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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020

 

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

COMMISSION FILE NUMBER: 814-01196

 

 

AB Private Credit Investors Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   47-5049745
(State of incorporation)  

(I.R.S. Employer

Identification No.)

1345 Avenue of the Americas

New York, NY 10105

(Address of principal executive offices)

(212) 969-1000

(Registrant’s telephone number, including area code)

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which  registered

   

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

Common Stock, par value $0.01 per share

(Title of Class)

 

 

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

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

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

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
Emerging Growth Company       

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

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

The issuer had 20,047,108.805 shares of common stock, $0.01 par value per share, outstanding as of November 13, 2020.

 

 

 


Table of Contents

AB PRIVATE CREDIT INVESTORS CORPORATION

FORM 10-Q FOR THE QUARTER ENDED September 30, 2020

Table of Contents

 

    

INDEX

   PAGE
NO.
 

PART I.

   FINANCIAL INFORMATION      3  

Item 1.

   Consolidated Financial Statements      3  

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations      46  

Item 3.

   Quantitative and Qualitative Disclosures About Market Risk      70  

Item 4.

   Controls and Procedures      70  

PART II.

   OTHER INFORMATION      71  

Item 1.

   Legal Proceedings      71  

Item 1A.

   Risk Factors      71  

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds      73  

Item 3.

   Defaults Upon Senior Securities      73  

Item 4.

   Mine Safety Disclosures      73  

Item 5.

   Other Information      73  

Item 6.

   Exhibits      73  

SIGNATURES

     

 

2


Table of Contents
Item 1.

Financial Statements

AB Private Credit Investors Corporation

Consolidated Statements of Assets and Liabilities

 

     As of
September 30, 2020
(Unaudited)
    As of
December 31,
2019
 

Assets

 

Investments, at fair value (amortized cost of $424,984,295 and $346,873,740, respectively)

   $ 414,711,112     $ 345,025,318  

Cash and cash equivalents

     23,593,970       14,931,791  

Interest receivable

     2,149,696       1,849,816  

Prepaid expenses

     439,002       112,166  

Receivable for investments sold

     143,796       286,935  

Receivable for fund shares

     30,001       19,909,278  

Deferred financing costs

     8,811       64,959  
  

 

 

   

 

 

 

Total assets

   $ 441,076,388     $ 382,180,263  
  

 

 

   

 

 

 

Liabilities

 

Notes payable (net of unamortized discount of $27,588 and $32,835, respectively, and debt issuance costs of $2,066,467 and $2,780,532, respectively)

   $ 211,055,945     $ 210,336,633  

Credit facility payable

     34,500,000       19,500,000  

Secured borrowings

     3,430,000       —    

Payable to Adviser

     2,399,951       355,255  

Incentive fee payable

     1,945,203       1,049,291  

Distribution payable

     1,411,652       964,833  

Management fees payable

     1,344,593       1,053,696  

Interest and borrowing expenses payable

     1,076,443       3,412,567  

Professional fees payable

     731,281       650,840  

Administrator and custodian fees payable

     301,054       260,061  

Accrued expenses and other liabilities

     58,112       —    

Directors’ fees payable

     50,000       —    

Transfer agent fees payable

     13,083       9,397  

Miscellaneous payable

     —         25,295  
  

 

 

   

 

 

 

Total liabilities

   $ 258,317,317     $ 237,617,868  
  

 

 

   

 

 

 

Commitments and Contingencies (Note 6)

 

Net Assets

 

Common stock, par value $0.01 per share (200,000,000 shares authorized, 20,047,109 and 14,627,401 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively)

     200,471       146,274  

Paid-in capital in excess of par value

     192,652,507       146,096,298  

Distributable earnings (accumulated loss)

     (10,094,548     (1,680,177
  

 

 

   

 

 

 

Total net assets of AB Private Credit Investors Corporation

   $ 182,758,430     $ 144,562,395  
  

 

 

   

 

 

 

Non-Controlling Interest in ABPCIC Equity Holdings, LLC

   $ 641     $ —    
  

 

 

   

 

 

 

Total net assets

   $ 182,759,071     $ 144,562,395  
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 441,076,388     $ 382,180,263  
  

 

 

   

 

 

 

Net asset value per share of AB Private Credit Investors Corporation

   $ 9.12     $ 9.88  
  

 

 

   

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

3


Table of Contents

AB Private Credit Investors Corporation

Unaudited Consolidated Statements of Operations

 

     For the three months ended
September 30,
    For the nine months ended
September 30,
 
     2020     2019     2020     2019  

Investment Income:

 

Interest income, net of amortization/accretion

   $ 7,592,653     $ 5,718,631     $ 21,927,281     $ 14,290,652  

Payment-in-kind interest

     279,404       104,675       641,304       166,946  

Other fee income

     96,220       35,731       397,531       171,072  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     7,968,277       5,859,037       22,966,116       14,628,670  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

 

Interest and borrowing expenses

     1,753,718       2,424,364       6,340,483       5,844,084  

Management fees

     1,563,422       1,017,059       4,359,381       2,477,129  

Income-based incentive fee

     326,274       180,792       1,382,704       586,627  

Collateral management fees

     462,788       367,534       1,380,737       693,343  

Professional fees

     339,664       379,792       1,220,261       1,197,314  

Administration and custodian fees

     95,391       113,524       286,900       259,233  

Directors’ fees

     50,000       37,500       150,000       112,500  

Insurance expenses

     25,998       68,338       138,162       193,013  

Transfer agent fees

     13,083       8,104       36,390       19,203  

Other expenses

     101,348       103,084       495,758       318,440  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     4,731,686       4,700,091       15,790,776       11,700,886  

Reimbursement payments to Adviser (See Note 3: Expense Support and Conditional Reimbursement Agreement

     998,880       —         1,751,021       —    

Waived collateral management fees

     (462,788     (367,534     (1,380,737     (693,343

Expense reimbursement from Adviser

     —         (31,875     (89,757     (447,556

Waived management fees

     (218,829     (60,261     (1,664,920     (191,359

Waived incentive fees

     —         (56,255     (486,784     (132,327
  

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

     5,048,949       4,184,166       13,919,599       10,236,301  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income before taxes

     2,919,328       1,674,871       9,046,517       4,392,369  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     2,919,328       1,674,871       9,046,517       4,392,369  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and change in unrealized gains (losses) on investment transactions:

 

Net realized gain (loss) from investments

     10,789       76,718       12,605       64,058  

Net change in unrealized appreciation (depreciation) on investments

     8,475,469       (470,046     (8,424,761     (422,333
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and change in unrealized gains (losses) on investment transactions

     8,486,258       (393,328     (8,412,156     (358,275
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 11,405,586     $ 1,281,543     $ 634,361     $ 4,034,094  
  

 

 

   

 

 

   

 

 

   

 

 

 

Less: Net increase (decrease) in net assets resulting from operations related to Non-Controlling Interest in ABPCIC Equity Holdings, LLC

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations related to AB Private Credit Investors Corporation

   $ 11,405,586     $ 1,281,543     $ 634,361     $ 4,034,094  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income per share (basic and diluted):

 

Net investment income per share (basic and diluted):

   $ 0.15     $ 0.15     $ 0.50     $ 0.48  

Earnings per share (basic and diluted):

   $ 0.57     $ 0.11     $ 0.04     $ 0.44  

Weighted average shares outstanding:

     19,882,995       11,226,276       18,105,602       9,182,983  

 

See Notes to Unaudited Consolidated Financial Statements

 

4


Table of Contents

AB Private Credit Investors Corporation

Unaudited Consolidated Statements of Changes in Net Assets

 

     Common Stock                             
     Shares      Par
Amount
     Paid in
Capital in
Excess of Par
     Distributable
Earnings
    Non-Controlling
Interest –
ABPCIC
Equity
Holdings,
LLC
     Total
Net Assets
 

Net assets at June 30, 2020

     19,881,192      $ 198,812      $ 191,141,567      $ (18,574,974   $ —        $ 172,765,405  

Increase (decrease) in net assets resulting from operations:

 

          

Net investment income

     —          —          —          2,919,328       —          2,919,328  

Net realized gain (loss) on investments

     —          —          —          10,789       —          10,789  

Net change in unrealized appreciation (depreciation) on investments

     —          —          —          8,475,469       —          8,475,469  

Capital transactions:

 

Issuance of common stock

     —          —          —          —         —          —    

Contribution of non-controlling interest into ABPCIC Equity Holdings, LLC

     —          —          —          —         641        641  

Issuance of common shares pursuant to distribution reinvestment plan

     165,917        1,659        1,510,940        —         —          1,512,599  

Repurchase of common stock

     —          —          —          —         —          —    

Distributions to stockholders

     —          —          —          (2,925,160     —          (2,925,160
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total increase (decrease) for the three months ended September 30, 2020

     165,917        1,659        1,510,940        8,480,426       641        9,993,666  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net assets at September 30, 2020

     20,047,109      $ 200,471      $ 192,652,507      $ (10,094,548   $ 641      $ 182,759,071  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Distributions declared per share

     —        $ —        $ —        $ 0.15     $  —        $ 0.15  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net assets at December 31, 2019

     14,627,401      $ 146,274      $ 146,096,298      $ (1,680,177   $ —        $ 144,562,395  

Increase (decrease) in net assets resulting from operations:

 

Net investment income

     —          —          —          9,046,517       —          9,046,517  

Net realized gain (loss) on investments

     —          —          —          12,605       —          12,605  

Net change in unrealized appreciation (depreciation) on investments

     —          —          —          (8,424,761     —          (8,424,761

Capital transactions:

 

Issuance of common stock

     4,876,625        48,766        41,796,086        —         —          41,844,852  

Contribution of non-controlling interest into ABPCIC Equity Holdings, LLC

     —          —          —          —         641        641  

Issuance of common shares pursuant to distribution reinvestment plan

     543,083        5,431        4,760,123        —         —          4,765,554  

Repurchase of common stock

     —          —          —          —         —          —    

Distributions to stockholders

     —          —          —          (9,048,732     —          (9,048,732
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total increase (decrease) for the nine months ended September 30, 2020

     5,419,708        54,197        46,556,209        (8,414,371     641        38,196,676  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net assets at September 30, 2020

     20,047,109      $ 200,471      $ 192,652,507      $ (10,094,548   $ 641      $ 182,759,071  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Distributions declared per share

   $ —        $ —        $ —        $ 0.52     $  —        $ 0.52  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

5


Table of Contents

AB Private Credit Investors Corporation

Unaudited Consolidated Statements of Changes in Net Assets

 

     Common Stock                    
     Shares     Par
Amount
    Paid in
Capital in
Excess of Par
    Distributable
Earnings
    Total
Net Assets
 

Net assets at June 30, 2019

     10,620,261     $ 106,203     $ 106,234,097     $ (623,964   $ 105,716,336  

Increase (decrease) in net assets resulting from operations:

 

Net investment income

     —         —         —         1,674,871       1,674,871  

Net realized gain (loss) on investments

     —         —         —         76,718       76,718  

Net change in unrealized appreciation (depreciation) on investments

     —         —         —         (470,046     (470,046

Capital transactions:

 

Issuance of common stock

     1,795,822       17,957       17,949,853       —         17,967,810  

Issuance of common shares pursuant to distribution reinvestment plan

     91,341       913       906,089       —         907,002  

Repurchase of common stock

     (8,478     (84     (84,329     —         (84,413

Distributions to stockholders

     —         —         —         (1,674,929     (1,674,929
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total increase (decrease) for the three months ended September 30, 2019

     1,878,685       18,786       18,771,613       (393,386     18,397,013  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net assets at September 30, 2019

     12,498,946     $ 124,989     $ 125,005,710     $ (1,017,350   $ 124,113,349  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions declared per share

     —       $ —       $ —       $ 0.13     $ 0.13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net assets at December 31, 2018

     6,383,672     $ 63,837     $ 63,838,147     $ (628,274   $ 63,273,710  

Increase (decrease) in net assets resulting from operations:

 

Net investment income

     —         —         —         4,392,369       4,392,369  

Net realized gain (loss) on investments

     —         —         —         64,058       64,058  

Net change in unrealized appreciation (depreciation) on investments

     —         —         —         (422,333     (422,333

Capital transactions:

 

Issuance of common stock

     5,896,977       58,969       58,997,766       —         59,056,735  

Issuance of common shares pursuant to distribution reinvestment plan

     241,635       2,416       2,401,687       —         2,404,103  

Repurchase of common stock

     (23,338     (233     (231,890     —         (232,123

Distributions to stockholders

     —         —         —         (4,423,170     (4,423,170
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total increase (decrease) for the nine months ended September 30, 2019

     6,115,274       61,152       61,167,563       (389,076     60,839,639  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net assets at September 30, 2019

     12,498,946     $ 124,989     $ 125,005,710     $ (1,017,350   $ 124,113,349  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions declared per share

     —       $ —       $ —       $ 0.44     $ 0.44  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

6


Table of Contents

AB Private Credit Investors Corporation

Unaudited Consolidated Statements of Cash Flows

 

     Nine Months
Ended
September 30, 2020
    Nine Months
Ended
September 30, 2019
 

Cash flows from operating activities

 

Net increase (decrease) in net assets resulting from operations

   $ 634,361     $ 4,034,094  

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

 

Purchases of investments

     (119,099,067     (191,726,921

Payment-in-kind investments

     (641,304     (166,946

Proceeds from sales of investments and principal repayments

     43,138,316       31,722,080  

Net realized (gain) loss on investments

     (12,605     (64,058

Net change in unrealized (appreciation) depreciation on investments

     8,424,761       422,333  

Amortization of premium and (accretion) of discount, net

     (1,495,895     (782,772

Amortization of discount, debt issuance and deferred financing costs

     775,460       640,997  

Increase (decrease) in operating assets and liabilities:

 

(Increase) decrease in receivable for investments sold

     143,139       (187,501

(Increase) decrease in interest receivable

     (299,880     (1,170,284

(Increase) decrease in prepaid expenses

     (326,836     (78,112

Increase (decrease) in management fees payable

     290,897       126,669  

Increase (decrease) in payable to Adviser

     2,044,696       350,114  

Increase (decrease) in administrator and custodian fees payable

     40,993       (69,577

Increase (decrease) in professional fees payable

     80,441       2,428  

Increase (decrease) in miscellaneous payable

     (25,295     —    

Increase (decrease) in incentive fees payable

     895,912       454,300  

Increase (decrease) in directors’ fees payable

     50,000       41,773  

Increase (decrease) in transfer agent fees payable

     3,686       (2,613

Increase (decrease) in interest and borrowing expenses payable

     (2,336,124     1,044,057  

Increase (decrease) in accrued expenses and other liabilities

     58,112       10,747  
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities

     (67,656,232     (155,399,192
  

 

 

   

 

 

 

Cash flows from financing activities

 

Issuance of common stock

     61,724,129       71,623,545  

Contribution of Non-Controlling Interest into ABPCIC Equity Holdings, LLC

     641       —    

Repurchase of common stock

     —         (232,123

Distributions paid

     (3,836,359     (1,655,139

Financing costs paid

     —         (3,686,406

Borrowings on notes

     —         213,117,165  

Borrowings on credit facility

     79,000,000       214,750,000  

Repayments of credit facility

     (64,000,000     (302,950,000

Secured borrowings

     3,430,000       —    
  

 

 

   

 

 

 

Net cash provided by (used for) financing activities

     76,318,411       190,967,042  
  

 

 

   

 

 

 

Net increase (decrease) in cash

     8,662,179       35,567,850  

Cash and cash equivalents, beginning of period

     14,931,791       2,510,208  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 23,593,970     $ 38,078,058  
  

 

 

   

 

 

 

Supplemental and non-cash financing activities

 

Cash paid during the period for interest

   $ 7,843,662     $ 3,986,622  

Issuance of common shares pursuant to distribution reinvestment plan

   $ 4,765,554     $ 2,404,103  

See Notes to Unaudited Consolidated Financial Statements

 

7


Table of Contents

AB Private Credit Investors Corporation

Consolidated Schedule of Investments as of September 30, 2020

(Unaudited)

 

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 
Investments at Fair Value —226.92% + * # ^  
U.S. Corporate Debt —221.22%  
1st Lien/Senior Secured Debt —217.02%  

Amercareroyal, LLC(1)

  Business Services   Term Loan   6.00% (L + 5.00%; 1.00% Floor)     11/25/2025     $ 4,544,081     $ 4,504,025     $ 4,362,318  

BEP Borrower Holdco, LLC(2) (3)

  Business Services   Delayed Draw Term Loan A   5.25% (L + 4.25%; 1.00% Floor)     06/12/2024       —         (9,567     (32,208

BEP Borrower Holdco, LLC(2) (3)

  Business Services   Revolver   5.25% (L + 4.25%; 1.00% Floor)     06/12/2024       —         (4,798     (12,883

BEP Borrower Holdco, LLC(1)

  Business Services   Term Loan A   5.25% (L + 4.25%; 1.00% Floor)     06/12/2024       3,435,477       3,395,736       3,332,413  

Edgewood Partners Holdings LLC(1)

  Business Services   Term Loan   5.25% (L + 4.25%; 1.00% Floor)     09/06/2024       5,579,947       5,536,588       5,412,549  

Metametrics, Inc.(2) (3)

  Business Services   Revolver   6.75% (L + 5.75%; 1.00% Floor)     09/10/2025       —         (10,773     (32,559

Metametrics, Inc.(1)

  Business Services   Term Loan   6.75% (L + 5.75%; 1.00% Floor)     09/10/2025       5,859,775       5,759,388       5,566,786  

Quirch Foods Holdings, LLC(1)

  Business Services   Term Loan B   5.90% (L + 5.75%)     12/19/2025       2,101,506       2,084,512       2,101,506  

Single Digits, Inc.(2) (3)

  Business Services   Delayed Draw Term Loan   7.00% (L + 6.00%; 1.00% Floor)     12/21/2023       —         (6,744     (83,230

Single Digits, Inc.(2)

  Business Services   Revolver   7.00% (L + 6.00%; 1.00% Floor)     12/21/2023       99,876       97,179       66,584  

Single Digits, Inc.(1)

  Business Services   Term Loan   7.00% (L + 6.00%; 1.00% Floor)     12/21/2023       3,270,920       3,247,194       3,009,246  

Smile Brands, Inc.(2)

  Business Services   Delayed Draw Term Loan   4.82% (L + 4.50%)     10/12/2024       479,701       475,364       460,749  

Smile Brands, Inc.(2) (3)

  Business Services   Revolver   4.82% (L + 4.50%)     10/12/2023       —         (1,566     (7,644

Smile Brands, Inc.(1)

  Business Services   Term Loan   4.82% (L + 4.50%)     10/12/2024       1,627,266       1,615,867       1,578,448  

Blink Holdings, Inc.(2)

  Consumer Non-Cyclical   Delayed Draw Term Loan   9.00% (L + 5.50%; 2.50% PIK; 1.00% Floor)     11/08/2024       946,258       935,737       838,043  

Blink Holdings, Inc.(1)

  Consumer Non-Cyclical   Delayed Draw Term Loan   9.00% (L + 5.50%; 2.50% PIK; 1.00% Floor)     11/08/2024       1,179,251       1,169,475       1,090,807  

Blink Holdings, Inc.(1)

  Consumer Non-Cyclical   Term Loan   9.00% (L + 5.50%; 2.50% PIK; 1.00% Floor)     11/08/2024       1,647,683       1,634,031       1,524,107  

Captain D’s, Inc.(2)

  Consumer Non-Cyclical   Revolver   5.50% (L + 4.50%; 1.00% Floor)     12/15/2023       145,851       144,713       141,929  

Captain D’s, Inc.(1)

  Consumer Non-Cyclical   Term Loan   5.50% (L + 4.50%; 1.00% Floor)     12/15/2023       1,968,189       1,956,691       1,928,826  

GPS Hospitality Holding Company LLC(1)

  Consumer Non-Cyclical   Term Loan B   4.47% (L + 4.25%)     12/08/2025       2,324,350       2,297,135       2,196,511  

PF Growth Partners, LLC

  Consumer Non-Cyclical   Delayed Draw Term Loan   6.00% (L + 5.00%; 1.00% Floor)     07/11/2025       119,842       118,874       112,052  

PF Growth Partners, LLC(1)

  Consumer Non-Cyclical   Term Loan   6.00% (L + 5.00%; 1.00% Floor)     07/11/2025       2,016,893       2,000,139       1,885,795  

5 Bars, LLC(2) (3)

  Digital Infrastructure &
Services
  Delayed Draw Term Loan   7.50% (L + 6.50%; 1.00% Floor)     09/27/2024       —         (41,435     —    

5 Bars, LLC(2) (3)

  Digital Infrastructure &
Services
  Revolver   7.50% (L + 6.50%; 1.00% Floor)     09/27/2024       —         (7,769     —    

5 Bars, LLC(1)

  Digital Infrastructure &
Services
  Term Loan   7.50% (L + 6.50%; 1.00% Floor)     09/27/2024       4,742,121       4,684,003       4,742,121  

Ahead Data Blue, LLC(2) (3)

  Digital Infrastructure &
Services
  Revolver   5.75% (L + 4.75%; 1.00% Floor)     11/08/2024       —         (15,840     —    

Ahead Data Blue, LLC(1)

  Digital Infrastructure &
Services
  Term Loan   5.75% (L + 4.75%; 1.00% Floor)     11/08/2024       5,365,412       5,274,802       5,365,412  

EvolveIP, LLC(2) (3)

  Digital Infrastructure &
Services
  Delayed Draw Term Loan   6.75% (L + 5.75%; 1.00% Floor)     06/07/2023       —         (8,667     (11,337

EvolveIP, LLC(2)

  Digital Infrastructure &
Services
  Revolver   6.75% (L + 5.75%; 1.00% Floor)     06/07/2023       113,374       106,886       104,871  

 

See Notes to Unaudited Consolidated Financial Statements

 

8


Table of Contents

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 

EvolveIP, LLC(1)

  Digital Infrastructure &
Services
  Term Loan A   6.75% (L + 5.75%; 1.00% Floor)     06/07/2023     $ 6,583,944     $ 6,506,480     $ 6,485,184  

Fuze, Inc.(2)

  Digital Infrastructure &
Services
  Delayed Draw Term Loan   8.50% (L + 6.50%; 2.00% Floor)     09/20/2024       777,531       251,115       766,905  

Fuze, Inc.(2) (3)

  Digital Infrastructure &
Services
  Revolver   8.50% (L + 6.50%; 2.00% Floor)     09/20/2024       —         (5,160     (18,531

Fuze, Inc.(1)

  Digital Infrastructure &
Services
  Term Loan   8.50% (L + 6.50%; 2.00% Floor)     09/20/2024       11,015,029       10,971,058       10,857,514  

InSite Wireless Group, LLC(2) (3)

  Digital Infrastructure &
Services
  Revolver   5.05% (L + 4.55%; 0.50% Floor)     03/15/2023       —         (4,001     —    

InSite Wireless Group, LLC(1) (2)

  Digital Infrastructure &
Services
  Term Loan   5.05% (L + 4.55%; 0.50% Floor)     03/15/2023       6,947,997       6,887,174       6,947,997  

Star2star Communications, LLC(2) (3)

  Digital Infrastructure &
Services
  Delayed Draw Term Loan   6.50% (L + 5.50%; 1.00% Floor)     03/13/2025       —         (11,446     (12,812

Star2star Communications, LLC(2) (3)

  Digital Infrastructure &
Services
  Revolver   6.50% (L + 5.50%; 1.00% Floor)     03/13/2025       —         (17,170     (19,217

Star2star Communications, LLC(1)

  Digital Infrastructure &
Services
  Term Loan   6.50% (L + 5.50%; 1.00% Floor)     03/13/2025       5,417,669       5,320,374       5,309,316  

AEG Holding Company, Inc.(1)

  Education   Delayed Draw Term Loan   6.50% (L + 5.50%; 1.00% Floor)     11/20/2023       1,070,084       1,058,369       1,048,682  

AEG Holding Company, Inc.(2)

  Education   Revolver   6.50% (L + 5.50%; 1.00% Floor)     11/20/2023       223,373       209,698       201,036  

AEG Holding Company, Inc.(1)

  Education   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     11/20/2023       6,059,519       5,990,702       5,938,329  

AEG Holding Company, Inc.(1)

  Education   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     11/20/2023       1,862,113       1,834,505       1,824,870  

Accelerate Resources Operating, LLC(2) (3)

  Energy   Delayed Draw Term Loan   8.50% (L + 7.50%; 1.00% Floor)     02/24/2026       —         (29,963     (49,772

Accelerate Resources Operating, LLC(2) (3)

  Energy   Revolver   8.50% (L + 7.50%; 1.00% Floor)     02/24/2026       —         (7,491     (12,443

Accelerate Resources Operating, LLC

  Energy   Term Loan   8.50% (L + 7.50%; 1.00% Floor)     02/24/2026       4,989,614       4,899,724       4,839,925  

BCP Raptor II, LLC(1) (4)

  Energy   Term Loan   4.90% (L + 4.75%)     11/03/2025       5,669,153       5,668,329       4,152,654  

Brazos Delaware II, LLC(1)

  Energy   Term Loan B   4.16% (L + 4.00%)     05/21/2025       4,014,003       3,930,569       3,070,712  

Nine Point Energy, LLC(2) (3)

  Energy   Delayed Draw Term Loan   9.00% (L + 5.50%; 2.50% PIK; 1.00% Floor)     06/07/2024       —         (5,045     (39,375

Nine Point Energy, LLC

  Energy   Term Loan   9.00% (L + 5.50%; 2.50% PIK; 1.00% Floor)     06/07/2024       5,801,551       5,713,152       5,105,365  

Higginbotham Insurance Agency, Inc.

  Financial Services   Term Loan   5.25% (L + 4.25%, 1.00% Floor)     12/19/2024       3,387,601       3,358,096       3,285,973  

American Physician Partners, LLC(1)

  Healthcare & HCIT   Delayed Draw Term Loan   7.75% (L + 6.75%; 1.00% Floor)     12/21/2021       1,015,556       1,009,101       974,933  

American Physician Partners, LLC(2)

  Healthcare & HCIT   Revolver   7.75% (L + 6.75%; 1.00% Floor)     12/21/2021       346,322       343,555       328,562  

American Physician Partners, LLC(1)

  Healthcare & HCIT   Term Loan A   7.75% (L + 6.75%; 1.00% Floor)     12/21/2021       5,380,891       5,344,464       5,165,655  

American Physician Partners, LLC

  Healthcare & HCIT   Term Loan C   7.75% (L + 6.75%; 1.00% Floor)     12/21/2021       1,164,338       1,157,506       1,117,765  

American Physician Partners, LLC(1)

  Healthcare & HCIT   Term Loan D   7.75% (L + 6.75%; 1.00% Floor)     12/21/2021       2,161,231       1,982,838       2,074,782  

Analogic Corporation(2) (3)

  Healthcare & HCIT   Revolver   6.25% (L + 5.25%; 1.00% Floor)     06/22/2023       —         (2,225     (7,486

Analogic Corporation(1)

  Healthcare & HCIT   Term Loan   6.25% (L + 5.25%; 1.00% Floor)     06/24/2024       2,122,847       2,096,111       2,048,548  

Azurity Pharmaceuticals, Inc.(2) (3) (5)

  Healthcare & HCIT   Delayed Draw Term Loan   6.25% (L + 5.25%; 1.00% Floor)     03/21/2023       —         (5,468     (9,659

Azurity Pharmaceuticals, Inc.(2) (3) (5)

  Healthcare & HCIT   Revolver   6.25% (L + 5.25%; 1.00% Floor)     03/21/2023       —         (5,468     (9,659

Azurity Pharmaceuticals, Inc.(1) (5)

  Healthcare & HCIT   Term Loan   6.25% (L + 5.25%; 1.00% Floor)     03/21/2023       7,219,345       7,133,946       7,074,958  

BK Medical Holding Company, Inc.(2) (3)

  Healthcare & HCIT   Revolver   6.25% (L + 5.25%; 1.00% Floor)     06/22/2023       —         (2,575     (19,304

BK Medical Holding Company, Inc.

  Healthcare & HCIT   Term Loan A   6.25% (L + 5.25%; 1.00% Floor)     06/22/2024       2,987,823       2,962,536       2,808,554  

Caregiver 2, Inc.

  Healthcare & HCIT   Term Loan   8.75% (L + 6.75%; 2.00% Floor)     07/24/2025       707,741       693,694       693,586  

Caregiver 2, Inc.

  Healthcare & HCIT   Term Loan   8.75% (L + 6.75%; 2.00% Floor)     07/24/2025       4,930,882       4,833,014       4,832,264  

 

See Notes to Unaudited Consolidated Financial Statements

 

9


Table of Contents

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 

Delaware Valley Management Holdings, Inc.(2) (3)

  Healthcare & HCIT   Delayed Draw Term Loan   7.28% (L + 4.00%; 2.25% PIK; 1.00% Floor)     03/21/2024     $ —       $ (25,677   $ (160,698

Delaware Valley Management Holdings, Inc.

  Healthcare & HCIT   Revolver   6.78% (L + 5.75%; 1.00% Floor)     03/21/2024       528,188       520,667       447,639  

Delaware Valley Management Holdings, Inc.

  Healthcare & HCIT   Term Loan   7.28% (L + 4.00%; 2.25% PIK; 1.00% Floor)     03/21/2024       3,447,513       3,398,034       2,921,768  

Ethos Veterinary Health LLC(1) (2)

  Healthcare & HCIT   Delayed Draw Term Loan   4.90% (L + 4.75%)     05/15/2026       1,067,934       1,050,801       1,029,793  

Ethos Veterinary Health LLC(1)

  Healthcare & HCIT   Term Loan   4.90% (L + 4.75%)     05/15/2026       2,297,487       2,278,001       2,251,538  

GHA Buyer, Inc.(2) (3)

  Healthcare & HCIT   Revolver   8.00% (L + 6.00%; 2.00% Floor)     06/24/2025       —         (5,502     (7,316

GHA Buyer, Inc.(1)

  Healthcare & HCIT   Term Loan   8.00% (L + 6.00%; 2.00% Floor)     06/24/2025       1,982,943       1,957,089       1,943,284  

GHA Buyer, Inc.

  Healthcare & HCIT   Term Loan   8.00% (L + 6.00%; 2.00% Floor)     06/24/2025       5,421,734       5,318,847       5,313,299  

GHA Buyer, Inc.

  Healthcare & HCIT   Term Loan   8.00% (L + 6.00%; 2.00% Floor)     06/24/2025       566,634       556,560       555,301  

INH Buyer, Inc.(2) (3)

  Healthcare & HCIT   Revolver   7.50% (L + 6.50%, 1.00% Floor)     01/31/2024       —         (2,109     (10,293

INH Buyer, Inc.(1)

  Healthcare & HCIT   Term Loan   7.50% (L + 6.50%, 1.00% Floor)     01/31/2025       8,615,130       8,514,382       8,184,374  

Kindeva Drug Delivery L.P.(2) (3)

  Healthcare & HCIT   Revolver   7.00% (L + 6.00%; 1.00% Floor)     05/01/2025       —         (33,196     (36,133

Kindeva Drug Delivery L.P.(1)

  Healthcare & HCIT   Term Loan   7.00% (L + 6.00%; 1.00% Floor)     05/01/2026       15,858,795       15,484,405       15,462,325  

OMH-HealthEdge Holdings, LLC(2) (3)

  Healthcare & HCIT   Revolver   6.50% (L + 5.50%; 1.00% Floor)     10/24/2024       —         (8,423     (13,762

OMH-HealthEdge Holdings, LLC(1)

  Healthcare & HCIT   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     10/24/2025       3,746,601       3,673,135       3,634,203  

Pace Health Companies, LLC(2) (3)

  Healthcare & HCIT   Revolver   5.50% (L + 4.50%; 1.00% Floor)     08/02/2024       —         (4,855     (21,584

Pace Health Companies, LLC(1)

  Healthcare & HCIT   Term Loan   5.50% (L + 4.50%; 1.00% Floor)     08/02/2024       5,372,536       5,329,043       5,184,497  

Pinnacle Dermatology Management, LLC(2) (3)

  Healthcare & HCIT   Delayed Draw Term Loan   5.25% (L + 4.25%; 1.00% Floor)     05/18/2023       —         (45,671     (98,659

Pinnacle Dermatology Management, LLC(2) (3)

  Healthcare & HCIT   Revolver   5.25% (L + 4.25%; 1.00% Floor)     05/18/2023       —         (3,432     (9,682

Pinnacle Dermatology Management, LLC(1)

  Healthcare & HCIT   Term Loan   5.25% (L + 4.25%; 1.00% Floor)     05/18/2023       6,282,614       6,194,415       6,094,136  

Pinnacle Treatment Centers, Inc.(2) (3)

  Healthcare & HCIT   Delayed Draw Term Loan   7.25% (L + 6.25%; 1.00% Floor)     12/31/2022       —         (2,734     (4,687

Pinnacle Treatment Centers, Inc.

  Healthcare & HCIT   Delayed Draw Term Loan
2
  7.25% (L + 6.25%; 1.00% Floor)     12/31/2022       351,545       348,964       344,514  

Pinnacle Treatment Centers, Inc.(2) (3)

  Healthcare & HCIT   Revolver   7.25% (L + 6.25%; 1.00% Floor)     12/31/2022       —         (2,531     (5,859

Pinnacle Treatment Centers, Inc.

