

(2,075

)

$

305

 

$

 

$

(33

)

$

1,970

 

$

129

 

$

(2,710

)

 

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Table of Contents

 

Transfers between levels, if any, are recognized at the beginning of the quarter in which transfers occur. For the nine months ended September 30, 2019, transfers from Level 2 to Level 3 were primarily due to decreased price transparency. For the nine months ended September 30, 2019, transfers from Level 3 to Level 2 were primarily due to increased price transparency.

 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2018:

 

 

 

 

First Lien
Senior Secured
Loans

 

First Lien
Last Out
Loans

 

Second Lien
Senior Secured
Loans

 

Subordinated
Debt

 

Investment
Vehicles 
(1)

 

Equity
Interest

 

Preferred
Equity

 

Total
Investments

 

Balance as of January 1, 2018

 

$

215,339

 

$

30,516

 

$

84,722

 

$

 

$

178,410

 

$

9,763

 

$

1,964

 

$

520,714

 

Purchases of investments and other adjustments to cost

 

309,220

 

422

 

57,391

 

24,700

 

79,574

 

7,678

 

 

478,985

 

Net accretion of discounts (amortization of premiums)

 

637

 

64

 

152

 

3

 

 

 

 

856

 

Proceeds from principal repayments and sales of investments

 

(104,816

)

(76

)

(17,070

)

 

(1,310

)

 

 

(123,272

)

Net change in unrealized appreciation (depreciation) on investments

 

(1,625

)

(529

)

(1,742

)

(3

)

1,958

 

1,176

 

107

 

(658

)

Net realized gains on investments

 

6

 

 

18

 

 

 

 

 

24

 

Transfers out of Level 3

 

(9,142

)

 

(13,458

)

 

 

 

 

(22,600

)

Transfers to Level 3

 

13,448

 

 

14,701

 

 

 

 

 

28,149

 

Balance as of September 30, 2018

 

$

423,067

 

$

30,397

 

$

124,714

 

$

24,700

 

$

258,632

 

$

18,617

 

$

2,071

 

$

882,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized appreciation (depreciation) attributable to investments still held at September 30, 2018

 

$

(1,215

)

$

(529

)

$

(1,398

)

$

(3

)

$

1,958

 

$

1,176

 

$

107

 

$

96

 

 


(1)                                        Represents equity investment in ABCS.

 

Transfers between levels, if any, are recognized at the beginning of the quarter in which transfers occur. For the nine months ended September 30, 2018, transfers from Level 2 to Level 3 were primarily due to decreased price transparency. For the nine months ended September 30, 2018, the transfer from Level 3 to Level 2 was primarily due to increased price transparency.

 

Significant Unobservable Inputs

 

ASC 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner.

 

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Table of Contents

 

 

 

As of September 30, 2019

 

 

 

Fair Value
of Level 3 Assets 
(1)

 

Valuation
Technique

 

Significant
Unobservable
Inputs

 

Range of Significant
Unobservable Inputs
(Weighted Average 
(2))

 

First Lien Senior Secured Loans

 

$

1,342,865

 

Discounted Cash Flows

 

Comparative Yields

 

4.4%-12.0% (7.4%)

 

First Lien Senior Secured Loans

 

14,025

 

Collateral Analysis

 

Recovery Rate

 

100%

 

First Lien Last Out

 

27,307

 

Discounted Cash Flows

 

Comparative Yields

 

7.4%-12.5% (10.4%)

 

Second Lien Senior Secured Loans

 

97,254

 

Discounted Cash Flows

 

Comparative Yields

 

6.1%-13.5% (9.4%)

 

Subordinated Debt

 

14,963

 

Discounted Cash Flows

 

Comparative Yields

 

13.5%-13.5% (13.5%)

 

Equity Interest

 

15,329

 

Comparable Company Multiple

 

EBITDA Multiple

 

6.8x-13.5x (8.6x)

 

Equity Interest

 

15,310

 

Discounted Cash Flows

 

Comparative Yields

 

10.0%-10.0% (10.0%)

 

Preferred Equity

 

21,454

 

Comparable Company Multiple

 

EBITDA Multiple

 

7.5x-12.0x (10.2x)

 

Warrants

 

129

 

Comparable Company Multiple

 

EBITDA Multiple

 

7.5x-7.5x (7.5x)

 

Total investments

 

$

1,548,636

 

 

 

 

 

 

 

 


(1)             Included within the Level 3 assets of $2,010,820 is an amount of $462,184 for which the Advisor did not develop the unobservable inputs for the determination of fair value (examples include single source quotation and prior or pending transactions).

(2)             Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.

 

The Company used the income approach and market approach to determine the fair value of certain Level 3 assets as of September 30, 2019. The significant unobservable input used in the income approach is the comparative yield. The comparative yield is used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the comparative yield would result in a decrease/increase, respectively, in the fair value. The significant unobservable inputs used in the market approach is the comparable company multiple and the recovery rate. The multiple is used to estimate the enterprise value of the underlying investment. An increase/decrease in the multiple would result in an increase/decrease, respectively, in the fair value. 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 valuation techniques and significant unobservable inputs used in Level 3 fair value measurements of assets as of December 31, 2018 were as follows:

 

 

 

As of December 31, 2018

 

 

 

Fair Value
of Level 3 Assets 
(1)

 

Valuation
Technique

 

Significant
Unobservable
Inputs

 

Range of Significant
Unobservable Inputs
(Weighted Average
(2))

 

First Lien Senior Secured Loans

 

$

248,967

 

Discounted Cash Flows

 

Comparative Yields

 

5.4%-12.8% (8.1%)

 

First Lien Senior Secured Loans

 

4,163

 

Comparable Company Multiple

 

Book Value Multiple

 

1x-1x (1x)

 

First Lien Senior Secured Loans

 

11,500

 

Collateral Analysis

 

Recovery Rate

 

100%

 

First Lien Last Out Loans

 

27,454

 

Discounted Cash Flows

 

Comparative Yields

 

8.6%-14.5% (12.1%)

 

Second Lien Senior Secured Loans

 

85,980

 

Discounted Cash Flows

 

Comparative Yields

 

6.6%-14.5% (10.6%)

 

Subordinated Debt

 

39,625

 

Discounted Cash Flows

 

Comparative Yields

 

10.0%-16.2% (12.3%)

 

Investment Vehicles (3)

 

279,363

 

Other

 

 

 

Equity Interest

 

3,000

 

Comparable Company Multiple

 

EBITDA Multiple

 

13.3x-13.5x (13.4x)

 

Equity Interest

 

14,723

 

Comparable Company Multiple

 

Book Value Multiple

 

1x-1x (1x)

 

Preferred Equity

 

2,207

 

Comparable Company Multiple

 

EBITDA Multiple

 

10.5x-10.5x (10.5x)

 

Total investments

 

$

716,982

 

 

 

 

 

 

 

 


(1)             Included within the Level 3 assets of $960,846 is an amount of $243,864 for which the Advisor did not develop the unobservable inputs for the determination of fair value (examples include single source quotation and prior or pending transactions).

(2)             Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.

(3)             Represents equity investment in ABCS. The Company determines the fair value of its investment in ABCS giving consideration to the assets and liabilities of ABCS, at fair value, including consideration of any necessary adjustments.

 

30


Table of Contents

 

The fair value of the loans held by ABCS were determined based upon recent transactions or the use of discounted cash flows, with comparative yields ranging from 7.7% to 10.9% and a weighted average of 8.9%. The carrying value of the ABCS Facility approximates fair value.

 

The Company used the income approach and market approach to determine the fair value of certain Level 3 assets as of December 31, 2018. The significant unobservable input used in the income approach is the comparative yield. The comparative yield is used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the comparative yield would result in a decrease/increase, respectively, in the fair value. The significant unobservable input used in the market approach is the comparable company multiple. The multiple is used to estimate the enterprise value of the underlying investment. An increase/decrease in the multiple would result in an increase/decrease, respectively, in the fair value.

 

The fair value of the BCSF Revolving Credit Facility (as defined in Note 6), which is categorized as Level 3 within the fair value hierarchy as of September 30, 2019 and December 31, 2018, approximates the carrying value of such facility. The fair values of the 2018-1 Notes (as defined in Note 6), which are categorized as Level 3 within the fair value hierarchy as of September 30, 2019, and December 31, 2018, approximate the carrying value of such facilities. The fair value of the JPM Credit Facility (as defined in Note 6), which is categorized as Level 3 within the fair value hierarchy as of September 30, 2019, approximates the carrying value of such facility. The fair values of the 2019-1 Debt (as defined in Note 6), which are categorized as Level 3 within the fair value hierarchy as of September 30, 2019, approximate the carrying value of such facilities.

 

Note 5. Related Party Transactions

 

Investment Advisory Agreement

 

The Company has entered into the first amended and restated investment advisory agreement as of November 14, 2018 (the “Investment Advisory Agreement”) with the Advisor, pursuant to which the Advisor manages the Company’s investment program and related activities. On November 28, 2018, the Board, including a majority of the Independent Directors, approved a second amended and restated advisory agreement (the “Amended Advisory Agreement”) between the Company and BCSF Advisors, LP (“the Advisor”). On February 1, 2019, Shareholders approved the Amended Advisory Agreement which replaced the existing Investment Advisory Agreement.

 

Base Management Fee

 

The Company pays the Advisor a base management fee (the “Base Management Fee”), accrued and payable quarterly in arrears. The Base Management Fee is calculated at an annual rate of 1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters. Such amount shall be appropriately adjusted (based on the actual number of days elapsed relative to the total number of days in such calendar quarter) for any share issuance or repurchases by the Company during a calendar quarter. The Base Management Fee for any partial quarter will be appropriately prorated. Effective February 1, 2019, the base management fee has been revised to a tiered management fee structure so that the base management fee of 1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an asset coverage ratio down to 200%, but a lower base management fee of 1.0% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company’s asset coverage ratio below 200%.

 

The Advisor, however, contractually waived its right to receive the Base Management Fee in excess of 0.75% of the aggregate gross assets excluding cash (including capital drawn to pay the Company’s expenses) during any period prior to the IPO. Additionally, for the period from the date of the IPO through December 31, 2018, the Advisor voluntarily waived its right to receive the Base Management Fee in excess of 0.75%. The Advisor was not permitted to recoup any waived amounts. In certain previous filings, management fees were presented on a net basis.

 

For the three months ended September 30, 2019 and 2018 management fees were $8.9 million and $4.6 million, respectively. For the nine months ended September 30, 2019 and 2018 management fees were $23.6 million and $11.6 million, respectively. For the three months ended September 30, 2019, $0.0 million was contractually waived and $2.6 million was voluntarily waived. For the nine months ended September 30, 2019, $0.0 million was contractually waived and $6.4 million was voluntarily waived. For the three months ended September 30, 2018, $2.3 million was contractually waived and $0.0 million was voluntarily waived. For the nine months ended September 30, 2018, $5.8 million was contractually waived and $0.0 million was voluntarily waived.

 

31


Table of Contents

 

As of September 30, 2019 and December 31, 2018, management fees payable were $6.3 million and $3.0 million, respectively.

 

Incentive Fee

 

For the periods ended September 30, 2019 and 2018, the incentive fee consists of two parts that are determined independently of each other such that one component may be payable even if the other is not.

 

The first part, the Incentive Fee based on income (the “Income Fee”), is calculated and payable quarterly in arrears as detailed below.

 

The second part, the capital gains incentive fee, is determined and payable in arrears as detailed below.

 

Incentive Fee on Pre-Incentive Fee Net Investment Income

 

Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the Base Management Fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding 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 (“OID”), 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 or unrealized capital gains or losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the Hurdle rate for a quarter, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses.

 

Prior to the calendar quarter that commences on January 1, 2019 the incentive on income was calculated as follows:

 

(i)                                     15.0% of the pre-incentive fee net investment income for the current quarter prior to the IPO; or

(ii)                                  17.5% of the pre-incentive fee net income for the current quarter after the IPO; and

(i)                                     15.0% of all remaining pre-incentive fee net investment income above the “catch-up” prior to the IPO, or

(ii)                                  17.5% of all remaining pre-incentive fee net investment income above the “catch-up” after the IPO.

 

Beginning with the calendar quarter that commences on January 1, 2019, the incentive fee based on income is calculated and payable quarterly in arrears based on the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2019 (or the appropriate portion thereof in the case of any of the Company’s first eleven calendar quarters that commence on or after January 1, 2019) (in either case, the “Trailing Twelve Quarters”). This calculation is referred to as the “Three-Year Lookback.”

 

With respect to any calendar quarter that commences on or after January 1, 2019, pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters is compared to a “Hurdle Amount” equal to the product of (i) the hurdle rate of 1.5% per quarter (6% annualized) and (ii) the sum of our net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Hurdle Amount will be calculated after making appropriate adjustments to our NAV at the beginning of each applicable calendar quarter for our subscriptions (which shall include all issuances by us of shares of our Common Stock, including issuances pursuant to the Company’s dividend reinvestment plan) and distributions during the applicable calendar quarter.

 

Commencing on January 1, 2019, the quarterly incentive fee based on income is calculated, subject to the Incentive Fee Cap (as defined below), based on the amount by which (A) aggregate pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters exceeds (B) the Hurdle Amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” The incentive fee based on income that is paid to the Advisor in respect of a particular calendar quarter will equal the Excess Income Amount less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.

 

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The incentive fee based on income for each calendar quarter is determined as follows:

 

(i)                                   No incentive fee based on income is payable to the Advisor for any calendar quarter for which there is no Excess Income Amount;

(ii)                               100% of the aggregate pre-incentive fee net investment income in respect of the Trailing Twelve Quarters with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Amount, but is less than or equal to an amount, which the Company refers to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by our NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters; and

(iii)                            17.5% of the aggregate pre-incentive fee net investment income in respect of the Trailing Twelve Quarters that exceeds the Catch-up Amount.

 

Incentive Fee Cap

 

With respect to any calendar quarter that commences on or after January 1, 2019, the incentive fee based on income is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in respect of any calendar quarter is an amount equal to 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters less the aggregate incentive fees based on income that were paid to the Advisor in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.

 

“Cumulative Net Return” during the relevant Trailing Twelve Quarters means (x) the pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the relevant Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, the Company will pay no incentive fee based on income to the Advisor in respect of that quarter. If, in any quarter, the Incentive Fee Cap for such quarter is a positive value but is less than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the Incentive Fee Cap in respect of such quarter. If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the incentive fee based on income that is payable to the Advisor for such quarter calculated as described above, the Company will pay an incentive fee based on income to the Advisor equal to the incentive fee calculated as described above for such quarter without regard to the Incentive Fee Cap.

 

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

 

For the three months ended September 30, 2019 and 2018, the Company incurred $4.3 million and $2.5 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the consolidated statements of operations. The Advisor has voluntarily waived $0.8 million and $0.6 million, respectively, of the income incentive fees earned by the Advisor during the three months ended September 30, 2019 and 2018. Such income incentive fee waiver is irrevocable and such waived income incentive fees will not be subject to recoupment in future periods. This income incentive fee waiver does not impact any income incentive fees earned by the Advisor in future periods.

 

For the nine months ended September 30, 2019 and 2018, the Company incurred $12.9 million and $6.1 million, respectively, of income incentive fees (before waivers), which are included in incentive fees on the consolidated statements of operations. The Advisor has voluntarily waived $2.7 million and $1.6 million, respectively, of the income incentive fees earned by the Advisor during the nine months ended September 30, 2019 and 2018. Such income incentive fee waiver is irrevocable and such waived income incentive fees will not be subject to recoupment in future periods. This income incentive fee waiver does not impact any income incentive fees earned by the Advisor in future periods.

 

As a result of the income incentive fee waivers, the Company incurred $3.6 and $10.2 million of income incentive fees (after waivers) for the three and nine months ended September 30, 2019, respectively. As a result of the income incentive fee waivers, the Company incurred $1.9 and $4.5 million of income incentive fees (after waivers) for the three and nine months ended September 30, 2018, respectively.

 

As of September 30, 2019 and December 31, 2018, there was $3.6 million and $3.3 million, respectively, related to the income incentive fee accrued in incentive fee payable on the consolidated statements of assets and liabilities.

 

On October 11, 2018, the Board approved, subject to completion of the IPO, the Investment Advisory Agreement. Beginning with the calendar quarter that commenced January 1, 2019, this Investment Advisory Agreement incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any,

 

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during the applicable three-year lookback period. The Amended Advisory Agreement approved by Stockholders on February 1, 2019 contains the same provisions.

 

Annual Incentive Fee Based on Capital Gains

 

The second part of the incentive fee is a capital gains incentive fee that will be determined and payable in arrears in cash as of the end of each fiscal year (or upon termination of the Amended Advisory Agreement, as of the termination date), and equals (i) 15% of our realized capital gains as of the end of the fiscal year prior to the IPO, and (ii) 17.5% of our realized capital gains as of the end of the fiscal year after the IPO. In determining the capital gains incentive fee payable to the Advisor, the Company calculates the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since our inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in our portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the cost of such investment. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the cost of such investment. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the cost of such investment. At the end of the applicable year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to our portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year will equal 15% before the IPO or 17.5% after the IPO, as applicable, of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of our portfolio in all prior years.

 

Because the IPO occurred on a date other than the first day of a fiscal year, a capital gains incentive fee was calculated as of the day before the IPO, with such capital gains incentive fee paid to the Advisor following the end of the fiscal year in which the IPO occurred. For the avoidance of doubt, such capital gains incentive fee was equal to 15% of the Company’s realized capital gains on a cumulative basis from inception through the day before the IPO, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. Following the IPO, solely for the purposes of calculating the capital gains incentive fee, the Company will be deemed to have previously paid capital gains incentive fees prior to the IPO equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid capital gains incentive fees for all periods prior to the IPO by (b) the percentage obtained by dividing (x) 17.5% by (y) 15%. 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.

 

There was no capital gains incentive fee payable to the Advisor under the Amended Advisory Agreement as of September 30, 2019 and December 31, 2018.

 

US GAAP requires that the incentive fee accrual consider the cumulative aggregate unrealized capital appreciation of investments or other financial instruments in the calculation, as an incentive fee 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 actually payable under the Amended Advisory Agreement (“GAAP Incentive Fee”). There can be no assurance that such unrealized appreciation will be realized in the future. Accordingly, such fee, as calculated and accrued, would not necessarily be payable under the Amended Advisory Agreement, and may never be paid based upon the computation of incentive fees in subsequent period.

 

For the three months ended September 30, 2019 and 2018 the Company accrued $0.0 million and $0.7 million of incentive fees related to the GAAP Incentive Fee which is included in incentive fees on the consolidated statements of operations, respectively. For the nine months ended September 30, 2019 and 2018 the Company accrued $0.0 million and $0.1 million of incentive fees related to the GAAP Incentive Fee which is included in incentive fees on the consolidated statements of operations, respectively. As of September 30, 2019 and December 31, 2018, there was $0.0 million and $0.0 million related to the GAAP Incentive Fee accrued in incentive fee payable on the consolidated statements of assets and liabilities.

 

Administration Agreement

 

The Company has entered into an administration agreement (the “Administration Agreement”) with the advisor (in such capacity, the “Administrator”), pursuant to which the Administrator will provide the administrative services necessary for us to operate, and the Company will utilize the Administrator’s office facilities, equipment and recordkeeping services. Pursuant to the Administration Agreement, the Administrator has agreed to oversee our public reporting requirements and tax reporting and monitor our expenses and the performance of professional services rendered to us by others. The Administrator has also hired a sub-administrator to assist in the provision of administrative services. The Company will reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement,

 

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including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to the business and affairs of the Company, and will be subject to oversight by the Board. The Company incurred expenses related to the Administrator of $0.2 million and $0.0 million for the three months ended September 30, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Company incurred expenses related to the Administrator of $0.8 million and $0.0 million for the nine months ended September 30, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. As of September 30, 2019 and December 31, 2018, $0.2 million and $0.0 million, respectively, in expenses related to the Administrator were payable and included in “accounts payable and accrued expenses” in the consolidated statements of assets and liabilities. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. The Company incurred expenses related to the sub-administrator of $0.2 million and $0.4 million for the three months ended September 30, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Company incurred expenses related to the sub-administrator of $0.5 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. The Administrator will not seek reimbursement in the event that any such reimbursements would cause any distributions to our stockholders to constitute a return of capital. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and the Company will reimburse the expenses of these parties incurred and paid by the Advisor on our behalf.

 

Resource Sharing Agreement

 

The Company’s investment activities are managed by the Advisor, an investment adviser that is registered with the SEC under the Advisers Act. The Advisor 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 Advisor has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Bain Capital Credit, LP (“Bain Capital Credit”), pursuant to which Bain Capital Credit provides the Advisor with experienced investment professionals (including the members of the Advisor’s Credit Committee) and access to the resources of Bain Capital Credit so as to enable the Advisor to fulfill its obligations under the Amended Advisory Agreement. Through the Resource Sharing Agreement, the Advisor intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Bain Capital Credit’s investment professionals. There can be no assurance that Bain Capital Credit will perform its obligations under the Resource Sharing Agreement. The Resource Sharing Agreement may be terminated by either party on 60 days’ notice, which if terminated may have a material adverse consequence on the Company’s operations.

