TCW Direct Lending LLC - FORM 10-K

TCW Direct Lending LLC - FORM 10-K - March 22, 2018

Attached files

Attached files

TCW Direct Lending LLC Reports

file	filename
EX-99.1 - FINANCIAL STATEMENTS OF TCW DIRECT LENDING STRATEGIC VENTURES LLC - TCW Direct Lending LLC	d547124dex991.htm
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - TCW Direct Lending LLC	d547124dex322.htm
EX-32.1 - CERTIFICATION OF PRESIDENT PURSUANT TO SECTION 906 - TCW Direct Lending LLC	d547124dex321.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) - TCW Direct Lending LLC	d547124dex312.htm
EX-31.1 - CERTIFICATION OF PRESIDENT PURSUANT TO RULE 13A-14(A) - TCW Direct Lending LLC	d547124dex311.htm
EX-21.1 - SUBSIDIARIES OF THE REGISTRANT - TCW Direct Lending LLC	d547124dex211.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2017

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

For the transition period from to

Commission file number 814-01069

TCW DIRECT LENDING LLC

(Exact Name of Registrant as Specified in Its Charter)


Delaware		46-5327366
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
200 Clarendon Street, Boston, MA		02116
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 936-2275

Not applicable

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

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. ☒

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

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

The number of the Registrant’s common units outstanding at March 22, 2018 was 20,134,698.

TCW DIRECT LENDING LLC

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2017

Table of Contents


	INDEX	PAGE NO.

PART I.

Item 1.	Business		1

Item 1A.	Risk Factors		12

Item 1B.	Unresolved Staff Comments		25

Item 2.	Properties		25

Item 3.	Legal Proceedings		25

Item 4.	Mine Safety Disclosure		25

PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26

Item 6.	Selected Financial Data		26

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28

Item 7A.	Quantitative and Qualitative Disclosures About Risk		39

Item 8.	Financial Statements and Supplementary Data		40

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		40

Item 9A.	Controls and Procedures		40

Item 9B.	Other Information		40

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance		41

Item 11.	Executive Compensation		41

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters		41

Item 13.	Certain Relationships and Related Transactions, and Director Independence		41

Item 14.	Principal Accountant Fees and Services		41

PART IV.

Item 15.	Exhibits, Financial Statement Schedules		42

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward- looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify 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:

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

a contraction of available credit could impair our lending and investment activities;

•

interest rate volatility, could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

•

our future operating results;

•

our business prospects and the prospects of our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

the ability of our portfolio companies to achieve their objectives;

•

competition with other entities and our affiliates for investment opportunities;

•

an inability to replicate the historical success of any previously launched fund managed by the direct lending team of our investment adviser, TCW Asset Management Company LLC (the “Adviser”);

•

the speculative and illiquid nature of our investments;

•

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

•

the adequacy of our financing sources and working capital;

•

the costs associated with being an entity registered with the Securities Exchange Commission (“SEC”);

•

the loss of key personnel;

•

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

•

the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

•

the ability of The TCW Group, Inc. to attract and retain highly talented professionals that can provide services to the Adviser in its capacity as our investment adviser and administrator;

•

our ability to qualify and maintain our qualification as a regulated investment company, or “RIC,” under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, or the “Code,” and as a business development company (“BDC”) under the Investment Company Act of 1940;

•

the effect of legal, tax and regulatory changes; and

•

the other risks, uncertainties and other factors we identify under “Part I—Item 1A. Risk Factors” of this Annual Report on Form 10-K.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are 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 report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the 1934 Act, which preclude civil liability for certain forward-looking statements, do not apply to the forward- looking statements in this report because we are an investment company.

PART I

In this annual report on Form 10-K, except as otherwise indicated, the terms:

“TCW Direct Lending LLC” refers to TCW Direct Lending LLC, a Delaware limited liability company.

The “Adviser” refers to TCW Asset Management Company LLC, a Delaware limited liability company.

For simplicity, this report uses the terms “Company,” “we,” “us,” and “our” to include TCW Direct Lending LLC and where appropriate in the context, its wholly-owned subsidiaries.

Item 1.

Business

Our Company

We are a direct lending investment company that seeks to generate attractive risk-adjusted returns primarily through direct investments in senior secured loans to middle market companies or other issuers. We are managed by the direct lending team (the “Direct Lending Team”) of the Adviser, a group of investment professionals that will use the same investment strategy employed by the Direct Lending Team over the past 17 years.

Although we are primarily focused on investing in senior secured debt obligations, there may be occasions where our investments may be unsecured. We may also consider making an equity investment, in combination with a debt investment. Our investments will mostly be made in portfolio companies formed as corporations, partnerships and other business entities. Our typical investment commitment has been, and is expected continue to be between $25 million and $150 million. We focus on portfolio companies in a variety of industries. While we generally focus on investments in middle market companies, we may invest in larger or smaller companies. See “Part II—Item 7. Financial Information—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We will consider financings for many different purposes, including corporate acquisitions, growth opportunities, liquidity needs, rescue situations, recapitalizations, debtor-in-possession (“DIP”) loans, bridge loans and Chapter 11 exits.

The issuers in which we invest are typically highly leveraged, and, in most cases, these investments will not be rated by any rating agency. If these investments were rated, we believe that they would likely receive a rating from a nationally recognized statistical rating organization of below investment grade, which is often referred to as “junk.” Exposure to below investment grade securities involves certain risks, and those securities are viewed as speculative with respect to the issuer’s capacity to pay interest and repay principal.

We were formed on April 1, 2014 as a limited liability company under the laws of the State of Delaware. Investment operations commenced on September 19, 2014 (the “Initial Closing Date”) when we issued limited liability company units (the “Common Units”) to persons not affiliated with the Adviser. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We have also elected to be treated for U.S. Federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the U.S Internal Revenue Code of 1986, as amended (the “Code”) for the taxable year ending December 31, 2015 and subsequent years. We are required to continue to meet the minimum distribution and other requirements for RIC qualification.

Because we are a RIC under the Code, our portfolio is subject to diversification and other requirements. As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest. In addition to those diversification requirements, we will not invest more than 10% of investors’ aggregate capital commitments to us through the Common Units (the “Commitments”) in any single portfolio company.

On May 16, 2016, we established a wholly owned subsidiary, TCW-DL VF Holdings, Inc., structured as a Delaware entity or tax blocker, to hold an equity investment in a portfolio company organized as a limited liability company.

On September 19, 2016, we formed TCW Direct Lending Luxembourg VI S.à.r.l., (“TCW Direct Lending Luxembourg”) a private limited liability company under the laws of Luxembourg, of which the Company owns 100% of the membership interests.

Throughout 2017, we formed several Delaware limited liability companies, all of which have a single member interest owned by us.

We borrow money from time to time, but as a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which will include all of our borrowings and any preferred units (the “Preferred Units”) that we may issue in the future, of at least 200%. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of proposed borrowings as well as the risks of such borrowings compared to our investment outlook. The use of borrowed funds or the proceeds of Preferred Units issued by the Company to make investments would have its own specific set of benefits and risks, and all of the costs of borrowing funds or issuing preferred stock would be borne by the holders of the Common Units (each, a “Common Unitholder” and together with holders of the Preferred Units the “Unitholders” or “Members”). See “Item 1A. Risk Factors—Borrowing Money.”

The Adviser

Our investment activities are managed by the Adviser, which is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Subject to the overall supervision of our board of directors, the Adviser manages our day-to-day operations and provides investment advisory and management services to us pursuant to the investment management and advisory agreement (the “Advisory Agreement”) by and between the Adviser and us.

The Adviser is a Delaware limited liability company registered with the Securities and Exchange Commission (the “SEC”) under the Advisers Act, and has been since 1970. The Adviser is a wholly owned subsidiary of The TCW Group, Inc. (the “TCW Group”); and together with its affiliated companies (“TCW”) manages or has committed to manage approximately $204.6 billion of assets as of December 31, 2017. Such assets are managed in various formats, including managed accounts, funds, structured products and other investment vehicles, including Regiment Capital Special Situations Fund V, L.P. (together with us and its four predecessor funds, the “Direct Lending Funds”).

The Adviser is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and monitoring our portfolio companies on an ongoing basis.

Our assets are managed by the Adviser’s Direct Lending Team. The Direct Lending Team joined the TCW Group in December 2012. The Direct Lending Team was previously with Regiment Capital Advisors, LP, an independent investment manager based in Boston, Massachusetts. TCW Direct Lending LLC is the Direct Lending Team’s sixth fund. The Direct Lending Team is led by Richard Miller and currently includes a group of dedicated investment professionals who have substantial investing, corporate finance, and merger and acquisition expertise and also significant experience in leveraged transactions, high yield financings and restructurings.

Investment Strategy and Opportunity

We provide private capital to middle market companies operating in a broad range of industries primarily in the United States. Our highly negotiated, private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, our investment bias is towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments. We compensate for the inherent lack of liquidity in our private investments by seeking returns that are higher than those of similar, but more liquid, investments. We consider financings for many different purposes, including corporate acquisitions, growth opportunities, liquidity needs, rescue situations, recapitalizations, DIP loans, bridge loans and Chapter 11 exits. As a result, we may invest in companies that are experiencing, or are likely to experience, operational, capital structure, liquidity and/or other financial difficulties. These investments can be subject to greater credit and liquidity risks, and could be more prone to default. The typical investment size has been, and is expected to continue to be between $25 million and $150 million. Additionally, while we generally focus on investments in middle market companies, we may invest in larger or smaller companies.

Investment Strategy

The Direct Lending Team applies its investment philosophy, strategy and approach to the management of the portfolio. The conditions of the economy or capital markets will not be used as an absolute indicator of the relative attractiveness of an investment opportunity considered. Rather, the investment must provide for adequate return relative to the risk assumed, regardless of the economic or capital market environment.

We pursue our investment objectives by adhering to a proactive strategy of exerting influence throughout each stage of the investment process from origination to exit. The tactics utilized in this strategy are paramount to our success and include selective origination, rigorous due diligence, customized structuring and active monitoring of the investment portfolio.

Selective Origination

The Direct Lending Team has a long-term presence in the private capital markets and, as a result, has developed an extensive network of strategic relationships. These relationships include capital market intermediaries such as broker-dealers, investment bankers, commercial bankers, private equity sponsors, mergers and acquisitions advisers, restructuring professionals, accountants and other financial professionals through whom the Adviser believes we will be able to source investment opportunities. The Direct Lending Team’s network also extends to the corporate community and includes senior management teams, independent industry consultants and other business executives who often refer opportunities to the members of the Direct Lending Team and who the Adviser believes will continue to refer opportunities to us. We may also have the opportunity to invest in companies and with management teams that worked with previous private investment funds managed by the Adviser or the Direct Lending Team or its other investment professionals.

A key to our investment strategy is to invest primarily in directly originated investment opportunities, as opposed to opportunities developed by financial intermediaries and then marketed widely to potential capital providers, which will rarely have economics, terms or conditions that will be acceptable to us. We expect to originate investment opportunities by independently developing such opportunities or by selectively identifying marketed and referred deals that can be significantly modified to meet our investment criteria. Originating transactions on a selective basis generally will allow us to customize terms that are consistent with our investment profile and exert greater influence throughout the life of the investment.

In certain instances, we may partner with other providers of capital, including strategic, financial, managerial or other related parties. Forging successful relationships with other investors may present us with additional opportunities, facilitate the closing of transactions or reduce risks.

Due Diligence

Given the Adviser’s approach to selectively originating transactions, its investment professionals will typically be in a position to be directly involved with each step of the investment process, beginning with due diligence. The Adviser’s investment philosophy is to perform a rigorous due diligence investigation designed to better understand a potential portfolio company’s risks and opportunities. This investigation will typically include comprehensive quantitative and qualitative analyses to identify and address risks.

The elements of the quantitative analysis may include:

•

Examination of financial statements such as income statements, balance sheets and cash flow reports as well as margin trends, financial ratios and other applicable performance metrics;

•

Review of financial projections and the impact of certain variables on a portfolio company’s performance and ability to service its obligations;

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Analysis of capital required for operations including growth and maintenance capital expenditures, working capital requirements, and any acquisition or divestiture opportunities;

•

Comparable analysis relative to companies and transactions in similar industries;

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Valuations reflecting a range of enterprise and asset values considering the sale of a healthy, stressed and distressed business enterprise, and the appraisal of working capital, real property, machinery, equipment, intellectual property and trademarks under similar circumstances; and

•

Identification of exit alternatives including repayment through free cash flow, acquisitions by strategic and financial buyers of all or portions of a business enterprise, asset liquidation, refinancing through the capital markets, and bankruptcy, including its impact on the portfolio company and the fund’s investment.

Qualitative analysis may include a review of:

•

Quality and depth of the management team, including background checks;

•

Product and/or service quality;

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Industry fundamentals, including raw material costs, pricing trends and demand drivers;

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Competitive position, including discussions with suppliers, customers, and competitors;

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Performance throughout the economic cycle;

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Production cost drivers and sourcing alternatives;

•

Quality of information systems and financial infrastructure;

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Diversity of customers and suppliers; and

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Competition, including the impact of alternate technology.

Comprehensive due diligence is an iterative process requiring many areas of expertise. For this reason, the Adviser’s investment professionals may be assisted by independent professionals with specific capabilities. Typically, a third party accounting specialist will be engaged to help perform an in-depth review of a target company’s historical financial performance. This analysis will provide a basis for determining the feasibility of the company’s forecasts. In many instances, outside industry consultants will review the company’s strategy, operations, budgets, competitive position and technological standing. Outside counsel will perform legal diligence and draft the investment documents, including any agreements among capital providers. The information garnered through the due diligence process may result in the modification of a transaction’s terms and conditions or potentially the rejection of an investment opportunity.

Customized Structuring

The Adviser’s investment professionals design a customized financial solution to address our requirements and each portfolio company. Through due diligence, the Adviser strives to better understand a portfolio company being financed in order to develop an appropriate form of investment with an acceptable capital structure. Our investments may be structured as senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities including options. The pricing associated with the investment reflects the risk inherent in such portfolio company, its capital structure and the type of investment. Once an agreement is reached between us and such portfolio company, it will be documented. This documentation will govern the relationship between us, such portfolio company and/or other creditors after the investment is made.

The objective of this structuring process is to provide the portfolio company’s management with the operating flexibility to effectively manage the business while creating accountability to its investors. The investment documentation typically will place limits on many of the portfolio company’s discretionary activities, such as capital expenditures, acquisitions, asset divestitures, dividends, as well as, for example, the reinvestment of tax receipts and insurance proceeds. Our investment documentation also typically requires extensive reporting by each portfolio company. Such reporting usually includes financial information and metrics useful in monitoring a portfolio company’s performance, as well as non-financial developments such as material changes in environmental issues, labor relations, key customers and suppliers. In addition, the investment documentation may include a range of positive and negative financial covenants initially set to establish a minimum allowable performance standard.

Active Monitoring

The Adviser’s investment professionals actively monitor and manage our investment portfolio by thoroughly and continuously analyzing all outstanding investments. Specifically, the investment professionals monitor each portfolio company’s compliance with the terms and conditions of its financing agreement, including reporting requirements and financial covenants. The reported information is gathered, analyzed and used to measure the portfolio company’s performance and potential impact on the investment. The investment professionals also maintain ongoing contact with each portfolio company’s management in order to understand and anticipate

opportunities and issues. Interaction with management may range from regular discussions of financial results, site visits, periodic company and industry reviews to daily liquidity monitoring. If the portfolio company violates any of the terms, conditions or covenants of the financing agreement or other investment documentation, we typically will be in a position to take action to attempt to protect the investment and influence the actions of the portfolio company, if necessary.

Types of Investments

The following descriptions are not intended to be an exhaustive categorization of our investments and are subject to change at any time. They are presented merely to acquaint investors with the available investment instruments as they are anticipated by the Adviser as of the date of this filing. The allocation of our portfolio among the different types of investments will vary over time based upon the Adviser’s evaluation of each specific investment opportunity. Under normal circumstances, the Adviser will utilize some or all of the following investment types, which are described in greater detail below:

•

secured fixed-rate or adjustable-rate senior loans (“Senior Loans”);

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unsecured fixed-rate or adjustable-rate loans;

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subordinated or mezzanine debt obligations;

•

equity securities, including preferred and common stocks and warrants;

•

convertible securities; and

•

options or other derivative instruments.

We generate revenues in the form of interest income and capital appreciation by providing private capital to middle market companies operating in a broad range of industries primarily in the United States. In general, we do not expect the Direct Lending Team to originate a significant amount of investments for us with payment-in-kind (“PIK”) interest features although, we may have investments with PIK interest features in limited circumstances. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, our investment bias will be towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

We are primarily focused on investing in senior secured debt obligations, although there may be occasions where the investment may be unsecured. We also consider an equity investment as the primary security, in combination with a debt obligation, or as part of a total return strategy. Our investments are mostly in corporations, partnerships or other business entities. Additionally, in certain circumstances, we may co-invest with other investors and/or strategic partners indirectly in a company through a joint venture, partnership or other special purpose vehicle (each, an “Investment Vehicle”). While we invest primarily in U.S. companies, there may be certain instances where we will invest in companies domiciled elsewhere.

We consider financings for many different purposes, including corporate acquisitions, growth opportunities, liquidity needs, rescue situations, recapitalizations, DIP loans, bridge loans and Chapter 11 exits. As a result, we may invest in companies that are experiencing, or are likely to experience, operational, capital structure, liquidity and/or other financial difficulties. These investments can be subject to greater credit and liquidity risks, and could be more prone to default.

The Adviser will consider an investment for our portfolio only if it believes that the relevant portfolio company is likely to repay its obligations. For example, the Adviser may determine that a portfolio company is likely to meet debt service requirements from cash flow or other sources, including the sale of assets, despite such portfolio company’s highly leveraged position, or that a portfolio company that is experiencing financial distress, but appears able to pay its interest and principal, is an attractive investment opportunity. There can be no assurance that such analysis will uncover all factors that may impair the value of our investments.

We may also provide interim or bridge financing to a portfolio company for working capital or other general corporate purposes. Interim or bridge financings are generally structured as loans and may be secured or unsecured. Such a portfolio company usually has a plan for repaying or refinancing at the time of the bridge loan funding, although there is a risk that such portfolio company will be unable to complete such refinancing successfully. In that case, the bridge loan typically converts into a more permanent investment usually at a higher cost to such portfolio company.

Collateral

Our debt investments are generally secured with one or more of (i) working capital assets, such as accounts receivable and inventory, (ii) tangible fixed assets, such as real property, machinery, buildings and equipment, (iii) intangible assets, such as trademarks or patents, or (iv) security interests in shares of stock of the company or its subsidiaries or affiliates.

We may invest in debt or equity instruments that are not secured by specific collateral, but are backed only by the enterprise value of the company. Unsecured investments typically involve a greater risk of loss than secured investments. We will generally not invest unless, at the time of the investment, the Adviser believes the estimated value of the borrower’s business or the underlying assets of the business equals or exceeds the aggregate investment amount, although there can be no assurance that the assets will be sufficiently liquid in order to satisfy the portfolio company’s obligations.

In the case of investments in a non-public company, such company’s shareholders may provide collateral in the form of secured guarantees and/or security interests in other assets that they own. We typically value the collateral by reference to such company’s financial statements or independent appraisals, and may assign a value to the collateral that is higher or lower than the value assigned by such company.

Covenants

Debt investments generally have operational and performance-based covenants designed to monitor performance of the borrower and to limit the activities of the borrower in an effort to protect the right of lenders to receive timely payments of interest and repayment of principal. Covenants may create positive or negative restrictions and, if violated, could result in a default on the debt obligations.

Default

We are subject to the risk that a company will default on its agreement with us due to a violation of provisions of the financing agreement or other investment documentation, including a failure to pay scheduled interest or make principal payments. If we accelerate the repayment of an investment because of a company’s violation of a covenant or other terms of a financing agreement or other investment documentation, such company might default on such payment. The risk of default generally will increase in the event of an economic downturn or, in the case of an adjustable-rate obligation, a substantial increase in interest rates. We may own a debt obligation of a borrower that is about to become insolvent. We may also invest in debt obligations that are issued in connection with a restructuring of the borrower under bankruptcy laws (also known as a DIP loan/financing).

Investments

Based on fair value as of December 31, 2017, our non-controlled/non-affiliated portfolio was comprised of 26 debt investments and three equity investments. Of these investments, 99.0% were debt investments which were primarily senior secured, first lien or term loans and 1.0% were equity comprised of common stock and warrants. As of December 31, 2016, our non-controlled/non-affiliated portfolio was comprised of 23 debt investments and one equity investment. Of these investments, 99.2% were debt investments which were primarily senior secured, first lien or term loans and 0.8% was common stock.

On June 5, 2015 the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P. entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Direct Lending Strategic Ventures (“TCW Strategic Ventures”). TCW Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The aggregate fair value of this controlled/affiliated investment was $259.7 million and $247.2 million as of December 31, 2017 and 2016, respectively.

For a further discussion of our investment activities and investment attributes as of December 31, 2017 and 2016, see “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Investment Advisory and Management Agreement

On August 7, 2017 the Company’s Board of Directors (the “Board”) reapproved the Investment Advisory and Management Agreement (the “Advisory Agreement”) originally entered into by the Company on September 15, 2014 with the Adviser, our registered investment adviser under the Investment Advisers Act of 1940, as amended. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of one year and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board.