  Healthcare & HCIT   Term Loan   7.25% (L + 6.25%; 1.00% Floor)     12/31/2022       4,226,598       4,194,175       4,142,066  

Platinum Dermatology Partners, LLC(6)

  Healthcare & HCIT   General Delayed Draw
Term Loan
  9.25% (L + 3.00%; 5.25% PIK; 1.00% Floor)     01/03/2023       1,459,436       1,432,847       1,189,440  

Platinum Dermatology Partners, LLC(7)

  Healthcare & HCIT   Revolver   10.50% (P + 2.00%; 5.25% PIK; 1.00% Floor)     01/03/2023       511,286       500,901       416,698  

Platinum Dermatology Partners, LLC

  Healthcare & HCIT   Specified Delayed Draw
Term Loan
  10.50% (P + 2.00%; 5.25% PIK; 1.00% Floor)     01/03/2023       2,009,662       1,972,519       1,637,874  

Platinum Dermatology Partners, LLC

  Healthcare & HCIT   Term Loan   9.25% (L + 3.00%; 5.25% PIK; 1.00% Floor)     01/03/2023       3,195,665       3,126,827       2,604,467  

RCP Encore Acquisition, Inc.(1)

  Healthcare & HCIT   Term Loan   5.75% (L + 4.75%; 1.00% Floor)     06/09/2025       3,944,680       3,912,589       3,794,782  

Salisbury House, LLC(2)

  Healthcare & HCIT   Revolver   6.00% (L + 5.00%; 1.00% Floor)     08/30/2025       149,448       138,323       138,239  

Salisbury House, LLC(1)

  Healthcare & HCIT   Term Loan A1   6.50% (L + 5.50%; 1.00% Floor)     08/30/2025       5,380,111       5,245,961       5,245,608  

The Center for Orthopedic and Research Excellence, Inc.(2)

  Healthcare & HCIT   Delayed Draw Term Loan   6.25% (L + 5.25%; 1.00% Floor)     08/15/2025       345,266       330,096       318,508  

 

See Notes to Unaudited Consolidated Financial Statements

 

10


Table of Contents

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 

The Center for Orthopedic and Research Excellence, Inc.(2) (3)

  Healthcare & HCIT   Revolver   6.25% (L + 5.25%; 1.00% Floor)     08/15/2025     $ —       $ (9,964   $ (15,537

The Center for Orthopedic and Research Excellence, Inc.(1)

  Healthcare & HCIT   Term Loan   6.25% (L + 5.25%; 1.00% Floor)     08/15/2025       4,956,293       4,883,096       4,844,777  

Theranest, LLC(1)

  Healthcare & HCIT   Delayed Draw Term Loan   6.00% (L + 5.00%; 1.00% Floor)     07/24/2023       2,750,535       2,715,502       2,681,772  

Theranest, LLC

  Healthcare & HCIT   Revolver   7.25% (P + 4.00%; 1.00% Floor)     07/24/2023       428,571       423,706       417,857  

Theranest, LLC(1)

  Healthcare & HCIT   Term Loan   6.00% (L + 5.00%; 1.00% Floor)     07/24/2023       2,977,500       2,941,756       2,903,063  

ZBS Alliance Animal Health, LLC(1) (2)

  Healthcare & HCIT   Delayed Draw Term Loan   6.25% (L + 5.25%; 1.00% Floor)     11/08/2025       3,056,995       2,979,538       2,966,283  

ZBS Alliance Animal Health, LLC(2)

  Healthcare & HCIT   Revolver   6.25% (L + 5.25%; 1.00% Floor)     11/08/2025       453,560       441,749       439,953  

ZBS Alliance Animal Health, LLC(1)

  Healthcare & HCIT   Term Loan   6.25% (L + 5.25%; 1.00% Floor)     11/08/2025       2,700,950       2,653,791       2,646,931  

RxBenefits, Inc.(2) (3)

  Pharmaceutical   Revolver   6.00% (L + 5.00%; 1.00% Floor)     03/29/2024       —         (4,060     (5,758

RxBenefits, Inc.(1)

  Pharmaceutical   Term Loan A   6.00% (L + 5.00%; 1.00% Floor)     03/28/2025       5,665,749       5,665,749       5,609,091  

Alphasense, Inc.(2) (3)

  Software & Services   Revolver   8.50% (L + 7.50%; 1.00% Floor)     05/29/2024       —         (11,488     (8,724

Alphasense, Inc.

  Software & Services   Term Loan   8.50% (L + 7.50%; 1.00% Floor)     05/29/2024       7,269,628       7,173,898       7,196,931  

AMI US Holdings, Inc.(2)

  Software & Services   Revolver   5.66% (L + 5.50%)     04/01/2024       788,116       772,291       766,223  

AMI US Holdings, Inc.(1)

  Software & Services   Term Loan   6.59% (L + 5.50%; 1.00% Floor)     04/01/2025       8,194,212       8,064,658       8,030,328  

Avetta, LLC(2) (3)

  Software & Services   Revolver   6.50% (L + 5.50%; 1.00% Floor)     04/10/2024       —         (5,868     (9,888

Avetta, LLC(1)

  Software & Services   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     04/10/2024       3,262,089       3,194,528       3,196,847  

Avetta, LLC(1)

  Software & Services   Term Loan B   6.50% (L + 5.50%; 1.00% Floor)     04/10/2024       4,294,118       4,229,064       4,208,235  

Businesssolver.com, Inc.(1)

  Software & Services   Delayed Draw Term Loan   8.50% (L + 7.50%; 1.00% Floor)     05/15/2023       388,235       385,678       388,235  

Businesssolver.com, Inc.(2) (3)

  Software & Services   Revolver   8.50% (L + 7.50%; 1.00% Floor)     05/15/2023       —         (3,499     —    

Businesssolver.com, Inc.(1)

  Software & Services   Term Loan   8.50% (L + 7.50%; 1.00% Floor)     05/15/2023       2,588,235       2,558,599       2,588,235  

Businesssolver.com, Inc.

  Software & Services   Term Loan   8.50% (L + 7.50%; 1.00% Floor)     05/15/2023       1,390,037       1,367,006       1,390,037  

Degreed, Inc.

  Software & Services   Delayed Draw Term Loan   7.35% (L + 6.35%; 1.00% Floor)     05/31/2024       2,924,689       2,861,271       2,895,442  

Degreed, Inc.

  Software & Services   Revolver   7.35% (L + 6.35%; 1.00% Floor)     05/31/2024       417,813       414,734       413,635  

Degreed, Inc.(1)

  Software & Services   Term Loan   7.35% (L + 6.35%; 1.00% Floor)     05/31/2024       2,228,335       2,210,908       2,206,051  

Dispatch Track, LLC(2) (3)

  Software & Services   Revolver   5.50% (L + 4.50%; 1.00% Floor)     12/17/2024       —         (3,833     (4,529

Dispatch Track, LLC(1)

  Software & Services   Term Loan   5.50% (L + 4.50%; 1.00% Floor)     12/17/2024       6,038,593       5,961,935       5,948,014  

Drilling Info Holdings, Inc.(1)

  Software & Services   Term Loan   4.40% (L + 4.25%)     07/30/2025       3,369,458       3,358,182       3,217,832  

E2open LLC(2) (3)

  Software & Services   Revolver   6.75% (L + 5.75%; 1.00% Floor)     11/26/2024       —         (3,254     (20,239

E2open LLC(1)

  Software & Services   Term Loan   6.75% (L + 5.75%; 1.00% Floor)     11/26/2024       4,907,719       4,853,124       4,588,717  

Engage2Excel, Inc.(1) (2)

  Software & Services   Revolver   9.21% (L + 6.00%; 2.00% PIK;1.00% Floor)     03/07/2023       257,830       253,971       235,199  

Engage2Excel, Inc.(1)

  Software & Services   Term Loan   9.00% (L + 6.00%; 2.00% PIK;1.00% Floor)     03/07/2023       1,024,282       1,010,635       962,825  

Engage2Excel, Inc.(1)

  Software & Services   Term Loan   9.00% (L + 6.00%; 2.00% PIK;1.00% Floor)     03/07/2023       2,962,792       2,929,441       2,785,025  

EnterpriseDB Corporation(2) (3)

  Software & Services   Revolver   7.75% (L+5.50%; 0.50% PIK; 1.75% Floor)     06/21/2024       —         (10,423     (12,186

EnterpriseDB Corporation(1)

  Software & Services   Term Loan   7.75% (L+5.50%; 0.50% PIK; 1.75% Floor)     06/21/2024       7,874,200       7,752,855       7,736,402  

 

See Notes to Unaudited Consolidated Financial Statements

 

11


Table of Contents

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 

EnterpriseDB Corporation(8)

  Software & Services   Term Loan   7.75% (L+5.50%; 0.50% PIK; 1.75% Floor)     06/21/2024     $ 4,512,559     $ 4,422,307     $ 4,433,589  

Exterro, Inc.(2) (3)

  Software & Services   Revolver   6.50% (L + 5.50%; 1.00% Floor)     05/31/2024       —         (4,094     (1,650

Exterro, Inc.(1)

  Software & Services   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     05/31/2024       2,793,450       2,759,147       2,779,483  

Exterro, Inc.(1)

  Software & Services   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     05/31/2024       5,809,123       5,710,713       5,780,077  

Faithlife, LLC(2) (3)

  Software & Services   Delayed Draw Term Loan   7.00% (L + 6.00%; 1.00% Floor)     09/18/2025       —         (60,272     (60,694

Faithlife, LLC(2) (3)

  Software & Services   Revolver   7.00% (L + 6.00%; 1.00% Floor)     09/18/2025       —         (5,542     (5,581

Faithlife, LLC

  Software & Services   Term Loan   7.00% (L + 6.00%; 1.00% Floor)     09/18/2025       732,515       717,897       717,865  

Finalsite Holdings, Inc.(2) (3)

  Software & Services   Revolver   6.50% (L + 5.50%; 1.00% Floor)     09/25/2024       —         (2,964     (4,430

Finalsite Holdings, Inc.(1)

  Software & Services   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     09/25/2024       3,307,718       3,266,662       3,249,833  

Genesis Acquisition Co.

  Software & Services   Delayed Draw Term Loan   4.22% (L + 4.00%)     07/31/2024       40,294       40,033       36,970  

Genesis Acquisition Co.

  Software & Services   Revolver   4.22% (L + 4.00%)     07/31/2024       202,400       199,761       185,702  

Genesis Acquisition Co.(1)

  Software & Services   Term Loan   4.22% (L + 4.00%)     07/31/2024       1,352,377       1,334,066       1,240,806  

GS AcquisitionCo, Inc.

  Software & Services   Delayed Draw Term Loan   6.75% (L + 5.75%; 1.00% Floor)     05/24/2024       1,433,657       1,433,657       1,404,984  

GS AcquisitionCo, Inc.

  Software & Services   Delayed Draw Term Loan   6.75% (L + 5.75%; 1.00% Floor)     05/24/2024       698,820       690,826       684,844  

GS AcquisitionCo, Inc.(2)

  Software & Services   Revolver   6.75% (L + 5.75%; 1.00% Floor)     05/24/2024       268,042       264,237       260,383  

GS AcquisitionCo, Inc.(1)

  Software & Services   Term Loan   6.75% (L + 5.75%; 1.00% Floor)     05/24/2024       3,535,661       3,500,100       3,464,948  

Kaseya Inc.(2) (3) (9)

  Software & Services   Delayed Draw Term Loan   8.09% (L + 4.00%; 3.00% PIK; 1.00% Floor)     05/02/2025       —         (1,700     (2,969

Kaseya Inc.(2) (9)

  Software & Services   Delayed Draw Term Loan   8.09% (L + 4.00%; 3.00% PIK; 1.00% Floor)     05/02/2025       103,411       98,126       97,003  

Kaseya Inc.(2) (9)

  Software & Services   Revolver   7.50% (L + 6.50%; 1.00% Floor)     05/02/2025       184,235       181,313       176,715  

Kaseya Inc.(1) (9)

  Software & Services   Term Loan   8.09% (L + 4.00%; 3.00% PIK; 1.00% Floor)     05/02/2025       4,916,021       4,875,488       4,817,700  

Ministry Brands, LLC(1)

  Software & Services   Delayed Draw Term Loan   5.00% (L + 4.00%; 1.00% Floor)     12/02/2022       652,655       651,040       636,338  

Ministry Brands, LLC(1)

  Software & Services   Term Loan   5.00% (L + 4.00%; 1.00% Floor)     12/02/2022       3,120,743       3,113,066       3,042,724  

Netwrix Corporation(2) (3)

  Software & Services   Delayed Draw Term Loan   7.25% (L + 6.25%; 1.00% Floor)     09/30/2026       —         (10,014     (11,896

Netwrix Corporation(2) (3)

  Software & Services   Delayed Draw Term Loan   7.25% (L + 6.25%; 1.00% Floor)     09/30/2026       —         (20,036     (23,793

Netwrix Corporation(2) (3)

  Software & Services   Revolver   7.25% (L + 6.25%; 1.00% Floor)     09/30/2026       —         (4,467     (3,956

Netwrix Corporation

  Software & Services   Term Loan   7.25% (L + 6.25%; 1.00% Floor)     09/30/2026       1,665,510       1,620,844       1,625,954  

Real Capital Analytics, Inc.(2) (3)

  Software & Services   Revolver   6.00% (L + 5.00%, 1.00% Floor)     10/02/2024       —         (2,845     —    

Real Capital Analytics, Inc.(1)

  Software & Services   Term Loan   6.00% (L + 5.00%; 1.00% Floor)     10/02/2024       3,019,297       3,006,552       3,019,297  

Real Capital Analytics, Inc.(1)

  Software & Services   Term Loan   6.00% (L + 5.00%, 1.00% Floor)     10/02/2024       4,863,178       4,843,072       4,863,178  

Rep Tec Intermediate Holdings, Inc.(2) (3)

  Software & Services   Delayed Draw Term Loan   7.50% (L + 6.50%; 1.00% Floor)     06/19/2025       —         (25,067     (26,527

Rep Tec Intermediate Holdings, Inc.(2) (3)

  Software & Services   Revolver   7.50% (L + 6.50%; 1.00% Floor)     06/19/2025       —         (8,356     (8,842

Rep Tec Intermediate Holdings, Inc.

  Software & Services   Term Loan   7.50% (L + 6.50%; 1.00% Floor)     06/19/2025       4,174,862       4,095,962       4,091,364  

Selligent, Inc.(2) (3) (10)

  Software & Services   Revolver   6.50% (L + 5.50%; 1.00% Floor)     11/03/2023       —         (1,875     (4,013

Selligent, Inc.(10)

  Software & Services   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     11/05/2024       1,892,621       1,871,928       1,854,769  

Sirsi Corporation(2) (3)

  Software & Services   Revolver   5.75% (L + 4.75%; 1.00% Floor)     03/15/2024       —         (5,914     (11,075

 

See Notes to Unaudited Consolidated Financial Statements

 

12


Table of Contents

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 

Sirsi Corporation(1)

  Software & Services   Term Loan   5.75% (L + 4.75%; 1.00% Floor)     03/15/2024     $ 8,554,115     $ 8,458,563     $ 8,383,032  

Smartlinx Solutions, LLC(2) (3)

  Software & Services   Revolver   7.00% (L + 6.00%; 1.00% Floor)     03/04/2026       —         (4,712     (9,974

Smartlinx Solutions, LLC(1)

  Software & Services   Term Loan   7.00% (L + 6.00%; 1.00% Floor)     03/04/2026       5,750,360       5,645,288       5,639,953  

Sugarcrm, Inc.

  Software & Services   Revolver   7.50% (L + 6.50%; 1.00% Floor)     07/31/2024       310,244       306,692       310,244  

Sugarcrm, Inc.(1)

  Software & Services   Term Loan   7.50% (L + 6.50%; 1.00% Floor)     07/31/2024       3,600,024       3,555,415       3,600,024  

Summit Infrastructure Group, Inc.(2)

  Software & Services   Delayed Draw Term Loan   5.00% (L + 4.00%; 1.00% Floor)     03/15/2024       450,303       434,610       450,303  

Summit Infrastructure Group, Inc.(2) (3)

  Software & Services   Revolver   5.00% (L + 4.00%; 1.00% Floor)     03/15/2024       —         (7,852     —    

Summit Infrastructure Group, Inc.(1)

  Software & Services   Term Loan   5.00% (L + 4.00%; 1.00% Floor)     03/15/2024       6,971,246       6,867,697       6,971,246  

Swiftpage, Inc.

  Software & Services   Revolver   6.63% (L + 5.50%; 1.00% Floor)     06/13/2023       225,317       222,860       217,430  

Swiftpage, Inc.

  Software & Services   Term Loan   6.50% (L + 5.50%; 1.00% Floor)     06/13/2023       2,477,778       2,449,177       2,391,056  

Swiftpage, Inc.

  Software & Services   Term Loan A   6.63% (L + 5.50%; 1.00% Floor)     06/13/2023       228,056       225,006       220,074  

Symplr Software, Inc.(2) (3)

  Software & Services   Revolver   5.72% (L + 5.50%)     11/30/2023       —         (2,907     (10,376

Symplr Software, Inc.(1)

  Software & Services   Term Loan   5.72% (L + 5.50%)     11/28/2025       5,713,296       5,644,787       5,513,331  

Symplr Software, Inc.

  Software & Services   Term Loan   5.72% (L + 5.50%)     11/28/2025       754,434       739,414       739,345  

Telesoft Holdings, LLC(2) (3)

  Software & Services   Revolver   6.75% (L + 5.75%, 1.00% Floor)     12/16/2025       —         (11,703     (13,429

Telesoft Holdings, LLC

  Software & Services   Term Loan   6.75% (L + 5.75%, 1.00% Floor)     12/16/2025       5,938,821       5,820,184       5,805,198  

TRGRP, Inc.(2) (3)

  Software & Services   Revolver   8.00% (L + 4.50%; 2.50% PIK; 1.00% Floor)     11/01/2023       —         (4,123     (6,667

TRGRP, Inc.(1)

  Software & Services   Term Loan   8.00% (L + 4.50%; 2.50% PIK; 1.00% Floor)     11/01/2023       1,089,261       1,073,662       1,067,476  

TRGRP, Inc.(1)

  Software & Services   Term Loan   8.00% (L + 4.50%; 2.50% PIK; 1.00% Floor)     11/01/2023       4,874,842       4,811,356       4,777,345  

Velocity Purchaser Corporation(2) (3)

  Software & Services   Revolver   7.00% (L + 6.00%; 1.00% Floor)     12/01/2022       —         (1,715     —    

Velocity Purchaser Corporation(1)

  Software & Services   Term Loan   7.00% (L + 6.00%; 1.00% Floor)     12/01/2022       660,247       652,749       660,247  

Velocity Purchaser Corporation(1)

  Software & Services   Term Loan   7.00% (L + 6.00%; 1.00% Floor)     12/01/2022       2,655,701       2,631,283       2,655,701  

Watermark Insights, LLC(1)

  Software & Services   Delayed Draw Term Loan   5.00% (L + 4.00%; 1.00% Floor)     06/07/2024       325,387       323,852       315,626  

Watermark Insights, LLC(1)

  Software & Services   Term Loan   5.00% (L + 4.00%; 1.00% Floor)     06/07/2024       2,592,811       2,575,810       2,515,027  

Purchasing Power, LLC(1)

  Specialty Finance   Term Loan   8.25% (L + 7.25%; 1.00% Floor)     02/06/2024       2,662,989       2,628,475       2,569,785  

Dillon Logistics, Inc.(2)

  Transport &
Logistics
  Revolver   8.00% (L + 7.00%; 1.00% Floor)     12/11/2023       214,686       210,493       27,635  

Dillon Logistics, Inc.

  Transport &
Logistics
  Term Loan A   8.00% (L + 7.00%; 1.00% Floor)     12/11/2023       2,797,528       2,678,713       1,510,665  

Dillon Logistics, Inc.

  Transport &
Logistics
  Term Loan B   8.00% (L + 7.00%; 1.00% Floor)     12/11/2023       822,784       776,017       444,304  

OSG Bulk Ships, Inc.(1)

  Transport &
Logistics
  Term Loan   5.16% (L + 5.00%)     12/21/2023       5,613,402       5,565,630       5,501,134  
           

 

 

   

 

 

 

Total U.S. 1st Lien/Senior Secured Debt

      407,149,377       396,614,617  

2nd Lien/Junior Secured Debt—4.20%

 

Brave Parent Holdings,
Inc.(1)

  Energy   Term Loan   7.65% (L + 7.50%)     04/17/2026     $ 1,230,107     $ 1,207,592     $ 1,202,429  

Conterra Ultra Broadband Holdings, Inc.(1)

  Software & Services   Term Loan   9.00% (L + 8.00%; 1.00% Floor)     04/30/2027       6,537,710       6,451,968       6,472,334  
           

 

 

   

 

 

 

Total 2nd Lien/Junior Secured Debt

 

    7,659,560       7,674,763  
         

 

 

   

 

 

 

Total U.S. Corporate Debt

 

    414,808,937       404,289,380  

Canadian Corporate Debt - 0.64%

 

1st Lien/Senior Secured Debt - 0.64%

 

McNairn Holdings
Ltd.(1) (10) (11)

  Business Services   Term Loan   6.00% (L + 5.00%; 1.00% Floor)     11/25/2025       841,967       834,545       808,288  

 

See Notes to Unaudited Consolidated Financial Statements

 

13


Table of Contents

Portfolio Company

  Industry   Facility Type  

Interest

  Maturity     Funded
Par Amount
    Cost     Fair
Value
 

Nuvei Technologies Corp.(1) (10)

  Business Services   Initial U.S. Term Loan
Commitment
  6.00% (L + 5.00%; 1.00% Floor)     09/29/2025     $ 355,163     $ 355,199     $ 351,611  
           

 

 

   

 

 

 

Total Canadian 1st Lien/Senior Secured Debt

 

    1,189,744       1,159,899  
         

 

 

   

 

 

 

Total Canadian Corporate Debt

 

    1,189,744       1,159,899  

Portfolio Company

          Industry     Shares     Cost     Fair
Value
 

U.S. Preferred Stock - 3.74%

 

Concerto, LLC(12) (13)

    Healthcare & HCIT       65,614     $ 349,977     $ 349,977  

Health Platforms Group, Inc.(13)

    Healthcare & HCIT       16,502       90,761       122,280  

SBS Ultimate Holdings, LP(13)

    Healthcare & HCIT       217,710       861,879       620,473  

Datarobot, Inc.(13)

    Software & Services       38,190       289,278       289,278  

Degreed, Inc.(13)

    Software & Services       43,819       278,541       438,190  

Heap(13)

    Software & Services       189,617       696,351       696,351  

Netskope, Inc.(13)

    Software & Services       36,144       302,536       302,536  

Phenom People, Inc.(13)

    Software & Services       35,055       220,610       220,612  

Protoscale Rubrik(13)

    Software & Services       25,397       598,212       598,201  

Punchh(13)

    Software & Services       24,262       275,337       275,337  

Samsara Networks, Inc.(13)

    Software & Services       33,451       369,998       369,998  

Symplr Software Intermediate Holdings, Inc.(13)

    Software & Services       1,196       1,160,532       1,453,607  

Workfront, Inc.(13)

    Software & Services       104,058       999,997       1,101,974  
     

 

 

   

 

 

 

Total U.S. Preferred Stock

 

    6,494,009       6,838,814  

U.S. Common Stock - 1.20%

 

Neutral Connect, LLC(13) (14)

   
Digital Infrastructure &
Services
 
 
    396,513       439,931       406,704  

Leeds FEG Investors, LLC(13)

    Education       320       321,309       341,595  

Nine Point Energy, LLC(13)

    Energy       3,567,059       —         —    

INH Group Holdings(13)

    Healthcare & HCIT       484,552       484,552       644,454  

Aggregator, LLC(13)

    Software & Services       417,813       417,813       676,856  

American Safety Holding Corp.(13) (15)

    Software & Services       130,824       130,824       130,824  
     

 

 

   

 

 

 

Total U.S. Common Stock

 

    1,794,429       2,200,433  

U.S. Warrants - 0.12%

 

Fuze, Inc., expire 09/20/2029(13)

   
Digital Infrastructure &
Services
 
 
    196,328       615,168       62,825  

SBS Ultimate Holdings, LP, expire 09/18/2030(13)

    Healthcare & HCIT       17,419       —         —    

Alphasense, LLC, expire 05/29/2027(13)

    Software & Services       38,346       35,185       64,051  

Degreed, Inc., expire 05/31/2026(13)

    Software & Services       26,294       46,823       95,710  
     

 

 

   

 

 

 

Total U.S. Warrants

 

    697,176       222,586  

TOTAL INVESTMENTS - 226.92%(16)

 

  $ 424,984,295     $ 414,711,112  
 

 

 

   

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS—(126.92%)

 

    $ (231,952,041
 

 

 

 

NET ASSETS—100.00%

 

  $ 182,759,071  
 

 

 

 

 

+ 

As of September 30, 2020, qualifying assets represented 98.70% of total assets. Under the 1940 Act we may not acquire any non-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets.

* 

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of Financial Accounting Standards Board’s Accounting Standards Codification 820 fair value hierarchy.

# 

Percentages are based on net assets.

^ 

Generally, the interest rate on floating interest rate investments is at benchmark rate plus spread. The borrower has an option to choose the benchmark rate, such as the London Interbank Offered Rate (“LIBOR”) or the U.S. Prime rate. The spread may change based on the type of rate used. The terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates (1M L, 2M L, 3M L or 6M L, respectively) at the borrower’s option. LIBOR loans may be subject to interest floors. As of September 30, 2020, rates for weekly 1M L, 2M L, 3M L and 6M L are 0.15%, 0.19%, 0.23% and 0.26%, respectively. As of September 30, 2020, the U.S. Prime rate was 3.25%.

(1) 

Position, or a portion thereof, has been segregated to collateralize ABPCI Direct Lending Fund CLO VI Ltd.

(2) 

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated. See Note 6 “Commitments and Contingencies”.

(3) 

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

(4) 

Categorized as Level 2 assets under the definition of ASC 820 fair value hierarchy.

(5) 

CutisPharma, Inc. has been renamed to Azurity Pharmaceuticals, Inc. in 2020.

(6) 

$300,962 of the funded par amount accrues interest at 10.50% (P + 2.00%; 5.25% PIK).

(7) 

$126,791 of the funded par amount accrues interest at 9.25% (L + 3.00%; 5.25% PIK).

(8) 

Portion of security pledged as collateral for the secured borrowings of the Fund.

 

See Notes to Unaudited Consolidated Financial Statements

 

14


Table of Contents
(9) 

Rhode Holdings, Inc. has been renamed to Kaseya Inc. in 2020.

(10) 

Positions considered non-qualified assets therefore excluded from the qualifying assets calculation as noted in footnote + above.

(11) 

JHMCRN Holdings, Inc. has been renamed to McNairn Holdings Ltd. in 2020.

(12) 

Concerto, LLC is held through ABPCIC Concerto Holdings LLC.

(13) 

Non-income producing investment.

(14) 

Neutral Connect, LLC is held through ABPCIC NC Holdings LLC.

(15) 

Position or portion thereof is held by REP Coinvest II Tec, LP which is held by ABPCIC Equity Holdings, LLC.

(16) 

Aggregate gross unrealized appreciation for federal income tax purposes is $2,501,535; aggregate gross unrealized depreciation for federal income tax purposes is $12,774,718. Net unrealized depreciation is $10,273,183 based upon a tax cost basis of $424,984,295.

 

L   -   LIBOR
P   -   Prime
PIK   -   Payment-In-Kind

 

See Notes to Unaudited Consolidated Financial Statements

 

15


Table of Contents

AB Private Credit Investors Corporation

Consolidated Schedule of Investments as of December 31, 2019

 

Portfolio Company

   Industry   

Facility Type

  

Interest

   Maturity      Funded
Par Amount
     Cost     Fair Value  
Investments at Fair Value —238.67% + * # ^  
U.S. Corporate Debt —231.87%  
1st Lien/Senior Secured Debt —226.60%  

Amercareroyal, LLC(1)

   Business Services    Term Loan    6.80% (L + 5.00%; 1.00% Floor)      11/25/2025      $ 4,682,293      $ 4,636,124     $ 4,635,470  

BEP Borrower Holdco, LLC(1)

   Business Services    Term Loan A    6.80% (L + 5.00%; 1.00% Floor)      06/12/2024        3,435,477        3,388,842       3,383,945  

BEP Borrower Holdco, LLC(2)(3)

   Business Services    Revolver    6.80% (L + 5.00%; 1.00% Floor)      06/12/2024        —          (5,753     (6,442

BEP Borrower Holdco, LLC(2)(3)

   Business Services    Delayed Draw Term Loan B    6.80% (L + 5.00%; 1.00% Floor)      06/12/2024        —          (22,949     (25,766

BEP Borrower Holdco, LLC(2)(3)

   Business Services    Delayed Draw Term Loan A    6.80% (L + 5.00%; 1.00% Floor)      06/12/2024        —          (11,474     (12,883

Edgewood Partners Holdings LLC(1)

   Business Services    Term Loan    6.05% (L + 4.25%; 1.00% Floor)      09/06/2024        5,622,980        5,572,024       5,568,438  

Metametrics, Inc.(1)

   Business Services    Term Loan    7.89% (L + 6.00%; 1.00% Floor)      09/10/2025        5,904,056        5,790,820       5,785,975  

Metametrics, Inc.(2)(3)

   Business Services    Revolver    7.89% (L + 6.00%; 1.00% Floor)      09/10/2025        —          (12,365     (13,024

Quirch Foods Holdings, LLC(1)

   Business Services    Term Loan B    7.93% (L + 6.00%)      12/19/2025        2,117,548        2,098,488       2,096,372  

Single Digits, Inc.(1)

   Business Services    Term Loan    7.95% (L + 6.00%; 1.00% Floor)      12/21/2023        3,295,889        3,267,258       3,262,930  

Single Digits, Inc.(2)(3)

   Business Services    Revolver    7.95% (L + 6.00%; 1.00% Floor)      12/21/2023        —          (3,315     (4,161

Single Digits, Inc.(2)(3)

   Business Services    Delayed Draw Term Loan    7.95% (L + 6.00%; 1.00% Floor)      12/21/2023        —          (8,290     (10,404

Smile Brands, Inc.(1)

   Business Services    Term Loan    6.70% (L + 4.50%)      10/12/2024        1,639,688        1,626,385       1,639,688  

Smile Brands, Inc.(2)

   Business Services    Revolver    8.25% (P + 3.50%)      10/12/2023        33,974        32,034       33,974  

Smile Brands, Inc.(2)

   Business Services    Delayed Draw Term Loan    6.70% (L + 4.50%)      10/12/2024        301,121        296,019       301,121  

GPS Hospitality Holding Company LLC(1)

   Consumer Non-Cyclical    Term Loan B    6.19% (L + 4.25%)      12/08/2025        2,429,318        2,397,496       2,392,878  

Blink Holdings, Inc.(1)

   Consumer Non-Cyclical    Term Loan    6.49% (L + 4.75%; 1.00% Floor)      11/08/2024        1,660,261        1,644,369       1,643,658  

Blink Holdings, Inc.(1)(2)

   Consumer Non-Cyclical    Delayed Draw Term Loan    6.49% (L + 4.75%; 1.00% Floor)      11/08/2024        1,068,410        1,057,010       1,056,534  

Captain D’s, Inc.(1)

   Consumer Non-Cyclical    Term Loan    6.44% (L + 4.50%; 1.00% Floor)      12/15/2023        2,003,178        1,988,982       1,983,146  

Captain D’s, Inc.(2)(5)

   Consumer Non-Cyclical    Revolver    8.25% (P + 3.50%, 1.00% Floor)      12/15/2023        134,587        133,209       132,636  

Lucky Bucks, LLC(1)

   Consumer Non-Cyclical    Term Loan    8.93% (L + 7.00%; 1.00% Floor)      04/10/2023        962,223        949,192       945,384  

Lucky Bucks, LLC(1)(2)(6)

   Consumer Non-Cyclical    Delayed Draw Term Loan    8.91% (L + 7.00%; 1.00% Floor)      04/10/2023        1,043,095        1,028,456       1,023,705  

PF Growth Partners, LLC(1)

   Consumer Non-Cyclical    Term Loan    6.80% (L + 5.00%)      07/11/2025        2,032,211        2,013,134       2,011,889  

PF Growth Partners, LLC(2)

   Consumer Non-Cyclical    Delayed Draw Term Loan    6.74% (L + 5.00%)      07/11/2025        60,071        56,721       56,467  

Tropical Smoothie Cafe, LLC(1)

   Consumer Non-Cyclical    Term Loan    7.30% (L + 5.50%; 1.00% Floor)      09/24/2023        1,343,338        1,332,936       1,343,338  

Tropical Smoothie Cafe, LLC(2)

   Consumer Non-Cyclical    Revolver    7.30% (L + 5.50%; 1.00% Floor)      09/24/2023        38,574        37,526       38,574  

Tropical Smoothie Cafe, LLC(2)(3)

   Consumer Non-Cyclical    Delayed Draw Term Loan    7.30% (L + 5.50%; 1.00% Floor)      09/24/2023        —          (65,980     —    

Ahead Data Blue, LLC(1)

   Digital Infrastructure &
Services
   Term Loan    6.49% (L + 4.75%; 1.00% Floor)      11/08/2024        5,447,119        5,340,940       5,338,177  

Ahead Data Blue, LLC(2)(3)

   Digital Infrastructure &
Services
   Revolver    6.49% (L + 4.75%; 1.00% Floor)      11/08/2024        —          (18,666     (19,225

 

See Notes to Unaudited Consolidated Financial Statements

 

16


Table of Contents

Portfolio Company

   Industry   

Facility Type

  

Interest

   Maturity      Funded
Par Amount
     Cost     Fair Value  

EvolveIP, LLC(1)

   Digital Infrastructure &
Services
   Term Loan A    7.55% (L + 5.75%; 1.00% Floor)      06/07/2023      $ 6,633,822      $ 6,536,708     $ 6,534,315  

EvolveIP, LLC(2)(3)

   Digital Infrastructure &
Services
   Revolver    7.55% (L + 5.75%; 1.00% Floor)      06/07/2023        —          (8,269     (8,503

EvolveIP, LLC(2)(3)

   Digital Infrastructure &
Services
   Delayed Draw Term Loan    7.55% (L + 5.75%; 1.00% Floor)      06/07/2023        —          (11,028     (11,337

5 Bars, LLC

   Digital Infrastructure &
Services
   Term Loan    8.30% (L + 6.50%; 1.00% Floor)      09/27/2024        4,742,121        4,674,290       4,670,990  

5 Bars, LLC(2)(3)

   Digital Infrastructure &
Services
   Revolver    8.30% (L + 6.50%; 1.00% Floor)      09/27/2024        —          (9,197     (9,700

5 Bars, LLC(2)(3)

   Digital Infrastructure &
Services
   Delayed Draw Term Loan    8.30% (L + 6.50%; 1.00% Floor)      09/27/2024        —          (49,051     (51,732

D1 Holdings LLC

   Digital Infrastructure &
Services
   Note    7.00%      06/26/2020        32,241        32,241       32,241  

Fuze, Inc.(1)

   Digital Infrastructure &
Services
   Term Loan    8.34% (L + 6.25%; 1.00% Floor)      09/20/2024        11,015,029        10,961,643       10,513,845  

Fuze, Inc.(2)

   Digital Infrastructure &
Services
   Revolver    10.00% (P + 5.25%; 1.00% Floor)      09/20/2024        907,120        901,003       848,157  

Fuze, Inc.(2)(3)

   Digital Infrastructure &
Services
   Delayed Draw Term Loan    8.34% (L + 6.25%; 1.00% Floor)      09/20/2024        —          (586,835     (117,926

InSite Wireless Group, LLC(1)(2)

   Digital Infrastructure &
Services
   Term Loan    6.28% (L + 4.52%; 0.50% Floor)      03/15/2023        6,833,574        6,700,275       6,670,911  

InSite Wireless Group, LLC

   Digital Infrastructure &
Services
   Revolver    6.32% (L + 4.52%; 0.50% Floor)      03/15/2023        460,172        455,073       454,419  

AEG Holding Company, Inc.(1)

   Education    Term Loan    7.74% (L + 6.00%; 1.00% Floor)      11/20/2023        1,876,255        1,842,769       1,838,730  

AEG Holding Company, Inc.(1)

   Education    Term Loan    7.80% (L + 6.00%; 1.00% Floor)      11/20/2023        6,106,250        6,022,723       5,984,125  

AEG Holding Company, Inc.(2)

   Education    Revolver    7.72% (L + 6.00%; 1.00% Floor)      11/20/2023        558,432        541,763       536,095  

AEG Holding Company, Inc.(1)

   Education    Delayed Draw Term Loan    7.74% (L + 6.00%; 1.00% Floor)      11/20/2023        1,078,211        1,063,994       1,056,647  

BCP Raptor II, LLC(1)(7)

   Energy    Term Loan    6.55% (L + 4.75%)      11/03/2025        5,712,209        5,711,278       5,255,233  

Brazos Delaware II, LLC(1)(7)

   Energy    Term Loan B    5.79% (L + 4.00%)      05/21/2025        4,045,160        3,949,599       3,441,743  

Nine Point Energy, LLC(1)

   Energy    Term Loan    7.24% (L + 5.50%; 1.00% Floor)      06/07/2024        4,921,875        4,832,047       4,823,438  

Nine Point Energy, LLC(1)(2)(3)

   Energy    Revolver    7.21% (L + 5.50%; 1.00% Floor)      06/07/2024        —          (5,998     (6,562

Nine Point Energy, LLC(1)(2)

   Energy    Delayed Draw Term Loan    7.24% (L + 5.50%; 1.00% Floor)      06/07/2024        437,500        406,186       402,500  

Higginbotham Insurance Agency, Inc.