 

Co-investments

 

The Company will invest alongside our affiliates, subject to compliance with applicable regulations and our allocation procedures. Certain types of negotiated co-investments will be made only in accordance with the terms of the exemptive order the Company received from the SEC initially on August 23, 2016, as amended on March 23, 2018 (the “Order”). Under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of our or its stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our Board’s approved criteria. In certain situations where co-investment with one or more funds managed by the Advisor or its affiliates is not covered by the Order, the personnel of the Advisor or its affiliates will need to decide which funds will proceed with the investment. Such personnel will make these determinations based on policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations.

 

Related Party Commitments

 

Prior to the IPO, the Advisor made commitments of $10.8 million to the Company as of December 31, 2018, of which $7.8 million had been called by the Company as of December 31, 2018. As of September 30, 2019 and December 31, 2018, the Advisor held 389,639.59 and 389,476.18 shares of the Company’s common stock, respectively. An affiliate of the Advisor is the investment manager to certain pooled investment vehicles which are investors in the Company. Collectively, these investors had made commitments to the Company of $555.3 million as of December 31, 2018 of which $388.7 million had been called by the Company as

 

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of December 31, 2018. These investors held 9,539,043.66 and 19,306,284.66 shares of the Company at September 30, 2019 and December 31, 2018, respectively.

 

All outstanding commitments were cancelled due the completion of the IPO on November 15, 2018.

 

Non-Controlled/Affiliate and Controlled Affiliate Investments

 

Transactions during the nine months ended September 30, 2019 in which the issuer was either an Affiliated Person or an Affiliated Person that the Company is deemed to Control are as follows:

 

Portfolio Company

 

Principal/
Par Amount

 

Fair Value
as of
December 31,
2018

 

Gross
Addition

 

Gross
Reductions

 

Change in
Unrealized
Gains
(Losses)

 

Realized
Gains
(Losses)

 

Fair Value
as of
September 30,
2019

 

Dividend
and
Interest
Income

 

Other
Income

 

Non-Controlled/affiliate investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADT Pizza, LLC, Equity Interest (1)

 

$

6,720

 

$

6,720

 

$

 

$

 

$

 

$

 

$

6,720

 

$

 

$

 

Total Non-Controlled/affiliate investment

 

$

6,720

 

$

6,720

 

$

 

$

 

$

 

$

 

$

6,720

 

$

 

$

 

Controlled affiliate investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACC Holdco, LLC, Preferred Equity

 

$

11,706

 

$

 

$

11,707

 

$

(4

)

$

3

 

$

 

$

11,706

 

$

491

 

$

4

 

Air Comm Corporation LLC, First Lien Senior Secured Loan

 

27,366

 

 

26,630

 

(69

)

(15

)

 

26,546

 

641

 

 

Antares Bain Capital Complete Financing Solution LLC, Investment Vehicle

 

 

279,363

 

1,432

 

(281,589

)

529

 

265

 

 

13,875

 

 

BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest

 

1,116

 

1,243

 

384

 

 

389

 

 

2,016

 

81

 

 

BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan

 

6,349

 

4,163

 

2,204

 

(18

)

 

 

6,349

 

383

 

 

BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest

 

11,863

 

13,480

 

 

 

(186

)

 

13,294

 

848

 

 

Gale Aviation (Offshore) Co, Equity Interest

 

8,708

 

 

9,127

 

(419

)

 

 

8,708

 

129

 

 

Total Controlled affiliate investment

 

$

67,108

 

$

298,249

 

$

51,484

 

$

(282,099

)

$

720

 

$

265

 

$

68,619

 

$

16,448

 

$

4

 

Total

 

$

73,828

 

$

304,969

 

$

51,484

 

$

(282,099

)

$

720

 

$

265

 

$

75,339

 

$

16,448

 

$

4

 

 


(1)                     Non-income producing.

 

Transactions during the year ended December 31, 2018 in which the issuer was either an Affiliated Person or an Affiliated Person a portfolio company that the Company is deemed to Control are as follows:

 

Portfolio Company

 

Principal/
Par Amount

 

Fair Value
as of
December 31,
2017

 

Gross
Addition

 

Gross
Reductions

 

Change in
Unrealized
Gains
(Losses)

 

Realized
Gains
(Losses)

 

Fair Value
as of
December 31,
2018

 

Dividend
and
Interest
Income

 

Other
Income

 

Non-Controlled/affiliate investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADT Pizza, LLC, Equity Interest (1)

 

$

6,720

 

$

 

$

6,720

 

$

 

$

 

$

 

$

6,720

 

$

 

$

 

Total Non-Controlled/affiliate investment

 

$

6,720

 

$

 

$

6,720

 

$

 

$

 

$

 

$

6,720

 

$

 

$

 

Controlled affiliate investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antares Bain Capital Complete Financing Solution LLC, Investment Vehicle

 

$

279,891

 

$

178,410

 

$

103,148

 

$

(1,310

)

$

(885

)

$

 

$

279,363

 

$

24,492

 

$

 

BCC Jetstream Holdings Aviation (On II), LLC, Unfunded Commitment (1)

 

 

 

 

 

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC, Equity Interest

 

731

 

424

 

407

 

 

412

 

 

1,243

 

30

 

 

BCC Jetstream Holdings Aviation (On II), LLC, First Lien Senior Secured Loan

 

4,163

 

1,837

 

2,326

 

 

 

 

4,163

 

312

 

 

BCC Jetstream Holdings Aviation (Off I), LLC, Equity Interest

 

11,863

 

7,839

 

4,459

 

 

1,181

 

 

13,479

 

866

 

 

Total Controlled affiliate investment

 

$

296,648

 

$

188,510

 

$

110,340

 

$

(1,310

)

$

708

 

$

 

$

298,248

 

$

25,700

 

$

 

Total

 

$

303,368

 

$

188,510

 

$

117,060

 

$

(1,310

)

$

708

 

$

 

$

304,968

 

$

25,700

 

$

 

 


(1)                     Non-income producing.

 

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Note 6. Debt

 

In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain exceptions, effective February 2, 2019, the Company is permitted to borrow amounts such that its asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required. As of September 30, 2019 and December 31, 2018, the Company’s asset coverage ratio based on aggregated borrowings outstanding was 161% and 257%, respectively.

 

The Company’s outstanding borrowings as of September 30, 2019 and December 31, 2018 were as follows:

 

 

 

As of September 30, 2019

 

As of December 31, 2018

 

 

 

Total Aggregate
Principal Amount
Committed

 

Principal
Amount
Outstanding

 

Carrying
Value
 (1)

 

Total Aggregate
Principal Amount
Committed

 

Principal
Amount
Outstanding

 

Carrying
Value
 (1)

 

BCSF Revolving Credit Facility

 

$

500,000

 

$

316,015

 

$

316,015

 

$

500,000

 

$

271,265

 

$

271,265

 

2018-1 Notes

 

365,700

 

365,700

 

363,789

 

365,700

 

365,700

 

363,660

 

JPM Credit Facility

 

666,581

 

581,798

 

581,798

 

 

 

 

2019-1 Debt

 

398,750

 

398,750

 

395,976

 

 

 

 

Total Debt

 

$

1,931,031

 

$

1,662,263

 

$

1,657,578

 

$

865,700

 

$

636,965

 

$

634,925

 

 


(1)                                     Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs.

 

The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the nine months ended September 30, 2019 and year ended December 31, 2018 were 4.8% and 4.3%, respectively.

 

The following table shows the contractual maturities of our debt obligations as of September 30, 2019:

 

 

 

Payments Due by Period

 

 

 

Total

 

Less than
1 year

 

1 — 3 years

 

3 — 5 years

 

More than
5 years

 

BCSF Revolving Credit Facility

 

$

316,015

 

$

 

$

 

$

316,015

 

$

 

2018-1 Notes

 

365,700

 

 

 

 

365,700

 

JPM Credit Facility

 

581,798

 

 

 

581,798

 

 

2019-1 Debt

 

398,750

 

 

 

 

398,750

 

Total Debt Obligations

 

$

1,662,263

 

$

 

$

 

$

897,813

 

$

764,450

 

 

SMBC Revolving Credit Agreement

 

On November 21, 2018, the SMBC Revolving Credit Facility was terminated. The proceeds from the initial public offering on November 15, 2018, were used to repay the total outstanding debt.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the Revolving Credit Facility were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

 

$

835

 

Unused facility fee

 

 

5

 

Amortization of deferred financing costs and upfront commitment fees

 

 

92

 

Total interest and debt financing expenses

 

$

 

$

932

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the Revolving Credit Facility were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

 

$

2,900

 

Unused facility fee

 

 

22

 

Amortization of deferred financing costs and upfront commitment fees

 

 

274

 

Total interest and debt financing expenses

 

$

 

$

3,196

 

 

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Table of Contents

 

BCSF Revolving Credit Facility

 

On October 4, 2017, the Company entered into the revolving credit agreement (the “BCSF Revolving Credit Facility”) with us, as equity holder, BCSF I, LLC, a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, as borrower, and Goldman Sachs Bank USA, as sole lead arranger (“Goldman Sachs”). The BCSF Revolving Credit Facility was subsequently amended on May 15, 2018 to reflect certain clarifications regarding margin requirements and hedging currencies. The maximum commitment amount under the BCSF Revolving Credit Facility is $500.0 million, and may be increased up to $750.0 million. Proceeds of the loans under the BCSF Revolving Credit Facility may be used to acquire certain qualifying loans and such other uses as permitted under the BCSF Revolving Credit Facility. The BCSF Revolving Credit Facility includes customary affirmative and negative 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. As of September 30, 2019 and December 31, 2018, the Company was in compliance with these covenants.

 

Assets that are pledged as collateral for the BCSF Revolving Credit Facility are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the BCSF Revolving Credit Facility.

 

Borrowings under the BCSF Revolving Credit Facility bear interest at LIBOR plus a margin. As of September 30, 2019 and December 31, 2018, the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 2.50%. The Company pays an unused commitment fee of 30 basis points (0.30%) per annum. Interest is payable quarterly in arrears. Any amounts borrowed under the BCSF Revolving Credit Facility, and all accrued and unpaid interest, will be due and payable, on the earliest of: (a) October 5, 2022 and (b) the date upon which all loans shall become due and payable in full, whether by acceleration or otherwise.

 

As of September 30, 2019 and December 31, 2018 there were $316.0 million and $271.3 million borrowings under the BCSF Revolving Credit Facility.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the BCSF Revolving Credit Facility were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

4,441

 

$

5,130

 

Unused facility fee

 

109

 

65

 

Amortization of deferred financing costs and upfront commitment fees

 

269

 

269

 

Total interest and debt financing expenses

 

$

4,819

 

$

5,464

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the BCSF Revolving Credit Facility were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

13,844

 

$

11,633

 

Unused facility fee

 

316

 

382

 

Amortization of deferred financing costs and upfront commitment fees

 

798

 

799

 

Total interest and debt financing expenses

 

$

14,958

 

$

12,814

 

 

2018-1 Notes

 

On September 28, 2018, the Company, through BCC Middle Market CLO 2018-1 LLC (the “2018-1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018-1 Notes”) are secured by a diversified portfolio of the Issuer consisting primarily of middle market loans and participation interests in middle market loans, the majority of which are senior secured loans (the “2018-1 Portfolio”). At the 2018-1 closing date, the 2018-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.

 

The CLO Transaction was executed through a private placement of the following 2018-1 Notes:

 

2018-1 Notes

 

Principal Amount

 

Spread above Index

 

Interest rate at September 30, 2019

 

Class A-1 A

 

$

205,900

 

1.55% + 3 Month LIBOR

 

3.83

%

Class A-1 B

 

45,000

 

1.50% + 3 Month LIBOR (first 24 months)

 

3.78

%

 

 

 

 

1.80% + 3 Month LIBOR (thereafter)

 

 

 

Class A-2

 

55,100

 

2.15% + 3 Month LIBOR

 

4.43

%

Class B

 

29,300

 

3.00% + 3 Month LIBOR

 

5.28

%

Class C

 

30,400

 

4.00% + 3 Month LIBOR

 

6.28

%

Total 2018-1 Notes

 

365,700

 

 

 

 

 

Membership Interests

 

85,450

 

Non-interest bearing

 

Not applicable

 

Total

 

$

451,150

 

 

 

 

 

 

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Table of Contents

 

The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018-1 Issuer in exchange for its sale to the 2018-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest.

 

The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation.

 

The Company serves as portfolio manager of the 2018-1 Issuer pursuant to a portfolio management agreement between the Company and the 2018-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.

 

During the reinvestment period, pursuant to the indenture governing the 2018-1 Notes, all principal collections received on the underlying collateral may be used by the 2018-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2018-1 Issuer and in accordance with the 2018-1 Issuer’s investment strategy and the terms of the indenture.

 

The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2018-1 Issuer for so long as the 2018-1 Notes remain outstanding.

 

The 2018-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2018-1 Issuer.

 

As of September 30, 2019, there were 64 first lien and second lien senior secured loans with a total fair value of approximately $404.6 million and cash of $36.5 million securing the 2018-1 Notes. As of December 31, 2018, there were 75 first lien and second lien senior secured loans with a total fair value of approximately $437.2 million and cash of $18.0 million securing the 2018-1 Notes. Assets that are pledged as collateral for the 2018-1 Notes are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture governing the 2018-1 Notes. Such assets are included in the Company’s consolidated financial statements. The creditors of the 2018-1 Issuer have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2018-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture governing the 2018-1 Notes. As of September 30, 2019 and December 31, 2018, the Company was in compliance with its covenants related to the 2018-1 Notes.

 

Costs of $2.1 million were incurred in connection with debt securitization of the 2018-1 Notes by the 2018-1 Issuer which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2018-1 Notes on the consolidated statements of assets and liabilities and are being amortized over the life of the 2018-1 Issuer using the effective interest method. The balance of the unamortized deferred financing costs related to the 2018-1 Issuer was $1.9 million and $2.0 million as of September 30, 2019 and December 31, 2018, respectively.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the 2018-1 Issuer were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

4,022

 

$

127

 

Amortization of deferred financing costs and upfront commitment fees

 

44

 

1

 

Total interest and debt financing expenses

 

$

4,066

 

$

128

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the 2018-1 Issuer were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

12,499

 

$

127

 

Amortization of deferred financing costs and upfront commitment fees

 

130

 

1

 

Total interest and debt financing expenses

 

$

12,629

 

$

128

 

 

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Table of Contents

 

Citibank Revolving Credit Facility

 

On February 19, 2019, the Company entered into a credit and security agreement (the “Credit Agreement” or the “Citibank Revolving Credit Facility”) with the Company as equity holder and servicer, BCSF II-C, LLC as Borrower, Citibank, N.A., as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian. The Credit Agreement is effective as of February 19, 2019.

 

The facility amount under the Credit Agreement is $350.0 million. Proceeds of the loans under the Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the Credit Agreement. The period from the closing date until February 19, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the Credit Agreement. The final maturity date is the earliest of: (a) the business day designated by the Borrower as the final maturity date upon not less than three business days’ prior written notice to the Administrative Agent, the Collateral Agent, the Lenders, the Custodian and the Collateral Administrator, (b) February 19, 2022 and (c) the date on which the Administrative Agent provides notice of the declaration of the final maturity date after the occurrence of an event of default. The Credit Agreement includes customary affirmative and negative 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.

 

Borrowings under the Citibank Revolving Credit Facility bear interest at the London Interbank Offered Rate (“LIBOR”) plus a margin. During the period prior to the last day of the reinvestment period, borrowings under the Credit Agreement will bear interest at a rate equal to the three-month LIBOR plus 1.60%. Commencing on the last day of the reinvestment period, the interest rate on borrowings under the Credit Agreement will reset to three month LIBOR plus 2.60% for the remaining term of the Credit Agreement. The Company pays an unused commitment fee based on a corresponding utilization rate; (i) 0 basis points (0.00%) per annum when greater than or equal to 85.0% utilization, (ii) 25 basis points (0.25%) per annum when greater than or equal to 75.0% but less than 85.0% utilization, (iii) 50 basis points (0.50%) per annum when greater than or equal to 50.0% but less than 75.0% utilization, (iv) 75 basis points (0.75%) per annum when greater than or equal to 25.0% but less than 50% utilization, or (v) 100 basis points (1.00%) per annum when less than 25.0% utilization.

 

On August 28, 2019, the Citibank Revolving Credit Facility was terminated. The proceeds from the 2019-1 Debt were used to repay the total outstanding debt.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the Citibank Revolving Credit Facility were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

1,174

 

$

 

Unused facility fee

 

134

 

 

Amortization of deferred financing costs and upfront commitment fees

 

108

 

 

Total interest and debt financing expenses

 

$

1,416

 

$

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the Citibank Revolving Credit Facility were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

4,104

 

$

 

Unused facility fee

 

357

 

 

Amortization of deferred financing costs and upfront commitment fees

 

124

 

 

Total interest and debt financing expenses

 

$

4,585

 

$

 

 

JPM Credit Facility

 

On April 30, 2019, the Company entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank.

 

The facility amount under the JPM Credit Agreement is $666.6 million. Proceeds of the loans under the JPM Credit Facility may be used to acquire certain qualifying loans and such other uses as permitted under the JPM Credit Agreement. The period from the effective date until November 29, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the JPM Credit Facility.

 

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Table of Contents

 

The maturity date is the earliest of: (a) November 29, 2022, (b) the date on which the secured obligations become due and payable following the occurrence of an event of default, (c) the date on which the advances are repaid in full and (d) the date after a market value cure failure occurs on which all portfolio investments have been sold and proceeds therefrom have been received by the Borrower. The stated maturity date of November 29, 2022 may be extended for successive one year periods by mutual agreement of the Borrower and the Administrative Agent.

 

Borrowings under the JPM Credit Facility bear interest at LIBOR plus a margin. As of September 30, 2019, JPM Credit Facility was accruing interest expense at a rate of LIBOR plus 2.75%. The Company pays an unused commitment fee of 75 basis points (0.75%) per annum. Interest is payable quarterly in arrears.

 

The JPM Credit Agreement includes customary affirmative and negative 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.

 

As of September 30, 2019, there were $581.8 million borrowings under the JPM Credit Facility.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the JPM Credit Facility were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

7,232

 

$

 

Unused facility fee

 

202

 

 

Amortization of deferred financing costs and upfront commitment fees

 

20

 

 

Total interest and debt financing expenses

 

$

7,454

 

$

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the JPM Credit Facility were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

12,387

 

$

 

Unused facility fee

 

328

 

 

Amortization of deferred financing costs and upfront commitment fees

 

33

 

 

Total interest and debt financing expenses

 

$

12,748

 

$

 

 

2019-1 Debt

 

On August 28, 2019, the Company, through BCC Middle Market CLO 2019-1 LLC (the “2019-1 Issuer”), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019-1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), a Delaware limited liability company, completed its $501.0 million term debt securitization (the “2019-1 CLO Transaction”). The notes issued in connection with the 2019-1 CLO Transaction (the “2019-1 Notes”) are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans and participation interests in middle market loans, the majority of which are senior secured loans (the “2019-1 Portfolio”). The Co-Issuers also issued Class A-1L Loans (the “Loans” and, together with the 2019-1 Notes, the “2019-1 Debt”). The Loans are also secured by the 2019-1 Portfolio. At the 2019-1 closing date, the 2019-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019-1 CLO Transaction.

 

The 2019-1 CLO Transaction was executed through a private placement of the following 2019-1 Debt:

 

2019-1 Debt

 

Principal Amount

 

Spread above Index

 

Interest rate at September 30, 2019

 

Class A-1L

 

$

50,000

 

1.70% + 3 Month LIBOR

 

3.86

%

Class A-1

 

222,500

 

1.70% + 3 Month LIBOR

 

3.86

%

Class A-2A

 

50,750

 

2.70% + 3 Month LIBOR

 

4.86

%

Class A-2B

 

13,000

 

4.23% (Fixed)

 

4.23

%

Class B

 

30,000

 

3.60% + 3 Month LIBOR

 

5.76

%

Class C

 

32,500

 

4.75% + 3 Month LIBOR

 

6.91

%

Total 2019-1 Debt

 

398,750

 

 

 

 

 

Membership Interests

 

102,250

 

Non-interest bearing

 

Not applicable

 

Total

 

$

501,000

 

 

 

 

 

 

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Table of Contents

 

The Loans and the Class A-1, A-2A, A-2B, and B Notes were issued at par. The Class C Notes were issued at a discount. The Notes are scheduled to mature on October 15, 2031. The Company received 100% of the membership interests (the “Membership Interests”) in the 2019-1 Issuer in exchange for its sale to the 2019-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest.