Pursuant to the Advisory Agreement, and subject to the overall supervision of the Board, the Adviser manages the Company’s day-to-day operations and provides investment advisory services to the Company. The Company pays to the Adviser, quarterly in advance, a management fee (the “Management Fee”) calculated as follows: (i) for the period starting on the initial closing date and ending on the earlier of (A) the last day of the calendar quarter during which the Commitment Period (as defined below) ends or (B) the last day of the calendar quarter during which the Adviser or an affiliate thereof begins to accrue a management fee with respect to a successor fund, 0.375% (i.e., 1.50% per annum) of the aggregate commitments determined as of the end of the period during which the Company’s limited liability company units (the “Common Units”) are being offered (the “Closing Period”), and (ii) for each calendar quarter thereafter during the term of the Company (but not beyond the tenth anniversary of the initial closing date), 0.1875% (i.e., 0.75% per annum) of the aggregate cost basis (whether acquired by the Company with contributions from members, other Company funds or borrowings) of all portfolio investments that have not been sold, distributed to the members, or written off for tax purposes (but reduced by any portion of such cost basis that has been written down to reflect a permanent impairment of value of any portfolio investment), determined in each case as of the first day of such calendar quarter. The Management Fee in respect of the Closing Period is calculated as if all capital commitments of the Company were made on the initial closing date, regardless of when Common Units were actually issued. The actual payment of the Management Fee with respect to the Closing Period was made prior to the first day of the first full calendar quarter following the end of the Closing Period. The “Commitment Period” of the Company began on the initial closing date and ended on September 19, 2017, the earlier of (a) three years from the initial closing date and (b) the date on which the undrawn Commitment of each Common Unit has been reduced to zero. While the Management Fee will accrue from the initial closing date, the Adviser deferred payment of such fees to the extent that such fees cannot be paid from interest and fee income generated by our investments.

In addition, the Adviser will receive an incentive fee (the “Incentive Fee”) as follows:

(a)

First, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions pursuant to this clause (a) equal to their aggregate capital contributions in respect of all Common Units;

(b)

Second, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions equal to a 9% internal rate of return on their aggregate capital contributions in respect of all Common Units (the “Hurdle”);

(c)

Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to Common Unitholders until such time as the cumulative Incentive Fee paid to the Adviser is equal to 20% of the sum of (i) the amount by which the Hurdle exceeds the aggregate capital contributions of the Common Unitholders in respect of all Common Units and (ii) the amount of Incentive Fee being paid to the Adviser pursuant to this clause (c); and

(d)

Thereafter, the Adviser will be entitled to an Incentive Fee equal to 20% of additional amounts otherwise distributable to Unitholders, with the remaining 80% distributed to the Unitholders.

The Incentive Fee will be calculated on a cumulative basis and the amount of the Incentive Fee payable in connection with any distribution (or deemed distribution) will be determined and, if applicable, paid in accordance with the foregoing formula each time amounts are to be distributed to the Unitholders.

deferred portfolio investment-related fees would be deemed accelerated, (B) the proceeds from such liquidation were used to pay all our outstanding liabilities, and (C) the remainder were distributed to Common Unitholders and paid as Incentive Fee in accordance with the “waterfall” (i.e., clauses (a) through (d)) described above for determining the amount of the Incentive Fee. We will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated. The Adviser Return Obligation (defined below) will not apply in connection with a Final Incentive Fee Payment.

Administration Agreement

On August 7, 2017, the Company’s Board reapproved the Administration Agreement with the Adviser, originally entered into on September 15, 2014, under which the Adviser (or one or more delegated service providers) oversees the maintenance of our financial records and otherwise assists the Company’s compliance with regulations applicable to a BDC under the 1940 Act and a RIC under the Code, to prepare reports to our Members, monitor the payment of our expenses and the performance of other administrative or professional service providers, and generally provides us with administrative and back office support. The Company reimburses the Administrator for expenses incurred by it on behalf of the Company in performing its obligations under the Administration Agreement. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

The Company, and indirectly the Members, will bear (including by reimbursing the Adviser or Administrator) all other costs and expenses of its operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of the Company’s counsel and accounting fees. However, the Company will not bear (a) more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments of the Company per annum (pro-rated for partial years) for its costs and expenses other than ordinary operating expenses (“Company Expenses”), including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser. All expenses that the Company will not bear will be borne by the Adviser or its affiliates. Notwithstanding the foregoing, the cap on Company Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts payable in connection with the Company’s borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to the liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments).

Employees

We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided through the Administration Agreement and the Advisory Agreement. Each of our executive officers are employees of our Adviser.

License Agreement

We have entered into a license agreement (the “License Agreement”) with an affiliate of the Adviser, pursuant to which we have been granted a royalty-free, non-exclusive license to use the name “TCW”. Under the License Agreement, we have a right to use the “TCW” name and logo, for a nominal fee, for so long as the Adviser or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we will have no legal right to the “TCW” name or logo.

Competition

We compete for investments with a number of BDCs and other investment funds (including private equity funds and venture capital funds), special purpose acquisition company sponsors, hedge funds that invest in private investments in public equities, traditional financial services companies such as commercial banks, and other sources of financing including alternative source of funding to companies considering an initial public offering. Many of these entities have greater financial and managerial resources than we do. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act and the Code will impose on us as a BDC and a RIC.

Derivatives

We do not expect derivatives to be a significant component of our investment strategy. We retain the flexibility, however, to utilize hedging techniques, such as interest rate swaps, to mitigate potential interest rate risk on our indebtedness. Such interest rate swaps would principally be used to protect us against higher costs on our indebtedness resulting from increases in both short-term and long-term interest rates.

We also may use various hedging and other risk management strategies to seek to manage additional risks, including changes in currency exchange rates and market interest rates. Such hedging strategies would be utilized to seek to protect the value of our portfolio investments, for example, against foreign currency fluctuations vis a vis the U.S. Dollar or possible adverse changes in the market value of securities held in our portfolio.

Regulation as a Business Development Company

On December 30, 2014 we elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment advisers or sub-advisers), principal underwriters and affiliates of those affiliates or underwriters. In addition, a BDC must be organized for the purpose of investing in or lending primarily to private companies organized in the United States and making significant managerial assistance available to them.

As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. A majority of our board of directors must be persons who are not “interested persons,” as that term is defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our Members arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of any such person’s office. As a BDC, we are currently also required to meet a minimum coverage ratio of the value of total assets to total senior securities, which include all of our borrowings and any Preferred Units.

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

We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, except for registered money market funds, we generally cannot acquire more than 3% of the voting securities of any investment company, invest more than 5% of the value of our total assets in the securities of one investment company, or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate. The portion of our portfolio invested in securities issued by investment companies ordinarily will subject the Members to additional expenses.

We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of the members of our board of directors who are not interested persons and, in some cases, prior approval by the SEC through an exemptive order (other than in certain limited situations pursuant to current regulatory guidance). We have received an exemptive order from the SEC that permits us to co-invest with other funds or other pools of capital or persons managed by the Adviser or its affiliates. This order is subject to certain terms and conditions accordingly, there can be no assurance that we will be permitted to co-invest with other funds managed by Adviser, other than in the limited circumstances currently permitted by regulatory guidance.

We will be subject to periodic examination by the SEC for compliance with the 1940 Act.

Qualifying Assets

Under the 1940 Act, a BDC may not acquire any assets other than assets of the type listed in section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. The principal categories of qualifying assets relevant to our business are the following:

•

Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:

•

is organized under the laws of, and has its principal place of business in, the United States;

•

is not an investment company (other than a small business investment company wholly owned by us) or a company that would be an investment company but for certain exclusions under the 1940 Act; and

•

satisfies either of the following:

•

has a market capitalization of less than $250 million or does not have any class of securities listed on a national securities exchange; or

•

is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a controlling influence over the management or policies of the eligible portfolio company, and, as a result thereof, the BDC has an affiliated person who is a director of the eligible portfolio company.

•

Securities of any eligible portfolio company that we control.

•

Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

•

Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.

•

Securities received in exchange for or distributed in connection with securities described above, or pursuant to the exercise of warrants or rights relating to such securities.

•

Cash, cash equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment.

Managerial Assistance to Portfolio Companies

A BDC must be operated for the purpose of making investments in the types of securities described under “Qualifying Assets” above. However, in order to count portfolio securities as qualifying assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the issuer of the securities significant managerial assistance; except that, where the BDC purchases such securities in conjunction with one or more other persons acting together, the BDC will satisfy this test if one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does in fact provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

Temporary Investments

Pending investment in other types of “qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment, which is referred to herein, collectively, as temporary investments, such that at least 70% of our assets are qualifying assets.

Senior Securities

We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of Preferred Units senior to the Common Units, if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. While any Preferred Units or, in certain limited circumstances, debt securities are outstanding, we may be prohibited from making distributions to Common Unitholders or repurchasing Common Units unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for generally up to 60 days without regard to the 200% asset coverage requirement described above. Finally, (i) Preferred Units must have the same voting rights as the Common Units (one unit, one vote), and (ii) holders of the Preferred Units (the “Preferred Unitholders”) must have the right, as a class, to appoint two directors to the board of directors.

Code of Ethics

We have adopted the code of ethics of the Adviser (the “Code of Ethics”) pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. The Code of Ethics generally contains restrictions on investments by our employees in securities that we may purchase or hold. This information will be available at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549 and on the SEC’s website at www.sec.gov. The public may obtain information on the operation of the SEC’s public reference room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of the Code of Ethics by written request addressed to the following: Beth Clarke, TCW, 1251 Avenue of the Americas, Suite 4700, New York, NY 10020.

Compliance Policies and Procedures

We and the Adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws, and will be required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and to designate a chief compliance officer to be responsible for administering the policies and procedures.

Proxy Voting Policies and Procedures

Since our principal business is the making of secured loans, we do not expect to be asked to vote by proxy with respect to publicly held securities. However, if and to the extent that we hold, and are asked to submit proxies with respect to publicly or privately held securities, we intend to delegate our proxy voting responsibility to the Adviser. The Proxy Voting Policies and Procedures of the Adviser are set forth below. The guidelines are reviewed periodically by the Adviser and our Independent Directors, and, accordingly, are subject to change.

An investment adviser registered under the Advisers Act has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, the Adviser recognizes that it must vote client securities in a timely manner free of conflicts of interest and in the best interests of its clients. These policies and procedures for voting proxies for the Adviser’s investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

If the Adviser has responsibility for voting proxies in connection with its investment advisory duties, or has the responsibility to specify to an agent how to vote the client’s proxies, it exercises such voting responsibilities through the corporate proxy voting process. The Adviser believes that the right to vote proxies is a significant asset of its clients’ holdings. In order to provide a basis for making decisions in the voting of proxies for its clients, the Adviser has established a proxy voting committee (the “Proxy Committee”) and adopted proxy voting guidelines (the “Guidelines”) and procedures. The Proxy Committee generally meets quarterly (or at such other frequency as determined by the Proxy Committee), and its duties include establishing proxy voting guidelines and procedures, overseeing the internal proxy voting process, and reviewing proxy voting issues. The members of the Proxy

Committee include the Adviser’s personnel from the investment, compliance, legal and marketing departments. The Adviser also uses outside proxy voting services (each an “Outside Service”) to help manage the proxy voting process. An Outside Service facilitates its voting according to the Guidelines (or according to guidelines submitted by the Adviser’s clients) and helps maintain the Adviser’s proxy voting records. The Adviser’s proxy voting and record keeping is dependent on the timely provision of proxy ballots by custodians, clients and other third parties. Under circumstances described below involving potential conflicts of interest, the Adviser may also request an Outside Service to help decide certain proxy votes. In certain limited circumstances, the Adviser may enter into voting agreements or other contractual obligations that govern the voting of proxies. In the event of a conflict between any contractual requirements and the Guidelines, the Adviser will vote in accordance with its contractual obligations. As a matter of firm policy, the Adviser does not disclose to unaffiliated third parties how it expects to vote on upcoming proxies and does not disclose the way it voted proxies without a legitimate need to know such information.

The Guidelines provide a basis for the Adviser’s decisions in the voting of proxies for clients. When voting proxies, the Adviser’s utmost concern is that all decisions be made solely in the interests of the client and with the goal of maximizing the value of the client’s investments. With this goal in mind, the Guidelines cover various categories of voting decisions and generally specify whether the Adviser will vote for or against a particular type of proposal. The Adviser’s underlying philosophy, however, is that the portfolio managers, who are primarily responsible for evaluating the individual holdings of the Adviser’s clients, are best able to determine how best to further client interests and goals. The portfolio managers may, in their discretion, take into account the recommendations of the Adviser’s management, the Proxy Committee, and any Outside Service.

Individual portfolio managers, in the exercise of their best judgment and discretion, may from time to time override the Guidelines and vote proxies in a manner that they believe will enhance the economic value of clients’ assets, keeping in mind the best interests of the beneficial owners. The Guidelines provide procedures for documenting and, as required, approving such overrides. In the event a potential conflict does arise, the primary means by which the Adviser will avoid a conflict of interest is by casting votes solely in the interests of its clients and in the interests of maximizing the value of their portfolio holdings. In this regard, if a potential conflict of interest arises, but the proxy vote to be decided is predetermined under the Guidelines to be cast either in favor or against, then the Adviser will follow the Guidelines and vote accordingly. On the other hand, if a potential conflict of interest arises and there is no predetermined vote, or the Guidelines themselves refer such vote to the portfolio manager for decision, or the portfolio manager would like to override a predetermined vote, then the Guidelines provide procedures for determining whether a material conflict of interest exists and, if so, resolving such conflict.

The Adviser or an Outside Service will keep records of the following items for at least five years: (i) the Guidelines and any other proxy voting procedures; (ii) proxy statements received regarding client securities (unless such statements are available on the SEC’s EDGAR system); (iii) records of votes cast on behalf of clients (if maintained by an Outside Service, that Outside Service will provide copies of those records promptly upon request); (iv) records of written requests for proxy voting information and the Adviser’s response (whether a client’s request was oral or in writing); and (v) any documents the Adviser prepared that were material to making a decision on how to vote, or that memorialized the basis for the decision. Additionally, the Adviser or an Outside Service will maintain any documentation related to an identified material conflict of interest.

ITEM 1A.

RISK FACTORS

An investment in our securities involves certain risks relating to our structure and investment objective. The risks set forth below are not the only risks we face, and we face other risks which we have not yet identified, which we do not currently deem material or which are not yet predictable. If any of the following risks occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value could decline, and you may lose all or part of your investment.

Risks Related to our Business and Structure

Lack of Operating History

We commenced investment operations in 2014 and have limited performance history. Past performance, including the past performance of the prior Special Situation Funds or other investment entities and accounts managed by the Adviser, is not necessarily indicative of our future results.

Experience Operating a BDC

The members of the Adviser have no prior experience managing a BDC, and the investment philosophy and techniques used by the Adviser to manage a BDC may differ from the investment philosophy and techniques it previously employed in identifying and managing past investments. Accordingly, there can be no assurance that the Adviser will replicate the historical performance of other investment funds, accounts or investment vehicles with which it has been affiliated. As a result, our investment returns could be substantially lower than the returns achieved by such other investment funds, accounts or investment vehicles.

Dependence on the Key Personnel and Other Management

Members have no right or power to participate in the management of the Company and may not receive detailed financial information regarding investments that is available to the Adviser. An investor in the Company must rely upon the ability of the Adviser (including the Direct Lending Team and other investment professionals of the Adviser) to identify, structure and implement investments consistent with our investment objectives and policies. Accordingly, our success is dependent on the Adviser’s ability to retain and motivate highly-qualified professionals. The loss of services of the Adviser’s investment professionals could have an adverse effect on our business, financial condition and results of operations. Our future success also depends on the Adviser’s ability to identify, hire, train and retain other highly qualified and experienced investment and management professionals. Competition for such professionals is significant, and there can be no assurance that the Adviser will be able to attract or retain other highly qualified professionals in the future. The inability of the Adviser to attract and retain such professionals could have a material adverse effect upon our business, financial condition and results of operations. In addition, we cannot assure you that the Adviser will remain the Company’s investment adviser or that the Company will continue to have access to its investment professionals or its information.

Reliance Upon Unaffiliated Co-Lender

In certain circumstances we may co-invest with an unaffiliated lender, who is sometimes responsible for performing some of the legal due diligence on the borrower and for negotiating some of the terms of the loan agreement that establishes the terms and conditions of the debt investment and the rights of the borrower and the lenders. In such circumstances, although we perform our own due diligence, we may rely in part on the quality of the due diligence performed by the co-lender and will be bound by the negotiated terms of the loan documentation. There can be no assurance that the unaffiliated co-lender has performed or will perform the same level of due diligence as we would perform or that the co-lender will negotiate terms that are consistent with the terms generally negotiated and obtained by us. If the unaffiliated co-lender is acting as collateral agent under the

loan documentation and becomes insolvent, the assets securing the debt investment may be determined by a court or regulatory authority to be subject to the claims of the co-lender’s creditors. If that were to occur, we might incur delays and costs in realizing payment on the loan, or we might suffer a loss of principal and/or interest.

Reliance Upon Consultants

The Adviser may rely upon independent consultants in connection with its evaluation of proposed investments. However, no assurance can be given that these consultants will accurately evaluate such investments and we may incur liability as a result of such consultants’ actions.

Borrowing Money

The use of leverage magnifies the potential for gain or loss on amounts invested and, therefore, increases the risks associated with investing in the Company. Subject to the borrowing limitation imposed on us by the 1940 Act, we borrow from or may issue senior debt securities to banks, insurance companies and other lenders. Our lenders will have fixed dollar claims on our assets that are superior to the claims of the Common Unitholders, and we would expect such lenders to seek recovery against our assets in the event of a default. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Leverage is generally considered a speculative investment technique. Our ability to service any debt that we incur depends largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures.

As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which includes all of our borrowings and any Preferred Units that we may issue in the future, of at least 200%. If this ratio declines below 200%, we may not be able to incur additional debt, which could have a material adverse effect on our operations. The amount of leverage that we employ depends on the Adviser’s assessment of market and other factors at the time of any proposed borrowing. There can be no assurance that we will be able to obtain credit at all or on terms acceptable to us.

In addition, our existing credit facility imposes, and any debt facility into which we may enter in the future would likely impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code. In particular, it is anticipated that any future credit facility would contain certain financial covenants, which may include requiring us to maintain a minimum amount of equity supporting the credit facility or comply with certain collateral quality and coverage tests. Failure to comply with these covenants could result in a default. In such a case, if we are unable to obtain a waiver of a default from the lenders, those lenders could accelerate repayment under that indebtedness, which may result in cross-acceleration of other indebtedness. An acceleration could have a material adverse impact on our business, financial condition and results of operations.

We cannot assure you that our future business will generate sufficient cash flow from operations or that future borrowings will be available to us under our credit facility or otherwise in an amount sufficient to enable us to repay future indebtedness or to fund any of our other liquidity needs. We may need to refinance all or a portion of our indebtedness before it matures or on maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions, such as selling assets. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would not be disadvantageous to Members or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

Effect of BDC and RIC Rules on Investment Strategy

Our having to comply with the various rules necessary to remain qualified as a BDC and a RIC could adversely impact the implementation of our investment strategy and thus reduce returns to investors. For example, the diversification requirements imposed by the RIC rules could, in certain situations, preclude us from making certain investments.

The 1940 Act imposes numerous constraints on the operations of BDCs that do not apply to other types of investment vehicles. For example, under the 1940 Act, we are required as a BDC to invest at least 70% of our total assets in specified types of “qualifying assets,” primarily in private U.S. companies or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. We may be precluded from investing in what the Adviser believes are attractive investments if the investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we will be prohibited from making any additional investment that is not a qualifying asset. These rules could prevent us from making follow-on investments in existing portfolio companies (which could result in the dilution of our position).

Furthermore, any failure to comply with the requirements imposed on us as a BDC by the 1940 Act could cause the SEC to bring an enforcement action against us or expose us to claims of private litigants. In addition, upon approval of a majority of our outstanding voting securities as required by the 1940 Act, we may elect to withdraw our status as a BDC. If we decide to withdraw our election or otherwise fail to maintain our status as a BDC, we might be regulated as a closed-end investment company that is required to register under the 1940 Act, which would subject us to additional regulatory restrictions, significantly decrease our operating flexibility and could significantly increase our cost of doing business. In addition, any such failure could cause an event of default under our then-outstanding indebtedness, which could have a material adverse effect on our business, financial condition and results of operations.

Regulations Governing our Operation as a BDC

We may issue debt securities or Preferred Units and/or borrow money from banks or other financial institutions, which are collectively referred to herein as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. In addition, our inability to satisfy this test could cause an event of default under our then-existing indebtedness. If we cannot satisfy this test, we may be required to sell a portion of our investments at a time when such sales may be disadvantageous and, depending on the nature of our leverage, repay a portion of our indebtedness. Accordingly, any failure to satisfy this test could have a material adverse effect on our business, financial condition and results of operations. Also, any amounts that we use to service our indebtedness would not be available for distributions to our Members.

Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss.

If we issue Preferred Units, the Preferred Units would rank “senior” to the Common Units in our capital structure, the Preferred Unitholders would have separate voting rights on certain matters and might have other rights, preferences, or privileges more favorable than those of the Common Unitholders.