   Financial Services    Incremental Term Loan    6.05% (L + 4.25%, 1.00% Floor)      12/19/2024        1,047,616        1,037,219       1,037,140  

Higginbotham Insurance Agency, Inc.(2)

   Financial Services    Delayed Draw Term Loan    6.05% (L + 4.25%, 1.00% Floor)      12/19/2024        —          —         —    

OMH-HealthEdge Holdings,
LLC(1)

   Healthcare & HCIT    Term Loan    7.30% (L + 5.50%; 1.00% Floor)      10/24/2025        3,774,984        3,692,206       3,690,047  

OMH-HealthEdge Holdings,
LLC(2)(3)

   Healthcare & HCIT    Revolver    7.30% (L + 5.50%; 1.00% Floor)      10/24/2024        —          (9,940     (10,321

ZBS Alliance Animal Health,
LLC(1)

   Healthcare & HCIT    Term Loan    5.97% (L + 4.25%; 1.00% Floor)      11/08/2025        2,721,360        2,668,061       2,666,933  

ZBS Alliance Animal Health,
LLC(2)

   Healthcare & HCIT    Revolver    6.04% (L + 4.25%; 1.00% Floor)      11/08/2025        498,916        485,603       485,309  

ZBS Alliance Animal Health,
LLC(2)(3)

   Healthcare & HCIT    Delayed Draw Term Loan    5.97% (L + 4.25%; 1.00% Floor)      11/08/2025        —          (88,520     (90,712

American Physician Partners, LLC

   Healthcare & HCIT    Term Loan C    8.44% (L + 6.50%; 1.00% Floor)      12/21/2021        1,203,704        1,192,634       1,191,667  

 

See Notes to Unaudited Consolidated Financial Statements

 

17


Table of Contents

Portfolio Company

   Industry   

Facility Type

  

Interest

   Maturity      Funded
Par Amount
     Cost     Fair Value  

American Physician Partners, LLC(1)

   Healthcare & HCIT    Term Loan A    8.44% (L + 6.50%; 1.00% Floor)      12/21/2021      $ 5,562,816      $ 5,503,929     $ 5,507,188  

American Physician Partners, LLC(2)

   Healthcare & HCIT    Revolver    8.44% (L + 6.50%; 1.00% Floor)      12/21/2021        177,601        173,200       173,161  

American Physician Partners, LLC(1)

   Healthcare & HCIT    Delayed Draw Term Loan    8.44% (L + 6.50%; 1.00% Floor)      12/21/2021        1,049,891        1,039,517       1,039,392  

Analogic Corporation(1)

   Healthcare & HCIT    Term Loan    7.80% (L + 6.00%; 1.00% Floor)      06/24/2024        2,937,163        2,891,148       2,893,987  

Analogic Corporation(2)

   Healthcare & HCIT    Revolver    7.80% (L + 6.00%; 1.00% Floor)      06/22/2023        28,696        24,667       24,678  

CutisPharma, Inc.(1)

   Healthcare & HCIT    Term Loan    7.79% (L + 5.75%; 1.00% Floor)      03/21/2023        7,292,268        7,183,139       7,164,653  

CutisPharma, Inc.(2)(3)

   Healthcare & HCIT    Revolver    7.79% (L + 5.75%; 1.00% Floor)      03/21/2023        —          (7,096     (8,451

CutisPharma, Inc.(2)(3)

   Healthcare & HCIT    Delayed Draw Term Loan    7.79% (L + 5.75%; 1.00% Floor)      03/21/2023        —          (7,096     (8,451

Delaware Valley Management Holdings, Inc.(1)

   Healthcare & HCIT    Term Loan    7.55% (L + 5.75%; 1.00% Floor)      03/21/2024        4,414,146        4,337,516       4,325,863  

Delaware Valley Management Holdings, Inc.(2)

   Healthcare & HCIT    Revolver    7.50% (L + 5.75%; 1.00% Floor)      03/21/2024        368,816        359,862       358,278  

Delaware Valley Management Holdings, Inc.(2)(3)

   Healthcare & HCIT    Delayed Draw Term Loan    7.55% (L + 5.75%; 1.00% Floor)      03/21/2024        —          (69,365     (105,376

Ethos Veterinary Health LLC(1) (2)

   Healthcare & HCIT    Term Loan    6.80% (L + 5.00%)      05/15/2026        3,382,870        3,343,496       3,340,651  

GHA Buyer, Inc.(1)

   Healthcare & HCIT    Term Loan    7.22% (L + 5.50%; 1.00% Floor)      10/23/2023        570,916        559,588       559,497  

GHA Buyer, Inc.(1)

   Healthcare & HCIT    Term Loan    7.30% (L + 5.50%; 1.00% Floor)      10/23/2023        1,998,132        1,966,554       1,958,169  

GHA Buyer, Inc.(2)(3)

   Healthcare & HCIT    Revolver    7.30% (L + 5.50%; 1.00% Floor)      10/23/2023        —          (3,098     (4,050

GHA Buyer, Inc.(2)(3)

   Healthcare & HCIT    Delayed Draw Term Loan    7.22% (L + 5.50%; 1.00% Floor)      10/23/2023        —          (5,656     (5,709

GHA Buyer, Inc.(2)(3)

   Healthcare & HCIT    Delayed Draw Term Loan    7.30% (L + 5.50%; 1.00% Floor)      10/23/2023        —          (5,175     (6,750

INH Buyer, Inc.(1)

   Healthcare & HCIT    Term Loan    10.43% (L + 6.50%; 2.00% PIK, 1.00% Floor)      01/31/2025        8,643,765        8,528,135       8,514,109  

INH Buyer, Inc.(2)(3)

   Healthcare & HCIT    Revolver    10.43% (L + 6.50%; 2.00% PIK, 1.00% Floor)      01/31/2024        —          (2,542     (3,088

Pace Health Companies, LLC(1)

   Healthcare & HCIT    Term Loan    6.44% (L + 4.50%; 1.00% Floor)      08/02/2024        5,413,237        5,362,021       5,359,104  

Pace Health Companies, LLC(2)(3)

   Healthcare & HCIT    Revolver    6.44% (L + 4.50%; 1.00% Floor)      08/02/2024        —          (5,789     (6,167

Pinnacle Dermatology Management, LLC(1)

   Healthcare & HCIT    Term Loan    6.05% (L + 4.25%; 1.00% Floor)      05/18/2023        6,319,034        6,207,891       6,192,653  

Pinnacle Dermatology Management, LLC(2)(3)

   Healthcare & HCIT    Revolver    6.11% (L + 4.25%; 1.00% Floor)      05/18/2023        —          (6,377     (9,368

Pinnacle Dermatology Management, LLC(2)

   Healthcare & HCIT    Delayed Draw Term Loan    6.11% (L + 4.25%; 1.00% Floor)      05/18/2023        1,499,395        1,455,846       1,436,536  

Platinum Dermatology Partners, LLC

   Healthcare & HCIT    Term Loan    8.24% (L + 6.25%; 1.00% Floor)      01/03/2023        3,147,110        3,107,800       2,911,076  

Platinum Dermatology Partners,
LLC(1)

   Healthcare & HCIT    Specified Delayed Draw Term Loan Commitment    10.00% (P + 5.25%; 1.00% Floor)      01/03/2023        1,959,465        1,934,744       1,812,505  

Platinum Dermatology Partners,
LLC(8)

   Healthcare & HCIT    Revolver    10.00% (P + 5.25%; 1.00% Floor)      01/03/2023        498,592        492,422       461,197  

Platinum Dermatology Partners,
LLC(1)(9)

   Healthcare & HCIT    General Delayed Draw Term Loan Commitment    8.20% (L + 6.25%; 1.00% Floor)      01/03/2023        1,422,407        1,404,839       1,315,726  

RCP Encore Acquisition, Inc.(1)

   Healthcare & HCIT    Term Loan    6.46% (L + 4.75%; 1.00% Floor)      06/09/2025        3,974,715        3,938,087       3,934,968  

The Center for Orthopedic and Research Excellence, Inc.(1)

   Healthcare & HCIT    Term Loan    7.31% (L + 5.25%; 1.00% Floor)      08/15/2025      $ 4,993,841      $ 4,910,901     $ 4,906,449  

The Center for Orthopedic and Research Excellence, Inc.(2)

   Healthcare & HCIT    Revolver    7.31% (L + 5.25%; 1.00% Floor)      08/15/2025        34,527        23,105       22,442  

 

See Notes to Unaudited Consolidated Financial Statements

 

18


Table of Contents

Portfolio Company

   Industry   

Facility Type

  

Interest

   Maturity      Funded
Par Amount
     Cost     Fair Value  

The Center for Orthopedic and Research Excellence, Inc.(2)(3)

   Healthcare & HCIT    Delayed Draw Term Loan    7.31% (L + 5.25%; 1.00% Floor)      08/15/2025      $ —        $ (14,181   $ (15,105

Theranest, LLC(1)

   Healthcare & HCIT    Term Loan    6.93% (L + 5.00%; 1.00% Floor)      07/24/2023        3,000,000        2,955,526       2,940,000  

Theranest, LLC(2)(3)

   Healthcare & HCIT    Revolver    6.93% (L + 5.00%; 1.00% Floor)      07/24/2023        —          (6,143     (8,571

Theranest, LLC(1)(2)

   Healthcare & HCIT    Delayed Draw Term Loan    6.93% (L + 5.00%; 1.00% Floor)      07/24/2023        1,613,143        1,577,054       1,568,143  

RxBenefits, Inc.(1)

   Pharmaceutical    Term Loan A    7.17% (L + 5.25%; 1.00% Floor)      03/28/2025        5,777,984        5,777,984       5,720,204  

RxBenefits, Inc.(2)(3)

   Pharmaceutical    Revolver    7.17% (L + 5.25%; 1.00% Floor)      03/29/2024        —          (4,900     (5,758

Dispatch Track, LLC(1)

   Software & Services    Term Loan    6.41% (L + 4.50%; 1.00% Floor)      12/17/2024        6,038,593        5,948,735       5,948,014  

Dispatch Track, LLC(2)

   Software & Services    Revolver    6.41% (L + 4.50%; 1.00% Floor)      12/17/2024        132,849        128,320       128,320  

Real Capital Analytics, Inc.(1)

   Software & Services    Term Loan    7.09% (L + 5.00%, 1.00% Floor)      10/02/2024        4,863,178        4,839,901       4,838,862  

Real Capital Analytics, Inc.(2)

   Software & Services    Revolver    6.90% (L + 5.00%, 1.00% Floor)      10/02/2024        555,792        552,482       552,318  

Real Capital Analytics, Inc.

   Software & Services    First Supplemental Term Loan    6.71% (L + 5.00%, 1.00% Floor)      10/02/2024        3,019,297        3,004,200       3,004,200  

Telesoft Holdings, LLC

   Software & Services    Term Loan    7.69% (L + 5.75%, 1.00% Floor)      12/16/2025        5,968,665        5,834,630       5,834,370  

Telesoft Holdings, LLC(2)(3)

   Software & Services    Revolver    7.69% (L + 5.75%, 1.00% Floor)      12/16/2025        —          (13,366     (13,430

AMI US Holdings, Inc.(1)

   Software & Services    Term Loan    7.19% (L + 5.50%; 1.00% Floor)      04/01/2025        8,256,605        8,108,278       8,091,473  

AMI US Holdings, Inc.(2)

   Software & Services    Revolver    7.30% (L + 5.50%; 1.00% Floor)      04/01/2024        481,626        462,683       459,734  

Avetta, LLC(1)

   Software & Services    Term Loan    7.55% (L + 5.75%; 1.00% Floor)      04/10/2024        3,287,118        3,206,937       3,221,375  

Avetta, LLC(2)(3)

   Software & Services    Revolver    7.55% (L + 5.75%; 1.00% Floor)      04/10/2024        —          (7,093     (9,888

Avetta, LLC(1)

   Software & Services    Incremental Term Loan B    7.55% (L + 5.75%; 1.00% Floor)      04/10/2024        4,326,814        4,249,497       4,240,278  

Avetta, LLC(2)(3)

   Software & Services    Delayed Draw Term Loan    7.55% (L + 5.75%; 1.00% Floor)      04/10/2024        —          (11,111     (12,360

Broadway Technology, LLC(1)

   Software & Services    Term Loan    6.85% (L + 4.75%; 1.00% Floor)      04/01/2024        4,444,603        4,365,514       4,355,711  

Broadway Technology, LLC(2)(3)

   Software & Services    Revolver    6.85% (L + 4.75%; 1.00% Floor)      04/01/2024        —          (6,544     (7,677

Businesssolver.com, Inc.(1)

   Software & Services    Term Loan    9.41% (L + 7.50%; 1.00% Floor)      05/15/2023        2,588,235        2,551,360       2,588,235  

Businesssolver.com, Inc.(2)(10)

   Software & Services    Revolver    9.30% (L + 7.50%; 1.00% Floor)      05/15/2023        129,412        124,990       129,412  

Businesssolver.com, Inc.(1)

   Software & Services    Delayed Draw Term Loan    9.41% (L + 7.50%; 1.00% Floor)      05/15/2023        388,235        385,043       388,235  

Degreed, Inc.(1)

   Software & Services    Term Loan    8.15% (L + 6.35%; 1.00% Floor)      05/31/2024        2,228,335        2,207,938       2,189,784  

Degreed, Inc.(2)(3)

   Software & Services    Revolver    8.15% (L + 6.35%; 1.00% Floor)      05/31/2024        —          (3,698     (7,228

Degreed, Inc.(2)

   Software & Services    Delayed Draw Term Loan    8.06% (L + 6.35%; 1.00% Floor)      05/31/2024        1,114,167        1,068,684       1,085,798  

Drilling Info Holdings, Inc.(1)(7)

   Software & Services    Term Loan    6.05% (L + 4.25%)      07/30/2025        3,395,236        3,382,377       3,395,236  

E2open LLC(1)

   Software & Services    Term Loan    7.66% (L + 5.75%; 1.00% Floor)      11/26/2024        4,944,898        4,881,721       4,895,449  

E2open LLC(2)(3)

   Software & Services    Revolver    7.66% (L + 5.75%; 1.00% Floor)      11/26/2024        —          (3,830     (3,114

Engage2Excel, Inc.(1)

   Software & Services    Term Loan    8.42% (L + 6.50%; 1.00% Floor)      03/07/2023        1,030,478        1,013,050       1,009,868  

Engage2Excel, Inc.(1)

   Software & Services    Term Loan    8.71% (L + 6.50%; 1.00% Floor)      03/07/2023        2,970,191        2,927,623       2,910,787  

Engage2Excel, Inc.(1)(2)(11)

   Software & Services    Revolver    10.25% (P + 5.50%; 1.00% Floor)      03/07/2023        251,270        246,280       243,732  

 

See Notes to Unaudited Consolidated Financial Statements

 

19


Table of Contents

Portfolio Company

   Industry   

Facility Type

  

Interest

   Maturity      Funded
Par Amount
     Cost     Fair Value  

Engage2Excel, Inc.(2)(3)

   Software & Services    Delayed Draw Term Loan    10.25% (P + 5.50%; 1.00% Floor)      03/07/2023      $ —        $ (5,481   $ (6,645

EnterpriseDB Corporation(1)

   Software & Services    Term Loan    7.33% (L + 4.50%; 0.75% PIK; 1.00% Floor)      06/21/2024        7,829,259        7,687,008       7,711,820  

EnterpriseDB Corporation(2)(3)

   Software & Services    Revolver    7.33% (L + 4.50%; 0.75% PIK; 1.00% Floor)      06/21/2024        —          (12,478     (10,445

Exterro, Inc.(1)

   Software & Services    Term Loan    7.41% (L + 5.50%; 1.00% Floor)      05/31/2024        5,945,987        5,834,920       5,916,257  

Exterro, Inc.(2)(3)

   Software & Services    Revolver    7.41% (L + 5.50%; 1.00% Floor)      05/31/2024        —          (4,915     (1,650

Exterro, Inc.(1)

   Software & Services    Initial Term Loan    7.41% (L + 5.50%; 1.00% Floor)      05/31/2024        2,866,875        2,825,603       2,852,541  

Finalsite Holdings, Inc.(1)

   Software & Services    Term Loan    6.93% (L + 5.00%; 1.00% Floor)      09/25/2024        3,333,032        3,285,122       3,283,036  

Finalsite Holdings, Inc.(2)(3)

   Software & Services    Revolver    6.93% (L + 5.00%; 1.00% Floor)      09/25/2024        —          (3,509     (3,797

Genesis Acquisition Co.(1)

   Software & Services    Term Loan    5.69% (L + 3.75%)      07/31/2024        1,362,701        1,341,127       1,335,447  

Genesis Acquisition Co.(2)

   Software & Services    Revolver    5.69% (L + 3.75%)      07/31/2024        70,840        67,715       66,792  

Genesis Acquisition Co.(2)(3)

   Software & Services    Delayed Draw Term Loan    5.69% (L + 3.75%)      07/31/2024        —          (2,804     (3,645

GS AcquisitionCo, Inc.(1)

   Software & Services    Term Loan    7.55% (L + 5.75%; 1.00% Floor)      05/24/2024        2,716,747        2,685,271       2,682,788  

GS AcquisitionCo, Inc.(2)

   Software & Services    Second Supplemental Delayed Draw Term Loan    7.55% (L + 5.75%; 1.00% Floor)      05/24/2024        205,022        191,520       190,366  

GS AcquisitionCo, Inc.(2)

   Software & Services    Revolver    7.55% (L + 5.75%; 1.00% Floor)      05/24/2024        193,445        189,956       189,667  

Ministry Brands, LLC(1)

   Software & Services    Term Loan    5.85% (L + 4.00%; 1.00% Floor)      12/02/2022        3,144,605        3,134,417       3,128,882  

Ministry Brands, LLC(1)

   Software & Services    Delayed Draw Term Loan    5.85% (L + 4.00%; 1.00% Floor)      12/02/2022        657,623        655,480       654,335  

Rhode Holdings, Inc.(1)

   Software & Services    Term Loan    8.72% (L + 5.50%; 1.00% PIK; 1.00% Floor)      05/02/2025        4,477,141        4,437,548       4,387,598  

Rhode Holdings, Inc.(2)

   Software & Services    Revolver    8.30% (L + 6.50%; 1.00% Floor)      05/02/2025        214,851        211,489       207,332  

Rhode Holdings, Inc.(2)

   Software & Services    Delayed Draw Term Loan    8.69% (L + 5.50%; 1.00% PIK; 1.00% Floor)      05/02/2025        69,949        64,481       63,878  

Selligent, Inc.

   Software & Services    Term Loan    7.45% (L + 5.50%; 1.00% Floor)      11/05/2024        1,907,069        1,883,067       1,878,463  

Selligent, Inc.(2)(3)

   Software & Services    Revolver    7.45% (L + 5.50%; 1.00% Floor)      11/03/2023        —          (2,323     (3,010

Sirsi Corporation(1)

   Software & Services    Term Loan    6.49% (L + 4.75%; 1.00% Floor)      03/15/2024        8,965,418        8,846,501       8,830,937  

Sirsi Corporation(2)(12)

   Software & Services    Revolver    8.50% (P + 3.75%; 1.00% Floor)      03/15/2024        221,497        214,397       213,190  

Sugarcrm, Inc.(1)

   Software & Services    Term Loan    8.30% (L + 6.50%; 1.00% Floor)      07/31/2024        3,600,024        3,548,249       3,600,024  

Sugarcrm, Inc.(2)(3)

   Software & Services    Revolver    8.54% (L + 6.50%; 1.00% Floor)      07/31/2024        —          (4,235     —    

Summit Infrastructure Group, Inc.(1)

   Software & Services    Term Loan    5.75% (L + 4.00%; 1.00% Floor)      03/15/2024        7,019,794        6,895,695       6,879,398  

Summit Infrastructure Group, Inc.(2)(3)

   Software & Services    Revolver    5.75% (L + 4.00%; 1.00% Floor)      03/15/2024        —          (9,518     (11,258

Summit Infrastructure Group, Inc.(2)(3)

   Software & Services    Delayed Draw Term Loan    5.75% (L + 4.00%; 1.00% Floor)      03/15/2024        —          (19,006     (22,515

 

See Notes to Unaudited Consolidated Financial Statements

 

20


Table of Contents

Portfolio Company

   Industry   

Facility Type

  

Interest

   Maturity      Funded
Par Amount
     Cost     Fair Value  

Swiftpage, Inc.

   Software & Services    Term Loan A    7.24% (L + 5.50%; 1.00% Floor)      06/13/2023      $ 229,796      $ 225,972     $ 225,200  

Swiftpage, Inc.

   Software & Services    Term Loan    7.30% (L + 5.50%; 1.00% Floor)      06/13/2023        2,496,789        2,460,901       2,446,853  

Swiftpage, Inc.(2)(3)

   Software & Services    Revolver    7.30% (L + 5.50%; 1.00% Floor)      06/13/2023        —          (3,128     (4,506

Symplr Software, Inc.(1)(13)

   Software & Services    Term Loan    7.94% (L + 6.00%)      11/28/2025        5,756,909        5,680,081       5,670,556  

Symplr Software, Inc.(2)(13)

   Software & Services    Revolver    7.94% (L + 6.00%)      11/30/2023        268,631        265,115       264,184  

TRGRP, Inc.(1)

   Software & Services    Term Loan    8.80% (L + 4.50%; 2.50% PIK; 1.00% Floor)      11/01/2023        4,806,090        4,728,641       4,709,968  

TRGRP, Inc.(2)(3)

   Software & Services    Revolver    8.80% (L + 4.50%; 2.50% PIK; 1.00% Floor)      11/01/2023        —          (5,139     (6,667

TRGRP, Inc.(1)

   Software & Services    Incremental Term Loan    8.80% (L + 4.50%; 2.50% PIK; 1.00% Floor)      11/01/2023        1,073,976        1,054,948       1,052,497  

Velocity Purchaser Corporation(1)

   Software & Services    Term Loan    7.80% (L + 6.00%; 1.00% Floor)      12/01/2022        2,815,750        2,781,894       2,815,750  

Velocity Purchaser Corporation(1)

   Software & Services    Term Loan    7.79% (L + 6.00%; 1.00% Floor)      12/01/2022        700,038        689,647       700,038  

Velocity Purchaser
Corporation(2)(3)

   Software & Services    Revolver    7.80% (L + 6.00%; 1.00% Floor)      12/01/2022        —          (2,300     —    

Watermark Insights, LLC(1)

   Software & Services    Term Loan    7.29% (L + 5.50%; 1.00% Floor)      06/07/2024        2,612,705        2,592,613       2,586,578  

Watermark Insights, LLC(1)

   Software & Services    Delayed Draw Term Loan    7.29% (L + 5.50%; 1.00% Floor)      06/07/2024        327,878        326,063       324,599  

Purchasing Power, LLC(1)

   Specialty Finance    Term Loan    8.96% (L + 7.25%; 1.00% Floor)      02/06/2024        2,854,850        2,810,973       2,804,891  

Dillon Logistics, Inc.(1)

   Transport & Logistics    Term Loan B    10.48% (L + 3.00%; 5.00% PIK; 1.00% Floor)      12/11/2023        1,172,909        1,154,246       1,089,984  

Dillon Logistics, Inc.(1)

   Transport & Logistics    Term Loan A    10.48% (L + 3.00%; 5.00% PIK; 1.00% Floor)      12/11/2023        2,658,594        2,616,179       2,470,631  

Dillon Logistics, Inc.(2)(14)

   Transport & Logistics    Revolver    8.90% (L + 7.00%; 1.00% Floor)      12/11/2023        365,443        360,395       336,694  

OSG Bulk Ships, Inc.(1)

   Transport & Logistics    Term Loan    6.69% (L + 5.00%)      12/21/2023        6,017,292        5,955,690       5,942,076  
                 

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

           329,471,892       327,560,477  

2nd Lien/Junior Secured Debt —5.27%

 

Brave Parent Holdings, Inc.(1)

   Energy    Term Loan    9.43% (L + 7.50%)      04/17/2026        1,230,107        1,204,314       1,180,902  

Conterra Ultra Broadband Holdings, Inc.(1)

   Software & Services    Term Loan    9.70% (L + 8.00%; 1.00% Floor)      04/30/2027        6,537,710        6,445,244       6,439,645  
                 

 

 

   

 

 

 

Total 2nd Lien/Junior Secured Debt

           7,649,558       7,620,547  
                 

 

 

   

 

 

 

Total U.S. Corporate Debt

           337,121,450       335,181,024  

Canadian Corporate Debt—1.95%

 

1st Lien/Senior Secured Debt —1.95%

 

JHMCRN Holdings, Inc.(1)(19)

   Business Services    Term Loan    6.80% (L + 5.00%; 1.00% Floor)      11/25/2025        846,198        837,854       837,736  

Nuvei Technologies Corp.(1)(4)(19)

   Business Services    Term Loan    6.80% (L + 5.00%; 1.00% Floor)      09/29/2025        2,015,143        2,010,646       1,994,992  
                 

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

           2,848,500       2,832,728  
                 

 

 

   

 

 

 

Total Canadian Corporate Debt

           2,848,500       2,832,728  

Portfolio Company

  

Industry

                    Shares      Cost     Fair Value  

U.S. Preferred Stock —3.36%

 

Concerto, LLC(15)(16)

   Healthcare & HCIT               65,614      $ 349,977     $ 349,977  

Datarobot, Inc.(16)

   Software & Services               38,190        289,278       289,278  

Degreed, Inc.(16)

   Software & Services               43,819        278,541       278,540  

Heap(16)

   Software & Services               189,617        696,351       696,351  

 

See Notes to Unaudited Consolidated Financial Statements

 

21


Table of Contents

Portfolio Company

  

Industry

                    Shares      Cost      Fair Value  

Protoscale Rubrik(16)

   Software & Services               25,397      $ 598,212      $ 598,201  

Punchh(16)

   Software & Services               24,262        275,337        275,337  

Symplr Software Intermediate Holdings, Inc.(16)

   Software & Services               1,196        1,160,531        1,374,165  

Workfront, Inc.(16)

   Software & Services               104,058        999,998        999,998  
                 

 

 

    

 

 

 

Total U.S. Preferred Stock

           4,648,225        4,861,847  

U.S. Common Stock —1.05%

 

NC Holdings, LLC(16)(17)

   Digital Infrastructure & Services               360,996        400,525        400,525  

Leeds FEG Investors, LLC(16)

   Education               320        321,309        359,147  

INH Group Holdings(16)

   Healthcare & HCIT               484,552        484,552        290,731  

Aggregator, LLC(16)

   Software & Services               417,813        417,813        467,950  
                 

 

 

    

 

 

 

Total U.S. Common Stock

           1,624,199        1,518,353  

U.S. Warrants —0.44%

 

Degreed, Inc., Warrants expire 05/31/2026(16)

   Software & Services               17,749        27,511        27,511  

Fuze, Inc., Warrants expire 09/20/2029(16)

   Digital Infrastructure & Services               184,665      $ 603,855      $ 603,855  
                 

 

 

    

 

 

 

Total U.S. Warrants

           631,366        631,366  

TOTAL INVESTMENTS—238.67%(18)

 

   $ 346,873,740      $ 345,025,318  
                 

 

 

    

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS —(138.67%)

 

      $ (200,462,923
           

 

 

 

NET ASSETS—100.00%

            $ 144,562,395  
                    

 

 

 

 

+ 

As of December 31, 2019, qualifying assets represented 98.38% of total assets. Under the 1940 Act we may not acquire any non-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets.

* 

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of Financial Accounting Standards Board’s Accounting Standards Codification 820 fair value hierarchy.

# 

Percentages are based on net assets.

^ 

Generally, the interest rate on floating interest rate investments is at benchmark rate plus spread. The borrower has an option to choose the benchmark rate, such as the London Interbank Offered Rate (“LIBOR”) or the U.S. Prime Rate. The spread may change based on the type of rate used. The terms in the consolidated schedule of investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates (1M L, 2M L, 3M L or 6M L, respectively) at the borrower’s option. LIBOR loans may be subject to interest floors. As of December 31, 2019, rates for 1M L, 2M L, 3M L and 6M L are 1.76%, 1.83%, 1.91% and 1.91%, respectively. As of December 31, 2019, the U.S. Prime Rate was 4.75%. See Note 4 “Borrowings.”

(1) 

Position, or a portion thereof, has been segregated to collateralize ABPCI Direct Lending Fund CLO VI Ltd.

(2) 

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date, that may expire prior to the maturity date stated. See Note 6 “Commitments and Contingencies”.

(3) 

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

(4) 

Pivotal Payments, Inc. was renamed to Nuvei Technologies Corp. in 2019.

(5) 

$56,565 of the funded par amount accrues interest at 6.35% (L + 4.50%).

(6) 

$29,780 of the funded par amount accrues interest at 10.75 (P + 6.00%).

(7) 

Categorized as Level 2 assets under the definition of ASC 820 fair value hierarchy.

(8) 

$124,648 of the funded par amount accrues interest at 8.24% (L + 6.25%).

(9) 

$293,434 of the funded par amount accrues interest at 10.00% (P + 5.25%).

(10) 

$45,294 of the funded par amount accrues interest at 11.25% (P + 6.50%).

(11) 

$78,522 of the funded par amount accrues interest at 8.49% (L + 6.50%).

(12) 

$110,748 of the funded par amount accrues interest at 6.54% (L + 4.75%).

(13) 

Caliper Software, Inc. has been renamed to Symplr Software, Inc. in 2019.

(14) 

$62,056 of the funded par amount accrues interest at 10.75% (P + 6.00%).

(15) 

Concerto, LLC is held through ABPCIC Concerto Holdings LLC.

(16) 

Non-income producing investment.

(17) 

NC Holdings LLC is held through ABPCIC NC Holdings LLC.

(18) 

Aggregate gross unrealized appreciation for federal income tax purposes is $1,824,555, aggregate gross unrealized depreciation for federal income tax purposes is $3,672,977. Net unrealized depreciation is $1,848,422 based upon a tax cost basis of $346,873,740.

(19) 

Positions considered non-qualifying assets therefore excluded from the qualifying assets calculation as noted in footnote + above.

 

L   -   LIBOR
P   -   Prime
PIK   -   Payment-In-Kind

 

See Notes to Unaudited Consolidated Financial Statements

 

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AB Private Credit Investors Corporation

Notes to Unaudited Consolidated Financial Statements

September 30, 2020

1. Organization

AB Private Credit Investors Corporation (the “Fund,” “we,” “our,” and “us”), an externally managed, non-diversified, closed-end, management investment company that elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), was incorporated under the laws of the state of Maryland on February 6, 2015. The Fund was formed to invest in primary-issue middle-market credit opportunities that are directly sourced and privately negotiated. AB Private Credit Investors LLC serves as the Fund’s external investment adviser (the “Adviser”).