 

The Loans and Class A-1, A-2A, A-2B, B, and C Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation.

 

The Company serves as portfolio manager of the 2019-1 Issuer pursuant to a portfolio management agreement between the Company and the 2019-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.

 

During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019-1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019-1 Issuer and in accordance with the 2019-1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable.

 

The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019-1 Co-Issuers for so long as the 2019-1 Debt remains outstanding.

 

The 2019-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019-1 Issuer.

 

As of September 30, 2019, there were 64 first lien and second lien senior secured loans with a total fair value of approximately $446.7 million and cash of $49.9 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of September 30, 2019, the Company was in compliance with its covenants related to the 2019-1 Debt.

 

Costs of the offering, including the discount of the Class C Notes, of $2.8 million were incurred in connection with debt securitization of the 2019-1 Debt by the 2019-1 Co-Issuers which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019-1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life of the 2019-1 Issuer using the effective interest method. The balance of the unamortized deferred financing costs related to the 2019-1 Issuer was $2.8 million as of September 30, 2019.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the 2019-1 Co-Issuers were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

1,651

 

$

 

Amortization of deferred financing costs and upfront commitment fees

 

21

 

 

Total interest and debt financing expenses

 

$

1,672

 

$

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the 2019-1 Co-Issuers were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

1,651

 

$

 

Amortization of deferred financing costs and upfront commitment fees

 

21

 

 

Total interest and debt financing expenses

 

$

1,672

 

$

 

 

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Table of Contents

 

Note 7. Derivatives

 

The Company is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by the Company may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency.

 

The Company may enter into forward currency exchange contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies, as described in Note 2. The fair value of derivative contracts open as of September 30, 2019 and December 31, 2018 is included on the consolidated schedule of investments by contract. The Company posted collateral of $0.1 million and $0.0 million with the counterparties on foreign currency exchange contracts at September 30, 2019 and December 31, 2018, respectively. Collateral amounts posted are included in collateral on forward currency exchange contracts on the consolidated statements of assets and liabilities.

 

For the three and nine months ended September 30, 2019, the Company’s average U.S. dollar notional exposure to forward currency exchange contracts was $205.9 million and $172.1 million, respectively. For the three and nine months ended September 30, 2018, the Company’s average U.S. dollar notional exposure to forward currency exchange contracts was $124.3 million and $97.1 million, respectively.

 

By using derivative instruments, the Company is exposed to the counterparty’s credit risk—the risk that derivative counterparties may not perform in accordance with the contractual provisions offset by the value of any collateral received. The Company’s exposure to credit risk associated with counterparty non-performance is limited to collateral posted and the unrealized gains inherent in such transactions that are recognized in the consolidated statements of assets and liabilities. The Company minimizes counterparty credit risk through credit monitoring procedures, executing master netting arrangements and managing margin and collateral requirements, as appropriate.

 

The Company presents forward currency exchange contracts on a net basis by counterparty on the consolidated statements of assets and liabilities. The Company has elected not to offset assets and liabilities in the consolidated statements of assets and liabilities that may be received or paid as part of collateral arrangements, even when an enforceable master netting arrangement or other arrangement is in place that provides the Company, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.

 

The following table presents both gross and net information about derivative instruments eligible for offset in the consolidated statements of assets and liabilities as of September 30, 2019.

 

Counterparty

 

Account in the
consolidated
statements of
assets and liabilities

 

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) presented on
the consolidated
statements of
assets and liabilities

 

Cash Collateral
paid
(received) 
(1)

 

Net
Amounts 
(2)

 

Bank of New York

 

Unrealized appreciation on forward currency contracts

 

$

1,510

 

$

 

$

1,510

 

$

 

$

1,510

 

Citibank

 

Unrealized appreciation on forward currency contracts

 

$

26

 

$

 

$

26

 

$

 

$

26

 

Goldman Sachs

 

Unrealized appreciation on forward currency contracts

 

$

7,772

 

$

 

$

7,772

 

$

 

$

7,772

 

 


(1)                                     Amount excludes excess cash collateral paid.

(2)                                     Net amount represents the net amount due (to) from counterparty in the event of default based on the contractual set-off rights under the agreement. Net amount excludes any over-collateralized amounts.

 

The following table presents both gross and net information about derivative instruments eligible for offset in the consolidated statements of assets and liabilities as of December 31, 2018:

 

43


Table of Contents

 

Counterparty

 

Account in the
consolidated
statements of
assets and liabilities

 

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) presented on
the consolidated
statements of
assets and liabilities

 

Cash Collateral
paid
(received) 
(1)

 

Net
Amounts 
(2)

 

Bank of New York

 

Unrealized appreciation on forward currency contracts

 

$

3,329

 

$

 

$

3,329

 

$

 

$

3,329

 

Citibank

 

Unrealized appreciation on forward currency contracts

 

$

1,676

 

$

 

$

1,676

 

$

 

$

1,676

 

Goldman Sachs

 

Unrealized appreciation on forward currency contracts

 

$

4,317

 

$

 

$

4,317

 

$

 

$

4,317

 

 


(1)                                     Amount excludes excess cash collateral paid.

(2)                                     Net amount represents the net amount due (to) from counterparty in the event of default based on the contractual set-off rights under the agreement. Net amount excludes any over-collateralized amounts.

 

The effect of transactions in derivative instruments to the consolidated statements of operations during the three months ended September 30, 2019 and 2018 was as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Net realized gain on forward currency exchange contracts

 

$

346

 

$

177

 

Net change in unrealized appreciation on forward currency exchange contracts

 

9,135

 

1,529

 

Total net realized and unrealized gains on forward currency exchange contracts

 

$

9,481

 

$

1,706

 

 

Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of ($8.1) million and ($1.4) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2019 and 2018, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $9.5 million and $1.7 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $1.4 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively.

 

The effect of transactions in derivative instruments to the consolidated statements of operations during the nine months ended September 30, 2019 and 2018 was as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Net realized gain (loss) on forward currency exchange contracts

 

$

11,042

 

$

(2,696

)

Net change in unrealized appreciation (depreciation) on forward currency exchange contracts

 

(14

)

9,123

 

Total net realized and unrealized gains (losses) on forward currency exchange contracts

 

$

11,028

 

$

6,427

 

 

Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of ($8.4) million and ($5.1) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2019 and 2018, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $11.0 million and $6.4 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $2.6 million and $1.3 million for the nine months ended September 30, 2019 and 2018, respectively.

 

Note 8. Distributions

 

The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2019:

 

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Table of Contents

 

Date Declared

 

Record Date

 

Payment Date

 

Amount
Per Share

 

Total
Distributions

 

February 21, 2019

 

March 29, 2019

 

April 12, 2019

 

$

0.41

 

$

21,108

 

May 7, 2019

 

June 28, 2019

 

July 29, 2019

 

$

0.41

 

$

21,176

 

August 1, 2019

 

September 30, 2019

 

October 30, 2019

 

$

0.41

 

$

21,176

 

Total distributions declared

 

 

 

 

 

$

1.23

 

$

63,460

 

 

The distributions declared during the nine months ended September 30, 2019 were derived from investment company taxable income and net capital gain, if any.

 

The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the nine months ended September 30, 2018:

 

Date Declared

 

Record Date

 

Payment Date

 

Amount
Per Share

 

Total
Distributions

 

March 28, 2018

 

March 28, 2018

 

May 17, 2018

 

$

0.34

 

$

10,610

 

June 28, 2018

 

June 28, 2018

 

August 10, 2018

 

$

0.36

 

$

13,484

 

September 26, 2018

 

September 26, 2018

 

October 19, 2018

 

$

0.41

 

$

17,967

 

Total distributions declared

 

 

 

 

 

$

1.11

 

$

42,061

 

 

The distributions declared during the nine months ended September 30, 2018 were derived from investment company taxable income and net capital gain, if any.

 

The federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon the Company’s investment company taxable income for the full fiscal year and distributions paid during the full year.

 

Note 9. Common Stock/Capital

 

The Company has authorized 100,000,000,000 shares of its common stock with a par value of $0.001 per share. The Company has authorized 10,000,000,000 shares of its preferred stock with a par value of $0.001 per share. Shares of preferred stock have not been issued.

 

Prior to the IPO, the Company had issued 43,982,137.46 shares in the private placement of the Company’s common shares (the “Private Offering”). Each investor had entered into a separate subscription agreement relating to the Company’s common stock (the “Subscription Agreements”). Each investor had made a capital commitment to purchase shares of the Company’s common stock pursuant to the Subscription Agreements. Investors were required to make capital contributions to purchase shares of the Company’s common stock each time the Company delivered a drawdown notice, which were delivered at least 10 business days prior to the required funding date in an aggregate amount not to exceed their respective capital commitments. The number of shares to be issued to a stockholder was determined by dividing the total dollar amount of the contribution by a stockholder by the net asset value per share of the common stock as of the last day of the Company’s fiscal quarter or such other date and price per share as determined by the Board in accordance with the requirements of the 1940 Act. As of December 31, 2018, aggregate commitments relating to the Private Offering were $1.3 billion. All outstanding commitments related to these Subscription Agreements were cancelled due to the completion of the IPO on November 15, 2018. As of September 30, 2019 and December 31, 2018, BCSF Advisors, LP contributed in aggregate $7.8 million to the Company and received 389,639.59 shares of the Company and contributed $7.8 million to the Company and received 389,476.18 shares of the Company, respectively. At September 30, 2019 and December 31, 2018, BCSF Advisors, LP owned 0.75% and 0.76%, respectively, of the outstanding common stock of the Company.

 

On November 19, 2018, the Company closed its initial public offering (the “IPO”) issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated proceeds, before expenses, of $147.3 million. All outstanding commitments were cancelled due the completion of the initial public offering.

 

The following table summarizes the total shares issued and amount received related to capital drawdowns delivered pursuant to the Subscription Agreements and shares issued pursuant to the dividend reinvestment plan during the three months ended September 30, 2019 and 2018:

 

45


Table of Contents

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Total capital drawdowns

 

 

$

 

6,245,548.12

 

$

125,973

 

Dividend reinvestment

 

 

 

119,579.90

 

2,408

 

Total capital drawdowns and dividend reinvestment

 

 

$

 

6,365,128.02

 

$

128,381

 

 

The following table summarizes the total shares issued and amount received related to capital drawdowns delivered pursuant to the Subscription Agreements and shares issued pursuant to the dividend reinvestment plan during the nine months ended September 30, 2019 and 2018:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Total capital drawdowns

 

 

$

 

18,569,410.17

 

$

376,948

 

Dividend reinvestment

 

167,674.81

 

3,322

 

276,373.39

 

5,594

 

Total capital drawdowns and dividend reinvestment

 

167,674.81

 

$

3,322

 

18,845,783.56

 

$

382,542

 

 

BCSF Investments, LLC and certain individuals, including Michael A. Ewald, the Company’s Chief Executive Officer and a Managing Director of Bain Capital Credit; Jonathan S. Lavine, Co-Managing Partner of Bain Capital, LP and Founder and Chief Investment Officer of Bain Capital Credit; John Connaughton, Co-Managing Partner of Bain Capital, LP; Jeffrey B. Hawkins, Chairman of the Company’s Board of Directors and a Managing Director of Bain Capital Credit; and Michael J. Boyle, the Company’s Vice President and Treasurer and a Managing Director of Bain Capital Credit, which such parties will buy up to $20 million in the aggregate of the Company’s common stock in the open market during the period beginning after four full calendar weeks after the closing of the IPO and ending on the earlier of the date on which the capital committed to the 10b5-1 has been exhausted or one year after the closing of the IPO. For the nine months ended September 30, 2019, 827,933 shares were purchased at a weighted average price of $18.78, inclusive of commissions, for a total cost of $15.6 million. As of February 21, 2019, zero dollars remain under the 10b5-1 Plan and no further purchases are intended under the 10b5-1 Plan.

 

On May 7, 2019, the Company’s Board of Directors authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Securities Exchange Act of 1934. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of September 30, 2019, there have been no repurchases of common stock.

 

Note 10. Commitments and Contingencies

 

Commitments

 

The Company’s investment portfolio may contain debt investments that are in the form of lines of credit and unfunded delayed draw commitments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements.

 

As of September 30, 2019, the Company had $221.3 million of unfunded commitments under loan and financing agreements as follows:

 

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Table of Contents

 

 

 

Expiration Date (1)

 

Unfunded Commitments (2)

 

First Lien Senior Secured Loans

 

 

 

 

 

A&R Logistics, Inc. — Revolver

 

5/5/2025

 

$

5,348

 

Abracon Group Holding, LLC. — Revolver

 

7/18/2024

 

2,834

 

AMI US Holdings Inc. — Revolver

 

4/1/2024

 

768

 

Amspec Services, Inc. — Revolver

 

7/2/2024

 

5,242

 

Ansira Holdings, Inc. — Revolver

 

12/20/2022

 

5,440

 

Ansira Holdings, Inc. — Delayed Draw

 

12/20/2022

 

1,509

 

AP Plastics Group, LLC — Revolver

 

8/2/2021

 

8,500

 

Appriss Holdings, Inc. — Revolver

 

5/30/2025

 

4,711

 

Aramsco, Inc. — Revolver

 

8/28/2024

 

1,920

 

Batteries Plus Holding Corporation — Revolver

 

7/6/2022

 

4,250

 

Captain D’s LLC — Revolver

 

12/15/2023

 

826

 

Chase Industries, Inc. — Delayed Draw

 

5/12/2025

 

2,619

 

Clinical Innovations, LLC — Revolver

 

10/17/2022

 

720

 

CMI Marketing Inc. — Revolver

 

5/24/2023

 

2,112

 

CPS Group Holdings, Inc. — Revolver

 

3/3/2025

 

4,933

 

Cruz Bay Publishing, Inc. — Delayed Draw

 

2/28/2020

 

1,098

 

Cruz Bay Publishing, Inc. — Revolver

 

2/28/2020

 

567

 

CST Buyer Company — Revolver

 

3/1/2023

 

898

 

Datix Bidco Limited — Revolver

 

10/28/2024

 

1,195

 

Direct Travel, Inc. — Delayed Draw

 

12/1/2021

 

10,072

 

Direct Travel, Inc. — Revolver

 

12/1/2021

 

4,250

 

Dorner Manufacturing Corp — Revolver

 

3/15/2022

 

1,099

 

Efficient Collaborative Retail Marketing Company, LLC — Revolver

 

6/15/2022

 

3,542

 

Element Buyer, Inc. — Delayed Draw

 

7/18/2025

 

7,933

 

Element Buyer, Inc. — Revolver

 

7/19/2024

 

2,834

 

FFI Holdings I Corp — Delayed Draw

 

1/24/2025

 

5,685

 

FFI Holdings I Corp — Revolver

 

1/24/2025

 

3,556

 

Fineline Technologies, Inc. — Revolver

 

11/4/2022

 

2,621

 

Grammer Purchaser, Inc. — Revolver

 

9/30/2024

 

945

 

Great Expressions Dental Center PC — Revolver

 

9/28/2022

 

610

 

Green Street Parent, LLC — Revolver

 

8/27/2025

 

2,419

 

Hightower Holding, LLC — Delayed Draw

 

1/31/2025

 

4,329

 

Horizon Telcom, Inc. — Delayed Draw

 

6/15/2023

 

1,488

 

Horizon Telcom, Inc. — Revolver

 

6/15/2023

 

116

 

Ivy Finco Limited — First Lien Senior Secured Loan

 

5/19/2025

 

6,458

 

JHCC Holdings, LLC — Delayed Draw

 

9/9/2025

 

8,500

 

JHCC Holdings, LLC — Revolver

 

9/9/2025

 

2,550

 

Kellstrom Commercial Aerospace, Inc. — Delayed Draw

 

7/1/2025

 

3,838

 

Kellstrom Commercial Aerospace, Inc. — Revolver

 

7/1/2025

 

3,433

 

Margaux Acquisition Inc. — Delayed Draw

 

12/19/2024

 

7,139

 

Margaux Acquisition Inc. — Revolver

 

12/19/2024

 

2,872

 

Margaux UK Finance Limited — Revolver

 

12/19/2024

 

613

 

Mertus 522. GmbH — Delayed Draw

 

5/15/2026

 

14,316

 

Profile Products LLC — Revolver

 

12/20/2024

 

3,833

 

RoC Opco LLC — Revolver

 

2/25/2025

 

10,241

 

Solaray, LLC — Delayed Draw

 

9/11/2023

 

992

 

Solaray, LLC — Revolver

 

9/9/2022

 

3,060

 

Stanton Carpet Corp. — Revolver

 

11/21/2022

 

4,250

 

SumUp Holdings Luxembourg S.à.r.l. — First Lien Senior Secured Loan

 

8/1/2024

 

18,485

 

Symplr Software, Inc. — Revolver

 

11/30/2023

 

929

 

TCFI Aevex LLC — Revolver

 

5/13/2025

 

276

 

TEI Holdings Inc. — Revolver

 

12/20/2022

 

3,259

 

Tidel Engineering, L.P. — Revolver

 

3/1/2023

 

4,250

 

Ventiv Holdco, Inc. — Revolver

 

9/3/2025

 

3,407

 

WCI-HSG Purchaser, Inc. — Revolver

 

2/24/2025

 

2,015

 

WU Holdco, Inc. — Delayed Draw

 

3/26/2026

 

4,801

 

WU Holdco, Inc. — Revolver

 

3/26/2025

 

3,944

 

Zywave, Inc. — Revolver

 

11/17/2022

 

851

 

Total First Lien Senior Secured Loans

 

 

 

$

221,301

 

 


(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 U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of September 30, 2019.

 

As of December 31, 2018, the Company had $110.2 million of unfunded commitments under loan and financing agreements as follows:

 

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Table of Contents

 

 

 

Expiration Date (1)

 

Unfunded Commitments (2) (3)

 

First Lien Senior Secured Loans

 

 

 

 

 

Abracon Group Holding, LLC — Revolver

 

7/18/2024

 

$

2,833

 

Aimbridge Hospitality LP — Revolver

 

6/22/2022

 

1,177

 

AMCP Clean Acquisition Company, LLC — Delayed Draw Term Loan

 

6/16/2025

 

2,315

 

Amspec Services, Inc. — Revolver

 

7/2/2024

 

4,735

 

Ansira Holdings, Inc. — Revolver

 

12/20/2022

 

5,440

 

AP Plastics Group, LLC— Revolver

 

8/1/2021

 

8,500

 

API Technologies Corp. — Revolver

 

4/22/2024

 

4,183

 

Aramsco, Inc. — Revolver

 

8/28/2024

 

3,161

 

Batteries Plus Holding Corporation — Revolver

 

7/6/2022

 

4,250

 

Caliper Corporation — Revolver

 

11/30/2023

 

2,358

 

Captain D’s LLC — Revolver

 

12/15/2023

 

1,074

 

Chase Industries, Inc. — Delayed Draw Term Loan

 

5/12/2025

 

3,544

 

Clinical Innovations, LLC — Revolver

 

10/17/2022

 

1,113

 

CMI Marketing Inc. — Revolver

 

5/24/2023

 

2,112

 

Cruz Bay Publishing, Inc. — Revolver

 

6/6/2019

 

567

 

CST Buyer Company — Revolver

 

3/1/2023

 

897

 

Datix Bidco Limited — Revolver

 

10/28/2024

 

1,240

 

Direct Travel, Inc. — Revolver

 

12/1/2021

 

4,250

 

Dorner Manufacturing Corp. — Revolver

 

3/15/2022

 

1,044

 

Drilling Info Holdings, Inc. — Delayed Draw Term Loan

 

7/30/2025

 

1,663

 

Efficient Collaborative Retail Marketing Company, LLC — Revolver

 

6/15/2022

 

3,542

 

Element Buyer, Inc. — Revolver

 

7/19/2024

 

4,250

 

ENC Holding Corporation — Delayed Draw Term Loan

 

5/30/2025

 

595

 

FineLine Technologies, Inc. — Revolver

 

11/2/2021

 

2,162

 

Grammer Purchaser, Inc. — Revolver

 

9/30/2024

 

945

 

Great Expressions Dental Centers PC — Revolver

 

9/28/2022

 

213

 

Home Franchise Concepts, Inc. — Revolver

 

7/9/2024

 

2,530

 

Horizon Telcom, Inc. — Delayed Draw Term Loan

 

6/15/2023

 

1,738

 

Horizon Telcom, Inc. — Revolver

 

6/15/2023

 

1,159

 

Margaux UK Finance — Revolver

 

12/19/2024

 

636

 

Margaux Acquisition Inc.— Revolver

 

12/19/2024

 

2,257

 

McKissock, LLC — Revolver

 

8/5/2021

 

1,842

 

PRCC Holdings, Inc. — Revolver

 

2/1/2021

 

3,542

 

Profile Products LLC — Revolver

 

12/20/2024

 

3,833

 

Solaray, LLC — Revolver

 

9/9/2022

 

7,084

 

Sovos Compliance, LLC — Delayed Draw Term Loan

 

3/1/2022

 

871

 

Sovos Compliance, LLC — Revolver

 

3/1/2022

 

1,452

 

Stanton Carpet Corp. — Revolver

 

11/21/2022

 

4,250

 

TEI Holdings Inc. — Revolver

 

12/20/2022

 

3,542

 

Tidel Engineering, L.P. — Revolver

 

3/1/2023

 

4,250

 

Zywave, Inc. — Revolver

 

11/17/2022

 

512

 

Total First Lien Senior Secured Loans

 

 

 

$

107,661

 

Other Unfunded Commitments

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC

 

 

 

2,562

 

Total Other Unfunded Commitments

 

 

 

$

2,562

 

Total

 

 

 

$

110,223

 

 


(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 U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of December 31, 2018.