Failure to Qualify as a RIC

Although we have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs, we cannot assure you that we will be able to maintain RIC status. As a RIC, we generally do not pay U.S. federal corporate level income taxes on our income and net capital gains that we distribute to our Members on a timely basis.

We are also subject to U.S. federal corporate level income tax on any undistributed income or gains and may also be subject to certain U.S. federal excise taxes, as well as state, local and foreign taxes.

We will be subject to U.S. federal corporate-level income tax if we are unable to maintain our qualification as a RIC. To qualify as a RIC, we must meet certain source-of-income, asset diversification and distribution requirements. The distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to the Members on an annual basis. Because we have incurred debt, we are subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in the Company having to dispose of certain investments quickly, at times we would not have otherwise done so, to prevent the loss of such qualification as a RIC. Because most of our investments will be in private or thinly traded public companies, any such dispositions may be made at disadvantageous prices and may result in substantial losses. In addition, we may have difficulty satisfying the diversification requirements as we liquidate our portfolio since we will generally not be making additional investments (except for certain follow-on investments and investments that were significantly in process prior to the termination of the Commitment Period). While we generally will not lose our status as a RIC as long as we do not acquire any non-qualifying securities or other property, under certain circumstances we may be deemed to have made an acquisition of non-qualifying securities or other property. If we fail to qualify as a RIC for any reason and become subject to corporate-level income tax, the resulting corporate income taxes could substantially reduce our net assets, the amount of income available for distributions to the Members and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and the Members.

Conflicts of Interest

Conflicts of interest may exist from time to time between the Adviser and certain of its affiliates involved with us. For example, the terms of the Adviser’s management and incentive fees may create an incentive for the Adviser to approve and cause us to make more speculative investments than we would otherwise make in the absence of such fee structure.

The Direct Lending Team is separated from those partners and employees of the Adviser and its affiliates involved in the management of the investments of other funds, accounts and investment vehicles (the “Other Employees”) by an ethical wall, and accordingly, the Other Employees may be unable to make certain material information available to the Direct Lending Team. In addition, the Adviser’s other funds, accounts and investment vehicles may take positions in securities and/or issuers that are in a different part of the capital structure of an issuer or adverse to ours.

The members of the senior management and investment teams and the Investment Committee of the Adviser serve or may serve as officers, directors, principals or investment committee members of entities that operate in the same or a related line of business as we do, or of investment funds, accounts or investment vehicles (including TCW Direct Lending VII LLC (“Fund VII”) managed by the Adviser or its affiliates. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in our best interests or in the best interest of the Members. As a result, those individuals at the Adviser may face conflicts in the allocation of investment opportunities between us and other investment funds, accounts or investment vehicles advised by principals of, or affiliated with, the Adviser.

We and the Adviser, have obtained exemptive relief from the SEC that, subject to certain conditions and limitations, permits us and other funds, accounts and investment vehicles advised by the Adviser (including Fund VII) and certain affiliates of the Adviser (referred to as “potential co investment funds”) to engage in certain co investment transactions (the “Co-Investment Exemptive Order”). Under the Co-Investment Exemptive Order, in the case where the interest in a particular investment opportunity exceeds the size of the opportunity, then the investment opportunity will be allocated among us, Fund VII and any other potential co-investment funds based on capital available for investment, which generally is determined based on the amount of cash on hand, existing commitments and reserves, if any, the targeted leverage level, targeted asset mix and other investment policies and restrictions set from time to time by the board or other governing body of the relevant fund or imposed by applicable laws, rules, regulations or interpretations. Since the Commitment Period ended in September 2017, we may not make new investments (other than certain follow-on investments and investments that were significantly

in process prior to the termination of the Commitment Period) and therefore would not expect to rely on the Co-Investment Exemptive Order except in connection with follow-on or significantly in-process investments. In situations where we cannot co-invest with other funds, accounts or investment vehicles managed by the Adviser or an affiliate of the Adviser due to the restrictions contained in the 1940 Act that are not addressed by the Co-Investment Exemptive Order or SEC guidance, the investment policies and procedures of the Adviser generally require that such opportunities be offered to us, Fund VII and such other funds, accounts and investment vehicles on an alternating basis. There can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.

Effect of Fees and Expenses on Returns

We pay Management Fees and Incentive Fees to the Adviser and generally bear other Operating Expenses. Generally, other than the Incentive Fee, fees and expenses are paid regardless of whether we produce positive investment returns. The fees and expenses reduce the actual returns to Members, the distributions we make to Members, and the overall value of the Members’ investment. In addition, because the Management Fees payable by us to the Adviser following the Commitment Period are calculated based on the cost of our investment portfolio, including that portion of the investment cost funded with leverage, the Adviser may be incentivized to use leverage, but will not utilize more than is permitted by applicable law or regulation. Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of the Common Units.

Economic Interest of the Adviser

Because the Adviser is compensated in part on a basis tied to our performance, the Adviser may have an incentive to make investments that are risky or speculative.

Resignation of the Adviser

The Adviser and the Administrator may resign at any time upon 60 days’ written notice under the terms of the Advisory Agreement and Administration Agreement, and the sub-administrator may resign upon 60 days’ written notice in certain situations under the terms of the sub-administration agreement, regardless of whether we have found replacements. If the Adviser, the Administrator or the sub-administrator resigns, we may not be able to find replacements or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption and our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected. In addition, the coordination of our management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Adviser, the Administrator, the sub-administrator and their affiliates. Even if comparable service providers or individuals performing such services are retained, whether internal or external, their integration into the business and lack of familiarity with our investment objectives may result in additional costs and time delays that may materially adversely affect our business, results of operations and financial condition. Any new advisory agreement also would be subject to approval by the Members.

Limited Liability of the Adviser

To the extent permissible by law, the Adviser will not be liable, responsible or accountable in damages or otherwise to us or to any Member for any breach of duty to us or the Member or for any act or failure to act pursuant to the Advisory Agreement or otherwise, except in certain limited circumstances provided by the 1940 Act and as set forth in the Advisory Agreement. In general, we will be required to indemnify the Adviser (and other related and/or affiliated parties) for certain losses arising out of its activities on behalf of us. Such obligations could reduce significantly the returns to the Member.

Fluctuations in Quarterly Results

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

Information System Failures

Our business is dependent on our and third parties’ communications and information systems, including those of the Adviser, the Administrator, their affiliates and third parties. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers or as a result of a cyber-attack, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities or those of the Adviser, the Administrator, their affiliates or third parties may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

•

sudden electrical or telecommunications outages;

•

natural disasters such as earthquakes, tornadoes and hurricanes;

•

disease pandemics;

•

events arising from local or larger scale political or social matters, including terrorist acts; and/or

•

cyber-attacks.

These events, in turn, could have a material adverse effect on our business, financial condition and operating results and negatively affect our ability to make distributions to Members.

Cybersecurity Risks

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of the Adviser’s or our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to the Adviser’s or our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships. We and the Adviser depend heavily on technology and computer systems in the course of our business functions. As these technologies have become more necessary for day-to-day operations, the risks posed to the Adviser’s and our information systems, both internal and those provided by third-party service providers, will also increase.

We and the Adviser have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as increased awareness of the nature and extent of a risk of a cyber incident, do not guarantee that a cyber incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident. Even if we protect our technological infrastructure and the confidentiality of sensitive data, we may incur significant expenses in connection with our responses to any such attacks and the adoption and maintenance of additional appropriate security measures. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in the Adviser’s or our respective vendors’ systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems we and the Adviser use. Privacy and information security legal and regulatory changes, and compliance with those changes, may also result in cost increases due to system changes and the need to develop new administrative processes.

Ineffective Internal Controls

Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations.

Recourse to Our Assets

Our assets, including any investments made by us and any capital held by us, are available to satisfy all our liabilities and other obligations. If we become subject to a liability, parties seeking to have the liability satisfied may have recourse to our assets generally and not be limited to any particular asset, even in the circumstance where a specific investment gave rise to the liability.

Litigation Risks

We will be subject to a variety of litigation risks, particularly if one or more of our portfolio companies face financial or other difficulties. Legal disputes, involving any or all of the Company, the Adviser, or affiliates, may arise from our activities and investments and could have a significant adverse effect on us.

Inability to Take Advantage of Investment Opportunities with Affiliated Funds or Investors

The 1940 Act limits our ability to engage in transactions with affiliated funds and investors. For example, we are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our Independent Directors and, in some cases, of the SEC. Any person that owns, directly or indirectly, five percent or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security from or to such affiliate, absent the prior approval of the Independent Directors. The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include co-investments in the same portfolio company, without prior approval of the Independent Directors and, in some cases, of the SEC. We are prohibited from buying or selling any security from or to any person who owns more than 25% of our voting securities or controls us (such as the Adviser) or certain of that person’s affiliates (such as other investment funds managed by the Adviser), or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC. As a result of these restrictions, we may be prohibited from buying or selling any security (other than any security of which we are the issuer) from or to any portfolio company of a private equity fund managed by the Adviser or its affiliates without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to us. In situations where we cannot co-invest with other investment funds managed by the Adviser due to the restrictions contained in the 1940 Act that are not addressed by the Co-Investment Exemptive Order or SEC guidance, the investment policies and procedures of the Adviser generally require that such opportunities be offered to us, Fund VII and such other funds, accounts and investment vehicles on an alternating basis. There can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.

Wind Down

Since the Commitment Period ended in September 2017, we generally may not make new investments (other than certain follow-on investments and investments that were significantly in process prior to the termination of the Commitment Period). As a result, during the remainder of our term, fewer investments will be available to generate cash flow, decreasing the amount of distributions. In addition, we will continue to incur expenses and other liabilities for the remainder of our term, which will reduce the amount ultimately available for distribution to Members. Amounts distributed to Members in connection with any dissolution and liquidation may be subject to clawback pursuant to the terms of the LLC Agreement.

Risks Related to Portfolio Company Investments

Portfolio Concentration

Although the regulatory restrictions applicable to RICs limit the amount that we may generally invest in any single portfolio company, our investments may not be adequately diversified. Aside from the diversification requirements that we will have to comply with as a RIC, we do not have any specific portfolio diversification or concentration limits. As a result, our portfolio may include a relatively limited number of large positions. If our investments are concentrated in a few issuers or industries, any adverse change in one or more of such issuers or industries could have a material adverse effect on our investments. In addition, since the Commitment Period ended in September 2017, we may not make new investments (other than certain follow-on investments or investments that were significantly in process prior to the end of the Commitment Period). As a result, our portfolio may become more concentrated as it begins to wind down under the terms of the LLC Agreement.

Special Risks of Highly-Leveraged or other Risky Portfolio Companies; Interest Rate Fluctuations

We can invest up to 100% of our total assets in debt and equity securities of portfolio companies that are highly leveraged and whose debt securities would be considered well below investment grade. We may invest in bridge loans, subordinated or mezzanine financing which is either unsecured or, if secured, will be subordinated to the interests of the senior lenders in the borrower’s capital structure. We may also invest in obligations of portfolio companies in connection with a restructuring under Chapter 11 of the U.S. Bankruptcy Code (i.e., a “DIP Financing”) if the obligations meet the credit standards of the Adviser.

These debt obligations tend to offer higher yields than investment grade securities to compensate investors for the higher risk, and are commonly referred to as “high risk securities” or, in the case of bonds, “junk bonds.” Lending to highly-leveraged or other risky borrowers is highly speculative. These investments may expose us to financial market risks, interest rate risks and credit risks that are significantly greater than the risks associated with other securities in which we may invest. An economic downturn or a period of rising interest rates, for example, could cause a decline in the prices of such securities. The prices of securities structured as zero-coupon or pay-in-kind securities may be more volatile than securities that pay interest periodically and in cash. In the event of a default by a portfolio company, we would experience a reduction of our income and could expect a decline in the fair value of the defaulted securities and may incur significant additional expenses to seek recovery.

Credit Risks

Debt investments are subject to credit risk. Credit risk relates to the ability of the borrower to make interest and principal payments on the loan or security as they become due. If the borrower fails to pay interest, our income might be reduced. If the borrower fails to repay principal, the value of that security and the value of the Company might be reduced. Our investments in debt securities are subject to risks of default. We may invest in debt securities made in connection with leveraged buy-out transactions, recapitalizations and other highly-leveraged transactions. While our investments in senior loans typically will be secured by collateral, we may have difficulty liquidating the collateral or enforcing our rights under the terms of the senior loans in the event of the borrower’s default. There is no guarantee that the collateral securing a senior loan will be sufficient to protect us against losses or a decline in income in the event of a borrower’s non-payment of interest or principal. In the event that a borrower declares bankruptcy, a court could invalidate our security interest in the loan collateral or subordinate our rights under the senior loan to other creditors of the borrower. Also, we may invest part of our assets in loans and other debt obligations that are not fully secured.

Limited Secondary Market for Securities

Our investments are generally heavily negotiated and, accordingly, do not have the liquidity of conventional securities. Due to their illiquid nature, we may not be able to dispose of our investments in a timely manner, at a fair price and/or in the manner that was thought to be viable when the investment was initiated (due to economic, legal, political or other factors). There is no assurance that we will be able to dispose of an investment in a particular security. The inability to dispose of a security could result in losses incurred by us, including the loss of our entire investment in such security. The debt of highly leveraged companies or companies in default also may be less liquid than other debt. If we voluntarily or involuntarily sold those types of debt securities, we might not receive the full value we expect.

Use of Investment Vehicles

We have made indirect investments in portfolio companies through TCW Strategic Ventures. In general, the risks associated with indirect investments in portfolio companies through a joint venture, partnership or other special purpose vehicle like TCW Strategic Ventures (each, an “Investment Vehicle”) are similar to those associated with a direct investment in a portfolio company. While we analyze the credit and business of a potential portfolio company in determining whether or not to make an investment in an Investment Vehicle, we are nonetheless exposed to the creditworthiness of the Investment Vehicle like TCW Strategic Ventures. In the event of a bankruptcy proceeding against an Investment Vehicle, the risks outlined below under “—Insolvency Considerations with Respect to Portfolio Companies” will be applicable with equal effect. Additionally, in the case of a bankruptcy proceeding against the portfolio company, the assets of the portfolio company may be used to satisfy its obligations prior to the satisfaction of our investment in an Investment Vehicle (i.e., our investment in an Investment Vehicle would be structurally subordinated to the other obligations of the portfolio company). To the extent that we have invested in an Investment Vehicle, we bear our ratable share of any such company’s expenses, including management and performance fees (if applicable). With respect to each of these investments, our Common Unitholders bear their share of the management fee and incentive fee due to the Adviser, as well as indirectly bear any management and performance fees and other expenses of any such investment funds.

Insolvency Considerations With Respect to Portfolio Companies

Various laws enacted for the protection of creditors may apply to our debt investments. A bankruptcy proceeding against a borrower could delay or limit our ability to collect the principal and interest payments on that borrower’s debt obligations. In a lawsuit brought by creditors of a borrower, a court or a trustee in bankruptcy could take certain actions that would be adverse to us. For example:

•

Other creditors might convince the court to set aside or subordinate a loan or the security interest in a loan as a “fraudulent conveyance,” a “preferential transfer” or for other equitable considerations. In that event, the court could recover from us the interest and principal payments that the borrower made before becoming insolvent. There can be no assurance that we would be able to prevent such recapture.

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A bankruptcy court may restructure the payment obligations under debt securities so as to reduce the amount to which we would be entitled.

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The court might discharge the amount of a loan we make that exceeds the value of the collateral securing the loan. The court could subordinate our rights to the rights of other creditors of the borrower under applicable law.

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Although our senior secured position under a senior loan provides some assurance that we would be able to recover some of its investment in the event of a borrower’s default, the collateral might be insufficient to cover the borrower’s debts. A bankruptcy court might find that the collateral securing the senior loan is invalid or require the borrower to use the collateral to pay other outstanding obligations. If the collateral consists of stock of the borrower or its subsidiaries, the stock may lose all of its value in the event of a bankruptcy, which would leave us exposed to greater potential loss.

•

If a borrower defaults on a scheduled interest or principal payment on a debt obligation, we may experience a reduction of our income. In addition, the value of the debt investment would decline, which may, in turn, cause our value to decline.

Lender Liability

In recent years, a number of judicial decisions in the United States have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories (collectively termed “Lender Liability”). Generally, Lender Liability is founded upon the premise that an institutional lender has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. Lender Liability claims generally arise in bankruptcy, but can also arise under state law claims. Lender Liability often involves claims of misconduct where a lender (a) intentionally takes an action that exacerbates the insolvency of a borrower or issuer or that results in the undercapitalization of a borrower or issuer to the detriment of other creditors of such borrower or issuer, (b) engages in other inequitable conduct to the detriment of such other creditors, (c) engages in fraud with respect to, or makes misrepresentations to, such other

creditors or (d) uses its influence as a shareholder to dominate or control a borrower or issuer to the detriment of other creditors of such borrower or issuer. We could be subject to allegations of Lender Liability because of the nature of certain of our investments. There is also a risk that where Lender Liability is alleged, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors (a remedy called “Equitable Subordination”).

We do not intend to engage in conduct that would give rise to a claim of Lender Liability or Equitable Subordination. However, as a BDC, we are obligated to offer managerial assistance to each of our portfolio companies. To the extent any of our portfolio companies elect to accept such offer to provide managerial assistance, that level of involvement with a portfolio company could strengthen a Lender Liability or Equitable Subordination claim against us. Therefore, claims for Lender Liability or Equitable Subordination affecting our investments could arise as a result of any managerial assistance that we provide in order to fulfill our obligations as a BDC. Moreover, because of the nature of our investments, we may not always be the lead creditor, and security or other agents may act on behalf of the investors in a security owned by us. Therefore, claims for Lender Liability or Equitable Subordination affecting our investments could also arise without our direct managerial or other involvement.

Reliance on Portfolio Company Management

The day-to-day operations of each portfolio company in which we invest is the responsibility of such entity’s management team. In addition, we may make investments in portfolio companies where we have limited influence and the other investors in such portfolio company have economic or business interests or goals that are inconsistent with our business interests and goals. Although the Adviser is responsible for monitoring the performance of each of our investments and is required, pursuant to a specific 1940 Act provision applicable to BDCs, to offer to provide each of our portfolio companies managerial assistance, there can be no assurance that the existing management team of a portfolio company or any successor will be able to operate any such entity in accordance with our expectations. In this situation, we may not be in a position to limit or otherwise protect the value of our investment.

Need for Follow-On Investments

We may be called upon to provide follow-on funding or additional loans for, or have the opportunity to increase our investment in, our portfolio companies. There can be no assurance that we will be able to make or arrange for follow-on investments or loans or that we will have sufficient funds to do so. Any decision not to make follow-on investments or loans or the inability to make them may have a substantial negative impact on a portfolio company in need of funds or may diminish our proportionate ownership in such entity and thus our ability to influence the entity’s future conduct. The inability to make follow-on investments or loans may also impede, diminish or reduce the number of attractive investments made available to us.

Risks of Using Derivative Instruments

We may use derivative financial instruments for hedging or managing the risks associated with the assets we hold. The risks posed by such instruments can be extremely complex and difficult to evaluate, including (i) risks relating to our counterparties in such a transaction; (ii) imperfect correlation between movements in the currency, interest rate or other reference on which the derivative is based and movements in the assets of the underlying portfolio; and (iii) reduced ability to meet short-term obligations because of the percentage of our assets segregated to cover derivative obligations. In addition, by hedging a particular position, any potential gain from an increase in value of such position may be limited.

Non-U.S. Investment Risk

We may invest up to 30% of our gross assets in portfolio companies domiciled outside of the United States (assuming that the remaining 70% of our gross assets constitute “qualifying assets” (as defined in the 1940 Act)). Non-U.S. obligations have risks not typically involved in domestic investments. For example, non-U.S. obligations not denominated in U.S. dollars will cause our investment performance to vary based on changes in the applicable currency exchange rate. Moreover, even if we attempt to hedge the currency exchange risk, these hedges may be expensive and may not completely protect us in all circumstances. Non-U.S. investing can also result in higher transaction and operating costs for the Company. Non-U.S. issuers may not be subject to the same accounting and disclosure requirements that U.S. issuers are subject to. The value of non-U.S. investments may be affected by foreign governmental laws, rules and regulations, including exchange control regulations,

expropriation or nationalization of a company’s assets, tax and bankruptcy related laws and policies restricting ownership of assets, non-U.S. taxes, delays in settlement of transactions, changes in governmental economic or monetary policies in the United States or abroad, or other political and economic factors. We may have greater difficulty taking appropriate legal actions in non-U.S. courts.

Non-U.S. countries may impose withholding taxes, transfer taxes and value added taxes on income paid on the debt securities of issuers or gains from our investments in those countries.

Risks Related to Economic and Market Conditions

General Economic and Financial Conditions

The success of any investment activity is influenced by general economic and financial conditions, all of which are beyond our control and the control of the Adviser. These conditions, such as the recent global economic crisis and significant downturns in the financial markets, may materially adversely affect our operating results, financial condition and ability to implement our business strategy and/or meet our return objectives.

Terrorist Action

There is a risk of terrorist attacks on the United States and elsewhere causing significant loss of life and property damage and disruptions in global market. Economic and diplomatic sanctions may be in place or imposed on certain states and military action may be commenced. The impact of such events is unclear, but could have a material effect on general economic conditions and market liquidity.