Prior to 2017, there were no significant operations other than the sale and issuance of 100 shares of common stock, par value $0.01, on June 27, 2016, at an aggregate purchase price of $1,000 ($10.00 per share) to the Adviser. The sale of common shares was approved by the unanimous consent of the Fund’s Board of Directors (the “Board”). In addition, prior to commencing operations in 2017, on May 26, 2017, the Fund issued and sold an additional 2,400 shares of common stock, par value $0.01 at an aggregate purchase price of $24,000 ($10.00 per share) to the Adviser. That sale was also approved by the unanimous consent of the Fund’s Board.

The Fund is conducting private offerings (each a “Private Offering”) of its common stock to investors in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any Private Offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of the Fund’s common stock pursuant to a subscription agreement entered into with the Fund. Investors will be required to fund drawdowns to purchase shares of the Fund’s common stock up to the amount of their respective Capital Commitment on an as-needed basis each time the Fund delivers a capital draw-down notice to its investors.

On September 29, 2017, the Fund completed the initial closing (“Initial Closing”) of its Private Offering after entering into subscription agreements (collectively, the “Subscription Agreements”) with several investors, providing for the private placement of the Fund’s common shares. At September 30, 2020, the Fund had total Capital Commitments of $439,989,586, of which 58% is unfunded. Capital Commitments may be drawn down by the Fund on a pro rata basis, as needed (including follow-on investments), for paying the Fund’s expenses, including fees under the Advisory Agreement, and/or maintaining a reserve account for the payment of future expenses or liabilities.

There were no operating activities from February 6, 2015 to November 15, 2017. As described above, the Fund completed its Initial Closing on September 29, 2017, and commenced operations on November 15, 2017. The Fund’s fiscal year ends on December 31.

On December 19, 2018, the Adviser established ABPCIC Funding I LLC (“ABPCIC Funding”), a Delaware limited liability company. ABPCIC Funding is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements commencing from the date of its formation.

On June 14, 2019, the Adviser established ABPCI Direct Lending Fund CLO VI Ltd (“CLO VI”), an exempted company incorporated with limited liability under the laws of the Cayman Islands. CLO VI is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements.

On August 9, 2019, ABPCIC Funding and CLO VI entered into a merger agreement, pursuant to which ABPCIC Funding has agreed to merge with and into CLO VI, with CLO VI as the surviving entity. CLO VI issued Class B, Class C and Subordinated Notes to the Fund through AB PCI Direct Lending Fund CLO VI Depositor LLC, a wholly-owned subsidiary of the Fund established on August 9, 2019.

On September 25, 2019, the Adviser established ABPCIC NC Holdings LLC (“ABPCIC NC”), through which the Fund made an investment. ABPCIC NC is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements commencing from the date of its formation.

On December 17, 2019, the Adviser established ABPCIC Concerto Holdings LLC (“ABPCIC Concerto”), through which the Fund made an investment. ABPCIC Concerto is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements commencing from the date of its formation.

 

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On February 7, 2020, the Fund and an affiliate of Abbott Capital Management, LLC (“Abbott”) became members of, ABPCIC Equity Holdings, LLC (“ABPCICE”), a Delaware limited liability company and a special purpose vehicle designed to invest in private equity investments sourced by Abbott. The Fund is the managing member and owns 100% of the Class L Units and 93% of the Class A Units of ABPCICE. As a result, the Fund consolidates ABPCICE in its consolidated financial statements and records a non-controlling interest of the equity interests in ABPCICE not held by the Fund.

On July 30, 2020, the Adviser established ABPCIC Funding II LLC (“ABPCIC Funding II”), a Delaware limited liability company. ABPCIC Funding II is 100% owned by the Fund and is consolidated in the Fund’s consolidated financial statements commencing from the date of its formation.

2. Significant Accounting Policies

The Fund is an investment company under accounting principles generally accepted in the United States of America (“GAAP”) and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services – Investment Companies. The Fund has prepared the consolidated financial statements and related financial information pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, we have not included in this quarterly report all of the information and notes required by GAAP for annual financial statements. In the opinion of management, the unaudited financial information for the interim period presented in this report reflects all normal and recurring adjustments necessary for a fair statement of financial position and results from operations. Operating results for interim periods are not necessarily indicative of operating results for an entire year. The functional currency of the Fund is U.S. dollars and these consolidated financial statements have been prepared in that currency.

Consolidation

The Fund will generally consolidate any wholly or substantially owned subsidiary when the design and purpose of the subsidiary is to act as an extension of the Fund’s investment operations and to facilitate the execution of the Fund’s investment strategy. Accordingly, the Fund consolidated the results of its subsidiaries (ABPCIC Funding, CLO VI, ABPCIC NC, ABPCIC Concerto, ABPCICE, and ABPCIC Funding II) in its consolidated financial statements. The portion of net assets that is attributable to non-controlling interest in ABPCICE is presented as “Non-Controlling Interest in ABPCIC Equity Holdings, LLC”, a component of total equity, on the Fund’s consolidated statements of assets and liabilities. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current presentation, with no significant effect on our financial condition, results of operations or cash flows.

The following is a summary of significant accounting policies followed by the Fund.

Cash and Cash Equivalents

Cash consists of demand deposits and money market accounts. Cash is carried at cost, which approximates fair value. The Fund maintains deposits of its cash with financial institutions, and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Fund considers all highly liquid investments, with original maturities of less than ninety days, as cash equivalents.

Revenue Recognition

Investment transactions are recorded on a trade-date basis. Interest income is recognized on an accrual basis. Interest income on debt instruments is accrued and recognized for those issuers who are currently paying in full or expected to pay in full. For those issuers who are in default or expected to default, interest is not accrued and is only recognized when received. Generally, when interest and/or principal payments on a loan become past due, or if the Fund otherwise does not expect the borrower to be able to service its debt and other obligations, the Fund will place the loan on non-accrual status and will cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to restructuring such that the interest income is deemed to be collectible. The Fund generally restores non-accrual loans to accrual status when past due principal and interest is paid and, in the management’s judgment, is likely to remain current. Interest income and

 

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expense include discounts accreted and premiums amortized on certain debt instruments as determined in good faith by the Adviser and calculated using the effective interest method. Loan origination fees, original issue discounts and market discounts or premiums are capitalized as part of the underlying cost of the investments and accreted or amortized over the life of the investment as interest income.

Realized gains and losses on investment transactions are determined on the specific identification method.

Certain investments in debt securities may contain a contractual payment-in-kind (“PIK”) interest provision. The PIK provisions generally feature the obligation, or the option, at each interest payment date of making interest payments in (i) cash, (ii) additional debt or (iii) a combination of cash and additional debt. PIK interest, computed at the contractual rate specified in the investment’s credit agreement, is accrued as interest income and recorded as interest receivable up to the interest payment date. On the interest payment date, the accrued interest receivable attributable to PIK is added to the principal balance of the investment. When additional debt is received on the interest payment date, it typically has the same terms, including maturity dates and interest rates, as the original loan. PIK interest generally becomes due on the investment’s maturity date or call date.

The Fund may earn various fees during the life of the loans. Such fees include, but are not limited to, syndication, commitment, administration, prepayment and amendment fees, some of which are paid to the Fund on an ongoing basis. These fees and any other income are recognized as earned.

Credit Facility Related Costs, Expenses and Deferred Financing Costs

The Revolving Credit Facility (as defined in Note 4) is recorded at carrying value, which approximates fair value. Interest expense and unused commitment fees on the Revolving Credit Facility are recorded on an accrual basis. Unused commitment fees are included in interest and borrowing expenses in the consolidated statements of operations. Deferred financing costs include capitalized expenses related to the closing of the Revolving Credit Facility. Amortization of deferred financing costs is computed on the straight-line basis over the contractual term. The amortization of such costs is included in interest and borrowing expenses in the consolidated statements of operations, with any unamortized amounts included in deferred financing costs on the consolidated statements of assets and liabilities.

Notes Payable Related Costs, Expenses and Unamortized Debt Issuance Costs

The Notes (as defined in Note 4) are recorded at carrying value. Interest expense on notes payable is recorded on an accrual basis. Debt issuance costs relating to notes payable are amortized on a straight-line basis over the contractual term and included in interest and borrowing expenses in the consolidated statements of operations. The unamortized debt issuance costs are included as a direct reduction of the carrying value of the notes payable (i.e. a contra liability).

Upon early termination or partial principal pay down of the Notes, the unamortized costs related to the Notes are accelerated into interest and borrowing expenses on the Fund’s consolidated statements of operations.

Secured Borrowings

The Fund may finance the purchase of certain investments through sale/buy-back agreements. In a sale/buy-back agreement, the Fund enters into a trade to sell an investment and contemporaneously enters into a trade to buy the same investment back on a specified date in the future with the same counterparty. The Fund uses sale/buy-back agreements as a short-term financing alternative to its existing Revolving Credit Facility. The Fund accounts for its sale/buy-back agreements as secured borrowings and continues to present the investment as an asset and the obligation to return the cash received as a liability within secured borrowings on the consolidated statements of assets and liabilities. Interest income earned on investments pledged under sale/buy-back agreements and financing charges associated with the sale/buy-back agreements are included within interest income and interest and borrowing expenses, respectively, on the consolidated statements of operations. Accrued interest receivable on investments and accrued financing charges on the sale/buy-back agreements are included within interest receivable and interest and borrowing expenses payable, respectively, on the consolidated statements of assets and liabilities.

Income Taxes

ASC 740, “Accounting for Uncertainty in Income Taxes” (“ASC 740”) provides guidance on the accounting for and disclosure of uncertainty in tax positions. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable

 

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tax authority. Tax positions deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Based on its analysis of its tax position for all open tax years (the current and prior two years), the Fund has concluded that it does not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740. Such open tax years remain subject to examination and adjustment by tax authorities.

The Fund has elected to be treated and intends to continue to be treated for federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). So long as the Fund is able to maintain its status as a RIC, it intends not to be subject to U.S. federal income tax on the portion of its taxable income and gains distributed to stockholders, if any. To qualify for RIC tax treatment, the Fund is required to distribute at least 90% of its investment company taxable income annually, meet diversification and income requirements quarterly, meet gross income requirements annually and file Form 1120-RIC, as provided by the Code. In order for the Fund not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. The Fund will accrue excise tax on estimated undistributed taxable income as required. For the three and nine months ended September 30, 2020, the Fund accrued excise taxes of $0 and $0, respectively. For the three and nine months ended September 30, 2019, the Fund accrued excise taxes of $0 and $0, respectively. As of September 30, 2020, and December 31, 2019, $0 and $0, respectively, of accrued excise taxes remained payable.

The Fund may be subject to taxes imposed by countries in which the Fund invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized gain (loss) as such income and/or gains are earned.

The Fund remains subject to examination by U.S. federal and state jurisdictions, as well as international jurisdictions, and upon completion of these examinations (if undertaken by the taxing jurisdiction) tax adjustments may be necessary and retroactive to all open tax years.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities, if any, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses recorded during the reporting period. Actual results could differ from those estimates and such differences could be material.

Distributions

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

 

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The Fund has adopted a dividend reinvestment plan that provides for stockholders to receive dividends or other distributions declared by the Board in cash unless a stockholder elects to “opt in” to the dividend reinvestment plan. As a result, if the Board declares a cash distribution, then the stockholders who have “opted in” to the dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash distribution.

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This update provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments in this update are optional and effective from March 12, 2020 through December 31, 2022. Management is currently evaluating whether to employ the optional expedients or exceptions in ASU 2020-04, and have not used the expedients or exceptions for the period ended September 30, 2020.

3. Related Party Transactions

Advisory Agreement

On November 13, 2019, the Fund entered into the Amended and Restated Advisory Agreement (the “Amended and Restated Advisory Agreement”), replacing the advisory agreement the Fund entered into with the Adviser on July 27, 2017 (the “Advisory Agreement”), pursuant to which the Fund will pay the Adviser, quarterly in arrears, a base management fee calculated at an annual rate of 1.50%. The base management fee is calculated based on a percentage of the average outstanding assets of the Fund (which equals the gross value of equity and debt instruments, including investments made utilizing leverage), excluding cash and cash equivalents, during such fiscal quarter. The average outstanding assets is calculated by taking the average of the amount of assets of the Fund at the beginning and end of each month that occurs during the calculation period. The base management fee is calculated and paid quarterly in arrears but will be accrued monthly by the Fund over the fiscal quarter for which such base management fee is paid. The base management fee for any partial month or quarter is appropriately prorated. For the three and nine months ended September 30, 2020, the Fund incurred a management fee of $1,563,422 and $4,359,381, respectively, of which $218,829 and $1,664,920, respectively, was voluntarily waived by the Adviser. For the three and nine months ended September 30, 2019, the Fund incurred a management fee of $1,017,059 and $2,477,129, respectively, of which $60,261 and $191,359, respectively, was voluntarily waived by the Adviser. As of September 30, 2020, and December 31, 2019, $1,344,593 and $1,053,696, respectively, of accrued management fees remained payable.

The Fund will also pay the Adviser an incentive fee that provides the Adviser with a share of the income that the Adviser generates for the Fund. The incentive fee will consist of an income-based incentive fee component and a capital-gains component, which are largely independent of each other, with the result that one component may be payable even if the other is not.

Income-Based Incentive Fee: The income-based incentive fee is calculated and payable quarterly in arrears based on the Fund’s net investment income prior to any deductions with respect to such income-based incentive fees and capital gains incentive fees (“Pre-incentive Fee Net Investment Income” or “PIFNII”) for the quarter, as further described below. PIFNII means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial and consulting fees or other fees the Fund receives from portfolio companies) that the Fund accrues during the fiscal quarter, minus the Fund’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement (the “Administration Agreement”) we have entered into with State Street Bank and Trust (the “Administrator”), and any interest expense and dividends paid on any issued and outstanding indebtedness or preferred stock, respectively, but excluding, for avoidance of doubt, the income-based incentive fee accrued under GAAP). PIFNII also includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay-in-kind interest and zero-coupon securities), accrued income that the Fund has not yet received in cash. The Adviser is not under any obligation to reimburse the Fund for any part of the income-based incentive fees it received that was based on accrued interest that the Fund never actually received.

PIFNII does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the income-based incentive fee, it is possible that the Fund may accrue such income-based incentive fee in a quarter where the Fund incurs a net loss. For example, if the Fund receives PIFNII in excess of a hurdle rate (as defined below) for a quarter, the Fund will accrue the applicable income-based incentive fee even if the Fund has incurred a realized and/or unrealized capital loss in that quarter. However, cash payment of the income-based incentive fee may be deferred in this situation, subject to the restrictions detailed at the end of this section.

 

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PIFNII, expressed as a rate of return on the average value of the Fund’s net assets (defined as total assets, less indebtedness and before taking into account any incentive fees payable during the period) as of the first day of each month during the course of the immediately preceding calendar quarter, will be compared to various “hurdle rates,” with the income-based incentive fee rate of return increasing at each hurdle rate.

Description of Quarterly Incentive Fee Calculations

The Fund pays the Adviser an income-based incentive fee with respect to PIFNII in each calendar quarter as follows:

 

   

No income-based incentive fee in any calendar quarter in which PIFNII does not exceed 1.5% per quarter (6% per annum), the “6% Hurdle Rate”;

 

   

100% of PIFNII with respect to that portion of such PIFNII, if any, that exceeds the 6% Hurdle Rate but is less than 1.67% in any calendar quarter (the “6% Catch-up Cap”), approximately 6.67% per annum. This portion of PIFNII (which exceeds the 6% Hurdle Rate but is less than the 6% Catch-up Cap) is referred to as the “6% Catch-up.” The 6% Catch-up is meant to provide the Adviser with 10.0% of the PIFNII as if hurdle rate did not apply if this net investment income exceeded 1.67% but was less than 1.94% in any calendar quarter; and

 

   

10.0% of the amount of PIFNII, if any, that exceeds the 6% Catch-up Cap, but is less than 1.94% (the “7% Hurdle Rate”), approximately 7.78% per annum. The 7% Hurdle Rate is meant to limit the Adviser to 10% of the PIFNII until the amount of PIFNII exceeds 1.94%, approximately 7.78% per annum; and

 

   

100% of PIFNII with respect to that portion of such PIFNII, if any, that exceeds the 7% Hurdle Rate but is less than 2.06% in any calendar quarter (the “7% Catch-up Cap”), approximately 8.24% per annum. This portion of PIFNII (which exceeds the 7% Hurdle Rate but is less than the 7% Catch-up Cap) is referred to as the “7% Catch-up.” The 7% Catch-up is meant to provide the Adviser with 15.0% of the PIFNII as if a hurdle rate did not apply if this net investment income exceeded 2.06% but was less than 2.35% in any calendar quarter; and

 

   

15.0% of the amount of PIFNII, if any, that exceeds the 7% Catch-up Cap, but is less than 2.35% (the “8% Hurdle Rate”, approximately 9.41% per annum). The 8% Hurdle Rate is meant to limit the Adviser to 15% of the PIFNII until the amount of PIFNII exceeds 2.35%, approximately 9.41% per annum; and

 

   

100% of PIFNII with respect to that portion of such PIFNII, if any, that exceeds the 8% Hurdle Rate but is less than 2.50% in any calendar quarter (the “8% Catch-up Cap”), approximately 10% per annum. This portion of PIFNII (which exceeds the 8% Hurdle Rate but is less than the 8% Catch-up cap) is referred to as the “8% Catch-up”. The 8% Catch-up is meant to provide the Adviser with 20.0% of the PIFNII as if a hurdle rate did not apply if this net investment income exceeded 2.50% in any calendar quarter; and

 

   

20.0% of the amount of PIFNII, if any, that exceeds 2.50% in any calendar quarter.

For the three and nine months ended September 30, 2020, the Fund incurred income-based incentive fees of $326,274 and $1,382,704, respectively, of which $0 and $486,784, respectively, was voluntarily waived by the Adviser. For the three and nine months ended September 30, 2019, the Fund incurred income-based incentive fees of $180,792 and $586,627, respectively, of which $56,255 and $132,327, respectively, was voluntarily waived by the Adviser. As of September 30, 2020, and December 31, 2019, $1,945,203 and $1,049,291, respectively, of accrued income-based incentive fees remained payable.

Capital Gains Incentive Fee: The capital gains incentive fee is determined and payable at the end of each fiscal year as 20% of aggregate cumulative realized capital gains from the date of the Fund’s election to be regulated as a BDC through the end of that year, computed net of all aggregate cumulative realized capital losses and aggregate cumulative unrealized depreciation through the end of such year, less the aggregate amount of any previously paid capital gain incentive fees. For the foregoing purpose, “aggregate cumulative realized capital gains” will not include any unrealized appreciation. For accounting purposes only, we are required under GAAP to accrue a hypothetical capital gains incentive fee based upon net realized gains and unrealized depreciation for that calendar year (in accordance with the terms of the Amended and Restated Advisory Agreement), plus unrealized appreciation on investments held at the end of the period. The accrual of this hypothetical capital gains incentive fee assumes all unrealized capital gain and loss is realized in order to reflect a hypothetical capital gains incentive fee that would be payable to the Adviser at each measurement date. The capital gains incentive fee is not subject to any minimum return to stockholders. If such amount is negative, then no capital gains incentive fee will be payable for such year. Additionally, if the Amended and Restated Advisory Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains incentive fee.

 

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Since inception, no capital gains incentive fees have been incurred or are payable as of September 30, 2020 and December 31, 2019, and for the three and nine months ended September 30, 2020 and September 30, 2019.

The amount of capital gains incentive fee expense related to a hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to the Adviser in the event of a complete liquidation of the Fund’s portfolio as of period end and the termination of the Amended and Restated Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee expense fluctuates with the Fund’s overall investment results.

The Fund will defer cash payment of any income-based incentive fee and/or any capital gains incentive fee otherwise earned by the Adviser if during the most recent four full fiscal quarter periods ending on or prior to the date such payment is to be made, the sum of (a) the PIFNII, and (b) the realized capital gain / loss and (c) unrealized capital appreciation/ depreciation expressed as a rate of return on the value of our net assets, is less than 6.0%. Any such deferred fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under the Amended and Restated Advisory Agreement.

Administration Agreement and Expense Reimbursement Agreement

We have entered into the Administration Agreement with the Administrator and a separate expense reimbursement agreement with the Adviser (the “Expense Reimbursement Agreement”) under which any allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs will be reimbursed by the Fund. Under the Administration Agreement, the Administrator will be responsible for providing us with clerical, bookkeeping, recordkeeping and other administrative services. We will reimburse the Adviser an amount equal to our allocable portion (subject to the review of our Board) of its overhead resulting from its obligations under the Expense Reimbursement Agreement, including the allocable portion of the cost of our Chief Compliance Officer and Chief Financial Officer and their respective staffs.

Expense Support and Conditional Reimbursement Agreement

On September 29, 2017, the Fund and the Adviser entered into an agreement (the “Expense Support and Conditional Reimbursement Agreement”) to limit certain of the Fund’s Operating Expenses, as defined below, to no more than 1.5% of the Fund’s average quarterly gross assets. To achieve this percentage limitation, the Adviser has agreed to reimburse the Fund for certain Operating Expenses on a quarterly basis (any such payment by the Adviser, an “Expense Payment”) and the Fund has agreed to later repay such amounts (any such payment by the Fund, a “Reimbursement Payment”), pursuant to the terms of the Expense Support and Conditional Reimbursement Agreement. The actual percentage of Operating Expenses paid by the Fund in any quarter after deducting any Expense Payment, as a percentage of the Fund’s average quarterly gross assets, is referred to as the “Percentage Limit.”

Any Expense Payment by the Adviser pursuant to the Expense Support and Conditional Reimbursement Agreement will be subject to repayment by the Fund on a quarterly basis within the three years following the fiscal quarter of the Fund in which the Operating Expenses were paid or absorbed, if the total Operating Expenses for the current quarter, including Reimbursement Payments, expressed as a percentage of the Fund’s average gross assets during such quarter is less than the then-current Percentage Limit, if any, and the Percentage Limit that was in effect at the time when the Adviser reimbursed the Operating Expenses that are the subject of the repayment, subject to certain provisions of the Expense Support and Conditional Reimbursement Agreement, as described below. For purposes of the Expense Support and Conditional Reimbursement Agreement, “Operating Expenses” means the Fund’s Total Operating Expenses (as defined below), excluding base management fees, incentive fees, distribution and stockholder servicing fees, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses and “Total Operating Expenses” means all of the Fund’s operating costs and expenses incurred, as determined in accordance with generally accepted accounting principles for investment companies.

However, no Reimbursement Payment for any quarter will be made if: (1) the Effective Rate of Distributions Per Share (as defined below) declared by the Fund at the time of such Reimbursement Payment is less than or equal to the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) the Fund’s Operating Expense Ratio at the time of such Reimbursement Payment is greater than or equal to the Operating Expense Ratio (as defined below) at the time the Expense Payment was made to which such Reimbursement Payment relates. For purposes of the Expense Support and Conditional Reimbursement Agreement, “Effective Rate of Distributions Per Share” means the annualized rate (based on a 365- day year) of regular cash distributions per share exclusive of returns of capital, distribution rate reductions due to distribution and stockholder fees, and declared special dividends or special distributions, if any. The “Operating Expense Ratio” is calculated by dividing Operating Expenses in any quarter by the Fund’s average net assets in such quarter.

 

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The specific amount of expenses paid by the Adviser, if any, will be determined at the end of each quarter. The Fund or the Adviser may terminate the Expense Support and Conditional Reimbursement Agreement at any time, with or without notice. The Expense Support and Conditional Reimbursement Agreement will automatically terminate in the event of (a) the termination of the Amended and Restated Advisory Agreement, or (b) the Board of the Fund making a determination to dissolve or liquidate the Fund. Upon termination of the Expense Support and Conditional Reimbursement Agreement, the Fund will be required to fund any Expense Payments, subject to the aforementioned requirements per the Expense Support and Conditional Reimbursement Agreement, that have not been reimbursed by the Fund to the Adviser.

As of September 30, 2020, the amount of Expense Payments provided by the Adviser since inception is $4,874,139. The following table reflects the Expense Payments that may be subject to reimbursement pursuant to the Expense Agreement:

 

For the Quarters Ended

   Amount of
Expense Support
     Amount of
Reimbursement
Payment
     Amount of
Unreimbursed
Expense
Support
     Effective Rate of
Distribution
per Share (1)
    Reimbursement Eligibility
Expiration
     Percentage
Limit (2)
 

September 30, 2017

   $ 1,002,147      $ 1,002,147        —          n/a       September 30, 2020        1.5

December 31, 2017

     1,027,398        856,715      $ 170,683        n/a       December 31, 2020        1.5

March 31, 2018

     503,592        —          503,592        n/a       March 31, 2021        1.5

June 30, 2018

     1,086,482        —          1,086,482        4.787     June 30, 2021        1.0

September 30, 2018

     462,465        —          462,465        4.715     September 30, 2021        1.0

December 31, 2018

     254,742        —          254,742        6.762     December 31, 2021        1.0

March 31, 2019

     156,418        —          156,418        5.599     March 31, 2022        1.0

June 30, 2019

     259,263        —          259,263        6.057     June 30, 2022        1.0

September 30, 2019

     31,875        —          31,875        5.154     September 30, 2022        1.0

December 31, 2019

     —          —          —          6.423     December 31, 2022        1.0

March 31, 2020

     89,757        —          89,757        10.17     March 31, 2023        1.0

June 30, 2020

     —          —          —          5.662     June 30, 2023        1.5

September 30, 2020

     —          —          —          6.063     September 30, 2023        1.5
  

 

 

    

 

 

    

 

 

         

Total

   $ 4,874,139      $ 1,858,862      $ 3,015,277          
  

 

 

    

 

 

    

 

 

         

 

(1)

The effective rate of distribution per share is expressed as a percentage equal to the projected annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular quarterly cash distributions per share as of such date without compounding), divided by the Fund’s gross offering price per share as of such date.

(2)

Represents the actual percentage of Operating Expenses paid by the Fund in any quarter after deducting any Expense Payment, as a percentage of the Fund’s average quarterly gross assets.

Transfer Agency Agreement

On September 26, 2017, the Fund and AllianceBernstein Investor Services, Inc. (“ABIS”), an affiliate of the Fund, entered into an agreement pursuant to which ABIS will provide transfer agent services to the Fund. The Fund bears the expenses related to the agreement with ABIS.

For the three and nine months ended September 30, 2020, the Fund accrued $13,083 and $36,390 in transfer agent fees, respectively. For the three and nine months ended September 30, 2019, the Fund accrued $8,104 and $19,203 in transfer agent fees, respectively. As of September 30, 2020, and December 31, 2019, $13,083 and $9,397, respectively, of accrued transfer agent fees remained payable.

4. Borrowings

Credit Facilities

On November 15, 2017, the Fund entered into a credit agreement (the “Credit Agreement”) to establish a revolving credit facility (the “Revolving Credit Facility”) with HSBC Bank USA, National Association (“HSBC”) as administrative agent (the “Administrative Agent”). The initial maximum commitment amount (the “Maximum Commitment”) under the Revolving Credit Facility was $30 million and may be increased in a minimum amount of $10 million and in $5 million increments thereof with the consent of HSBC or reduced upon request of the Fund. As of January 31, 2019, the Fund has increased the Maximum Commitment to $50 million. So long as no request for borrowing is outstanding, the Fund may terminate the lenders’ commitments (“Commitments”) or reduce the Maximum Commitments by giving prior irrevocable written notice to the Administrative Agent. Any reduction of the

 

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Maximum Commitments shall be in an amount equal to $10 million or multiples thereof; and in no event, shall a reduction by the Fund reduce the Commitments to $35 million or less (in each case, except for a termination of all the Commitments). Proceeds under the Credit Agreement may be used for any purpose permitted under the Fund’s organizational documents, including general corporate purposes such as the making of investments. The Credit Agreement contains certain customary covenants and events of default, with customary cure and notice provisions. As of September 30, 2020, the Fund is in compliance with these covenants. The Fund’s obligations under the Credit Agreement are secured by the Capital Commitments and capital contributions to the Fund.

Borrowings under the Credit Agreement bear interest, at the Fund’s election at the time of drawdown, at a rate per annum equal to (i) with respect to LIBOR Rate Loans, Adjusted LIBOR (as defined in the Credit Agreement) for the applicable Interest Period (as defined in the Credit Agreement); and (ii) with respect to Reference Rate Loans (as defined in the Credit Agreement), the greatest of: (x) the rate of interest per annum publicly announced from time to time by HSBC as its prime rate, (y) the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, plus two hundred basis points (2.00%), provided that if such rate is not so published for any day that is a Business Day (as defined in the Credit Agreement), the average of the quotation for such day on such transactions received by the Administrative Agent, from three (3) Federal funds brokers of recognized standing selected by the Administrative Agent and, upon request of Borrowers (as defined in the Credit Agreement), with notice of such quotations to the Borrowers and (z) except during any period of time during which LIBOR is unavailable, one-month Adjusted LIBOR plus one hundred ninety basis points (1.90%). The Fund will also pay an unused commitment fee of 35 basis points (0.35%) on any unused commitments.

The Revolving Credit Facility was scheduled to mature on November 11, 2020, subject to the Fund’s option to extend the maturity date for up to one additional term not longer than 364 days, subject to the following conditions: (i) each of the Lenders (as defined in the Credit Agreement) and the Administrative Agent consents to the extension in their sole discretion; (ii) the Fund has paid an extension fee to the Administrative Agent for the benefit of the extending Lenders consenting to such extension in an amount agreed to by the Administrative Agent and the Borrowers at the time of the extension and as set forth in the applicable extension request; (iii) no potential default or event of default has occurred and is continuing on the date on which notice is given in accordance with the following clause (iv) or on November 11, 2020; and (iv) the Fund has delivered an extension request to the Administrative Agent not more than one hundred twenty (120) days or less than forty-five (45) days prior to November 11, 2020.

On January 30, 2019, ABPCIC Funding entered into a credit agreement (the “Barclays Credit Agreement,” and together with all ancillary documents thereto, the “Barclays Credit Facility”) with Barclays Bank PLC, New York Branch (“Barclays”) as facility agent and U.S. Bank National Association (“U.S. Bank”) as collateral agent (in such capacity, the “Collateral Agent”), collateral administrator (in such capacity, the “Collateral Administrator”) and custodian (in such capacity, the “Custodian”). The Barclays Credit Facility was terminated on August 9, 2019.

All of the collateral pledged to lenders by ABPCIC Funding under the Barclays Credit Facility was held in the custody of the Custodian under an account control agreement by and among ABPCIC Funding, the Collateral Agent and the Custodian. The Collateral Administrator maintained and performed certain collateral administration services with respect to the collateral pursuant to a collateral administration agreement among ABPCIC Funding, the Adviser and the Collateral Administrator. Borrowings under the Barclays Credit Facility were secured by all of the assets held by ABPCIC Funding. Pursuant to a collateral management agreement (the “Collateral Management Agreement”) by and between ABPCIC Funding and the Adviser as collateral manager, the Adviser performed certain duties with respect to the purchase and management of the assets securing the Barclays Credit Facility. The Adviser elected to waive any fees that would otherwise be payable under the Barclays Credit Facility and the Collateral Management Agreement. ABPCIC Funding was responsible for reimbursing the expenses incurred by the Adviser in the performance of its obligations under the Collateral Management Agreement other than any ordinary overhead expenses, which were not required to be reimbursed. For the three and nine months ended September 30, 2020, the Fund did not incur any collateral management fees. For the three and nine months ended September 30, 2019, the Fund incurred collateral management fees of $100,949 and $426,758, respectively, which were voluntarily waived by the Adviser.

The Barclays Credit Facility provided for borrowings in an aggregate amount up to $150 million. Borrowings under the Barclays Credit Facility bore interest paid on an annual adjusted LIBOR for the relevant interest period, plus an applicable spread of 2.25%. ABPCIC Funding would also pay an unused commitment fee of .50% and the commitment would have expired on July 30, 2020. Interest and fees were paid quarterly in arrears. Any amounts borrowed under the Barclays Credit Facility would have matured, and all accrued and unpaid interest thereunder would have been due and payable, on the earlier of (i) January 20, 2029, (ii) the date on which ABPCIC Funding issues collateralized loan obligation securities in a transaction for which the sole arranger is Barclays (or an affiliate thereof) or (iii) upon certain other events which result in accelerated maturity under the credit facility. Borrowing under the Barclays Credit Facility was subject to certain restrictions contained in the 1940 Act. The Barclays Credit Facility matured and was paid down in 2019 in connection with the issuance of the Notes (as defined below). For a discussion of the CLO Transaction, see Note 4. Borrowings; Collateralized Loan Obligations.

 

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The Fund’s outstanding borrowings through the Revolving Credit Facility as of September 30, 2020 were as follows:

 

     Aggregate Borrowing
Amount Committed
     Outstanding
Borrowing
     Amount
Available
     Carrying
Value
 

HSBC

   $ 50,000,000      $ 34,500,000      $ 15,500,000      $ 34,500,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 50,000,000      $ 34,500,000      $ 15,500,000      $ 34,500,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

The Fund’s outstanding borrowings through the Revolving Credit Facility as of December 31, 2019 were as follows:

 

     Aggregate Borrowing
Amount Committed
     Outstanding
Borrowing
     Amount
Available
     Carrying
Value
 

HSBC

   $ 50,000,000      $ 19,500,000      $ 30,500,000      $ 19,500,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 50,000,000      $ 19,500,000      $ 30,500,000      $ 19,500,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2020, and December 31, 2019, deferred financing costs were $8,811 and $64,959, respectively, which remain to be amortized, and are reflected on the consolidated statements of assets and liabilities.

Collateralized Loan Obligations

On August 9, 2019, CLO VI (the “Issuer”) and ABPCI Direct Lending Fund CLO VI LLC, a limited liability company organized under the laws of the State of Delaware (the “Co-Issuer,” and together with the Issuer, the “Co-Issuers”), each a newly formed special purpose vehicle, completed a $300,500,000 term debt securitization (the “CLO Transaction”). The stated reinvestment date is August 9, 2022.