(3)             Unfunded commitments represent unfunded commitments to fund investments, excluding the Company’s investment in ABCS as of December 31, 2018.

 

Contingencies

 

In the normal course of business, the Company may enter into certain contracts that provide a variety of indemnities. The Company’s maximum exposure under these indemnities is unknown as it would involve future claims that may be made against the Company. Currently, the Company is not aware of any such claims and no such claims are expected to occur. As such, the Company does not consider it necessary to record a liability in this regard.

 

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Table of Contents

 

Note 11. Financial Highlights

 

The following is a schedule of financial highlights for the nine months ended September 30, 2019 and 2018:

 

 

 

For The Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Per share data:

 

 

 

 

 

Net asset value at beginning of period

 

$

19.46

 

$

20.30

 

Net investment income (1)

 

1.23

 

1.02

 

Net realized gain (loss) (1)(7)

 

0.19

 

(0.23

)

Net change in unrealized appreciation (1)(2)(8)

 

0.06

 

0.19

 

Net increase in net assets resulting from operations (1)(9)(10)

 

1.48

 

0.98

 

Stockholder distributions from income (3)

 

(1.23

)

(1.11

)

Net asset value at end of period

 

$

19.71

 

$

20.17

 

 

 

 

 

 

 

Net assets at end of period

 

$

1,018,225

 

$

883,961

 

Shares outstanding at end of period

 

51,649,812.27

 

43,821,595.55

 

Per share market value at end of period

 

$

18.97

 

N/A

 

Total return based on market value (12)

 

20.55

%

N/A

 

Total return based on net asset value (4)

 

7.72

%

4.92

%

Ratios:

 

 

 

 

 

Ratio of net investment income to average net assets (5)(11)(13)

 

8.50

%

6.95

%

Ratio of total net expenses to average net assets (5)(11)(13)

 

10.37

%

5.27

%

Supplemental data:

 

 

 

 

 

Ratio of interest and debt financing expenses to average net assets (5)(13)

 

6.14

%

3.01

%

Ratio of expenses (without incentive fees) to average net assets (5)(11)(13)

 

9.37

%

3.47

%

Ratio of incentive fees and management fees, net of contractual and voluntary waivers, to average net assets (5)(11)(13)

 

3.48

%

4.68

%

Average principal debt outstanding

 

$

1,225,077

 

$

454,824

 

Portfolio turnover (6)

 

35.54

%

18.48

%

Total committed capital, end of period

 

N/A

 

$

1,256,069

 

Ratio of total contributed capital to total committed capital, end of period

 

N/A

 

70.02

%

 


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

(2)                                     Net change in unrealized appreciation (depreciation) on investments per share may not be consistent with the consolidated statements of operations due to the timing of shareholder transactions.

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

(4)                                     Total return based on net asset value is calculated as the change in net asset value per share during the period, assuming dividends and distributions, including those distributions that have been declared. Total return has not been annualized.

(5)                                     The computation of average net assets during the period is based on averaging net assets for the periods reported.

(6)                                     Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value for the periods reported. Year-to-date sales and year-to-date purchases for the nine months ended September 30, 2019 exclude the ABCS distribution transaction.

(7)                                     Net realized gain (loss) includes net realized gain (loss) on investments, net realized gain (loss) on forward currency exchange contracts and net realized gain (loss) on foreign currency transactions.

(8)                                     Net change in unrealized appreciation (depreciation) includes net change in unrealized appreciation (depreciation) on investments, net change in unrealized appreciation (depreciation) on forward currency exchange contracts and net change in unrealized appreciation (depreciation) on foreign currency translation.

(9)                                     The sum of quarterly per share amounts presented in previously filed financial statements on Form 10-Q may not equal earnings per share. This is due to changes in the number of weighted average shares outstanding and the effects of rounding.

(10)                                Net increase in net assets resulting from operations per share in these financial highlights may be different from the net increase in net assets per share on the consolidated statements of operations due to changes in the number of weighted average shares outstanding and the effects of rounding.

(11)                                The ratio of voluntary incentive fee waiver to average net assets was (0.27%) and (0.23%) for the nine months ended September 30, 2019 and 2018, respectively (Note 5). The ratio of voluntary management fee waiver to average net assets was (0.64%) for the nine months ended September 30, 2019 (Note 5). The ratio of net investment income without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the nine months ended September 30,

 

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Table of Contents

 

2019 would be 7.60%. The ratio of net investment income without the voluntary incentive fee waiver to average net assets for the nine months ended September 30, 2018 would be 6.73%. The ratio of total expenses without the voluntary incentive fee waiver and voluntary management fee waiver to average net assets for the nine months ended September 30, 2019 would be 11.28%. The ratio of total expenses without the voluntary incentive fee waiver to average net assets for the nine months ended September 30, 2018 would be 5.49%.

(12)                                Total return based on market value (not annualized) is calculated as the change in market value per share during the period, assuming dividends and distributions, plus the declared distributions, divided by the beginning market price for the period. Total return has not been annualized.

(13)                                Ratio is annualized. Incentive fees, voluntary incentive fee waivers, and voluntary management fee waivers, if any, included within the ratio are not annualized.

 

Note 12. Subsequent Events

 

The Company’s management has evaluated the events and transactions that have occurred through November 6, 2019, the issuance date of the consolidated financial statements, and noted no items requiring disclosure in this Form 10-Q or adjustment of the consolidated financial statements.

 

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Table of Contents

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

You should read the following analysis of our financial condition and results of operations in conjunction with our financial statements and related notes appearing in our Annual Report on Form 10-K (the “Annual Report”) for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2019. The information contained in this section should also be read in conjunction with our unaudited financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

 

Overview

 

Bain Capital Specialty Finance, Inc. (the “Company”, “we”, “our” and “us”) is an externally managed specialty finance company focused on lending to middle market companies. We have elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “1940 Act”). We are managed by BCSF Advisors, LP (our “Advisor” or “BCSF Advisors”), a subsidiary of Bain Capital Credit, LP (“Bain Capital Credit”). Our Advisor is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our Advisor also provides the administrative services necessary for us to operate (in such capacity, our “Administrator” or “BCSF Advisors”). Since we commenced operations on October 13, 2016 through September 30, 2019, we have invested approximately $3.2 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. We seek to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last-out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds.

 

On November 19, 2018, we closed our initial public offering (the “IPO”) issuing 7,500,000 shares of our common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018.

 

Our primary focus is capitalizing on opportunities within our Senior Direct Lending strategy, which seeks to provide risk-adjusted returns and current income to our stockholders by investing primarily in middle-market companies with between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). However, we may, from time to time, invest in larger or smaller companies. We generally seek to retain effective voting control in respect of the loans or particular classes of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities, including common and preferred equity, on an opportunistic basis, and in secondary purchases of assets or portfolios but such investments are not the principal focus of our investment strategy. In addition, we may invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.

 

We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we generate income from various loan origination and other fees, dividends on direct equity investments and capital gains on the sales of investments. The companies in which we invest use our capital for a variety of reasons, including to support organic growth, to fund changes of control, to fund acquisitions, to make capital investments and for refinancing and recapitalizations.

 

Investments

 

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

 

As a BDC, we may not acquire any assets other than “qualifying assets” specified in the 1940 Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the 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.

 

As a BDC, we may also invest up to 30% of our portfolio opportunistically in “non-qualifying” portfolio investments, such as investments in non-U.S. companies.

 

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Revenues

 

We primarily generate revenue in the form of interest income on debt investments and distributions on equity investments and, to a lesser extent, capital gains, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind (“PIK”) interest. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts into or against income over the life of the loan. We record contractual prepayment premiums on loans and debt securities as interest income.

 

Our debt investment portfolio consists of primarily floating rate loans. As of September 30, 2019 and December 31, 2018, 98.7% and 95.5%, respectively, of our debt investments, based on fair value, bore interest at floating rates, which may be subject to interest rate floors. Variable-rate investments subject to a floor generally reset periodically to the applicable floor, only if the floor exceeds the index. Trends in base interest rates, such as LIBOR, may affect our net investment income over the long term. In addition, our results may vary from period to period depending on the interest rates of new investments made during the period compared to investments that were sold or repaid during the period; these results reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macroeconomic trends.

 

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

 

Expenses

 

Our primary operating expenses may include the payment of fees to our Advisor under the second amended and restated investment advisory agreement (the “Amended Advisory Agreement”), our allocable portion of overhead expenses under the administration agreement (the “Administration Agreement”) and other operating costs, including those described below. The Base Management Fee and Incentive Fee compensate our Advisor 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:

 

·                  our operational and organizational cost;

 

·                  the costs of any public offerings of our common stock and other securities, including registration and listing fees;

 

·                  costs of calculating our net asset value (including the cost and expenses of any third-party valuation services);

 

·                  fees and expenses payable to third parties relating to evaluating, making and disposing of investments, including our Advisor’s or its affiliates’ travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments, monitoring our investments and, if necessary, enforcing our rights;

 

·                  interest payable on debt and other borrowing costs, if any, incurred to finance our investments;

 

·                  costs of effecting sales and repurchases of our common stock and other securities;

 

·                  the base management fee and any incentive fee;

 

·                  distributions on our common stock;

 

·                  transfer agent and custody fees and expenses;

 

·                  the allocated costs incurred by the Administrator in providing managerial assistance to those portfolio companies that request it;

 

·                  other expenses incurred by BCSF Advisors or us in connection with administering our business, including payments made to third-party providers of goods or services;

 

·                  brokerage fees and commissions;

 

·                  federal and state registration fees;

 

·                  U.S. federal, state and local taxes;

 

·                  Independent Director fees and expenses;

 

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·                  costs associated with our reporting and compliance obligations under the 1940 Act and applicable U.S. federal and state securities laws;

 

·                  costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

 

·                  costs of holding stockholder meetings;

 

·                  our fidelity bond;

 

·                  directors’ and officers’ errors and omissions liability insurance, and any other insurance premiums;

 

·                  litigation, indemnification and other non-recurring or extraordinary expenses;

 

·                  direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, staff, audit, compliance, tax and legal costs;

 

·                  fees and expenses associated with marketing efforts;

 

·                  dues, fees and charges of any trade association of which we are a member; and

 

·                  all other expenses reasonably incurred by us or the Administrator in connection with administering our business.

 

To the extent that expenses to be borne by us are paid by BCSF Advisors, we will generally reimburse BCSF Advisors for such expenses. 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 profit to the Administrator. We will also reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain rent and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment and fees paid to third-party providers for goods or services. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to our business and affairs, and will be subject to oversight by our Board of Directors (our “Board”). We incurred expenses related to the Administrator of $0.2 million and $0.0 million for the three months ended September 30, 2019 and 2018, respectively, and $0.8 million and $0.0 million for the nine months ended September 30, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. As of September 30, 2019 and December 31, 2018, $0.2 million and $0.0 million, respectively, in expenses related to the Administrator were payable and included in “accounts payable and accrued expenses” in the consolidated statements of assets and liabilities. The sub-administrator is paid its compensation for performing its sub-administrative services under the sub-administration agreement. We incurred expenses related to the sub-administrator of $0.2 million and $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $0.5 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively, which is included in other general and administrative expenses on the consolidated statements of operations. BCSF Advisors will not be reimbursed to the extent that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses are ultimately borne by our stockholders.

 

Leverage

 

We may borrow money from time to time. However, our ability to incur indebtedness (including by issuing preferred stock), as of September 30, 2019, is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150%. We do not intend to change our primary focus of capitalizing on opportunities within our Senior Direct Lending strategy, which seeks to provide risk-adjusted returns and current income to our stockholders by investing primarily in middle market companies. In determining whether to borrow money, we will 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.

 

Portfolio and Investment Activity

 

During the three months ended September 30, 2019, we invested $274.6 million, including PIK, in 39 portfolio companies, and had $184.2 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $90.4 million for the period.

 

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During the three months ended September 30, 2018, we invested $343.4 million in 52 portfolio companies, including ABCS as a single portfolio company, and had $65.1 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $278.3 million for the period.

 

During the nine months ended September 30, 2019, we invested $953.3 million, including PIK, in 80 portfolio companies, including ABCS as a single portfolio company, and had $754.5 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $198.8 million for the period. These amounts exclude the ABCS distribution transaction on April 30, 2019. On April 30, 2019, the Company received a distribution from ABCS. The portfolio of investments that were distributed comprised of 25 senior secured unitranche loans with a fair value of $919.0 million.

 

During the nine months ended September 30, 2018, we invested $716.8 million in 78 portfolio companies, including ABCS as a single portfolio company, and had $192.6 million in aggregate amount of principal repayments and sales, resulting in a net increase in investments of $524.2 million for the period.

 

The following table shows the composition of the investment portfolio and associated yield data as of September 30, 2019 (dollars in thousands):

 

 

 

As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

Weighted
Average
Yield

 

First Lien Senior Secured Loans (1)

 

$

2,189,765

 

86.6

%

$

2,178,962

 

86.9

%

7.5

%

First Lien Last Out Loans (1)

 

27,645

 

1.1

 

27,307

 

1.1

 

8.4

 

Second Lien Senior Secured Loans (1)

 

202,565

 

8.0

 

192,205

 

7.7

 

9.9

 

Subordinated Debt (1)

 

14,744

 

0.5

 

14,963

 

0.6

 

13.5

 

Corporate Bonds (1)

 

31,818

 

1.3

 

26,012

 

1.0

 

8.3

 

Equity Interests

 

43,292

 

1.7

 

45,702

 

1.8

 

N/A

 

Preferred Equity

 

19,227

 

0.8

 

21,454

 

0.9

 

N/A

 

Warrants

 

 

0.0

 

129

 

0.0

 

N/A

 

Total

 

$

2,529,056

 

100.0

%

$

2,506,734

 

100.0

%

7.7

%

 


(1)             Computed for debt investments based upon the annual interest rate as of September 30, 2019, divided by the total par amount of investments. For investments with floating interest rates, the yield calculation is computed using the contract rate as of September 30, 2019. The weighted average yield does not represent the total return to our stockholders.

 

The following table shows the composition of the investment portfolio and associated yield data as of December 31, 2018 (dollars in thousands):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

Weighted
Average
Yield

 

First Lien Senior Secured Loans (1)

 

$

1,074,413

 

61.3

%

$

1,058,839

 

61.3

%

7.0

%

First Lien Last Out Loans (1)

 

27,325

 

1.5

 

27,488

 

1.6

 

8.7

 

Second Lien Senior Secured Loans (1)

 

263,759

 

15.0

 

258,139

 

14.9

 

9.7

 

Subordinated Debt (1)

 

39,711

 

2.3

 

39,625

 

2.3

 

11.2

 

Corporate Bonds (1)

 

41,387

 

2.4

 

35,023

 

2.0

 

8.1

 

Investment Vehicles (1) (2)

 

279,891

 

16.0

 

279,363

 

16.2

 

14.0

 

Equity Interests

 

24,078

 

1.4

 

26,522

 

1.5

 

N/A

 

Preferred Equity

 

2,553

 

0.1

 

2,807

 

0.2

 

N/A

 

Warrants

 

 

0.0

 

 

0.0

 

N/A

 

Total

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

8.7

%

 


(1)             Computed for debt investments based upon the annual interest rate, including PIK, at December 31, 2018, divided by the total par amount of investments. For investments with floating interest rates, the yield calculation is computed using the contract rate at December 31, 2018. Weighted average yield for Investment Vehicles represents the weighted average

 

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levered yield of our proportionate investment in ABCS at December 31, 2018. Weighted average yield for Investment Vehicles is computed based upon (1) the weighted average of the interest rate of investments held by ABCS less (2) the weighted average interest rate of the ABCS Facility, divided by our par amount in ABCS. Total weighted average yield is the weighted average of the yields of the debt investments and the Investment Vehicles in ABCS. The weighted average yield does not represent the total return to our stockholders.

(2)             Represents equity investment in ABCS.

 

The following table presents certain selected information regarding our investment portfolio as of September 30, 2019:

 

 

 

As of

 

 

 

September 30, 2019

 

Number of portfolio companies

 

126

 

Percentage of debt bearing a floating rate (1)

 

98.7

%

Percentage of debt bearing a fixed rate (1) 

 

1.3

%

 


(1)             Measured on a fair value basis.

 

The following table presents certain selected information regarding our investment portfolio as of December 31, 2018:

 

 

 

As of

 

 

 

December 31, 2018

 

Number of portfolio companies (2)

 

132

 

Percentage of debt bearing a floating rate (1)

 

95.5

%

Percentage of debt bearing a fixed rate (1) 

 

4.5

%

 


(1)             Measured on a fair value basis.

(2)             Includes ABCS as a single portfolio company. For details of portfolio companies held within ABCS, refer to the selected financial data of ABCS.

 

The following table shows the amortized cost and fair value of our performing and non-accrual investments as of September 30, 2019 (dollars in thousands):

 

 

 

As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage at
Amortized Cost

 

Fair Value

 

Percentage at
Fair Value

 

Performing

 

$

2,529,056

 

100

%

$

2,506,734

 

100

%

Non-accrual

 

 

 

 

 

Total

 

$

2,529,056

 

100

%

$

2,506,734

 

100

%

 

The following table shows the amortized cost and fair value of our performing and non-accrual investments as of December 31, 2018 (dollars in thousands):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage at
Amortized Cost

 

Fair Value

 

Percentage at
Fair Value

 

Performing

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

Non-accrual

 

 

 

 

 

Total

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

 

Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

 

The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents and foreign cash as of September 30, 2019 (dollars in thousands):

 

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As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage of
Total

 

Fair Value

 

Percentage of
Total

 

Cash and cash equivalents

 

$

70,637

 

2.7

%

$

70,637

 

2.7

%

Foreign cash

 

1,066

 

0.0

 

992

 

0.0

 

Restricted cash

 

86,402

 

3.2

 

86,402

 

3.2

 

First Lien Senior Secured Loans

 

2,189,765

 

81.5

 

2,178,962

 

81.8

 

First Lien Last Out Loans

 

27,645

 

1.0

 

27,307

 

1.0

 

Second Lien Senior Secured Loans

 

202,565

 

7.5

 

192,205

 

7.2

 

Subordinated Debt

 

14,744

 

0.5

 

14,963

 

0.6

 

Corporate Bonds

 

31,818

 

1.3

 

26,012

 

1.0

 

Equity Interests

 

43,292

 

1.6

 

45,702

 

1.7

 

Preferred Equity

 

19,227

 

0.7

 

21,454

 

0.8

 

Warrants

 

 

0.0

 

129

 

0.0

 

Total

 

$

2,687,161

 

100.0

%

$

2,664,765

 

100.0

%

 

The following table shows the amortized cost and fair value of the investment portfolio, cash and cash equivalents and foreign cash as of December 31, 2018 (dollars in thousands):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage of
Total

 

Fair Value

 

Percentage of
Total

 

Cash and cash equivalents

 

$

14,693

 

0.8

%

$

14,693

 

0.8

%

Foreign cash

 

589

 

0.0

 

591

 

0.0

 

Restricted cash

 

17,987

 

1.0

 

17,987

 

1.0

 

First Lien Senior Secured Loans

 

1,074,413

 

60.1

 

1,058,839

 

60.1

 

First Lien Last Out Loans

 

27,325

 

1.5

 

27,488

 

1.6

 

Second Lien Senior Secured Loans

 

263,759

 

14.8

 

258,139

 

14.6

 

Subordinated Debt

 

39,711

 

2.2

 

39,625

 

2.3

 

Corporate Bonds

 

41,387

 

2.4

 

35,023

 

2.0

 

Investment Vehicles (1)

 

279,891

 

15.8

 

279,363

 

15.9

 

Equity Interests

 

24,078

 

1.3

 

26,522

 

1.5

 

Preferred Equity

 

2,553

 

0.1

 

2,807

 

0.2

 

Warrants

 

 

0.0

 

 

0.0

 

Total

 

$

1,786,386

 

100.0

%

$

1,761,077

 

100.0

%

 


(1)             Represents equity investment in ABCS.