Changes in Applicable Law

We must comply with various legal requirements, including requirements imposed by United States and non-U.S. anti-money laundering laws, securities laws, commodities laws, tax laws and pension laws. Should any of those laws change over the life of the Company, the legal requirements to which we and the Adviser may be subject could differ materially from current requirements.

Risks Related to our Common Units

No Assurance of Profits

There is no assurance that we will be able to generate returns for our investors or that the returns will be commensurate with the risks of investing in the types of companies and transactions described herein. The marketability and value of any of our investments will depend upon many factors beyond our control. We will incur organizational expenses, Management Fees and other operating expenses which may exceed our income, and a Member could lose the entire amount of its contributed capital. Therefore, a prospective investor should only invest in the Company if such investor can withstand a total loss of his or her investment. The past investment performance of the entities and accounts with which the Adviser and its investment professionals have been associated cannot be taken to guarantee future results of any investment in the Company.

Effect of Varying Terms of Classes of Units

Although we have no current intention to do so, we may issue Preferred Units pursuant to our operating agreement (the “LLC Agreement”). If we issue Preferred Units, there can be no assurance that such issuance would result in a higher yield or return to the holders of the Common Units. The issuance of Preferred Units would likely cause the net asset value of the Common Units to become more volatile. If the dividend rate on the Preferred Units were to approach the net rate of return on our investment portfolio, the benefit of leverage to the holders of the Common Units would be reduced. If the dividend rate on the Preferred Units were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders of the Common Units than if we had not issued Preferred Units. Any decline in the net asset value of our investments would be borne entirely by the holders of the Common Units. Therefore, if the fair value of our portfolio were to decline, the leverage would result in a greater decrease in net asset value to the holders of the Common Units than if we were not leveraged through the issuance of Preferred Units.

Obligations of Common Unitholders Relating to Credit Facilities

Under our current credit facility and any credit facility we may enter into in the future, we have granted, and may in the future grant, security over and may be required to transfer our right to drawdowns of capital from investors to our lenders or other creditors. Common Unitholders will be required to fund drawdowns up to the amount of their respective Undrawn Commitments if an event of default under our credit facility or any other borrowing agreement occurs in order to repay any indebtedness of the Company.

Consequences of Failure to Pay Commitment in Full

If a Member fails to pay any installment of its Commitment, other Members who have an outstanding Commitment may be required to fund their respective Commitments sooner than they otherwise would have absent such a default. In addition, if funding of Commitments by other Members and our borrowings are inadequate to cover defaulted Commitments, we may be unable to pay our obligations when due or be subjected to penalties or may otherwise suffer adverse consequences that could materially adversely affect the returns to the Members (including non-defaulting Members). If a Member defaults, there is no guarantee that we will recover the full amount of the defaulted Commitment, and such defaulting Member may lose all or a portion of its economic interest in us.

No Registration; Limited Transferability of Common Units

The Common Units are being offered without registration under the Securities Act or any other laws of applicable jurisdictions. All dispositions and transfers of the Common Units shall be made pursuant to an effective registration statement or in accordance with an exemption from registration contained in the Securities Act. Members will not be permitted to transfer their Common Units unless (i) we and, if required by our lending arrangements, our lenders give consent and (ii) the Transfer is made in accordance with applicable securities laws. Furthermore, the transferability of the Common Units may be subject to certain restrictions contained in the Subscription Agreement and the LLC Agreement and may be affected by restrictions on resale imposed under U.S. federal, U.S. state or another jurisdiction’s securities laws. A public market does not currently exist for the Units and one is not expected to develop. Withdrawal from an investment in the Common Units will not generally be permitted. In light of the restrictions imposed on any such transfer and in light of the limitations imposed on a Member’s ability to withdraw all or part of its investment in Common Units, an investment in the Common Units should be viewed as illiquid and subject to high risk.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

We maintain our principal executive office at 200 Clarendon Street, 51st Floor, Boston, MA 02116. We do not own any real estate.

ITEM 3.

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 4.

MINE SAFETY DISCLOSURES

None.

PART II

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

On September 19, 2014, the Company began accepting subscription agreements from investors for the private sale of its Common Units. The Company continued to enter into subscription agreements since that date through the final closing date of March 19, 2015. Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Members. The issuance of the Common Units pursuant to these subscription agreements and any draw by the Company under the related commitments is expected to be exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, and Rule 506(c) of Regulation D thereunder.

ITEM 6.

SELECTED FINANCIAL DATA

The table below sets forth our consolidated selected financial data for the years ended December 31, 2017, 2016 and 2015 and the period from May 13, 2014 (Inception) to December 31, 2014. The selected consolidated income statement, balance sheet and other data for the years ended December 31, 2017, 2016, 2015 and 2014 have been derived from our audited consolidated financial statements, which are included elsewhere in this Form 10-K and our SEC filings.

The selected financial information and other data presented below should be read in conjunction with the information contained in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the audited consolidated financial statements and the notes thereto included elsewhere in this annual report on Form 10-K:


	Year Ended December 31,									Inception to December 31,
	2017			2016			2015			2014
	($ in thousands, except unit data)
Statement of Operations Data
Income
Total investment income	$	151,429		$	111,425		$	31,421		$	1,463

Expenses
Net expenses		47,354			46,222			44,360			5,102

Net investment income (loss)		104,075			65,203			(12,939	)		(3,639	)
Net realized gain (loss) on non-controlled/non-affiliated investments		(88	)		519			2,350			129
Net realized gain distributions from controlled affiliated investments		1,432			—			—			—
Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments		(1,979	)		(17,114	)		(6,453	)		2,187
Net change in unrealized appreciation on controlled affiliated investments		876			13,193			6,075			—

Net increase (decrease) in Members’ Capital from operations	$	104,316		$	61,801		$	(10,967	)	$	(1,323	)

Income (Loss) per unit	$	5.17		$	3.07		$	(0.58	)	$	(0.16	)


	Year Ended December 31,
	2017			2016			2015			2014
	($ in thousands, except unit data)
Balance Sheet Data
Cash and cash equivalents	$	209,784		$	214,913		$	180,436		$	6,967
Non-controlled/non-affiliated investments		1,163,294			1,083,226			586,626			112,500
Controlled affiliated investments		259,698			247,164			206,635			—
Total assets		1,655,257			1,558,101			1,008,801			125,627
Total debt		378,000			590,000			329,000			55,000
Total liabilities		379,837			594,997			357,498			61,099
Total Members’ Capital		1,275,420			963,104			651,303			64,528

Net asset value per unit (accrual base), End of year/period	$	78.70		$	93.55		$	99.35		$	99.84

Other Data
Number of portfolio companies at year-end		26			23			11			2
Common Unitholder Total Return ⁽¹⁾		9.5	%		8.3	%		(3.3	)%		(2.0	)%
Weighted-average yield of debt and income producing securities ⁽²⁾		10.5	%		10.3	%		9.5	%		8.1	%
Fair value of debt investments as a percentage of principal		96.5	%		96.7	%		97.9	%		100. 0	%

(1)

Common Unitholder Total Return for the periods ended December 31, 2017, 2016, 2015 and 2014 was calculated by taking the net income/(loss) of the Company for the period divided by the weighted average contributions from the members during the period. The return is net of management fees and expenses.

(2)	Weighted average yield is calculated using the par outstanding and excludes income collected from borrowers on unfunded commitments

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

The information contained in this section should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page iii of this annual report.

Overview

We were formed on April 1, 2014 as a limited liability company under the laws of the State of Delaware. We have filed an election to be regulated as a BDC under the 1940 Act. We have also elected to be treated for U.S. federal income tax purposes as a RIC under the Code for the taxable year ending December 31, 2015 and subsequent years. We are required to continue to meet the minimum distribution and other requirements for RIC qualification. As such, we will be required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

Each investor was required to enter into a subscription agreement in connection with its Commitment (a “Subscription Agreement”). Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Common Unitholders. Investors have entered into subscription agreements for 20,134,698 Common Units of the Company issued and outstanding representing a total of $2.013 billion of committed capital.

On May 18, 2016, we established a wholly owned subsidiary, TCW-DL VF Holdings, Inc., as a Delaware entity to hold an equity investment in a portfolio company organized as a limited liability company.

Throughout 2017, the Company formed several Delaware limited liability companies, all of which have a single member interest owned by the Company.

Revenues

We generate revenues in the form of interest income and capital appreciation by providing private capital to middle market companies operating in a broad range of industries primarily in the United States. In general, we do not expect the Direct Lending Team to originate a significant amount of investments for us with payment-in-kind (“PIK”) interest features, although we may have investments with PIK interest features in limited circumstances. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, our investment bias will be towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

We are primarily focused on investing in senior secured debt obligations, although there may be occasions where the investment may be unsecured. We also consider an equity investment as the primary security, in combination with a debt obligation, or as a part of total return strategy. Our investments are in corporations, partnerships or other business entities. Additionally, in certain circumstances, we may co-invest with other investors and/or strategic partners through indirect investments in portfolio companies through a joint venture vehicle, partnership or other special purpose vehicle (each, an “Investment Vehicle”). While we invest primarily in U.S. companies, there may be certain instances where we will invest in companies domiciled elsewhere.

Expenses

We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided through the Administration Agreement and the Advisory Agreement.

We will bear (including by reimbursing the Adviser or Administrator) all costs and expenses of our operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of our counsel and accounting fees. However, we will not bear (a) more than an amount equal to 10 basis points of the aggregate Commitments for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments per annum (pro-rated for partial years) for our Operating Expenses, including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser and its affiliates. Notwithstanding the foregoing, the cap on Operating Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap described above), amounts payable in connection with our borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to our liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Adviser or the Administrator). All expenses that we will not bear will be borne by the Adviser or its affiliates.

Critical Accounting Policies and Estimates

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

In addition to the discussion below, our critical accounting policies are further described in Note 2 to the consolidated financial statements. We consider these accounting policies to be critical because they involve management judgments and assumptions, require estimates about matters that are inherently uncertain and are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The critical accounting policies should be read in connection with our risk factors as disclosed in “Item 1A. Risk Factors.”

Investments at Fair Value

Investments which we hold for which market quotes are not readily available or are not considered reliable are valued at fair value and approved by our Board of Directors based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified by us based on valuation inputs used to determine fair value into three levels.

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect our determination of assumptions that market participants might reasonably use in valuing the assets.

Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation levels are not necessarily an indication of the risk associated with investing in those securities.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Registered Investment Companies, (Level 1), include registered open-end investment companies that are valued based upon the reported net asset value of such investment.

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine fair value of investments in private debt for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Debt, (Level 3), include investments in privately originated senior secured debt. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A discounted cash flow approach incorporating a weighted average cost of capital is generally used to determine fair value or, in some cases, an enterprise value waterfall method. Valuation may also include a shadow rating method. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt, credit, industry, and market risk and events.

Equity, (Level 3), include common stock. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health, and relevant business developments of the issuer; EBITDA; market multiples of comparable companies; comparable market transactions and recent trades or transactions; issuer, industry and market events; and contractual or legal restrictions on the sale of the security. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Pricing inputs and weightings applied to determine value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized form sales or other dispositions of investments.

Net Asset Value (“NAV”) (Investment Funds and Vehicles): Equity investments in affiliated investment fund (TCW Strategic Ventures) are valued based on the net asset value reported by the investment fund. Investments held by the affiliated fund include debt investments in privately originated senior secured debt. Such investments held by the affiliated fund are valued using the same methods, approach and standards applied above to debt investments held by the Company. The Company’s ability to withdraw from the fund is subject to restrictions. The term of the fund will continue until June 5, 2021 unless dissolved earlier or extended for two additional one-year periods by the Company, in its full discretion. The Company can further extend the term of the fund for additional one-year periods, upon notice to and consent from the funds management committee. The Company is entitled to income and principal distributed by the fund.

Investment Activity

Based on fair value as of December 31, 2017, our non-controlled/non-affiliated portfolio consisted of 26 debt investments and three equity investments. Of these investments, 99.0% were debt investments which were primarily senior secured, first lien or term loans and 1.0% were equity comprised of common stock and warrants. Based on fair value as of December 31, 2016, our non-controlled/non-affiliated portfolio consisted of 23 debt investments and one equity investment. Of these investments, 99.2% were debt investments which were primarily senior secured, first lien or term loans and 0.8% was common stock.

The table below describes our non-controlled/non-affiliated investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in industries as of December 31, 2017:


Industry	Percent of Total Investments
Hotels, Restaurants & Leisure		12	%
Industrial Conglomerates		12	%
Food Products		11	%
Software		10	%
Metals & Mining		8	%
Technologies Hardware, Storage and Peripherals		6	%
Diversified Financial Services		5	%
Auto Components		5	%
Pharmaceuticals		5	%
Chemicals		4	%
Commercial Services & Supplies		4	%
Health Care Providers & Services		4	%
Textiles, Apparel & Luxury Goods		3	%
Distributors		3	%
Information Technology Services		2	%
Diversified Consumer Services		2	%
Household Durables		1	%
Construction & Engineering		1	%
Internet & Direct Marketing Retail		1	%
Diversified Telecommunication Services		1	%

Total		100	%

Interest income from non-controlled/non-affiliated investments, including interest income paid-in-kind, was $128.8 million, $96.0 million and $30.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Results of Operations

Our operating results for the years ended December 31, 2017, 2016 and 2015 were as follows (dollar amounts in thousands):


	Year Ended December 31,
	2017			2016			2015
Total investment income	$	151,429		$	111,425		$	31,421
Net expenses		47,354			46,222			44,360

Net investment income (loss)		104,075			65,203			(12,939	)
Net realized gain (loss) on non-controlled/non-affiliated investments		(88	)		519			2,350
Net realized gain distributions from controlled affiliated investments		1,432			—			—
Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments		(1,979	)		(17,114	)		(6,453	)
Net change in unrealized appreciation/depreciation on controlled affiliated investment		876			13,193			6,075

Net increase (decrease) in Members’ Capital from operations	$	104,316		$	61,801		$	(10,967	)

Total investment income

Total investment income for the years ended December 31, 2017, 2016 and 2015 was $151.4 million, $111.4 million and $31.4 million, respectively, and included interest income as well as interest income paid-in-kind from non-controlled/non-affiliated investments of $128.8 million, $96.0 million and $30.5 million, respectively, as well as dividend income of $22.6 million, $14.8 million and $0.9 million, respectively, from TCW Strategic Ventures, a controlled affiliated investment which commenced operations in 2015.

Net investment income (loss)

Our net investment income (loss) for the years ended December 31, 2017, 2016 and 2015 was $104.1 million, $65.2 million and ($12.9) million, respectively. The increase in net investment income for the years ended December 31, 2017 and 2016 was primarily attributable to current operations and the increase in the number of debt investments year over year, in addition to a greater number of debt investments which earned interest income for the entire year. The net investment loss for the year-ended December 31, 2015 was primarily attributable to management fees charged on commitments from the Initial Closing Date and interest and credit facility fees which exceeded investment income as we increased investment operations throughout 2015.

Operating expenses for the years ended December 31, 2017, 2016 and 2015 were as follows (dollar amounts in thousands):


	Year Ended December 31,
	2017			2016			2015
Expenses
Management fees	$	25,101		$	30,202		$	35,244
Interest and credit facility expenses		19,639			13,503			6,717
Professional fees		1,921			1,581			742
Administrative fees		1,258			1,104			684
Directors’ fees		298			290			289
Other expenses		404			377			372

Total expenses	$	48,621		$	47,057		$	44,048

Expenses recaptured/(reimbursed) by the Investment Adviser		(1,267	)		(835	)		312

Net expenses	$	47,354		$	46,222		$	44,360

Our total operating expenses were $48.6 million, $47.1 million and $44.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. Our operating expenses include management fees attributed to the Adviser of $25.1 million, $30.2 million and $35.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Management fees for the year ended December 31, 2015 included $5.0 million for the final placements of Common Units from the Initial Closing Date of September through those closings. Operating expenses in all categories increased during the year-ended December 31, 2017 versus the prior year as well as during the year-ended December 31, 2016 compared to the prior year primarily due to year over year increase in our investment portfolio. For the period ended December 31, 2016, professional fees included $0.2 million in fees associated with the formation of TCW Direct Lending Luxembourg.

Net expenses include an expense (reimbursement)/recapture of ($1.3) million, ($0.8) million and $0.3 million in the years ended December 31, 2017, 2016 and 2015, respectively. The expense reimbursement during the years ended December 31, 2017 and 2016 is due to the expense limitation on operating expenses as outlined in the Advisory Agreement. The expense recapture during the year ended December 31, 2015 offset the expense reimbursement by the Investment Adviser of $0.3 million in the period from Inception to December 31, 2014, related to the expense limitation on organization expenses as outlined in the Advisory Agreement.

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

Our net realized gain (loss) on non-controlled/non-affiliated investments for the years ended December 31, 2017, 2016 and 2015 were ($0.1) million, $0.5 million and $2.4 million, respectively. Our net realized loss on non-controlled/non-affiliated investments during the year-ended December 31, 2017 was primarily due to losses on our disposition of our term loan to Controladora Dolphin Discovery, S.A De C.V. Mexico of $1.4 million, offset by gains on Challenge Manufacturing Company, LLC of $0.4 million, Harvest Hill Beverage Company of $0.3 million, and Robertshaw US Holding Corp. of $0.2 million.

Our net realized gain on non-controlled/non-affiliated investments during the year-ended December 31, 2016 was primarily due to the realization of gains related to our first out term loan to Harvest Hill Beverage Company and our term loan to ASC Acquisition Holding.

Our net realized gain on non-controlled/non-affiliated investments during the year-ended December 31, 2015 was primarily related to the transfer of investments (see Investment Activity) to TCW Strategic Ventures and corresponding realization of origination fees from the investments transferred.

Net realized gain distributions from controlled affiliated investments

Our net realized gain distributions from controlled affiliated investments for the years ended December 31, 2017, 2016 and 2015 were $1.4 million, $0.0 million and $0.0 million, respectively. The net realized gain during the year ended December 31, 2017 reflects a distribution from TCW Strategic Ventures during the period from its net short- and long-term gains.

Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments

Our net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments for the years ended December 31, 2017, 2016 and 2015 were ($2.0) million, ($17.1) million and ($6.5) million, respectively. Our net change in unrealized appreciation/depreciation for the year ended December 31, 2017 was primarily due to our term loan to H-D Manufacturing Company which recorded net increases in fair value of $22.9 million, offset by fair value decreases of $14.1 million attributable to our term loan to Patriot National, Inc., $5.4 million to our term loan to Cedar Electronics Holdings, Corp., $2.2 million on our term loan to Frontier Spinning Mills, Inc., $2.7 million in prior period reversals of unrealized gains on various positions that we exited during the year ended December 31, 2017, as well as other mark to market adjustments during the year.

Our net change in unrealized appreciation/depreciation for the year ended December 31, 2016 was primarily due to our term loan to H-D Manufacturing Company which recorded net decreases in fair value of $23.9 million, partially offset by fair value increases in our term loan to OTG Management LLC of $1.8 million, as well as other mark to market adjustments resulting from market yield spreads during the year.

Our net change in unrealized appreciation/ depreciation for the year ended December 31, 2015 primarily related to a change to our method for valuing the investments. As of December 31, 2015, unless noted, we are utilizing the midpoint of a valuation range provided by an external, independent valuation firm and approved by the Board. The Board may approve a value other than the midpoint if it believes that is the fair value. Previously, we utilized a point within the range of values provided by an external, independent valuation firm based on qualitative and quantitative assessment of factors. This change to the midpoint was approved by our Board. This unrealized depreciation was partially offset by unrealized gains from investments originated in 2015.

Net change in unrealized appreciation/depreciation on controlled/affiliated investments

Our net change in unrealized appreciation/depreciation on controlled/affiliated investments were $0.9 million, $13.2 million and $6.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. The net change in unrealized appreciation/depreciation on controlled/affiliated investments during the years ended December 31, 2017, 2016 and 2015 primarily resulted from loans originated in 2017, 2016 and 2015, respectively, as well as undistributed profits from TCW Strategic Ventures. This appreciation was partially offset by depreciation driven by an adoption of a more quantitative approach to pricing, similar to the non-controlled/non-affiliated investments.

Net increase (decrease) in members’ capital from operations

Our net increase (decrease) in members’ capital from operations was $104.3 million, $61.8 million and ($11.0) million for the years ended December 31, 2017, 2016 and 2015, respectively. The increase during the year ended December 31, 2017 compared to prior year is primarily attributable to the increase in investment income and net realized and unrealized gain on investments, coupled with relatively flat operating expenses. The increase during the year ended December 31, 2016 reflects the increase in operations and loan originations through December 31, 2016, compared to the year ended December 31, 2015. The decrease in the year ended December 31, 2015 primarily relates to the commencement of investment operations and management fees charged on new commitments, as well as ongoing costs.