The CLO Transaction was executed through a private placement and the notes offered (the “Notes”) that remain outstanding as of September 30, 2020 and December 31, 2019 were as follows:

 

September 30, 2020  
     Principal
Amount
     Interest
Rate
    Carrying
Value(1)
 

Class A-1 Senior Secured Floating Rate Note (“Class A-1”)

   $ 178,200,000        L + 1.73   $ 176,472,146  

Class A-2A Senior Secured Floating Rate Note (“Class A-2A”)

   $ 25,000,000        L + 2.45   $ 24,757,596  

Class A-2B Senior Secured Fixed Rate Note (“Class A-2B”)

   $ 9,950,000        4.23   $ 9,826,203  

Class B Secured Deferrable Floating Rate Note (“Class B”)

   $ 16,400,000        L + 3.40   $ —  

Class C Secured Deferrable Floating Rate Note (“Class C”)

   $ 17,350,000        L + 4.40   $ —  

Subordinated Notes

   $ 53,600,000        N/A     $ —  

 

*

Class B, Class C and Subordinated Notes have been eliminated in consolidation.

(1)

Carrying value is net of unamortized discount and debt issuance costs. Unamortized discount and debt issuance costs associated with the Notes totaled $27,588 and $2,066,467, respectively, as of September 30, 2020 and are reflected on the consolidated statements of assets and liabilities.

 

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Table of Contents
December 31, 2019  
     Principal
Amount
     Interest
Rate
    Carrying
Value(1)
 

Class A-1 Senior Secured Floating Rate Note (“Class A-1”)

   $ 178,200,000        L + 1.73   $ 175,875,031  

Class A-2A Senior Secured Floating Rate Note (“Class A-2A”)

   $ 25,000,000        L + 2.45   $ 24,673,826  

Class A-2B Senior Secured Fixed Rate Note (“Class A-2B”)

   $ 9,950,000        4.23   $ 9,787,776  

Class B Secured Deferrable Floating Rate Note (“Class B”)

   $ 16,400,000        L + 3.40   $ —  

Class C Secured Deferrable Floating Rate Note (“Class C”)

   $ 17,350,000        L + 4.40   $ —  

Subordinated Notes

   $ 53,600,000        N/A     $ —  

 

*

Class B, Class C and Subordinated Notes have been eliminated in consolidation.

(1)

Carrying value is net of unamortized discount and debt issuance costs. Unamortized discount and debt issuance costs associated with the Notes totaled $32,835 and $2,780,532, respectively, as of December 31, 2019 and are reflected on the consolidated statements of assets and liabilities.

The Notes are scheduled to mature on August 9, 2030.

The CLO VI indenture provides that the holders of the CLO VI Class A-1, Class A-2A, Class A-2B, Class B and Class C Notes are to receive quarterly interest payments, in arrears, on the 20th day in January, April, July and October of each year, commencing in August 2019.

The Notes are the secured obligations of the Co-Issuers, and the indenture governing the Notes includes customary covenants and events of default. The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration.

The Adviser serves as collateral manager to the Issuer pursuant to a collateral management agreement between the Adviser and the Issuer (the “CLO Collateral Management Agreement”). For so long as the Adviser serves as collateral manager to the Issuer, the Adviser will elect to irrevocably waive any base management fee or subordinated interest to which it may be entitled under the CLO Collateral Management Agreement. For the three and nine months ended September 30, 2020, the Fund incurred collateral management fees of $462,788 and $1,380,737, respectively, which were voluntarily waived by the Adviser. For the three and nine months ended September 30, 2019, the Fund incurred collateral management fees of $266,585 and $266,585, respectively, which were voluntarily waived by the Adviser.

Secured borrowings

From time to time, the Fund may engage in sale/buy-back agreements, which are a type of secured borrowing. The amount, interest rate and terms of these agreements will be individually negotiated on a transaction-by-transaction basis. Each borrowing is secured by an interest in an underlying asset which is participated or assigned to the sale/buy-back counterparty for the duration of the agreement.

Secured borrowings outstanding as of September 30, 2020 were as follows:

 

 

Counterparty

  

 

Macquarie US Trading LLC

Maturity

   Thirty days or less from September 29, 2020

Rate

   1.25 bps daily

Amount

   $3,430,000

 

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As of September 30, 2020 and December 31, 2019, outstanding borrowings under the Revolving Credit Facility, Notes, and secured borrowings were $248,985,945 and $229,836,633, respectively.

For the three and nine months ended September 30, 2020 and September 30, 2019, the components of interest and other debt expenses related to the borrowings were as follows:

 

     For the three months ended
September 30
   

For the nine months ended
September 30

 
     2020     2019     2020     2019  

Interest and borrowing expenses

   $ 1,434,018     $ 2,072,853     $ 5,509,431     $ 5,024,175  

Commitment fees

     16,445       45,986       55,592       178,912  

Amortization of debt issuance and deferred financing costs

     303,255       305,525       775,460       640,997  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,753,718     $ 2,424,364     $ 6,340,483     $ 5,844,084  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average interest rate (1)

     2.33     4.32     3.04     4.64

Average outstanding balance

   $ 244,838,696     $ 190,161,957     $ 242,281,387     $ 144,708,242  

 

(1)

Calculated as the amount of the stated interest expense and fees divided by average borrowings during the period.

LIBOR Risk—The Fund may invest in certain debt securities, derivatives or other financial instruments that utilize the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. In July 2017, the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out the use of LIBOR by the end of 2021. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. In addition, in April 2018, the Federal Reserve System, in conjunction with the Alternative Reference Rates Committee, announced the replacement of LIBOR with a new index, calculated by short-term repurchase agreements collateralized by U.S. Treasury securities, called the Secured Overnight Financing Rate, or the “SOFR.” At this time, it is not possible to predict whether SOFR will attain market traction as a LIBOR replacement. Additionally, the future of LIBOR at this time is uncertain. Potential changes, or uncertainty related to such potential changes, may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities, or the cost of our borrowings. In addition, changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities, including the value of the LIBOR-indexed, floating-rate debt securities in our portfolio, or the cost of our borrowings. Additionally, if LIBOR ceases to exist, we may need to renegotiate our credit arrangements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate and certain of our existing credit facilities to replace LIBOR with the new standard that is established. The potential effect of the phase-out or replacement of LIBOR on our cost of capital and net investment income cannot yet be determined.

5. Fair Value Measurement

In accordance with ASC 820, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation.

The three-tier hierarchy of inputs is summarized below:

 

   

Level 1 – Quoted prices in active markets for identical investments.

 

   

Level 2 – Other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).

 

   

Level 3 – Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments at the reporting date).

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require

 

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significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. If a fair value measurement uses price data vendors or observable market price quotations, that measurement is a Level 2 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Valuation of Investments

Investments are valued at fair value as determined in good faith by our Board, based on input of management, the audit committee and independent valuation firms that have been engaged to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter.

The fair values of loan investments based upon pricing data vendors or observable market price quotations are generally categorized as Level 2; however, those priced using models with significant unobservable inputs are categorized as Level 3.

In determining the fair value of the Fund’s Level 3 debt and equity positions, the Adviser uses the following factors where relevant: loan to value (“LTV”) based on an enterprise value determined using the original purchase price, public equity comparable, recent M&A transaction, and a discounted cash flow (“DCF”) analysis, and yields from comparable loans, comparable high yield bonds, high yield indexes and loan indexes (“comparable yields”).

Due to the inherent uncertainty of valuations, however, estimated fair values may differ from the values that would have been used had a readily available market for the securities existed and the differences could be material.

The following table summarizes the valuation of the Fund’s investments as of September 30, 2020:

 

Assets*

   Level 1      Level 2      Level 3      Total  

1st Lien/Senior Secured Debt

   $ —        $ 4,152,654      $ 393,621,862      $ 397,774,516  

2nd Lien/Junior Secured Debt

     —          —          7,674,763        7,674,763  

U.S. Preferred Stock

     —          —          6,838,814        6,838,814  

U.S. Common Stock

     —          —          2,200,433        2,200,433  

U.S. Warrants

     —          —          222,586        222,586  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ —        $ 4,152,654      $ 410,558,458      $ 414,711,112  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

See consolidated schedule of investments for industry classifications.

The following table summarizes the valuation of the Fund’s investments as of December 31, 2019:

 

Assets*

   Level 1      Level 2      Level 3      Total  

1st Lien/Senior Secured Debt

   $ —        $ 12,092,212      $ 318,300,993      $ 330,393,205  

2nd Lien/Junior Secured Debt

     —          —          7,620,547        7,620,547  

U.S. Preferred Stock

     —          —          4,861,847        4,861,847  

U.S. Common Stock

     —          —          1,518,353        1,518,353  

U.S. Warrants

     —          —          631,366        631,366  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ —        $ 12,092,212      $ 332,933,106      $ 345,025,318  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

See consolidated schedule of investments for industry classifications.

 

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Table of Contents

The following is a reconciliation of Level 3 assets for the nine months ended September 30, 2020:

 

     1st Lien/Senior
Secured Debt
    2nd Lien/
Junior

Secured
Debt
     U.S. Common
Stock
     U.S. Preferred
Stock
     U.S.
Warrants
    Total  

Balance as of January 1, 2020

   $ 318,300,993     $ 7,620,547      $ 1,518,353      $ 4,861,847      $ 631,366     $ 332,933,106  

Purchases (including PIK)

     118,520,426       —          170,230        1,845,784        65,810       120,602,250  

Sales and principal payments

     (43,957,138     —          —          —          —         (43,957,138

Realized Gain (Loss)

     12,605       —          —          —          —         12,605  

Net Amortization of Premium/Discount

     1,485,785       10,002        —          —          —         1,495,787  

Transfers In

     6,836,979       —          —          —          —         6,836,979  

Transfers Out

     —         —          —          —          —         —    

Net Change in Unrealized Appreciation (Depreciation)

     (7,577,788     44,214        511,850        131,183        (474,590     (7,365,131
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance as of September 30, 2020

   $ 393,621,862     $ 7,674,763      $ 2,200,433      $ 6,838,814      $ 222,586     $ 410,558,458  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Change in Unrealized Appreciation (Depreciation) for Investments Still Held

   $ (7,710,821   $ 44,214      $ 511,850      $ 131,183      $ (474,590   $ (7,498,164

For the nine months ended September 30, 2020, there were transfers of $6,836,979 from Level 2 to Level 3 fair value measurements for the Fund due to lack of observability and liquidity. There were no transfers from Level 3.

The following is a reconciliation of Level 3 assets for the year ended December 31, 2019:

 

     1st Lien/Senior
Secured Debt
    2nd Lien/
Junior

Secured
Debt
    U.S. Common
Stock
    U.S. Preferred
Stock
     U.S.
Warrants
     Total  

Balance as of January 1, 2019

   $ 122,981,395     $ 1,200,773     $ 379,849     $ 1,160,531      $ —        $ 125,722,548  

Purchases (including PIK)

     238,113,812       6,439,645       1,312,798       3,487,694        631,366        249,985,315  

Sales and principal payments

     (43,180,812     —         (183,182     —          —          (43,363,994

Realized Gain (Loss)

     (37,702     —         120,448       —          —          82,746  

Net Amortization of Premium/Discount

     1,319,839       8,480       —         —          —          1,328,319  

Transfers In

     —         —         —         —          —          —    

Transfers Out

     —         —         —         —          —          —    

Net Change in Unrealized Appreciation (Depreciation)

     (895,539     (28,351     (111,560     213,622        —          (821,828
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Balance as of December 31, 2019

   $ 318,300,993     $ 7,620,547     $ 1,518,353     $ 4,861,847      $ 631,366      $ 332,933,106  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Change in Unrealized Appreciation (Depreciation) for Investments Still Held

   $ (830,746   $ (28,351   $ (111,560   $ 213,622      $ —        $ (757,035

For the year ended December 31, 2019, there were no transfers to or from Level 3.

The following tables present the ranges of significant unobservable inputs used to value the Fund’s Level 3 investments as of September 30, 2020 and December 31, 2019, respectively. These ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Fund’s Level 3 investments.

 

36


Table of Contents
     Fair Value
as of
September 30, 2020
    

Valuation
Techniques

  

Unobservable
Input

  

Range
(Weighted

Average) (1)

  

Impact to
Valuation from

an Increase in

Input

Assets:

              

1st Lien/Senior Secured Debt

   $ 340,202,565      Market Yield Analysis    Market Yield    4.9%-16.9% (7.7%)    Decrease
     10,257,303      Market Approach    EBITDA Multiple   

1.6x-10.7x

(5.4x)

   Increase
     20,681,116      Recent Transaction    Transaction Price    N/A    N/A
     22,480,878      Recent Purchase    Purchase Price    N/A    N/A

2nd Lien/Junior Secured Debt

     7,674,763      Market Yield Analysis    Market Yield    8.6%-9.4% (9.3%)    Decrease

U.S. Common

Stock

     986,049      Market Approach    EBITDA Multiple   

11.5x-15.7x

(14.2x)

   Increase
     676,856      Market Approach    Recurring Revenue Multiple    5.0x    Increase
     406,704      Market Approach    Network Cashflow Multiple    34.9x    Increase
     130,824      Recent Purchase    Purchase Price    N/A    N/A

U.S. Preferred Stock

     2,074,080      Market Approach    EBITDA Multiple   

10.7x-13.6x

(12.7x)

   Increase
     1,101,974      Market Approach    Dividend Yield    8.0%    Increase
     560,470      Recent Transaction    Transaction Price    N/A    N/A
     3,102,290      Recent Purchase    Purchase Price    N/A    N/A

U.S. Warrants

     126,876      Market Approach    Revenue Multiple   

5.5x-7.8x

(6.7x)

   Increase
     95,710      Recent Transaction    Transaction Price    N/A    N/A
  

 

 

             

Total Assets

   $ 410,558,458              

 

(1)

Weighted averages are calculated based on fair value of investments.

 

     Fair Value
as of
December 31, 2019
    

Valuation
Techniques

  

Unobservable

Input

  

Range

(Weighted

Average) (1)

  

Impact to
Valuation from

an Increase in

Input

Assets:

              

1st Lien/Senior Secured Debt

   $ 233,166,392      Market Yield Analysis    Market Yield    6.3%-11.7% (8.2%)    Decrease
     85,134,601      Recent Purchase    Purchase Price    N/A    N/A

2nd Lien/Junior Secured Debt

     7,620,547      Market Yield Analysis    Market Yield    10.5%-11.0% (10.6%)    Decrease

U.S. Common

Stock

     1,117,827      Market Approach    EBITDA Multiple    5.0x-16.0x (10.3x)    Increase
     400,526      Recent Purchase    Purchase Price    N/A    N/A

U.S. Preferred Stock

     1,374,166      Market Approach    EBITDA Multiple    13.6x    Increase
     2,573,089      Market Approach    Revenue Multiple    5.0x-12.7x (9.0x)    Increase
     914,592      Recent Purchase    Purchase Price    N/A    N/A

U.S. Warrants

     27,511      Market Approach    Revenue Multiple    12.3x    Increase
     603,855      Recent Purchase    Purchase Price    N/A    N/A
  

 

 

             

Total Assets

   $ 332,933,106              

 

(1)

Weighted averages are calculated based on fair value of investments.

 

37


Table of Contents

Financial Instruments Disclosed, But Not Carried, At Fair Value

The following table presents the carrying value and fair value of the Fund’s financial liabilities disclosed, but not carried, at fair value as of September 30, 2020 and the level of each financial liability within the fair value hierarchy.

 

     Carrying      Fair                       
     Value (1)      Value      Level 1      Level 2      Level 3  

Class A-1 Senior Secured Notes

   $ 176,472,146      $ 177,849,302      $ —        $ —        $ 177,849,302  

Class A-2A Senior Secured Notes

     24,757,596        25,103,500        —          —          25,103,500  

Class A-2B Senior Secured Notes

     9,826,203        10,592,372        —          —          10,592,372  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 211,055,945      $ 213,545,174      $ —        $ —        $ 213,545,174  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Carrying value is net of unamortized discount and debt issuance costs. Unamortized discount and debt issuance costs associated with the Notes totaled $27,588 and $2,066,467 as of September 30, 2020 and are reflected on the consolidated statements of assets and liabilities.

The following table presents the carrying value and fair value of the Fund’s financial liabilities disclosed, but not carried, at fair value as of December 31, 2019 and the level of each financial liability within the fair value hierarchy.

 

     Carrying      Fair                       
     Value (1)      Value      Level 1      Level 2      Level 3  

Class A-1 Senior Secured Notes

   $ 175,875,031      $ 178,195,723      $ —        $ —        $ 178,195,723  

Class A-2A Senior Secured Notes

     24,673,826        24,889,050        —          —          24,889,050  

Class A-2B Senior Secured Notes

     9,787,776        9,916,279        —          —          9,916,279  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 210,336,633      $ 213,001,052      $ —        $ —        $ 213,001,052  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Carrying value is net of unamortized discount and debt issuance costs. Unamortized discount and debt issuance costs associated with the Notes totaled $32,835 and $2,780,532 as of December 31, 2019 and are reflected on the consolidated statements of assets and liabilities.

 

38


Table of Contents

6. Commitments & Contingencies

Commitments

The Fund may enter into commitments to fund investments. As of September 30, 2020, the Adviser believed that the Fund had adequate financial resources to satisfy its unfunded commitments. The amounts associated with unfunded commitments to provide funds to portfolio companies are not recorded in the Fund’s consolidated statements of assets and liabilities. Since these commitments and the associated amounts may expire without being drawn upon, the total commitment amount does not necessarily represent a future cash requirement. The Fund had the following unfunded commitments by investment types as of September 30, 2020:

 

Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

1st Lien/Senior Secured Debt

           

5 Bars, LLC

   Delayed Draw Term Loan      09/27/2022      $ 3,448,815      $ —    

5 Bars, LLC

   Revolver      09/27/2024      $ 646,653      $ —    

Accelerate Resources Operating, LLC

   Delayed Draw Term Loan      08/24/2021      $ 1,659,057      $ (49,772

Accelerate Resources Operating, LLC

   Revolver      02/24/2026      $ 414,764      $ (12,443

AEG Holding Company, Inc.

   Revolver      11/20/2023      $ 893,492      $ (17,870

Ahead Data Blue, LLC

   Revolver      11/08/2024      $ 961,256      $ —    

Alphasense, Inc.

   Revolver      05/29/2024      $ 872,355      $ (8,724

American Physician Partners, LLC

   Revolver      12/21/2021      $ 97,681      $ (3,907

AMI US Holdings, Inc.

   Revolver      04/01/2024      $ 306,489      $ (6,130

Analogic Corporation

   Revolver      06/22/2023      $ 213,889      $ (7,486

Avetta, LLC

   Revolver      04/10/2024      $ 494,396      $ (9,888

Azurity Pharmaceuticals, Inc.

   Delayed Draw Term Loan      05/17/2021      $ 482,932      $ (9,659

Azurity Pharmaceuticals, Inc.

   Revolver      03/21/2023      $ 482,932      $ (9,659

BEP Borrower Holdco, LLC

   Delayed Draw Term Loan A      06/12/2021      $ 1,288,304      $ (32,208

BEP Borrower Holdco, LLC

   Revolver      06/12/2024      $ 429,435      $ (12,883

BK Medical Holding Company, Inc.

   Revolver      06/22/2023      $ 321,733      $ (19,304

Blink Holdings, Inc.

   Delayed Draw Term Loan      09/10/2021      $ 496,602      $ (37,245

Businesssolver.com, Inc.

   Revolver      05/15/2023      $ 323,529      $ —    

Captain D’s, Inc.

   Revolver      12/15/2023      $ 50,267      $ (1,005

Delaware Valley Management Holdings, Inc.

   Delayed Draw Term Loan      03/21/2021      $ 1,053,759      $ (160,698

Dillon Logistics, Inc.

   Revolver      12/11/2023      $ 191,947      $ (88,296

Dispatch Track, LLC

   Revolver      12/17/2024      $ 301,930      $ (4,529

E2open LLC

   Revolver      11/26/2024      $ 311,365      $ (20,239

Engage2Excel, Inc.

   Revolver      03/07/2023      $ 119,353      $ (7,161

EnterpriseDB Corporation

   Revolver      06/21/2024      $ 696,355      $ (12,186

Ethos Veterinary Health LLC

   Delayed Draw Term Loan      05/17/2021      $ 839,091      $ (16,782

EvolveIP, LLC

   Delayed Draw Term Loan      11/26/2021      $ 755,824      $ (11,337

EvolveIP, LLC

   Revolver      06/07/2023      $ 453,495      $ (6,802

Exterro, Inc.

   Revolver      05/31/2024      $ 330,000      $ (1,650

Faithlife, LLC

   Delayed Draw Term Loan      09/19/2022      $ 3,034,704      $ (60,694

Faithlife, LLC

   Revolver      09/18/2025      $ 279,053      $ (5,581

Finalsite Holdings, Inc.

   Revolver      09/25/2024      $ 253,142      $ (4,430

Fuze, Inc.

   Delayed Draw Term Loan      09/20/2021      $ 1,814,240      $ (7,438

Fuze, Inc.

   Revolver      09/20/2024      $ 1,295,886      $ (18,531

GHA Buyer, Inc.

   Revolver      06/24/2025      $ 365,800      $ (7,316

GS AcquisitionCo, Inc.

   Revolver      05/24/2024      $ 114,875      $ (2,297

INH Buyer, Inc.

   Revolver      01/31/2024      $ 205,858      $ (10,293

InSite Wireless Group, LLC

   Revolver      03/15/2023      $ 460,172      $ —    

InSite Wireless Group, LLC

   Term Loan      08/01/2022      $ 2,827,880      $ —    

Kaseya Inc.

   Delayed Draw Term Loan      05/03/2021      $ 435,075      $ (5,177

Kaseya Inc.

   Delayed Draw Term Loan      03/04/2022      $ 237,545      $ (2,969

Kaseya Inc.

   Revolver      05/02/2025      $ 191,755      $ (3,835

Kindeva Drug Delivery L.P.

   Revolver      05/01/2025      $ 1,445,322      $ (36,133

Metametrics, Inc.

   Revolver      09/10/2025      $ 651,183      $ (32,559

Netwrix Corporation

   Delayed Draw Term Loan      03/31/2021      $ 500,905      $ (11,897

Netwrix Corporation

   Revolver      09/30/2026      $ 166,551      $ (3,956

Netwrix Corporation

   Delayed Draw Term Loan      09/30/2021      $ 1,001,811      $ (23,793

Nine Point Energy, LLC

   Delayed Draw Term Loan      06/07/2021      $ 328,125      $ (39,375

OMH-HealthEdge Holdings, LLC

   Revolver      10/24/2024      $ 458,721      $ (13,762

Pace Health Companies, LLC

   Revolver      08/02/2024      $ 616,682      $ (21,584

Pinnacle Dermatology Management, LLC

   Delayed Draw Term Loan      10/31/2021      $ 3,288,636      $ (98,659

Pinnacle Dermatology Management, LLC

   Revolver      05/18/2023      $ 322,749      $ (9,682

Pinnacle Treatment Centers, Inc.

   Delayed Draw Term Loan      01/17/2022      $ 234,363      $ (4,687

 

39


Table of Contents

Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

Pinnacle Treatment Centers, Inc.

   Revolver      12/31/2022      $ 292,954      $ (5,859

Real Capital Analytics, Inc.

   Revolver      10/02/2024      $ 694,740      $ —    

Rep Tec Intermediate Holdings, Inc.

   Delayed Draw Term Loan      03/19/2021      $ 1,326,335      $ (26,527

Rep Tec Intermediate Holdings, Inc.

   Revolver      06/19/2025      $ 442,112      $ (8,842

RxBenefits, Inc.

   Revolver      03/29/2024      $ 575,767      $ (5,758

Salisbury House, LLC

   Revolver      08/30/2025      $ 298,895      $ (7,472

Selligent, Inc.

   Revolver      11/03/2023      $ 200,660      $ (4,013

Single Digits, Inc.

   Delayed Draw Term Loan      12/21/2020      $ 1,040,369      $ (83,230

Single Digits, Inc.

   Revolver      12/21/2023      $ 316,272      $ (25,302

Sirsi Corporation

   Revolver      03/15/2024      $ 553,741      $ (11,075

Smartlinx Solutions, LLC

   Revolver      03/04/2026      $ 519,484      $ (9,974

Smile Brands, Inc.

   Delayed Draw Term Loan      10/12/2020      $ 152,035      $ (4,561

Smile Brands, Inc.

   Revolver      10/12/2023      $ 254,808      $ (7,644

Star2star Communications, LLC

   Delayed Draw Term Loan      03/11/2022      $ 640,576      $ (12,812

Star2star Communications, LLC

   Revolver      03/13/2025      $ 960,864      $ (19,217

Summit Infrastructure Group, Inc.

   Delayed Draw Term Loan      03/15/2021      $ 675,454      $ —    

Summit Infrastructure Group, Inc.

   Revolver      03/15/2024      $ 562,878      $ —    

Symplr Software, Inc.

   Revolver      11/30/2023      $ 296,459      $ (10,376

Telesoft Holdings, LLC

   Revolver      12/16/2025      $ 596,866      $ (13,429

The Center for Orthopedic and Research Excellence, Inc.

   Delayed Draw Term Loan      08/15/2021      $ 1,381,064      $ (21,406

The Center for Orthopedic and Research Excellence, Inc.

   Revolver      08/15/2025      $ 690,532      $ (15,537

TRGRP, Inc.

   Revolver      11/01/2023      $ 333,333      $ (6,667

Velocity Purchaser Corporation

   Revolver      12/01/2022      $ 193,237      $ —    

ZBS Alliance Animal Health, LLC

   Delayed Draw Term Loan      11/08/2021      $ 1,478,606      $ (29,572

ZBS Alliance Animal Health, LLC

   Revolver      11/08/2025      $ 226,780      $ (4,536
        

 

 

    

 

 

 

Total 1st Lien/Senior Secured Debt

         $ 54,173,554      $ (1,326,320
        

 

 

    

 

 

 

Total

         $ 54,173,554      $ (1,326,320
        

 

 

    

 

 

 

The Fund had the following unfunded commitments by investment types as of December 31, 2019:

 

Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

1st Lien/Senior Secured Debt

           

5 Bars, LLC

   Delayed Draw Term Loan      9/27/2024      $ 3,448,816      $ (51,732

5 Bars, LLC

   Revolver      9/27/2024      $ 646,653      $ (9,700

AEG Holding Company, Inc.

   Revolver      11/20/2023      $ 558,432      $ (11,168

Ahead Data Blue, LLC

   Revolver      11/8/2024      $ 961,256      $ (19,225

American Physician Partners, LLC

   Revolver      12/21/2021      $ 266,402      $ (2,664

AMI US Holdings, Inc.

   Revolver      4/1/2024      $ 612,979      $ (12,260

Analogic Corporation

   Revolver      6/22/2023      $ 258,261      $ (3,616

Avetta, LLC

   Delayed Draw Term Loan      4/11/2020      $ 1,235,991      $ (12,360

Avetta, LLC

   Revolver      4/10/2024      $ 494,396      $ (9,888

BEP Borrower Holdco, LLC

   Delayed Draw Term Loan A      6/12/2021      $ 1,288,304      $ (12,883

BEP Borrower Holdco, LLC

   Delayed Draw Term Loan B      6/30/2020      $ 2,576,608      $ (25,766

BEP Borrower Holdco, LLC

   Revolver      6/12/2024      $ 429,435      $ (6,442

Blink Holdings, Inc.

   Delayed Draw Term Loan      11/8/2020      $ 119,189      $ (1,192

Broadway Technology, LLC

   Revolver      4/1/2024      $ 383,845      $ (7,677

Businesssolver.com, Inc.

   Revolver      5/15/2023      $ 194,118      $ —    

Captain D’s, Inc.

   Revolver      12/15/2023      $ 60,466      $ (604

CutisPharma, Inc.

   Revolver      3/21/2023      $ 482,932      $ (8,451

CutisPharma, Inc.

   Delayed Draw Term Loan      5/17/2021      $ 482,932      $ (8,451

Degreed, Inc.

   Delayed Draw Term Loan      5/31/2021      $ 1,810,522      $ (17,562

 

40


Table of Contents

Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

Degreed, Inc.

   Revolver      5/31/2024      $ 417,813      $ (7,228

Delaware Valley Management Holdings, Inc.

   Delayed Draw Term Loan      3/21/2021      $ 5,268,797      $ (105,376

Delaware Valley Management Holdings, Inc.

   Revolver      3/21/2024      $ 158,064      $ (3,161

Dillon Logistics, Inc.

   Revolver      12/11/2023      $ 41,191      $ (2,912

Dispatch Track, LLC

   Revolver      12/17/2024      $ 169,081      $ (2,537

E2open LLC

   Revolver      11/26/2024      $ 311,365      $ (3,114

Engage2Excel, Inc.

   Delayed Draw Term Loan      10/25/2020      $ 664,490      $ (6,645

Engage2Excel, Inc.

   Revolver      3/7/2023      $ 125,635      $ (2,513

EnterpriseDB Corporation

   Revolver      6/21/2024      $ 696,355      $ (10,445

Ethos Veterinary Health LLC

   Term Loan      5/17/2021      $ 839,091      $ (8,391

EvolveIP, LLC

   Delayed Draw Term Loan      11/26/2021      $ 755,824      $ (11,337

EvolveIP, LLC

   Revolver      6/7/2023      $ 566,868      $ (8,503

Exterro, Inc.

   Revolver      5/31/2024      $ 330,000      $ (1,650

Finalsite Holdings, Inc.

   Revolver      9/25/2024      $ 253,142      $ (3,797

Fuze, Inc.

   Delayed Draw Term Loan      9/20/2021      $ 2,591,772      $ (117,926

Fuze, Inc.

   Revolver      9/20/2024      $ 388,766      $ (17,689

Genesis Acquisition Co.

   Delayed Draw Term Loan      7/31/2020      $ 364,466      $ (3,645

Genesis Acquisition Co.

   Revolver      7/31/2024      $ 131,560      $ (2,631

GHA Buyer, Inc.

   Delayed Draw Term Loan      12/31/2020      $ 570,916      $ (5,709

GHA Buyer, Inc.

   Delayed Draw Term Loan      12/31/2020      $ 675,044      $ (6,750

GHA Buyer, Inc.

   Revolver      10/23/2023      $ 202,513      $ (4,050

GS AcquisitionCo, Inc.

   Revolver      5/24/2024      $ 108,813      $ (1,360

GS AcquisitionCo, Inc.

   Second Supplemental Delayed Draw Term Loan      8/2/2021      $ 1,934,450      $ (13,251

Higginbotham Insurance Agency, Inc.

   Delayed Draw Term Loan      3/11/2020      $ 2,365,584      $ —    

INH Buyer, Inc.

   Revolver      1/31/2024      $ 205,858      $ (3,088

InSite Wireless Group, LLC

   Term Loan      8/1/2022      $ 6,179,466      $ (77,243

Lucky Bucks, LLC

   Delayed Draw Term Loan      4/9/2020      $ 64,919      $ (1,136

Metametrics, Inc.

   Revolver      9/10/2025      $ 651,183      $ (13,024

Nine Point Energy, LLC

   Revolver      6/7/2024      $ 328,125      $ (6,562

Nine Point Energy, LLC

   Delayed Draw Term Loan      6/7/2021      $ 1,312,500      $ (26,250

OMH-HealthEdge Holdings, LLC

   Revolver      10/24/2024      $ 458,721      $ (10,321

Pace Health Companies, LLC

   Revolver      8/2/2024      $ 616,682      $ (6,167

PF Growth Partners, LLC

   Delayed Draw Term Loan      7/11/2021      $ 300,356      $ (3,003

Pinnacle Dermatology Management, LLC

   Delayed Draw Term Loan      5/18/2020      $ 1,643,567      $ (32,871

Pinnacle Dermatology Management, LLC

   Revolver      5/18/2023      $ 468,424      $ (9,368

Real Capital Analytics, Inc.

   Revolver      10/2/2024      $ 138,948      $ (695

Rhode Holdings, Inc.

   Delayed Draw Term Loan      5/3/2021      $ 467,302      $ (5,280

Rhode Holdings, Inc.

   Revolver      5/2/2025      $ 161,139      $ (3,223

RxBenefits, Inc.

   Revolver      3/29/2024      $ 575,767      $ (5,758

Selligent, Inc.

   Revolver      11/3/2023      $ 200,660      $ (3,010

Single Digits, Inc.

   Delayed Draw Term Loan      12/21/2020      $ 1,040,369      $ (10,404

Single Digits, Inc.

   Revolver      12/21/2023      $ 416,148      $ (4,161

Sirsi Corporation

   Revolver      3/15/2024      $ 332,245      $ (4,984

Smile Brands, Inc.

   Delayed Draw Term Loan      10/12/2020      $ 333,798      $ —    

Smile Brands, Inc.

   Revolver      10/12/2023      $ 220,833      $ —    

Sugarcrm, Inc.

   Revolver      7/31/2024      $ 310,244      $ —    

Summit Infrastructure Group, Inc.

   Delayed Draw Term Loan      3/15/2021      $ 1,125,756      $ (22,515

Summit Infrastructure Group, Inc.

   Revolver      3/15/2024      $ 562,878      $ (11,258

Swiftpage, Inc.

   Revolver      6/13/2023      $ 225,317      $ (4,506

Symplr Software, Inc.

   Revolver      11/30/2023      $ 27,828      $ (417

Telesoft Holdings, LLC

   Revolver      12/16/2025      $ 596,865      $ (13,430

The Center for Orthopedic and Research Excellence, Inc.

   Delayed Draw Term Loan      8/15/2021      $ 1,726,330      $ (15,105

 

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Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

The Center for Orthopedic and Research Excellence, Inc.

   Revolver      8/15/2025      $ 656,005      $ (11,480

Theranest, LLC

   Delayed Draw Term Loan      7/23/2020      $ 1,386,857      $ (20,803

Theranest, LLC

   Revolver      7/24/2023      $ 428,571      $ (8,571

TRGRP, Inc.