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of September 30, 2019 (with corresponding percentage of total portfolio investments) (dollars in thousands):

 

 

 

As of September 30, 2019

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

High Tech Industries

 

$

375,320

 

14.8

%

$

374,478

 

14.9

%

Healthcare & Pharmaceuticals

 

252,982

 

10.0

 

247,821

 

9.9

 

Aerospace & Defense

 

235,670

 

9.3

 

237,045

 

9.5

 

Consumer Goods: Non-Durable

 

213,725

 

8.5

 

214,378

 

8.6

 

Services: Business

 

205,045

 

8.1

 

203,882

 

8.1

 

Capital Equipment

 

149,382

 

5.9

 

149,604

 

6.0

 

Wholesale

 

121,024

 

4.8

 

119,720

 

4.8

 

Transportation: Cargo

 

109,952

 

4.3

 

110,101

 

4.4

 

Energy: Oil & Gas

 

75,634

 

3.0

 

76,390

 

3.0

 

Construction & Building

 

71,173

 

2.8

 

72,261

 

2.9

 

Media: Advertising, Printing & Publishing

 

65,797

 

2.6

 

63,926

 

2.5

 

Services: Consumer

 

60,702

 

2.4

 

59,478

 

2.4

 

Transportation: Consumer

 

59,519

 

2.4

 

59,019

 

2.4

 

Media: Diversified & Production

 

57,540

 

2.3

 

57,768

 

2.3

 

FIRE: Insurance (1)

 

51,256

 

2.0

 

51,301

 

2.0

 

Hotel, Gaming & Leisure

 

47,044

 

1.9

 

47,386

 

1.9

 

Media: Broadcasting & Subscription

 

43,125

 

1.7

 

42,889

 

1.7

 

Consumer Goods: Durable

 

39,507

 

1.5

 

39,303

 

1.6

 

Automotive

 

38,583

 

1.5

 

38,785

 

1.5

 

Retail

 

38,317

 

1.5

 

38,393

 

1.5

 

Chemicals, Plastics & Rubber

 

35,750

 

1.4

 

35,658

 

1.4

 

Banking

 

32,333

 

1.3

 

32,350

 

1.3

 

Forest Products & Paper

 

23,521

 

0.9

 

23,134

 

0.9

 

Energy: Electricity

 

22,222

 

0.9

 

22,184

 

0.9

 

Telecommunications

 

21,810

 

0.9

 

21,864

 

0.9

 

Beverage, Food & Tobacco

 

30,695

 

1.2

 

20,214

 

0.8

 

Environmental Industries

 

16,467

 

0.7

 

15,992

 

0.6

 

Containers, Packaging, & Glass

 

11,634

 

0.5

 

11,633

 

0.5

 

FIRE: Real Estate (1)

 

10,759

 

0.4

 

10,140

 

0.4

 

Utilities: Electric

 

12,568

 

0.5

 

9,637

 

0.4

 

Total

 

$

2,529,056

 

100.0

%

$

2,506,734

 

100.0

%

 

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Table of Contents

 


(1)                                     Finance, Insurance and Real Estate (“FIRE”).

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2018 (with corresponding percentage of total portfolio investments) (dollars in thousands):

 

 

 

As of December 31, 2018

 

 

 

Amortized Cost

 

Percentage of
Total Portfolio

 

Fair Value

 

Percentage of
Total Portfolio

 

Investment Vehicles (1)

 

$

279,891

 

16.0

%

$

279,363

 

16.2

%

High Tech Industries

 

205,845

 

11.7

 

202,999

 

11.7

 

Services: Business

 

137,816

 

7.9

 

135,398

 

7.8

 

Healthcare & Pharmaceuticals

 

127,105

 

7.3

 

125,745

 

7.3

 

Aerospace & Defense

 

120,070

 

6.8

 

121,411

 

7.0

 

Transportation: Cargo

 

85,198

 

4.9

 

83,513

 

4.8

 

Hotel, Gaming & Leisure

 

81,487

 

4.6

 

80,683

 

4.7

 

Consumer Goods: Non-Durable

 

73,809

 

4.2

 

71,439

 

4.1

 

Wholesale

 

64,530

 

3.7

 

63,053

 

3.6

 

Capital Equipment

 

44,054

 

2.5

 

42,796

 

2.5

 

Construction & Building

 

41,240

 

2.4

 

41,582

 

2.4

 

Retail

 

43,263

 

2.5

 

41,384

 

2.4

 

FIRE: Insurance (2)

 

43,287

 

2.5

 

41,106

 

2.4

 

Services: Consumer

 

41,328

 

2.4

 

41,023

 

2.4

 

Containers, Packaging & Glass

 

40,212

 

2.3

 

38,694

 

2.2

 

Beverage, Food & Tobacco

 

38,154

 

2.2

 

35,613

 

2.1

 

Energy: Oil & Gas

 

31,541

 

1.8

 

31,195

 

1.8

 

Media: Diversified & Production

 

30,364

 

1.7

 

30,491

 

1.8

 

Automotive

 

29,482

 

1.7

 

29,337

 

1.7

 

Energy: Electricity

 

22,368

 

1.3

 

22,283

 

1.3

 

Forest Products & Paper

 

22,515

 

1.3

 

21,903

 

1.3

 

Media: Broadcasting & Subscription

 

21,868

 

1.2

 

20,945

 

1.2

 

Media: Advertising, Printing & Publishing

 

19,635

 

1.1

 

19,731

 

1.1

 

Chemicals, Plastics & Rubber

 

19,147

 

1.1

 

19,511

 

1.1

 

Consumer Goods: Durable

 

17,098

 

0.9

 

17,248

 

1.0

 

Environmental Industries

 

16,489

 

0.9

 

16,482

 

1.0

 

Telecommunications

 

15,240

 

0.9

 

15,122

 

0.9

 

Banking

 

13,260

 

0.7

 

13,235

 

0.8

 

FIRE: Real Estate (2)

 

10,714

 

0.6

 

10,650

 

0.6

 

Utilities: Electric

 

12,483

 

0.7

 

10,311

 

0.6

 

FIRE: Finance (2)

 

3,624

 

0.2

 

3,560

 

0.2

 

Total

 

$

1,753,117

 

100.0

%

$

1,727,806

 

100.0

%

 


(1)                                     Represents equity investment in ABCS.

(2)                                     Finance, Insurance and Real Estate (“FIRE”).

 

57


Table of Contents

 

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

 

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

 

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

 

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

 

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

 

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

 

Our Advisor rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3 or 4, Advisor enhances its level of scrutiny over the monitoring of such portfolio company. Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.

 

·                  An investment is rated 1 if, in the opinion of our Advisor, it is performing above underwriting expectations, and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company or the likelihood of a potential exit.

 

·                  An investment is rated 2 if, in the opinion of our Advisor, it is performing as expected at the time of our underwriting and there are generally no concerns about the portfolio company’s performance or ability to meet covenant requirements, interest payments or principal amortization, if applicable. All new investments or acquired investments in new portfolio companies are initially given a rating of 2.

 

·                  An investment is rated 3 if, in the opinion of our Advisor, the investment is performing below underwriting expectations and there may be concerns about the portfolio company’s performance or trends in the industry, including as a result of factors such as declining performance, non-compliance with debt covenants or delinquency in loan payments (but generally not more than 180 days past due).

 

·                  An investment is rated 4 if, in the opinion of our Advisor, the investment is performing materially below underwriting expectations. For debt investments, most of or all of the debt covenants are out of compliance and payments are substantially delinquent. Investments rated 4 are not anticipated to be repaid in full, if applicable, and there is significant risk that we may realize a substantial loss on our investment.

 

The following table shows the composition of our portfolio on the 1 to 4 rating scale as of September 30, 2019 (dollars in thousands):

 

 

 

As of September 30, 2019

 

Investment Performance Rating

 

Fair
Value

 

Percentage of
Total

 

Number of
Companies 
(1)

 

Percentage of
Total

 

1

 

$

158,719

 

6.3

%

4

 

3.2

%

2

 

2,313,411

 

92.3

 

118

 

93.6

 

3

 

34,604

 

1.4

 

4

 

3.2

 

4

 

 

 

 

 

Total

 

$

2,506,734

 

100.0

%

126

 

100.0

%

 


(1)                                     Number of investment rated companies may not agree to total portfolio companies due to investments across investment types and structures.

 

The following table shows the composition of our portfolio on the 1 to 4 rating scale as of December 31, 2018 (dollars in thousands):

 

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Table of Contents

 

 

 

As of December 31, 2018

 

Investment Performance Rating

 

Fair
Value

 

Percentage of
Total

 

Number of
Companies

 

Percentage of
Total

 

1

 

$

17,301

 

1.0

%

1

 

0.7

%

2

 

1,684,494

 

97.5

 

128

 

97.0

 

3

 

26,011

 

1.5

 

3

 

2.3

 

4

 

 

 

 

 

Total

 

$

1,727,806

 

100.0

%

132

 

100.0

%

 

Antares Bain Capital Complete Financing Solution

 

Prior to April 30, 2019, we were party to a limited liability company agreement with Antares Midco Inc. (“Antares”) pursuant to which it invested in ABC Complete Financing Solution LLC, which made investments through its subsidiary, Antares Bain Capital Complete Financing Solution LLC (together with ABC Complete Financing Solution LLC, “ABCS”). ABCS, an unconsolidated Delaware limited liability company, was formed on September 27, 2017 and commenced operations on November 29, 2017. ABCS’ principal purpose was to make investments, primarily in senior secured unitranche loans. We recorded our investment in ABCS at fair value. Distributions of income received from ABCS, if any, were recorded as dividend income from controlled affiliate investments in the consolidated statements of operations. Distributions received from ABCS in excess of income earned at ABCS, if any, were recorded as a return of capital and reduced the amortized cost of controlled affiliate investments.

 

We and Antares, as members of ABCS, agreed to contribute capital up to (subject to the terms of their agreement) $950.0 million in aggregate to purchase equity interests in ABCS, with us and Antares contributing up to $425.0 million and $525.0 million, respectively. Funding of such commitments generally required the consent of both Antares Credit Opportunities Manager LLC and the Advisor on behalf of Antares and us, respectively. ABCS was capitalized with capital contributions from its members on a pro-rata basis based on their maximum capital contributions as transactions were funded after they had been approved.

 

Investment decisions of ABCS required the consent of both the Advisor and Antares Credit Opportunities Manager LLC, as representatives of us and Antares, respectively. Each of the Advisor and Antares sourced investments for ABCS.

 

On April 30, 2019, we formed BCSF Complete Financing Solution Holdco, LLC (“BCSF CFSH, LLC”) and BCSF Complete Financing Solution, LLC (“BCSF Unitranche” or “BCSF CFS, LLC”), wholly-owned, newly-formed, subsidiaries. We received our proportionate share of all assets which represented 44.737% of ABCS. The portfolio of investments that was distributed comprised of 25 senior secured unitranche loans with a fair value of $919.0 million and cash of $3.2 million. The Company also assumed the obligation to fund outstanding unfunded commitments of $31.4 million. In connection with the distribution, we recognized a realized gain of $0.3 million. The Company is no longer a member of ABCS. The distribution of assets received by the Company have been included in the Company’s consolidated financial statements and notes thereto.

 

In conjunction with the distribution from ABCS, on April 30, 2019, BCSF CFS, LLC entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank. On the date of the ABCS distribution, the Company had $577.5 million outstanding on the JPM Credit Facility.

 

Below is selected balance sheet information for ABCS as of December 31, 2018:

 

Selected Balance Sheet Information

 

 

 

As of December 31, 2018

 

Loans, net of allowance of $17,616 (1)

 

$

1,616,795

 

Cash, restricted cash and other assets

 

52,240

 

Total assets

 

$

1,669,035

 

Debt (2)

 

$

1,027,615

 

Other liabilities

 

30,762

 

Total liabilities

 

$

1,058,377

 

Members’ equity

 

610,658

 

Total liabilities and members’ equity

 

$

1,669,035

 

 


(1)                                     ABCS is not considered an investment company and does not follow the accounting and reporting guidelines in ASC 946. ABCS applies an allowance for loan loss methodology prescribed by FASB ASC 310, Receivables, and FASB ASC 450 Contingencies. The allowance for loan loss as of December 31, 2018 is a general allowance, there was no specific allowance

 

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for loan losses during the period. The Company estimates a fair value for each loan in the ABCS portfolio, which is presented in the Antares Bain Capital Complete Financing Solution schedule of investments below, which is an input to the Company’s valuation of ABCS as a whole.

(2)                                     Net of $3.6 million deferred financing costs for the ABCS Facility, December 31, 2018.

 

Below is selected statements of operations information for the three and nine months ended September 30, 2019 and 2018:

 

Selected Statements of Operations Information

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30,
2019 
(1)

 

September 30,
2018

 

September 30,
2019 
(1)

 

September 30,
2018

 

Interest Income

 

$

 

$

29,224

 

$

53,494

 

$

72,352

 

Fee income

 

 

89

 

217

 

1,036

 

Total revenues

 

 

29,313

 

53,711

 

73,388

 

Credit facility expenses

 

 

12,564

 

22,008

 

32,284

 

Other fees and expenses

 

 

13,848

 

6,661

 

16,326

 

Total expenses

 

 

26,412

 

28,669

 

48,610

 

Net investment income

 

 

2,901

 

25,042

 

24,778

 

Net increase in members’ capital from operations

 

$

 

$

2,901

 

$

25,042

 

$

24,778

 

 


(1)                                     The ABCS distribution was effective April 30, 2019.

 

Antares Bain Capital Complete Financing Solution

 

Schedule of Investments

As of December 31, 2018

(In Thousands)

 

Portfolio Company

 

Spread Above
Index 
(1)

 

Interest
Rate

 

Maturity Date

 

Principal/
Par Amount

 

Carrying Value

 

Fair Value (2)

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

Delayed Draw Term Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

 

 

 

 

PRCC Holdings, Inc.

 

L+ 6.50%

 

9.02

%

2/1/2021

 

$

11,878

 

$

11,878

 

$

11,878

 

Total Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

11,878

 

11,878

 

Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

 

 

 

 

Solaray, LLC

 

L+ 5.75%

 

8.49

%

9/9/2023

 

$

26,680

 

26,389

 

26,547

 

Solaray, LLC (3)

 

 

 

9/9/2023

 

$

 

 

(33

)

Total Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

26,389

 

26,514

 

FIRE: Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

Margaux Acquisition Inc. (3)

 

 

 

12/19/2024

 

$

 

 

(417

)

Total FIRE: Insurance

 

 

 

 

 

 

 

 

 

 

(417

)

High Tech Industries

 

 

 

 

 

 

 

 

 

 

 

 

 

Element Buyer, Inc. (3)

 

 

 

7/19/2025

 

$

 

 

(133

)

Element Buyer, Inc.

 

L+ 5.25%

 

7.76

%

7/19/2025

 

$

7,600

 

7,473

 

7,543

 

Total High Tech Industries

 

 

 

 

 

 

 

 

 

7,473

 

7,410

 

Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

 

 

 

 

Ansira Holdings, Inc.

 

L+ 5.75%

 

8.27

%

12/20/2022

 

$

2,478

 

2,472

 

2,459

 

Ansira Holdings, Inc. (3)

 

 

 

12/20/2022

 

$

 

 

(56

)

Total Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

2,472

 

2,403

 

Services: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

McKissock, LLC

 

L+ 5.75%

 

8.55

%

8/5/2021

 

$

2,605

 

2,583

 

2,605

 

Total Services: Consumer

 

 

 

 

 

 

 

 

 

2,583

 

2,605

 

Transportation: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Travel, Inc.

 

L+ 6.50%

 

9.12

%

12/1/2021

 

$

1,672

 

1,669

 

1,672

 

Direct Travel, Inc.

 

 

 

12/1/2021

 

$

 

 

 

Total Transportation: Consumer

 

 

 

 

 

 

 

 

 

1,669

 

1,672

 

Total Delayed Draw Term Loan

 

 

 

 

 

 

 

 

 

$

52,464

 

$

52,065

 

First lien senior secured loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

 

 

 

 

 

 

 

 

 

 

 

 

API Technologies Corp.

 

L+ 5.75%

 

8.27

%

4/20/2024

 

$

117,861

 

116,559

 

117,566

 

Total Aerospace & Defense

 

 

 

 

 

 

 

 

 

116,559

 

117,566

 

Capital Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

Tidel Engineering, L.P.

 

L+ 6.25%

 

9.05

%

3/1/2024

 

$

86,442

 

86,415

 

86,442

 

Total Capital Equipment

 

 

 

 

 

 

 

 

 

86,415

 

86,442

 

 

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Table of Contents

 

Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

 

 

 

 

AP Plastics Group, LLC

 

L+ 5.25%

 

7.60

%

8/1/2022

 

$

48,398

 

48,348

 

47,914

 

PRCC Holdings, Inc.

 

L+ 6.50%

 

9.02

%

2/1/2021

 

$

73,813

 

73,813

 

73,813

 

Total Chemicals, Plastics & Rubber

 

 

 

 

 

 

 

 

 

122,161

 

121,727

 

Construction & Building

 

 

 

 

 

 

 

 

 

 

 

 

 

Profile Products LLC

 

L+ 5.75%

 

8.54

%

12/20/2024

 

$

78,832

 

77,614

 

77,256

 

Total Construction & Building

 

 

 

 

 

 

 

 

 

77,614

 

77,256

 

Consumer Goods: Durable

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Franchise Concepts, Inc.

 

L+ 5.00%

 

7.43

%

7/9/2024

 

$

69,091

 

68,773

 

68,400

 

Stanton Carpet Corp. (7)

 

L+ 5.50%

 

8.04

%

11/21/2022

 

$

60,231

 

60,179

 

59,629

 

Total Consumer Goods: Durable

 

 

 

 

 

 

 

 

 

128,952

 

128,029

 

Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

 

 

 

 

Solaray, LLC

 

L+ 5.75%

 

8.49

%

9/9/2023

 

$

96,230

 

95,175

 

95,749

 

Total Consumer Goods: Non-Durable

 

 

 

 

 

 

 

 

 

95,175

 

95,749

 

Energy: Oil & Gas

 

 

 

 

 

 

 

 

 

 

 

 

 

Amspec Services, Inc.

 

L+ 5.75%

 

8.55

%

7/2/2024

 

$

90,025

 

88,986

 

86,874

 

Total Energy: Oil & Gas

 

 

 

 

 

 

 

 

 

88,986

 

86,874

 

FIRE: Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

Margaux Acquisition Inc.

 

L+ 6.00%

 

8.80

%

12/19/2024

 

$

65,125

 

63,766

 

63,822

 

Margaux UK Finance Limited

 

GBP LIBOR+ 6.00%

 

7.00

%

12/19/2024

 

£

17,356

 

21,651

 

21,665

 

Total FIRE: Insurance

 

 

 

 

 

 

 

 

 

85,417

 

85,487

 

High Tech Industries

 

 

 

 

 

 

 

 

 

 

 

 

 

Caliper Software, Inc.

 

L+ 5.50%

 

8.02

%

11/28/2025

 

$

68,182

 

67,509

 

67,159

 

Element Buyer, Inc.

 

L+ 5.25%

 

7.78

%

7/19/2025

 

$

85,287

 

83,863

 

84,647

 

Total High Tech Industries

 

 

 

 

 

 

 

 

 

151,372

 

151,806

 

Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

 

 

 

 

Ansira Holdings, Inc.

 

L+ 5.75%

 

8.27

%

12/20/2022

 

$

81,011

 

80,874

 

80,404

 

Cruz Bay Publishing, Inc. (5)

 

L+ 5.75%

 

8.30

%

6/6/2019

 

$

11,418

 

11,418

 

11,418

 

Cruz Bay Publishing, Inc. (6)

 

L+ 6.75%

 

9.57

%

6/6/2019

 

$

3,813

 

3,813

 

3,813

 

Total Media: Advertising, Printing & Publishing

 

 

 

 

 

 

 

 

 

96,105

 

95,635

 

Media: Diversified & Production

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficient Collaborative Retail Marketing Company, LLC

 

L+ 6.75%

 

9.55

%

6/15/2022

 

$

22,800

 

22,722

 

22,572

 

Efficient Collaborative Retail Marketing Company, LLC

 

L+ 6.75%

 

9.56

%

6/15/2022

 

$

33,741

 

33,241

 

33,404

 

Total Media: Diversified & Production

 

 

 

 

 

 

 

 

 

55,963

 

55,976

 

Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

Batteries Plus Holding Corporation

 

L+ 6.75%

 

9.27

%

7/6/2022

 

$

68,156

 

68,156

 

68,156

 

Total Retail

 

 

 

 

 

 

 

 

 

68,156

 

68,156

 

Services: Business

 

 

 

 

 

 

 

 

 

 

 

 

 

TEI Holdings Inc.