TCW Direct Lending Strategic Ventures LLC (“TCW Strategic Ventures”)

On June 5, 2015, the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P., entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Strategic Ventures. TCW Strategic Ventures will focus primarily on making senior secured floating rate loans to middle-market borrowers. The Agreement is effective June 5, 2015. The Company’s capital commitment is $481.6 million, representing approximately 80% of the preferred and common equity ownership of TCW Strategic Ventures, with the third-party investors representing the remaining capital commitments and preferred and common equity ownership. A portion of the Company’s capital commitment was satisfied by the contribution of two loans to TCW Strategic Ventures. TCW Strategic Ventures also entered into a revolving credit facility to finance a portion of certain eligible investments on June 5, 2015. The revolving credit facility is for up to $600 million. TCW Strategic Ventures is managed by a management committee comprised of two members, one appointed by the Company and one appointed by Oak Hill Advisors, L.P. All decisions of the management committee require unanimous approval of its members. Neither the Company, nor the Adviser will receive management fees from this entity. Although the Company owns more than 25% of the voting securities of TCW Strategic Ventures, the Company does not believe that it has control over TCW Strategic Ventures (other than for purposes of the 1940 Act). The Company’s ability to withdraw from the fund is subject to restrictions.

The Company’s investments in controlled affiliated investments for the years ended December 31, 2017 and 2016 were as follows (dollar amounts in thousands):


	Fair Value as of January 1, 2017		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of December 31, 2017		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	247,164	$	75,658	$	(64,000	)	$	876	$	259,698	$	22,618	$	1,432

Total Controlled Affiliates	$	247,164	$	75,658	$	(64,000	)	$	876	$	259,698	$	22,618	$	1,432


	Fair Value as of January 1, 2016		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of December 31, 2016		Dividend Income
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	206,635	$	104,337	$	(77,001	)	$	13,193	$	247,164	$	14,797

Total Controlled Affiliates	$	206,635	$	104,337	$	(77,001	)	$	13,193	$	247,164	$	14,797

During the years ended December 31, 2017 and 2016, we did not recognize any realized gains (losses) on controlled affiliated investments. During the years ended December 31, 2017 and 2016, we recognized $1.4 million and $0.0 million of net realized gain distributions from TCW Strategic Ventures. The net realized gain during the year ended December 31, 2017 reflects a distribution from TCW Strategic Ventures during the period from its net short- and long-term gains.

Financial Condition, Liquidity and Capital Resources

On March 19, 2015 we completed the final private placement of Common Units. We generate cash from (1) drawing down capital in respect of Common Units, (2) cash flows from investments and operations and (3) borrowings from banks or other lenders.

Our primary use of cash is for (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including expenses, management fees, incentive fees, and any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to the Common Unitholders.

As of December 31, 2017, 2016 and 2015, aggregate Commitments, Undrawn Commitments and subscribed for Units of the Company are as follows (dollar amounts in thousands):


	December 31,
	2017			2016			2015
Commitments	$	2,013,470		$	2,013,470		$	2,013,470
Undrawn commitments	$	309,125		$	920,589		$	1,349,024
Percentage of commitments funded		84.6	%		54.3	%		33.0	%
Units		20,134,698			20,134,698			20,134,698

Natixis Credit Agreement

We have a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750 million (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

On April 10, 2017, the Company and Natixis entered into a Third Amended and Restated Revolving Credit Agreement. Under the April 10, 2017 Credit Agreement borrowings bear interest at a rate equal to either the (a) adjusted eurodollar rate calculated in a customary manner plus 2.35%, (b) commercial paper rate plus 2.35%, or (c) a base rate calculated in a customary manner (using the higher of the Federal Funds Rate plus 0.50%, the Prime Rate and the Floating LIBOR Rate plus 1.00%) plus 1.35%. Moreover, the Credit Agreement’s stated maturity date was extended from November 10, 2017 to April 10, 2020. The Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Company fail to satisfy certain covenants. As of December 31, 2017, we were in compliance with such covenants.

As of December 31, 2017 and December 31, 2016, the amounts outstanding under the Credit Facility were $378 million and $590 million, respectively. The carrying amount of the amount outstanding under the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of September 30, 2017 and December 31, 2016, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and condition. We incurred financing costs of $10.1 million in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. These costs have been recorded as deferred financing costs on our Consolidated Statements of Assets and Liabilities and are being amortized over the life of the Credit Facility. As of December 31, 2017 and December 31, 2016, $8.7 million and $2.0 million, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the years ended December 31, 2017, 2016 and 2015 is as follows (dollar amounts in thousands):


	Year Ended December 31,
	2017			2016			2015
Borrowing interest expense	$	13,635		$	10,308		$	3,039
Unused fees		2,525			829			1,660
Administrative fees		68			75			75
Amortization of financing costs		3,411			2,291			1,943

Total	$	19,639		$	13,503		$	6,717

Weighted average interest rate		3.31	%		2.24	%		1.97	%
Average outstanding balance	$	411,569		$	459,691		$	154,751

Contractual Obligations

A summary of our contractual payment obligations as of December 31, 2017 and 2016 is as follows (dollar amounts in thousands):


Revolving Credit Agreement	Total Facility Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
Total Debt Obligations – December 31, 2017	$	750,000	$	378,000	$	349,000
Total Debt Obligations – December 31, 2016	$	750,000	$	590,000	$	32,000

(1)	The amount available considers any limitations related to the debt facility borrowing.

The Company had the following unfunded commitments and unrealized gains/(losses) as of December 31, 2017 and 2016 by investment (dollar amounts in thousands):


			December 31,
			2017					2016
Unfunded Commitments	Maturity/ Expiration		Amount		Unrealized (Losses)⁽¹⁾			Amount		Unrealized Gains (Losses)
ASC Acquisition Holdings LLC		December 2018	$	11,207	$	(326	)	$	13,076	$	(26	)
ENA Holdings Corporation		May 2021		4,804		(19	)		4,804		5
FQSR, LLC		December 2018		2,415		(17	)		N/A		N/A
Help At Home, Inc.		August 2020		6,757		—			6,757		61
OTG Management LLC		February 2018		3,005		(30	)		10,291		62
Patriot National, Inc.		November 2021		N/A		N/A			6,429		58
Quantum Corporation		November 2017		N/A		N/A			16,371		180
Quicken Parent Corp.		April 2021		518		(15	)		1,725		22
Ruby Tuesday, Inc.		December 2022		4,575		(41	)		N/A		N/A
School Specialty, Inc.,		April 2019		6,450		(19	)		N/A		N/A
Mavenir Private Holdings II Ltd. (UK) (an affiliate of Mavenir, Inc.,)		August 2022		N/A		N/A			2,014		6
Mavenir, Inc., (fka Xura, Inc.)		August 2022		N/A		N/A			3,020		9
Vertellus Performance Chemicals LLC		September 2019		4,218		(63	)		N/A		N/A

Total			$	43,949	$	(530	)	$	64,487	$	377

(1)	As of January 1, 2017, the Company changed its valuation policy to cap fair values of unfunded commitments at par, thereby eliminating unrealized gains on unfunded commitments.

The Company’s total capital commitment to its underlying investment in TCW Direct Lending Strategic Ventures LLC is $481.6 million. As of December 31, 2017 and December 31, 2016, the Company’s unfunded commitment to TCW Strategic Ventures was $241.2 million and $252.9 million, respectively.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. At December 31, 2017, 100.0% of our debt investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. At December 31, 2017, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 0.0%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We assess our portfolio companies periodically to determine whether such companies will be able to continue making interest payments in the event that interest rates increase. There can be no assurances that the portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.

Based on our December 31, 2017 consolidated statement of assets and liabilities, the following table shows the annual impact on net income (excluding the related incentive compensation impact) of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure (dollar amounts in thousands):


Basis Point Change	Interest Income			Interest Expense			Net Income
Up 300 basis points	$	41,872		$	11,498		$	30,374
Up 200 basis points		27,915			7,665			20,250
Up 100 basis points		13,957			3,833			10,124
Down 100 basis points		(1,130	)		(3,986	)		2,856
Down 200+ basis points		(0	)		(6,132	)		6,132

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

See the audited financial statements set forth herein commencing on page F-1 of this annual report on Form 10-K.

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

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective, at a reasonable assurance level, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2017, based upon the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of December 31, 2017, we maintained in all material respects, effective internal control over financial reporting. Pursuant to rules established by the SEC, this annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

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

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item has been omitted and will be incorporated herein by reference, when filed, to our Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2017.

ITEM 11.

EXECUTIVE COMPENSATION

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

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

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a) List separately all financial statements filed

The financial statements included in this Annual Report on Form 10-K are listed on page F-1 and commence on page F-3.

(b) The following exhibits are filed as part of this report or incorporated herein by reference to exhibits previously filed with the SEC.


Exhibits

3.1		Certificate of Formation (incorporated by reference to Exhibit 3.1 to a registration on Form 10 filed on April 18, 2014)

3.4		Second Amended and Restated Limited Liability Company Agreement, dated September 19, 2014 (incorporated by reference to Exhibit 3.4 to a filing on Form 10-Q filed on November 7, 2014)

10.1		Investment Advisory and Management Agreement (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on September 25, 2014).

10.2		Administration Agreement dated September 15, 2014, by and between TCW Direct Lending LLC and TCW Asset Management Company (incorporated by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q filed on November 7, 2014).

10.4		Revolving Credit Agreement, dated as of November 12, 2014, among TCW Direct Lending LLC, as borrower, and Natixis, New York Branch, as Administrative Agent and Committed Lender (incorporated by reference to Exhibit 10.9 to the registrant’s Current Report on Form 8-K filed on November 18, 2014).

10.5		Amended and Restated Revolving Credit Agreement, dated as of December 22, 2014, by and among TCW Direct Lending LLC, as borrower, Natixis, New York Branch, as administrative agent, sole lead arranger and sole book manager, and lenders party thereto (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on December 23, 2014).

10.6		Final form of the TCW Direct Lending Strategic Ventures LLC Amended and Restated Limited Liability Company Agreement, dated June 5, 2015 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 10, 2015).

10.7		Second Amended and Restated Revolving Credit Agreement, dated as of July 1, 2015, by and among TCW Direct Lending LLC, as borrower, Natixis, New York Branch, as administrative agent, sole lead arranger and sole book manager, and lenders party thereto (incorporated by reference to Exhibit 10.7 to the registrant’s Annual Report on Form 10-K filed on March 30, 2016).

10.8		Third Amended and Restated Revolving Credit Agreement, dated April 10, 2017, by and among TCW Direct Lending LLC, as borrower, Natixis, New York Branch, as administrative agent, sole lead arranger and sole book manager, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 14, 2017).

21.1*		Subsidiaries of the Registrant

31.1*		Certification of President Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2*		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1*		Certification of President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

32.2*		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

99.1*		Financial Statements of TCW Direct Lending Strategic Ventures LLC for the fiscal year ended to December 31, 2017.

*	Filed herewith

ITEM 16.

Form 10-K Summary

None.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TCW DIRECT LENDING LLC

Date: March 22, 2018	By:	/s/ Richard T. Miller
		Richard T. Miller
		President and Director
		(Principal Executive Officer)

Date: March 22, 2018	By:	/s/ Jess M. Ravich
		Jess M. Ravich
		Chairman of the Board and Director

Date: March 22, 2018	By:	/s/ David R. Adler
		David R. Adler
		Director

Date: March 22, 2018	By:	/s/ William Cobb
		William Cobb
		Director

Date: March 22, 2018	By:	/s/ Donald M. Mykrantz
		Donald M. Mykrantz
		Director

Date: March 22, 2018	By:	/s/ James G. Krause
		James G. Krause
		Chief Financial Officer
		(Principal Financial Officer)

TCW Direct Lending LLC

Index to Consolidated Financial Statements


Report of Independent Registered Public Accounting Firm			F-2

Consolidated Schedule of Investments as of December 31, 2017 and 2016			F-3

Consolidated Statements of Assets and Liabilities as of December 31, 2017 and 2016			F-12

Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 2015			F-13

Consolidated Statements of Changes in Members’ Capital for the Years Ended December 31, 2017, 2016 and 2015			F-14

Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015			F-15

Notes to Consolidated Financial Statements			F-16

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Unitholders and the Board of Directors of TCW Direct Lending LLC

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of TCW Direct Lending LLC (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, changes in members’ capital, and cash flows for each of the three years in the period ended December 31, 2017, the financial highlights for the years ended December 31, 2017, 2016 and 2015, and for the period from May 13, 2014 (Inception) to December 31, 2014, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations, changes in members’ capital and cash flows for each of the three years in the period ended December 31, 2017, and the financial highlights for the years ended December 31, 2017, 2016 and 2015, and for the period from May 13, 2014 (Inception) to December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2017 and 2016, by correspondence with the custodian, loan agents, and borrowers; when replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Los Angeles, California

March 22, 2018

We have served as the Company’s auditor since 2014.

F-2

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments

As of December 31, 2017


Industry	Issuer	Acquisition Date	Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments Debt
Auto Components
	Challenge Manufacturing Company LLC	04/20/17	Term Loan - 8.57% (LIBOR + 7.00%, 1.00% Floor)		4.3%	$	54,824,000		04/20/22	$	53,763,399	$	55,372,240

					4.3%		54,824,000				53,763,399		55,372,240

Chemicals
	Vertellus Performance Chemicals LLC(1)	09/22/17	First Lien Term Loan - 8.32% (LIBOR + 6.75%, 1.25% Floor)		3.3%		42,076,364		09/22/22		41,132,324		41,655,600

					3.3%		42,076,364				41,132,324		41,655,600

Commercial Services & Supplies
	School Specialty, Inc.(1)	04/07/17	Delayed Draw Term Loan - 7.81% (LIBOR + 6.25%, 1.00% Floor)		0.5%		5,643,846		04/07/22		5,643,846		5,677,709
	School Specialty, Inc.	04/07/17	Term Loan - 7.71% (LIBOR + 6.25%, 1.00% Floor)		3.4%		43,513,046		04/07/22		42,636,070		43,774,125

					3.9%		49,156,892				48,279,916		49,451,834

Construction & Engineering
	Intren, LLC	07/18/17	Term Loan - 8.11% (LIBOR + 6.75%, 1.25% Floor)		1.2%		15,943,681		07/18/23		15,649,247		15,561,033

					1.2%		15,943,681				15,649,247		15,561,033

Distributors
	ASC Acquisition Holdings, LLC(1)	12/16/16	First Lien Term Loan - 8.89% (LIBOR + 7.50%, 1.00% Floor)		2.4%		31,942,266		12/15/21		31,436,772		31,015,940

					2.4%		31,942,266				31,436,772		31,015,940

Diversified Consumer Services
	Pre-Paid Legal Services, Inc.	05/21/15	First Lien Term Loan - 6.82% (LIBOR + 5.25%, 1.25% Floor)		1.4%		17,166,352		07/01/19		17,139,337		17,166,352

					1.4%		17,166,352				17,139,337		17,166,352

Diversified Financial Services
	Patriot National, Inc.	11/09/16	First Lien Term Loan - 12.00% inc PIK (PRIME + 5.50%, 3.00% Floor, 2.00% PIK)		0.1%		913,180		11/09/21		913,180		644,705
	Patriot National, Inc.	11/09/16	First Lien Term Loan - 12.00% inc PIK (PRIME + 5.50%, 3.00% Floor, 2.00% PIK)		2.5%		45,796,009		11/09/21		45,512,536		32,331,983

					2.6%		46,709,189				46,425,716		32,976,688

	Verus Financial, LLC	04/11/16	First Lien Term Loan - 8.95% (LIBOR + 7.25%, 0.75% Floor)		1.3%		16,734,375		04/12/21		16,515,332		16,684,172

					3.9%		63,443,564				62,941,048		49,660,860

F-3

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (continued)

As of December 31, 2017


Industry	Issuer	Acquisition Date	Investment	% of Net Assets		Par Amount		Maturity Date	Amortized Cost		Fair Value
Diversified Telecommunication Services
	Alaska Communications Systems Holdings, Inc.	03/28/17	First Lien Term Loan - 8.57% (LIBOR + 7.00%, 1.00% Floor)		1.1%	$	13,765,500	03/13/23	$	13,555,491	$	13,627,845

					1.1%		13,765,500			13,555,491		13,627,845

Food Products
	Bumble Bee Holdings, Inc.	08/15/17	Term Loan B1 - 9.44% (LIBOR + 8.00%, 1.00% Floor)		2.6%		33,246,972	08/15/23		32,621,648		32,881,255
	Connors Bros. Clover Leaf Seafoods Company (Canada) (an affiliate of Bumble Bee Holdings, Inc.)(2)	08/15/17	Term Loan B2 - 9.44% (LIBOR + 8.00%, 1.00% Floor)		0.7%		9,419,428	08/15/23		9,242,264		9,315,814
	Harvest Hill Beverage Company	01/20/16	First Out Term Loan - 8.07% (LIBOR + 6.50%, 1.00% Floor)		6.6%		84,157,361	01/19/21		83,387,224		83,820,732

					9.9%		126,823,761			125,251,136		126,017,801

Health Care Providers & Services
	Help at Home, LLC(1)(3)	08/03/15	Term Loan B - 8.84% (LIBOR + 7.50%, 1.25% Floor)		3.7%		46,554,054	08/03/20		46,184,725		46,786,824

					3.7%		46,554,054			46,184,725		46,786,824

Hotels, Restaurants & Leisure
	FQSR, LLC(1)	03/23/17	Delayed Draw Term Loan - 7.95% (LIBOR + 6.25%, 1.00% Floor)		1.0%		13,662,000	03/24/22		13,662,000		13,634,676
	FQSR, LLC	03/23/17	Term Loan - 7.95% (LIBOR + 6.25%, 1.00% Floor)		0.5%		6,848,250	03/24/22		6,460,623		6,834,553

					1.5%		20,510,250			20,122,623		20,469,229

	OTG Management, LLC(1)	06/30/16	Delayed Draw Term Loan - 9.98% (LIBOR + 8.50%, 1.00% Floor)		0.6%		7,286,419	08/26/21		7,286,419		7,279,132
	OTG Management, LLC	06/30/16	First Lien Term Loan - 9.88% (LIBOR + 8.50%, 1.00% Floor)		5.9%		75,012,754	08/26/21		73,917,551		74,937,741

					6.5%		82,299,173			81,203,970		82,216,873

	Ruby Tuesday, Inc.(1)	12/21/17	Term Loan - 11.64% inc PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		3.2%		42,090,000	12/21/22		39,790,887		40,574,760

					11.2%		144,899,423			141,117,480		143,260,862

Household Durables
	Cedar Electronics Holdings, Corp.(3)	07/01/15	Senior Term Loan - 10.67% inc PIK (LIBOR + 6.00%, 0.50% Floor, 3.00% PIK)		1.3%		23,103,293	06/26/20		22,839,243		17,119,540

					1.3%		23,103,293			22,839,243		17,119,540

Industrial Conglomerates
	H-D Advanced Manufacturing Company	06/30/15	First Lien First Out Term Loan - 12.19% inc PIK (LIBOR + 7.00%, 1.00% Floor, 3.50% PIK)		2.4%		31,019,030	06/30/20		30,788,816		30,491,706

F-4

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (continued)

As of December 31, 2017


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Industrial Conglomerates (con’t)
	H-D Advanced Manufacturing Company(3)		06/30/15	First Lien Last Out Term Loan - 12.19% inc PIK (LIBOR + 7.00%, 1.00% Floor, 3.50% PIK)		8.5%	$	114,839,275		06/30/20	$	114,049,255	$	108,752,793

						10.9%		145,858,305				144,838,071		139,244,499

Information Technology Services
	ENA Holding Corporation(1)		05/06/16	First Lien Term Loan - 8.69% (LIBOR + 7.00%, 1.00% Floor)		2.2%		28,205,599		05/06/21		27,880,298		28,205,599

						2.2%		28,205,599				27,880,298		28,205,599

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC		08/28/17	First Lien Term Loan - 8.57% (LIBOR + 7.00%, 1.00% Floor)		1.2%		14,510,234		08/28/22		14,103,199		14,785,929

						1.2%		14,510,234				14,103,199		14,785,929

Metals & Mining
	Pace Industries, Inc.		06/30/15	First Lien Term Loan - 12.09% inc PIK (LIBOR + 8.25%, 1.00% Floor, 2.50% PIK)		6.9%		89,797,392		06/30/20		89,142,751		88,181,039

						6.9%		89,797,392				89,142,751		88,181,039

Pharmaceuticals
	Noramco, LLC(3)		07/01/16	Senior Term Loan - 9.72% inc PIK (LIBOR + 8.00%, 1.00% Floor, 0.38% PIK)		4.1%		53,784,989		07/01/21		53,355,500		52,655,505

						4.1%		53,784,989				53,355,500		52,655,505

Software
	Mavenir Private Holdings II Ltd. (UK) (an affiliate of Mavenir, Inc.)(2)		08/19/16	First Lien Term Loan - 11.89% inc PIK (LIBOR + 9.50%, 1.00% Floor, 1.00% PIK)		2.0%		25,974,225		08/19/22		25,974,225		25,792,405
	Mavenir, Inc. (fka Xura, Inc.)		08/19/16	First Lien Term Loan - 11.89% inc PIK (LIBOR + 9.50%, 1.00% Floor, 1.00% PIK)		5.3%		67,431,025		08/19/22		65,909,677		66,959,008
	Quicken Parent Corp.		04/01/16	First Lien Term Loan - 10.35% inc PIK (LIBOR + 8.50%, 1.00% Floor, 0.50% PIK)		1.8%		23,267,580		04/01/21		23,147,248		22,592,820
	Quicken Parent Corp.(1)		04/01/16	Revolver - 10.18% (LIBOR + 8.50%, 1.00% Floor)		0.0%		345,000		04/01/21		345,000		331,890