   Revolver      11/1/2023      $ 333,333      $ (6,667

Tropical Smoothie Cafe, LLC

   Revolver      9/24/2023      $ 96,435      $ —    

Tropical Smoothie Cafe, LLC

   Delayed Draw Term Loan      6/18/2021      $ 6,659,893      $ —    

Velocity Purchaser Corporation

   Revolver      12/1/2022      $ 193,237      $ —    

ZBS Alliance Animal Health, LLC

   Delayed Draw Term Loan      11/8/2025      $ 4,535,600      $ (90,712

ZBS Alliance Animal Health, LLC

   Revolver      11/8/2025      $ 181,424      $ (3,628
        

 

 

    

 

 

 

Total 1st Lien/Senior Secured Debt

         $ 71,406,720      $ (1,007,901
        

 

 

    

 

 

 

Total

         $ 71,406,720      $ (1,007,901
        

 

 

    

 

 

 

 

(1)

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

(2)

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

(3)

A negative fair value was reflected as investments, at fair value in the consolidated statements of assets and liabilities. The negative fair value is the result of the capitalized discount on the loan.

Contingencies

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

7. Net Assets

Equity Issuance

In connection with its formation, the Fund has the authority to issue 200,000,000 shares of the Fund’s common stock, par value $0.01 per share.

On September 29, 2017, the Fund completed its Initial Closing after entering into Subscription Agreements with several investors, including the Adviser, providing for the private placement of the Fund’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Fund’s common shares up to the amount of their respective Capital Commitments on an as-needed basis upon the issuance of a capital draw-down notice. At September 30, 2020 the Fund had total Capital Commitments of $439,989,586, of which 58% is unfunded. At December 31, 2019, the Fund had total Capital Commitments of $397,620,551. The minimum Capital Commitment of an investor is $50,000. The Adviser, however, may waive the minimum Capital Commitment at its discretion.

Capital Commitments may be drawn down by the Fund on a pro rata basis, as needed (including for follow-on investments), for paying the Fund’s expenses, including fees under the Amended and Restated Advisory Agreement, and/or maintaining a reserve account for the payment of future expenses or liabilities.

 

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The following tables summarize the total shares issued and amount received related to capital drawdowns delivered pursuant to the Subscription Agreements during the nine months ended September 30, 2020 and 2019:

 

     For the nine months ended
September 30, 2020
     For the nine months ended
September 30, 2019
 

Quarter Ended

   Shares      Amount      Shares      Amount  

March 31

     4,876,625      $ 41,844,852        2,317,068      $ 23,125,308  

June 30

     —          —          1,784,087      $ 17,963,617  

September 30

     —          —          1,795,822      $ 17,967,810  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total capital drawdowns

     4,876,625      $ 41,844,852        5,896,977      $ 59,056,735  
  

 

 

    

 

 

    

 

 

    

 

 

 

Distributions

The following tables reflect the distributions declared on shares of the Fund’s common stock during the nine months ended September 30, 2020 and September 30, 2019:

 

Date Declared

 

Record Date

 

Payment Date

 

Amount Per Share

 

Dollar Amount

3/27/2020

  3/27/2020   4/29/2020   $0.24   $3,551,533

6/26/2020

  6/26/2020   7/29/2020   $0.13   $2,572,039

9/28/2020

  9/28/2020   10/28/2020   $0.15   $2,925,160
       

 

        $9,048,732
       

 

 

Date Declared

 

Record Date

 

Payment Date

 

Amount Per Share

 

Dollar Amount

3/27/2019

  3/27/2019   4/25/2019   $0.15   $1,057,242

6/28/2019

  6/28/2019   7/19/2019   $0.16   $1,690,999

9/25/2019

  9/26/2019   10/30/2019   $0.13   $1,674,929
       

 

        $4,423,170
       

 

Distribution Reinvestment Plan

On September 26, 2017, the Fund adopted a dividend reinvestment plan, which was amended and restated on August 6, 2018 (the “DRIP”). Pursuant to the DRIP (both before and after it was amended), stockholders receive dividends or other distributions in cash unless a stockholder elects to reinvest his or her dividends and other distributions. As a result of adopting the DRIP, if the Board authorizes, and the Fund declares, a cash dividend or distribution, stockholders who have opted into the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of common stock, rather than receiving cash.

The following tables summarize shares distributed pursuant to the DRIP during the nine months ended September 30, 2020 and September 30, 2019 to stockholders who opted into the DRIP:

 

Date Declared

 

Record Date

 

Reinvestment Date

 

Shares

 

Dollar Amount

3/27/2020

  3/27/2020   3/31/2020   225,117   $1,931,666

6/26/2020

  6/26/2020   7/29/2020   152,049   $1,321,289

9/28/2020

  9/28/2020   9/30/2020   165,917   $1,512,599
       

 

        $4,765,554
       

 

 

Date Declared

 

Record Date

 

Reinvestment Date

 

Shares

 

Dollar Amount

3/27/2019

  3/27/2019   3/29/2019   58,319   $581,297

6/28/2019

  6/28/2019   6/28/2019   91,975   $915,804

9/25/2019

  9/26/2019   9/30/2019   91,341   $907,002
       

 

        $2,404,103
       

 

Share Repurchase Plan

On March 23, 2018, the Small Business Credit Availability Act (the “SBCAA”) was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a

 

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majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On September 26, 2018, the Fund’s stockholders approved the reduction of the asset coverage ratio applicable to the Fund from 200% to 150%. Pursuant to the SBCAA, on November 27, 2018, the Fund extended to its stockholders as of such date the opportunity to sell the shares held by that stockholder as of such date, with 25% of those shares to be repurchased in each of the four calendar quarters following the calendar quarter in which the approval was obtained.

There were no shares repurchased during the nine months ended September 30, 2020.

The following table summarizes shares repurchased during the nine months ended September 30, 2019:

 

Tender Period

 

Payment Date

 

Shares

 

Dollar Amount

 

Average Price Paid Per
Share(1)

2/22/2019-3/26/2019

  3/28/2019   7,331   $72,668   $9.91

5/17/2019-6/25/2019

  6/28/2019   7,529   $75,042   $9.97

8/16/2019-9/25/2019

  9/25/2019   8,478   $84,413   $9.95
   

 

 

 

 
    23,338   $232,123  
   

 

 

 

 

 

(1)

Per share price disclosed in this column is the actual price at which each share was repurchased.

8. Earnings Per Share

The following information sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2020 and September 30, 2019:

 

     For the three months ended
September 30,
     For the nine months ended
September 30,
 
     2020      2019      2020      2019  

Net increase (decrease) in net assets from operations

   $ 11,405,586      $ 1,281,543      $ 634,361      $ 4,034,094  

Weighted average common shares outstanding

     19,882,995        11,226,276        18,105,602        9,182,983  

Earnings per common share-basic and diluted

   $ 0.57      $ 0.11      $ 0.04      $ 0.44  

9. Financial Highlights

Below is the schedule of financial highlights of the Fund for the nine months ended September 30, 2020 and September 30, 2019:

 

     For the nine months
ended
September 30, 2020
    For the nine months
ended
September 30, 2019
 

Per Share Data:(1)(9)

 

Net asset value, beginning of period

   $ 9.88     $ 9.91  

Net investment income (loss)

     0.50       0.48  

Net realized and unrealized gains (losses) on investments

     (0.74     (0.02
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (0.24     0.46  
  

 

 

   

 

 

 

Distributions to stockholders(2)

     (0.52     (0.44
  

 

 

   

 

 

 

Net asset value, end of period

   $ 9.12     $ 9.93  

Shares outstanding, end of period

     20,047,109       12,498,946  

Total return at net asset value before incentive fees(3)(4)

     (1.65 )%      5.08

Total return at net asset value after incentive fees(3)(4)

     (2.17 )%      4.65

 

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     For the nine months
ended
September 30, 2020
    For the nine months
ended
September 30, 2019
 

Ratio/Supplemental Data:(9)

 

Net assets, end of period

   $ 182,758,430     $ 124,113,349  

Ratio of total expenses to weighted average net assets(5)

     11.96     15.68

Ratio of net expenses to weighted average net assets(5)(6)

     10.38     13.78

Ratio of net investment income (loss) before waivers to weighted average net assets(5)

     6.23     4.76

Ratio of net investment income (loss) after waivers to weighted average net assets(5)(6)

     7.81     6.66

Ratio of interest and credit facility expenses to weighted average net assets(5)

     5.02     8.17

Ratio of incentive fees to weighted average net assets(4)(7)

     0.82     0.61

Portfolio turnover rate(4)

     11.23     14.47

Asset coverage ratio(8)

     173     159

 

(1)

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

(2)

The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the entire period.

(3)

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

(4)

Not annualized.

(5)

Annualized, except for professional fees, directors’ fees and incentive fees.

(6)

For the nine months ended September 30, 2020 and September 30, 2019, the Adviser voluntarily waived a portion of their management fees, incentive fees, and collateral management fees. Additionally, the Adviser also reimbursed the Fund for operating expenses exceeding the percentage limit as per the Expense Support and Conditional Reimbursement Agreement. The ratios include the effects of the waived expenses of 2.71%, and 1.37% for the nine months ended September 30, 2020 and September 30, 2019, respectively.

(7)

Ratio of incentive fees to weighted average net assets calculated before the voluntary waiver of incentive fees by the Adviser.

(8)

Asset coverage ratio is equal to (i) the sum of (A) net assets at end of period and (B) debt outstanding at end of period, divided by (ii) total debt outstanding at the end of the period.

(9)

Ratios calculated with Net Assets excluding the Non-Controlling Interest in ABPCICE.

10. Subsequent Events

Subsequent events after the consolidated statements of assets and liabilities date have been evaluated through the date the financial statements were issued. The Fund has concluded that there are no events requiring adjustment or disclosure in the financial statements, other than as described below.

On November 10, 2020, the Fund entered into an amendment to the Credit Agreement (the “Credit Agreement Amendment”) concerning the Revolving Credit Facility. The Credit Agreement Amendment (i) extended the maturity date of the Revolving Credit Facility from November 11, 2020 to November 9, 2021, and (ii) inserted a provision permitting the Fund and the Administrative Agent to, upon the occurrence of certain conditions, amend the Credit Agreement to replace references to LIBOR with references to an alternate benchmark rate that may include a forward-looking rate based on the secured overnight financing rate or another alternate benchmark rate subject to certain conditions.

On October 15, 2020, ABPCIC Funding II entered into a revolving credit facility (the “Synovus Credit Facility”) with Synovus Bank, Specialty Finance Division, as facility agent, and U.S. Bank, as collateral agent, collateral custodian and securities intermediary. The Synovus Credit Facility provides for borrowings in an aggregate amount up to $100,000,000. Borrowings under the Synovus Credit Facility will bear interest based on an annual adjusted LIBOR for the relevant interest period or the applicable replacement thereto provided, plus an applicable spread. Borrowings under the Synovus Credit Facility will be secured by all of the assets held by ABPCIC Funding II.

 

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Item 2.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the Fund, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” 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 the Fund’s control and difficult to predict and 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 the Fund’s portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of the Fund’s investments in such portfolio companies;

 

   

such an economic downturn could disproportionately impact the companies that the Fund intends to target for investment, potentially causing the Fund to experience a decrease in investment opportunities and diminished demand for capital from these companies;

 

   

pandemics or other serious public health events, such as the recent global outbreak of a novel strain of the coronavirus, commonly known as “COVID-19”;

 

   

a contraction of available credit and/or an inability to access the equity markets could impair the Fund’s lending and investment activities;

 

   

interest rate volatility could adversely affect the Fund’s results, particularly if the Fund elects to use leverage as part of its investment strategy;

 

   

the Fund’s future operating results;

 

   

the Fund’s business prospects and the prospects of the Fund’s portfolio companies;

 

   

the Fund’s contractual arrangements and relationships with third parties;

 

   

the ability of the Fund’s portfolio companies to achieve their objectives;

 

   

competition with other entities and the Fund’s affiliates for investment opportunities;

 

   

the speculative and illiquid nature of the Fund’s investments;

 

   

the use of borrowed money to finance a portion of the Fund’s investments;

 

   

the adequacy of the Fund’s financing sources and working capital;

 

   

the loss of key personnel;

 

   

the timing of cash flows, if any, from the operations of the Fund’s portfolio companies;

 

   

the ability of the Adviser to locate suitable investments for the Fund and to monitor and administer the Fund’s investments;

 

   

the ability of the Adviser to attract and retain highly talented professionals;

 

   

the Fund’s ability to qualify and maintain its qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);

 

   

the effect of legal, tax and regulatory changes; and

 

   

the other risks, uncertainties and other factors the Fund identifies under “Risk Factors” of its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

Although the Fund believes that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could 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 the Fund that the Fund’s plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled “Item 1A. Risk Factors” of the Annual Report on Form 10-K for the fiscal

 

46


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year ended December 31, 2019, the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and elsewhere in this report. These forward-looking statements apply only as of the date of this report. Moreover, the Fund assumes no duty and does not undertake to update the forward-looking statements. The forward-looking statements and projections contained in this Quarterly Report are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) because the Fund is an investment company.

The following analysis of the Fund’s financial condition and results of operations should be read in conjunction with the Fund’s financial statements and the related notes thereto contained elsewhere in this Quarterly Report.

Overview

The Fund was formed on February 6, 2015 as a corporation under the laws of the State of Maryland. The Fund is structured as an externally managed, non-diversified, closed-end management investment company. The Fund was formed to invest primarily in primary-issue middle-market credit opportunities that are directly sourced and privately negotiated. The Fund commenced investment operations on November 15, 2017 (“Commencement”). The Fund is advised by AB Private Credit Investors LLC (the “Adviser”), which is registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Adviser is responsible for sourcing potential investments, conducting due diligence on prospective investments, analyzing investment opportunities, structuring investments and monitoring the Fund’s portfolio on an ongoing basis. State Street Bank and Trust Company (the “Administrator”) provides the administrative services necessary for the Fund to operate.

The Fund has elected to be treated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund has also elected to be treated and intends to qualify annually as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. As a BDC and a RIC, respectively, the Fund is and will be required to comply with various regulatory requirements, such as the requirement to invest at least 70% of its assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of its taxable income and tax exempt interest.

The Fund is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Fund will remain an emerging growth company for up to five years following its initial public offering, if any, although if the market value of its common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, the Fund would cease to be an emerging growth company as of the following December 31. For so long as the Fund remains an emerging growth company under the JOBS Act, it will be subject to reduced public company reporting requirements.

Effects of COVID-19 on the Fund’s Results of Operations

The rapid spread of COVID-19, a novel strain of coronavirus causing respiratory illness (“COVID-19”) has resulted in temporary closures of many corporate offices, retail stores, and manufacturing facilities and factories around the world, which could materially disrupt the demand for the Fund’s portfolio companies’ products and services. The World Health Organization (“WHO”) declared COVID-19 a global pandemic, and the WHO and governments have recommended, and in some cases, mandated, containment and mitigation measures worldwide. The COVID-19 pandemic has had a significant impact on the U.S. economy and supply chains worldwide have been interrupted, slowed or rendered inoperable, with an increasing number of individuals becoming ill, subject to quarantine, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Governmental mandates to control an outbreak may require forced shutdown of the Fund’s portfolio companies’ facilities for extended or indefinite periods. The extent of the impact of the COVID-19 outbreak on the financial performance of the Fund’s current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy as a result of COVID-19, all of which are highly uncertain and cannot be predicted. Adverse impacts on the Fund’s investments may have a material adverse impact on the Fund’s future net investment income, the fair value of the Fund’s portfolio investments, the Fund’s financial condition and results of operations and the financial condition of the Fund’s portfolio companies.

The Fund will continue to monitor the rapidly evolving situation surrounding the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities, and may take additional actions based on their recommendations. The majority of the Fund’s investments are within sectors that the Fund expects to be relatively insulated from the impact of COVID-19 and related social distancing measures, such as software and technology enabled services, pharmaceutical and healthcare information technology, digital infrastructure and services, and other mission critical business services. The Fund believes that it has limited exposure to sectors currently experiencing challenges, such as gym franchises (comprising approximately 1.3% of the Fund’s portfolio as of September 30, 2020), and energy (comprising approximately 4.9% of the Fund’s portfolio as of September 30, 2020). In sectors where the Fund believes that it has modest exposure, such as non-essential health care services/practice management (comprising approximately 6.8% of the Fund’s portfolio as of September 30, 2020), the Fund is closely

 

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monitoring these companies. In these circumstances, there may be developments outside the Fund’s control requiring it to adjust its plan of operation. As such, given the dynamic nature of this situation, the Fund cannot reasonably estimate the impact of COVID-19 on its financial condition, results of operations or cash flows in the future.

The Private Offering

The Fund enters into separate subscription agreements with investors providing for the private placement of its common stock (the “Shares”) in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act,” and such offering, the “Private Offering”). Each investor makes a capital commitment (a “Capital Commitment”) to purchase Shares pursuant to a subscription agreement. Investors are required to make capital contributions to purchase Shares each time the Fund delivers a capital call notice, which is issued based on the Fund’s anticipated investment activities and capital needs, delivered at least 10 business days prior to the required funding date, provided that investors may fund such requirements sooner than the deadline as agreed between the Fund and the investor. Generally, purchases of the Fund’s Shares are made pro rata in accordance with each investor’s Capital Commitment, in an amount not to exceed each investor’s remaining capital commitment (“Remaining Commitment”), at a per-Share price equal to the net asset value per share of the Fund’s common stock subject to any adjustments. Pursuant to the Private Offering, the Fund’s initial closing occurred on September 29, 2017.

The Fund may accept additional Capital Commitments quarterly (“Subsequent Closings”) from new investors as well as existing investors that wish to increase their commitment and shareholding in the Fund. These Subsequent Closings are expected to occur on a calendar-quarter end based on investor interest as well as the state of the market and the Fund’s capacity to invest the additional capital in a reasonable period. Each Capital Commitment is for the life of the Fund or for a shorter period based on the investor’s liquidation election, subject to the Fund’s receipt of exemptive relief that would permit stockholders to liquidate their investments pursuant to transactions that are currently prohibited by the 1940 Act and would require an SEC order in order to be established.

Revenues

The Fund’s investment objective is to generate current income and prioritize capital preservation through a portfolio that primarily invests in directly-sourced, privately-negotiated, secured, middle market loans. The Fund intends to primarily invest in middle market businesses based in the United States. The Fund expects that the primary use of proceeds by the companies in which the Fund invests will be for leveraged buyouts, recapitalizations, mergers and acquisitions and growth capital.

The Fund will seek to build its portfolio in a defensive manner that minimizes cyclical and correlated risks across individual names and sector verticals by targeting companies with strong underlying business models and durable intrinsic value.

The Fund will primarily hold secured loans, which encompass traditional first lien, unitranche and second lien loans, but may also invest in mezzanine, structured preferred stock and non-control equity co-investment opportunities. The Fund will seek to deliver attractive risk adjusted returns with lower volatility and low correlation relative to the public credit markets. The Adviser believes the Fund’s flexibility to invest across the capital structure and liquidity spectrum will allow the Fund to optimize investor risk-adjusted returns.

Expenses

Under the Amended and Restated Advisory Agreement, the Fund’s primary operating expenses will include the payment of fees to the Adviser, the Fund’s allocable portion of overhead expenses under the Expense Reimbursement Agreement and other operating costs described below. The Fund bears all other out-of-pocket costs and expenses of the Fund’s operations and transactions, including those relating to:

 

   

reasonable and documented organization and offering expenses to the extent reimbursement of such expenses is included in any future agreement with the Adviser;

 

   

calculating the Fund’s net asset value (including the cost and expenses of any independent valuation firm);

 

   

fees and expenses payable to third parties, including agents, consultants or other advisers, in connection with monitoring financial (including advising with respect to the Fund’s financing strategy) and legal affairs for the Fund and in providing administrative services, monitoring the Fund’s investments and performing due diligence on the Fund’s prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments;

 

   

interest payable on debt, if any, incurred to finance the Fund’s investments;

 

   

sales and purchases of the Fund’s common stock and other securities;

 

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base management fees and incentive fees payable to the Adviser;

 

   

transfer agent and custodial fees;

 

   

federal and state registration fees;

 

   

all costs of registration and listing the Fund’s securities on any securities exchange;

 

   

U.S. federal, state and local taxes;

 

   

independent directors’ fees and expenses;

 

   

costs of preparing and filing reports or other documents required by the SEC, the Financial Industry Regulatory Authority or other regulators;

 

   

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

 

   

the Fund’s allocable portion of any fidelity bond, directors’ and officers’ errors and omissions liability insurance, and any other insurance premiums;

 

   

direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and

 

   

all other expenses incurred by the Fund, the Administrator or the Adviser in connection with administering the Fund’s business, including payments under the Administration Agreement and payments under the Expense Reimbursement Agreement based on the Fund’s allocable portion of the Adviser’s overhead in performing its obligations under the Expense Reimbursement Agreement, including the allocable portion of the cost of the Fund’s Chief Compliance Officer and Chief Financial Officer and their respective staffs.

Portfolio and Investment Activity

During the three months ended September 30, 2020, the Fund invested $18,223,070 in 7 portfolio companies, $4,163,360 was drawn down against the revolvers and delayed draw term loans, and the Fund had $23,097,505 in aggregate amount of principal repayments, which includes $5,105,050 in revolver and delayed draw term loan paydowns, and $92,814 in sales, resulting in net repayments of $803,889 for the period. For the three months ended September 30, 2020, the Fund had $279,404 in PIK interest.

During the three months ended September 30, 2019, the Fund invested $43,773,769 in 10 portfolio companies, $7,722,734 was drawn down against the revolvers and delayed draw term loans, and the Fund had $11,984,003 in aggregate amount of principal repayments, which includes $1,995,849 in revolver and delayed draw term paydowns, and $5,323 in sales, resulting in net investments of $39,507,177 for the period. For the three months ended September 30, 2019, the Fund had $104,675 in PIK interest.

During the nine months ended September 30, 2020, the Fund invested $79,637,229 in 25 portfolio companies, $39,461,838 was drawn down against the revolvers and delayed draw term loans, and the Fund had $41,261,446 in aggregate amount of principal repayments, which includes $13,391,142 in revolver and delayed draw term paydowns, and $1,876,870 in sales, resulting in net investments of $75,960,751 for the period. For the nine months ended September 30, 2020, the Fund had $641,304 in PIK interest.

During the nine months ended September 30, 2019, the Fund invested $174,165,536 in 35 portfolio companies, $17,561,385 was drawn down against the revolvers and delayed draw term loans, and the Fund had $24,086,016 in aggregate amount of principal repayments, which includes $6,444,889 in revolver and delayed draw term paydowns, and $7,636,064 in sales, resulting in net investments of $160,004,841 for the period. For the nine months ended September 30, 2019, the Fund had $166,946 in PIK interest.

The following table shows the composition of the investment portfolio and associated yield data as of September 30, 2020:

 

     As of September 30, 2020  
     Cost      Percentage of
Total Portfolio
    Fair Value      Percentage of
Total Portfolio
    Weighted
Average
Yield(1)
 

First Lien Senior Secured Debt

   $ 408,339,121        96.08   $ 397,774,516        95.92     8.47

Second Lien Junior Secured Debt

     7,659,560        1.80       7,674,763        1.85       9.30  

Preferred Stock

     6,494,009        1.53       6,838,814        1.65       0  

Common Stock

     1,794,429        0.43       2,200,433        0.53       0  

Warrants

     697,176        0.16       222,586        0.05       0  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 424,984,295        100   $ 414,711,112        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

(1) 

Based upon the par value of the Fund’s debt investments.

 

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The following table shows the composition of the investment portfolio and associated yield data as of December 31, 2019:

 

     As of December 31, 2019  
     Amortized Cost      Percentage of
Total Portfolio
    Fair Value      Percentage of
Total Portfolio
    Weighted
Average
Yield(1)
 

First Lien Senior Secured Debt

   $ 332,320,392        95.80   $ 330,393,205        95.76     8.31

Second Lien Junior Secured Debt

     7,649,558        2.21       7,620,547        2.21       10.49  

Preferred Stock

     4,648,225        1.34       4,861,847        1.41       0  

Common Stock

     1,624,199        0.47       1,518,353        0.44       0  

Warrants

     631,366        0.18       631,366        0.18       0  
  

 

 

    

 

 

   

 

 

    

 

 

   

Total

   $ 346,873,740        100   $ 345,025,318        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

(1) 

Based upon the par value of the Fund’s debt investments

The following table presents certain selected financial information regarding the Fund’s investment portfolio:

 

     As of
September 30, 2020
    As of
December 31, 2019
 

Number of portfolio companies

     98       85  

Percentage of debt bearing a floating rate(1)

     100     99.99

Percentage of debt bearing a fixed rate(1)

     0.0     0.01

 

(1) 

Measured on a fair value basis, and excludes equity securities.

The following table shows the amortized cost and fair value of the Fund’s performing and non-accrual debt investments as of September 30, 2020:

 

     As of September 30, 2020  
     Amortized Cost      Percentage at
Amortized Cost
    Fair Value      Percentage at
Fair Value
 

Performing

   $ 415,998,681        100   $ 405,449,279        100

Non-accrual

     —          —         —          —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 415,998,681        100   $ 405,449,279        100
  

 

 

    

 

 

   

 

 

    

 

 

 

The following table shows the amortized cost and fair value of the Fund’s performing and non-accrual debt investments as of December 31, 2019:

 

     As of December 31, 2019  
     Amortized Cost      Percentage at
Amortized Cost
    Fair Value      Percentage at
Fair Value
 

Performing

   $ 339,969,950        100   $ 338,013,752        100

Non-accrual

     —          —         —          —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 339,969,950        100   $ 338,013,752        100
  

 

 

    

 

 

   

 

 

    

 

 

 

 

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Generally, when interest and/or principal payments on a loan become past due, or if the Fund otherwise does not expect the borrower to be able to service its debt and other obligations, the Fund will place the loan on non-accrual status and will cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to restructuring such that the interest income is deemed to be collectible. The Fund generally restores non-accrual loans to accrual status when past due principal and interest is paid and, in the management’s judgment, is likely to remain current. As of September 30, 2020 and December 31, 2019, the Fund had no investments that were on non-accrual status.

The following table shows the amortized cost and fair value of the investment portfolio and cash and cash equivalents as of September 30, 2020:

 

     As of September 30, 2020  
     Amortized Cost      Percentage of
Total
    Fair Value      Percentage of
Total
 

First Lien Senior Secured Debt

   $ 408,339,121        91.03   $ 397,774,516        90.75

Second Lien Junior Secured Debt

     7,659,560        1.71       7,674,763        1.75  

Preferred Stock

     6,494,009        1.45       6,838,814        1.56  

Common Stock

     1,794,429        0.40       2,200,433        0.50  

Warrants

     697,176        0.15       222,586        0.06  

Cash and cash equivalents

     23,593,970        5.26       23,593,970        5.38  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 448,578,265        100   $ 438,305,082        100
  

 

 

    

 

 

   

 

 

    

 

 

 

The following table shows the amortized cost and fair value of the investment portfolio and cash and cash equivalents as of December 31, 2019:

 

     As of December 31, 2019  
     Amortized Cost      Percentage of
Total
    Fair Value      Percentage of
Total
 

First Lien Senior Secured Debt

   $ 332,320,392        91.85   $ 330,393,205        91.79

Second Lien Junior Secured Debt

     7,649,558        2.11       7,620,547        2.11  

Preferred Stock

     4,648,225        1.28       4,861,847        1.35  

Common Stock

     1,624,199        0.45       1,518,353        0.42  

Warrants

     631,366        0.17       631,366        0.18  

Cash and cash equivalents

     14,931,791        4.14       14,931,791        4.15  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 361,805,531        100   $ 359,957,109        100
  

 

 

    

 

 

   

 

 

    

 

 

 

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of September 30, 2020 (with corresponding percentage of total portfolio investments):

 

     As of September 30, 2020  
   Amortized Cost      Percentage of
Total Portfolio
    Fair Value      Percentage of
Total Portfolio
 

Business Services

   $ 27,872,149        6.56   $ 26,881,974        6.48

Consumer Non-Cyclical

     10,256,795        2.41       9,718,070        2.34  

Digital Infrastructure & Services

     40,945,503        9.63       40,986,952        9.88  

Education

     9,414,583        2.22       9,354,512        2.26  

Energy

     21,376,867        5.03       18,269,495        4.41  

Financial Services

     3,358,096        0.79       3,285,973        0.79  

Healthcare & HCIT

     121,701,823        28.64       118,181,462        28.50  

Pharmaceutical

     5,661,689        1.33       5,603,333        1.35  

Software & Services

     172,537,462        40.60       172,375,818        41.57  

Specialty Finance

     2,628,475        0.62       2,569,785        0.62  

Transport & Logistics

     9,230,853        2.17       7,483,738        1.80  
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 424,984,295        100   $ 414,711,112        100
  

 

 

    

 

 

   

 

 

    

 

 

 

 

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Table of Contents

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2019 (with corresponding percentage of total portfolio investments):

 

     As of December 31, 2019  
   Amortized Cost      Percentage of
Total Portfolio
    Fair Value      Percentage of
Total Portfolio
 

Business Services

   $ 29,492,348        8.50   $ 29,467,961        8.54

Consumer Non-Cyclical

     12,573,051        3.63       12,628,209        3.66  

Digital Infrastructure & Services

     35,923,507        10.36       35,849,013        10.39  

Education

     9,792,558        2.82       9,774,744        2.83  

Energy

     16,097,426        4.64       15,097,254        4.38  

Financial Services

     1,037,219        0.30       1,037,140        0.30  

Healthcare & HCIT

     77,923,042        22.46       77,112,970        22.35  

Pharmaceutical

     5,773,084        1.66       5,714,446        1.66  

Software & Services

     145,364,022        41.91       145,699,305        42.23  

Specialty Finance

     2,810,973        0.81       2,804,891        0.81  

Transport & Logistics

     10,086,510        2.91       9,839,385        2.85  
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 346,873,740        100   $ 345,025,318        100
  

 

 

    

 

 

   

 

 

    

 

 

 

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

 

   

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

 

   

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

 

   

comparisons to the Fund’s other portfolio companies in the industry, if any;

 

   

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

 

   

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

Results of Operations

The following is a summary of the Fund’s operating results for the three months ended September 30, 2020 and September 30, 2019:

 

     For the Three Months Ended
September 30,
2020
     For the Three Months Ended
September 30,
2019
 

Total investment income

   $ 7,968,277      $ 5,859,037  

Total expenses

     4,731,686        4,700,091  
  

 

 

    

 

 

 

Reimbursement payments to Adviser

     998,880        —    

Expense Reimbursement from Adviser

     —          (31,875

Waived Collateral Management Fees

     (462,788      (367,534

Waived Management Fees

     (218,829      (60,261

Waived Incentive Fees

     —          (56,255

Net investment income

     2,919,328        1,674,871  

Net realized and change in unrealized appreciation/(depreciation) on investments

     8,486,258        (393,328
  

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 11,405,586      $ 1,281,543  
  

 

 

    

 

 

 

 

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Table of Contents

The following is a summary of the Fund’s operating results for the nine months ended September 30, 2020 and September 30, 2019:

 

     For the Nine Months Ended
September 30,
2020
     For the Nine Months Ended
September 30,
2019
 

Total investment income

   $ 22,966,116      $ 14,628,670  

Total expenses

     15,790,776        11,700,886  
  

 

 

    

 

 

 

Reimbursement payments to Adviser

     1,751,021        —    

Expense reimbursement from Adviser

     (89,757      (447,556

Waived Collateral Management Fees

     (1,380,737      (693,343

Waived Management Fees

     (1,664,920      (191,359

Waived Incentive Fees

     (486,784      (132,327
  

 

 

    

 

 

 

Net investment income

     9,046,517        4,392,369  

Net realized and change in unrealized appreciation/(depreciation) on investments

     (8,412,156      (358,275
  

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 634,361      $ 4,034,094  
  

 

 

    

 

 

 

Investment Income

During the three months ended September 30, 2020, the Fund’s investment income was comprised of $7,592,653 of interest income, which includes $535,934 from the net amortization of premium and accretion of discounts, $279,404 of payment-in-kind interest and other fee income of $96,220.

During the three months ended September 30, 2019, the Fund’s investment income was comprised of $5,718,631 of interest income, which includes $297,702 from the net amortization of premium and accretion of discounts, $104,675 of payment-in-kind interest and other fee income of $35,731.

During the nine months ended September 30, 2020, the Fund’s investment income was comprised of $21,927,281 of interest income, which includes $1,495,895 from the net amortization of premium and accretion of discounts, $641,304 of payment-in-kind interest and other fee income of $397,531.

During the nine months ended September 30, 2019, the Fund’s investment income was comprised of $14,290,652 of interest income, which includes $782,772 from the net amortization of premium and accretion of discounts, $166,946 of payment-in-kind interest and other fee income of $171,072.