 

L+ 6.00%

 

8.80

%

12/20/2023

 

$

118,589

 

117,726

 

117,403

 

Total Services: Business

 

 

 

 

 

 

 

 

 

117,726

 

117,403

 

Services: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

McKissock, LLC

 

L+ 5.75%

 

8.55

%

8/5/2021

 

$

8,071

 

8,004

 

8,071

 

McKissock, LLC

 

L+ 5.75%

 

8.55

%

8/5/2021

 

$

42,144

 

41,792

 

42,460

 

Total Services: Consumer

 

 

 

 

 

 

 

 

 

49,796

 

50,531

 

Transportation: Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Travel, Inc.

 

L+ 6.50%

 

9.30

%

12/1/2021

 

$

112,153

 

111,789

 

112,153

 

Total Transportation: Consumer

 

 

 

 

 

 

 

 

 

111,789

 

112,153

 

Wholesale

 

 

 

 

 

 

 

 

 

 

 

 

 

Abracon Group Holding, LLC. (4)

 

L+ 5.75%

 

8.56

%

7/18/2024

 

$

81,497

 

80,367

 

80,682

 

Aramsco, Inc.

 

L+ 5.25%

 

7.77

%

8/28/2024

 

$

50,343

 

49,394

 

48,958

 

Total Wholesale

 

 

 

 

 

 

 

 

 

129,761

 

129,640

 

Total First Lien Senior Secured

 

 

 

 

 

 

 

 

 

$

1,581,947

 

$

1,580,430

 

Total Corporate Debt

 

 

 

 

 

 

 

 

 

$

1,634,411

 

$

1,632,495

 

Total Investments

 

 

 

 

 

 

 

 

 

$

1,634,411

 

$

1,632,495

 

 


(1) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) which reset daily, monthly, quarterly or semiannually. For each, the Company has provided the spread over LIBOR and the current weighted average interest rate in effect at December 31, 2018. Certain investments are subject to a LIBOR interest rate floor.

(2) Fair Value determined by the Advisor.

(3) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.

(4) $204 of the total par amount for this security is at P + 4.75%.

(5) $158 of the total par amount for this security is at P + 4.75%.

(6) $53 of the total par amount for this security is at P + 5.75%.

(7) $391 of the total par amount for this security is at P + 4.50%.

 

Results of Operations

 

Our operating results for the three months ended September 30, 2019 and 2018 were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Total investment income

 

$

52,688

 

$

26,663

 

Total expenses, net of fee waivers

 

31,513

 

12,764

 

Net investment income

 

21,175

 

13,899

 

Net realized gain (loss)

 

495

 

(3,101

)

Net change in unrealized appreciation (depreciation)

 

(3,471

)

8,193

 

Net increase in net assets resulting from operations

 

$

18,199

 

$

18,991

 

 

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Our operating results for the nine months ended September 30, 2019 and 2018 were as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Total investment income

 

$

143,178

 

$

65,547

 

Total expenses, net of fee waivers

 

79,603

 

29,391

 

Net investment income

 

63,575

 

36,156

 

Net realized gain (loss)

 

9,723

 

(8,084

)

Net change in unrealized appreciation

 

3,436

 

8,445

 

Net increase in net assets resulting from operations

 

$

76,734

 

$

36,517

 

 

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

 

Investment Income

 

The composition of our investment income for the three months ended September 30, 2019 and 2018 was as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Interest income

 

$

51,491

 

$

20,367

 

Dividend income

 

961

 

6,204

 

Other income

 

236

 

92

 

Total investment income

 

$

52,688

 

$

26,663

 

 

Interest income from investments, which includes interest and accretion of discounts and fees, increased to $51.5 million for the three months ended September 30, 2019 from $20.4 million for the three months ended September 30, 2018, primarily due to the growth of our investment portfolio. Our investment portfolio at amortized cost increased to $2,529.1 million from $1,341.8 million as of September 30, 2019 and 2018, respectively. Dividend income decreased to $1.0 million for the three months ended September 30, 2019 from $6.2 million for the three months ended September 30, 2018, primarily due to the closing of the ABCS distribution transaction on April 30, 2019.  As of September 30, 2019, the weighted average yield of our investment portfolio decreased to 7.7% from 8.7% as of September 30, 2018.

 

The composition of our investment income for the nine months ended September 30, 2019 and 2018 was as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Interest income

 

$

127,060

 

$

48,902

 

Dividend income

 

15,487

 

16,345

 

Other income

 

631

 

300

 

Total investment income

 

$

143,178

 

$

65,547

 

 

Interest income from investments, which includes interest and accretion of discounts and fees, increased to $127.1 million for the nine months ended September 30, 2019 from $48.9 million for the nine months ended September 30, 2018, primarily due to the growth of our investment portfolio. Our investment portfolio at amortized cost increased to $2,529.1 million from $1,341.8 million as of September 30, 2019 and 2018, respectively. Dividend income decreased to $15.5 million for the nine months ended September 30, 2019 from $16.3 million for the nine months ended September 30, 2018, primarily due to the closing of the ABCS distribution transaction on April 30, 2019.  As of September 30, 2019, the weighted average yield of our investment portfolio decreased to 7.7% from 8.7% as of September 30, 2018.

 

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Operating Expenses

 

The composition of our operating expenses for the three months ended September 30, 2019 and 2018 was as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Interest and debt financing expenses

 

$

19,427

 

$

6,524

 

Base management fee

 

8,910

 

4,639

 

Incentive fee

 

4,330

 

3,242

 

Professional fees

 

789

 

900

 

Directors fees

 

159

 

68

 

Other general and administrative expenses

 

1,243

 

330

 

Total expenses, before fee waivers

 

$

34,858

 

$

15,703

 

Base management fee waiver

 

(2,582

)

(2,319

)

Incentive fee waiver

 

(763

)

(620

)

Total expenses, net of fee waivers

 

$

31,513

 

$

12,764

 

 

The composition of our operating expenses for the nine months ended September 30, 2019 and 2018 was as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Interest and debt financing expenses

 

$

46,592

 

$

16,138

 

Base management fee

 

23,644

 

11,643

 

Incentive fee

 

12,905

 

6,158

 

Professional fees

 

1,615

 

1,740

 

Directors fees

 

370

 

203

 

Other general and administrative expenses

 

3,672

 

954

 

Total expenses, before fee waivers

 

$

88,798

 

$

36,836

 

Base management fee waiver

 

(6,450

)

(5,821

)

Incentive fee waiver

 

(2,745

)

(1,624

)

Total expenses, net of fee waivers

 

$

79,603

 

$

29,391

 

 

Interest and Debt Financing Expenses

 

Interest and debt financing expenses on our borrowings totaled approximately $19.4 million and $6.5 million for the three months ended September 30, 2019 and 2018, respectively. Interest and debt financing expenses on our borrowings totaled approximately $46.6 million and $16.1 million for the nine months ended September 30, 2019 and 2018, respectively. Interest and debt financing expense for three and nine months ended September 30, 2019 as compared to September 30, 2018, increased primarily due to higher principal balances outstanding on our revolving credit facilities and the issuance of our 2019-1 Debt in August 2019, offset by the termination of our Citibank Revolving Credit Facility on August 28, 2019. On April 30, 2019, the Company entered into a new loan and security agreement with JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., the JPM Credit Facility.

 

The weighted average interest rate (excluding deferred upfront financing costs and unused fees) on our debt outstanding was 4.7% and 4.3% as of September 30, 2019 and December 31, 2018, respectively.

 

Management Fees

 

Management fee (net of waivers) increased to $6.3 million for the three months ended September 30, 2019 from $2.3 million for the three months ended September 30, 2018. Management fees (gross of waivers) increased to $8.9 million for the three months ended September 30, 2019 from $4.6 million for the three months ended September 30, 2018, primarily due to an increase in assets to $2.7 billion as of September 30, 2019 from $1.6 billion as of September 30, 2018. Management fees waived for the three months ended September 30, 2019 and 2018 were $2.6 million and $2.3 million, respectively.

 

Management fee (net of waivers) increased to $17.2 million for the nine months ended September 30, 2019 from $5.8 million for the nine months ended September 30, 2018. Management fees (gross of waivers) increased to $23.6 million for the nine months ended September 30, 2019 from $11.6 million for the nine months ended September 30, 2018, primarily due to an increase in assets to

 

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$2.7 billion as of September 30, 2019 from $1.6 billion as of September 30, 2018. Management fees waived for the nine months ended September 30, 2019 and 2018 were $6.4 million and $5.8 million, respectively.

 

Incentive Fees

 

Incentive fee (net of waivers) increased to $3.6 million for the three months ended September 30, 2019 from $2.6 million for the three months ended September 30, 2018. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $0.8 million for the three months ended September 30, 2019 and $0.6 million for the three months ended September 30, 2018. For the three months ended September 30, 2019 there were no incentive fees related to the GAAP Incentive Fee.

 

Incentive fee (net of waivers) increased to $10.2 million for the nine months ended September 30, 2019 from $4.5 million for the nine months ended September 30, 2018. Incentive fee waivers related to pre-incentive fee net investment income consisted of voluntary waivers of $2.7 million for the nine months ended September 30, 2019 and $1.6 million for the nine months ended September 30, 2018. For the nine months ended September 30, 2019 there were no incentive fees related to the GAAP Incentive Fee.

 

Professional Fees and Other General and Administrative Expenses

 

Professional fees and other general and administrative expenses increased to $2.0 million for the three months ended September 30, 2019 from $1.2 million for the three months ended September 30, 2018, due to an increase in costs associated with servicing our investment portfolio.

 

Professional fees and other general and administrative expenses increased to $5.3 million for the nine months ended September 30, 2019 from $2.7 million for the nine months ended September 30, 2018, due to an increase in costs associated with servicing our investment portfolio.

 

Net Realized and Unrealized Gains and Losses

 

The following table summarizes our net realized and unrealized gains (losses) for the three months ended September 30, 2019 and 2018 (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Net realized gain on investments

 

$

218

 

$

1

 

Net realized loss on investments

 

(191

)

(3,176

)

Net realized gain on foreign currency transactions

 

127

 

 

Net realized loss on foreign currency transactions

 

(5

)

(103

)

Net realized gain on forward currency exchange contracts

 

346

 

177

 

Net realized loss on forward currency exchange contracts

 

 

 

Net realized gains (losses)

 

$

495

 

$

(3,101

)

 

 

 

 

 

 

Change in unrealized appreciation on investments

 

$

11,255

 

$

11,448

 

Change in unrealized depreciation on investments

 

(24,023

)

(4,767

)

Net change in unrealized appreciation (depreciation) on investments

 

(12,768

)

6,681

 

Unrealized appreciation (depreciation) on foreign currency translation

 

162

 

(17

)

Unrealized appreciation on forward currency exchange contracts

 

9,135

 

1,529

 

Net change in unrealized appreciation on foreign currency and forward currency exchange contracts

 

9,297

 

1,512

 

 

 

 

 

 

 

Net change in unrealized appreciation (depreciation)

 

$

(3,471

)

$

8,193

 

 

For the three months ended September 30, 2019, and 2018, we had net realized gains (losses) on investments of $0.0 million and ($3.2) million, respectively. For the three months ended September 30, 2019, and 2018, we had net realized gains (losses) on foreign currency transactions of $0.1 million and ($0.1) million, respectively. For the three months ended September 30, 2019 and 2018, we had net realized gains on forward currency contracts of $0.3 million and $0.2 million, respectively, primarily as a result of settling GBP, EUR and NOK forward contracts.

 

For the three months ended September 30, 2019, we had $11.3 million in unrealized appreciation on 46 portfolio company investments, which was offset by $24.0 million in unrealized depreciation on 82 portfolio company investments. Net unrealized

 

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depreciation for the three months ended September 30, 2019 resulted from a decrease in fair value, primarily due to negative valuation adjustments.

 

For the three months ended September 30, 2018, we had $11.4 million in unrealized appreciation on 54 portfolio company investments, which was offset by $4.8 million in unrealized depreciation on 47 portfolio company investments. Net unrealized appreciation for the three months ended September 30, 2018 resulted from an increase in fair value, primarily due to positive valuation adjustments.

 

For the three months ended September 30, 2019 and 2018, we had unrealized appreciation on forward currency exchange contracts of $9.1 million and $1.5 million, respectively. For the three months ended September 30, 2019, unrealized appreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and AUD forward contracts. For the three months ended September 30, 2018, unrealized appreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and AUD forward contracts.

 

The following table summarizes our net realized and unrealized gains (losses) for the nine months ended September 30, 2019 and 2018 (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Net realized gain on investments

 

$

1,610

 

$

360

 

Net realized loss on investments

 

(2,739

)

(5,381

)

Net realized gain on foreign currency transactions

 

60

 

163

 

Net realized loss on foreign currency transactions

 

(250

)

(530

)

Net realized gain on forward currency exchange contracts

 

11,042

 

11

 

Net realized loss on forward currency exchange contracts

 

 

(2,707

)

Net realized gains (losses)

 

$

9,723

 

$

(8,084

)

 

 

 

 

 

 

Change in unrealized appreciation on investments

 

$

31,462

 

$

9,015

 

Change in unrealized depreciation on investments

 

(28,473

)

(9,650

)

Net change in unrealized appreciation (depreciation) on investments

 

2,989

 

(635

)

Unrealized appreciation (depreciation) on foreign currency translation

 

 

461

 

(43

)

Unrealized appreciation (depreciation) on forward currency exchange contracts

 

(14

)

9,123

 

Net change in unrealized appreciation on foreign currency and forward currency exchange contracts

 

447

 

9,080

 

 

 

 

 

 

 

Net change in unrealized appreciation

 

$

3,436

 

$

8,445

 

 

For the nine months ended September 30, 2019, and 2018, we had net realized losses on investments of ($1.1) million and ($5.0) million, respectively. For the nine months ended September 30, 2019, and 2018, we had net realized losses on foreign currency transactions of ($0.2) million and ($0.4) million, respectively. For the nine months ended September 30, 2019 and 2018, we had net realized gains (losses) on forward currency contracts of $11.0 million and ($2.7) million, respectively, primarily as a result of settling GBP, AUD, DKK, EUR and NOK forward contracts.

 

For the nine months ended September 30, 2019, we had $31.5 million in unrealized appreciation on 88 portfolio company investments, which was offset by $28.5 million in unrealized depreciation on 62 portfolio company investments. Net unrealized appreciation for the nine months ended September 30, 2019 resulted from an increase in fair value, primarily due to positive valuation adjustments.

 

For the nine months ended September 30, 2018, we had $9.0 million in unrealized appreciation on 48 portfolio company investments, which was offset by $9.7 million in unrealized depreciation on 58 portfolio company investments. Net unrealized depreciation for the nine months ended September 30, 2018 resulted from a decrease in fair value, primarily due to negative valuation adjustments.

 

For the nine months ended September 30, 2019 and 2018, we had unrealized appreciation (depreciation) on forward currency exchange contracts of $0.0 million and $9.1 million, respectively. For the nine months ended September 30, 2019, unrealized depreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and AUD forward contracts. For the nine months ended September 30, 2018, unrealized appreciation on forward currency exchange contracts was due to EUR, GBP, DKK, NOK and AUD forward contracts.

 

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The following table summarizes the impact of foreign currency for the three months ended September 30, 2019 and 2018 (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Net change in unrealized depreciation on investments due to foreign currency

 

$

(8,349

)

$

(1,241

)

Net realized gain (loss) on investments due to foreign currency

 

(2

)

4

 

Net change in unrealized appreciation (depreciation) on foreign currency translation

 

162

 

(17

)

Net realized gain (loss) on foreign currency transactions

 

122

 

(103

)

Net change in unrealized appreciation on forward currency exchange contracts

 

9,135

 

1,529

 

Net realized gain on forward currency exchange contracts

 

346

 

177

 

Foreign currency impact to net increase in net assets resulting from operations

 

$

1,414

 

$

349

 

 

Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of ($8.1) million and ($1.4) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the three months ended September 30, 2019 and 2018, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $9.5 million and $1.7 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $1.4 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively.

 

The following table summarizes the impact of foreign currency for the nine months ended September 30, 2019 and 2018 (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Net change in unrealized depreciation on investments due to foreign currency

 

$

(8,773

)

$

(4,735

)

Net realized gain on investments due to foreign currency

 

64

 

10

 

Net change in unrealized appreciation (depreciation) on foreign currency translation

 

 

461

 

(43

)

Net realized loss on foreign currency transactions

 

(190

)

(367

)

Net change in unrealized appreciation (depreciation) on forward currency exchange contracts

 

(14

)

9,123

 

Net realized gain (loss) on forward currency exchange contracts

 

11,042

 

(2,696

)

Foreign currency impact to net increase in net assets resulting from operations

 

$

2,590

 

$

1,292

 

 

Included in total net gains (losses) on the consolidated statements of operations is net gains (losses) of ($8.4) million and ($5.1) million related to realized and unrealized gains and losses on investments, foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates for the nine months ended September 30, 2019 and 2018, respectively. Including the total net realized and unrealized gains (losses) on forward currency exchange contracts of $11.0 million and $6.4 million, respectively, included in the above table, the net impact of foreign currency on total net gains (losses) on the consolidated statements of operations is $2.6 million and $1.3 million for the nine months ended September 30, 2019 and 2018, respectively.

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

For the three months ended September 30, 2019 and 2018, the net increase in net assets resulting from operations was $18.2 million and $19.0 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended September 30, 2019 and 2018, our per share net increase in net assets resulting from operations was $0.35 and $0.46, respectively.

 

For the nine months ended September 30, 2019 and 2018, the net increase in net assets resulting from operations was $76.7 million and $36.5 million, respectively. Based on the weighted average shares of common stock outstanding for the nine months ended September 30, 2019 and 2018, our per share net increase in net assets resulting from operations was $1.49 and $1.03, respectively.

 

Financial Condition, Liquidity and Capital Resources

 

Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, 2018-1 Notes, 2019-1 Debt, and cash flows from operations. The primary uses of our cash are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) the cost of operations (including payments to the Advisor under the Investment Advisory and Administration Agreements); (3) debt service, repayment, and other financing costs; and, (4) cash distributions to the holders of our common shares.

 

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We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time enter into additional debt facilities, increase the size of existing facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of September 30, 2019 and December 31, 2018, our asset coverage ratio was 161% and 257%, respectively.

 

At September 30, 2019 and December 31, 2018, we had $158.0 million and $33.3 million in cash, foreign cash, restricted cash and cash equivalents, respectively.

 

At September 30, 2019 we had approximately $184.0 million of availability on our BCSF Revolving Credit Facility and $84.8 million of availability on our JPM Credit Facility, subject to existing terms and regulatory requirements. At December 31, 2018 we had approximately $228.7 million of availability on our BCSF Revolving Credit Facility, subject to existing terms and regulatory requirements.

 

For the nine months ended September 30, 2019, cash, foreign cash, restricted cash, and cash equivalents increased by $124.8 million. During the nine months ended September 30, 2019, we used $259.3 million in cash for operating activities, primarily to purchase investments of $1,068.9 million, which was offset by proceeds from principal payments and sales of investments of $730.3 million, and a net increase in net assets resulting from operations of $76.7 million. During the nine months ended September 30, 2019, we generated $385.0 million from financing activities, primarily from borrowings on our debt from BCSF Revolving Credit Facility, Citibank Revolving Credit Facility, JPM Credit Facility, and the issuance of our 2019-1 Debt, offset by repayments on our debt of $700.9 million and distributions paid during the period of $60.1 million.

 

For the nine months ended September 30, 2018, cash, foreign cash and cash equivalents increased by $49.6 million. During the same period, we used $447.4 million in operating activities, primarily as a result of purchases of investments, slightly offset by proceeds from principal payments of investments. During the nine months ended September 30, 2018, we generated $497.4 million from financing activities, primarily from borrowings on our Revolving Credit Facilities and the issuance of common stock, offset by repayments on our Revolving Credit Facilities.

 

Equity

 

On November 19, 2018, we closed our initial public offering (the “IPO”) issuing 7,500,000 shares of its common stock at a public offering price of $20.25 per share. Shares of common stock of the Company began trading on the New York Stock Exchange under the symbol “BCSF” on November 15, 2018. The offering generated net proceeds, after expenses, of $145.4 million. All outstanding capital commitments from the Company’s Private Offering, were cancelled as of the completion of the IPO.

 

BCSF Investments, LLC and certain individuals adopted the 10b5-1 Plan in accordance with Rules 10b5-1 and 10b-18 under the Exchange Act, under which such parties will buy up to $20 million in the aggregate of our common stock in the open market during the period beginning after four full calendar weeks after the closing of the IPO and ending on the earlier of the date on which the capital committed to the 10b5-1 has been exhausted or one year after the closing of the IPO. For the nine months ended September 30, 2019, 827,933 shares have been purchased under the 10b5-1 Plan at a weighted average price of $18.78, inclusive of commissions, for a total cost of $15.6 million. As of September 30, 2019, zero dollars remain under the 10b5-1 Plan and no further purchases are intended under the 10b5-1 Plan.