						1.8%		23,612,580				23,492,248		22,924,710

						9.1%		117,017,830				115,376,150		115,676,123

Technologies Hardware, Storage and Peripherals
	Quantum Corporation		10/21/16	Delayed Draw Term Loan - 9.65% (LIBOR + 8.25%, 1.00% Floor)		1.3%		16,371,429		10/21/21		16,174,444		16,093,114
	Quantum Corporation		10/21/16	Incremental Delayed Draw Term Loan - 9.65% (LIBOR + 8.25%, 1.00% Floor)		1.3%		16,371,429		06/30/20		15,038,649		16,174,972

F-5

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (continued)

As of December 31, 2017


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
Technologies Hardware, Storage and Peripherals (con’t)
	Quantum Corporation		10/21/16	Term Loan - 9.62% (LIBOR + 8.25%, 1.00% Floor)		3.1	%	$	40,928,571		10/21/21	$	40,256,156	$	40,314,643

						5.7	%		73,671,429				71,469,249		72,582,729

Textiles, Apparel & Luxury Goods
	Differential Brands Group, Inc.		01/28/16	Term Loan - 12.20% (LIBOR + 10.50%, 0.50% Floor)		2.0	%		27,695,500		01/28/21		27,397,588		25,479,860
	Frontier Spinning Mills, Inc.(3)		05/19/15	Last Out Term Loan B - 9.57% (LIBOR + 8.25%, 1.00% Floor)		0.6	%		13,004,548		04/30/20		12,944,409		8,023,806

						2.6	%		40,700,048				40,341,997		33,503,666

	Total Debt Investments					90.3	%						1,175,797,333		1,151,531,820


								Shares
	Equity
Diversified Financial Services
	Verus Financial, LLC(4)		05/20/16	Common Stock		0.7	%		8,750				7,779,536		9,194,318
Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.)		12/21/17	Warrant, expires 12/21/27		0.1	%		1,470,632				1,379,747		1,345,231
Technologies Hardware, Storage and Peripherals
	Quantum Corporation		12/18/17	Common Stock		0.1	%		161,784				871,974		910,844
	Quantum Corporation		12/14/17	Warrant, expires 12/14/22		0.0	%		108,052				294,237		311,476

	Total Equity Investments					0.9	%						10,325,494		11,761,869

	Total Non-Controlled/Non-Affiliated Investments^*					91.2	%						1,186,122,827		1,163,293,689


												Cost
	Controlled/Affiliated Investments
Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(2)(5)			Preferred membership interests		20.4	%		239,554			$	239,553,673	$	259,698,273
				Common membership interests		0.0	%		800				—		—

	Total Controlled/Affiliated Investments					20.4	%					$	239,553,673	$	259,698,273

	Cash Equivalents
	Blackrock Liquidity Funds, Yield 1.00%					0.0	%		4,556			$	4,556	$	4,556

F-6

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (continued)

As of December 31, 2017

Total Investments 111.6%

1,425,681,056

1,422,996,518

Net unrealized depreciation on unfunded
commitments ((0.0%))

(530,006

)

Liabilities in Excess of Other Assets (11.6%)

(147,046,261

)

Net Assets 100.0%

1,275,420,251

The fair value of the Quantum Corporation Common Stock held by the Company represents the quoted market price as of December 31, 2017 and is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of the remaining non-controlled/non-affiliated investments were determined using significant unobservable inputs and are considered to be Level 3 investments within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

(1)

Excluded from the investment above is an unfunded loan commitment for a delayed draw term loan or revolving credit. The Company earns an unused fee on the unfunded commitment during the commitment period. The expiration date of the commitment period may be earlier then the maturity date of the investment stated above. See Note 5 - Commitments and Contingencies.

(2)

The investment is not a qualifying asset as defined in Section 55(a) under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2017, $295,442,306 or 17.9% of the Company’s total assets were represented by “non-qualifying assets.”

(3)

In addition to the interest earned based on the stated interest rate of this loan, the Company is entitled to receive an additional interest amount on the “first out” tranche of the portfolio company’s first lien senior secured loans.

(4)

Holdings of Verus Financial, LLC common stock are through Verus Holdings LLC, a special purpose vehicle

(5)

As defined in the Investment Company Act of 1940, the investment is deemed to be a “controlled affiliated person” of the Company because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company.

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

PRIME - Prime Rate


Country Breakdown of Portfolio
United States		97.5%
United Kingdom		1.8%
Canada		0.7%

See Notes to Consolidated Financial Statements

F-7

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments

As of December 31, 2016


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date	Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments Debt
Chemicals
	GSE Environmental, Inc.		09/26/16	First Lien Term Loan - 11.00% (LIBOR + 10.00%, 1.00% Floor)		1.3%	$	12,106,276	08/11/21	$	12,106,276	$	12,227,339

						1.3%		12,106,276			12,106,276		12,227,339

Computers & Peripherals
	Quantum Corporation(1)		10/21/16	Term Loan - 8.50% (LIBOR + 7.50%, 1.00% Floor)		4.3%		40,928,571	10/21/21		40,093,378		41,378,786

						4.3%		40,928,571			40,093,378		41,378,786

Distributors
	ASC Acquisition Holdings, LLC(2)		12/16/16	Term Loan - 8.50% (LIBOR + 7.50%, 1.00% Floor)		4.1%		39,227,344	12/15/21		38,449,671		39,148,889

						4.1%		39,227,344			38,449,671		39,148,889

Diversified Consumer Services
	Pre-Paid Legal Services, Inc.		05/21/15	First Lien Term Loan - 6.50% (LIBOR + 5.25%, 1.25% Floor)		1.9%		18,667,515	07/01/19		18,618,087		18,760,853

						1.9%		18,667,515			18,618,087		18,760,853

Diversified Financial Services
	Patriot National, Inc.(3)		11/09/16	Term Loan - 8.25% (LIBOR + 7.25%, 1.00% Floor)		5.6%		53,571,429	11/09/21		53,137,809		54,053,572
	Verus Financial, LLC		04/12/16	First Lien Term Loan - 8.13% (LIBOR + 7.25%, 0.75% Floor)		1.8%		17,171,875	04/12/21		16,878,420		17,257,734

						7.4%		70,743,304			70,016,229		71,311,306

Food Products
	AmeriQual Group, LLC		03/31/16	First Lien Term Loan - 8.63% (LIBOR + 7.75%, 0.75% Floor)		1.4%		13,686,575	01/20/21		13,513,544		13,755,008
	Harvest Hill Beverage Company		01/20/16	First Lien, First Out Term Loan - 5.00% (LIBOR + 4.00%, 1.00% Floor)		1.4%		13,785,149	01/19/21		13,617,666		13,674,867
	Harvest Hill Beverage Company(4)		01/20/16	First Lien, Last Out Term Loan - 7.25% (LIBOR + 6.25%, 1.00% Floor)		10.8%		103,961,373	01/19/21		102,698,294		103,961,373

						12.2%		117,746,522			116,315,960		117,636,240

						13.6%		131,433,097			129,829,504		131,391,248

Health Care Providers & Services
	Help at Home, LLC(4)(5)		08/03/15	Term Loan B - 8.75% (LIBOR + 7.50%, 1.25% Floor)		4.5%		42,837,838	08/03/20		42,442,790		43,223,378

						4.5%		42,837,838			42,442,790		43,223,378

F-8

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (continued)

As of December 31, 2016


Industry	Issuer		Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Hotels, Restaurants & Leisure
		Controladora Dolphin Discovery, S.A De C.V. Mexico(6)		10/09/15	Senior Secured Notes - 11.00% (LIBOR + 10.00%, 1.00% Floor)		4.1%	$	39,572,542		10/09/20	$	38,977,211	$	39,414,252
		OTG Management, LLC(7)		06/30/16	First Lien Term Loan - 9.50% (LIBOR + 8.50%, 1.00% Floor)		7.8%		75,012,754		08/26/21		73,617,664		75,462,830

							11.9%		114,585,296				112,594,875		114,877,082

Household Durables
		Cedar Electronics Holdings, Corp.(4)		07/01/15	Senior Term Loan - 6.94% (LIBOR + 6.00%, 0.50% Floor)		2.2%		21,427,500		06/26/20		21,076,157		20,784,675
		Robertshaw US Holding Corp.		06/15/16	Term Loan B - 8.50% (LIBOR + 7.00%, 1.50% Floor)		6.4%		62,523,495		06/18/19		62,196,483		61,773,213
		Robertshaw US Holding Corp.		06/15/16	Term Loan C - 8.50% (LIBOR + 7.00%, 1.50% Floor)		0.5%		4,750,013		06/18/19		4,750,013		4,693,013
		Robertshaw US Holding Corp.		08/29/16	Term Loan D - 8.50% (LIBOR + 7.00%, 1.50% Floor)		1.0%		9,831,637		06/18/19		9,723,758		9,713,657

							7.9%		77,105,145				76,670,254		76,179,883

							10.1%		98,532,645				97,746,411		96,964,558

Industrial Conglomerates
		H-D Advanced Manufacturing Company		06/30/15	First Lien First Out Term Loan -5.50% inc PIK (LIBOR + 4.50%, 1.00% Floor, 0.50% PIK)		3.2%		32,914,262		06/30/20		32,570,243		30,346,950
		H-D Advanced Manufacturing Company(4)		06/30/15	First Lien Last Out Term Loan -13.80% inc PIK (LIBOR + 7.00%, 1.00% Floor, 5.80% PIK)		8.4%		110,785,456		06/30/20		109,043,607		80,873,383

							11.6%		143,699,718				141,613,850		111,220,333

Information Technology Services
		ENA Holding Corporation(8)		05/06/16	First Lien Term Loan - 8.00% (LIBOR + 7.00%, 1.00% Floor)		3.3%		31,628,680		05/06/21		31,154,835		31,660,309

							3.3%		31,628,680				31,154,835		31,660,309

Metals & Mining
		Pace Industries, Inc.		06/30/15	Senior Secured Notes - 9.25% (LIBOR + 8.25%, 1.00% Floor)		9.0%		88,875,000		06/30/20		87,943,929		86,742,000

							9.0%		88,875,000				87,943,929		86,742,000

Pharmaceuticals
		Noramco, LLC(4)		07/01/16	Senior Term Loan - 9.00% (LIBOR + 8.00%, 1.00% Floor)		6.4%		61,177,080		07/01/21		60,751,282		61,972,382

							6.4%		61,177,080				60,751,282		61,972,382

Road & Rail
		Total Military Management, Inc.(4)		04/14/15	Second Out Term Loan - 7.75% (LIBOR + 6.75%, 1.00% Floor)		8.4%		81,523,810		10/14/20		80,216,095		81,279,238

							8.4%		81,523,810				80,216,095		81,279,238

F-9

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2016


Industry	Issuer	Acquisition Date		Investment	% of Net Assets		Par Amount		Maturity Date		Amortized Cost		Fair Value
Software
	Quicken Parent Corp.(9)		04/01/16	First Lien Term Loan - 9.50% (LIBOR + 8.50%, 1.00% Floor)		2.6%	$	24,710,625		04/01/21	$	24,542,712	$	25,031,863
	Sierra Private Holdings II Ltd.(6)(10)		08/19/16	UK Term Loan - 9.50% (LIBOR + 8.50%, 1.00% Floor)		2.9%		27,477,510		08/19/22		26,785,778		27,559,943
	Xura, Inc. - US(6)(11)		08/19/16	First Lien Term Loan - 9.50% (LIBOR + 8.50%, 1.00% Floor)		4.3%		41,216,265		08/19/22		40,178,666		41,339,914

						9.8%		93,404,400				91,507,156		93,931,720

Textiles, Apparel & Luxury Goods
	Differential Brands Group, Inc.		01/28/16	Term Loan - 10.00% (LIBOR + 9.00%, 0.50% Floor)		2.9%		28,413,000		01/28/21		28,008,033		27,702,675
	Frontier Spinning Mills, Inc.(4)		05/19/15	Last Out Term Loan B - 9.25% (LIBOR + 8.25%, 1.00% Floor)		1.1%		13,611,553		04/30/20		13,522,149		10,807,573

						4.0%		42,024,553				41,530,182		38,510,248

	Total Debt Investments					111.6%						1,096,614,550		1,074,599,669


							Shares				Cost
	Equity
	Verus Financial, LLC(12)		05/20/16	Common Stock		0.9%		8,750				8,368,247		8,626,399

	Total Non-Controlled/Non-Affiliated Investments*					112.5%					$	1,104,982,797	$	1,083,226,068


	Controlled/Affiliated Investments
Investment Funds &Vehicles
	TCW Direct Lending Strategic Ventures LLC(6)(13)		06/05/15	Preferred membership interests		25.7%		227,896			$	227,895,573	$	247,164,240
				Common membership interests		0.0%		800				—		—

	Total Controlled/Affiliated Investments					25.7%					$	227,895,573	$	247,164,240

	Cash Equivalents
	Blackrock Liquidity Funds, Yield 1.00%					20.4%		197,000,436			$	197,000,436	$	197,000,436

	Total Investments 158.6%										$	1,529,878,806	$	1,527,390,744

	Net unrealized appreciation on unfunded commitments (0.0%)												$	376,683

	Liabilities in Excess of Other Assets (58.6%)												$	(564,663,883	)

	Net Assets 100.0%												$	963,103,544

F-10

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (continued)

As of December 31, 2016

The fair value of each non-controlled/non-affiliated investment was determined using significant unobservable inputs and is considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

(1)

Excluded from the investment total above is an unfunded delayed draw term loan commitment in an amount not to exceed $16,371,429, at an interest rate of LIBOR plus 7.50%, with a LIBOR Floor of 1.00%, and a maturity of October 11, 2021. This investment is accruing an unused commitment fee of 0.50% per annum. The change in unrealized appreciation (depreciation) on this commitment is $180,086 as of December 31, 2016.

(2)

Excluded from the investment total above is an unfunded delayed draw term loan commitment in an amount not to exceed $13,075,781, at an interest rate of LIBOR plus 7.50%, with a LIBOR Floor of 1.00%, and a maturity of December 15, 2021. This investment is accruing an unused commitment fee of 0.38% per annum. The change in unrealized appreciation (depreciation) on this commitment is $(26,152) as of December 31, 2016.

(3)

Excluded from the investment total above is an unfunded revolving credit facility commitment in an amount not to exceed $6,428,571, at an interest rate of LIBOR plus 7.25%, with a LIBOR Floor of 1.00%, and a maturity of November 09, 2021. This investment is accruing an unused commitment fee of 0.50% per annum. The change in unrealized appreciation (depreciation) on this commitment is $57,857 as of December 31, 2016.

(4)

(5)

Excluded from the investment total above is an unfunded revolving credit facility commitment in an amount not to exceed $6,756,757, at an interest rate of LIBOR plus 7.50%, with a LIBOR Floor of 1.25%, and a maturity of August 03, 2020. This investment is accruing an unused commitment fee of 0.50% per annum. The change in unrealized appreciation (depreciation) on this commitment is $89,054 as of December 31, 2016.

(6)

The investment is not a qualifying asset as defined in Section 55(a) under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2016, $356,250,096 or 22.9% of the Company’s total assets were represented by “non-qualifying assets.”

(7)

Excluded from the investment total above is an unfunded delayed draw term loan commitment in an amount not to exceed $10,291,552, at an interest rate of LIBOR plus 8.50%, with a LIBOR Floor of 1.00%, and a maturity of August 26, 2021. This investment is accruing an unused commitment fee of 1.00% per annum. The change in unrealized appreciation (depreciation) on this commitment is $61,749 as of December 31, 2016.

(8)

Excluded from the investment total above is an unfunded revolving credit facility commitment in an amount not to exceed $4,804,290, at an interest rate of LIBOR plus 7.00%, with a LIBOR Floor of 1.00%, and a maturity of May 06, 2021. This investment is accruing an unused commitment fee of 0.50% per annum. The change in unrealized appreciation (depreciation) on this commitment is $4,804 as of December 31, 2016.

(9)

Excluded from the investment total above is an unfunded revolving credit facility commitment in an amount not to exceed $1,725,000, at an interest rate of LIBOR plus 8.5%, with a LIBOR Floor of 1.00%, and a maturity of April 01, 2021. This investment is accruing an unused commitment fee of 1.00% per annum. The change in unrealized appreciation (depreciation) on this commitment is $22,425 as of December 31, 2016.

(10)

Excluded from the investment total above is an unfunded revolving credit facility commitment in an amount not to exceed $2,013,624, at an interest rate of LIBOR plus 8.5%, with a LIBOR Floor of 1.00%, and a maturity of August 19, 2022. This investment is accruing an unused commitment fee of 0.50% per annum. The change in unrealized appreciation (depreciation) on this commitment is $6,041 as of December 31, 2016.

(11)

Excluded from the investment total above is an unfunded revolving credit facility commitment in an amount not to exceed $3,020,436, at an interest rate of LIBOR plus 8.5%, with a LIBOR Floor of 1.00%, and a maturity of August 19, 2022. This investment is accruing an unused commitment fee of 0.50% per annum. The change in unrealized appreciation (depreciation) on this commitment is $9,061 as of December 31, 2016.

(12)

Holdings of Verus Financial LLC common stock are through Verus Holdings LLC, a special purpose vehicle

(13)

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

Prime - Prime Rate


Country Breakdown of Portfolio
United States		95.6%
Mexico		2.6%
United Kingdom		1.8%

See Notes to Consolidated Financial Statements

F-11

TCW DIRECT LENDING LLC

Consolidated Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)


	As of December 31, 2017			As of December 31, 2016
Assets
Investments, at fair value
Non controlled/non-affiliated investments (amortized cost of $1,186,123 and $1,104,983, respectively)	$	1,163,294		$	1,083,226
Controlled affiliated investments (cost of $239,554 and $227,896, respectively)		259,698			247,164
Cash and cash equivalents		209,784			214,913
Interest receivable		12,485			9,738
Deferred financing costs		8,698			1,972
Receivable from Investment Adviser		1,203			578
Unrealized appreciation on unfunded commitments		—			403
Prepaid and other assets		95			107

Total Assets	$	1,655,257		$	1,558,101

Liabilities
Credit facility payable	$	378,000		$	590,000
Unrealized depreciation on unfunded commitments		530			26
Interest and credit facility expense payable		418			260
Directors’ fees payable		—			3
Payable for investments purchased		—			3,840
Other accrued expenses and other liabilities		889			868

Total Liabilities	$	379,837		$	594,997

Commitments and Contingencies (Note 5)

Members’ Capital
Common Unitholders’ commitment: (20,134,698 units issued and outstanding)	$	2,013,470		$	2,013,470
Common Unitholders’ undrawn commitment: (20,134,698 units issued and outstanding)		(309,125	)		(920,589	)
Common Unitholders’ return of capital		(394,008	)		(102,960	)
Common Unitholders’ offering costs		(853	)		(853	)
Accumulated Common Unitholders’ tax reclassification		(9,215	)		(9,596	)

Common Unitholders’ capital		1,300,269			979,472
Accumulated net realized loss		(20,543	)		(13,710	)
Accumulated net investment loss		(1,091	)		(546	)
Net unrealized depreciation on investments		(3,215	)		(2,112	)

Total Members’ Capital	$	1,275,420		$	963,104

Total Liabilities and Members’ Capital	$	1,655,257		$	1,558,101

Net Asset Value Per Unit (accrual base) (Note 9)	$	78.70		$	93.55

See Notes to Consolidated Financial Statements

F-12

TCW DIRECT LENDING LLC

Consolidated Statements of Operations

(Dollar amounts in thousands, except unit data)


	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Investment Income:
Interest income from non-controlled/non-affiliated investments	$	117,063		$	92,880		$	30,527
Interest income from non-controlled/non-affiliated investments paid-in-kind		11,748			3,096			—
Dividend income from controlled affiliated investments		22,618			14,797			894
Other fee income		—			652			—

Total investment income		151,429			111,425			31,421

Expenses:
Management fees		25,101			30,202			35,244
Interest and credit facility expenses		19,639			13,503			6,717
Professional fees		1,921			1,581			742
Administrative fees		1,258			1,104			684
Directors’ fees		298			290			289
Other expenses		404			377			372

Total expenses		48,621			47,057			44,048
Expenses recaptured/(reimbursed) by the Investment Adviser		(1,267	)		(835	)		312

Net expenses		47,354			46,222			44,360

Net investment income (loss)	$	104,075		$	65,203		$	(12,939	)

Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on non-controlled/non- affiliated investments	$	(88	)	$	519		$	2,350
Net realized gain distributions from controlled affiliated investments		1,432			—			—
Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments		(1,979)			(17,114)			(6,453)
Net change in unrealized appreciation/depreciation on controlled affiliated investments		876			13,193			6,075

Net realized and unrealized gain (loss) on investments	$	241		$	(3,402	)	$	1,972

Net increase (decrease) in Members’ Capital from operations	$	104,316		$	61,801		$	(10,967	)

Basic and diluted:
Income (loss) per unit	$	5.17		$	3.07		$	(0.58	)

See Notes to Consolidated Financial Statements

F-13

TCW DIRECT LENDING LLC

Consolidated Statements of Changes in Members’ Capital

(Dollar amounts in thousands, except unit data)