 

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Table of Contents

Operating Expenses

The following is a summary of the Fund’s operating expenses for the three months ended September 30, 2020 and September 30, 2019:

 

     For the Three
Months
Ended
September 30,
2020
     For the Three
Months
Ended
September 30,
2019
 

Interest and borrowing expenses

   $ 1,753,718      $ 2,424,364  

Management fees

     1,563,422        1,017,059  

Professional fees

     339,664        379,792  

Collateral management fees

     462,788        367,534  

Income-based incentive fee

     326,274        180,792  

Administration and custodian fees

     95,391        113,524  

Insurance expenses

     25,998        68,338  

Directors’ fees

     50,000        37,500  

Transfer agent fees

     13,083        8,104  

Other expenses

     101,348        103,084  
  

 

 

    

 

 

 

Total expenses

     4,731,686        4,700,091  

Reimbursement payments to Adviser

     998,880        —    

Expense reimbursement from Adviser

     —          (31,875

Waived collateral management fees

     (462,788      (367,534

Waived management fees

     (218,829      (60,261

Waived incentive fees

     —          (56,255
  

 

 

    

 

 

 

Net expenses

   $ 5,048,949      $ 4,184,166  
  

 

 

    

 

 

 

The following is a summary of the Fund’s operating expenses for the nine months ended September 30, 2020 and September 30, 2019:

 

     For the Nine
Months
Ended
September 30,
2020
     For the Nine
Months
Ended
September 30,
2019
 

Interest and borrowing expenses

   $ 6,340,483      $ 5,844,084  

Management fees

     4,359,381        2,477,129  

Professional fees

     1,220,261        1,197,314  

Collateral management fees

     1,380,737        693,343  

Income-based incentive fee

     1,382,704        586,627  

Administration and custodian fees

     286,900        259,233  

Insurance expenses

     138,162        193,013  

Directors’ fees

     150,000        112,500  

Transfer agent fees

     36,390        19,203  

Other expenses

     495,758        318,440  
  

 

 

    

 

 

 

Total expenses

     15,790,776        11,700,886  

Reimbursement payments to Adviser

     1,751,021        —    

Expense reimbursement from Adviser

     (89,757      (447,556

Waived collateral management fees

     (1,380,737      (693,343

Waived management fees

     (1,664,920      (191,359

Waived incentive fees

     (486,784      (132,327
  

 

 

    

 

 

 

Net expenses

   $ 13,919,599      $ 10,236,301  
  

 

 

    

 

 

 

 

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Table of Contents

Interest and Borrowing Expenses

Interest and borrowing expenses include interest, amortization of debt issuance and deferred financing costs, upfront commitment fees and unused fees on the unused portion of the Revolving Credit Facility, secured borrowings and the Notes issued in the CLO Transaction. The Fund first drew on the Revolving Credit Facility on November 15, 2017. As of September 30, 2020, there was an outstanding balance of $34,500,000 on the Revolving Credit Facility. As of December 31, 2019, the Revolving Credit Facility had an outstanding balance of $19,500,000. As of September 30, 2020, there was an outstanding balance of $3,430,000 in secured borrowings. As of December 31, 2019, the outstanding balance on secured borrowings was $0. On August 9, 2019, ABPCIC Funding issued collateralized loan obligation securities (“CLOs”), and terminated the Barclays Credit Facility. The outstanding amount on the Notes is $211,055,945, net of unamortized discount and debt issuance costs as of September 30, 2020. As of December 31, 2019, the amount outstanding on the Notes was $210,336,633, net of unamortized discount and debt issuance costs.

Interest and borrowing expenses for the three months ended September 30, 2020 and September 30, 2019 were $1,753,718 and $2,424,364, respectively. Interest and borrowing expenses for the nine months ended September 30, 2020 and September 30, 2019 were $6,340,483 and $5,844,084, respectively. The weighted average interest rate (excluding deferred upfront financing costs and unused fees) on the Fund’s debt outstanding was 3.04% and 4.64% for the period ending September 30, 2020 and September 30, 2019, respectively.

Management Fee

The gross management fee expenses for the three months ended September 30, 2020 and September 30, 2019 were $1,563,422 and $1,017,059 respectively. The increase in the management fee for the three months ended September 30, 2020 was a result of the increase in average gross assets during this period, which are the basis used to calculate management fees. For the three months ended September 30, 2020 and September 30, 2019, the Adviser waived management fees of $218,829 and $60,261, respectively.

The gross management fee expenses for the nine months ended September 30, 2020 and September 30, 2019 were $4,359,381 and $2,477,129, respectively. The increase in the management fee for the nine months ended September 30, 2020 was a result of the increase in average gross assets during this period, which are the basis used to calculate management fees. For the nine months ended September 30, 2020 and September 30, 2019, the Adviser waived management fees of $1,664,920 and $191,359, respectively.

Fund Expenses

For the three months ended September 30, 2020, the Fund incurred $4,731,686 of expenses in relation to professional fees, directors’ fees, collateral management fees, management fees, incentive fees, insurance expenses, interest and borrowing expenses, transfer agent fees, other fees, and administration and custodian fees. There was no reimbursement received by the Fund from the Adviser. Additionally, $998,880 was reimbursed by the Fund to the Adviser and its affiliates, and $218,829 of management fees, $462,788 of collateral management fees and $0 of incentive fees were waived by the Adviser.

For the nine months ended September 30, 2020, the Fund incurred $15,790,776 of expenses in relation to professional fees, directors’ fees, collateral management fees, management fees, incentive fees, insurance expenses, interest and borrowing expenses, transfer agent fees, other fees, and administration and custodian fees. The Fund was reimbursed by the Adviser in the amount of $89,757. Additionally, $1,751,021 was reimbursed by the Fund to the Adviser and its affiliates for a net payment by the Fund to the Adviser and its affiliates of $1,661,264. Further, $1,664,920 of management fees, $1,380,737 of collateral management fees and $486,784 of incentive fees were waived by the Adviser.

For the three months ended September 30, 2019, the Fund incurred $4,700,091 of expenses in relation to professional fees, directors’ fees, collateral management fees, management fees, incentive fees, insurance expenses, interest and borrowing expenses, transfer agent fees, other fees, and administration and custodian fees. The Fund was reimbursed by the Adviser in the amount of $31,875. Additionally, $60,261 of management fees, $56,255 of incentive fees and $367,534 of collateral management fees were waived by the Adviser.

For the nine months ended September 30, 2019, the Fund incurred $11,700,886 of expenses in relation to professional fees, directors’ fees, collateral management fees, management fees, incentive fees, insurance expenses, interest and borrowing expenses, transfer agent fees, other fees, and administration and custodian fees. The Fund was reimbursed by the Adviser in the amount of $447,556. Additionally, $191,359 of management fees, $132,327 of incentive fees and $693,343 of collateral management fees were waived by the Adviser.

 

55


Table of Contents

Net Realized Gain (Loss) on Investments

During the three months ended September 30, 2020, the Fund had principal repayments of $23,097,505, which included $5,105,050 of revolver and delayed draw term loan paydowns, and $92,814 in sales, resulting in $10,789 of net realized gain. During the nine months ended September 30, 2020, the Fund had principal repayments of $41,261,446, which included $13,391,142 of revolver and delayed draw term loan paydowns, and $1,876,870 in sales, resulting in $12,605 of net realized gain.

During the three months ended September 30, 2019, the Fund had principal repayments of $11,984,003, which included $1,995,849 of revolver and delayed draw term loan paydowns, and $5,323 in sales, resulting in $76,718 of net realized gain. During the nine months ended September 30, 2019, the Fund had principal repayments of $24,086,016, which included $6,444,889 of revolver and delayed draw term loan paydowns, and $7,636,064 in sales, resulting in $64,058 of net realized gain.

Net Change in Unrealized Appreciation (Depreciation) on Investments

During the three months ended September 30, 2020, the Fund had $8,475,469 in net change in unrealized appreciation on $424,984,295 of investments in 98 portfolio companies. Tightening credit spreads across broader fixed income markets, further supported by improved fundamental performance of the portfolio companies, drove the fair value recovery in the third quarter.

During the three months ended September 30, 2019, the Fund had $470,046 in net change in unrealized depreciation on $299,530,860 of investments in 80 portfolio companies.

During the nine months ended September 30, 2020, the Fund had $8,424,761 in net change in unrealized depreciation on $424,984,295 of investments in 98 portfolio companies. During the first quarter of 2020, there were COVID-19 related write downs of the portfolio. In the subsequent periods, the Fund partially recovered those write downs due to a tightening risk premium in the broader credit markets and stabilizing or improving fundamental performance for the Fund’s portfolio companies.

During the nine months ended September 30, 2019, the Fund had $422,333 in net change in unrealized depreciation on $299,530,860 of investments in 80 portfolio companies.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended September 30, 2020 and 2019, the net increase in net assets resulting from operations was $11,405,586 and $1,281,543, respectively. Based on the weighted average shares of common stock outstanding for the three months ended September 30, 2020 and 2019, the Fund’s per share net increase in net assets resulting from operations was $0.57 and $0.11, respectively.

For the nine months ended September 30, 2020 and 2019, the net increase in net assets resulting from operations was $634,361 and $4,034,094, respectively. Based on the weighted average shares of common stock outstanding for the nine months ended September 30, 2020 and 2019, the Fund’s per share net increase in net assets resulting from operations was $0.04 and $0.44, respectively.

Cash Flows

For the nine months ended September 30, 2020, cash increased by $8,662,179. During the same period, the Fund used $67,656,232 in operating activities, primarily as a result of net purchases of investments. During the nine months ended September 30, 2020, the Fund generated $76,318,411 from financing activities, primarily from issuance of common stock, the secured borrowings and net borrowings on the Revolving Credit Facility.

For the nine months ended September 30, 2019, cash increased by $35,567,850. During the same period, the Fund used $155,399,192 in operating activities, primarily as a result of net purchases of investments. During the nine months ended September 30, 2019, the Fund generated $190,967,042 from financing activities, primarily from issuance of common stock and net borrowings on the Revolving Credit Facility and Notes.

Hedging

The Fund may enter into currency hedging contracts, interest rate hedging agreements such as futures, options, swaps and forward contracts, and credit hedging contracts, such as credit default swaps. However, no assurance can be given that such hedging transactions will be entered into or, if they are, that they will be effective. For the nine months ended September 30, 2020 and September 30, 2019, the Fund did not enter into any hedging contracts.

 

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Table of Contents

Financial Condition, Liquidity and Capital Resources

At September 30, 2020, and December 31, 2019, the Fund had $23,593,970 and $14,931,791 in cash and cash equivalents, respectively. The Fund expects to generate cash primarily from (i) the net proceeds of the Private Offering, (ii) cash flows from the Fund’s operations, (iii) any financing arrangements now existing or that the Fund may enter into in the future and (iv) any future offerings of the Fund’s equity or debt securities. The Fund may fund a portion of its investments through borrowings from banks, or other large global institutions such as insurance companies, and issuances of senior securities.

The Fund’s primary use of funds from a credit facility will be investments in portfolio companies, cash distributions to holders of its common stock and the payment of operating expenses.

In the future, the Fund may also securitize or finance a portion of its investments with a special purpose vehicle. If the Fund undertakes a securitization transaction, the Fund will consolidate its allocable portion of the debt of any securitization subsidiary on its financial statements, and include such debt in the Fund’s calculation of the asset coverage test, if and to the extent required pursuant to the guidance of the staff of the SEC.

Cash and cash equivalents as of the nine months ended September 30, 2020, taken together with the Fund’s uncalled Capital Commitments of $256,446,800 and $15,500,000 undrawn amount on the Revolving Credit Facility, is expected to be sufficient for the Fund’s investing activities and to conduct the Fund’s operations for at least the next twelve months. As of September 30, 2020, the Fund had $23,593,970 in cash and cash equivalents. During the nine months ended September 30, 2020, the Fund used $67,656,232 for operating activities. This “Financial Condition, Liquidity and Capital Resources” section should be read in conjunction with “Effects of COVID-19 on the Fund’s Results of Operations” above.

Equity Activity

The Fund has the authority to issue 200,000,000 shares of common stock at a $0.01 per share par value.

The Fund has entered into Subscription Agreements with investors providing for the private placement of the Fund’s common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Fund’s common shares up to the amount of their respective Capital Commitments on an as-needed basis upon the issuance of a capital draw down notice. As of September 30, 2020, the Fund received Capital Commitments of $439,989,586. Inception to September 30, 2020, the Fund received capital contributions to the Fund of $183,542,786.

For the three months ended September 30, 2020, the Fund received total Capital Commitments of $7,384,900, had $1,512,599 of dividend reinvestments and issued 165,917 shares to investors that opted into the Fund’s dividend reinvestment plan, issued capital drawdown notices to its investors for an aggregate amount of $0 and issued 0 shares to investors in respect of such capital drawdowns. For the three months ended September 30, 2019, the Fund received no Capital Commitments, had $907,002 of dividend reinvestments, issued 91,341 shares to investors that opted into the Fund’s dividend reinvestment plan, $84,413 and 8,478 shares were withdrawn from the Fund as part of the quarter-end SBCAA share repurchase program, issued capital drawdown notices to its investors for an aggregate amount of $17,967,810 and issued 1,795,822 shares to investors in respect of such capital drawdowns.

For the nine months ended September 30, 2020, the Fund received Capital Commitments of $42,369,035, had $4,765,554 of dividend reinvestments, issued 543,083 shares to investors that opted into the Fund’s dividend reinvestment plan, issued capital drawdown notices to its investors for an aggregate amount of $41,844,852 and issued 4,876,625 shares to investors in respect of such capital drawdowns. For the nine months ended September 30, 2019, the Fund received Capital Commitments of $51,852,141 (however, a capital commitment of $4,000,000, originally committed during the quarter ended March 31, 2019, was subsequently reduced by $1,000,000 before any capital was called), had $2,404,103 of dividend reinvestments, issued 241,635 shares to investors that opted into the Fund’s dividend reinvestment plan, $232,123 and 23,338 shares were withdrawn from the Fund as part of the quarter-end SBCAA share repurchase program, issued capital drawdown notices to its investors for an aggregate amount of $59,056,735 and issued 5,896,977 shares to investors in respect of such capital drawdowns.

Distributions

Distributions to stockholders are recorded on the record date. To the extent that the Fund has income available, the Fund intends to distribute quarterly distributions to its stockholders. The Fund’s quarterly distributions, if any, will be determined by the Board. Any distributions to the Fund’s stockholders will be declared out of assets legally available for distribution.

The following table summarizes distributions declared during the nine months ended September 30, 2020:

 

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Table of Contents

Date Declared

   Record Date    Payment Date      Amount Per Share    Total Distributions

March 27, 2020

   March 27, 2020      April 29, 2020      $0.24    $3,551,533

June 26, 2020

   June 26, 2020      July 29, 2020      $0.13    $2,572,039

September 28, 2020

   September 28, 2020      October 28, 2020      $0.15    $2,925,160
        

 

  

 

Total distributions declared

      $0.52    $9,048,732
        

 

  

 

The following table summarizes distributions declared during the nine months ended September 30, 2019:

 

Date Declared

   Record Date    Payment Date      Amount Per Share    Total Distributions

March 27, 2019

   March 27, 2019      April 25, 2019      $0.15    $1,057,242

June 28, 2019

   June 28, 2019      July 19, 2019      $0.16    $1,690,999

September 25, 2019

   September 26, 2019      October 30, 2019      $0.13    $1,674,929
        

 

  

 

Total distributions declared

      $0.44    $4,423,170
        

 

  

 

The federal income tax characterization of distributions declared and paid for the fiscal year will be determined at fiscal year-end based upon the Fund’s investment company taxable income for the full fiscal year and distributions paid during the full year. For the nine months ended September 30, 2020, the Fund distributed $9,048,732 to stockholders, all of which was attributable to ordinary income. The character of distributions for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is only ordinary income or gains.

To the extent the Fund’s taxable earnings fall below the total amount of its distributions paid for that fiscal year, a portion of those distributions may be deemed a return of capital to the Fund’s stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to stockholders may be the original capital invested by the stockholder rather than the Fund’s income or gains.

For the nine months ended September 30, 2019, the Fund distributed $4,423,170 to stockholders, all of which was attributable to ordinary income. The character of distributions for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is only ordinary income or gains.

Contractual Obligations

The Fund has entered into certain contracts under which it has future commitments. Payments under the Amended and Restated Advisory Agreement with the Adviser consist of (i) a base management fee equal to a percentage of the average outstanding assets of the Fund (which equals the gross value of equity and debt instruments, including investments made utilizing leverage), excluding cash and cash equivalents, during such fiscal quarter and (ii) an incentive fee based on the Fund’s performance. The cost of both the base management fee and the incentive fee will ultimately be borne by the Fund’s stockholders. Under the Administration Agreement, the Fund will reimburse the Adviser an amount equal to the Fund’s allocable portion (subject to the review of the Fund’s Board) of its overhead resulting from its obligations under the Expense Reimbursement Agreement. Stockholder approval is not required to amend the Administration Agreement or Expense Reimbursement Agreement. Any new investment advisory agreement would be subject to approval by the Fund’s stockholders.

The following table shows the Fund’s contractual obligations as of September 30, 2020:

 

     Payments Due by Period  
     Total      Less Than
1 Year
     1 –3 Years      3 – 5 Years      More Than
5 Years
 

Revolving Credit Facility

   $ 34,500,000      $ 34,500,000      $ —      $ —      $ —  

Secured borrowings

   $ 3,430,000      $ 3,430,000      $ —      $ —      $ —  

Class A-1 Senior Secured Floating Rate Note

   $ 178,200,000      $ —      $ —      $ —      $ 178,200,000  

Class A-2A Senior Secured Floating Rate Note

   $ 25,000,000      $ —      $ —      $ —      $ 25,000,000  

Class A-2B Senior Secured Floating Rate Note

   $ 9,950,000      $ —      $ —      $ —      $ 9,950,000  

 

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Table of Contents

The following table shows the Fund’s contractual obligations as of December 31, 2019:

 

     Payments Due by Period  
     Total      Less Than
1 Year
     1 –3 Years      3 – 5 Years      More Than
5 Years
 

Revolving Credit Facility

   $ 19,500,000      $ 19,500,000      $ —      $ —        $ —    

Class A-1 Senior Secured Floating Rate Note

   $ 178,200,000      $ —        $ —        $ —        $ 178,200,000  

Class A-2A Senior Secured Floating Rate Note

   $ 25,000,000      $ —        $ —        $ —        $ 25,000,000  

Class A-2B Senior Secured Floating Rate Note

   $ 9,950,000      $ —        $ —        $ —        $ 9,950,000  

See Notes to Financial Statements – Note 4. Borrowings” for a discussion of the terms of the Revolving Credit Facility and Notes.

Off-Balance Sheet Arrangements

As of September 30, 2020 and December 31, 2019, the Fund had unfunded Capital Commitments related to Subscription Agreements of $256,446,800 and $255,922,617, respectively.

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

As of September 30, 2020 the Fund’s off-balance sheet arrangements consisted of the following:

 

Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

1st Lien/Senior Secured Debt

           

5 Bars, LLC

   Delayed Draw Term Loan      09/27/2022      $ 3,448,815      $ —    

5 Bars, LLC

   Revolver      09/27/2024      $ 646,653      $ —    

Accelerate Resources Operating, LLC

   Delayed Draw Term Loan      08/24/2021      $ 1,659,057      $ (49,772

Accelerate Resources Operating, LLC

   Revolver      02/24/2026      $ 414,764      $ (12,443

AEG Holding Company, Inc.

   Revolver      11/20/2023      $ 893,492      $ (17,870

Ahead Data Blue, LLC

   Revolver      11/08/2024      $ 961,256      $ —    

Alphasense, Inc.

   Revolver      05/29/2024      $ 872,355      $ (8,724

American Physician Partners, LLC

   Revolver      12/21/2021      $ 97,681      $ (3,907

AMI US Holdings, Inc.

   Revolver      04/01/2024      $ 306,489      $ (6,130

Analogic Corporation

   Revolver      06/22/2023      $ 213,889      $ (7,486

Avetta, LLC

   Revolver      04/10/2024      $ 494,396      $ (9,888

Azurity Pharmaceuticals, Inc.

   Delayed Draw Term Loan      05/17/2021      $ 482,932      $ (9,659

Azurity Pharmaceuticals, Inc.

   Revolver      03/21/2023      $ 482,932      $ (9,659

BEP Borrower Holdco, LLC

   Delayed Draw Term Loan A      06/12/2021      $ 1,288,304      $ (32,208

BEP Borrower Holdco, LLC

   Revolver      06/12/2024      $ 429,435      $ (12,883

BK Medical Holding Company, Inc.

   Revolver      06/22/2023      $ 321,733      $ (19,304

Blink Holdings, Inc.

   Delayed Draw Term Loan      09/10/2021      $ 496,602      $ (37,245

Businesssolver.com, Inc.

   Revolver      05/15/2023      $ 323,529      $ —    

Captain D’s, Inc.

   Revolver      12/15/2023      $ 50,267      $ (1,005

Delaware Valley Management Holdings, Inc.

   Delayed Draw Term Loan      03/21/2021      $ 1,053,759      $ (160,698

Dillon Logistics, Inc.

   Revolver      12/11/2023      $ 191,947      $ (88,296

Dispatch Track, LLC

   Revolver      12/17/2024      $ 301,930      $ (4,529

E2open LLC

   Revolver      11/26/2024      $ 311,365      $ (20,239

Engage2Excel, Inc.

   Revolver      03/07/2023      $ 119,353      $ (7,161

 

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Table of Contents

Investment

Type

  

Facility

Type

   Commitment
Expiration Date (1)
     Unfunded
Commitment (2)
     Fair
Value (3)
 

EnterpriseDB Corporation

   Revolver      06/21/2024      $ 696,355      $ (12,186

Ethos Veterinary Health LLC

   Delayed Draw Term Loan      05/17/2021      $ 839,091      $ (16,782

EvolveIP, LLC

   Delayed Draw Term Loan      11/26/2021      $ 755,824      $ (11,337

EvolveIP, LLC

   Revolver      06/07/2023      $ 453,495      $ (6,802

Exterro, Inc.

   Revolver      05/31/2024      $ 330,000      $ (1,650

Faithlife, LLC

   Delayed Draw Term Loan      09/19/2022      $ 3,034,704      $ (60,694

Faithlife, LLC

   Revolver      09/18/2025      $ 279,053      $ (5,581

Finalsite Holdings, Inc.

   Revolver      09/25/2024      $ 253,142      $ (4,430

Fuze, Inc.

   Delayed Draw Term Loan      09/20/2021      $ 1,814,240      $ (7,438

Fuze, Inc.

   Revolver      09/20/2024      $ 1,295,886      $ (18,531

GHA Buyer, Inc.

   Revolver      06/24/2025      $ 365,800      $ (7,316

GS AcquisitionCo, Inc.

   Revolver      05/24/2024      $ 114,875      $ (2,297

INH Buyer, Inc.

   Revolver      01/31/2024      $ 205,858      $ (10,293

InSite Wireless Group, LLC

   Revolver      03/15/2023      $ 460,172      $ —    

InSite Wireless Group, LLC

   Term Loan      08/01/2022      $ 2,827,880      $ —    

Kaseya Inc.

   Delayed Draw Term Loan      05/03/2021      $ 435,075      $ (5,177

Kaseya Inc.

   Delayed Draw Term Loan      03/04/2022      $ 237,545      $ (2,969

Kaseya Inc.

   Revolver      05/02/2025      $ 191,755      $ (3,835

Kindeva Drug Delivery L.P.

   Revolver      05/01/2025      $ 1,445,322      $ (36,133

Metametrics, Inc.

   Revolver      09/10/2025      $ 651,183      $ (32,559

Netwrix Corporation

   Delayed Draw Term Loan      03/31/2021      $ 500,905      $ (11,897

Netwrix Corporation

   Revolver      09/30/2026      $ 166,551      $ (3,956

Netwrix Corporation

   Delayed Draw Term Loan      09/30/2021      $ 1,001,811      $ (23,793

Nine Point Energy, LLC

   Delayed Draw Term Loan      06/07/2021      $ 328,125      $ (39,375

OMH-HealthEdge Holdings, LLC

   Revolver      10/24/2024      $ 458,721      $ (13,762

Pace Health Companies, LLC

   Revolver      08/02/2024      $ 616,682      $ (21,584

Pinnacle Dermatology Management, LLC

   Delayed Draw Term Loan      10/31/2021      $ 3,288,636      $ (98,659

Pinnacle Dermatology Management, LLC

   Revolver      05/18/2023      $ 322,749      $ (9,682

Pinnacle Treatment Centers, Inc.

   Delayed Draw Term Loan      01/17/2022      $ 234,363      $ (4,687

Pinnacle Treatment Centers, Inc.

   Revolver      12/31/2022      $ 292,954      $ (5,859

Real Capital Analytics, Inc.

   Revolver      10/02/2024      $ 694,740      $ —    

Rep Tec Intermediate Holdings, Inc.

   Delayed Draw Term Loan      03/19/2021      $ 1,326,335      $ (26,527

Rep Tec Intermediate Holdings, Inc.

   Revolver      06/19/2025      $ 442,112      $ (8,842

RxBenefits, Inc.

   Revolver      03/29/2024      $ 575,767      $ (5,758

Salisbury House, LLC

   Revolver      08/30/2025      $ 298,895      $ (7,472

Selligent, Inc.

   Revolver      11/03/2023      $ 200,660      $ (4,013

Single Digits, Inc.

   Delayed Draw Term Loan      12/21/2020      $ 1,040,369      $ (83,230

Single Digits, Inc.

   Revolver      12/21/2023      $ 316,272      $ (25,302

Sirsi Corporation

   Revolver      03/15/2024      $ 553,741      $ (11,075

Smartlinx Solutions, LLC

   Revolver      03/04/2026      $ 519,484      $ (9,974

Smile Brands, Inc.

   Delayed Draw Term Loan      10/12/2020      $ 152,035      $ (4,561

Smile Brands, Inc.

   Revolver      10/12/2023      $ 254,808      $ (7,644

Star2star Communications, LLC

   Delayed Draw Term Loan      03/11/2022      $ 640,576      $ (12,812

Star2star Communications, LLC

   Revolver      03/13/2025      $ 960,864      $ (19,217

Summit Infrastructure Group, Inc.

   Delayed Draw Term Loan      03/15/2021      $ 675,454      $ —    

Summit Infrastructure Group, Inc.

   Revolver      03/15/2024      $ 562,878      $ —    

Symplr Software, Inc.

   Revolver      11/30/2023      $ 296,459      $ (10,376

Telesoft Holdings, LLC

   Revolver      12/16/2025      $ 596,866      $ (13,429

The Center for Orthopedic and Research Excellence, Inc.

   Delayed Draw Term Loan      08/15/2021      $ 1,381,064      $ (21,406

The Center for Orthopedic and Research Excellence, Inc.

   Revolver      08/15/2025      $ 690,532      $ (15,537

TRGRP, Inc.

   Revolver      11/01/2023      $ 333,333      $ (6,667

Velocity Purchaser Corporation

   Revolver      12/01/2022      $ 193,237      $ —    

ZBS Alliance Animal Health, LLC

   Delayed Draw Term Loan      11/08/2021      $ 1,478,606      $ (29,572

ZBS Alliance Animal Health, LLC

   Revolver      11/08/2025      $ 226,780      $ (4,536
        

 

 

    

 

 

 

Total 1st Lien/Senior Secured Debt

         $ 54,173,554      $ (1,326,320
        

 

 

    

 

 

 

Total

         $ 54,173,554      $ (1,326,320
        

 

 

    

 

 

 

 

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Table of Contents

As of December 31, 2019, the Fund’s off-balance sheet arrangements consisted of the following:

 

Investment

Type

  

Facility

Type

   Commitment
Expiration Date(1)
     Unfunded
Commitment(2)
     Fair
Value(3)
 

1st Lien/Senior Secured Debt

           

5 Bars, LLC

   Delayed Draw Term Loan      9/27/2024      $ 3,448,816      $ (51,732

5 Bars, LLC

   Revolver      9/27/2024      $ 646,653      $ (9,700

AEG Holding Company, Inc.

   Revolver      11/20/2023      $ 558,432      $ (11,168

Ahead Data Blue, LLC

   Revolver      11/8/2024      $ 961,256      $ (19,225

American Physician Partners, LLC

   Revolver      12/21/2021      $ 266,402      $ (2,664

AMI US Holdings, Inc.

   Revolver      4/1/2024      $ 612,979      $ (12,260

Analogic Corporation

   Revolver      6/22/2023      $ 258,261      $ (3,616

Avetta, LLC

   Delayed Draw Term Loan      4/11/2020      $ 1,235,991      $ (12,360

Avetta, LLC

   Revolver      4/10/2024      $ 494,396      $ (9,888

BEP Borrower Holdco, LLC

   Delayed Draw Term Loan A      6/12/2021      $ 1,288,304      $ (12,883

BEP Borrower Holdco, LLC

   Delayed Draw Term Loan B      6/30/2020      $ 2,576,608      $ (25,766

BEP Borrower Holdco, LLC

   Revolver      6/12/2024      $ 429,435      $ (6,442

Blink Holdings, Inc.

   Delayed Draw Term Loan      11/8/2020      $ 119,189      $ (1,192

Broadway Technology, LLC

   Revolver      4/1/2024      $ 383,845      $ (7,677

Businesssolver.com, Inc.

   Revolver      5/15/2023      $ 194,118      $ —  

Captain D’s, Inc.

   Revolver      12/15/2023      $ 60,466      $ (604

CutisPharma, Inc.

   Revolver      3/21/2023      $ 482,932      $ (8,451

CutisPharma, Inc.

   Delayed Draw Term Loan      5/17/2021      $ 482,932      $ (8,451

Degreed, Inc.

   Delayed Draw Term Loan      5/31/2021      $ 1,810,522      $ (17,562

Degreed, Inc.

   Revolver      5/31/2024      $ 417,813      $ (7,228

Delaware Valley Management Holdings, Inc.

   Delayed Draw Term Loan      3/21/2021      $ 5,268,797      $ (105,376

Delaware Valley Management Holdings, Inc.

   Revolver      3/21/2024      $ 158,064      $ (3,161

Dillon Logistics, Inc.

   Revolver      12/11/2023      $ 41,191      $ (2,912

Dispatch Track, LLC

   Revolver      12/17/2024      $ 169,081      $ (2,537

E2open LLC

   Revolver      11/26/2024      $ 311,365      $ (3,114

Engage2Excel, Inc.

   Delayed Draw Term Loan      10/25/2020      $ 664,490      $ (6,645

Engage2Excel, Inc.

   Revolver      3/7/2023      $ 125,635      $ (2,513

EnterpriseDB Corporation

   Revolver      6/21/2024      $ 696,355      $ (10,445

Ethos Veterinary Health LLC

   Term Loan      5/17/2021      $ 839,091      $ (8,391

EvolveIP, LLC

   Delayed Draw Term Loan      11/26/2021      $ 755,824      $ (11,337

EvolveIP, LLC

   Revolver      6/7/2023      $ 566,868      $ (8,503

Exterro, Inc.

   Revolver      5/31/2024      $ 330,000      $ (1,650

Finalsite Holdings, Inc.

   Revolver      9/25/2024      $ 253,142      $ (3,797

Fuze, Inc.

   Delayed Draw Term Loan      9/20/2021      $ 2,591,772      $ (117,926

Fuze, Inc.

   Revolver      9/20/2024      $ 388,766      $ (17,689

Genesis Acquisition Co.

   Delayed Draw Term Loan      7/31/2020      $ 364,466      $ (3,645

Genesis Acquisition Co.

   Revolver      7/31/2024      $ 131,560      $ (2,631

GHA Buyer, Inc.

   Delayed Draw Term Loan      12/31/2020      $ 570,916      $ (5,709

GHA Buyer, Inc.

   Delayed Draw Term Loan      12/31/2020      $ 675,044      $ (6,750

GHA Buyer, Inc.

   Revolver      10/23/2023      $ 202,513      $ (4,050

GS AcquisitionCo, Inc.

   Revolver      5/24/2024      $ 108,813      $ (1,360

GS AcquisitionCo, Inc.

   Second Supplemental Delayed Draw Term Loan      8/2/2021      $ 1,934,450      $ (13,251

Higginbotham Insurance Agency, Inc.

   Delayed Draw Term Loan      3/11/2020      $ 2,365,584      $ —  

 

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Investment

Type

  

Facility

Type

   Commitment
Expiration Date(1)
     Unfunded
Commitment(2)
     Fair
Value(3)
 

INH Buyer, Inc.

   Revolver      1/31/2024      $ 205,858      $ (3,088

InSite Wireless Group, LLC

   Term Loan      8/1/2022      $ 6,179,466      $ (77,243

Lucky Bucks, LLC

   Delayed Draw Term Loan      4/9/2020      $ 64,919      $ (1,136

Metametrics, Inc.

   Revolver      9/10/2025      $ 651,183      $ (13,024

Nine Point Energy, LLC

   Revolver      6/7/2024      $ 328,125      $ (6,562

Nine Point Energy, LLC

   Delayed Draw Term Loan      6/7/2021      $ 1,312,500      $ (26,250

OMH-HealthEdge Holdings, LLC

   Revolver      10/24/2024      $ 458,721      $ (10,321

Pace Health Companies, LLC

   Revolver      8/2/2024      $ 616,682      $ (6,167

PF Growth Partners, LLC

   Delayed Draw Term Loan      7/11/2021      $ 300,356      $ (3,003

Pinnacle Dermatology Management, LLC

   Delayed Draw Term Loan      5/18/2020      $ 1,643,567      $ (32,871

Pinnacle Dermatology Management, LLC

   Revolver      5/18/2023      $ 468,424      $ (9,368

Real Capital Analytics, Inc.

   Revolver      10/2/2024      $ 138,948      $ (695

Rhode Holdings, Inc.

   Delayed Draw Term Loan      5/3/2021      $ 467,302      $ (5,280

Rhode Holdings, Inc.

   Revolver      5/2/2025      $ 161,139      $ (3,223

RxBenefits, Inc.

   Revolver      3/29/2024      $ 575,767      $ (5,758

Selligent, Inc.

   Revolver      11/3/2023      $ 200,660      $ (3,010

Single Digits, Inc.

   Delayed Draw Term Loan      12/21/2020      $ 1,040,369      $ (10,404

Single Digits, Inc.

   Revolver      12/21/2023      $ 416,148      $ (4,161

Sirsi Corporation

   Revolver      3/15/2024      $ 332,245      $ (4,984

Smile Brands, Inc.

   Delayed Draw Term Loan      10/12/2020      $ 333,798      $ —  

Smile Brands, Inc.

   Revolver      10/12/2023      $ 220,833      $ —  

Sugarcrm, Inc.

   Revolver      7/31/2024      $ 310,244      $ —  

Summit Infrastructure Group, Inc.

   Delayed Draw Term Loan      3/15/2021      $ 1,125,756      $ (22,515

Summit Infrastructure Group, Inc.

   Revolver      3/15/2024      $ 562,878      $ (11,258

Swiftpage, Inc.

   Revolver      6/13/2023      $ 225,317      $ (4,506

Symplr Software, Inc.

   Revolver      11/30/2023      $ 27,828      $ (417

Telesoft Holdings, LLC

   Revolver      12/16/2025      $ 596,865      $ (13,430

The Center for Orthopedic and Research Excellence, Inc.

   Delayed Draw Term Loan      8/15/2021      $ 1,726,330      $ (15,105

The Center for Orthopedic and Research Excellence, Inc.

   Revolver      8/15/2025      $ 656,005      $ (11,480

Theranest, LLC

   Delayed Draw Term Loan      7/23/2020      $ 1,386,857      $ (20,803

Theranest, LLC

   Revolver      7/24/2023      $ 428,571      $ (8,571

TRGRP, Inc.