 

During the nine months ended September 30, 2019, we issued 167,674.81 shares of our common stock to investors who have opted into our dividend reinvestment plan. During the nine months ended September 30, 2018, we issued 276,373.39 shares of our common stock to investors who have opted into our dividend reinvestment plan.

 

On May 7, 2019, the Company’s Board of Directors authorized the Company to repurchase up to $50 million of its outstanding common stock in accordance with safe harbor rules under the Securities Exchange Act of 1934. Any such repurchases will depend upon market conditions and there is no guarantee that the Company will repurchase any particular number of shares or any shares at all. As of September 30, 2019, there have been no repurchases of common stock.

 

Debt

 

Debt consisted of the following as of September 30, 2019, and December 31, 2018 (dollars in thousands):

 

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As of September 30, 2019

 

As of December 31, 2018

 

 

 

Total Aggregate
Principal Amount
Committed

 

Principal
Amount
Outstanding

 

Carrying
Value
 (1)

 

Total Aggregate
Principal Amount
Committed

 

Principal
Amount
Outstanding

 

Carrying
Value
 (1)

 

BCSF Revolving Credit Facility

 

$

500,000

 

$

316,015

 

$

316,015

 

$

500,000

 

$

271,265

 

$

271,265

 

2018-1 Notes

 

365,700

 

365,700

 

363,789

 

365,700

 

365,700

 

363,660

 

JPM Credit Facility

 

666,581

 

581,798

 

581,798

 

 

 

 

2019-1 Debt

 

398,750

 

398,750

 

395,976

 

 

 

 

Total Debt

 

$

1,931,031

 

$

1,662,263

 

$

1,657,578

 

$

865,700

 

$

636,965

 

$

634,925

 

 


(1)                                     Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs.

 

SMBC Revolving Credit Agreement

 

On November 21, 2018, the SMBC Revolving Credit Facility was terminated. The proceeds from the initial public offering on November 15, 2018, were used to repay the total outstanding debt.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the Revolving Credit Facility were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

 

$

835

 

Unused facility fee

 

 

5

 

Amortization of deferred financing costs and upfront commitment fees

 

 

92

 

Total interest and debt financing expenses

 

$

 

$

932

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the Revolving Credit Facility were as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

 

$

2,900

 

Unused facility fee

 

 

22

 

Amortization of deferred financing costs and upfront commitment fees

 

 

274

 

Total interest and debt financing expenses

 

$

 

$

3,196

 

 

BCSF Revolving Credit Facility

 

On October 4, 2017, we entered into the revolving credit agreement (the “BCSF Revolving Credit Facility”) with us, as equity holder, BCSF I, LLC, a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, as borrower, and Goldman Sachs Bank USA, as sole lead arranger (“Goldman Sachs”). The BCSF Revolving Credit Facility was subsequently amended on May 15, 2018 to reflect certain clarifications regarding margin requirements and hedging currencies. The maximum commitment amount under the BCSF Revolving Credit Facility is $500.0 million, and may be increased up to $750.0 million. Proceeds of the loans under the BCSF Revolving Credit Facility may be used to acquire certain qualifying loans and such other uses as permitted under the BCSF Revolving Credit Facility. The BCSF Revolving Credit Facility includes customary affirmative and negative 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. As of September 30, 2019 and December 31, 2018, we were in compliance with these covenants.

 

Assets that are pledged as collateral for the BCSF Revolving Credit Facility are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the BCSF Revolving Credit Facility.

 

Borrowings under the BCSF Revolving Credit Facility bear interest at LIBOR plus a margin. As of September 30, 2019 and December 31, 2018, the BCSF Revolving Credit Facility was accruing interest expense at a rate of LIBOR plus 2.50%. We pay an unused commitment fee of 30 basis points (0.30%) per annum. Interest is payable quarterly in arrears. Any amounts borrowed under the BCSF Revolving Credit Facility, and all accrued and unpaid interest, will be due and payable, on the earliest of: (a) October 5, 2022 and (b) the date upon which all loans shall become due and payable in full, whether by acceleration or otherwise.

 

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As of September 30, 2019 and December 31, 2018 there were $316.0 million and $271.3 million borrowings under the BCSF Revolving Credit Facility.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the BCSF Revolving Credit Facility were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

4,441

 

$

5,130

 

Unused facility fee

 

109

 

65

 

Amortization of deferred financing costs and upfront commitment fees

 

269

 

269

 

Total interest and debt financing expenses

 

$

4,819

 

$

5,464

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the BCSF Revolving Credit Facility were as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

13,844

 

$

11,633

 

Unused facility fee

 

316

 

382

 

Amortization of deferred financing costs and upfront commitment fees

 

798

 

799

 

Total interest and debt financing expenses

 

$

14,958

 

$

12,814

 

 

2018-1 Notes

 

On September 28, 2018, the Company, through BCC Middle Market CLO 2018-1 LLC (the “2018-1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018-1 Notes”) are secured by a diversified portfolio of the Issuer consisting primarily of middle market loans and participation interests in middle market loans, the majority of which are senior secured loans (the “2018-1 Portfolio”). At the 2018-1 closing date, the 2018-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.

 

The CLO Transaction was executed through a private placement of the following 2018-1 Notes (dollars in thousands):

 

2018-1 Notes

 

Principal Amount

 

Spread above Index

 

Interest rate at September 30, 2019

 

Class A-1 A

 

$

205,900

 

1.55% + 3 Month LIBOR

 

3.83

%

Class A-1 B

 

45,000

 

1.50% + 3 Month LIBOR (first 24 months)

 

3.78

%

 

 

 

 

1.80% + 3 Month LIBOR (thereafter)

 

 

 

Class A-2

 

55,100

 

2.15% + 3 Month LIBOR

 

4.43

%

Class B

 

29,300

 

3.00% + 3 Month LIBOR

 

5.28

%

Class C

 

30,400

 

4.00% + 3 Month LIBOR

 

6.28

%

Total 2018-1 Notes

 

365,700

 

 

 

 

 

Membership Interests

 

85,450

 

Non-interest bearing

 

Not applicable

 

Total

 

$

451,150

 

 

 

 

 

 

The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018-1 Issuer in exchange for its sale to the 2018-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest.

 

The Class A-1 A, A-1 B, A-2, B and C 2018-1 Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation.

 

The Company serves as portfolio manager of the 2018-1 Issuer pursuant to a portfolio management agreement between the Company and the 2018-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.

 

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During the reinvestment period, pursuant to the indenture governing the 2018-1 Notes, all principal collections received on the underlying collateral may be used by the 2018-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2018-1 Issuer and in accordance with the 2018-1 Issuer’s investment strategy and the terms of the indenture.

 

The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2018-1 Issuer for so long as the 2018-1 Notes remain outstanding.

 

The 2018-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2018-1 Issuer.

 

As of September 30, 2019, there were 64 first lien and second lien senior secured loans with a total fair value of approximately $404.6 million and cash of $36.5 million securing the 2018-1 Notes. As of December 31, 2018, there were 75 first lien and second lien senior secured loans with a total fair value of approximately $437.2 million and cash of $18.0 million securing the 2018-1 Notes. Assets that are pledged as collateral for the 2018-1 Notes are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture governing the 2018-1 Notes. Such assets are included in the Company’s consolidated financial statements. The creditors of the 2018-1 Issuer have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2018-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture governing the 2018-1 Notes. As of September 30, 2019 and December 31, 2018, the Company was in compliance with its covenants related to the 2018-1 Notes.

 

Costs of $2.1 million were incurred in connection with debt securitization of the 2018-1 Notes by the 2018-1 Issuer which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2018-1 Notes on the consolidated statements of assets and liabilities and are being amortized over the life of the 2018-1 Issuer using the effective interest method. The balance of the unamortized deferred financing costs related to the 2018-1 Issuer was $1.9 million and $2.0 million as of September 30, 2019 and December 31, 2018, respectively.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the 2018-1 Issuer were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

4,022

 

$

127

 

Amortization of deferred financing costs and upfront commitment fees

 

44

 

1

 

Total interest and debt financing expenses

 

$

4,066

 

$

128

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the 2018-1 Issuer were as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

12,499

 

$

127

 

Amortization of deferred financing costs and upfront commitment fees

 

130

 

1

 

Total interest and debt financing expenses

 

$

12,629

 

$

128

 

 

Citibank Revolving Credit Facility

 

On February 19, 2019, the Company entered into a credit and security agreement (the “Credit Agreement” or the “Citibank Revolving Credit Facility”) with the Company as equity holder and servicer, BCSF II-C, LLC as Borrower, Citibank, N.A., as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian. The Credit Agreement is effective as of February 19, 2019.

 

The facility amount under the Credit Agreement is $350.0 million. Proceeds of the loans under the Credit Agreement may be used to acquire certain qualifying loans and such other uses as permitted under the Credit Agreement. The period from the closing date

 

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until February 19, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the Credit Agreement. The final maturity date is the earliest of: (a) the business day designated by the Borrower as the final maturity date upon not less than three business days’ prior written notice to the Administrative Agent, the Collateral Agent, the Lenders, the Custodian and the Collateral Administrator, (b) February 19, 2022 and (c) the date on which the Administrative Agent provides notice of the declaration of the final maturity date after the occurrence of an event of default. The Credit Agreement includes customary affirmative and negative 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.

 

Borrowings under the Citibank Revolving Credit Facility bear interest at the London Interbank Offered Rate (“LIBOR”) plus a margin. During the period prior to the last day of the reinvestment period, borrowings under the Credit Agreement will bear interest at a rate equal to the three-month LIBOR plus 1.60%. Commencing on the last day of the reinvestment period, the interest rate on borrowings under the Credit Agreement will reset to three month LIBOR plus 2.60% for the remaining term of the Credit Agreement. We pay an unused commitment fee based on a corresponding utilization rate; (i) 0 basis points (0.00%) per annum when greater than or equal to 85.0% utilization, (ii) 25 basis points (0.25%) per annum when greater than or equal to 75.0% but less than 85.0% utilization, (iii) 50 basis points (0.50%) per annum when greater than or equal to 50.0% but less than 75.0% utilization, (iv) 75 basis points (0.75%) per annum when greater than or equal to 25.0% but less than 50% utilization, or (v) 100 basis points (1.00%) per annum when less than 25.0% utilization.

 

On August 28, 2019, the Citibank Revolving Credit Facility was terminated. The proceeds from the 2019-1 Debt were used to repay the total outstanding debt.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the Citibank Revolving Credit Facility were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

1,174

 

$

 

Unused facility fee

 

134

 

 

Amortization of deferred financing costs and upfront commitment fees

 

108

 

 

Total interest and debt financing expenses

 

$

1,416

 

$

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the Citibank Revolving Credit Facility were as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

4,104

 

$

 

Unused facility fee

 

357

 

 

Amortization of deferred financing costs and upfront commitment fees

 

124

 

 

Total interest and debt financing expenses

 

$

4,585

 

$

 

 

JPM Credit Facility

 

On April 30, 2019, the Company entered into a loan and security agreement (the “JPM Credit Agreement” or the “JPM Credit Facility”) as Borrower, with JPMorgan Chase Bank, National Association, as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank.

 

The facility amount under the JPM Credit Agreement is $666.6 million. Proceeds of the loans under the JPM Credit Facility may be used to acquire certain qualifying loans and such other uses as permitted under the JPM Credit Agreement. The period from the effective date until November 29, 2020 is referred to as the reinvestment period and during such reinvestment period, the Borrower may request drawdowns under the JPM Credit Facility.

 

The maturity date is the earliest of: (a) November 29, 2022, (b) the date on which the secured obligations become due and payable following the occurrence of an event of default, (c) the date on which the advances are repaid in full and (d) the date after a market value cure failure occurs on which all portfolio investments have been sold and proceeds therefrom have been received by the Borrower. The stated maturity date of November 29, 2022 may be extended for successive one year periods by mutual agreement of the Borrower and the Administrative Agent.

 

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The JPM Credit Agreement includes customary affirmative and negative 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.

 

Borrowings under the JPM Credit Facility bear interest at LIBOR plus a margin. As of September 30, 2019, JPM Credit Facility was accruing interest expense at a rate of LIBOR plus 2.75%. We pay an unused commitment fee of 75 basis points (0.75%) per annum. Interest is payable quarterly in arrears.

 

As of September 30, 2019, there were $581.8 million borrowings under the JPM Credit Facility.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the JPM Credit Facility were as follows (dollars in thousands):

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

7,232

 

$

 

Unused facility fee

 

202

 

 

Amortization of deferred financing costs and upfront commitment fees

 

20

 

 

Total interest and debt financing expenses

 

$

7,454

 

$

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the JPM Credit Facility were as follows (dollars in thousands):

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

12,387

 

$

 

Unused facility fee

 

328

 

 

Amortization of deferred financing costs and upfront commitment fees

 

33

 

 

Total interest and debt financing expenses

 

$

12,748

 

$

 

 

2019-1 Debt

 

On August 28, 2019, the Company, through BCC Middle Market CLO 2019-1 LLC (the “2019-1 Issuer”), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019-1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), a Delaware limited liability company, completed its $501.0 million term debt securitization (the “2019-1 CLO Transaction”). The notes issued in connection with the 2019-1 CLO Transaction (the “2019-1 Notes”) are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans and participation interests in middle market loans, the majority of which are senior secured loans (the “2019-1 Portfolio”). The Co-Issuers also issued Class A-1L Loans (the “Loans” and, together with the 2019-1 Notes, the “2019-1 Debt”). The Loans are also secured by the 2019-1 Portfolio. At the 2019-1 closing date, the 2019-1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019-1 CLO Transaction.

 

The 2019-1 CLO Transaction was executed through a private placement of the following 2019-1 Debt:

 

2019-1 Debt

 

Principal Amount

 

Spread above Index

 

Interest rate at September 30, 2019

 

Class A-1L

 

$

50,000

 

1.70% + 3 Month LIBOR

 

3.86

%

Class A-1

 

222,500

 

1.70% + 3 Month LIBOR

 

3.86

%

Class A-2A

 

50,750

 

2.70% + 3 Month LIBOR

 

4.86

%

Class A-2B

 

13,000

 

4.23% (Fixed)

 

4.23

%

Class B

 

30,000

 

3.60% + 3 Month LIBOR

 

5.76

%

Class C

 

32,500

 

4.75% + 3 Month LIBOR

 

6.91

%

Total 2019-1 Debt

 

398,750

 

 

 

 

 

Membership Interests

 

102,250

 

Non-interest bearing

 

Not applicable

 

Total

 

$

501,000

 

 

 

 

 

 

The Loans and the Class A-1, A-2A, A-2B, and B Notes were issued at par. The Class C Notes were issued at a discount. The Notes are scheduled to mature on October 15, 2031. The Company received 100% of the membership interests (the “Membership Interests”) in the 2019-1 Issuer in exchange for its sale to the 2019-1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest.

 

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The Loans and Class A-1, A-2A, A-2B, B, and C Notes are included in the consolidated financial statements of the Company. The Membership Interests are eliminated in consolidation.

 

The Company serves as portfolio manager of the 2019-1 Issuer pursuant to a portfolio management agreement between the Company and the 2019-1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.

 

During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019-1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019-1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019-1 Issuer and in accordance with the 2019-1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable.

 

The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019-1 Co-Issuers for so long as the 2019-1 Debt remains outstanding.

 

The 2019-1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019-1 Issuer.

 

As of September 30, 2019, there were 64 first lien and second lien senior secured loans with a total fair value of approximately $446.7 million and cash of $49.9 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of September 30, 2019, the Company was in compliance with its covenants related to the 2019-1 Debt.

 

Costs of the offering, including the discount of the Class C Notes, of $2.8 million were incurred in connection with debt securitization of the 2019-1 Debt by the 2019-1 Co-Issuers which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019-1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life of the 2019-1 Issuer using the effective interest method. The balance of the unamortized deferred financing costs related to the 2019-1 Issuer was $2.8 million as of September 30, 2019.

 

For the three months ended September 30, 2019 and 2018, the components of interest expense related to the 2019-1 Co-Issuers were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

1,651

 

$

 

Amortization of deferred financing costs and upfront commitment fees

 

21

 

 

Total interest and debt financing expenses

 

$

1,672

 

$

 

 

For the nine months ended September 30, 2019 and 2018, the components of interest expense related to the 2019-1 Co-Issuers were as follows:

 

 

 

For the Nine Months Ended September 30,

 

 

 

2019

 

2018

 

Borrowing interest expense

 

$

1,651

 

$

 

Amortization of deferred financing costs and upfront commitment fees

 

21

 

 

Total interest and debt financing expenses

 

$

1,672

 

$

 

 

Distribution Policy

 

The following table summarizes distributions declared during the nine months ended September 30, 2019 (dollars in thousands, except per share data):

 

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Date Declared

 

Record Date

 

Payment Date

 

Amount
Per Share

 

Total
Distributions

 

February 21, 2019

 

March 29, 2019

 

April 12, 2019

 

$

0.41

 

$

21,108

 

May 7, 2019

 

June 28, 2019

 

July 29, 2019

 

$

0.41

 

$

21,176

 

August 1, 2019

 

September 30, 2019

 

October 30, 2019

 

$

0.41

 

$

21,176

 

Total distributions declared

 

 

 

 

 

$

1.23

 

$

63,460

 

 

The following table summarizes distributions declared during the nine months ended September 30, 2018 (dollars in thousands, except per share data):

 

Date Declared

 

Record Date

 

Payment Date

 

Amount
Per Share

 

Total
Distributions

 

March 28, 2018

 

March 28, 2018

 

May 17, 2018

 

$

0.34

 

$

10,610

 

June 28, 2018

 

June 28, 2018

 

August 10, 2018

 

$

0.36

 

$

13,484

 

September 26, 2018

 

September 26, 2018

 

October 19, 2018

 

$

0.41

 

$

17,967

 

Total distributions declared

 

 

 

 

 

$

1.11

 

$

42,061

 

 

Distributions to common stockholders are recorded on the record date. To the extent that we have income available, we intend to distribute quarterly distributions to our stockholders. Our quarterly distributions, if any, will be determined by the Board. Any distributions to our stockholders will be declared out of assets legally available for distribution.

 

We have elected to be treated, and intend to operate in a manner so as to continuously qualify, as, a regulated investment company (a “RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our taxable year ended December 31, 2016. To qualify for and maintain RIC tax treatment, among other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount generally at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses. In order to avoid the imposition of certain excise taxes imposed on RICs, we must distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year; (2) 98.2% of our capital gains in excess of capital losses, adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year; and (3) the sum of any net ordinary income plus capital gains net income for preceding years that were not distributed during such years and on which we paid no federal income tax.

 

We intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain all or a portion of our net capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to our stockholders.

 

We have adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends and distributions. Prior to the IPO, stockholders who “opted in” to our dividend reinvestment plan had their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions. Subsequent to the IPO, stockholders who do not “opt out” of our dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions. Stockholders could elect to “opt in” or “opt out” of our dividend reinvestment plan in their subscription agreements, through the private offering. The elections of stockholders that make an election prior to the IPO shall remain effective after the IPO.

 

The U.S. federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon our investment company taxable income for the full fiscal year and distributions paid during the full year.

 

Commitments and Off-Balance Sheet Arrangements

 

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the statements of assets and liabilities.