	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income (loss)	$	104,075		$	65,203		$	(12,939	)
Net realized gain on investments		1,344			519			2,350
Net change in unrealized appreciation/depreciation on investments		(1,103	)		(3,921	)		(378	)

Net Increase (Decrease) in Members’ Capital from Operations		104,316			61,801			(10,967	)

Distributions to Members from:
Net investment income		(109,356	)		(72,270	)		—
Net realized gains		(3,060	)		(3,205	)		—
Return of capital		(291,048	)		(102,960	)		—
Return of unused capital		(250,000)			—			—

Total Distributions to Members		(653,464	)		(178,435	)		—

Increase in Members’ Capital Resulting from Capital Activity
Contributions		861,464			428,435			598,595
Offering costs		—			—			(853)

Total Increase in Members’ Capital Resulting from Capital Activity		861,464			428,435			597,742

Total Increase in Members’ Capital		312,316			311,801			586,775

Members’ Capital, beginning of year		963,104			651,303			64,528

Members’ Capital, end of year	$	1,275,420		$	963,104		$	651,303

Accumulated net investment loss	$	(1,091	)	$	(546	)	$	(17,431	)

See Notes to Consolidated Financial Statements

F-14

TCW DIRECT LENDING LLC

Consolidated Statements of Cash Flows

(Dollar amounts in thousands, except unit data)


	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Cash Flows from Operating Activities
Net increase in net assets resulting from operations	$	104,316		$	61,801		$	(10,967	)
Adjustments to reconcile the net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(503,814	)		(947,347	)		(859,314	)
Interest income paid in-kind		(11,748	)		(3,096	)		—
Proceeds from sales and paydowns of investments		429,340			414,455			181,821
Net realized gain (loss) on investments		88			(519	)		(2,350	)
Change in net unrealized appreciation/depreciation on investments		1,103			3,921			378
Amortization of premium and accretion of discount, net		(6,664	)		(4,948	)		(1,268	)
Amortization of deferred financing costs		3,411			2,291			1,942
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		(2,747	)		(7,085	)		(2,024	)
(Increase) decrease in receivable from Investment Adviser		(625	)		(578	)		311
(Increase) decrease in receivable for investments sold		—			27,098			(27,098	)
(Increase) decrease in prepaid offering costs		—			—			663
(Increase) decrease in prepaid and other assets		12			50			(157	)
Increase (decrease) in investments purchased payable		(3,840	)		3,840			—
Increase (decrease) in interest and credit facility expense payable		158			(236	)		454
Increase (decrease) in directors’ fees payable		(3	)		3			(160	)
Increase (decrease) in management fees payable		—			(27,737	)		24,244
Increase (decrease) in initial organizational expense payable to affiliate		—			—			(682	)
Increase (decrease) in offering costs payable to affiliate		—			—			(663	)
Increase (decrease) in other accrued expenses and liabilities		21			631			(208	)

Net cash provided by (used in) operating activities	$	9,008		$	(477,456	)	$	(695,078	)

Cash Flows from Financing Activities
Contributions from Members	$	674,000		$	250,000		$	598,595
Unused contributions returned to Members		(250,000	)		—			—
Distributions to Members		(216,000	)		—			—
Capital call due from Members, net		—			933			(833	)
Offering costs paid		—			—			(853	)
Deferred financing costs paid		(10,137	)		—			(2,362	)
Proceeds from credit facility		384,696			1,076,000			850,000
Repayments of credit facility		(596,696	)		(815,000	)		(576,000	)

Net cash (used in) provided by financing activities	$	(14,137	)	$	511,933		$	868,547

Net (decrease) increase in cash and cash equivalents	$	(5,129	)	$	34,477		$	173,469
Cash and cash equivalents, beginning of year	$	214,913		$	180,436		$	6,967

Cash and cash equivalents, end of year	$	209,784		$	214,913		$	180,436

Supplemental and non-cash financing activities
Interest expense paid	$	13,635		$	10,246		$	3,023
Deemed purchase and return of capital from Investment Funds & Vehicles	$	—		$	26,068		$	—
Investments transferred (exchanged) in-kind	$	—		$	—		$	111,656
Deemed distribution/re-contribution from Members’ (Note 9)	$	187,464		$	178,435		$	—
Deemed distribution/re-contribution from Investment Funds and Vehicles	$	—		$	1,643		$	—

See Notes to Consolidated Financial Statements.

F-15

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements

(dollar amount in thousands, except for unit data)

December 31, 2017

1. Organization and Basis of Presentation

Organization: TCW Direct Lending LLC (“Company”), was formed as a Delaware corporation on March 20, 2014 and converted to a Delaware limited liability company on April 1, 2014. The Company conducted a private offering of its limited liability company units (the “Common Units”) to investors in reliance on exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”). In addition, the Company may issue preferred units, though it currently has no intention to do so. The Company has engaged TCW Asset Management Company LLC (“TAMCO”), an affiliate of The TCW Group, Inc. (“TCW”) to be its adviser (the “Adviser”). On May 13, 2014 (“Inception Date”), the Company sold and issued 10 Common Units at an aggregate purchase price of $1 to TAMCO.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company has also elected to be treated for U.S. federal income tax purposes as a Regulated Investment Company (a “RIC”) under Subchapter M of the U.S Internal Revenue Code of 1986, as amended (the “Code”) for the taxable year ending December 31, 2015 and subsequent years. The Company is required to meet the minimum distribution and other requirements for RIC qualification and as a BDC and a RIC, the Company is required to comply with certain regulatory requirements.

On May 18, 2016, the Company established a wholly owned subsidiary, TCW-DL VF Holdings, Inc., as a Delaware entity to hold an equity investment in a portfolio company organized as a limited liability company.

On September 19, 2016, the Company formed TCW Direct Lending Luxembourg VI S.à.r.l., (“TCW Direct Lending Luxembourg”) a private limited liability company under the laws of Luxembourg, of which the Company owns 100% of the membership interests. The Company incurred $0.2 million in professional fees in connection with the formation of TCW Direct Lending Luxembourg, all of which were expensed as incurred.

Throughout 2017, the Company formed several Delaware limited liability companies, all of which have a single member interest owned by the Company.

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Term: The term of the Company will continue until the sixth anniversary of the Initial Closing Date (as defined below), September 14, 2020 unless extended or sooner dissolved as provided in the limited liability agreement or by operation of law. The Company may extend the term for two additional one-year periods upon written notice to the holders of the Common Units and holders of preferred units, if any, (collectively the “Unitholders” or “Members”) at least 90 days prior to the expiration of the term or the end of the first one-year period. Thereafter, the term may be extended for successive one-year periods, with the vote or consent of a supermajority in interest of the holders of the Common Units.

Commitment Period: The Commitment Period commenced on September 19, 2014 (the “Initial Closing Date”) and ended on September 19, 2017, the third anniversary of the Initial Closing Date. In accordance with the Company’s Limited Liability Company Agreement, the Company may complete investment transactions that were significantly in process as of the end of the Commitment Period and which the Company reasonably expects to be consummated prior to 90 days subsequent to the expiration date of the Commitment Period. The Company may also effect follow-on investments up to an aggregate maximum of 10% of Capital Commitments (as defined below), provided that any such follow-on investment to be made after the third anniversary of the expiration of the Commitment Period shall require the prior consent of a majority in interest of the Common Unitholders.

Capital Commitments: On September 19, 2014 (“the Initial Closing Date”), the Company began accepting subscription agreements from investors for the private sale of its Common Units. On March 19, 2015, the Company completed its final private placement of its Common Units. Subscription agreements with commitments (“Commitments”) from investors (each a “Common Unitholder”) totaling $2,013,470 for the purchase of Common Units were accepted. Each Common Unitholder is obligated to contribute capital equal to their Commitment and each Unit’s Commitment obligation is $100.00 per unit. The amount of capital that remains to be drawn down and contributed is referred to as an “Undrawn Commitment”.

F-16

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

1. Organization and Basis of Presentation (continued)

The commitment amount funded does not include amounts contributed in anticipation of a potential investment that the Company did not consummate and therefore returned to the Members’ as unused capital. As of December 31, 2017, aggregate Commitments, Undrawn Commitments and subscribed for Units of the Company were as follows:


	Commitments		Undrawn Commitments		% of Commitments Funded			Units
Common Unitholder	$	2,013,470	$	309,125		84.6	%		20,134,698

Recallable Amount: A Common Unitholder may be required to re-contribute amounts distributed equal to 75% of the principal amount or the cost portion of any Portfolio Investment that is fully repaid to or otherwise fully recouped by the Company within one year of the Company’s investment. The Recallable Amount is excluded from the calculation of the accrual based net asset value.

The Recallable Amount as of December 31, 2017 was $100,875.

2. Significant Accounting Policies

Basis of Presentation: The consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies (“ASC Topic 946”). The Company has consolidated the results of its wholly owned subsidiary in its consolidated financial statements in accordance with ASC Topic 946.

Reclassifications: Certain prior period amounts in the Consolidated Statements of Assets and Liabilities relating to net unrealized appreciation/depreciation on unfunded commitments have been reclassified to separately present gross balances of net unrealized appreciation and net unrealized depreciation on unfunded commitments. These reclassifications have been made to conform to the current period presentation. Certain prior period amounts in the Consolidated Statements of Operations relating to interest income paid-in-kind (“PIK”) have been reclassified out of interest income to disclose PIK interest income separately, in accordance with updated Regulation S-X. These reclassifications have been made to conform to the current period presentation.

Use of Estimates: The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the reported amounts of income and expenses during the years presented and (iii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates, and such differences could be material.

Investments: The Company measures the value of its investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosure (“ASC Topic 820”). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC Topic 820, the Company considers its principal market to be the market that has the greatest volume and level of activity.

Transactions: The Company records investment transactions on the trade date. The Company considers trade date for investments not traded on a recognizable exchange, or traded in the over-the-counter markets, to be the date on which the Company receives legal or contractual title to the asset and bears the risk of loss.

Income Recognition: Interest income is recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. The Company typically receives a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, using the effective-interest method assuming there are no questions as to collectability,

F-17

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

2. Significant Accounting Policies (continued)

and reflected in the amortized cost basis of the investment. Discounts associated with a revolver as well as fees associated with a delayed draw that remains unfunded are treated as a discount to the issuers’ term loan. Ongoing facility, commitment or other additional fees including, prepayment fees, consent fees and forbearance fees are recognized immediately when earned as income.

Deferred Financing Costs: Deferred financing costs incurred by the Company in connection with the revolving credit facility, including arrangement fees, upfront fees and legal fees, are amortized on a straight-line basis over the term of the revolving credit facility.

Organization and Offering Costs: Costs incurred to organize the Company totaling $665 were expensed as incurred. Offering costs totaling $853 were accumulated and charged directly to Members’ Capital on March 19, 2015, the end of the period during which Common Units were offered (the “Closing Period”). The Company did not bear more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses.

Cash and Cash Equivalents: The Company considers all investments with a maturity of three months or less at the time of acquisition to be cash equivalents. At December 31, 2017 cash and cash equivalents is comprised of demand deposits and highly liquid investments with maturities of three months or less, which approximate fair value.

Income Taxes: So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. Federal income taxes on any ordinary income or capital gains that it distributes at least annually to its Members as dividends. Rather, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s Members and will not be reflected in the consolidated financial statements of the Company.

Accounting Pronouncements Recently Adopted: In February 2015, the FASB issued Accounting Standard Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which amends the consolidation requirements in ASC 810, Consolidation, and significantly changes the consolidation analysis required under GAAP. The FASB’s focus during deliberations was largely on the investment management industry. The key amendments that had a significant impact on Company’s consolidation conclusion included:

•

Limited partnerships will be variable interest entities (VIEs), unless the limited partners have either substantive kick-out or participating rights. Although more partnerships will be VIEs, it is less likely that a general partner will consolidate a limited partnership.

•

The ASU changes the effect that fees paid to a decision maker or service provider have on the consolidation analysis. Specifically, it is less likely that the fees themselves will be considered a variable interest, that an entity will be a VIE, or that consolidation will result.

•

The deferral of ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, for investments in certain investment funds has been eliminated. Therefore, investment managers, general partners, and investors in these investment funds will need to perform a drastically different consolidation evaluation.

•

For entities other than limited partnerships, ASU 2015-02 clarified how to determine whether the equity holders (as a group) have power over the entity (this will most likely result in a change to current practice). The clarification could affect whether the entity is a VIE.

ASU 2015-02 became effective for the Company on January 1, 2016. The adoption of ASU 2015-02 had no material impact on the Company’s consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. ASU 2015-07 is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2015. The adoption of ASU No. 2015-07 had no material impact on the Company’s consolidated financial statements.

F-18

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

2. Significant Accounting Policies (continued)

In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, the “Final Rules”) intended to modernize the reporting and disclosure of information by registered investment companies and BDCs. In part, the Final Rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017, and the Company has implemented the applicable requirements into this report, namely the separate disclosure of PIK interest income on the Consolidated Statements of Operations and disclosure of realized gains/(losses) on controlled affiliated investments.

Accounting Pronouncements Not Yet Adopted: On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, this Update supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition–Construction-Type and Production-Type Contracts. This update will be effective for fiscal years beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities. The amendments in this update makes improvements to the requirements for accounting for equity investments and simplify the impairment assessment of equity investments. For public entities this update will be effective for fiscal years beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

3. Investment Valuations and Fair Value Measurements

Investments at Fair Value: Investments held by the Company are valued at fair value. Fair value is generally determined on the basis of last reported sales prices or official closing prices on the primary exchange in which each security trades, or if no sales are reported, based on the midpoint of the valuation range obtained for debt investments from a quotation reporting system, established market makers or pricing service.

Investments for which market quotes are not readily available or are not considered reliable are valued at fair value and approved by the Board of Directors (the “Board”) based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified by the Company based on valuation inputs used to determine fair value into three levels:

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect the Company’s determination of assumptions that market participants might reasonably use in valuing the assets.

F-19

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

3. Investment Valuations and Fair Value Measurements (continued)

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Registered Investment Companies, (Level 1), include registered open-end investment companies that are valued based upon the reported net asset value of such investment.

Equity, (Level 1), includes common stock valued at the closing price on the primary exchange in which the security trades.

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine fair value of investments in private debt and equity for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Equity, (Level 3), include common stock and warrants. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health, and relevant business developments of the issuer; EBITDA; market multiples of comparable companies; comparable market transactions and recent trades or transactions; issuer, industry and market events; and contractual or legal restrictions on the sale of the security. When a Black-Scholes pricing model is used it follows the income approach. The pricing model takes into account the contract terms as well as multiple inputs, including: time value, implied volatility, equity prices and interest rates. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Net Asset Value (“NAV”) (Investment Funds and Vehicles): Equity investments in affiliated investment fund (Strategic Ventures) are valued based on the NAV reported by the investment fund. Investments held by the affiliated fund include debt investments in privately originated senior secured debt. Such investments held by the affiliated fund are valued using the same methods, approach and standards applied above to debt investments held by the Company. The Company’s ability to withdraw from the fund is subject to restrictions. The term of the fund will continue until June 5, 2021 unless dissolved earlier or extended for two additional one-year periods by the Company, in its full discretion. The Company can further extend the term of the fund for additional one-year periods, upon notice to and consent from the fund’s management committee. The Company is entitled to income and principal distributed by the fund.

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of December 31, 2017:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	1,151,532	$	—	$	1,151,532
Equity		911		—		10,851		—		11,762
Investment Funds & Vehicles ⁽¹⁾		—		—		—		259,698		259,698
Cash equivalents		5		—		—		—		5

Total Assets	$	916	$	—	$	1,162,383	$	259,698	$	1,422,997

⁽¹⁾

Includes equity investments in Strategic Ventures. In accordance with ASC Topic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statement of Assets and Liabilities.

F-20

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

3. Investment Valuations and Fair Value Measurements (continued)

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of December 31, 2016:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	1,074,600	$	—	$	1,074,600
Equity		—		—		8,626		—		8,626
Investment Funds & Vehicles ⁽¹⁾		—		—		—		247,164		247,164
Cash equivalents		197,001		—		—		—		197,001

Total Assets	$	197,001	$	—	$	1,083,226	$	247,164	$	1,527,391

⁽¹⁾

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the year ended December 31, 2017:


	Debt			Equity			Total
Balance, January 1, 2017	$	1,074,600		$	8,626		$	1,083,226
Purchases^*		436,485			2,547			439,032
Sales and paydowns of investments		(363,879	)		(1,461	)		(365,340	)
Net amortization of discount/(premium)		6,664			—			6,664
Net realized gains (losses)		(88	)		—			(88	)
Net change in unrealized appreciation/depreciation		(2,250	)		1,139			(1,111	)

Balance, December 31, 2017	$	1,151,532		$	10,851		$	1,162,383

Change in net unrealized appreciation/depreciation in investments held as of December 31, 2017	$	(458	)	$	1,139		$	681

*	Includes payments received in-kind

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the year ended December 31, 2016:


	Debt			Equity			Total
Balance, January 1, 2016	$	586,626		$	—		$	586,626
Purchases^*		765,459			8,750			774,209
Sales and paydowns of investments		(265,175	)		(382	)		(265,557	)
Accretion of original issue discounts		4,948			—			4,948
Net realized gains		519			—			519
Net change in unrealized appreciation/depreciation		(17,777	)		258			(17,519	)

Balance, December 31, 2016	$	1,074,600		$	8,626		$	1,083,226

Change in net unrealized appreciation/depreciation in investments held as of December 31, 2016	$	(16,222	)	$	258		$	(15,964	)

*	Includes payments received in-kind

F-21

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

3. Investment Valuations and Fair Value Measurements (continued)

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. During the years ended December 31, 2017 and 2016, the Company did not have any transfers between levels.

Level 3 Valuation and Quantitative Information: The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2017.

Investment

Type

Fair Value

Valuation
Technique

Unobservable

Input

Range

Weighted
Average

Impact to
Valuation
from an
Increase
in Input

Debt

$840,792

Income Method

Weighted Average Cost of Capital

Shadow Credit Rating

6.5% to 22.1%

B+ to CCC-

12.0%

N/A

Decrease

Increase

Debt

$252,620

Income Method

Shadow Credit Rating

BB- to CCC

N/A

Increase

Debt

$50,096

Income/Waterfall
Method

EBITDA Multiple

5.0x to 6.5x

N/A

Increase

Debt

$8,024

Income/Market/
Waterfall Method

Weighted Average Cost of Capital

Shadow Credit Rating

EBITDA Multiple

Revenue Multiple

25.0% to 30.0%

CCC- to CC

6.5x to 7.5x

0.2x to 0.3x

27.5%

N/A

Decrease

Increase

Equity

$311

Income Method

Implied Volatility

Risk Free Rate

Expected Term

70.8%

1.5%

0.5 yrs. to 1.0 yrs.

N/A

0.75 yrs.

Increase

Equity

$10,540

Market/Waterfall

Method

EBITDA Multiple

4.5x to 12.0x

N/A

Increase

Investment

Type

Fair Value

Valuation
Technique

Unobservable

Input

Range

Weighted
Average

Impact to
Valuation
from an
Increase
in Input

Debt

$982,919

Income Method

Weighted Average Cost of Capital

Shadow Credit Rating

6.0% to 13.4%

CCC+ to BB

10.0%

N/A

Decrease

Increase

Debt

$80,873

Market Method

EV Implied Multiple

10.0x to 11.0x

N/A

Increase

Debt

$10,808

Income/Market
Method

Weighted Average Cost of Capital

Shadow Credit Rating

EV Implied Multiple

19.6% to 24.1%

CC to CCC-

7.0x to 8.0x

21.9%

N/A

Decrease

Increase

Equity

$8,626

Market Method

EV Implied Multiple

10.8x to 11.8x

N/A

Increase

Valuation Process: Oversight for determining fair value is the responsibility of the Board of the Company (with input from the Adviser and an external, independent valuation firm retained by the Company). The Company and the Adviser value the investments at fair value on a quarterly basis and whenever required by the Company’s operating agreement. The Company has engaged an external, independent valuation firm to assist the Board in determining the fair market value of the Company’s investments for which market quotations are not readily available.

Unless noted, the Company is utilizing the midpoint of a valuation range provided by an external, independent valuation firm. Based on its review of the external, independent valuation firm’s range and related documentation, the Adviser documents the valuation recommendations. The Adviser discusses its valuation recommendation with the Company’s audit committee, based on / along with the independent valuation report. After the Company’s audit committee reviews the valuation recommendations, the Board discusses the portfolio company and investment valuations with the Adviser and determines the fair value of these investments in good faith. The Board may approve a value other than the midpoint if it believes that is the fair value.

F-22

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

3. Investment Valuations and Fair Value Measurements (continued)

The Adviser uses all relevant factors in recommending fair value including, without limitation, any of the following factors as may be deemed relevant by the Board: current financial position and current and historical operating results of the issuer; sales prices of recent public or private transactions in the same or similar securities, including transactions on any securities exchange on which such securities are listed or in the over-the-counter market; general level of interest rates; recent trading volume of the security; restrictions on transfer including the Company’s right, if any, to require registration of its securities by the issuer under the securities laws; any liquidation preference or other special feature or term of the security; significant recent events affecting the portfolio company, including any pending private placement, public offering, merger, or acquisition; the price paid by the Company to acquire the asset; the percentage of the issuer’s outstanding securities that is owned by the Company and all other factors affecting value.