   Revolver      11/1/2023      $ 333,333      $ (6,667

Tropical Smoothie Cafe, LLC

   Revolver      9/24/2023      $ 96,435      $ —  

Tropical Smoothie Cafe, LLC

   Delayed Draw Term Loan      6/18/2021      $ 6,659,893      $ —  

Velocity Purchaser Corporation

   Revolver      12/1/2022      $ 193,237      $ —  

ZBS Alliance Animal Health, LLC

   Delayed Draw Term Loan      11/8/2025      $ 4,535,600      $ (90,712

ZBS Alliance Animal Health, LLC

   Revolver      11/8/2025      $ 181,424      $ (3,628
        

 

 

    

 

 

 

Total 1st Lien/Senior Secured Debt

         $ 71,406,720      $ (1,007,901
        

 

 

    

 

 

 

Total

         $ 71,406,720      $ (1,007,901
        

 

 

    

 

 

 

 

(1)

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

(2)

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

(3)

A negative fair value was reflected as investments, at fair value in the consolidated statements of assets and liabilities. The negative fair value is the result of the capitalized discount on the loan.

 

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Co-investment Exemptive Order

On August 6, 2018, the SEC granted the Fund relief sought in a new exemptive application that expands the co-investment exemptive relief previously granted to the Fund in October 2016 to allow the Fund to co-invest in portfolio companies with Affiliated Funds in a manner consistent with its investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with the Order. Pursuant to the Order, the Fund is permitted to co-invest with Affiliated Funds, which the new exemptive relief defines to include affiliated managed accounts, if, among other things, a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Fund’s independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Fund and the Fund’s stockholders and do not involve overreaching in respect of the Fund or the Fund’s stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Fund’s stockholders and is consistent with the Fund’s investment objective and strategies. The Fund intends to co-invest with Affiliated Funds, subject to the conditions included in the Order.

Credit Facility

Revolving Credit Facility

On November 15, 2017, the Fund entered into the Credit Agreement to establish the Revolving Credit Facility with HSBC as Administrative Agent and any other lender that becomes a party to the Revolving Credit Facility in accordance with the terms of the Revolving Credit Facility, as lenders.

The Maximum Commitment of the Revolving Credit Facility is $30 million. The Maximum Commitment amount may be increased upon request of the Fund to an amount agreed upon by the Fund and the Administrative Agent. Such increase may be done in one or more requested increases, each in a minimum amount of $10 million and in $5 million increments thereof, or such lesser amount to be determined by the Administrative Agent, subject to certain terms and conditions. On January 31, 2019, the Fund increased the Maximum Commitment to $50 million. So long as no request for borrowing is outstanding, the Fund may terminate the Commitments or reduce the Maximum Commitments by giving prior irrevocable written notice to the Administrative Agent. Any reduction of the Maximum Commitments shall be in an amount equal to $10 million or multiples thereof; and in no event shall a reduction by the Fund reduce the Commitments to $35 million or less (in each case, except for a termination of all the Commitments). Proceeds under the Revolving Credit Facility may be used for any purpose permitted under the Fund’s organizational documents, including general corporate purposes such as the making of investments.

Borrowings under the Revolving Credit Facility bear interest, at the Fund’s election at the time of drawdown, at a rate per annum equal to (i) with respect to LIBOR Rate Loans, Adjusted LIBOR for the applicable Interest Period; and (ii) with respect to Reference Rate Loans, the greatest of: (x) the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate, (y) the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, plus two hundred basis points (2.00%), provided that if such rate is not so published for any day that is a Business Day, the average of the quotation for such day on such transactions received by the Administrative Agent from three (3) Federal funds brokers of recognized standing selected by the Administrative Agent and, upon request of Borrowers, with notice of such quotations to the Borrowers and (z) except during any period of time during which LIBOR is unavailable, one-month Adjusted LIBOR plus one hundred ninety basis points (1.90%). The Fund will also pay an unused commitment fee of 35 basis points (0.35%) on any unused commitments.

The Revolving Credit Facility was scheduled to mature on November 11, 2020, subject to the Fund’s option to extend the maturity date for up to one additional term not longer than 364 days, subject to the following conditions: (i) each of the Lenders and the Administrative Agent consents to the extension in their sole discretion; (ii) the Fund has paid an extension fee to the Administrative Agent for the benefit of the extending Lenders consenting to such extension in an amount agreed to by the Administrative Agent and the Borrowers at the time of the extension and as set forth in the applicable extension request; (iii) no potential default or event of default has occurred and is continuing on the date on which notice is given in accordance with the following clause (iv) or on November 11, 2020; and (iv) the Fund has delivered an extension request to the Administrative Agent not more than one hundred twenty (120) days or less than forty-five (45) days prior to November 11, 2020.

Subject to certain terms and conditions, the Revolving Credit Facility is secured by a first priority, exclusive, perfected security interest and lien in and on all of the Fund’s right, title and interest, in, to and under, whether now existing or hereafter acquired or arising and wherever located (a) all of the Fund’s rights, titles, interests and privileges in and to the Capital Commitments, and the capital contributions made by its Investors, and all other rights, titles, interests, powers and privileges related to, appurtenant to or arising out of the Capital Commitments; (b) all of the Fund’s rights, titles, interests, remedies, and privileges under the Constituent Documents (i) to issue and enforce Capital Calls and pending Capital Calls, (ii) to receive and enforce capital contributions and (iii) relating to Capital Calls, pending Capital Calls, Capital Commitments or capital contributions; (c) all proceeds of any and all of the foregoing.

 

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The Revolving Credit Facility contains customary covenants and events of default (with customary cure and notice provisions).

As of September 30, 2020, there was an outstanding balance of $34,500,000 on the Revolving Credit Facility and the Fund was in compliance with the terms of the Revolving Credit Facility. As of December 31, 2019, the Fund had $19,500,000 outstanding on the Revolving Credit Facility and the Fund was in compliance with the terms of the Revolving Credit Facility. The Fund intends to continue to utilize the Revolving Credit Facility on a revolving basis to fund investments and for other general corporate purposes.

For the three months ended September 30, 2020 and 2019, the components of interest expense related to the Revolving Credit Facility were as follows:

 

     For the Three Months Ended September 30,  
     2020      2019  

Interest and borrowing expenses

   $ 168,140      $ 44,955  

Commitment fees

     16,445        40,945  

Amortization of deferred financing costs

     18,853        43,878  
  

 

 

    

 

 

 

Total interest and debt financing expenses

   $ 203,438      $ 129,778  
  

 

 

    

 

 

 

For the nine months ended September 30, 2020 and 2019, the components of interest expense related to the Revolving Credit Facility were as follows:

 

     For the Nine Months Ended September 30,  
     2020      2019  

Interest and borrowing expenses

   $ 531,788      $ 410,787  

Commitment fees

     55,592        122,574  

Amortization of deferred financing costs

     56,148        147,432  
  

 

 

    

 

 

 

Total interest and debt financing expenses

   $ 643,528      $ 680,793  
  

 

 

    

 

 

 

Barclays Credit Agreement

On December 19, 2018, the Fund formed ABPCIC Funding, an indirectly wholly-owned Delaware limited liability company, the primary purpose of which was to function as the Fund’s special purpose, bankruptcy remote, financing subsidiary in connection with the Barclays Credit Agreement, providing for borrowings in an aggregate amount up to $150,000,000 collateralized with certain assets sold to ABPCIC Funding by the Fund (the “Collateral”). The Fund was appointed as the Designated Manager of ABPCIC Funding and as such had full and exclusive control of ABPCIC Funding’s business and makes all decisions affecting its affairs (except with respect to certain material actions). On January 30, 2019, ABPCIC Funding entered into the Barclays Credit Agreement. Concurrently with the closing of the Barclays Credit Agreement, the Fund contributed and/or sold certain assets to ABPCIC Funding pursuant to a transfer agreement (the “Transfer Agreement”), by and between the Fund as seller and ABPCIC Funding as buyer. The Fund expected to continue to contribute and/or sell assets to ABPCIC Funding pursuant to the Transfer Agreement in the future.

All of the collateral pledged to lenders by ABPCIC Funding under the Barclays Credit Facility was held in the custody of the Custodian under an account control agreement by and among ABPCIC Funding, the Collateral Agent and the Custodian. The Collateral Administrator maintained and performed certain collateral administration services with respect to the collateral pursuant to a collateral administration agreement among ABPCIC Funding, the Adviser and the Collateral Administrator. Borrowings under the Barclays Credit Facility were secured by all of the assets held by ABPCIC Funding. Pursuant to a collateral management agreement (the “Collateral Management Agreement”) by and between ABPCIC Funding and the Adviser as collateral manager, the Adviser performed certain duties with respect to the purchase and management of the assets securing the Barclays Credit Facility. The Adviser elected to waive any fees that would otherwise be payable under the Barclays Credit Facility and the Collateral Management Agreement. ABPCIC Funding was responsible for reimbursing the expenses incurred by the Adviser in the performance of its obligations under the Collateral Management Agreement other than any ordinary overhead expenses, which were not required to be reimbursed. For the three and nine months ended September 30, 2020, the Fund incurred no collateral management fees. For the three and nine months ended September 30, 2019, the Fund incurred collateral management fees of $100,949 and $426,758, respectively, which were voluntarily waived by the Adviser.

 

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The Barclays Credit Facility provided for borrowings in an aggregate amount up to $150 million. Borrowings under the Barclays Credit Facility bore interest paid on an annual adjusted LIBOR for the relevant interest period, plus an applicable spread of 2.25%. ABPCIC Funding would also pay an unused commitment fee of .50% and the commitment would have expired on July 30, 2020. Interest and fees were paid quarterly in arrears. Any amounts borrowed under the Barclays Credit Facility would have matured, and all accrued and unpaid interest thereunder would have been due and payable, on the earlier of (i) January 20, 2029, (ii) the date on which ABPCIC Funding issues collateralized loan obligation securities in a transaction for which the sole arranger is Barclays (or an affiliate thereof) or (iii) upon certain other events which result in accelerated maturity under the credit facility. Borrowing under the Barclays Credit Facility was subject to certain restrictions contained in the 1940 Act. On August 9, 2019, ABPCIC Funding issued collateralized loan obligation securities, and terminated the Barclays Credit Facility. For a discussion of the CLO Transaction see Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Debt Securitization.”

For the three months ended September 30, 2020 and September 30, 2019, the components of interest expense related to the Barclays Credit Facility were as follows:

 

     For the Three Months Ended September 30,  
     2020      2019  

Interest and borrowing expenses

   $ —      $ 751,048  

Commitment fees

     —          5,041  

Amortization of deferred financing costs

     —          123,547  
  

 

 

    

 

 

 

Total interest and debt financing expenses

   $ —      $ 879,636  
  

 

 

    

 

 

 

For the nine months ended September 30, 2020 and September 30, 2019, the components of interest expense related to the Barclays Credit Facility were as follows:

 

     For the Nine Months Ended September 30,  
     2020      2019  

Interest and borrowing expenses

   $ —      $ 3,336,538  

Commitment fees

     —          56,338  

Amortization of deferred financing costs

     —          355,465  
  

 

 

    

 

 

 

Total interest and debt financing expenses

   $ —      $ 3,748,341  
  

 

 

    

 

 

 

Borrowings of ABPCIC Funding were considered borrowings by the Fund for purposes of complying with the asset coverage requirements under the 1940 Act applicable to business development companies. The obligations of ABPCIC Funding under the Barclays Credit Facility were non-recourse to the Fund. The Barclays Credit Facility was in effect during 2019, but terminated on August 9, 2019.

Debt Securitization

On August 9, 2019, the Issuer and the Co-Issuer, each a newly formed special purpose vehicle, completed the CLO Transaction. The Notes offered by the Co-Issuers in the CLO Transaction are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans and participation interests in middle market loans and may also include some broadly syndicated loans. The CLO Transaction was executed through a private placement of: (i) $178,200,000 of Class A-1 Senior Secured Floating Rate Notes, which bear interest at three-months LIBOR plus 1.73% per annum; (ii) $25,000,000 of Class A-2A Senior Secured Floating Rate Notes, which bear interest at LIBOR plus 2.45% per annum; (iii) $9,950,000 of Class A-2B Senior Secured Fixed Rate Notes, which bear interest at 4.23% per annum;

(iv) $16,400,000 of Class B Secured Deferrable Floating Rate Notes, which bear interest at LIBOR plus 3.40% per annum; and (v) $17,350,000 of Class C Secured Deferrable Floating Rate Notes, which bear interest at LIBOR plus 4.40% per annum. The Notes are scheduled to mature on August 9, 2030.

The Notes are the secured obligations of the Co-Issuers, and the indenture governing the Notes includes customary covenants and events of default. The Notes have not been, and will not be, registered under the Securities Act, as amended, or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from registration.

 

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The Adviser serves as collateral manager to the Issuer pursuant to the Collateral Management Agreement. For so long as the Adviser serves as collateral manager to the Issuer, the Adviser will elect to irrevocably waive any base management fee or subordinated interest to which it may be entitled under the Collateral Management Agreement. For the three and nine months ended September 30, 2020, the Fund incurred collateral management fees of $462,788 and $1,380,737, respectively, which were voluntarily waived by the Adviser. For the three and nine months ended September 30, 2019, the Fund incurred collateral management fees of $266,585 and $266,585, respectively, which were voluntarily waived by the Adviser.

The interest rate and outstanding borrowings under the Notes as of September 30, 2020 were as follows:

 

Notes

   Principal Amount      Interest rate at September 30, 2020     Carrying Value      Fair Value  

Class A-1

   $ 178,200,000        L+1.73%     $ 176,472,146      $ 177,849,302  

Class A-2A

     25,000,000        L+2.45%       24,757,596        25,103,500  

Class A-2B

     9,950,000        4.23%       9,826,203        10,592,372  

Class B

     16,400,000        L+3.40%       0        0

Class C

     17,350,000        L+4.40%       0        0

Subordinated Notes

     53,600,000        N/A       0        0
  

 

 

      

 

 

    

 

 

 

Total

   $ 300,500,000        $ 211,055,945      $ 213,545,174  
  

 

 

      

 

 

    

 

 

 

 

*

Class B, Class C and Subordinated Notes have been eliminated in consolidation.

The interest rate and outstanding borrowings under the Notes as of December 31, 2019 were as follows:

 

Notes

   Principal Amount      Interest rate at December 31, 2019     Carrying Value      Fair Value  

Class A-1

   $ 178,200,000        L+1.73%     $ 175,875,031      $ 178,195,723  

Class A-2A

     25,000,000        L+2.45%       24,673,826        24,889,050  

Class A-2B

     9,950,000        4.23%       9,787,776        9,916,279  

Class B

     16,400,000        L+3.40%       0        0

Class C

     17,350,000        L+4.40%       0        0

Subordinated Notes

     53,600,000        N/A       0        0
  

 

 

      

 

 

    

 

 

 

Total

   $ 300,500,000        $ 210,336,633      $ 213,001,052  
  

 

 

      

 

 

    

 

 

 

 

*

Class B, Class C and Subordinated Notes have been eliminated in consolidation.

For the three months ended September 30, 2020 and September 30, 2019, the components of interest expense related to the Notes were as follows:

 

     For the Three Months Ended
September 30
 
     2020      2019  

Interest and borrowing expenses

   $ 1,265,878      $ 1,276,850  

Amortization of debt issuance costs

     284,402        138,100  
  

 

 

    

 

 

 

Total interest and borrowing expenses

   $ 1,550,280      $ 1,414,950  
  

 

 

    

 

 

 

 

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For the nine months ended September 30, 2020 and September 30, 2019, the components of interest expense related to the Notes were as follows:

 

     For the Nine Months Ended
September 30
 
     2020      2019  

Interest and borrowing expenses

   $ 4,977,643      $ 1,276,850  

Amortization of debt issuance costs

     719,312        138,100  
  

 

 

    

 

 

 

Total interest and borrowing expenses

   $ 5,696,955      $ 1,414,950  
  

 

 

    

 

 

 

Secured Borrowings

From time to time, the Fund may engage in sale/buy-back agreements, which are a type of secured borrowing. The amount, interest rate and terms of these agreements will be individually negotiated on a transaction-by-transaction basis. Each borrowing is secured by an interest in an underlying asset which is participated or assigned to the sale/buy-back counterparty for the duration of the agreement.

On September 29, 2020, the Fund entered into a $3,430,000 sale/buy-back agreement with Macquarie US Trading LLC (“Macquarie”), and pursuant to the agreement, the Fund has assigned certain assets to Macquarie, with a corresponding repurchase obligation at an agreed-upon price within 30 days after the sale date (the “Macquarie Sale/Buy-Back”). The Macquarie Sale/Buy-Back has a funding cost of 1.25 bps per day and is not subject to any additional fees. As of September 30, 2020, secured borrowings pursuant to the Macquarie Sale/Buy-Back were $3,430,000 with a maturity of less than thirty days. The Fund accounts for these secured borrowings as secured financings for financial reporting purposes in accordance with GAAP.

Asset Coverage

In accordance with the 1940 Act, the Fund has historically only been allowed to borrow amounts such that its “asset coverage,” as defined in the 1940 Act, is at least 200% after such borrowing, permitting the Fund to borrow up to one dollar for investment purposes for every one dollar of investor equity. “Asset coverage” generally refers to a company’s total assets, less all liabilities and indebtedness not represented by “senior securities,” as defined in the 1940 Act, divided by total senior securities representing indebtedness and, if applicable, preferred stock. “Senior securities” for this purpose includes borrowings from banks or other lenders, debt securities and preferred stock.

On March 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On July 5, 2018, the Board voted to approve the adoption of the reduced asset coverage ratio and separately recommended that Investors approve the reduced asset coverage requirements at the 2018 annual meeting of stockholders. On September 26, 2018, at the Fund’s 2018 annual meeting of stockholders, the Fund’s stockholders approved the reduction of the required minimum asset coverage ratio applicable to the Fund from 200% to 150%, which took effect on September 27, 2018. This reduction in the required minimum asset coverage ratio increases the amount of debt that the Fund is permitted to incur, permitting the Fund to borrow up to two dollars for investment purposes for every one dollar of investor equity.

As of September 30, 2020, and December 31, 2019, the Fund had total senior securities of $248,985,945 and $229,836,633, respectively, consisting of borrowings under the Revolving Credit Facility, secured borrowings and the Notes, and had asset coverage ratios of 173% and 163%, respectively.

Critical Accounting Policies

Valuation of Investments

The Fund measures the value of its investments at fair value accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or “ASC Topic 820,” issued by the Financial Accounting Standards Board, or “FASB.” 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.

The audit committee of the Fund’s Board (the “Audit Committee”) is also responsible for assisting the Fund’s Board in valuing investments that are not publicly traded or for which current market values are not readily available. Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from independent pricing services, broker-dealers or market makers. With respect to portfolio investments for which market quotations are not readily available, the Fund’s Board, with the assistance of the Adviser and its senior investment team and independent valuation firms, is responsible for determining in good faith the fair value in accordance with the valuation policy approved by the Fund’s Board. If more than one valuation method is used to measure fair value, the results are evaluated and weighted, as appropriate, considering the reasonableness of the range indicated by those results. The Fund considers a range of fair values based upon the valuation techniques utilized and selects the value within that range that was most representative of fair value based on current market conditions as well as other factors the Adviser’s senior investment team considers relevant.

 

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ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. In accordance with ASC Topic 820, these inputs are summarized in the three levels listed below:

 

   

Level 1 – Quoted prices in active markets for identical investments.

 

   

Level 2 – Other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).

 

   

Level 3 – Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments at the reporting date).

 

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The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. If a fair value measurement uses price data vendors or observable market price quotations, that measurement is a Level 2 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Because of the inherent uncertainty of valuation for all fair value investments and interests, the Board’s determination of fair value may differ from the values that would have been used had a ready market existed, or that could have been (or will be) realized in an actual sale, and such differences could be material.

The value of any investment on any valuation date is intended to represent the fair value of such investment on such date based upon the amount at which the investment could be exchanged between willing parties, other than in a forced liquidation sale, and reflects the Board’s determination of fair value using the methodology described herein. Any valuation of an investment may not reflect the actual amount received by the Fund upon the liquidation of such investment.

The Fund’s investments will be primarily loans made to middle-market companies. These investments are mostly considered Level 3 assets under ASC Topic 820 because there is not usually a known or accessible market or market indices for these types of debt instruments and, thus, the Adviser’s senior investment team must estimate the fair value of these investment securities based on models utilizing unobservable inputs.

Investment Transactions, Realized/Unrealized Gains or Losses, and Income Recognition

Investment transactions are recorded on a trade-date basis. The Fund measures realized gains or losses from the repayment or sale of investments using the identified cost method. The amortized cost basis of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees. The Fund reports changes in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments in the consolidated statement of operations.

Interest income, adjusted for amortization of market premium and accretion of market discount, is recorded on an accrual basis to the extent that the Fund expects to collect such amounts. Interest income on debt instruments is accrued and recognized for those issuers who are currently paying in full or expected to pay in full. For those issuers who are in default or expected to default, interest is not accrued and is only recognized when received. Interest income and expense include discounts accreted and premiums amortized on certain debt instruments as determined in good faith by the Adviser and calculated using the effective interest method. Loan origination fees, original issue discounts and market discounts or premiums are capitalized as part of the underlying cost of the investments and accreted or amortized over the life of the investment as interest income.

Management and Incentive Fees

The Fund will accrue for the base management fee and incentive fee. The accrual for the incentive fee includes the recognition of the incentive fee on unrealized capital gains, even though such incentive fee is neither earned nor payable to the Adviser until the gains are both realized and in excess of unrealized depreciation on investments. The amount of capital gains incentive fee expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to the Adviser in the event of a complete liquidation of the Fund’s portfolio as of period end and the termination of the Amended and Restated Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee expense fluctuates with the Fund’s overall investment results.

Federal Income Taxes

The Fund has elected to be treated, and to qualify annually, as a RIC under Subchapter M of the Code. Generally, a RIC is not subject to federal income taxes on distributed income and gains if it distributes at least 90% of its net ordinary income and net short-term capital gains in excess of its net long-term capital losses, if any, to its stockholders. The Fund intends to distribute sufficient dividends to maintain its RIC status each year and the Fund does not anticipate paying any material federal income taxes in the future.

 

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Fund is subject to financial market risks, including changes in interest rates. To the extent that the Fund borrows money to make investments, the Fund’s net investment income is dependent upon the difference between the rate at which the Fund borrows funds and the rate at which the Fund invests these funds. In periods of rising interest rates, the Fund’s cost of funds would increase, which may reduce the Fund’s net investment income. Because the Fund expects that most of its investments will bear interest at floating rates, the Fund anticipates that an increase in interest rates would have a corresponding increase in the Fund’s interest income that would likely offset any increase in the Fund’s cost of funds and, thus, net investment income would not be reduced. However, there can be no assurance that a significant change in market interest rates will not have an adverse effect on the Fund’s net investment income. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in the value of the securities held by the Fund.

The Fund will generally invest in illiquid loans and securities including debt and equity securities of middle-market companies. Because the Fund expects that there will not be a readily available market for many of the investments in the Fund’s portfolio, the Fund expects to value many of its portfolio investments at fair value as determined in good faith by the Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce the Fund’s gross investment income and could result in a decrease in the Fund’s net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that the Fund earns on any portfolio investments, a decrease in the Fund’s operating expenses, including with respect to the Fund’s income incentive fee, or a decrease in the interest rate of the Fund’s floating interest rate liabilities tied to LIBOR.

Assuming that the consolidated statement of assets and liabilities as of September 30, 2020, were to remain constant and that the Fund took no actions to alter its existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.

 

Change in Interest Rates

   Increase (Decrease) in
Interest Income
     Increase (Decrease) in
Interest Expense
     Net Increase (Decrease) in
Net Investment Income
 

Down 25 basis points

   $ (76,377    $ (559,750    $ 483,373  

Up 100 basis points

     1,247,839        2,377,000        (1,129,161

Up 200 basis points

     5,293,624        4,754,000        539,624  

Up 300 basis points

     9,522,487        7,131,000        2,391,487  

In addition, although the Fund does not currently intend to make investments that are denominated in a foreign currency, to the extent it does, the Fund will be subject to risks associated with changes in currency exchange rates. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved.

The Fund may hedge against interest rate and currency exchange rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate the Fund against adverse changes in interest rates, they may also limit the Fund’s ability to participate in benefits of lower interest rates with respect to the Fund’s portfolio of investments with fixed interest rates.

 

Item 4.

Controls and Procedures

As of the end of the period covered by this report, the Fund carried out an evaluation, under the supervision and with the participation of the Fund’s management, including the Fund’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Fund’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Fund’s Chief Executive Officer and Chief Financial Officer have concluded that the Fund’s current disclosure controls and procedures are effective in timely alerting them to material information relating to the Fund that is required to be disclosed by the Fund in the reports it files or submits under the Exchange Act.

 

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

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

The Fund is not currently subject to any material legal proceedings, nor, to the Fund’s knowledge, is any material legal proceeding threatened against the Fund. From time to time, the Fund may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Fund’s rights under contracts with its portfolio companies. The Fund’s business is also subject to extensive regulation, which may result in regulatory proceedings against the Fund. While the outcome of these legal proceedings cannot be predicted with certainty, the Fund does not expect that these proceedings will have a material effect upon its financial condition or results of operations.

 

Item 1A.

Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Fund’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which could materially affect the Fund’s business, financial condition and/or operating results. The risks described in the Fund’s Annual Report on Form 10-K are not the only risks the Fund faces. Additional risks and uncertainties that are not currently known to the Fund or that the Fund currently deems to be immaterial also may materially adversely affect the Fund’s business, financial condition and/or operating results. During the nine months ended September 30, 2020, there have been no material changes from the risk factors set forth in the Fund’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Fund’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, except for the following.

The Small Business Credit Availability Act allows the Fund to incur additional leverage, which may increase the risk of investing with the Fund.

On March 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On July 5, 2018, the Board voted to approve the adoption of the reduced asset coverage ratio and separately recommended that Investors approve the reduced asset coverage requirements at the 2018 annual meeting of stockholders. On September 26, 2018, the Fund’s stockholders voted to approve the adoption of the reduced asset coverage ratio, effective September 27, 2018.

Increased leverage could increase the risks associated with investing in the Fund. For example, if the value of the Fund’s assets decreases, although the asset base and expected revenues would be larger because increased leverage would permit the Fund to acquire additional assets, leverage will cause the Fund’s net asset value to decline more sharply than it otherwise would have without leverage or with lower leverage. Similarly, any decrease in the Fund’s revenue would cause its net income to decline more sharply, on a relative basis, than it would have if the Fund had not borrowed or had borrowed less (although, as noted above, the Fund’s asset base and expected revenues would likely be larger). However, since the Fund already uses leverage in optimizing its investment portfolio, there are no material new risks associated with increased leverage other than the amount of the leverage.

If the Fund’s asset coverage ratio falls below the required limit, the Fund will not be able to incur additional debt until it is able to comply with the asset coverage ratio. This could have a material adverse effect on the Fund’s operations, and the Fund may not be able to make distributions to stockholders. The actual amount of leverage that the Fund employs will depend on the Board’s and the Adviser’s assessment of market and other factors at the time of any proposed borrowing. The Fund currently anticipates being able to obtain sufficient credit on acceptable terms, although the Fund can make no assurance that this will be the case or that it will remain such in the future.

The following table illustrates the effect of leverage on returns from an investment in the shares of common stock assuming that the Fund employs leverage such that the Fund’s asset coverage equals (1) the Fund’s actual asset coverage as of September 30, 2020 and (2) 150%, each at various annual returns, net of expenses and as of September 30, 2020.

The calculations in the tables below are hypothetical, and are provided for illustrative purposes only. Actual returns may be higher or lower than those appearing below.

 

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Assumed Return on the Fund’s Portfolio (net of expenses)

     (10.00 )%      (5.00 )%      0.00     5.00     10.00
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Corresponding net return to holders of common stock assuming actual asset coverage as of September 30, 2020(1)

     (28.2 )%      (16.1 )%      (4.1 )%      8.0     20.1

Corresponding net return to holders of common stock assuming 150% asset coverage(2)

     (35.7 )%      (20.7 )%      (5.7 )%      9.3     24.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Assumes $441.1 million in total portfolio assets, $258.3 million in senior securities outstanding, $182.8 million in net assets, and an average cost of funds of 2.9%. Actual interest payments may be different.

(2) 

Assumes $441.1 million in total portfolio assets, $294.1 million in senior securities outstanding, $147.0 million in net assets, and an average cost of funds of 2.9%. Actual interest payments may be different.

Economic recessions or downturns could impair the Fund’s portfolio companies and harm the Fund’s operating results.

Certain of the Fund’s portfolio companies may be susceptible to economic downturns or recessions and may be unable to repay the Fund’s loans during these periods. Therefore, during these periods the Fund’s non-performing assets may increase and the value of the Fund’s portfolio may decrease if the Fund is required to write down the values of its investments. Adverse economic conditions also may decrease the value of collateral securing some of the Fund’s loans and the value of the Fund’s equity investments.

The Fund principally invests in floating-rate assets and incurs indebtedness on a floating-rate basis as well, and intends to incur indebtedness, when possible, on the same floating base rate applicable to the assets in which it invests, which is currently LIBOR. Regulators in the U.K. have set a 2021 deadline for a transition away from LIBOR. The discontinuation of LIBOR creates uncertainty around the indebtedness the Fund will incur on a floating-rate basis in the future. Because the base rate of the Fund’s assets and indebtedness are expected to be same and will therefore fluctuate on largely the same basis, the increased cost of the Fund’s indebtedness (resulting from rising interest rates in the event of a recession or downturn) would be expected to be accompanied by increased revenues resulting from the same rising interest rates on the Fund’s floating rate assets. Nonetheless, economic slowdowns or recessions could lead to financial losses in the Fund’s portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase the Fund’s funding costs, limit the Fund’s access to the capital markets or result in a decision by lenders not to extend credit to the Fund. Furthermore, while most of the Fund’s investments are not publicly traded, applicable accounting standards require the Fund to assume as part of its valuation process that the Fund’s investments are sold in a principal market to market participants (even if the Fund plans on holding an investment through its maturity) and impairments of the market values or fair market values of the Fund’s investments, even if unrealized, must be reflected in the Fund’s financial statements for the applicable period, which could result in significant reductions to the Fund’s net asset value for the period. These events could prevent the Fund from increasing investments and harm the Fund’s operating results.

The recent global outbreak of COVID-19 has disrupted economic markets and the prolonged economic impact is uncertain. Some economists and major investment banks have expressed concern that the continued spread of COVID-19 globally could lead to a world-wide economic downturn. Many manufacturers of goods in China and other countries in Asia have seen a downturn in production due to the suspension of business and temporary closure of factories in an attempt to curb the spread of the illness. As the impact of COVID-19 spreads to other parts of the world, similar impacts may occur with respect to affected countries. Similarly, between 2008 and 2009, instability in the global capital markets resulted in disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major domestic and international financial institutions. In particular, the financial services sector was negatively impacted by significant write-offs as the value of the assets held by financial firms declined, impairing their capital positions and abilities to lend and invest. While market conditions have largely recovered from the events of 2008 and 2009, there have been continuing periods of volatility. There can be no assurance that market conditions will not worsen in the future.

A portfolio company’s failure to satisfy financial or operating covenants imposed by the Fund or other lenders could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its assets representing collateral for its obligations, which could trigger cross defaults under other agreements and jeopardize the Fund’s portfolio company’s ability to meet its obligations under the debt investments that the Fund holds and the value of any equity securities the Fund owns. The Fund may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. Any extension or restructuring of the Fund’s loans could adversely affect the Fund’s cash flow. In addition, if one of the Fund’s portfolio companies were to go bankrupt, even though the Fund may have structured its interest as senior debt, depending on the facts and circumstances, including the extent to which the Fund actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize the Fund’s debt holding and subordinate all or a portion of the Fund’s claim to those other creditors.

 

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The Fund is currently operating in a period of capital markets disruption and economic uncertainty.

The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on the Fund’s business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase the Fund’s funding costs, limit the Fund’s access to the capital markets or result in a decision by lenders not to extend credit to the Fund. These events have limited and could continue to limit the Fund’s investment originations, limit the Fund’s ability to grow and have a material negative impact on the Fund’s operating results and the fair values of the Fund’s debt and equity investments.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Except as previously reported by the Fund on its current reports on Form 8-K, the Fund did not sell any securities during the period covered by this Quarterly Report that were not registered under the Securities Act.

 

Item 3.

Defaults Upon Senior Securities

None.

 

Item 4.

Mine Safety Disclosure

Not applicable.

 

Item 5.

Other Information

On November 10, 2020, the Fund entered into the Credit Agreement Amendment concerning the Revolving Credit Facility. The Credit Agreement Amendment (i) extended the maturity date of the Revolving Credit Facility from November 11, 2020 to November 9, 2021, and (ii) inserted a provision permitting the Fund and the Administrative Agent to, upon the occurrence of certain conditions, amend the Credit Agreement to replace references to LIBOR with references to an alternate benchmark rate that may include a forward-looking rate based on the secured overnight financing rate or another alternate benchmark rate subject to certain conditions.

The information set forth above with respect to the Credit Agreement Amendment does not purport to be complete in scope and is qualified in its entirety by the full text of the Credit Agreement Amendment, which is attached to this Quarterly Report on Form 10-Q as Exhibit 10.1.

 

Item 6.

Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

 

10.1    Fourth Amendment to Revolving Credit Agreement.*
31.1    Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
31.2    Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
32.1    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.*

 

*

Filed herewith

 

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SIGNATURES

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

 

      AB PRIVATE CREDIT INVESTORS CORPORATION
Date: November 13, 2020     By:  

/s/ J. Brent Humphries

      J. Brent Humphries
      Chief Executive Officer
      (Principal Executive Officer)
Date: November 13, 2020     By:  

/s/ Wesley Raper

      Wesley Raper
      Chief Financial Officer
      (Principal Financial and Accounting Officer)