 

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As of September 30, 2019, the Company had $221.3 million of unfunded commitments under loan and financing agreements as follows (dollars in thousands):

 

 

 

Expiration Date (1)

 

Unfunded Commitments (2)

 

First Lien Senior Secured Loans

 

 

 

 

 

A&R Logistics, Inc. — Revolver

 

5/5/2025

 

$

5,348

 

Abracon Group Holding, LLC. — Revolver

 

7/18/2024

 

2,834

 

AMI US Holdings Inc. — Revolver

 

4/1/2024

 

768

 

Amspec Services, Inc. — Revolver

 

7/2/2024

 

5,242

 

Ansira Holdings, Inc. — Revolver

 

12/20/2022

 

5,440

 

Ansira Holdings, Inc. — Delayed Draw

 

12/20/2022

 

1,509

 

AP Plastics Group, LLC — Revolver

 

8/2/2021

 

8,500

 

Appriss Holdings, Inc. — Revolver

 

5/30/2025

 

4,711

 

Aramsco, Inc. — Revolver

 

8/28/2024

 

1,920

 

Batteries Plus Holding Corporation — Revolver

 

7/6/2022

 

4,250

 

Captain D’s LLC — Revolver

 

12/15/2023

 

826

 

Chase Industries, Inc. — Delayed Draw

 

5/12/2025

 

2,619

 

Clinical Innovations, LLC — Revolver

 

10/17/2022

 

720

 

CMI Marketing Inc. — Revolver

 

5/24/2023

 

2,112

 

CPS Group Holdings, Inc. — Revolver

 

3/3/2025

 

4,933

 

Cruz Bay Publishing, Inc. — Delayed Draw

 

2/28/2020

 

1,098

 

Cruz Bay Publishing, Inc. — Revolver

 

2/28/2020

 

567

 

CST Buyer Company — Revolver

 

3/1/2023

 

898

 

Datix Bidco Limited — Revolver

 

10/28/2024

 

1,195

 

Direct Travel, Inc. — Delayed Draw

 

12/1/2021

 

10,072

 

Direct Travel, Inc. — Revolver

 

12/1/2021

 

4,250

 

Dorner Manufacturing Corp — Revolver

 

3/15/2022

 

1,099

 

Efficient Collaborative Retail Marketing Company, LLC — Revolver

 

6/15/2022

 

3,542

 

Element Buyer, Inc. — Delayed Draw

 

7/18/2025

 

7,933

 

Element Buyer, Inc. — Revolver

 

7/19/2024

 

2,834

 

FFI Holdings I Corp — Delayed Draw

 

1/24/2025

 

5,685

 

FFI Holdings I Corp — Revolver

 

1/24/2025

 

3,556

 

Fineline Technologies, Inc. — Revolver

 

11/4/2022

 

2,621

 

Grammer Purchaser, Inc. — Revolver

 

9/30/2024

 

945

 

Great Expressions Dental Center PC — Revolver

 

9/28/2022

 

610

 

Green Street Parent, LLC — Revolver

 

8/27/2025

 

2,419

 

Hightower Holding, LLC — Delayed Draw

 

1/31/2025

 

4,329

 

Horizon Telcom, Inc. — Delayed Draw

 

6/15/2023

 

1,488

 

Horizon Telcom, Inc. — Revolver

 

6/15/2023

 

116

 

Ivy Finco Limited — First Lien Senior Secured Loan

 

5/19/2025

 

6,458

 

JHCC Holdings, LLC — Delayed Draw

 

9/9/2025

 

8,500

 

JHCC Holdings, LLC — Revolver

 

9/9/2025

 

2,550

 

Kellstrom Commercial Aerospace, Inc. — Delayed Draw

 

7/1/2025

 

3,838

 

Kellstrom Commercial Aerospace, Inc. — Revolver

 

7/1/2025

 

3,433

 

Margaux Acquisition Inc. — Delayed Draw

 

12/19/2024

 

7,139

 

Margaux Acquisition Inc. — Revolver

 

12/19/2024

 

2,872

 

Margaux UK Finance Limited — Revolver

 

12/19/2024

 

613

 

Mertus 522. GmbH — Delayed Draw

 

5/15/2026

 

14,316

 

Profile Products LLC — Revolver

 

12/20/2024

 

3,833

 

RoC Opco LLC — Revolver

 

2/25/2025

 

10,241

 

Solaray, LLC — Delayed Draw

 

9/11/2023

 

992

 

Solaray, LLC — Revolver

 

9/9/2022

 

3,060

 

Stanton Carpet Corp. — Revolver

 

11/21/2022

 

4,250

 

SumUp Holdings Luxembourg S.à.r.l. — First Lien Senior Secured Loan

 

8/1/2024

 

18,485

 

Symplr Software, Inc. — Revolver

 

11/30/2023

 

929

 

TCFI Aevex LLC — Revolver

 

5/13/2025

 

276

 

TEI Holdings Inc. — Revolver

 

12/20/2022

 

3,259

 

Tidel Engineering, L.P. — Revolver

 

3/1/2023

 

4,250

 

Ventiv Holdco, Inc. — Revolver

 

9/3/2025

 

3,407

 

WCI-HSG Purchaser, Inc. — Revolver

 

2/24/2025

 

2,015

 

WU Holdco, Inc. — Delayed Draw

 

3/26/2026

 

4,801

 

WU Holdco, Inc. — Revolver

 

3/26/2025

 

3,944

 

Zywave, Inc. — Revolver

 

11/17/2022

 

851

 

Total First Lien Senior Secured Loans

 

 

 

$

221,301

 

 

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(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 U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of September 30, 2019.

 

As of December 31, 2018, the Company had $110.2 million of unfunded commitments under loan and financing agreements as follows (dollars in thousands):

 

 

 

Expiration Date (1)

 

Unfunded Commitments (2) (3)

 

First Lien Senior Secured Loans

 

 

 

 

 

Abracon Group Holding, LLC — Revolver

 

7/18/2024

 

$

2,833

 

Aimbridge Hospitality LP — Revolver

 

6/22/2022

 

1,177

 

AMCP Clean Acquisition Company, LLC — Delayed Draw Term Loan

 

6/16/2025

 

2,315

 

Amspec Services, Inc. — Revolver

 

7/2/2024

 

4,735

 

Ansira Holdings, Inc. — Revolver

 

12/20/2022

 

5,440

 

AP Plastics Group, LLC— Revolver

 

8/1/2021

 

8,500

 

API Technologies Corp. — Revolver

 

4/22/2024

 

4,183

 

Aramsco, Inc. — Revolver

 

8/28/2024

 

3,161

 

Batteries Plus Holding Corporation — Revolver

 

7/6/2022

 

4,250

 

Caliper Corporation — Revolver

 

11/30/2023

 

2,358

 

Captain D’s LLC — Revolver

 

12/15/2023

 

1,074

 

Chase Industries, Inc. — Delayed Draw Term Loan

 

5/12/2025

 

3,544

 

Clinical Innovations, LLC — Revolver

 

10/17/2022

 

1,113

 

CMI Marketing Inc. — Revolver

 

5/24/2023

 

2,112

 

Cruz Bay Publishing, Inc. — Revolver

 

6/6/2019

 

567

 

CST Buyer Company — Revolver

 

3/1/2023

 

897

 

Datix Bidco Limited — Revolver

 

10/28/2024

 

1,240

 

Direct Travel, Inc. — Revolver

 

12/1/2021

 

4,250

 

Dorner Manufacturing Corp. — Revolver

 

3/15/2022

 

1,044

 

Drilling Info Holdings, Inc. — Delayed Draw Term Loan

 

7/30/2025

 

1,663

 

Efficient Collaborative Retail Marketing Company, LLC — Revolver

 

6/15/2022

 

3,542

 

Element Buyer, Inc. — Revolver

 

7/19/2024

 

4,250

 

ENC Holding Corporation — Delayed Draw Term Loan

 

5/30/2025

 

595

 

FineLine Technologies, Inc. — Revolver

 

11/2/2021

 

2,162

 

Grammer Purchaser, Inc. — Revolver

 

9/30/2024

 

945

 

Great Expressions Dental Centers PC — Revolver

 

9/28/2022

 

213

 

Home Franchise Concepts, Inc. — Revolver

 

7/9/2024

 

2,530

 

Horizon Telcom, Inc. — Delayed Draw Term Loan

 

6/15/2023

 

1,738

 

Horizon Telcom, Inc. — Revolver

 

6/15/2023

 

1,159

 

Margaux UK Finance — Revolver

 

12/19/2024

 

636

 

Margaux Acquisition Inc.— Revolver

 

12/19/2024

 

2,257

 

McKissock, LLC — Revolver

 

8/5/2021

 

1,842

 

PRCC Holdings, Inc. — Revolver

 

2/1/2021

 

3,542

 

Profile Products LLC — Revolver

 

12/20/2024

 

3,833

 

Solaray, LLC — Revolver

 

9/9/2022

 

7,084

 

Sovos Compliance, LLC — Delayed Draw Term Loan

 

3/1/2022

 

871

 

Sovos Compliance, LLC — Revolver

 

3/1/2022

 

1,452

 

Stanton Carpet Corp. — Revolver

 

11/21/2022

 

4,250

 

TEI Holdings Inc. — Revolver

 

12/20/2022

 

3,542

 

Tidel Engineering, L.P. — Revolver

 

3/1/2023

 

4,250

 

Zywave, Inc. — Revolver

 

11/17/2022

 

512

 

Total First Lien Senior Secured Loans

 

 

 

$

107,661

 

Other Unfunded Commitments

 

 

 

 

 

BCC Jetstream Holdings Aviation (On II), LLC

 

 

 

2,562

 

Total Other Unfunded Commitments

 

 

 

$

2,562

 

Total

 

 

 

$

110,223

 

 

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(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 U.S. dollars have been converted to U.S. dollars using the applicable foreign currency exchange rate as of December 31, 2018.

(3)             Unfunded commitments represent unfunded commitments to fund investments, excluding our investment in ABCS as of December 31, 2018.

 

Significant Accounting Estimates and Critical Accounting Policies

 

Basis of Presentation

 

The Company’s unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The Company’s unaudited consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 1, 6, 10 and 12 of Regulation S-X. These consolidated financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein and are not necessarily indicative of the full fiscal year. We have determined we meet the definition of an investment company and follow the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC 946”). Our financial currency is U.S. dollars and these consolidated financial statements have been prepared in that currency.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.

 

Revenue Recognition

 

We record our investment transactions on a trade date basis. We record realized gains and losses based on the specific identification method. We record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized into or against interest income using the effective interest method or straight-line method, as applicable. We record any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts received upon prepayment of a loan or debt security as interest income.

 

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for such distributions in the case of private portfolio companies, and on the ex-dividend date for publicly traded portfolio companies. Distributions received from an equity interest, limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

 

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. We record PIK as interest or dividend income, as applicable. If at any point we believe PIK may not be realized, we place the investment generating PIK on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, as applicable.

 

Certain structuring fees and amendment fees are recorded as other income when earned. We record administrative agent fees received as other income when the services are rendered.

 

Valuation of Portfolio Investments

 

Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If we cannot obtain a price from an independent pricing

 

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service or if the independent pricing service is not deemed to be representative with the market, we value certain investments held by us on the basis of prices provided by principal market makers. Generally investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained, in some cases, primarily illiquid securities, multiple quotes may not be available and the mid of the bid/ask from one broker will be used. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the Board, based on the input of our Advisor, our Audit Committee and one or more independent third party valuation firms engaged by our Board.

 

With respect to unquoted portfolio investments, we value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. 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 and/or assist us in our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 

With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below:

 

·                  Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Advisor responsible for the portfolio investment or by an independent valuation firm;

 

·                  Preliminary valuation conclusions are then documented and discussed with our senior management and our Advisor. Agreed upon valuation recommendations are presented to our Audit Committee;

 

·                  Our Audit Committee of our Board reviews the valuations presented and recommends values for each of the investments to our Board;

 

·                  At least once annually, the valuation for each portfolio investment constituting a material portion of the Company’s portfolio will be reviewed by an independent valuation firm; and

 

·                  Our Board discusses valuations and determines the fair value of each investment in good faith based upon, among other things, the input of our Advisor, independent valuation firms, where applicable, and our Audit Committee.

 

In following this approach, the types of factors that are taken into account in the fair value pricing of investments include, as relevant, but are not limited to: comparison to publicly traded securities, including factors such 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 companies ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion.

 

Recent Accounting Pronouncements

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 is part of the disclosure framework project and eliminates certain disclosure requirements for fair value measurements, requires entities to disclose new information, and modifies existing disclosure requirements. The new guidance is effective after December 15, 2019. Early adoption is permitted. We do not believe this change will have a material effect on our consolidated financial statements and disclosures.

 

Contractual Obligations

 

We have entered into the Amended Advisory Agreement with our Advisor (which supersedes the Investment Advisory Agreement dated November 14, 2018 we had previously entered into). Our Advisor has agreed to serve as our investment adviser in accordance with the terms of the Amended Advisory Agreement. Under the Amended Advisory Agreement, we have agreed to pay an annual base management fee as well as an incentive fee based on our investment performance.

 

On October 11, 2018 the Board approved, subject to completion of the IPO, the Investment Advisory Agreement. Beginning with the calendar quarter that commences January 1, 2019, this Investment Advisory Agreement incorporates (i) a three-year lookback provision and (ii) a cap on quarterly income incentive fee payments based on net realized or unrealized capital loss, if any, during the applicable three-year lookback period.

 

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On November 28, 2018, our Board, including a majority of our Independent Directors, approved the Amended Advisory Agreement. On February 1, 2019 the Company’s stockholders approved the Amended Advisory Agreement.  Pursuant to this Agreement, effective February 1, 2019, the base management fee of 1.5% (0.375% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will continue to apply to assets held at an asset coverage ratio of 200%, but a lower base management fee of 1.0% (0.25% per quarter) of the average value of the Company’s gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) will apply to any amount of assets attributable to leverage decreasing the Company’s asset coverage ratio below 200%.

 

We have entered into an Administration Agreement with the Administrator pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. We reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including certain compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment.

 

If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Amended Advisory Agreement and Administration Agreement.

 

A summary of the maturities of our principal amounts of debt and other contractual payment obligations as of September 30, 2019 are as follows (dollars in thousands):

 

 

 

Payments Due by Period

 

 

 

Total

 

Less than
1 year

 

1 — 3 years

 

3 — 5 years

 

More than
5 years

 

BCSF Revolving Credit Facility

 

$

316,015

 

$

 

$

 

$

316,015

 

$

 

2018-1 Notes

 

365,700

 

 

 

 

365,700

 

JPM Credit Facility

 

581,798

 

 

 

581,798

 

 

2019-1 Debt

 

398,750

 

 

 

 

398,750

 

Total Debt Obligations

 

$

1,662,263

 

$

 

$

 

$

897,813

 

$

764,450

 

 

Subsequent Events

 

We have evaluated the events and transactions that have occurred through November 6, 2019, the issuance date of the consolidated financial statements, and noted no items requiring disclosure in this Form 10-Q or adjustment of the consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are subject to financial market risks, including changes in interest rates. We will generally invest in illiquid loans and securities including debt and equity securities of middle-market companies. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 

Assuming that the statement of financial condition as of September 30, 2019 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.

 

 

 

 

 

 

 

Net Increase

 

 

 

Increase (Decrease) in

 

Increase (Decrease) in

 

(Decrease) in

 

Change in Interest Rates

 

Interest Income

 

Interest Expense

 

Net Investment Income

 

Down 25 basis points

 

$

(5,847

)

$

(4,123

)

$

(1,724

)

Up 100 basis points

 

23,815

 

16,493

 

7,322

 

Up 200 basis points

 

48,181

 

32,985

 

15,196

 

Up 300 basis points

 

72,667

 

49,478

 

23,189

 

 

From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques

 

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to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of September 30, 2019 (the end of the period covered by this report), our management has carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Based on that evaluation our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Changes in Internal Controls Over Financial Reporting

 

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, that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.

 

Item 1A. Risk Factors

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. During the nine months ended September 30, 2019, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

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Item 6. Exhibits, Financial Statement Schedules

 

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2019 (and are numbered in accordance with Item 601 of Regulation S-K under the Securities Act).

 

Exhibit
Number

 

Description of Document

3.1

 

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

3.2

 

Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

4.1

 

Dividend Reinvestment Plan (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

10.1

 

Second Amended and Restated Investment Advisory Agreement, dated February 1, 2019, by and between the Company and the Advisor (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on February 1, 2019).

 

 

 

10.2

 

Administration Agreement, dated October 6, 2016, by and between the Company and the Administrator (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

10.3

 

Form of Advisory Fee Waiver Agreement by and between the Company and the Advisor (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

10.4

 

Form of Subscription Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

10.5

 

Form of Custodian Agreement by and between the Company and U.S. Bank National Association (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form 10 (File No. 000-55528) filed on October 6, 2016).

 

 

 

10.6

 

Revolving Credit Agreement, dated December 22, 2016, among the Company, as Borrower, BCSF Holdings, L.P., as the Feeder Fund, and BCSF Holdings Investors, L.P., as the Feeder Fund General Partner and Sumitomo Mitsui Banking Corporation, as Sole Lead Arranger, Administrative Agent, Letter of Credit Issuer and Lender. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on December 23, 2016).

 

 

 

10.7

 

Revolving Credit Agreement, dated October 4, 2017, among the Company as Equity Holder, BCSF I, LLC as Borrower, and Goldman Sachs Bank USA, as Sole Lead Arranger, Syndication Agent and Administrative Agent, and U.S. Bank National Association as Collateral Administrator, Collateral Agent and Collateral Custodian (incorporated by reference to Exhibit 10.7. to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on November 13, 2017).

 

 

 

10.8

 

Omnibus Amendment No. 1, dated May 15, 2018, to Revolving Credit Agreement, dated October 4, 2017, among the Company as Equity Holder, BCSF I, LLC as Borrower, and Goldman Sachs Bank USA, as Sole Lead Arranger, Syndication Agent and Administrative Agent, and U.S. Bank National Association as Collateral Administrator, Collateral Agent and Collateral Custodian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on May 17, 2018).

 

 

 

10.9

 

Indenture, dated as of September 28, 2018, between BCC Middle Market CLO 2018-1, LLC, as issuer, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on October 17, 2018).

 

 

 

10.10

 

Portfolio Management Agreement, dated as of September 28, 2018, by and between BCC Middle Market CLO 2018-1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as portfolio manager (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on October 17, 2018).

 

 

 

10.11

 

Loan Sale Agreement, dated as of September 28, 2018, by and between BCC Middle Market CLO 2018-1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as the transferor (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on October 17, 2018).

 

 

 

10.12

 

Collateral Administration Agreement, dated as of September 28, 2018, by and between BCC Middle Market CLO 2018-1, LLC, as issuer, Bain Capital Specialty Finance, Inc., as portfolio manager, and Wells Fargo Bank, National Association, as collateral administrator (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on October 17, 2018).

 

 

 

10.13

 

Master Participation Agreement, dated as of September 28, 2018, by and between BCSF I, LLC, as financing subsidiary, and BCC Middle Market CLO 2018-1, LLC, as issuer (incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on October 17, 2018).

 

 

 

10.14

 

Credit and Security Agreement, dated February 19, 2019, by and among the Company as Equityholder and Servicer, BCSF II-C, LLC as Borrower, Citibank, N.A., as Administrative Agent, and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent and Custodian (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K (File No. 814-01175), filed on February 28, 2019).

 

 

 

10.15

 

Loan and Security Agreement, dated April 30, 2019, by and among BCSF Complete Financing Solution LLC, as Borrower, JPMorgan Chase Bank, National Association, as Administrative Agent and Wells Fargo Bank, National Association as Collateral Administrator, Collateral Agent, Securities Intermediary and Bank (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q (File No. 814-01175), filed on August 7, 2019).

 

 

 

10.16*

 

Indenture, dated as of August 28, 2019, between BCC Middle Market CLO 2019-1, LLC, as issuer, BCC Middle Market CLO 2019-1 Co-Issuer, LLC, as co-issuer and Wells Fargo Bank, National Association, as trustee.

 

 

 

10.17*

 

Portfolio Management Agreement, dated as of August 28, 2019, by and between BCC Middle Market CLO 2019-1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as portfolio manager.

 

 

 

10.18*

 

Loan Sale Agreement, dated as of August 28, 2019, by and between BCC Middle Market CLO 2019-1, LLC, as issuer, and Bain Capital Specialty Finance, Inc., as the transferor.

 

 

 

10.19*

 

Collateral Administration Agreement, dated as of August 28, 2019, by and between BCC Middle Market CLO 2019-1, LLC, as issuer, Bain Capital Specialty Finance, Inc., as portfolio manager, and Wells Fargo Bank, National Association, as collateral administrator.

 

 

 

10.20*

 

Master Participation Agreement, dated as of August 28, 2019, by and between BCSF I, LLC, as financing subsidiary, and BCC Middle Market CLO 2019-1, LLC, as issuer.

 

 

 

10.21*

 

Master Participation Agreement, dated as of August 28, 2019, by and between BCSF II-C, LLC, as financing subsidiary, and BCC Middle Market CLO 2019-1, LLC, as issuer.

 

 

 

14.1

 

Code of Conduct (incorporated by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K (File No. 814-01175), filed on November 15, 2018).

 

 

 

24.1

 

Powers of Attorney (incorporated by reference to Exhibit 24.1 to the Company’s Annual Report on Form 10-K (File No. 814-01175), filed on March 29, 2017).

 

 

 

31.1*

 

Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

 

 

 

31.2*

 

Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

 

 

 

32*

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

 


* Filed herewith.

 

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Table of Contents

 

SIGNATURES

 

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

 

Bain Capital Specialty Finance, Inc.

 

 

 

 

 

Date: November 6, 2019

By:

/s/ Michael A. Ewald

 

Name:

Michael A. Ewald

 

Title:

Chief Executive Officer

 

 

 

Date: November 6, 2019

By:

/s/ Sally F. Dornaus

 

Name:

Sally F. Dornaus

 

Title:

Chief Financial Officer

 

83