4. Agreements and Related Party Transactions

Advisory Agreement : On September 15, 2014, the Company entered into an Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Adviser, its registered investment adviser under the Investment Advisers Act of 1940, as amended. The Advisory Agreement was approved by the Board at an in-person meeting. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of two years and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board.

Management Fee: Pursuant to the Advisory Agreement, and subject to the overall supervision of the Board, the Adviser will manage the Company’s day-to-day operations and provide investment advisory services to the Company. The Company will pay to the Adviser, quarterly in advance, a management fee (the “Management Fee”) calculated as follows: (i) for the period starting on the initial closing date and ending on the earlier of (A) the last day of the calendar quarter during which the Commitment Period (as defined below) ends or (B) the last day of the calendar quarter during which the Adviser or an affiliate thereof begins to accrue a management fee with respect to a successor fund, 0.375% (i.e., 1.50% per annum) of the aggregate commitments determined as of the end of the Closing Period, and (ii) for each calendar quarter thereafter during the term of the Company (but not beyond the tenth anniversary of the initial closing date), 0.1875% (i.e., 0.75% per annum) of the aggregate cost basis (whether acquired by the Company with contributions from members, other Company funds or borrowings) of all portfolio investments that have not been sold, distributed to the members, or written off for tax purposes (but reduced by any portion of such cost basis that has been written down to reflect a permanent impairment of value of any portfolio investment), determined in each case as of the first day of such calendar quarter. The Management Fee in respect of the Closing Period will be calculated as if all capital commitments of the Company were made on the initial closing date, regardless of when Common Units were actually funded. The actual payment of the Management Fee with respect to the Closing Period will not be made prior to the first day of the first full calendar quarter following the end of the Closing Period. The “Commitment Period” of the Company will begin on the initial closing date and end on the earlier of (a) three years from the initial closing date and (b) the date on which the undrawn Commitment of each Common Unit has been reduced to zero. While the Management Fee will accrue from the initial closing date, the Adviser intends to defer payment of such fees to the extent that such fees cannot be paid from interest and fee income generated by our investments.

For the years ended December 31, 2017, 2016 and 2015, Management Fees incurred amounted to $25,101, $30,202 and $35,244, respectively (net of $175, $0 and $0, respectively, of fee income as described below in Transaction and Offset Fees), of which $0, $0 and $27,737 remained payable at December 31, 2017, 2016 and 2015, respectively. Net expenses include an expense reimbursement of $1,267 and $835 in the years ended December 31, 2017 and 2016, respectively. Net expenses include an expense recapture of $312 in the year ended December 31, 2015 which offset the expense reimbursement by the Investment Adviser of $312 in the period from the Inception Date to December 31, 2014 related to the expense limitation on organization expenses as outlined in the Advisory Agreement.

Transaction and Offset Fees: Any (i) transaction, advisory, consulting, management, monitoring, directors’ or similar fees, (ii) closing, investment banking, finders’, transaction or similar fees, (iii) commitment, breakup or topping fees or litigation proceeds and (iv) other fee or payment of services performed or to be performed with respect to an investment or proposed investment received from or with respect to Portfolio Companies or prospective Portfolio Companies in connection with the Company’s activities will be will be the property of the Company. Notwithstanding the foregoing, for administrative or other reasons, certain fees described in clauses (i) through (iv) above (including any fees for administrative agent services provided by the Adviser or an

F-23

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

4. Agreements and Related Party Transactions (continued)

affiliate with respect to a particular loan or portfolio of loans made by the Company) may be paid to the Adviser or the affiliate (rather than directly to the Company), in which case the amount of such fees (net of any related expenses associated with the

generation of such fees borne by the Adviser or such affiliate that have not been and will not be reimbursed by the Portfolio Company) shall be paid to the Company or shall offset amounts (including the Management Fee) otherwise payable by the Company to the Adviser.

Since inception of the Company, the Adviser was paid $827 in such fees, of which $175 was paid during the year ended December 31, 2017. In accordance with the limited liability company agreement, $175 was applied towards management fees for the year ended December 31, 2017 and $652 of such fees had been recorded as fee income during the year ended December 31, 2016. No fees were paid to the Adviser for the year ended December 31, 2015.

Incentive Fee: In addition, the Adviser will receive an incentive fee (the “Incentive Fee”) as follows:

(a) First, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions pursuant to this clause (a) equal to their aggregate capital contributions in respect of all Common Units;

(b) Second, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions equal to a 9% internal rate of return on their aggregate capital contributions in respect of all Common Units (the “Hurdle”);

(c) Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to Common Unitholders until such time as the cumulative Incentive Fee paid to the Adviser is equal to 20% of the sum of (i) the amount by which the Hurdle exceeds the aggregate capital contributions of the Common Unitholders in respect of all Common Units and (ii) the amount of Incentive Fee being paid to the Adviser pursuant to this clause (c); and

(d) Thereafter, the Adviser will be entitled to an Incentive Fee equal to 20% of additional amounts otherwise distributable to Unitholders, with the remaining 80% distributed to the Unitholders.

If the Advisory Agreement terminates early for any reason other than (i) the Adviser voluntarily terminating the agreement or (ii) our terminating the agreement for cause (as set out in the Advisory Agreement), we will be required to pay the Adviser a final incentive fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Advisory Agreement is so terminated and will equal the amount of Incentive Fee that would be payable to the Adviser if (A) all our investments were liquidated for their current value (but without taking into account any unrealized appreciation of any portfolio investment), and any unamortized deferred portfolio investment-related fees would be deemed accelerated, (B) the proceeds from such liquidation were used to pay all our outstanding liabilities, and (C) the remainder were distributed to Unitholders and paid as Incentive Fee in accordance with the “waterfall” (i.e., clauses (a) through (d)) described above for determining the amount of the Incentive Fee. We will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated. The Adviser Return Obligation (defined below) will not apply in connection with a Final Incentive Fee Payment.

For the years ended December 31, 2017, 2016 and 2015, no Incentive Fees were incurred.

Administration Agreement: On September 15, 2014, the Company entered into the Administration Agreement with the Adviser under which the Adviser (or one or more delegated service providers) will oversee the maintenance of our financial records and otherwise assist on the Company’s compliance with regulations applicable to a BDC under the 1940 Act, and a RIC under the Code, to prepare reports to our Members, monitor the payment of our expenses and the performance of other administrative or professional service providers, and generally provide us with administrative and back office support. The Company will reimburse the Administrator for expenses incurred by it on behalf of the Company in performing its obligations under the Administration Agreement. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

F-24

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

4. Agreements and Related Party Transactions (continued)

The Company, and indirectly the Unitholders, will bear (including by reimbursing the Adviser or Administrator) all other costs and expenses of its operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of the Company’s counsel and accounting fees. However, the Company will not bear (a) more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments of the Company per annum (pro-rated for partial years) for its costs and expenses other than ordinary operating expenses (“Company Expenses”), including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser. All expenses that the Company will not bear will be borne by the Adviser or its affiliates. Notwithstanding the foregoing, the cap on Company Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts payable in connection with the Company’s borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to the liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments).

TCW Direct Lending Strategic Ventures LLC: On June 5, 2015, the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P., entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Direct Lending Strategic Ventures LLC (“Strategic Ventures”). Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The Agreement was effective June 5, 2015. The Company’s investment in Strategic Ventures is restricted from redemption until the termination of Strategic Ventures.

The Company’s capital commitment is $481,600, representing approximately 80% of the preferred and common equity ownership of Strategic Ventures, with the third-party investors representing the remaining capital commitments and preferred and common equity ownership. A portion of the Company’s capital commitment was satisfied by the contribution of two loans to Strategic Ventures. Strategic Ventures also entered into a revolving credit facility to finance a portion of certain eligible investments on June 5, 2015.

The Company’s investments in controlled affiliated investments for the year ended December 31, 2017 were as follows:


	Fair Value as of January 1, 2017		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of December 31, 2017		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	247,164	$	75,658	$	(64,000	)	$	876	$	259,698	$	22,618	$	1,432

Total Controlled Affiliates	$	247,164	$	75,658	$	(64,000	)	$	876	$	259,698	$	22,618	$	1,432

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


	Fair Value as of January 1, 2016		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of December 31, 2016		Dividend Income
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	206,635	$	104,337	$	(77,001	)	$	13,193	$	247,164	$	14,797

Total Controlled Affiliates	$	206,635	$	104,337	$	(77,001	)	$	13,193	$	247,164	$	14,797

F-25

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

4. Agreements and Related Party Transactions (continued)

For the years ended December 31, 2017 and 2016, the Company did not recognize any realized gains (losses) on controlled affiliated investments. During the years ended December 31, 2017 and 2016, we recognized $1.4 million and $0.0 million of net realized gain distributions from TCW Strategic Ventures. The net realized gain during the year ended December 31, 2017 reflects a distribution from TCW Strategic Ventures during the period from its net short- and long-term gains.

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized gains/(losses) by investment as of December 31, 2017 and 2016:


		December 31,
		2017					2016
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized (Losses)⁽¹⁾			Amount		Unrealized Gains (Losses)
ASC Acquisition Holdings LLC	December 2018	$	11,207	$	(326	)	$	13,076	$	(26	)
ENA Holdings Corporation	May 2021		4,804		(19	)		4,804		5
FQSR, LLC	December 2018		2,415		(17	)		N/A		N/A
Help At Home, Inc.	August 2020		6,757		—			6,757		61
OTG Management LLC	February 2018		3,005		(30	)		10,291		62
Patriot National, Inc.	November 2021		N/A		N/A			6,429		58
Quantum Corporation	November 2017		N/A		N/A			16,371		180
Quicken Parent Corp.	April 2021		518		(15	)		1,725		22
Ruby Tuesday, Inc.	December 2022		4,575		(41	)		N/A		N/A
School Specialty, Inc.,	April 2019		6,450		(19	)		N/A		N/A
Mavenir Private Holdings II Ltd. (UK) (an affiliate of Mavenir, Inc.,)	August 2022		N/A		N/A			2,014		6
Mavenir, Inc., (fka Xura, Inc.)	August 2022		N/A		N/A			3,020		9
Vertellus Performance Chemicals LLC	September 2019		4,218		(63	)		N/A		N/A

Total		$	43,949	$	(530	)	$	64,487	$	377

⁽¹⁾	As of January 1, 2017, the Company changed its valuation policy to cap fair values of unfunded commitments at par, thereby eliminating unrealized gains on unfunded commitments.

The Company’s total capital commitment to its underlying investment in Strategic Ventures is $481,600. As of December 31, 2017, the Company’s unfunded commitment to Strategic Ventures is $241,246.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of December 31, 2017, management is not aware of any pending or threatened litigation.

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

F-26

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

6. Members’ Capital

During the years ended December 31, 2017 and 2016, the Company did not sell or issue any Common Units. The activity for the years ended December 31, 2017, 2016 and 2015 is a follows:

Years Ended December 31,

2017

2016

2015

Units at beginning of period

20,134,698

Units issued and committed

—

Units issued and committed at end of period

20,134,698

For the years ended December 31, 2017, 2016 and 2015 the Company processed $187,464, $178,435 and $0, respectively, of deemed distributions and re-contributions.

7. Credit Facility

The Company has a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750 million (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the “Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

As of December 31, 2017, the Available Commitment under the Third Amended and Restated Revolving Credit Agreement is $727 million. As of December 31, 2016, the Available Commitment was $622 million. Prior to the Third Amended and Restated Credit Agreement the Available Commitment decreased from $622 million to $303 million as of March 29, 2017 and decreased from $750 million to $622 million as of August 30, 2016 in conjunction with capital activity that decreased the remaining Undrawn Commitments together with the Recallable Amount of the Company’s Members. As of December 31, 2017 and 2016, the amounts outstanding under the Credit Facility were $378 million and $590 million, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of December 31, 2017 and 2016, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and condition. The Company incurred financing costs of $10.1 million in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. The Company recorded these costs as deferred financing costs on its Consolidated Statements of Asset and Liabilities and are being amortized over the life of the Credit Facility. As of December 31, 2017, 2016 and 2015, $8.7 million, $2.0 million and $4.3 million, respectively, of such prepaid deferred financing costs had yet to be amortized.

F-27

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

7. Credit Facility (continued)

The summary information regarding the Credit Facility for the years ended December 31, 2017, 2016 and 2015 were as follows:


		Year Ended December 31,
	2017		2016		2015
Borrowing interest expense	$	13,635	$	10,308	$	3,039
Unused fees		2,525		829		1,660
Administrative fees		68		75		75
Amortization of financing costs		3,411		2,291		1,943

Total	$	19,639	$	13,503	$	6,717

Weighted average interest rate		3.31%		2.24%		1.97%
Average outstanding balance	$	411,569	$	459,691	$	154,751

8. Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act and has elected to be treated as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. Federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its common unitholders as dividends. The Company elected to be taxed as a RIC in 2015. The Company evaluates tax positions taken or expected to be taken in the course of preparing its 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 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.

Federal Income Taxes: It is the policy of the Company to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of its net taxable income and any net realized gains on investments to its shareholders. Therefore, no federal income tax provision is required.

As of December 31, 2017, 2016 and 2015, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes were as follows:


		Year Ended December 31,
	2017			2016			2015
Cost of investments for federal income tax purposes	$	1,445,098		$	1,346,589		$	795,312
Unrealized appreciation	$	31,987		$	32,909		$	5,828
Unrealized depreciation	$	54,788		$	49,108		$	7,879
Net unrealized appreciation (depreciation) on investments	$	(22,801	)	$	(16,199	)	$	(2,051	)

F-28

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

8. Income Taxes (continued)

The following reclassifications have been made for the permanent difference between book and tax accounting as of December 31, 2017, 2016 and 2015. These differences result primarily from net operating losses and differences in accounting for partnership interests.


	Year Ended December 31,
	2017			2016			2015
Common Unitholders tax reclassification	$	381		$	24		$	(9,620	)
Undistributed net investment income	$	4,736		$	7,112		$	15,987
Accumulated net realized loss	$	(5,117	)	$	(7,136	)	$	(6,367	)

The tax character of shareholder distributions attributable to the years ended December 31, 2017, 2016 and 2015 were as follows:


		Year Ended December 31,
Paid distribution attributable to:	2017		2016		2015
Ordinary income	$	111,193	$	75,344	$	—
Long term gain	$	1,223	$	131	$	—
Return of capital	$	291,048	$	102,960	$	—

The tax components of distributable earnings on a tax basis for years ended December 31, 2017, 2016 and 2015 were as follows:


	Year Ended December 31,
	2017			2016			2015
Net tax appreciation (depreciation)	$	(22,801	)	$	(16,199	)	$	—
Ordinary and post-October capital loss deferrals	$	(1,715	)	$	—		$	—

The Company did not have any unrecognized tax benefits at December 31, 2017, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; and therefore no interest or penalties were accrued. The Company is subject to examination by U.S. federal and state tax authorities for returns filed for the prior three and four years, respectively.

F-29

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

9. Financial Highlights

Selected data for a unit outstanding throughout the years ended December 31, 2017, 2016 and 2015 and for the period from May 13, 2014 (Inception) through December 31, 2014 is presented below. The accrual base Net Asset Value is calculated by subtracting the per unit loss from investment operations from the beginning Net Asset Value per unit and reflects all units issued and outstanding.


	For the year ended December 31, 2017			For the year ended December 31, 2016			For the year ended December 31, 2015			For the Period May 13, 2014 (Inception) to December 31, 2014
Net Asset Value Per Unit (accrual base), Beginning of Year	$	93.55		$	99.35		$	99.84		$	100.00

Net Increase in Common Unitholder NAV from Prior Year/ Period⁽¹⁾		—			—			0.09			—

Income from Investment Operations:
Net investment income (loss)⁽²⁾		5.17			3.24			(0.64	)		(0.44	)
Net realized and unrealized gain (loss)		0.01			(0.18	)		0.06			0.28

Total from investment operations		5.18			3.06			(0.58	)		(0.16	)
Less Distributions:
From net investment income		(5.43	)		(3.59	)		—			—
From net realized gains		(0.14	)		(0.16	)		—			—
Return of capital		(14.46	)		(5.11	)		—			—

Total distributions⁽³⁾		(20.03	)		(8.86	)		—			—

Net Asset Value Per Unit (accrual base), End of Year	$	78.70		$	93.55		$	99.35		$	99.84

Common Unitholder Total Return⁽⁴⁾		9.5	%		8.3	%		(3.3	)%		(2.0	)%

Common Unitholder IRR⁽⁵⁾		6.9	%		4.5	%		—	%		—	%

Ratios and Supplemental Data
Members’ Capital, end of period	$	1,275,420		$	963,104		$	651,303		$	64,528
Units outstanding, end of period		20,134,698			20,134,698			20,134,698			8,240,510
Ratios based on average net assets of Member’s Capital:
Ratio of total expenses to average net assets		4.21	%		6.10	%		13.14	%		133.05	%⁽⁶⁾
Expenses recaptured by Investment Adviser		(0.11	)%		(0.11	)%		0.09	%		(8.41	)%⁽⁷⁾

Ratio of net expenses to average net assets		4.10	%		5.99	%		13.23	%		124.64	%⁽⁶⁾
Ratio of financing cost to average net assets		1.70	%		1.75	%		2.00	%		17.11	%
Ratio of net investment income (loss) before expense recapture to average net assets		8.91	%		8.34	%		(3.77	)%		(93.53	)%⁽⁶⁾
Ratio of net investment income (loss) to average net assets		9.02	%		8.45	%		(3.86	)%		(85.11	)%⁽⁶⁾
Credit facility payable		378,000			590,000			329,000			55,000
Asset coverage ratio		4.4			2.6			3.0			2.2
Portfolio turnover rate		30	%		37	%		42	%		61	%

⁽¹⁾	Net increase in Common Unitholder NAV from prior year is a one-time adjustment to account for the increase in the Common Units issued from January 1, 2015 through the final closing date of March 19, 2015.

⁽²⁾	Per unit data was calculated using the number of common units issued and outstanding as of December 31, 2017, 2016, 2015 and for the period from Inception to December 31, 2014.

⁽³⁾	Includes distributions which have an offsetting capital re-contribution (“deemed distributions”). Excludes return of unused capital.

⁽⁴⁾

The Total Return for the years ended December 31, 2017, 2016, 2015 and for the period from Inception to December 31, 2014 was calculated by taking the net income (loss) of the Company for the period divided by the weighted average capital contributions from the members during the period. The return is net of management fees and expenses.

⁽⁵⁾

The Internal Rate of Return (IRR) since inception for the Common Unitholders, after management fees, financing costs and operating expenses is 6.9% through December 31, 2017. The IRR is computed based on cash flow due dates contained in notices to Members (contributions from and distributions to the Common Unitholders) and the net assets (residual value) of the Members’ capital account at period end. The IRR is calculated based on the fair value of investments using principles and methods in accordance with GAAP and does not necessarily represent the amounts that may be realized from sales or other dispositions. Accordingly, the return may vary significantly upon realization.

⁽⁶⁾	Annualized except for organizational costs.

⁽⁷⁾	Annualized.

F-30

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Continued)

(dollar amount in thousands, except for unit data)

December 31, 2017

10. Selected Quarterly Financial Data (Unaudited)

The following are the quarterly results of operations for the years ended December 31, 2017, 2016 and 2015. The following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.


	Quarter Ended
	December 31, 2017			September 30, 2017		June 30, 2017			March 31, 2017
Total investment income	$	40,245		$	33,455	$	43,765		$	33,964
Net investment income		32,062			20,099		29,867			22,047
Net realized and unrealized gains (losses)		(11,214	)		24,494		(1,933	)		(11,106	)
Net increase in Members’ Capital from operations		20,848			44,593		27,934			10,941
Basic and diluted earnings per Unit		1.04			2.21		1.39			0.54
Net asset value per unit at quarter end		78.70			78.95		86.17			88.31

	Quarter Ended
	December 31, 2016			September 30, 2016		June 30, 2016			March 31, 2016
Total investment income	$	32,502		$	30,655	$	27,953		$	20,315
Net investment income		20,979			18,277		16,610			9,337
Net realized and unrealized gains (losses)		968			2,405		(1,345	)		(5,430	)
Net increase in Members’ Capital from operations		21,947			20,682		15,265			3,907
Basic and diluted earnings per Unit		1.09			1.03		0.76			0.19
Net asset value per unit at quarter end		93.55			92.46		93.14			99.54

	Quarter Ended
	December 31, 2015			September 30, 2015		June 30, 2015			March 31, 2015
Total investment income	$	14,012		$	10,702	$	4,397		$	2,310
Net investment income (loss)		3,689			498		(5,138	)		(11,988	)
Net realized and unrealized gains (losses)		(9,731	)		4,492		7,325			(114	)
Net increase (decrease) in Members’ Capital from operations		(6,042	)		4,490		2,187			(12,102	)
Basic and diluted earnings per Unit		(0.30	)		0.15		0.11			(0.54	)
Net asset value per unit at quarter end		99.35			99.65		99.41			99.30

11. Subsequent Events

The Company has evaluated subsequent events through the date of issuance of the consolidated financial statements. There have been no subsequent events that require recognition or disclosure in these consolidated financial statements.

F-31

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Accelerated filer

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Smaller reporting company

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